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Which Way Wednesday – Fed Edition

Fed days are always great fun.

Although it's just the minutes and not a policy decision, often the minutes of the Fed meeting move the market more than the decision itself.  Sure a cynic may say that the reason for this is that the minutes are less meaningful and they are just an excuse for manipulators to create whatever market reaction suits their needs but we are no cynics here are we?  On the last Fed Minutes Day (April 8th) the market opened up 1%, then fell 1% on a poor oil report at 10:30, then rose 1.5% by 1pm, then dropped 1.5% through the minutes until 3pm when it amazingly recovered and we finished the day up about .75%.  Isn't that exciting?!?

It sure was exciting for us as we had grabbed the DIA $78 puts at 1:10 as the market rallied for no particular reason and we caught the dead top of a 150-point drop for a huge win.  We'll be looking for opportunities like that today but we're not going to force it – that opportunity came because the markets were up irrationally so it was easy to play.  My quick notes (at 2:03) from the last Fed release were:  "Credit not easing.  Concern over assets they are buying under TALF.   Serious downward GDP forecast to -1.3% for 2009 AND 2010 Continuing deflation risk.  Economic activity fell sharply and should continue to contract.  Uptick in housing starts was a glitch, not a trend. Energy and Ags now being affected by slowdown where they were not before."  As I concluded at the time "Not exactly rally fuel."

Nonetheless, the next day we jumped 250 points to 8,083 as "green shoots" were seen in the Fed's language.  That was April 9th and we spent the rest of the month struggling below the 8,100 mark but punched over at the end and here we are, up 10% from the last minutes and looking for even greener shoots to break us over our 40% lines.   What gave us a boost on April 29th was the FOMC non-decision where the Fed said: "Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower."  I know – don't you just get goosebumps?  Exciting as a statement like that may be to investors (and the markets gained 5% in the week after that release) we can only imagine what amazing things will  be revealed in the minutes to fuel the next round of buying.

The Fed indicated they would engage in massive quantitative easing (ie. printing money) since they have already cut rates below 0.25% and they aren't quite ready to pay people to borrow money yet (maybe at the next meeting).  That decision was excused by the statement: "In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued."  Aside from our PPI and CPI coming in 50% hotter than forecast, clearly the massive run-up in both commodities and emerging markets would indicate that there is much less economic slack than the Fed believes so what should we do when we have either a Fed that is clearly wrong and pursuing what could be disastrous policies as they misread the markets or markets that are ignoring a gloomy Fed outlook and are off on a disastrously wrong course?

Speaking of disastrously wrong courses:  Oil is back over $60 at the start of summer driving season and ahead of next week's OPEC meeting (28th).  As usual, today's inventory will show a "surprising" drawdown in gasoline as gas stations top off their tanks ahead of the holiday weekend.  This happens every year and analysts are surprised every year so keep in mind that if they can't sell an extra 4Mb of gasoline this weekend, they never will.  We've been having a good old time playing the trading range in crude futures but today we're hoping they get it to $61+ so we can short the hell out of it. 

There will be a "shocking" draw in petroleum in today's 10:30 report but IT'S A SCAM!  As you can see from last week's inventory report, there is now 1 Billion 806 Million barrels of oil in US storage.  That is 138M more barrels (8%) more oil than we had last year.  This is DESPITE the fact that net imports are down 1M barrels a day.  So DESPITE the fact that they are shipping us 7M LESS barrels of oil per week, we have added 3Mb per week to inventories, that is a net drop in consumption of 10Mb PER WEEK!  Oil collapsed last summer from $147 (boosted by the misguided Bush stimulus package) in June to $35 in December as demand destruction first showed up in the numbers and we are using far less oil now than we did then.  In another act of terrorism against the US consumer, our own refineries are operating at just 83.8% capacity – lower than post Katrina levels when a significant number of refiners were knocked off-line entirely.  This is down 3% from last year's low levels and is shorting US consumers 1.6Mb PER DAY of refined product, creating artificial shortages and driving the prices higher – stealing the money from consumers and pulling it out of the economy just when we need it most.  WRITE YOUR CONGRESSMAN!

 

By the way, don't blame the dollar.  The dollar was at 72 last summer and is at 82 now.  Pathetic still but closer to our high of 89 than the lows and we still higher than we were in December, when oil was $35 a barrel.  In the month of December, we used 276M barrels of gasoline, that was UP 4MB from June (extra day) but down just 10Mb from the December 2007.  In February, we used just 246M barrels of gasoline per week and that was down 10Mb from Feb '08.   In the last 2 weeks, we used 9Mb of gasoline per day so figure 279M for a 31-day month and that's 6Mb less than last year and May is the BIGGEST consumption month of the year.  If they do not have a SIGNIFICANT draw today, oil will make a wonderful short but we still have the OPEC meeting ahead so don't expect immediate benefits.

There were no immediate benefits in Japan's GDP report as Q1 was down 4% from the last quarter, on pace to fall 15.2% for the year in the world's second-largest consumer of oil.  Japan is getting hit by higher oil prices as well as sagging exports (down 26%) AND their consumers are pulling back as well (down 1.1%).  Despite these AWFUL numbers, economists (always accurate) are predicting a turnaround.  Why?  Because they think other countries are getting better and will pull them out of their slump as demand for exports improves.  Hey – that's our plan!  With every country expecting every other country to save them with increasing demand (including OPEC) we're lining up a very scary group of dominoes in order to establish a global buying premise. 

The Nikkei gave up half of an early morning pump but managed to finish up 54 points for the day and 100 points off their own May 11th high.  Shanghai gave back another 1%, the Hang Seng was relatively flat but also tapered off from a morning pump and India dropped 2% so it will take a very good showing from US equities to get those markets moving again. 

Our beloved BDI is up over 2,600 although a lot of that is due to tankers being pulled off line as well as parked for months at a time holding surplus oil.  There were two tanker companies in last night's extensive list of dividend plays, TNK and DHT, both of which make nice hedged buy/writes down here.  When in doubt about Asia's prospects, we use copper as a tiebreaker and, sadly, copper has been drifting down to 206 from 221 at our May 8th peak (which I noted at the time was due to Chinese stockpiling).  Copper faces a technical test as it squeezes between the 200 dma at 207 and the 50 dma at 196, so a break in either direction will be very significant and is likely to indicate the global market's direction for the summer.

Over in Europe, the UK is off .5% and Germany is up .7% along with France so things are better "on the continent."  NVS is boosting the Pharma industry with a $1.3Bn purchase of Ebewe.  Banks are also moving forward and the auto sector is bouncing back somewhat so it would seem the UK's poor showing is over the resignation of the Speaker of the House of Commons over an ongoing scandal involving expense violations that may claim another dozen or so Members of Parliament before it runs its course.  This is the first time a speaker has been removed since Sir John Trevor was given the axe by William of Orange in 1695. 

[scandal in u.k. spurs a historic departure]

We'll be watching the OIH today as they make a nice short at $100, October $85 puts are just $5.50 and hopefully we can get $2 or better for the June $85 puts, now $1 on a pullback but as long as we get $1.50 for the June $90 puts (if it goes the wrong way on us) we'll be happy as it only costs $2 for us to roll up to the Oct $90 puts if we have to.  That's my favorite oil short ahead of OPEC.  On the whole we'd love to see the sector fly higher so we can short the rest but we need that $61 oil first. 

The same levels as I pointed out in yesterday's post apply today and maybe we'll repeat last month's move with a high open, down on disappointing energy inventories, back up in anticipation of the Fed minutes and then selling into the minutes as traders look to begin cashing out ahead of the long weekend.  We're mainly in cash so not too concerned but we do have our bearish DIA bets which we'll be adding to as the market heads back up to test yesterday's highs.

Be careful out there.

 


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  1. Bank of Americas dilutes share holders value by 1.25 BILLION shares and gives the buyers 10% discount and still the pre-market boys want to push the stock 5% higher. The madness continues.


  2.  In 1923 Weimer Germany suffered hyperinflation in which the Mark devalued to one trillionth of what it was in 1914. Common belief is that the government printing money (quantitative easing) caused the collapse. But that may not be true.
     
    What actually drove the wartime inflation into hyperinflation, said Schacht, was speculation by foreign investors, who would bet on the mark’s decreasing value by selling it short.
     
    The article’s analysis also interestingly notes that the Nazis used quantitative easing to finance the government and create full employment works programs which turned a ruined economy into Europe’s strongest in just four years.
     
    http://www.webofdebt.com/articles/hyperinflation.php


  3. Is there a less inspiring CEO of a major company than Jeffrey Immelt ?
    What a DOOFUS !
    Sounds like a cheesy politician.
     
    I can’t believe that guy hasn’t been canned yet.


  4.  But by transferring wealth from those who did not finance reckless loans to those who did – providing monetary compensation without economic production – the bureaucrats at the Treasury and Federal Reserve have crowded out more than a trillion dollars of gross investment that would have otherwise have been made by responsible people in the coming years, shifted assets to the control of those who have proven themselves to be irresponsible destroyers of capital, and have planted the seeds of inflation that will cut short any emerging recovery.
     
    http://finance.yahoo.com/tech-ticker/article/250640/Brace-for-Hyper-Inflation,-3


  5. Phil: check ,
    protective puts sept 88, NAKED,
    speculative puts jun ????


  6. Game plan still on for MOS & POT puts? Continue to scale in here?


  7. Let the games begin! 

    Oil already up to $60.30, gold up to $930 and the indexes are loving it.  Not so much the Russell, which doesn’t have many oil companies and is still at 496.  There is no real rally if they don’t break 500.  Also no real rally if we can’t take out yesterday’s highs which still haven’t taken out our May highs:   Dow 8,657 (8th),  Nas 1,773 (7th), S&P 930 (8th), NYSE 6,003 (8th) and Russell 512 (8th). 

