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Friday – Is Anybody Working For the Weekend?

Rollercoaster monksWheeee, what a ride! 

Just like any good roller coaster, market plunges can be fun when you are strapped in safely and prepared for them.  Our members have been so prepared we’ll have to hand our Eagle Scout badges (we don’t need no stinkin’ badges) for riding out a toppy market for two tedious weeks, which I won’t rehash here but you can go back to my Sept 19th "Wrong Way Weekly Wrap-Up" to see how hard it was to stay bearish in the face of all that "great" news that the media kept throwing at us.  Nonetheless, had you followed our trading ideas in that post, you’d be a VERY happy camper right now!   

Now we are down 300 points from that Friday’s finish, about halfway to our 9,100 target, which is the top 5% of our original trading range around Dow 8,650.  We’d love to see 9,100 hold, especially on a nice volume sell-off so we can move our range up 5% and make 9,100 our new mid-point, putting the 33% (off the top) lines withing striking distance of a proper breakout but suddenly the news-flow has turned sharply negative.   This is something I warned members about way back on August 11th, the last time I thought we were getting toppy (and we were) at Dow 9,400 when I said: "Watch the newsflow in the MSM.  If it starts to get negative, look out below."  

Yesterday we talked about GS’s about-face on the REIT sector and, later that day, we noted during Member chat that JPM had decided to downgrade SKS, hitting the retail sector hard in the afternoon.  I called a slightly early top on Retail on 9/16, when I said to Members: "Right now all retail is being played like a huge winner, as if no segment will lose market share to another.  This is amazingly stupid in a declining wages and declining consumer credit environment." RTH was $88.76 that day after running up just about 20% from July 7th so we were looking for a pullback at least to $85, but I think worse as I see nothing in the data that makes me believe in Santa Clause this year or the rally he often brings. 

As you can see from David Fry’s chart of the XLY (another Retail tracker) we topped out at technical resistance and are now looking for a completion of a 5% drop back to the August highs but I’m very concerned about today’s job number and wondering how Retail indexes can get back to last June’s highs with 10% less people working than there were last June (5% "officially").  Are we really supposed to think that the 90% of people still working will be doing 11% more shopping to make up for it.  No, that is just stupid.  Well, then so are the current valuations don’t you think?

8:30 Update:  Oops, jobs are even worse than I thought (and miles worse than GS and other analysts thought) with 263,000 jobs lost (a 9.8% unemployment rate) and the people who are working are averaging just 33 hour work-weeks, which itself is down 7% from last year.  That should lock in the 5% rule target levels I set in our 1:10 Member Alert yesterday which are: Dow 9,329, S&P 1,016, Nasdaq 1,942, NYSE 6,688 and Russell 589.  As the Russel already blew 589 yesterday on a weak finish, we were very confident in our bearish stance going into yesterday’s close and we’ll have to see how our 5% lines perform today.  Keep in mind, just like I said in my 3:54 comment into the close regarding the 2.5% lines we’d been wathing all day - 3 of 5 indexes blowing levels = BAD!

Our late additions yesterday were EDZ at $7.59 and an SKF vertical that’s already well on track for a 100% gain.  SRS has finally turned around and our widow-maker is now becoming a money-maker so congrats to those who rode out that annoying index.  Our ERYs will also be flying but we did take 1/2 of those off with "just" a 42% gain.  That’s the fun thing about playing the bear side, nothing happens for a very long time and then suddenly it’s payday.  I spent much of the day yesterday warning members it was too early to bottom fish and I will say right now it’s STILL too early, especially with the weekend looming and a lot of scary magazine covers ahead of us as editors are scrambling to wake up their bearish writers as we speak – suddenly back in favor after weeks on the bench. 

My prediction for today was a 1.5% drop on the indexes and it now looks like we’ll be opening there so watch for a 1% bounce back from our 5% lines but anything less than that will keep us bearish into the weekend, otherwise we will be shifting to a more neutral stance.  Some of the Semis, like WFR are getting cheap enough to sell naked puts on – perhaps selling the Nov $14 puts naked for $1 or better as they bottomed out around $12 in March and we could double down at that price and be very happy to own them long-term for $13 average, especially with the huge option premiums they command as sales

Speaking of the 2.5% rule, that’s exactly what both the Nikkei and the Hang Seng did to the downside.  Speaking of REITs turning ugly, Glorious Property Holdings Ltd. became the 5th consecutive IPO to fail in Hong Kong this morning, dropping 18% from its open.  Hong Kong investors may know something because, on this side of the Pacific, office rents in San Francisco fell 37% in the third quarter.  That’s THIRTY-SEVEN PERCENT.  Did I say 37%?  OK, good, now that we have that down, let’s role-play:

The scene is one year ago and IYR (Real Estate ETF, which we shorted last week) is at $40 in October:

  • Me: Hey Mr. REIT, how is business? 
  • Mr REIT: Oh it’s terrible, credit is tight and the stimulus checks are running out and a bad Christmas may cause me to lose tenants.
  • Me:  Wow, I guess I shouldn’t buy IYR at $40.  How are you holding up Mr. REIT?
  • Mr. REIT: It’s very tough, we are barely break even despite refinancing at the lowest rates ever and despite oil dropping to $40 and lowering our energy costs.  I can’t sell my building because there are no buyers and the banks are foreclosing on other buildings and then I have competitors with lower entry costs who can undersell me on rents – even if I could fill my space. 
  • Me: Ouch that’s not good.  What would happen if you had to drop rents 37%?
  • Mr REIT:  Why that’s madness, I’d go bankrupt.

I hope you enjoyed our little play and perhaps gained some insight as to why we are short IYR and long SRS, which is the ultra short of the same thing.  As I mentioned in yesterday morning’s post, we are also short BXP, who hit their own 5% rule yesterday so you are welcome free readers, even if you didn’t catch the option play we took that is up over 100% already.  We are not going crazy, as with yesterday we are still taking bearish profits off the table relatively quickly as this market can turn on a dime but that is true to the downside as well.  This morning, for example, The cost of protecting Asia-Pacific bonds from default soared 10% as worse-than-expected U.S. jobless claims and manufacturing data increased concern that the pace of recovery in the world’s largest economy is faltering.  10% – that’s a lot for a day

Our gal pal, Meredith Whitney points out that the credit crunch continues . Taxpayer dollars have supported institutions that are ‘too big to fail.’ Small business has been left out in the cold. Anyone counting on a meaningful economic recovery will be greatly disappointed. Credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan.  They fail, they don’t pay REITs, REITs fail – this is not hard stuff people.

I’m sorry I don’t have better news going into the weekend but at least the BDI got back over our 2,250 line.  We need to see 2,400 again for things to get interesting but just arresting the downtrend this week is encouraging.  We’re going to be watching our levels closely and taking some speculative upside plays off the bottom but our weekend stance is sure to be neutral and we’ll wait and see how things play out in the media as well as how far down Asia can go on Monday before shifting our stance for next week. 

Have a great weekend,

- Phil


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  1. stkinvstr

    Phil,
    I have been following your daily articles for months.  My account does not allow me to sell put options except to close an open position.  I have had little luck duplicating your success without this strategy.  Would you suggest an alternative strategy or just moving on to another system?

  2. balancenv

     Good morning Phil (It’s PM time here in the pacific and Hang Seng also tanked today… Other than the well staged spectacular parade, nothing else seems upbeat..) 
    FSLR is bucking the trend being added to S&P. I have a 145/150 call spread in danger of going under water, any suggestion as to role to Nov or ?
    Thanks.

  3. EricL

    Looks like we’re finally getting our bull shock. Gold and oil futures still holding support; copper has broken through. SPX has some August support at the 1010 area, which is what I will be watching. If it holds, we will probably see a little recovery by the close.

  4. 1020

    Good Morning All!  I was just reading this past week that Clark County (Las Vegas) was considering doing the unthinkable, laying off some full time/long time employees. I wake up to see we lost 53,000 govt. jobs – state and local govt. jobs  Wow……

  5. where

    I’m going to be interested to see what kind of distribution goes on with this new downtrend.  I don’t expect people to be in panic mode like last year, but it will be illustritive to see if "saftey" stocks stay up along with commodities.  It will definitely help with my investment choices.
     
