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Just Another Manic Monday

Oh I love the manic-depressive market sentiment!

Today we are going to be happy because the government says every little thing’s gonna be alright so don’t you just feel good about the markets today?  I shouldn’t complain, we played for this last week but it makes me nervous to see the market go straight from "despairing, negative, fatigued and negative" straight to "elevated, hyperactive, suddenly escalated and deluded.

Here’s my problem – I’m a fundamentalist, so I believe a company has value and an economy will do X and not Y and I don’t believe that changes from day to day to any great degree.  Our basic investing strategy is that, when we see a stock deviating from our percieved "value" of a company and we feel the risk/reward is justified over the time frame – we buy some options looking for a return to the norms.

So it disturbs me when, for example, a massive financial institution like FRE or FNM can, through the wisdom of Wall Street and the "efficient market," lose 1/2 it’s value at 9:30 and then get it all back at the end of the day.  When the Dow goes up and down 200 points 6 times in one week and makes 20 100-point reversals in 5 days, then we know fundamentals have simply been thrown out the window and we are now playing stock market roulette. 

The market wants to tell me that CROX, with $1Bn in sales and $168M in profits is worth just $648M and that BAC, who pay a $2.56 dividend on a $21.67 stock (11.8%) have somehow lost $150Bn in market cap since October despite the fact that they have not posted a negative quarter and earnings simply slumped from a 2006 high of $21Bn back to the normal range of $15Bn.  I can’t buy that TASRs move from a $4M loss on $67M in sales in ’06 to a $15M profit on $100M in sales in ’07 merits their value cut in half (and down 75% from last year’s highs) and I guess we’ll find out what crime GOOG committed on Thursday as they have given up $60Bn in market cap this year (and it was much more in March) despite the fact that they have never missed estimates and have been growing well over 20% and no one seems to dipute that that will continue for the foreseeable future.

Is HOV really worth just $4.51 a share?  $368M might be a pretty low market cap for a company with $5Bn in revenues and a book value of $874M.  Real estate has had slumps before and, surprisingly, people still like living in homes – I guess they’ll never learn!  GE is making the same amount of money as it did last year and missed it’s first quarter in 5 years in Q1 and that cost them $190Bn in market cap – at some point you need to take a stand and make some buys.  We took ours last week reversing my Monday advice to "SELL THE PREMIUMS, SELL THE PREMIUMS, SELL THE PREMIUMS" we decided on Friday that the drop was way overdone and took out a lot of callers entering the weekend as uncovered as we’ve been in quite some time.

We’ll see what kind of snap we get but we have fallen very far and there will be nothing impressive about a 600-point recovery to 11,800 so let’s call that the minimum I want to see this week if we are really going to recover here.  Otherwise, we are far more likely to see a fairly long consolidation down here if we blow the ellusive "V Bottom’" that cheers up the chart people.  Chartmaster Tom2oc gave us an "unconfirmed bullish" reading on Friday’s close, let’s hope we can get some confirmation today!

We’re going to be cautiously optimistic today but let’s not forget to establish some index puts if we get a huge run.  It’s a huge data week with PPI and CPI tomorrow and Wednesday and Retail Sales tomorrow (and we already got a very negative reaction from the preliminaries).  Also, it’s an earningpallooza with MTB reporting this morning and DNA and NVLS later.  The rest of the week has too many to mention but we’re watching:

  • Tues: ADTN, SCHW, JNJ, USB, GWW (am), ALTR, CSX, INTC and STX (pm)
  • Weds: ABT, AMB, DAL, GCI, HST, NITE, VIVO, PJC, STJ, WFC (am), AMR, CBSH (mid day), CCK, EBAY, HOKU, KMP, TER, XLNX and YUM (pm)
  • Super Thursday: BK, BLK, CIT, KO, CCE, CAL, CY, FCS, FCF, FHN, F, HOG, HBAN, IGT, JCI, JPM, MTG, EDU, NOK, NVS, NUE, PNC, RS, SPWR, AMTD, TXT, UTX (am), AMD, COF, ESLR, GILD, GOOG, IBM, MER, MSFT, SOV, WERN and ZION
  • Friday: C, GAP, HON, MAN, MAT and SLB

Hopefully we’ll have a pretty good handle on the markets by Thursday morning, which is great as that’s the day we want to sell our August contracts.  Like I said, if this week can’t get us back to 11,800 then we need to get used to the 11s, as we’ll be here for quite a while and probably testing lower than that. 

Asia did not, on the whole, react well to the news from the US this weekend.  As I noted in weekend chat, the Fed and Paulson timed their statements to get ahead of the Asian Monday open but both the Nikkei and the Hang Seng shook off good starts to finish lower.  Shanghai moved up a point but still below 320 despite a nice move up in the dollar.  If the US has a strong day with a good finish then FXI calls could be a fun play overnight as the Hang Seng is overdue for a big move up.  The front-month premiums are prohibative but I like the Aug $130s at $9 if WE close over 11,400 but the move would be to buy them early and get out if we can’t hold 11,300 during the day.  Also, don’t forget TM and SNE are just laying there, ready to rock and roll if the US shows some backbone this week.

Europe is taking our government at face value and is up close to 2% this morning (9 am) with banks leading the charge and the Inbev/Bud deal sealed.  PHG turned in good sales numbers with profits off from last year because last Q2 was a great quarter (soccer championships drove record TV sales). Chief Executive Gerald Kleisterlee said in a statement that sales showed "the quality and the resilience of our overall business virtual portfolio in a rapidly deteriorating macro-economic environment."  Boy those European CEOs sure don’t sugar-coat things like they do in the states!  "We might do a few small things and we continue to look for opportunities. Don’t expect to see significant moves in 2008," he said in a conference call with news agencies.  Could you imagine what would happen if a US executive were that honest?

We have a long road to recovery so let’s not get overly excited.  If today’s rally gets you even on a position you were worried about, then lighten up.  Cash is still a very good thing to have, if it’s a real recovery, we’ll be led up by XLF and BKX and we have a long, long, long way to go before we are in anything like a recovery mode.  After lunch action is key, we need a good finish and then we need good economic data and then we need good earnings – not too much to ask for is it?

 


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  1. mSquare

    UYG – Bought some pre-market for a day (or hopefully a few days) trade.

  2. xian

    1M iphones sold

  3. DanW

    CNBC – Hugh Johnson (awesome), just said that the UK’s plan to buy people’s mortgages and rent out the equity to folks (where have I read that before…) wouldnt work here. His only reason as to why: "too much government involvement". Of course, he goes on to say that it’s what the guvmint has proposed this weekend with Freddie & Fannie… Tool.

  4. ephmen85

    AAPL  Under rule #1, would you sell some callers on the opening or wait to see how the day/week progresses?

  5. bballer22

    GM Phil – You had said Apple will pop big on monday…looks like it is going to have a good day and week heading into earnings next week. Do you see financials putting a short term bottom on the FRE/FNM plan? Any plans on Google earning play this week?

  6. Phil

    UYG – Interesting vertical possiblities there, maybe start with the Aug $16s and sell the $19s for $1+ and roll them to whatever in Aug that gives you all your money back with the spread as a bonus.   XXX

    AAPL – if naked I would sell some calls into the excitement for sure, I’m going with 25% the $175s and see what happens.  XXX  In $25KP, we take the money and run!

  7. xian

    MCD- tos not showing the JAN09 chains? confirm this

  8. cbtc

    xian- OXPS showing them- give me a specific and I’ll tell you what it shows.

  9. xian

    C- niether…i just want to look at depth and stuff

  10. xian

    cbtc- thanks anyway

  11. rebelatl

    Crook dumbacrat award of the week goes to Chuckie SWhere chumer for causing a bank run on Indy Mac.  Way to go Chuckie!!!    This guy needs to be locked up.

  12. rebelatl

    thats Chuckie Schumer

  13. tooearly

    Re Coal
    From Stock Psycology 6.30.08

    The coal rally has gone too far too fast. The basic numbers of supply and demand does not warrant such a strong coal rally. I warned folks invested in coal stocks to take profit now, and move to other, more bullish commodity sectors. It’s been proven correct and timely. Coal stocks peaked on June 23, right after I issued the warning.

