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Advanced Pattern Recognition: Omega III Weekly Wrap-Up

What a fine and predictable week it was!

How can you not have fun when the market does exactly what you expect it to do every day?  Why it’s almost as if we stole Goldman Sach’s evil playbook (and the Russell once again is at 666) so we too can make profits EVERY SINGLE TRADING DAY – just like they do!  This is a real testament to my famous saying:

We don’t care IF the game is rigged, as long as we know HOW it is rigged so we can place our bets accordingly.

Remember it was last summer that Goldman’s secret trading program was stolen.  At the time, Goldman Sachs asserted that: "There is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."  I believe this was a misquote and what GS meant to say was that there was a danger someone ELSE could use it to manipulate the markets in unfair ways.  Was it just a coincidence that the indictment of computer thief Sergey Aleynikov on Feb 11th coincided with the beginning of this year’s massive rally or was that the day GS regained sole control of their pet program?

Does this sound conspiratorial?  Well perhaps then you haven’t read Tim Lavin’s "Monsters in the Markets," where he points out: "Algorithms now trigger 70 percent of all trades in U.S. equities. The speed and volume of everyday trading have propelled the market into a new and esoteric dimension, and rendered traders in the pits largely obsolete…  At least a few high-frequency traders have learned to make a killing by detecting the more simplistic algo strategies deployed by basic pension funds and mutual funds, buying the next stock the funds plan to buy, and then selling it to them at a higher price. This may not be illegal, but it’s almost certainly unfair to the funds’ investors. “It is increasingly clear that there are quite a number of high-frequency bandits in the high- frequency-trading community who pump up volume statistics, front-run investor orders, increase transaction costs, and hurt real liquidity,” according to former NASDAQ vice-chairman David Weild."

We certainly know better than to trust our money to fund managers!  Last Friday ("Pattern Recognition 101"), we determined that the TradeBots were following the rally pattern we now call Omega III and that meant we expected the day to finish near flat (like Feb 13th) and that the following week (this week) would look like the week of February 16th:

What we should have taken into account was that Feb 16th was a Tuesday, as Monday was President’s Day so, my bad, and the Bots filled the gap with an undecided day on Monday before the big push on Tuesday:

We are a little closer to that 1,120 line and we attribute a lot of the enthusiasm this week to end-of-month "window dressing" as funds try to impress you with their performance at the end of the quarter.  We flipped short into Friday’s close as we felt that A) The rally was fake, B) We were close to overhead resistance and C) because the Omega III pattern predicts two selling days ahead anyway. 

Of course, these are just our short-term bets that we flipped bearish on, we are still very happy with all the long-term plays we picked up while everyone was in panic mode two weeks ago and we have our Top 20 Buy List (perfectly timed on June 7th!) as well as our aggressive list of plays with 500% upside by Jan 19th if the markets keep climbing so, of course, we want to play cautiously against short-term corrections to protect our long-term positions.  If we don’t head lower next week – then we will happily take small losses on the short-term hedges as we make another advance towards our long-term goals.

As I mentioned in last week’s wrap-up, we had upped the ante on the bullish side on Thursday, with our list of plays aimed at turning $10,000 into $50,000 by Jan 21st and, we made enough money on last week’s open calls to take them off the table this week as we topped out.  We don’t slavishly believe we will follow the pattern through up an up, there are still many grave macro concerns to consider so we do take our profits when they get silly and our short-term bullish profits were getting silly indeed:

  • VLO July $17 puts sold for .97, was .82, now .35 - up 63%
  • OIH July $89.10 puts sold for $5.70, was $2.30, now .67 - up 88%
  • RIG 2012 $35 puts sold for $9.20, was $9.10, now $6.70 - up 27%
  • MTN stock at $38.50, was $39.09, now $40.53 - up 5.3% (Oxen Idea)
  • QQQQ July $45 calls at $1.08, was $1.65, now $2.50 - up 131%
  • DIA July $105 calls at $1.10, was $1.30, now $1.73 - up 57%
  • OIH July $89 puts sold for $3.25, was $2.30, now .67 - up 79%
  • TNA June $38/41 bull call spread at $2.20, was $2.20, expired at $3, up 36%
  • TNA June $38 puts sold for $1.80, was .90, expired worthless - up 100% (pair trade)
  • DIA July $105 calls at $1, was $1.30, now $1.73 - up 73%

Those were ALL of our unhedged, open positions into last weekend.  Not a bad group of suggestions, was it?  I will point out that even PSW Report subscribers, getting these trades as late as last weekend (the "was" price), could have still had a fantastic week, especially following up on our slower trades.  Once we fill our positions, we are happy to share them but do be aware that we exit when the momentum stops so DON’T BE GREEDY!  Unfortunately, as membership is closing for the summer next month, this will be one of the last times we do publish our open positions for the general public as the point was to allow non-members to follow along and get a free preview (and hopefully make some money).  Still, for now, please, enjoy:

Weekend Reading – Default or Hyperinflation for US? 

This article pretty much sums up my macro view of things.  It has now become "en vogue" to talk about global austerity and deflation but, if that’s the case, why is gold at $1,250 an ounce?  If belts are being tightened then money supplies tighten too and gold becomes worth less (worthless?) to the dollar.  If the economy is going down and we drift into deflation, then what is it gold is going to hedge you against?  What the Hell, then, is the media talking about? 

Under what premise do we say BUYBUYBUY gold while cutting budgets and paying down debts and allowing unemployment to fester and begin a deflationary cycle that drives down prices?  Belt tightening and deflation might make sense if we DIDN’T have a $15Tn debt already, it might make sense if we didn’t have $75Tn of unfunded liabilities already – BUT WE DO!  So deflation = default, whether now or next year or the year after, there is NO WAY deflation will "save" us and the proponents of NOW trying to scrimp and save AFTER we had a $90Tn party and the bill is due are not just unrealistic – they are IDIOTS! 

Just like anyone or any company that is in debt and needs to survive and avoid bankruptcy – America needs to get back to work.  We wasted $4Tn stimulating and bailing out banks (including Fed asset purchases) and we have done NOTHING for the American people.  The people should be revolting but instead 580 MILLION votes were cast for American Idol, while our President, who had 63M votes and Congress, some of whom got elected with as little as 50,000 votes, continue to sell out our national interests to Bankers and Big Business.  Man are we stupid….

Just Another Manic Monday – The Deja Viewpoint

What else can I do?  I started the week off pointing out that we were perfectly following the Omega III pattern and I pointed out that we had even been able to perfectly play Friday’s gap down and rally back reversal because it was EXACTLY what the pattern was supposed to do.  I said everything there was to say for the week right in the Monday morning post:  

Today we are hopefully going to stick to the Feb 16th plan and finish just short of our breakup points so we can have a successful "Testy Tuesday" tomorrow.  If you look over our SUPER BULLISH positions in the Weekly Wrap-Up, you can see how happy that will make us so keep in mind that we are unusually biased this week as our usually market neutral stance has tipped as bullish as it gets the past two weeks.

So it’s going to be a race to amass enough good news before the first round of FIFA eliminations puts the EU back to work, which will coincide with the G20 meeting at the end of the month.  It was very easy for us to be very bullish last week, now we have good enough news where not breaking our levels (which are, I will remind you, the LOWER levels of our ranges) will be a very serious sign of trouble so the theme for this options expiration week for our bullish plays is likely to be: "Take the Money and Run" unless we can decicively punch through our levels.

The levels we were looking for were: Dow 10,250, S&P 1,100, Nas 2,260, NYSE 6,820 and Russell 666 but, in my morning Alert to Members at 9:51, I upped our "caution" line to include NYSE 7,000 as the NYSE had lost considerable ground since February and I thought 6,820 was being too generous.  The NYSE failing to retake 7,000 and the Russell struggling at 666 got us to take the money and run on the short bullish plays this week and flip a bit more bearish into the weekend – just in case

  • TZA Jan complex spread – on target
  • BAC Jan buy/write – on target
  • BRCD 2012 buy/write – on target
  • TZA $6 calls at .63 (avg), out at .77 – up 22%
  • APOL July $40/June $45 put spread at .46, now .64 - up 43%
  • APOL July $55 calls at $1.15, out at $1.40 - up 21% (pair trade)
  • QCOM Jan artificial buy/write – on target
  • HAL 2012 buy/write – on target
  • SSO June $36/37 bull call spread at .52, expired at $1, up 92%
  • SSO June $35 puts sold for .45, expired worthless, up 100% (pair trade)

As you can see, we went on quite the bullish shopping spree as we thought the sell-off was a gift.  As I said in my closing comment to our Members at the end of Monday’s session: "On the whole, I think that was a gap-fill and a healthy pullback but they sure did make it ugly-looking!

Testy Tuesday – Are We There Yet? 

The futures were doing well but then we got sandbagged by the tag-team of DOOM, Nouriel Roubini and Mohamed El-Arian, who were part of the parade of the damned on CNBC that depressing morning.  I often call Mohamed his partner Bill "bond pimps" and I said that morning that El-Arian should have to make a simple disclosure when he is spouting off on TV to the effect of "You know, I do well when the market does badly so it’s in my interest to spin everything negative and scare as many people into bonds as possible because I’m sitting on $1,000,000,000,000 worth of them." 

I didn’t get one Email complaining that I was unfair to Mohamed but boy did I get get an earful for calling Dr. Roubini a one-trick pony, who is being used by the MSM as a tool to instill fear in the hearts of investors so they trot him out on TV to do his little show whenever sponsors like Pimpco or other Gang of 12 need to give the markets a push down.  I respect Dr. Roubini and I agree with much of what he says but if the guy is being used I am going to point it out – especially to the investing publish he is being used to scare.  So, just to clarify – I do not refute Roubini’s findings, I simply object to the way his findings are being used to generate fear and volatility in the marketplace in ways he might not be aware of.  Cramer, on the other hand, is very aware of what he’s doing to people and he disgusts me – so I hope that is clear as well…

Despite the poor-looking open, I maintained my bullish stance Tuesday morning, saying: "The Dow was at 9,500 and heading higher a year ago and we’re 10% stronger now so I maintain that my 10,700 target (1,145 on S&P) is a very fair value for equities coming into next month’s earnings.  If we can escape margin issues, then we will have room to test the next 5% move up in our range but I’m perfectly happy if we drift along the low end for now, between 10,200 and 10,700 and that’s our hope for this week – to re-assert ourselves over our bounce levels, which will hopefully become a floor for a sustainable trading range going forward – not the V-shaped nonsense we had in March and April."

  • TZA Jan complex spread – on target
  • DIA June $105 calls at .15, out at .32 – up 113%
  • BBY Jan $37 puts sold for $4, now $3.85 – up 3%
  • BAC 2012 complex spread – on target
  • BP July $30/32 bull call spread at $1, now $1.20 – up 20%
  • BP July $26 puts sold for $2.15, now .92 – up 57% (pair trade)
  • YRCW at .21, now .23 – up 12%
  • GOOG June $480 puts sold for $2.40, expired worthless – up 100%
  • BP Oct $33/July $33 ratio backspread (3:5) at net $225, now $460 – up 104%
  • TZA July $7/June $6 spread at net .08, now .12 – up 50%
  • SIRI 2012 buy/write – on target
  • SIRI 2012 $1 puts sold at .33, now .26 – up 21%
  • FXP July $35 puts at .95, out at .95 – even
  • JPM 2012 artificial buy/write – on target

We were still in bargain-hunting mode early on but, like any sale, the really good stuff was picked over by the end of the day.  Don’t forget, we’ve been buying since the beginning of the month as the S&P first tested our 1,070 line so we already have our fill of blue chips at much lower prices than we saw this week. 

Will We Hold It Wednesday – Oil Slippage

Obama gave an energy speech on Tuesday night that left me far less than pleased.  John Stewart did a better job than I did of making fun of it in a post Paul Kedrosky very aptly titled "Funny and Sad."  I rolled out my own energy plan, which goes into effect the moment I am appointed Caesar in the New Republic (because there is no way I’m going through that election BS) and right after I roll a few heads, probably as part of the coronation ceremony.   

Having already hit the top of our expected run for the week, I pointed out that we were both bullish and skeptical about the rest of the week and we kept our eye on Spain, where the crisis still threatens to boil over at any time but, lacking any actually NEW news, we let our levels be our guid but you’ll notice how our mix of picks begins to change over the next 3 days as we stop taking bullish short-term bets and look to lock in our bullish gains and prepare for a possible pullback.  In my morning Alert to Members at 9:43, I said:

We need that Russell to hold it together today and we’re not really happy with the NYSE below 7,000, which I know is harsh but that’s the difference between enjoying a bounce and actually starting to feel secure. 

We’ll see how the morning goes but I’m for being very well balanced here as we’re likely to flatline into expirations on Friday anyway and then we’ll have to wait until next week to get a real feel for where we’re going (and it’s almost time for earnings again!). 

