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Wednesday Worries: Wall Street, Greece & China

Can Super Market ignore 3 major issues in a single day?

Issue #1 (this is my audition to take over the McLaughlin Group, by the way)Americans are disgusted with Wall Street and give both Wall Street Executives and Corporate CEOs ratings as low as Congress (66% disapproval).  In a Bloomberg survey conducted over the weekend, by a 2-to-1 margin Americans believe the economy has worsened over the past year and only 3 out of 10 people benefited from the rise in the markets over the past 12 months, missing the rally as their wiped- out life savings went to pay for mundane things like food and fuel.

A sense of despair pervades perceptions of the economy and nation. Barely one-in-three Americans say the country is on the right track. Fewer than one in 10 say they believe the economy will be strong again within a year. Just 4 percent of Americans who cut back on spending during the recession now say they are confident enough to open their wallets, according to the poll, which has a margin of error of plus or minus 3.1 percentage points.  Clearly these are not the same people Jim Cramer knows.  In general, the public wants Wall Street regulated – AND Punished! 

Issue #2: Greece is still uncertain and the Dollar moves to a 10-month high against the Euro, which touched $1.33 this morning with the Pound dropping to $1.494 and, even against the Yen we gained ground, rising to 91.35 Yen to the dollar as investors fly to the relative safety of the dollar.  French and German leaders said any aid package for Greece would require help from the International Monetary Fund, denting confidence in the European Union.  The 16-nation currency also fell against the yen and the pound as Fitch Ratings cut Portugal’s credit grade.  “If Greece goes with the IMF, that says something terrible about the political process within Europe,” said Stuart Bennett, a senior foreign-exchange strategist at Credit Agricole Corporate and Investment Bank in London. “This undermines any confidence in the currency.”   

Issue #3: Are the Bulls in a China Shop?  Vitaliy Katsenelson compares China’s economy to the bus in Speed, that would explode if its speed dropped below 50 m.p.h. "Well," he says: "China is like that bus with 1.3 billion people aboard. If the Communist Party can’t keep the economy growing at a fast clip, the result will be catastrophic." 

To achieve high growth, China kept its currency, the renminbi, at artificially low levels against the dollar. This helped already cheap Chinese-made goods become even cheaper. China turned into a significant exporter to the developed economies. Normally, if free-market economic forces were at work, the renminbi would have appreciated and the US dollar would have declined. However, had China let this occur, demand for its products would have declined, and its economy wouldn’t have grown at roughly 10 percent a year, which it did during the past decade.  

Of course the US is now under tremendous pressure to do something about China’s currency manipulation – which was cute for a while but now we kind of need some of those 30M jobs we shipped overseas to come back.  Time Magazine asks whether Google is an early indicator of a brewing US-China trade war as the drumbeat of protectionism grows louder each time a Senator filibusters another extension of unemployment benefits.  Meanwhile, S&P warns that as much as 10% of the $1.4Tn lent out by Chinese banks last year may end up as "non-performing."  I don’t know about China but that would be considered a problem for US banks…

Doesn’t it bother you that the primary bullish premise is the strength of an economy on the other side of the World?  It bothers me.  We hear so much conflicting information and we know our own government’s data is total BS – why on earth would we believe China’s?  I know from having conversations with many Capitalists that it doesn’t bother anybody that the average Chinese worker makes $2,500 a year and the average US worker’s compensation has been moving downward to meet it.  Even though there are 1.3Bn Chinese and just 300M Americans – is it really good to throw the dice on their consumer purchases (on the other side of the world) making up for US losses? 

Asia had a slightly up session this morning, gaining about 0.25% across the board but that doesn’t really tell the story as the Hang Seng once again DROPPED 200 points off a 220 point gap-up open (all futures) and finished right back at the 21,000 line.  If I didn’t know any better, I’d say that the Chinese market is looking almost as manipulated as the US market but that would be crazy – Chinese regulators can’t possibly be that lax, can they?  So there’s your up 20 day in China…

Europe is also surprisingly blase’ about our move to within just over 100 points away from Dow 11,000 yesterday.  EU Markets are flat but the CAC is down half a point as the strike in France marches on.  Germany got good news on exports and Business Confidence as the global top 10% continue to buy their Mercedes’ and Brauns.  In fact, US Durable Goods orders were up 0.5% in February after being up 3.9% in March but we were up 0.9% ex-transportation so better than expected for sure. 

Oil is coming down nicely ahead of inventories at 10:30 and we won’t need to be risking them as $80.50 is going to be a great place to cash out our short positions from yesterday, when oil was way up at $82.  We are very much in hit and run mode with our trading, still staying in mainly cash and watching the market nonsense from the sidelines.  MBA mortgage applications fell 4.2% this week after falling 1.9% last week and that’s a lot of falling when they are already 80% off the highs!  You have to sell A LOT of washing machines to make up for not selling 1.5M homes…

Obama’s $50B effort to stem foreclosures has been a disappointment, says TARP’s inspector general. The program may be delaying foreclosures rather than preventing them, and has so far provided long-term payment relief to 169K households vs. the 3-4M the White House says the program will help.  Now Bank of America (BAC) will start forgiving up to 30% of mortgage principal for homeowners who owe more than 120% of their home’s value or who are struggling with ever-expanding "negative amortization" loans – hopefully that will help.

Continue to be careful out there – it’s a crazy time in the markets and cash is definitely King!

 


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  1. lapper

    Why are bonds getting hit? TBT is up 1.10.  Not that I am complaining…

  2. judahbenhur

    S up 20% since last week on news of its 4G phone.  Now, what was that rule--oh yeah, sell into the excitement.

  3. iprosper20

    gold is1095, copper diving at 3.32……

  4. jamie

    Phil, Thanks for yesterday’s response re: C, always something to learn.

  5. samz3700

    Judah -
    How do you TNA/TZA traders handle making trades into the open?? What’s the general strategy?

  6. morxlntway

    Pharmboy? you awake yet? Guess i should have taken the first loss on PARD and moved on. What is your assessment of this new event?

  7. jamie

    Pharmboy, One of Cap’s recomendations EMIS seems strong and another NNVC, do you have opinions on these? Thanks in advance

  8. phlit

    Mornin Phil, Based on your comments re GOOG Yesdy is the April 470/510 put sprd a good idea? thks, phlit

  9. phlit

    Mornin Phil, Based on your comments re GOOG Yesdy is the April 470/510 put sprd a good idea? thks, phlit

  10. phlit

    TBT runnung.what Up???

  11. roaster

    Pharm – Any thoughts on ONTY after yesterday’s news?

  12. morxlntway

    did phil get kidnapped? he just stopped in the miiddle of a sentence. censored i guess.

  13. samz3700

    TBT – guess people are not liking sovereign debt so much this am or durable goods order has bond market thinking things are picking up

  14. JRW III

    IWM
    Support at 68.82 and 68,51; resistance at 69.24 and 69.63

  15. morxlntway

    woo-hoo USO

  16. deano

    Phil

    Looking at using Pharm’s (outstanding) article on big Pharma, and doing some bull call spreads – any suggestions for these?

    BMY – I was thinking of Sept. 23’s, selling the 26’s ans the 23 puts for net 1.65 on the $3 spread
    GSK – thinking the Nov 32.5’s, selling the 37.5 and the 32.5 puts for net 2.7 on the $5 spread
    MRK – the Oct 34’s, selling the selling the 38’s and the 34 outs for net 1.1 on the $4 spread

    Please let me know your opinions & thoughts, thx

  17. ssdirk

    JRW – we may need some lines below those.

  18. judahbenhur

    SS,  Always the optimist.  ;)

  19. ssdirk

    judah – lol. Just trying to will my way to a red day. Keeping positive thoughts (or would that be negative).

  20. bgbigelow

    Bidu – time to throw in the towel Phil?

  21. Kwan

    DELL looking outside of China for  "safer environments". This is according to the Indian Prime Minister, of course.

  22. aclend

    Deano,
    Where is the Pharm article? Thanks

  23. 1020

    Good Morning!  Out of TZA and DXD for a small loss…..

  24. aclend

    Nevermind…found it.

  25. Phil

    Good morning!

    Feels like the movie "Groundhog Day" lately but here are the levels we need to hold:

    Just like yesterday we’re looking to hold the previous highs at: Dow 10,767, S&P 1,153, Nasdaq 2,362, NYSE 7,471 and Russell 678.

    Below that we MUST hold 3 of 5 of our old breakout levels (barely held yesterday) which are: Dow 10,700, S&P 1,050, Nas 2,350, NYSE 7,400 and Russell 677.

    I don’t know what’s going to hold us up with oil back at $80.50 and gold at $1,091 but copper bounced of $3.32 so still hope for the commodity bulls but not only did silver give up $17 but I hear rumors there’s a CTFC investigation going on re. some major manipulation in that segment (and you know that will spread). 

    The dollar may get more of a boost this morning based on this:

    Greece will default on its bonds "at some point," says the deputy chief of global economics at UBS. "Europe has failed to clear its first serious hurdle. If Europe can’t solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesn’t work."

    Still, I doubt any of it will matter until at least next week, after the Quarter ends and Friday is a holiday so it would be kind of silly to crash the market next Thursday (hopefully) but that does set us up for a possible black Monday on April 5th.  It will be up to earnings to save us (very mixed so far) and this week we have CKR, PAYX and RHT tonight with BBY (HUGE deal!), CAG, LULU, MKC, SCHL and TXI tomorrow morning followed by COMS, ACN, ORCL, TIBX and WTSLA Thursday night with nothing scheduled Friday.

    Next week is not very exciting but a few goodies like MU, PBY, SCHN, RIMM, MOS, BLUD, DG, RAD, ZZ, CHRS, LDK and APOL but the real fun starts April 12th, when AA begins earnings season for real

  26. ssdirk

    JRW, judah – still not enough selling to cause a big market flush.  After this initial selling we may continue our climb. What do you think?

  27. daveo

    TBT:  I’m long the Jan 43 and 44 Calls.  I feel the need to cover.  Your last suggestion was the Apri 49s at 0.49.  Now that the 49s are 0.59 does this still make sense or should I go out to the 50s?

  28. Pharmboy

    EMIS & NNVC/jamie – the first is trying out oral delivery of peptides/enzymes (eg, heparin) and small molecules.  Interesting concept and I do not know about the technology (big pharma is also using them for their molecules that .   There are several other companies focused on the same area, and many, many fail.  ALZA (JNJs 12B debacle) was one that had success with patches and other delivery agents, but none oral.  JAZZ is the ALZA team after they left.  They have heparin in PIII, so if it is successful, then they have something. I would wait until those results.  Might pay a bit more, but not worth the headache.  As for NNVC, there are a ton of companies in this space, and I do not know who will make it first.  There are also drugs in the pipeline that will compete with their targets.  They could be fine, as thee are subtle differences between these small companies competing in the space, but they are not my area of expertise.

  29. JRW III

    ss
    Technically we are still in a Bull market

  30. jamie

    Pharmboy, Thanks for the great input, J

  31. ssdirk

    Selling picking up at the moment.

  32. judahbenhur

    SS,  I’m trying to stay agnostic this morning, looking at JRW’s S2 line for entry to buy calls and also hoping it breaks down from there.

  33. JRW III

    Much higher volume than ussual in the 2X and 3X Bear ETFs today !

  34. Pharmboy

    ARNA is picking up steam……

  35. diamond

    Pharmboy – Any thoughts on PARD?

  36. Phil

    TBT/Lapper – Woo-hoo!  Man those guys can move off the bottom fast!  They’re suddenly back to saying Greece may default and that’s sending everything up sharply but it’s the same old BS and probably the kind of excitement you want to be selling into if you are day-trading it.

    S/Judah – I told you guys they were too cheap!

    Woo hoo on gold and oil too – what a morning!

    C/Jaimie – Glad I could help.

