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Thrill-Ride Thursday – Where Will Economic Indicators Lead Us?

Isn’t this fun?

Up 200, down 200, up 200, down 200 - wash out your savings, rinse and repeat!  What a total sham of a market we have these days with machines running us up and down on virtually no news at all.  Yesterday they would have you believe that Ben Bernanke caused a sell-off.  How ridiculous is that?  He didn’t say one thing that he didn’t already say in the Fed Minutes that were released on the 14th, which were the notes from the meeting of June 23rd so for analysts to get on TV and say "the markets were concerned by the Chairman’s comments" is beyond stupid – it’s criminal negligence

That’s Can Not Be Correct and other media outlets are supposed to have something that is called a Public Trust, which means that broadcast licenses are a national resource that are meant to be used responsibly.  I know, that almost sounds like a joke but it’s not – we used to care about these things…  Now the public is treated like cattle and is simply stampeded to the slaughterhouse at the whim of the media and the Big Money that pulls their strings and our equally puppet Government spend their days fighting over who gets to wear the captian’s hat on the Titanic.  Maybe it is a joke - too bad it’s on us!  

That’s why we keep things light over at PSW – we know it’s a crock but, as long as it’s a crock we can figure out, we’re happy.  I mentioned yesterday that Tuesday morning’s Alert to Members had 2 long plays on the Russell that made over 40% each in a day.  Well yesterday we shorted the Russell at 9:42 with TNA $32 puts $1.60 and IWM $60 puts at $1.32.  It wasn’t as exciting as Tuesday but the TNA puts made $2 (25%) and the IWM puts performed much better, also hitting $2 for a 50% gain on the day.  We have now learned that TNA and TZA, despite looking sexy, are not as good to play for direction as the IWM puts and calls.  This is due to the wide bid ask spread and low liquidity, which means the Market Maker can rob you blind by stealing nickels and dimes from you every time you buy and sell – this is something you should always be aware of when trading options on ultra-ETFs. 

We made a couple of attempts to go long, first with QQQQ and then with DIA but we got stopped out of both of those with small losses but we did get to do a little more bottom fishing – grabbing UNG (nice play for possible hurricane), STX, BAC, CCJ, GOOG and BYD.  NFLX made our day with a poor report – they were our focus short for the week, as I mentioned in Tuesday morning’s post and, although we were below our levels, so we couldn’t get bullish, we were wise enough to take our bearish money and run on that nice sell-off – especially as copper (remember our key indicator?) was holding up nicely at $3.075, which was our predicted pullback target

This morning it looks like the markets are primed for another major flip-flop as the futures are up a whole percent at 8am.  Why?  Who cares?  None of it matters until we get the jobs data at 8:30 and then we have our Leading Economic Indicators at 10 (and Barry Ritholtz has a good take on this here) and those are expected to be a depressing -0.4% so a lot to slog through before we can, once again, retest our levels. 

8:30 Update:  464,000 people got pink slips last week, 24,000 worse than expected (5%) and 37,000 (almost 10%) more than last week but the futures don’t seem to care.  Continuing claims are down sharply at at 4.49M, down 190,000 and we can thank our friends in the Republican party for that one as they once again blocked the extension of unemployment benefits yesterday (the real cause of the market sell-off) and that’s how many people lose their benefits EVERY WEEK under the Republican plan (or lack thereof).  Wouldn’t you know it though, those sneakey Democrats finally broke the seven-week filibuster and passed the vote 59-39 last night, helping the futures to take off

2.5M Americans will have their benefits restored and it will be fun to watch Conservative Narrators Bashing Congress do somersaults all day trying to pretend that doing the right thing and helping our fellow man can’t possibly be a reason for the markets to rally.  The problem for Conservatives is, if they admit that giving 2.5M people a little bit of money actually HELPS the economy – it becomes much harder to argue that giving 250M people a little bit of money is not as good of an idea as their current strategy (and our national policy) that gives 3M people a LOT of money and takes a little bit of money away from 299M people, something I explained in "The Dooh Nibor Economy – That’s Robin Hood Backwards."

File:Mt Popa.jpgThings are now looking so bright in the markets that New York City is going to toss $7.6Bn worth of pension money into hedge funds (call me Mike!) in a plan that can’t possibly go wrong, can it?  In other things that can’t possibly go wrong – congratulations to Myanmar (Burma), who are joining the Nuclear Weapons club.  Ah there’s nothing more comforting than seeing that even Military Dictatorships can make their own nuclear bombs if they keep their eyes on the prize – this should be an inspirational tale for those slackers in Iran and North Korea - who should be ashamed not to keep up with Myanmar and their $1,197 per capital GDP.  

If "Buddists Building Big Bombs" doesn’t shake up the global markets – what will?  C lowered their 2010 China Growth Forecast by 1% to 9.5% and cut their Global Growth Forecast by 0.1% to 3.7% this year (not bad) and 3.3% in 2011.  The US forecast was dropped 0.4% to 2.8% in a generally gloomy report that no one seems to care about

Asia was up (other than the Nikkei, of course) this morning and Europe is once again off to the races with 2% gains just ahead of the US open and, once again, we take a poke at dead center of our trading range at: Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620.  Keep in mind the EU is flying over their levels (FTSE 5.250, DAX 6,000 and CAC 3,500) so, if we match their pace, we should also fly through ours, which are about 1.25% up from yesterday’s close.  If we hit a lot of resistance there, then that’s a signal to get a little shorter right away.   Oil ($78) and copper ($3.16) both look very strong and Nat Gas is heading over $4.60 again (go UNG!) and gold is at $1,185 and it would be very nice to see them heading down as the markets break over our levels.  

