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Fickle Friday – Budapesky Concerns to Trump Jobs?

File:Trianon Statue Bekescsaba big.jpgOops, now it looks like Hungary is blowing up!

This is a big concern to me because I just asked "What will be the ‘shot heard round the world’ that sparks the next global revolution" and, wouldn’t you know it – it’s Hungary again!  It was also in June (of 1914) when the assassination of Archduke Ferdinand of Austria and his wife triggered a series of events that plunged the planet into World War I.  Today Hungary is the first of the Eastern Europe block to step into the economic confessional as a spokesman for Prime Minister Viktor Orban was quoted this morning as saying the nation’s economy is in a "grave situation."

Before WWI, Hungary was the 2nd largest nation in Europe (behind Russia) but the Treaty of Trianon (June 4th, 1920!) carved it up into 7 countries.  Modern Hungary has about 10M people and a GDP of $185Bn ($18,500 per capita) so it is not, by itself going to bring Europe down but keep in mind this is EXACTLY where we predicted we’d be last Friday, when I put up the chart of the Cycle of Fiat Currency Failures.  So let’s take this seriously folks – next on the list after the baltics is the UK and France and then it’s our turn!

They say those who forget the past are condemned to repeat it and maybe that’s why we are able to stay ahead of the game.  Yesterday we became concerned that Obama’s prediction of strong jobs numbers on Wednesday were already baked into the 200-point rally they sparked so I called an end to "short-term, unhedged, upside plays" in Member Chat at 10:04 and we added an aggressive upside play on BGZ that is designed to pay 1,000% if the market falls.  We also got more aggressively bearish on our Mattress Plays so to say we’re not expecting a big push on the jobs number is an understatement. 

Ahead of the close, I had commented to Members that, even if we get a big pop on the jobs number (need 600,000+), then we would likely short into it - looking for 10,350 at best to settle out but it the jobs come in below 450,000, then "look out below!"  Volume was unimpressive yesterday and, even though we benefited from the daily stick save, it wasn’t strong enough to impress us

The futures were looking like they were heading to my 10,350 target before the Hungarian news broke but now they are down about 1% and the EU markets fell off a cliff from a bullish open but are steadying out down about 1% ahead of our jobs numbers – which now have a tremendous amount of pressure on them. 

8:30 Update – WOW – HUGE MISS!  What the hell was Obama thinking?  Only 431,000 Jobs added and 90% of them were census takers.  That’s right, just 41,000 jobs were "saved or created" in the private sector.  Somehow, unemployment rate fell to 9.7% but that’s bad too as it doesn’t make it more likely the Fed will react to the jobs number with more free money.  Fortunately for Seeking Alpha readers (and, of course our Members) I had posted a great hedge in Stock Talks on April 28th, after calling for the cash out on April 16th:

EDZ June $35 sold at $1.25 vs. June $38/44 bull call spread is $2.80 and is 100% in the money at net $1.55 on the $6 spread

EDZ is now at $51 with 2 weeks to expiration and that play will close up 287% as will many of our Members disaster hedges.  I stopped posting trades in Stock Talks because I got nothing but negative feedback on the trades that didn’t work (and feel free to go over the list and count what a small percentage that was) so it just wasn’t worth the hassle.  Now that Membership on PSW is near full and about to close, we have started making some of my daily commentary available in Seeking Alpha’s Instablog as a new experiment.  No trade ideas (Members only), but certainly everything you needed to know about today’s drop was indicated in yesterday’s comments

EDZ is an example of the "Disaster Hedges" we have ON TOP OF our normally hedged long-term positions in our Buy List, which I’ll be updating this weekend as we once again have some nice entry opportunities thanks to this fiasco!

Speaking of fiascoes – Europe is quite a mess.  The nationalization of Spanish bank, CajaSur, is causing a lot of urest in that country and now France (who are next on our Default Cycle list) is up in arms over derivative problems at Société Générale.  UKs HSBC Bank caused jitters with a research note to clients in which it downgraded Europe excluding the U.K. to underweight from neutral. "There remains too much uncertainty about the health of banks, about the future arrangements for the euro, about sovereign debt and about growth for us to want to take risk in this region for the moment," said HSBC.

Flows ChartThat caused the Europ to plunge to $1.20 this morning and the Pound bottomed out at $1.455.  The Yen (surprise, surprise) bottomed out into the Nikkei close at 92.88 and then jumped to 91.96 once the exporters stopped trading.  It’s amazing that I can point to this daily, and lucrative, con game for weeks now and it just keeps happening every day.  Just like the US stick saves and Futures Follies – it’s adding to the global list of concerns that has Frederick Sheehan asking "Should Investors Boycott the Stock Market?"  Actually Fred, they already are – as we can see from this Option Monster chart of money flow – they already are!

So down and down the market goes – where she stops, nobody knows but, we can make some educated guesses:

Those red lines are the supports we must hold to stay in a longer-term uptrend, which I think we can keep so we are still looking at this sell-off as a buying opportunity and will treat it as such until proven otherwise.  It’s going to be a very exciting trading day and there’s tons of money to be made for those of us still playing the markets but we’ll be well-covered into the weekend so we can enjoy our summer, even in these crazy times.

Oh – and this is a FANTASTIC day to buy TBT at $39.46 or sell the July $40 puts for $2.15 or buy the Jan $43 cals for $3.15 – all great ways to play my favorite hedge against inflation.

Have a great weekend,

- Phil


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  1. sns1

     Phil- FYI re Hungary, they already took steps to restructure with IMF 2yrs ago, so they are ahead of Greece in that respect. The issue is political as the new party is looking to reneg on promises it made to its voters. So by making things look worse, they can avoid taking some steps they knew they couldnt take anyway and later say "look at the progress we made". Nonetheless, it doesnt negate the fact that mkt is sensitive to headline risk, and also recall that European banks have a lot of exposure to Eastern Europe, so investors will shoot first and ask questions later.

  2. chaps

    Just renewed Premium for another year. Best service around.

  3. kinkistyle

    Holy crap jobs report was terrible! 430K.  We are in for a rough day people!

  4. jromeha

    Phil, if oil falls to 72.5 are you buying?

  5. lapper

    wonder if Obama did it on purpose or ‘they’ did to him on purpose….
    Phil, re: oil trading, when you say buy 73 with nickel stop, chart shows dip to 72.85, how do you end up with a long?  Just keep rebuying as it comes to 73 with a nickel stop again or what?

  6. pahurik

    Phil, Hungary never be 2. nation in Europe, it was Austria-.Hungary and its different. Hungary lost lands after WW II to Romania, Slovakia etc.

  7. 1020

    …."This market is going to be nuts with jobs etc"….  Another spot on calll Phil!  :)

  8. 1020

    I must say, I have no idea why anyone would be holding any longs. Today will and should be ugly…….

  9. chyer

     The numbers stink, not sure why Obama raise everyone’s hopes, he is losing his cred

  10. roma_

    Hi, Phil!
    What you think about crude oil? Where it will find support?

  11. samz3700

    Nice call gel – think you called a short against florent a month or so ago.
    back from vacation and was hoping to cash out with a lower vix – guess not

  12. Hulk1182

    Phil, the XOM play from yesterday, 52.5-60 2012 CS vs  Oct 60 p at what point do you start rolling these things should XOM drop? 

  13. amatta

     Phil, 
    Regarding those short hedges we were discussing yesterday, if today theres a big drop (what would that be in these volatile days? 100, 200, 300 pts?) should I exit the June plays (TZA, SDS?)
    Thanks

  14. yipcarl

    IWM Levels
    64.11 – 64.97 – 65.53 – 65.88 – 66.37 – 67.07 -68.12
    Futures are way overblown IMHO

  15. Pharmboy

    Hulk – plenty of time and not to worry about a drop in a day.  In addition, I typically wait a bit on the entries and then enter with a 1/4 position.  This assures if there is a better price, then I can get it.  Further, if I miss it and the position starts to run, there are plenty of more to choose from.  I think this is something that we all need to remember, one does not have to jump on every position that is noted here.  Patience is a key. 

  16. matt1966

    Today we should close down 394 points.  Easily doable.  Where are the green shoots?  No where.

  17. lionel

    Morning Phil,
    Could you advise us on adjusting our DIA matress after this morning dump?
    Should we go back to half covered DIA 102 SEP puts (lowering our 103 SEP puts) and selling half June 101s.
    Thanks

  18. kinkistyle

    Birth/Death Adjustment came in at 215K
    So if you work out the math, 431k – 400k census – 215k B/A Adj. = -184K  
    Thats NEGATIVE job growth.

  19. JRW III

    Good morning,
     IWM 62.62,63.56, 64.77,65.36, 66.60, and 67.09
    Lets make some profit today and limit the meathodology questions to after hours, thanks.
    Good hunting !!

  20. lionel

    AUD/JPY
    Just entered half position at 76.53 looking to retrace back to 77.80
    AUD/JPY has been down more than 2% on this payroll move.

  21. exec

    Green Shoots are being eaten by the Pigs

  22. yipcarl

    IN TNA 45.96

  23. goldman

    Recall Alert – McDonalds Shrek glasses contain toxic cadmium paint
    http://www.reuters.com/article/idUSN0411222920100604

  24. yipcarl

    Goldman… OMG…it never ends.

  25. Phil

    Good morning!

    No time for chit chat.  Read the post for levels but this is a buy point, not a sell.

    On mattress plays and as a naked sell, this is a great chance to sell the DIA $102 puts for $2.60.

    DIA $105 calls are a good gamble at .49 with a stop at .40 but could be a double if we bounce up 100

    And this is a FANTASTIC day to buy TBT at $39.46 or sell the July $40 puts for $2.15 or buy the Jan $43 cals for $3.15 – all great ways to play my favorite hedge against inflation.

    Also, if you have short-side gains – don’t be greedy, this is where you want to take them off the table and we can get more beaish if the Dow can’t hold 10,000 but the S&P is way over danger at 1,070 and is even holding 1,085, which is relatively stable and the Nas is way over 2,225 so – DON’T BE A SHEEP!!!

  26. Phil

    SSO $34/36 bull call spread at $1.25, selling $35 puts for $1.35 pays $2 if we hold 1,085 for 2 weeks.

  27. yodi

    YIP,
    Just this morning I answered some questions on the play
    simply what are these numbers for thanks
    yipcarl
    June 4th, 2010 at 9:20 am | Permalink  
    IWM Levels
    64.11 – 64.97 – 65.53 – 65.88 – 66.37 – 67.07 -68.12
    Futures are way overblown IMHO

  28. yipcarl

    Phil – GOOD CALL!

  29. yipcarl

    Pull up a chart of IWM.

  30. matt1966

    Phil, I would agree that it looks like a perfect setup for a day long grind upward.  The move on jobs reports always seems AH and then reverses by market open.  But I really can’t see where the rally is going to come from today.  There is just too much bad news out there.  I say we go down further.  IMHO.

  31. yipcarl

    Support is in or around 10k on the Dow.  This Europe news is more of the same…They got their 1 trillion dollar BS bailout and our job numbers were not good but they weren’t terrible.  This market is mass manipulation..make the world look like it’s ending scare everyone OUT then ride this puppy back up with wild swings DOWN to scare you out but ultimately in 1 week we are higher.

  32. roma_

    Excuse me. I have been stopped on the news :)

  33. JRW III

    In TNA at $45.66 (1/2)

  34. matt1966

    The manipulators, I mean market makers, have their work cut out for them today.  Might have to call up some quick cash from one of their wholy independent ‘subsidiaries’.

  35. 1020

    Matt – My SWAG is around fat finger low 9900…..

  36. gel1

    Phil…. I must be getting the drift of your trading success. I bought a large position in TBT, prior to reading your post on same.

  37. yipcarl

    JRW… :) entry… wow.

  38. gel1

    David… congrats again for another good pick… Closed out my ZQK for a profit.

  39. yodi

    Good Morning Phil,
    Just keep up the good work you can never be 100% right and if some do not understand this they should not be in the market or better watch foot ball.
    My question this morning is on AAPL  In jan I set up this play Jan 11 sold 280 c for 9.48 now 25.00 175 p sold for 14.50 now 6.00 I am a bit concered about the caller side 280 c as apple is really going great guns. This morning at opening only 3.00 down now only 1.80 a show of good strength. Shall I roll the stangle higher 190/300. As always thanks for your help.