    GOOG/Phlit – I don’t like vertical spreads for things you are not pretty sure of as they are not very flexible.  I am bullish on GOOG but certainly not at the moment and I’m hoping they go on sale at $515.  Other than that, patience is the way to play. 

    Durable Goods/Samz – That’s a good point.  Good news is, of course bad news for the Wonderland market.

    Bull calls/Deano – My opinion is wait.  I don’t know how many different ways I can say that I don’t think it’s a good time to be buying stocks.  I’m fairly sure that BMY, GSK and MRK are all stocks so, at the moment, I wouldn’t want to get into a play unless you REALLY want to scale in and adjust it later.  Also, selling puts now with the VIX at 17 can MASSIVELY screw you if the market drops 10% and the VIX goes to 30.  BMY, for example, is close to the ATH and is a great company but you are making a play that hopes to double in Sept and make $1.65.  If you REALLY want the stock long-term, why not just buy 2012 $25s for $3.30 and sell the May $27s for .50?  If you can pick up .50 every other month for 2 years, that’s $5 back on your $3.30 PLUS whatever value you hold and if they go down, you can roll lower and THEN sell puts and, if they go up, you can DD on your leap and roll the caller to 2x whatever. 

    When the market dynamics change, your strategies have to change.  One of the main reasons I killed the Buy List is because it was structured mainly with buy/writes (not paying enough now due to low VIX) and bull call spreads (too risky as they fix your long position plus puts don’t pay well enough to take the risk).  We need to look at new strategies for this market but it would be nice if we can be patient enough to see if we are breaking over 11,000 or heading back to 10,000 because, as you can imagine, that will affect our decisions

    BIDU/BG – As I said, BIDU is just like AMZN – they can go up even higher than this and the best thing to do is to day-trade them bullish over $600 but, over time (real time, not day 2) true value will win out.

  37. iprosper20

    basic materials shows deep red, yet fcx is fighting the downside hard--what is your take?

  38. dilbert

    I have cash – from Bidu calls which I got out
     
    what do I do now?

  39. ssdirk

    JRW, judah – as expected we drift higher when selling stops.  Bought a few 68 calls for 1.82.

  40. jossietx

    Phil, what’s your opinion on SONC since it has announced poor earnings? I have bought the JUNE  $10 calls. thanks

  41. JRW III

    In TNA at $ 56.86

  42. Phil

    TBT/Daveo – When in doubt, sell half or, in this case, half cover.  You can sell 1/2 the $49s for .57 and if they fall below .35 you can then sell 1/2 the $48s and put a stop on the $49s back at .40 and so on.  Bottom line is the May $51s are .57 so easy roll and easy 2x roll from the $48s so no sense in not taking the money. 

    Amazing, as soon as the volume stops it’s buy, buy, buy, buy, buy, buy, buy on no volume at all. 

    ETFs/JRW – Hmm, I’m wondering if buying activity in ultra-short ETFs is being measured as bullish buys? 

    FCX/Iprosper – People think the dollar move up will reverse soon so this may be a commodity blow-off spike down before the real fun begins (don’t forget how we peaked in Apr-July ’08).   The commodity bulls believe we’re heading for the same kind of rally, forgetting that Bush pumped $150Bn into the much more employed economy at the time and that was long before everybody realized that their home lines of credit were death-traps.  So, the short answer is, I still like shorting FCX at $80.

    Cash/Dilbert – Go have a nice lunch. 

    ROFL!!  EIA Petroleum Inventories: Crude +7.3M vs. consensus of +1.4M. Gasoline -2.8M vs. consensus of -1.3M. Distillate -2.4M vs. consensus of -600K.

  43. judahbenhur

    Samz/open.  Well, that’s the $64K question and better answered by JRW, since I botch the open far too often to give advice.  Here’s what I do, though, when I’m on my game.  I try to be agnostic about direction because I can’t guess the market direction.  I take JRW’s lines, or if I don’t have them, pivot points and support/resistance from the days before.  I watch the initial move until it gets to one of the points.  I watch the volume at that point, and depending on whether it looks like the volume favors buying or selling, I get on TNA or TZA (or IWM calls or puts).  If I got it wrong, I get out right away, which is the single most important part of the strategy.   If I got it right, I wait for the next support/resistance point and repeat the process.  I typically sell half at that next level of support/resistance, so that at worst I will break even and at best I let the other half run. 

  44. iprosper20

    Great help, thank you--what’s your take on Dell? they missed a mortgage payment, yet are doing well in India, etc. they have been range riding between 13.50-14.50; they seem high--even though their target price is around 20

  45. ssdirk

    Out of the calls for a .04 loss.  I don’t want to be in this tug-of-war at the moment.  Waiting for direction.

  46. yodi

    Cash/Dilbert – Go have a nice lunch.
    Fellow surely has a problem

  47. dilbert

    Lunch? not yet it is 7:45 AM here (PST). Anyway we are having potluck so can’t spend on Lunch :)

  48. Pharmboy

    Pharma/deano – in Phil’s light, that is why I did not put any entries into the write-up as I am not sure we are going to hold up and I wanted to put these on the next Buy List.  I am slowly moving to cash, but holding DCTH, CRIS, CLDX, ARNA, ARIA, BSX, PDLI, VIVO and VOLC (last three are hedged positions).

  49. yodi

    Phil
    Like to hear your commends on SONC hold stock as well .98 down shall will sell some putters to stop bleeding?

  50. Pharmboy

    Oh, and VIAP….at a whopping 17c today.

  51. drumkeerin

    Phil
    What do you think is a good bear spread on FCX?

  52. Phil

    SONC/Jossie – That’s the same bad news they had in Jan which took them to $8 where we bought them so I’m not at all bothered by the fact that  they fell to $10 on the same information.   They may catch a downgrade still but don’t run away based on a penny miss. 

    LOL, oil is not going to let a little thing like a net 2.1Mb draw keep them down.  They bounced off $80 and back to $81, now $80.77.  If they blow $80, that will be a bid deal but that could unravel the whole rally so the NYMEX pump crew should get a lot of support today.  Hey, remember last week when people were worried that OIH was at $130?  Ah, good times..

    DELL/Iprosp – Micheal Dell’s 4 Seasons investment missed a payment, not DELLl, the stock.  I don’t like them but I wouldn’t bet against them.  They have been moving up lately on the great story of the global rebound and, as you say, infinite demand on the other side of the world (where we can’t see it).   It’s interesting because you say they "are doing well in India" and I’m not busting on you, I’m sure you’ve heard it from reputable sources but can you quantify that statement?  What does it mean?  I see this over and over again with so much of this bull rally based on this incredible opportunity in the emerging markets but the emerging markets themselves have people rioting in the streets for food.

    SONC/Yodi – If you are in it, best to hold.  If you are looking for entry, always give the downgrade police at least a full day before picking a bottom. 

    Talk about strange bedfellows: CEOs at several Chinese state-controlled companies support Obama’s call for yuan appreciation.

    Green shoots in Athens:  Greek citizens are growing increasingly despondent over the country’s austerity measures, but Greek officials, looking for an upside, say the situation is so bad that even a little reform would go a long way to stimulating growth.

    Municipal bonds could wind up the biggest winners in the Obamacare fallout, as looming tax hikes on upper brackets make tax-free income more valuable. Some munis may have more appeal than others.

    U.S. mortgage applications fell for a second straight week, with demand for home loan refinancing sinking to its lowest level, according to the Mortgage Bankers Association. Demand for purchase loans edged higher but activity was down from a year earlier, further evidence of a slowing housing market.

    Industry lobbyists are watching helplessly as lawmakers prepare to shift student lending away from private banks to the federal government. The move will make it easier for workers to pay back their student loans, but private lenders will lose a $70B/year student loan business.

    Analysis of the historical record provides no support for the notion that first-quarter strength translates into above-average performance for the rest of the year. Just take 1931: After the Dow’s Q1 gain of 4.7%, the index plummeted 54.8% over the last three quarters.

  53. morxlntway

    Pharm – you didn’t list PARD as one of your holdings. :)

  54. Pharmboy

    Morx – thank goodness! 8)  Actually, never was in on that trade as I had the above and others at the time, so I was exposed enough to the sector.

  55. gel1

    Lots of talk around the world about the strong possibility of more countries raising rates. Look for the Bank of Canada to make a lot of noise today about a raise, preparing the citizens for what is coming – This is putting big pressure on investors in TBT to asume it will happen here in the US – This is my take on the boost today.in TBT

  56. Phil

    FCX/Drum - I sure like selling the $80 calls for $3 – hard to turn that down.  You can buy some Jan $100s ($4.25) to cap possible gains but if $100 seems silly to you, then why bother with the protection because the $80s can be rolled to May $85s etc…

    Raising rates/Gel- It’s like I said yesterday, when you see cororations able to sell bonds at lower rates than the US government, you know you are only a step away from rates going up.  That’s one way the free markets work very well – money flows tell you what’s real and what’s not if you pay attention.

    And wheeee!

  57. Phil

    Note sent to me from TraderHugo at SeekingAlpha:

    Only as of the latest quarterly report, which came out on 11/3/2010 has the FED started reporting on direct purchases of equities by itself, however, it has been reporting on direct purchases of equities by the US government (AKA the PPT), since Q4 08.. The numbers are staggering.. and not surprisingly roughly align to the numbers estimated by Charles Biderman.

    In Section L.213 on pg 92

    A new line appears in the latest report, Line 10 – Showing 25.1billion in US corporate equity purchased by the monetary authority in 4Q-09. (this is the first quarter the fed has discreetly purchased equities)

    Section F.213 – Shows an additional 4Q-09 amount of 100.4 Billion for the preferred shares issued to the Fed under TARP & the monetary authorities preferred interests in AIG subsidiaries AIA and ALICO.

    Now that is just the Federal Reserve.

    Now the figures for the direct purchase of equities by the US Federal Government itself.

    Section L.106 – Line 11 Corporate Equities. This line item was only created Q408. Here are the numbers since the govt became equity traders..

    Q4-08 – 188.7 Billion
    Q1-09 – 219.8 Billion
    Q2-09 – 153.5 Billion
    Q3-09 – 154.8 Billion
    Q4-09 – 65.1 Billion

    Thats a total of 781.9 Billion of direct equity purchases by the US Government in 15 months, & 125.5 Billion by the Fed. A total of 907 Billion.

  58. JRW III

    Out of TNA with a $ 0.06 loss; buying back if they can retake 68.51.
    To make things even more interesting, my wave theory analysis has a 6 day window opening tomorrow for a big drop, previously posted on Saturday.

  59. judahbenhur

    JRW, SS.  68.50 has been a very telling line for the past week. 

  60. deano

    Phil/Pharm
    Thought that might be the answer I might get – need to work on my patience – tough in a market that doesn’t go down though!

  61. judahbenhur

    Bought the 69 calls at 68.50.

  62. JRW III

    Back in TNA at $ 56.40

  63. mclemente

    JRW you in TNA calls?

  64. RMM

    Phil:
    low premium left, needs some roll I believe, what do you think ?
    NAKED BMY puts jun 22, ).89 to 0.16,
    SPWRA have stock, callers apr22 went from 1.19 to 0.10$
    MRK have stock, putters apr 35 went from 0.76 to .16$.

  65. JRW III

    mclemente
    No, the stock,

  66. judahbenhur

    JRW/wave theory.  I’d like to read that.  You say you posted on Saturday?  I haven’t been able to find it yet.

  67. gel1

    Phil/Rates
    Right you are!  Norway is one of the countries that is ready to move rates up, as well as Canada, NZ et al. Their reason for these moves is strictly fear of inflation which they abhor.Their economies are heating up and the US will follow. The Norwegian Krone  (NOK) has been a favorite of mine for a long time – I’m short the EUR/NOK today.