Uncle Rupert continues to fight the good fight for the bears with the current on-line headline at the WSJ saying "Stock Futures Gains Shrink" (9:20) so we’ll see if that’s true or if it’s just the integrity of the paper that is shrinking along with the rest of the Mainstream Media.

 


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  1. chaps

    Phil: Would like you input on how I’m trying to get even on some of my TBT plays. I have Jan $37 calls that were originally the long part of a bull call vertical. After selling off the short end of the vertical quite awhile ago, I was selling front-month callers against them while they (the Jan $37 calls) were still in the money.
     
    Now they’re getting pretty for out of the money. So I’ve converted the Jaun $37 calls to Jan $30/35 bull call spreads. I’m selling 2X ATM front-month calls against these. If TBT heads back up, I figure you can assume the bull call spreads are providing you $2.50 of free rolling of the callers (half the $5 spread.) If TBT keeps heading up, you could buy additional Jan bull call spreads at higher strikes.
     
    If TBT continues down, you should make significantly more from the callers than you lose on the bull call spreads, and you could roll the spreads down if TBT keeps falling.

  2. samz3700

    Chaps – tbt – i like it but sometimes tbt just takes off – guess that is your risk -
    we all clearly got that one wrong – in fact – every time i play interest rates – i get it wrong – maybee should just leave it to the bond guys – add that one to the srs list -
    i am crazy about phil and what this board can do – but I do think our tbt bets were a case of group think where we did not seriously entertain other opinions and alternative strategies -  sure some will disagree -

  3. rainman

    Phil/SDS — Last night’s SDS hedge post — Bravo! The clearest, most detailed hedge post I’ve seen since I’ve been a subscriber. I’d recommend that one for the strategy section, perhaps made generic.

  4. chaps

    samz:
     
    I agree we’re not bond guys. And I think these things are very hard to get right, even for bond guys – many of whom thought it was likely that rates would rise sooner rather than later.
     
    I think we got some of the economics wrong too. We got caught up in the "Fed printing press" and "we’re becoming Zimbabwe" metaphor for why rates would rise. But macroeconomics, I’m starting to learn, is more complicated than that. The US is the world’s largest economy with the largest trade deficit , all of our debt is in dollars, and the dollar is the world’s reserve currency. Despite what we’ve done to our fiscal house, there’s nothing on the horizon to replace the dollar. And for most of our trading partners, ending the status-quo is generally considered the worst scenario – even though that leaves them exposed to what our government does to the dollar.
     
    Hence the world remains awash in dollars, still a relatively strong currency, and they must go somewhere. In uncertain, perhaps deflationary times, making next to nothing on treasuries seems to look good to a lot of people. Deflation would obviously not be good for equities. And US equity markets, and equity markets in general, are not trusted by many people. Luckily, we have options to deal with that, but most people don’t.

  5. jvest

    Here is Phil’s SDS hedge post mentioned by rainmain.

  6. kwan

    Does Dell even understand the concept of good PR these days? Now they’re replacing motherboards with virus laden equivalents. But it’s okay, because it was "human error".
    Really, Dell?

  7. chaps

    samz/TBT play:
     
    If TBT heads up significantly, your bull call spread goes more into the money and you can add more spreads at higher strikes. The new spreads then provide addition "rolling money" for the callers if TBT continues its climb, etc. So you use the bull call spreads to keep pushing your break-even on the callers higher and higher.

  8. kururi67

    This feels a bit like the movie Groundhog Day, compared to yesterday, futures flying up, great earnings, only to end (possibly) in tears later today.  I’ll bet a nickel one of the ratings agencies tries to ruin it all with a country downgrade this morning.

  9. jerriodmb

    I picked up Qqqq puts at the close do you think I should sell and buy calls

  10. matt1966

    Oh yes… I think we’ll continue up today.  At 8:30am when the jobs data came out, there was a big spike in volume for FAS.  Initially selling.. and then ‘they’ just pushed it right back up.  Nothing to see here!  Move along folks.. everyone into the pool.  The water is great!

  11. rstuart4201

    When to short, when to short….

  12. kinkistyle

    Ditto on the hedge post.  It puts it in a clear and concise way why and how a good long term portfolio that is already discounted thanks to option premium should be hedged against tail risk.  Great education!

  13. Phil

    It’s all about our 2.5% lines this morning: Dow 10,200, S&P 1,075, Nas 2,200, NYSE 6,800 and Russell 620.

    Of course it’s one thing to get over and quite another to hold it! 

    Hopefully you have your upside bets in because it’s a bit fast to chase.  

    VLO is still cheap at $16.89, C is still under $4, BAC at $13.60 is still a buy, AAPL could pop back to $265. 

