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FinReg Friday – Goldman Gets a Wrist Slap and BP Stops the Flow!

Dip, what dip?

I didn’t see any dip, what dip are you talkin’ about? Oil spill?  I don’t see no oil spilling, do you?  Goldman did what?  They’re regulating who?  Fuhgeddaboudit!  That’s right markets, move along, nothing to see here.  In fact, exactly as we predicted since the market first started dropping – it’s all just noise in between options expiration days, a way to traumatize the retail suckers who run in and out of positions under the direction of their chosen media messiahs.  Clearly most market analysis is nothing more than "a tale told by an idiot, full of sound and fury, signifying nothing."

If you think this chart looks a little like someone is laughing at you – you are not being paraniod.  This smiley face pattern is bought to you by the chart painters at GS and the rest of the Gang of 12 and their media lapdogs who push and pull the markets around on a daily basis.  I asked back on the 6th, when I very accurately called for a "Turnaround Tuesday – Will CNBC Apologize to America?" as I pointed out the ridiculous degree of negativity that had contributed to the mini crash, which I had predicted on Monday the 21st, when my 9:40 Alert to Members said:

Good morning! 

I have to go with my gut initially and stick to our plan, which is roll up the USO and DIA short plays (rolling the open puts to higher strikes) and, if the Dow holds 10,500 and USO holds $36 ($80 oil), we’ll have to sell June puts and roll our puts to a longer month – hoping for a post-holiday sell-off. 

Upside levels are 50 dmas at:  Dow 10,600, S&P 1,140, Nasdaq 2,350, NYSE 7,130, Russell 683, SOX 366 (already over), Transports 2,130, Oil $78 and Gold $1,200 (already over).  Anything less than that is just a move to the top of our range and then we can expect a nice pullback by Wednesday.

Obviously, it’s a great time to add some disaster hedges, I now like selling TZA $6 puts for .45 and buying the TZA $6/8 bull call spread for .50 and that’s net .05 on the $2 spread so even if you have to margin $3,000 for 10 short TZA puts, the $450 you collect plus another $50 buys you $2,000 worth of downside insurance.  

I like those DIA June 30th $104 puts for .57 too as a day trade.

I’m not liking any upside chases at the moment

The June 30th $104 puts finished at $6.26 (up 998%) and the TZA hedge is still worth $1.05 (up 2,000%), even if you didn’t take the money and run when it was almost double that two weeks ago.  So we at PSW are proud to be flip-floppers – We like to be bearish when the markets are going down and we like to be bullish (see the very well-timed July 7th article "9 Fabulous Dow Plays Plus a Chip Shot").  It’s a funny little concept called "buying low and selling high" that I must have picked up from a book or something and it amuses me to see how upset people get that I’m not ALWAYS bullish or ALWAYS bearish – as if you have to pick a side and stick with it

You cannot AFFORD to get emotionally invested in the markets.  Stocks do not love you or hate you, they do what they do for a variety of technical and fundamental reasons and we analyze those as well as the influences contributed by the Media, politics and crowd psychology.  While I get criticized for discussing things that "don’t relate to the markets" like income disparity and Corporate Kletpocracy, I will continue to insist that if you don’t explore ALL the things that affect the market environment that you will NEVER understand the markets and it will ALWAYS seem like a series of random events to you.

I advise our Members to spend at least 25% of their time reading things that totally disagree with their point of view.  For many of them, that’s my own posts!  Most of our Members are Conservative and I’m some kind of Socialist/Anarchist – something that used to be called a Capitalist back in the days when "building a better future" and "helping your fellow man" weren’t concepts that were considered some kind of moral weakness by our current "every man for himself, kill them all and let God sort them out" brand of Capitalists, who are worshiped these days.  More about that on the weekend – for now, lets see what’s up this option expiration day. 

Speaking of helping our fellow man.  You can’t say that the Ameican people don’t know how to be charitable.  Between 2002 and 2008 we gave $72Bn worth of desperately-needed subsidies to energy companies, as noted in this chart.  Those greedy renewable energy companies got $12.2Bn while Bush’s ethanol lobby pals collected $16.8Bn in that misguided venture that doubled the price of food in order to save a nickel on a $3 gallon of gas.  According to Fox, we have to stop that madman Obama from "wasting" more money on "greenie subsidies" and let the "free market" decide our energy policy.  ROFL!!!  

The big news of the day is, of course, the GS settlement and I have no need to discuss that here as it was exactly the nonsense we expected.  FinReg passed but we knew that would happen and BP stopped the leak but we knew that would happen too (we were big BP buyers at the bottom) so – YAWN.  That makes the really big news that GOOG missed and we didn’t see that coming but they missed expectations of $6.52 by 0.07 or 1% on a 25% increase in revenues with big R&D and hiring spending so they are a BUYBUYBUY on the dip.  The only other misses ALL week, out of 30 reports, were HITK (10%), AIR (10%), PGR (13%), MTOX (20%) and MAT (6%) – not too shabby for our first week of earnings….

Nobody gave negative guidance – another thing the bears promised us that isn’t happening.  What’s key for us is all of our financials hit their targets.  That isn’t stopping them from selling off a bit after a nice run but JPM, GE, C, BAC and CBSH all put in solid earnings so we can probably ditch our Financial hedges (but not until Monday) as we gear up to play some earnings.  It’s all well and good we have removed a lot of the bearish overhang but it’s still going to be put up or shut up next week and we do need a NEW catalyst to get us over our target levels (Dow 10,290, S&P 1,102, Nas 2,257, NYSE 6,930 and RUT 651).

Of course, since we are AT our target levels into the weekend, we will be looking at a hedge unless we have a huge move up today, which is possible if we get an AAPL rally at 10 am, right after a surprisingly improved Michigan Sentiment Report.  We will absolutely be picking up some Google longs but with copper failing to hold $3 in pre-market, that’s going to steer our trading today

Asia was flat except Japan, where exporters FREAKED OUT as the Yen hit 87 to the dollar and even that was on BS support as our FOREX trade that never misses (mostly) scored another big win today as the Yen dropped from 87.35 at 3am to 86.50 at 8am.  The Nikkei dropped 2.86% this morning to 9,408 and that is a huge and unusual gap to the Dow, which closed at 10,359 and, if the Nikkei doesn’t improve soon, we could end up snapping back ourselves so everyone go out and by something from TM or SNE this weekend, please.  

The good news is that the volatile Nikkei could be uber-bullish for us if they do turn back up but that’s hoping for a break of a 20-year downtrend from 35,000 so don’t hold your breath.  EU markets are trending from a good open back to flat ahead of the US open and our futures are off half a point for no particular reason so we will just go with the flow today and see what happens.  Big earnings week next week along with June Housing Data will give us plenty to look forward to and today our goal is simply to hold the gap from Monday’s close – should be doable…

Have a great weekend,

- Phil


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  1. Phil -
    I have the Jan 2011 bull call spread on apple – own 185 and sold 240s – sold 185 puts
    I know I asked you about this before – but does it seem ok just to let the premium drain out of the 240s.
    I would like to get into the 2012 spread but I have a full position and think it would be more profitable just to let this expire -
    the jan 2011 puts still have 7 + in premium or $1.28 per month so it does not make sense to buy  them back and sell the 2012.
    That said – I already hit a double and don’t want to screw myself with Iphone4 disaster etc. 
    I could sell 1/2 but honestly paying my caller which is $23 in premium seems like a bad move.


  2. VVUS showing 5.37/5.40…should be a good one for those of us who bought puts. GOOD CALL, PHARM!  Now if we can get the other half of the premise to work out then we are bankin’.


  3. Speaking of Apple, what are they doing having their double-secret iPhone 4 conference 3 hours before the end of Opex day?  Could be some money made and lost between 1:00 and 1:30 PM!


  4. Phil – Perhaps something you can address on the weekend, but Im puzzled by your adherence to Hayek/Austrian economics.  It seems to me that Keynes was right, sometimes demand is subdued by animal spirits, and the government is effective in stepping in to kick start demand, after which it can step aside once things start moving again.  I don’t see why that is such a crazy idea.
    As to our particular predicament we’re living through today, there are a couple of reasons our stimulus attempts may not have worked (or better stated, worked as effectively) as we would have wanted.  One may be that enough stimulus wasn’t used (as Krugman argued from the beginning).  Secondly, the problem may not be animal spirits.  In this case the problem may be the real financial overhang due to so many people being underwater on their mortgages.  If this is really the problem, then you would want to deal directly with the mortgage issue (as I think you’ve suggested before), and not rely on a more generalized stimulus.  I’d appreciate your two cents.  Also, sorry if I’m asking you to repeat yourself.


  5. Phil, I got caught with VVUS at $12.50 per share and did not add a put plan. any suggestion would be greatly appreciated.


  6. Pharma / ARNA – what’s the next move here? take some profit, let it run, or hedge our gains a bit?


  7. …somebody taking the futures down for one last good buying opportunity, perhaps?


  8. FAZ up 4.26% premarket.  Crazy.  Completely negating yesterday’s huge stick.  I don’t understand how they can afford to push FAZ down so far in pretty big volume only to let it float all the way back up premarket in such relatively light volume.  It’s actually heavy volume for premarket but a pittance compared to yesterday afternoon.  Looks like a trap to me.  But what the hell do I know-


  9. Aclend / futures – everything is down – cpi number low – deflations concerncs i guess


  10. Matt, I go home flat every day in my trading account…just wondering, do you? and why?


  11. Phil,
    Your post touches on something that I was just thinking about while I was watching the news last night.  Usually I watch FOX (imagine that) but last night I mistakenly turned on NBC  or one of the other networks and I was struck by the commentary.  They had the host who brought on a guest and discussion was so biased, pro Democrat/anti Republican, that it occurred to me that the news media is no longer a source of unbiased news, rather, an extension or our political parties.  Some people think Fox is pro-republican, which I would agree to given the stark contrast to the other networks unabated bias.  In any case, your post demonstrates that it is the same situation with financial news.  These clowns are not unbiased, rather, they are being directed by the big institutions, and designed to steer the lemmings where they want.


  12. Phil
    BAC naked Aug14 call play getting slaughtered….. any adjustments at this point?


  13. Damn,  I bought FAZ 5 minutes before the close and sold it in after hours for a .25% gain when I heard about GS…..dumb…..I always get burned in after hours.


  14. Exec / news -
    Just turn it off – read the paper NYT and WSJ – read the editorials in both. If you know something about the subject, you will see that the coverage is not great some of the time -
    Also try the News Hours on PBS – they have ok interviews that last more than 30 sec. They actually do have both republicans and dems – PBS is so worried about the Republicans coming after them that they do make an effort – even if the staff is probably a bunch of lefties (like me).


  15. Good morning,
     
    IWM 62.62, 62.91,63.43,  64.39, 64.65, and 65.36


  16. VVUS – yes, very nice!
     
    ARNA/deano & Co – they are moving again (up) in AH trading, but I think taking some profits off from last nights buy is warranted, or at lest selling some volatility and premium.  Remember, when it doubt, sell 1/2, otherwise use rule #1 on a profit, 1) take money, 2) run.  I am  bullish on ARNA, but get gunshy around FDA time.  Will they get approval, I think yes.  Many think the safety data will be fine, it comes down to efficacy now…..Meanwhile, I posted last night a possible bull call spread, but not sure if it will still be relevant this morning so we will have to watch it.
     
    On the article deano, I think I commented on it a while ago, and I don’t see ARNA making it to $40 upon approval – I think they get taken out at $15-20 range by Eisai.  Yes, I believe the obesity market is worth more than most, but good ol’ diet and exercise are the best.  As for market size – $10B is the high estimate, but I think locaserin is $2-4B.


  17. Good morning Phil
    I sold 100 BAC July $15 puts for $0.48. Now $0.43…..expiring today and stock at $14.60
    Allow stock to be put to me?
    Roll them? To what?
    Thanks for your help


  18. Phil, thanks for your cautionary note on GOOG a few days ago, advising to be careful trying to pick a direction before earnings. I was way off………


  19. V – Phil, do you like it here?


  20. Hi, gel1,
    To answer your question last night: I am in the east coast.  So, I can’t watch jpy around 3am my time.  I wished that I could.
     
    BTW, USDJPY is at 86.8 right now!  If you use it as a market sentiment gauge, that’s quite low!  Watch out!  The markets might go lower.


  21. Phil: TZA BCSpread 6/9: with TZA at 36 ? how does this work ?


  22. loopy, what do you mean ‘flat’?  I rarely hold overnight if that’s what you mean.  It’s way too risky.  Sometimes I would get lucky but mostly not.


  23. etrade gave me a 62.53 line this morning. but that doesn’t seem to be holding. What’s below that?


  24. GOOG   What’s the best vertical to take a bullish position? 


  25. morx,
    62.35 and 61.87


  26. morx
    62.10
    61.40
    60.79


  27. Good morning! 

    YAWN…  We are STILL NOT impressed by anything less than making our levels now:  Dow 10,290, S&P 1,102, Nas 2,257, NYSE 6,930 and RUT 651.

    Now we would like to make sure we hold our 5% gains (not our 5% levels) off last Wednesday’s lows, which are: Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620.  Dropping just 2 of 5 here would be BAD! 