  68. kustomz

    Phil can you get your hands on the report (PDF)? TraderHugo at SeekingAlpha

    Whats with the date 11/3/2010….European?

  69. humvee4me

    Gel,
    Thanks for the currency information yesterday; I’m going to look into using your currency trading firm; i’m using TOS and interactive brokers, but they really don’t provide any research.

  70. humvee4me

    Leaving Las Cruces heading to Tucson for a week; I can’t wait to gorge on Mexican food again.

  71. JRW III

    judah / post
    No details in the post, just mapped it and thought it was worth a post.

  72. judahbenhur

    JRW, Gotcha.  When you said "big drop," it had me salivating at the possibility. 

  73. Phil

    List/RMM – BMY – at .16 I’d take them out.  What are you going to do, tie up the margin for 3 months to make .15?  If that appeals to you, you may as well sell something more expensive like VLO June $17 puts at .28…  SPWRA we’ve been selling puts.  Same deal on the caller, not worth keeping at .10, just wait for a bounce and sell then.  MRK is also a win but that one is just a month and .16 is .16 so just think if you have something better to do with the money or not.  I don’t just look at it as money though – I think that it’s taking up a slot in the portfolio and taking up my time to look it over every day so things do get to a certain point where they are just not worth keeping.

    Inflation/Gel – Note that it’s the commodity exporters who really hate inflation.  That’s because they get screwed by the futures market. 

    Report/Kustomz – I’t not his report, it’s the Fed’s recently released quarterly balance sheet. 

    Las Cruces/Humvee – Don’t they call it "New Mexican" food there?

  74. JRW III

    Phil,
    Is your feel for market direction for the balance of the day still CASH ?

  75. RMM

    Phil:
    how about a position in BPT ??

  76. b1ll

    Hey Phil, thoughts on EWG .  As far as a (realistic under these conditions) pullback to re-enter, 10,700 / 1149 and then 10,550 / 1131 ?

  77. Phil

    If you like gold, the GLL $43/45 bull call spread is .85 and you can sell the $42 puts for .75 so that’s .10 on the $2 spread or you are in GLL at net $42.10, which is 4% down from here or about Gold $1,070.

    Another nice way to get bullish is the DIA Apr $109/110 bull call spread for .40 and that can be paid for by selling the $103 puts, now .22 for .40 if we drop about 100 points.  So, if your are bullish enough to think we hold 10,400 for the month, then this is a good little play.

  78. gel1

    Humvee/GFTrading
    Good move, IMO. You will not be disappointed. There is a lot of action coming and it will be fun!

  79. JRW III

    " They " are using the same program as March 15; look at the chart !!

  80. diamond

    Humvee – Did you not try the exquisite Mexican food at Chopes Cafe in La Mesa, NM?

  81. judahbenhur

    JRW/program.  I guess then I should sell my calls soon, go hit some golf balls and then at 2:30 load up again for the end of the day stick.

  82. RMM

    Phil: SPWRA: how about rolling apr19 putters to may18 putters ?

  83. b1ll

    Why do you think VLO / TSO turned around today ?

  84. Phil

    Cash/JRW – My feel for the balance of Passover (April 6th) is CASH!  I’m all for hit and run plays like the 2 above which are spreads but we can still take a quick 10-20 cents and run.   In general, you know I love playing a rigged game but only when the rigging is easy to follow.  This upswing has gotten so ridiculous that I don’t see the end game right now.  Do they really think they can push this past 11,000?  Notice that poll today shows that the higher the market goes, the more resentful the voters are getting because they got cashed out (thanks Cramer) at the very bottom and never got a chance to get back in.  

    For the people who lost 50% of their retirement accounts and followed their broker’s advice to get more conservative and then missed a 100% run in the markets – all they see is a rigged game that stole their money and that’s going to force Congress to do some nasty things to Wall Street (and the top 10%) to show they are still on the people’s side.  There’s a lot of crazy ideas floating around Washington right now and you have to be very concerned about what may get passed or proposed until Congress goes back on a break (3/29-4/11) and realy until the big Summer recess, where not much is likely to get done until September. 

    Speaking of which:

    Kansas City Fed President Thomas Hoenig: Reform efforts so far are too short on substance. Crisis was inevitable, even if only because TBTF firms would push us until we were in crisis. Three things to do: Allow orderly failures, return to simple rules like leverage ratios, and improve the rules framework – possibly including reversing deregulation and implementing Volcker rule.

    The House Financial Services Committee’s Barney Frank says "I believe we will get a very good bill out of here" because financial reform is the American public’s current No. 1 issue.

    The public is mighty unhappy with all sorts of folks: bankers, business executives, Congress. But almost 7 out of 10 people in a Bloomberg survey support using current bank regulators for consumer protection, a position held by the financial industry.

    Sen. Arlen Specter plans to bring back a proposal letting investors sue advisers that aid frauds, in the wake of reports that show possible malpractice in Ernst & Young’s audits of Lehman Brothers (LEHMQ.PK). The measure would upend Supreme Court decisions that gave law firms and accountants immunity in similar situations.

    Meanwhile, missing the point entirely:  Bank bullishness from Dick Bove: Stocks in the industry could quadruple in the next two to three years as defaults decline, which is "all that investors in banks care about."

    BPT/RMM – Ask me again when oil is at $70.

    EWG/B1 – I think they are kind of low if you buy the posiitve spin on Germany since the DAX is up 70% but EWG is up 75% so it’s not like they are lagging the index or anything.  I love playing EDZ because I think something, somewhere is going to break but that same logic keeps me out of being bullish on specific countries, other than ours, which probably has the best chance of surviving another global downturn (because our govenment will dump another few Trillion into the markets). 

    Program/JRW – I think it’s pretty much the same every day.  The wildcard is, are there any non-affiliated selling funds taking an exit or not on any particular day.  

    SPWRA/RMM – The $19 puts are $1.15 with the stock at $18.55 so that’s .60 in premium.  Can you guess my answer?

  85. Pharmboy

    PARD info out on another restructuring, and they have brought in Leerinik Swann (whoever that is) to help evaluate its options (close doors) and finally suspending its attempt to gain regulatory approval for the cancer program

  86. RMM

    Phil: is BPT independent of oilprice ?
    see this:
     
    The BP Prudhoe Bay Royalty Trust (BPT) is a favorite among income-oriented dividend stock investors. The stock offers a hefty yield, and since it’s a “depletion trust” based on the life of its reserves, it’s not as tied to oil prices as other stocks in the energy sector. But after dropping 13% in two days last week, some are wondering if it is time to cut this stock loose – or time to buy more.
    Let’s take a look:
    First, though the BP Prudhoe Bay trust does have a finite life span, it is no where near the end of the road. There is still a lot of oil there, for maybe another 15 years or so based on current estimates, and BPT updates the status of the field all the time so it won’t come as a shock when the rigs run dry. So if you’re worried about the depletion of this depletion trust, take a deep breath. It won’t disappear any time in the next few years.
    Because of the clear life and supply of this fund, it’s also not as susceptible to crude oil price swings as the rest of the sector. While it won’t rally as much when crude is soaring, it also won’t drop as much when demand is soft. Consider the recent glut of crude supply and weak demand -- Exxon Mobil (XOM) is down about 3% in the last six months while BP’s Prudhoe Bay Royalty trust is actually up about 20%.
    The real question though is whether the 13% drop late last week is a correction because the price of BTP shares got too far ahead of reality. Oil went up $12 from the Feb low, and BPT went up over 15% a share … that’s not typically the way a depletion trust trades.
    It’s worth noting that the trust not particularly liquid, with about 200,000 shares a day, so a spike in volume can really ramp up volatility. The rebound in shares today (about 6% as of this writing) indicates that some people may be buying back in after stop losses created a slippery slope on Friday that pushed shares below a reasonable valuation.
    But whatever the reason for the drop, the dividend yields of this stock is now a whopping 17% (if you annualize the current $3.61 payout) after the slide in shares. Even if the upside potential may not be out of this world, a decade of dividends that are that big may make this depletion trust worth your while. Similarly, if you want an energy stock that will not be whipsawed by volatility in crude, BPT is a great low-risk investment because of its “depletion discount” that is priced into shares.
    However, as a pure energy sector play you won’t get the pop from other pure oil and gas stocks. The 20% surge against the sector in the last six months is not typical, so keep in mind the old axiom that “past performance does not indicate future returns” with BPT.

  87. Pharmboy

    Stent news: 
    Five-year data from the PASSION trial reveal that there is no statistically significant difference in the safety and efficacy of bare-metal and drug-eluting stents (BSX, ABT and JNJ are in this field) in acute heart attack-a finding that contrasted with the investigators’ original hypothesis.
    The trial examined data from 619 patients with acute heart attack who between March 2003 and December 2004 were randomized to receive either Taxus Express2-a paclitaxel-eluting stent-or the Express2 or Liberté bare-metal stents. All three were manufactured by BSX.

  88. ssdirk

    JRW, judah – it’s my helium balloon theory: without constant downward pressure it will float up.

  89. dilbert

    I wonder how high can BIDU go? today and this week and next?

  90. morxlntway

    Pharm – did you get the impression that PARD would continue the cancer treatment for colorectal, prostate & ovarian cancers? Are these already approved and being used?

  91. jossietx

    Phil, what’s your opinion on CHK since natural gas is down so much…  Any sell puts ideas? thanks

  92. tuscadog

    Phil, Tradermark stats on Gov’t acquiring $907B in 15 months is worrying.  Will they continue crushing all short plays indefinately?  The insiders who know when the Gov’t will stop buying equities will be the only winners – and the mkt will crash.  How do outsiders possibly win in this game when Goldman et al see the cards before we do?

  93. Pharmboy

    Morx – not sure about continuing at this point and to my knowledge they are in trials.  Their compound was being positioned as SAFER than other trtmts while efficacy was same if not better.  That did not pan out.  There are other platinum treatments on the market.

  94. morxlntway

    i guess it’s ridiculous to keep hoping PARD will get back to $3.60. (my break even)
    Could we take a vote? Poll the audience? What would you do?
    I would loose $2800 in a $100K portfolio. Play or fold?

  95. dilbert

    There is no doubt we are heading to 11k on the DOW – probably 10995.
     
    The question remains is what NEXT? Is it how hard are we going to fall? or …
    And where the heck is BIDU heading to?

  96. biodieselchris

    Buying TBT calls under 47 is like a money printing machine. Front month calls up 100% today!
     
    Good thing too because BIDU is killing me. FRACK! So much for my pet theory google would ‘work this out’

  97. yodi

    Phil the stk you quoted below is trading at TOS for 10.02 ?????
    Phil
    March 24th, 2010 at 11:58 am | Permalink  
    If you like gold, the GLL $43/45 bull call spread is .85 and you can sell the $42 puts for .75 so that’s .10 on the $2 spread or you are in GLL at net $42.10, which is 4% down from here or about Gold $1,070.

  98. biodieselchris

    Fun silver play now that it’s pulled back nicely.

  99. judahbenhur

    JRW, It really is a remarkable retrace of 3/15 so far.

  100. biodieselchris

    TBT really taking off 48.80+…..

  101. ssdirk

    Whoa, what just happend?

  102. judahbenhur

    SS, That was one of those bot tests we were talking about the other day.

  103. gel1

    If the GOOG/ China government issue does not get resolved, many say this could shave $50.00/ share of the current price of the stock. Rather than hedge and wait, I closed out my stock position. This business in mainland China was but 1% of the revenue, but a huge potential for future revenue and that is not good. I personally do not see a resolution.

  104. JRW III

    Well, if this is last Monday’s program, it should be strait up from here !!

  105. ssdirk

    judah – this last week seems harder to trade TNA/TZA than weeks past.  Do you feel the same?  Seems like trickery everywhere.

  106. Phil

    VLO,TSO/B1 – That’s easy, oil went down more than gas.  It’s all about the crack spread with the refiners. 

