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Wall of Worries Wednesday – But Climbable!

Duncan Frearson of Smith Street Capital puts it well:

Anyone who has kids knows when the lights go out, the boogey man appears. We are in the unfortunate position where problems in Europe, the end of some government stimulus programs, some large budget gaps and a growing oil leak have turned off the market’s lights. The boogey man has entered the mind of the market causing some fearful behavior.

Investors and fund managers are clearly in panic mode.  We are not in a double dip, and there are no real indications we are going into one but the fear of renewed recession has sent investors stampeding into oil, out of oil, into copper, out of copper into gold, out of gold ($1,186 today), in and out of the Nasdaq, AAPL, Small Caps, Financials… on and on and on with virtually no actual changes in earnings or outlook from any sector other than the general trend of SLOWLY improving conditions.

Panic is easy to provoke.  Get 5 people to act crazy outside a store and tell them the whole town has gone nuts and they need to shut the windows and turn out the lights.  Once they listen to you, take your show to the next store but now you can point to the first store as an example of the panic that is on the streets.  By the time you get half a dozen stores (think funds) to panic, you don’t even have to do your little show anymore, people just see store shutting down and they ask them what’s up and rumors take on a life of their own and, before you know it, the whole town is in a panic over nothing real at all.

"At the end of the day", Frearson continues, "the earnings power of a company is all that matters and thus understanding customer behavior is paramount. For the economy as a whole we should ask ourselves: are we currently spending beyond our means? Individuals are earning at record levels – around $10,103 billion for real disposable personal income in Q2 and we are only just beginning to push real spending beyond Q4 2007 levels leading to a savings rate in the 3.5% range, according to government data. The debt service coverage ratio and the financial obligations ratio both indicate the consumer is de-leveraging into a more stable financial foundation."

Last month, the ECRI’s Short-Term Index turned down and pushed the fear levels to new highs.  Zero Hedge’s title was "ECRI Leading Economic Index Drops To 44 Week Low, Predicts Massive Economic Contraction" and the WSJ said it was "Confirming A Sense Of Gloom" but the Managing Director of the ECRI said (in the comments of the WSJ article, that nobody reads):

The purported false alarms from “the ECRI” mentioned in this article [WSJ article] come from a mistaken and simplistic view that negative growth in ECRI’s Weekly Leading Index (WLI) is tantamount to a recession forecast. In fact, since 1983, cyclical downturns have taken WLI growth under the zero line a dozen times, but recessions have followed on only three of those occasions – times when ECRI actually made a recession forecast.

Since ECRI itself has never used WLI growth going negative as a recession signal, it is important that such “false alarms” are attributed not to ECRI or even to the WLI, but to what is a mistaken interpretation of the WLI.

In fact, at the very least, ECRI itself would need to see a “pronounced, pervasive and persistent” decline in the level of the WLI (not merely negative readings in its growth rate) following a “pronounced, pervasive and persistent” decline in ECRI’s U.S. Long Leading Index (not discussed in the article), before it makes a recession call.

What the LONG-TERM ECRI Indicators are showing is this

Meanwhile, it’s 8:30 and, once again Mohammed El-Erain has the floor on CNBC for an extended period and he says "the new normal" is a World of dismal failure and contraction as nation after nation tightens their belt to make sure they have enough money to pay back the $1Tn he lent them.  That’s the sunshine report for our pre-market.  At 5am, for Europe’s open, CNBC has a special guest too, who got out of bed early and spent the whole hour with them.  He was kind of gloomy too but that’s not surprising as he was Arnab Das, the managing director of Global Economics.  Who is Global Economics?  Why that’s Roubini’s firm! 

See, Phil – they don’t have Roubini and El-Erian on CNBC EVERY time they are trying to panic the market, sometimes they have El-Erian and Roubini’s Managing Director or sometimes it’s Gross and Roubini and sometimes it’s Greenspan (now on Pimpco’s payroll) and one of the above so please, PLEASE don’t say they always have Roubini and El-Erian trying to frighten the markets – that’s just not true

How long can the Gloom and Doom squad keep the market back on it’s heels?  Frearson postulates that the longer stability is maintained, the more consumers will feel comfortable about increasing their spending. Ironically, U.S. states are increasing general fund expenditures in their FY 2011 budgets to $635.3 billion from $612.9 billion in FY 2010, according to the National Governors Association. Increased tax revenue from improving economic activity, the usage of remaining American Recovery Act Funds and “rainy day” funds will help stabilize a recovery. Confidence is slowly returning as employment stabilizes. Gallup polls suggest higher income consumers are beginning to spend more and this will filter down to middle income and eventually to lower income consumers even in light of the declining equity markets due to restructured personal balance sheets. Companies, in turn, will respond with increased production, inventory rebuilding and increased hiring.

Let’s keep in mind that our beloved Fed Chairman, Ben Bernanke, has already printed more money in the past for years than this country created in the first 230 years.  That money is sitting in bank vaults and on corporate balance sheets and tied up in shiny bits of metal and speculative gold futures and zero-interest TBills and it is ANXIOUS to seek a better rate of return once the fear and panic subside but, that would be catastrophic for Pimco, who loaned out $1Tn at fairly low interest and that would be bad for GE, who borrowed $500Bn at very low interest rates so they will use ALL of their influence to keep those rates as low as possible for as long as possible.

The Fed is bailing out banks and bailing out companies like GE by either buying up their assets WITH YOUR MONEY at face value (40% over market) and they are lending companies like GE YOUR MONEY at 0.25% interest while you continue to pay 5% interest on your home loan.  Isn’t that ridiculous?  Of course it is.  But you put up with it because you are scared!  You are scared because GE tells you to be scared through their TV network – you will do anything to avoid things getting worse, even when anything includes submitting to repeated corporate gang rapes that affect you now, in your future and in the future of your children and their children.

Wake up America – this is pathetic! 

Asia and Europe turned down a bit but not too much.  What does it matter, though?  Fundamentals are not relevant at the moment.  Nothing matters until investors grow a spine and I’m not counting on that!  We have our disaster hedges and we had a lot of fun riding that pullback yesterday with DIA puts and this morning we have 10 new well-hedged entries on some of the beaten-down Dow components we looked at in yesterday’s post so bring it on markets – you keep panicking and we’ll keep buying! 

Be careful out there…

 


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  1. loopy

    Phil, I’m very impressed with the bright minds here.  Thank you all for the spirited conversation about real-time help in the markets. 
    My question is how do you feel about EUO, the Euro short.  It seems to be up against support after pulling back and after reading Dennis Gartman this morning he seems to feel the Euro decline will reassert.  El-Eriain is on CNBC…It’s sickening how sensationalized our problems have become.

  2. roscoe

    Good morning,
    Thanks for your help, Phil.  I’m one of your FNGs, and need a little reassurance about how to use the Hedging for Disaster plays published on the 3rd.  The contracts look to be the same as what was published in a Hedging for Disaster piece earlier in the spring.  Do I use the same strike prices on these contracts?  Is the setup exactly the same, except the prices are a little different?
    Thanks, best of the best

  3. yodi

    Good morning Phil,
    The story with the store closing this morning is well taken.
    On the other hand what is positive in the trading world $ store made a profit. Mercedes BMW and VW in Germany are up 45% in sales of last year mainly selling there Lux crusers to China India and USA.
    Gel on the other hand liquidates his portfolio
    I fell like we are like a herd of cattle we do not have a direction.

  4. exec

    Phil,
    Business and the producing people of this country have figured out that the Boogey Man’s in the White House with his contingent of gargoyle’s have scared to death the people that make this economy work.  It’s very similar to the Evil witch and her flying monkey’s in the Wizard of Oz.  We’re all hunkered down in our bunkers waiting for the other shoe to drop and the last thing we’re going to do is spend our money because we all know we’re going to need it. 
     
    I’m not convinced that a double dip is out of the question.  What is interesting is that the media, even the mainstream, have concluded that it’s fashionable to bash Bama and talk down the economy. 

  5. yodi

    Adding to the above US Gov. is dumping stk of C. BAC, HOV not going any where but down. Where is the direction???

  6. yodi

    Adding to the above US Gov. is dumping stk of C. BAC, HOV not going any where but down. Where is the direction???

  7. terrapin22

    Pharm/SGMO – what’s your take on Sangamo?  any near term potential positive catalysts?  

  8. TmDecay

    This article about CEO pay is right down your alley I think.   Your progressive ideas are irrritating some times but I have to agree that this pay scale bifurcation is a big big problem.  That’s the main reason I left Cypress Semiconductor.
    http://www.dailyfinance.com/story/how-many-workers-can-you-hire-for-the-price-of-one-ceo/19540733/

  9. chyer

    All thanks to El-Eriain for the bounce. He said he expects a new normal not a double dip. prices are around new normal level but not too far away. China is the only major market green today. But I am not buying anymore till we hold above 1042 and not selloff fast everytime we approach short term overbought.
    Now the question is when to put in hedges hmmm.

  10. David Ristau

    Hey all,

    I am picking up shares of SIRIUS XM (SIRI) this morning in my Buy of the Day. And, we are short selling JASO. You can view my analysis, commentary, entry, and exit here. 

    As always…I am available all day to answer any questions you have.

    Good investing!

  11. srfrog

     stopped out of YRCW @ 0.11

  12. jromeha

    Senor Frog – Stopped out? I thought the whole point of the play was to let it ride b/c they could go bankrupt but if they dont we are looking at another SIRI.

  13. srfrog

     Jromeha – I followed Phil’s recommendation to a T, which had a stop in at 0.11.  I’m okay w/ it because I had only a very small position and feel there is more downside coming anyway…

  14. David Ristau

    I’m very glad to see the market sustaining these gains through the first 20 minutes… I was not expecting this…

  15. Phil

    Good morning! 

    Still looking to check of our low closes an our low spikes before we can actually feel better:

    • Low Spikes:  Dow 9,725, S&P 1,042, Nasdaq 2,145, NYSE 6,480, Russell 608, SOX 326 and Transports 1,921
    • Low Closes: Dow 9,815, S&P 1,050, Nasdaq 2,158, NYSE 6,512, Russell 617, SOX 332 and Transports 1,955

    Red means not likely to happen in a day

    Oil is over $72.50 again and gold is at $1,194.   Nas gas is death at $4.64 and we get both inventory reports tomorrow.  Copper is flirting with $3 at $2.995 and is still a great indicator of market mood.  