    We have GOOG down past 5% and AAPL laying around $253 and the other horesmen (AMZN, RIMM, BIDU) are no good so a MASSIVE turn-around can be staged in the Nasdaq if AAPL pops up but right now copper is $2.95 and gold is $1,189 despite dollar weakness and oil is falling back to $76 so we need to take this sell-off seriously until we see a bottom.  Hopefully our dowside levels will ALL hold.

    IWM Aug $60/64 bull call spread is $2.40 and you can sell the $58 puts for $1.30 for net $1.10 on the $4 spread that’s $2.50 in the money at the moment. That’s a good upside play.

    DIA $105s did not work yesterday but if we can get the $103s for .20 and plan to DD at .10 and .05 (for a total of .45 for 4x) or .11 each, then that’s a fun way to play for a stick or an AAPL bounce.   Keep in mind these naked day trades are "craps rolls" – you shouldn’t play with more money than you would be willing to bet on a table in Vegas as they are pure gambles. 

    We already have the DXD hedges so I’m not keen to add anything here but I will update if we blow 2 levels. 


  28. MOT new phone the X sell out,
    The Motorola Droid X is sold out online and in certain parts of the country at retail Verizon and Best Buy stores, despite Verizon Wireless’ insistence on Wednesday that it would have plenty of the phones in stock. You will now have to wait until July 23 if you want a Droid X if you didn’t get one Thursday. That’s when Verizon Wireless says it will replenish depleted supplies.


  29. Two months/ Phil  -  Today marks my second month of investing under your guidelines.  I’m happy to say that I’m up about 8% right now, with about 30 percent of my portfolio in conservative buy-writes, plus hedged for about a 15 percent downturn and a few short-term August positions, mostly put sales way out of the money.  I like trading this way (especially since I am making money.)  I’m certainly content making about 4% a month in a conservative portfolio, and I have made some stupid mistakes along the way.  Fortunately the mistakes were on small position sizes.  One the of the best trades I made was the complex spread on JOYG.  I made about 30% on margin over about 6 weeks, on a stock that basically jumped around and stayed fairly flat after its earnings.  
     
    I’ve stayed away from most of the day-trading, since running a homeless shelter and renting 58 rooms plus preaching on Sundays does not allow for watching things closely.  I am interested in understanding the mattress strategy better.  Maybe that could be a weekend article.
    And I would read your newsletter just for the political and economic commentary.  I have subscribed to other services in the past and had to hold my nose when they commented on politics.  I canceled IBD when their view of the housing bubble started blaming African-Americans for being unfaithful to their debts.  I canceled another service when they started an elite club of 400 people to figure out how to hide their wealth from the government and prepare to leave the country to Argentina when the US falls apart.  It seems that many wealthy people want to succeed from the Union when things get tough.  I don’t want my subscriptions funding that kind of nonsense.  We hang together or we hang separately!  So keep speaking your mind Phil.  To me it is very relevant to how I invest.  


  30. Ahh, deflation….that’s what I have been talkin’ ’bout! 
     
    NPR last night had a blurb on the housing situation, and I know we all are aware, but just to reiterate – foreclosures are moving UP, but not as many notices are going out!  I also read that


  31. Big volume on this sell-off.  That’s good to see as it’s not a very big sell-off so far so bullish if we hold our levels on big volume.  Dow volume at 9:53 is 98M, that’s where we usually are around 1pm!


  32. hit the wrong button….anyway, I also read that vacancy rates in commercial are approaching 20%….


  33. There goes GLD as well.


  34. Consumer confidence sucking at 66.5 (down from 76).  Now it will be very interesting if we do hold our levels but I doubt it now


  35.  Maybe BP can cap the well again.


  36.  Interesting that GOOG hasn’t moved down more with the latest sell off.  


  37. Phil – Agree with revtodd64.  Values and perspective matter.  Also, its simply easier to trust someone who shows he’s not just out for number one!


  38. Out of TZA in TNA at $37.69


  39. Phil / Levels    Could you clarify how we play "breaking two level"  Do this mean just breaching two (now 3) we start adding short positions, or we are concerned with breach at end of the day?


  40. Apple seems to have nice support around 250, especially on a big down day.  You have to like the chances for a few point move up going into the press conference and beyond.


  41. AAPL?/Samz – I don’t see why you’d want to pay $7 to that putter.  If it’s a margin issue, then you have to look at it as rolling to the 2012 $185 puts at $23 so +$16 for 12 more months.  It’s a fair role but you are taking on 12 months more risk as well.  I would just leave it alone and be happy if you collect in full in Jan and THEN worry about 2012.

    Hayek/Jcaesar – I’m not an austerian but I do object to misplaced spending.  Happy to discuss on weekend.  

    VVUS/42L - Well you can DD at $5.11 and then sell 2x the 2012 $5 puts and calls for $4.30 and that will leave you in at net $4.51/4.76 and if you don’t like the stock enough to do that, then you souldn’t be in it at all, right?  You can also sell the stock, take the $5.13 and buy 3x the 2012 $2.50/7.50 spreads for $1.70, which will make 3x $3.30 for you if they hit and sell the 2012 $7.50 puts for $4 so your worst case is you are back in 1x the stock at net $16 in 2012 so risking $3.50 more to make $9.90 going that way. 

    QQQQ $45s at .20!


  42. Values and perspective…… sums up my feelings as well. Thanks Phil!


  43. Those August FCX $60 puts can now be sold for $3.25


  44. IWM 63′s for 6 cents


  45. It’s interesting how the last few weeks everyone was saying that the US was the "safe haven" compared to Europe, but Europe has been consistently outperforming the US market recently.


  46. FCX/ Thanks Jarboe


  47. GOOG $470s at $1.40 too much fun not to play.  $480s at .15 are also a fun place to put $150 (10 contracts) and just sell half at .30 and its free to the close (or you lose $150 if they don’t pop at all, of course)


  48. Hi Phil — do you think we should add more dxd aug spread hedge into the weekend ?  aug 27/30spread with a sell of a put like october 24 put. thx


  49. Phil / QE2   The Michigan ‘unconfidence’ is pointing the way to your fct QE.  Since good earnings don’t seem to be working so far, that is probably the only big catalyst left to pump the mkts.  But, they can’t even extend unemployment, so is QE2 politically possible at this time?  We may need proof of deflation and depression first?  ps bought my first $50k of Google today.  The mkt reaction to great AMD results is disconcerting?


  50. JRW/
    Do you trade the up and downs in a movement like this one. We are stuck at 42 but TNA oscillate in a 20c range?


  51. Phil,
    What do you think of selling GLW Jan11 $17.50 puts for $2.15 as a possible entry.


  52. Bias/Exec – Yes, it’s terrible and made even worst by the narrow-cast choices people have now so whatever view you hold, you will find links or commercials for dozens of other things that only serve to reinforce your views, no matter how crazy they are.  The web makes it so much worse as the overwhelming amount of data and the concept of "favorites" just takes people down a narrow little tunnel of thinking and pretty much radicalizes everyone.  Even the people in the middle are radical centrists and thing people on both sides are completely off base…   

    BAC/Kururi – Not much to do about it other than DD at .92.  You could roll down for .70 to the $13s and DD at $1.63 and then sell the $14s to cover if you are super-worried.  BAC earnings were fine.  It’s not your problem if some fund didn’t like them and wants to get out.

    BAC/Maya – Well, you should have bought them right back rather than risking a loss but holding them into earnings after you were up 75% yesterday was already hopelessly greedy wasn’t it?  At this point there isn’t much to do other than roll them across tot he Aug $15 puts and hope for a bounce.  At least you collect another .40…

    GOOG/Ocelli – Not losing is as good as winning sometimes. 

    V/Fab – Not really.  We were short MA and I like V better than MA but it seems that defaults are dropping and spending is ticking up so I can’t be sort anymore but I’m not comfortable enought to be long either.  If they went into the $60s, I would be liking them for a buy/write.

    TZA/RMM – Divide by 5, so TZA about $7 now.  You shouldn’t be buying new spreads on the old amounts as they will get very illiquid as time goes by.

    GOOG – Don’t forget our goal is to get out of 1/2 with a double but up .40 already is worth protecting.


  53.  Phil/GOOG – When google disappoints, the majority of the time the gap down day is negative, and the stock continues to fall for a number of weeks. The last few gap down days following earnings led to a continued to decline 7.59%, 5.66%, 2.79%, 9.77%, 8.58% on the day for the past two years. 


  54. lionel
    I’m in TNA at $37.69; my watch points are IWM 62.35 then 62.62 or a fail of course !!


  55. wow does this look familiar-


  56. OK thanks on BAC Phil. I  was not sure if I needed to roll down August or roll out to November….


  57. SPY 108 P are still 50c.  Hummmm…..


  58. drcraig / GOOG : agree with you historically, but this stock has rarely traded at these multiples…so at some point history will not / cannot repeat itself. But, that may be wishful thinking…..I’m also in the GOOG 470s and now the August 480s.


  59. Phil, what do you think about BAC Aug $14 calls now at 0.90 as a fresh entry? and planning to sell some Aug $15 calls later next week, or some Aug $13 puts if it goes down further.


  60. BAC – Got it, you replied earlier.


  61. Pharm / ARNA – is your bull call spread from yesterday still valid?  what is it?  if not, can you suggest a new one?  I already own the stock.  looking for more exposure.  when is FDA ruling expected?  Thx. 


  62. Phil your GOOG Jul $470 calls, $1.40 are now $2.  Wow.


  63. JRW/
    My question was when in your position do you bother trading the small oscillations around the main trend line (EMA8 or just stay put. Is it worthwile in your experience?
    I follow your great posts and managed to follow you this morning. Except that you had a slightly better TNA entry point than I did. I find it hard to switch from TZA to TNA. With IB TNA can be shorted so the opposite switch is way easier as I just keep selling more.


  64. Pharm / puts
    So you’re thinking further down today?


  65. Phil / Gold   Why is dollar down gold down big?  Luckily I’ve followed your guidance and sold my gold miners a while ago.   What’s your Dow call for the end of day?


  66. ARNA/Terr – link is above for bull call spread.  Still looks ok.  FDA advisory is Sept 15, FDA decision is Oct 22.


  67. lionel,
    If a trading range develops, and it is at least 50 to 75 cents on IWM, I’ll trade it; anything smaller is a pain !!


  68. JRW – no, I think they are sucking premium.


  69. drcraig
    Interesting stats relating to GOOG drops in the past.  I am doubtful the entire market will look at the income drop yesterday as anything significant, as their overall revenue was up, which is very positive. The company has been hiring big time the last two years ( 20,000 ), and they merely took some of their income and invested it into new products. To me – this is very positive. Additionally, their relationship with the Chinese is in full reconcilliation mode. I think the stock should have risen on the news..


  70. Hi Phil,
    I see your remarks on TZA Hold the Jan11 4 call for 3.50 now 3.90 sold the 8call for 1.68 now against me 2.19
    sold Jan 12 call 5 for 2.93 now 4.45 sold the jan 12 5put for 1.83 now 1.86
    what do I need to adjust thks


  71.  Hi Phil,
    I decided to play GOOG by selling 470/460 put spreads when I noticed it not going down with the market.  Sold 5 contracts for about 4.30 each.  Got stopped out of 1.  Should I go with tighter stops as EU markets about to close?
    Thanks!


  72. TSLA still rockin’

    GOOG/Eph – I like the Jan $450/470 bull call spread at $10 and the 2012 $500/600 spread at $32.

    Thanks Rev and so glad you are doing well sticking to the basics – which is EXACTLY what I want to convey to people who have retirement accounts or (gasp!) work for a living and can’t trade full time.  Following our core strategy, which aims at making 20% a year, will often do better than that and is MUCH more relaxing to trade

    #1/JCaesar – In truth, I’d have to say I’m a lot more concerned about my children than myself.  I’ll be fine but they have to deal with the mess we’ve made for the next 100 years and that’s what really drives me – it just baffles me that it doesn’t seem to drive others…

    Breaking levels/Tusca – As a rule of thumb, I call a break the formation of 2 solid 10 minute candles below my line.  Anything less than that I usually ignore.  For longer-term positioning, I’m looking for 2 DAYS below a line.  The 5% rule is all about ignoring spikes.  You need to learn to step back from the short-term charts and get perspective or the technicals will rule your life.

    Speaking of technicals – we are still in that nasty downtrending channel on the majors and if the Dow can’t get over 10,300 for the end of day (S&P 1,085) we may have to lean a bit more bearish over the weekend.  We only cleared the downtrend on yesterday’s stick save as before that hit we were trending right down in channel.  We’re still getting big volume selling that is being met by big buying but if the buying breaks we may have trouble.  

     


  73. Phil, how about selling CHK puts here?  November hurricanes premise.


  74. Out of TNA at $8.20; TBT failing


  75. FCXRJ – Good catch and copper is bouncing off $2.95 now so maybe we can blame Europe for the sell-off.  They close in 15 mins and then it’s up to US traders to carry the ball over the goal line. 

    Europe/Kururi – Not much rational to the last few weeks…

    DXD/Gucci – Yes, if we can’t make 10,300 at close then I would say adding more DXD is a good idea.

    QE2/Tusca – I think with the latest poll showing a skunk with a little perfume could beat most incumbants is about all the political will they’ll need to pass something before recess because it will be too late by the time they get back in September as it would be seen as a blatant election move, rather than the blatant election move it would be if they do it now.

