Entries by Phil

Monday Market Movement – Dead Week Ahead

Why are you here? 

I told you it was going to be a pointless, slow week.  You need to take advantage of these things and take vacations.  Surely you didn't become a trader so you could be chained to a desk all day, right?  Get out there and have some fun, the market will still be here when you come back.  

We took a quick $338 per contract profit off the table already on our oil shorts and that's a nice $3,380 on 10 contracts to fly us down to Florida and have a big old turkey dinner with the family and THAT is why I like being a trader – just a little bit of work for a lot of reward (after putting in years and years of hard work and practice, though).  Still, the point is you have to learn to enjoy yourself, that's why our tag-line is: "High Finance for Real People – Fun and Profits."  If you're not having any fun – what good are the profits? 

Related imageAs I noted in our Portfolio Reviews last week, we're trying to emphasize the LONG-term investing strategies.  Futures trades like the one above are fun but they are a lot more fun when you KNOW you have a good collection of stocks working for you 24/7 to keep new money pouring in.  In the case of our Long-Term Portfolio (LTP), we're collecting $50,000 a year in dividends alone and we just added another dozen big dividend-paying stocks to our Watch List.  

Our Portfolios have been pretty much locked in neutral since October, with only our Buttefly Portfolio putting up big returns because it's already self-hedging and doesn't really care whether the market goes up, down or sideways.  If I had to trade just one strategy the rest of my life – that would be the one I'd pick (though I'd be SO bored!).  Boredom is why we play the Futures.  Good trading is BORING – it's supposed to be boring as you grind out steady, consistent gains.  If your tading is exciting, you are probably doing it wrong…

One of our Memberships at PSW is our Top Trade Alert and we've sent out 6 Alerts in the
continue reading

Fearless Friday – Markets Head into the Holidays at All-Time Highs

Image result for winter vacation cartoonNext week is nonsense

In the US, Thanksgiving is Thursday and the markets are closed and many people take the whole week off and almost everyone is in vacation mode by Wednesday and Friday (a half-day on Wall Street) is a total joke for those who show up – often the lowest volume day of the year.  So we don't expect much action next week and certainly not a move higher and then, after Thanksgiving it's Christmas time and then New Years so let's just meet back here on Jan 2nd and see where things are, OK? 

We've been reviewing our porfolios in our Live Member Chat Room and we're well-locked in neutral already with very little gained in the past month but that's OK, as the market has made very little gains in the past months.  In fact, our last Portfolio Review was October 28th and the S&P closed that Friday at 2,581 and, this morning, we're at 2,585 so – happy holidays – see you in Januray!  

If you do insist on hanging around, you can expect more of the same in December – unless the Trump Tax Plan fails to pass the Senate, then we are likely to break below the range.  At the moment, as we've discussed before, most people are holding their equities (including us) into next year, so we can take our profits when the taxes are lower.  If no one is willing to sell (and take high-tax profits), then the new buyers are forced to offer higher prices and the market does drift higher but the low volumes indicate it may be very hard to find buyers once people do want to cash in their gains. 

There are good strategies for locking in gains and I'll tell you a few.  Apple, for example, is at $171 and let's say you bought 1,000 shares for $120 ($120,000) and you have a $51,000 gain.  If you take that gain now, you will be taxed, for example, 38.5% ($19,635) but if you wait and next year you pay just 25% ($12,750) you are saving almost $7,000.  So your 1,000 shares of AAPL would have to fall more than $7 (4%) for it to be…
continue reading

$450M Thursday – A Least It’s a Nice Frame

Image result for Salvator Mundi.$450,000,000!  

That's a lot of money to spend on a painting and yet another justification for my daughter to go to art school!  It just goes to show you how rich the rich are gettin as the previous record for a painting at auction was $300M for Kooning's "Interchange" 2 years ago and this painting was previously purchased in 2013 for "only" $127.5M – how's that for inflation?  So, on this trajectory, we're only a few years away from the first Billion-Dollar painting – just in time for Madeline to graduate with her art degree!  

The buyer is mystery but look for a guy with a 26" space on his wall – that's probably him.  That's right, this is a pretty small painting but it is cool that it was painted by DaVinci 500 years ago though how they prove that, I can't say.  There was a VanGough that went for "only" $81.3M that I liked better – and it's more in my price range.