  40. lapper

    Yip, pretty please with sugar on top don’t make the problem worse.  Feel like chatting, I can give you my skype and we can discuss anything and everything.  Phil is pissed at the amount of messages, please don’t make it worse.

  41. gel1

    Have been wanting to get off my hampster wheel going nowhere for sometime…. taking advantage of this market weakness and executed  Phil’s suggestion on a spread for GS – Jan 125/145 bull, and selling Jan 120 puts.- Thanks, Phil.

  42. hia_5

    Bgt the DIA jun 105 calls for .46

  43. exec

    David,
     
    Are you still holding ZQK

  44. yipcarl

    Phil got your DIA call and your SSO bull call spread!!

  45. dilbert

    9850 today?

  46. Hulk1182

    Pharm, I have not executed anything on XOM.  My experience of always making sure to curb tail risk flies in the face of these short put strategies.  So I’m just trying to understand, what my outs are and when I need to be looking to roll these puts.  $5 in the money, $10?  When is too late/early?

  47. exec

    David,
    Sold ZQK
    10% plus profit. 
    Good lookin out.
    Nice to make money on a company I never heard of.

  48. Pharmboy

    I know Phil is not much of an Iron Condor fan in this type of market, but with a few weeks to go and us bouncing around in a zone, the SPX Jun Quarterly 1005/1000 P – 1150/1155 C is $2 credit/contract.  Risk is $300, profit is 200.  Break even is 1003 or 1152.

  49. JRW III

    Doubling TNA at $45.90

  50. lflantheman

    Trading GOOG…Bought back the June 510c for 7.00 (sold yest for 9,50).   I agree with Phil.  This is a BUY day. 

  51. exec

    David,
    Sold ZQK
    10% plus profit. 
    Good lookin out.
    Nice to make money on a company I never heard of.

  52. hbjames

    Phil, is a hold of 73 dollar crude oil ok to go long?

  53. goldman

    Phil – Got DIA $105 2 $0.38, out at $0.44…15% in less than 10 minutes…way easier than fighting TNA/TZA…thanks for kicking some sense into us yesterday, got to get off the TNA drip every once and a while…=D
    Also averaging back into TBT @ 39.50, next 39.25, etc…
    FYI – Goog showing freakish strength on low volume…10 pts in 20 minutes.

  54. Phil

    There is NO volume to this selling so far.  It would be nicer if we had a blow-off bottom so we need to watch closely before going crazy with the upside. 

    Sensitivty/SNS – Good point.  Hungary is too small to really matter but it doesn’t take much to spook investors at this stage does it?

    Thanks Chaps!

    Oil/Jrom - Yes, $72.50 is/was still our buy point or, missing that, then a cross over $73 triggers a buy with tight stops.  We were supposed to discuss that but tight stops means (at $73), $72.95.  Over $73, once you get to .10 you stop at .05 (.05 trailing) and at .25 you raise the trail to .10 and at .40 you raise it to .15 and at $72.75 you can raise the trailing stop to .25.  These futures contracts are HUGE gambles and pay $10 per penny move but also lose $10 per penny move so we take the money and run and we ONLY play at very obvious support and resistance lines.  Note we got out at $74 yesterday and oil did top out at $75.50 overnight but fell through $74 so fast that you would have been out .75 (x $10 per contract) before it stopped.  It’s NOT worth taking chances on middle entries!

    Oil/Lapper – Yes, you expect to lose a few nickels and we’re playing for the bigger move.  It’s more effective with scaling and you can remind me to discuss on the weekend. 

    Still no volume, 28M on the Dow at 10.

    Hungary/Pahurik - Hmm, I thought Austria-Hungary counted as one country at the time?  I know about the lands, that’s the treaty I discussed.

    XOM/Hulk – Well we certainly don’t start rolling on a one-day move the day after we buy them!  Unless XOM goes below $55, we’re on target through July at least. 

    Hedges/Amatta – It depends what % of max proft you are at and also how in danger it is.  The EDZ I discussed above is oil and EDZ is miles above it so I’d be inclined to stay in that one unless I could get 90% early.  If you are closer to the money and can get more than 50% of your max profits with 2 weeks left for the market to recover – unless you REALLY need the protection, it’s a good time to consider cashing out.  Keep in mind that Rule #2 is "When in doubt, sell half," which is to say, if you are not going to take profits into the excitement like a smart trader, then AT LEAST take 1/2 off the table if you have ANY doubts at all that you won’t hold those profits

    Oh Matt, you are such a bear!  8-)

    Mattress/Lionel – We were 1/2 covered on Sept $103 puts with June $103 puts.  Since we are playing for a bounce, we are moving to full cover by selling 1/2 June $102 puts, now $2.65.  If we fail to take back 10,100 by lunch, I’d be inclined to roll the $103 puts down to the $100 puts for $1.50 but we’re not there yet.

    -184K/Kinki – Good point but anyone who works in the real economy knows things are still very tough so not a huge surprise, even with the model.

    Good plan JRW!

    MCD/Gold – Hopefully they get cheap again.  They really got away as I liked them at $55 but can’t bring myself to pay + 20%. 

  55. EricL

    Took off yesterday’s GDX cover.

  56. EricL

    Also long a little more GLD at the first bounce off of 1200, but still risky here.

  57. matt1966

    Boy, you can really see the MMs at work today.  No disguising it.  Only they’re playing defense against a world of hurt.

  58. lflantheman

    JRW….Doing the TNA play with you today.  Irresistable :)

  59. EricL

    Oil services sector is still going up, so some risk appetite visible there.

  60. dmankoff

    hi, Phil, so i did buy TBT, bot the Sept. 37 calls and sold the June 41 calls, to take advantage of the upside coming up, then I’ll roll the June to July and collect more premium…. perhaps i should do your play also , selling the July 40 puts…
    David

  61. EricL

    Boy, got some great fills on TBT spreads this morning. I guess the MM was happy to see bulls show up.

  62. exec

    Long tails……could be heading up.

  63. lapper

    Gold is a tricky trade here Eric, I am hesitant to add to small longs I already have in PM stocks.  Just sold 41 puts on ABX and 52.5 on NEM, but staying small, very uncertain here.  Last 3 months was rally-ho until 1 week to expiry, then sharp down, and right back up after options expire.  This month rally-ho is missing the ‘ho’ part.  Preserving capital for a better spot.

  64. yipcarl

    Seems my 65.53 on IWM is the shiz!

  65. EricL

    lapper,
     
    I basically agree. I still think the odds favor another major thrust higher, but it’s taking longer than I would like.

  66. EricL

    I’m doing pretty well flipping GDX options in the meantime though. It’s still in a bull market, as is GLD.

  67. yipcarl

    Phil…Think we should make that stop loss on the DIA puts a bit lower or you liking the 40 cents?

  68. jomptien

    DCTH – sold June 12.50 puts for .75
    nice premium on stock that Pharmboy likes

  69. yipcarl

    Correction… I mean DIA CALLS..

  70. shadowfax

    pharm,
    You have any comment on IPXL, I own the stock, sold puts and calls, bought back the calls on weaknes and want to sell soon to hold profit, my goal was $22.50, out or sell more calls. Anything would be nice to know.

  71. EricL

    If we somehow manage to fill the 8:30 gap in the futures today, I’ll likely add some small SPY short positions.

  72. Phil

    1 week/Yip – I hope so.  We’re right around the non-spike lows of Jan and Feb but, if we don’t pop the bottom of our ranges we’re in danger of looking more like Jan (with Feb lows lying ahead) than Feb (with the lows behind us). 

    Good job Gel – I hope DMan is watching too, he’s been waiting two weeks for today!

    AAPL/Yodi – Never strangle stocks that have moved more than 10% over the prior period that you are strangling.  Anyway, AAPL is at $261 so no way would I pay the Jan $280 caller $25 since the only way I owe him $25 in Jan is if AAPL is at $305 and then I can roll him to 2012 $330s anyway (and sell more puts to push him up to $350+).  If you are worried to the upside, yes you can roll the puter up to $200 puts but, for just $4 to take $25 more risk, I wouldn’t bother (more margin too) so I’d save the money and just buy July $280s (now $6) as an on/off momentum play but I’d be using $258 as the line and probably getting out around $264 so not a good entry here.  If we go over $265, then you can use that as an on/off line for a momentum cover too.

    Messages/Lapper – I don’t mean none at all.  I’d just like to find a happy medium between 12 and 120!  This is the same way as I once had to tell people not to thank me for trades or point out trades were working etc.  That’s my job and we don’t need 500 comments a day saying "Yay".  More important we deal with problem trades and share new ideas and clarify important issues in the 6.5 hours the market is open.  After the close – feel free to kiss my ass all you want.  8-)

    GS/Gel – Keep in mind I do not have a lot of faith in GS doing well but, statistically, it’s a good spread. 

    DIA $105s at .43 and I still like them.

    Condor/Pharm – That one I do like, it’s a good risk/reward considering the spread.

    Oil/HB – Absolutely, we got our cross and we’re off to the races!   $73.40 means stop is now $73.25 (.15 trail).

    DIA/Gold – Nice Job.  As I mentioned, if you combine that strategy with sensible scaling you can string together a lot of 10-20% winners with a lot less worry. 

  73. judahbenhur

    EricL, All the way back to 1096?

  74. lionel

    EricL/SPY
    Do you buy July OTM puts (850/900 strikes)?

  75. pstas

    Phil- just a clarification on the oil comment above- 72.50 is the support/buy point; crosses above 73; then this is seen as an interim "support"? Just watching at this point.

  76. gucci

    Hi Phil AET breakout above 50dma — what is your rec on a bull call spread — thx

  77. EricL

    judah,
     
    Yeah. Don’t think it can’t happen :)
     
     
    lionel,
     
    No, I would buy June puts well ITM to avoid buying extrinsic value premium. Then I would wait for a bounce back down and sell June ATM puts against them before the close so that I would go into the weekend with a nice high-theta position (i.e., short more extrinsic than I am long). So the idea is I would finish with a put vertical.
     
    I may do it anyway, even if we don’t get that far back up.

  78. pstas

    TBT- so, you are advocating buying the Jan 43 calls with no hedge? Unusual, please clarify?

  79. lapper

    Phil, 8:51 comment, answer when you have time please, even after the close.

  80. EricL

    lionel,
     
    I’m not buying yet, but if I were to buy right here it would be with June 116 SPY puts. They have a decent spread (.08-.10) and about .60 extrinsic. I would hope to sell a June option with about four times as much extrinsic by the close, possibly on a ratio to lower the delta by the weekend.

  81. gucci

    hi phil SSO bull call spread is for june or July — thx

  82. EricL

    Sorry, I mean sell a few more puts to raise the delta (flatten the position delta into the weekend).

  83. powermd

    DIA/Phil- Stop loss for DIA 105′s at 0.40 triggered, bummer. Phil, I assume you still like them if they return to this level, yes?

  84. Phil

    SPWRA $13.50!  OIH still on the march…  RIG doing well, BP is interesting.

    BP 2012 $30/40 bull call spread for $5 is not a bad way to put $5K away and get $10K in 18 months.  You can put a stop at $3K and you are risking $2K to make $5K.  If BP heads much lower, you can sell $20 puts for $5 too (now $2.10) so a good trade you can work into if you believe BP survives this.

    Defense/Matt – Yes and I think there’s no way Obama is going to let himself get burned today so, if there is a PPT and if they have any power at all – we will erase at least 1/2 this drop by the close. 

    TBT/DMan – Good job!  Don’t go too crazy but I do love them below $40 yet they can go lower still on a major panic. 

    VIX only 32 – kind of a rip off as we were getting 40 at this level a week ago.

    Oil got big rejection at $73.50 and stopped out at $73.30.  Another entry at $72.50 (we don’t wait for cross below) OR cross BACK OVER $73 (so it has to fall below first) but if it’s looking weak (judgement call) you don’t want to keep throwing nickels at it – it isn’t a slot machine – use your head

    Watch that 1,085 line on the S&P – we don’t want to lose that.  SOX over 350, Nas at 2,271, RUT holding 650 - all indicate panic a bit overdone still.  

  85. lionel

    SPY/EricL
    Sorry Eric but you have confused me.
    Let s say you buy now June 116 Puts @ 7.6 (.6 premium with SPY at 109)
    Then you want to wait for a move up? to sell against a June ATM (lets say 110) for 3.6 (now 3.15)
    You will end up with a put vertical 116/110 for $4
    Is that the idea?
    In your post you mentioned a "bounce back down", but you meant up right?