    Also watching 40% levels of: Dow 8,412, S&P 945, Nas 1,716, NYSE 6,232 and Russell 513.  

    Still on plan with DIA to DD at .90 (off $1.10 basis) and sell 1/2 at $1 (stop) to reduce basis back to $1, wash, rinse repeate as necessary.


  8. Good morning all.  Back from a long vacation. And married. ;)


  9. Would someone please explain to me how BAC can sell new shares at a 20% discount to where their current share price is?  Wouldn’t holders of currently issued stock simply sell and buy the new issue?  Why wouldn’t they want to get a discount? 
     
    The answer is simple.  The Fed is using every available tool they have at their disposal.  They have publicly announced their quantitative easing policy.  They had to.  It’s essential people have confidence that interest rates will stay low.  But they haven’t announced alot of other stuff.  In fact, they are being sued to make more public.  Something they won’t announce is that one of their ‘tools’ is to pump money into the stock market.  I’m not talking about the PPT.  I’m talking about putting freshly printed money into it and keeping it there.  It takes alot of the float off the table.  And since they have the where withall not to sell, it provides a stabilizing base and prevents a serious pullback.  You know, the pullback everyone is looking for?  And when it comes, more money will be thrown in by investors thinking the coast is clear.  Hyperinflation is here already.  It’s just limited to the stock market.  It might work in the short term.  But in the long term, if people figure it out.. I think there will be a rush to the exits.  Which will probably occur next year as Jim Rogers predicts.
     
    http://www.cnbc.com/id/30838800


  10. Correction, I meant to say:  "when the pullback doesn’t come, more investors will throw money in thinking the coast is clear".


  11. shorting SPG again at 52 +;  2nd time today


  12. USO going nuts


  13. So matt, if all these forces are at work to prop up the market, and new money will also come in, your advice for now presumably would be buy buy buy?


  14. MOS/Pstas – As that was my first play and I already DD’d ($1.83 basis) I’m not inclined to press it at $1.35.  POT just filled my 2nd round at .90 so I’m fine with that.  On MOS, if it heads higher, I’m more inclined to roll up than DD (same cost) but today is going to be a crazy day so best to watch and wait.

    Geithner is talking to Senate so they’ll be able to pull some green shoot sound bites from that. 

    Dollar is getting crushed this morning, down 1% against the Euro and Pound since we opened!  Holding at 95.5 Yen as that economy is a train wreck too but I can’t see Europe being happy about a dead Japan and a weak dollar (1.375 to the Euro now) from an export perspective but perhaps they have a British Larry Kudlow saying "green shoots" over and over on CNBC Europe (he could wear the same bow tie).

    Gold heading to $940, oil $61.60 – can’t short it while the dollar is diving…


  15. Phil: OIH put openings: at what level to open ?


  16. I wonder how long this lunacy will last ? I want to short the markets because there is no underlying reason for this and its taking no end of restraint to stay in (nearly all) cash.


  17. Do we stilll want to roll the 81 DIA Jun puts up to 82 for .20?


  18. Caterpillar says its US dealer sales are down 51% in the 3 months to April. No Green Shoots unearthed by their diggers then. But should boost the market nevertheless.


  19. Congrats Jordan!

    Putting my speculative foot down on oil at $61.70, shorting the futures with normal strategy (see last night).  USO $32 puts at .80 are the way to go on the options side but expect to have to roll up for .30 twice and DD if oil goes crazy


  20. Phil
    What are you holding on MOS & POT- June 50′s & 90"s?


  21. stevenparker, the longer we go without a legitimate pullback, into the 7900-8100 range then yes, the likelihood of us going higher is there.  So buy buy buy if you want a momentum trade.  Just don’t try and tell me the market is moving up for legitimate reasons.  This movement is not organic.


  22. Lol matt. I do care about understanding if the market is gonna go up or down (as much as we can).
    If I successfully believe it is going up I really don’t give a damn why, the money made will be the same….


  23. Phil;
    re:
    Still on plan with DIA to DD at .90 (off $1.10 basis) and sell 1/2 at $1 (stop) to reduce basis back to $1, wash, rinse repeate as necessary.
    Is this the roll DIA 80 to 81 to 82 put play?


  24. So I’m hoping this is a blow-off bottom for the dollar ahead of Timmy’s kind words.

    BAC/Matt – It was $10.77 a share vs yesterday’s close at $11.20 and a 5% discount is appropriate for someone kicking in $1Bn isn’t it?  The fact that that was ALL they had to give up to raise $13Bn is absolutely a plus and it illustrates just how much cash is sitting on the sidelines looking to get in if bulk shares become available.  If hyperinflation is already here, then I damn sure want my money in BAC stock rather than in their vaults!

    DIA roll/Steve – At the moment, I’m looking to buy more at .80 first as I’ll do better on a pullback.  I get 1/2 back out at .95 (hopefully) and that’s my new basis but, of course, I’m not doing anything until the upside momentum stops.  Each time we make a 10 level (8,570, 8,580) I make that my next buy point if we cross back under for more than 5 mins.

    CAT/DB – Good call, look at their stock fly!

    POT/Pstas – POT $90 puts avg $1 and MOS $80 puts avg $1.83. 

    Dollar still dumping, oil at $61.90 so this is round 2 but getting scary as gold crosses $940.


  25. Phil
    MOS 80′s- typo or what is it?


  26. hi Phil
    I am building a FAS trade and wanted a little feedback on scaling in please…currently, I am naked callers only.
    5 $8 strike at $2.20 and and 5 $10 strike at $1.50..therefore, say this all finishes in the $, my cost is $7.65
    My question is about getting long by using the short puts – since we have a couple weeks, should I wait to scale into the 7′s or 8′s and if NOT, whats a good scaling strategy here?  


  27.  pstas – it was a type


  28. LOL typO. pun not intended there…


  29. SPG on shorts # 4 & 5 … now 53
     
    When this dumps, it dumps hard


  30. stevenp, ok, I didn’t know that’s how you felt.  You often argue with me over the things I point out on here so I assumed you were arguing from a valuation standpoint.  As in, things are fairly valued and the growth ahead supports a stocks’ PE.  I didn’t know you were just being argumentitive.  I’ll remember to ignore your comments in the future.


  31. "what should we do when we have either a Fed that is clearly wrong and pursuing what could be disastrous policies as they misread the markets or markets that are ignoring a gloomy Fed outlook and are off on a disastrously wrong course?"
     
    Good question Phil. If the Fed is seeing actual signs of inflation (rapid expansion of private lending and credit, money velocity increasing, etc.) then they should immediately start implementing the ‘corrective’ actions that they told us about last month. I’d say the chances of them doing that soon are about zero.
     
    There should be some good information in the minutes today. Maybe the inflation-premised commodity trade is on to something, but I’ll want to see the data that support it first.


  32.  I’m buying Jun DIA puts right here "at the bid"…. let’s see if the MM gives me a fill


  33. I guess the bear market is over, with the VIX at 26.66. Does another 50% more drop and on VIX equate to another 50% run up on the dow?  That should put us 12,500.  Just like nothing ever happend.


  34.  whoa… got a quick fill on my new puts


  35. As much as our brains are objecting to this rally as unsustainable without some fundamental improvement in the data, I believe it is more important to have people BELIEVE things are better, and those in power understand this. Belief, in fact, is what will CAUSE the data to improve. Smoke and mirrors can produce a powerful illusion that should not be scoffed at. All this cheerleading and spin will work! People will believe. Things will recover. The rally will, after a pause, continue. I don’t expect a retest of the lows unless some truly awful news comes out that cant be spun.
    The fundamentals will improve as people regain confidence. Inflation will return – a good thing in the short run – and then, of course, it will become worse. Our recovery will run out of steam, and the next decade may very well play out like the 70s.
    Phil, I would appreciate your take on inflation plays? Raw materials?


  36. tried to short SLG (yes SLG) at 23.30 — cant borrow
    tried FSLR at 199.5 — cant borrow
    short AMZN at 81


  37. Cap
    Tried shortin SPG but got carried away to the upside.
    Bad timing …..


  38. and yes, shorting into FMD action is a bit nutty; however these 4-5% moves are asking to be sold…..


  39. DIA roll/Chaps – The roll up is .20 now but the difference in delta is just .05 so I prefer to DD at .80 and lower my $1.10 basis to .95 as it takes a 75-point drop in the DIA to allow me to get that 1/2 back at .95 and leave me in with a lower basis than I had last night.  If I can lower my basis by .10-.15 3 or 4 times, I won’t be too worried about the roll.

    MOS/Pstas - I have the MOS $50 puts and my average cost is $1.83.  I do not wish to DD at $1.20 as it only cost $1.35 to roll to the $85s and they have double my delta so a better use of my cash but right now I’m just patiently waiting to see how long they can keep this going. 

    So far, this is just like Wednesday, May 6th when everyone who was short was freaking out and capitulating as we went relentlessly higher on the day after we decided to pick up some shorts.  The difference was that then we had only 2 weeks to expiration and now we have a month but it doesn’t seem to matter to most of the bears here who want us to go straight down on "no news."

    FAS/BC – You own those calls?  I’m confused.  If you sold calls naked you aren’t in, you  have to supply the stock at those prices if it goes in the money and there is no limit to your losses.  If you sold the puts than you will own 5 for net $8.50 and 5 for net $4.80 assuming they get put to you but FAS would have to be below the strikes.  Which is it?

    Oil coasting along $61.80 ahead of inventory.  This is very exciting!  Dollar touching $1.38 to the Euro and over $1.56 to the Pound.  Down to 95 Yen again so we suck compared to an economy that’s falling 15% this year.  Even Canada is only paying us $1.14 now and you only get 80 cents for an Aussie dollar – that’s really sad!