    Almost all traders focused their attention to NYMEX coal future trade, or Australian Newcastle Port coal spot price, which continues to climb up at scary pace to this day! But on a typical day about 20 contracts for any particular month are traded on NYMEX, with each contract worth 1550 tons. In a typical week about 2 million tons of coal is loaded to ships docked at the Newcastle Port. Those numbers are a drop in the bucket comparing with the scale of global coal supply and demand, which according to BP is over 3 billion tons a year, or nearly 6 billion tons according to other sources.
    What people don’t understand is that the global coal market is largely a LOCAL market. Shipping coal half an earth away is too expensive and getting ever more so with skyrocketing oil price and extremely tight global dry bulk shipping capacity. Good luck for any major US coal producers to sell thousands of future contracts on NYMEX when the daily trade volume is only 20, or find enough ships to shop the bulk of their production to Europe.
    They really can’t rip profit from current high spot price either buy selling futures contracts, or by shipping a considerable portion of their coal production overseas. If they do, they merely collapse the NYMEX futures market, or simply drive up the dry bulk shipping rate to sky high levels that force international coal buyers to stay back. Good fortune to the Aussies, though. Producing only 6.9% of the world’s coal, they are nevertheless the world’s Saudi in coal, with 75% of their coal production exported in the first place.
    Global coal exports can NOT expand significantly due to the bottleneck of global dry bulk shipping capacity. The Europeans might be so desperate that they are willing to buy coal at $200 a ton and want to import more. But they will not pay $200 a ton at Virginia harbors. Instead they probably pay $60/ton to Americans and then pay $140/ton to the Panamans (the ships). So if you really believe the global coal export market is tight, sell your coal stocks and buy dry bulk shipping stocks like  Dryships (DRYS), Diana Shipping (DSX). The bottleneck of coal market is NOT coal production, but coal shipment across the oceans. Don’t be misled by the coal spot price at shipping ports!
    I insist on looking at commodities at their basic supply and demand numbers, and future trend, and how elastic or inelastic the supply and demand responds to price changes. I don’t think coal is the best long term commodity play judging from all I see..
    http://seekingalpha.com/article/84411-the-brightest-stars-in-the-commodities-boom-part-two?source=wl_tab

  14. Phil

    CNBC Addison – He’s saying the proof of an oil shortage is a shortage of diesel fuel in China.  That has NOTHING to do with a shortage of oil, just a refining issue….

    Very unimpressive move so far.  Oil still at $145, moving up is still bad there let’s not forget.

    Someone taking the opportunity to dump GOOG big time, knocked off $8 in 10 mins.

    BBall – not making any predictions, just watching at the moment and not liking what I’m seeing so far but it’s to be expected that bears don’t suddenly turn into bulls and a lot of people are selling into the initial excitement as they think the government can’t help the GSEs in any meaningful way.  Whitney, Cramer, GS et al have this market so spooked that people feel foolish buying financials.

    ’09 chains.  A lot of them disappear on and off as they are rewriting the symbols to take on the new year.

    GOOG $530s at $19, 10 in the DTP, with a roll down to the $520s at $4.50 if possible.  XXX

  15. xian

    cbtc?OK- OK, i just have to know….what r the MCD JAN09 55 and 60 calls? thanks

  16. RMM

    Phil:

    Good Morning:
    how are you going to play AAPL ?
    when is earnings reporting ?
    what is outlook ?
    I am 40% covered with 170, like to roll this to 175 ?

  17. bigs

    MGM – Phil I’m in an Aug 30′s covered by Jul 30′s.  The plan was to roll to sept half covered aug.  I’m pretty nervous about earnings and don’t want to put any more money into it.  Would you just close it or what would you do?
    Thanks.

  18. xian

    chains….ooohhhhhh

  19. xian

    rally denied….C

  20. xian

    oil- has nigeria done anything since the end of the "cease fire"?…wasnt that a few dollars the other day? i know….the market doesnt make sense day to day…..

  21. xian

    MCD- playing strong as the market goes weaker

  22. Phil

    Coal – I agree, I think I wrote something about that a while ago as part of my premise for shorting PCX (which is back at $139).

    AAPL/AAPL – I’m kind of concentrating on this week’s plays at the moment.  I’m 1/2 covered with $175s right now.  Will cover with 1/4 more $165s soon as this looks bad!

    FRE/FNM huge pullbacks off their runs, someone is just relentlessly getting out of the market and oil’s over $145 now, we’re just doomed if this is going to keep up…

    XLF went red!

  23. cbtc

    xian- Now they’re gone from OXPS!

  24. JB

    SMH and IWM red as well…

  25. acton88

    the financials are down.  They should be up, right.  Any other news?

  26. xian

    crip, crip- its over

  27. kc

    MCD – Jan55: 6.40/6.60, Jan60: 3.30/3.50 (from OXPS)

  28. Phil

    MGM/ – No earnings until Aug but you are way out of the money now.  You can let the July caller expire of course (why give him .10) and then you can sell Aug $25s at $2.62 and roll to the Sept $25s for + $2, which pockets 1/2 hour value anyway and gives you a reasonable spread. 

    OXPS changed their format and is not 5 times slower.  I’m really pissed!

    GOOG roll went through, hope it works out.

    That should be it for the sell-off for now.  Now we have to see if the buyers can retake the opening highs.

  29. cbtc

    Had to re-boot computer- OXPS went down completely- now working including streaming quotes.

  30. JB

    OXPS – I don’t like the look of the new site, but it seems faster so far. Won’t know for sure until we get a higher volume day though.

  31. Singapore Steve

    cbtc
    Streaming quotes are a luxury, mine come in by morse code.   OXPS tripped out several times on me but hitting the back button restored it.

  32. David

    OXPS – Quotes continuing to crash at irregular intervals.  Not fun!

  33. DanW

    OXPS – Not happy about the change either. Not digging the new look, and it does seem a whole lot slower.

  34. RMM

    Phil:
    with DITM covers for AAPL (170) and expiration this week , if AAPL runs up, the thing to do is roll the caller to aug ????
    Is this the right strategy ?

  35. bmb

    OXPS fine for me, no crashes

  36. bmb

    No streaming stuff though

  37. windywheel

    rmm
    wait until friday.  anything can happen between now and then.  go look at last month’s expiration week and day for AAPL.

  38. Peter

    Phil – when you suggested the GOOGFLY last week, the stock was at $546…Now the stock is at 530.  I did not enter a trade then. Is it worth it to do one here?   What strikes?

  39. xian

    AAPL- 1M phones…was that too easy? or who cares? obviously those people were freaked out by FNM/FRE

  40. DB

    What on earth is wrong with BIDU ?

  41. xian

    Freddie Mac Gets Higher-Than-Average Demand for Bills

    July 14 (Bloomberg) — Freddie Mac sold $3 billion of short- term notes, finding higher-than-average demand after U.S. Treasury Secretary Henry Paulson said the government will shore up the mortgage-finance company.

    Freddie Mac sold $2 billion of three-month bills at a yield of 2.309 percent and $1 billion of six-month reference bills at 2.496 percent, the McLean, Virginia-based company said today in a statement. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was more than 50 percent above the average of the past three months, according to Stone & McCarthy Research Associates

  42. Greg (the Bagholder)

    bought some DIA 111 calls for day trade

  43. David

    TA on VLO – I want to build a 2010, 30 or 35 position to sell  premium against.   Any TA on VLO as it bottoms would be appreciated.  

    Abracadabra –  Market turns up!  8-)

  44. RMM

    windy:
    sometimes I trade too much, I know that, patience is often better,
    what happened last month upon expiration ?

  45. xian

    Fannie Mae, Freddie Rescue a `Disaster,’ Rogers Says

    The U.S. Treasury Department’s plan to shore up Fannie Mae and Freddie Mac is an “unmitigated disaster” and the largest U.S. mortgage lenders are “basically insolvent,” according to investor Jim Rogers…….

    ……The chairman of Rogers Holdings, who in 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a “long way to go.”

    “These companies were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt,” Rogers, 65, said from Singapore.

  46. xian

    1M people buying iphines were thinking "dude (or: oh my god, super cute..), a FNM/FRE bailout would b, like, socialism- not cool…they better have more 16Gigs."

  47. Demetrius Michael

    bullish again greg?

  48. Phil

    AAPL/RMM – yes, of course roll to Aug if it takes off but at $172.90 what is this question about?

    Googlefly – I’ll take another look later but the way to go would be to buy up some $550 calls right now as one leg of the spread where you aim to sell $540 puts and calls.

    BIDU is a good gamble down here.  Aug $300s are $24 and July $300s can be solf for $8.40 so my idea is to take the Augs, roll down and sell the $290s if I have to at $10 but hopefully sell the $310s for $10 or better on a bounce.  A riskier play is the $300s straight up at $8.50 and I’m doing that but it’s very dangerous…

  49. xian

    this reminds me: it AAPL ever got the "dude ur getting a dell" guy in their ads- its over and had been over for a while.

  50. Singapore Steve

    RMM
    I think Optionsage just wrote that his best profits were when he did nothing.    When I change a postion, I will give it 3-5 days before I touch it again.   Phil last week gave some good advice to improve our calls, not adjust our callers.     Hey you must be getting juiced about heading to Alaska here soon.

  51. Greg (the Bagholder)

    DM – just trying to catch a move, ready to bail at any time

  52. Shahir Ahmed Ahmed

    Phil what does the 10kp look like right now?

  53. windywheel

    i think this was GOOGs bottom

  54. RMM

    Steve;
    wow, you still remember,
    I should have sold my portfolio in May and gone to Alaska, I would be way ahead,

  55. Phil

    GOOG – In $520s at $23.50, now $18.85, rolling to $510s for $5 in DTP  XXX

  56. Greg (the Bagholder)

    DIA 111 calls out

  57. xian

    at least people rally need expensive oil

  58. Demetrius Michael

    Greg – Do you trade based on T/A? Do you mind sharing?