    CAT ($67) had great earnings but are surprisingly laying around so I like them in the Sept $65 calls at $5.20, selling the Aug $67.50s for $2.50 to wipe out the premium

    That’s it for now, oil needs to hold $77.50 and copper should make $3.20 now and below $3.10 is bad.  Not holding 2 of 3 levels is BAD and we need to buy some bear plays there for sure. 

    Have fun!

  14. exec

    Bad unemployment numbers and the market soars.  Makes perfect sense.

  15. matt1966

    lol.  Free money day!  So far..  Enjoy the sham!

  16. yshenhar

     Phil / TZA
    I have Jan $4 / $10 spread from before the reverse split (bought at $2). How will it be priced at expiration? My understanding is that since both are deep in the money now I will get $6 * 20 – is that correct?

  17. jromeha

    Yeah, this has a feeling of one of those days that it doesnt matter WHAT numbers come out, we are going up. Housing will be terrible but Im sure they will find SOMETHING in the economic indicator #s to get excited over. What Im surprised at is that they aren’t waiting for the #s to come out….

  18. fjd10595

    Does anyone have an opinion on Google?   I sold the Sept 480 calls phil gave us on monday for solid profits, then I got back into the Sept 490 calls after the pull back.  Google’s  balance sheet looks fantastic. I would like to hold for a few months or more.  I believe that the market will climb a wall of worry and start a summer rally about now.

  19. Pharmboy

    jrom – it’s called squeezing the juices out until the pressure is too much.  Since there are less suckers to squeeze, they are moving things in a much more dramatic fashion……

  20. gucci

    Hi Phil-- FAZ spread Aug 15/17 hedge — is it mean for close out after GS earning or hol til expiration
    thx

  21. JRW III

    Good morning,
     
    IWM 61.92, 62.32 (16), 62.90, 63.39, and 64.33

  22. Phil

    TBT/Chaps – I like the strategy but, as Samz says, just be aware that TBT can, on some financial event – really take off on you.  That’s fine if you can afford to add some 2012 $40s ($4.90) to cover in an emergency and do the rolls which, since you have naked callers, I assume you can do no problem but don’t get too complacent.  Germany had a FAILED bond aution this week, their 3rd of the year where not all debt offered was sold.  This will eventually spread and is the real reason Europeans are on the austerity bandwagon – no one is willing to fund further debt…

    Don’t forget leading indicators at 10 – that can reverse us or send us to the moon.

    SDS/Rain – Will do.  Sometimes I can’t tell if I’m making sense or rambling…

    Good point on macros Chaps. 

    Country downgrade/Kururi – I read yesterday that they are not going to rate anything until FinReg is cleared up – that would be interesting…

    QQQQ/Jeri – Well you should pick up some calls to stop the bleeding in the very least.  Of course you can also sell the July weekly OR quarterly puts against them and roll, which ones do you have? 

    Water is great?  Thanks Matt!  An all clear from you means a lot…  8-)

    We are doing all this on just 25M in volume at 10 am by the way…. 

    Thanks Kinki!

    Indicators time, I’d go with DIA $99 puts, now $1.18 if we drop and fail 10,250, using that line as a stop.

  23. Phil

    Oh no, existing home sales fell 5.1% in June and we’re not dropping!  Inventories up 2.5% to 8.9 month supply, which is crazy high for the summer (when everyone moves). 

    Leading Indicators "only" down 0.2% vs. down 0.4% expected but May was revised up to 0.5% from 0.4% and they are blaming – LOSS OF BENEFITS!   That’s no longer true so we can ignore this and RALLY! 

  24. jromeha

    Bad #s and we rally more. Awesome. I feel like Matt today – this is sick…

  25. rstuart4201

    Anyone notice that there is almost always a giant stick for FAZ or FAS at 10am and that giant stick solidifies the direction either ETF will move for the rest of the morning and a lot of times the day?

  26. matt1966

    …and they wonder why retail investors aren’t playing along.  The S&P just broke a short term technical indicator mostly because of a 22 pt move after hours.  They go about it in the least expensive way possible.  If this move is on the back of extending unemployment ($39B?), it is only temporary.  Phil, how long to burn through this cash or it gets priced into the market?

  27. Phil

    Can Bernanke stop the rally???

  28. kinkistyle

    Coming to a major technical resistance area.  Fasten thy seatbelts

  29. dbarakat

    rstuart, I did notice that.

  30. ephmen85

    IBM/CSCO   I tend to be quick to cover my spreads which helps me in downturns but hurts me in up moves.  I’m currently naked on IBM and Cisco and wonder when I should cover.  My first thought is to shoot 1/2 covers with IBM 130s at $1.50 and CSCO 24s at .50, but that’s just a WAG.  Any suggestions?

  31. RMM

    Phil:  my MO and MRK stock are 9% green: question: keep and sell some 2012 premium or sell stock (assuming a drop in market) ?

  32. Phil

    Poor BIDU – going the other way. 

    House hearings shouldn’t be as negative for the markets as the Senate hearings because there are less Republican’ts speaking but I still like the DIA $99 puts, now $1.08 up until Ron Paul attacks and then give up if that doesn’t take us down or if we break over the 2.5% line on the Nas (now 2.35%) and NYSE (2.44%) and S&P (2.2%)

  33. JRW III

    I’m shorting at IWM 63.19; connect the tops from 4/26, ignor 6/21

  34. jdub929

     I think It’s time for the Big Boys to start selling some upside calls on those weeklies…They have to find alternate ways of making money right?:P

  35. Pharmboy

    Treasuries are also positive….can that mean something?????  It says max pain is coming…..