    Matt and Steve exchanging views.

    VIX/Thatway – That in itself is the craziest thing I’m seeing…


  40. patience on SPG is key …. no reason for this other than usual market shenanigans.


  41. OIH at the 5% rule already, $95 puts were $4 yesterday so a fun play at $1.90 with a stop at $1.50.


  42. covered AMZN; a quick 40 cents is ok w/ me…. AMZN could still drop $1 or more here.


  43. I SOLD the calls , therefore naked…I have no intention of staying naked there – too big of gamble
    the reason I have asked the question is to to GET LONG without buyng the stock – I would rather sell the puts, which I have not yet done as i was trying to figure out the best way in to them


  44. Oil down 2.1Mb, Gas down 4.3Mb, Distillates up 600K so a big draw but nothing unexpected so we’ll see if that was baked into the price of oil already or not.   They are spiking oil up to $62 and that’s my last round on the futures.  Now we’ll see what’s real and what’s not as there should be people taking this opportunity to get rid of some contracts that they got stuck with at the close of May.


  45. Senator:   "Don’t we own 80% of AIG" ….   I Love it!!!
    Next interesting comment"
    Timmay: "We must help AIG meet their obligations"     Which means: I gotta get my boys at GS paid off!!


  46. POT & MOS- Thanks , Phil- following your lead here. Remember, I have learned "patience" here.
    Appreciate you keeping me/us informed on these.
    Thanks,


  47. Matt I am just trying to make money.
    I found your coverage on government collusion with blackrock yesterday and the post this morning help convince me to be more confident in the near term price action of shares, whether I believe valuations are great or not (I don’t). I was interested if you would draw the same conclusion.
    I do interpret differently a number of the issues you have raised, and had only commented in the spirit of debate.


  48. Straight down on news – Come on Phil you have to admit it’s bizzare when something like CAT goes up 3-4% when announcing a 39% drop in global sales. The drop doesnt have to be straight down but some semblance of reality would be good here.


  49. Phil, lol!


  50. Still have not found a resource to educate me on following your DIA trades, rolls, etc.  Can you be more specific. Thanks.


  51. I can only hope that this correction (when and if it comes) will be orderly.  In that I mean people will ditch all the crap stocks and keep the good ones.  I don’t want another wholesale panic.


  52. Inflation/Barf – What inflation?  I don’t think you can go for raw materials as THAT IS smoke and mirrors.  Demand is not there and although inflation is the end game, we’re still in the middle and there will be another massive round of stimulus before this is even close to over.  That Japan number was HORRIBLE, they can spin all they want but it’s the second largest economy in the world ($9Tn) falling 15% in one year ($1.3Tn) – that’s 10% of our GDP!  How can you invest in materials when 10% of our economy’s worth of usage is off the table.  Obama isn’t spending $1.3Tn on infrastructure, China isn’t spending $1.3Tn on infrastructure…  You have to be realistice.

    Appropos to that, oil just fell .60 in 5 minutes. 

    FSLR is a very good put if oil fails $60 again.  Selling the $200 calls for $13 is my favorite play on them as the premiums are too ridiculous (stop at $15).

    FAS/BC – So you sold those calls naked.  At least you know that’s bad but selling puts doesn’t cover you either.  At a certain point you need to buy to cover but I would not sell puts or buy the ETF way up here.  XLF is not moving much and that’s with a huge BAC pump and GS having gone wild this week.

    AIG/Chuck – Say, aren’t their obligations bets?  Don’t they owe CDS payouts to GS et al?  Why do we HAVE to help them pay off the gamblers.  Part of gambling is your expectation of the bookie to pay.  You get better odds on a game from a guy down the street than at the window in a casino BECAUSE you are taking the risk on collecting as well as the risk of the bet.  Why should AIG not be able to default when GS breaks the bank?  In order not to hurt too many legitimately insured partys, pay off all bets up to $500M only, the rest are from boys who should be big enough to go out and raise capital like BAC since there is such an appetite.

    CAT/DB – It’s not that strange.  Sales are "only" down 39% and the stock is down 65% so the fact of the sale numbers trumps the bearish speculation baked into the stok price.  It’s not a conspiracy, it’s basic valuation theory…

    DIA/Savannah – If the link didn’t work just look up "Stock Market Parachute" or "Mattress Plays" in Google and there are articles there or put Mattress in our own search box to find discussions on the topic or check the K1 project where it’s discussed or remind me on the weekend and we can go over it in detail.

    Panic/Where – Why would you want retail panic when you can buy wholesale panic?  We love panic, I’ve been holding out on the Buy List for panic and I’ll be very disappointed if all we get is an orderly sell-off.


  53. Lost my chart service, am blind,
    only see the trading platform which has charts also but not as good,


  54. hi phil – i wanted my cake and no calories…just trying to figure out way to collect a bunch of money for something I do not mind owning at less than about $7
    but even if I get assigned on the 10′s, i have collect $2.20/1.55 and gives me a worst case price of $6.75 on those 
    am I UNDERthinking this?


  55. chart vservice back, I can see again.


  56.  Phil: What impact do you think the new credit card rules are having on the market’s perception of bank stocks?  Materials stocks are flying with the market today, but banks like JPM, Zion aren’t getting any lift.  Are financial stocks with heavy credit card exposure likely to be relative underperformers?


  57. Booya!! DIE SPG DIE!!!


  58. SPG has been very very good to us this week !  All covered.


  59. DIA 81s another round off at .94, rinse and repeat with same levels?


  60. Cap, did you say you covered your short already?


  61. Wheee – look at oil go! 

    Assigned/BC – On the calls you sold, you are obligated to give someone the stock at $8 in exchange for $2.20.  If FAS is at $20, you still have to buy it and sell it to the caller for $8.  You are effectively short on the stock at $10.20, not in the stock at $5.80, it’s a very big difference.  Should the banking sector pop on some crazy news overnight FAS could jump 30% on you before you have a chance to move and, in the morning, you will need to come up with cash or buy out your caller and you’ll just be one of those shorts getting squeezed that we usually laugh at.  Be VERY careful with selling naked calls. 

    CC/John – We talked about this yesterday.  I do think it’s a drag to some extent.  More so for COF (doing very poorly today) and others who target high-risk consumers.   AXP seems unphased and C is up today so I wouldn’t assume it’s not priced in to most.

    Damn, stopped out of oil already.  Maybe a chance to get back in later…

    DIA/Steve – Nice job.  Don’t forget we’re expecting a run back to the highs ahead of the Fed minutes so we’re just waiting now and we will look for a nice top to DD again but, if not, it means our play is looking good for the longer term.


  62. Phil: cashed in on the trades opened this am; FAS, FAZ, DIA, USO,
    hoping POT and FSLR will also cooperate.
    If it runs up agin, will repeat same trades at top.


  63. DIA Plays link for Newbies….about 3/4 down the scroll page.  Bookmark it.
    http://www.philstockworld.com/2009/03/05/thrill-ride-thursday/#comment-216966


  64. phil – thanks – I had completely forgotten that you can be called prior to expiration -  I was closed out and will revisit – just lost about $100…I was thinking I would wait it out and see if I could buy on a dip, but the alternative on American options slipped my mind


  65. craigzooka … yes all covered;  just did another one at 52.72 but covered.


  66. Wow, sorry boys, I went long for the Fed rally and broke the market!


  67.  Just sold naked calls (FSLR 200′s @ 13.30) for the first time in my life.  It’s kind of nerve wracking having this sort of position.  How do you guys usually protect this sort of position?  Right now I just have a stop like Phil suggested.  Do you do other things like buy higher strike calls to help cap losses?  What sort of parameters go into your thinking?


  68. Phil        what do you think about buying the amtd jan10  17.50 calls and selling the june 17.50 calls
    for a net debit 1.75  this is a play on amtd aquiring swim in june and having two earning quarters  thanks


  69. Phil- Thanks for the information on dividend stocks (buy/writes) for retirement portfolio yesterday.


  70. texasmotion: how do I find the dividendstock info you just praised ?


  71. Nothing wrong with the quick profits RMM!

    ThanksPharm.

    FAZ at $5.22, selling July $5 calls for $1.33 and July $4 puts for .55 nets $3.34/3.67 – not bad with such a low VIXYou can sell the calls first and put a $5.25 buy stop on the underlying and hold off on the puts, maybe get back to $4.90 and .75 for the puts for a very nice entry.


  72. Phil
    What is going on in solar?  I own the YGE 10 Calls which is breaking out above 10.50 resistance and I don’t know whether to sell or watch it run.  (Usually I sell when I’m confused on a position and miss out a larger move I could not anticipate)


  73. Dry shippers just on fire lately except for DRYS, how long can he  stay down when his peers are raging?  Selling puts here might be a good play…


  74. texasmotion: there is a good guy in Texas, txs motion.


  75. Andy, JASO reported today, revenue down 79% from last year but the stock’s up 15%, YGE is just catching that wave — that’s how this nutty market works!  BTW, YGE reports Friday.


  76. Keep in mind last minutes day we bottomed out at 11:30 and topped out again at 1, about the same top as the morning but then went into a big dip that lasted until 3pm at which point we were stick saved back to the open

    FSLR/Chen – Well we REALLY don’t think FSLR is getting bought, which is your main danger when selling naked calls but it is a dangerous stock on a big rally.  Really what we are doing is selling what we think is an overpriced call to the caller on the assumption that FSLR will either pull back or consolidate under $200 in such a way that the crazy 7% premium he paid you starts to look like it may have been a bad idea.  That contract was $6 yesterday so you should target a 50% retrace or $4 down to about $9 which means if that contract  drops $2 you should be thrilled to take a quick profit.  I’d say at about $11.50 you should start consdering lightening up unless the market is collapsing or oil is below $60, which is what we wanted to see to be confident with this short.  Obviously, if oil break over $62, the premise is blown and you should get out.  Oil is at $61.57 right now, off the lows but not looking too excited.  OIH is up 3.4%, if it gets over 4% again, that should make you nervous. 