    The Pound is $1.515 and the Euro is $1.26 with 87 Yen to the Dollar again, down about 0.5 from 3am in our "sure thing" currency trade. 

    There’s no volume at all to this move up so it’s going to be hard to sustain – let’s watch that $72.50 line on oil for major signs of weakness. 

    We have 10 new 2012 Buy/Writes so don’t say there’s nothing to buy.  These are Blue-Chip stocks that we can pick up at net prices near 10-year lows – nothing wrong with that….  Of course the Buy List is all good as well and there are two new ways to hedge in the Dow post for the marginally challenged

  16. jromeha

    JRW – where you at buddy?

  17. srfrog

     I had it up anyway (YRCW) so this was quick to paste in here:
    "So that’s going to be 10,000 shares of YRCW at .21 ($2,100) with a stop at .11 ($1,000 loss).  Our intention is to either sell 1/2 for .42 ($2,100) or sell 10 Jan $1 calls for .10 ($1,000) to drop our risk back to $1,000 on this trade."

  18. 42laurel

    david; how many shares of siri do you buy? It seems to me that you would have to buy 10 to 20,000 in order to make it worth while.

  19. tradinv1

    Exec,  You are correct about the business leaders’ attitudes.  I am spending the summer with a bunch of them and they are universally negative about the administration and the short term outlook.  They may all be wrong and things will improve inspite of these attitudes, but it is unreal how uniform their opinions are of where we are heading.

  20. David Ristau

    42laurel -

    I bought around 3000. 3000 x 0.03 is a $90 gain…this is a typical gain for my portfolio. I just deal with less money than most of you…percentages not dollars is what matters.

  21. dezev

    Good Morning Phil,
    I just want to politely make one distinction.  Bernanke hasn’t actually printed money.  He has indeed created credit but there is a significant difference.

  22. hoss18

    Phil, on the new Buy/Writes, I see CSCO doesn’t have a dividend, would they be a play with an artificial buy/write, say a Jan 2012 20/25 spread for $2.30 selling the Jan2012 17.50 puts for 1.90 so net $0.40 on $5.00 spread that’s $1.62 good?
    thought?

  23. JRW III

    Good morning,
     
    IWM 58.65, 59.59, 59.97, 60.77, 61.41

  24. exec

    JRW
    I was curious about something.  Your comment yesterday :   No conformation, maybe 12:03 or :06 and then you should have been back in TZA at 12:15 on the 3 min chart. Keep at it, you’re always getting better !!  
    Take a look at this chart.  chart.ly/qv86fr
    At 12:09 we had an engulfing that touched the 8EMA.  Then it dipped a bit and at 12:18 we had a positive engulfing that took the 8EMA.  Did you bail on this uptick or did you hold?  If you held, what was it that gave you the confidence to hold?

  25. JRW III

    exec / chart
    Your chart shows the 12:03 push north; I just didn’t see the RSI or volume and didn’t buy it, I held. (a move that;s usually wrong).

  26. JRW III

    Sorry, add IWM 62.53 to today’s levels

  27. Phil

    EUO/Loopy – I was bullish on the Euro off $1.20 and we shorted EUO at $26 but took money and ran at $24 so I guess at $23.50 I do think the Euro ($1.26) could pull back a bit but not worth playing to me as I don’t think they fall lower than $1.24 and that’s only going to be about .75 on EUO so the risk (very easy to lose .75) is not otweighed by the likely reward. 

    Hedging/Rosco – I certainly hope the strikes aren’t the same!  I did use the old post as a base because they all worked last time so no need to re-invent the wheel.  Just keep in mind that I have NO FAITH AT ALL in any of those plays paying off because I VERY FIRMLY believe this is a market bottom and I am quite content to go with light protection here and add to that IF we fail 9,500 (when the VIX will be higher and we’ll still get good net prices).

    Oh too much!  Now CNBC is tossing around the words "Iran" and "nuclear" – What’s amazing to me is that the market isn’t down 1,000 more points with this non-stop gloomfest!

    Moooo/Yodi – That’s what "THEY" want you to be.  Too many people, even here in PSW, are too focused on the short-term.  Read my "Worst Case Scenario" that I put up on June 6th, when we initiated the current Buy List.  My opinion has not changed since and the World, frankly, hasn’t changed since – only the sentiment has changed and, from my perspective, it’s been changed by this relentless media onslaught of unwarranted doom and gloom that is giving people unrealistically negative outlooks.  So you can either be one of the herd and sell everything and go to cash and sit in your fallout shelter or you can be a wolf and prowl without fear, having your choice of the best stocks at the lowest prices if you have the nerve to go for it.  I’m certainly not saying to go all in, but if they deal you two aces to open in poker – you don’t play defense!

    Fashion/Exec – That’s because their fashionable bosses want rates to stay low, want property and labor to stay cheap and want taxes to remain low so they can keep buying things on the cheap.  Rich people (real rich people) have long-term perspectives.  This morning, at the end of yesterday’s post, I talked about the L’Oreal girl who’s handing out "gifts" to the Sarkozy administration and I pointed out that a person with just $1Bn, clearing just 5% on their assets, is making $143,000 a day.  They don’t want change and they don’t want to pay tax on that money and the ones who make their Billions on Wall Street (a good percentage of the 10,000) are working double overtime to stop financial reform while there’s still a chance.  That’s hard to do if the economy is on fire after the bill passes the House so anyone in the top 10,000 who has a TV or Radio station or newspaper or magazine just wants to make sure that their viewpoint is being properly represented so "Obama Bad, Change Bad, Economy Bad, Low Rates Good, Stimulus (taking their tax money) Bad, Defaulting on Bonds Bad, Cutting Social Programs Good, Tax Cuts Good…).  It’s not a conspiracy, just common sense….

    Europe back to green again (barely).

    Stock dumping/Yodi – Old news.  Imagine what happens when the single largest shareholder stops selling.  The government is not selling because something is wrong with the banks, they are just getting their money back so they sell too much for too little in order to be "on schedule" – again, it’s a buying opportunity for the patient. 

  28. terrapin22

    Phil/site update – have you capped the number of members of your site as you had mentioned earlier this year?  Any other changes coming this summer?  Thanks.

  29. sunilram

     Are we out of YRCW at 0. 11c?

  30. edro00

    DIA hedge in the DOW post
    I know you hate this type of thing but you said
    "we can do a very simple, margin-free hedge like the DIA 2012 $95/80 bear call spread for $5.50, which pays $15 if the Dow is below 8,000 in Jan 2012"
    Didn’t you mean a bear PUT spread?

  31. gmarts

    Kass on CNBC calling a bottom???? Kass??

  32. Phil

    CEOs/TM – Don’t forget that most CEO’s aren’t even close to the top 0.01% and, of course, as the article mentions, they have other compensations besides money.  There are CEOs with jets that cost more than their salaries. 

    Looks like we’ll get another crack at the DIA protection.  Looks like the $95 puts at .52 are most attractive, let’s say at 9,800 or lower.  If RUT breaks 600, that will become our new cover spot, likely along with S&P 1,040 but, for now, they are both below so we will use the Dow line as a marker.

    TSLA sale continues at $15.30! 

  33. tuscadog

    Phil / % cash guidance    Phil, I believe that prior to today you were guiding us to hold about 65% cash, vs 75% previously.  With the buy recos today, what is the cash ratio guidance now?

  34. nicha

    Phil – for a 15k potfolio which ones wud be better picks from the 10 fabulous plays of this morning? Thank you.

  35. Phil

    YRCW/SrF – Yeah, they are sucking but that’s just the bad news on the bonds, not a new thing but also not worth riding out past your loss limit.  Plenty of other fish in the sea…

    Bernanke/Dez – True, I was (and Barry was in the post) simply referring to the expansion of the money supply.  Call it what you will but the Fed whipped out and empty, unfunded checkbook and wrote out $2.5Tn worth of checks to banks in excahnge for $2.5Tn (hahaha) worth of assets.  So now, the Fed "got their money’s worth" and the banks have $2.5Tn worth of cash plus whatever they kept on the loans in the foreclosures plus all the interest and fees they collected over the years.  So it’s a WIN/WIN for the Fed and the Banksters.

    CSCS/Hoss – Sure you can play them that way too and then you only end up owning 1x at net $17.90, worst case.

    Site/Terra – We stopped promotions and we’re winding down, membership will close as soon as programmers are ready to start site updates.  Lots of things being done but not a lot of changes to this daily format, mostly ways to expand what we have on the main site and a few tweeks to chat.  Going over the schedule this weekend, I don’t know how much will really get done in time (end of Aug) because they are already behind schedule on the July 4th weekend server upgrade (test didn’t go right so they didn’t move the main system.  So, a work in progress. 

    YRCW/Sun – Unless you are scaling in or committed to very long-term, then not worth holding.  If you were in at .21 and now you can buy 2x more at .11, then your average for 3x is 14.3 and you are still 30% out of the money so a tough road to follow sticking with it. 

    DIA/Edro – Damn, I did mean a bear put spread!   DIA 2012 $95/80 bear PUT spread for $5.50, which pays $15 if the Dow is below 8,000 in Jan 2012.  Thanks for catching that. 

    Cash/Tusca – I’d still lean 65% cash but keep in mind that if you are 35% invested then 70% of your cash is already committed and we need to treat it that way (even though margin just around 35%) until we are MUCH more comfortable with the upside. 

    Kass/Gmarts – About time.

    $15K/Nicha – The ones you can afford to buy 100 shares of for less than $1,000.  That’s as much as you’d want to commit to a single position in a $15K portfolio.  Remind me after hours and we can look at some artificial plays that can help prevent you from overcomitting but AA is a great stock and GE and WFR are great stocks regardless.