  86. yipcarl

    Does David take Friday’s off?  I think he was gone last Friday too?

  87. Pharmboy

    IPXL – nice little company.  Generics are the way to go, and the company is in bed with TEVA, SGP(now MRK), etc on bio-equivalents.  Margins are great, so I would stick with them.  Generic anything is going to be the way to go in health care, and I think big pharma is going to move into the space to supplement income margin for incremental revenue/margin.

  88. lionel

    Sorry EricL, I was doing my homework and I didnt read your earliest post before posting my reply.
    I am glad you picked the 116 Put :)

  89. kustomz

    Looks like Hal popped a handful of Xanax

  90. EricL

    lionel,
     
    Right. Think of the 116 put purchase as a day trade (betting on a move back down) that I would ‘close’ by selling the most premium-heavy SPY put options near the end of the day. So instead of closing the day-trade by just selling the 116s, I would close it by selling premium-heavy puts to form a vertical intended to benefit from time decay, and to keep a little bear exposure over the weekend.
     
    If we instead went higher at the open Monday, whatever front-month puts I wound up selling today would be horribly brutalized in unmentionable ways. This is because as the panic subsided, the extrinsic would be quickly drained off of them. Since I’d be short these, it wouldn’t likely be that painful for me if I got direction wrong on Monday morning (i.e., up, instead of down).
     
    Anyway, I still haven’t done anything and from the looks of it I might regret not having bought those puts earlier.

  91. RMM

    Phil: your comment: take the short-side gains,
    the callers of the TNA jan 35/55 spread are green 40 %, usually you say: let the spread sit and wait until jan.

  92. lionel

    Eric,
    Now I ve got it!
    And it makes more sense… Thank you for taking the time,

  93. amatta

     Phil, 
    Actually both June hedges have lost money for me. Down 200% on the TZA June and 20% on the SDS June… 

  94. bobhu

    Good morning Phil,
     
    What do you think about this trade – Sell DIA Jun 98 Put for about 1.20.  It’s less risk to 102 Put for 2.70.
     
    Thanks a lot.

  95. tuscadog

    Phil / double dip confirmation    The poor job creation is confirmation that a double dip is coming as stimulus runs out.  As I said yesterday, how can we have meaningful job creation when we’re in a multi year construction hiatus while we absorb huge excess residential/commerical investories.  You seem quite optimistic Phil, do you think the mkt has already discounted a double dip in current pricing?

  96. exec

    Dog,
    I agree with your assessment.  No jobs is bad enough, creating more government jobs just compounds the problem.

  97. Phil

    DIA/Yip – Worth a .60 roll down to the $103 calls (now .98), which I like as a brand new entry too.

    Oil/Pstas – $73 is weak support but a move BACK over it indicates some buying interest.  $72.50 is solid support that we expect to hold so (and I didn’t want to get into this with little time) it’s good for a 1x entry on the line and a DD at $72.40 and another DD if $72.25 is held and we see $72.30 but out at $72.20 on 2x with a .25 loss so risk is at least $500 to play just one contract that way.   Also, you don’t mindlessly buy at $72.50, you need to look at the momentum and try to buy on the first uptick if it goes below but – if we go below $72.50 without it acting as support, then our premise is already not holding up so, unless that $500 is play money – it’s not worth the risk.  Unfortunately, like all day trading – you have to get a feel for the thing you are trading and learn what moves LOOK real and which ones don’t.  That takes a lot of practice and some (many/most) people never get it. 

    AET/Gucci – I do like them.  Old Buy List pick.  Stock at $30.90, selling 2012 $25 calls for $9.40 and 2011 $30 puts for $3.10 is net $18.40/24.20 with a nice 35% gain if called away and we get to sell 2012 putters too if all goes well

    TBT clarification/Pstas – They are very cheap so I like buying them. 

    Oil/Lapper – there are several comments on oil above. 

    SSO/Gucci – June.  If I don’t say a month, it’s the current one but if the numbers don’t match, always ask as I do make mistakes.

    DIA/Power – Now I like those $103s better.  Hopefully we’ll get a flush here and then a real move up into lunch to prevent the retailers from dumping us down to new lows.  Also, I don’t trigger a stop loss if it’s early in a scale and the move down doesn’t form the fat body of at least 1 ten-minute candle.  As you can see above I called for a roll rather than the stop-out.

    David/Yip – He’s young and it’s summer.  I’d be gone too!   I’m happy to fill in for him if you have a question on one of his trades. 

    Short side gains/RMM – Short-side gains doesn’t really mean stripping your covers.  That’s a different kind of aggressive.  It’s fine to do but be very judicious.  Now, that being said – Yes, I 100% agree with taking out the TBT covers because we have a very high degree of confidence that we’ll be able to re-sell them at higher prices.

    Poor pelicans! 

    TZA/Amatta – How can you be down on TZA?   When did you enter and at what prices?

    DIA/Bob – That’s a fine sale as they are very easy to roll but keep in mind you do risk a black swan on Monday so keep it a realistic amount.

  98. aclend

    RMM, Usually he means unhedged directional bets, not one leg of a spread unless it is a big profit, say 75%+ and, therefore, is not buffering the position much anymore…also depends how much time is left. I don’t think it would apply  for  one leg of your Jan spread. I hope that is helpful but we will see when Phil weighs in. 8-)

  99. RMM

    aclend, txs, you are right.

  100. matt1966

    Whhwweeeeee!

  101. stockbern

    USO/Phil      You have been giving a lot of advice on  day trading oil futures.  Could you also throw in a few USO option trades.

  102. JRW III

    Scaled out of TNA at $45.70; loss of $0.08. Not setting up for either direction here, NO conviction. I agree with Phil, the PPT needs a phone call !!

  103. Phil

    Ugly action!  Lows of Wed were:  Dow 10,020, S&P 1,070, Nas 2,220, NYSE 6,666, RUT 641 so we have a long way to go (except the Dow) before we re-bottom if that’s where we’re going.  If the Dow fails 10,020 and then 10,000 – we are probably going to cross lower all around and SSG is probably best protection as SOX are way high (Transports already blew the support line).

    SSG $16 puts can be sold for .85 (SSG currently $16.23).  I also like the $15/16 bull call spread at .50 and you can sell $15 puts for .40 against that.

  104. shadowfax

    Pharmboy
    Thanks for your comments holding well into selloff, must confirm looking to sell more calls on an up.

  105. ssdirk

    judah – if you are around shoot me an email dowupdown at gmail dot com.

  106. amatta

    TZA  June 8C/9C 1.27/.93  July 6P .39  now ..44/.29 ..48

  107. Phil

    Finally getting rid of all that negative EU trading – We’d better be able to pull it out here!  DAX and FTSE down 2%, CAC down 3%.  Our markets are down 3% and that’s ridiculous as we are the safe haven.

  108. yipcarl

    JRW…how you got out at that price is absolutely unbelievable. 
    I am a COMPLETE BEAR on the medium term future of the market HOWEVER the coolaid tastes great and this market will rally next week, kool aide..kool aide.  We knew there would be more countries in the EU declaring this and their will be more countries still…..

  109. amatta

     I got involved today with the DIA 105 at .43, I have a stop which is close to being triggered at .32 should I lower it and wait for a spike to lunch?

  110. judahbenhur

    SS, Sent, from knowanother at gmail dot com.  (They who do not know one thing, know another.  Kenyan proverb)

  111. rainman

    DIA/Phil – can you briefly explain why 103′s became attractive for a roll following the 105 purchase?

  112. edro00

    Oil
    Never bought futures before so a question – do you buy the future at the ATM strike?

  113. DKGuy

    Phil, I agree we could function as a safe haven but if so what does that mean for our TBT plays ? This emplyment report could also mean inflation is further out ?

  114. dilbert

    good volatility in the morning to have high premiums. Flat for the rest of the day? SO the premium loses value?

  115. shadowfax

    Phil,
    When is lunch for you? I haven’t had breakfast in the mountains. Stepping back lightly DIA 105 @ .39 still out at double .43?
    Still holding my Wuck RIG 60 putters, every day looks better.

  116. edro00

    Oil
    Nevermind – I see that there are options on the futures and those are what I was looking at.
    Oil
    Never bought futures before so a question – do you buy the future at the ATM strike?

  117. mSquare

    JNJ – Added to short leg of bullish put spread. I think the Tylenol issue is overblown and it will bounce back…

  118. judahbenhur

    Phil, That last 15-30 minute dump from Europe happens with enough frequency that I think I’ll put a stickie on one of my screens that says "Don’t buy anything between 11:00 and 11:30."   That’ll go right next to my "Never trade SRS." stickie.

  119. yipcarl

    I still have my initial DIA calls I added more at .36…As I said I believe higher next week..

    Stop .29

  120. Phil

    Optimism/Tusca – Partly that I think there’s no NEW bad news and partly because where they hell else will people put their money.  Long-term, we will inflate and you need to have some assets.  Keep in mind that we’re "bullish" but also scaling in with about 20% of the mainly cash portfolio and hedged with Disaster protection and buy/writes all the way to a 40% drop that covers us back to 666 on the S&P so it’s a funny kind of bullish – more like a "we don’t want to miss a huge, stupid BS rally" kind of bullish than a "USA, USA, USA" kind of rally.  Clear?

    Matt’s having fun!  I will point out here that Matt did totally call the great crash of ’08 and he kept calling it while others were trying to get bullish at 11,000 and 10,000 and 9,000 and 8,000 so let’s not forget how relentless these sell-offs can be.  CASH IS STILL KING.

    USO/Stock – Ah, see how $72.50 didn’t hold at all that time.  If someone took the futures at the end of that drop ($72) I would say get the hell out here at $72.15 as IT BLEW OUR BUYING PREMISE.  If $72.50 doesn’t hang tough, we can’t count on it not to turn into upside resistance now so we don’t want to take a risk again until it re-establishes itself.   Meanwhile, as to USO – 5% down in oil is now $65 and 5% down in USO is $31.50 so I like selling the July $31 puts for $1 on the assumption $65 holds and you can pare that with the $31/33 bull call spread at $1.20 if you want to get more aggressive, which is reasonable after this weeks bullish inventroy plus summer driving data on July 4th and from last weekend.

  121. lionel

    edro00/
    Futures dont have a strike per say. The price traded is the "future" price for Oil at delivery.
    If you want to trade options on futures, just be careful of the expiration date of the option may differ from the expiration date on the future contract – ie JUL option on JUL futures expires in June.
    Hope it helps

  122. Phil

    ABX $42 calls for $1.08.

  123. stjeanluc

    It’s amazing to think that they are now talking about cleanup and legal costs of around $35 billion for BP! I checked and that would buy you 10,000 wind turbine (at $3.5 M a piece) that would generate 20,000 MW of electricity or the equivalent of 20 nuclear power plant! What a waste…  

  124. tuscadog

    Phil / Clear  Yes, but at 70% bounce isn’t the mkt still ignoring the increasing probability of a serious double dip, probably globally as Europe deflates, commodities tank and trade tensions increase.

  125. yipcarl

    IWM bottom at 64.11

  126. Phil

    TZA/Amatta – Yeah, we looked at that yesterday, didn’t we?  Those were from ages ago I take it but the point of the trade was (and still is) that you took a $1 bull call spread for .34 (now .13) and you paid for it by selling the July $6 puts for .39 (now .47) but those July $6 puts ARE $1.12 OUT OF THE MONEY!  The point is that, mathematically, we did not expect the $6 puts to ever get triggered and, worst case, they could be rolled to Jan $4 puts, which are now .46 and that would put you in TZA at net $3.95, which is 44% BELOW where it is right now so, unless the Russell is going to gain 15% by January – YOU CAN’T LOSE.  If you don’t understand the trade and don’t understand the idea of premiums etc then you should not be in it but this trade is not even slightly in trouble but you certainly should cash out the .13 on the bull call spread, which means you only need to buy back the putter for .18 to be even – and that’s FREE INSURANCE.  As I said yesterday – if you are not going to make MUCH more money than you lose if the Russell rises 15% by Jan (RUT 744) then you are WAY over-insured. 

    Damn, here comes the lunch-time panic – we’ll see if our bottoms hold but 10K dropped off the Dow already.