    Oh, and those USO calls I sold at close yesterday are going to be a nice little payoff this morning!

  6. matt1966

    Wait a minute.. you mean job losses are no longer a lagging indicator?  I thought we all knew there would be job losses and that it didn’t matter?  Back to the drawing board.   On another note, how bout GS’s ability to call the numbers a day in advance!  Aren’t those guys great?

  7. samz3700

    stkinvstr -
    No question – switch brokers – it’s probably an issue of the level of clearance your broker has given you – almost sure that you will also be getting less expensive trades.
    Most people here seem to like think or swim TOS -  or IB Interactive Brokers -
    When you apply for your account they might  ask you a bunch of questions about your trading experience – levels granted might depend on your answers or account size  - what kind of answers you choose to give is up to you.

  8. aclend

    Notables from "G"-land:
    Accenture Plc (ACN) Buy: Add CL-Buy on more aggressive capital deployment and rising ROC. Up to this point, the debate on Accenture (ACN) shares had focused on the demand environment and its recovery prospects. We believe last night’s announced 50% DPS increase (2.5% yield), shift to a semi-annual dividend payout and incremental $4 bn share buyback authorization ($4.9 bn total) change the equation for valuing the shares. We raise our FY10E EPS to $2.82 ($2.80), FY11 EPS to $3.23 ($3.05, +15% yoy) and introduce FY12E EPS of $3.61 (+12% yoy) and raise our 12-month price target to $47 from $44 (+29% upside potential); this implies a CY10E P/E of 16X our EPS of $2.93 (+12%). We rate the shares Buy and add them to our Conviction List.

    Buy CL, PM, KO, MJN, and LO
    We highlight five high-quality Staples stocks across the Staples coverage universe that have been left behind the market rally—Colgate, Philip Morris International, The Coca-Cola Company, Mead Johnson, and Lorillard. Our price targets imply about 20% upside potential on average for these select names over the next 12 months. All of these names are structural winners that have high pricing power, strong brand equity, and ample cash generation potential. In addition, we see roughly 4% upside to consensus estimates on average for these names for 2010.

  9. concreata

    Phil – DXD – now at 37.20 – how about Apr 35/40 – sell 40 call at open, then buy 35 call as DXD (hopefully) rises?

  10. lflantheman

    The market is like a roller coaster, with empty containers at the bottoms and the tops, and money in the middle.   Today we will go to thebottom, pick up our empty containers, and fill them as we move upward again next week, or even this afternoon.  At the top (a few days or weeks from now) we will pick up  new container s and fill them  during the next drop.  Geez, this is easy!  

  11. 1020

    Phil/ Alan Grayson. A liberal with Testicles… Maybe he could lend one to Max "the turd with eyes" Baucus….

  12. RMM

    Phil: you use the 50 cents rule to roll the DIA puts, do you apply the 50 cent rule also for calls when they are down ?

  13. Phil

    Selling puts/Stk – Ask me again after hours, we talked about that a little in yesterday’s comments.  Also, call ThinkorSwim and see if their policies are the same for your type of account as there are huge differences from broker to broker. 

    FSLR/Balance – Do you guys care about the anniversary over there?  As to FSLR, I think the boost from the S&P is short-term and your spread is probably a good target, let’s give it until next week to see what happens.

    Everyone holding up fairly well at the moment considering.  Volume very low so far and we had that yesterday until the sellers started piling on so watching and waiting at the moment.  This is a good time to sell the other 1/2 of the DIA $95 puts for $2 and if we turn back down, we roll the $97 puts (now $3.30) down to the $95 puts as well before that roll costs more than $1.50.  That keeps us clean down to 9,300 and then we can roll to Nov if we have to.

    5% Rule levels are:  Dow 9,329, S&P 1,016, Nasdaq 1,942, NYSE 6,688 and Russell 589 – Dow and Nas are the only ones above and 3 or 5 below = BAD!  No bullish bets until we are 3 of 5 above!!!

    2.5% levels (I doubt we get there) are:  Dow 9,820, S&P 1,043, Nas is 2,096, NYSE 6,894 and RUT 604 – don’t let anyone tell you the market is recovering until we are 3 of 5 over those lines.

    I expect us to finish within 1% of the 5% levels today and that would indicate likely bearish follow-through next week. As usual, volume is key and the more there is, the worse the market does as we are firmly entrenched in our car lot market model. 

  14. redfern1

    Phil
    I bot SKF Apr 30 calls and sold Apr 24 puts (@ $4.40 and $3.80 respectively) what are reasonable stops if any today?

  15. where

    They are absolutely trashing the dollar to keep things up here, so watch that as a possible impetus for a further leg down.

  16. bassdad

    Phil,
    I started some positions with the latest 100K portfolio.  BAC, PARD & UNG
    I have, I believe, digested the concept and workings of the BAC position, selling short term putters & callers to pay for the time decay of the long put/call position while we hope for a significant move up or down on the long position over a 15 month span.  I have been comfortable with the buy/writes all along. 
    I’m still trying to get a handle on the UNG play, however.  I have, as follows;
    2011 Jan. $6 calls bought at $4.10
    2011 Jan $10 puts bought at $3.10
    2011 Jan $14 callers sold at $1.65
    While I understand that I have a long $4 spread, with the buy in cost reduces by selling the callers, I have been just sitting and watching this one.  Unlike the BAC play where we are actively offsetting time decay on the long position.  Have I missed updates suggesting adjustments or should I just be sitting and waiting for ???.
    Could you also clarify whether I was correct in picking these as self hedged plays, or should I have other hedges for them.

  17. samz3700

    Phil – Is there still a play on SRS for those of us who did not get in yet

  18. Phil

    Dollar is getting killed against the Euro, down to $1.459 from 1.448 at 8:30 and they are even sacrificing the Yen, which is up to 88.75 to the Dollar so every posible effort is being made right now to prop up the markets by making the dollar go down.  All BS of course…

    Gov Jobs/1020 – Yeah, and that’s WITH tons of Federal money sent to the local govs.  I don’t know what people thought was going to happen with all these businesses going under and people not working and homes in foreclosure – towns and states can’t run massive deficits like the Federal Gov – when they run out of money, they have to actually cut expenses to balance their books and, just like any corporation people go first.  Next the towns starts spending less and that puts even more pressure on local businesses which lead to even less tax revenues, which leads to even more cutbacks.  This is a perfect example of the Republican strategy of "Starving the Beast" in action.  Here’s a great article by Rober Scheer who was right on the money in 2001, when Bush first said:

    So we have the tax relief plan [...] that now provides a new kind — a fiscal straightjacket for Congress. And that’s good for the taxpayers, and it’s incredibly positive news if you’re worried about a federal government that has been growing at a dramatic pace over the past eight years and it has been.

    Wow, gold really got going, up to $1,005 again from $987 at the open, that must have hammered a lot of futures bears.  So far, a little too much effort (me looking at level 2 volumes) is being put into getting us back to yesterday’s lows so I don’t think it’s going to hold.

    August Factory orders down 0.8%, that’s not good….

  19. yodi

    Hi Phil hold Mos oct shorts 50put and 65 call shall I just roll over to nov hoping mos gets up to or over 50 again?

  20. 1020

    Phil/Gov. Jobs   Many of those jobs may not come back…Might be a good thing…..

  21. jromeha

    Phil, you kind of already answered this question but do you see the sell off accelerating to the close? It seems like this is a pretty mild reaction to both employment numbers and factory orders……

  22. concreata

    Phil – GLD – is there gold play, I still hold JAN 105 longs (cost 4.30 current 2.55) I would like to do something with – or sell more front month calls?

  23. Phil

    Great time to sell RIMM Naked Nov $65 puts at $3.60 as the VIX is 29 and RIMM is back down at $65 but you have to REALLY want to own it, just in case.

    GS/Aclend – Wow, buy staples in a downturn.  Do they really get paid to tell people that?

    DXD/Concreata – I’m sorry, I don’t like buying ANYTHING that’s up 10% in 2 days.  We are technically oversold right now and all it will take is a kind word from our President (who’s busy in Copenhagen pushing for the Olympics today) and the markets can bounce back half of the losses on Monday so I sure don’t want to put a new bearish play using an ultra today. 