  36. exec

    Phil,
    I know…..I’m just pulling your chain because it’s somewhat entertaining the way you come unglued when I criticize Bama and the dems.  Your right though…..the real rich are playing these politicians like puppets on a string.  I’m not sure where the balance is, however, I’m pretty certain the answer it’s not demonizing business and the working people and pandering to the takers to get their votes.

  37. Phil

    Gloomy bond investors clash with upbeat stock managers

    FT’s Lex team says its recommendations fared quite well, thank you, in the first half by steadfastly following its core strategy: "to mine the research produced by investment banks every six months to establish consensus trading strategies. Then trade against them… The markets continue to reward us for listening to the experts – then doing the opposite."

    Individuals are earning at record levels and moving into a more stable financial foundation. Corporate cash positions are high, with little risk of sharp resource reductions. U.S. states and EU nations are reducing budget gaps. Just a few of the reasons to take comfort that 2010 is not 2008.

    Global chip sales rose 4.5% in May from April, hitting a new record of $24.7B in sales, and up 48% from a year ago, the Semiconductor Industry Association says. "Emerging markets, including China and India, are fueling sales of computation and communications products," SIA President George Scalise says.

    Turkey is closer to fulfilling the criteria for adopting the euro than most of the troubled economies already in the euro zone. A decade ago, its budget deficit was 16% of GDP; by next year, it could drop below 3%.

    Attempting to allay investors’ fears of political meddling, European bank regulators say they will show the methodology behind the stress tests. ZeroHedge isn’t convinced, saying the tests must be a "farce" because if they weren’t, "the dominoes [would] start falling."

    Looking at the likelihood of a "long siege," Paul Krugman advocates a "kitchen sink strategy" – "throwing everything we can," including more stimulus, to stop the slide into another recession. The trouble with that approach, Niall Ferguson says, is that nothing would scare the markets more.

    Job growth will sustain the U.S. economic recovery even as government fiscal stimulus ends, Morgan Stanley’s David Greenlaw says, foreseeing about 200K jobs added each month during the second half of the year. It’s not right, he says, to tie a second-half slowdown to the removal of stimulus.

    Investors worry that the risk of default for U.S. local governments is growing, as some regions – particularly parts of California, Illinois, Michigan and New York – face the same type of difficulty in curbing pension and budget deficits as some European countries. Analysts foresee further spread widening in the muni bond market.   States: the new strategic defaulters - There are good reasons for the stigma against default, James Saft writes, but it’s hard to ignore the overall economic benefits of defaulting – whether you’re a homeowner or a country.

    "Something more than cyclical forces is weighing on the American jobs machine," Tim Duy believes. We must appreciate the importance of manufacturing capacity and the possibility that offshoring has damaged the U.S. economy more than commonly accepted, he says, but that will require "a significant paradigm shift in the thinking of U.S. policymakers."

    They call this the JRW EffectAt least one sentiment indicator suggests still too much bullishness, Mark Hulbert says: Investors poured $434M last week into ETFs that provide three-to-one leverage on the long side of U.S. equities, while pulling $355M out of ETFs that provide similar leverage on the short side. Those investors apparently "have a knack for zigging precisely when they should zag."

    More fear-mongering by Lobbyists and PR guys:  If Dodd-Frank passes, U.S. companies could be forced to put up an additional $1T in collateral to continue using derivatives to reduce their business risk. FMC Corp. (FMC) says some companies will need to post hundreds of millions in additional margin – cash or committed credit that can’t be used to build plants, hire workers or fund R&D.

  38. Phil

    Interesting – Everyone if over yesterday’s open excetp the Russell, who are WAY under (12 points = 2%) and the Nas, who are near even. 

    Well, the first protect never triggered and let’s hope we don’t need this one either but now we have Dow 9,890 and RUT 600 and S&P 1,044 so let’s call it 9,875 and say blowing 2 out of 3 is a reason to grab the DIA $97 puts, now .77, which started the day at $1.30 so nice protection if we need it.

  39. tuscadog

    Phil/ 65% Cash    So, with margin commitment on puts/calls and 35% long positions we should be left with uncommitted investible cash balance of around 30% should you become more bullish? Is that the right way to look at it?

  40. terrapin22

    Phil / TBT advice – I’m down 87% on 10 TBT 1/22/2011 calls.  When should I roll?  Thx. 

  41. Phil

    Votes/Exec – Whatever it takes to fight the power at the moment.  Getting into office and giving up because the whole system is more corrupt and hopeless than a candidate could have ever imagined has not done very well for us for the past 50 years so maybe we should give something else a try?

    Wow, Europe with a really nice turn-up.  Now up 1.5% on CAC and about 0.8% on DAX and FTSE with FTSE over 5,000 and DAX testing 6,000 and CAC not too far below 3,500.  Nice follow-through move on yesterday towards the 5% rule.  We are barely at 2% so far….

    30%/Tusca – Yes, but don’t forget that, in a buy/write, the margin requirement goes down as your stock goes up (and the VIX goes down) so you end up with a good amount of money to spend on upside plays once we make some levels. 

    Europe dumping into the close – they don’t want to get burned by us after their close like they did yesterday.

    TBT/Terra – Those you should probably roll now.  What are strikes and entries?

  42. Pharmboy

    Good morning all!  What a break in Hawai’i, and it was NOT busy at all in Kona/Wikaloa area.  I don’t know when peak season is, but the Marriott there was running specials every night!
     
    SGMO/Terr – I vaguely remember them from a while ago, and their technique is interesting, but a long shot at that.  I would rather catch them when they can prove something in the clinic than chase on a whim.  There are plenty of other things in that price range that have more potential than them.

  43. exec

    Votes/Phil,
    Well…..probably the place to start is by having true finance reform.  It’s pretty hard to politicians to do what’s right when they are being controlled by big money.  Second, you can’t expect things to end well when it’s been an effective and legal strategy for politicians to buy votes by promising people free stuff paid for by the public coffers.  It’s just a matter of time before we’re bankrupt if this is allowed to continue.  Then again……given what definition of bankrupt you use…..we may already be bankrupt.

  44. exec

    JRW,
    Just curious.  Are you short right now?

  45. Phil

    MBA Mortgage Applications: +6.7% vs. +8.8% last week. Thirty-year fixed mortgage rate increased to 4.68% from 4.67%.

    ICSC Retail Store Sales: +1% W/W, vs. +2.1% last week. +3.9% Y/Y, vs. 3% last week. The hot weather boosted weekly sales, and led to the strongest yearly rate since May.

    Redbook Chain Store Sales: +3.1% Y/Y vs. +2.5% last week. The hot weather in much of the U.S. spurred demand for summer merchandise and drove shoppers into air-conditioned malls

    Consumer loan delinquencies dipped to 2.98% in Q1 from 3.19% the quarter before, the third consecutive quarterly improvement, while bank card delinquencies fell to the lowest level in eight years. Individuals are "borrowing less, saving more and building wealth. These are all positive signs" of an overall economic improvement.

    Shopping center vacancies continued to rise in Q2, inching up to 9% from 8.9% in Q1, research firm Reis said. The pace of the deterioration appears to be slowing, but it may take until 2012 to see a recovery, and until 2016 for vacancy rates to fall to their pre-crisis lows.

    China’s resource producers are taking a hit after the country said it plans to impose a tax on coal, oil and gas extraction in western provinces. The move will reduce profits for firms like PetroChina (PTR) and Sinopec (SNP).

    Standard Chartered tells clients to prepare for a 30% drop in property prices in China’s largest cities. Ken Rogoff foresees a "collapse" in China’s property market that will hit the country’s banking system.

    China seeks to allay concerns that it would use its $2.45T stockpile of U.S. Treasurys as a "nuclear weapon," saying any increase or decrease in its holdings is a "normal investment operation" and should not be interpreted politically. But China called on the U.S. and other major countries to take "responsible measures" to maintain the value of their currencies.

    Central banks are selling gold at a record rate, taking advantage of the precious metal’s historically high value to raise cash. "A little-noticed data point at the back of a 216-page report released last week by the BIS shows the international agency has taken 349 metric tons of gold since December – allowing central banks to raise a record $14B."

    A fall in steel prices could be cause for worry, as manufacturing activity slows and consumers once again grow wary about buying expensive items such as cars and appliances.

    Unemployment in rich nations may have peaked, according to a new OECD report, but those countries need to create another 17M jobs to get back to pre-crisis employment levels. There are 47M unemployed people in OECD nations, a rate of 8.6%, and the rate could stay above 8% at the end of 2011.

    Microsoft (MSFT) plans to lay off employees as early as this week, WSJ reports, although the number is believed to be smaller than the roughly 5,000 laid off last year. MSFT +0.5% premarket.

    Disney (DIS) is obviously seeing some success in its China-based schools that teach students English. After a trial phase with 11 schools, the company plans to expand to 148 in the next five years, calling it "a very sizeable opportunity, something that can deliver operating earnings of well over $100M in the next five years."

    State Street (STT +2.9%) says its will report a Q2 profit well above analysts’ expectations due to improving revenue trends. On an operating basis, the company expects EPS of $0.93 vs. consensus of $0.72. (PR)

    Google (GOOG) is facing early-stage antitrust scrutiny in Europe, where regulators are looking "very carefully" at allegations that Google unfairly demotes rivals’ sites in search results.

  46. amatta

    Exec, 
    I am trying to follow the trades on IWM… and was looking at your comments regarding yesterday’s action. I am quite a few steps behind and was hoping for some anwers to basic questions:
    What exactly is conformation? Engulfing? 
    When is it a buy signal based on the Stoch/Entry point posted/Volume? I assume the reverse is true for exit…
    Thanks

  47. yodi

    Phil
    I am rolling some of the Jul 104 p mattress plays to Aug 102  for a cost of .35 does this look OK to you ??? thks

  48. yodi

    Phil
    I am rolling some of the Jul 104 p mattress plays to Aug 102  for a cost of .35 does this look OK to you ??? thks

  49. JRW III

    exec,
    No, in fact I haven’t entered a play all morning, no conviction. If this is going to be a 50 cent day on IWM (59.59-59.97), I may just take the day off !!

  50. shadowfax

    Phil
    Give somthing else a try, yes, and give peace a chance from 1969 on all wars. 1970  to 1999 wasn’t too bad overall.