    TNA $39 puts can be sold for .70 and those can be rolled even to Aug $24 puts so not too risky for a quick .70.  TNA now at $37.87.


  76. Opinions/Phil –
    You’re right, of course, we need to hear others’ disparate opinions – the problem I see is that we’ve all become so isolated into our groups that we do not look at the foundations of the opinions we hear and take on. It’s like the underlying Confucianism in the Korean culture that I live partly inside. It’s so deeply imbued in the thinking that it never gets noticed. It’s been a while, therefore, that I’ve heard anyone support thinking, on either side of our US conservative/liberal fence, with real thought and facts and figures. You do this very well, Phil, and Buckley did well enough that he made me stop and think, always good. There must be other conservative commentators out there who do this well since Buckley died; none come to mind though. On the liberal side, people like Jim Hightower or Bill Moyers do well, but these guys are not radicals or even socialists, not by international standards. It’s a frustrating time in many ways.


  77. That’s $38.20 of course, for 51 cents !!


  78. Matt - All of your posts recently on the Faz & the banks nudged me into buying some $15 Faz calls for $0.10 EOD Thurs…thanks buddy, as I sold half for 280% gain, and the other half is set for a minumum of 250%.  I would also like to thank Citi and Bank of America…=D


  79. ROTFL!!!
    goldman
    July 16th, 2010 at 11:30 am | Permalink  
    …set for a minumum of 250%.  I would also like to thank Citi and Bank of America…=D


  80. GLW/RJ – I like that.  I like them very much long-term.

    GOOG/Dr Craig – I would be thrilled to DD on GOOG at $430!

    Volume at EU close on the Dow is 156M at 11:30 – that’s a whole good day for us usually.  So we’re looking for less volume and rising indexes now and if we don’t get them by noon, we may have a problem as the people who are watching their 401Ks drop at work start calling their brokers. 

    NOW the S&P is holding up better than others and if they blow 1,075 you might want to consider the SDS Aug $31/35 spread at $1.95, selling the $32 puts for .95 for net $1 on the $4 spread that’s $3.38 in the money at the moment.


  81.  AMD back to green!!


  82. JR
    What is "TBT" failing?


  83.  Phil,
    Do you (or anyone else here) have an opinion on doing a buy/write on VVUS at these levels?
    Thanks


  84.  Phil, 
    I bought the FAZ spread (no put) and it’s doing nothing for me can you please explain what the strategy was as it seems the delta on the 11 and 16 are about the same… (5 contracts have yielded all but $100)! I didn’t get the put so that obviously didn’t help but still.. My intention was to protect positions in BAC (ouch!) and C…lon 


  85. Goldman,  you’re welcome.  Glad someone is profiting from it.  This being oe week clouds my judgement-


  86. Goldman,  you’re welcome.  Glad someone is profiting from it.  This being oe week clouds my judgement… that and the f-ing stick saves.


  87. exec / TBT
    Short 20 year; an indicator that $ is being pulled out of equities. Normally I’d be back in TZA but we are right above a trend line of mine so well see !!


  88. BAC/Jordan – What do you think I feel about buying naked premium?  Better plan with the $13s, which have just .30 in premium that can already be 100% covered by selling the $14s, now .82.

    Gold/Tusca – Gold is way overpriced and I think big traders are taking advantage of weak dollar to cover their exits as gold should be going up as the dollar drops so the logical expanation for why it isn’t would be because someone is timing big sales of gold with dollar dips to make it seem like gold isn’t falling as hard as it is relative to the dollar. 

    GOOG offering a re-load at $1.15 on the $470s but riskier now.  Fun as a planned DD at .85, looking for the bounce.


  89. cslanson2/ VVUS : I cant’t speak for anyone else, but i have looked through the data and read all the published reports, and I do not like VVUS at any level. After the Fen-Phen debacle, the safety profile of a new obesity drug is paramount. VVUS product does not comfortably meet these guidelines. Perhaps after more data / studies they can get approval, but I would not put new money in here.


  90.  I’m all out of my GOOG put spreads for a net of $1.58 (5 spreads).  Will now risk $140 on SSO 34/35 spread (2).  That should be it for me today although PFE looking very tasty here. 


  91. Speaking of Bear Traps, Macro Man can’t help be reminded of the last time markets that were fretting about a double-dip and got sucked into a bear-trap which was subsequently followed by a very aggressive multi-month rally. Team Macro Man remembers it well as they were amongst those that were the wrong way around that time…
    Click charts below to enlarge

    So what was the set-up in July 2009?

    A Head and Shoulders pattern had recently completed.
    The S&P 500 had broken below its 200-day moving average.
    Double-dip fears related to the inevitable multi-year de-leveraging of household balance sheets and scepticism about the existence of a recovery and credibility of the stress tests were widespread.
    There was a large dichotomy between traders and analysts with respect to whether earnings and guidance would be good or not.

    Sound familiar? As we now know, traders were wrong and analysts were right, with a blow-out earnings season powering equities higher with little correction, forcing players to chase.


  92. Dow call/Tusca – I think we get back to our bottom levels by end of day but that won’t be a great thing.  I HOPE we can make it back 10,300 but, at the moment, we’re looking very weak. 

    TZA/Yodi – Doesn’t matter what price they say they are, what matters is value at expiration.  TZA at $7.62 so that play is worth $3.64 no matter what the premiums tell you.  Same goes with the $5 puts sold, there’s nothing to adjust – it’s a hedge that pays if the Rusell doesn’t go higher. 

    Noon volume on Dow is 170M. 

    GOOG/Jdub – Verticals are very tough on expiration day, very hard to make money.  You are better off just momentum trading in the money puts or calls or, as we’re doing with the $470s, calls or puts that are just barely off the money and certainly close enough that a $5 move will put them in.

    Russell is down more than 2.5% now, Transports, Nasdaq, NYSE are right about there with S&P down 2.25%, SOX down 2.15% and Dow down 2% so make or break on these lines – a 0.5% bounce is considered weak so take it as a chance to get out of longs if we only make it back that far.


  93. JW
    Where’s your support 61.67?


  94. Phil / BP – I’m up 44% on BP 27.5/35 jan 2012 bull call spread.  I got in at 8.75/5.72 and now marked at 14.10/9.725.   would you take profits here or hold for longer term or roll into different spread?  Thx. 


  95. In TNA at $37.52


  96. Phil –  Lloyd just called again … he said that if you would just apologize then he would rally the market … uh … Phil?


  97.  In agreement with you on the verticals Phil.  However, I was open to gaming the move either way--had GOOG shot up, I’d sell call spreads against it to lock in the gains on those profitable put spreads as well as use theta to my advantage.  And the reason for spreads is that I don’t have a huge account to go selling naked contracts either way.  
    So my premise was that GOOG @ 465 would at least try to make a move to 470 after I noticed how it barely nudged when the market was tanking.  I was actually hoping for it to shoot to the mid 470s to sell those 480/490 call spreads against my put spreads but it didn’t pan out that way.  
    Update on those SSO.  I decided to take it off as I really wasn’t loving the price action for any sudden spike.  I might just play a much smaller amount right as AAPL announce something.  


  98. And out at $37.49; if this is a flush, it’s on all fronts !!
     
    In TZA at $38.18


  99. Pharm, GILD is down 6.9% to $32 …..any idea why.


  100. exec
    61.60, 61.16, 60.85, 60.05, and 59.67


  101. CHK/Jordan – Absolutely, selling Oct $21 puts for $1.75 is a net $19.25 entry.

    Frustrating/Snow – That’s why I like my own site.  Nice collection of smart people with differing opinions and, since we’re all writing it down, no one gets shouted down and people can take the time they like to formulate an opinion and reply in a conversation – even if it’s a week later!  That’s what first attracted me to this format – it’s a great way to share ideas above all else. 

    LOL Goldman! 

    TBT/Exec – Looks like everyone is panicing back to cash – AGAIN. 

    VVUS/Cslan – If you think they are going to survive, then you can go for 2x 2012 $2.50/5 spread for $1 and sell the $5 puts for $2 so you have $5 upside against the risk of owning the stock for $5 for about $2,500 in margin.

    12:30 was the start of yesterday’s first uptrend, let’s hope we get it again.  GS selling off though – that’s not good….


  102. phil any thoughts on ge, I’ve been holding for over a year


  103. JEFFERIES CUTS GILEAD SCIENCES INC GILD PRICE TARGET TO $38 FROM $48; RATING HOLD

    For a summary of rating and price target changes on S&P 500 companies: Reuters 3000Xtra users, double-click [RCH/US]
    Reuters Station users, click .1568
    Reuters Plus users search on RCH/US
    For a summary of rating and price target changes on non-S&P 500 companies: Reuters 3000Xtra users, double-click [RCH/US2]
    Reuters Station users, click .2102
    Reuters Plus users search on RCH/US2
    For a summary of rating and price target changes on Canadian companies: Reuters 3000Xtra users, double-click [RCH/CA]
    Reuters Station users, click .4899
    Reuters Plus users search on RCH/CA
    ((Bangalore Equities Newsdesk +91 80 4135 5800; within U.S. +1 646 223 8780))

    Fri Jul 16 11:17:33 2010 -GMT- pnac (nWNAB6327) = 1 11:17

     


  104. JRW III
    Thanks again for the levels!


  105. Fed Minutes negative / Phil – contrary to Phil’s generally sanguine reading of yesterdays minutes Ambrose-Pierce has a nice piece that bangs the gong of QE2 and dire straits by focusing on the negative. Given today’s move it still makes me wonder why the prospect of tons of invented money should knock out equities and gold when fundamentals would indicated the opposite. At least the dollar is getting its thrashing. I’m thinking confusion, manipulation, and options expiration are more at play today. OTOH, the negative view of the minutes does restore last week’s negativity, to some extent. But even so, it was QE that sent the market up over the last year and it surely will do it again. Consequently, I sold a good portion of my downside hedges hoping to reload soon on a bounce. Oh yes, the piece at the Telegraph is at: http://www.telegraph.co.uk/finance/currency/7893238/Feds-volte-face-sends-the-dollar-tumbling.html


  106. JRW- do you have the IWM 63′s you mentioned?


  107. Phil, when you posted the 9 Fabulous Dow Plays I didn’t have my money in place to take advantage that day. Since then I’ve been scaling into the list as opportunities present themselves.  GE is one I’m not in yet.  GE is down over 3% right now and I’m wondering if I should start looking at the buy/write play you recommended at $13.97/share. I haven’t done so because the chart looks terrible with a text book downtrend on the daily time-frame.   Profits are up, but sales are down, so I gather that’s weighing heavily on this stock in a market behaving fearful of delayed economic recovery.


  108.  Phil, 
    Are we unloading the MA puts bought? 
    Thanks


  109. It looks like we are bottoming out for the day…maybe the AAPL news conference and give the market a nice upswing to make back the 5% levels? I’m in AAPL August $290 Calls as of early yesterday when the stock was down.  I believe AAPL will properly take care of this antennae problem and the stock will get a nice pop after the announcement at 1pm.  I also believe their iPad and related Apps sales will help destroy earnings next week.  Though, I might sell into earnings if the stock pops above 260 relatively quickly.


  110. JRW
    entered TNA 37.37 you out TZA?


  111. Jbur
    I sold them back even,; had a 50% gain there for about 20 min !!


  112. FAZ/Amatta – Verticals don’t do anything for you until they start losing premium.  The two positions on have a very small net delta.  The advantage is that a move against you doesn’t cost you much but a move in your favor won’t really pay you anything unless it is sustained.  If the move down in financials isn’t sustained, you should be happy because your financials recover.  Since FAZ is at $15.35, if you have the Aug $11/16 spread at $3, you know you have $2.35 coming to you if the financials don’t recover and FAZ finishes at $15.35.  That means you can use $2.35 of your cash to improve your BAC and C positions because we assume that, if they don’t pick up, you’ll collect that $2.35 on the spread. 

    Qs just did a crazy spike way up to $45.62, that’s going to screw up people’s short-term charts.  AAPL down $2 at $249.40 with 1/2 hour to go to conference.

    Macros/JRW – One can only hope but this is very disheartening.

    BP/Terra – I’d hang on.  Unless the well leaks again I think $35 will hold so you have $2.50 coming to you on $5 at risk – not a bad pay-off.  Just keep a stop if they fail $37 and be happy.

    Lloyd/Diamond – I think Lloyd is buying right now and will releast the bots and make $550M by EOD – that’s how rich guys teach government guys a lesson. 

    GOOG/Jdub – I’m talking about buys, not naked sells – those are way too dangerous.  As long as you’re on top of it, it’s fine.

    GE/Jerri – I like them long-term but I wouldn’t hold them without drawing an income from selling premium.  They are a great buy at $14.70, selling 2012 $15 calls for $2.55 and $12.50 puts for $2.05 for net $10.10/11.30 so make 50% while you wait

    Pierce/Tenger – Anyone who starts out an article taking what the Fed said at face value withouth the context of the fact that the EU kicked in $1Tn and the Fed backstopped their fund flows and everything has now stabilized is just not going to be making a good case to me.  The Fed’s job is to sit down and have a meeting and discuss the economic environment – it just so happened that that meeting took place on a day when the outlook was bleakest and those minutes and quotes from those minutes are a snapshot of a game that changes every single day.  The same goes for the consumer confidence numbers and other polls.  I don’t know, I assume that people who make their living analyzing surveys have at least taken basic courses in statistical analysis but from what I hear on TV, very few of the people with opinions know more about what the Fed said than what they read in the WSJ highlights on the way to work.  