    EZ/Iflan – You’re right and that’s a great discipline I talked about last week, if you just play the middle and are satisfied with 5-20% gains, you can make them over and over and over.   What people have to learn is, as I just said to Concreata, DON’T try to get on the tail end of a 5% move to make up for what you missed.   Just sit patiently and wait for the turns.

    Grayson/1020 – Yeah I like that guy, he’s a local boy who made good.   He was a real attack dog on HAL and other war profiteers…

    Fiddy Cents/RMM – The only "rule" on DIA positions is to roll the LONG put (the one you own) UP to the next $1 strike for .50 whenever you can.  I’m not sure what calls you are talking about but if you are playing the opposite way, you could do that but our system is based on a complex insurance relationship, where we expect to be gathering profits from short puts sold and ALSO, VERY IMPORTANTLY, this is a system designed to tread water and NOT make money except in a very harsh market sell-off.  It’s insurance, like life insurance, you don’t REALLY want it to pay off!

    SKF/Red – On Aprils?  Why would you even buy Aprils if you intend to pull them in October?  Unless you make a serious amount of money or you change your mind about the play, there’s no reason to do anything with an April spread based on a one-day move in October.  You could, perhaps, sell some Oct $31s for .70 to make up some of your own ridiculous premiums on the call side, especially since you are doubly screwed if SKF does fall sharply. 

  24. RMM

    Phil: DIA insurance puts: ok, I know,
    i have POT calls nov 90, base 5.98$, now 3.9$, how about rolling these out to dec95 or what ?? obviously needs more time.

  25. matt1966

    Daggone they can make a mockery out of this market!

  26. jlui_tx

    hi Phil, we did a Oct 60/70 puts spread couple weeks ago. Should be take profits now since BXP is back to $63 now

  27. Phil

    Very funny, as the volume drops off, the market takes off.  Morning stick is clearly in action, watch oil at $70 as they need that to get that sector back on track.  XLF still $14.27 so not very impressive overall.  SRS $10.50 would be bad if blown for the bears.  

    You can cover bearish Real Estate plays by buying URE at the $5.50 line and keeping nickel stops at $5.75 and $6.

    UYG/Bassad – I don’t have that in the $100KP.  Was that a play we looked at?  If so, it never filled.  Your break even on that is $11.55 and the most you can make is $2.45 with a max risk of $1.55 since you have the $10 puts so it’s not a terrible risk/reward on the hopes that UNG would get back to somwhere around 1/2 of their usual trading range within 15 months.  It’s a very, very dull play that is simply a bet that nat gas is way too low.  I think maybe we looked at this that way because there was that fear that UYG would shut down and go bust over the new regulations as that’s not a play I would usually make. 

    SRS/Samz – Too crazy right now to take up new ultra plays.  VIX is high so you are way overpaying.

    Volume 60M at 10:30, more than usual (slow usual).  Still backing my theory that this is early stick action to forestall disaster and not at all a surge of buyers at the bottom. 

  28. stevenparker

    I am confused. It’s ok, it’s normal :)
    Why would the gang of 12 be talking the market down (REITS, employment number, paying for negative opinions to be on TV etc.) and stick saving the market up at the same time?

  29. Cap

    Hey … Ireland / EU … the undemocratic bureacrats in Ireland keep trying to jam stuff on people that they don’t want, democracy be damned (hey, sounds like Pelosi & Co.).   Maybe the EU needs to hire ACORN, create some fake voters, and "win" an election.   Call Sen. Franken(stein) for some advice on how to fraudulently steal an election with Acorn !
     
    Alan Grayson -  nutjob & bombthrower.  No wonder Phil likes him !  :lol:     I have to admit, that I did enjoy his grilling of the Fed’s legal counsel (for the cameras, before an empty chamber).
     
    WTF w/ the REITs today ??   What a joke !   SLG down $2 plus early; up $1 by 10:30 am.  Same for SPG.

  30. kustomz

    GS cushioned the shock some what with that late revision to their unemployment prediction. Good guys them GS boys good guys!

  31. lflantheman

    Phil….Why would I want to own RIMM when I can own AAPL?http://www.minyanville.com/articles/UBS-+upgrade-+apple/index/a/24757/from/yahoo#

  32. ssdirk

    Isn’t it just incredible that GS revises the day before the jobs report everytime?  Why didn’t they revise last week?  Things couldn’t have looked that different to them.  Maybe they weren’t positioned just yet.

  33. bassdad

    Phil,
    A little confusing, as you referenced UYG in your answer above.  I’m refering to a play you suggested on UNG back on 9/2, as follows;

    An interesting way to play UNG is the 2011 $6s at $4.30, selling the 2011 $14s for $1.70 and buying the 2011 $10 puts for $3 which is net $5.60 on a $8 spread to the upside with a net $4 guarantee. If UNG crashes and you pick up $5.60 for the puts, you have a free call play. If UNG flys up and you get $5.60 for the call spread, you can cash out an you have the puts for free. Worst case is you lose $1.60 if UNG stays in range for 15 months
    Regardless, should I be doing anything with this position, or just wait it out to see if it moves further.  I get the impression after re-reading the original, that the idea was to take out one direction or the other based on opportunity.  I’m also, after re-reading, assuming we have not reached that opportunity.

  34. stevenparker

    Cap – is there foul play in the referendum in Ireland?
    I do hope the Irish reject it again. The EU is about as democratically accountable as a tin of cold soup.

  35. yodi

    Hi Phil hold Mos oct short 50put and 65 call shall I just roll over to nov hoping mos gets up to or over 50 again?

  36. Highlander

    nasdaq 100 trying to go going red !!!

  37. pstas

    Phil,
    FOLLOW THE RULES! Got out of my OIH Oct long puts this AM with a respectable 14% profit, "selling into the excitement".
    Very happy camper since I was deep in the tank just a week ago. All it takes is courage of one’s convictions which, in this market environment I define as having nerves of steel couple with a brain of Jello. :)
    BAC- Looking at BAC to sell some Nov puts. Looks like a long way down if it cannot hold the 16/16.50 level. Your thoughts?

  38. Highlander

    phil,
    europe going down again !

  39. allen060

    Pharm,
    Any opinion on DCTH? Currently it is at about 4.75 but volatility is high. One could do a buy/write by selling Nov 5 puts and calls and bring in 1.40-1.50 in premium.

  40. 1020

    Cap/ Nutjob   Bombs Away :)

  41. Cap

    stevenparker …. i don’t know if there is foul play in Ireland, but the EU probably needs it if they don’t want the Irish voters to reject it again.  I was making a joke w/ social commentary tying into the ACORN fiasco here in the US.
     
    As for Ireland I hope they reject it again; of course; glad we agree on this one.

  42. Highlander

    say goodbye to europe guys. they just closed !
    cac -1.89; dac -1.54; ftse -1.08

  43. 1020

    Down Goes Chicago!!!… not good for Michelle….

  44. Phil

    August Factory Orders: -0.8% ($2.8B) to $352.9B, its first decline in five months, vs. consensus of +0.7%. Shipments decreased $0.9B (0.3%). Inventories dropped for the 12th straight month, -0.8% to $3.9B.

    MOS/Yodi – Wheat prices are way down but MOS just hit the 200 dma so you can expect some kind of bounce here off $45.  If you are short the $65 caller, I don’t think there’s anything to worry about there and I’d leave the putter as is too unless they break below $45, when you can roll to lower puts and calls (the Nov $45 puts and calls are $7 so not much to worry about as your putter is $4.50).

    Jobs/1020 – Not a good thing at all when you need government spending to stimulate the economy and the government doesn’t have enough people to run a program like Cash for Clunkers properly, which allows Republicans to call it a failure and get on TV showing dealers who didn’t get checks on time and then they stop the next round of stimulus and another division like Saturn is shut down, costing another 100,000 jobs, which leads to lower tax revenues (especially as auto dealers are huge in local economies) and even less government employees to help the 100,000 newly unemployed people until finally we reach the Randian goal of pure survival of the fittest with no governmet left to intervene.  Yep, you have fun with that, I’ll be moving to France!