    AMTD/Bill – Well they haven’t ruined SWIM yet so I do like that play but maybe a 2/3 cover in case they take off (it’s easier to add cover than subtract).

    Dividends/Texas – NP, it was needed anyway.  There are lots of good dividend plays in a huge list at the end of yesterday’s post in case you like hedged dividend plays.

    YGE/Andy – Oil over $60 and Obama pushing alt energy is good for solar but that’s the kind of run I’d cash into.  Don’t forget Rule #2:  When in doubt, sell half!  Also, keep in mind that selling just means putting in tight stops on your gains, no sense in selling if it keeps going up…

    DRYS/Mr. M – Good call, another one that keeps a nice premium (due to insane volatility but what the hell).  At $6.89 we can sell the July $6s for $1.67 and the July $5 puts for .43 for net $4.79/4.90.

    XLF blew $12, looking weak.  S&P back to the 911 line which is not good when they fail and Dow failing 8,490 probably won’t end well either.  It does look like we’re going down some more, maybe retesting yesterday’s lows of Dow 8,460, S&P 905, Nas 1,717 (watch GOOG to break $400 for sign), NYSE 5,850 and RUT 489.  I’d say if we blow two of those we are heading quite a bit lower

    Of course we still have the minutes, maybe they will be the excuse to drop us but they could also save it – It’s a coin flip so be careful.


  77. Increased my Jul DIA put position by 20%… just in case.


  78.  I just sold a 3/4 cover of JUN 86 puts against my SEP DIA 86 puts….
     
    looking to take advantage of any run up back to today’s highs from the Fed minutes.


  79. Stopped out of my DIA calls so I’m calling the bottom right here!


  80. oh well; talk about a day to have conviction on your short positions !


  81. oh well; talk about a day to have conviction on your short positions !


  82. DIA Mattress.    I’m naked with Sep 87s and frustrated that I took out my Jun 85s for 2.77 on Monday.   I’m waiting for a 300 point drop so I can re-cover like Ron Popeil (Set it and Forget it, (until opex)), but I’m beginning to think it’s more like Waiting for Godot where it never comes.   Sorry for channelling my inner Dennis Miller, but I’m getting punchy.   :-)


  83. epmen85 – reminds me of somehting I heard george soros say once:  
    use the rules but do not beleive them…
    i am short now too


  84. Phil;
    have HK jun 26 calls, if I sell jun25 calls against them for 1.6 $, would this work ?
    if the stock drops, will the 25 call loose faster than the 26 call ?


  85. Phil, Will oil just follow the market up or down after the fed minutes release?
    I’m in the USO 32 puts @ .85  and we seem to be in a tight channel.


  86. FSLR – it’s a fun stock for buy Long Straddle.  I got the June 180s PUTs and CALLs straddle a couple of days ago, and sold the long calls today, recovered the cost of the straddle, and have free PUTs.   VIX already got pumped up into the Fed minutes, so the long straddles are not as attractive today.  Keep an eye on the ATM straddles when VIX calms down.  These are risky trades of course, but as VIX drops, long straddles are cheaper and can win big in a huge drop or rally.   Since I have a lot of short strangles, I don’t mind loosing on the long straddles if the market doesn’t move as the profit from the short strangles is more than enough to cover the longs.  Always looking for ways to balance out my portfolios is the theme.


  87. Phil,
    What is it going to take to get to 6500s again?


  88.  8440 has been a minor support level… I have an order to sell another set of covers on a retest of that support level.
     
    at 8440 I’ll be at a full 100% cover on my DIA puts.


  89. I don’t even know why I bother looking at VNO AND BXP – they are nearly identical every time.  Both are holding $47.50, that’s a big sign of a breakdown if they lose it.

    DIA/Eph – for the most part, the long calls are meant to be disaster protection for your overall portfolio, they are not good plays otherwise.  The idea of selling the front-months is nothing more than to whittle down the cost of the longer puts over time (and we have 4 months to make $7) so you need to think more in terms of speculating bottoms by selling 1/2 the whatever DIAs get you $3 and looking for a quick .50.  You can’t really lose, if it goes lower, you just roll the putters and, if it goes higher, you’ve got enough protection to roll up 300 points.  That means more often than not you should be covered.  If your game plan is to wait for a 300 point drop or nothing, then some young Beckett may start writing a play about you…

    HK/RMM – Yes it works as they have a higher delta than you but just a little.  If you are looking to stop the bleeding without quitting the position that’s fine but keep in mind they also outgain you on the way up.

    Oil/Chuck – Now it’s getting interesting as they test $61 again.  They will follow the market up or down and wil also do the opposite of whatever the dollar does so you need to watch the combo.  I think they go to $60.50 at least and that should be about $32.80 on USO.  The MM is messing with us because we bought so many at that strike but he’ll have to break soon and start raising the price.

    Down goes Gooogle!  Down Goes Google!


  90. test


  91. Test


  92. Hold on fight fans, I may have spoken too soon.  GOOG got right back up and was given the standing 8 count and it looks like they’re ready to go on but they’re up against the $400 ropes and looking a little punchy – another solid shot could drop them back to the canvas…

    Seriously, they wil make or break the Nas staying green and that will make or break the markets.

    45 minutes to the minutes….


  93. Phil,
    I cannot submit anything


  94. phil,
    what is your take on the spike in the baltic dry goods index. is it as bullish as it is being portrayed?


  95.  background music for today’s market..  chuckle
     
    "gonna stomp all night… now everybody take it to the top"   http://www.youtube.com/watch?v=7tgWS9c4kI8
     
    boy does that sound take me back… gotta love that bass


  96. Looks like we’re drifting into the Fed from here.

    Baltic/High – I think the spike is caused by all those ships being parked in Singaport (article from last weekend) as well as all the tankers being contracted to store oil, grain, barbies and all the other crap there’s no demand for.  Much of this rally is based on a giant shell game where every government and many businesses are doing their best to try to put lipstick on the pig and move things around, juggle books, hide inventory – whatever it takes so they can buy another quarter of hope at the moment.  As Barfinger said early this morning, getting people to BELIEVE things are getting better can make them actually get better but watch out if this doesn’t work as all we’re doing is pushing the boulder a little further up the hill.

    Oil back to $62 ahead of the Fed, that’s reviving the energy sector and other commodities are relived and going up too – now let’s see if that causes others to head for the exits…


  97. Phil: closed with FSLR green, also the second round of FAS closed green again,
    only open is the darn POT, will I ever make a buck with this one, keep dropping, you are too high.
     
    Is it ime to sell FSLR call 200 again ? 14$ ?


  98. Phil, I hace no stats to back this up, but wouldn’t it make sense for the Chinese etc to stockpile hard assets instead of dollars? Might this not explain the BDI and commodity price action?


  99. Those headlines are NOT good ….
    Let’s see how the spinmeisters try to spin it again….


  100. Bloomberg had nothing good to say about the minutes. 


  101. Fed Downgrades Economic Forecast thru 2011
     
    TENTATIVE signs that PACE OF CONTRACTION Waning
     
    May need to buy more Treasurys, MBS  -   (no one else will !)


  102. Does anyone know of a website where I can stream CNBC live?


  103. Well the commodities are right on script and back to the highs.  I’m going back in the oil puts but out quickly if things go the wrong way (waiting until the first reaction).

    FSLR/RMM – I think yes but give it until we see direction.

    China/Jamie – Yes but they drive the price up when they buy and become their own bagholders.

    Minutes are out.  Economic outlook is NOT good,  They see growth in 2nd half but hard to quantify beyond that.  Labor deteriorated.  Industrial production down "substantially.’  Retail spending down.     NOT GOOD.


  104. Cap – I predict they’ll have no problem spinning, after all they just make something up, related or not , as long as it has the words "green shoots" the market will believe – because it wants too !


  105. CNBC just said "green shoots" so rally time!


  106. NO $HIT SHERLOCK!  The closest thing to truth out of their mouths in years.  Oh yeah, we’ll be growing by year end for sure.
     
    There is absolutely no way they will have the balls to raise rates before inflation is rampant.  That is, if we get inflation and not deflation.  But I’m pretty sure they’ll be willing to wreck the US for good before they allow deflation to occur.


  107. Now the guest just said "green shoots" too, you think they pay him $100 for each mention?


  108. The summary I read (unfortunately I cant cut and paste it) shows a real decline in sentiment from the last reading – but as predicted the market doesnt want to know.


  109. Hi All -  we’re combining efforts with a service, Channel Checkers, to devise option strategies that take into account their research, heading into a company’s earnings.  Phil will look at their findings, and considering market factors, come up with simple hedged (or possibly unhedged, e.g. tgt yesterday) option trading ideas.  We’ll post the research and trade ideas in the Insider Zone – Channel Checkers Section (six sections down, right) and keep a track record of how the trades turn out.  So, take a look at the IZ-CC section when you have time.  Yesterday, the tgt trade would have turned out very well.  We won’t know about the GME trade until their earnings, tomorrow.  Here’s the post with the CC research and Phil’s trade ideas:  http://www.philstockworld.com/author/insider-zone/. – Ilene


  110. I guess that shows us how manipulated things really are by GS aka our Treasury Dept.


  111. Judging by today’s chart, I’d say there was a leak of the minutes ahead of time.  A drop like that, after rallying before almost all of the previous fed minutes recently, just hasn’t happened lately.  A drop like that was probably based on insider information.