  59. Singapore Steve

    rmm
    I wished i would have sold mine at xmas.  Being in high tech for 30 years, I remember everything I read.

  60. Phil

    GOOG – Excellent spread on Sept/Aug $550s at $7.40 net.  XXX

    FRE sale – that’s funny, they borrow $2.5Tn at 2.5% and lend it at 6% for a net of $87Bn a year in spread and so far they’ve written down about $15Bn and this is what’s paniciking the markets.  Well, I guess I have to accept the fact that even investors have no sense of financial proportion and that solid numbers have pretty much no meaning anymore. 

    Let’s grab the $7 calls for $1.77, 10 in $10KP, 20 in $25KP with a stop at $1.50, looking for $3 but we’ll try to turn it inot a vertical later so we don’t have to day trade.  XXX

  61. Singapore Steve

    CROX
    They want $30 bucks USD for those things over here in Manila.  The average worker here makes about $3/day.  Did not see any missing shoes on the rack.

  62. mck

    googlefly – Phil, the original has long aug550 puts, short july 560. What do you do with those 560s with 4 days left?

  63. Greg (the Bagholder)

    DM – I may have bailed too soon, but trying to be disiplined and not give up more the a few bucmks on a trade.  The DIA 1 min chart broke above downward resistance line and then came back to bounce off of it as support at 10:26.  That is when i decided to take the trade hopeing for a nice up move, when we violated that low I bailed, should have given it a few minutes to see if a test or real down move, but I chickened out, looks like I was right to begin with and should have stuck to my gut instinct.  Trying to stay disiplined and not lose money.

  64. KHAANNN!!!

    1/2 out of GME for 100% ;)

  65. David

    Added 1,000 shares of GE to my long portfolio this am at 27.48.  Just looking for the selling of covered calls and the 5% dividend.  Do not like their politics much but I’m in this game to money so I’m investing against my conscience.  At least they have an alternative energy division aka T. Boone…

  66. Bronek

    Phil ref FRE. I understand that the share owners’ equity is less that 1.5% of the mrkt cap, and it will be completely wiped out if the default rate on the mortgages that they hold will double. If these numbers are not dispelled, then market is pretty rational by wanting to hold shares of the company w/o assets in uncertain field.

  67. vicky

    Ameritrade not allowing FRE call buying….anyone else having this issue?

  68. Bronek
    Repost due to the error. Phil ref FRE. I understand that the share owners’ equity is less that 1.5% of the mrkt cap, and it will be completely wiped out if the default rate on the mortgages that they hold will double. If these numbers are not dispelled, then market is pretty rational by not wanting to hold shares of the company w/o assets in uncertain field.
  69. Demetrius Michael

    Greg – Okay so your trade based on S/R? 1 min charts, I haven’t touched those in a while… I like tight stops, much better than the wait and see approach hah.

  70. JB

    Bush coming on at 1:30 EST re: executive ban on OCS exploration.

  71. JB

    Phls favorite short the market indicator :)

  72. Phil

    DIA calls – Good move Greg.  I have the Sept $110s, still $5.25  XXX

    VLO/David – I’d say this is the place to buy them.  I have Sept $35s that have been kicking my ass at $2.10 which I highly recommend.   XXX

    Jim Rogers – what a prick, trying to float his commodity book by tanking the US economy.  Don’t forget he left the US and put all his money into China last year at the top of the market and is down about 40% on that move so if the commodity bubble pops, he’ll be sitting in coach for his flight back to the US.  I had a nice chat with him before he left, he really thought the US was over…

    $10KP – isn’t the sheet up.  Just the useless QID puts, the Aug $55 WFRs and the FREs we just took.

    MCK – is that your only two remaining GOOGs in that spread?

    Nice on GME Khan.

    Greg, you are right in this market, there is no reward for holding positions.

    GE – I love them, they are a huge evil conglomerate but, long-term, they are going to be the guys that give us fusion and save the world…

    FRE – actually I haven’t filled mine yet.  I offered $1.80 and no takers even with the sell-off. 

    Out of BIDU at $9.30 XXX

  73. David

    jomama – can you take a look at ATSI again?  It seems that they are having success with their minimally invasive cryoblation products and the heart valves continue to sell and get favorable reviews.

  74. Singapore Steve

    You guys will love this.  In the US embassy in Manila in immagration area, Bush,, Chenny, and Rice’s pictures are in the Kiddie Corner.  And if you frame it just right you can get cute little umbrellas over each of there heads.  Just wish I could have had a camera in there for that one.

  75. Demetrius Michael

    Prick Rogers – I thought you were his friend lol?….Rogers is down 40%, but was correct in calling a recession?

  76. Ryan Payne

    FSLR is waiting for me to short it back down to 240.

  77. JB

    FRE: I can’t buy FRE calls via OPX, it says they are only available for "closing only."

  78. mck

    googlefly – Phil, call side is still intact, so call: sep530 LC, jul530 SC, puts: aug550 LP, jul560 SP.

  79. Fabregas

    Phil,
    BA – would you DD here?  I have Nov calls.

  80. Dan Bender

    DM
    Where did you find the info on Rogers being down 40%?  Thanks

  81. Yev

    Global Sales predictions for iPhone, but an interesting part is about the iPhone in the corporate world.
    http://www.thestandard.com/news/2008/07/14/global-sales-figures-predictions-iphone

  82. Greg (the Bagholder)

    Yev:  I got my scooter delivered in a crate on a pallet last week and did the bit of final assembly over the weekend (no directions included).  Drove it to work today, top speed was about 35 mph on flat road, worse going up hill, faster down hill.  Fun to ride, but cars treat me like a bicycle because I am staying close to the side of the road and they fly past me (I am going the 30 mph speed limit).   Looks as good as the more expensive scooters.  Started right up once I got it put together.

  83. Yev

    Greg, I am trying ot make the connection…

  84. Greg (the Bagholder)

    Didn’t we talk about scooters a few weeks ago and didn’t you buy  a Honda Metro from Craigs list?  Maybe I am confusing you with someone else here at PSW.  Sorry.

  85. Yev

    Greg, not me, but I do remember a conversation about it on here :)

  86. Dan Bender

    DM
    Roger is down 40% on China, but that does not represent his total portfolio.

  87. DB

    Another Sell Off on the way here.

  88. Phil

    FRE/Bro – If you want to be rewarded for buying stock tomorrow, then stay away but there is a company there and it earned $2-$3 per $8 share you’re buying now in 2004-2006.  You’re not going to get a buying opportunity when everyone thinks things look great for the company, that’s what they thought last year when the stock was at $65.  If you ever stood by and watched big boys buy things for 10 cents on the dollar and said, "how come I never get a deal like that" it’s simply because you see something like this and you listen to everything negative you hear without considering the very large risk/reward ratio just in case all the doomsayers are wrong and this whole country isn’t about to implode into the second great depression, which is what would have to happen for these worst-case scenarios to play out. 

    FRE – You can buy the stock for $7.60 and buy the 2010 $20s for $13.55, that’s $21.15 and you can’t lose more than $1.15 between now and 2010.  You can get fancy and sell the Aug $10s for $1.35 to make it a no-loss play (you would just have to roll and roll and roll if it takes off) and you can sell Aug $5 puts for $1 to work off the cost of your protective put.  It’s a nice, safeish way to play just to see if I’m right.

    Damn this sucks!  National City halted and people are panicking first, asking questions later.

  89. Joseph

    X – adding an August call credit spread, buy 210, sell 200. Not very daring but the sheer craziness is making me err very much on the conservative side

  90. Phil

    Rogers/DM – Was he correct in recession call?  I’m still not seeing an actual recession.

    LOL – NCC says "NO unusual withdrawals – everything is fine."

  91. Phil

    Back in 10 BIDU $300s at $8.50 in DTP  XXX

  92. bmb

    Phil
    Not following your FRE play. If you buy stock and ’10 calls, how can you not lose more than 1.15? My main worry with FRE is the propesct of being nantionalized, in which case we’ll be left with squat. Or do you mean buy stock and sell ’10 calls?

  93. Demetrius Michael

    Dan – Oh okay, I though phil was serious about being all in China.  Are you invested with Jim?

  94. bmb

    Ah you mean ’10 puts, never mind

  95. jomama

    David, i will try to look at it tonight.  I like nuvasive a little better because people are willing to spend anything for back pain.  Patients and doctors also overlook the data on backsurgery/procedures which are generally unfavorable.   This is also the type of company that are targets by the like of medtronic  (i.e. kyphon)  I still like ISRG better, long term.
    A few observations from my trip to venice.  Airplane on the way their was 35% empty but 100% full on the way back.  Very few americans in venice.  Tour guide said that his business has tanked.
    Phil, i have a bunch of 130 Leaps for IBM.  How would you play/cover for earnings?  thanks

  96. Demetrius Michael

    Phil – You don’t think we’re in a recession?

  97. JB

    BMB / FRE – Buy the 2010 20 Puts.