    BPT/RMM – It’s not VERY dependent on the price of oil but, rather than reading a write-up that tells you they are stipp a buy at $95, why not look back and see what actually happened to them when oil fell in 2008 and they dove from $90 to $45.  The article is right, they shouldn’t get the pop that oil gets but they got 100% of it in the last 12 months and they seem stretched.  Also, I never play these guys because the options are way underpriced to the potential movement so it’s almost impossible to protect. 

    BIDU is getting interesting as the May $650/620 bear put spread is just $18 and you can sell the May $670 calls for $19.50 so a $1.50 credit means you don’t lose money until $671.50 and you get up to a $30 bonus under $650.

    CHK/Jossie – Yes, this is a good time for that one as nat gas has crossed coal and is now cheaper for power plants to use.  Add the fact that it’s cleaner and I think we have a floor as long as coal doesn’t start falling off sharply and that would be a big surprise to the Cramer crowd, who think there is a shortage on coaking coal (there might be, who can tell?).  Since CHK is always a nice stock to own, I like the arificial buy/write with the 2012 $20s at $6.60, selling July $24 calls for $1.60 and July $21 puts at .95 for a net $4.05 entry on the $5 spread with 18 months to roll.  You can also go for the Jan $17.50/22.50 bull call spread at $3.20 and, since they are $6 in the money, I don’t see any point on covering the nearly 100% gain UNLESS CHK falls below $21 and, by then, the $20 puts should be about $2.50 and that brings the net entry down to $19.15, which is 18% below where we are now.

    Outsiders/Tusca – You just have to pick your spots.  Right now I’m waiting for a correction and then for the governemnt (in an election year) to step in and tell us how they will "fix" things and then we’re going to take their word for it and BUYBUYBUY with the bots. 

    PARD/Morx – Do you have the stock?  I’d point out that you can sell the Jan $2.50s for .25 which will get you even in 10 years.  Not much but better than nothing if you decide to wait.  Of course you could spend $1,250 more to DD and drop bais to $2.43 and sell the calls to get to net $2.18 which means you need less than $1 bounce to get even and only 4 more years of .25 sales to get even. 

    TBT/BDC – Have I mentioned I like them lately?  8-)

    GLL/Yodi – Damn, you are right, that was UGL!!!  I’m so used to playing the short side I got mixed up

    5-year auction did not go well, good for TBT:

    The Treasury sells $42B in five-year notes at 2.605% (.pdf). Bid-to-cover ratio of 2.55; indirect bidders take 39.7%. Direct bidders take 10.8%.

    The Treasury sells $42B in five-year notes at 2.605% (.pdf) in a weak auction. Bid-to-cover ratio of 2.55 (lowest since September) vs. recent 2.74; indirect bidders take 39.7% vs. recent 49.6%. Direct bidders take 10.8%. Treasurys steepened losses on the day: the 10-year yield +0.14 to 3.83%; 5-year +0.15 to 2.57%.

    The New York Fed buys $1.5B in U.S. agency debt of $6.775B submitted – bringing its total cumulative purchase to $172.131B of a planned $175B program.

    Three lunchtime reads:
    1) Ten reasons why this is not a bull market
    2) Economy volatility a hurdle for stocks
    3) Greece is EU’s responsibility, not the IMF’s

    Man, I’m a total bull compared to John now:  The velocity of money is collapsing. The end of a 50 year super cycle in lending. The government might as well be pushing on a wet noodle. The gold bugs have got it all wrong. The chances of the Fed being able to head off an inflationary burst are close to nil. But the bond vigilantes may have to wait a couple of years. Tax hikes of 3% of GDP next year will strangle the recovery in the crib. A wide ranging, in depth interview with John Mauldin on Hedge Fund Radio.

  107. judahbenhur

    JRW, The timing is more compressed.  Last Monday we were at this point at 2:30, instead of 1:20.  But here we are, back at that reliable 68.50 line.

  108. ssdirk

    Phil – I know you get tired of repeating yourself on TBT, but do you have a new play to add?  I currently own shares and have sold puts and am looking to add a bit more.

  109. JRW III

    judah / more compressed
    Exactly !!

  110. ssdirk

    JRW, judah – are you going to play the market up?  I am on the fence at the moment.

  111. lflantheman

    Phil…..Stick likely today?   This ‘bearishness’ today seems without conviction, suggesting a stick.   Eh? 

  112. judahbenhur

    SS, I agree.  I had a bad day a few days ago, but since then I’ve been more patient on the buys and exited more quickly on the sells.  I’m also trying something out where I turn a put/call that goes wrong into a spread for protection on the strangles.  I haven’t worked it all out yet, but I’ve never made money on the crazy plays, so I’m thinking of giving them up and making the IWM put/call spreads my own crazy play.

  113. JRW III

    ss
    I’m still in TNA; looking for a 1:30 version of the 2:30 Stick

  114. judahbenhur

    SS, I’ve been playing according to the 3/15 program, using the 68.50 line to buy calls.

  115. EricL

    Not good that the Treasury auctions aren’t going well. The U.S. is no worse than any other major*sovereign bond issuer; debt to GDP ratios are terrible for all of them, and our currency is holding up better than most. So if there aren’t buyers for our bonds why think it will be much better for the others? Indirect (foreign CB) bidding has been falling hard lately, I’m sure some of that is reduced Chinese buying. Obviously if demand keeps declining globally, we (the global economy) have a problem.
     
    My guess though still is that hot money is chasing equities and that if/when that ends bidding will perk up. (Alternatively, a crisis on the bond front causes a stock market correction.)

  116. EricL

    I came within .02 of getting a nice fill on a bunch of TLT stock today: I put a bid in at 89.04 thinking that the 5-year might not go well, but then it would bounce. Grrr.

  117. bord

    Phil, ABX down over 3% today. Any recommended scale in play for one of your "lifetime" stocks?

  118. gel1

    Eric
    The Euro is now called the "echo" trade. The issues with Greece really has tanked the Euro, however there are more echos in the currency future. Portugal was downgraded by Fitch today, exacerbating the already weak  Euro. Coming soon are more "echos" because of the deteriorating conditions in Spain, Italy. This weak Euro is contrbuting to the dollar "flight to safety" dollar.

  119. yodi

    Phil  I am not rocking the boat DIA mattress play running still the Jun 109p covering with MAR 31 106 puts practically dead .16 and some April 104 put sold for .51 now .37 any change on the cover or just wait and see?

  120. EricL

    I agree gel. Maybe the strength of the dollar is putting off buyers, but because of the Euro issue I’d rather be in Treasuries right now than any EU bond, even Bunds. The bond traders likely know what they are doing here though.

  121. gel1

    Phil… I have 730 contracts long on TBT – some calls but  mostly puts.. Is today a good time to lighten up and wait for a pull-back?

  122. RMM

    Phil: agree with you on BPT, dividend yield is very high, that usually signals high risk.
    just closed my MRK with good gain, but I would like to be in some more promising drugstock: how about TEVA ?
    also: with expectation that later this year the interest scenerio will change and rates go up, meaning inflation will go up too, I should be in some inflation hedge: how about GLD ?

  123. biodieselchris

    So much for GOOG, can MSFT (a.k.a. ‘The Death Star’) make a dent in BIDU.

  124. JRW III

    Out of TNA at $56.56; doesn’t feel right. $ 0.16 gain

  125. wassellc

    The PPT is really earning their (I mean our) money today, holding that 68.5 line with DX up a point (!!!).  You IWM experts out there, what’s next when/if 68.5 fails?

  126. judahbenhur

    JRW,  I think they realized it was too compressed and they stretched out this middle period until maybe 2:00. We’ll soon know. Wouldn’t it be nice if we could just start referring to prior program days and play accordingly.  Then, someone would just say 3/15/00 or 11/13/09, and we’d all just follow script. 

  127. JRW III

    judah, ss
    Back in TNA at $ 56.50

  128. ssdirk

    JRW – I hear you man.  I had 3 orders to buy calls and canceled them all.

  129. Phil

    GOOG/Gel – I predicted on Day one of the cyber attack that GOOG would pull out of China – not because of the attacks but because the ROI in China isn’t worth the effort.  GOOG is not infinite, they have already scoured the globe and hired the best people money can buy with pretty much no expense spared in that department.  Now they have a pretty good handle on what they have to work with for the rest of the decade.  They already bought up all the spare dark fiber, also a finite resource and they are already planning on increasing their capacity 10-fold at their hubs with the new CSCO crap and – given all that – they have determined that they can effectively serve (guessing) 2.5Bn eyeballs a day.  That means they now need to choose WHICH 2.5Bn eyeballs to serve. 

    As a business consultant, I preach the concept of "fire your customers" to my own customers and that is what Google is doing.  China gave them a very convenient out to make their move look "non-evil" which boost the company’s image in the "Free" World and allows them to focus on the eyeballs that generate the most income for the company.  Another benefit for GOOG is that they have stampeded their competitors into the business morass that is China, which should distract them all nicely while GOOG takes away their remaining US and European customers (the ones that make an average of 20 times what the average Chinese person makes).   Don’t forget, BIDU has 60% of China and GOOG 30% – the other guys haven’t even got experience in China yet so they have a long, tough road ahead of them working that market and every time a MSFT HR person takes an hour to interview a salesperson for Liaoning or Guizhou, that’s an hour they won’t be spending placing someone to cover Spain or Norway. 

    So, short story is – let them sell Google for doing the right thing at the right time for the right reasons – I love a good sale!

    Trickery/SS – That’s why we went to cash.  Markets get very annoying at forced tops.  Once the break either up or down they become very pleasurable, but only for the people who aren’t all tied up with churning positions.

    TBT/SS – LOL!  It’s the same every time.  I must have put up a TBT play every day since last Wednesday when no one asked but, now that they jump 5%, someone wants a play…  Well the June $47 puts can still be sold for $1.05 and any time we can buy TBT for net $46.50 or less, we are happy.  The $50 calls popped up to .50 so those are good to sell and that pays for 1/2 of the June $51 calls at $1.05 so a nice entry spread there. 

    Stick/Iflan – Volume is 111M at 2pm so still stickable (140M at 3 is sticky) so I’d have to, sadly, say yes – I expect a stick to take us back over 10,850 into the close but I don’t think they can get us green but, then again, I’m in cash because who knows the way things have been going?

    If you want to play the stick – TNA $56 calls are $3.40 and the goal is either take a quick .40 on a move up or to sell the $57 calls for the same price so you have a free $1 bull call spread.  It’s a pure stick play so if TNA fails $56.50 it’s a quick dime loss and out

  130. ssdirk

    JRW – that was quick.  Did Lloyd call?

  131. RMM

    Phil: 50 and 200 MA (Moving average: how does this statistic figure into trading decisions ? Do you use it ?

  132. kustomz

    Call me crazy but feels like a sell off coming

  133. gel1

    Phil/GOOG
    Your analysis and commentary re the strategy GOOG is playing really makes sense for a well managed company. The QUALITY of your distribution, is always far more important than the quantity. Many companies have taken their eye off the ball by chasing the big potential numbers, but in reality the real potential is always in pursuing quality, as that is where the bottom line profits exist.

  134. Phil

    Hmm, I didn’t ask for this mail so I suppose I can share it with you guys (I imagine they are hoping I will utilize the data to write an article) but please don’t share it with others - it’s very interesting:

    A new source of daily economic data shows that the 'demand' side of the
    economy has been shrinking at an annualized rate of over 1.5% during the
    trailing quarter. The new data, derived from millions of daily U.S. consumer
    internet transactions, recorded the trailing 91-days transitioning into net
    contraction on January 15th, 2010 after peaking at the end of August 2009.
    The contraction will flow down to the 'supply' side of the economy over the
    next few months, with the lagging GDP shrinking in the second quarter (see
    http://www.consumerindexes.com/GDPvsDGI.gif).
    
