Hey Phil,
You called all the trends and market movements with perfection this week. I enjoyed it! Thanks for keeping us sane!
GClay
Phil - Wow…wow. The vision and inate grasp of the options world you posess is rather staggering. It's this type of experience that I really hope to develop. I'm afraid I still can't see the moves, but I WILL learn. I cannot thank you enough for the patience, knowledge and effort you put into this place. Please keep it going!
Where
I enjoy your informative materials, Phil... as it is obviously beneficial to so many "styles" of trading the markets... long term, swing or day trading the market moves.
As a longer term trader, I really like you long term calls, as I for one recognize the difficulty of calling these, because the further out you go in time, projecting price movement becomes more difficult.
I have to congratulate you for your accuracy... You called the March 2009 market upward reversal almost to the day, and the AAPL reversal to THE day. Only one who has been a student of the economy and the markets over a period of time could have done this, and so many other accurate calls. I'm sure it was difficult and consistent work, but it did pay off... thanks from one who benefited big time !
1234Gel
I am about 1000 hours into learning about investing. While, I have tried other websites along the way, they don't teach or focus on selling premiums and certainly don't have your mindset. Anyway, I have a lot to learn and look forward to the new portfolios.
So, thank ALL of you for being patient and teaching others how to "Be the House and not the Gambler"!
GrassHopper67
I cannot believe the success I have had in the last 6 months because of what I have learned here! It has been truly life changing. It's like the old adage about teaching someone how to fish instead of just giving them a fish. Thank you Phil, I am forever grateful and hope I have helped someone else along the way.
Craigsa620
Thanks for the USO mention, Phil, 140% on my USO lottery ticket in 12 hours, and no hesitation in taking the money and running — you have trained us well. Sometimes it's teaching, but with this kind of stuff, where you get whipped like a dog if you let 250% profit melt away, it's definitely training. Happy Fourth!!!
Zeroxzero
I have been a member for over six years and I still learn something new every day. This site gives you the skills to trade without having to be spoon fed. More importantly it teaches you about risk which is WAY more important than profit. Honestly, it is not a get rich quick scheme!
Malsg
Here I have learned and look differently at things. Over the years being with PSW I have first of all learned and gained in knowledge of trading. This to me is one of the biggest gains. I still remember the play on Caesar Palace, paid my trip to Atlanta!
Yodi
I took $2 (up 133%) and ran on those USO puts, quite a bit more than the 20 you played in the $25KP. Thank you once again for turning a bad market week into a great personal week. You will be happy to know I am back to cashy and cautious with a few of your favorite longs into the weekend. Thanks to Phil, JRW and all the members who share their knowledge here.
Dennis
I have been a member off and on for years. Using these techniques I do consistently beat the S&P 500. Phil's Stock World has been the most important site in my financial life. It's impact on me over the past years has been huge. As have my tax bills!
Knightpilot
/NKD- Kownichiwa Cowboy!! One week of patience and scaling in and out pays off. This is a testament to Phil's fundamental analysis with the PSW technique. Thanks Phil.
JohnO
WOW, glad I went bearish… Phil, thanks for the help on the QID calls yesterday, I turned it into a partial cover rolling down to the Feb 52s selling the 55s 1/2 covered. Sold 1/2 and now lowered my cost basis to $4.38 on the $52s (fully covered).
Texasmotion
Thanks to Phil (again) for the lessons on the art of the roll, selling premium and hanging tight under fire (particularly in the first hour of trading-MADNESS). Watching you manage the $25KP has really helped my trading in a big way.
Oknoman
I have been reading the "free" PSW for about a year and have always liked Phil's style as it closely resembled the way I like to trade (mostly naked put options). I have been a paid subscriber for about 5 weeks and I have been learning a lot from Phil and other members. I had made some money on Phil's "free" ideas in the past and I joined because one of Phil's futures ideas paid for my subscription within the same day (NG). Phil deserved my subscription and I was eager to learn more. I just did a quick tally and within the last 5 weeks the ideas that I chose to follow from Phil generated over 25K in options profits and 12K in futures profits (some of my trades were more conservative than what Phil's had suggested). I have a lot to learn, experience and confidence to gain. Thanks again Phil and Successful Trading to all.