  • SVU 2012 buy/write – on target
  • STP Jan buy/write – on target
  • TZA Jan complex spread – on target
  • POWR Jan buy/write – on target
  • UNG artificial buy/write – on target
  • CHK 2012 buy/write – on target
  • FRE at .55, out at .75 – up 36%
  • USO July $33 puts at .51, now .47 – down 8%
  • INTC Jan artificial buy/write – on target
  • RIG 2012 buy/write – on target
  • WFR Jan buy/write – on target

At 3pm I warned Members: "We are still looking toppy here – not feeling the breakout and BP is driving what rally we do have" and I had already reminded them earlier in the week: "Don’t forget – it’s not a profit until it’s cashed and back in your pocket – don’t leave gains on the table if you have ANY doubts we’re going to hold out levels."  Hopefully, everyone has that concept down.  My closing comment at 3:58, was: "Notice S&P NOT holding 1,115, RUT right on 666 line, NYSE still not at 7,000.  We’re holding up but it’s an ugly hold."

Jobless Thursday – Productivity and Prices are Peaking

I put up a Dow chart for the morning and painted our top line of resistance on the Dow, based on our 5% Rule, at 10,455.  Where did we finish the week – 10,450.  Just as I said in the morning post: "Close enough, right?  Of course we don’t base our decisions on pattern matching (which can give you many false positives) but when we feel the fundamentals are the same AND the market movement looks the same, then we get pretty interested in watching how that pattern is playing out!  so today should be a flat day and we most likely flatline into expirations, which would be good as we still need to form a base but the question remains – do we have enough good news and data to take us back to the top of our range at 10,700 (1,140 on S&P)?

I think laying out the market moves for the next 48 hours is a pretty good way to start a Thursday, don’t you?  Our friendbuddypal Jim Cramer must have let his PSW subscription lapse because he simply had no clue what was going on in the markets and he had a little temper tantrum which we talked about in the morning.  He was dead on with his Shakespearean close though as his show is certainly "a tale told by an idiot, full of sound and fury and signifying nothing" and now I’m wondering if his own staff is starting to hate him and feeding him these fall-guy lines…

I predicted a dip, we had a dip (poor Philly Fed at 10, weak Leading Indicators).  I predicted we’d recover from it and we recovered – yawn…  Actually boring is good, boring means we’re in synch with the markets and making the right moves at the right times and we even caught the fake, Fake, FAKE move in the Yen as it was being pushed up against the dollar like some reverse version of Sysiphus’ stone, constantly gaining ground against the dollar no matter how hard they tried to push it back down every night.  Unfortunately, my biggest concern of a new rally killer was the possibility of EU stress tests and now it looks like they are on the table – one of the main reasons we flipped more bearish ahead of schedule.   

  • GLL July $37 puts, sold for $1.30 (avg), now $1.50 – down 15%
  • QQQQ July $46 puts at .85, out at $1.05 – up 23%
  • AAPL June $270 calls sold for $3.10, out at $2.45 – up 20%
  • AAPL July $280 calls at $6.75, out at $8 – up 18%
  • TBT July $38 puts sold for $1, now .95 – up 5%
  • TNA June $47 calls at $1.20, out at $1.60 – up 33%
  • Copper futures at $2.9085, out at $2.915 – up $12.50 per 0.0005 per contract!
  • OIH June $104.10 puts at $2.02,
  • TBT 2012 buy/write – on target
  • TBT 2012 complex spread – on target
  • INTC 2012 artificial buy/write – on target

I called an end to short-term bearish plays just before the turn, at 3:19, saying: "Volume at 3:15 is 99M on Dow, still super-stickable so take those short profits!"  At 3:51 I said to Members: "LOL – Look at what candle we’re forming today and compare it to the Feb 19th candle in the morning post.  We are still right on that track!"  Just after the close, at 4:19, I concluded:

That was some very insane sticking today – you can see why I’m so quick to take profits off the table!  Obviously, there was no news or any other justification for it – it’s just a goose to make us look positive so the international spin cycle can continue into Friday’s close so Nomura can make their numbers, and CS and BCS can make their numbers etc.

Note the Russell is once again at 665.85 – those last 0.15 points are still too much for it.  NYSE at 6,982 and they haven’t hit 7,000 yet.

Flatline Friday?  Economy and Markets on Hold

We love day-trading during expiration week and I was very jazzed to discuss it as I had gotten a nice comment from new Member Flipsiceland the prior day telling me:  "Thanks Phil, just paid for my 3 month ‘prescription’ for the members service, in one and half hours."  We are not really a day-trading site but we have our share of day-traders and, frankly, in this choppy, crazy market – it’s a great strategy and, since our overriding strategy is to "go with the flow," we end up doing more day-trades than usual because A) We still have a ton of cash on the side (75%) and B) Our long-term positions are well-hedged so it’s like watching paint dry waiting for the broader market to pick a direction

We are also blessed to be able to follow the incredible JRW and his "Rut Pack" during the day as they move in and out of positions on that index like a precision fighter squadron and, of course, David Ristau’s Oxen Group, who do as well picking ordinary stocks to buy and sell every day that he gives even the best option traders a run for their money.  That’s what makes day-trading fun.  We usually do not intend to make day trades but if we blow past my 20% targets in a single day – you can be damn sure we’re going to take it off the table!  Making 20% in a single day is a run rate of 4,000% over a year’s worth of trading days - unless your normal ROI is better than 4,000% annually – it is just plain stupid not to take 20% or even 10% profits when offered up in a single day.   With stock trades, that expectation drops down to 2% and you’ll find the bulk of David’s picks do look for 2-5% gains – one of the reasons I love his style!

Paul Krugman and I were both outraged at the irresponsible fiscal rhetoric (the part where they want to act "responsibly" all of a sudden) and I went in to one of my bi-monthly liberal rants that was really a continuation of the topic we were pursuing in Member chat the night before.  I was very concerned about the effect increased taxes will have on 100M retiring Baby Boomer’s long-range planning but no one else in the media seems concerned so I guess I won’t worry either and, as I said in Friday morning’s post: "It’s options expiration day and it’s my job to take care of my people and make sure they can take advantage of this nightmare and make some money because we damn sure won’t be able to count on Social Security to get us through retirement."

On options expiration day we like to take small gambles I call "craps rolls" as they are pure risk and we don’t play for more money than we would be willing to lose on the roll of the dice in Vegas.  They are fun, high-risk, high-reward trades but still – not so much fun when we lose!   

  • TZA July $6/8 bull call spread for .55, now .50 – down 10%
  • TZA July $6 puts sold for .50, now .42 – up 16% (pair trade)
  • DIA June 30th $103 puts at .83, still .83 – even
  • USO June $35 puts at .23 (average), out at .10 – down 43%
  • USO July $33 puts at .50 (avg), now .47 – down 6%
  • DIA $103 puts at .05, expired worthless – down 100%
  • GLL July $37 puts sold for $1.40, still $1.40 – even
  • AAPL Jan artificial buy/write – on target
  • SSO July artificial buy/write – on target
  • DIA June 105 puts at .50, out at .60 – up 20%

At 1:13 I noted to Members that the action for the day was winding up, saying: "1pm – that may be about it for the fun kids"  and at 1:33 I pointed out: "RUT still at 666…  Notice they and the NYSE (6,984), which are the two hardest indexes to manipulate, are both below their breakouts while the others are well above.  Very suspicious."  Although we went bearish into the close, the second to last trade we added was the short-term 300% upside SSO trade – just in case our bear call gets burned with one of those famous Manic Monday moves up. 

We are now torn between fundamental concerns that tell us we may still get a sharp correction back to 10,200 at least and the Omega III chart pattern that has now been holding up for over a month.  The July losers on Friday were necessary to balance us out into the weekend as we are pretty long-term bullish overall.  Sadly, they messed up a nearly perfect week with just 2 misses in our first 56 trade ideas (including Friday’s carry-over 10 for 10) but the 4 for 10 performance on Friday dragged us down to 6 misses on 66 trade ideas this week – not terrible but I’m mad at myself in retrospect for not just sitting on the TZA covers and sitting options expiration day out.  Just because we’re way ahead doesn’t mean we should gamble! 

We’ll see if our pattern holds up yet again next week but, if it does, it’s going to be dull one although, if we do get that dip and hold it early – we will have a chance to hit the Buy List one last time before it’s too late to catch all the bargains.

 


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  1. Phil,
    I never saw the GS "secret Sauce" article before. 
    It never ends!!!  The evidence that the entire market is being manipulated is overwhelming.   The more I read, the more I believe that GS is the kingpin behind it all.  You mentioned during one of last weeks posts that Cramer was just another pawn of GS and that what he say’s has to be interpreted in that light, thus, he’s a critical tool of PSW strategy of taking a contrarian view of his comments.  Very interesting.  It’s all starting to make sense now!!!


  2. Sadly it does…  A lot of Members say joining PSW is like taking the red pill in The Matrix.


  3. JRW,
    I had a question related to some of the information you provided last week.  I’ve been playing around with the chart settings this morning, trying some of your settings.  You said you use a 3 day 8EMA to determine reversal.  (I assume that’s a 8 period exponential with  a study shift of 0).  It looks like these setting do a good job of tracking revesals.  Are these the settings you are using.
    Also, someone said while trading last week, "to watch the Stoch".  Man, I played around with the Stoch all morning using the Soch RSI set at Stoch period 14, RSI period 3, Slowing 3, on a 1 min chart and it’s all over the place.  When I plot it against what went on the last few days, it doesn’t show me anything.  It goes up when the market goes up, it goes up when the market goes down and vica versa?  Am I doing something wrong or am I missing something here?  The same thing holds true for the momentum indicator. 
    The books I’ve been reading are outdated and talk about computer programs like there some kind of future event.  Do you know of any current book or website that explains the use of these studies in detail?


  4.  HI Phil,
    Here’s my post from yesterday which you told me to remind you of:
    "So sorry for the numerous posts.  I want to get into the tech space.  Not an AAPL fan only coz i’ve got burned trying to go against the price action and with my luck, if decide to go long, it will start to fade and drop a bit.  Been so much better off playing RIMM and GOOG.
    ANYWAY, wanted to get your (anyone else for that matter)  thoughts.  I don’t have enough capital to build a big tech position and now have to decide between a few players.  Should I go with large caps like IBM or more growth oriented stocks that make a play in cloud computing?  I used to hold HPQ and don’t mind going back into it but between HPQ and IBM, I’m inclined to go with IBM.
    As for growth oriented stocks, soooo many to choose from!  I like SFSF and CRM for SaaS play but also like VMW.  If I like VMW, then I ask myself, why not go with EMC where I get VMW (cloud computing) and a storage play.
    Thoughts on these or other great ideas?"


  5. Phil  – you’ve been commenting on the increasing wealth and privilege gap recently, and this
    http://www.latimes.com/news/local/la-me-banks-20100619-31,0,6954577.column
    points that up very well. I’m sure many of you heard about the peasants getting unruly after the Laker’s winning the NBA championship, with none of the backstory that Banks provides. This is exactly the kind of thing Phil has been raising concerns about.


  6. exec,
     
    My conformation chart is SS Pro 2 day, 3 minute, using candles against the 8EMA. I show the 40 and 200 SMA, pivots, MOM Stoch 14, volume, Bollinger Bands and my own trend lines.
     
    My primary trading screen is a 1 minute OHLS with most of the same but being quicker, I watch the Stoch for an upward Z formation near or above 50 with RSI support and momentum pointing up. All of this primarily at my lines of course but I am only following Mr Market’s lead regardless of my lines. If I go in 1/2 on the surge ( Stoch Z ) and then get conformation from the 3 minute, I usually go all in.
     
    This can be done with any stock or ETF; I use the Russell because of diversification yet greater volatility and therefor greater potential for profit !!
     
    Good hunting


  7. In your weekly wrap up showing trades and wins you did not mention this post from June 14: 
    "I’m for taking the downside hedges here, naked on DIA mattress play (Sept $105 puts, now $6 and good for a new entry) and I also like the TZA $6 calls at .70.


  8. Phil – You know what the-goldman-rule is…."Doing God’s Work", of course…=D  Goldman is by far the most powerful "market mover", reaching almost 80% of all trading volume at certain points right after March of 2009…it became obvious way back then that they had connections and control beyond anyone’s imagination.  I’ve done my research on GS…but it is difficult to get their research papers, and unless you have a minimum of $10M to start a "premium" client account, I’m not sure how you gain access to their esquisite club.  Even with their top account holders, GS will "roast you" if it pleases their corporate financially goals…so I’m not sure any client really has the true inside track 100% of the time.  Phil, I forwarded "admin/Greg" an email "alert" I sent out in December of 2009 to a wealthy friend concerning a part of my GS research…I believe you will find it intriguing…
     
    That said, Goldman is not the only player in town…last quarter alone, the four largest banks (GS, BAC, JPM, C) made profits that averaged $100 Million a day each,over 100% of the trading days of last quarter…a perfect record, beyond probablility or logic.  What was really surprising for me was how little MSM attention was given…the article I’m posting below is from NPR:
    http://www.npr.org/blogs/money/2010/05/a_perfect_quarter_for_four_big.html


  9. Phiil, do you mind commenting on HOV?  I’m in buy/write with a basis of around $3.20 if put to me.  Right now I’m still in good shape, assuming it is around this price at the end of 2011.  But with housing continuing to look weak, and HOV losing about a third of its value in the last couple weeks, I’m getting a little concerned.
    Has your outlook on HOV and/or housing in general changed?
     