  98. Yev

    Phil, AAPL is reporting earnings on Monday the 21st, are you going into that fully covered?

  99. Dan Bender

    DM
    Not invested with him.  Just like to follow some of his long term recommendations, which with the exception of China, have been fairly accurate.  Don’t agree with all of his US comments, but he is right about our monetary and fiscal policies.  They have and will continue to exascerbate our (US) recession (if you use real inflation vs. core inflation numbers, I think we are in real recession,  ie. negative  GDP growth).

  100. Phil

    Googlefly/MCK – I’d take out the $530 calls and/or roll the $560 putter to the $540 puts for $14, which puts him into $6 more premium.  The cheapest adjustment to make is tor roll yourself down to the Sept $520s ($4.80)  and roll the $560 putter down to the $550 puts for  $6.50 which barely costs you more than the $10 in margin you eliminate.

    BA/Fab – I don’t thik I would DD anything the way we’re selling off right now.    I already have a ton of BA and I’m more interested in rolling down than doubling down as I need to be in position to sell calls.

    Gold stocks leading the charge here, not really what we want to see!

  101. Singapore Steve

    Thought I was doing good going from full to 1/2 covers with GS when it hit 161.   I did roll down my long calls.  Time to jump out of my 1st story window again.

  102. Bronek

    Phil – Ref BIDU (Jun300C @8.5). I am tagging along with you, I got in @7.5. Do you plan to DD at ~-20% and exit @~+20%, before EOD? Thx.

  103. Singapore Steve

    When the big boys come back from their 3 martini lunch at 1pm maybe they will say look at these bargains and we get a rally.

  104. Phil

    Rogers – Oh yes, I wouldn’t mind being down 40% on China and holding the rest of his commodity basket!

    Recession – No, I think we have too much employment to be in a real recession.  As long as people can find jobs, even crappy ones, the economy doesn’t really die.  I don’t think we go to negative growth for 2 straight quarters and again and again I will point out that corporate earnings are holding up (other than financials).

    DM – this is my favorite suicidal song.  As far as manic, tough to call, depends what I’m manic about…

    AAPL Earnings/Yev – Probably 75% covered, depends on GOOG

    BIDU/Bro – Hey I got $7.69!  I’m probably going to start getting depressed after lunch (especially if I keep listening to the song I just linked!).  If this is where were going to lay this afternoon.  We have a lot of earnings this week that can move the market but we can’t sit around and pray.

    NCC – "We are well capitlized and we have no issues" and they hit a new low for the day!

    Steve – I think we’d better give them 4 martinis today.

  105. rockaintdeadyet

    Alright, alright….I suppose I’ll buy something…

  106. Phil

    GOOG – $540s for $12.50  XXX

  107. rockaintdeadyet

    Manic: http://www.youtube.com/watch?v=ktZaC9mhVTE

  108. Phil

    Buying NCC for stocks portfolio.  XXX

  109. jomama

    Phil, may i please have your thoughts on how to cover my 130 IBM Leaps for thursdays earnings?  Thanks  Your general thoughts on IBM would be appreciated as well.

  110. DB

    Do you think GOOGs earnings have leaked or a people just down on the stock ?

  111. biodieselchris

    IV on GG is high — Jan10 45 call is ~14 and Aug 45 is 6.20. and you can keep selling these for the next 16 months.

    if gold ever stops running of course….

  112. Bronek

    Phil -Your link is to the GITMO songs,

  113. Joseph

    gold has been a good sentiment indicator for months. Even this morning when Paulson/Fed saved the mortgage industry (again), the futures were up, oil was down, dollar was up and gold didn’t care. I’m liking it for a bullish August credit put spread followed by an uncovered or half-covered AUG/SEP bullish debit spread on a break out. If not, then at some point, adding a call credit spread to the put spread should work nicely.

    gold may not necessarily break a lot higher but it does have pretty solid support to the downside.

  114. biodieselchris

    NCC ??

    you might want this to shake out a little longer before jumping in?

  115. rampage09

    Are the 4 horsemen gonna bring us back from the brink?!?

  116. Seattle

    GOOG – What I can say is that I have a friend who has consistently done $1500 per month in GOOG adsense revenue over the last few years.  It is generally not seasonal and he pulls in roughly the same revenue per month in August, December or whatever month.  Over the last 3-4 months his adsense revenue has fallen off a cliff to around $1000-$1100.  When he is making less money, Google is also making less money from his site.  Sure, it is only 1 website and peanutes compared to Googles overall revenue stream, but if a bunch of websites using adsense are like his and also seeing revenues drop, then Google has suddenly learned the laws of diminishing marginal returns.  Dont get me wrong, Google is a great company and they will do fine, but as for the stock performance, you have to keep in mind that very high expectations are very easy to disappoint.  Im out, and staying away for now – not going long, not going short.

  117. Cap

    FRE:  Why is it down ?  Goldman, of course …

    UPDATE: Freddie Mac $3 Bln Bills Price Stronger Than Expected
     
    12:48 PM ET 7/14/08 | Dow Jones
    (Updates with quote from Freddie, detail on additional Freddie issues and fresh stock price)

    DOW JONES NEWSWIRES

    Freddie Mac’s (FRE) auction of $3 billion of short-term debt Monday sold at better than expected prices as the offering was well received by investors.

    "We are pleased," said Timothy Bitsberger, treasurer and senior vice president of funding at Freddie Mac. "The deal is business as usual."

    The fact that the auction was successful comes as a big sigh of relief for investors in Freddie, sister company Fannie Mae (FNM), as well as the market as a whole, as the likelihood is lowered that the ailing mortgage giants will fail.

    Concerns last week over Freddie Mac’s capital issues battered the stock price leading to questions about whether investors would show up in large numbers for the bill sale. However, a backstop plan from the U.S. government on Sunday helped alleviate market fears.

    "The auction went pretty well," said Mahesh Swaminathan, a mortgage strategist at Credit Suisse. The actual yields finished three to four basis points tighter than expected, he said.

    The $2-billion, three-month bill was awarded at 2.309%, after having traded at as much as 2.35% in the when-issued market earlier this morning.

    The $1-billion, six-month bill was awarded at 2.496% and had been as much as 2.55% earlier in the day.

    While small, the planned sale of Freddie Mac notes had assumed an outsized importance as a test of investor confidence, especially after both Freddie and Fannie saw their shares drop about 45% last week amid fears about their solvency. Freddie was recently down 5.94% to $7.29, while Fannie was down 0.3% to $10.22.

    Freddie, as well as Fannie – which has its own short-term debt auction set for Wednesday – sell tens of billions of dollars of short- and long-term debt each month and use the proceeds to finance their purchases of mortgages from banks. Freddie is expected to come out with a reference-note issue on Wednesday, and 12-month bill on Friday.

    If they were unable to replace maturing debt for an extended period, they would have to stop buying mortgages and eventually sell home loans and securities they hold in their portfolios. That would likely send consumer mortgage interest rates soaring.

    Market analysts had expected Freddie to be able to find buyers for its three- and six-month issues. Still, there were worries that some financial institutions and investors would demand higher-then-usual yields.

    Fannie and Freddie are the nation’s dominant providers of funding for home mortgages. They buy loans made by banks, package most of them into securities, and sell many to investors all over the world. Together, they own or guarantee about $5.2 trillion of U.S. home mortgages, nearly half of all mortgages outstanding.

    The government can ill afford to see a financial crisis at either firm. With home prices falling and mortgage defaults rising, Congress and the administration have come to depend even more on Fannie and Freddie. If either company ran into serious financial trouble – a prospect that seemed real last week when their stocks fell precipitously – it would deal a severe blow to the housing market and the sagging economy.

    Earlier Monday, Goldman Sachs analyst Daniel Zimmerman cut his share-price and earnings estimates on Fannie and Freddie, while increasing cumulative-loss rate expectations. He called the U.S. government’s plan to bolster the capital of the two biggest mortgage-lenders "positive for their long-term viability," but "not a game changer to the common equity holders." Zimmerman noted shareholders may see their shares diluted, as well as "significant looming credit issues" as negative factors.

    Regarding the debt Freddie auctioned off, similar Freddie and Fannie notes that are currently outstanding yield around 2.5%. If weak demand for Freddie’s auction lead to sharply higher yields on the new notes, it would likely trigger a selloff across a wide range of debt issued by the companies, some analysts said. But most said such a scenario was unlikely.

    Prior to the auction, Fannie’s and Freddie’s debt obligations had far exceeded the total amount of federal government debt outstanding, which is $4.6 trillion, or about 40% of annual U.S. economic output.

    Fannie’s and Freddie’s debt included $1.5 trillion of its own debt instruments and more than $5 trillion in mortgage debt it guarantees. It also had $2.3 trillion in exposure to counterparties in derivatives contracts, according to independent research firm CreditSights.

    Asian central banks and financial institutions are major holders of U.S. debt and are believed to own substantial portions of debt for Fannie and Freddie. According to U.S. Treasury Department data Sunday, foreigners owned 21.4%, or $1.3 trillion, of the total outstanding long-term debt issued by U.S. government agencies as of June 2007.