    "Floor traffic was lousy all month. Every brand, every region of the country – it was a real post-clunker hangover. It was disappointing. I expected the month to be a bit stronger, but it just wasn’t." - Mark LaNeve, GM’s VP of U.S. sales, after yesterday’s weak September sales data

    Close/Jrom – I think THIS (the run back to yesterday’s lows) is the stick save and that we head back down from here.  The real test will come as we retest today’s open, near the 5% rule again.

    The number of U.S. lenders (zombie banks?) with 20% or more of their loans 90-days overdue hits an 18-year high of 26. So why are they even open? "Either they’ve got a massive amount of capital, or the FDIC just hasn’t gotten around to them."

    GLD/Concreata – I KNOW I told you to take the money and run on those when they were up.  At least now you know why.  Now it’s Oct and Jan isn’t so far away but $105 sure is on GLD, which needs gold to be at $1,075 for those to be just in the money and $1,100 for you to break even.  I’m bearish on gold over that period so the only thing I would do with it, if you insist on keeping it, is to sell the Jan $98 calls for $4.90 to get your money back and then, IF gold holds $1,020 for more than a day, THEN sell the Jan $105s and buy the June $102s, now $7 and then roll up your callers over time.  If that is too bearish for you, you can always do a partial cover but $1,020 gold is about GLD $100 at best so they only get $3 of $5 back, even at that level. 

    If history is any indication, Fed’s Eric Rosengren says bankers should be worried more about disinflation than inflation. "Significant excess capacity in labor markets has the potential to be disinflationary at a time when the inflation rate is already below where we expect it to settle in the long run," he says.

    POT/RMM – Same as MOS, wheat futures are in the crapper so not likely they go up.  You know I don’t like them anyway so, like Concreata’s gold play, I’d sell the Nov $85s for $6 and you can even sell the Nov $75 puts for $1.65 too if you are so bullish and then you have $7.65, which would pay for you to roll out to the March $90s, now $8.70 if things are going so fantastically well for POT. 

    Mockery/Matt – I know, it’s hard to take this thing seriously. 

    BXP/Jlui – We also rolled up to the $75 puts but too late now if you didn’t.  I’m still comfortable with the spread targets.  Just because some idiots are buying this morning doesn’t change the fundamentals for BXP as earnings draw near

    G12/Steve – Oh I’m confused about that too but maybe it was falling too fast.  Maybe not all 12 are on the same page (don’t forget they compete with each other so GS and JPM may have hosed the others yesterday), maybe it’s not official G12 action but Cramer’s sheeple thinking this is some kind of bottom fishing opportunity or maybe it’s just regular funds with their regular computers following the 5% rule to the letter as the Dow falls from 9,900 to 9,400 (5%) and then they kick in for a 20% retrace of the run back to 9,500 before making the next leg down.  Since this is action that is anticipated by the 5% rule in any sort of market, there’s nothing at all surprising in seeing it happen, G12 or no G12. 

    RIMM/Iflan – Er. because RIMM is really, really cheap and AAPL isn’t….  Basically your question is like "Why would I want to buy a New Mercedes SL convertible  for $70,000 (30% off) when I could buy a BMW M6 convertible for $95,000 (5% off).  I’m not going to get into an argument about which is better and I’m not going to say the BMW isn’t a good deal.  The difference is whether you are a dispassionate investor who buys the best deal or a guy who likes Beamers… 

    UNG/Bass – Oh I just mixed that up but I know it was UNG.  Yes, that was from the time we thought it may crash out and we wanted the cheap play on the calls but we also wanted to guard against BK.  So it’s exactly what I said, you can lose $1.60 or make $2.40 and you won’t know which for 15 months.  It is now not looking likely that they will head lower but you never know.  The spread is still around $5.60, which is also expected as it’s a fairly even coverage and won’t do much unless we get way out of range. 

    Chicago and Tokyo out of Olympic consideration.  That leaves either Rio or Madrid and I think Rio wins now as Brazil deserves a shot and is a good emerging market bet.  Spain is still teetering way to close to economic meltdown and the IOC would be crazy to give it to them as they just don’t have the cash.  

    LOL Pstas – Nice job!  BAC I would wait until next week.  Very long way to go up if things go well so you won’t miss much if they jump a buck next week.

    LOL – Kudlow trying to spin IOC decision as a knock on Obama.  Man that guy is an ass!

  45. 1020

    I’d be a little embarrassed if I were Barack. Never should have made the trip……

  46. Highlander

    euro closed cac -1.93; dax -1.58; ftse -1.11!!! we prob will follow, stick be dammed!

  47. 1020

    Phil/Krudlow  That may be an insult to most asses ;)

  48. Cap

    Chicago is said to be out of 2016 Olympic consideration.   Good job Obama; can’t believe the guy would fly to Denmark if the thing wasn’t in the bag.   Now get back to work before your next golf outing.
     
    Olympics down to Rio and Madrid.

  49. Cap

    Then again; I can believe it; beats having to talk to your generals about the "real war".

  50. Highlander

    vix just went green!!

  51. Highlander

    hang on, the big steering wheel’s (aapl) vol is creeping up and stock creeping down!!

  52. oldgoat

     Phil, I  have dec 104 spy puts that are up 52%. Should I sell and roll them to March? I can buy March 98′s for the price that I’d get for the Dec 104′s.

  53. pstas

    To the IOOC:
    The taxpayers of Illinois say Thank you, thank you , thank you !!!!!

  54. oldgoat

     Phil, I also have dec 96 dia puts that are up 41%. What do you suggest?

  55. 1020

    Phil/Jobs  You know, its embarrassing when you have an administration that has these programs (cash for clunkers) that are ran improperly and Barack running to Denmark while pushing for what Is most important for our country (healthcare reform)  and I am beginning to mutter WTF!!! 

  56. Phil

    Speakng of AAPL:

    Apple (AAPL) investors enjoying the upgrade to "buy" from UBS on continued iPhone strength and speculation the company is working on a digital service platform; shares up 2.3%. Meanwhile, Dan Frommer says iPhone share could double when it expands beyond AT&T (T), and tablet speculation includes a new patent application for a touchscreen that would individually detect both palms and all 10 fingers.

    Boy did ICE fall off a cliff since we shorted them, testing $90 now. 

    Oil popped back down to $69.  Gold back under $1,004.  Volume 91M at 11:30 – heavy for 2 hours (per recent volumes).

    Not looking strong overall and a big volume can send us down hard.

    David Merkel explains why the Fed’s so good at stimulating stock markets, but so bad at stimulating the economy.

    Ireland/Cap – The EU made huge concessions to Ireland to get this vote and Ireland desperately needs EU banks backing them up or they are going to go down the toilet by Christmas.  It would be insane for the voters to reject this now but, as I said this morning, 50/50….

    Europe/High – Well that’s the 5% rule for them and we can expect the same but that does not bode well for next week. 

    DIA – Now the roll from the $97 puts to the $95 puts is just $1.15, so we saved .35 and that’s nice.  So the official position is now the Jan $100 puts fully covered with the Oct $95 puts, now $1.85

    Barack/1020 – What was he going to do?  Chicago was making a bid, they did a terrible job putting the presentation together and they asked him to help.  How could he say no?  When LA and Atlanta put their presentations together they were amazing – Chicago had no budget and poor organization (and 50% of the people in Chigago are AGAINST the games) and also, the entire world is kind of pissed at us for bankrupting them at the moment….

    Kudlow/1020 – You are right, I humbly apologize to asses everywhere for lumping them in with Kudlow…  Oh, you too Cap!  8-)

    EMIS/Cap – Back at .78 again, this is a great day trader for scalping nickels!

    SPY/OldG – How about taking the money and running when you are up 50%?  Is cash really that awful?  They don’t have Jan so I would have zero interest in making a spread on them until they do as March is too long and you can’t get an efficient delta other than the $104s, which would require you to risk 150% of your original bet, even if you do sell Oct $102s and they have a .46 delta so you have virtually nothing to gain from the play. 

    DIA/OldG – Well if you are a good boy and take the SPYs off the table then you can run the DIA Jan $97 puts for  + $1.10 and offset that by selling 1/2 the Oct $95 puts for $1.84 but only if you actually need protection, otherwise why not sleep well with cash over the weekend?