  127. gucci

    Hi DIA open yeter June 100/102bull call  for 1.49 adn sold june 100 put  for 1.01 — should adjust , get out or wait till next week — thx

  128. kinkistyle

    Check out EUR/USD folks
    1.1986

  129. dmankoff

    pphil, u nder water already in my TBT spread… 37 Sept.  long and short 41 call, for June
     
    should i just wait and let it unfold, or make any adjustments… i thought today down  $1.50 in TBT was pretty safe, but since we’re implodinng in stocks, etc.  bonds are so strong…

  130. dmankoff

    pphil, u nder water already in my TBT spread… 37 Sept.  long and short 41 call, for June
     
    should i just wait and let it unfold, or make any adjustments… i thought today down  $1.50 in TBT was pretty safe, but since we’re implodinng in stocks, etc.  bonds are so strong…

  131. kustomz

    They didnt/wont let the markets sell off (intervention), possibility of another fat finger episode likely…keep a close eye on the yen

  132. yipcarl

    JRW…Your S/R levels are irrely close to the Fib levels..  the numbers themselves and the approximate distance between the fib levels also correspond with distance between your levels…

  133. shadowfax

    JRW’s points and mine say the market is pos now, this low will pass.

  134. Phil

    DIA/Amatta – I took the rolls down to the $103 calls, now .82 so a .50 roll should do it to improve your position by $2 but you have to have fath.  You can sell 3/4 the $102 calls to cover over the weekend or less or more depending on how worried you are.  As long as you sell them for more than $1 (now $1.15) it doesn’t cost you any margin to sell them

    $103s/Rainman – Gaining $2 in position for .50 is always attracive and by effectively doubling down the position we move from a .15 delta to a .29 delta so it only takes a 50 point bounce in the Dow to make up the net .15 we lost on the trade and we can get out even.  After a 250-point drop, a 50-point bounce becomes pretty likely. 

    Futures/Edro – You buy it at the exact penny that the contract is at at the time of purchase.  TOS has huge blow-up charts to follow the penny by penny ticks and you need that kind of view because these things move fast and you have to have your buys and stops ready to go at a moment’s notice.  Not at all for ameteurs but fun to play with single contracts if you can afford to lose the occasional $1,000 because you went to the bathroom.  8-)

    TBT/DK – TBT may all need to be rolled to 2012 if we don’t start picking up over $40 by July but the logic of all these Sov defaults is that countries will have to raise rates to attract funding (investors have already run out of the markets, next they run out of bonds) OR they have to print money like crazy to pretend they don’t need it.  Either way, at some point it all hits the fan and inflation kicks in and drives down the value of existing low-interest bonds anyway.  If you have a 20-year bond that pays 3.5% and inflation looks like even 2.5%, then your taxes will eat into the final value of your bond so you will be inclined to dump it at a discount.  Rule of thumb is a 5% discount for 0.25% inflation so it would take very little inflation to drop 20-year notes 10% in value, which kicks TBT up 20%.  We all know the inflation is already here – these moves down in TBT are short-term currency fears, not an indication that US TBills are the best investment in the World.  Don’t forget people in Europe who had money in Iceland banks GOT STIFFED!  How do you think that makes people with Millions or Billions in cash in SocGen or Barclays feel, not to mention whatever Spanish, Greek or whatever banks?  You’d be panicking too…

    Lunch/Shadow – Lunch in the market is Wall Street lunch and there is so much money in NY that noon in NY is lunch as far as behavior goes but it’s also wake-up time in CA, where the rest of the money is and if NY office types start selling at Noon then CA office types call their brokers too because, by the time they get to lunch, the market is closing.  ROFL on great us of Wuck! 

    Good stickers Judah!

    Lunch frenzy calming down at Dow 93M coming into 12:30.  Now we need a buyer to show up.  JRW?

  135. yodi

    I have been slowly scaling in to sell Jun DIA 102p up to 3.20 a shot (mattress play)

  136. yodi

    YipcarI,
    Possible you missed my question of this morning as well what does one understand to S/R sell and resistance ?
    thanks
    yodi
    June 4th, 2010 at 9:44 am | Permalink  
    YIP,
    Just this morning I answered some questions on the play
    simply what are these numbers for thanks
    yipcarl
    June 4th, 2010 at 9:20 am | Permalink  
    IWM Levels
    64.11 – 64.97 – 65.53 – 65.88 – 66.37 – 67.07 -68.12
    Futures are way overblown IMHO

  137. Phil

    Waste/Stj – Yes, it’s very sad.  We are a penny-wise, pound foolish society that goes for the instant gratification over long-term planning every time and the US, as a hole, is suffering the fate of anyone who spends 60 years partying and getting into debt and now finds he’s getting old with limited prospects for income growth where a very small streak of bad luck can land them in the poor house.  What’s bad for life planning is bad for nation planing too!

    70%/Tusck – Yes but, as I’ve often said, the S&P never should have fallen below 800.  The fact that we paniced down another 20% doesn’t make it real and certainly shouldn’t be the basis for expecting long-term pullbacks to match the insanity.  We went up 50% from 800 to 1,200 and a 20% retrace of that 400-point move takes us down to 1,120 or 25% at 1,100 or a 38% Fib retrace at 1,048 so that’s our zone but holding ANY of those levels does not interrupt a generally bullish uptrend.  If you do want to count the spike to spike run on the S&P it’s 666 to 1,219 which is 553 and 20% of that is 110 so still 1,100 is the proper pullback line.  Right now, wer’e at 1,078, which is only 2% below the expected pullback line – hardly a reason to panic but, fortunately for us – that doesn’t stop the suckers from doing it! 

    DIA/Gucci – I’ts a free play if we hold 10,000 to end of month and rollable to July $88 puts so unless you’re looking for lower than 8,800 by July expiration, not worth worrying about. 

    TBT/DMan – That’s why I said don’t go nuts.  Europe could crash on Monday and TBT could be 10-20% lower for a brief time.  That’s when we’d adjust but no need otherwise. 

  138. Cap

    i see down still l07.8

  139. Cap

    emis !

  140. EricL

    Covering GDX a little bit again to lock in some gains. But miners are acting well here.

  141. dmankoff

    i have $20,000 in the TBT in total, so i guess I can relax and can always collect that 20,000 o ver the next few months by selling July and August calls after the Junes expire, it just hurts the mark to market for the moment…..  over the weekend, i don’t know if i want to hold it though, since you’re right, everything could crash on Monday.  What is the catalyst for any upward movement in the stock market?  i don’t see it, Europe is so bad, in a real sehnse, not just sentiment, so i may go to cash now on TBT , take the loss and then deal with it next week when it’s lower.

  142. Cap

    sell xom 57.5 puts

  143. yipcarl

    Yodi.. Didn’t you send me a personal email?
     
    IWM is the Russell 2000 index and IWM is an ishare that tracks it.
    Let me make a suggestion.  When a post says IWM S/R levels you should plug in anything that looks like a symbol before you ask the question. 
     
    IWM plug it into your quote window.
    S means SUPPORT LEVEL
    R means RESISTANCE LEVEL
    THOSE NUMBERS ARE SUPPORT AND RESISTANCE LEVELS BASED ON PREVIOUS LEVELS CORRESPONDING WITH TREND LINES, FIBS, AND OTHER TECHNICAL ANALYSIS STUDIES THAT CONVERGE TO CREATE A POINT OF SUPPORT OR RESISTANCE.

  144. EricL

    "and the US, as a hole, is suffering"
     
    True, lol. The whole country as a hole.

  145. biodieselchris

     Not that I can sell naked options but buying stocks and selling the call/put strategy would be good at this level given the premiums. I sold TBT Jun-41 puts at 2.31 (but forced to buy the 31 puts at 3 cents so it’s a "Spread" and not naked). Comfortable enough to hold this over the weekend and I am tempted to gamble on some short term SPY or DIA for a Monday bounce (thinking most of the bad news is baked in).
     
    Saw BP protesters today "Don’t buy BP or ARCO gas." Hahaha! Don’t do them any favors, ever heard of a "Loss Leader" gentlemen? The top third of the distillation column makes all the money. Oh well, at least their trying.

  146. EricL

    chris,
     
    Do you brew your own BD?

  147. SeanC

    Phil: your post "ABX $42 calls for $1.08": you mean to buy it?  You don’t like Gold, but you like ABX?

  148. yodi

    yipcarl
    Thanks for the info I sent Ryan a reply do you wish a copy ?

  149. gel1

    ABX 2012 bull call spread – 40/60, selling 2012 35 puts.

  150. SeanC

    Phil: your post "ABX $42 calls for $1.08": you mean to buy it?  You don’t like Gold, but you like ABX?  Now it is at 1.30- wow!

  151. biodieselchris

    David: another good one: ZQK!
     
    I only had 400 shares, one of these days I’ll start "really" listening to you :)
     
    Funny, I already hold a fairly big long-term put option position on GMCR. I love it when fads crash. Taser, Hanson, Crocs, etc etc etc …. 

  152. matt1966

    At the end of today you’ll look at the chart and say Damn!  It’s obvious the whole day was a rout.  Why the hell did I keep thinking it was going to turn around?  I’ve been there.  Done that a lot.  Every time a trade goes against me I always look for the corner being turned.  Guess what.  Some times it doesn’t happen.  Until the chart shows you beyond a doubt that the corner has ben turned.. why try catching a falling knife?  Don’t try and force something.
     
    I only say this because I wish someone who tell me when I’m doing it.  Good luck!
     
    Btw, regarding BP’s liability.. it doesn’t even begin to cover the damage this travesty, tragedy, calamity, devestation will have on the economies of the Gulf states.  It is almost incalculable.  Folks up in AK said don’t for a second think the oil company and the govt will make you whole again.  Only you can make yourself whole.  If this were the only thing we had to worry about it would be devestating to our economy.  But since we’re sitting on a tinder box to begin with.. and with derivatives now the plague of the world.. we quite possibly are doomed.  Sorry.  My hearts broken, too.

  153. gel1

    PNRA – Bought stock, and sold equal amount of Jan 80 puts. – structured for a possible takover.

  154. biodieselchris

     Eric, oh I used to a while ago and moved out of that garage and gave most of the equipment away. Working on the glycerin by product as a day job.

  155. morxlntway

    don’t tell phil that crocs are a fad

  156. shadowfax

    Hey all!
    Don’t recall what I did but I am getting auto refresh to last post, sometimes it sucks, but I wll look closer this weekend and post. Some wanted it, it might require 64 bit Explorer!

  157. biodieselchris

     matt – I think TBT has turned today FWIW….

  158. Phil

    May saw 133,459 U.S. bankruptcy petitions, the second-highest daily level since 2005 and a 10% rise from the year before. The takeaway: The economy may be improving but consumers are still struggling to claw their way out from debt.

    May Nonfarm Payrolls: +431K vs. +536K expected, +290K in April. Unemployment 9.7% vs. 9.7% expected, 9.9% prior. It’s the biggest monthly increase since March 2000.  The key disappointment was in private payrolls, strategist T.J. Marta says. "While we did get the census hiring, the private economy is not hiring the way we would have liked." Census hirings accounted for 411K of the 431K new jobs reportedWhuck?

    More on the drop in unemployment: The number of unemployed reentrants to the labor force actually fell by 286K in May, offsetting an increase in April. The drop to 9.7% was largely fueled by 322K people exiting the labor force. (BLSI knew something was wrong with that number!

    New comments from Hungary government officials are extremely confusing, "and more market panic should be expected," Nordea strategist Elisabeth Andrew says. PM spokesman Peter Szijjarto suggested that Hungary is in a very grave situation, sparking a fresh bout of panic on the financial markets, with the forint hitting a new cycle low against the euro.

    Policymakers at the G20 express unusual candor at the eurozone’s financial woes. "It is essential to ensure continued recovery that Europe fix its banks," the Canadian finance minister says. "Without further and ongoing action from us, the recovery may not remain on track," South Korea’s finance minister says. But Geithner says, "We’re in a much stronger position…"

    The euro’s down 1.4% to $1.2007, but that may be as low as it goes as Medley Global Advisors reports China is buying euro-denominated assets, indicating a "sensitivity to the $1.20 level," and that the Bank for International Settlements was buying the currency around the same mark.