    GE/Poindexter – See above play, I like that just fine.


  113. shadow
    Still in TZA


  114. In TNA now JRW, using my Bollinger band entry strategy; plus looking for bottoming and a bounce (dangerous)


  115. In TNA now JRW, using my Bollinger band entry strategy; plus looking for bottoming and a bounce (dangerous)


  116.  Hey Phil,
    Been watching PRU for a while.  Wanted to get your thoughts on this name.  Thinking of going Jan ’12 45/50 call spread and selling Jan ’12 for about break even or a slight credit(spreads are wide so I’m not quite sure what I’d get).  Or should I wait a little longer when it reports as financials aren’t doing so well after they report.


  117. Phil: I’m confused. I bought 30 FAZ Aug. $15/$17 bull call spread for $1.62 & sold 10 UYG Aug. $45 puts  for net $.1.12 which is net $.50. the FAZ spread is now $.70 and the UYG  puts are $1.38 now for overall loss of  $151. I thought  this spread was to give  me protection on financials declining in value? How did I mess up ?


  118. Phil,
    Your thoughts re best longer term FXP hedge for China equities position.
    Thanks,
    Ken


  119.  Question is for Apple it is still holding up waiting for the news, even if the news is positive, a sell off may be in order


  120. Phil
    Looking at our mattress I think it’s a good day to sell some Aug puts 102 or 104 your thoughts thanks


  121. Out TNA; take the money and run, even if its small (that’s 4 or 5 times today) just don’t like the internals here.


  122. This CNBC coverage of the Apple announcement is absolutely ridiculous….


  123. I like the price action in Apple , down about a buck now on a day where everything else is down a lot more. 


  124. Cap/ Bravo good call on IWM.
    I have tried twice before TNA but ended up with cents losses


  125. This whole Apple "Special Report" deal on CNBS is very dumb……


  126. @Phil or anyone:   Maybe it’s a dumb question but what is the number after the forward slash ($10.11/11.30) in this statement:
    "……They are a great buy at $14.70, selling 2012 $15 calls for $2.55 and $12.50 puts for $2.05 for net $10.10/11.30 so make 50% while you wait…"


  127. sorry to be the "echo" in the room……. :)


  128. Sorry for the bold statement :)


  129. ZZZZZZZZZZZZZZZZZZZZZzzzzzzzzzzzzzzzzzzzzzzzzzzzzz.  Can we get this week over with already?


  130. Phil, 
    Now with a better entry you still feel the TNA 39Puts are worth selling? 
    Thanks, 


  131. Gawd what a ZOO on CNBC… Shrieking harpies and flying monkeys of doom!


  132. Out of TZA at $38.48 and getting into TNA at $37.16;
     
    Thanks for the warning Cap !!   8-)


  133. MA puts/Amatta – Oh yes, they did their job.

    Bottom/RS – I certainly hope so! 

    Jobs is leading AAPL talk so that’s good. 

    PRU/Jdub – You never know where the insurance companies have invested their reserves, that’s the problem with them.   I would certainly wait to see the new financials. 

    FAZ/Dflam – UYG is at $52.91 so what are the Aug $45 puts really worth if they expire tomorrow?  FAZ is at $15.40 so what is that spread worth?  It was a rangey play against an unforseen catastrophe.  XLF falling 3% is not an unforseen catastrophe is it?  The idea was that the risk on the play was was kept down by the sale of the UYGs but you still need more than a 3% fall in the financials to make real money.  

    Yay, AAPL goes green!


  134. I would like to see how well the "Gorilla Glass" in the Apple IP4 holds up under a Terex TV900   ;)


  135. Hello all,

    I am getting involved with a Longterm Investment in Paychex Inc. (PAYX). Check out my analysis, thesis, valuation, and entry here.

    Good Investing!


  136. Back in TNA 37.14


  137. Pins and needles JRW


  138. Hey boyz… cut over to Fox Business and you will see a better picture on Apple!


  139. AAPL getting pinned at 250


  140. Marketwatch giving a ‘line by line’ account of some of the important statements from Jobs.  The return rate of the phones has been 1.7%.  Gee, what is all the fuss.


  141. Even though Steve Jobs is skin and bones, looks very energetic on stage.

    Surprising to see short covering in AMD on a weak day, bullish indicator

     


  142.  what the heck – I had the non-standard July TZA calls ($7 calls, so $35 now) in my TDameritrade account – ITM, and out of nowhere a market order was executed to sell them all.  Anyone know what this would happen?


  143. Did you get flushed out of TNA JR?


  144. out TNA !


  145. All iPhone customers get a free case or a full refund.  Problem solved, lets move on.   Judging by the screaming and arguing on CNBC, you’d think the Iphone was leaking oil into the ocean or something…


  146. Phil / Monday news   What is likely to influence mkt direction on Monday.  Need something positive to chge mkt sentiment.  Good earnings don’t seem to help much at the moment.


  147. FXP/8800 – FXP is a bad ETF because it gets really beat up by the constant up and down gyrations in China.  It’s OK to guard agains a short-term sell-off but it’s very bad at holding value.  On the bright side, they do have good spreads so you can take the Sept $32/37 bull call spread for $3 and sell the $35 puts for $1.30 for net $1.70 on the $5 spread with the understanding that you will need to roll the postion along if you lose about 50% and make sure you are comforable with that cost of insuance. 

    AAPL free case stimulus!

    Mattress/Yodi – Yes, good point.  Good time to sell DIA 1/2 Aug $102 puts for $3 against Dec $104 puts, now $8.  If you rolled other putter then OK to be in full cover but you must buy 1/2 Sept $99 puts, now $3.10 if we keep dropping on Monday to increase downside delta. 
     

    Wheeee- Go AAPL, Go Nasdaq!!!!


  148. exec,
    No, I’m still in; but I might be in trouble as I see Cap has bailed !!


  149. back in 37.20


  150. oh please JRW; I should just give you the password to my account and let you go to work !!  :grin:


  151. Phil : Buy JPM at $39.35 and sell 2012 $40 c and $35 puts for $13.50 for net $25.85/$30.42 ? Thanks.


  152. Out of TNA at $37.39; channel is too narrow to trade. "They" may just pin everything right here !!


  153. We crapped out that little rally…not looking good!


  154. S&P restesting 1070!


  155. Apple just illustrated exactly why these class action lawsuits are ridiculous. 1) They’ve always allowed you to return the phone BUT NO ONE DOES. 2) They’re now giving away free bumpers and reimbursing you if you’ve already purchased one and 3) the current phone is dropping less than 1% more calls than the 3GS does which for all intents and purposes is negligible.
    The fact that people aren’t actually returning the phone speaks volumes (~75% less returns with the 4G than the 3GS at 1.7% and ~6%, respectively). Furthermore, everyone seemed to completely ignore that Consumer Reports, although dropping their rating after the antenna issue because apparent, still rated the phone 2 points higher than the 3GS and the HTC EVO. 
    So move along, nothing to see here… Like someone mentioned earlier, hopefully this ridiculousness is over. And I’m going to place that order for mine now :)


  156. Steve Jobs Snarky!?   How is a Billionaire with an awesome product supposed to react to these "crybabies" ……


  157. New Member to PSW and learning the strategies.  CNBC is my "FAVORITE" place for noise during trading day.  Are not Michelle and Dennis just lovely, especially, today re; AAPL……….. "the Wicked Witch of the East" and "Dennis the Menace"…. Hope, to be able to contribute substantively in the near future…… The leveraged ETF’s have been my cup of tea but, I am branching out to the options world…..
    Phil: I have read you for quite some time…… VERY ENJOYABLE and RIGHT ON…. I don’t believe in political labels, they only serve to prevent constructive discussion…… Later 


  158. Phil got involved with TNA 39P at 1.45… moved up to 2 now. At what point do I buy back and roll if that is the strategy, since the market is not bouncing back?
    Thanks


  159. AAPL haters on TV, nothing Jobs said would have pleased them. Fear and envy with the "experts" seething that they were to be cut off and lose their ability to spew further…. Looks like the gang of 12 moving in for the pin on the stock.
     
    What a frenzied freak show, leaves a bad taste in my mouth.


  160. Oh GOD, Cap, do I have to get back in again ???!!!!!!!!!  OK, but I’ll wait for a entry, and a Bloody Mary !!


  161. CNBC guest …. "Communism isn’t Bullish !".
     
    LOL


  162. Hi Phil: Are you still medium term bullish on TBT?


  163. I’m getting whipped sawed today.  Get get the timing down.


  164. This is some dumpathon they are laying on us today on an expiration Friday.
     
    I "think" we are close to bottoming for the day …


  165. Markets are being pushed down – Most of indices trade on the bid side


  166. but, its up to the robots, isnt it ?


  167. Cap,
    Seems like massive profit taking in order to spur an increase in value of bearish options positions that lost value in the rally AND new bearish positions opened yesterday when the market was declining…my conspiracy theory for the day


  168. Cap
    Seems like a bottom


  169. Cap – agreed. I wasn’t expecting a 200 pt + drop on expirations day 


  170. Slash/Flips – It’s the "put-to" price, how much your average entry on 2x would be if the stock dives and is put to you at (in that example) the $12.50 strike price. 

    TNA/Amatta – Yes as the RUT is already down 3% and I was hoping that line would hold.  Note they can still be rolled to the Aug $24 puts. 

    Well that was disappointing.  Just $253 for AAPL and the Nas still down 2.5%.  What a rotten way to end the week if we’re flatlining here.

    I love the commentary on CNBC: "Communism isn’t bullish."  

    BAC down 9% on a beat, that’s amazing.  $14.07 and you can sell the 2012 $12.50 calls for $4.10 and the $10 puts for $1.45 for net $8.52/9.26.

    TZA/Srf – That’s strange.  I’d like to know how they justify that.   Maybe because you are in the money and can’t afford the assignment?

    LOL Kinki!  Next they’ll find out that the new antenna design causes cancer or something.

    Market/Tusca – If we finish below our levels then it won’t take much to send us lower on Monday.  Any bad earnings will do it – either here or Europe, where poor earnings are more likely.  Going into a weekend like this makes people more prone to dump out next week so make sure you have hedges in place and are well covered.   If we do rally back to levels, we still can’t get bullish as it’s just a pump job at this point.  I may have bought into it if it came right with the AAPL resolution but now it’s going to look super-fake.  


  171. acrobra65
    hi from one newbe to another.  yes michelle just exudes wicked witch. lol


  172. acobra/political labels
    Yes sir….. we here at PSW never blur the difference between libertarians and liberalterians, and the debate keeps our minds sharp for our superior trading skills – right Phil?


  173. Crudes holding up pretty well considering how ugly the market is…. Thinking of buying a contract around  3amish on monday…


  174.  Phil – what you said is true… I don’t have the $ for the assignment … but I let ITM options in another TD account (regular brokerage) expire before and what happens is they get assigned and immediately sold in afterhours…  This time it is my IRA account so maybe that is why.  Too bad – I would have got a better sale price had I been able to set it mayself (probably almost .10 more!)…


  175. Phil,
    Suggestion for an ERY hedge?


  176. PHil I am confused should we not roll the Sept to Dec 104 I still have some Sept 104 left I could roll them to Sept 99 for a profit of aprx 2.30.  Thanks


  177. CNBC commentators all seem plussed when the advance decline line is heavily weighted… all stocks up or all stocks down. This is a binary market, driven by bots who in turn drive the indexes. Stock selection means almost nothing in todays game. These commentators KNOW it, but act shocked and do their best to perpetuate the lie.
    Isn’t there an honest man somewhere?
    Diogenes


  178.  Phil, 
    So buying back the TNA 39P’s for a .80 loss (sold at $1.45 now $2.25) and looking then to be even selling something for the same paid out ($2.25)? The Aug 24′s you are mentioning are .85/1.00 and have no volume whatsoever. The 34′s if that was a typo are 3.0/3.5
    Thanks


  179. APOL/ up $1.50 today – green shots do exist!


  180. Sorry about the rant, I gotta turn that damn box off!


  181. gmarts,
    Enjoyed the rant.  It’s amazing watching them try and justify what’s going on rationally when they know it’s bots.  Jon Najarian is one of the few people who consistently calls out the craziness of the bot manipulated markets. 


  182.  Phil, I feel I am undercovered (long buy writes at $200K and have 30 OCT DXD 23/27 and 40 SDS 31/35 August from today. But I have seen that my beta on the upside is only like 1 versus 1.5-2 on the downside so I am having erosion-- when we go down and don’t make it back on the way up!
    You think I should add a mattress play now? I don’t have any… what would be the play and how many to complement the above hedges?
    Thanks


  183. AAPL 250 calls STILL have over $12.00 of time value with under 2 hours of time left!!!  ANY WAY TO PLAY THAT????


  184. Cars are so cheap in the US – I just saw an ad on Marketwatch for the new Panamera starting price is $74,400.
    That is a fourth of the price for what it retails here…..Cheap oil and cheap cars! Lucky country :)


  185.  jkorf
    those are the 240s


  186. SORRY…I was looking at AUGUST options…


  187. AAPL Jul calls, wow.  Who is willing to buy Jul $270 calls for $2.20 with only 2 hours of trading, stock at $251???


  188. AAPL; these are July 23 expiration???


  189.  Phil – it just did the same thing in my regular brokerage now… are they clearing out the old NS options?  or what you said before (don’t have the $ in the acct to take the assignment)?