  36. dbarakat

    Is now a good time to set up a disaster hedge?

  37. chyer

     Not liking the action on apple for such a big day on up only 1.22% This market confuses me more and more everyday ha ha

  38. fjd10595

    No, Bernanke cannot stop this rally: "The Fed will ease if necessary".  I think we have all learned that stocks love having money thrown at them.  Did anyone say summer rally.

  39. jdub929

     Hi Phil,
    Any adjustments needed on the mattress play?

  40. 8800

    Phil,
    Any thoughts on shorting the Euro here? Approaching the area in which reaction rally may have run its course and succumb  to fundamentals ?
    Thanks,
    Ken

  41. RMM

    Phil: anticipating oil price increase over next 6 months, which oil ETF is best to own ?

  42. rstuart4201

    They should give Ron Paul an hour long special interview with Bernanke…if only everyone didn’t think he was crazy, maybe he could have been nominated instead of a geriatric and an idiot

  43. jomama

    RMM, i like XLE 2012 Leaps – they really hold their value in the wild swings – in addition, out of the money calls have nice premiums – the XLE 55′s for this month are over .8 and XLE is 53.5.

  44. fjd10595

    I agree on Apple, not liking the action, but didn’t it pull back from 260 to 240, then back to this level, all in a few weeks?  Perhaps it is just treading water for now.

  45. matt1966

    JRW, interesting.  Thanks for pointing that out..

  46. savitri

    Hi Phil,
    New to the whole thing--have RRC at 45 --can I sell some calls etc to bring cb down?
    Tx

  47. cslanson2

     Phil,
    I followed your lead with CAT (Short $67.50 August Calls paired with Long $65.00 September Calls) Interesting possibilities.  Is there a name (Options Strategy Label) for this trade?
    Thanks

  48. jromeha

    Are you still short JRW?

  49. judahbenhur

    Jromeha,  JRW has a line at 62.90.  My guess is that when that line held, he switched horses.

  50. rexx

    How about selling CTRP 44 Aug Calls.  Stock seems very rich at 39.

  51. cwan120

    Time to get out of short-term (Aug) hedges?  Or maybe get out 1/2?

  52. JRW III

    Here comes The Push; the other thought is if "they" succeed, all the TA guys will be BUYING !!

  53. rainman

    cslanson2/cat — that’s a "diagonal spread"

  54. RMM

    jomama; txs, what about OIH ?

  55. tuscadog

    Phil / A lesson for new subscribers.  One of the main benefits I’ve derived from your site is the ability to follow a wiser head / heads in terms of short term positioning, about which I was (am) very naive.  It’s fine to have a fundamentalist macro view but leave a lot of money on the table even if one is (eventually) right.  But the mkt is a manipulated casino and you’d better run with the fox if you don’t want to lose your eggs.  I’ve benefited from going from 90% to 50% cash and being long on blue chip stocks.  Today is great, and I continue to follow your shrewd daily trade positioning and long term picks and hedges.  I posted the below post on July 20th, would still appreciate your thoughts on my core questions.
    July 20th, 2010 at 5:09 pm | Permalink  
    Phil / You nailed it again today!   IBM and TXN results looked ok to me, (as did GOOG) so hard to understand early trading?
    I’m still 50% long and 50% cash and that’s worked better for me than my earlier sceptical 90% cash!  The housing and unemployment disaster will continue (and jobs ain’t coming back from China and Mexico until we become selfish mercantilists again), so I still see a nasty DD, with neg GNP, without major new QE (extended unemployment helps maintain some spending but doesn’t kick start growth).  RUT profits (mainly USA) can’t grow without significant GNP growth.  The problem is that handing out money, like UI, just sends more money to China via WMT.  It’s not a structural change.   Hard to see a bullish catalyst after earnings in July, (harder comps ahead) other than a major QE initiative.  Even record low mortgage rates are making no difference to housing.  So, it may now be about you timing the move to going back to cash or net short sometime in July?
    I’m thinking money to be made going short again at some point, then going long when things look grim enough to support China style QE and infrastructure push in both US and Europe to exit depression / deflation?  However, you’re the timing expert.  Thoughts?
    I would add today this mornings housing and unemployment confirm that there’s no recovery and no reason to expect one.  It’s all about QE and the political winds suggest we’ll have to wait until it’s depression before we address the required structural changes to the economy, including mercantalism, which is the only way we’ll create real desireable jobs. ps most of the jobs created in the private sector in the past decade were crap jobs in min wage service and processing industries.  Working at McD or a chicken plant doesn’t support a house purchase.

  56. rainman

    Phil/Volume — your volume benchmarks are on the Dow right? How do you do the time based comparison. Is there a way to get hourly moving averages or do you just know typical volumes?

  57. JRW III

    jromeha
    Sold the TNA I bought at the open at 10.05 (too soon); in TZA at $34.80 now

  58. matt1966

    It’s days like these that provide abundant proof that ‘they’ have this market in lockdown.  NOTHING happens unless they want it to happen.  We’re are but squirrels begging for nuts in their world.