  51. lionel

    JRW/
    Thank you for posting that comment. I will follow your advice assiduously and will come back for the closing..

  52. shadowfax

    JRW
    The only signal I saw was a sell about 11:15 and that was not convinceing. Glad to see I get your way and learning how to hunt. THANKS!

  53. rstuart4201

    Is it just me or does it look like the market trend is starting to roll over exactly like yesterday?

  54. Phil

    Bankrupt/Exec – Well it’s a whole broken system.  We elect politicians to represent our local interests and, technically, their goal should be to get as much money as possible out of Washington on over to the local community.  To some extent, Reagan’s idea was right, cut the Federal government down to very few functions and push the responsibility for everything else down to the states but then you saw what happened in the 80s as states totally started collapsing and the government had to step in anyway.  So then you have the issue of who trusts who to handle money and even if Washington just sticks to War and stuff, they are still going to get lobbied on where they spend that $1Tn a year.  Benevolent Despotism is the only practical answer.  Put me in charge and give me martial law for 4 years and I’ll have most of this crap cleaned up.  If not, I’ll run again based on my accomplishments – assuming I reintstate elections….   8-)

    Actuallly, what I would like to do is get elected Senator and then do a blog where I report on the actual BS that’s going on up there every day.  Things like "Guess who offered me $10,000 today?" and "Here’s a list of how many people actually were at this vote" or "Who is kissing whose ass this week:"   It would be fun until they find some reason to remove me from office!

    Mattress roll/Yodi – Sure, that’s a good roll.  You might not want to rush it though as Europe closed up 4% in 2 days and we are only up about 2% so far so maybe another 200 to squeeze out of the Dow this week. 

    Europe’s banking stress tests may assume a 17% haircut on Greek bonds, sources tell Bloomberg, and a 3% hit to Spain’s debt. But losses on German bunds are unlikely to be part of the scenario.

  55. rstuart4201

    Never mind, looks like the buyers were able to stall off the roll over for now…..

  56. Phil

    Now the Fast Money guys will explain why today’s run is incorrect.

  57. kinkistyle

    David’s buy recommend, SIRI, stuck at $1

  58. exec

    Amatta
    Asking me that question is a lot like asking a electrical apprentice how to wire the new world trade center.  But I’ll give it a try:  First off, buy this book and read it.   productsearch.barnesandnoble.com/search/results.aspx
    An engulfing pattern is when a candle totally engulfs another candle in the opposite direction.  JRW used an engulfing pattern that passes through the 8 EMA on a 3 minute chart as conformation.
     
    As far as your second question, I’m still struggling with this, however, if there is a move above the S/R levels with volume with the Stoch indicators above the 80 level and momentum pointing up.  It’s a buy signal.  If this is too confusing……then try my proven method……flip a silver dollar……heads buy long…..tails buy short.   Guaranteed to lose you money!!!

  59. shadowfax

    rstuart4201
    I do not see today like yesterday. Yesterday we opned up and more or less went down all day. Today has been a boring uptrend with lunch hour weakness.

  60. jromeha

    Phil, are you expecting any kind of a bounce in NG towards the end of the day? Seems like with the hot weather and what not I would expect NG to be up today in anticipation of inventories….

  61. kinkistyle

    I wonder if its possible to scalp pennies off that movement on SIRI

  62. terrapin22

    Phil / TBT roll – the strike on my ten 1/22/2011 TBT calls is $45.  My cost basis is around $7.50.  Thx. 

  63. blue

    Phil,   where do we send our contributions for your Senate election campaign?

  64. rainman

    Phil/Senate — sounds like a death sentence.

  65. Cap

    Hey, JRW, what are u complaining about ?  I got 15 cents !   missed out on $2  :<(
     
    LOL

  66. kinkistyle

    JRW’s system gave a great entry signal at 9:54 and exit at 11:06.  This morning was such a nice little reprieve from all the chaos and fear thats been the norm of late…

  67. Phil

    Wow – CNBC’s assasination of the housing market, which had not one shred of current information – was worth cutting off the President’s speech on the economy and now commercials are more important too.  What, is their new mission to make sure their viewers miss everything???  You don’t have to like Obama but he is the President – what he says does matter and it does affect the markets….

    Nat gas/Jrom – I expect a bounce by October, not today!

    TBT/Terra – Well, way too late to do a good adjustment now but you can sell the Jan $36 calls for $3.30 and spend $4.40 (+$1.10) to roll to the Jan $32s.  That will put you $4 in the money for net $8.50 and hopefully you get back to $4 and then you are down "just" about 50% and you can work on 2012. 

    Contributions/Blue – Just have an heiress stop by with a bag of cash – those French are so good at politics!  8-)

    Senate/Rain – Tina is a DC kid, she is sure I’ll be assassinated if I’m elected because I have too much fun annoying powerful people. 

  68. amatta

     Exec, 
    LOL…. yes it sure doesn’t play out so easily as it sounds! Thanks for the pointers. Although I wasn’t using a coin flip to enter and exit, it was basically the same thing-- just not comfortable with all moving parts and what to make of them yet…

  69. matt1966

    blue, send to:
     
    Phil
    c/o matt1966
    1 Crummy St.
    Alex., VA
     
    I hope I’m not interrupting today’s intense action but wanted to let you all know that July is for Pie and Wholefoods has them on sale for $10.  Furthermore, I just ate half of one for lunch.  Carry on-

  70. jromeha

    hahaha matty!

  71. yodi

    JRW,
    Please can you explain the 8 EMA on a 3 minute chart and possible where I can find it on TOS thanks a lot

  72. willsons

    matt 1966    what kind of pie?

  73. yipcarl

    Yodi,
     
    Why don’t you call TOS so they can walk you through it.
    (866) 839-1100
    JRW uses Schwab

  74. amatta

     Phil, 
    DIA 97 puts, should we keep them if the market finishes above the levels mentioned above? Or take the losses (I got in at .88)
    Thanks, 

  75. rainman

    matt/action — seems awfully quiet out there. I’d be happy to be bored for the rest of the day and close here but I know the action is yet to come since the dow hasn’t swung 200 pts yet. Question is will we be negative by 65 today or up another 65?
    willsons/pie — I don’t know but he must have bought a lot of ‘em – WFMI +3%

  76. HHFIV

    Phil: I own 100 shares of RIG at 49.50 and -1 JAN 2011 47.5 PUT / -1 JAN 2011 50 CALL. I’ve been watching the movement in the PUT and CALL prices as RIG has started to increase. Since shares of RIG were above 90 before the BP disaster, then it’s possible that it could come back up. As this happens, I plan to adjust the PUT/CALL strikes (i.e., up) so that neither one gets away from me. Is this the correct adjustment?

  77. rj_jarboe

    A short read for all of the members who think Obama is anti-market and anti-business.

  78. Phil

    Gold getting back to $1,200.  Copper $3.01, oil $73.44, Nat gas $4.58

    "Signs of recovery" in liquid-fuels demand in the latest EIA energy outlook, with consumption up by 500K barrels/day compared to a year ago, and emerging markets accounting for all the expected growth in consumption (some 1.5M barrels/day in 2010 and 2011). Supply forecasts (OPEC and non-OPEC) are up. Crude futures +2.11% to $73.525.

    Bank of America now sees the Fed keeping rates where they’re at until March 2012, later than its forecast of action in August 2011, on lower forecasts of economic growth. The 10-year Treasury yield should end this year at 3.25%, the bank’s analysts say, compared to earlier predictions of 3.75%.

    Japanese firms from Toyota (TM) to Canon (CAJ) are trying to play catch-up to their international rivals in targeting emerging markets. With a slump at home and in the companies’ traditional, wealthy markets, high growth now lies with consumers making less than $3,000 per year. (Other firms jumping on the emerging-nation bandwagon: I, II, III…)

    Thanks for the pie tip Matt!

    Hey RMM – Are you still regretting buying back the AAPL callers?

    Three lunchtime reads:
    1) U.S. data dogs on quest for sexier statistics
    2) Five ways Congress can bolster growth
    3) IADB president: Welcome to the Latin American decade

  79. exec

    "Phil,   where do we send our contributions for your Senate election campaign? "
    Wait a minute!!!  He’s one of them!!!.  A tax and spender!!!!  They’ve already got the numbers in the Senate, are you nuts!!!
     
    Whooooaaa!!!!  Let’s think about this a second……if he’s elected……technically he will be indebted to us give the fact that we’re paying members.  And if we play our cards right…..like slip him a few untraceable dollars under the table…….we can expect even bigger and juicier gifts!!!  
     
    Thus……the Honorable Senator Phil R Davis can steer all the legislation in a way the benefits us most.  Start with the Clean Water and High Paying Jobs for Everyone Act…….which we all know is just a fancy name for the Day Trader Bailout Fund.  Where every loosing trade will be reimbursed…..in full…..and with interest of course….all with those pesky taxpayer’s dollars. 
     
    Now were talking baby!!!!

  80. matt1966

    willsons / same as mcdonalds / apple / cherry
     
    Hate to say it folks but this looks like the beginning of another option expiration induced rally.  Since oe will occur during earnings it could last a little longer or not as long as the last one.  No doubt the downward trend will remain in tact-

  81. yipcarl

    exec,,,,, i like it!

  82. loopy

    Well I’m running a real-time chart of TNA with 1,2 and 3 minute EMA’s…looks like very well defined convergence on entry/exit points.  I’m going to try to run it on a variety of stocks/ETFs after the close.

  83. RMM

    Phil:
    I looked at your 9 fab DOW plays and wonder whether to add to the ones I have or get some new ones:
    I have: AA, GE, INTC, WMT,  AXP, MRK, MO, VLO, C,
    WHAT would you do ?

  84. exec

    Phil,
    What is your feel for this market today? 
     
    To me, it almost seems like there is a lot of reluctance and caution out there.  Everyone wants it to go up…..but since they haven’t been getting the bounces off every low that they’ve come accustomed too, and given the fact that the media is downplaying the market…..it’s like everyone is just sitting and waiting to see where it’s heading.  So the question is…..which way is it going to explode…..up or down?