  190. Jkorf, those are the 240s, however the weekly 250s are $9 – 260 – $5 and 270 – $2.3


  191. lionel / Panamera
    I agree, cheep car !!  8-)


  192. barf,
    See how those callers lost value very quickly today.  The "earnings premium" in the index options evaporated today.


  193. Phil: will this market still drop more today ?


  194. Hi Phil,
     
    I have few bad positions need advices…
     
    Short EEM July 42 put,
    Short MON July 70 Put,
    Short WMT July 52.5 Put,
    Short XOM July 65 put, Which month and price should I roll to?
     
    Thanks a lot.


  195. Apple is the only one holding us up
    Asia is going to crap their ass on Monday!! 


  196. JRW/ Are you being sarcastic? Panamera has a starting price of Euro 80,000 in Europe and unfortunately way way more here in Asia. For USD 75k, you can drive a used 996 with a few miles on the meter :)


  197. Phil,
    Do we have too much  volume going for a stick?


  198. lionel
    I have a Carerra S conv – what is the price in Asia after tax?


  199. lionel / cheep car
    I’m saying compared to a nice car !!


  200. JPM/Dflam – Yes, I like that play.  The bank earnings carried slower IBank performance – what’s not to like?

    2pm Dow volume 211M – still very big seller(s) dumping and dumping all day.  Pasani says not a big volume day – maybe he’s on drugs?

    IPhone/Kwan – A great buying opportunity for AAPL is all it is.  I got my 4 after trying my friends for an hour – the camera alone is worth it but I’ve had no problem with the phone part with no case and I’m a lefty.

    Snarky/1020 – I’ll bet he would have loved to have gotten a whole lot snarkier if it were up to him.    I would have brought out a desk covered in cash and offered to give a cash refund to anyone in the room who wants to give back their IPhone or a free case to anyone who wants to keep their IPhone and then let the press take a picture of the two lines. 

    Welcome Acorbra!  We love our leveraged ETFs here (even though some of them don’t love us). 

    TNA/Amatta – Well you can roll them down to Aug $29 puts if you want and, if you are willing to do that, then no pressure as long as you have an even roll and you can hope we get a little stick action into the close (still possible). 

    Bad taste/Gmarts – That’s kind of how I always view the media.  Maybe because I read so much of it.  Having an issue like that where all the rabid dogs go in a box together just points out the sort of BS that happens all the time.   Probably should save this tape as a good example of what I mean when I talk about hyena attacks…

    Damn, we should have gone the other way on GOOG – huge winner on the put side! 

    Libertarians/Gel – Of course right!

    ERY/Kazoo – I’m not bearish on energy down here.  I think $77.50 is the currently correct price (sadly, I wish it was lower), so unless you are loaded up with bullish energy plays, I would not use ERY as a hedge.  Also, the spreads on them are ridiculous, which makes them hard to play.

    DIA/Yodi – Dec $104 puts are now our anchor play.  You should not still be in Sept puts

    A/D/Gmarts – Not only that but a 4:1 ratio is not even a big deal lately, we’ve had plenty of 10+ days.  Whatever makes their point at the moment is the rule of thumb…

    TNA/Amatta – No, just rolling the .80 loss to the Aug $24s (.90), you don’t have to keep trying to win when getting even is good. 

    Hedging/Amatta – Dont’ forget that you dela is masked by premiums on the hedges so you’re not seeing all the potential gains.  You don’t want to overhedge but, if you want to get more bearish, just add a few SDS $32s or DXD $23s to give yourself some naked upside but don’t start adding more and more different positions you need to keep track of.

    AAPL/Jkor – Not sure what you mean, they only have a .20 premium with AAPL at $252.50.  Not much to be done about it but you could risk buying them and adding the $250 puts for .26 just in case they fly down. 

    Brokers/SR – I wonder if anyone else is getting this? 

    Drop/RMM – I don’t think so but there is relentless selling pressure and if some fund needs to be out by end of day we could have a nasty close still but, on the other hand, if they are done, we could pop into the close.  GS is getting clobbered all afternoon and that’s killing the financials (along with BAC and C) but AAPL holding up makes me think that there are buyers out there and yesterday’s stick was huge so no way at all to predict close. 

    GOOG down to $461!


  201. Hi, Peter D,
    I was trying to sell some SPX calls today.  Their values drop really fast!  I don’t want to chase.  Maybe it’s better to wait until next week.  What do you think?
    Sigh…  I should’ve sold some calls yesterday.


  202. Phil,
    Thanks for the insights into FXP behavior (1:35PM). Would a better option (npi) be to do a bear spread using puts on FXI?
    TIA,
    Ken


  203. JRW/ Now that is funny!
    Gel/ Carrear S
    SGD 470k
    AUD 280k


  204. In TNA at $36.70


  205. GS Hammered / But Bove said it was a screamin buy today?  This is one magnificently controlled burn, huh?


  206. Well JR….made your line….U think it will hold?


  207.  Going into a weekend like this makes people more prone to dump out next week so make sure you have hedges in place and are well covered. 
    I am a relatively new member and am very confused about where to start with hedging. I have read about 2 months of comments with the Basic membership  in addition to the articles under the Portfolio tab – mattress play, 9 fabulous plays, hedging for disaster, etc. I am very happy with the buy writes that I have made off of the buy list but I just can’t figure out how to begin the hedging…………….DIA, DXD?????
    I also have positions in 401k growth and international mutual funds, and other "buy and hold" positions that were crushed in 2008/09 (that I am trying to repair by selling premium). Hedging would have saved me a lot of grief in the past and I am anxious to begin. Sorry to even ask…there is so much information here…I just can’t seem to find out where the beginning is! Many Thanks!!


  208. Phil   What about an FXP Monday trade?


  209. Phil   Never mind…just read it…thanks


  210. JR
    Didn’t see your post above.  What made you get in at that level?


  211. exec IWM 61.16
    Well, I hope it holds as I am long; I should have waited a bit longer for entry !!


  212. Phil re the TNA roll on todays trade, i rolled mine to the Aug 32s. I know you rec going lower. Does that indicate you are anticipating a pretty awful August?


  213. Phil  here are your two comments
    Mattress/Yodi – Yes, good point.  Good time to sell DIA 1/2 Aug $102 puts for $3 against Dec $104 puts, now $8.  If you rolled other putter then OK to be in full cover but you must buy 1/2 Sept $99 puts, now $3.10 if we keep dropping on Monday to increase downside delta.  
     
    DIA/Yodi – Dec $104 puts are now our anchor play.  You should not still be in Sept puts


  214. Positions/Bob – Well you waited a bit long.  You should never be in current positions as of the Wednesday before expiration unless you are specifically playing them for expiration day.  All you can really do is roll them along to the next month and hope things change for now.  Whatever makes you comfortable on strike and time-frame.  EEM $42 puts can be rolled alown to Jan $37 puts better than even but do you want to be tied up that long?  If so, then just find strikes that work for each one.  

    Asia/Chyer – LOL, great prediction!

    Volume/Exec – Normally I would say too much for the stick but action was heavy early and did not look to me like anyone was trying to support it so I think bots have yet to be triggered but relentless selling is going to keep them idle, at least until the last moment. 

    FXI/8800 – How about selling the Jan $40 calls for $2.80, which you would have to cover with stock or deep calls if FXI breaks $40 and then buying the $43/38 bear put spread for $2.80 so no cost on the $5 spread that’s $4+ in the money.  As long as you take the cover – it’s a nice hedge on China

    LOL Diamond – If only Toyota would have thought of that song!

    Getting ready to pass the 3pm stick window with oil at $76.25, gold at $1,190, copper $2.94 and nat gas $4.53.  I will personally lose faith if we don’t get a 3pm stick as the voluem (now 237M on Dow) will make a later stick difficult to pull off unless they are going to do a real jam job in the last 15 mins.


  215. exec,
    Overlay TBT on your IWM chart; you’ll see !!


  216. "The market has made me an offer I couldn’t resist"! I just did a Buy / Write on BBY, buying 100 shares of stock @ 34.15 (keeps going down, but it’s fine) and sold a straddle Jan 2012 $30 Call/Put for $13.5 in premium, to bring my avg cost down to $20.65 / $25.33 (if assigned).. max profit is a nice 45% which annualized would be around 20% per year.. very good, very conservative, very boring.. that was done in an IRA account so I can set and forget for the next year and a half! The cherry on top would be the dividends.. let’s see what happens.


  217. JR.  Was that you dumping?


  218. "Positions/Bob – Well you waited a bit long.  You should never be in current positions as of the Wednesday before expiration unless you are specifically playing them for expiration day.  All you can really do is roll them along to the next month and hope things change for now.  Whatever makes you comfortable on strike and time-frame.  EEM $42 puts can be rolled alown to Jan $37 puts better than even but do you want to be tied up that long?  If so, then just find strikes that work for each one.  "
     
    Thanks Phil,
     
    My question… What was to do before Wed.?  They were still under water and if I rolled them than, it’s just more in red….. What did I miss??


  219. JRW - did you hammer TNA @ 36.70…talk about a wall of selling!!!


  220.  Out of TNA at $36.38; loss of 32 cents. We are still South of the 8ema, so the selling continues !!


  221. Phil: trading on OPEX day is mostly sh…
    wish I had gone golfing.
    Now I am stuck with some TNA unless there is a stick.
    Usually I do not hold TNA but how can they not recover next week ? What do you think ??


  222. Anti stick on OE day, very impressive!


  223. Hi Cwan,
    Sell the calls now.  VIX is high, meaning the volatility holds up the call value.  You’d get less for selling them on Monday.  If the market don’t bounce, those calls will worth a lot less next week.


  224. Do we test 1065 here and get a stick? Please for the love of God at least stick to a 1070+ close….


  225. JR,
    I did the overlay…..so your premise is that TBT would pull up IWM since it reversed?


  226. JRW - The beauty of your trading is that it doesn’t matter with a $0.32 loss when you have already made over $1.50!  I thought for sure you hammered TNA on a half sell around $36.70….it never broke that exact number.


  227. Back at 1066 on $SPX.  Same old Battle of Hastings returning again. 


  228. Any doubts what the overall trend is now?  S&P1047 here we come.


  229. What a friggin headfake yesterday was.  Got me completely turned around.  But I have the chart.  I will remember!  Looking back historically, that pattern is usually a set up for the next day.


  230. exec / TBT
    That was the premise.
     
    goldman,
    The good news is that I was all in on TZA and then the short-lived TNA play this morning; since then I’ve only had 8 to 11 block plays (no conviction and no conformation)


  231. lol, Matt – sounds like you’re feeling better today. Nothing so bad as a grumpy bear!


  232. PHIL  thanks for the advice to  take the profit in my long uup put yesterday. i made 100% :)


  233. Matt/ it was a beautiful TZA day for you almost 11%! FAZ 12%!
    I tend to agree with you. We have peaked on Wed and now we are trending down again to our bottoms RUT 590 unless something amazing comes from the Q2 earnings.


  234. Hi, Peter, Got it.  Thanks!


  235. Wheeeeee!


  236. Short Stranglers (if any left) and put sellers,
    Now, it’s time to think about what-ifs scenarios.   What if the market drops another 2% on Monday, how would your portfolio would perform?  If the answer is badly, then flip some putters to callers, or sell additional calls.


  237. If the option expires, what is the settlement price, I have been chasing to get out of the TNA puts and they keep going up. there’s a .50 spread…!!!


  238. The 1 min 6 hour chart of IWM looks like a well controlled aviation landing.


  239. Should of gone with TZA instead of VXX, what a move!!


  240. No more whees matt!


  241. Well, that’s probably a wrap.  Not worth the risk of a friggin stick. 


  242. Nice Job Matt!


  243. Wheeeeeee!


  244. They’ll claim.. and make it look like we’re bouncing off 1066.  More lies!!


  245. Index futures showing that they at least have a pulse!


  246. Hoo boy; I was on some phone calls….. market; TNA getting crushed.
    Hey, I did sell the July 37 call for 0.05 !  (covered);  I’ll take 37 by the close if they can get it there.
     
    And will hold for monday.
     
    Damn robots !


  247. matt,
    Congrats my friend !!


  248. Welcome Ranger!  If you can remind me on the weekend, I’d be happy to discuss with you but 3pm on options expiration day is not the best time..

    TNA/Morx – With a day like today, we could drop another 2.5% on Monday so $32 is a little too close for comfort.

    Mattress/Yodi – You must buy Sept $99 puts (+50%) IF WE KEEP GOING DOWN ON MONDAY IN ADDITION TO THE DEC PUTS YOU SHOULD HAVE.  Is that clearer?

    BBY/Rav – Good combo!

    Weds/Bob – Yes it would have been just as bad but you don’t want to have to be making adjustment under pressure on the last trading day when you are forced to take whatever price is offered.  Also, the longer puts would have caused less damage due to lower delta than they ones you are in now, saving you 10-20% of your losses. 