    China and Japan were by far the largest investors in such securities, holding $376 billion and $229 billion, respectively. It isn’t clear how much debt either country owns from Fannie and Freddie specifically.

    Announcement of the government moves Sunday had been timed to precede the opening of Asian markets Monday, as well as the closely watched auction of debt by Freddie. In it, the Treasury said it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for the two companies.

    The Treasury also said it would seek temporary authority so that it could buy equity in either company "if needed" to ensure they have "sufficient capital to continue to serve their mission" of providing a steady flow of money into home mortgages.

    The plan, which requires congressional approval, also calls for a provision to give the Federal Reserve a "consultative role" in the process of setting capital requirements and other "prudential standards" for Fannie and Freddie.

    -By Donna Kardos and Prabha Natarajan, Dow Jones Newswires; 201-938-5963; donna.kardos@dowjones.com

    (James R. Hagerty, Deborah Solomon and Sudeep Reddy of The Wall Street Journal contributed to this report.)

    Click here to go to Dow Jones NewsPlus, a web front page of today’s most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=D7LvL%2Bn4Z64nTbfN829c4w%3D%3D. You can use this link on the day this article is published and the following day.

    > Dow Jones Newswires

    07-14-08 1248ET

     
  118. Karl

    FRE just hit $6.66 — looks like a buy signal.

  119. richard marble

    WM joining NCC on deaths door…..

  120. Joe Dawson

    Phil:

    NCC, when a bank has to say there is no problem to convince people there is no problem isn’t that a red flag, ala Bear, Drexel, LTC, and so on, is it really worth the risk when all these regionals have an absorbitant amount of risk in the credit and housing markets?

  121. Phil

    IBM – strong global sales and a weak dollar is excellent for them.   They’ve been invulnerable but will be way overshadowed on Thurs by swamp of earnings and then C on Friday am so I think it’s safe to assume they don’t make new ATH at $130 on Friday so not much danger in taking 1/2 cover of Aug $120s at $6, which you can roll up to full cover at $125s if they go up and, even if they break out, you will still probably get a reasonable roll to 2x the $130s. On the way down, of course you can quickly cover more but these give you more protection than a full sell of anything else with a better upside.

    GOOG/DB – This is "normal" ahead of earnings for them, driven by rumor up and down all over the place.  I’m loving the calls down here for now.

    GG – good company!

    Bro – GITMO songs?

    NCC – I thought $3.15 looked pretty well shaken actually.  Not going to marry it but $3.70 is 20%.

    4 horsemen went over the brink.  Nas is a trainwreck and the VIX is way higher than the Dow is down.  I never count Monday’s anyway but today’s action is just downright strange.

    FRE/FNM – That’s the beauty about having an inside guy like Paulson writing policy.  There was no point in saying the government might take an equity stake other than to panic shareholders and I’m sure no one in governemnt considered the implications when Paulson added it to the list but he damn well knew that the net effect would be to dampen enthusiasm and isn’t it funny the GS is right there with the call….

    NCC – as a large part of your portfolio – not worth the risk but as a quick trade that might pop 50% this afternoon (more likely than falling below my 5% stop at $3) sure…

    FXI came down nicely, now we only need the market to turn back up…

  122. Phil

    Selling VIX Aug $30s for $1.20 naked, pretty unlikely we hold this level.   XXX but high margin.

  123. Fabregas

    VIX to make another run at 30…

  124. DanW

    FRE – got some stock at 6.50. This is absolutely ridiculous.

  125. biodieselchris

    man this market stinks.
    In my LTP, I rolled an EBAY Jan09-40 call to Jan10-35 for 2.70.

  126. Alex

    This is hard, all premarket gains are blast away.
    C is tumbling down another 5% rule but now under 10€.

    And here coming in fresh new sellers. I wish I had hold my DIA Jul puts longer. But still in Sep puts

  127. Phil

    Testing $11K yet again.  10,977 was Thursday’s low, it would be nice not to see that again.

    Oil creeping up to kill us. 

    Nice roll BDC!

    C – Wow!  Amazing with earnings on Friday…

  128. DanW

    BA with another $13-14B in deals and still down. I feel like heading downtown and starting to hit everyone over the head with my shoe.

  129. xian

    VIX- looking good

  130. xian

    VIX- looking good

  131. Phil

    LOL Dan!  I’m not getting mad, just rolling back to 2010 and waiting patiently for my Dreamliner to come in…  BA reports NO cancellations so far.

    AAPL projected selling 8M IPhones this year but sold 1M this weekend and they still can’t break $180 – what hope do mortal companies possibly have in this market?

    At least GOOG is perking up a bit.

  132. Fabregas

    GE – picking up some Aug $27s

  133. DanW

    With my portfolio down 50% now, I am mad. However, I’m not sure I can afford to use up my shoe beating these dingbats.

    Phil, if you dont mind I’ll post my portfolio up tonite after the close and maybe you can suggest some fixes. I’m at a loss here as things are just heading to the crapper.

    Oh no, Bush…dammit!

  134. Fabregas

    BA – I think their website mentioned 1 cancellation?  That explains why we dropped 12 straight pts.

  135. texasmotion

    Good afternoon…  I had jury duty this morning. SOOOOO much fun!  I watched the better part of 3:10 To Yuma on my iphone. 

    Who killed BIDU?  I made some coin on the 310s this morning.  Now its WAY down.

  136. Phil

    Bush "For years my administration has been calling to expand drilling"  Oh yeah, then why is today the first day he’s removing his father’s Presidential order against it?

    Well, Bush was no help there.  Oil did drop .07 while he was talking so he’s got that to point to.

    Dan – sure thing.   Hopefully you are in leaps, which is pretty easy to fix compared to close months.

    GOOG volume just 2.7M so far, about 1/2 a normal day and pretty low into earnings.  Last earnings were 4/17 and Mon the 14th they opened flat and dropped $6 to $451.66 – 3.8M.  Tues opened back at $458.13, closed $446.84 (down $12) – 4.5M.  Weds they opened at $444.40 and closed at $455.03 (up $11) – 7.6M.  Thurs they opened at $455.63, closed at $449.54 (down $6) – 13.3M and Friday they opened at $535.21 and closed at $539.79 up $90 – 18.2M shares.  So I wouldn’t put much stock in what happens with 2.7M shares traded on Monday before earnings!

  137. Phil

    BIDU – we’re back in Texas!

  138. tom2oc

    Phil, GOOG crossed 520 on good volume.  What I wanted to see to stop the bleeding. See intraday GOOG TA.  Keep going GOOG!

  139. Alex

    DanW,
    Welcome in the "50% or more loss in the porfolio Club". It is very hard to come back to 100% becuase we need 100% gain. But I think we can do that.

  140. bmb

    BA – i’m patiently adding to my 2010 70 calls. In about 40% right now, though 62 seems like a floor that is holding well

  141. Phil

    Cool Tom, I agree!  Can’t fault them for shaking out the wimps before pushing the buy button.  XLF very distrubing though…

    Alex – just don’t try too hard.  With a market this low you can cruise to a 100% gain by going long with 1/2 sells.  Plenty of stuff to buy like C with Dec $17.50s at $1.60 selling 1/2 Aug $15s for $1.75 which can be rolled to a full cover at $17.50 even(ish) and the Sept $17.50s are $1.04 at worst.  That puts you in for about .80 net and a very nice gain if C hits earnings.  Stuff like that is what you want to do to catch up – you won’t make a lot but you are less likely to lose and you are just 4 months of 20% gains from being even.

    Gosh I thought we were having a Bush rally for a moment…

    Not liking GOOG today if they can’t break $525 on this run (30 mins).

  142. Alex

    DM,

    Your last trade on your site was pretty good MOS. What option did you trade on it?
    Why you set the Take profit line so high on your CLF Trade?

    Thanks

  143. ephmen85

    The Bush rally starts Jan 20th

  144. Phil

    ROFL – CNBC asking the question what could have fueled the sell-off of FRE and FNM when all it was was a couple of rumors.  Gee, do you think it’s the 72 hours of continual coverage that CNBC devoted to shouting the rumor as if it were a fact and having dozens of interview in which 3 seconds are spent saying "Assuming FRE is going bust, what will be the fallout" and then having 10 minutes of time spent with people discussing the repercussions of the fallout as if it were a fact…

    Oh no, Poole attacks again!  "Moral hazzard risks have risen considerably."

  145. rampage09

    I think Goog’s just waiting for some of the other laggards to line up intraday before the $525 test

  146. DanW

    DOW JONES NEWSWIRES Billionaire investor George Soros said that the solvency issues facing Fannie Mae (FNM) and Freddie Mac (FRE) won’t be the last financial disruption of the current credit crisis, Reuters reported Monday. "This is a very serious financial crisis and it is the most serious financial crisis of our lifetime," Soros said, adding that it was inevitable that it would affect the real economy. He said the companies’ stocks are down because of the "tremendous dilution" shareholders are facing. At around 2 p.m. Fannie is trading at $10.08, down about 1.5%, while Freddie is trading at $7.15, down about 8%.