  112. Some key (IMO) snippets. The Fed notes in the minutes that bond spreads and Libor/OIS rates declined, but then say:
     
    "The debt of the domestic private nonfinancial sector appeared to have contracted in the first quarter at about the same pace as in the fourth quarter of 2008. Activity in the mortgage market reflected mainly refinancing, and staff estimates indicated that residential mortgage debt contracted again in the first quarter, depressed by the very low pace of home sales, falling house prices, and write-downs of nonperforming loans. Consumer credit was essentially flat in January and February. Expansion of nonfinancial business debt was tepid, as robust bond issuance was partly offset by declines in commercial paper and bank loans."
     
    And:
     
    "Commercial bank credit contracted in March and was estimated to have dropped again in April. The decline in bank credit in March was due importantly to a decrease in loans to businesses that reflected, in part, paydowns with the proceeds of bond issuance. Commercial real estate loans also fell. Bank lending to households was weak, although credit extended under revolving home equity lines of credit again expanded robustly. Residential mortgage loans on banks’ books fell, on balance, in March and the first part of April; banks reportedly sold a considerable amount of single-family mortgages to the government-sponsored enterprises. Consumer loans held by banks also shrank, amid heavy securitization. The Senior Loan Officer Opinion Survey conducted in April indicated that banks continued to tighten their credit standards and terms on all major loan categories over the previous three months."
     
    My take-away here is that spreads have improved as the result of all the central-bank interventions (which is also behind the residential mortgage improvement), but there is no corresponding uptick in lending. So the liquidity provided is still just sitting around.


  113. FSLR getting more bubbly even as oil falls…..


  114. Fed minutes not good, real economy not good (say with your best Gomer Pyle "Surprise, surprise, surprise" impersonation)… chuckle
    in this market that translates to a divergence of at least 150 to 200 points going up right??… LOL
     
    let the anti-trading begin


  115. Minutes:

    Markets are fixating on this statement:  "The information reviewed at the April 28-29 meeting indicated that the pace of decline in some components of final demand appeared to have slowed recently.  Consumer spending firmed in the first quarter after dropping markedly during the second half of 2008.."  CNBC is pushing this as a "green shoot" and the markets are heading up but it seems crazy to me.  If the Fed believed it they would not have been so drastic with the easing in a unanimous decision.

    Housing activity remained depressed but seemed to have leveled off in February and March. In contrast, businesses cut production and employment substantially in recent months--likely reflecting, in part, inventory overhangs that persisted into the early part of the year--and fixed investment continued to contract. Headline and core consumer prices rose at a moderate pace over the first three months of the year.

    Labor market conditions deteriorated further in March. Private nonfarm payroll employment registered its fifth consecutive large monthly decrease, with losses widespread across industries. Moreover, the average workweek of production and nonsupervisory workers on private payrolls ticked down in March from the low level recorded in January and February, and total hours worked for this group stayed below the fourth-quarter average.

     

    Industrial production fell substantially in March and for the first quarter as a whole, with cutbacks widespread across sectors, and manufacturing capacity utilization decreased to a very low level.  In contrast, the production of communications equipment edged up in the first quarter. The output of other consumer durables and business equipment stayed low, and broad indicators of near-term manufacturing activity suggested that factory output would contract over the next few months.

    Despite the upturn in consumer spending, the fundamentals for this sector remained weak: Wages and salaries dropped, house prices were markedly lower than a year ago, and, despite recent increases, equity prices were down substantially from their levels of 12 months earlier.

    The latest readings from the housing market suggested that the contraction in housing activity might have moderated over the first quarter.  THIS TURNED OUT TO BE WRONG

    Real spending on equipment and software dropped markedly in the first quarter, with declines about as steep and widespread as in the fourth quarter of 2008. Orders and shipments of nondefense capital goods excluding aircraft fell in March, turning negative again after having been flat in February. The fundamental determinants of equipment and software investment stayed weak in the first quarter: Business output continued to drop sharply, and credit availability was still tight.  Despite the significant cuts in production in recent quarters, inventories remained sizable early in the year, although the overhang appeared to be less severe than in late 2008. Given the elevated level of inventories, firms continued their efforts to reduce their stocks.

    M2 expanded rapidly in March. A strong increase in liquid deposits, the largest component of M2, likely reflected further reallocations by households toward safer assets. Retail money market mutual funds and small time deposits contracted modestly. Currency growth was apparently bolstered by elevated foreign demand.

    Despite the bad data the Fed members all felt things were going to get better.  Hopefully they are not as clueless as the 60% of Americans who think their home has held its value or improved in value over the last 12 months but, of course, the strong consumer confidence numbers are one of the reasons the Fed is more optimistic. 

    They do seem determined to make a win out of this and we all know the power of the stick save so be very careful with bearish bets here, I’d say 8,520 is the breakout point for the Dow and I’m not feeling very brave.  No change in POT or MOS but the DIA can be re-shorted anytime and so can oil so why mess around?


  116. Chauncey Gardner said that there will be Growth in the Spring !  dammit , so what the hell is the Fed talking about by saying maybe by the end of the year ?  Don’t they listen to Chauncey ?


  117. How many are on this board?  We need to do some front running…that will give us some real buying power out there.  Let’s pick some small stocks so we  ca…that’s illegal isn’t it?  Oh well, I work for Goldma…I mean, Saks Fifth Ave.


  118. matt, re: leak, perhaps in the good ‘ole economic recovery meeting this morning ….


  119. very tempting to throw a big Dow short on right here


  120. The market is just sitting there like a deer caught in headlights.


  121. Ah the dollar dropped another 1/3% on those minutes.  I guess the happy go-lucky way the Fed is spending money is having the major effect. 

    The credit card reform bill just passed, mostly voted in by Rebublicans so I’m confused now.

    FSLR is flying now!

    Liquidity/Eriuso

    c – Good point.  If all these major banks need to float money just to pay back TARP and get in compliance then obviously they don’t have any money to lend…

    Not making 8,520 yet…  RUT not at 500, VNO and BXP going down…  

    FSLR $200 calls can now be sold naked for $15.50!

    USO $33 puts at $1.15.


  122.  man… this market getting sharp and choppy…30 point swings back and forth in minutes


  123. There are zero positives in the Fed statement. The market is in "Irrational Exerburence" yet again. Buy Buy Buy – Housebuilders, Banks, Consumer, Software and Manufacturing. (Especially HPQ and TOLL who have announced cracking results today !)


  124. Are FSLR naked puts a go with  stop say at $16.50 ……Thanks


  125. Hi Phil,
    Does this mean we are adjusting our currently naked DIA Jun 81 and Sep 86s please?
    DIA can be re-shorted anytime and so can oil so why mess around?


  126. Phil: what choice except stopping out with a loss is there for FSLR naked calls sold for 14$ ?????


  127. SPG — Holy Crap !
     
    The Market ?  ridiculous.


  128. Phil, did I get another step closer to my colored anti-trade box today?  My bottom call at 12:35 was only two minutes off of the day’s low!


  129. DB, the $hit still hasn’t hit the fan over here yet.  There are hurting people to be sure.  But not nearly as many as will be.  Consumer spending will absolutely drop further from here.  The exuberance of Spring will give way to the dog days of Summer and ‘we’ (the consumer) will not be feeling so chipper.  Personally, I have tightened my belt.  But I plan on tightening it further.  The irrepressible Naz is in for a rude awakening.  The Fed minutes addresssing the IT sector were horrible.  There is very little spending going on for IT that isn’t absolutely necessary for businesses.  I think Apple maybe an exception on the consumer side.  I think they are doggedly taking the PC markets lunch.
     
    I think the only green shoot there is is that homes are selling at a pretty good clip right now, relatively speaking.  Spring fever has definately hit around my area and homes are moving.  But it will be temporary.  Spring is a miraculous tonic.  But unfortunately it doesn’t last very long before the mosquitoes and heat come back to spoil the party.


  130. Oh – Jeff Immelt said green energy is the most important sector of the 21st century.  That’s what’s driving solars crazy.  Of course he’s an unbiased opinion…

    Our REITs are still testing the bottom, XLF is under $12, Qs still holding $34.50, GOOG over $400 (barely) but BIDU can’t take back $250. 

    Dollar hit $1.38 to the Eurpo and $1.58 to the Pound and fell below 95 Yen so you’re stock better have gained 2.5% today or you lost ground to commodities…

    Dow moves: BAC up 3%, GE up 2.5%, GM up 14% (because they are so great), MCD up 5%, MRK up 2%, PG up 3%, VZ up 1.5%.   AXP down 1.5%, C down 1.5% (credit cards), HD down 2.5%, HPQ down 5%, JPM down 2.5% (CC), T down 1% (cancels VZ).  So the Dow is up on Immelts dog an pony show, MCD doing well in a recession and some safety stocks.  Not impressive, especially when you consider that a weak dollar is great for the Dow components.  XOM and CVX are flat on $62 oil????

    FSLR/Magret – Yes, stop if they break $205 or $16.50 is good.  Also maybe get out if the Dow breaks 8,520 or if USO holds $34 through the close.

    Oil did close at $62 but I’ve switched to the USO $33 puts, now $1.12 rather than the futures.

    DIA/Steve – Only if we break 8,520 but be warned – we had a tremendous gain the day after the last Fed minutes.  If you are not prepared to scale into a pretty steep loss, you need to hedge now, perhaps selling some DIA $85 puts, now $2.24, which have a  .48 delta, to reduce your delta close to neutral overnight


  131. FSLR/RMM – You have the margin to stick it out and roll up.  That’s a lot of premium and you should have an even roll to the July $230s and Sept $250s or, of course, a DD to the Sept $280s – kind of like sticking with SKF, FSLR is now about as ridiculous as SKF was at $250.

    SPG/Cap – Nice short!

