Posts Tagged ‘Smart Portfolio Management’

Fabulous Friday – Counting our Blessings in the Market Collapse

Wheeeeeee – isn't this fun?  

We're certainly having a good time and, if you've been following our posts and getting our trade ideas – you probably are too as yesterday's DXD trade idea, for example, made 100% in a day for the 2nd time this week!  

Now let's say you put just 2% of your portfolio into a hedge like that against a worry that we'd have a 5% drop.  Well, on Tuesday we collected 100% of that 2% on a 2.5% drop and yesterday we collected another 100% of 2% on another 2.5% drop – there's 4% back and we never even fell 5%.  This is how you hedge and hedging is what we teach you to do at PSW (sorry, Memberships now full, try the wait list for next month).  

Of course, if you find yourself on the wrong side of the market, the Futures also make excellent hedges and it just so happens that we teach that as well!  We did a Futures Webinar just this Wednesday and you can watch us make money live on the replay.

 Those are the hedging strategies that led us to call for shorts yesterday (right in the morning post) at 1,100 on /TF (Russell Futures), 4,040 on /NQ (Nasdaq Futures), 1,965 on /ES (S&P Futures) and 16,900 on /YM (Dow Futures).  Aside from the Alert we sent to our Members, we also Tweeted out and Facebooked? the trade ideas – THAT'S HOW SURE WE WERE!  If you followed those, we closed the day at:

  • Dow (/YM) 16,550: down 350 points at $5 per point – Gain of $1,750 per contract 
  • S&P (/ES) 1,918: down 47 ponts at $50 per point – Gain of $2,350 per contract 
  • Nasdaq (/NQ) 3,950: down 90 points at $20 per point – Gain of $1,800 per contract 
  • Russell (/TF) 1,060: down 40 points at $100 per point – Gain of $4,000 per contract 

The margin requirements for the Futures trades are roughly $4,000 per contract so we're talking net gains of
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$5,000 Friday – How to Profit from Market Corrections

$5,000! 

That's how much our FREE Futures suggestions made between the time I put them in yesterday's morning post (8am) and the close of trading at 4pm.  That's not bad for 6 hour's work, is it?  As I said in the morning:

So, you may wonder, why would we want to go against the wishes of two of the most powerful people and short oil ($93.40), gasoline ($2.75), the Dow (17,150) and the Nikkei (16,350)?  Well, that's because, as powerful as these people may be – they are still fighting physics in trying to make the markets do things they simply shouldn't be doing.  

I'm sure ALL the newsletters you follow are able to give you equally profitable advice so, by all means, DON'T SUBSCRIBE HERE – especially ahead of the rate increase in October (sorry, inflation). blush  But, can you really blame us for being pleased that we totally nailed the drop?  

In fact, had you simply joined us on Wednesday and replicated our virtual Short-Term Portfolio, which was only up 53.4% at the time, you would have caught a ride from there to 60% in just two days.  Last Thursday, the STP was up only 30%, so that's a 30% ($30,000) gain for the week as our bearish bets paid off and it very much offset the $15,560 decline in our bullish Long-Term Portfolio.  So much so that we took some of our shorts off the table to get us more neutral into the morning (as we expect a slight bounce unless GDP sucks).  

SPY 5 MINUTEYou don't have to trade the Futures to make great money on your hedges.  Our DXD Oct $24 calls jumped from 0.50 on Tuesday (when I reminded you about them in the morning post) to 0.96 at yesterday's close – up 92% in 3 days!  That's a good hedge, especially when you consider the Dow only fell 2.5%, so we got 36:1 leverage on that hedge – and THAT is how we balance our portfolios and protect them from sell-offs.  

Even a straight purchase of TZA (also noted in Tuesday's post – why…
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Will We Hold It Wednesday – Global Correction Edition

You call this a correction?

The Nasdaq is down 4%, Russell is down 5%, the Hang Seng is down 6% and the FTSE is down 3.6% but barely a pause from the rest of our Global Indexes.  The problem is, it's been so long since we had a proper pullback that people think a tiny little correction is the end of the World.  Even in the good old days, before high-frequency trading made a joke out of the market – investors didn't get too upset about a 5% pullback

That may be the problem as well.  The reason the market has marched off to record highs is BECAUSE investors have been led to believe that it's better than bonds, better than cash, even – to have your money in the stock market.  We certainly seem to have convinced a lot of Boards of Directors that the best thing to do with their company's money is to buy back their own stock or the stock of their competitors – no matter how ridiculous the price.  