    This is pretty much the only play that I have from your buy list that looks a little shaky by the way, everything else is looking great, and my account is up 10% in 5 weeks, with about 60% still in cash!  So your efforts are much appreciated.


  10.  I’m getting frustrated, this is the third week in a row I read about all the profitable trades "we" had, that I didn’t see where they came from. I spend hours each day combing through this site, reading articles and comments.
     
    For instance you say the 10,000 to 50,000 picks by january were winners, and go on to list many positions, but only two of which I find in the article (BP & YRCW). When I read the article YRCW was at .26, far above your .21 entry. I try to search for these trade ideas for the others on the site but I can’t find them. 
     
    How do I avoid this same frustration come next saturday when you list all the successes in your weekly wrap-up? I read, read, read, and read and it seems I’m always missing out on the party. This past week I took your TZA hedge suggestion but that is just for insurance not profit. And July USO 33 puts & DIA June quarterly 103 puts. I saw a suggestion to sell WFR puts at $.80 but never got filled for me all day.
     
    Can someone tell me where to focus on to find these trade ideas that always turn up in the weekly wrap-ups that I always miss out on? So far the only trade successes I’ve had are from David Ristau, and my own personal ones. It’s really frustrating to invest so much time reading here and miss out week after week. I could use some help. I have been through the new members guide.


  11. Phil,
    Bought TBT for $38.04 and sold Jan  $39.00 puts for $5.58. Since rates are staying low (for now) I am wondering if I should sell Jan $44 calls for $2.00 to lower my basis and still have nearly $6 of upside, plus a total of $7.58 for the sell of the puts and calls or do you think it is unwise at this point to cap the upside?
    Thanks!


  12. OIL SPILL UPDATE
     There’s a great comment over at OilDrum about the state of the oil spill.  It’s about 10 pages of text and worth the read.  This is by far the best analysis I have read on the subject.
    Also, a post that goes well with the Oil Drum author’s conclusion that the structure of the well is falling apart.
    He makes a comment after extensive footnotes to his opinion (including a ridiculous WSJ article on why top kill failed).  Here is the comment in full:

    I used to cover the energy business (oil, gas and alternative) here in Texas, and the few experts in the oil field — including geologists, chemists, etc. — able or willing to even speak of this BP event told me early on that it is likely the entire reserve will bleed out. Unfortunately none of them could say with any certainty just how much oil is in the reserve in question because, for one thing, the oil industry and secrecy have always been synonymous. According to BP data from about five years ago, there are four separate reservoirs containing a total of 2.5 billion barrels (barrels not gallons). One of the reservoirs has 1.5 billion barrels. I saw an earlier post here quoting an Anadarko Petroleum report which set the total amount at 2.3 billion barrels. One New York Times article put it at 2 billion barrels.
    If the BP data correctly or honestly identified four separate reservoirs then a bleed-out might gush less than 2 to 2.5 billion barrels unless the walls — as it were — fracture or partially collapse. I am hearing the same dark rumors which suggest fracturing and a complete bleed-out are already underway. Rumors also suggest a massive collapse of the Gulf floor itself is in the making. They are just rumors but it is time for geologists or related experts to end their deafening silence and speak to these possibilities.

    Here’s a video of oil leaking from rock cracks in the seabed floor.  
    Everything is deteriorating.  This will probably take the mainstream press at least 4-5 days to report, as they have been behind the bloggers by about that much, so don’t expect an immediate reaction in BP’s stock on monday.  A lot of what just came out this week on the flow rate was released by skytruth.org about 3 weeks ago, so it can take quite some time.


  13.  Brief note on the above:  The oil drum commenter is not an "author" just a commenter.  Don’t know who he is, but the comment is well researched.
    Also, think about the damage to St. Joe, the real estate venture on the Florida panhandle.  The spill is getting closer to it, and the fishing ban now covers the coast off of Panama City, just north of the St. Joes area.   In the past, oil has arrived about a week or two after fishing bans.  But it all depends on the currents.  In any case, the fishing bans are updated about every week. So expect the next week it will be extended to St. Joes area, and then the tar balls and smell of oil should arrive about 1 to 2 weeks later.
    The endgame on this will take some time, but total environmental destruction seems inevitable.  One thing that speeds it up is the inevitable gulf storm, which will occur in the next two months.
    Remember not to trade emotionally however much you love the ocean and birds.  Timing is everything.  ;)


  14.  PHIL.
     
     What’s your take on this trade?
     
     Buy BP @ $30 == 100 shares
    Sell BP Call $35 2012 = $7.80
    Sell BP Put $30 2012 = $7.30
     
    == Cost Basis ($30 – $15.10 = $14.90)
     
     


  15. JRW,
    Ok…now I’m getting frustrated.  I assume you’re referring to the Stoch RSI when you say MOM Stoch 14.  I have SS-Pro and there are 4 different Stoch options, non being a MOM stoch option.  Currently I’m using the Stoch RSI and there is only on occilating line so I don’t understand the Z pattern that you are referring to.   Does Phil allow screenshots on this forum?  I’d love to see a screen of your primary chart for reference.


  16. exec / Z pattern
    Yes on Stoch RSI
    When black pierces red in an angled Z; think Nazi SS kind of Z. Just look for it; after a few days, you will recognise it.


  17. JRW – From one of your moves on Friday, shown pasted below, when would you get out "IF" the position started to fail…$0.15 down, $0.25 down, do you have a bail-out percentage range in order to not lose huge amounts of money?  Getting into a position with thousands of shares is one thing, getting out if a trade goes bad , without loosing thousands, can be challenging.  You must eat your wheaties every morning (perhaps play some relaxing classical music, get a foot massage, etc…=D), as I’m often times into a trade near your entry, but exit either too soon when it "woobles", or sell up at only a $.40 gain on TNA as it approaches one of my intermediate levels .  My entry ability is usually much better than my exit ability…I’m sometimes too fast on the trigger, not patient enough.  Your patience is amazing…I’ve noticed you will often time ignore a $0.40 rise, and bank on something closer to $1.00…even if it means you end up break even on the trade. 
    —————
    JRW III
    June 18th, 2010 at 10:57 am | Permalink  
    Capt.
     
    I had a line at IWM 66.47 so when it turned I went long ( $47.44 ) thinking they would take it to 66.90 or better, then just waited for it to lose strength to get out. I pulled 1/2 too early, but I’m a big believer in Phil’s two rules when you have a profit in a choppy market:
     
                                                     1) TAKE THE MONEY
                                                     2) RUN   !!


  18. Phil,
    To date, I haven’t taken any of your advice on your favorite picks because I’m relitively new to PSW and don’t completely understand all of what is going on.  In your post today, it says you took a lot of the calls off the table.  I’m sitting on cash that I don’t day trade with and need to find a place for longer term.  Do you typically set up a buy list that you execute or is this an evolving list that grows and shrinks continuously?  I’m anxious to get started executing some of your picks, but have been cautious because I’m not certain where all the picks are in the life cycle of the trades.  Is there a location on this site that organizes all of the current trades or are they compiled from your posts in the comments section?


  19. JRW,
    I’m missing something here.  I don’t have a black and red only one occilating line.  Do you have an email that you exchange infor with other members?  I could send you a screen of my chart.


  20. Phil or anyone that may know,
    How will the a reverse spilt affect the TZA hedging strategy?


  21. jamesdstark – Phil’s winning trades (that are listed above) come from his comments in BOLD that are contained in his BLUE BOXES that appear throughout the day (Monday – Friday) ON HIS BOARD starting shortly after the markets open until the market closes.


  22.  Matt Simmons latest on the BP oil leak.
    It’s worth taking a look at the former Bush advisor on oil looks, at the end as if he’s about to cry.
    http://www.youtube.com/watch?v=gBL_MUGtWds&feature=player_embedded


  23. Occam/ Leak
    it is complete BS, my dog understands in Balet more than this guy in oil business :)


  24. Exec/jamesdstark- buy list/trades – click on the link at the top of the page- "portfolio" to find the buy lists.
    Phil updates from time to time and in my opinion are good shopping lists from which to prepare one’s own buy list. The daily chat is also a source of excellent ideas as many members have suggestions which are worth a look. Also, during the daily comments, Phil and others present trade ideas which are shorter term – hourly, daily, weekly etc. These are not for everybody because sometimes these very attractive shorter term trades turn to longer term commitments (AMZN comes to mind). So, one needs to separate the long and short term ideas. Until one is familiar with the context and "lingo" it can be a bit confusing.
    I maintain my own buy list which is a minimal selection of 5- 10 companies which I like. These picks are some of my own plus from the buy lists and member suggestions. I have entry points and trades ready and enter orders accordingly. This means I miss entries often (since I always try to get it a little cheaper) but I don’t chase because there will always be another better buy coming down the road soon.Besides, the one I want may very well come back around to my price or better.  The bottom line is I want to only own very good, solid companies and I only want to buy them for less than what they are actually worth. The key is that Phil’s , mine, or your opinion of  value may be different. That is what makes a market.
    Another thing to keep in mind timing. I have found Phil’s ability to read overall market levels to be rather accurate. Again, one needs to sort out the short/long term. Day to day fluctuations are very important for the short term trades and for getting good prices on long term picks. These fluctuations don’t mean much otherwise. The longer term market levels are important for being ready for long term entries. Back when S&P was bumping 1200 , it was not a good time to be buying. Now, it is a good time to be at least "nibbling" or "scaling in " to what you want. A casual reading of Phil’s daily comments can give one a gloomy perspective. If one sorts out the political rants, you will see a lot of good data and analysis. Phil’s politics are, IMO, almost always wrong (sorry Phil :) ) but his economic analysis is generally pretty good.
    So, I found it takes about a year of daily following to get a decent grip on how things work at PSW. I have learned much that is good and found a few new ways to get in trouble. What’s most important, is now I have tools to get out of trouble.  


  25. Happy Father’s Day!

    Techs/Jdub:

    • IBM at $130 bothers me a bit but, of course, a great staple to have in a portfolio so I would "buy" IBM for $112 by selling the 2012 $110 puts for $9.50 and  taking the 2012 $120/150 bull call spread for $11.50 for a net $2 entry on the $30 spread.  Your worst case is you have IBM put to you for net $112 and you start off $10 in the money with $20 more to gain so your upside ($30) is as good as if you buy the stock at $130 and it goes to $160 (up 23%).
    • INTC pays a better dividend than IBM (3% vs 2%) and that kind of tips me towards ownership.  One very simple thing to do is just buy the damn stock for $21.40 and sell the 2012 $15 calls for $7.20, which is crap for upside but drops your basis by 1/3 so, from a dividend perspective, you are effectively raising the .63 annual dividend from 3% of $21.40 to a respectable 4.4% of $14.20 with FREE 33% downside protection on the stock.  That means, if you were going to buy 1,000 shares of INTC for $21,400 to collect a $630 dividend, you can now buy 1,500 shares of INTC for the same $21,000 and collect a $945 dividend.  You can even go crazy and sell 15 2012 $15 puts for $1,950 which, according to TOS, would cost me a net $1.048 in margin and that will bring your total return to over 13% with the worst case that you own 3,000 shares of INTC at net $13.95.
    • WFR is a nice little chip co.  $11.76 for the stock and you can sell the 2012 $10 puts and calls for $6 for net $5.76/7.88.
    • AAPL, I hear, is a nice little computer company and, if you want to buy them for $145 you can sell the 2012 $155 puts for $10 and TOS tells me that’s net $5,129.04 in margin for 10 contracts (buying power effect), which seems like a reasonable amount of money to put aside to make $10,000 in 18 months.  Always keep in mind though, that, if the stock does drop severerly, the margin requirement goes up.  This is never a problem if you REALLY wanted to own AAPL at net $145 and you have your 50% of $145 on the sidelines for that purpose.  That doesn’t mean you can’t day-trade the $14,500, nor does it mean you can’t have it set aside in some ultra-safe trade like INTC, knowing you’d have to liquidate it in an AAPL emergency but it does mean you’d better damn well mean it when you sell ANY kind of put because (in this example) it’s not about whether AAPL hits $155, it’s about whether you can stand the puts going to $25 and the margin doubling if AAPL drops $50.
    • AMAT is very under-rated as a general upside play on tech.  They made a big investment in solar fabs that is killing them right now but I like the long-term suvivability and you can buy them for $13.34 (2% dividend) and sell the 2012 $12.50 calls for $2.80 and the $10 puts for $1.15 for a net $9.39/9.70 entry that makes the .28 dividend 3% and gives you a pretty nice 33% call away at $12.50.  
    • DELL is a fun pick because I think it’s getting almost impossible now for them to disappiont us as the expectations are now so low.  The stock is at $14.04 and you can sell 2012 $12.50 puts and calls for $5.45 for a net $8.59/10.55 entry.
    • CSCO took a nice dive recently and that makes them a fun risk candidate into earnings.  I like selling July $24 puts for .92 since I think CSCO is a buy at $23.08 but it’s only $23.49 now so why quibble when the 2012 $22.50 calls can be sold for $4.40 and the $20 puts can be sold for $2.10 for a net $16.58/18.29.
    • QCOM is another candidate for stupid dividends tricks at $35.69 but the dividend is just .76 (2%) so I’d want to go aggressive and sell the 2012 $25s for $12.25 and the $25 puts for $2.05 (net $1.20 margin on the puts) so we’re laying out $23.44 for the stock and $1.20 margin on the puts, and collecting about $4.50 for our troulbes for a respectable 19% in exchange for our agreeing to own QCOM at $25.