    TNA/RMM – Could be a bad couple of days but no fundamentals have changed so we’ll be buying next week anyway. 

    UUP/Z4 – Nice!

    3:30 got a small uptick but volume selling came right back on top of it so it looks to me like someone is doing a major liquidation.  Figure stick firepower good for about 1/3 normal day’s volume (70M on Dow) so problem at 248M at 2:30 is stick not very effective to turn markets up unless they wait longer to run the program.  Once they run it – if seller takes advantage and keeps dumping – we get a failed stick.  So it’s going to be very hard to get 100 into the close at this point and will only work if Mr Seller is done.


  249. Phil,
    Newbie question:  Whats the rationale behind the FXI bear 43/38 put spread (3:01PM) which limits upside to 38 (now 39.13) as opposed to using a 40/35 spread with more upside potential (drop in FXI). 
    Thanks again,
    Ken


  250. These late market swings are making my heart hurt.  I need a klonopin stat!


  251. In TNA at $36.39


  252. Phil – what’s your fav bull call spread for TZA now?  Thx. 


  253. Seller/Phil – remember a few weeks ago we had a spell of the market being hit by a hypothesized single seller. It would be very useful if we could identify the timing of this – maybe it’s the same guy.


  254. They’re pinning her right here.. or at least trying to.


  255.  Phil—what to do with a JUL QQQQ 44/46 call spread? I could roll to the AUG 44 call and sell the AUG 44 put for even but do you think that too risky?  Many Thanks!!!!


  256. JR.
    Too much downside power today.  Overriding the 3 min conformation chart.


  257. That’s it; out at $36.38.  Still, 5% on the day, but I’m with RMM, should have gone golfing at 11:00 !!


  258. Thanks Phil  got it


  259. Wow, guess I was wrong.  Or maybe they were trying to pin it but the pullback was clearly a setup for more dumping!


  260. That’s one ugly daily candle


  261. What a rotten finish.  Relentless selling all the way through.  Notice how there were several failed attempts to move up, all sold into

    Sorry guys, should have been more bearish when we didn’t hold our 2 of 3 levels.  I thought it was just expiration day nonsense but 300M on the Dow down all day says maybe worse than that. 

    Have a good weekend all,

    - Phil


  262.  damn… ameritrade liquidated my new july TZA call options about 2 minutes before the close… I bought these after they liquidated the old ones.  Guess it does have to do w/ having the $ to take the assignment – this didn’t happen last time I let options expire – anyone know what’s up?


  263. That last TNA buy was my bad trade of the day; oh well….


  264. OE Friday lived up to it’s name again!  Expect the unexpected.  And when you do.. the unexpected expected will happen! 
     
    Thanks for the good words guys but I barely capitalized on this huge move.  Wasn’t in over night and was looking for yesterday’s pattern for a good part of the day.  But now I know better.  That being said, I doubt it’s straight down from here.  We either get a bounce on Monday or we could have another big down day.  If we’re down, I doubt it will be little.
     
    Have a good ‘un~


  265. Cap
    You get the gold star today; I was fighting the tape all day. That’s what I get for thinking, instead of following the system !!  Congrats


  266. JRW – only 3% here on the TNA trade.  I’ve never beat your profit margins over the last 8 weeks of day trading!  Everyone should have been day trading Faz today…490% average on the puts that I thought was a long shot, with the stock up 12%!  I really need to play more options, Phil is on to something here…=D  Sometime I want to discuss a new indicator that would have keep you out of the last two TNA trades…not sure if it is consistently accurate yet…but so far, so good…
     
    Everyone have a great weekend!


  267. "$15 Faz July Calls"…not puts…gets a little confusing when you are long a short…


  268. Phil – I care about future generations too, but it still may make more sense (from a Keynesian perspective) to run short-term deficits (even very large ones) in order to avoid a sharp drop in economic output that may actually lead to higher deficits (due to lower revenues).  One analogy I like to use is the cancer patient who floods his body with cancer causing substances (chemotherapy, radiation therapy) in order to deal with the fire that’s raging in his body (the cancer).  His focus is the near-term problem.  The long term effects are secondary concerns.


  269. jcaesar, there is no cure for cancer.  Only remission.  If we go the Keynesian route.. we could wind up with both an impossible defecit AND ultimately deflation.  There is nothing organic that will take root and grow as a result of more stimulus.  If we had a fledgling industry perhaps.. but of our two industries, financial products that nearly destroyed the world and consumer spending, neither will sustain growth.  There is no escaping the pain.


  270. Phil : Do u still like TZA Jan $6/ $11 bull call spread selling 1/2 $5 puts


  271. Matt / Spot on    We exported millions of jobs to poorer nations, mainly China and Mexico under free trade/ GATT.  We disguised the huge structural problem we created with a fraudulent finance/RE/ consumer spending boom which pulled fwd millions of jobs from future years.  QE does not fix this massive structural problem, just pushes out the day of reckoning.  We’re stuck with multi-year depression and deflation.  No credit worthy co or individual wants to borrow more and spend.
    The ultimate fix will come through more nationalism and trade protectionism.  People will realize that what is good for CEO stock options is not good for the country, eg moving production (including high tech) to China and Mexico.  We’ll go for natgas, nuclear, wind and coal and end oil imports, saving $400mm p.a. and reemploying millions.  It’s ridiculous that we have the most open auto mkt in the world, why we need Jap cars made in Japan is beyond me.  The auto industry has a massive supply chain multipier, could reemploy millions.  Why are our airlines buying subsidized planes from Europe?  And, as Phil emphasizes, why the heck are we spending a $trillion on foreign occupations to ‘save’ people who don’t even like us?  We could have spend part of that money to convert every vehicle in America to nat gas.
    The US is the only country which lies down to be raped (for decades) by offshore mercantilists with their own much more focused, smart, nationalist agendas.  We have exported our standard of living.  Yes, that’s not fair to ’poorer’ nations like China and richer ones like Germany and Japan, but we are the ones with the biggest problem. Time out!
    But, our population is so politically naive and uninformed, it’s hard to see where the nationalist initiative will come from when the CEO’s control the MMM and message.  Perhaps we need another Great Depression to shake the people out of their lethargy away from sports and soaps.  Sovereign debt crisis may be our  catalyst.


  272. FXI/8800 – In the bear put spread you buy the $43 put and sell the $38 put, which I think you get.  You are not limiting anything, it’s just a math game so the cost of the spread is offset by the sale of the calls and any drop in FXI expires the short call worthless and puts the spread $5 in the money.  With the $40/35 spread, FXI has $3 (10%) further to fall to give you a max pay-off. 

    TZA/Terra – I would not chase ultra-shorts here.  I still, now that I review the day, feel this sel-off was BS and it looked very much to me like forced selling by a fund, not any kind of real market exodus.   Copper is below $3 but oil is still over $75, which is higher than it was when copper was below $3 and gold is $1,192, also not breaking down so not really getting all the signals for a downtrend yet – other than technical ones, which were dead wrong last time. 

    Same guy/Snow – I doubt it.  Someone may have bet nat gas down and was forced to liquidate or something…

    QQQQ/Fortep – Sorry, late now but not much to do but roll or cash.  I don’t think it’s too risky as we seem overdone on sell-off.

    Gotta go, will be around tonight.


  273. Matt – Thanks for the response. Regarding its substance – I didn’t say cure for cancer, I said "dealing" but really this is just a distinction without a difference and matters very little to the analogy itself. 
    I’ve heard the argument about needing to endure pain, but I’m not sure what people mean by this.  How do we as a country endure economic pain?  In what form will this pain be experienced and how will it ultimately lead to economic cleansing/healing?   Also, who is going to endure the pain?  All of us?  If not, which of us will?  Also, if the pain involves economic contraction, how is that helping when it comes to the deficit/debt?  More people will be out of work causing unemployment benefits and other stabilizers to kick in.
    Tuscadog – Not sure you mercantilism is the way out.  I think you do have a point in so far as we need reciprocity when it comes to trade.  If we’re going to open our borders, we should expect the same of others for our products.  And of course currency manipulation has been a massive issue with Chinese for too long. 


  274. jcaesar / reciprocity   caesar, that’s the problem, we won’t get reciprocity unless we are more nationalistic and selfish.  Look at how the Japs manage trade, a surplus with no resources.  I’ve visited many huge, modern Chinese factories.  We don’t have a prayer of competing.  They are America of the 50′s.  Work like dogs, long hours, disciplined, educated people working for peanuts, pride in their work.  Their Gov’t is making sure the foreign tech cos set up the latest plants in China as a quid pro quo for access to their mkt. Our CEO’s are willing cooperative Henry’s. 
    Our main competitive asset is our huge market and more carefully auctioning access to our market is our best weapon.  Meanwhile nurturing high tech and manufacturing industries with appropriate political strategies. eg it’s madness to have subsidized energy policies like solar and wind which are based on imported equipment.  The problem is that the lobbyist bribes paid to the politicians doesn’t distinguish between foreign and American jobs.
    Apple has a great product, but why does it have to be made in Asia?  It’s sad that, outside the public sector, the biggest  growth segments are building prisons and increasingly unaffordable hospitals and nursing homes.  If we cut off the money printing we’ll be forced to develop a structural solution to a structural problem.


  275. Phil/"DD" – "Double Dip" talk is coming out of the woodwork…evidenced by two Friday PSW articles below.  This past week could be the "new norm"…
    ——————-
     
    Double dipping, longer and slower?

    Double dipping, longer and slower?
    Courtesy of Rick Davis at Consumer Metrics Institute
    http://www.philstockworld.com/2010/07/16/double-dip-on-the-way-milder-but-longer/
     
    ————
     
    ECRI Plunges At 9.8% Rate, Double Dip Recession Virtually Assured
     
     
    Submitted by Tyler Durden on 07/16/2010 09:48 -0500

     
     

    http://www.zerohedge.com/article/ecri-plunges-98-rate-double-dip-recession-virtually-assured


  276. Phil,
    Have you looked at the 5 year and 10 year graphs of the major indices? I can’t help but see a major roll over occuring….I love your bullishness, but I keep thinking about the constant sucking away of any non-service related industry to foreign countries.  The FED says 5 to 6 years to get back to normal unemployment. I think the next 5-6 years will involve more companies leaving this country to operate in more competitive and stable pastures, leaving us with less jobs.  I believe a lot of the jobs lost over the past couple years were inevitable losses.  Our economy now operates in a global labor market and our wages are heavily inflated compared to other countries’.  The recession gave companies’ a reason to axe these jobs and increase efficiency using available technologies and outsourcing.  If you don’t have an advanced degree, or are highly intelligent, your ability to get a job is dwindling.  Even with an advanced degree or high-level of intelligence, your ability to get employed won’t be safe in the future.  Did you know the number of people in India that make up the top 25th percentile in IQ is greater than the total number of people we have in the U.S.?
     
    Cool video if you’ve never seen it…I recommend to everyone: http://www.youtube.com/watch?v=lUMf7FWGdCw 


  277. correction: The recession gave COMPANIES…not companies’ … stupid typos


  278. Tuscadog,
    Read what I just wrote.  I completely agree with what you wrote.
    Have you seen this video before: http://dailybail.com/home/peter-schiff-of-course-were-not-going-to-pay-back-the-chines.html
    Peter Schiff makes me laugh when he calls people out…if you have the time, and inclination, I recommend watching his entire speech at that conference


  279. tuscadog – Good points.  I like the idea of treating access to our markets as an asset – never thought of it that way.  Our policymakers certainly don’t treat it as an asset.  I did a stint as a college intern at the Dept of Commerce’s Office of Technology Policy.  It seemed to me to be much window dressing (setting up award banquets, seminars, forums with technology leaders, etc.), but there wasn’t much bite.  I also worked at the Treasury Department’s International Affairs division and while there I couldn’t find a person (and I’m talking about the policy analysts) who considered currency manipulation or the trade imbalance to be a problem.   There seemed to be a dogmatic belief in laissez faire.


  280. Phil/ Goldman earning estimates – Looking at Goldman’s David Kostin 2010 Full Year earnings estimates at $78/share…even with a P/E of say 15, it would seem challenging for the SP 500 to get beyond 1200 anytime soon.  Do you agree with the GS analysis?  Also, the "DDs" are coming out of the woodwork, Tyler and Rick Davis both have articles listed on PSW today that have "Double Dip" in the title.  The last two weeks may become the "new norm"…
     
    ——-
    Per http://www.philstockworld.com/2010/07/16/the-micro-view-q2-earnings-season-past-present-and-future/
    Here is Goldman’s David Kostin with a perspective on the Q2 earnings season: where we were, are and are going. 
    PAST: 2Q 2010 earnings season - We expect index-level 2Q 2010 earnings will positively surprise relative to bottom-up consensus expectations. Of the 37 companies already reported, 20 beat consensus EPS expectations by more than one standard deviation.
    PRESENT: 2010 full-year earnings outlook – Our full-year 2010 S&P 500 operating earnings forecast of $78 per share implies 4% potential negative revisions to current bottom-up consensus estimates of $82. GS Economics expects US GDP growth will slow to 1.5% annualized pace during 3Q and 4Q 2010, below the consensus estimates.
    FUTURE: How various economic scenarios will affect 2011 - EPS Investors are intensely focused on the profit outlook for 2011 more than 2Q results. We provide sensitivity analysis around our 2011 EPS forecast of $93 adjusting assumptions for US real GDP growth.


