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Fearless Thursday – Fiddling While Rome Burns

Posted on the 21 May 2015 by Phil's Stock World @philstockworld

SPY  5  MINUTEThis is just getting silly!  

Look at the ridiculous and FAKE move up that began BEFORE the Fed announcement at 2pm that was completely reversed by 3pm with, as usual, twice as much down volume as up volume during the hour.  There, in a nutshell, is what the entire market has been doing since we bailed on it in late March.  

Don't get me wrong, we're having an absolute blast taking advantage of all this blatant market manipulation but, come on – can we ever get back to reality, where it matters how much money companies are making and what sort of return on investment they offer?  While we're waiting for that to happen, at 2:11 pm I said to our Members in our Live Chat Room:

I'm back one short /TF at 1,257.50 but not a lot of conviction.  Dollar at 95.72, so not seen as easy by the currency traders.

Fearless Thursday – Fiddling While Rome BurnsThis morning we flipped long on /TF at 1,252.50, which was good for a $500 per contract gain from our short and now we're back to flat at 1,255, which was good for a $250 per contract gain from our long.  Even better, the long trade idea we had on Gasoline Futures (/RB) in Tuesday's Live Trading Webinar (replay here) hit our goaaaaaaaaaaaaaaaaaaallllllllllllll at $2.06 this morning and that was good for $2,520 per contract – not bad for a free Webinar pick!  

Don't worry, for those of you too cheap to subscribe to one of our Membership packages, our next Free Webinar is scheduled for June 24th – I'm sure we'll have another good pick for you then!  

Fearless Thursday – Fiddling While Rome BurnsSpeaking of economies that are burning, we'll be looking for a short entry on China (FXI) this morning as their PMI was negative for the 3rd consecutive month (and 5 out of 6) DESPITE massive stimulus.  We got burned shorting FXI last month and we've been looking for another entry.

Aside from the bearish economic macros in China, we had Hanergy Thin Film Power (OTCPK:HNGSF) dropping 47% yesterday, erasing $19Bn if market value before trading was suspended and now Goldin Financial (OTC:GDFNF) AND Goldin Properties fell 60% each this morning.  This simply illustrates my point that the valuations in China (and a lot of other places) are a complete and utter joke.  You can't look at a $38 BILLION company like Hanergy and watch it drop 47% in a day and still believe ALL the other stocks are fine.  This kind of stuff is what happens when the whole market is in a late-stage bubble.  

Fearless Thursday – Fiddling While Rome Burns

If you are currently in any stocks that have similar rising profiles (come to think of it, the S&P has a similar rising profile!), you may want to consider taking some off the table.  We have taken most off the table but clearly – if you are still in stocks that look like these – you haven't been listening to us in the first place.  Look at what's happening here – EVERYBODY who bought the stock for the last 3 months got burned in a day.  When the market shifts from Roulette to Russian Roulette, you may want to rethink your risk exposure.  

As I said yesterday, CASH!!! is a perfectly valid investing position.  Again, I'm not saying the markets WILL blow up – if we were confident that would happen we'd be shorting a lot more heavily and we wouldn't have 20 positions in our Long-Term Portfolio.  I am, however, stating emphatically that the markets MIGHT blow up and that makes this a good time to be Cashy and Cautious.  

Fearless Thursday – Fiddling While Rome BurnsYou won't hear this kind of advice on TV and you certainly won't read it in the Financial Media because telling you to stay in cash is not a very profitable stance to take.  My sponsors don't like me telling you that but, fortunately, we have a Member-driven revenue model that doesn't depend on advertising.  On the free part of our site that does carry ads, they are mainly ads for brokers and funds and those guys make their money through fees generated by your INVESTMENTS, not through your cash – so of course they are going to tell you what a great time it is to INVEST. 

Why is it that, when you see a commercial for cars or candy or cereal or beer you KNOW they are just trying to sell you something and you take it with a grain of salt but when you see commercials for Financial Products you take them seriously?  These guys are the same snake oil salesmen that try to convince you one toothpaste is better than the other.  When you are reading financial articles or viewing financial news – pay attention to who is sponsoring them – that's who they work for!  

As we discussed Tuesday, investment advisers are some of the worst kinds of hucksters and of course your "trusted" investment adviser thinks you should stay invested in the market – THAT'S HOW THEY GET PAID!  My biggest regret in 2008 was not being strenuous enough with my warnings – I'm not making that mistake again.

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