  147. Alex

    Phil,

    I also think there are really good trades to be made. But I misplayed WFR and my monthly gain in the LTP is gone away. I´m going to wait and find good things for the LTP. I´m going to read and playing a bit with paper money.
    This market is shocking and it reacts on every bit rise in oil with panic. Also we are in a bottom like mode but we can surely trade in sideway markets for the rest of the year. I´m going to watch.

    This is the first Bear-Market I´m trading but the next time with good gains I think. ;-)

  148. Phil

    ZION is getting hammered all day long.  GS put them at a sell with their earnings coming up on Thursday and they are down 22% – that’s just crazy!    They cut WM too, now $3.45 along with NCC (got ‘em) and WB, now at $10.30.  This is just nuts

    Oh look, CNBC found a guy who’s bullish on oil and doesn’t believe in speculators – shocking!

    WB – Buying stock fro $10.30, selling $10s for $1.15, nice 10% in 5 days as long as they can remain solvent until then.  XXX  Buying stock first and waiting of course….

  149. fredrang

    CNBC Coverage

    Yes, it’s like the police interviewing an innnocent man and starting off the interview with "so after you bludgeoned the victim and decapitated the body, where did you hide the head?"

    Also, running the list of banks to be concerned about is exacerbating the XLF decline.

  150. xian

    C- JAN10 20/17.5 ive found some rolls for 0.80…and could sell JUL 17.5 for 0.30

  151. xian

    CNBC/infrastructure pump- what does GE do so well lately?

  152. Greg (the Bagholder)

    Oil pumpers pulling out all the stops the last couple of minutes, they don’t want to close red

  153. Marek

    Phil: I have C 20x Jan’10 17.5  and I sold 15x Jul 17.5. Is it wise to follow advice you gave to Alex (2pm)? I mean buy back July’s and sell 10x Aug 15?  Or just lighten up on July’s and wait few more days…

  154. DanW

    2:30 rally caps?

  155. xian

    t brown on kudlow tonight

  156. Demetrius Michael

    Alex -  The TP and stops are based on the model I am building for the last little while. As you can see from the site that it’s clearly not perfect. Soon though, but my hands are not rubbing with cupidity.

  157. tom2oc

    GOOG attempting to breakout above 525 on huge volume.   Just a matter of time now.

  158. fredrang

    NCC

    Nice grab on these guys.  I deposited some safety funds with them earlier this year at 5.5% and knew they were in trouble for paying such an exorbitant rate.

  159. Demetrius Michael

    MOS – I can’t remember, trade was w/ old broker that I closed my account with last week.

  160. fredrang

    xian

    T. Brown….really like this guy.  Hopefully he is right and won’t turn out to be a nutcase.

  161. Greg (the Bagholder)

    Hey Hoo, Lets GO!!  Hey Hoo, Lets GO!!
    I’ve got my rally cap on.

  162. rahul

    Phil – Nice call on NCC!  I made a nice gain and had to cover with some July $4 Calls.  Thanks.

  163. Cap

    There is no speculation in the oil market.
    There is no speculation in the oil market.
    There is no speculation in the oil market.
    Close your eyes, and tap your heels three times, and say it again.
    There is no speculation in the oil market.
    There, I feel so much better now.

  164. Demetrius Michael

    Are you bullish Greg?

  165. Fabregas

    Phil,
    USB – would you consider some $22.5 putters ahead of earnings?

  166. xian

    HNW- this is what’s wrong w/ america

  167. Demetrius Michael

    lol cap, i think you mean manipulation. Speculation is everywhere.

  168. Greg (the Bagholder)

    I bought a few DIA calls at 1:30, gonna bail soon unless we go back up ASAP

  169. Phil

    Alex – Actually the price of oil is the only legitimate reason to panic.  We are spending $1.1Tn on oil and another $2Tn on food, up about $1.5Tn from 3 years ago and 10% of our entire GDP – that is unsustainable to say the least.  It was masked through 2006 as people refinanced their homes and maxed out their credit cards to pay the rising costs as we though they were "temporary" but now that prices have set in, either we need a 20% bump in wagest to pay for it all, which will be more inflationary, or consumers have to cut back on $1Tn worth of consumer goods, knocking 7% off the GDP, or the price of oil and food must come down.  Oil is not like gold as you really have to ultimately sell it to people who can’t live without it so rising oil can destroy the global economy more so than most commodities.

    C/Marek – If you are rolling down with a stock you buy back your caller first.  Wait and roll when you think it’s a bottom (best price) and then wait and sell more calls when you get worried again.  So for sure I would take out the $17.50s but I think I’d wait to sell, keeping my eye on the Aug $15s, which you can get a beefy $1.75 for so maybe say at $1.50 you sell 1/2 for sure.

    GOOG – that was my deadline passed, not good.  Giving up on BIDU.  XXX

  170. xian

    art cashin- notice his point was "mistaken headlines" or whatever for halts on anouncement

  171. Greg (the Bagholder)

    Out of DIA, damn,

  172. rampage09

    is GOOG given us another chance to get in or has the rally been rejected?

  173. tom2oc

    Goddam POS BKX down 7.4% is just too much to cope with.  Each rally sold into. Just amazing how oversold that  POS can get.

  174. JB

    Jeez, I reboot my computer and the market goes down 40 more points. How crappy is that!!!

  175. Phil

    Oh dear – Bidu filled way too fast at $7.20, now I feel ripped off!

    NCC – got my $3.75 and out!   XXX

  176. Phil

    Actually Cap, I like the new mantra that for every buyer there must be a seller therefore there are just as many short sellers as long speculators.  It’s very interesting when you consider that 300M barrels a day are traded on the NYMEX and only 30M are delivered at the end of the month by actual sellers of oil.

    USB – I can’t take puts on a bank that’s down 35% already without having a really good reason – or sell them…

    GOOG – I don’t know that they have time to turn this around for today.

    NCC – I guess I’m not the onnly guy who was targeting $3.75..

  177. Phil

    DNA $75s at $2.50 as a mo play for $3.50 into earnings.  Out EOD regardless.  XXX

  178. Phil

    GOOG – in DTP we are in $510s for $28.50 and the Aug $540s at $20.15.  We need to roll down the $540s to the $520s for $8.75 and roll the $510s to the $500s for $6 and sell 10 (1/2 of total positions) the $530s for $15 but let’s do the rolls first and see how we close, we’ll sell $520s if we have to (now $19.40).  XXX

  179. cbtc

    Phil- It seems like lots of experienced traders like yourself are talking about strange movements in stocks and the markets. Do you think the so-called "dark pools" may be to blame?

  180. Phil

    Took out my AAPL callers again.

  181. PharmBoy

    Phil or DM:  I posted on Friday about .GLDIV (100 Sept Call)…a lot of 50000 moved, and it is there again today. There is no other volume like that around the calls/puts.  Any comments?

  182. Demetrius Michael

    retail tomorrow should be interesting

  183. PharmBoy

    Wow, I can finally see my posts!!!

  184. orion

    At least the VIX is getting angry.
    Cashed out of AAPL this morning, no not at the opening spike like I should have, but at 10AM.  Too wild for me.  Not sure earnings will be rationally evaluated by Mr. Market either.  One word about concerns over future sales and the market vultures will peck you apart.

  185. DB

    Should’ve sold in May and gone far far away.

  186. windywheel

    bid / ask on AAPL julys are inverted right now
    oh, already corrected.

  187. Phil

    Dark pools – I don’t think crossing networks are entirely to blame – they’ve been there for a while, but when you couple it with an almost total lack of regulation, lots of free money from the Fed and you put one of the greatest wall street money bullies of all time in charge of the Treasury, yeah, I guess something very dark is happening to the markets…

    DTP – Still looking to sell $530s, now $16.50, we’d love to get $20 on a good run but if they can’t break $522, we take what we can get.  XXX

  188. RMM

    DB:
    you are so right: MAY where are you??

  189. newparadigmz

    after hours question or for anyone not busy…

    my friend wants to buy some shares of some company for a kid in the kid’s name…how does this work? i don’t even think my friend has a broker acount…

    any info would be much appreciated …..thanks

  190. windywheel

    trying hard to dispel my role of wimp by not recovering the naked portion of GOOG today.  made it through the worst i believe.  tough going for a while there.  exhale…

  191. Phil

    GLD/Pharm – looks like he was just in it for a quick buck.

    FXI Aug $130s still look good at $8.80  XXX  no sale against them if we have a close better than +50, otherwise selling the $134s for $2.50.

  192. Bronek

    Phil – I have eek out +$.5 on BIDU . Thx, but tomorrow pls do it better. ;-)

  193. kustomz

    " I like the new mantra that for every buyer there must be a seller therefore there are just as many short sellers as long speculators"

    Theres also a saying that i like to reference,theres an ass for every seat….be careful guys this market is trending lower lots of nervous people and moneys tight. Im here in Europe yet again and things have slowed to nearly a hault the building boom i witnessed in Feb is at a crawl. Global recession? Seeing the signs and hope they fade quickly as i have invested here, nice to collect rent in Euros.