  85. rainman

    Anyone thinking anti stick?

  86. dflam

    Phil:  I have 20 TZA Jan. $6 / $11 bull call spread with sale of 1/2 Jan. $5 p to hedge $200 k for a 10 % drop in the market. Should I switch over to your DXD Oct. $30  /$38 C bull call spread  paired with sale of Jan. $26 P ? Thank you. 

  87. Cap

    Anti – Stick ? 
     
    Anything is possible, but NO.  These are FMD conditions.
     
    Let’s see if we can make new highs today….

  88. rainman

    Cap/FMD — FMD? Foot-in-mouth disease? Isn’t that what Phil’s been saying CNBC has? 

  89. rainman

    I guess that’s no to the anti

  90. ravalos

    Well, FINALLY.. I had back in Feb sold short 2x Mar $35 Calls in WFMI (naked), then I rolled up and out to 2x Apr $36, then again to 4x Apr $37, then again to 8x Apr $38, then one more time to 8x May $41, the per Phil’s suggestion I rolled down to 4x Jun $40, then up again to 4x Aug $45, and FINALLY yesterday I bought them back at $0.08 for an 85% profit.. crazy crazy..

  91. exec

    Someone is buying……could be their strategy….talk down the market while you buy it up.

  92. morxlntway

    One could roll up the Sept DIA 99s, 2 pts for a dollar, if one wanted to.

  93. matt1966

    Wow, what a kowinkydink.  At exactly 1:12pm today indices covering more then 5000 different stocks all take off at the same time!  What are the odds…  HAL?

  94. Cap

    you didnt get the memo Matt ?

  95. yipcarl

    Damn MAtt I thought you were on top of things.  I can’t believe you don’t know why that happened… lol ;)

  96. yodi

    Yipcarl.
    Thanks for the advice. I had the technical dep of TOS and they ask what the 8 stands for pls assit thks

  97. exec

    JRW,
    Are you buying this or did you pack it up?

  98. yipcarl

    exec
    The RUT has clearly broke the 1 minute.,.however I’m not sure, could be a headfake

  99. Jbur

    rainman- you can look it up at urbandictionary.com

  100. David Ristau

    Every time I hear the word contrarian on CNBC I want to puke. These people are so "fake" smart…they are news broadcasters because they are not smart enough to actually make financial decisions.

  101. goober

    Talk about conflicting idioms? I’m confused more now not less. In this entire article you could not and did not point to one real economic indicator that would lend any positive going forward yet you stated there is no reason to think otherwise? The negative indicators are numerous and unfortunately building not relenting? Some days you make a lot of sense and some you seem lost or detached from reality. Unfortunately we all do that occassionally, so please keep it to a minimum. Ha Ha Ha Ha !  

  102. terrapin22

    Phil / RIG – can you recommend a 2011 bull call spread?  the 2012 is not very liquid.  Thx. 

  103. exec

    3 min is just riding the 8 ema.  Somethings got to give here.  Tempted to go TZA

  104. morxlntway

    Phil – Re Terrapin’s TBT, would it work to just sell for a loss then sell puts for an amt equal to the loss?

  105. millstone99

    I’m in TZA and praying this is a top for the day.

  106. JRW III

    exec,
    I’m here, I’m just working on the things I never take time for.  If you’re long, watch out at IWM 60.59, after bumping the portfolio 25% in the last two trading sesions, I just can’t get excited with this !!

  107. Pharmboy

    Round two for CRIS buying….1.37.  This is a 1/2 position now for those interested. 

  108. matt1966

    Boy, they are trying to make this as easy as possible for the shell shocked ‘investors’ to get back in.  Floors are established each step of the way up.  Total FMD to be sure.  I expect a pull back though.. they don’t want to make it too obvious.  They’ve got 7 days to fill before oe and they can only take it so far.

  109. Phil

    SQQQQ $64 puts (yesterday’s play) up to $1.50 already so don’t be greedy!  1/2 off and .25 trail on the other half locks in a 40% gain.   

    DIA/Amatta – Those were a stop out over the levels, not meant to be kept at all if we head up!

    RIG/HHF – The risk is not gone from the trade just because there is a relief.  Greed and hedged plays do not mix well, we take buy/writes becasue we plan to be satisfied with 20% gains on a position.  Moving the strikes around increases your risk and changes it to a very directional bet, plus you are chasing the price – all bad things.   As it is you sold the $50s – what madness to buy them back for $8.90 when RIG is at $51.32….  Looking out, if you are still very bullish in a month or two – the roll to the 2012 $60s is currently a $1 credit.  As long as that relationship remains, no matter what the prices – then you have nothing to worry about.  

    Exports/RJ – It does kind of worry me that every country on Earth’s plan is to double their exports in 5 years.  We’d better hope that Mars probe finds life and that that life has a good credit score!

    Wheeee!  And money finally comes out of bonds! 

    Clean water and Jobs/Exec – Yeah, I can be for that. 

    Dow/RMM – I’d add more on this dip and you are already covered so you can afford to wait for a move up to sell.  Maybe average in a little on putters who are up on you or take out some of the callers that are low.  Of course this would have been better to do when we were down more…

    Feelings/Exec – Every bullish move for the past month has been slapped down so the buyers are very nervous but that’s exactly what they want.  The bears are holding on thinking this "silly" rally will fade out and the bulls are sitting on their hands worried they’ll get burned again.  Since we’re having what Cap calls a "Free Money Day" no one can complain they didn’t get a chance to come in and another day like this and it’s a big squeeze in a perfectly played market.

    TZA/Dflam – I think the TZA is fine but if you are ahead, I’d cash it and wait to see which way we head before adding more protection.  If all goes we”, you’ll get a nice, cheap entry back at 10,200 or so.

    Strategy/Exec – That’s exactly what this was all about I think.  A big push to clear all the suckers out before the big boys start buying again.. 

    Coincidence/Matt – Yep, just one of those odd little things that happen sometimes, I guess…

    RIG/Terra – Stock at $51.12 and selling the $50 calls for $8.80 and the $45 puts for $6.50 is net $35.82/40.41

    I hope we are not running out of gas here.  Dow volume just 100M at 2pm so they probably haven’t even run a bot yet and certainly there hassn’t been any volume capitulation so we could get some real fireworks if we break up here.

  110. exec

    Mill,
    I like that Strategy.  I’ll try it…….Hail Mary…..Full of Grace…………………………

  111. tradinv1

    Phil,  How do you like scaling into Weatherford here.  They are 30% off their 52 week high and obviously suffering from the BP contagion.  Buying the stock at14 selling J 2011 p&c’s for a 10/11.5 entry? 

  112. jpuma

    Phil,
    My fearless leader…. I have a ques… I noticed on NYSE, SP500 & Dow that the 50 day moving average has crossed below the 200 day moving average, known as a "death cross".  Typically when this happens the underlying entity continues to move down.  I recall that you are not a fan of technical analysis, but I’m curious if you have a take on this & more importantly if you could point to a time when this has happened & the mkt didn’t go down.  On every chart I can find, a death cross is followed by further deterioration.  Thank you for your thoughts….
    Puma

  113. RMM

    Phil: I have cashed in my TZA 4/14 spread: now I wait for what ? 10200 and then back in again ?

  114. yodi

    yipcarl
    Again my question Called TOS they do not know what the 8 stands for in 8EMA please explain thanks

    July 7th, 2010 at 12:42 pm | Permalink  
    Yodi,
     
    Why don’t you call TOS so they can walk you through it.
    (866) 839-1100
    JRW uses Schwab

  115. Phil

    TBT/Morx – Sure but I didn’t want to add margin for no reason.  If you have it to spare and you REALLY want to own TBT at the net strike, then that’s always a good way to go. 

    TZA/Mill – I doubt it.  You are lucky RUT isn’t at 615 yet.  TZA is a hedge, not a bet.  As a bet it sucks.

    FMD/Matt – If your goal is to perk up consumer confidence and get investors back into the market, nothing works better than a 10% stair-step over several days.   Don’t worry though, CNBC just used the words panic and fear another 5 or 6 times at the top of the hour and the English guy says only fools are buying right now….

  116. kustomz

    Hey Phil just took half off the table, wheres your high mark on the Dow?  I think 10k up 2.5% is a stretch… 9945 up 2% more likely

  117. exec

    Phil/Fools,
    Ya right.  The fools are the little guys watch the English guy and selling while his company is stealing their shares.

  118. exec

    Phil,
    It’s interesting watching the charts today.  IWM is tracking the 8ema to a tee.  Do you understand how this happens?  Is it possible that the BOTs are set to buy along this line?

  119. gmarts

    8EMA means (in this case) 8 minute exponential moving average. I believe JRW is using a candlestick chart with a 3 minute (candlewidth) period

  120. yipcarl

    Out of TNA at 35.44 in at 35.00 pure momentum play when IWM broke resistance around 60.10

  121. matt1966

    It kills me how ez they make it for bulls and how difficult they make it for bears.  Quadruple bottoms?  Give me a break-

  122. JRW III

    yodi / ema
    You can set the period; I use 8. SS DIRK came up with it and it works really well as conformation of the 1 min indicators.

  123. jvest

    FCX Jul 10 57.50 Put sale is up very nicely since a few days ago.

  124. jromeha

    Convert to the darkside Matt.

  125. chyer

    Phil/  WDC is a amazing buy near 26 (if it gets there) PE around 6!!

  126. millstone99

    I hear you, Phil, but I played TZA twice so far today as a bet and won. Let’s see if the third time is the charm. So far so good.

  127. Phil

    WFT/Trad (not to be confused with WTF) – I don’t like them because their current price is based on the assumption of a radical return to profitability and they have missed 3 of the last 4 earnings by 33,37 and 81%.  I don’t know them well enough to like them but I do know that SLB is a far better bet as is RIG if you don’t mind the legal risk. 

