Phil's Stock World
All posts from Phil's Stock World
Phil's Stock World in Phil's Stock World,

TGIF – 84 Dead in Terror Attack – BUYBUYBUY!!!

There was another horrible terror attack in France yesterday.  

The markets have given it a big "who cares" so let's act like it doesn't matter because it's Options Expiration Day and it's much more important we pump up the stock indexes (back to that magic 3,000 mark on Euro Stoxx and 10,000 on Germany's DAX) so the Funds, who are about to dump massive amounts of shares, can buy cheap puts to protect their gains during the sell-off.  

Oops, I'm not supposed to tell you that – it's one of those inside market manipulators' secrets we're not supposed to discuss with the retail suckers traders.  Move along, nothing to see here, pay no attention to the man behind the curtain.  Terrorism?  Why on Earth would that affect the stock market?  President Trump plans to nuke those suckers out of existence, so why should we be worried?  It's nice to know he has a plan – even if the plan is horrifying!

We still haven't gone full-blown short on the markets because the technicals are so set against us but we did press our short bets in our Short-Term Portfolio as well as our Options Opportunity Portfolio in yesterday's Member Chat.  We looked over our Member Portfolios in Wednesday's Live Trading Webinar and the replay for that is HERE.  

While the Dow and S&P may be at all-time highs, we're still waiting for the Nasdaq (5,150), NYSE (11,250) and Russell (1,292) to confirm the move and, of course, looking at the DAX, they are still miles away (20%) from last year's high of 12,500 and China is still 40% off the highs and Japan's Nikkei is still 20,000 points (50%) off it's all time high at 39,000 but that was 1989.  More recently (last July, in fact) the Nikkei topped out at 20,600 so 16,600 is only down 4,000 – also 20%ish.  

So all the other global markets are down 20-40% and we are making all-time highs.  This hasn't happened since October of 2007, so I'm sure there's nothing to worry about this time either…

See?  And we all know how well that worked out.  Boy, we forget how crazy China used to be – it was the C in BRIC along with those other fantastic investment opportunities the media was pumping 24/7:  Brazil, Russia and India – how are those trades working out for you?  Look, I really don't want to be the guy who keeps saying "be careful" when everyone else is trying to have a party but, back in 2007 and 2008 – I didn't say "be careful" often enough and people lost money – I don't want to see that happen again.

My mother is in CASH!!!, my brothers are in CASH!!!, our Member Portfolios are in CASH!!! and maybe we'll miss out on some more rally but I missed the end of the big run in 1999 and survived so I think I'd rather survive another insane rally than be on the wrong side of a crash and having to spend the next decade, as Jim Cramer summarized for his sheeple: "Getting Back to Even."   

Of course, you have to admire the brilliance of this all from Cramer's point of view:  He sells you books and tells you to BUYBUYBUY at the top of the market and then, when the market crashes and you get wiped out because you followed his advice, he sells you books that tell you how to get your life back together after a crash.  He's creating his own customers – BRILLIANT!

I STRONGLY advise we take some time to reflect on the crash of 2008/9 by re-reading our Crashiversary Posts:

We're not there yet.  We weren't there in 2007 when the Hang Seng was making record highs but a year later, it had dropped 50% – just like the Shanghai has since last summer and, just like the S&P at the time, we were ignoring the Chinese crash as if it didn't matter and coasting along at our all-time highs while banks in Europe began failing (which we also ignored).  It was only after a few US Financials began to actually fail that panic really set in over here.  

So the good news is we probably have a while before anything really bad happens and the bad news, of course, is that once again most people won't be prepared when it does.  

We lost over $20,000 on our hedges since April's Portfolio Review but our long positions made over $100,000 to make up for it.  Had we not had our hedges, we may have been tempted to stop out of our longs when the S&P fell below 2,000 last month or even during the May dip from 2,100 to 2,020 but, because we were well-insured, we rode it out with our longs and made a lot more money.  

We can use our sideline cash to take a swing at some Futures shorts after the mandatory opening pop - just in case today's the day and yesterday morning, in our Live Member Chat Room, I set our targets:

I don't know guys, this market seems unshortable but have to take another swing if 18,450 doesn't hold and we're lined up at 2,165, 4,595, 1,210 and 16,600 so 3 of 5 of those below and you can short the laggard but NOT shorting if 3 of 5 are over.  

Watch the Dollar at 95.92 – it's weakness is keeping things up for now.

Those are the lines for the Futures and, this morning, we have 18,436 (/YM), 2,158 (/ES), 4,593 (/NQ), 1,201 (/TF) and 16,650 (/NKD) so all are under except the Nikkei, which makes it the lagging indicator but we don't like /NKD short because we bet the Dollar long (see yesterday's post), and that trade is already doing great with /DX flying back to 96.25 for a $400 per contract gain (so far).  Our target is 100 – that will be another $3,750 from here. 

The Nikkei loves a strong Dollar and that should hold it up vs. our US indexes but we'll be looking to short the laggard of our indexes into the weekend, as it's hard to imagine that SOMEONE won't want to take some profits off the table before they take a helicopter to the Hamptons for the weekend.  We stop out if any 3 of our 5 indexes are over their lines, of course.  

Speaking of a strong Dollar, June Retail sales came in very hot at 0.6% vs. 0.2% in May (revised down 60% from 0.5% but shhhhhhhhh) and, once again, the Fed has no reason not to raise rates in two weeks.  We're up 2.7% from last year despite a 10% drop in gasoline sales, so it is a good number, just not all-time market highs good…  

We're going to ignore the Empire State Manufacturing Survey because that one wasn't good (so the MSM won't mention it) with an overall 0.55 vs 5.0 expected so economorons were off by about 90% and New Orders were down to -1.82 vs +10.90 expected by the finest minds in our nation.  That is horrifically bad and should be discussed, but this is the last you'll hear it mentioned unless you google it.

Meanwhile, in the Miss Japan Look-Alike Competition, our CPI came in at 0.2%, which was only 33% below the 0.3% expected by perhaps the same economorons or maybe they have special economorons for the CPI – who knows?  

Anyway, so far it's a runaway rally and we'll see what happens next week as we get more earnings reports but, so far, the few we've seen have been pretty good.  

Have a great weekend, 

- Phil


Provided courtesy of Phil's Stock World.

Would you like to read up-to-date articles on the day they are posted? Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE - Not the Gambler!