    Those are lovely blu-chippy plays you can get into.  I do not like CRM at all as they are valued way high and can be replaced by a better or cheaper program.   SFSF looks more like a short to me, if they miss earnings or gudance they’ll be back below $20 very fast.  VMW is also nice but not cheap and I don’t see cloud computing as being a defensible business model, especially when AMZN is making money on it so how far behind is GOOG going to be? 


  26.  Phil,
    Re: the possible longer term positions you just mentioned (IBM, INTC, AMAT, ect.) 
    Do you feel that presently this is a fairly good time to begin scaling into these types of positions or would you recommend waiting for a nasty down day or two with the VIX spiking upward so as to juice the option premiums and lower the stock prices?


  27. "Phil’s politics are, IMO, almost always wrong (sorry Phil ) "
    Laugh!!!……Why is that Pstas???
    I haven’t been around long enough to know Phil’s political views, however, I have detected a bit of a liberal bias to some of his comments.  Come to think of it……wasn’t he just defending Socialism the other day.
    Man….we’re definitly going to clash one of these days if he’s a hard core lefty.


  28. Pstas,
    Thanks for the info.  I suppose if I’m totally honest with myself, the reason I haven’t jumped in on any of the options suggestions is that I’m still not totally comfortable with all the terminology and don’t fully understand the entire system.  I still don’t have a disaster hedge in place and therefore given the current market enviroment and my bearish opinion, I’m a bit worried about going long without a full understanding of how it all works and having protection in place.
    JRW has been very helpful with the day trading, but I intend to focus on the longer term strategies in the near future.


  29.  Thanks a ton Phil on the picks, strategies and most of all the RISKS!  
    Just a couple more of questions(no strategies necessary) and comments. 
    -you were hesitant on IBM at these levels so if i said HPQ instead (which has taken a hit) since they almost have the same business model (with the exception of HP’s PC units which makes me really think 2x) would you be more open to it?
    -i know you love INTC, but how about using the strategy on another blue chip like TXN?
    -and just thoughts on EMC/NTAP and the likes (again no strategies required)?
    -AAPL just scares me as the likelihood of it shooting much higher is just about as high as it just falling apart. not just a gloom and doom perspective but it’s wall st.’s darling right now with CNBC tossing the pompoms.  
    -Dell just reminds me of PALM where everyone thought it can’t get any worse but it did.
    -Love the CSCO trade a lot!
    -QCOM: been thinking about this long and hard for the past several weeks (thank goodness it hasn’t done much since then) and my one BIG concern is that they focus on CDMA technology.  Not really good when the rest of the emerging world uses GSM. I’ve heard talks of a new technology revolving around both set ups but again, they are all talk.


  30.  Phil
     
    I am reposting this on the weekend  as per your request.
     
     I have put a list of the positions to build the 25% buy-write portfolio, but have a bunch of questions. I am posting after hours for that reason. Sorry if it is a lot, but want to make sure to position myself better this time.  For some I didn’t put the actual plays as the ones posted are no longer applicable so Im hoping to get some entry points here (perhaps these could be used for the weekend buy list?).
     
    TECHNOLOGY
    INTC  2010 15/22.5 $4 15P $2
    AAPL Not sure if right time now and how to play it?
    TASR Do you still like it now?
    GLW
    POWR
     
    FINANCIALS
    C (I hold now 4000 shares bought at 5.06) will trade for 2.50/5 4p Net .23
    BAC Buy Stock 15.8 Sell Jan 15 C/P’s for $4.30
    Not sure if doing also the XLF as I would have 3 positions in Financials?
     
    COMMODITIES/MATERIALS
     
    VLO (do you like VLO better than CVX?) Buy @ $18.2 Sell Calls/Puts 2012 for $
    FCX Jan 2011 55/75 $10 2012  55 P f$10.70  Not sure I understand why the huge mismatch on the expirations?
    OIH is there still any upside left here?
     
     
    DIVIDEND/DEFENSIVE
     
    MO 
     
    FOOD/AGRIGULTURE
     
    MON
     
    CONGLOMERATES/BLUE CHIPS
     
    GE  16.2 2012 15 P/C $7
    CAT No play posted
    BA  
     
    HOUSING
     
    HOV (do you still like them, having lost 40% since post? I like getting in at a better price but not sure if the fundamentals are good still?)
     
    HEALTHCARE
     
    PFE
    MRK  I think you like this one better than PFE right?
    DCTH  Do you still like it with the big price retreat from posting time?
     
     
    I hold these long, which should keep by adding protection?
     
    T  (up 5%)
    AMT (up 5%)
    EXC  (down 20%)
    TBT   (down 10%)
     
    One thing I don’t have clear is how do I account for the $120K in buy writes that I need to setup. I mean to say do you add up the stock owned, plus the outlay for option premiums plus the posible outlay of cash to purchase positions put to you? Or how is it done?
     
    Hedges:
     
    I really like the new hedge you posted today with TZA. Boy that is some cheap insurance…
     
    On the TZA hedge, you can now take the Jan $4/10 spread for $1.45 and sell 2012 $4 puts for $1.30 for net .15 on the $6 spread that’s already $2.39 in the money so it’s up 1,493% to start and has a max gain of 3,900% so committing $450 to 30 contracts has an upside of $18,000 at $10 and your worst-case obligation is you own 3,000 shares of TZA at net $4.15 in 2012
     
    But I still currently have the following hedges, which I need to reshuffle to properly cover the buy-writes I am about to enter… Would killing them and exchanging for the TZA be better?
     
    29 DXD Oct 23/27 and 24 23P’ for Net $1,892
    30 SDS Sep 29/36 30P for Net $3,060.
     
    These would cover roughly $30K in losses, so I would be covered (with the 20% cushion on the buy-writes), for a 45% drop in the market.
     
    Sorry for the very long post…
     
    Thanks a lot.
     
     


  31.  Sorry, I’m new. The words "according to TOS" – is this a calculator?
    Thanks


  32. lunarman
    It is just the Think Or Swim brokerage service  that most of the members of this site seem to use. He just checks how much margin is required for each trade through them. Your brokerage firm may have different margin requirements.


  33.  Phil: you forgot to list this trade you posted on June 8:
             FAS Jan $10/20 bull call spread for $3 is a nice way to play a recovery. FAS is currently $19.68 so you make 200% if we hold this line.  You can sell the $9 puts for $2.20 to make it a net .80 spread and if FAS falls over 50%, you own it for net $9.80 and, since that would double FAZ to $35, you can take the Jan $23/32 bull call spread for $1, which pays $9 if FAZ is up 50%, which would pay for all the FAS you have to buy and it raises your cost back to $1.80 on the overall spread
     
    The bull call spread is now worth ~$7, and the puts only ~0.70.  So they are already up more than 100%!
    Unfortunately Phil, I didn’t take this or any other of your bullish calls and am now kicking myself.  I am still mostly observing.  The challenge for me is that there are too many trades that I don’t know which to take.  I don’t know if it’s possible; but if you could single out a few trades per week that you like the most, it would be helpful for people who can’t trade so frequently.
    Jamestark: I copy/paste Phil’s trade ideas into a word documents so that I can track them easily.  But I don’t do that consistently – only when I have time.  If you or other people have an interest, I could post them after hours.


  34. amatta – MRK – that is me liking them better than PFE, but from a cash outlay, PFE pays the same dividend.  My problem is on P/E. MRK is 7, PFE is 14…..so who is right.  Either PFE goes down or MRK goes up.
     
    DCTH – hold until the signs in the fall show that it is being accumulated again.  Right now, I think they retreat a bit more, then I am going to DD.  Kinda like SPWRA, who were beaten down, thrashed, hung out to dry.  Now they are starting a slow rebound. 
     
    Happy Father’s Day to all!


  35.  Thanks rj_jarboe – ah yes I’ve seen TOS before. I’m with Schwab and only trading common stock – doing great after an initial two week horror show 6 months ago flushing all (most) of my emotional hangups out. Now wanting to master the options game so naturally I ended up here. What a great value for the money.


  36. Does anyone follow Garmin, they look tempting at this level. 
    Garmin GRMN is @ 32.00 down from 40.00 in April after reporting a bad first quarter. The 2012 $30.00 puts and calls are $12.80. They pay a 4.7% dividend, 32.00-12.80=19.20/24.60 30.00-19.20=10.80/19.20=56%+7% dividend=63% in 18 months if called and a 23% discount from current price if put to.


  37. Riots/Snow – A lot of pent-up aggression in the people, we’re just waiting for the right spark to start the revolution I think…

    As we’re halfway through the year and coming to earnings, it’s a good time for new Members to read my "2010 Outlook – A Tale of Two Economies" from December, where I go into detail about how the economy can look so different from different viewpoints – which is very important when sussing out what the earnings reports really indicate.  A couple of already points of interest for those too lazy to read the whole thing: 

    Let’s not kid ourselves, America, we have effectively re-created a slave-driven economy but we’ve wrapped it in the flag and keep the slaves in line by providing them with cheap beer, happy meals and 200 channels of corporate entertainment while drumming into their heads that all they need is a dollar and a dream and they too can step right over the fallen bodies of their fellow workers to join us at the top of the pyramid.

    Our conservative Members who are worried about having to deprogram me should take heart in this statement (although it was tongue in cheek):

    OK, liberal rant over now – I feel better having indulged my Dickensian side and identifying with the plight of the workers but workers don’t buy stock market newsletters so f*ck them, right?  We are investors and we shouldn’t be worried about if it’s FAIR or RIGHT that we have established an economic engine that funnels the wealth of the nation to the top – if you are reading this article, then chances are you are on or near the top and our job is to figure out how to maintain or improve our position and my biggest failing of 2009 has probably been worrying about the long-term repercussions of impoverishing 295M people when really it’s just us (me and my 9,999,9999 economically close friends) that we need to worry about and we have jobs and money and assets and stocks so, once again – F*ck those people!

    My main concern for the US and the global economy is that rising rates and other credit risks, reflected in various CDS rates, will begin to bring down some of the marginal global economies like Spain, Greece and anything ending in "stan" or "ia." 


  38. Exec- liberal bias- now there is an understatement. Some of the  views found here are on the far left of the left end of the Bell curve! I am conservative in my politics. I believe this country’s strength is rooted in a commitment to individual liberty tempered by personal responsibility. Not long ago, classic liberals and conservatives could agree on this central premise and perhaps disagree on how best to promote/preserve such principles. As the left leaning 60′s and 70′s era stalwarts have come to dominate portions of our popular culture, the agenda has moved too far towards creating equal outcomes versus equal opportunity. This is all destined to ultimately fail as this equal outcomes premise ignores the reality of human nature. The grand and tragic experiments of communism and failing European quasi-socialism bear this out. Those advocates whom now occupy the "dustbin of history" learned their lessons. We will learn ours also. I am confident we will do so sooner rather than later.

    While I respect those who have the courage of conviction, I stand in wonder at times just whence it comes? I am not part of the oft maligned 10%-ers nor likely ever will be. However, I do slug it out day to day in trenches ( sometimes in real trenches) and see things from a perspective of reality of people who want to make money but are not willing to genuinely work to earn; mindless government interference; taxes levied and collected and spent primarily to feather nests and buy support; failing school systems sucking up more money; etc. As bad as the bankers, GS and others may be, I can opt out and work around them all. Just how benevolent and "just" can a power (government) , which ultimately can/will enforce its will at the point of a gun) be?

    End of Sunday sermon :)

    Disaster hedges and understanding- You are correct to remain cautious until you figure it all out. I found it helpful to focus on one or two things and forget the rest. The buy/writes are best for long term. I like the short strangles (but be very, very mindful of postion sizing/margin); short puts are great money makers but again, caution is the word- a fat finger day in the market is a thrill no one should miss. I think the disaster hedges can be over done. Keep them in perspective. As Phil has often said- they are insurance. If a buy/write is already covered for a 20% drop and you don’t anticipate a bigger decline then what purpose is served? I have some but recognize these positions have to be managed also.

    Remember to always ask if you don’t understand. Most of the time, Phil takes pity on us knuckle dragging conservatives and will walk us through the maze. :)


  39.  JRW/Stoch RSI – For Stoch RSI you have to pick a %K and %D period. My defaults are 10 and 14 respectively. Which are you using? Regarding the Nazi "Z" take a look at this http://en.wikipedia.org/wiki/Nazi_symbolism 
    Which Z do you mean? The horizontal Z from the swastika, the vertical Z from the Sig runes, or the horizontally aligned Wolfsangle? 