    Death cross/Jpum – It is a very powerful signal but my theory (working at this exact moment) is that the death crosses were forced in order to get a market dump.  If the machines can move the market up, then they can move the market down and if they can move the market up and down then they can shake it all around and do the hokey pokey – in other words, "THEY" can paint any pattern they wish to and if I know there is a pattern that is going to make traders dump the markets en masse and I want to do some buying, then I will program my bots to make that pattern becuase there is no more profitable way to play the markets than to be a buyer during a panic you caused.  Since you know the cause is you, you can buy with confidence on the way down.   If the Gang of 12 believes there will be a QE2, then they want to BUYBUYBUY ahead of the news and if they can get the general population to SELLSELLSELL to them, so much the better. 

    So, in an ordinary market, I do take a death cross more seriously but there was nothing natural about this sell-off.  The end of April to the 200 dma was normal and expected but then we should have flatlined into earnings at around 1,100 and the cross should have been decided by FACTS of earnings reports, not by rumors and panic selling.  So we’re about 10% down from what should be the mid-point and 1,050 is 5% below, which is the bottom of our expected S&P range for a flatline. 

    10,200/RMM – Yep, but we’ll need to see what looks good up there.  So far, the RUT is a lagger and we like to short the leaders.

    Dow/Kustomz – Dow doesn’t matter, 1,050 on S&P is a big test and we are bound to hit resistance here, which is 9,950 on the Dow and 2,150 on the Nas and 6,650 on the NYSe and 605 on the RUT.  All we need today, is a finish up here and then we can fill the gap up another 2% by Thursday but THEN it gets very tricky as we’ll be topping a 5% run at about 1,070 on the S&P, which is our 2.5% line down from 1,100 and right back to where we’re supposed to be and the logical move from there is profit taking that re-tests 1,050.  That means that this is a pretty good place to take August puts if you are so inclined as we are likley to revisit this line even if we do head higher….

    Bots/Exec – Of course they are programmed that way.  I was saying this last week – Bots don’t do fundamentals.  They can be programmed to score stocks but that’s a BS way to track things (with all due respect to the IBD 100) – especially in the short run so they program bots to follow TA or trends of some sort and that’s how we end up with my 5% rule as it measures the convergence of the major trading progrrams.  I don’t need to see the programs, from my consulting days I know the general designs and once we catch a good inflection point we can extrapolate the rest.

    8EMA/Gmarts – You guys crack me up.  I use the 4-hour moving average which, by the way, says $36.39 is where TNA should top out and a huge punch-up from there (to $39.19) if they don’t. 

    FCX/Jvest – It is very liberating to short a put on a stock you REALLY don’t mind owning.

    WDC/Chyer – Try STX at $13.36, selling 2012 $10 puts and calls for $7 for a net $6.36/8.18 entry

  128. tradinv1

    Phil, Thanks and SLB it is.  I already have RIG.  "WTF" is the most appropriate symbol for this market!!

  129. gmarts

    Re; 8EMA, I was just explaining the term. I am set for 5  min candles and 50min and 200min ema’s on intraday charts. Some folks slit the hairs finer than others

  130. exec

    Phil,
    I use the 4-hour moving average
     
    Care to explain your 4 hour moving average?  How is that set up?

  131. Phil

    With bigger auctions ahead and inflation expectations low, yields will have to come up to boost tomorrow’s record-tying $12B sale of TIPS, says Barclays’ Michael Pond. He says the securities have long-term structural value but "many headwinds" in the near term.

    "There is too much confusion” in light of actions such as the passage of health care and financial legislation, Dallas Fed President Richard Fisher tells CNBC, which prevents hiring and hampers economic growth. Fisher says there’s little the Fed can do on this issue: “This has nothing to do with monetary policy… it’s rule making” that needs to be resolved.

    Don’t you just hate it when Democrats are in control?  McDonald’s (MCD +1.3%) defends its use of toys in its Happy Meals, blasting a threat from a consumer advocacy group to sue it over the marketing tactic. The Center for Science in the Public Interest says using toy-related promotions encourages kids to eat unhealthy foods.

    Sirius XM (SIRI +7%) raises its subscriber guidance and projects the addition of 1.1M net subscribers for 2010 – the third guidance increase of the year. But there are so many shares outstanding that the company would need to make hundreds of millions of dollars in profits just to post a real penny or two of earnings.

    The U.S. government asks an appeals court to reinstate the moratorium on deepwater drilling declared after BP‘s Gulf oil well blowout, saying that drillers would not suffer permanent damage. But the government’s energy forecasting unit says a drilling ban would reduce crude output by an average of 82,000 barrels per day next year, more than previously estimated.  That’s 82,000 out of 18,500,000 that we consume per day. 

  132. loopy

    Phil do you do any mentoring, like a week of group instruction?  You mentioned consulting…just a thought.

  133. loopy

    Phil do you do any mentoring, like a week of group instruction?  You mentioned consulting…just a thought.

  134. gmarts

    I can almost picture Phil violently and reflexively expelling root beer out his nasal passages at the mention of an 8EMA   :-)

  135. chyer

     Got you on STX, but I think WDC is the better company on a product level

  136. kustomz

    Aye Captain Davis…figure its easier to watch 30 stocks for direction since the Dow represents Financials, Tech, Oil, Pharma, Consumer staples.. etc. etc…

     

  137. doro165

    Reminder that TZA does its reverse split tonight after close. 5-1

  138. fjd10595

    I still like the BP Jan 2011- 17.50 puts to sell as there is still good premium there.  Anyone think that BP will be cut in half again by January?

  139. lapper

    Phil, if QE2 comes, do you expect them to buy the treasuries again?  In this case sharp down for TBT and then a large rally?  Since most of that money from QE1 never found its way into actual economy, what are the chances of them not buying treasuries this time?  If QE2 comes, and it looks that way say hello to gold 1400 :)

  140. millstone99

    Okay, you were right, Phil. Played with TZA and got burned the third time.

  141. exec

    JRW,
    You were smart to sit this crappy day out.

  142. exec

    Mill,
    Tough day to have TZA.  I bought a little at .40 and still holding.  Gunna dump soon due to Phil’s maloik!!!

  143. rstuart4201

    All the negative nancies on CNBC can’t hold this market down today! I think we toy with 10k on the DOW, but close below it.  We’ll still have a nice headline for the news "Bottom may be found. DOW up 200 points"…followed by a nice morning spike up from new buyers who got sucked in by the headline, then a nice lunch/afternoon sell off.

  144. exec

    BTW……are there any woman members on this site?

  145. kustomz

    Todays about not giving the shorts any breathing room..

  146. pahurik

    what happend TZA calls after revers split if you own?

  147. judahbenhur

    JRW, btw SS and I have stopped using the 3min8ema.  We think we’ve found something that works better.  I don’t mean to sound secretive, but it is a little off-beat and we are still ironing out the kinks and therefore not really ready to post the details. It was SS’s idea and he’s not around right now, so I’ll let him explain it to you if you want to shoot him an email.

  148. millstone99

    I was only holding TZA for a few minutes. Did well the first two times but the third got away on me. The market kept looking toppy but then it suddenly pushed thru. Frustrating. Should have quit while I was ahead.

  149. shadowfax

    exec
    I saye yes as I found out Harford is a woman.

  150. jromeha

    Exec, are you kidding!? Today has been a grrrrrrrrrrreat day!  JRW put the lines out and you shoulda made a decent chunk of change…

  151. tuscadog

    Phil, Ristau / FDO  Fam Dollar sells to America’s huge soft underbelly (60 million), the unemployed/welfare and marginally attached living in poor areas (a growing mkt!).  Customers live hand to mouth, own a beat up vehicle or none and make frequent small purchases as survival funds become available.  Often there the Walmart is too distant or not worth the visit for such small purchases.  CEO guidance caution may be related to the non extention of Unemployment benefits.  Will this be reinstated when the Senate resumes in 10 days?  If so, FDO could bounce back up again.  I think Dave missed this customer funding dynamic feeding into guidance? Thoughts on FDO value following this 8% decline? 
    Re earnings starting next week:  If FDO gets whacked 8% following great results and( only!) 6% plus sss next qtr sales guidance, shouldn’t we be very concerned about how earnings season guidance (which will likely be somewhat cautious) will be received.  FDO looks like an interesting canary?

  152. Phil

    4-hour/Exec – It’s a standard view in TOS Active Trader charts when you’re looking a pivot study.  Anything longer than that loses the bars though, which I find annoying so I’ve settled into watching the 4hr charts when I want to look at those things. 

    LOL – Now CNBC has a guy defending lobbyists!  I can’t wait for them to do a segment on Satan so I can see who they get for the "pro-Satan" argument….  8-)

    Mentoring/Loopy – I’ve never done that.  I used to have a consulting firm (still do, technically) and we did programming, orgainization and M&A work.  Once I we had the kids, I just didn’t want to be flying all over the place anymore and then I kind of drifted more into this and let that business fade out…  One of these days I think it would be fun to do a seminar-type thing in Vegas but it would be a bitch to organize. 

    Root beer/Gmarts – Beer has a root? 

    WDC/Chyer – I don’t think quality is an issue in that space, I think it’s about small and cheap these days. 

    Dow/Kustomz – I like the Dow because you can see all the components on one live page and there’s almost never a news story that happens to a Dow component that isn’t considered "breaking" news so you are rarely caught trying to figure out why your index is turning.

    TZA 1:5 split/Doro – Yes, that might make TZA and TNA the combo we want to short!  I’ve been thinking that 2 bear calls might both pay off and the risk is limited as it’s not likely you lose both but it is possible that you win both if market chop drives them both to the low $20s over time.  Remind me tomorrow and we’ll see how the strikes work out

    BP/FJD – I still have my short puts.  Once the relief well is done and they pop off that, I might be done.

    QE2/Lapper – I can’t see them doing anything that doesn’t have a heavy jobs component.  If they can hire 5M people by November, that’s going to be 10M votes and if they give the money to banks again or even business, then all the unemployed will be pissed off in November.  They will buy treasuries because they must keep prices down but if they are going to do a stimulus, there will be a weekly photo-op lined up where Obama will re-open another factory or open a new business of some kind.  No point in spending $500Bn if you can’t buy an election with it…

    LOL Mill!