    Denmark/1020 – That was a no-win for him.  There is no way he could dis Chicago, even though or maybe especially knowing the bid was doomed because if he didn’t go and they lost, then Cap would tell you how he abandoned his people and is a dirtbag who’s friends can’t even count on him for a small favor.  This way, at least his own people know he tried and those are the people he has to live with – I don’t think he was going to win Cap and his pals over either way…

    Not unexpected news that consumer bankruptcies have passed the million mark through the first nine months – the highest number since 2005 changes to bankruptcy law, though still behind that year’s record 2.1M.

  57. jamie

    Phil, Now you are considering a French outpost for PSW, where should we start looking!

  58. dmankoff

    HI, Phil, i own  SRS  and am short the Oct. 10 c alls.
    for a net cost of $9.40.   any adjustment think I should make now, that the SRS is up on the day?
    thanks
    David
    and any new good trade to enter on EDZ ?

  59. hinners6969

    Phil good call on OIH puts at 1.82.  got in late at 1.98 sold half at 2.80. 
    Would you hold rest over weekend?

  60. 1020

    Phil/Denmark  I agree, most of us would have done the same for our freinds, unfortunately we are a huge battle of perception and the administration (Barack) must not have any more failures….

  61. dmankoff

    Phil, how can I find your portfolio details of what the current holdings are?  is there a website link to go to?

  62. jamie

    Denmark, The concern I have is the cost  of these trips, we are the Broke States of America, formerly the USA. I wish he would lead by example and wish that his openness would include releasing the cost of these trips. Including transport of cars, secret service and Michelle’s ealier arrival.

  63. allen060

    Really interesting, big picture view of the economy and the role of government intervention from Credit Writedowns blog.
    http://www.creditwritedowns.com/2009/10/the-recession-is-over-but-the-depression-has-just-begun.html

  64. gel1

    Yesterday was real ugly for me… Started out the day as a Bull, then morfed into a Pig, got slaughtered and now I am part of a BLT sandwich. Need to pay more attention in PSW class.

  65. RMM

    Phil: good political explanations by you as always, Txs for being informed and knowing what counts, unfortunately you always fail to convince Cap.
    If people in Chicago were split 50/50 on whether to have the olympics, that was the killer, the world out there looks for more enthusiasm.

  66. Highlander

    rmm,
    or in other words as we say in the computer biz, cap’s neurons act more like rom’s than dram’s.

  67. jomama

    phil, do you like CY here?  they should benefit from both chips and solar?

  68. JRW III

    Phil – Mr. Stick
    Do you think the 10:15 stick was the HIGH of the day or more to come ? And if GS and JPM are now bearish, then who was that masked stick ?

  69. Highlander

    boy it just makes you want to shout for joy (in Portuguese of course)!

  70. Highlander

    which time zone for your stick, jwr III

  71. redfern1

    Phil

    what would you do if you were long BSX Jan $10 calls and short the $10 puts and both down 50% from price($1.90 and $0.55)?

    by the way thanks for the help with SKF – I keep trying with bear stocks and I never seem to enter correctly – no "feel" for them I guess.

  72. JRW III

    Highlander – Stick
    The 10.15 EST stick; though I am PST.

  73. Phil

    France/Jaimie – Either Lyon, France or Lerici, Italy are the two most likey places I’d live in Europe while my kids are young.  If they were older I’d prefer Amsterdam…

    Rio Wins!!! 

    SRS/Dman – Same anwer as this morning on the previous post. On EDZ, same spread as yesterday still works.

    OIH/Hinner – Nice job!  We got exactly to my $111 target on that one.  I’m not big on holding anything for the weekend – the more cash you have, the more flexible you can be next week.

    Portfolio/David – The only currently published portflio is the $100KP, which is up at:  http://www.wallstreetsurvivor.com/Public/Content/PhilStockWorld/Dashboard/Philstockworld.aspx

    Trips/Jamie – That would not go over well.  They both travel with such massive security that any trip they make, even if it’s from DC to Baltimore, costs a stunning amount of money.  All that would be is yet another political football to kick around.  Keep in mind the goal of that trip was to bring Billions of dollars into the Chicago/US economy so it’s really a failed sales call overall.   Speaking of our Government:

    How off was the government in estimating the recession’s toll on employment? The Labor Department will revise its March numbers to subtract more than 800,000 jobs it thought were filled by workers – 0.8% of private-sector jobs – in the largest benchmark revision in a dozen years.

    Depression/Allen – Too depressing for a Friday.

    BLT/Gel – Sounds like maybe taking some longer-term positions might help.  Days shouldn’t affect you like that.

    Rio/RMM – Absolutely, those guys looked pretty psyched too!

    CY/Jo – I’m no longer clear on their ownership of SPWRA, which was the main reason I used to like them.  My gut instinct is that I wouldn’t pay $10 for them but if they come down to $8 I wouldn’t mind selling puts around $7.

    Stick/JRW – I THINK that was today’s stick but let’s keep open the possibility that GS and JPM are still BUYBUYBUYing and all they wanted to do was shake out the weak hands ahead of earnings so they could go shopping for a 5% discount.  As I said this morning, balanced into the weekend and we’ll see what happens

    Volume 110M at 1pm.  Just a little higher than the usual stick zone but if we drift along with 20M per hour into 3pm, they can still jam us green into the close. 

    BSX/Red – Well that’s really going wrong for you isn’t it?  I wouldn’t do anything with the puts unless it breaks $10 and I’d spend $1.70 to roll down to the May $8s ($2.60) and sell 1/2 the Nov $10s (now .65) at no less than .50 but hopefully for $1 on a move back up. 

  74. billman

     Phil when you say  Great time to sell RIMM Naked Nov $65 puts at $3.60 as the VIX is 29 and RIMM is back down at $65 but you have to REALLY want to own it, just in case.
    Why not go further out and sell the Dec 65 puts for 5.50 is that to far out? Thanks

  75. stevenparker

    Hi Phil, one question on the mattress play please sorry if I missed it. How much do you look to pay to roll out a month?

  76. 1020

    Phil- How nice is Lerici? Where would you say is similar? I have all of moms side of the family in and around Udine and Venice….

  77. Highlander

    phil,
    boy it seems that hoo raa siss boom bah guys (and girls) at cnbc have the wind out of their sails now that they have been told that they were never really integral to ge’s big picture. they must feel like the backstreet bar pick-up the next morning after waking up alone in a really cheap hotel

  78. pstas

    Denmark- They probably should have been rolling the doobies with the preemo hopium in Denmark
    I agree , Obama was between a rock and a hard place but "a small favor"? Not hardly. It was a command performance. .  There is a very long puppeteers string running from 1600 Pa. Ave. to the 5th floor of City Hall. Remember it is always the guy behind the guys who are behind THE GUY. This was Daley’s hail Mary pass. This failure will feed speculation that he will leave the scene. The Fed’s have been sniffing up his tail and the recent local blunders (parking meters deal & student deaths) make it a bit more likely. Perhaps there is an ambassorship in Daley’s future? If Daley’s ship starts taking on water the rats will scurry and the Feds will be there with lifeboats. Lots of bodies buried in Chicago and anything could turn up. Not trying to make too much of this but a chink in the armor can lead to rust which can lead to….? It’s always fun to speculate.
    In any event, the winners, at least temporarily, are the taxpayers of Illinios who will not get left holding the bag.

  79. Cap

    Tell me again; does NBC broadcast the Olympics ?
    All the networks must be covering this earth shattering news about 2016 right ?

  80. Cap

    Hey, I’ll have a post later at ObamaNation about President Obama’s excellent adventure…. talk about diluting his brand between striking out on the Olympics (should have stayed home) and playing footsie with the irredentist terror state of Iran (again, should have stayed home).
     
    Hey market pump; REIT pump back on !
     
    SLG up $3.50 from morning lows; SPG also.   SRS down 7% from morning highs.  Just another day in market HFT manipulation ….

  81. jomama

    Phil, perhaps more of a weekend question, but looking for some solid longterm holds for my retirement account.  On my list BA, BAC, INTC, GILD  (I like IBM but not at this price)

  82. Cap

    Well, Daley can always count on a pardon …

  83. jomama

    Nice line,  "limousine liberal"

  84. dflam

    Hi Phil : I could use some guidance. I’ve got MET at $36.10 ,now $35.85. I sold OCT. $39 calls for $1.65,now $.30 so my profit is $1.10 for 4 weeks. Should I close out position to see what happens next week or roll down to Oct. $36 calls for $1.25, or roll to Nov. $37 for $1.90 . MET  recently broke 50 DMA with MDA at $30.00 Thnak you
    dflam

  85. Cap

    Phil / Ireland … you mean bribes were involved ?  Shocking ?
     