  59. jossietx

    Phil, what’s your opinion on MHS? Why it’s off so much today when earning is not bad? Time to pick some up? thanks

  60. gel1

    CGA is sprouting lots of green today!

  61. JRW III

    DIA 99 puts now $1.05 !!

  62. Phil

    TZA/Yshen – Just divide TZA by $5 so about $7 now and, of course, you’ll get whatever it is above $4 up to $10. 

    GOOG/Fjd – Lots of overhang as Europe is hassling them over monopoly and still uncertainty in Chna so I don’t think they will be rocketing to $600 but they do deserve to be higher than $500. 

    FAZ/Gucci – That was a cover through the weekend (that went past) but done now.  Not enough bank danger to hold the short-term FAZ spread.

    FAZ/FAS/Rstu – No but very worth tracking! 

    $39Bn/Matt – That should force a new extension vote in October, just in time to hang it like a burning tire around the necks of the Republicans – BRILLIANT! 

    Only the S&P is still below that 2.5% line, maybe 1,097 is it.  Oh sorry, the Dow is below it to (2.1%) but that’s a silly index that we can’t take seriously at the best of times...

    When in doubt, sell half Eph!  (Cover half in this case). Better to cover aggressively (on the money) with half and you can always roll up to 2x a higher strike. 

    MO/MRK/RMM – Both pay a nice premium so same advice at Eph – Sell half while they are running (MO 2012 $20s at $2.50, MRK 2012 $35s at $4.75) and then you can relax while you decide what to do about covering the rest. 

    Weeklies/Jdub – I agree, the premiums on those things are crazy – great to take advantage of.

    Fed/Fjd – Ease with what?  They really have to start paying people to borrow money at this point but, then again, as long as they are paying the Gang of 12 and charging it to us – that’s just business as usual in America.

    Mattress/Jdub – At the moment, it’s DIA Dec $106 calls, now $6.90, 1/2 covered by Aug $102 puts, now $1.85 and, if we hold up today, we need to add 1/2 Aug $104 puts, now $2.67 and and put $2 stops on the $102 puts

    Disaster hedge/Dbar – I you don’t have one already, then yes!  You never know when you might wake up to a 500-point drop so it’s always good to at least have a long-term hedge.  We have our "5 Plays that Make 500%" and I’d stick with those as they are generally Oct hedges and can withstand more upside punishment while still giving good bang for the buch on a near-term dip.

    Euro/8800 – Technically, you can short for a pullback from $1.30 back to $1.28 but I don’t think you want to short stern austerity measures in Europe against Ben’s promising to keep the money flowing as a strategy. 

    Copper reaching up to kiss that $3.20 mark. 

    Oil/RMM – XOM.

    Damn, they said the gentleman from Texas and it wasn’t Ronnie!

  63. Pharmboy

    FWIW:  The big news yesterday was the continued decline in bond yields – with the 10-year note closing down at 2.88%, which is the lowest since April 2009. This is critical because the Treasury market is telling a different story than equities are…but remember which asset class really leads.

    Treasury yields peaked three months before equities peaked in 2007 (June vs. October) and bottomed three months  before equities in 2008-09 (December ’08 vs. March ’09). When did Treasury yields peak this year? Try early April at 4.01% – while "hope" persists in equities we doubt that this condition will be sustained as the weakening in the economic data points spill over into the earnings landscape.

  64. jomama

    RMM, on OIH i have some long dated bull put spreads that are way out of the money – that has a pretty good risk reward.

  65. acobra65

    Phil:
    WHAT A THRILL RIDE………. Wheeeeeeeeeeeeee!
    Bt 7/21 DIA 104 @ 1.05 Sold this morning 1.55 Was not Greedy but look at THEM NOW !!! Thanks Phil
    By the way I have paid my annual subscription to PSW with 3 of Phil and David’s trades this week…. So, now I am trading on the House’s money…… Thank You !!!
    I will have to visit the Brown Hand Center (Commercial in TV land) to repair my fingers and wrists with the mouse this morning LOL…. I have BEEN PATIENT this past week waiting for many option plays to come into focus for me and this morning, I have been ratcheting the price down….. I was position trading leveraged ETF’s in major indexes and was doing too much day trading which was losing as much as making money (if, I would have held most of those losing positions, they would have become very profitable) .  So…. now, I am picking my spots with PATIENCE, I have never exhibited before……
    I promised myself, I would not express or respond to Non-Market comments during trading…….. Maybe,  after hours or on weekends….  

  66. yodi

    Hi Gel
    Again thks for the reminder on CGA . I was away for a few days but must say you have a good memory!!!
    I am still holding on to this stk and opts.

  67. jdub929

    Just a clarification on the mattress play. You mentioned 2 days ago, it was Dec. 102 P covered by 1/2 Aug 102 P.  Did anything change between now and then?  Or is your current play totally different from the one you mentioned the other day?
    Thanks.

  68. JRW III

    Pharm / Peak
    Well said !!

  69. Pharmboy

    Very good article in the FT by J. Sachs.

  70. rainman

    jossietx/MHS — looks like a major technical breakdown. Have a look at the 1 year.