    TZA/Pahurik – Nothing will probably happpen, there will be two classes or it is possible you will end up with 20 $30 puts instead of 100 $6 puts but I can’t see how they would deal with people who just have 2 or 3 in the first place. 

    Quitting while ahead/Mill – Very difficult skill to master. 

  153. JRW III

    Squeeze strategy intact.
     
    Meanwhile, in other headlines:
     

    Proofreading is a dying art, wouldn’t  you say?  
    Man Kills Self Before Shooting Wife and Daughter  
    This one I caught in the SGV Tribune the other day and called the Editorial Room and asked who wrote this.  It took two or three readings before the editor realized that what he was reading was impossible!!!  They put in a correction the next day.     

     

    I just couldn’t help but send this along. Too funny.    
    Something Went Wrong in Jet Crash, Expert Says  
          Really? Ya think?  
    —————————————————————————- 

    Police Begin Campaign to Run Down Jaywalkers   
           Now that’s taking things a bit far!  

      ———————————————————--  
    Panda Mating Fails; Veterinarian Takes Over   
           What a guy!    
    —————————————————————   

    Miners Refuse to Work after Death  
     No-good-for-nothing’ lazy so-and-so’s!  
    ——————————————————   

    Juvenile Court to Try Shooting Defendant   
    See if that works any better than a fair trial!  
      ———————————————————-  

    War Dims Hope for Peace   
     I can see where it might have that effect!  
     —————————————————————-  

     If Strike Isn’t Settled Quickly, It May Last Awhile  
       Ya think?!  
    ———————————————————————--   

    Cold Wave Linked to Temperatures   
          Who would have thought!  
     —————————————————————-  

    Red Tape Holds Up New Bridges   
          You mean there’s something stronger than duct tape?  
      ———————————————————-  

    Man Struck By Lightning: Faces Battery Charge   
         He probably IS the battery charge!  
    ———————————————-   

    New Study of Obesity Looks for Larger Test Group   
    Weren’t they fat enough?!  
    ———————————————--    

    Astronaut Takes Blame for Gas in Spacecraft   
    That’s what he gets for eating those beans!  
     —————- ———————————   

        Local  High School Dropouts Cut in Half   
           Chainsaw Massacre all over again!  
     ***************************************************  

    Hospitals are Sued by 7 Foot Doctors   
           Boy, are they tall!  
     *******************************************   

    And the winner is…   
    Typhoon Rips Through Cemetery; Hundreds Dead   
        
         Did I read that right?  
    ***************************************************  
       

  154. Phil

    Oh poor bears – this is going to hurt! 

  155. snow

    Geez, they’re gonna try & break 10,000.

  156. jvest

    Phil> Low Spikes: 
    Dow 9,725
    , S&P 1,042, Nasdaq
    2,145
    ,
    NYSE 6,480
    , Russell
    608
    ,
    SOX 326
    and Transports
    1,921
    .
    Red means not likely to happen in a day
    .
     
    Nasdaq and RUT are right there at your red low-spike numbers. I guess that means the bounce is better than you expected in one day.
    Tomorrow, do you expect a pullback or a gap-up? I’m trying to decide whether to take some profits into close or give them another few days.

  157. kustomz

    exec… I’ve got man boobs…does that count? ;-)

    Im all out here..I’m all giddy great sell signal

  158. SeanC

    Phil: you are proved right again!  thanks for your guidance. 
    Now what?  We are going straight to 11,000?

  159. jvest

    (Sorry, that text box jumbled my quote of your numbers from this morning.)

  160. lori13

    exec
    Yes!  I use to be a bond broker, had kids, built a mini mini mall in Santa Clara, did some other R/E but sick of
    managing it and my kids and husband won’t let me sell.  Shorted the last crash with an ETF and didn’t make nearly enough money.
    So now I’m going to learn how to do it right.
    Lori

  161. matt1966

    Oh c’mon FAS.  Can’t you take out 4 days of losses in a day?  What’s the matter with you?  Haven’t you heard…  Street Financial beat expectations!

  162. exec

    Major short squeeze

  163. kinkistyle

    Phil’s gut is the best leading indicator I know of.

  164. gmarts

    Steady grind upwards…
    This is gonna paint a pretty candle on the daily charts

  165. snow

    Leading Indicators / judahbenhur
    "JRW, btw SS and I have stopped using the 3min8ema.  We think we’ve found something that works better. "
     
    I’ve got it! Here’s what you guys are using, right?

    dezev
    July 6th, 2010 at 8:48 pm | Permalink  
    Wonder if anyone has tracked the number of comments to Phil as an indicator.  Not so many today.  There must be some correlation there somewhere relative to the markets but I’m new to the site so maybe someone else already has noted this and will divulge the secrets.

  166. Phil

    Cemetary/Gel – What’s amazing about that one is thousands were buried there and now only hundreds dead…. 

    Am I crazy or does CNBC do nothing but try to negate every possible positive?

    FDO/Tusca – Dave doesn’t look more than 5 days out so I wouldn’t say he missed it.  You are very right though, it’s a good buy premise ont he dip.  It should be reinstated but hard to get the votes so very speculative but worth a toss from down here.  Also, my kids love FDO – there’s one where I get my hair cut and I give them $5 each and they go on a shopping spree – they love it.   Also, middle-class parents use them to buy party supplies for little kids too, I don’t think those habits will change too fast.  Also, also, I don’t know that FDO is the canary you think (and CNBC has been banging all day) – maybe it’s just the unemployment cut-off and maybe the customers are moving back up to WMT etc as their finances improve.  

    Bounce/Jvest – Oh yes, now we have a squeeze stick, which I wasn’t expecting in the morning.  I still expect a move up tomorrow, somewhere between 10,150 and 10,250 was my target for this bounce since last week (when most people thought I was nuts).

    11,000/Sean – see right above.  Let’s not get too excited, at 11,000 I’m very likely to flip bearish again.  My fundie trading range is about 1,100 on the S&P and 10,700 on the Dow and up or down 5% from those but I have expected to be on the low 1,050, 10,200 range into earnings and we would have to prove we deserved the upper end of the range. 

    ROFL – Now the CNBC chick puts up a RUT chart and shows how weak it is!  RELENTLESS!!!

    Thanks Kinki!

  167. lflantheman

    JRW/Phil  ….I entered TNA yesterday at  33.06 on conviction that we’d be up today.   Out today at 36.10.   Used only 5% of portfolio.   :)  

  168. Phil

    Bob Pasni sounded like he was going to cry as the Dow crossed 10,000.

  169. Jbur

    Phil, thanks for the FCX put sale recommendation a few days ago! I sold the 55′s instead of the 57.50′s. +75% is some happiness.

  170. yipcarl

    Phil OMG LOL>>> That guy Bob is a fruit.

  171. Phil

    Nice Job Iflan! 

    Hitting goal on TNA by the way – anything past this is pure bonus movement.

  172. judahbenhur

    Snow, I think you’re onto something there!  In fact, I think you can narrow the "PSW comments" indicator to the number of comments about adjustments to TBT.  The more comments, the worse the market.  And, if we were all still playing SRS, that would be the contra-indicator — the more comments about adjusting SRS positions, the better the market.

  173. JRW III

    Iflan,
    Congratulations, overnight is gutsy !!

  174. Phil

    AAPL $270 is still up 4% move from here and that will push the Nas a point higher by itself so lots of room to run tomorrow.  

    I’m sorry I have to go to a meeting, I’m dying to hear Cramer tell us how he knew it all along at 6pm.  Was he on today?  I missed him if he was but maybe he was too busy covering his shorts….  8-)

    You are very welcome JBur! 

    Indicator/Judah – You may be onto something there. 

    EEM still looking nice and perky too.

  175. millstone99

    nice move, flantheman. Why oh why wasn’t I playing TNA today?

  176. doro165

    Another indicator is the number emails from experts selling their services at a discount! My inbox has been getting 10 a days since the weekend!

  177. Phil

    Stuff CNBC fails to mentionRetailers’ sales are growing at the fastest pace in four years – about 4% so far this year – the top economist of the International Council of Shopping Centers says. “The sales results have been uneven, [but the underlying growth rate] suggests a relatively healthy, moderate pace of spending for the remainder of the year.” Nordstrom (JWN) and Kohl’s (KSS) are among chains analysts believe will soon report June sales increases.

    The growth in temporary jobs, 19.6% higher than last year, continues to gap away from the growth of private sector jobs less temp jobs, down 0.7% year-over-year – a "very troublesome" trend, Barry Ritholtz says. "This is yet another variation on the theme of whether this [recovery] may be as good as it gets."

    Another TBT convertAllstate (ALL) CEO Thomas Wilson says government borrowing at all levels is "way out of control" and is positioning his company’s bond holdings accordingly. “We think there’s a greater chance that interest rates [eventually] will go up, and we’re spending hundreds of millions of dollars hedging off our portfolio for a large spike.”

    Same old song:  Investors should sell bonds and buy commodities as a “refuge” against continuing problems in the world economy, Jim Rogers says. Agricultural commodities are even better than metals as prices are “very depressed,” he says, pointing to sugar, which is 75% below its all-time high in 1974.

    AT&T (T -0.7%) and supplier Alcatel Lucent say they have found a software defect that cuts speeds for customers looking to send data from the iPhone 4 (AAPL +3.2%) or from laptop modems. The companies say the issue affects less than 2% of AT&T’s wireless customers, or about 1.75M people

  178. Phil

    Wow, SQQQ $65.30!!!  This is my new favorite!

    Can you friggin believe the conversation on CNBC is going on while the markets are flying up past 3%???  This is nuts!

  179. matt1966

    Pretty lousy day covering their intentions.  Pretty good day for squeazin the shorts.  But +12% on FAS in a day after what we’ve been through is pretty outrageous.

  180. flipspiceland

    It must be said:
    You went out and hung your fanny on a limb, stating a bit earlier, "I’m calling a bottom….".     Many congratulations.

  181. JRW III

    matt / 12%
    Congrats !!

  182. dflam

    PhiL : Is it the market or me? I’m not having much success entering spread orders by using the "ask price" for the buy sell of each leg.I’m getting quotes that show prices less than the "bid" on the sell leg and/or higher than the "ask" on the buy leg.I than have to b uy each position separately which costs me time &  2 commissions.Any suggesstions? 