    There are two separate stories in the above paragraph:
    
    1) There is a revolutionary new daily source of spin-free hard data about
    the demand side of the economy. It does not involve any governmental
    sources. It does not utilize 'seasonal adjustments' (all numbers are
    year-over-year). It is simply based on real-time U.S. consumer transactions
    (see http://www.consumerindexes.com/Overview.pdf).
    
    2) Current real-time consumer tracking data is showing contraction even as
    the latest GDP release indicates nearly 6% growth. The GDP lags by some 17
    weeks both because it measures production activities 'downstream' from
    consumers and because the traditional data requires months to collect and
    adjust.
    
    Some of this had been in the news recently, including coverage by Art
    Cashin, Bob Wenzel, Barry Ritholtz and Mike Shedlock (see
    http://www.consumerindexes.com/Shedlock.pdf).
    
    However, the latest story is how the current contraction is unfolding. The
    two most recent prior contractions in 2006 and 2008 behaved very
    differently. The 2006 contraction was mild and was ignored by the equity
    markets. The 2008 contraction was neither. The 2010 contraction is tracking
    its own unique line on a day-by-day basis (see
    http://www.consumerindexes.com/ContractionWatch.gif).
    
    We are not professional doom-sayers. We simply report what consumers have
    been doing on a day by day basis by mining on-line U.S. consumer tracking
    data for purchases of discretionary durable goods. We were incredibly upbeat
    one year ago -- when most economic indicators were preaching doom and gloom.
    Since August, however, consumers have been pulling in their spending, and
    our numbers have slowly turned upside down.
    
    >From our perspective on the demand side of the economy, a contraction is
    already here, having started officially in the middle of January. The only
    question now is whether the 2010 contraction will revisit 2006 or 2008? Our
    daily updates will ultimately tell the story.
    
    If you would like to contact me for an interview, simply reply to this
    e-mail. If you are on a tight deadline, call me directly at the Consumer
    Metrics Institute: (303)656-9801.
    
    The indexes themselves can be found at http://www.consumerindexes.com.
    FAQS can be reviewed at the http://www.consumerindexes.com/faqs.html.
    RSS news feed: http://feeds.feedburner.com/ConsumerMetricsInstituteNews
    An E-Mail news feed is available at the following:
    http://feedburner.google.com/fb/a/mailverify?uri=ConsumerMetricsInstituteNews&loc=en_US.
    
  135. tchayipov

    does anybody know why CME jump up today so much?

  136. judahbenhur

    Phil/TBT.  It has been a reliable bouncing ball between 46.50 and 50 these past months.  So, what do you think gets it above 50?  (Or do I just keep selling at 50 and waiting for the drop back below 47.)

  137. RMM

    Phil: is a NAKED AMGN put there to sell ?

  138. gel1

    When GOOG sells off because of the China hit,  and the corresponding investor disappointment, then I’m back in with a better base cost.

  139. jburgess

    JRW:
    Two spikes up to 68.95  in the past hour or so…. maybe we should call them "bot spikes"?

  140. RMM

    gel1: BIDU dropping, have been waiting with my may 670 call for this.

  141. ssdirk

    Phil – If BAC follows through with its plans to reduce principal on mortgages, don’t you think it will force other big banks  to follow?  And if so, don’t you think it will generate huge writedowns and poor earnings numbers?  While I think it may be necessary in order to start to clear this mess they may be opening up a stinky can of worms even though it is spaced over time.  However, they must have done the math to know what they can handle and it’s impact.

  142. JRW III

    Out of TNA at $ 56.54 for $ 0.04; I agree with Kustomz

  143. gel1

    Phil/ Demand Contraction
    There is a difference this time around…. consumers are scared – this time they no longer have the confidence they could empty out their home ownership piggy bank, because for the first time they no longer have equity in their home – it is gone. That leaves Uncle Charlie – no help there as well. Charlie no longer has any available resources as his 401 value has disappeared, and he is probably out of work. These are the new dynamics of this retraction, that did not prevail to this extent in the past. No parachute, then no demand.

  144. judahbenhur

    JRW, SS,  I’m switching to puts if it breaks down below 68.50, but otherwise I’m sticking with Mr. Stick.  I want Kustomz to be right.

  145. ssdirk

    JRW, judah – i got puts.

  146. jromeha

    Phil – do you like Palm down here? Was thinking of doing a simple buy/write for April….

  147. JRW III

    Back in TNA at $ 56.40

  148. Pharmboy

    All-  interesting article in BusinessWeek about Shell Oil and massive construction project in Qatar.  They are trying to make more profitable petro products.  Nothing of its kind.  Might want to watch them if/when it comes on line FWIW.  Here is a link to the article.

  149. salvum1

     Phil / TNA- unable to see how you can sell the TNA 57 calls for $3.40.

  150. JRW III

    And Out with a $ 0.04 loss

  151. ssdirk

    JRW – it has been rough the last couple of days with a lot of whipsawing.  Not a bad time for a house project.

  152. matt1966

    What?  The Fed is buying equities?  Boy, talk about being too early, if someone were to go and search the comments from about exactly one year ago I’m pretty sure you’d find one from me saying the March 9th action and every save since then was a direct result of our government’s intervention in our market via their agents.  THAT’S why I, for one, have not participated in the wonderful 70% returns the market has provided since then.  My conscious has cost me a fortune.
     
    Onto the future.  John Mauldin is working on the end game.  When he gets it all figured out I think I’ll follow his lead.  I have alot of respect for that guy.  I just hope he doesn’t go and pull some kind of Jesse James move and crush what little respect I still have for folks in the industry.  Poor Sandy!   sniff.
     
    So, you can’t trust the stock market.  Too dangerous to go short.  Too stinky to go long.  That brings us to inflation.  Of course it’s coming.  Just maybe not as soon as some think.  And then it will be followed with deflation.  But I’m getting ahead of myself.  The only thing we can REALLY trust is that our govt will continue to spend money they don’t have and that they will not regulate Wall Street sufficiently.  Since there is no telling what the next scheme Wall Street will come up with is.. let’s just stick to our govt.  They’ve  spent a $hit load.  But they are NO WAY through with it.  They will most assuredly have to start buying MBS again to keep interest rates down in the mortgage market.  They will inevitably start QE again to keep bond rates down.  And they will also be many more jobs bills and unemployment extensions.  More and more money will be printed.,  That you can take to the bank.  It’s the only thing they are really good at.
     
    Last Spring, I came up with the great idea of buying Aussie dollars.  Wish I’d followed through!  But if some RE of mine sells soon I will have to do something..
     
    Gel / Phil / Eric / Kustomz /  Anyone else:  Which is a more compelling purchase in an US inflationary env..  the Aussie or the Loon?  Both are big commodity exporters, both depend on the US market and both have relatively little debt.
     
    BTW, Dick Bove must be some kind of idiot with his bank prediction today.  First he said all that matters are earnings.  Now that earnings will suck, he’s saying all that matters is the lower deterioration of asset value.  What’s next, whether they have free checking or not?

  153. JRW III

    ss
    Buying 1/4 TZA; this is just brutal !!

  154. mrmocha

    For you BIDU followers, I’ve noticed a pattern in my day trading – if you short BIDU at noon and close the trade at the end of the day, you’d have 7 winning days out of the last 10.

  155. ssdirk

    JRW – not that I am happy you aren’t doing good today, but I was beginning to think I was awful at it when you weren’t around the last couple of days.  Trends have not lasted and when they have they are quickly erased.  Haa, right on que a spike up.  Crooks.

  156. Phil

    ABX/Bord – Safer to play the UGL play above to be bullish on gold at the moment.  Just because I love a stock, doesn’t mean I’m going to buy it the moment it ticks down.  I’d like to see gold fall back to 1,050 and ABX test $33.

    Euro/Gel – Every time another EU nation gets downgraded, the rates go up on the rest and then next weakest link in the chain snaps, which raises the rates again and snaps the next link – that’s the flaw in the EU, because they have a half-assed conglomerate but still act like individual nations, something like this can chew them to bits…  To drive rate spreads up on the US you have to attack our whole $15Tn GDP and drop confidence in all 50 states at once – to drive rate spreads up in Germany, you only have to attack Greece, then Portugal…

    DIA/Yodi – I’d take them both out, they are wasting your time at the moment.  If we head lower, you can re-cover with 1/2 Apr $106 puts (now .68) at $1+ and if we head higher, you can cover with 1/2 the $108 puts (now $1.30) before they go below $1 so, either way, you are trading .16 + .37 for $1 while taking a chance on doing very welll if we turn down.

    TBT/Gel – (Rule #1) ALWAYS sell into the initial excitement and (Rule #2) WHEN IN DOUBT – sell half.  There’s a less well-known Rule #3 that goes: "If you still have your stock because you didn’t follow Rule #1 or Rule #2 then what is the point of having a Rule #3 since you just don’t listen anyway?"

    TEVA/RMM – Can’t you find anything that ISN’T at an all-time high?  As to GLD, I would think you know I don’t believe in it but TBT, I may have mentioned liking at some point….

    Moving averages/RMM – Sure, I use it all the time (do you ever actuall read my posts?).  They show you good resistance points if nothing else. 

    GOOG/Gel – I can just imagine Steve Ballmer is sitting in his office right now with one of those Rosetta Stone programs learning Mandarin while Sergey and Larry are meeting with Viacom and tying up a content deal.  8-)

    CME/Tcha – There are CTFC regulatory hearings going on and I THINK CME is looking pretty good as they are probably the best self-regulated exchange internally and the new regs are barely going to affect them but the jig may be up for ICE..

    TBT/Judah – Once TBT goes over 50 then I’m pretty sure my disaster hedges will start kicking in nicely so I’m not too worried about the next step but we can just do what we do now but with a lower floor.  With TBT (and see above comment on subject) not taking the money and running at $50 has been foolish except for one time last summer, when they flew up to $59.  Frankly, I’m happier making $1 10 times than $9 once so I tend to favor taking the small victories when they come. 

    AMGN/RMM – I think the real question is:  Why are any puts there?  You emphasize NAKED but were not Adam and Eve both naked and happy until they learned of their nakedness?  Why then should "a naked AMGN put there to sell?"  I think, in the end, it must be the put’s own choice for, without free will – there are no options.

    BAC/SS – I’ve been pondering that one.  I don’t think it forces other banks to do anything unless BAC is willing to take other people’s mortgages and forgive them too.  Perhaps somewhat of a customer relations win and I’m sure the government is picking up most of their loss so maybe BAC says we have 1M mortages that are likely to fail so we reduce them by 30% and now only 200K fail so we’re almost even already (assuming a loss on the foreclosures and the normal 270% returns on a 30-year mortgage).  On top of that, the government is going to kick in 70% of the losses and tax write-offs will cover the rest so a very cheap PR way to come across to America as the "nice" bank.  If they spin this right, they can capture a huge amount of business from banks that "don’t care about their customers."

    Demand/Gel – I agree with all the but how do you get from there to buying gold and other commodities?

    PALM/Jrom – Well I liked them at $6 so it just goes to show you…  I do think they either recover or get bought.  They have tech that’s useful to others plus manufacturing, R&D and International distribution channels that should be worth $1Bn to someone ($6/share).  Currently, they are being attacked by Cramer’s jackals at The Street but you can bet on them surviving with a Jan $2.50/5 bull call spread at $1.15, selling $2.50 puts for .55 for net .60 and $1.50 in the money with $1.90 of upside – you can stop out with a .25 loss for a pretty good risk/reward ratio but, again, this is not the best week to be buying anything….

    Shell/Pharm – It’s good to see some of these guys starting to think differently. 

  157. judahbenhur

    JRW, SS,  Careful. 3:00. The bots have been turned on.