  40. DIA/Hia – I don’t bother with our mattress adjustments as they are constant with too many on and offs to make any sense to someone reading a wrap-up.  As to the TZA, that was the Tuesday spread as I called for the cover just after the initial buy. 

    Goldman/Goldman – Thanks I took a quick look already and will have to sit down and think them over (with my historical charts to see the net effect).   When I talk about the Gang of 12 or "THEM", that (loosely) is Goldman, BAC, JPM, C, MS, GE, CS, BCS, DB, Pimpco, TBoone and Murdoch.  That is a group have similar enough interests that it’s very easy to imagine them all sitting in a room somewhere plotting how to bring down Western Civilization and, of course, profit from it.  When I talk about GS most, it’s because they are clearly the group’s leader. 

    HOV/Palotay – See Friday’s comments.

    Trades/James – I’m not sure what you are doing.  These picks come from our chat every day and are REVIEWED on the weekend – not originated there.  If you click on the large, blue headings for each day above, it will take you to that day’s post where there’s a comment section at the bottom, just like the one you are in now, where these picks are all made 1 by one, live.  For insance, Monday’s APOL pick was from my 12:52 comment in Member Chat.  There is not a single trade idea you’ll see on the weekend that doesn’t come from either a post or a comment and those posts (of mine) are always on the main page, even if they eventually end up being categoriezed under Portfolio or Education (tabs on top).   

    And what Diamond said!  8-)

    TBT/RJ – TBT has been very disappointing but I really don’t think it’s not going to pop back to $40 or so at some point.  My attitude would be that if the ETF falls lower, then you should be selling the $38 calls, now $4.20, for maybe $3.50+ as that would drop your net basis to $28.96/33.98, with a nice margin of safety.  Now that sounds so appealing I bet you kind of hope it goes down now, don’t you?  That’s the trick to these things – try to find good outcomes whichever way it goes.  If it heads higer, THEN you can sell the $40 calls, now $3.35 for $5+ and you’ll have and even better basis ($27.46/33.23) and $2 more on a call away.  You can do wonderful things PATIENTLY if your initial premise is NOT TO BE GREEDY!

    BP/Occam – So now they are saying they broke the whole Earth?  Good thing we’re in a Global recession as that should keep the damages lower…  8-)

    BP/iTrade – Well according to Occam, BP could be on the hook for about $50Tn in damages so keep in mind that’s pretty dangerous but I do like that spread as small % gamble (less than 1% of portfolio). 

    Updates/Exec – Sure, every day we make new picks because every day, for whatever reason, people move in and out of positions, which is kind of why static lists are pointless.  The Buy Lists I follow though until they are done but recently they’ve been mainly 2012 plays so not very much do do with them over the next 15 or 16 months unless we have a cataclysmic market failure.  If you look under the "Portfolio" tab, you’ll see how we actively followed the old lists and, when market conditions change, then our list will change but the main point here is for you to learn the hows and whys of portfolio management (also a series of articles under the Portflio tab) so you don’t have to depend on others to tell you when to take things off the table.  It is not intended for any one person to have ALL the trades I post as ideas each week (56 this week, 50-something last week, 72 the week before) so tracking them would be ridiculous too.  If you want to follow one thing that I will baby-sit for you, that would be the Buy List.  As far as I’m concerned, any short-term trade terminates once it makes 20% and anything over that is a bonus (see strategy section).  You’ll get a lot more out of this site if you spend 3 months learning HOW to be a good trader and HOW to manage a portfolio and THEN spend a lifetime sensibly building weakth.  Invest in yourself first, markets second…

    TZA/BPS – It shouldn’t affect it much, we’re in on the same basis but we’ll have to watch how it behaves.  I don’t like it because it removes my downside comfort zone to some extent.  Although mathematically the same, the difference is that, at $2, I can still sell TZA $4 calls for .10 every other month for a 15% annual return but at $20, I probably can’t do as well selling the $40 calls so that damages the long-term safety net to some extent. 

    Matt Simmons/Occam – He’s about to cry because a lot of this crap is his fault!  He’s one of the Peak Oil Crisis, drill, baby, drillers that hacked away the regulations and outlawed Greenpeace and gutted the EPA, all in the name of oil company profits.  He’s also famous for betting someone that oil will be over $200 a barrel this year so this is his big chance to win his bet if he can freak out enough people… 

    There is a full court press on by oil speculators to jam up the futures on oil and refined product, using this disaster and the upcomming hurricane season to bring in as many suckers as possible so they can finally unload the tankers they’ve been storing offshore.  Imagine if they can get oil up to $140 a barrel again?  There are 300M barrels of oil floating around in tankers held by speculators like JPM, TBoon and C and $140 oil would be a $21Bn bonus to them and that’s nothing compared to the $178Bn PER MONTH EXTRA that would be made by the people who currently sell 85Mb per day, not to mention the additiona tens of Billions per month in refining mark-ups.  Why it would almost be worth BP’s while to purposely cause a disaster like this because they can make 10x more on the long-term jacked up prices than they would have to pay out in fines. 

    It’s interesting that it was BP’s safety negligence in 2006 that gave oil a big boost when their pipeline sprang a mysterious leak in Alaska and knocked out 500,000 barrels of daily production.  See, there is a glut of oil and OPEC failed to cut production at their meeting and the American people would freak out if our own cartel were to cut production for no good reason so they stage a fire here and a spill there and they get the Administration to halt production and now it’s not their falut that the price of oil and is flying up right into the summer driving season is it?  I know it’s unimaginably sick but it would not surprise me if this whole disaster was intentionally caused by BP and perhaps just got out of hand.  Either that or they are just REALLY unlucky, VERY often.  This is why we were BUYBUYBUYing oil and oil companies when oil was under $70 – we KNEW "THEY" were going to do something – we just didn’t know what, but we sure knew when….

    Notice they have this game going on so there’s been no need to play the Iran or Rent-A-Rebel card!

    Good points Pstas other than the one that I’m always wrong politically.  It’s interesting because my political observations are part of my overall economic observations and we can quantify the results so, objectively, if you look at the outcome, then one could probably argue that it is likely I am RIGHT about my political assumptions.  Anyway, I love what you say about having the tools to get out of trouble because that’s what it’s all about.  NOBODY is right all the time and I’m thrilled with 60% of the time because, if you stop out your 4 losses at 20% and your 6 winners average just 15%, you will be up 10% and on your way to a good year.  Anything above that is gravy.  By the same logic – if you ALWAYS stop out with 20% losses, it takes just one 100% gain to wipe out 5 losses and that really takes the pressure off your other 4 out of 10 plays…


  41.  Pharmboy/Amatta on MRK vs. PFE: I’ve grappled with which name to go to and although I’m in PFE, I constantly think about whether I should just go with MRK instead.  I’m sure I’d have the same thoughts if it were the other way around.  Regarding P/Es, I agree one has to be right.  So I decided to look for clues elsewhere.   
    -Forward P/E compared to current P/E:
    PFE 6.70/14.15 vs. MRK 9.24/7.7--C?ter?s paribus, lower forward P/E vs current P/E is positive since future earnings are expected to grow.  Granted that P/E can also decrease with a decreasing market price (which can very well happen to PFE just by looking at its chart).  However, looking at other big pharma stocks, most are in the double digit P/E (except LLY) so I think this criteria favors PFE
    -Price to book:
    Advantage PFE
    -PEG ratio:
    Advantage MRK
    -Quarterly Rev Growth:
    Advantage MRK
    -Quarterly Earnings growth (and this could be a big clue to the P/E dilemma)
    Both are negative but PFE wins this w/ a less negative decline
    -Revenue per Share:
    Advantage MRK
    No other name in big pharma has been criticized more for not making a move to improve its pipeline of big cash cow names whose patent are set to expire within the next 2-3 years like PFE.  So I’m thinking, if they somehow decide to do something really smart with their cash and buy some smaller biotech names (DNDN, HGSI, BIIB, etc) out there, I think this stock will pop (assuming they don’t overpay of course)


  42. drcraig,
     
    Sig rune, indeed. Stoch at 14,3,3. RSI at 14, separate graphs on the 1 minute chart.
     
    Stoch RSI on the 3 minute chart at 14, 14, 1


  43. Happy Father’s Day to all that are !!
     
    I’m off to fully enjoy mine; see you in the morning.


  44. Hi Phil : Happy Father’s day ! When you have a moment,can u explain to me the potential negatives of an artificial buy/write compared to buying the stock and selling calls/puts. I know most of the advantanges of the artificial,but I’m not clear on the negatives.I’m aware of the loss of dividend under an artificial buy/write ,but if that’s the only drawback,why would anyone not use an artificial instead of spending more capital to buy the stock.My guess is that if the stock declines, my percentage loss would be larger under an artificial vs the buy/write with the stock,but I"m not sure.  
    Thank you for your help


  45.  a barrel weighs about 0.16 tons, so after capturing a 1-ton tar ball, only 16,000 to go before cleaning up what is spilled  EVERY SINGLE DAY
     
    Traditional Liberal/Conservative politics is not going to help us anymore in this Great Recession / New Depression. If anyone wants to start a new party let me know. It’s going to be the part of Tough Love and Tough Choices and if anyone even TALKS about abortion your excommunicated for life.


  46.  A gamble is always fun but BP seems to me like it will go to zero.  At least this week seems like bad week with their bond offering and having to reveal risks to potential bondholders.  
    On the other hand, it seems like Anadarko, just downgraded by a rating agency friday evening, has a good chance of prevailing in their contention that they don’t have to pay a dime because BP was guilty of "willful misconduct."  The only question is why they haven’t released the contract with BP.  But that won’t bother most.  And there was a release saying BP will sue Anadarko because it has not put up any money, and then it was denied.  
    Also, rig may benefit because BP is such a screw up, they probably have no liability, and they may benefit from the thought that relief well will have to be drilled (2x the business!).  


  47. "Remember to always ask if you don’t understand. Most of the time, Phil takes pity on us knuckle dragging conservatives and will walk us through the maze. "
     
    Now that’s funny!!!
     
    Phil,  I went into the portfolio section and checked out you have your top 20 buy list for Q2.  Do you plan on sending out a new list of Q3? 


  48. Positions/Cslan – I think if we are holding these levels then we’re probably heading higher and it’s a great time to get in.  I think if we sell off Mon or Tues and hit any sort of bottom, then it’s a great opportunity to scale in.  These plays pay about 20-30% so if we committ to a scale and start with a 25% allocation, we have built-in 20-30% downside protection so even if we call it 20% and the market falls 40% (S&P 650, Dow 7,000) we simply DD at 40% off and we’re in at about 30% below the current price.  I WANT to load up on IBM at $91, I WANT to load up on INTC at $11, I WANT to own a ton of AAPL at $120 and I really don’t give a damn what the "market" thinks they are worth in some kind of panic – those are entries I’m happy to sit on for many years.  If you don’t feel that way about ANY stock you buy – why would you buy it at today’s price?  My main criteria in buying into a long-term stock position today is looking ahead to my 2x and 4x purchase and thinking about whether I’ll still be happy with my 4x entry if NYC or London has just been nuked and we’re in some sort of 5-year war.  If I can say, yes, because 10 years from then I’ll still be glad I own IBM or AAPL or C or whatever company I think will survive a worst-case scenario – then that’s a buy, isn’t it? 

    Hard-core Lefty/Exec – Why I am left-handed actually.  Didn’t think it came across in my writing…  8-)

    HPQ/Jdub – To me, the big difference between owning HPQ and IBM long-term is research.  IBM is committed to R&D and the next big thing is much more likely to come out of Armonk than Palo Alto.  Slow and steady will likely win this race in the long-haul.  You like cloud computing – IBM just spent $500M building a massive data center in NC but it’s ONLY for testing and development.  I think IBM’s goal is to create "personal clouds" for corporations that will allow them to have better data control and security and I think they have a pretty good read on that market.  TXN is nice and I used to love them but they made a lot of missteps and I just don’t trust them like I used to.  Neither EMC or NTAP appeal to me as they are not at all cheap AND now they have to compete with cloud players and the business environment isn’t that great anyway.  If you love drive capacity, go to the source and buy STX, who have a p/e of about 5 and great growth prospects. 

    STX at $15.35, selling 2012 $15 puts and calls for $7.60 is net $7.75/11.37.

    Amatta Project:

    All techs are good, see above for some specific plays.

    • C and BAC are much riskier than XLF so if you feel overweight in financials, I’d kill C and go XLF.
    • VLO I like better than anybody.  CVX I like less than XOM.  FCX I don’t like too much but we did expect them to hold $65 and the longer puts pay more money for less premium and $10 in your pocket is $10 in your pocket regardless of the underlying position – the idea is just to borrow $10 you should never have to pay back.  Absolutely no on OIH, I only liked them because they got stupidly cheap, usually we short them from $120+.  RIG is still pretty cheap.
    • All dividends are good by try to buy the ones that are down.
    • HOV I mentioned at Friday’s close, still like them best in that space.  
    • PFE and MRK are always good and DCTH was a gamble and still is.
    • T is great, AMT bothers me if WiMax ever catches on, EXC I’d press the bet on and TBT is a cash protector so if you have cash, it’s a keeper. 