$533Bn of hard-earned Corporate Profits were spent buying just the S&P 500, by the S&P 500, in the past 12 months alone.  That's 20% more than all of 2013 ($420Bn) and 30% over the 5-year average and that DOESN'T include M&A activity – also at a record pace.   While this has been going on, insiders have been SELLING their company stock at a record pace – Interesting…

So the company uses it's profits, not to invest in it's own future but to prop up it's own stock price – making earnings seem better because you are dividing the profits by a lower number of shares than there were last year.  This inflates the stock price and the insiders get out and that's when you buy – is that about right?  

What a friggin' scam - I can't believe you fell for that!  Seriously, that is such an obvious fraud that you would think people would run screaming away from equities.  The problem is, there's nowhere to run to, is there.  Your cash is being devalued, bonds don't keep up with inflation, real estate is still very…
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Technical Tuesday – Rejected, Rejected, Rejected!

So much for 2,000 holding.

Fortunately, our Big Chart kept us cautiously bearish into the weekend and the hedges in our Short-Term Portfolio functioned perfectly, gaining $13,000 on the day and completely offsetting the drop of $8,000 in our Long-Term Portfolio. 

That's without our big hedge, DXD, kicking in yet, as the Dow is still over 17,000 but, should it fail, we'll see those STP gains multiply quickly.  

For those of you who are not Members, and don't have access to our various Member Portfolios (and you can by subscribing here), we have done our best to prepare you for this drop as well.  Last Thursday, right in the morning post, I shared our short stance with the general public, saying

It's going to be crazy into the weekend but, in our Live Chat Room this morning, I said to our Members:

Futures pumped back up to yesterday's highs at 17,125, 2,001.50, 4,080 and 1,156.5 so I like shorting below 17,100, 2,000, 4,075 and 1,155 – short the laggard, out of any of them cross back over – very simple! 

That's our plan into the weekend.  As I've mentioned before, we're also using DXD ($24 at the time), TZA ($14.68) and SQQQ ($35.26) to hedge our long portfolios – just in case things unravel over the weekend.  We also discussed FXI ($40.30) puts earlier in the week as a play on China melting down so PLENTY of ways to profit from the downside.

INDU DAILYThis morning, the Futures are 17,050 on /YM (up $375 per contract), 1,979 on /ES (up $1,125 per contract), 4,035 on /NQ (up $900 per contract) and 1,116.50 on /TF (up $4,000 per contract) – so that strategy went pretty well.

In last Wednesday's post, we also shorted Oil Futures at $95 and oil fell to
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Fabulous Friday – Our AliBaba Play Pays off Big!

We're already up over 100% on Alibaba.

How, you may wonder?  Well, two ways:  Back in October of 2007, before Alibaba IPO'd in China, I was touting the company when it had an $8Bn valuation ($1.10 per  share – pre-split).  I was the first and only analyst in the US to point out the benefits of Yahoo's investment back then and our Members who play the Asian markets were able to take advantage of that and today should be the culmination of the white whale of investing – the 20-bagger as Alibaba is expected to IPO in the US at $160Bn just 7 years later

YHOO, on the other hand, took the long and winding road but it should finally be getting to our $50 target and that's another 100% gain on the stock – though a very small consolation to those who didn't pick up AliBaba directly.  Fortunately, at Philstockworld, we know how to BE THE HOUSE – Not the Gambler and, back in June, when the rumors of the AliBaba IPO began we came up with a way for our Members to make 400% playing YHOO into the AliBaba IPO.  

From our Live Member Chat Room:

YHOO/Albo – Why not just buy YHOO?  YHOO is $35Bn and owns 22% of AliB while SFTBY is $91Bn and owns 33% of AliB, so you get a lot more bang for your buck with YHOO, whose forward p/e is only 19, than SFTBY, whose forward p/e is about 17 – so not all that significant.  Of course, more significantly is the potential impact of (guessing) $50Bn worth of AliB on a $35Bn company!  

So we don't even have to go crazy if we want to play the "YHOO is undervalued" game.  The Jan $38/45 bull call spread is $1.60 on the $8 spread with 400% upside if YHOO gains 28%.  I think that's worth $800 for 5 shares in the $25KP


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Which Way Wednesday – Fed Edition

Wow, what a recovery!  

And wow, what complete and utter BS it is.  They NYSE is still below 11,000 (our Must Hold line) and the Russell is still below it's 50 dma and we up on less than 10% of the volume (total) that sold off for the last two weeks.  But, who cares as long as it paints a pretty picture?  

We can thank the Wall Street Journal's Fed Whisperer, John Hilsenrath with yesterday's rally as he wrote not one but TWO  articles that whipped traders into a frenzy on his "insider view" that the Fed "may keep the words "considerable time" in its policy statement."  Oh, be still my heart!  More free money?  Really?  Will wonders never cease?  