  158. JRW III

    ss, judah
    I’m buying some TNA puts or some TZA calls by EOD; hoping for a stick so as to get better prices. I plan to hold them through next week, what strikes do you suggest ?

  159. ssdirk

    JRW – I have the IWM 68 puts that I am beginning to get more comfortable holding overnight.  IWM is much more liquid than TNA/TZA options.

  160. JRW III

    ss
    Thanks

  161. Phil

    Actually, when you consider what a strong dollar day we’re having, the rise in rates is VERY disturbing!

    LOL Matt!  I’d go Aussie because they do benefit from selling crap to China.  Canada relies on us to buy everything and we will drag them straight to Hell with us if it all goes down here.  Still I think TBT is the most logical possible inflationary hedge as it will outpace the fall in a 20-year note’s value (essentially the inflation-adjusted value of a dollar) by 2x, you won’t get that from Aussie Dollars.  You are right about Bove too – I think next he will start talking about the value of the brands – that’s when you know the BK guys are circling…

    BIDU/Mr M – Nice observation!

    Uh oh – this is not the right way for a stick…

  162. RMM

    Phil: one of my stocks is up 38% today: MXL
    I wa looking for an AMGN put to sell, did not understand your dissertation.

  163. ssdirk

    Phil/strong dollar - I was thinking the same thing.  So does this mean people just want CASH.

  164. judahbenhur

    JRW, I’ve been playing the IWM puts and calls.  The spread is so wide on those TNA puts that I haven’t tried. As for the TZA calls, I would think those Apr 6 calls if they can handle your volume.

  165. JRW III

    Out of TZA at $ 7.01 for $ 0.05

  166. kustomz

    matt that sounds like a trick question, lol inflationary environment in the US….both Canada and Aus have housing bubbles they aren’t paying much attention to…it wont end well if we continue to depend on Gov stimulus (China/Aus) (Canada/US) to sustain all the BS.

  167. judahbenhur

    JRW,  The IWM puts and calls I’ve been playing are Apr 68s and 69s.

  168. mrmocha

    BIDU bots working hard now to stave the downdraft, will they stick it?

  169. JRW III

    judah
    I was thinking the April 68 iwm puts from ss, maybe 400 contracts; I need to hedge my long TNA possion

  170. cwan120

    Hi, JRW, Judah, SS,
    What are you TNA/TZA folks’ reading on the stick?  Coming up or not?

  171. JRW III

    cwan
    As a Supreme Court Justice once said, " I know it when I see it "

  172. Phil

    MXL/RMM – That’s nice but I have no idea what that stock is.  As to AMGN, that’s certainly not what you said so I just answered you as best I could based on your original question.  AMGN is at our sell target of $60, not our buy target at $50 and it’s still a stock so I don’t like the idea of taking a chance on it right now. 

    Cash/SS – It means cash is moving to the sidelines – we’ll have to see where it gets deployed but keep in mind that, when we go down, money does go into the TBills and that drops TBT, which is why I like to take those quick wins and be happy because TBT makes a good early-warning signal but, in a real market panic – they can go the "wrong" way at first as people fly for dollar safety.  If the dollar starts dropping now, though, then TBT can really fly as there’s two factors to buying a 20-year:  What you think inflation will be in general and what you think the relative value of the dollar will be over time.  The reason interest on Zimbabwe notes goes up to 1,000% is not because people think there will be 1,000% inflation but because they think the undelying currency may drop 1,000% relative to the investors’ currency. 

    Since the US very much relies on foreign bidders to buy our notes – we too have to worry about what they think the value of the dollar relative to Euros and Yen will be in 20 years.  The notion of the relative long-term strength of the dollar to the Euro and Yen has helped keep our rates low this year but disconnecting China from the dollar will provide a new alternative for investors and, frankly, I think I might have to call it for China as to which currency will hold better value over the next 20 years..

    I think Mr. Stick is going to pin my 10,850 target but we do have 1/2 hour and just 140M on the Dow so far so lots of slack.

  173. judahbenhur

    JRW,  I haven’t had any trouble filling the Apr 68s or 69s.  Of course, I only buy 20-50 at a time, not 400.

  174. gel1

    Phil/Demand
    The US is becoming isolated compared to many other countries… Asia ecomonies are on fire, as well as Canada and others that have been blessed with good government policy. Our government was far too aggressive in pushing homes onto people that could not afford them, and then selling the worthless mortgages into the financial markets. Canada and many others had no part of this whatsoever. This is our problem, and we have to solve it ourselves, but adding to the deficit is not the answer at this time. Demand is a function of "feeling safe" and with no home equity or job security, then demand has been diminished. The commodities are moving up because many of them are "necessities" that are the last to drop, however the emerging markets are building a middle class that is filling in the demand  that is lagging in the US.

  175. ssdirk

    cwan – I am not feeling one today.  It’s past 3:00, but we are at 140M shares traded.

  176. hanna5

    Phil / rates / dollar : Yeah, explain that to me please. OK. Bad bond auction leading to lower bond prices and higher rates. Meanwhile, uncertainty in other parts of the world brings money into the dollar. But, dont these people want to consume our treasuries if they are in dollars? Shouldnt that push rates lower? How does it make sense that rates are rising so much when our dollar is becoming stronger??? I’m confused, i think.

  177. Pharmboy

    MXL – based in Carlsbad, CA.  MaxLinear is a provider of highly integrated radio-frequency analog and mixed signal semiconductor SoC solutions for broadband communication applications offering high levels of performance, small silicon die-size, and low power consumption.  IPO was today.

  178. biodieselchris

    Question: if China re-values their currency, say at 4 to 1, versus 6.83 to 1 now … does that mean every chinese stock moves up 70%? Would BIDU go from 610 to 1037 overnight? MIght be worth holding mega-out-of-the-money front month calls for a few pennies if such a scenario were even theoretically possible.
     
    Maybe a dumb quesiton….

  179. gel1

    A recognition of the scam the government is perpetrating by the sucking of bond purchasers into treasuries is now known. China ‘s purchases have dropped for over three months. They are even "bad mouthing" the stuff. Purchasers of this junk are now demanding better rates, and the better rates will rotate money out of the equity markets into the enhanced bond rates. Has Phil mentioned he likes TBT, lately?

  180. JRW III

    judah
    I’m scaling in

  181. Phil

    Bond pimps on the warpath:  Bill Gross denounces U.S. debt: "No investment vigilante worth their salt or outrageous annual bonus would dare argue that [health care] legislation is a deficit reducer… Prudent lending must be directed not only towards sovereigns that can escape a debt trap, but ones that can do so with a minimum of reflationary consequences and currency devaluation." But stocks may do better.

    Bond investors believe the mortgage market is now stable enough to prevent a big jump in rates when the Federal Reserve ends its purchase of mortgage-related debt. But it will depend on Bernanke’s restraint in selling holdings any time soon, which some Fed officials want to do.

    Sell the euro and buy Asian currencies, FX Concepts’ John Taylor says, since "it is clear that Asia has come out of the recession screamingly fast and very strong… Europe is not coming out of it at all, and the U.S. is in the middle." He expects the euro to drop to $1.20 by August, but maybe it won’t take that longI just need someone to check for me whether John Taylor has actually been to Asia

    New home sales are usually one of the key engines that pull the economy out of a ditch, so these ugly charts are worrisome indeed.

    Why do Bank of America (BAC +3.2%) shares lag the other big banks that were trading below book value at the start of the year? Investors may be worried about its stake in the mortgage mess, but one analyst believes the stock looks cheap.

    Bond insurers are surging on Bank of America’s (BAC +2.0%) plan to move agressively in modifying subprime mortgages on its books. PMI Group (PMI +25.6%), MBIA (MBI +14.6%), MGIC (MTG +8.1%) all way up.

    Woo-hoo on SNE shorts by the way:  Sony’s (SNE -4.3%) new low-end e-reader illustrates how the company has become irrelevant to the digital age.

    Duh!  The iPad (AAPL) apparently is for more than just fun and games, as many companies and employees are buying them for business purposes. More than half of mobile-phone users surveyed say they would use a tablet device such as the iPad for working outside the office.  Seriously, is this an actual surprise to people?

    Fast-food chains find that their counter-cyclical business model makes economic recovery a bigger challenge than a recession. Popular promotions like Burger King’s dollar cheeseburger have boosted sales but hurt margins, and bottom lines are starting to suffer at companies like Sonic (SONC -5.1%) and CKE Restaurants (CKR -0.2%).  But I thought the country was turning around and the consumer was spending – what’s with the value meals then?

    Oh Mr. Stick – how could we have doubted you?

  182. Fein234

    Phil / TBT – GREAT call last week per below. One question about it, as I’m trying to take the non-greedy play. I left my June $46 calls uncovered and just sold 1/2 the April $49s for $0.93… close enough to $1. In this case, though, is the non-greedy play a full cover for the "great spread" you suggest? I figured 1/2 is good while below $50 per your other comments today, but just wanted to check how you’d define greedy in this case. Thanks again for the great tip. Here’s your earlier comment:
    TBT – Was that a successful bearish spread or are you behind?  $2 rolls you down to the $46s, which are $1 in the money and you can sell 1/2 Apr $47s for .95 and decide on additional cover depending on what TBT does although I’d do the roll and risk it for a few days to see if maybe they get back over $48 and maybe you can sell the Apr $49s for $1, which would make a great spread.

  183. Cap

    Oh man, I can’t stand this same EOD program BS every single day.  Incredibly annoying.

  184. judahbenhur

    JRW, This is first indication you’ve given in a while that you think there’s a sell-off brewing. (the indication being your post Saturday and your interest in buying puts.)  Must be serious.

  185. hanna5

    Wow. I second that Cap. Greece troubles. Bad home sales. Poor bond auction. Rising rates. Strong dollar. Woohoo! Stock market continues higher!

  186. JRW III

    judah
    Just have to get past this window; mine is about the same as Phil’s, but mine is technical, and his is fundamental, so worth noting !

  187. ssdirk

    judah – did you get any puts?  I am in for 1.16 on the 68′s giving me a little wiggle room so I am holding overnight.

  188. gel1

    Matt/ Hedge against Dollar
    My strategy is to go long on the Loonie, Aussie, Kiwi and the Norwegian Krone. The Loonie will eventually be par with the dollar. Other currencies are emerging as good players, however the liquidity is much less. Anyway you look at it, the dollar will fade as these stronger currencies become known. The latest 1 trillion expenditure for healthcare is a shock to so many investors around the world as they have watched our spending habits and are concerned. The healthcare bill might be good for many, but has ominous ramifications for the outsiders that buy our treasuries.Money will always chase the higher yields, and the US treasuries are experiencing substantial competition that is now surfacing.

  189. matt1966

    Phil / TBT:  The leverage of TBT is a good point but QE can be used to push rates down all the while the flames of inflation will be engulfing the rest of the economy.  Remember, Volker ’allowed’ bond rates to rise to 18% to break the back of inflation.  They weren’t that high until he and Carter made the decision to let them float.  But then, maybe they didn’t have a choice in the matter and they were just trying to keep up with the vigilantes..  it’s kind of a chicken or the egg conundrum.
     
    Yes, the volume in TBT today along with its rise on an up dollar day is very interesting/disturbing.  Why today?  Was the auction THAT bad?

  190. ssdirk

    gel -  is there any way to go long these currencies with ETF’s or something besides Forex trading?  Thanks.  Things seem like they are starting to get interesting.

  191. judahbenhur

    SS/puts.  Yes, I got in a little later than you ($1.20) and I’m holding overnight.

  192. RMM

    gel1: please give me the tickersymbols of the currency LONGS you mention.

  193. RMM

    Phil: are bond prices dropping and yields going up on bonds today ?

  194. gel1

    Phil/TBT
    Took your guidance and followed PSW Rule #1. Made enough for 1/2 Porsche, so will sell it to JRW so he has a complete car!
    Thanks for the initial recommendation and the take-out advice !