    Phil / EMIS … sadly you are correct

  86. samz3700

    FAS is way up  since this am lows.
    Do people think it is likely to sell off in to the close as people lock in profits before the weekend?

  87. dflam

    Phil : In last mesage,MDA at $30. was the 200 MDA
    dflam

  88. dflam

    Phil : In last message.MDA at $30 was the 200 MDA
    dflam

  89. RMM

    PHil:
    from San Remo to La Spezia and on to Cinque Terre: great coast, nice towns, have spent time in that area for 50 years,
    Lerici is nice town, forget Amsterdam, too sloppy.

  90. jromeha

    Are we going to get a big volume sell off? No way in hell with today’s news this market should be in the green!

  91. Phil

    RIMM/Bill – The Nov $65 puts give you less time to be wrong and they can always be rolled down to the Dec $60s about even ($3.40) while the Dec $65 puts are NOT an even roll to the Jan $60 puts ($4.20) so that right there makes them worse.  Also, you are selling 6 weeks for $3.60 (.60 per) vs selling 10 weeks for $5.50 (.55 per) so you are not doing anything smart by stretching the timeframe. 

    Roll/Steve – I don’t really have a guideline there.  Sometimes you are rolling 4 weeks and sometimes 5 so it’s not a set amount and sometimes it makes sense to roll up and out a month and sometimes it makes sense to roll down and out a month.  If I were now in the Dec $98 puts at $6.35, I would be more likely to roll to Jan $94 puts at $4.45 to take $1.90 off the table (which I can bank to make 4 rolls later) and then I could sell 1/2 the Oct $95 puts for $1.65 which pays for 1.5 rolls up and can be rolled down to Nov $91 puts (now $1.89) which would put me 1/2 covered on the $3 spread that I’m in for net $3.60 with $2.70 cash on the side to add to my puts if they go lower anyway. 

    Meanwhile, anyone watching ZION, VNO and BXP could have called this move…

    Lerici/1020 – It’s a very small town on the Riviera which is very touristy (so English friendly) and very old, which is something I like.  It’s got beaches and a young population with lots of kids and rolling hills to climb but a quick drive along the coast or, even better, by boat, to all the upscale restaurants and nightlife you could want.  The town is right around a bay called "the Bay of Poets" for good reason as it is the kind of place you can sit all day and write sonnets about. 

    GE/High – I would love it if there was a massive shake-up at that station but if wishes were fishes…

    Olympics/Pstas – Both Atlanta and Los Angeles were run at a profit and the city ends up with new facilities, housing and the games themselves tend to pump Billions into the local economy.  The only reason the taxpayers of Illinios are lucky is they are too dumb know they blew an excellent opportunity to revitalize their city with that idiotic infighting that turned off the committee.  Not that it would have gone to them anyway as Rio made the very excellent point that South America has 400M people and never had an Olympics while Australia, with 22M people, has had them twice (Europe 20 times, US 12, Asia a few and just had it).  

    NBC has the 2012 Olympics but no bidding yet on the new games (they had to pick a spot first). 

    Market/Cap – The markets are coming back because Obama’s coming home!  He is absolutely the anti-Bush for the market as we used to be able to short any day Bush was going to have a mike put in front of his face while Obama is a rallly 2/3 of the time easy.

    This David Letterman thing is just fascinating….

    Weekend/Jo – Yes, better on the weekend and I certainly wouldn’t pick up anything until next week anyway.

    Oops here comes volume and it’s selling – a lot like yesterday’s close! 

  92. Grant

    Cap – I think I heard on the radio yesterday that NBC has the Olympics through 2014.  Being from the western burbs, the Olympic coverage was just over the top (rah, rah).  WLS-AM was going to preemp Rush at 11:00 here to cover the party.  Well the party was over in a minute and Rush was on the air on time.  I am happy about the result and am happier for the taxpayers.  The committee spent $70 million to fail.  Imagine the cost to win!

  93. Highlander

    jrom,
    fyi cy is no longer a solar play!!! they spun all off to stockholders in effort to avoid crashing a stock which they felt was too overvalued to continue to hold. smart move as it was the only way to alow tj rodgers to claim he passed on the value to the stockholders. from a chip standpoint they are a poor mans broadcom. they buy small startups and milk the technology.

  94. jomptien

    Phil,
    On the buy/writes, do you write the same amount (dollar wise) in both the puts and calls or one more than the other?
    Also, when you just sell the puts and calls – always in the same dollar amount?

  95. Grant

    Phil – "Both Atlanta and Los Angeles were run at a profit and the city ends up with new facilities…"  Our plan was for all the major facilities to be temporary.  The stadium, the swimming center and many other smaller venues were all to be removed when the games ended.  Yes there would be benefits, but our track record leaves Chicagoans suspicious to claims of gains, when nothing here has been run well to bolster our confidence.

  96. 1020

    Thanks Phil!  Looks sweet :)

  97. matt1966

    See I told ya jobs didn’t matter!  So far, Europe is more upset about our job situation then us.  That’s our 0% interest rate at working hard for us again!

  98. Phil

    MET/Dflam – There are 2 weeks left and you are up more than 50% on your caller – end of story there unless you have no intention of possibly covering lower or do not expect any kind of move back up.  I wouldn’t roll as we held 5% and it looks like we’re working on a green close.  Just be aware of your fallback plan, maybe selling 1/2 the Nove $36 calls for $2 (now $2.30) if it breaks below $35.

    Ireland/Cap – Not bribes, concessions.  The biggest one was Ireland, who are very anti-abortion, don’t want the EU to be able to dictate policy on the matter in a non-majority ruling.  On the whole, they say that probably sank the vote last time because the Irish would take the money but not the morals of the EU.   Did your friend ever get that article up?

    Amsterdam/RMM – For a guy who likes having beers and playing chess with strangers and talking to people from all over the world, it’s the greatest place on earth.  Lots of great museums, incredible food and it’s a total walking city, which is something else I love.  Also, location-wise for traveling it’s as good as Paris, which I like for visiting but not living (nor do I like living in NYC). 

    Sell off/Jrom – Well the volume DIED, just 131M at 2:23 so right down to the very stick savable 140M at 3pm BUT our theory is that the real Mr. Stick is dead and that puts the 5% rule in charge and Mr. 5% rule says a 20% retrace of the drop, which is Dow 9,535, S&P 1,032, Nas 2,070, NYSE 6,668 and RUT 586.  So far, only the Dow is over and they are the least reliable.   When calculating short moves in the 5% rule, you include the spikes up and down, when calculating long-term moves, you throw spikes out and look for consolidation areas

    Buy/writes/Jom – It’s about the targeting more than anything.  Usually my goal is to end up with a 15-20% discount if the stock is put to me.  By being consistent there, I don’t have to keep trying to remember what my goal was on various positions and I know quickly when something passes my tolerance levels. 

    Temporary/Grant – Well that doesn’t sound smart at all.  I spoke to some people who were trying to put together an NYC bid for the Olympics and it was simply decided that it would be way too much hassle.  We had the world cup blow through here a few years ago and it was more an annoyance than anything else.  I don’t think Chicago is that different, we get enough people here without having to advertise but NY is already building all new stadiums, I would think it would have been a good excuse for Chicago to do the same.

    Citadel’s high-frequency trading unit brought in about $1B in profits in 2008. The revelation, which emerged from a court case this week, gives new insight into just how lucrative the secretive practice can be

  99. qcmike

    Pharmboy  / Phil
    Is GILD a buy on the drop today  ?

  100. jomama

    qcmike – i am looking for GILD to hit 44 then i plan to buy for my retirement account ( i already own leaps)  They have tamiflu and continue to make $$$$ on aids rx which is pretty recession proof.  As people with aids live longer, the revenue stream increases.  But there has been some large insider selling.

  101. Cap

    REIT’s rolling over; DIA about to ….