  71. rainman

    By the way, there are a lot of stocks with charts that look like MHS but that’s the first one I’ve seen break down.

  72. Pharmboy

    JRW – Thx.  Not me, but just passing on what I read…..

  73. amatta

     JRW, 
    Boy that line is a magnet!! It doesn’t want to let go…. Come on TZA! 

  74. kustomz

    Pharm David Rosenberg…Pharm here’s a another nice tidbit from the man
     
    What also makes this cycle entirely different from all the other ones experienced
    in the post-WWII era is that this is the first consumer recession we have
    witnessed where the median age of the baby boom population is 52 going on
    53.  The last time we had a consumer recession in the early 1990s, the boomer
    population was in their early 30s and they were still expanding their balance
    sheets.  The last time we had a bubble burst in 2001 they were in their early
    40s.  Now they are in their early 50s, the first of the boomers are in their early
    60s, and we are talking about a critical mass of 78 million people who have
    driven everything in the economy and capital markets over the last five decades. 
    This cohort realize that they may never fully recoup their lost net worth, and yet
    they will probably live another 20 or 30 years.  
    So, what is happening, which is at the same time fascinating and disturbing, is that
    the only part of the population actually seeing any job growth in this recession are
    people over the age of 55.
      Everyone else can’t get a job or are losing jobs — there
    is a youth unemployment crisis in the United States of epic proportions and a

     

  75. Pharmboy

    TOS double double – SNDK Sell Aug 38/47 P/C, buy Sept 38/47 P/C for 1.55 debit. 

  76. Phil

    Ron Paul/Rstu – Hey they give William Shatner and Larry King interview shows – why not Ron Paul?

    YRCW .28! 

    CAT/Cslan – That’s just a calendar spread (diagonal). 

    CTRP/Rexx – Word on Fu Quan road is that Ctrip is growing way too fast to short it.  Or did that cookie say short it fast?  Hard to tell, my Mandarin is rusty…

    Hedges/Cwan – Which ones?  Disasters, yes.  We were done with most of those on Friday and Monday was certainly the last straw.  The ones we added yesterday can still be rolled along as we expected them to take a hit but if we have 2 days over our levels then we probably have a new bottom (finally). 

    OIH/RMM – If they can pop $107 they may be off and running to $115-120.  Oil is stuck under $70 at the moment and I don’t think they break $80 and OIH will not like that so a tricky play in this middle spot but you can gamble it using $105 as a stop. 

    Thanks Tusca – glad to know we’re helping!  As to the rest, notice it’s hard to find a question in there.  Best to lead with a statement and end with a question.  I’m guessing you are looking for infrastructure plays based on QE2 and CAT I mentioned this morning is one as well as our Dow plays from a week ago (see Portflio Tab).  WFR was my favorite and even though they have been rocketing back, I continue to like them SOOOOOOOOOOOO much as any kind of stimulus will be aimed at the solar sector.   HOV is still really cheap, C is really cheap, I mentioned VLO earlier – you don’t need to gamble on TXT etc when perfectly normal, everyday companies are on sale.  ANY money moving into the economy is good for VLO and C and AA and GE (great infrastucture play too) and CSCO and XOM. 

    PANL making year highs!  VMW too. 

    Overall, we are looking a bit toppy here and S&P did not confirm 2.5% line.  DIA $99 puts hanging tough at $1.05 and I’m up for a DD if we spike to .95 before giving up.  

  77. hanna5

    When is all the money gonna come out of bonds? When will TBT spike to 60? :)

  78. rainman

    kustomz/youth — HA! Most youth that I know (I don’t have kids) couldn’t/won’t do even remedial tasks. I feel that (most) parents are too easy on their kids (spoiled) and they don’t know what it’s like to have to work for something. And what’s with all these attention deficits they all have? When I was young we called that BOREDOM… and we were expected to still pay attention and slug our way though it.  ahh… don’t get me started!

  79. rn273

    Weeklies/Phil – I seem to be obsessed with them, but anyway – how about a backspread using the weeklies? Buy 10 QQQQ Aug 47 for 0.63, sell 5 or 6 July 30 $46 QQQQ for 0.59. We should be able to make money if QQQQ goes up; if it is below 46, we have pretty much covered for 5 or 6 of the 47s we bought. We could do something with the IWMs too this way…

  80. shadowfax

    hana5
    TBT is up 2.2% today, it may be starting.

  81. goldman

    Why is there an infatuation with "$2 Trillion corporate cash on hand" statement in the MSM?  As of Feb 2010…Apple had $40 billion, Google had $25 billion, Microsoft $41 billion, Intel $19 billion…those four companies alone hold over 6% of this "$2 Trillion" number…
    What I would like to see is a chart with the history of cash reserves, and what percentage is held by a few large corporations…and how long have they been holding similiar reserves?  Also a correlation chart between cash reserves and future hiring…anything but a single number…
     

  82. gel1

    Chaps/TBT
    I do believe we should not be too hard on ourselves for taking an overly bullish position in TBT. I probably was the one who was the strongest cheerleader, but I believed in the fundamentals. At one time I was leveraged out with 75,000 shares – mostly short naked puts.. The fundamentals pointed directly to a big move in this ETF – Bill Gross, the bond expert said buying treasuries did not make sense given the increasing government debt. The Chinese government, who was the largest buyer of this stuff was backing off, and making a lot of noise about getting out altogether. We were blindsided by the unwinding of European confidence of their own debt, thus the rotation into our junk.  Who would guess these dynamics could have played out, as we have no historical data that would suggest these events. I was able to unwind my positions without too much pain, and at the moment hold 2012 naked puts in the $32 range. Just my perspective.