    Mr. M – If our initial tests of a reverse color box hadn’t caused siezures in 40% of our test subjects, you’d have it already!  8-)


  132. Ilene/Phil – Channel Checkers. Looks good. Can we have an alert when there’s a new post ?


  133. Phil:
    Are you buying USO put?


  134. Channel Checks/DB – I doubt we’ll be able to do that but it will come with the regular reports at 8:30 and 6.

    USO/Bvar – I’m in the $33 puts at $1.15 so far.

    This is turning into a satisfying day!


  135. Phil: FSLR even roll now gets to sep240 ?


  136. QID plays now that the DIA is negative and QQQQ are still +?


  137.  looks like DJIA is trying to touch that 8440 line before the close


  138. I vote for no more stick saves, somebody bust out plunger and unclog this ($%#D) backed up drain, else Phil is going to go on a summer raid and start making economic sense like he told us last year about the roaches at gas station.


  139. ARNA is on the run since their disasterous BLOOM study news.  Might be worth a run into the summer for 10-20% more on the underlying.  Out by July (data out in Sept), as they tend to run things up, then yank the chain for the pullback.


  140.  There it is… 8440 support tested…sold my full cover on DIA puts


  141. Sorry, hit the wrong button.  ARNA has a gap to fill up to about 4.


  142. FSLR/RMM – You have to allow for some premium gains on the way up.

    QID/Pharm – Kind of chasing now.  These are the levels I predicted at 12:30 and only the Dow is below at the moment, if another one bites the dust then you can play the Nas to catch up but, at the moment, it’s more likely the others hold the Dow up until the S&P gives up 905.  There is some good volume to the selling though and some all-stars are going down like GS, ISRG, ICE, XOM, COP – so we may get some legs if Mr. Stick doesn’t show up at 3:30.


  143. Woh, in the last 15 mins POT just fell off a cliff.  This worked last time so DIE POT DIE!!.


  144. PharmBoy, I bought some ARNA a few days ago at 2.90 based on your recommendation, up nicely so far.  Thanks!


  145. Mr. Stick called.  Said he’s too afraid to buy right now.


  146. Now that the Banks have gotten their secondarys off, the Fed can easily be trying to create a range for the market to keep commodities from over shooting their targets.


  147. selling FAS july 7.5 puts for 1.3


  148.  Mr. Stickeeeee…. where are you?… yoooo hooooooo… c’mere boy


  149. Phil, how about some chinese overnight play? What do you think of FXP calls?


  150. Phil/USO
    Assuming we’re holding USO into the close??
    What are your expectations for overnight trading and the open tomorrow for oil, hence USO?


  151. Phil
    Please pontificate on tomorrow. Earlier you mentioned a big up day the day after the last fed day.  This seems like this has been a little bit contrary type day to what you have been saying about the last fed day. 
    A little bit of Hype about RF’s secondary offering plus the whisper of a C secondary. 
    WE are looking for that catalyst to unleash your boulder….?
    What you thinking?  I need to decide about taking some profits
    Thanks


  152. Look at the S&P chart.. a regression line shows a nice straight decline since 10:30 this moring.  Tell me ‘they’ didn’t have the info on the minutes ahead of time.  This market is so friggin stacked against the retail investor it’s not even funny.  It’s no wonder the financial firms are making a killing in their equity trading groups.  If they’re not taking taxpayer money to prop up their companies they’re taking it directly from retail traders.
     
    I’m no TA expert, but wouldn’t a close down here for the S&P be pretty bad? 


  153. The POT trade just went green for the day.  Are you thinking about holding overnight?  If I can get $1.15 for the JUN 90′s I plan on cashing in half.  Whats your plan with the trade Phil?  Holding overnight?


  154. MrM – Nice….I am gonna try to get a free ride on VRTX.  Buying 2X Jul 40 @ 15c, selling 1X Jun 25s @ 30c.  With Pharma needing to fill the pipes, and VRTX having the only Hep treatment that appears to work (in PIII), they will move swiftly to scoop them up.  25s should hold, as the low is 25.94 a month ago or so.


  155. Chuck, if in doubt… take profits


  156.  down 100 points in 1 hour… how ’bout that…
     
    Maybe Mr. Sticky got the swine flu today… chuckle


  157. why did it take so long for reality to set in?


  158. Phil: out for all trades. 1/2 cover for DIA puts,
     
    until domani.


  159. Don’t look now but but HOV is up 4% today.  Go figure.


  160. Where’s my stick at?

    See, now wasn’t this worth waiting for?

    FXP/Jordan – I sold the June $15 puts for $1.40 – they are still $1.30 and I’m really happy with that play.

    USO/Jofori – Sure, we want a big sell-off there.  I took the USOs because I’m sick of the gyrations on the futures.  USO I can roll up and DD more easily.

    Tomorrow/Chuck – We also had a huge stick save after the last minutes, not looking like it today.  Of course take some profits – I’m sure we’ll find something to trade tomorrow if you have cash.


  161. COF obviously has no mates to upgrade and pump the stock before making its offering !!!


  162. Yes, Matt.  A close below SPX 905 would give an inverted hammer (or shooting star), and it looks bad as it would be a failed attempt at testing the SPX 930 high a couple of weeks ago, giving it a double top.  I have a same disclaimer on not being a TA expert.


  163.  I had to buy DIA calls on that last little dip at the end… it was just toooooo tempting


  164. YEAH on POT and DIA 81s.  Made a nice 20% today. Thx Phil.


  165. THEY/Matt – Hey we are they today, that was our game plan since yesterday.  We did have the minutes in advance because we pay attention to the data and that’s all the minutes are is a discussion of the data..

    POT/Craig – I AM NOT A DAY TRADER!  I will take 20% profits in a day or stop out with 10% if it pulls back from 20% but I don’t go into trades looking to make .10 with a month to go on the option.  If you bought too much, sell 1/2 for sure but I only have a first round.

    DIA/RMM – I cashed out 1/2 with a very big profit so didn’t feel the need for cover as I’m happy to buy more now if they jam it up again.

    You are very welcome Pharm! 

    We still have a long way to go to fill the gap from Friday’s close (8,280).  With all these failed technicals, we may get there tomorrow.


  166. Phil: what DIA putd make you so much $$ ?


  167. TOS   I was playing around with the platform and found a feature that might be of use when setting up spreads.  On the trade page, you can set the column headings to "intrinsic" & "extrinsic" so you know exactly how much premium you are paying on your call or sellign on your caller.   Maybe that is old news, but I thought it was neat.  I’m wondering if there is a way to setting an alert when the intrinsic/extrinisic ratios hit a certain level.  It would be a way to know when you need to roll up an ITM caller.


  168. Glad I bought a few more DIA Jul 87 puts this morning…  A little goes a long way.


  169. Pete / Phil / Shooting Star:  Does a shooting star mean different things depending on which direction you were headed?  Meaning.. the last time we had a shooting star that looked like this was on March 9th (du, du, du, duuuh!).  But that was after a decent (big one).  Today’s is after an ascent (Monday).  Do they both signal reversals?  
     
    If this doesn’t turn us I’m not sure what will until next quarterly earnings. 


  170. Whatchya think Phil…. levels that I am watching…
     
    S&P500 support at 898
    DJIA support at 8320
    RUT support at 479
    Naz support at 1717
    NYSE support at 5500
     
    We had a 186 pt range today which is about what the daily average true range has been for the whole bear market. We had two days of consolidation at the 8500 level and a push to a new rally high. My intuition makes me think we are still going to push up towards 9000 before we get a really nice correction.
     
    I have DIA SEP puts full covered by Jun puts. I sold my speculative lower strike DIA JUN puts for a 23% profit this afternoon, and then bought speculative "out of the money "DIA calls minutes before the market close. I’m looking for a gap up open tomorrow back to 8500 and a move to 8600.


  171. Phil: fundamental issue: the calls sold on FSLR and USO: I closed them out for the day and a small loss, what is the advantage of rolling these out into the future and of course higher strikes m?


  172. EDZ (3X Bear EEM) – Bought some thinking Asia sells off some reading FOMC down revision for US growth.


  173. DIA/RMM – The $81 puts that went from .80 (see 10:26 comment) to $1.30 today.  Note my 10:30 logic on this roll paid off as my basis, had I rolled up to the $82  puts, would have been $1.30 and they finished at $1.60 (up .30 on 1x), while the DD at .80 dropped my basis to .95 and the $1.30 finish was up .35 on 2x.  By keeping discipline and getting 1/2 out at the close, the trade basis is now .60 on the remaining 1x and, of course, I put a stop at $1.20 on 1/2 and .90 on the rest to make sure I keep a .45 profit at least which, off my $1.10 entry, is very nice. 

    TOS/Eph – I don’t do anything fancy with it, if it isn’t built in, I don’t use it.  Just too busy really.  Some day I should take a weekend off to play with that platform – it does many cool things.  You should go to one of their seminars, they show you all kinds of tricks.

    Shooting star/Matt – Yes, it’s a reversal depending on which way it appears.  Volume was about average today, which is high for recently so it gives the pattern more weight. 

    Levels/Merk – you are in the neighborhood of our dollar-adjusted 50 dmas at:   We have our Dollar-adjusted 50 DMAs at: Dow 8,370, S&P 918, Nas 1,695, NYSE 5,587, RUT 476, SOX 256 and TRANQ 1,717  Of course that was from a week ago and the dollar is down another point since so +1% to all those and that means we are already failing on the Dow, S&P & SOX.  I think 9K is off the table as we already failed 8,650, which is our midpoint.  That means 8,217 is the critical test for the Dow (-5%) and 8,433 was the 2.5% rule off that spot and we finished just below that today. 