  183. exec

    Phil
    It’s a standard view in TOS Active Trader charts when you’re looking a pivot study.
    I hear a lot about the TOS active trader charts but don’t know what they are.  What is TOS?
    It must be different that the SS pro pivot point study because I don’t see any setting for hours.  I’m not how to use the PP study.  I put it up on my screen and it doesn’t show me anything of value from what I can tell.  How does your study work?

  184. jromeha

    Great lines JRW, thanks!

  185. fjd10595

    Phil or anyone, any thoughts on RIMM here?  Are they going out of business or can we sell some far out of the money puts for Jan 2011? 

  186. dflam

    Phil : got an answer to my own question from Schwab. They tell me  all spread orders are only routed & filled by Chicago Exchange and prices above below bid/ask are incorrect & I should call them. With all the computer technology out there,it’s hard to believe their answer.

  187. revtodd64

     Short Cleveland/Long Knicks  -  LeBron will be broadcasting his announcement from a studio in Greenwich, CT (just outside of NYC).   MSG stock tripled today and Chad Ochocinco twittered that LeBron is going to New York.  I like the idea of a strangle on MSG (and as a Celtics fan any sentence with the words "strangle" and "Knicks" sounds good.  Just call us the Boston Stranglers!)  So how do we short Cleveland for a pair trade?  We can’t short the Rock and Roll Hall a Fame, but maybe Tower Records?  Ideas?

  188. rj_jarboe

    dflam
    With Optionsfirst (Scottrade) I have the same problem. With my other account at TOS I do not have the problem.

  189. doro165

    Revtodd64- The owner of the Cav’s is the founder of Quicken Loans, that might work for your pair trade.

  190. cwan120

    Hi, dflam,
    Can you elaborate your problem with Schwab?  I’d appreciate an example with numbers.
    I have an account at Schwab.  I am quite concerned.
    Thanks.

  191. JRW III

    dflam,
     Get a TOS account for those trades.

  192. JRW III

    Capt.
    You are most welcome !!

  193. Stark

    Financial apocalypse postponed! 
    I got suckered and got out of my JUL options before the big rally.. still a relief for my longs.

  194. bloomer

    Phil – My first comment since becoming a subscriber.
    You say that rising interest rates "would be catastrophic for Pimco, who loaned out $1Tn at fairly low interest and would be bad for GE, who borrowed $500Bn at very low interest rates—so they will use ALL of their influence to keep those rates as low as possible for as long as possible."
    You may be right re Pimco.   But rising interest rates for GE (or anyone else) who has already borrowed and locked in a low rate can only be a plus for them.  Why would they fight to keep rates low?  As rates rise, their indebtedness will decline in value, thereby making it possible for them to buy it at back at less than par.  Maybe significantly less, realizing a nice gain.   

  195. Cap

    Some day; I should have been more aggressive at 1040-42 S&P.
    1060 !! that’s crazy.  The robots put the squeeze on good.
    What will tomorrow bring ?
     
    Hey, I got a GREAT RUMOR.  A friend of mine is in the sports marketing business and claims that LeBron to the Knicks is going to happen tomorrow.  Got this from a Knicks exec.   I didn’t believe him, but he was insistent.
     
    Stay tuned …

  196. revtodd64

     doro165/Cap/short Cleveland – Thanks, maybe the Quicken loans would work for a short prior to LeBron announcing his move to the Knicks.  
    Cap – sounds like the rumor is true.  Hard to keep a secret when you have to produce a one-hour TV special, plan a party in the city, etc.  

  197. yshenhar

    Caps/LBJ - 
    MSG is up 2.6% in after hours on the same rumors…

  198. Phil

    Futures holding up as of 10pm but pulling back a bit off a move up from earlier. 

    Thanks Flip but, just like I wasn’t wrong after a day, I’m not right after one either.  We need to see how things work out. 

    Spreads/Dflam – I see you narrowed it down to Schwab.  I must say to all that price and execution are so different from broker to broker that it will knock your socks off to go from a bad one to a good one.  If you have a significant account.  You MUST take $25,000 and try ThinkorSwim or IB so you can compare for yourself.  I learned this first when I had OXPS and was helping a friend who had ETrade and they filled everything worse than me, later than me or not at all – even when we were on the phone at the same time.  He had a huge account and supposedly the best of the best service but the fact is he was losing his ass on spreads and poor fills.  So I was very pleased with my Options Express until I compared that to TOS and that was as much better than OXPS as OXPS was to ETrade.  It’s a hard thing to quantify overall – it’s like trying to explain to someone who doesn’t actually drive off road why a Range Rover is better than a Jeep. 

    TOS/Exec – ThinkorSwim and you can set up a trial paper account and get all the features, which is very cool.

    RIMM/Fjd – They won’t go out of business as long as AAPL stays off VZ.  There as so many people who think T is the devil that they will never switch to IPhones.  I was thinking $50 was a very fair price for them but someone is messing with them after hours and back to $48.  Here’s a nice article on pros and cons from The Street.

    LeBron Speculation – Knicks is the word.  Makes sense as the salaries may be in the same ballpark but any agent knows that NY is +$50M a year in endorsements and I doubt his agent is going to give up $5M a year so LeBron can feel good about staying in Cleveland.  Also, the Knicks are cheap bastards and have a lot of cap room (for whatever that is worth as it never seems to stop any deals) so it all makes sense other than the announcement in Greenwich unless that’s a ploy and he’ll be on a train to MSG and pop up from under the garden to make the announcement there.  

    As to shorting Cleveland – haven’t they suffered enough?  For the MSG play – see Wilkinson’s lead this evening – someone already did it. 

    Welcome Bloomer!  Rates for GE are rollover rates.  It’s not like they took out one $500Bn loan for 20 years at 2%.  They have a constant rollover through GE Capital on leases and CRE etc so, like any bank, they are constantly rolling over debt at near current rates – any rise in rates comes right out of their bottom line and they are still trying to backfill a pretty big hole in their balance sheet from all the crap assets they are probably still holding in "mark to make-believe" mode. 

    If there’s money to be made knowing about LeBron in advance - You could find out who makes the Knick uniforms and bribe someone there.  That’s the first thing they do when someone signs is hold the jersey with their name on the back…

  199. cwan120

    Phil, I took one of your short-term disaster hedge suggestions and bought the DXD July 31/32 put spread.  Its value has gone down 50% and I tried to sell it at $0.15 and wasn’t filled.  Maybe because the bid/ask spreads are pretty big.  Any suggestions?
    I know it’s insurance.  But it doesn’t hurt to get some money back…

  200. jromeha

    Since we are talking a little sports I just wanted say what a joke Lebron is and punks like him are the reason the NBA is faltering in America… Sorry – cant stand the guy or most of today’s stars in the NBA. Fortunately, football season is almost here, GO SEAHAWKS!

  201. snow

    Athletes / jromeha – there are some real decent kids out there as well – my son played football at Central High in Omaha a few years behind Ahman Green (football season is coming up…) so we both saw and met Ahman on several occasions, including after he joined the Packers – very decent young man, good sense of humor.

  202. jomptien

    Jromeha/Lebron – Lebron seems to be a pretty sensible guy being friends and getting advice from Buffett. Guys like Iverson are the ones you are probably refering to giving the NBA a bad name.

  203. neverworkagain

    Phil / 3AM Yen trade:  Phil, I have always laughed when reading your comments about how the Yen always strengthens around 3am ET after having been weaker while the Nikkei is open (apparently to gas the Japanese equity market). I have been watching this for a while as well. You said last week something like "I hope some member is making money off this". Well, I put on a short EUR-JPY trade on at 3am ET today and so far am showing a profit. I have ‘retired’ to Mauritius (my version of your island-play) in the Indian Ocean, which means it is 11am my time.  Anyways, just wanted to let you know your musings about the Yen are not completely falling on deaf ears!  :)

  204. Phil

    Good morning!

    Futures have been drifting verly slowly lower pretty much all night but we had a silly stick at the end of yesterday so giving that back (and we’re not even halfway there) is no big deal. 

    We have an EU/BOE rate decision and Unemployment at 8:30 and Nat gas inventories at 10:30 and Crude inventories at 11:00 (or vs. vs – hard to tell).  Consumer Credit at 3pm may also do something. 

    Greece is on strike again today but Europe is in a pretty good mood. 

    DXD/Cwan – You can sell 1/2 you calls at .40 and leave yourself with a 1:2 vertical.  The delta of the $31s is .27 vs .19 for the $32s so only .11 at risk on a reverse and you can cover back up if you have to. 

    Yen/Never – That’s great!  Of course, keep in mind that higher Yen is "weaker" (more Yen needed to buy $1) and lower is "stronger" – that way you’ll sound cooler at FOREX parties.  Also, keep in mind that trade is over by about 5-6am most days and, of course, it’s very dangerous.  Pretty much, you need to use futures rules – which is pick a very tight stop and stick to it off your entry.  Since this play works 3 to 4 out of 5 times, there’s no need to play on questionable days.  Also, keep in mind WHY this is happening.  They Yen is pushed down from around Japan’s open (9pm) through the close (3am) in order to please exporters – who want to see a weaker Yen.  Once trading halts, the Yen drifts back towards it’s natural level. 

    I don’t play currencies myself but if I did – I don’t see why I’d play any other one.  Let me know how it goes for you, it’s great that you are in a time zone to take advantage of this.  Mauritius is very interesting!  Any dodo sightings?

  205. Phil

    Oh I see, you are playing the Euro/Yen – I think the Dollar/Yen (USD/JPY) is more reliable.

  206. neverworkagain

    Yen:  Yes, I am watching both today. Maybe the USD-JPY is better. I was using EUR-JPY as it is one I watch all the time to give an indicator of ‘risk appetite’. Today seems like a text book Yen Manipulation day. The Yen weakened continuously after last nights NY close, and then right around 3am ET, it started to strengthen again. Going long Yen (so short USDJPY) at 88.40 at around 3am gave a pretty ‘easy’ move of 0.35. I’ll continue to track this.

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