    SocGen (SCGLY.PK -9%) isn’t commenting publicly on rumors of derivatives losses, but the bank is reportedly telling analysts it hasn’t suffered losses. "Beyond rumors polluting the market, concerns of writedowns and industrial accidents always overhang Societe Generale," says one manager.

    Former finance minister Naoto Kan is elected Japan’s new prime minister, and the yield on five-year government bonds drops to the lowest levels in nearly seven years on speculation that the incoming government would increase pressure on the Bank of Japan to further ease monetary policy.  Further ease?  They will have to pay you to borrow money!

    Treasurys are the "least dirty shirt," Pimco’s Bill Gross says in noting that "the focus for us" is five- to 10-year notes and 30-year bonds. “The world is full of dirty shirts in terms of excessive debt, and the U.S. is one of those countries, but it still remains the reserve currency and still remains the flight to quality haven."

    Weak stock markets sent pension plan assets on a plunge in May, resulting in the worst funding status since October. Funded status fell 4.3 points to 82%, wiping out the year’s gains. With recent volatility, companies are on the look for "new solutions to manage financial risks posed by their pension plans," BNY Mellon says.

    Hedge funds unsurprisingly had their worst month of the year in May, but most avoided huge losses (the S&P 500 lost 8%) through such approaches as careful hedging and short positions. David Einhorn’s Greenlight Capital was up 0.4% for the month, with a heavy long position in gold.

    Whuck again!  S&P president Deven Sharma reminds DealBook that ratings services only address credit risk and are not designed as investment recommendations. On Buffett’s warning of a crisis in municipal and state bonds: "There are certain states that put the payment of debt at a higher priority than other services, so as a result the ratings will reflect that… But public entities, like if you are a sewer system or a hospital, those are different issues."

    With double-downgrades from Fitch and Moody’s, and bleeding market cap, BP (BP) CEO Tony Hayward and chairman Carl-Henric Svanberg will hold a conference call today to try to reassure panicked investors.  BP (BP -2.4%) CEO Tony Hayward says the financial consequences of the oil leak will be "severe" but the company is generating significant cash flow, giving it "significant flexibility" in paying for leak-related costs. He says it will meet obligations to shareholders who rely on the company’s dividend

    Goldman drops U.S. Steel (X) from its Conviction Buy list, citing a trio of negatives: weak European credit markets; a Chinese tightening; and now the Gulf oil crisis. The downgrade is Goldman’s fifth switch on X during 2010 – as good a read as any on this year’s economic uncertainty. X -3.6% premarket.

    Chemical companies are developing soybean, corn and cotton varieties tolerant of harsh older pesticides so that farmers can freely spray these on fields invaded by weeds that are growing immune to Monsanto’s (MON) Roundup. It’s a "very significant opportunity" for Dow Chemical (DOW), DuPont (DD), Bayer (BAYRY.PK), BASF (BASFY.PK) and Syngenta (SYT).

    Several large investors are pressing Elan (ELN) to delay the spin-off of Elan Drug Technologies, its drug delivery business, arguing the unit could be worth far more if the company waits 18+ months. CEO Kelly Martin previously said the transaction will likely take place within the year.

    Workers of the World – Unite!  British communications giant BT Group (BT -3%) is looking at its first strike in 23 years as it refuses demands to double its offer of a 2% pay raise by midday today.

    As migrant workers increasingly look for jobs in cities closer to home, Beijing responds by hiking the city’s minimum wage 20% – another milestone in the tipping of power in China toward labor. (ETFs: FXI, GXC)

    Three lunchtime reads:
    1) Volcker: The time we have is growing short
    2) Five head-to-head ETF matchups to keep an eye on
    3) Robert Arnott’s magic indexing formula

  159. jromeha

    Phil, I apologize for asking a question you already answered recently (but I cannot seem to find it) – You stated recently that you did not believe oil would fall below __?__ price per barrel before 4th of July weekend. What was the price per barrel? Thx!

  160. biodieselchris

     DOW 22000 (2015) is a ridiculous 17% annum gain over 5 years, but…. only 6% from mid 2007 highs of 14,000.
     
    In case you’re wondering DOW 22K-Y2015 is my new pet theory of where we’re headed long term. Can somebody make the case for me? 
     
    A main course of Inflation, mixed with a little Emeril notch-kicker as known as US Productivity and a side salad of Where The Hell Else Are You Going To Put You’re Money?

  161. David Ristau

    Hello everyone,

    I am here. I have been working all morning on a financial report that I just finished on Green Mountain Coffee Roasters. I don’t take Fridays off haha. I wish though.

    If you have questions for me, I check my own pages much more regularly than Phil’s page. I just had not checked his new story yet today, so I apologize for the length of time it took me to get back to you.

    Yesterday, I sent out an alert at 3:18, commenting that I had gotten out of ZQK for a 4% gain. I did not hold it overnight since it had reached my 4-6% exit range. I wish I had held it, but I did not unfortunately. Thank you for the comments Gel, Exec, and Bio.

    If you have any questions, I am free to answer, and again, if you can, it is less confusing and easier for me to see questions if they are posted on my page. I am on this page to, but if you can remember, that would be really helpful for me.

    I do have a new position that I spent all morning writing about for my Long Term Portfolio in Green Mountain Coffee Roasters Inc. If you aren’t familiar with the stock, they have seen 6000% growth in the past ten years. I believe they are quite overvalued right now, and I am getting a long term short on the stock. You can read the report here. 

    Thanks and Good Investing!

  162. stjeanluc

    Weird movements in commodities – 1 month ago oil was at $85, Natgas at $4.00, Copper at $3.60 and Gold at $1150. Today oil cannot find at floor at $72, natgas going to $5, copper is at $2.80 and gold is at $1218. It’s getting a bit irrational now. Currency changes can explain some, but not all the divergence!

  163. biodieselchris

     oops – TBT — LOL ….. nevermind …..
     
    Buying FXE calls out a few months here.

  164. biodieselchris

     David, did you see XIDE?

  165. David Ristau

    Bio -

    Haha yes! I made 38% on it. I got out yesterday at 5.45. Did you pick it up?

  166. aclend

    Matt,
    Ha! People have told you but you don’t listen. Remember our "rigid cognitive bias" discussion? :-)

  167. kyw206

    Phil/DIA/TBT   Phil doe you still like DIA 103 calls as a new entry?  What about TBT still sell a put at 40?

  168. biodieselchris

     No, I didn’t play XIDE  :(
     
    I am not the Jedi Knight in this forum!
     
    Liking GOOG’s price action. Looking for 575 post earnings from here. 

  169. EricL

    There’s now some decent support at /ES 1070, which should hold today.

  170. shadowfax

    Phil,
    Just broke my support on S & P you said 1070, your take?

  171. GSsucks

    Phil-  I was the guy who killed most of your SRS trades [by joining them] and I’m probably the culprit for the DIA play not working out well today either.  I rolled down to the $103 for 55 cents.  In regards to selling the $102 as cover, wouldn’t the $102 call I sell outpace the $103 call I own [due to a higher delta] and thus end up actually increasing my loss if DIA started moving up?

  172. amorgan400

     Phil – I am a new member.  What are your thoughts on shorting EUO at this point?  Elliott Wave has it finishing its fifth wave here.

  173. shadowfax

    JRW
    You in or out, you are one of my indicators on momentum? Thanks

  174. yodi

    Phil
    On the Mattress play most of my Sep long putters are on 103 Still hold 5 112p Question is today a good time to roll the putter down to  10×103 at a cost of .93  or just leave it as is? Thanks

  175. yipcarl

    Unless JRW has stopped posting he got out of TNA like 3 seconds before it fell off a cliff so he’s OUT.
    Boy would it be nice for him to do a write up on how he does what he does.  Boy would it be..

  176. lapper

    Well the reason he got out is clear, he went long, gave it a chance, it came back near his cost and flatlined.  The odds are 50/50 there, there is no clear call what to do, so he went flat.  Did not see a clear direction and probably went drinking.

  177. lapper

    she is tough today.  does not give easy trades, everything gets stopped.  Maybe we will see a wash out to 64.11 here, and then a bounce.  Fridays are tough with all the rumors on Europe.

  178. matt1966

    FAS a c. hair away from busting thru 5/20′s low/close for the day.  That will leave just two other days’ lows to break through until the big kahuna!
     
    Aclend, touche.  But you never told me don’t catch a falling knife.  All I got out of it was a bunch of psycho babble!  8-)

  179. yipcarl

    Lap…You got 64.11 on IWM too?  I swear this is a wash out, next week it’s up. 

  180. humvee4me

    Matt:  the big kahuna is a global meltdown?

  181. lapper

    those lows om WED, 64.02, 64.12 on 10 min chart.  Somewhere in that area.  Not so sure if we get there, and once we get there if its a bounce, see now it should have went but bounced.  Very easy to take the market down right now, Monday looks outright scary.

  182. amatta

    Phil,  Boy what bad timing… I also got 20 DIA 102 Puts for 2.75… now up to 3.25 should I roll these also? 

  183. Pharmboy

    UNG is flying…….

  184. lapper

    what cracks me up is that we have a DEBT crisis and the treasuries are flying.  Oh yeah debt levels here are sooooo much better than in Greece!  But can’t fight the tape.  One day they will collapse and msm will explain to us why.

  185. yipcarl

    Lap.. Sure anything can happen but the market also went up 9 months straight for a 70% gain when it should have actually gone lower.  Accept instead it was manipulated higher and higher.  They can do whatever they want and as far as I’m concerned this market IS going to 5000 but it’s going up first.  What do I know what that’s what I think.  Rally til Aug-Sept up to 10,800-11,500 then kaboom.

  186. shadowfax

    Phil was pos lapper neg, yicarl pos unhedged I hit get the xxxx out now, How do you decide? Tis scarry counting on Hedges!

  187. yipcarl

    At this point the IWM most likely is going to touch down around 64 before this is over..

  188. Phil

    Catalyst/Dman – At the moment we have a G20 meeting in progress.  They usually don’t accomplish anything but a strong statement of solidarity or another round of global stimulus could give us a nice run up.  

    Freudian slip/Eric – LOL! 

    See, now $72.50 is acting as topside resistance on oil.  What we look for next is consolidation between $72 and $72.50 and we see which way it breaks and then wait for a retest to prove we’ve got a change so we’re a long way from getting confident on new oil trades and the NYMEX closes at 2:35 so that’s it for those.  The hardest thing about futures trading is the 90% of the time you SHOULN’T be trading them.

    No buyers but no sellers either.  Dow volume 104M at 1:15.  Waiting for next shoe to drop

    ABX/Sean – Yes, buy but gold got harshly rejected at $1,220 so not as exciting looking as it was at the time when gold was flying back up, as a quick trade that one is dead at even.

    Tinder Box/Matt – Yep, the elephant in the room. 

    NYSE 6,666….

    CROX/Morx – Hey, they tried to tell me that at $1 and I didn’t believe them did I? 

    Auto-refresh/Shadow – Maybe you need to click your mouse to set a point.  I have many screens so I am always clicking on spots on the page but maybe sometimes others are not?

    Oil/Jrom – $65 – see USO play above. 

    22K/BDC – Mainly inflation, I don’t see much real growth outside of what the government pays for.  This anti-immigration thing is insane – it’s the same thing that keeps Japan from ever growing.  We have an aging, declining population and there is very little chance of us generating internal growth naturally outside of some huge, game-changing invention like fusion or very efficient solar or something that saves the people the 15% of their income they spend on fuel.  And sorry BDC but replacing it with some other fuel that costs $3 a gallon does not fix the problem…

    GMCR/David – Great company.  I had lost interest when the stock went crazy but I love that idea on this pullback.

    Copper is a nice futures gamble again at $2.81 but dangerous into the weekend.  It was $3.18 last Friday (up 13%).

    DIA/KyW - I still like the $103 calls (now .85, delta .29) but I’d 1/2 cover with $102 calls (now $1.26, delta .36) over the weekend.  Of couse selling puts on TBT but only if you REALLY intend to stick with it long term (on the crazy theory that one day, in the next decade, rates will go up)

    Support/Shadow – I see 1,075 on SPX so not worried at all (well, maybe a little).

    $102 covers/GS – Yes, see above.  1/2 sale is relative .58 to .36 delta, just enough for the sting to be taken out on a big gap down, which we could use the $102 winnings to roll further down with.  We have 2 weeks to recover and we’d roll to July by Weds if no luck. 