Needless to say we took the opportunity to re-short the Dow Futures (/YM) at 17,050 and the S&P Futures (/ES) at 1,993 and the Nasdaq Futures (/NQ) at 4,060 and the Nikkei Futures (/NKD) at 15,950 – all of which we discussed in yesterday's Live Trading Webinar that was, sadly, a Members only affair (but you can join us here).  

We also got a chance to short oil at $95 again (a level I published in yesterday's post) and we're thrilled with that and already this morning, it's back at $94.50 for $500 per contract gains.  For non-futures players we grabbed the SCO Sept $30s at .25 as a fun play that inventories at 10:30 won't support $95 oil in much the way Fed policies at 2pm won't support these market levels.  In fact, here's CNBC's Art Cashin telling you yesterday at noon what I told you pre-market, yesterday morning – BRILLIANT!  

 

Art's actually one of the very few Wall Street analysts I respect (and not just because he repeats what I say), I've followed him since I was a kid – he's a fantastic guy and a lot of what I share with you – I learned from him.  As you can see on the Big Chart, the Russell is the laggard and, if the indexes break higher – it's the index we'll go long on but our short bets
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$1,500 Friday – Yesterday’s Futures Play Pays Big!

That's $2,200 in two days playing with us!

Not bad for free picks, right?  On Wednesday, we played the Nasdaq Futures (/NQ) short at 4,100 and those gave us a nice, $700 per contract gain in just a few hours.  Yesterday, we reviewed that trade idea right in the morning post (which you can have delivered to you every morning, pre-market, by SUBSCRIBING HERE) and I added:

That's why, today, right now, we are once again shorting the Futures at 17,100 in /YM(Dow) and 2,005 on /ES (S&P) and 1,175 on /TF(Russell).  Yesterday we shorted the Nasdaq(/NQ) at 4,100 – a trade idea I outlined in the morning post for our subscribers – and that trade made $700 per contract by noon.  Not a bad day's work, right?  

SPY 5 MINUTEFutures trading is a useful skill as we can make adjustments to our trading almost anytime we get some new information – even when the market is closed.  

We played bullish on Draghi fever early in the morning and then, in our Live Member Chat Room, at 10:35, we nailed the turn for a re-entry at 1,180 on the Russell (/TF Futures), 17,150 on the Dow (/YM) and 2,010 on the S&P (/ES) as well as $95 on oil (/CL) and we were rewarded with moves down to 1,160 (+$2,000 per contract), 17,025 (+$625 per contract), 1,990 (+$1,000 per contract) and $94.25 (+$750 per contract).  

As I said yesterday, we can make trades like this because the market is RIGGED and we understand how it's rigged, which enables us to play along and profit from the manipulation.  We don't like it, we don't endorse it but, since it happens every day – we may as well bet on it, right?  

Of course there are other ways to make money on pullback and we teach those as well at PSW. Here's a couple of trade ideas we had for our Members
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Thrilling Thursday – Rejection at S&P 2,000

SPY 5 MINUTEOh my God, it's dip!  

The Futures are off a bit today and that's no surprise to those of us who have been paying attention to the volume, or lack thereof, as we made our final approach at the 2,000 line on the S&P 500.  Jim Cramer was literally foaming at the mouth this week as he and his CNBC co-conspirators herded the sheeple into the markets to participate in the tail end of the rally, where the suckers could hold the bags for their Corporate Masters.  

Why am I angry at Cramer today?  Because yesterday he committed the same crime he commtted in 2008 that cost so many people their life's savings – he told people not to sell their stocks on a pullback.  "Don't take profits" is the message for the viewing public.  But, I would ask, if people don't take profits – when will they ever get profits?  What kind of stupid message is that?  Well, it's the message that leaves you holding the bag while his hedge fund buddies head for the exits.  It's not much different than telling one group of people not to leave a burning building while you make sure all your friends are getting out safely.

"This is not just my opinion. I can prove it to you empirically. See, as I was preparing to write my book "Get Rich Carefully," I went over the previous five years of trades made by my charitable trust. And as I reviewed those trades I noticed that far too often, my good judgment would be overcome by excessive skepticism."

If the "proof" Jim is talking about is his Action Alerts Plus, then I'd say you really should think long and hard about following his advice here (via Kirk Lindstrom – who does compete with Cramer):

Jim Cramer's Action Alerts Plus Performance & Returns

I guess, sure, Jim legitimately should regret that he wasn't more bullish from 2008 to 2013, when the market popped 200% and his trust gained about 100% but don't you think the lesson Cramer should be taking from that experience is to CUT YOUR LOSSES, not
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Testy Tuesday – 50 DMA Spectacular!