  281. jceasar, what are the ‘short term deficits’ you speak of?  We have not run short term deficits nor will we.  We have liabilities as far as the eye can see, to be inherited by our grandchildren.  It is a vast understatement to say it is a disgrace.  we must start paying our way.  Society today must take medicine, must acccept that we have been living beyond our means.  We have to stop giving the bill for our largess to posterity.


  282. Continued, essentially that is what Krugman says, "we must spend now to get out of recession and then when we expand we must pay down the debt",.  One little problem, we don’t pay down the debt in good times either.  We spend the moeney.  We spend our children’s money.  That is the legacy of the US society- spend now pay later.  Keyes once said, "in the long run we are all dead (so don’t worry about the future)".  Yes, but what about posterity?  Apparently Mr. Keynes was not too worried.  It is disgraceful for this society to recklessly steal from the future but we continue to do so we abandon.  One other observation.  We did end the deficit under Clinton, I suppose that some of it resulted from gridlock at the time, but we did not even begin to put a dent into the unfunded liabilities that our children face.  To do so will require pain like the spoiled American people have never even conceived.  So i am sorry to be pessimistic but I’m afraid that the problems that we have baked into the cake for future generations are insolvable.  This will go down in history as ‘the selfish generation’.


  283. As you said, we went from deficits to surplus under Clinton.  It was a priority during the right time – during an economic expansion.  We were reckless under Reagan and the two Bushes – to run deficits during periods of economic expansion is the height of irresponsibility.   But it might also be equally irresponsible to try to balance the budget during a time of economic contraction – your deficits might actually be bigger and the economy might contract more.  What does that leave for you or your kids?  
    How about we get a true recovery under way and then start paying down the debt?  I’m all for that.


  284. Also, how much do you want to bet if the White House and Congress go Republican in 2012, theholier than thou deficit cutters will just cut taxes on the rich and let the deficits run wild? 


  285. Hi, Peter,
    Many of the short stranglers went to JRW camp.  They wanted more excitement!
    I am still around.  I’ll see you next week.  Should be another interesting week to strangle the SPY!


  286. The drop in VIX at the end of the day really killed the long options, bringing my short strangle accounts to a positive profit status for the week!  As the uptrend seems to be broken, the short calls got slaughtered.  Those caller values diminished so much that I had to flip some short puts to short calls so that the portfolios are prepared for more possible market move to the downside.  If the market turns up, VIX would drop, giving us a day or two to make adjustments on the short call side.
     
    RUT settlement was 629.02, similar to May’s 629.95 and Feb’s 628.69  (how amazing).  Both SPX and Dow settlement were 4% higher than May’s.  Good thing that RUT and SPX expired in the morning as I had some July RUT 610 putters left.  The daily SPX chart is a TA’s dream, where it touched the 50 days MA and turned down.  Just a comment from a non-TA expert.


  287. To drive home my point, here’s an article just published by the Nation – http://www.thenation.com/article/37534/deficits-mass-destruction
    Hayes makes an excellent point about false pretexts: "Perhaps the most egregious aspect of the selling of the Iraq War was its false pretext. It never really was about weapons of mass destruction, as Paul Wolfowitz admitted. WMDs were just "what everyone could agree on." So it is with deficits. Conservatives and their neoliberal allies don’t really care about deficits; they care about austerity—about gutting the welfare state and redistributing wealth upward."


  288. Cwan,
    Yeah, a combination of JRW’s and short strangles, or Optrader and short strangles would really juice up the returns on the accounts.  It seems like the day trading and swing trading are more difficult to master, so those with that skillsets can add to their potential returns with short strangles or even buy/write.


  289. Today’s sell off landed the s&p right at the flash crash lows - stockcharts.com/h-sc/ui


  290. rstuart
    Shiff is correct in the sense that the debt may be repaid to the Chinese, or others that hold treasuries…… however the debt is denominated in dollars, and the dollar will soon be devalued down to a fraction of its current value.( This is the same result as non payment ) The treasuries and other debt instruments do not have an inflation adjustment clause in the language.  Oh my goodness!  The dollars the Chinese will receive in repayment will be but a fraction of the value of the dollars they advanced to buy the treasury bonds. If the bonds were to redeamed in inflation adjusted amounts, then they would have a zero value, as BK is the only resolution of choice. The Chinese government and the folks at the Fed know very well this will be the end game…. we are just waiting for the Fed to start the printing presses, as the jig is up. The Chinese are already backing off of buying more, and if it were not for the fact we have a "rush to safety" syndrome that prevails at the moment, creating a market for this junk, then we would see a very frightened Fed moving sooner toward a QE-02 Keynesian solution.


  291. PeterD,
    If things stablize, Buy/Writes and Stangles with a 5% or 10% Day-trade portfolio would be quite attractive; thanks for all you do !!


  292. JRW, no gold star for me; I fought the tape and won 4 or 5 times on TNA; then I fought it and lost, and wiped out those hard won gains.
     
    Overall, the day was fine; other than long stock positions going down; reasonably well hedged with calls and puts, and all my exposed puts expiring today expired w/ no troubles and I was able to initiate some new positions for next month.
     
    Portfolio balance looks ugly for the day just due to the stocks getting hit; and the TNA trade took up too much mental energy; and I have still yet to become a master like you.


  293. JCaseser, The Nation gives you away, you are not trying to be objective.
     
    The problem, or one problem, is our corrupt and incompetent politicians are not willing or capable to solve the problems in an intelligent fashion.
     
    Here is where Obama and the Dems are going.  This latest commission will recommend, guess what, MORE SPENDING.  And TAX INCREASES (whether bush cuts expire; new taxes, VAT, others, all).  And they will PROMISE that LATER they will be MORE RESPONSIBLE and CUT SPENDING, but only after we let them spend like drunken sailors on whores and raise taxes.
     
    And, as you know, they will NEVER cut spending; NEVER cut entitlements; NEVER cut bureacracy.
     
    As for the Republicans, they can’t pass any new laws or tax cuts w/out Obama signing them.  If they want to cut taxes, you think Obama wil sign ? NO WAY.  Unless the congress can override his veto, which is doubtful.
     
    Most likely, we will have acrimonious gridlock.
     
    And more crap like this Fin Reg 2300 piece of do nothing bureacracy … hey America, we DID Something.  We REFORMED Wall Street !  Yeah right.  And Goldman Sachs, how convenient to have an SEC case to make them a punching bag, until the SAME DAY Fin Reg passes, well we don’t need that GS punching bag anymore, so Voila, its settled with a slap on the wrist.
     
    Some government.


  294. I take it that The Nation then likes beefing up the welfare state and redistributing wealth downward ?
     
    What a rag …


  295. jcaesar:  these economic cycles have such long lag times that its almost always wrong to give blame or credit to the president for surpluses or deficits.  During the 1990′s the US was in the midst of the internet revolution, huge stock market run up and end of the cold war.  Tax revenues surged and its no surprise that we had a surplus, albeit fleetingly.  To give Clinton all the credit is as inane as blaming Obama for the massive deficits now.  He is painted into a corner, and unless the economy miraculously revives he’s going to be lucky to beat Hilary for re-election.  He could have pulled out of Afganistan instead of increasing the war, so he owns that now (probably a huge mistake).  So what is a citizen to do?  For me, I’m voting for Gerry Brown for our governor, I want the Dems in control from top to bottom as California sinks into the abyss.


  296. Yes, Clinton had a budget surplus but he inherited the internet boom.  In 2000, the budget surplus was $230 billion.  Also in 2000, capital gains taxes collected peaked at $119 billion.  From 1990 to 1995, capital gains taxes collected were between $20 and $45 billion.  Unemployment reached its lowest in 2000 as well, so lets add in income taxes and payroll taxes.  Clinton didn’t do anything special.  He just inherited a thriving economy and was a rockstar because of it.  Bush inherited the dot-com bubble burst and 9-11.  Obama inherited the rubble that came after Bush.  The next President will inherit an even bigger mess. 
    Gel
    Agreed.  The Chinese know what’s going on, so it makes me wonder if they are doing it purposefully.  Once they’ve sucked all of the industries from our country and they have established a consuming middle-class, do they really need us to repay them?  The amount we owe them is a small price to pay to become the most dominant country in the world and dismantling us in the process.


  297. Phil, obviously GS and the other manipulators read your post this morning ….


  298. Phil or Others,
    I will be assigned some TNA  for 38 basis from some puts sold earlier in the month that I should of probably rolled when I had the chance but stood fast hoping the stick would save me as it did earlier in the week.
     
    I am trying to decide whether to sell for loss (less than 6% at the moment), hold a while and/or begin selling some calls against. Do you have any particular thoughts on this? Do you think it is possible we bump 40 next week? I do notice that this favorite  toy of many on this site can reverse fortunes very quickly, so I am trying to learn it from the selling put side as I can’t follow every moment. So far, till today, I have been doing OK so any ideas are appreciated on how to recover.
    Thx


  299. Great job today by JRW and Cap and, of course Matt!  Keep the faith bro…

    Ameritrade/SrFrog – If you talk to them, I’d love to know what their logic is.

    Hey JRW – Do you think there is something strange with TNA vs IWM?  It seems to me that IWM fell harder than TNA and it also seems like IWM broke through it’s expected floor but not TNA.  Seems a little odd to me but you watch them more. 

    Short-term deficits/Jcaesar – I agree 100% with that but, like anything else, too much of a good thing can kill you.  The problem isn’t stimulus or deficit spending, it’s what we spend it on.  Dropping the Fed Funds rate from 3.5% to 0.25% costs us taxpayers the 3% spread on whatever the Fed lends to the banks less what they have to borrow 10-year funds for (unless you think we’re getting out of the deficit in 10 years or less).  So the Fed expands their balance sheet by $2Tn and 3% of $2Tn (not exactly how it works but ballpark) is $60Bn a year or $600Bn over 10 years spent and that wouldn’t be so bad BUT THE BANKS DON’T LEND THE MONEY. 

    What’s the point if they banks keep it for themselves and don’t reduce CC rates or mortgage rates?  Same goes for TARP and other stimulus packages – they are wasted because they don’t go to the root of the problem which is creating jobs and industry.  We also deficit spend $600Bn a year on dopey wars that have no long-term benefit to us at all and we spend another $1Tn paying for the wold’s most expensive health care system and we spend $400Bn a year on interest on what we already borrowed.  You can’t win that game by borrowing more. 

    If you have cancer, something is growing inside you that must be killed or it will take over your body and use up its resources and starve out your vital organs.  The cancer on this country are the top 0.01% and their wealth grows and grows and starves the other 299.99M people of the ability to earn money and you aren’t going to cure that by giving the top 0.01% more money!  We have already done this for a decade and ignored the long-term effects and those effects (massive deficits, bankrupt government, outsourced labor system built with tax incentives, sky-high commodity prices, loss of US economic stature) are now coming back to haunt us.  

    As long as we are running a massive trade deficit, borrowing money every month and sending jobs overseas then all stimulus does is create a bigger hole through which money pours out.  Since the stimulus money is internal, this is like going to a hospital with multiple stab wounds and they decide not to stop the bleeding but to begin draining your blood so they can put more blood into you until the bleeding stops of its own accord.  Good luck with that plan….

    TZA/Dflam – Apparently they are a problem to buy new so be careful or, just multiply all by 5 and take the new side. 

    Excellent points Tusca!  I hate to say it but it does seem that it may be time for a good old-fashioned trade war.  What do we buy, other than oil, that we can’t make here?  Even the oil is a big problem but if we flip the chart I put up this morning from giving the oil companies $70Bn to giving solar, wind and nat gas companies $70Bn, then we can cut that part of our trade deficit too.  Slap a 50% tarrif on imports and put that money to jobs programs in America.  We import about $2.5Tn worth of crap a year and only about 20% of it is oil, the rest is stuff we could be making here, employing American workers but, since it’s more profitable to have it made overseas and shipped here – we do that.  Figure $2Tn and 50% of the cost is labor and that’s $1Tn worth of jobs or 20M $50,000 jobs – PROBLEM SOLVED!   And don’t think we need the exports, our trade deficit is $1Tn and most of our exports are food anyway so more food for our 20M newly employed workers and their families…

    ECRI/Goldman – When did those come out?  I know the ECRI guys were just saying to ignore the short-term signal and that the long-term trend was still positive – is this after that?

    Nice video Rstu – That’s another thing that pisses me off.  Our great resource was our people and we were, in the 60s, the best educated work-force in the world.  Unfortunately, Nixon decided that liberal "intellectuals" were the enemy and began a 30-year program of dismantaling the education system culminating in "No Child Left Behind" which was the greatest double-speak program ever pushed onto the American people as we end up leaving no child behind by leaving all the children equally behind so "No Child" can catch up.  Unfortunately, as you say, the 300M Indians who are smarter than 75% of Americans are happy to take over all of our service jobs (the ones we had to fall back on after we exported all of our manufacturing jobs) and on and on it goes as there’s really no point in educating our consumer cows, who are expected to work their minimum wage jobs and stop at Wal-Mart on the way home to pick up the latest batch of imported goods.