  102. qcmike

    jomama
     
     
    Thanks

  103. Grant

    Phil – We just rebuilt Soldier Field and it is less than the 100,000 capacity the Olympics requires.  There are no other new stadiums planned or need for one on the horizon.  None of the cool Olympic facilities you would expect to survive after the games were going to be anywhere near downtown.  There has also been major concern for the ability to move everyone around to the various spreadout venues.  The CTA is crumbling and the highways grind to a halt just for Cubs or Sox games.  Only in the last few days has there been any mention on the news for permanently displacing many residents around the southside park where the temporay stadium would be built.  To spend $300-400 million on just the temp stadium is foolish.  I think in the end, the voting committe saw through the weaknesses in the Chicago bid, just as many realistic Chicagoans have.

  104. pstas

    Olympics- You are right that this show could be a very good thing for civic improvement, etc.-- anywhere else but Chicago (with the possible exception of New Jersey :) ). What may be perceived as infighting was actually citizens expressing their disgust with the endless and pervasive corruption. Don’t believe the PR. The "city that works" is a myth. It works for the connected, the low-life hustlers; mobsters; patronage payrollers; doofus coat holders and bagmen; union thugs; sleazeball paving and trucking contractors; and yes, upstanding Republican type "business leaders" who are too scared to spit without permission from City Hall for fear of a visit from some half-in-the-bag city inspector looking to get his palm greased. That is the reality.

  105. RMM

    Grant: I grant you you made a good analysis about Chicago.

  106. Highlander

    cnbc says ubs (guiding mkt) whoops upgrading aapl and it is (steering) whoops leading the market ……

  107. 1020

    Phil – Sounds like Amsterdam is alot like Las Vegas. Here you can have all the beer you want, play chest with total strangers and talk to people from all over the world. We have the liberace museum and many fine restaurants. To walk the strip on any evening, is a "sight" to behold. ;)

  108. RMM

    1020; NO, LV and Amsterdam is not the same, its like a donut compared to a truffelcake.

  109. stevenparker

    If anybody didn’t catch it I have to recommend allen060′s link from earlier, especially if you are a beginner needing economics food for thought  like me….
    http://www.creditwritedowns.com/2009/10/the-recession-is-over-but-the-depression-has-just-begun.html

  110. Phil

    Semiconductor sales are another "less bad" indicator, totaling $19.1B in August, down 16.1% from the prior year. In July, sales were 18.2% below last year, and the first half was down 26% Y/Y on average.

    GILD/Qc – THIS IS A NOTE TO ALL BARGAIN HUNTERS – Before asking me about whether something is a buy, kindly check the chart from last October 2nd.  If that was indeed the bottom for you stock then, yes, this may be a good time to buy.  If, however, your stock – like most of the market, fell another 10-20% over the next two weeks, please, please, PLEASE indulge me by being A LITTLE FREAKIN’ PATIENT!  Thank you….

    EMIS/Cap – Cool, thanks!

    140M on the button at 3pm.  Either programs are still doing 90% of the trading or that is the freakiest coincidence in the history of trading

    ChiTown/Grant – Sounds like a bust but also sounds like they should have had a better plan that took $2Bn to SOLVE problems in Chicago, rather than make more.  They had a great opportunity to come to Obama and get a massive grant to upgrade the El if they got the games.  That 100K thing is BS as the China one is only 80K and Athens was 71K, there’s only about 10 stadiums in the world that hold 100K.  Your guys just did a crap bid and a lot of what you’re getting is spin to cover the fact that these guys didn’t do their homework.  Oh well, they have 4 years to get it together for the next one but, if the Trade Center ever gets rebuilt, NY will very likely be the winning bidder as I’ve already seen those plans and they kick ass. 

    NJ/Pstas – Hey, I resemble that remark!  Like the World Cup, the Olympic bid is a NY/NJ thing.  Nice image of Chicago though, makes me appreciate Bloomberg’s boys for keeping things in line (as long as it’s a line Bloomberg drew). 

  111. morxlntway

    Phil – haven’t seen PSQ, 100k, mentioned lately. Would this be a good opportunity  to sell calls?

  112. 1020

    RMM – Yeah but who doesn’t like an "old fashioned" once in a while ;)

  113. jamie

    pstas, Your comment "Olympics- You are right that this show could be a very good thing for civic improvement, etc.– anywhere else but Chicago (with the possible exception of New Jersey ). What may be perceived as infighting was actually citizens expressing their disgust with the endless and pervasive corruption. Don’t believe the PR. The "city that works" is a myth. It works for the connected, the low-life hustlers; mobsters; patronage payrollers; doofus coat holders and bagmen; union thugs; sleazeball paving and trucking contractors; and yes, upstanding Republican type "business leaders" who are too scared to spit without permission from City Hall for fear of a visit from some half-in-the-bag city inspector looking to get his palm greased. That is the reality."
    If this is true, how the hell did Obama rise thru the "slimey"  world of Chicago w/o being corrupted??? Or perhaps this explains why he went!

  114. ssdirk

    He couldn’t wait 30 frickin minutes!

  115. Highlander

    i really wish that we continued to pound the republicans on health care rather than apologize for the Olympics

  116. blair

    I see green!

  117. Cap

    3:30 stick attempt …. being met w/ selling  so far

  118. ssdirk

    My watch list flashes green and red with up and down bid and ask prices.  When Obama speaks it looks like his voice is connected to a graphics equilizer.

  119. Cap

    pstas … lol …. good rant , er, post.

  120. Phil

    All right, somebody besides me finally noticed this:

    grim view on employment: Hours worked per person continues its nosedive, to the lowest average recorded (see chart) – another hint that the headline jobless numbers are hiding an awful lot more frustrated workers

    [hours+per+civ.png]

    Nice, clear picture of what I mean when I say that the people who are working (140M) are underemployed by 10%, the same as another 14M people out of work!  Is this an economy you want to take big upside risks on???  The market stock bottomed in Aug 1982, AFTER that line turned up for good – we haven’t even had a bounce yet…

    Vegas/1020 – That’s another city I love but I don’t like it for kids and it has the drawback of still being in America, where the premise was to get the hell out of this country.  RMM is right, they are not the same but do attract a similar crowd, although I take it "chest" was not a typo but a very good subtle joke highlighting the major cultural difference!  8-)

    Stop depressing people Steve! 

    Copper pretty weak today, down to $2.67 on futures, up from $2.64 this morning but still down nicely from 299 at the beginning of Sept and below 50 dma at $2.78.  I think copper has to retest $2.50, which is 10% lower and that means $900 gold and $64 oil (again) and works out perfectly with another 5% market correction so my outlook remains the same.  Even Obama couldn’t give us a rally just then. 

    PSQ/Morx – I’m still bearish over the weekend.  I’m trying not to have an opinion and just going by the 5% rule, which says a 20% bounce back to 4% levels without breaking them is still bearish.  Since Europe is at the same levels and Asia is below them, I’m not thinking we’re going to come ripping back on Monday (unless there is some massive intervention). 

    Obvama/High – He’s multitasking.  Remember when Bush would get back from Europe and have to sleep for 2 days?  Obama gets right of the plane and starts making speeches – so cool!

    LOL SS! 

    I agree Cap, plenty of sellers into this mess but I think they are saving the uber push for the last few mins.

  121. matt1966

    Phil, so you think they’ll try and get us to the 20% bounce levels?

  122. blair

    Whoops!

  123. 1020

    Phil/Vegas  Totally tongue in cheek Phil.  Just moved to Carlsbad, CA. with our 9 year old twins for the same reasons….

  124. jomama

    1020 – been to legoland yet?

  125. 1020

    jomama – Oh yeah, we are less than 5 minutes away and the kids know it :)

  126. matt1966

    Well, those programs really paid for themselves today.  Another unbelievable day in LaLa Land.  Gee, I wonder if we’ll be going up next week..

  127. blair

    Have a good weekend all.

  128. Pharmboy

    1020 – good to know that two of us are here in Carlsbad…. ;)

  129. Phil

    Levels/Matt – I think they already tried this afternnon.  Now we are curving down on low volume and my premise that Mr. Stick has retired is holding water.  That means that was just a normal 5% rule bounce which means this market is still due for another 5% move down at least.  That’s still my 9,100 target so nothing very excting there. 