    Im on the Adriatic coast , the Russians are dumping billions into Eastern Europe. I like CAT for the simple fact thats all i see being used here for construction equipment.

  194. Phil

    Buying shares for kids – this is one of my favorite things as a gift:  http://www.oneshare.com/  If you seriously just want shares, he needs to open an account up in the kid’s name and gift him the funding.

    Good job Windy!  Good to know your recent lows so you know what to expect…

    Sorry Bro, I’ll try to get double digits tomorrow.

  195. Demetrius Michael

    MA is just one of those stocks that just wouldn’t let me make any money!

  196. Joseph

    GLD – started bullish put credit spread AUG 88/90 @ .35. Hoping for a breakout to add naked long or semi-hedged bullish call debit spread. If it stalls, will add call credit spread to complete an Iron Condor.

  197. Demetrius Michael

    Pharm – I don’t see anyone that bought that lot size at once. Watch the open Interest tomorrow morning, see if it changes from 60k to 110k, you’ll know easily if he’s bullish on gold or not.

  198. Joseph

    DIA – filled on Iron Condor, AUG 118/116 calls, 106/104 puts @ .94 credit

  199. Demetrius Michael

    Looks like things want to gear to a bullish day tomorrow. Kinda weird.

  200. Bronek

    Phil – you are great and don’t believe if someone tells you otherwise. In two months watching you I have learned more than in previous four years. Thanks again.

  201. Phil

    DNA wrong way!!!!

  202. Demetrius Michael

    Glad you’re making a killing Bronek!!! These last two months were harder than the last 4 years to most traders.

  203. newparadigmz

    oneshare was exactly what i was looking for…thanks phil…

  204. WTell

    Apple $170′s again for $6.50 or less

  205. Alex

    financials getting hit hard again…

  206. Alex

    I hope I get all the premium from my financial and pepsi Covers.
    There were no big oil pumper at the close, that is strange, sometime they pump and sometime they let the news kill the markets or sometimes both.

  207. Phil

    Well thanks Bro! 

    Financials – As Tom said, the financials are a total disaster.  The really bad thing is that if they start to recover, they will suck up a lot of money that could be going into other things.  It will be some joke if money goes out of housing, into the idiot financials that created the housing bubble, then out of financials and  into commodities where the same idiot financials create a bubble, then out of commodities and right back to financials until they pin the tail on the next donkey sector to blow up…..

    All right, that was an interesting day.  DNA missed so I guess that negative mo was right.  Tomorrow we get JNJ and USB and SCHW in the morning but DNA not giving us a good start with a 5% miss although revenues were in-line.   This is another thing that needs to be investigated as there is no way someone didn’t know what the earnings were going to be on that one.

    XLF ended at the 5% rule.

  208. Alex

    should I really roll my XLF Jul cover down to the 18$ Strike?
    I had rolled friday from the Jul 21 to the Jul 19 and now have already 60% gain on the cover. mhh

  209. BonVivant

    HOV.  What is your view on HOV.  Any chance they get back to 7.50 – plus?

  210. Cap

    Anyone see LEH get absolutely pasted into the close ?!
    That was slammed, baby.

  211. mSquare

    DNA – GENENTECH INC After Hours: 76.25 Up 0.86 (1.14%) 5:00pm ET

  212. orion

    XLF:  How low can a SPDR crawl?  I stopped playing puts at 20 thinking there was some inherent value (P/B and/or P/E) in most of the 92 stocks in the fund and betting on a continued decline would be risky… I wuz wrong.

  213. DanW

    OK, Phil. If you can help point me in the right direction with this, I’d appreciate it. These are my positions after rolling, DD’ing and just plain out gambling (AMR/LEH). What can I do with this, and how much capital am I going to need to inject to do it? And if your advise is to cash out completely and start over with the proceeds, I can dig that too.
    10 AMR AUG 7 Call Now: $0.30  Cost: $1.64
    15 BA NOV 70 Call Now: $2.70 Cost: $4.04
    90 C SEP 20 Call Now: $0.39 Cost: $1.10
    5 COST Oct 70 Call Now: $4.70 Cost: $5.30
    50 HOV AUG 7.5 Call Now: $0.10 Cost: $.73
    10 JOSB OCT 25 Call Now: $3.20 Cost: $4.64
    20 LEH JUL 17.5 Call Now: $0.38 Cost: $1.33
    XLF JAN 2010 22 Call Now: $1.77 Cost: $3.69
    Thanks,
    -Dan

  214. mck

    FYI – Murphy Market Message from Stockcharts. This is minus the charts, if you subscribe you get the full monty by email. Many of you probably get them, for others this is a pretty good sample.
    Mon, Jul 14 2008 4:54 PM ET 
    FINANCIALS LEAD MARKET LOWER AGAIN — S&P 500 EMA TREND IS STILL DOWN — GOLD STOCK ETF BREAKS OUT — CELGENE AND GENZYME ARE BIOTECH LEADERS — VIX STILL NOT HIGH ENOUGH TO SIGNAL A BOTTOMREGIONAL BANKS TUMBLE …
    The rout in financial shares continues. Chart 1 shows Bank Regional Holders tumbling to the lowest level in six years. That contributed to more big losses in the entire financial sector. Chart 2 shows the RHK bearing down on its 2002 lows. As has been suggested herein many times, the market decline is likely to continue until the financial sector stabilizes. So far, there’s no sign of that happening
    S&P 500 EMA DOWNTREND IS STILL INTACT … One of the best ways that I know of to measure the trend of the S&P 500 is with a 13 and 34 period exponential moving average combination. Chart 3 shows the short-term trend turning negative over a month ago. And it’s still down. The spread between the two EMA lines (below chart) is still dropping as well. The weekly EMA combination, which measures the longer-term trend, turned negative last December and has been negative ever since. The weekly bars in Chart 4 show the S&P 500 bearing down on its spring 2006 lows at 1219. None of that is very encouraging.
    GOLD STOCKS BREAK OUT … Bullion achieved a bullish breakout a couple of weeks ago (Chart 5). Gold stocks followed suit today. Chart 6 shows the Market Vectors Gold Miners ETF (GDX) closing above its May/June highs near 50. Its relative strength line has been climbing over the last month. Gold has become one of the market’s few safe havens.
    SOME HEALTHCARE LEADERS … Arthur Hill has been pointing out recent leadership in the defensive healthcare sector. He focused last week on biotechs in particular. On July 3, I highlighted Amgen as one of the leaders in both groups. Here are two more. Chart 7 shows Celgene trading at the highest level in nine months. Its relative strength line (below chart) has climbed sharply as well. Chart 8 shows Genzyme reaching a five-month high. Its RS line has already reached a new high. The monthly bars in Chart 9 show Genzyme spending the last two years consolidating just above its 2001 peak at 64. Its relative strength line has just hit a new record. The stock price may not be far behind.
    VIX STILL ISN’T HIGH ENOUGH … My July 1 Market Message expressed the view that the CBOE Volatility (VIX) Index hadn’t risen far enough to signal a bottom. It still hasn’t. Chart 10 shows the VIX closing above 28 today which is the highest close in four months (red line). The chart shows the VIX climbing over 30 four times in the last year. Each one of those four peaks produced a market bounce (see green line). The March rally began from a VIX reading over 32. That suggests that the VIX still has further to climb. Until the VIX reaches those higher levels (and turns down), the market will most likely continue to weaken.

  215. xian

    Citigroup’s $1.1 Trillion of Mysterious Assets Shadows Earnings

    Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.

  216. xian

    Money Funds Stick With Fannie, Freddie Debt on Rescue (Update1)

    July 14 (Bloomberg) — Vanguard Group, Federated Investors Inc. and The Reserve, investment firms that manage more than $520 billion in money-market funds, said they will continue to buy Fannie Mae and Freddie Mac debt because the U.S. Treasury’s rescue plan has bolstered confidence.

    Treasury Secretary Henry Paulson plans to ask for authority to buy equity stakes in the two largest mortgage firms and lend them capital has quelled fears among money funds. Paulson’s actions are close to an explicit backing of the companies’ debt, said David Glocke, a portfolio manager for Vanguard in Valley Forge, Pennsylvania.

    “The steps that the Treasury is proposing is a strong positive for the marketplace as a whole,” Glocke said in an interview. Vanguard oversees $170 billion in money funds. “We’ve been a big buyer and have positions in all our portfolios.”

  217. Phil

    XLF/Alex – well, if you’re in 2010s like I am and you are buying dollars for .60 at a clip, it seems like a good deal to me.

    HOV/Bon – over time I think for sure they come back.  This is a 3rd generation building family that’s been through plenty of downturns.  The reason I like HOV is because they are mainly in the Northeast and we are least affected overall by housing slump (total lack of buildable land).