This is an indicator of how drastic income inequality is becomming in the US.  There was a roomful of people yesterday, bidding hundreds of Millions of Dollars on a painting while their pet Congresspeople are screaming to the cameras that these art lovers need massive tax breaks in order to "create jobs".  In order to give the art lovers these tax breaks, we have to give up our nacent universal health insurance, we have to cut Medicare, cut Student Loan Funding and cut Farm Subsides – all while taking on $1,500,000,000,000 in additional debt (minimum), which is enough money to buy 3,000 more paintings!  

Going long Sothebey's (BID) might be the best way to play along at home because all this money we, The People are scrificing is going to just 3M of our fellow citizens in the Top 1% and this chart is old as they now control 50% of the wealth in this country – and guess where they took the other 10% from?

wealth3

That extra blob of green on the chart is what was cut off from the top of the top 90% and it belongs to the Top 97, 98 and 99th percentiles and yes, a
continue reading

Will We Hold It Wednesday – NYSE 12,250 Edition

Aren't you glad we're hedged? 

Just yesterday, in our Morning Report, we gave you an example of our Members' Portfolio Hedges we use at PhilStockWorld.  Later in the day, in our Live Member Chat Room, we made some aggressive adjustments to our main hedges in the Short-Term Portfolio Review and tightened up some covers in our Butterfly Portfolio Review.  I don't know if this week's pullback is the sign of things to come – I just know I sleep a lot better knowing we are well-hedged if things do turn sharply south.  

The big line to watch at the moment is 12,250 on the NYSE and we finished the Day just 30 points above that 50-day moving average.  Looking at the position of the MACD line (lower part of the chart) compared to the last time we crossed under the 50 dma (Aug 9th), it would now be surprising if the Senior Index doesn't drop 100 points below that line – at least.  Already this morning we're seeing some early weakness, but perhaps that's just because North Korea has declared that Trump deservs the death penalty and is calling Trump a coward for cancelling a visit to the inter-Korean border.

Or perhaps the markets are down this morning because the GOP Senate has, for some insane reason, decided to wrap up the Trump Tax Plan in a Bill to Kill Obamacare – now putting two very unpopular measures on the same bill.  We fought hard to stop this insanity back in July and here we go again (see: "Trump Orders GOP to Kill Over 4,000 People Per Month").   I know Trump's Asia trip was a disaster, but he doesn't have to come home and take it out on the poor, does he?

If they fail (and God help us all if they don't), Republicans will enter the midterm election year with their message muddled, without a victory on tax reform, and having spent a year's worth of time trying and repeatedly failing to dismantle Obamacare with nothing to show for it but bad headlines. 

The Republicans want to use the $338Bn it costs to cover the uninsured ($33Bn/yr) to hand out bigger tax breaks to Billionairs – like Trump!  4M people will lose health
continue reading

Triple Toppy Tuesday – Nasdaq Finally Finds a Level it can’t Break Over

6,325.  

Who'd have thought THAT was going to be where the Nasdaq finally had enough?  Actually, the Nasdaq (QQQ) did hit 6,350 on Nov 8th but, before that and since that, it's been getting stuck at 6,325.  6,345 would make more sense, as that's our 17.5% line on the Big Chart off our base of 5,400 we consolidated at last Spring. 

The initial run topped out at 5,800, which was up 7.5%, so another 10% run since then with a pause at 6,000 makes 6,300 the 5% Rule™ and watch that line because, below that, there's really no suport until 6,000.

Apple (AAPL) of course often distorts moves in the Nasdaq as that one stock is over 15% of the index and AAPL has ramped up 10% in two weeks which, by itself, adds 1.5% (94.5 points) to the Nasdaq.  So, without AAPL's strong support, the Nasdaq would already be on the way down and, of course, what Apple giveth, Apple can taketh away – so watch out for any negative signs on that stock.

AAPL busted out of its channel and, deservedly so, as they made more money than the entire Automotive Industry combined.  Or Airlines or Retail, for that matter.  Apple may be part of the Retail Sector but they are nothing like a retailer with their 35% sales margins, constant crowds and absolutely no discounting.  Make your own high-quality stuff, offer great service and people will come is something 1,000 other retailers can't seem to figure out.  

Something traders can's seem to figure out is how easy it is to make money playing Apple bullishly.  Apple is the biggest position in our Options Opportunity Portfolio and our trade will pay us $180,000 if AAPL is over $170 next January, so we're well ahead of schedule.  What's the current price?  $49,350.  