  195. ssdirk

    JRW, judah – you both know I have been waiting a looong time for a really good pullback.  So, my prediction is that a doozy will happen between 3/31 and 4/9 while I am in Europe.  If it does just know that I will be sipping some marvelous Brunello di Montepulciano in celebration.

  196. gel1

    ssdirk… don’t do it – stay here for the festivities!

  197. cwan120

    Mr. Stick must have taken too much Viagra lately.  The drug is not working even with a stronger dose??
    8)

  198. RMM

    ssdirk: I think its Brunello di Montalcino: nice wine.

  199. judahbenhur

    SS,  Ahhh, my wife and I got married in Florence and honeymooned in Montepulciano.  Have some pici for me. 

  200. kustomz

    matt,  we arent dealing with normal markets…how can we come to any conclusions when everything has been so distorted?

  201. RMM

    ssdirk: montepulciano d’Abruzzo. nice wine too.

  202. Phil

    LOL JRW! 

    Demand/Gel – I just don’t see how 10% growth in China’s $7Tn GDP offsets 3% declines in US and Europe’s $30Tn.  If the US and Europe come back, then yes, I’ll see it but commodities bubbled up based on demand projections for 2009 that we arent’ going to hit until 2014 at this pace.  At some point, there will be a supply and demand reality but speculation distorts the picture so drastically that you almost can’t tell until it’s way too late because the ETFs buy product that no one actually wants and when the market turns sour, the ETFs sell product that no one actually wants at a time when NO ONE wants it – that’s the trap of this thing.  You can’t get George Soros or even Jim Rogers to spend $1Bn on gold at the top but you can get a million people to put $1,000 into GLD every single day to do the same.  The problem is that, in the end, you need some guy in China to actually buy gold-plated bathroom fixtures or somebody, somewhere is going to be sitting on a lot of useless commodities…

    Confused/Hanna – No you’re not.  That’s right so the fact that, today, we have a strong dollar (money coming into US) AND we also have to offer more money for people to put money into a 20-year note indicates that either the investors think the dollar is topping out or they thing inflation is about to become a HUGE problem.  Don’t forget though, that if you are an EU investor or a Japanese investor – YOUR currency is rapidly falling relaitve to copper and oil and gold and also relative to the Equity markets so you get the impression of inflation against your local buying power.  It’s all very complex….

    MXL/Pharm – Oh thanks, I wondered what they were.  Nice pick RMM!

    China/BDC – No because we trade ADRs that are priced in dollars and no way will China do anything fast.  Even if they decide to make a 20% change – I’d be surprised if they go more than 2% a year. 

    TBT/Fein – Since you didn’t sell the forst 1/2 cover, you are in good shape.  I’m going to risk confusing you with this though – the June $46s are $3.70 with TBT at $48.91 so you have a .80 premium, selling the $49s for $1 doesn’t do all that much for you after this nice pop.  Cash out the longs at $3.70 and buy 2x the Sept $46/49 bull call spread for $1.65 and that leaves you 1/4 covered with the Apr $49s which you can roll along to 2x whatever if TBT stays strong (and you can always add more longs to cover as well.  That puts the .24 (per long) you collected plus another .20 (per long) back in your pocket and you are left in this spread at net $1.20 with $1.80 of upside already 100% in the money.

    Couldn’t hold 10,850 – that’s not good.   Jobs tomorrow too…

    Auction/Matt – This started yesterday when we were seeing BRK.A and GIS getting better bond rates than the US government.  Investors are wising up!

    Bonds/RMM – Yes, a lot of upward pressure on rates but could calm down quickly if they fix Greece. 

    TBT/Gel – Cool!  Nothing like half a car to cap off a nice day’s trading…

    Dose/Cwan – Oh that reminds me, someone in China govmn’t said today that they will continue stimulus long-term and THAT didn’t help.

  203. barfinger

    Good grief. I know about the VIX, but my short SPX calls inflated 6% despite the market down over 6 points. That’s a little ridiculous. They inflated 6% the day before, with the market up 6 points. Lose either way. Not pleasant.

  204. TmDecay

    The perturbations caused but these HFT algobots are confusing the bulls and bears and technical and fundamental traders alike.   I know I’m confused anyway.  I like your cash idea more and more since I can’t be bullish and I have too many scabs to be bearish.  This will end badly it seems but when, who knows?  Some little weak spot in the balloon will burst one of these days.  I had lunch yesterday with a guy who writes algo-bot interfaces.  It makes we wonder how traders can ever beat the bots.  I am reverting to the tried and true approach: "Sell Emotional Premium with Strikes Outside the Channel" (SEPSOC)  Sorry for the meaningless rambling.  I am just frustrated by this action.   

  205. ssdirk

    RMM – technically yes, I should have said Nobile di Montepulciano, but it is also known as Brunello di Montepulciano to the locals.
     
    judah – nice.  I lived in Arcore which is between Lake Lecco and Milano in 1993 and 1994.  Florence is my favorite large Italian city, however I like the small villages and the Lake Country even more.  We stay with friends and make nice daytrips by train. 

  206. Phil

    I love this – look at Sarah Palin’s choice of icons for "targeting" Democrats.  This is so funny I may have to become a "fan" of hers on facebook!  

     

  207. gel1

    ssdirk
    Re Currency ETF’s…. Yes they do exist, however it is not your BEST play, because in currency trading you most often are better off matching your strongest long with the weakest short. When trading the US dollar against a foreign currency ETF you are really not getting your best play as the USD is weighed against six other currencies on a relative basis, so the strength is somewhat blurred. Trading FX gives you the leverage and you can, when trading your currency choice, match it against any opponent you desire. It is like a dog fight ( repulsive example ) but you want to match the strongest dog against the inverse which is the weakest dog, in order to enhance your chances for success.. I have FXC ( Canada ETF ) at the moment, sitting with short puts that are out a way, as I believe the USD will eventually reach parity with the Loonie.

  208. Phil

    Once again our broad indexes (RUT and NYSE) fell the most (1%) with the Dow down 0.48%, S&P down .55% and Nas down .68%.  SOX were awful, down 2% but don’t blame SNDK (up 1.2%).

    Short calls/Barf – Hence the rule, ALWAYS sell (or buy back) into the initial excitement.  If you get used to that relationship, you realize how valuable a quick gain can be when things go your way.

    SEPSOC/TM – That’s a reliable strategy but needs a better acronym, maybe just Selling Premiums Outside Channels or SPOCs, unless you can think of a good K-word to add. 

  209. Phil

    Mommy-tracked: A former Goldman Sachs (GS) vice president files a discrimination suit against the firm, alleging it views working mothers as "second-class citizens."

    California won’t default ahead of Greece because it’s too big to fail, Nouriel Roubini says, which will only make the problem worse. “Federal support will create moral hazard… and delay the necessary fiscal adjustment to balance their long-term budgets."

  210. gel1

    ssdirk
    I am envious… it is one of my favorite regions. My wife took me to Lake Como for a vacation a few years ago. Stayed at the Vills d’este which many years ago was a catholic monistary.  Lots of history, hospitality, good food and drink ! Also lucky…. I married a woman that is generous.( she reminds me often )

  211. matt1966

    SARAHPAC?  I saw her on Bill OReilly the other night and all I’ve got to say is if people are actually sending her money then there is no end to what the analysts can accomplish in this market by telling people to buy, buy, buy.

  212. bord

    Gel, Could a patchwork solution be marrying an FXC short put with a UUP (dollar ETF) short call or long put?

  213. dflam

    Hi Phil:I have a bull call spread on CTCT June $15/June $22.50 at $2.39 ,now $ 6.35. ythere is only $ 1.17 premium left so I’m risking $3.96 for $1.17 which is not a good risk /reward ratio as I have learned from u in  the past. With your rcommendations to "go to cash " should I cash it out or do u have  other recommendations. Thank you.

  214. matt1966

    CA / TBTF:  I forgot to add to my list of reasons the govt will be running the printing presses at full tilt ‘for an extended period’.. all of the insolvent states!  What will that be called StateTARP?  And while I’m on the subject, the federal govt’s dealing with insolvent states is VERY MUCH like the EU having to deal with its insolvent countries.  Just as Germany has every right, imho, to balk at bailing out the alleged lazy and fiscally imprudent Greeks.. so to do Virginians when it comes to bailing out the Californias of our country.  How can the US subsidize California’s fiscal imprudence when VA has a constitution that prevents it from EVER carrying a deficit from one year to the next?  So following the analogy of the EU, if it goes… will so our union?  Will the South rise again??  I say make California sell Santa Barbara first!

  215. bobhu

    The following is one response on the news about US passing the Health Care Bill in The World Jounal(the largest Chinese Newspaper in the US).  The orignal post was in Chinese, I did my bast to translate it to English.  In case I made any mistake I have the oringal post and my translation(please correct me if I made any mistake).  This will let you know how some people see the Health Care Bill.  Just some fun reading and thinking when market is closed. 
     
    BTW, Obama Mao is NOT a type error.  Some people in China(even US) call our President by that name.
    ============================================================== 
    ?????????????????????????????????????????????????????????????????????????????????????????????????????????????
     
    I have to congratulate President Obama Mao, he successfully communize the US health care system under capitalist system.  From now on we don’t need to worry about losing our job, because people who work will pay for our health care!  In the future I hope the government will communize all the money and then give us free medical care and housing, even pay for our food on the table. Haha, Haha, Ha Ha Ha Ha!  LOL!
     
    ==============================================================================
     
    This is the link:
     

    http://www.worldjournal.com/view/full_news/6790216/article-%E5%81%A5%E6%94%B9%E6%B3%95%E6%A1%88%E9%81%8E%E9%97%9C-%E5%A4%A7%E5%8B%A2%E5%BA%95%E5%AE%9A?instance=top_rec

  216. bobhu

    Sorry, the Chinese can’t show but the link is good.
     
    Have a nice night all.

  217. Phil

    Very good point made by Tim Iacono asking:  "What if it Was all Just a Big Bubble?"

    Notice how we had virtually the same sell-off as we had in the great depression except we were "rescued" by stimulus in 2002 and again now but we never had the real re-pricing that is generally necessary for a real recovery.  If people lose half their money and 10% of their jobs but house prices drop 50% – then, over time people can recover but if the same thing happens and the prices come back but not the jobs – then the people are massively set back with no hope of being able to get back in the game. 

    The people on top don’t need to liquidate their assets to pay bills so when the assets come back – they are right back to 100% but the people who had to scramble and cash out 401ks and IRAs in order to pay their bills are the ones answering the poll from this morning and those people are not recovering at all.  I just don’t see how this rally can keep going when it’s really nothing more than a relief spending spree by the top 10%.

    If we begin creating jobs, maybe things can get better but keep in mind that this is the global economy WITH $12Tn in stimulus last year and, with things like TARP and China, a lot of those stimulus programs are still going strong.   What happens when we’re pushed out of the nest and have to fly on our own?  Clearly, no one is in a hurry to find out but then we’re back to the never-ending deficit problem and that’s not likely to end well…

  218. Phil

    Speaking of China – this makes sense, they are investigating inventory levels of iron ore since it turns out they imported 628M tons of it in 2009, which was 70% of the world’s supply and up 180M tons from the previous year yet the ports show just 70M tons.  I guess they have the same inventory system as the NYMEX! 

    This is a kick-ass article from China Daily (.cn) -  "Google has become but a political tool, overseas netizens say" (don’t miss the cartoon that goes with the article):

    Google Inc formally announced on March 22 it will end its self-censorship of harmful information in accordance with Chinese law by redirecting traffic from its Beijing-based search engine to its service in Hong Kong. The move triggered an intense discussion on chinadaily.com.cn, and a majority of overseas netizens believes that multinational corporations should abide by their host country’s laws. According to the netizens, Google has degenerated into a political tool of the US government to seek hegemony.