Verreaul
Wishing Phil and all fellow PSW members a Happy, Healthy and Prosperous New Year 2017! Thanks to all of you for your insights and comments which help make me a better investor every day. Wishing everybody the best of luck for 2017
Learner
Phil/USO Adjustment~~ Thanks for showing us the make it even (maybe even profitable) tricks for 'fixing' a losing position. I would have never known the trick if you didn't explain it. The option adjustment techniques are very helpful. Trading stocks would probably never offer that kind of flexibilities! Thanks!
Investwizard
Thank you Nantucket. It is hard to be a complete beginner in the market with this complicated, fast moving, and very advanced group. Phil is the Great One, but the membership is absolutely amazing! Had I known this ahead I would probably log in as "awe struck" everyday.
Coke
Phil, 26% on the week for the 20% I day-trade, and since drinking the kool-aid last fall, the whole portfolio has doubled. Have a great weekend !!
JRW III
I have been around for many years now, was a modest inexperienced investor when I started, and I can honestly say I would not be at the point in my portfolio I am today without the guidance of Phil and JeanLuc and Yodi and all the others I've had the pleased of learning from and, on a few occasions meeting, over the years. Truly been a great experience.
RPeri
GMCR – Just bought back my Jan $90 callers on GMCR for a nice $10,000 gain. Thanks for the recommendation Phil! It was nice to cash in on a momo.
Palotay
The wonderful resource that Phil has created for us and nourished by its members is so powerful in what it can teach us going forward, but also what we can learn from the past. I never say it often enough, but Phil – thanks for all the work you do for us.
Winston
All I can say is — I understand that the Universe sent me to PSW for a reason. So, I'm listening!! …and studying. Your commentary is literally outstanding. …and your members are impressive as well.
Seaquill
I want to thank you for sharing your wisdom with us. I've learned a lot (and still am) about your trading strategy, but also I see a man who truly cares about our country, America. Thank you.
Autolander
Phil – I wanted to tell you how much of a privilege it is to learn from your every day. You are a shining beacon in the life of so many investors. You have assembled probably the best group of people in the history of financial blogging and you, yourself have done more to help investors in the last 6 months than all previous financial advisors combined.
StJeanLuc
Way back did 20 of your suggested short BP Jan 11 26 P @ 4.3 now .85 — sold half. this am —
paid for a years sub AGain!! thank you very much!
Ban2
Thank you Phil we appreciate all the work you put in to teach us valuable lessons about investing.
Pat Swap
BTW Phil, I wanted to relate a conversation I had with my business partner yesterday. I told him that I have been much more relaxed about my investments ever since I joined your site. It's funny how a 15-20% cushion does to your nerves. My returns have increased dramatically and my risk diminished. Many thanks for the guidance and patience. Good thing I am doing better financially as you might have increased my life expectancy as well!
StJeanluc
Phil…..You have absolutely NAILED IT! This is not a bull market, nor is it a bear market. It is a Rangeish market, and it's going to stay that way for a long time (the latter is my prediction. I love the word. What I love more is the fact that I've found someone with some investing intelligence greater than mine who can assist me in playing this type of market. Your description today of how it's playing out is right on. I predict some media ‘guru' will steal your word and your description within the next few days and we'll all get to read about what ‘they' discovered about this market. Thanks Phil!
Iflantheman
1,000% on SKF - It was a freakin' monster into the center field bleachers! I saw it play out live and squawked it from the StockTwits ID which 14k people follow: Home run trade of the week @philstockworld just knocked cover off ball w $SKF puts. http://bit.ly/piBL Great trade bud!
Phil Pearlman - StockTwits
I have been very fortunate over the years as an investor. Last year was on of my best in terms of percentage gains. I have to attribute much of this success to my membership in PSW which gave me the best education available anywhere when it comes to the understanding of option trading , discipline and general trading strategies. I will be forever grateful to Phil and the many "highly skilled" traders that have offered their advice.
It’s time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.
This chart is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.
Here is a nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.
Introduction: Richard Davis is President of the Consumer Metrics Institute (CMI). At the Institute, Rick measures real-time consumer transactions as an objective indicator of consumer demand and the associated health of the US economy. In this interview, we explore the history behind the government-published numbers and the reasons prompting Rick to devise better ways to measure the state of the economy.
History
Ilene: Rick, what got you interested in measuring economic numbers?