    Welcome Amorgan!  Yes, I like shorting EUO. We had great success doing it at $25 before and $26 is another good spot but, at this point, I think I’d either wait for the weekend or just pick up the July $25 puts for .70 as a first attempt at shorting. 

    Mattress/Yodi – I’d cash in those $112 puts.  Huge money to leave on the table. 

  189. matt1966

    Paul Volker is one smart MOFO.  What a well written article!  A little long for most people to actually read.. but f-them.
     
    Say sayonara to the pig faced banks.   Whhheeeeeeeeeeee!

  190. JRW III

    Had to go to a meeting at my daughter’s school; WOW. Had I been here I would have been buying at IWM 64.77

  191. exec

    I’m closing out of my DXD.
    Gone Golfin.
    Have a good weekend All.

  192. craigzooka

     PHIL, something new showed up in my SPY trade page.  I am showing the regular JUN options and the JUN quarterlys, but now I also show (expiring in 7 days) JUN Weekly’s.  Is this a new product?

  193. jomama

    GSsucks – your monicker cracks me up – there is some guy by my gym whose wifi home network is applesucks and it keeps popping up on  my iphone.  pretty funny

  194. aclend

    Pharm,
    Do you know anything about OCLS? …looks promising, but I am no expert.

  195. lapper

    almost have to go long gold over w/e.  G20 says free money for all everything goes higher, G20 says nothing much – markets come off and gold goes higher.

  196. goldman

    JRW - IWm 64.06 seems possible, double low previous week.  VIX is starting to get out of control…

  197. jsurti

    Phil,
    Your advice on JPM, Sell July 35 Puts $1.18
                                   Sell Sept 35 Puts $2.15
    Thank you

  198. Jordan

    Russell 2000, hardest to manipulate, is down the most.  NYSE, second hardest to manipulate is down second-most.  The indices which are down the least are the easiest to manipulate: DOW and NASDAQ.

  199. goldman

    JRW – SP500 R3 = 1070.83…possible bounce?

  200. samz3700

    Anyone panicking?
    For a big drop this feels fairly controlled – vix is up but not back to 40

  201. yodi

    Phil How do you see the mattress play on the end of today thanks

  202. shadowfax

    Phil,
    After we held closes of 10,200/1,100 my new death cross was 10,000/1,075. they crossed at the same time so only NAS left and it seems to be getting worse. 1.071.76 or pray for hedge god forgivness, hope 1,070 is right

  203. JRW III

    We may just hit bottom at 2:30 – 45 !!

  204. craigzooka

    Not that I am complaining, but can anyone explain why SPWRA is up huge on a day when the market is tanking like crazy?

  205. jromeha

    Craig – ‘Massive’  (and by massive Im talking only 150k shares) insider buying and a note by Citigroup saying everything negative already priced into SPWRA & reaffirming their 15$ target…

  206. sns1

    Pharm- you finding any prices attractive re names in pharma, biotech, or other healthcare related?

  207. Pharmboy

    OCLS/ace – interesting, and the insiders own a big chunk of them.  Revenue is ok, and the platform looks interesting from a scientific standpoint, but SG&A expense is huge….I would hold off a I think they fill that gap back at 1.8, then one could start a smallish position.

  208. Phil

    Not good right now.  Lunch is long gone, NYMEX is closing in 30 mins and no run-up at all on oil and no positive action on our indexes – very sad.  Gold got over $1,220 though…  I am encouraged that the DIA $103 calls are holding .80 – it shows demand because they should be lower.

    DIA/Amatta – You sold them I take it?  No, do nothing.  We have 2 weeks to recover so unless you intended a day trade, they are still about 1/3 premium so all of your losses are paper. 

    UNG/Pharm – Yep, nat gas snuck up to $4.80!  

    Cash is king Shadow.  You just need to pick a few blue chips you can see yourself doubling down on if they drop 50% and doubling down again if they drop another 50% and then waiting for the Dark Ages to end.

    June/Craig – Those are quarterlies that expire 6/30. 

    JPM/Jsurt – Those are sales you made?   I like JPM and they’re at $38 on a horrendously down market day so what do you think I’m going to say?  Again I will say that this is the FATAL problem people have when they

    Wow, oil futures just flopped to $71.40 – that’s a buy if you are super-brave.

  209. JRW III

    In TNA at $43.15 (1/4)

  210. biodieselchris

     Aging population – I actually liked the idea I think McCain (?) had to document the current illegals. I mean the situation is, they’re already here and continue to pour, so let’s match policy and reality here. And let’s do it soon and be done with it and focus on getting this economy revved up!
     
    Phil – not sure about the fuel comment (replacing with $3 gas), don’et let my handle fool you I’m not an advocate for biodiesel beyond homebrewing it yourself for fun (and my wife makes soap), so their certainly is no denial here that 200 MM gal per year of production is going to make a dent in the gazillion we burn from petro sources. However i do think that if the next game-changer technology is going to come out, it WILL come from the US, and with the rest of the markets and currencies crumbling, we’ll crumble the least setting us up the best for this to occur.

  211. David Ristau

    Craig -

    Also, solars aren’t getting hit as hard as some sectors because of the fact that in Germany today they talked about not cutting subsidies.

  212. jcedens

     The FCX 2012 premiums are amazing. 

  213. biodieselchris

     wow this market is ugly. Get drunk this weekend and forget about — hope for the best next week. 
     
    As always, hope is my favorite strategy!

  214. Pharmboy

    sns – I like GSK and MRK in here for the dividend.  I want to enter, but I think we will get a better price on Monday.  I am not willing to play over the weekend.  The buying GSK in here and selling the Jan11 35/32.5 strangle for $5 is a nice entry into them

  215. amatta

     Phil, can you elaborate on selling the 102 DIA calls? if the market does continue down, I do get some cushion from those, but if it rebounds, don’t I lose the upside (I am not conversant on the greeks…) on the 103 bought? 

  216. shadowfax

    Hope you people keep giving the levels 64.09 close enough if it turns into the 2:30 2:45 reverse. I would go mad trying to do those every morning but they seen to be relible. Thanks

  217. Pharmboy

    That would be for Monday FWIW, not today…..

  218. EricL

    Uh oh! Let’s see if we get back over 1070 in the next few minutes. I think we will.

  219. Phil

    Cramer putting icing on the cake with negative commentary. 

    Damn, oil just kept going lower.  Now $71.15 and not worth playing it it’s going to be this crazy.  S&P down to 1,070 and barely holding it, SOX back at critical 350 breakdown point, Nas nearing 2,225, RUT 640 – we could get a big dump into the close here if volume comes in so be careful.

  220. jsurti

    Phil,
    I know JPM is on your list with 2012 Puts&Call’s. No, I have not made my scalein’s yet. You left me puzzled by not completing your sentence. I was looking to put some cash in my pocket on a short term play. I was planning to do that with AXP too.
    Thanks

  221. JRW III

    Gave up TNA at $42.88

  222. yipcarl

    JRW…all support has broken. 

  223. matt1966

    The stick getting sold into!!  Let’s see how long they can keep up the pressure…

  224. EricL

    Oh dear. 1060 is some support, but I think we need to retest 1040 now.

  225. Phil

    Mattress/Yodi – I think ride it out with the full cover over the weekend.  We can always roll to July puts and add more Sept puts if we don’t recover but RUT and Transports are down more than 4% so, even if we hit 5% on Monday, we would still expect a bounce back to where we are now so it’s worth the risk to be brave but, again, not with anything you can’t easily afford to DD and roll with.  

    SPWRA/Craig – Because they were insanely oversold.  And what Jrom said.

    15 Mins to stick and the Dow volume is 135M – right on track.  Think about how few shares it took to knock almost $2Tn of market cap off the markets..

    Tech/BDC – I agree but when?  I have great faith that this country will get most of it’s energy from solar by 2030 even if left to private enterprise because Moore’s law applies to solar too and if we can go from 10% to just 50% efficiency it will make it practical to roll solar out on every surface in the country. 

    Euro not holding $1,20 – that’s what’s killing the market – a huge dollar rally.  Killing commodities too.  Pound down to $1.44 and Yen back up to 91.55 so another great day for the World’s easiest currency trade….

    So keep in mind that your stocks are going down because they are priced in dollars and the dollar is up 1.5% today – we are very close to where we were in the Nov ’08 and March ’09 crashes on the dollar (89ish) yet, as Tusca points out, our markets are 70% higher than they were at the time.  If the dollar devalues now – our markets will rocket and that’s all the G20 has to accomplish and it’s a win-win for everyone – save the Euro, boost US equities….

  226. matt1966

    Can I get a whee?
     
    Nevermind.
     
    Whhhhhhheeeeeee!

  227. shadowfax

    matt1966
    You see hope how why low volume sell is all I see thoughts?

  228. yipcarl

    Shadow errrr Matt what does that mean?

  229. hia_5

    Rolled down to dia 102′s    
    bgt abx jun 42 at .95

  230. hia_5

    get the stick and whip em Phil

  231. EricL

    Two weeks to go, and an ATM SPY June straddle is almost 6.00. Like the good ole days!

  232. fizz

    Have you all noticed the ARMS index?? my chart says 13.65!!  comments anyone?

  233. stjeanluc

     JRW, this was a TZA at 9:30 AM and hit the links until 3:00 PM day!

  234. chyer

     Why anyone listen to Bove amazes me, this guy keeps getting his calls wrong, I dont think GS will have a bad qtr since most of their earnings are from trading

  235. shadowfax

    DIA 105s turned Pray or spook this away!

  236. RMM

    Phil: how often is Friday a bad day, particularly when it opens down big, here we have it again, the total news scenario is just too TERRIBLE.

  237. tuscadog

    Phil / But Europeans want/need a lower Euro, the only way to get their economy moving.  "Beggar thy neighbour", so back to par we go.  Awful for US competitiveness and stocks.  I just can’t shake my uber bearishness right now.

  238. Phil

    633 is 5% rule on the RUT.  Transports down 5.25%.  SOX down 4.25%, the rest are down about 3.5%

    DIA/Amatta – You lose the net delta if it rebouns so about .13 per 100 points if you fully cover.  You can part cover (70%) and that gets you to right about neutral so nothing happens whichever way the market moves.  

    JPM/Jsurt – Sorry, something came up.  I was going to say the the FATAL mistake people make when they sell puts is that they don’t REALLY want the stock for that price.  If you don’t want JPM for net $34, then why would you sell $35 puts for $1?  It’s a contract saying you WANT to buy JPM if they go as low at $34 by the expiration date.  Think of it like making a binding offer on a car.  If I see a Range Rover is $72,000 and I say to the dealer, I will contract to buy the Range Rover if you can deliver it to me for $55,000 in July then that’s that.  I either get the car or the cash.  This works perfectly UNLESS I didn’t really want the car.  If the car goes on sale for $45,000 and I end up with it at $55,000, I may be upset but I’m going to drive it for 4 years so I don’t really care.  THAT’S how you have to be with stocks and if you don’t feel that way about a stock being put to you – DON’T SELL PUTS! 

    Go sticky go!  3pm on the dot.  Going to take some doing to make this look encouraging, need to get back to down 2% or better

  239. maxim

    Cashed a nice quick profit shorting the oil AUG 80 calls yesterday afternoon & happy to have SDS disaster hedge in place -thanks Phil! 
    Bounce on Monday?

  240. morxlntway

    crox – not talking abt the stock, but the orange things on your feet :)

  241. JRW III

    stjeanluc  / golf
    It’s raining here so this has to be my entertainment for the day !!

  242. Cap

    close lows?

  243. lapper

    if IWM comes up to 64.10-15 area, it breaks the chanel and rally-ho.  Go sticky go

  244. RMM

    Phil: what is outlook for next week ?

  245. JRW III

    The WORST case is "they" use the Stick and it FAILS !!

  246. JRW III

    lapper,
    Good eye !!

  247. RMM

    tuscadog: hard to see that EU wants a lower EURO.

  248. aclend

    Yip,
    Wheeee is the sound for the "roller coaster" market when we dive down. I think Phil has a graphic somewhere that he uses on the articles.

  249. yipcarl

    Mr. Stick told me that when CNBC is preaching death and destruction it would be the first time they are right. 
    What the market should be at is 5000, what the market is at has nothing to do with logic.  
    I say we finish at the lows, get a little more spooky on Monday then Kool Aid is back for a couple months.