At the moment, we're "in trouble" with our short Nov $145 calls but we can roll them along to 30 of the the Jan $155 calls at $20.40 ($61,200) and it's still only a 1/2 cover and we can kill the short 2019 $130 puts at $3.63 ($7,260) and sell 20 of the 2020 $150 puts for $13 ($26,000) so there's another $22,140 in…
continue reading

Monday Market Melt-Down Continues With GE’s 50% Dividend Cut

Related imageGE is restructuring.  

We knew that already and discussed GE in depth (we're still bullish) in this weekend's 2018 Watch List Update, where we identified (so far) a dozen dividend-paying stocks we consider good buys at the current levels, which will become compelling buys if they pull back a bit more with the market.

And the market is pulling back with the Nikkei giving up 1.4% and Europe down almost a full point as Brexit Talks seem like they are failing and our Futures are, so far, down about a quarter point and indicating lower but it's Monday – so anything can happen and it won't mean anything if it does.  I've only got 16 Mondays left until I quit in March (Mondays, not the whole week) so I'm enjoying my last ones before my 20% retirement party. 

Over in Asia, despite still being 40% below their 2007 bubble highs, Chinese stocks are not doing the heavy-lifting required to catch up to the rest of the World, which is right back at the bubble highs.  There was the strong rally of 2015 but that ended in disaster but China has spent many Trillions of Dollars on various stimulus packages over the past two years, and that hasn't helped either.  China has now switched strategies and is ENCOURAGING foreign investors to buy Chinese stocks – that might not end well…  

Polish nationalists light flares during an independence-day march organized by a nationalist youth league, the National Radical Camp, in Warsaw on Saturday. Speaking of things that aren't ending well:  In addtion to Brexit Talks once again breaking down, Europe is a little concerned with "tens of thousands" of White Nationalists marching on Warsaw for the Independence Day Celebration.  While the thousands of torches may have had a festive look and while "Fatherland" is certainly a catchy tune, the new battle cry of the Polish Fascists comes from Donald Trump's July Speech in Warsaw: "We want God," while calling for the extermination of Jews and Muslims


continue reading

PhilStockWorld 2017 Watch List Update – Rolling into 2018

Related imageIt's very important to have a Watch List.

I like to have about 24 stocks I keep a close eye on so that, when something happens and they go on sale, I'm ready, willing and able to pull the trigger in an instant.  We just did that this week when Macy's (M) announced their earnings and we thought they were just what we wanted yet the market sold them off after the opening pop.  That gave us a window to act and, because we follow M closely – we KNEW it was time to act and I issued a Top Trade Alert, identifying it as our top contender for Stock of the Year for 2018 (replacing LB, another retailer who has already flown higher).  

We issued our 2017 Watch List back in March and in May we picked 13 out of 24 for action, including M as well as BMY, ESRX (still cheap), FCX, GE (cheaper), GILD, LB, PSA (still cheap), QCOM, TGT, GCI, FMCC and SEE (still cheap).  So, out of 13 picks we had been watching and pulled the trigger on, 10 are winners, 2 are flat and one (GE) is down and the one that's down is the one we like most at the moment.  Our "too early" entry on GE was:

GE (3/5) – Forever $30 but talk about a safe place to park your money!  They even pay a 3.2% dividend (0.89) while you wait for something to happen – and it won't.  GE is a $262Bn company that pays no taxes ($464M refund last year on $9Bn in earnings!) and has tons of money overseas – what's not to love?  Even better, you can sell the 2019 $28 puts for $2.50 and use that free money to buy the $25 ($6.10)/30 ($3.05) bull call spread for $3.05 and that's net 0.55 on the $5 spread for a near 10-bagger if GE simply holds $30.  There's anothe interesting way to play this one and that's to effecively buy it by selling the 2019 $32 calls for $4.40 for a net $27.60 entry and then buy the $28 calls ($4.20) for a net 0.20 credit and then just sell 1/2 of the April $30s (0.75).  That way, you are collecting 0.375 per long and each time you collect $1.70 (4-5 quarters)


continue reading

TGIF – Market’s First Red Week Since September Comes to a Close

A down week?

What is that?  Since when do markets go lower?  Well, they don't generally (any more) and this market hasn't had a down week since the first week of September, when the S&P was at 2,450 so it was a nice 150-point run (6.12%) before pulling back and the 5% Rule™ says we can expect a 30-point weak retracement to 2,570 and that's exactly what we got but 2,570 is still a 5% gain (2,572.5 actually) and, as long as that holds – it's still bullish – just a minor correction

As you can see (or at least extrapolate) on our Big Chart, 2,600 is the 20% line on the S&P so of course we're going to get a pullback there.  It's going over that line that's going to be siginficant and, rather than a bearish hedge, we're going to be needing bullish hedges to play the upside from there.  