    I have no idea what you mean by $120K in buy/writes but if you have a $500K portfolio then you should be allocating no more than 5% to any single position ($25,000), which means you generally aim to have no more than 20 positions at various stage of entry.  A scaled entry should be in 4 round minimum so about $6-8,000 iniitially.  That means you can’t AFFORD to play IBM, because a full position (400 shares = $52,000) is more than you should want to have in your portfolio. 

    If we look at an entry on VLO for example, VLO is $17.99 and we can buy the stock and sell the Jan $16 puts and calls for $4.80 for a net $13.19/14.60 entry.  So we can buy 500 shares for net $6,595 and, if another round is put to us at $16, we’ll have 1,000 at net $14,60 = $14,600 and then the next round, we’d sell the 2012 $15 puts and calls (assuming we were still bullish) for another $6 (est) and that would make our new basis $8.60/11.80 and, if put to us again in Jan 2012, we’ll own 2,000 shares at $11.80 = $23,600 and there we have a full position and a 20% loss on our full position would be $4,720 or less than 1% of our whole portfolio and that would occur if VLO is below $9.44 in Jan 2012. 

    The last time VLO was below $10 was Jan 2003 but, keep in mind, this is still a stock, this is not a bank and you are ALWAYS risking your capital when you buy one.   This is just the trade logic you’d better have worked out BEFORE YOU BUY YOUR FIRST SHARE!   What are you investing?  What will you do next?  How will that impact your total portfolio?  At what point will you need to adjust the trade or give up on it?  If you don’t know those things then you are gambling, not trading… 

    So that brings us to hedges.  Since this play (and our other blue-chip buy/writes) makes 20% as long as VLO doesn’t fall below $16 by Jan, we pretty much know (in a well diversified group) that there’s no way we don’t make 20% on cash invested (say $125,000 of $500K at 25% invested in round 1) by Jan 1st.  That is a FACT that we have $25,000 coming to us.  Our cash at risk is $125K but it’s already covered for a 20% dip and we WANT to buy another round of our stocks cheap so there’s nothing to defend UNTIL we get below 20%.  So we lose $25,000 (20% of cash) only when the market drops 30% and forces us to DD at the 20% limit so we want at least $25K of protection that kicks in when the market drops 20% and, on a 500% insurance play, that protection costs us $5,000.

    Since we are early in the scale with just $125K invested, we actually do BETTER if we drop 30% because we end up getting that very cheap stock with no negative impact.  If the stocks zoom to the upside, we make our $25,000 but possibly lose our whole $5K insurance so up just $20,000 would be a big disappointment but, we still have $375K on the side in this example and that means we can BUYBUYBUY as we move higer because we have, not only our insurance (which we roll up, of course) but now the 20% gains on the first round of stocks are protecting us from a downturn back to that level.  That’s where we hope to be if these levels hold up and we move higher in July

    As to your DXD and SDS play.  If we go up, you have to kill them and if we go down, they are brilliant plays that will pay well.  Keep in mind that you are not going to sit there like a vegetable and lose the whole $5K on the hedges, if we head higher, you will lose about 1/2 and then you will roll to whatever Jan hedges and in Oct, if we are heading even higher, you will lose another $2.5K and roll out to 2012 hedges.  Also, think about the logic – if you keep losing on those hedges, it’s only because the index is goiing much higher and if the indexes go MUCH higher than the buy/writes will pay off early and we can reset the whole portfolio with brand new plays that will make even more money.  People tend to fixate on each play and lose site of the big picture but that goes back to REALLY understanding HOW the trades work and WHY we are in them in the first place.  Without HOW and WHY, WHEN to act will always be uncertain…

    FAS/Sean – Oh well, can’t catch them all.  You need to understand that singling out trades is a bad practice.  It is very easy for someone to join a site and watch what trades people are making and then bet against them or squeezing people out of short positions (sold puts or calls) or even MMs can widen the gaps as they see a play unwind where a lot of people will be looking to sell in a short period.   Effectively, what you are saying is "Hey coach, can you please hand out your playbook to all the other teams and, also, cut it down to just 3 or 4 plays so they don’t have to worry about which one we’re running oh – and by the way, also make sure you very specifically tell them which play you are running next."  This site works because we teach people HOW to trade and HOW to build a portfolio and then we give them many, many good ideas that they can pick and choose from.   As I said to someone earlier, if you can’t be bothered to take the responsibility to learn how to be a professional trader but you still insist on making professional-level trades – then follow the Buy List as I purposely select stocks and time-frames that I feel are safe enough for large group entries and I will baby you and coddle you and hold you hand on those 20 trades, all of which are suitable for people who don’t have time to check the markets regularly. 

    Thanks Pharm!

    GRMN/RJ – I’m not sure what their business is now.  Long-term, almost any phone will be a GPS and their margins get squeezed over time.  I like them on a play like you pasted with a $19.20 break-even as I don’t think they will die a quick death (and auto sales are still a big boost to them) but I don’t like them when there are so many better-quality stocks that are cheap.  That’s an important thing to consider.  I may like GRMN at $32 when INTC is at $23 but not when INTC is at $21 (down 10%) because then INTC is a better use of my $32…

    Artificial/Dflam – Usually the big disadvantage of an artificial (aside from no dividend) is that we are usually targeting a higher outcome so we have less downside tolerance but there is little disadvantage to the math of the position.  Generally, if I REALLY want to build a long-term position in a stock, then I’ll go with a buy/write but, if I’m playing for a move up and then get out (like BP), I’d rather go artificial.  Sometimes the math is so much better on an artificial that the choice is obvious (always work it out both ways) and, of course, if I’m less sure about a position, the artificial on puts 1x to me at the end of round 1 so for AAPL, I would almost certainly go artificial as I think they are toppy.  Oh yes, also, for AAPL, GOOG, ISRG – it’s WAY cheaper to go artificial and, unless you are playing with many millions, that’s a factor too.

    Tough Love/BDC – That’s a good name for a party!  And now, we will hear from Tough Love candidate, Phil Davis, who is on the road in his "Suck it up America" campaign bus…

    Buy List/Exec – Generally we run a Buy List until it runs it’s course and then run another one.  This one being very long-term oriented, I think it’s likely I’ll make a more aggressive Buy List (see Watch List) once we firm up over our levels.  If the S&P 1,300 crowd is right, we have LOADS of time to get in and make money on the way up but let’s get to 1,200 first! 

    OK, BBQ time for me so I’ll see you guys tomorrow!


  49. To those who are somtimes frustrated I am also and I have called this the newenglish, one word. All the plays are actually there and I think only Phil is multitasking at mutitasker X 10. Most of us love walking and chewing gum at the same time without tripping. I also do not talk while driving and hope it is outlawed. I also wish the DUI level be raised back to .1 because impared drivers, those in wrecks, or just arested are usually .2 or better and I do know of the .09s but they were arested in the parking lot. This from somebody disabled by othe rdrunk drivers. Because it’s discussed and intil 2000 a conservative another point that turned me away was they are all for  gun rights. The lie is they want to lock up everyone, now stealing food is a feloney, how dare they not starve to death. They take your guns, take your right to vote them out and do the soapbox lie. Living in a conservative state that is all western pro hunting why do they take your guns? Because a soccer mom or 2 says your violent, no criminal record, and no one ever seeing even a slap. The answer is you don’t go to the right church, your not mormon, LDS, your drink ethinol, coffee, and disagree with me. I am a god and I will control you and that is why I am leaving Teton County, Jackso Hole, Yellowstone park, and going liberal. I still don’t buy Phil’s your in the top because of assets, my disability check is $1,500 per month, doctors have refused to treat me because my insurance is medicare, and making money is too intense this way. I pay $500 per month in property taxes by those non-taxing conservatives.


  50. Phil: thanks – your answer is what I pretty much figured but still thought I’d ask :-) .  By the way, lefty or righty, I think you are brilliant!


  51. Sorry about the double but seemed like it was being filtered out, submitted again. There are just too many coinsidences, big brother is watching and listening his name is homeland security. Please remove your shoes and no we don’t need probable cause or any of that old Bull Shit geting in the way of my justice!


  52. Phil
    I will be all for buying APPL @ $145 if they can hold it for a quarter!


  53.  Guess what I got for Father’s Day……….  An iPad !!!!      Hope all you other dads had a great day, as I did.  


  54.  Phil,
    Thanks for the response.  Like you, I also would like to own IBM at $90.00 but short of a global crisis, I doubt it.  What is your view of writing the IBM Jan/11 $90.00 Puts or the Jan/12 $65.00 Puts for a $1.30 premium to juice up the portfolio return with only a very slight risk?  I mentioned IBM but of course there are other candidates also. 


  55. Hey Phil… Happy Fathers Day – You have two very fortunate children, as I am sure you are a great father, as this is clear to me after following your writings for a couple of years.
    I will in the next few minutes, walk down to the 18th hole here at the US Open, and watch the "shoot-out" for the championship. Tiger is in the hunt, but I believe Phil (another winner) Mickleson will come from behind and walk with the goods.
    Just a quick follow-up to our debate on Thursday, I could not say it better than the commentary submitted by Pstas. He is really on targett, in sumarizing my thoughts, and the "never to be resolved" posturing by the opposing sides in this philosophical theorum. I believe you have not properly characterized my approach to achieving wealth, and the compassion I might have for the less than fortunate. I have to admit, I am a fierce competitor, by my oun definition. That does not mean I have stepped on or over others to achieve success. This is not necessary if you are the best prepared and thoroughly motivated  in your quest. I am a member of PSW for this reason as I believe I will receive the best educational opportunity that exists in option trading. I am fully motivated, and for these reasons profited 80% last year. I did it without stepping on any of the folks you say are disadvantaged. I additionally paid to the governmental entities (state & fed) over 50% of what I made. I additionally gave 10% to charity (Joe Biden would say that is a big f888888 deal) as he gave only $3500 to charity. Biden is probably a hypocrite, but that does not make me a slave owner..
    Phil, political decisions and political action has a profound effect on the markets and investing strategy, more than anything else, so for this reason I keep a close eye on all political developments. To do otherwise would be considered negligent. Fot the most part, investing success is based on following the fundamentals, and watching the political winds, as a good equity with all the best fundamental, can be desecrated by irresponsible political action. With the current administration, this has been played out many times over, and will continue until a change takes place. Case in point -  we soon will see new regulatory reform relating to banking. If it is irresponsible, and has a major negative effect on the banks profitability, then investor sentiment will send the market possibly into a double dip recession.. I’m out of here, and off to watch capitalism at work, in its best form. Have a nice weekend!


  56. gel1
    I truely believe I could sell you the brookland bridge. I was very good at selling your results may differ. Reagan never corrected the banking laws that blew up a few years ago. Some of your banking buddies may have to serve time to realize they are not even giving the stockholders part of their crime gained profits. How about those bonuses? The too big to fail banks need to fail like 1930!


  57. Phil, I have been a member for a month now and appreciate your passion towards the options markets.  While I have noticed we are exposed to a tremendous amount of information, I have a respect for your overall strategy (long term). As an avid options trader, I have been involved with different services to inspect and learn if anyone truly has a consistent system that can produce profits.  My previous trading strategies had received attention from the SEC, therefore I was seeking some new idea’s.(no – not insider trading ) Anyways, again love the passion but I do have a concern as well.
    Today, I happened to read your blog from this Sat and Sun.  Below, I cut and pasted a trade in which I participated in as well yet it was not mentioned in your Sat blog.  While this could be an oversight, I am hoping that this was simply an error.  While I can care less about the costs /fees associated with this site(you can easily justify), I do value integrity and will not follow anyone if I was too notice that the winning trades are touted and the losing trades are not discussed.  This would remind of the sports betting or "touting" business.  (advertise the winners and just not discuss the losing trades- While we can learn from losing trades as well)
    hia_5
    June 19th, 2010 at 2:09 pm | Permalink  
    In your weekly wrap up showing trades and wins you did not mention this post from June 14: 
    "I’m for taking the downside hedges here, naked on DIA mattress play (Sept $105 puts, now $6 and good for a new entry) and I also like the TZA $6 calls at .70.

    Overall, my point is not to call you out for missing one of more trades that may have failed.  I also recall a few short Gold plays that may not have worked.  I think I can speak for the group and trust that most of us value integrity.  While email or blogs can sometimes be a poor form of communication, I just struggle to make my point any clearer without making this appear as if I am being negative.  Again, overall pleased as new member.


  58. Hey you all what is the story? Never on a debate team? I personally love a great debate and believ me I am changable with any convincing argument. I will concede if you convince. This is only fun with the serious! Nbody actually cares what we think.