  174. FSLR/RMM – Shame on you for closing after one day!  We sell the $200s because they have $15 in premium and FSLR has to gain 10% just for this guy to get even.  Don’t go into those plays if you are going to get chased out.  You need to scale in and roll up with a plan for the next 20% (if you are wrong by 20% you are just screwed but anything under 20% you should be able to save).  I mentioned the rolling strategy on this one above that would have gone well past $240.  Rolling a caller up is just like rolling a putter down, you are hoping for a reversal at some point down the road.  FSLR is up 20% in 3 days at $205, you have to have conviction to sell calls.  I didn’t pick $205 out of a hat, that was the high they spiked to on the 7th so I was just playing for a repeat since they dropped $25 from that point, which makes for a nice win.

    EDZ/M2 – That’s not a bad idea…  They got crushed lately but still have nice premiums to sell so the Oct $10s at $6.65 covered with the July $15s at $2.95 is a nice entry as is the buy/write at $15.44, selling July $14 calls for $3.40 and July $12.50 puts for 1.35 for net $10.69/11.60


  175.  I hear ya Phil…
     
    It does look like a double top on the chart doesn’t it? We got intraday highs of 8587 back on May 10th and then 8591 today.
     
    I’m looking for a new trading range to form between 8320 to 9030. So I’m still thinking we should get a push up to that 8650 to 8700 area (middle of the channel) and then get a failure back to bottom channel support at 8320. That’s why I went to full cover and bought speculative calls…. just couldn’t resist.  ;)
     
    If the bulls wanna get real frisky they could make a quick push up to that 9000 area of resistance. That would drive the bears insane back into hibernation just as springtime is rolling in… chuckle
     
    If we do head down tomorrow, I think 8320 is going to prove very difficult support to breakdown…. especially if this rally is going to stay intact.


  176. Not so fast Nicaragua!  Looks like Obama’s ‘quick’ bankruptcy for Chrysler is already in jeapordy.  I think between this or perhaps the cramdown measure on mortgages will wind up at the Supreme Court before they are inacted.  If ever.  Of course, with free spending Barack and Ben, they could just easily by off the IN Teacher’s Union.  But would that make it right?  I mean it’s more then Noriega would offer.. but it would send shivers down my spine.  This ‘anything for the country’ attitude is going to ruin the country!  Just look at Iraq to see how well Bush’s attempts to ‘save us’ have faired.
     
    http://www.ft.com/cms/s/0/b3c8beb8-4564-11de-b6c8-00144feabdc0.html


  177. merkhava, this time last year is when we started our -50% decent.  My lesson’s learned was that there is no bottom in a bear market.  If we look at the 15 year, monthly chart on SPY, the chance of testing the March low is very high in the next few months, easily testing SPY 80, if not 70.  However, it will be interesting to see how the market navigate the rising 50 MA coming up at 85-87.5.  The latest BusinessWeek has an intesting graph on projected P/E of the S&P 500 that shows the forward looking P/E have exceeded the levels in Oct 2008. 
     
    I’m not a bear by any chance, but I’m prepared for two consecutive 5% down days in my portfolios.


  178. Not so fast Nicaragua!  Looks like the fast tracked Chrsyler BK has already been derailed.  I think between that and the push for the cramdown measure something is going to wind up in the Supreme Court.  They are trampling basic contract law in the name of saving our economy.  This ‘anything for our country’ attitude is going to ruin the country!  It didn’t work out too well for Bush (and now us) in Iraq either if I’m not mistaken..
     
    http://www.ft.com/cms/s/0/b3c8beb8-4564-11de-b6c8-00144feabdc0.html


  179.  I agree with ya Peter… with your sentiment that bear markets can still go lower.
     
    Of course there is always an intrinsic bottom that has to exist so long as civilization isn’t unravelling eh? Phil has made a good explaination to articulate how that is true.
     
    I can take a down move no problem, I just won’t profit as nicely as staying naked on my puts. But I figure I got time against my June putter. Even if we do go down to test 8320, or even that 8150 area, I still think we come back up to a new 8320-9030 channel before June OE day.
     
    Lots of bad news to give bears a reason to short and expect big down moves. But, as Phil has said over and over about the fundamentals and news wires, "It just doesn’t matter"…. LOL
     
    So long as there is $11T liquidity out there in the system sitting on the sidelines, the potential to hit all time highs in the market indexes remains real, despite what the real economy is doing.


  180. I know your not a day trader Phil.  I waited a little on the entry and bought 5 contracts at $.90.  Then I DD when they dropped to $.80  giving my net down to $.85.  When they shot up to $1.10 I figured almost 40% was a good time to take half off the table.  I realize you think that are overpriced even at $110.  Do you have a target price where you are planning to exit the trade, or Just let it ride till the premium decays to fast.


  181.  Japan’s economy has suffered its worst quarterly performance since records began more than five decades ago as it continues to struggle with the economic crisis.
     
    http://www.telegraph.co.uk/finance/financetopics/recession/5353297/Japans-economy-suffers-record-plunge.html


  182.  The economic atrocity of the dealer franchise letters being sent out by Chrysler and GM…
     
    http://www.americanthinker.com/blog/2009/05/letter_from_a_dodge_dealer.html


  183. Merkhava:   All time highs ?  R U high ?  :grin:
     
    May 8:  DIA high = 75.97
    May 20:  DIA high = 75.97
     
    Had some good short entries today; made money; but in retrospect, terrible (as in way early) exits:
    SPG  AMZN  OIH
     
    And should have acted on my 2:25 pm comment.
     
    Can’t win ‘em all …. was still a win; just a modest one.



  184. You gotta see this one…..
    Nobody knows what’s up with our 2Trillion portfolio a the Fed
    LinK: http://dailybail.com/home/there-are-no-words-to-describe-the-following-part-ii.html
    This is absolutely NUTS!!


  185. Roubini’s latest:
    Guess what, he has not grown more bullish with time.
    Link: http://www.rgemonitor.com/roubini-monitor/256792


  186. CNBC’s Macke Lose’s it
    Link: http://bit.ly/19XBD3
    Very Funny


  187. what was that ?? Was Macke all coked up ??  I was waiting for the guys with the straighjackets to appear.
    the only thing I can guess he was trying to say is that he gives up in trying to understand why the market was rallying and who is giving BAC any money (valid question)>


  188. Cap,
    I kept thinking drugs had to be involved or he had pulled an allnighter (with ot without drugs) and his brain was starting to pull a disconnect.


  189. test


  190. phil,a little confusing sometimes,!!when your getting into calls /puts is it possible for you to say buying/selling.that way it will be very clear what your doing.thanks.


  191.  LOL… am I high?!?!… chuckle
     
    No I’m still bearish overall. But I have to consider the potential that the DJIA could make it to 15k during Obama’s first term as Prez. Phil has made a good case how "They" have been buying the market float to sit on those shares for the next 20 years. So the small float left to trade being manipulated with trillions of dollars still sitting on the sidelines makes for explosive upside potential.
     
    Think of the political ramifications of DJIA 15,000. It would make Obama look like a god and his popularity would soar as people began to feel that "wealth effect" again as the pension funds and 401K retirement accounts not only recovered thier losses from the 2008 crash, but built nice gains on top.
     
    So I’m saying, be careful for prospect that the indexes decouple from the real economy. CNBC has already put us on notice it will happen. So we could see the DJIA going up up and up in the face of relentless bad news about the real economy.


  192. Good Morning Everyone
     
    S&P futures down. For the first time I can remember in ages they are not being hyped into the open. Maybe the FED minutes have put some reality into the market – but then probably not. Job figures will probably dictate what happens at the open.


  193.  Hey, remember 2008 how oil went to $147 despite that fact that inventories were building and consumptive demand destruction was occurring during the runup?
     
    Think "they" can’t do a spectacular runnup to the market indexes even when all the economic news sucks? I think "They" can. And what direction do you think "They" want the markets to go, if they were buying long term hold positions in the stock of high quality companies at fire sale prices during Feb and March 2009?
     
    What if the markets get back to 2007 levels BEFORE the 2010 US Congressional elections occur? What happens then when Americans feel "wealthy" again, Obama is hugely popular and the Democrats sweep the elections to make Congress into essentially a one party controlled institution? What kind of laws can then be pushed on Americans when there is no longer any real opposition to stop Obama from doing whatever he pleases to do?
     
    Hmmmmmmmmmmmmmm? (doing my SNL "church lady" impersonation)….


  194. Good Morning Phil, DB & merkhava & all


  195. Asia Markets :    Thursday, May 21, 2009
    (The following is from Yahoo; please cross check with other sources to confirm.)   

    Australia All Ordinaries*             3804.70           -4.20    -0.11%
    Nikkei Average*                           9264.15          -80.49    -0.86%
    Shanghai Composite*               2610.62          -40.79    -1.54%
    Hang Seng*                               17199.49        -276.35    -1.58%
    Seoul Composite*                      1421.65          -14.05    -0.98%
    Singapore Straits Times*         2210.97          -58.27    -2.57%
    Bombay Sensex*                      13739.91        -329.60    -2.34%
    Baltic Dry Index                            2665.00            21.00     0.78%
                                                   
    *at Close


  196. Asian Stocks Stumble on US Growth Outlook

    Asian markets weakened Thursday after news that the Federal Reserve lowered its forecasts for U.S. economic growth over the next three years. In fresh quarterly forecasts, the Fed projected the U.S. economy would contract by between 1.3 percent and 2.0 percent this year, with the unemployment rate rising to between 9.2 percent and 9.6 percent. In January, the Fed had forecast a milder contraction of between 0.5 percent and 1.3 percent, with the jobless rate rising to between 8.5 percent and 8.8 percent.

    Japan’s Nikkei fell 0.9 percent, dented by Honda Motor and other exporters as the yen climbed to a two-month high on the dollar and after the Federal Reserve cut its outlook for the U.S. economy.

    Seoul shares closed almost 1 percent lower, led by industrial issues but brokerages outperformed on the partial lifting of a short-selling ban.