  83. JRW III

    Ahhhhhhhhh  !!!!!!
     
    That’s better  8-)

  84. amatta

     JRW, 
    What is the line to exit TZA??
    Thanks

  85. kustomz

    rain, looks like parents are forced to support their children that are in their mid 20′s/30′s….the saying…your job as a parent never ends has an all new meaning

  86. amatta

     Lets go TZA!!!!

  87. matt1966

    JRW that IWM call is looking pretty good!

  88. rainman

    kustomz/kids — around here if they were willing to do what the illegals do (hard labor, cheaply) they probably wouldn’t have as much of a problem. I could draw parallels to Phil’s competetion model. Maybe they should all read that. I’ll bet that nickel the parents aren’t making them work for their room and board and I’ll bet another one that the kids aren’t asking too.

  89. rexx

    CTRP – bad justification but short term, never got much past there, but I  do a little and can always roll up. It can’t go up forever.  But I sure can’t see paying for puts on them.
    But how about BIDU. Its back to 75.

  90. rainman

    Vix seems to be heading up faster than the indexes are heading down. It’s already at it’s already above it’s mid-point for the day.

  91. JRW III

    amatta / TZA
    Well, I’m riding it until it’s no fun any more; we should test 62.90 then 62.75, and I doubt we get below 62.32. Just watch your indicators !!

  92. rn273

     YRCW/Phil – Are you selling some at 0.29 (I believe you had once mentioned that you would have sold some of what you had at 0.29 when it had last spiked there).

  93. gel1

    jromeho/fjd
    From earlier this morning regarding energy independance…. I am only the messinger, as I too believe we can do much better in the revisionary efforts to have cleaner energy. I am agreeing with Kent Moors on the premise that until we can convert over to the new technology, we should make all efforts to become energy independant.  It will take many years for this to evolve. The requirement for oil will not go away soon for these same reasons – so why are we still providing petro dollars to foreign countries when we have all the reserves right here at home? Answer- bad politics!  The technology of removing oil from shale is currently in use in California. The method is chemical free and is pressure only.  Dr Kent Moors is the go to guy for energy sector data.  He is a highly paid consultant that is engaged by almost every producer, as well as sovereign governments throughout the world.  He has a very informative newsletter ( Energy Advantage) that is cutting edge expertise.

  94. Pharmboy

    Goldman- Here you go on
    Corporate cash reserves
    ….

  95. Pharmboy

    gel – PIMCO and China wanted better prices, then China "revalued" their currency.  TBT is a dead horse for the rest of this year and most likely next.

  96. JRW III

    matt,
    I certainly hope that you are thoroughly enjoying yourself here !! (And are uncovered on your FAZ)

  97. goldman

    Thanks Pharmboy for the link…exactly what I was searching for!  Didn’t know the hording has been going on since 1982, along with the media craze history on the topic.

  98. RMM

    Phil: holding on longer to IWM and DIA puts ?

  99. amatta

    JRW seems it is not breaking through the 62.90… get out now?
    Thanks

  100. Jbur

    Phil, posted this late last night. Just wanted you to know the hedging piece was great.

    Jbur
    July 22nd, 2010 at 1:12 am | Permalink  
    Phil, I read, re-read, and then printed out your 6:43 post to Dflam on hedging. Very nicely laid out, and very much appreciated. Why in the world does hedging seem so counterintuitive, so unnatural? Like doing acrobatics. Are we that programmed to think the market will only go up?

  101. JRW III

    amatta,
    Patience is a virtue that you had better hurry up and learn 8-)
    As Phil says, "when in doubt, sell 1/2"

  102. gel1

    rainman
    I totally agree with you…. our society is raising kids to be part of the entitlement class.The kids today are morphing into a new form of useless protoplasm, most are physically unfit, lazy nitwits that sit on their computers playing games. Very few engage in learning the work ethic, or even engaging in competitive sports which might prepare them for the challenges of the future. In my area, the parents buy these misfits BMW cars in order to get to the high school. More than half of them are into drugs. Like all societies, we eventually will follow in the footsteps of the Roman empire, as we rot from the inside out. I blame the entitlement mind set that has taken over our youth (parents as well).

  103. RMM

    gel1: its not entitlement, its spoiling in order not to have to deal with them

  104. jromeha

    Phil/JRW – thanks for giving me confidence to stick with my shorts! I heavily shorted the futures this morning (in preperation for the expected bad news and doubled down after reading your comments. My account was getting destroyed, but after doubling down and just cashing out now I have just had a bad day :) ! It sucks to be down on a big up day but thanks to you both I am not down as much.

  105. sydney99

    Tuscadog , i aggree with your comments
    i have been struggling with website, new user

  106. rstuart4201

    Phil,
    re: Shatner and Larry King — lol
    European stress tests – Given that we are toppy here, could positive stress tests be enough to break through 1,100 on the S&P? If the tests come back lower than expectations, should we see an accelerated decline to the low end of our trading range with financials leading the way down?