Rick: I first became frustrated with the current state of economic data after learning about the history of the collection process and the government’s continued reliance on 70 year old concepts. The government began collecting economic data during Franklin Delano Roosevelt’s (FDR) second term, around 1937. There was concern that the recovery from the 1937-1938 recession (i.e., a recession nested within the Great Depression) was stalling. The economy had been improving significantly from early 1933 through 1936 before the wheels came off the recovery in mid-1937. FDR’s administration realized it did not have adequate data to monitor the economy and the administration asked the National Bureau of Economic Research (NBER) to look into this problem. Wesley Clair Mitchell set out to find data that would help FDR’s administration address its concerns about the U.S. economy.
Wesley Clair Mitchell was a once-in-a-generation economic genius when it came to data collection. He collected over 500 interesting data sets measuring items such as sales, employment, railcar loadings--items that would allow him to constantly monitor the health of the economy. Most of these things are still measured, and the numbers have evolved into the core reports put out by the Bureau of Economic Analysis (BEA).
What frustrated me was that the data sets measured by Dr. Mitchell were developed in the 1930s and designed to capture those things that were important to the 1930s economy. They are not geared for today’s economy. Things that mattered in the mid-20th century simply cannot completely describe what is happening in the 2010 economy.
For instance, to find out what was happening in the music industry in 1950, someone could have gone to a neighborhood music store, counted the Doris Day 45’s in the retail bins…
Here’s another perspective on the comparison charts of the Dow Jones between the 1929 crash and recovery and the 2009 crash and recovery.
Let’s take a quick view of the line charts of the daily Dow Jones in 1929 structure and how it compares with today’s weekly Dow Jones structure.
First, the Daily Dow Jones: 1929 Crash and Recovery
I drew the numbers not so much as an Elliott Wave notation, but so that comparing key swing highs and lows would be easier.
The peak to trough crash lasted 72 days as the Dow Jones fell 47% (peaking in September 1929 at 386 and falling to 195 in November 1929). It unfolded roughly in a 5-wave progression.
The rally began off the November lows and lasted 155 days, peaking up 47% at 295 during April, 1930.
This shows an important principle in investing and trading, namely that if your account (or an index) falls 50%, then it would take a full 100% rally off the lows to recapture the prior highs, and not a 50% rally off the lows as seen above.
The rally phase took twice as long as the ‘crash’ phase and also unfolded in a 5-wave affair (with smaller waves).
I found it interesting that the daily chart showed an almost identical head and shoulders reversal pattern that failed – which is similar to the June/July failed head and shoulders pattern in 2009.
Because the 2008-2009 crash and recovery took longer, I am showing the weekly line chart of the Dow Jones.
Finally, the Current Weekly Dow Jones 2008-2009 Crash and Recovery:
Again, we see a similar 5-wave slow-crash down to the final March 2009 lows.
Price peaked in October 2008 at 14,198 and then fell 52% to the March 2009 lows of 6,469 – 72 weeks (510 days). The decline also fell in a similar 5-wave decline (with the 3rd wave ‘fractalizing’ into its own mini-five wave decline).
From the March 2009 lows, price has – so far – rallied 65% to the January high of 10,723 over the last 320 trading days… or almost all of 2009.
Again, despite the 65% rally, price is still 5,000 points lower than its 2007 peak.
The current rally also unfolded in a mini-five wave affair on a steeper…
It’s been 80 years since Black Thursday. On that day in 1929 stocks plummeted on record volume. Big banks got together and propped up the market by buying huge blocks of shares. That only delayed the pain, of course. It reminds me of our current short-sighted attempts to prop up the markets. More info.
In the spirit of “those who don’t learn from history…” I suggest watching The Crash of 1929, a great documentary from PBS. There are some fascinating first-hand accounts from the people who lived through it. Ignore the fuzzy image, that’s just Google Video being wonky. It’s a full 53 minutes long, and the picture isn’t bad. (For more historical perspective, see these cartoons from the Great Depression.)
In an UNBELIEVABLE move off the bottom over the past 6 months and one week, we have gained 58% on the S&P and have finally crossed into our 33% levels (from the highs) that we first set as upside targets back in our July Big Chart Review. At the time I said "I just don't see that happening without a pullback" yet here we are, with barely a wiggle down since I wrote that on July 27th and up 20% from our July 13th S&P base at 880.