    Many netizens say Google has degenerated into a US government tool to seek hegemony. Helen from the UK said that "it is well known internationally that Google’s initial start-up was funded by the CIA. Besides, Google now has links to all the U.S. Intelligence agencies, which is a well publicized fact." Australian netizen James added that "Google has finally shown its real intent! That is to use the Internet to subvert and control China. I suppose China and its citizens will not agree to hand over this control of information to Google and let it use it as a tool to carve up the Chinese nation."

    American netizen John said that even in the US, Google practices censorship. "In the US, Google is obeying the Patriot Act, which means that it is spying on the email of an unknown number of people without their knowledge and without a court order as I understand it."

    LOL – That’s just great.  These guys should write for Cap’s site!  8-)

  219. Pharmboy

    Here is the new post on my thoughts of Big Pharma in the coming year or so.

  220. biodieselchris

    wait what?
    GOOG wants Chinese individuals to have access to sites NOT filtered by big brother, and they are the ones being accused of trying to manipulate the masses???

  221. gel1

    Bord…. I really don’t like the trade, however your strategy makes sense. I humbly say this, because the Canadian Loonie is strong and will continue to be strong for some time as their economy is strengthening, and the B of C has suggested they will soon have a rate increase. Playing the ETF – I would sell puts. On the Dollar, it is currently strong as well, but I believe the strength will not last forever, as it is caused by "flight to safety" ( some out of Euro ),and not internal economic strength, that will prevail in the long term. I am short term bullish on the USD, but bearish long term, as the economic future stinks, with what I observe. The best bet is to play the Forex on any platform that supports it. You can do it on TOS, I believe. Select your pairing and go long or short.  By the way, I believe the governmnt in Thaland is soon to rase rates – they must be doing well economically, or are in need of an influx of bond revenue. This could be a good cross trade on an exotic currency – they can really jump!  Cheers!

  222. Cap

    Obama Mao …. very fitting;  I may need to add that to my everyday lexicon !   :grin:

  223. Cap

    "GOOG wants Chinese individuals to have access to sites NOT filtered by big brother, and they are the ones being accused of trying to manipulate the masses???"
     
    Yeah its that "harmful" info that GOOG is intent on poisoning Chinese minds with.
     
     
    That’s like Obama criticizing Cable TV and Blogs for his dismal approval ratings ….

  224. Cap

    Opps, I mean "Obama Mao"

  225. jburgess

    Phil and all:
    I read Phil’s post:  "Duh!  The iPad (AAPL) apparently is for more than just fun and games…" and it reminded me. I visited my local Apple computer seller and repair store and was talking with the owner about the ipad. I told him that some people thought of it as no more than a large iphone.. his response is that it’s going to be huge. He said there are apps being created so that the ipad user will be able to  access his office or home desktop (or laptop) and run anything the home (office) computer can run…. remotely. Pretty interesting.

  226. lflantheman

     Hey,  check this out.   Bank of America  reducing the principle  owed on their mortgage up to 30% for some strapped homeowners who are ‘underwater’ and can’t make the payments.  
    news.yahoo.com/s/ap/20100324/ap_on_bi_ge/us_bank_of_america_mortgages

  227. Pharmboy

    Cap – UR only around after hours….keeping busy during the day?

  228. kustomz

    There are hundreds of millions smart phones in use and the IPhone was a game changer. I don’t think the IPad will be the hit everyone expects. AAPL would have to create the market, and i think competitors have learned their lesson with the IPhone, they wont let AAPL run away with it without a fight…..if it takes off.

    I laughed watching this video about the IPad their selling points sound desperate….just doesn’t make me say WOW i got to have it.
    http://www.youtube.com/user/Apple?feature=pyv&ad=4586558836&kw=ipad#p/u/0/1-YAQ1wfNqc

    Whats AAPL do when IPhone sales start to fizzle, blasphemy!!!

     

  229. bord

    Gel, Very good insights, thanks for your thoughts. TOS is the way to go…. but I might paper trade this idea and see what happens. I hope you are wrong about the baht, I live/work the better part of the year in Thailand (but get paid in dollars) so when the baht goes up, it eats big time into my purchasing power! I will have to look into that about their maybe raising rates, as I had not seen/heard much on that. It’s always hard to tell what the Thai central bank will do because Thai politics/government is so corrupt and non-transparent. In terms of corruption and governance they make China look as straight laced like Warren freakin’ Buffet!  With all the recent political upheaval though, the baht and the Thai stock market (SET) has held up remarkably well.

  230. bord

    Well, GOOG does share information with the NSA, including personal user information…  True, GOOG is the good guy here, but let’s not make them out to be lily-white virgins when it comes to spying, censorship, etc.

  231. Cap

    PharmBoy …  does seem that way lately doesn’t it.  I think its a combination of my being fed up with this market’s unnatural feel.  Long ideas are few; short ideas don’t won’t work with this algo grind nonsense.
     
    In addition; I sometimes have too much info coming at me at once; information overload; plus the need to focus on the swing trades I am doing.
     
    I don’t want to clog things up during the day w/ posts that don’t add any value I guess.
     
    Its not exactly a trading slump; I am doing ok despite maintaining a number of short positions; its more of an idea and enthusiasm slump.
     
    Thanks for noting; still here….

  232. Cap

    Pharm; but the way; keep an eye on EMIS …

  233. Cap

    by the way

  234. wayne

    http://articles.moneycentral.msn.com/Investing/CompanyFocus/why-this-is-a-rich-mans-recovery.aspx
    Phil is your pen name "Michael Brush"?  Never mind, if it had been your article, Bush would’ve been to blame. :) But seriously that guy is 3 months in your shadow.

  235. kustomz

    Hey Cap maybe you should look into investing in some MBS ;-)

     Ginnie Mae securities are among the most secure investments in the global capital market. We offer the only mortgage-backed securities carrying the full faith and credit guaranty of the United States government, which means that even in uncertain times, our investors are guaranteed payment of interest and principal – in full and on time. And that’s a claim no one else can make.
    http://www.ginniemae.gov/investors/investors.asp?subTitle=Investors

  236. hoss18

    Phil, I know this is totally off topic, but you seem very well educated and experienced in the workings of the market, so I thought I would ask.  I was reading through one of the links you posted the other day to Armstrong’s "Behind the Curtain" or "Letters from the Hole".  In one of them, Mr. Armstong noted that people should read Hoover’s Memoirs on the Great Depression 1931 to a look into our current situation.
    I looked up said reference and have been reading Hoover’s Memoirs through a Wiki link.  My question to you is, have you read any of that?  Hoover’s descriptions of how the Depression unfolded and how they attempted to react to them are eerily familiar.  There are whole sections that could almost be cut out verbatim and credited to the situation we are currently experiencing.
    Basically, he describes how defaults in European debt became the contagion that pushed the US into the abyss.  And the speed with which it hit, literally a day or two, he records as shocking.  More alarming was how he found out the contagion was in the US because US banks had been playing European REPO and short term debt markets for thier 6-7% interest rates against our artificially held low interest rates.  When the defaults happened, those banks blew up.
    What’s your take on where we are now?  Do you see the parallel?(Assuming you have read the Memoir.)  Anyway, I know I’m new, and this is totally off target for this thread during the day, but I wanted your insight.  It seems like if this stuff breaks, similar to 1931, it will breakdown so fast nobody will have the chance to get out alive.  Worse, this time around it seems we have no ammunition to defend the dollar or our economy, as Hoover did.
    So, finally, if this situation is setting to be that bad again, what is your thought on the best place to "hove to" and ride out the storm?  Just stick with your disaster hedges?
    I’m so new I’m still reading the 30 days worth of previous posts and trying to get my head above water, so if I’m a complete NOOB, and this is worthless to you, I understand.

  237. hoss18

    http://www.ecommcode.com/hoover/ebooks/pdf/FULL/B1V3_Full.pdf
    Here’s the wiki link to Hoover’s Memoirs, the section I have found most interesting is on the Phases of the Depression beginning about p. 70.
    Thx.

  238. gel1

    Bord
    I double checked my research re my comments on the Thai government raising rates and the greater value of the baht. Yes, my source confirmed this eventuality this week, in an observation the surrounding governments of Australia and Malasia had recently raised rates. This guy is the leading analyst specializing in exotic currencies. Not good for you. I have made five trips to Thailand in the past, while working with their FDA in getting approval for some drug products I manufactured. They were very tough to satisfy. Stayed at the Oriental Hotel and took a trip on the speed boats to the Temple up the river. Beautiful country!

  239. deano

     Cap
     
    I am with Pharm in missing your contributions during the day (don’t miss the political ones, as I am not quite as far right as you, but the market commentary). Hope you don’t stay amiss.

  240. gel1

    Cap
    I understand your frustration, as I think we all are somwhat confused by the market moves with such low volume. It makes trading vwry difficult. I am playing only long term holds and compelling short term opportunities. Most of my current activity is trading currencies, as the volume is perpetually high and consistently liquid. This makes the plays far more predictable. The FX is the largest financial market in the world, so it can’t be rigged with the same kind of probability that exists in the equity markets.Additionally, the plays take less effort, and you do not have to be a " screen junkie" I like your posts !

  241. ssdirk

    gel -you have sparked my curiosity in FX trading.  I set up my TOS Forex Trader screen.  So in your analysis what are the strong dogs and what are the weak dogs at the moment?  I can assume that the Aus Dollar and the Canadian Dollar are strong, and the Euro and GBP are weak.  So shorting the EUR/AUD seems to be a good bet.  I have a lot to learn before I commit real money to this and your knowledge in this area is greatly appreciated.

  242. Phil

    Good morning!

    Wow – futures are flying as the dollar is diving as the ECB moves to help Greece.  In very coincidental timing, Dubail gets $9.5Bn too!   Lesson is – if you’re going to need a bailout – try to have your crisis at the end of the quarter!

    IPad/Kustomz – Gosh, I don’t know…  My reaction to that video was I had to stop myself from going to the web-site and ordering one 3 times…  Macs are very personal and some people are never going to be Mac People and some people will never be anything else.  I’ve always had Apple stuff but I’m mostly a PC person because Apple never had a good business interface (and I’m not looking to argue this point with Mac people) so, after college, I ended up using PCs pretty much until my kids were born when, after much consideration, I bought them an EMac, then IMac.  Because we’re a PC house with a couple of Macs, my kids flip back and forth between them but I don’t think there’s a chance in the world they would choose any kind of laptop over an IPad.  I can’t wait to scrap my super-duper HP laptop for an IPad and even Tina, who HATES Apple (because she’s a tech and likes to take things apart and reconfigure them), wants an IPad.  So that’s my household survey.  All the kids in my neighborhood have IPod touches and the PSPs and the DS’s have been gathering dust since Christmas because there are new apps every day and the kids never get bored and they are emailing and texting and sharing apps and collaborating and getting indoctrinated into the Apple culture (and the parents love it because apps cost $1.99 and game cartidges cost $30).  Don’t bet against Apple…

    Taking it all in/Cap – I agreee, the wisest thing to do sometimes is sit back and observe.  If I didn’t have this job I’d probably be on vaca right now.

    Brush/Wayne – I actually like it when I see my ideas taking hold in the MSM!

    Hoover/Hoss – That’s a great topic but you’ll have to remind me on the weekend.  Short answer is money flow and speed of information back then is night and day so what takes them by surprise "overnight" is not what happens to us.  What happens to us is some people read the signs correctly and some don’t – unfortunately, in the last correction – most people chose to ignore the signs.  Now our leaders are hyper-sensitive to the signs so I don’t think anything will sneak up on us -  see Greece and Dubai getting rescued this morning…

  243. Pharmboy

    :*)

  244. Pharmboy

    :P

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