    Estimates/Goldman – I think 1,200 is high for the S&P too.  1,250 if everything is great but about 1,150 is about right at year end.  That would be a good, healthy consolidation off last year’s lows.

    Selfish/FJd – This is so silly.  We can fund EVERYTHING and pay off our debts and maintain our long-term obligation if we simply tax 25% of our $15Tn GDP.  Currently our government collects $2.5Tn, that’s 16.6%. which is, not coincidentally, Warren Buffet’s tax rate.  That’s because the top 1% earn the majorty of the money in this country and corporations own the rest and both of them pay effective tax rates of around 16%.  Raise it to 25% and we are collecting $3.75Bn, which is a surplus and then, if we end the war, we can drop a full $1Tn a year into paying down debt so 15 years from now we have no more debt and that saves $400Bn more a year in interest payment and that’s a $1.5Tn annual surplus which is enough to pay 60M retirees $2,000 a month right there.  See all solved with a single change that raises the effective tax rate on the top 1% to 25%.  People who are currently paying 25% have nothing to worry about. 


  300. IWM/Phil
    If the market opens down on Monday (seems a high chance), how about selling the IWM 52 puts (naked currently at 0.5, might go higher to 0.6)? Or as a reverse spread (buy 48 put, sell 52 put) if margin is an issue. This could be free margin. We could cover for by going on a long TZA position if needed (TZA would be up by more than 30% if the puts get into the money).
    What would be the risk here?
    Thanks


  301. Good bet JCaesar!

    Flash lows/Yshen – well there’s a reason they tested those levels. 

    Entitlements/Cap – So let me get this straight.  A person worked for 40 years and made and average of $20,000 a year and put 6% of his income into SS and his employer matched 6% (as part of his total compensation) and, after contributing $72,000, which at 5% interest would have been $323,000 saved for retirement but your boy broke the lock box and gave this guy’s money to his rich pals.  Now you say that it’s an "entitlement" that needs to be stopped.  So you mug a guy, take all his money and then blame him for bleeding on the carpet – shameless…

    Hillary/Humvee – She’s not going to run against Obama, that’s just not done. 

    TNA/Bps – We can give a better answer on Monday but keep in mind that you can cover by selling $32 calls for $7.50, which is like collecting $39.50 if you don’t mind being patient. 

    IWM/Rn – It’s a good plan.  The flaw is in the overnights, where you could get gapped but generally, a sound idea.


  302. Phil
    I am sure you know that the argument against you is quote this ass hole or that unbacked up pile of shit. I am proud of you always backing up your views with facts and math, they can’t do that because their side is selfish and so corrupt that all they can say is but but but this ass hole agrees with me. George W. Bush had the But But But But problem and destroyed America and his self rightous crape has created a WORLD THAT HATES US AND EXPLOITS US and he/they say it wasn’t me you just don’t understand. It is loud and clear to you and me.


  303. Phil/ECRI- ECRI is releases to the professional members at 9:10 AM ET on Friday each week.  Tyler sometimes posts a summary around 9:45 AM ET.  It had peaked around 135 about 10 weeks ago, and now we are at 120…a far cry from the 105 lows during the "great recession", but I’m amazed at the velocity of decay.  Tyler believes "we are there" in terms of the double dip recession, per today’s ECRI article @ http://www.zerohedge.com/article/ecri-plunges-98-rate-double-dip-recession-virtually-assured .  Tyler has never been "Mr. Sunsine" I know, but I definately respect his depth of knowledge on such matters…
    As far as ignoring the short-term trends, I had read the same a few weeks ago…but I don’t have professional access to the actual reports so I’m not sure what exact data point(s) we are supposed to ignore as "noise".  I do read the excerpts at their web page, cut and pasted below.  There are no excerpts from June yet, but do note what I underlined below from April and May 2010.  What I would really like to study are the professional reports mixed in with the weekly ECRI updates…as shown in the release schedule @ http://www.businesscycle.com/news/reports/  (especially the June 22nd "How likely is a Double Dip?")
     
    Excerpts from ECRI professional reports:

    January 2010 “The U.S. Long Leading Index (USLLI) growth rate, which had soared to a 63-year high in September, is now in a cyclical downturn… This means that U.S. economic growth is likely to start easing by mid-year…In this context, it is also notable that cyclical downturns in stock prices (a short leading indicator) have almost always followed post-recession cyclical downturns in USLLI growth…In sum, the U.S. economy is moving off the sweet spot and entering a higher-risk environment.”

    February 2010 ECRI goes on public record about implications of upcoming slowdown (CNBC clip above).

    March 2010 “With stronger U.S. economic data discrediting the doubters, double-dip talk has dried up. Not surprisingly, most economists are marking up their growth projections for 2010 and beyond. As usual, such prognosticators are focused largely on coincident economic indicators, which they then extrapolate. This is why there was so much fear of depression last spring, when we forecast a growth rate cycle upturn, based on our objective leading indexes.

    Having correctly predicted an upturn in economic growth in the face of widespread skepticism a year ago, those leading indexes are now anticipating a near-term cyclical peak in U.S. economic growth. Specifically, growth in the U.S. Long Leading Index (USLLI) has declined for five straight months to a ten-month low… The directional unanimity among our sector-specific leading indexes is striking. Just as compelling are the successive downturns in USLLI growth, WLI growth and USSLI growth, which are providing sequential signals of an upcoming growth rate cycle downturn for the overall economy – precisely as expected… (Thus), even as people are starting to believe that the perfect storm has ended, clouds are gathering on the horizon.”

    April 2010 “There is no doubt that USLLI growth is in a post-recession cyclical downturn… (O)ur forecast of a growth rate cycle downturn by mid-year remains fully intact. With the markets growing increasingly confident about a sustained acceleration in U.S. economic growth in the coming months, this highlights a potential divergence between ECRI’s outlook and growing market optimism.”

    May 2010 “The risk of a cyclical downturn in stock prices has risen significantly. Moreover, we are approaching the most dangerous period of the business cycle to employ a buy-on-dips strategy.”


  304. Hilliary is positioning herself for a run at it; in our lifetimes incumbent Democratic presidents have had to contend with own party challenges in 1952,1968,1980 and Republicans in 1992.  It does definitely happen, and will again if his poll numbers stagnate.  


  305. shadowfax:  please keep your rants civil and out of the gutter (do you talk to your mother with that potty mouth?)


  306. I said this a year ago and I am staying out on that limb. Pres. Obama will be a single term president. He is an idealogue- great for an academic and useful for a leader but only if this can be translated into keeping the troops rallied. The polls, for now indicate a failing grade. The guys behind the the guys whom are behind THE GUY are hard nosed pragmatists. Their formula reads: low polls=lost elections=lost power=lost contracts. Cynical and crude but absolutely true. They don’t back losers.
    I agree with Humvee, Hillary is testing the water. The Clinton’s have demonstrated their political mastery before and we are seeing it again. I don’t think this was just a coincidence:
    http://online.wsj.com/article/SB10001424052748704518904575365482705270718.html
    The big tell, in my opinion , will come around labor day- the "start" of the mid-term election campaigns. It will be interesting to see if Team Obama makes a big move to the center.


  307.  TZA/Dflam
    I have a 4/10 TZA1 spread (from before the split). They are very thinly traded now and the spreads are huge. Even on Friday, with TZA moving +10% the spread hardly moved. 


  308. Phil, I agree that the top 1% should pay more.  But please, by anyone’s standard this is a terribly selfish generation, from top to bottom.  I put the rich first and foremost in that class. The population during WW2 was called ‘the greatest generation’.  They sacrificed to pay for a war.  What did this generation do?  Go to the mall and buy more cheap junk from China.  Pass the bill for the war to children?  Perhaps your best response to this is that society was not inspired by a forward thinking leader to do otherwise (George Bush told us to go to the mall and spend, while not funding his war).  I am saying as a generalization that we don’t pay our bills.  We borrow from the future.  We use finite resources that rightly belong to our grandkids. We are causing irreversible changes to the environment that belongs to our grandkids.  We all do this, and we all have not demanded that government impose regulations and laws that stop these reckless and selfish practices.  What does that tell you?  Whether rich or poor, a large portioin of the population wants a handout from government, whatever that may be, i.e. tax breaks, school tax rebates which mask the true cost of a local education, income tax deductions, welfare, unemployment, subsidies for farmers, etc.  As far as I know, it was not that way going back in history.  Society has not (yet) demanded that the 15 trillion in unfunded liabilities be paid off so as not to burden and destroy our kids’ future.  Society has not demanded that the war be paid for now.  What does it tell you?  I will answer: Selfish, don’t worry about, get me past the next election, make sure that we have the tickets to Friday’s ballgame.  By the way, in the 15T figure, did you the environmental time bomb that this generation has also chosen to hand to children.  I think that your 15T figure is very much on the low side.  I agree with most everything you say but there is always room for some disagreement.  I have appreciated your comments back to seeing your articles on SA.


  309. Phil, when are we getting an edit key?  I see now that you did not list 15T as the unfunded liabs. thanks.


  310. Pstas, I’ll take that bet and give you odds! No way does Obama lose, not b/c he is so strong in the polls but b/c the republican challengers are so weak. Who are you guys going to run? All you have is leftovers from the last election, noone new(much like the dems the year Kerry won the nom). Palin is too stupid to make it through a national campaign without saying stuff like she did to couric last campaign…. So realistically you’re left with Romney and whoever he chooses as a sidekick, not necessarily a compelling ticket. Then you have a potential Ron Paul or tea party ticket which will suck more potential votes from the republican party and virtually give the election to President Obama. Basically it will be a replay of what happened to Bush Sr. Vs Clinton when Perot ran. I’m actually going to place a small bet on his reelection when we are a year out with one of these online gambling sites:)


  311. ECRI/Goldman – Thanks, good stuff (well, bad but good info). 

    Top 1%/FJD – See morning post…  As to edit key – too many cooks crash a database, we’ve been told that’s a bad idea so better to encourage people to think at least once before posting.  8-)


  312. hi everyone, I am a newbie in the site but an oldie trader, I am 53 and very glad to join Phil and all of you, hope I will learn a lot and have fun in the way. Since I am from Argentina and have been living in Geneva for a while and in Barcelona since 2004 my english is not perfect and will need some time to adjust. Meanwhile, hello to everybody and havea nice weekend!


  313. I left out a few more  unfunded liabilities in the trillions that we are leaving for our grandkids: our water systems are antiquated and need replacement, population growth has and will continue to outstrip availabe water supplies (desalination uses vast amounts of energy that we don’t have), we have built whole communities in areas that are guaranteed not to have water in 50-100 years, i.e. the southwest is a desert and development should have been strictly limited there, our highways, bridges, and railways are falling apart, our electric grid needs a complete rebuild, we have no energy policy meaning that posterity won’t have safe reliable energy sources, we continue to dump carbon into the air with reckless abandon which means that it is practically guaranteed that the climate of the planet will be unalterably changed leading to future costs in the trillions (to say nothing of the permanment loss of biodiversity).  Does the tax on the top 1% (which I favor but which won’t get done) handle all of this?  The outlook is bleak.


  314.  Phil – when you use Social Security and "lockbox" in the same sentence you completely lose me and your argument.
     
    There is no such thing.
     
    The problem w/ Soc Security is less and less people paying in to more and more beneficiaries.
    When it was started is was like 4 workers to 1 retiree
    Now it is like 1 worker for 12 retirees.
     
    The gov’t has for decades used any excess amounts payed into the system to fund spending elsewhere, replacing the money with worthless IOUs.
     
    So when you and I retire and say, hey, where’s my money … well, its not there, and there may not be any Soc Security system by then.


  315. On this topic, please review the commission report from the mid-1990s, (the one that had Tim Penny on it). There was a long-term fix that reasonably and fairly pushed the problem well into the future. Was this done?
     
    Is that sort of thing our problem?


  316. I would like to suggest a Stranglers chat site for discussion of strategies – so we don’t clog this site with extraneous stuff.


  317. The fix did nothing but forstall the ultimate collapse.  The problem is that the money is not in a lock box.  Like all goverment programs, they use the money for what they want, then later we say, "gee, the program is running out of money or has become too expensive."  In Westchester County NY, we have been paying tolls on the Tappan Zee bridge for 50 years.  The bridge had a design life of 50 years.  It is now falling down.  Now we are saying, where will we get the 15 billion to pay for a new bridge?  Some have said, where did the toll money go?  Wasn’t it in a ‘lock box’.  No, it wasnt.  It was spent on other stuff.  That is wrong.  Again, I say we passed the bill for a current program (the bridge) to future generations.  It is wrong, wrong, wrong.  Infrastructure is falling down in this country, and it will cost trillions to fix it.  We used the stuff up and passed the bill to children.  It is not silliness.  On the ‘extraneous non trading related problem’, I admit to being a part of the problem by making these comments.  It can get to be too much on a site that is dedicated to making trading and investment profits. Not sure of the answer. Ban these type of comments?  Stick to the markets?   


  318.  Phil,
    Lots of controversy about the new FinReg bill and political opinions are predictable.  I suspect there are at least some elements of it that are worthwhile but then my opinion doesn’t count for much.  Off hand, do you know of any business leaders who have come out even partially in favor of this almost done deal legislation?