  59. No answer? The answer is NO!


  60. newbie question –
    it’s a weekend so I’m asking a novice question question about syntax. Phil’s "Happy Father’s Day" email recommends:
    "WFR is a nice little chip co.  $11.76 for the stock and you can sell the 2012 $10 puts and calls for $6 for net $5.76/7.88"

    I look up the 2012 $10 calls bid at $3.85, and the 2012 $10 puts bid at $1.84. Selling one of each against WFR brings in $5.69, discounting WFR’s $11.76, for a net debit of $6.07/share.
    FIRST QUESTION: Phil seems to say the income from the sale is $6, but I’m seeing 11.76 – 6.07 = $5.69, why the difference?
    SECOND QUESTION: What does "net $5.76/$7.88" mean? I can’t find any combination of selling just the call, or selling just the put, or selling both call and put that gives either of these two numbers. Is it just a question of differences in the quotes? Being unsure put my whole understanding in doubt.
    THIRD QUESTION: just to reveal the full measure of my ignorance: what’s "a mattress play?" I mean, it sure isn’t defined anywhere that I can find, and I can’t tell if the implication is "expendable spare change we keep stashed under the mattress," or "highly conservative money that we’re so careful with that we keep it under the mattress." Personally, I don’t keep my money under a mattress, so I’m out of it.


  61. tenger,
    I’ll answer your second question, but defer the others.  "net $5.76/7.88" means your price basis for the two possible outcomes:
    * If the shares end up above $10 when the options expire, you’re in your shares for $11.76 – $6.00, or $5.76 (i.e., the price of the shares minus the amount you got for selling the options.
    * If the shares end up below $10 when the options expire, you’ll have another round put to you at $10, on top of your first round at $11.76 – $6.00 = $5.76.  One round at $5.76 plus another at $10 is two rounds at $15.76, or an average of $7.88.


  62. Shadowfox, You asking me to respond – if so specifically, what is your question……if not, hope my post was clear.  Just making a point. 


  63. Phil and the rest
    I have just listened to CBS news and their take on LEDs. Don’t fall for the BS. The issue with LEDs is more than the cost to the power supplies, it is also the heat, there are a few LED headlights for cars,  style maybe but they don’t melt snow and ice buildup although the power supply needs cooling  and ice builds up on the outside, they need to be colled on the backside. Don’t play the upside this week, the stocks may go up but they will go down, this is a media BS event!


  64. deankara,
    I posted earlier about a FAS trade that was up >100% within a week but Phil didn’t mention in his wrap-up today.   To that his comment was "well, can’t catch them all".  He probably has 40-50 trade suggestions per week and he only mentions a handful of them in his weekly wrap-up.  During the week of June 7th, he was unusually bullish and most of this trade ideas were bullish ones.  After a good 5% run, he became a bit cautious hence the trade you mentioned. 


  65. deankara 1
    There isn’t a question, I am asking for a debateable responce on any liberal/conservitive viewpoint. I was a total conservative until they only lied, I really want to see their other side and be convinced.


  66. Hey!
    My father is almost 94, I have no children, my mother says even the devil doesn’t want him. I say as on Sienfeld today, festivis for the rest of us. Seems their is no dbate!


  67. Shadowfox- The devil doesn’t want him" ….never heard that one.  Very funny!
    SeanC- While Phil may list a few of the 40-50 mentioned trades, maybe he did leave out other winners, but my point is that any one of can list 40 -50 trades with front month options and have 10 or 15 rise by 50%-100%.  Think about it – If I place 20 Bullish , 20 % bearish and 20% neutral plays…..odds are I will hit a decent percentage.  Again, I am not saying this is what is happening – just making a point.  If I only mention the winning plays every week, you will think I don’t make mistakes.  We know that is not possible, therefore I just wanted to point this out to new members.


  68. tenger,
    Google "Stock market parachute for a read on the mattress strategy. It takes a little getting used to… add this, stop out there, half-cover, full cover, etc.


  69. "stock market parachute"


  70. deankara 1
    I agree that we can’t win all of Phils’s successes and maybe it seems like a farce but the problem isn’t Phil but the fact that once he posts  in that millaset the deal is done. That is why I asked members to not reveil JRW’s system by asking too many questions and to me he is busted alone with Phil. They watch me because I TELL THE TRUTH!


  71.  /ES jumping here.  Thanks Phil for that SSO call into the close on Friday.  Otherwise, my those DIA 103 P Quarterlies would have made a big dent tomorrow if this thing holds up.


  72. deankara1 – This issue of trades posted/not posted is a old contentious issue.  In the past, Phil used to list almost every single trade that was made or suggested in a spread sheet format.  Phil, may not trade or execute every suggestion so this was brought up and discussed by a few disgruntled old members.  
    I have been here since day 1 – you will rarely get the same results as phil or anyone else because of  hedging and timing etc.  This blog is mostly a forum for ideas, questions but mostly you will learn how to think about trades, options, hedging and "the big picture"
    GEL, I hope you are having fun at the US Open.  Looks like a great rollercoaster.  
    SHADOWFOX – our group recently dropped medicare because we are getting paid 20% of commercial rates before this recent cut.  We loose money and expose ourself to greater liability since medicare patients are usually sicker and more complex.


  73. Deankara1, I’ve also am new, having only been around for a month and still learning. Phil made an earlier comment today: "if you ALWAYS stop out with 20% losses…".
    I read that as make the assumption that losing trades lost a maximum of 20%. If Phil follows his own rule and he were to list the losing trades, they would all be the same percentage loss.  Reading through Friday’s comments, you can see that a number of trades didn’t work out. I think of the weekly wrap as a summary of what worked over the week (although comments about what didn’t work and why would be useful as well).


  74. Jomama, Thanks for your input.  Again, just hard for new members to read nothing but winning trades.  Personally, I enjoy the creative thinking , regardless of the wins and losses.


  75. Augrusot, Agreed


  76. JOMAMA
    I at least don’t lie and when you retire or become disabled you will find out that your pimary is by law and you have no choice medicare. My 94  year old father and many more are paying extra because they didn’t believe their federal blue cross plan was secondary. I am sicker than most and you are ignorent!


  77. jomama, spelling typo, you are STUPID!


  78. Augrusot, cost basis may vary due to offsetting spreads that may have reduced the loss so you kind of have to run your own race.


  79. Miissing trades/Deankara – OK, I suppose the fact that Hia asked the question at 2:09 and that I answered it on Sat at 1:17 (first response although I think I thought Hia was asking about the Tues spread as the Monday was clearly covered) somehow doesn’t satisfy you and rather than just nicely say "Hey Phil, I think you missed one trade out of 66 this week on TZA in your wrap-up" you have to insult my integrity?  REALLY??? 

    First of all, as I said, I do not have the time or indication to track every move we make on a mattress play.  The Sept $105 puts were covered with July $102 puts which made money and were taken off and the Sept $105 puts were rolled up to the Sept $108 puts and our stance going into the weekend was the Sept $108 puts naked or 1/2 covered with July $103 puts if you wanted to be more conservative.  Mattress plays should be left at least 1/2 covered at all times unless you are comfortable with momentum day trading anyway. 

    So you dilligently copy the June 14th  10:33 TZA comment on the TZA calls at .70 to insinuate that I’m somehow sandbagging a bad trade but you don’t bother to copy the 11:26 comment where I say:

    Big punch up now testing Wednesday (3rd’s) highs, above that and we may get moving again because the volume is only 55M at 11:20 and the EU looks like they are closing well and there are still plenty of short to be squeezed.  TZA calls are going to be a DD at .55 (down 20%) but then we’ll have to give up at .45, which should be just about 667 on the RUT.  What we’re hoping for is a pullback here into the gap zone between Friday’s close and today’s open.

    Nor the 11:45 comment where I said:

    SDS/Japar – They are June so playing a dangerous game staying in them but, as with the TZA’s, it’s a fun day trade looking for a pullback during lunch.  If we break 666 on RUT though, any bear play is a bad idea.

    Or the 3:39 comment where I said:

    Done with those annoying TZA’s by the way at .77!

    And, of course, right under the headline for Monday above it does, in fact say:

    TZA $6 calls at .63 (avg), out at .77 – up 22%

    So there Dean, did you "get me" did you uncover my evil scheme to hide a trade that didn’t work out?  How about the Gold trades you claim I am hiding?  Would that be the GLL July $37 puts that are the first trade I mention under Thursday’s summary or the GLL trade that is #7 on Friday’s summary? 

    I do these summaries as an EXTRA service on weekends to try to put the week into context and review what worked and what didn’t work for the week.  I do try my best to get all the trades but maybe I do miss one or two and, you know what – it shouldn’t matter because the idea is to have fun and help each other do better and I am more than happy to discuss any trade a member is stuck in or that didn’t go well and I’m not even calling you a dumbass or an idiot for failing to follow any of the subeseqent instructions to the trade you say you entered that would have expired at .38 if you were too greedy to take it off the table for 5 straight days even though they hit .95 (up 35%) at Monday’s close and then drifted around .70 the next day through 1:30 pm before falling all the way to .30 on Wednesday but then recovered to .65 on Thursday.

    So please – get out while you can before I disappoint you again.  Greg will be happy to arrange a refund – this is where I work and you do not come in here and insult my integrity, especially with baseless accusations based on your own carelessness, not mine.  Good luck in your future endeavors. 

    - Phil


  80. I’ve been here for a year and a half so my unscientific assessment is that many, if not most, of the trades are able to be had at or very close to the execution price Phil uses, which is also why he says to not chase trades. Some of them can be had for better prices as well, which is not factored into the success rate. All I can say, is that there is not another service out there that I know of that has Phil’s level of real-time market analysis and synthesis combined with NUMEROUS excellent trade/investment ideas AND his level of commitment to educating his members and personally helping them adjust specific trades ALL THE TIME. There is a huge learning curve on this forum but once you "get it," it all comes together. I wish you the best and Phil can speak for himself but I defy you to find a better trading site anywhere. If you are going to hang around and be negative, then why waste your time and money?


  81.  shadowfox, i am sorry that you are sick.   my patients really don’t think i’m stupid, especially when i take care of them for free.  


  82. Interesting ,Phil. We must have been writing at the same time. I felt obligated to say some things as well. I’m glad you posted. Otherwise, I could have looked like another confederate in the evil scheme.  :-)    Happy Father’s Day. Keep up the good work.


  83. Sadly, what appeared to be resolved (other individuals answered the questions) was blown out of proportion.  My post had many positives in respect to the chemistry of site. Again, like most new people I was merely trying to understand why all positive trades.  (nobody perfect) Wanted to understand why the losing trades not mentioned as we could learn.  I guess these type of questions can be misconstrued. 


  84.  Hi Phil,
    I’m a newbie here and was wondering if it’s possible to do this without too much of a hassle--how about numbering each person’s post?  I think it would help those who communicate back and forth and could be useful in terms of referring what was said and when.  Again, just a suggestion that could be useful.


  85. deankara1,
    Are you kidding?  You drop a bombshell claiming that Phil is purposely hiding losing trades, which turns out to be proven wrong and then, in the next comment, you tell Sean that  Phil is picking his best 20 trades out of "40 or 50" which is ridiculous because his 66 picks above would imply 66-90 hidden losers and you call that "miconstrued."  I’m pretty sure the proper word is libel, especially when you make accusations like that in a work environment which, for Phil, this is. 
    I have also been a member of many service, who’s names I have the good taste not mention and no one has ever come close to Phil’s level of dedication to his members.  He’s turned my portfolio around and, as I understand, the portfolios of many members here and if you are not happy with something, just leave.  The guy signed in at 10pm on a Sunday night to answer qestions and instead had to deal with your crap so now I’m upset, but not at Phil.


  86. jomama
    I  won’t waste time going back but now you sound like a doctor but siad we gave up on medicare. I was disabled by a drunlk high rich ass hole. I hate being disabled and midicare but don’t have a choice, I am unisurable at any cost and unfortunately doctors don’t understand or even take the time to find out the facts. I even offered a bribe of thousands for cervical surgery and turned down. Any sujestions?


  87. I tell you, shadowfax,my daughter is an EMT & second year med student who intends going into emergency medicine. But seeing the way medical care payment and coverage is handled in the US, she’s decided to graduate and practice elsewhere. She’s saddened by seeing ERs full of people who are there because it’s the only place they can see a physician at all. She herself broke her leg skiing a few months ago, just as she was going off my medical coverage with a very big HMO, applied to that same HMO (who had been covering her for years and had in fact set her leg)  and was informed they wouldn’t take her because she had a pre-existing condition – the broken leg – and they were concerned about her Vicodin prescription – one round of which she took in the week after the break. So, even my company,which is one of the US’s best, non-profit, prevention-oriented HMOs, behaves that way.  Myself, as I mentioned, am retiring in a couple of years to Korea, where I was in the Peace Corps and where my wife’s from, and where medical care is tons cheaper and where there is cheap (like 50 bucks per month) national health care insurance.  My advice to you would be to do something similar, because things ain’t gonna work out here.


  88. Wanted to get my best wishes in before its officially Monday and its back to playing second fiddle to the wife…Happy fathers day and hope everyone had a great weekend with their loved ones.