  250. Phil

    ARMS/Fizz – I never look at it, mainly good for day trading but that is exreme. 

    Terrible/RMM – Well we had terrible news didn’t we?  The question is whether it was terrible enough to blow the bottom of our trading range and I don’t think so.  We are creating no jobs and more countries are screwed up – are you shocked?  Are you 5% shocked?  If not, the move is extreme…  Keep in mind I would not be shocked if France collapses and takes us down 20% or CRE collapes and takes us down 20% but that’s not what this is, this is just facts coming out that we, and I’m sure other market movers, knew about months ago and it doesn’t change the value of VLO or WFR, or PFE or even C for that matter. 

    Euro/Tusca – To a point they want a lower Euro, as you can see from the long-term dollar chart as well as this chart on the Euro to oil or the Euro to gold – this is probably that point. 

    Speaking of gold, that’s a good point.  Gold is now up 100% to the Euro since this run started in 2007.  There was major profit taking as they went up 50%, about a 50% retrace.  Now we’re up 50% from the retrace and up 100% from where we started so it’s very likely gold pulls back to $850 – all other things being equal, which they rarely are but it does pay to consider the possiblility.  Up 100% against the dollar would be $1,300 and the retrace there would be at least $1,150, which is my dollar-based target so I’m feeling very good about that target. 

    Crocs/Morx – I have a pair, my kids have serveral and the store in NYC is packed.  I don’t think the utility function is faddish.  Also, they are finally doing more interesting things with the colors. 

    Next week/RMM – If WWIII doesn’t break out over the weekend I think Monday will be a good short-covering day that takes ups back to at least 10,100 and then we need to see what the conviction is.

  251. yipcarl

    Aclend
      Love it

  252. craigzooka

     Phil, I can see the JUN quarterlys, but there is a set expiring in 7 days.  On my trade page I see
    JUN (7) (weeklys)
    JUN (14)
    JUN (26) (Quarterlys)
     
    I swear I am not going crazy and the "JUN (7) (weeklys)" appeared out of nowhere.

  253. Pharmboy

    Nice on EMIS Cap.  Still not sure if the deal goes through, but ME is an arb play for 25.5.  APA said 0.170843 share and 7.8 in cash on Apr 15 when APA was at 107…..

  254. JRW III

    yip,
    The thing is Europe is WAY more likely to riot in the streets than we are, so the euro gets parity and we tank.  We are the USA that’s what we do, we save the world !!

  255. lapper

    stick looks like a fail…..

  256. RMM

    yip: draw a trenline or error channel from opening to now: was a case for shorting something. or buy TZA., or shorting TNA or pick what you want.

  257. shadowfax

    Rule # 2 and hedge = I have no clue. For years I had rule # 3 get out stupid, KISS!

  258. RMM

    JRW III: maybe in the past, now we need to save ourselves.

  259. kinkistyle

    Craig:  same here.  On fidelity they have JUN 11, JUN 19, and JUN 30 expirations

  260. JRW III

    Wow , I’m letting my bearish side show, MORE KOOL-AID !!!

  261. matt1966

    Covering for the off chance that Mr. Sticky grows some doo-dads at 3:30.  3:45 is more like it..

  262. JRW III

    RMM
    You can’t short TNA.

  263. rainman

    DIA/craigzooka – I see those weeklys too. Seems today must be the first day of trading on them since there is ZERO open interest.
    Stickman, come together with your hands. Save me. I’m together with your plan. Save me….

  264. RMM

    Phil: man the TNA jan 55 callers are green 55%, very tempting to close but then you command rings in my ear: do not touch the spread.

  265. yipcarl

    JRW…definitely true, however if the US is 50% less bad….. that’s still ALOT worse then it is now. 
     
    RMM I assume you mean on IWM….. Yea it went down in a perfect angle all day long.

  266. Maya1

    Phil
    I sold some DIA puts this morning at $2.90.
    Let them ride/ DD? or buy them back now for a loss?
    Thanks

  267. biodieselchris

     P A I N F U L

  268. RMM

    yip
    IWM, TNA: same slope

  269. kustomz

    Phil sell or hold VXX?

  270. RMM

    JRW: its hovering around your 63.56. Will it break this down ? to your 62.62.
    All s1,s2,s3 are broken today, have never seen such malaise.

  271. Phil

    Stick failure already.  Dow volume 165M at 3:26.  If we get up over 220M into the close and we’re still down here, that’s going to be a bad sign but under 190M and there’s no real selling interest.

    June weeklies/Craig – On the futures or the SPY?  Oh wait, I do see June weeklies on SPY – I have no clue what they are or what they do.  Just a new game at the casino.   Zero open interest on options. 

    If you are NOT already well covered into the weekend, the SDS $34/36 bull call spread is .90 and you can sell $34 puts for .96 and SDS is currently at $35.74 and wasn’t lower than $31 since early May, when the S&P was over 1,150 so it makes a nice hedge that you can roll along to July $31 puts and if you take out 50 contacts, it pays $10K if the S&P even squeeks lower while your risk is $5,000 per 3% the S&P is over 1,150 in July but that’s up 10% from here so if you want to lock down $100,000K that moves with the S&P, you buy 10% downside protection against giving up 1/2 your gains and, of course, there is always more rolling.  Non PM margin is about $65K.

    TNA/RMM – I’m sure the calls are down about the same.  You can always be brave and buy back 25%.

    DIA/Maya – I’d leave them.  Lost of premium and many, many moons to roll.

    Stick attempt #2 failed already – someone is selling into any buying and they may show their hands with a big down finish here.

  272. aclend

    Bought some IWM calls on a stick gamble. Who’s with meeeee?!  :-)

  273. sns1

    Pharm- Txs

  274. srfrog

     Holy Crap JRW’s last line is broken!

  275. srfrog

     … oops… I guess we can take a dive to 62.62 still

  276. Phil

    FXP $46 calls for $2 are a fun weekend play on China freaking out on Monday.

  277. srfrog

     Phil … love that play!  … and you have a way with words btw haha

  278. RMM

    srfrog; no, he has
    one more at 62.62.

  279. JRW III

    I think Cap nailed it; close on the lows!
    Down for the day 0.03% ($3200) and lucky at that !!

  280. RMM

    Hello Traders: does Phil;s page automatically refresh ? I endlessly have to hit the refresh button . Appreciate any help.

  281. craigzooka

     PHIL, If there are now options expiring every friday on the SPY then I think we should consider the possibility of using them as our mattress play.  I know you prefer the DIA’s because you only have to track 30 stocks.  But does that out-weigh the ability to roll every single week?
     
    ALso, the open interest numbers are wrong, since I have sold several of them as covers for my positions.
     
    In addition,  I think this may make calendar spreads in the SPY much more effective.  Since the point of a calendar is to collect a nice credit on the rolls, this adds many more such opportunities.
     
    Thoughts?

  282. RMM

    JRW III: you are a good LINE manager, your 63.56 is it for today.

  283. Phil

    So it seems to me that they are trying to stick the markets and that makes me think that they will do what they have to in the futures and we may have a gap up Monday.  I still like the DIA $103s overnight, now down to .72 and you can 1/2 cover with the $102 puts (now $1) and your delta is .50 to .32 and the plan would be to buy out the callers on a big dip and hope for a recovery or, if we move up, hopefully have time to buy back the callers bit by bit on the way up so you keep outgaining them.  Note that if you had half covered earlier at $1.29 the drop in the $102 puts would have completely offset the drop from .85 on the $103s – that’s how you hedge out to neutral…

    VXX/Kustomz – I wouldn’t play it up from here.  It’s already at 36 and 40 has been a top out and the premiums are crazy to I’d take the money and run.  You can always take a % of profits and go for the $33/35 bull call spread at .50 so you don’t feel like you’ll miss out…

    Very good call Cap and Matt!

    Refresh/RMM – Try F5 key as well as hitting refresh less often.  8-)

  284. willsons

    RMM     My F5 key is worn out. 

  285. RMM

    Phil: I closed 30 % of the jan55 TNA callers, so when its up again, I sell 30 % again for full cover.

  286. yipcarl

    RMM
     
    63.56 on the IWM which JRW had as a low I had too.  Why?  Open a IWM chart back to say mid april and look at the look on computer glitch day 5/6/10 and you will see why we have that level!!

  287. lflantheman

     Matt………very close !

  288. goldman

    JRW – I had started buying TNA about 30 seconds before you posted…down 0.6%.  Glad I took Phil’s DIA play this morning for 15% to recoup the loss.  Thought we would get at least one decent bounce at the end…stuck with it too long…grrr…=)

  289. EricL

    Every time I’ve closed or covered a long position in the last two weeks I’ve thought, "Eh, I’m probably being too conservative. We’re not likely to blow apart again". Then we promptly do, lol.

  290. EricL

    Gold futures closed over 1220, but have failed to hold here recently. Still, I’m staying long there over the weekend.

  291. yipcarl

    Goldman…Me 2

  292. RMM

    yip; man I love the logic of descending to the 5/6 computer glitch level, those boys programming their computers use such overpowering logic.

  293. dflam

    Phil : will you be updating buy/write list this weekend?

  294. 1020

    9890.33 – Hey I had a pretty decent SWAG!  I guess I can high-five the cat….sniff….

  295. gel1

    The market drop was, in theory, precipitated by the horrible employment report.  My take is the horrible feeling, caused by the lack of confidence and veracity in our government.  On Wednesday, the Pres and VP said the numbers are "blow out" positive, but turned out to be just the inverse. To me, that is intentional "lying", and if they are lying about a single report, they are lying to us about most everything. This lack of confidence will kill the market for a very long period of time. I have to add, however, Biden is just dumb and uninformed, as he has been nothing else his entire life. Obama, however is not dumb, but unfortunately, his word is not worth a small percentage of Biden’s intelligence.

  296. 1020

    Have a great weekend all!!!

  297. Phil

    Weekly/Craig – I’d have to see how they behave for about 3 months before I even attempt to answer that question.  I do agree they should be fun for spreading and all kinds of arbs but they can also be used to jerk the indexes around every week, which would be a nightmare.

    TNA/RMM – Good move. 

    Well that was fun everyone!  Congrats to the survivors who didn’t gnaw their legs off yet (that will be next week’s game plan!).  While that was a terrible finish, the RUT is down 5% on the dot for the day and I’ll be very pleased if they bounce back Monday to our bounce target (640).  We are pretty much on the lines we drew this morning (charts in main post) so just a normal pullback so far and last time the markets were this low and things looked this dire, we rallied 13% between Feb 8 and Apr 26th.  I called the top 10 days early in April and maybe I’m calling the bottom a little early here but it’s not the kind of move you want to miss out on, is it?

    So have a nice weekend and get some sun and get away from the computers because I bet we’ll be glued to them all of next week as it’s going to be wild, one way or the other. 

    Have a great weekend,

    - Phil

  298. goldman

    JRW – You mean 0.3% loss?  Check it out, TNA up a buck already in AH…

  299. Phil

    Buy List/Dflam – For sure.  Don’t forget though, we should be mainly in cash still as these are just round 1 entries.  It would be great to be sure this is a bottom but there are still a centipede’s worth of shoes to drop and if this relatively little bad news can hit us this hard, the Dow 5,000 crowd may have their day and I want to make sure we have the cash to go all in down there.  If the world doesn’t end and we go up, then we make good money on what we have and I’m sure some nice short-term plays along the way but no sense risking too much here.

  300. RMM

    Phil: last question today:
    TNA jancallers55: had sold those for 15$, now closed 30% for 7$, do I aim for getting 15$ again once market moves up: at what point do I cover those again?
     
    Have good weekend.

  301. goldman

    Gel – I’m starting to realize that to be President, you have to lie alot, and somewhat believe your lies in the process.  Do you really think Obama is being honest with the following statement today…reported on reuters and other news sources:
     
    President Barack Obama said on Friday the gain of 431,000 jobs in May is a sign the economy is getting stronger, although there will still be ups and downs going forward.
    "This report is a sign that our economy is getting stronger by the day," Obama said in remarks to about 50 workers at a large truck garage in Maryland

  302. RMM

    goldman: most of these job gains were census worker jobs. So, does not last.

  303. JRW III

    goldman,
    The truck garage used to have 634 workers !!