    Hong Kong shares gave up 1.6 percent, falling for a second straight day as doubts emerged about an early turnaround in the global economy.

    Singapore’s Straits Times Index was 2.4 percent lower with financials leading the decline.

    China’s Shanghai Composite Index sank 1.5 percent as blue chips eased on renewed worries about the strength of China’s economic recovery and high share valuations.

    Bombay Stock Exchange’s Sensex ended at 13732.61, down 328.05 points or per cent. Indian markets ended sharply lower Thursday in line with other markets after global economic worries resurfaced to haunt investors. Profit booking across the board was also seen after a phenomenal rise of indices since Monday.


  197. Good morning! 

    Day trading/Craig – Sorry, that wasn’t directed at you in particular, I was just getting annoyed that so many people can’t differentiate between having fun during expiration week and serious set-ups we’re trying to do for June.  You played it perfectly and no, I don’t have exits as I generally let my stops decide where to exit – I’m just happy to be right enough to make 20%+.  Once you get 1/2 off the table you are cruisin’ and if you feel very strongly (then you can stop out the other half even or even decided to go back to a full position if it pulls back (if you think the pullback is BS).  As I mentioned a few times last week, I’m not ashamed to make the same trade 3 times in one day/week if it keeps working.  If we are lucky, it’s going to be a great summer for channel trading as we settle in between 7,900 and 8,650, which is what I predicted for consolidation over the summer.

    Chrysler/Merk/Cap – I am really shocked at what that letter says.  It’s one thing for the company to go BK but to reorganize and totally screw the dealers is just crazy.  It’s going to cause all the other dealers to demand onerous contracts for one thing and I can’t even imagine how many mini bankruptcies will be caused by wrecking all these dealerships.  I think this letter is probably step one in softening the public up for another bailout…

    Exits/Cap – No such thing as an early exit in this market.  Government could intervene at any moment.

    Woo hoo – Oil back to $60.80, Ka-Ching on USO puts!

    $2Tn/Chuck – You know, it’s very hard to run a shadow banking system if people keep shining lights on it….  8-)

    Roubini/Chuck – At this point, he’s just looking to extend his 15 minutes of fame.  History does not remember the doomsaysers, they remember the people who made money from the bottom, even though pretty much any idiot can do that and it takes real brains to see that something is going wrong while everyone else is having a party.

    Macke looks like he just had a really, really bad day, maybe he was short FSLR or GM or something – he just seems bitter and pissed.  Obviously Jeff did not turn off his brain and got it smashed in with a brick.  He does look like it’s time for the nice men in the white suits to take him away.  Of course, if I had to sit in a studio listening to that idiot Dennis for 30 minutes I’d be ready for a rubber room too…

    Confusion/Jash – I do my best but try to get used to it and feel free to ask if you think something is unclear.  By sticking with my system, I am able to make as many as 100 calls a week with very few typos or wrong instructions, better you get used to that than I start trying to learn new formats.  It’s kind of like you being the new nurse in the operating room and demanding the doctor start saying things the way they taught you at your medical school rather than the way he and his team are used to…

    15K/Merk – Now THAT’s a little bullish!  There is a limit to how high the market can go as there’s a point at which you can convert stocks to hard assets (like real estate) that are also attractive at low levels.  We had a $40Tn stock market, now $25Tn and about $8Tn got out and the rest was destroyed (or locked up in low-priced shares).  However, we have a $30Tn real estate market that dropped to $20Tn and virtually no money got out at all.  At the same time, the US needs $2Tn to fund it’s deficit and they will be competing for that sideline cash as well.  So if you figure $11Tn is on the sides and 1/2 will stay on the sides for many years, there’s only $5Tn to go into the pot and the government needs $2Tn and they WILL get it.  That leaves just $3Tn to go into the markets and real estate and, at 20% down, it takes $1Tn to buy just $5Tn in real estate and that is money that used to be in stocks that will leave the markets.  That leaves just $2Tn for the markets and, while that can pump the markets up more than 10% as it goes in, over time it’s really just a 10% gain so that (9,100) plus whatever is earned by corporations this year (maybe $1Tn) plus perhaps another $1Tn out of our GDP this year coming in from 401Ks etc is all we can really expect as a true value increase in the market so maybe 10,000 is fair assuming we continue to improve through the end of the year.

    Jobs/DB – Would have to be a pretty damn good number to reverse us.

    Oil/Merk – Very different as it’s a thinly traded, easy to control commodity.  Oil is worth whatever 100 guys in the NYMEX pit say it’s worth and they work for about 12 people if you follow the money and those guys have those cool Cisco teleconference systems so they can yank the price of oil up and down 5% whenever they want to.  The broader markets are harder to manipulate to those kinds of extremes although a lot easier now as they’ve beaten the life out of retail shareholders and dropped the value of the market to the point where GS can drop $16Bn on the market at 3:30 and jack it up 2.5% but that quickly gets to be more expensive as people look to cash out – that’s what happened at yesterday’s close, it wasn’t that no one tried to save the markets – they just ran into a very determined seller who took advantage of Mr. Stick and sold into the buy.  This is what I expected coming into the holiday weekend – it only takes a few big funds looking to lighten up ahead of the break to shove the markets down.


  198. Growth Worries Hit Euro Stocks; Oils Fall

    European shares fell in early trade on Thursday to snap a five-day winning run after the United States deflated hopes of an early economic recovery by cutting its growth forecasts.
    The FTSEurofirst 300 index of top European shares was down 0.9 percent at 868.20 points. The benchmark has rallied nearly 35 percent from a lifetime low hit on March 9.

    Miners were broadly weaker, with BHP Billiton, Rio Tinto and Anglo American down 2-3.2 percent as copper fell 2 percent, while heavyweight oil shares BP, Shell and Total lost 1.5-2 percent as oil took a breather below $62 a barrel.

    Around Europe:

    FTSE     4,376.65    – 91.76    – 2.05%
    DAX        4,968.12    – 70.82    – 1.41%
    CAC         3,253.35    – 50.02    – 1.51%


  199. Oil Slips Below $62 After 6-Month Peak on US Stockdraw

    Oil was steady under $62 a barrel on Thursday, after rallying to a six-month high on Wednesday, as government data showed a steep drop in U.S. crude and gasoline stockpiles ahead of the summer driving season. The market will study weekly U.S. jobless claims and April leading indicators due later in the day for more clues on the pace of demand recovery in the world’s top energy consumer.

    U.S. crude [  60.84    -1.20  (-1.93%)] for July delivery fell. It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity.

    London Brent [ 59.4    -1.19  (-1.96%)] was down

    Crude oil and gasoline stockpiles in the United States tumbled sharply last week, according to the U.S. Energy Information Administration’s report on Wednesday, with crude declining 2.1 million barrels and gasoline falling 4.3 million barrels.

    Further price support came from unrest in OPEC member Nigeria, Africa’s top oil and gas exporter.Shooting broke out in the Nigerian oil port city of Warri on Wednesday following days of military helicopter and gunboat raids on militant camps in the surrounding creeks. Top Italian oil and gas company ENI declared force majeure for its Brass River export terminal in Nigeria, adding that its output affected so far was 9,000 barrels per day.

    OPEC has no reason to cut production again at the meeting, Algerian Energy and Mines Minister Chakib Khelil said this week.


    Sterling tumbles after S&P

    Sterling tumbled from an earlier six-month peak and London stocks fell on Thursday after Standard & Poor’s revised down its UK ratings outlook, while world stocks slipped after the Federal Reserve cut the U.S. economic outlook. The S&P lowered its outlook on Britain to negative from stable, because the UK’s government debt burden may approach 100 percent of gross domestic product, although it affirmed the current triple-A ratings.

    Sterling fell to 88.47 pence per euro after hitting its highest level against the euro in 3-1/2 months of 87.23 per euro. Against the dollar, it was trading at $1.5609 falling sharply from an earlier six-month peak above $1.58. The June gilt future also tumbled, down 50 ticks at 119.46.

    The cost of protecting UK government debt against default rose 2.3 basis points to 75.8 bps after the S&P move, according to CMA DataVision.

    The dollar fell as low as 94.33 yen on trading platform EBS, its lowest since March, before rebounding slightly to 94.52 yen down 0.4 percent from late New York trade on Wednesday. The euro was down 0.1 percent to $1.3768 retreating from $1.3831 the previous day on EBS, its highest since early January, dragged down by a drop against the yen.

    The Bank of Japan begins a two-day policy board meeting on Thursday. But traders said the event is unlikely to have much impact because the central bank is widely expected to keep its interest rates near zero.

    Gold hits 8-week high as dollar extends losses

    Gold  rose 0.5 percent to $941.90 an ounce by 0537 GMT, compared with the New York notional close of $937.10.

    The dollar fell to its lowest level since January 1 against a basket of major currencies on Thursday after the Federal Reserve said it had considered buying more securities, raising concerns the global financial system could be flooded with more dollars.

    The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings stood at 1,105.62 tonnes on Wednesday, unchanged since May 1.

    Physical buying by local players was limited as they were less keen to buy due to the recent appreciation in their currencies, traders said.


  200. To all you guys shorting POT – be warned it had an upgrade from Scotia today. Green Shoots :-)


  201. Phil, your posts are literally packed with realtime very valid trading ideas. I fully agree with you that you stick to your particular way of putting in words these ideas. However to new subscribers like the undersigned sometimes, understanding one of your posts sometimes takes me 5 minutes. I think it would be unfair for me or other newbies to bombard your site with questions during trading hours. With your permission i am willing to dissect and elaborate in my own words one or two of your bold comments daily and post my understanding and / or any queries i may have thereof in an after hour comment.


  202. POT – 2 price target upgrades and 1 downgrade this AM