    LEH down to $6.5Bn in cap when they earned $4Bn in ’07 profits, $4Bn in ’06 profits and $3Bn in ’05 profits.  The loss last Q was $2.7Bn and estimates are they lose maybe $2Bn more and they have a lot of cash and investments (and debt).  I think if they were left alone they could pull it out but no one’s going to leave them alone with blood in the water.

    XLF – Can it be that the average bank in the index has really dropped 50% of it’s value since last summer? 

    Dan Project:

    I will preface this by saying today’s action left me thoroughly depressed and I’m shifting towards extreme worry if we can’t turn it around tomorrow, which will be tough with Retail Sales, the PPI and (I think) Bernanke:

    10 AMR AUG 7 Call Now: $0.30  Cost: $1.64 – not much to be done about this one is there.  I don’t see that you have enough cash to mess around with it so the best bet is to pray for a miracle on this. 

    15 BA NOV 70 Call Now: $2.70 Cost: $4.04 – Best here is to roll down to the Nov $65s for $1.90 and collect .55 for the current $65s, then $2+ for the Aug $65s and just hope it doesn’t take off on you (get it?!?).  There is the air show so you might want to take a chance and roll and wait as sentiment may change this week

    90 C SEP 20 Call Now: $0.39 Cost: $1.10 – It would be a shame not to spend .55 to roll down $2.50 to the Sept $17.50s.  You can sell 60 of the Aug $17.50s to help pay for it but don’t forget earnings are Thursday and a loss is expected but it could be anywhere from very small to $1.25 (more than last Qs .91) according to Whitney. 

    5 COST Oct 70 Call Now: $4.70 Cost: $5.30 – I hate to ask if you let that slide from last week’s high, $5 higher than this when it was $8.  There are no earnings catalyst and they are retail stars so I’d go for the roll to the $67.50s for $1.40 and sell the July $70s for $1, then the Aug $70s for $2.50 ish.  $67.50 is the 200 dma so you should have time to roll your caller down if things go the wrong way but taking a superior positon first is key in case it pops back up on you.

    50 HOV AUG 7.5 Call Now: $0.10 Cost: $.73  – I’m DD on those.  $500 puts you in at .42 rather than .73 and we were at .40 ten days ago so it’s not too much to expect.  This is a buy and hope play though as you can’t sell a caller, it’s just too dangerous.  The issue is, of course, the time-frame, which is down to 5 weeks but, last time HOV was at $4.50 in Dec, it was at $12.50 a month later so I’m willing to roll dice on this.  Always remember with any DD though, that greed kills you.  When you get even you MUST get 1/2 out, fighting the temptation to let ride double your original bet is one of the hardest things to learn….

    10 JOSB OCT 25 Call Now: $3.20 Cost: $4.64 – With retail sales tomorrow, your fate will probably be decided before the bell but there is no shame in selling the current $22.50s, which were $1.20 this afternoon as they can be rolled easily to the Aug $25s once you work off the $1 of premium.  Again, always remember your job is to sell premiums, if you are not selling premiums you are not doing your job.

    20 LEH JUL 17.5 Call Now: $0.38 Cost: $1.33 – Well, we just talked about them but these are going to be a catastrophe judging by the after hours trading.  You can sell the $15s for .92 against the Aug $15s at $2.74 and your $17.50s act as a backstop to the upside and that gives you an extra month to see if this madness ever ends but, then again it may not and end up taking another $3K with it.  Actually, you can paper trade this to see what I’m talking about but if you focus on your goal of recovering $1.38 then we can sell the $12.50s for $1.90, roll the $17.50s to the $15s for .50 (so net $1.40) and buy the Oct $12.50s for $4.65.  That’s net $3.25 out of pocket to recover your $1.40 and, if LEH heads higher, you WILL collect your $1.40 in premium and then you can roll your caller forward, even into a vertical by selling the Oct $15s, now $3.67 which means you would collect your .40 and anything above $12.50 by October is a bonus.

    XLF JAN 2010 22 Call Now: $1.77 Cost: $3.69 – Well, at this point we’re pretty sure they’re not going to run up on us!  The good news is you have 18 months, the bad news is you have to live with this thing for 18 months…  You have to bite the bullet and roll down, preferably to the $16s at $4.10 (+$2.40) and then you can sell the July $17s for $1.20, then the Aug $18s (hopefully it won’t still be going down) for $1.20 too and that’s your $2.40 back.  When you have a long spread like this, it’s best to always put 1/2 of the money you collect from callers into rolling yourself down until your premium is down to about 1/3 of your contract price so your goal would be to get to the $15s at some point.
    On the whole, they’re not bad positions, we are just in a terrible market.  Nothing is working at all but selling premiums will let you ride it out and hopefully we can make it through the summer if it takes that long.

  218. Seattle

    ONION ARTICLE THAT IS EERILY TRUE!
    What our country desperately needs is another bubble to bail us out:
    http://www.theonion.com/content/news/recession_plagued_nation_demands

  219. Seattle

    Interesting article on AT&T and iPhone:
    http://www.geldpress.com/2008/07/att-lose-money-iphone/

  220. newparadigmz

    does anyone have some kind of writeup/primer on all the exchanges (CME, ICE, etc) post consolidation or know where I can buy some kind of research report?

  221. JB

    I think the only thing keeping me from jumping out the window is the fact that most of my positions are Jan 09 and Jan 2010. I have a small Sept position in CY, but everything else is rolled out out out. Hopefully we see some life before October so I can roll my remaining 09 positions to 2010.

  222. xian

    FNM/FRE – is this godd that they r now being dealt with? dont all(most) housing/credit related problems end and start w/ them?

  223. DanW

    Thanks Phil, looks like i’ll have to sink some more cash to get myself out of this jam. And COST was a new position at 5.30. I had gotten rid of my previous position on it right before the ride up to ~9 from 5-6 to get some cash to DD on C and BA. I may have to do that again to salvage the rest and re-enter at another point. Its actually one of my favorites and have been able to rent it out consistently.

    This market blows.

  224. Bronek

    DM – REF making killing (Permalink). Thanks DM, but I would not go this far as stating of making killing if you meant making profit. I am behind, much behind, but think that I understand what is Phil doing right and I am doing wrong. I am scaling back, rolling down and positioning myself for a rebound. Also, I am already (almost) done with two chapters of Mind over Market and I am monitoring actions of other participants of this BB. I noticed that few traders peeled off, but still I have plenty examples to learn from. You are one of them. So please make sure that you do well tomorrow and thereafter. Regards.

  225. windywheel

    broadbandbrew – i hadn’t heard from them in about a month, so just went to their website, which is no longer active.  one can only guess the reason.  very sad, as their analysis was excellent and i looked forward to reading it and sharing it every week.

  226. Demetrius Michael

    Bronek – Thanks for the comment. At the end of the day I’m really happy to hear people make money. Best of luck in nailing that bottom —- I would assist, but my girlfriend might not approve. Ona jest z pochodzenia polskiego.

  227. DB

    Good Morning everyone.

    Another dire start here in the UK – FTSE down another 1.4%. The dollar is taking another pasting,

    In addition to Phil’s solutions to solving the current housing/bank crisis I would add one more – Gag the financial press. I’ve read so much gloom/doom and drivel it’ll last me till the next millenium.

  228. David

    Sign of the times:  Porsche Club of America (PCA) event at Sebring may be cancelled because of a lack of participation.

    I have been a member of the PCA for over twenty five years.  PCA rents racetracks for their members and provides instructors for drivers of these high performance vehicles so they can learn driving technique and vehicle dynamics on the racetrack.  Historically these programs are sold out well in advance and many drivers are wait-listed.  

    Saturday I received an e-mail stating that the July 26-27 Sebring event may be cancelled because there were over thirty vacant positions for drivers.  I have NEVER seen an event cancelled for lack of participation.  So I got off of my dustyduff and started calling my race buddies to help drum up some excitement.  Holy $hip!  People are simply not interested!

    Since the Porsche cadre is a notoriously republican and affluent crowd I could not resist taking their temperature on the economy and  life in general.   Members are pulling in on spending at every level and are recognizing how over-extended they are.  I found a shocking number of them making disparaging remarks about the Bush administration and having no faith in either of the candidates for president.

    If I had doubts that the sub-prime mess would spread up the feeding chain to the prime mortgage market they are now solidly dispelled.  This is getting ugly…

  229. David

    Here comes another Oil Pumpers dream.  Invest 94L is projected to become tropical depression three.  "This system eventually could end up anywhere in the Caribbean, Gulf of Mexico or Western Atlantic, and at any strength."

  230. DB

    UK now down 2%. US Futures – BAD

  231. Fabregas

    Dollar Index @ 71.4
    Euro @ 1.60
    Oil @ $146+

  232. mck

    Futures = yuck. s&p -15.75, dow -139

  233. fredrang

    Opec Demand Forecast

    Note in particular that OPEC demand is forecast to drop 1.1 Million BPD, resulting in a significant build in inventories, that’s assuming they actually bring the oil out rather than cut production.

    http://www.france24.com/en/20080715-opec-revises-2008-world-oil-growth-forecast-down-120

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