  304. matt1966

    Staying 1/3 bearish over the weekend.  Call me greedy!  …but I think we’re going below the February 5th low next week.  That was the big kahuna I was referring to earlier.  There is nothing but nothing to keep us up and a world of hurt to pull us down.
     
    Have a great one-

  305. goldman

    RMM – Agreed, along with the other fuzzy math used in "creating" the unemployment numbers
    JRW – LOL!  Perhaps the admin can pass another $200 Billion long term job stimulus, I hear the white house lawn needs some new sod…

  306. snow

    Geez, guys, look at this – you thought the suicides in the foxconn factory were bad; here’s an epidemic being undergirded by use of really cheap labor:
    http://www.sciencedaily.com/releases/2010/06/100603160319.htm
     
    (from your friendly board epidemiologist, and old Peace Corps TB control worker)

  307. hoss18

    Phil, thanks for the SDS play at the end of the day for $0.90, was looking for a little more short term coverage as I’d banked all the short hedges already.  So I did take that if we need to adjust on Monday or Tuesday.
    Question, on my JPM buy/write(that I’ve been on since March), I wrote the Jun 40C back in May and now see over 70% profit on the trade.  Is there anything wrong with buying that back to bank the profit and then either re-writing @ 39 or looking at July 40 instead?  Is there a hard and fast rule on buying back written calls?  I think I would like to take off anything over 70% in the money because I’m risking alot(70%) for a little(30% remaining).
    I know this is a total NOOB question, but thank you for helping me to better understand this.  The strategy has already brought my entry from $45.79 down to $38.80, so I am VERY happy with how it’s working out.

  308. jromeha

    Goldman, were you saying this when Bush was in office? I’ll give you a point for his speech being misleading, but what is he supposed to do? Would you rather him give up & just say, ‘we are f*cked.’ I’ll take hope and optimism over the fear-mongering & other sh!t we had for 8 years with Bush!

  309. kinkistyle

    jromeha:  I think Obama’s big mistake was he pumped everyone up in advance of a dismal report which ensured the huge let-down sell-off in this already fragile market.  Of course once the numbers come out, he has to spin it in a positive light, but he should’ve been more prudent with the prediction.

  310. shadowfax

    HEY! Remember the party of NO that actually caused all this, was in when it started, that started the war mentality, the lock up all noncoformers, created red light days, says this is all REVERSEABLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    I started telling everyone that would talk to me, that BS will erase the only good thing about Big Bad Bill BALANCE!!!!!!!!!!!!!!!!!!!!! Like the Karate, like Phil. Why did I not take the cheap monney, maintaining NOOOOO BEDT! That crap is totally unsustainable, your wrong, the geat Ron changed every idea in the second term and did’t stop the banking problem to come. That was 1998 where is market today!
    Stop all wars including the drug war, control imigration, stop multination corps, that will bring back jobs and the rest is crap!!!Noboby will like us HAHA they already HATE US!

  311. ravalos

    BEAUTIFUL words of wisdom Matt.. I wish you could’ve posted this earlier in the day before I attempted two day trades where I thought things were going to turn the corner.. I did close them out quick with a small loss, but why oh why was I thinking things were going to turn around when the economic news were bad?! Impressive.
    matt1966
    June 4th, 2010 at 12:55 pm
    At the end of today you’ll look at the chart and say Damn!  It’s obvious the whole day was a rout.  Why the hell did I keep thinking it was going to turn around?  I’ve been there.  Done that a lot.  Every time a trade goes against me I always look for the corner being turned.  Guess what.  Some times it doesn’t happen.  Until the chart shows you beyond a doubt that the corner has ben turned.. why try catching a falling knife?  Don’t try and force something.
     

  312. Phil

    TNA/RMM – Well, I’d say if you don’t take $15 then you are a greedy bastard.  Always look for 50% bounces so if they bottom out at $7 from $15, at around $11 you need to strongly consider selling again.

    Obama/Goldman – I think the problem is (and maybe always has been) that the President is also the PR guy for the country.  When Churchill said "We will fight them in the trenches…." England was totally screwed and everyone knew it but he damn well said it with conviction and inspired them to hang on long enough for things to improve.  Leaders have to lead and I’m not sure what there is to be gained from looking at this pre-summer jobs report, with 10M people graduating from college and no jobs in site it’s probably not a good time for Obama to say "Abandon all hope."  Is it wrong?  Probably but that’s what you get when you let the collective IQ of the country drop 30% since the 60s so all the people can pay attention to is and 8-minute segment on TV with 30-second sound bytes and 140 character tweets. 

    If I were President, I’d probably want to have a public roundtable where we discuss the economy with a bunch of really smart guys and use power-points and charts and stuff perhaps once a month for a couple of hours so the people can see what’s going on. 

    Africa/Snow – Oh that’s the place that China exploits for cheap labor so you can imagine the horror!

    JPM/Hoss – Absolutely.  70% is about where you want to consider taking them out.  Rule of thumb is 50% with over 2 weeks to go (or 30% of time if longer term) and 70% with one week to go and 85% in last week are all places you pretty much want to buy back callers and putters and look to move on.  You don’t do it for no reason but they should be on watch for action at all times.  You are doing it exactly right and now it’s a question of what we think will hold through July or maybe something happens and we actually get bullish and go naked for a bit…

  313. biodieselchris

     I wish the market was open weekends. Maybe like a half-day Saturday like my bank. Phooey.
     
    Next week is up up up up up up ………… sips whiskey ……  up up up up and AWAY!

  314. goldman

    jromeha – The country is headed for the cliff, and I’ve not really seen much difference in leadership between Dem or Repub…they both love war, they both pander to wall street, both embrace deficit spending, both accept bribes, uh I mean lobby donations from corporations, both are worried about getting re-elected above all else, etc, etc, etc.  I really don’t take sides on Bush vs Obama, they are very similiar in may aspects.  It is more dissapointing to me that a smarter and better spoken pres such as Obama would pull the same old "hope" jargon, when what is really needed in America is tough love.  Yes, I do believe we, as a country, should try the truth as the political correct lying method has failed us for decades.  Look, I’m neither glass half full, or glass half empty…I believe the glass is shattered…and I would rather talk about hard fixes and real solutions myself, and admit that our country has lived well beyond its means for decades.  Obama has/had it in him…youtube his speech concerning "deadbeat fathers"…but every day he remains in the current corrupted system, it would seem that he is losing the ability to be a great leader by simply being honest…

  315. Phil

    Market recap: Stocks fell from the beginning and kept sliding all day, thanks to… Hungary? It’s a small country that will have little actual impact on the U.S., but the early headlines added a new layer of uncertainty about European debt problems. Then when jobs failed to hit their whisper number, the die was cast for the day. As concerns intensified again, investors turned away from equities and risky assets and back toward safe-haven shelters.

    At the close: Dow -3.16% to 9931. S&P -3.43% to 1065. Nasdaq -3.64% to 2219.
    Treasurys: 30-year +2%. 10-yr +1.14%. 5-yr +0.75%.
    Commodities: Crude -4.62% to $71.16. Gold +0.89% to $1220.80.
    Currencies: Euro -1.6% vs. dollar. Yen +1.08%. Pound -0.99%.

    A New York Fed paper notes that negative-equity homeowners are counted in the Census Bureau’s homeownership rate, yet the daunting savings they’ll need means many will convert to renters – and an adjusted rate 5.6 points below the Bureau’s rate points to where the official rate is headed. (via)

    Obama’s upbeat comments on the U.S. job market earlier this week "suckered [people] into thinking this was going to be a good number," one mutual fund manager says. "No way should the president be commenting on the employment number ahead of time," an economist adds, claiming he and his advisers "need to better understand what the private sector is looking at."

    Yes, the paltry number of new private sector jobs was weak, but the report contained some positive signs for the future. Gains in average workweek and temp jobs point to stronger employment growth ahead, and expectations for wage growth were well surpassed. Besides, recoveries don’t move in straight lines.

    As if the jobs report wasn’t bad enough, there’s another worry for the markets: With over half the stimulus money chewed up, how does the economy survive? Without the government safety net, analysts say investors will need to see sure signs of strength before the market can regain sustainable momentum.

    Those who see positive signs in the U.S. economy are "living in a dream world," Bob Janjuah tells CNBC. Deflation will push 10-year yields down to 2%, and governments will mistakenly begin a global quantitative easing program worth $10-$15T, he says. On the banks: "We are seeing a repeat of 2007 and 2008 with the inter-bank market in trouble; people are ignoring this."

    "It’s going to be a horrible roller coaster in Europe," but attention will turn to U.S. problems once Europe eventually settles down, according to Matthew Bishop, U.S. business editor for The Economist. "The longer-term issues for America are really, really serious," and a new Congress after the November elections will not bring a return to fiscal discipline in the U.S.

    It’s not just Hungary – many of the Eastern European countries are on the verge of default, David White says. Even France is losing its relative safe haven status, as CDS spreads on French government debt rose sharply today.

    S&P joins Fitch and Moody’s in downgrading BP’s (BP -4.2%) long-term credit rating, to AA-. The rater placed BP’s long- and short-term ratings on CreditWatch with negative implications.

    The general consensus that the BP (BP) oil spill is the worst-ever environmental disaster is "wildly overblown," a University of Alabama professor says. The amount spilled is tiny in comparison to the amount spilled by rigs and tankers around the world every year, he says, and it’s not even the worst spill ever in the Gulf of Mexico.

    A website’s "Redesign BP’s Logo" contest attracts an interesting assortment of mockery and monsters.

    Dick Bove turns negative on banks, particularly Goldman Sachs (GS -1.2%), cutting its stock price target and 2010 earnings estimates. It has nothing to do with the SEC’s civil suit; "It has everything to do with fears in Europe, the fears in the financial markets and the widening of the spreads."

    Analysts at Goldman and Barclays cut 2010 revenue and earnings estimates for Google (GOOG -1.3%) on euro concerns. Big internet companies derive about a quarter of revenues from eurozone countries, Goldman says, making them sensitive to forex swings. But a Morgan Stanley analyst still finds a lot to like.

    Apple’s (AAPL -2.9%) iPhone 3G is no longer available for sale on its website ahead of next week’s Worldwide Developers Conference, where some analysts say a new device will be announced. The early success of the iPad will set a high bar.

    Roger Ibbotson, who’s long favored equities’ long-term returns over bonds, has a new "theory of everything" that has him advising two new mutual funds: Buy low liquidity. He says stocks with the lowest 25% of trading volume return 2.5%-8% more than their peers annually.

    Of all the stocks in the S&P 500, only one – Cephalon (CEPH +0.5%) – posted a gain today.

  316. doro165

    Well said Goldman. Its very hard to get elected speaking the truth! As its rarely heard until they stop running for reelection.
    The last President with that reputation was Truman and he had some worst polling numbers ever.

  317. biodieselchris

     haha!!!!  Phil get’s a love letter on the yahoo message boards. 
     
    I’m not making 100% a month!!!!!! THIS SITE IS A SCAM. !!!!!

  318. Jordan

    Thanks Phil, this was a trying day.  Re: discussion – I like it exactly as it is.  I can check in during the day when I have time, or read later.
    What do you think of initiating a disaster hedge here? 
    DXD Oct 2010: Buy 26 Call, Sell 26 Put and 30 Call?

  319. Jordan

    and how would you compare the desirability of these two hedges here?
    DXD Oct 2010: Buy 26 Call, Sell 26 Put and 30 Call?
    vs the one you outlined earlier:
    DXD Oct 2010: Buy 23 Call, Sell 27 Put and 27 Call?

  320. Jordan

    er, made a mistake, meant to say:
    DXD Oct 2010: Buy 26 Call, Sell 26 Put and 30 Call?
    vs the one you outlined earlier:
    DXD Oct 2010: Buy 23 Call, Sell 23 Put and 27 Call?
    Thanks!

  321. Jordan

    biodieselchris/Yahoo messages – some people do have free time on their hands :)

  322. craigzooka

    Phil, I just looked at the DIA’s and they now have weekly options as well, so no need to switch anything up.  Although now, every Friday is Options Expiration!!!

  323. lflantheman

    Jobs…… Interesting article:http://www.thestreet.com/_yahoo/story/10775460/1/job-creation-was-actually-787000.html

  324. yipcarl

    Goldman… BIngo
     
    " he wrote. "Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy."
    Carroll Quigley

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