Have we been too bearish? Is it now natural for the market to rise 20% in 2 months without a pullback? Are we really 20% better off than we were 2 months ago? History tells us not to mess with the 5% rule so we SHOULD encounter powerful resistance here as we approach the zone of a roughly 60% move off the March lows as well as 30% off our highs – it's going to be a rough 2.5% from here. As you can see from the above chart, we have already exceeded all previous recoveries by almost 100% at this point in the cycle. And why not, our government spent $9 TRILLION dollars to do it so we damn sure better have a pretty chart as a souvenir! The other rally that had a spectacular recovery was the the great crash of 1929 (the grey line).
In the 1929 crash, the stock market fell first, not the banks, which didn't begin failing until 1932 as lack of electronic data and next-day mail meant it took a lot longer for the late payment and foreclosure cycle to start impacting bank balance sheets. Also, of course, they were nowhere near as maniacally levered as today's institutions. In 1929 the banks did not play the market, they simply lent money to people who invested in stocks, businesses and properties that went bust so there were two distinct waves to the market crash in the Great Depression: First the people went broke, then the banks.
Unemployment in the US in 1930, a year after the crash, was only 8.7% - less than it is now. No one at that time thought it was important to help the average American get back on their feet after…
Dshort has an excellent chart out comparing the road to recovery using the rebounds that occurred following similar bear markets. Excluding the 1929 data, I’ve used the S&P 500 oil crisis recovery and the tech crash to calculate potential future returns. Assuming a total recovery of 61% (the average) from the bottom we can expect just 8.2% total returns in the coming 2 years after the incredible 5 month run we’ve already experienced. That’s a whopping 4% compound annual growth rate.
There is no doubt that the rally off the bottom has been swift and incredible, but now investors have to begin wondering whether or not the stock market is substantially ahead of itself in the near-term? 4% annual returns would certainly imply a very poor risk/reward environment which is in-line with our current thinking. Two pieces of data are by no means a solid scientific study, but the questions remain: is the stock market ahead of the road to recovery? Is it different this time?
Unfortunately, taking the long-term perspective comes to much the same conclusions. As I’ve mentioned before, one of the primary problems with bubbles is that the effect can often be as long and drawn out as the cause. The only reasonable explanations for a v-shaped stock market recovery would be either 1. a miraculously quick de-leveraging & turnaround in the U.S. consumer (which isn’t occurring) or 2. rampant inflation caused by the Federal Reserve. Unfortunately, the latter is unlikely to occur as borrowing remains extraordinarily low, banks continue to hoard cash and the consumer fails to recover quickly. The only logical expectation is that this recovery and stock market performance will be similar in terms of performance as all of those bubbles that preceded it:
If you've been paying attention you might have picked up on the irony that Turkey now appears the most powerful country in Europe thanks to the refugee threat. It's further appeared unfazed that the EU has appeared ready to ban all arms deliveries to Ankara over its internationally condemned military incursion into Syria, following Germany and France over the weekend announcing a temporary suspension, fearing weapons would be used a...
Life would be so much easier if we didn’t have to worry about our financial futures. Though I suppose we don’t have to worry. Animals don’t. Squirrels instinctively store away nuts and thus live through winter without much thought.
We humans have retirement winters, and we’re more sophisticated than squirrels. We generally outsource the job of managing our nuts/money to professionals. All well and good if we save enough and if the professionals do their jobs right. As we saw last week, the elected squirrels who run Social Security haven’t evolved to face changing con...
KeyBanc lowered Allegheny Technologies Incorporated (NYSE: ATI) price target from $33 to $28. Allegheny Technologies shares closed at $21.32 on Friday.
Stephens & Co. lowered the price target for Delta Air Lines, Inc. (NYSE: DAL) from $75 to $57. Delta Air shares closed at $52.95 on Friday.
KeyBanc cut Universal Stainless & Alloy Products, Inc. (NASDAQ: USAP) price target from $24 to $20. Universal Stainless shares closed at $14.69 on Friday.
Palisade Radio talks with Chris as he discusses his approach to trading and why technical analysis works for him. He focuses on the chart and price action and explains why investors need to follow a trading strategy that suits their personality.
He cautions that a broad sell-off is likely when stocks move into the next bear market. This liquidation will pull everything down, including gold, for a time. Afterward, he anticipates a massive rally in the juniors.
I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.
In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.
That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...
As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...
For most people, the purpose of investing is to build up enough wealth to allow you to retire. In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.
Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives. A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.
Still, the stock market has been better over the last 10 (7%) an...
Phil has a chapter in a newly-released eBook that we think you’ll enjoy.
In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.
This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site