You've gotta love those trend lines.

Chart people sure love them and we love chart peopel because they are SOOOOOOOO predictable and predictable behavior is behavior we can bet on and that makes us happy.  Today we'll be seeing the 50-day moving averages on the Dow, the NYSE and the Russell all tested at the same time – what happens next will tell us a lot about this rally.  

As I pointed out to our Members in our Live Chat Room this morning, though we may be past our bounce levels and though we are now challenging the 50 dmas, we still have 3 of 5 of our Must Hold levels red on the Big Chart – that's not too impressive.  Consider what a 50-day moving average is.  It means that, over the last 50 days, half the time the index has been above the line and half the time it's been below – so how impressive should it be to see the index back in the middle?

SPY 5 MINUTENonetheless, Chart People believe it's some mystical symbol that gives them a rally signal and half the time they are right – so the religion of TA continues to prosper!  As you can see from Dave Fry's SPY chart from yesterday, 75% of yesterday's gain came on no volume as we gapped up in the Futures and the rest of the day's trading was one of the lightest of the year.  

The reason I like Dave is because he's one of the only TA people who actually pay attention to volume and this volume is total BS.  Still, it's enough to stampede the retail suckers back in and God bless them because they throw money at us to sell them the things we liked when they were out of favor.

In May and June, for example, we compiled a Buy List for our Members, which had 29 trades we liked for the rest of 2014.  Here's a few that we are done with already:


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Phil's Favorites

Stall Speed Economy

 

Stall Speed Economy

Courtesy of John Mauldin, Thoughts from the Frontline

When Cornwallis surrendered to George Washington at Yorktown in 1781, tradition has it that the British band played an old English children’s folk tune, “The World Turned Upside Down.”


Painting by John Trumbull

If buttercups buzz’d after the bee,
If boats were on land, churches on sea,
If ponies rode men and if grass ate the cows,
And cats should be chased into holes by the mouse,
If the mamas sold their babies
To the gypsies for half a crown;
If summer were spring and the other way ‘round,
...



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ValueWalk

Coronavirus stimulus checks: Senate Republicans hint openness to working with Biden

By Aman Jain. Originally published at ValueWalk.

Republicans and Democrats have been unable to reach a consensus on the next stimulus package so far. Efforts by the White House to broker a deal haven’t resulted in success either. Thus, it looks unlikely that there will be any stimulus package before the November election. Similar signs are also being given by Senate Republicans, who are now hinting that they are open to striking a relief deal on coronavirus stimulus checks and other benefits with Joe Biden if he wins the presidential election in November.

Q2 2020 hedge fund letters, conferences and more

...

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Politics

Can Trump and McConnell get through the 4 steps to seat a Supreme Court justice in just 6 weeks?

 

Can Trump and McConnell get through the 4 steps to seat a Supreme Court justice in just 6 weeks?

A political battle is shaping up over the confirmation of the next Supreme Court Justice. Jose Luis Magana / AFP/Getty Images

By Caren Morrison, Georgia State University

United States Supreme Court Justice Ruth Bader Ginsburg died on Sept. 18, thrusting the acrimonious struggle for control of the Supreme Court into public view.

President Trump and Senate Majority Leader Mitch McConnell have already ...



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Zero Hedge

The Possible Limits Of China-Russia Cooperation

Courtesy of ZeroHedge View original post here.

Authored by Lawrence Franklin via The Gatestone Institute,

China and Russia's coordinated policies in foreign affairs and economic endeavors belie deep-seated fissures that might well prevent their current period of cooperation from evolving into a sustained alliance.

Despite China's planned participation in Russia's annual ...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Kimble Charting Solutions

Gold Breakout Triggers Buy Signal, Is $3000 Next Target?

Courtesy of Chris Kimble

90-days ago this cup & handle pattern was discussed on See It Market when Gold was trading at 1717.

Fast-forward to today and Gold is up 15 percent. So it’s time for an update!

As we pointed out 90-days ago, the initial price magnet for the rally was the 261.8 Fibonacci extension that marked the 2011 high at (1).

That high has served as price resistance for nearly 9 years! …But it may be ...



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Biotech/COVID-19

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

 

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

Firefighters have battled camp crud before, but COVID-19 brings new risks with the potential for heart and lung damage. Robyn Beck/AFP/Getty Images

By Luke Montrose, Boise State University

Two forces of nature are colliding in the western United States, and wildland firefighters are caught in the middle.

Emerging research suggests that ...



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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.