  89. snow
    Thanks for the supportand I am sorry to hear about you daughter. After it was decided surgery was too dangerous I was put on all pain killers ending with oxicottin. The doctor decided to say I had a drug problem, I stopped all drugs, he told his doctor friends, one told his wife that said I was violent in a wheelchair who convinced another and the sheriff took my guns. That is actually the rest of the story and the cold facts about conserative ass hole liers who ruined our country, stole everything and just like Dr Michael Mendilowcino say it is your fault. Now I clean myself up and suffer in pain every day. The drunkin drug addick is now in treatment, I am refused and as reported hear doctors give up medicare patients. I don’t believe any country wants me including the USA.


  90. shadowfox, i am trully sorry to hear about your situation. I actually do medical missions, mostly internationally because i cant get sued in there. medicare and tricare just are plain awful for my field, anesthesia – when you combine the recent 21 percent cut…..

    If you have a complex problem, i would recommend a university hospital. They will take a lot of very sick, complex teaching cases irrespective of insurance. In phoenix, it is “the county hospital” there are many good, caring physicians in these hospitals. Unfortunately, many private practice docs don’t do many probono cases secondary to liability issues. sadly, it is more advisable to go to another country to provide charity care. I do understand your frustrations and i apologize if i came across in a callous way.


  91. To all your fathers there:  Happy Father’s Day.  Here is a Father’s Day trivia:
                           Q. Which day are there more collect calls than any other day of the year?
                            A. Father’s Day


  92. Jomama
    I had a responce but submit would not go just like the ______ University Hospital would not help. And fools don’t think the spys are working for the US government. Big brother is listening!


  93. mattress play – aclend, thanks for the reference and glad I asked as the meaning is more subtle than I would have thought. For those who are interested the term "mattress play" refers to last ditch hedging to counter unanticipated, or unlikely market actions that endanger one’s portfolio. The reference is to the idea that one needs to pile on more mattresses in order to cushion one’s fall when one’s parachute fails. It’s funny that the metaphor should derive from parachuting because, as a parachutist, I’d never use that metaphor! Also, and parenthetically, I think that some people whose parachutes have failed actually HAVE survived. It wasn’t mattresses that saved them, I believe is was hitting steep snow slopes, so maybe it should be renamed "the snow slope play." However, part of the idea is that one can pile on more of such plays in order to add more protection. That would be hard with snow slopes.
     
    Someone (Phil?) should write a review of this thinking because it’s important to have seat-of-the-pants rules for countering unexpected losses.


  94. Sounds like a nice rebound to me…

    The government-run Hsinchu Science Park (HSP), Southern Taiwan Science Park (STSP) and the Central Taiwan Science Park (CTSP) generated combined revenues of NT$680.474 billion (US$21.3 billion) during January-April 2010, hiking by 81.72% on year, according to statistics released by the National Science Council (NSC).
     

    ============================================================================
    Global e-book reader shipments from manufacturers to vendors in April-May 2010 reached 740,000 units, with Barnes & Noble’s nook accounting for 37% and Amazon’s Kindle trailing at 16%, according to Digitimes Research.

    Amazon is reducing its Kindle inventory as it prepares for the launch of a new version of its e-book reader in July-August, Digitimes Research explained. The new Amazon e-book reader will still use E-Ink solutions, but picture quality will be better than the present Kindles. Production cost and street prices will also be lower.

    ==============================================================================
    PCB (printed circuit board)

    PCB and IC substrate maker Unimicron Technology has revised upward its second-quarter revenues guidance to a sequential 15-20% growth from a 10% growth projected previously thanks to stronger-than-expected demand for handset PCBs and IC substrates

    Shipments of handset PCBs in the second quarter will be higher than those shipped in the first quarter due to increasing orders from a client in North America, offsetting the impact arising from decreased orders from Europe, Tzeng noted.
     


  95. Phil -    You know honestly the people who are going to make your life easier, contribute to this forum, respect you and your partners, and be long term members…they will skim over such accusational posts and think nothing about it.  Yet those in the "I blame society society" group might instead point the finger of denial to cope with their own investment actions and/or inactions, lack of experience, failed day trading experiment, etc.  I’ve done my research on PSW before signing up, and after signing up I’ve studied the forum archives and know which members have been around long term and know how they are assets to PSW daily (also read about some of the deleted crazies…wowza!).  The only question I have is why give so much keyboard time to the liabilities?   Why not send them the link to that other place (that sends out a 28 page long perpetual spam email) where there is a "NASA Scientist" and a "Retired Hedge Fund Manager"  who "can propel you past 99.4% of investors"!!!  Hurry, act now…they are only taking another "2,500 members" when enrollment opens again for the 5 time this year on June 22nd! =D 
    gel1 - I really appreciate your political take on the markets….politics can move the markets in strange ways.  I have made unusual profits placing bets on "acts of Congress" that should have never paid off in a logical world.  For example, when Congress ended mark to market in 03/09, I instantly bought BAC calls and made 700% profit in a couple of weeks.  I also attempted to buy C calls at $0.02…but the priced doubled when I entered my order and I didn’t get a fill.  Over time, the C calls went up almost 125x.  Had I obtained the C calls to maturity…I would have sent Barney Franks a very large box of chocolates…  =D


  96. Phil – Speaking of "Acts of Congress"…I have a question concerning "Acts of God".  CNBC had Crammer saying a hurricane will wipe out BP(I read the headlines, NOT the show!)…not sure I buy that "thesis" but I would like to know your energy play for a possible spike in oil and natural gas (I may have missed a post already discussed…and I know I already missed the spike in natural gas!).  Also, is there an insurance play?  Even better…"short" the department of emergency management perhaps…that could be a 300 bagger!


  97. contention, rancor, accusations, integrity – Please don’t call me a Polyanna but I appreciate hearing the accusations and rebuttals. I also wonder about the completeness of the fast and seemingly loose summaries that are quoted and find it instructive to hear them challenged and defended. And even though Phil may have the upper hand in fact, the interpretation of the quoted figures is complex and confusing. My opinion is that it doesn’t matter much because it’s my trading decisions that I’m trying to watch and evaluate, not someone else’s. And, as Phil points out, it’s the big picture that is important, not the individual trades.
     
    In that regard I think Phil overreacts because he doesn’t include the confusion factor into other people’s mistaken contentions. I did not think the comments were offensive, but I also didn’t read them carefully. And since there is no rigorous induction/introduction/training for members this kind of confusion is only to be expected. My point is that as a reader it’s useful to hear other people’s confusion, and to hear the defense, even if (maybe especially when) that defense provides extra detail and clarifying caveats.
     
    I would also remind Phil to consider that if his critic is at all representative of other readers, then they may be making the same kind of mistakes and, in that context, an ounce of prevention might be better than a pound of cure. Which is to say, this confusion might be rectified by more structure. Why doesn’t Phil hire someone ELSE to compile the summaries and reviews and he can annotate them? Might that save time and add perspective and structure? Just a thought.
    I also want to add my support to a couple of statements made in this thread:
    1) "Phil’s weekly summaries are valuable and unusual." I TOTALLY agree. I study these summaries both for insight into the weight that I should give to various projections, and also to remind me to extract and remember the more essential points as each week progresses. I feel that if I can’t remember what Phil quotes from his daily comments when he makes his weekly summary, then I have not been paying sufficiently close attention on a daily basis. In this way I use the summary as a test of my recollection of the weeks events. I just really dig this and it makes me want to keep a log and create a summary of my own trading thoughts on a weekly basis.
    2) Personally, I find Phil’s maintenance of a buy list a bit hard to square in the context of his fast and inclusive, and sometimes obscure, repartee. Maybe I’ll come to understand it better with time, but for the moment it seems hard to feel my hand will be held without also being spoon fed "action alerts." I mean i have no objection, but it seems that as a hand-holding service, the Buy list requires a high degree of attentiveness and noise filtering by those whose hands need holding, and that’s not generally a skill that I associate with people who need their hands held.
    3) "The service is unique and valuable." I’m a "basic" member so I lack full access, but from my perspective I whole-heartedly agree. I also wonder why it is, in fact, so unique. Why aren’t there other services like it? I’ve subscribed to various, but none have come close. That raises some kind of warning flag for me, and it makes me think that in the near future this is going to change. It’s my suspicion that Phil just happens to be judiciously positioned to take advantage of the death of "buy and hold" and other long term strategies. Indeed, the only other fully satisfactory cynical opportunist (I mean that in a good way) I’ve found is J.S. Kim, who also has an advisory service, though it works through a different mechanism.
    There are other cynics — like J.S. Kim, J.Howard Kunstler, and the people at Casey Research — and many would-be opportunists — like just about everybody — but few seem as adept, task-oriented and willing as Phil and his crew. There is something somewhat ominous in this because once cynical opportunism goes mainstream there will be a sea change in US attitudes.


  98. health issues – shadowfax, you should consider neurofeedback and I’ll be happy to explain it to you. You can find out more about it form links at my web site: http://www.tengerresearch.com/grow. It may or may not aid you, but you should know about it nonetheless, and you won’t learn about it through the venues of main stream medicine. You can contact me off-list for more info. Email address on the web site.


  99. Phil, any plays On futures you like now with Asia and oil being up big?


  100. Tenger, I’m going to take the opposite side. It was a dumb comment. Originally I thought Phil was stuffing the ballot with only his winners as well (b/c no one is that good) However, instead of calling him a l liar I looked back on 4 weeks of wrap ups and cross referenced them with his daily picks. Then I purchased an annual membership…


  101. [0620yuan01]Good Morning!

    Major bump in the futures and I’m trying to decide if it’s deserved just because China says they will float the Yuan.  Asia came on like gangbusters, Japan was, of course, super thrilled that one of their biggest customers was going to have more buying power (in theory).

    Despite the rhetoric, there was no change in the official Yuan peg (but the currency traded higher) and, of course, the timing of making the announcement right before the G20 meeting (next weekend) is to take the issue off the table as things were really coming to a head with the US on the currency issue. 

    On the whole, it’s a good thing because China needs to slow their growth anyway and this will stall demand for their goods and thus their consumption of commodites while a rising currency will make it cheaper to buy those goods so we can imply better margins at factories – the only question is:  How much will it impact sales? 

    Giving the Chinese people more spending power is kind of like raising your kid’s allowance from $5 a week to $5.50 – it’s really not likely to rock the global economy but, combined with recent wage hikes – it’s nothing to sneeze at. 

    Also, in the big picture, China was letting the Yuan appreciate to the dollar from July 2005 through July 2008 and then stopped (click on image for nice WSJ interactive).  That coincides very neatly with our entire market run and, of course, just after they stopped – we crashed.  While it certainly can’t be the only factor, it’s enough of a factor or even a coincidence that we may get some heavy betting that this is going to be great for our markets, whether logical or not.

    China’s trade surplus in May was a whopping $19.5Bn, up 48% from last year – that pretty much took away any excuse China had to hold their currency down and Schumer threatened a bill sanctioning China just 2 weeks ago.  Combine that with their 3.1% CPI in May and this decision is in our (US and China) mutual interest.

    This should be Nasdaq positive (now Chinese workers can afford the IPods they make) and is good for commodities.  Frankly, there’s not much downside to this other than the fact that I was short-term bearish going into the weekend and this gap up (we’re up 1.5% in the futures) makes it very difficult to participate in the rally. 

    Oil is up at $78.50 and the last time China floated their currency oil shot up 12% in a month so a huge gift to that sector – as I mentioned on the weekend, what policy maker can resist the opportunity to make the people who sell 85M barrels of oil per day an extra $20Bn a month ($7.85 increase)?  How many bribes would it take to make this happen and how big would they have to be?  XOM and BP alone make 10% of that money each – that will pay to clean a lot of pelicans! 

    So, whatever the motive, it’s a nice positive to start the week on and now let’s see what holds up.  If we hold a gap fill tomorrow, that will be nice and bullish but so will simply holding NYSE 7,000.

    Meredith Whitney is on CNBC at 8 so we’ll see how well the futures hold up there.  Expect another Alert this morning near the open and we’ll see if there’s a good way to play it but, on the one hand, it’s just another manic Monday with a big gap open in the futures that we used to be able to expect like clockwork when we were in rally mode in the Spring.  Maybe they skipped the pullback we expected and went right to the good part! 


  102. just would like to add coulple of words, this forum is not for daytrading but for long term investment, portfolio and risk management is reslponsibility of members and short term trades should not be more than 20-30% of portfolio. This is why it is recommended to all newbies to read strategy section and all posts before start to risk real money (how to scale in, how to roll, portfolio construction, ect). If you try to follow and trade all Phill’s ideas ( which is mostly short term, because long term is not discussed very often) without proper risk and portfolio management you can lose your shirt


  103. I found that to be successful in short term plays I need stable and conservitive long term portfolio, and if you trade with it you will get lots of fun and profit


  104. Phil and all subscribers,
    After reviewing the posts I have made the past few days, I would like to clarify and apologize for any inaccuracy in my postings.  First of all, I never accused Phil of intentionally not posting a trade.  This was my mistake in not recognizing certain plays do not receive any intention. As a new subscriber, I was merely confused and want to clear the air as to the importance in that my comments were not misconstrued.  While my comments contained certain speculation, my derogatory comments (cynical) were based upon certain frustrations with other services. Sorry, if I offended anyone here.