That's right, we already have bearish hedges in our Short-Term Portfolio and our Options Opportunity Portfolio and we don't want to get rid of those but, above the milestone S&P 2,600, we are going to want to hedge the hedges – in case the next 20% move up wipes them out and turns them into very expensive, unused insurance.  When we hedge a hedge we go long the laggards – the indexs that are underperforming in anticipation that they would catch up.  

We tend to take a hedge like that each quarter and, in May (19th), I was on China Global Television discussing the Brazil Crisis and we decided it was low enough to make a bullish play out of it and our trade idea at the time was:

So I like EWZ down here ($32.75) and we can take advantage of this dip with the following:


continue reading

Faltering Thursday – GOP Losses and Trump’s Lack of China Deal Spook Markets

China Donald Trump & Xi Jinping (Reuters/D. Sagolj)Mr. Trump went to China.  

That's it, nothing happened.  The deal-maker in chief made no deals, though he did take credit for $250Bn in business deals, which were actually the course of our normal trade with China, like $36Bn worth of Boeing (BA) planes, most of which were already part of their existing backlog.  While these transparent attempts to puff himself up may work with the gullible US voters, Trump faced mockery in the Chinese press – even the "official" press which said: "Emotional venting cannot become a guiding policy for solving the nuclear issue on the peninsula."

There was no trade deal, no pushback on exports, no movement on China's currency manipulation, NOTHING which Trump promised during the campaign and nothing is coming from Trump's "great friendship" with China's President Xi.  Trump went so far, in fact, to absolve China for unfair trade practices saying they were only doing what's best for their country and it was the fault of past US Presidents for making bad deals – like the one he is sticking to by leaving China empty-handed.  

"After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. I give China great credit, but in actuality I do blame past administrations for allowing this out-of-control trade deficit to take place." 

Japan's Nikkei went on a wild ride last night and is currently off 1.666% at 22,580 after bottoming out at 22,500 and we noted this action in Tuesday's morning Report and shorted the Dow Futures at 23,500 in our Live Trading Webinar yesterday along with Oil (/CL at $57.50) and, yesterday, in our Live Member Chat Room, my comment to our Members into the close (3:58) was:

Indexes curling over, Good time to short /ES at 2,590 (tight stops above).  Lined up with 23,500, 6,340 and 1,480.


continue reading

Wild Wednesday – US Consumers go $1Tn in Debt, Saudis Confiscate $800Bn in Wealth

Image result for iq americansMaybe Americans are smart?  

Rather than saving $1Tn, like the Saudi Royals who have fallen out of favor, Americans go the other way and put themselves $1Tn into debt on their credit cards so the powers that be can't afford to lock them up – as they need to keep paying those 18% interest rates.  That's right, our fellow citizens have now passed the $1Tn mark in credit-card debt and that's up 11% ($100Bn) since Trump was elected as Americans are running out to pre-spend those tax cuts.

Some might say that having to pay $20Bn/month in interest alone on credit-card debt can be damaging to US consumers but those are people who know MATH and understand ECONOMICS and, fortunately, those kinds of people are NOT in charge of our country.  To quote our President "Bing, bing, bong, bong, bong, bing, bing."

Meanwhile, those tax cuts aren't coming and already the Senate Republicans are considering a one-year delay on the promised Corporate Tax Cut in order to save the $100Bn hit that provision alone takes from Government Revenues.  The news comes amid the expected growing opposition in the Senate to the current bill. One day after Trump nemesis John McCain said tax reform is "dead on arrival", on Tuesday, Sen. Ted Cruz said that the House tax bill could end up raising taxes on some middle-class Americans, and he pushed for assurances that the Senate bill would lower everyone’s taxes.  

Bloomberg reports that on Tuesday afternoon President Trump called into a meeting between Senate Democrats, National Economic Council Director Gary Cohn and White House Legislative Affairs Director Marc Short, Democratic Sen. Jon Tester tells reporters. Tester said that Trump spoke (maybe screamed would be a better description) for about 15 minutes by phone from Asia and insisted the rich will be hurt by the tax bill.

If the Top 1% can't pass a bill that steals money from the poor, they are going to turn on each other (something I have predicted for many years) and it's already happening in Saudi Arabia where one side of the Royal Family has arrested hundreds of members of the other side of
continue reading