    DIA people.  By the way, the next move we will be making if we head lower, is to layer the mattress with, probably, the Jan $94 puts at about $5 (now $4.65).  The trick in layering is to buy 1/2 x the lower puts and put a .25 trailing stop on 1/2 the $100 puts.  Since the $100 puts have a .70 delta and the $94 puts have a .47 delta, the stop out on the bounce automatically drops your delta to an average of just under .60 and we’re fully covered with Oct $95 puts that have a delta of .51.  Then we would stop out the other 1/2 of the $100 puts at another .25 down so we capture all but .37 of the max gain on the $100s and we DD on the Jan $94 puts, that are 1/2 covered by the Oct $95 puts and suddenly we have flipped bullish and we go back to rolling up for .50 per $1 with loads of cash off the table.  It’s very nice when this happens in slow motion like this – mattress plays were originally designed when 100-point market moves in a day were a rarity.  Back then, if you made 2 adjustments in a week it was considered busy

    That was not a strong finish and all going according to plan. 

    Have a nice weekend everyone,

    - Phil

  130. chuaeu

    Phil,
    Totally agree with you re unemployment is understated, and that this recovery will be anemic until this turns around.  Will continue to be patient as I also agree that this correction has further to go.  Have a great weekend all.

  131. 1020

    Pharm – Hey neighbor! Life is "RAD" in Carlsbad! :)

  132. pstas

    Jamie- Chicago corruption – Obama- The simple answer is he didn’t (two words- Tony Rezko). Let me explain. I am not a fan of President Obama (I know, you are all shocked at this revelation) but I don’t think he is a crook. Nor do I think he is corrupt. I would say he is "relatively honest" as far as Chicago politicos go. You see, If in politics in Illinois, it is impossible to not get tainted by the Rezko-types simply because they are coming out of the woodwork everywhere . You or I , as ordinary law abiding citizens would run for the hills at the prospect of being in the same room with someone like a Tony Rezko but the mere fact that someone as obviously intelligent and world wise as Barack Obama would not cross the street when seeing someone of his ilk coming down the pike tells volumes. It’s the "Chicago way". Everyone has an angle; everyone is trying to cut a deal; so, you go along to get along. If you don’t get caught with shoeboxes full of cash in your closet or putting your mistress on the government payroll you quailify as "honest" in Illinois politics. President Obama has never (to the best of my knowledge) spoken out on the subject and likely never will. Just look at his advisors- Rahm Emmanual and David Axelrod are Daley proteges; Valerie Jarret- another one; the list goes on. Does this make him guilty by association? No, but it would be foolish to not keep your hand on your wallet when in the vicinity.

  133. matt1966

    Phil, thanks for the clarification.  Looking at the daily bars, we normally (since March normal) close flat to signal a turnaround.  That didn’t happen today.. so maybe this was just a pause before the plunge resumes.  Probably start off with a big fat gap up at open, too.  So when you think Mr. Stick has retired.. do you mean indefinately?  Or just for this correction? 
     
    Gonna do me some camping this weekend at an annual fall fair out in the beautiful VA countryside.  Mmm… cool, crisp air and friggin dew everywhere.  It’s gonna be a bourbon kinda night!  Have a good one all.

  134. Phil

    So much for that brief fling with savings: The latest BEA release shows that the U.S. personal savings rate fell to 3% in August.

    Starwood Capital’s group is the likely winner in the auction of failed Corus Bank’s (CORS) $5B of condo loans and other assets, what remained after MB Financial (MBFI) assumed $6.6B in deposits. The loans are still distressed and the FDIC will take a 60% stake in the partnership of the auction winner.

    A second bad week for equities. For the week: The Dow down 1.9%, its worst week since the middle of June. S&P 500 down 1.8%; Nasdaq down 2.1%.

    Morning chart was very, very ugly but we pulled it back to 1,025 so just very ugly now

    100209intraday

  135. pstas

    1020- Carlsbad- I stopped to look around Carlsbad last week while in SoCal on vacation. Very appealing community. Seems to be a nice compromise between the madness of LA and the urban attractions of SD.  It got my wheels turning on how to relocate. The older I get the less I can withstand winter. I still can’t get over how great the weather is. I was there for 7 days and did not see one cloud and came back to rain and overcast in Chicago. Very depressing.
    I stopped in one RE office and looks like housing is still pricey even with the recent declines. What did you find?

  136. Cap

    Obama:  Carrots & Marshamallows …
     
    http://hopeychange.blogspot.com/2009/10/carrots-marshmallows.html

  137. Cap

    Top 10 Reasons Chicago Didn’t Get the Olympics  
     
     

    Top 10 Reasons Chicago Didn’t Get the Olympics   
     
     
     

    10. Dead people can’t vote at IOC meetings
    9. Obama distracted by 25 min meeting with Gen. McChrystal
     
     

     
     
     
     
     
     
     
     
     
     
     
     
     

    8. Who cares if Obama couldn’t talk the IOC into Chicago? He’ll be able to talk Iran out of nukes.
    7. The impediment is Israel still building settlements.
    6. Obviously no president would have been able to acomplish it.
    5. We’ve been quite clear and said all along that we didn’t want the Olympics.
    4. This isn’t about the number of Olympics "lost", it’s about the number of Olympics "saved" or "created".
    3. Clearly not enough wise Latina judges on the committee
    2. Because the IOC is racist.
    1. It’s George Bush’s fault.

  138. 1020

    Pstas/Carlsbad   I bought back in ’04 and prior to moving in this summer, my family and I used it when the kids were free from school. The prices in Carlsbad have taken about a 10-30% hit over the last two years, with the range for the decline moving higher the further you go inland, but thats only 2 to 5 miles inland. I live across the street from the Pacific and prices here have been holding steady at $450 to $ 500 per square foot for homes 1900 to 2600 sq. ft.
    Let me know if I can be of more help. Have a good weekend.

  139. 1020

    Cap/Chicago  I KNOW I KNOW!!!  is it number 1 Mr.Cap???;)

  140. diamond

    Appearing on ‘Fast Money’ (the CNBC show), Chris Whalen of Institutional Risk Analytics said that he’d stay away from Bank of America, given the financial and executive upheaval. In fact, Whalen thinks the bank could be in the government’s hands by the middle of next year.
     
    These are serious assertions. Are they spurious and irresponsible?
     
    Phil – What are your thoughts regarding Bank of America’s viability? 

  141. Pharmboy

    1020 – Ponto?

  142. Phil

    BAC/Diamond – I think you can hedge against BAC failing buy buying the SKF $1,000s for .01 as they should return about $1,000 if BAC fails!  8-)

  143. pstas

    DIA-levels
    It is amazing how the media sentiment flipped from bullish to bearish on Oct 1st. I have been watching for this  and hope that we are in the first leg of a down move. If I have absorbed your posts on levels correctly, it would appear withing the realm of possibility that we could see a correction to the neighborhood of 9-9100. Throw in a bit of bad news (Iran, Israel, whatever) and we could get an overshoot with a dose of panic selling. I have been looking at my port. and determined that I have been too bearish and intend to lighten up on the DIA mattress puts. So, I am looking for inflection points to make this move.
    I am currently in the Dec 99 puts and 1/2 covered with Oct 93′s @ $1. I need a "wider moat" on the covers since I not able to trade these as much as I would like. So, my plan is to hold the portion that I intend to unload in the Dec 99′s ; follow your rolling recomendation on the balance and hold/roll the covers to expiration. 
    What does your crystal ball tell you about inflection points? And, comment on my plan?
    Thanks,

  144. 1020

    Pharm – Good Morning. Yes, I drive Ponto every day into the Hanover Beach community. Headed to the Miramar air show with the family today…..

  145. Pharmboy

    1020 – we are directly across from the Ponto area in San Pacifico – Avenida Encinas.  Now ain’t that a fine how’dya do.

  146. 1020

    Pharm – Wow! you really are a neighbor. Any time I can buy a contributer, graced with a color on PSW no less, lunch at the location of their choosing, let me know. :)

  147. Pharmboy

    1020 – cdking123@yahoo.com.   Coffee, Starbucks – we’ll have to meet sometime in the a.m. weekend.  I will bring the Leucadia Doughnuts (and my kids)! :o

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