  107. Phil

    Volume/Rainman – Oh yes, Dow volume at 11:30 is 69M, about "average".  Yes, I watch it every day and it’s live on ETrade Pro, which is the only place I’ve ever seen a good tracker for it.   I like the Dow volume because it’s the Dow that is usually used to manipulate the markets (just 30 stocks to push around) so a great early indicator.  What we have decided is "normal" in this low-volume environment of the last year is 50M at 11 and 20-30M per hour with 140M at 3pm about what we consider "stickable" since we usually end the day at about 200M so that last 60-70M can really shove the markets around when they are 50% more than the day’s action up to the last hour. 

    Copper $3.18 – now we’ll see what’s what…

    MHS/Jossie – Profits are up 14% from last Q when they were at $45 and now the stock is at $50 – makes sense to me.  Yearly growth about 10% so probably safe enough as a long-term position but if you’re not selling calls to produce an income, I wouldn’t bother. 

    CGA/Gel – Are most of their sales just in Xian or have the grown enough to distribute to other provinces?  I would be concerned as to whether they complete the highway with all the government slowdowns otherwise what is the long-term plan to expand?

    Treasury/Pharm – Worth watching but there has been so much hype keeping rates down plus the Fed promising endless easy money, as if it’s just a decision they get to make.  As I mentioned this morning – Germany has now had 3 failed auctions this year – we’re next….

    You are very welcome Acorba – that’s great!   When you have a big winner like the $105s and you want to take them off the table but fear regrets, you can buy the $107s, which have a lower delta but still have nice upside on momentum and then you can stop out your $105s without fearing what you miss.  If the Dow heads lower, you can sell 1/2 or 3/4 the $105s to some other sucker and you are in a bearish call spread with a low delta.  If we bottom out, you can either kill the spread near even or just take out the callers and leave your speculative longs.  Next time it happens – ask me and we can go through it as an exercise in day trading.  It would be good for everyone to go through the logic of that.  Very good job with patience and focus.  As a reward, watch "The Man Who Planted Trees" (again, I hope) and realize how fast you are coming along by learning to take it slowly!

    Mattress/Jdub – We roll up the Dec $102 puts anytime we can do so for less than .50 per $1.  So far, we have had 2 roll-ups at .45 and .40 (this morning).  That’s an ALWAYS play that is part of owning the position.  So it’s the same play but, as the market goes up, and you beat the putters, that money is used to improve your long position, which keeps you in position to sell more aggressive puts on the way up (although the sale of the $102 puts, at the time, were aggressive already)

    Tax Cuts/Pstas – What you are surprised that a couple of Congresspeople are selling out and taking cash from rich guys to vote against their party and keep giving Welfare to the wealthy?   We wouldn’t be in this mess in the first place if Congress wasn’t full of weak-willed men of low moral quality and althought the MSM will make this seem like a major break in the ranks – it’s not going to be enough to stop the will of the party in the long run.   Singing POWER to the PEOPLE….

    Attention deficits/Rainman – Me too!  Wow am I sickend by the way other people raise their kids.  One of my daughter’s friends only drinks Dr. Pepper because "it’s all she likes" – there is this mania to keep them constantly entertained as if parents are terrified their ratings will slip if they can’t keep the show going.  Birthday parties are a nightmare too with like 10 activities scheduled for a 2-hour party – the whole concept of sitting still and talking to someone is totally foreign to most of these kids.  My kids like to read books and thank goodness they have each other to share it with because their friends don’t read any book unless there’s a movie…

    Weeklies/RN – Well they are interesting.  We are conducting a SPY experiment from yesterday so we’ll see how that goes.  I like that spread but you are a wimp.  Think about it.  Your delta on the Aug $47s is .33 and the delta on the 7/30 $46s is .44 so you can sell 7 (7 x .44 = 3.08) vs 10 (10 x 33 = 3.30) and you still have a positive delta.  More importantly, the Aug $48s have a .20 delta and both of you have far better Theta (1 week vs 3 weeks) so even if the Qs pop $46.50 and look to be giving you trouble, you will very likely have an even roll of the 7 7/30 $46s to 10 Aug $48s about even, putting you in a cheap $1 bull spread at worst. 

    $2Tn/Goldman – Well it’s usually about half of that for one thing.  The main point is that they don’t need the banks to lend them money and they can weather a storm – two things we didn’t believe a year ago.  Also, once banks do start lending, having that kind of cash laying around can lead to a major M&A frenzy – there are already signs of this starting up, people just don’t understand the lead time involved in these deals.  Cash reserves don’t lead to hiring, more often the lead to M&A (firings) or capital equipment expenditures (efficiency and firings) and rarely to expansion as companies that are actually expanding don’t generally accumulate a lot of capital (AAPL being a big exception).   Also, I can’t believe you left out GE, with $72Bn in cash and $51Bn in short-term investments, which is more than double what they had in ’07 or ’08 and they’ve also dropped $300Bn into Net Receivables, so that will be nice when it comes in…

    TBT/Gel – It still does seem inevitable but boy do we need to be patient.  Still, it fulfilled it’s function as a hedge on our cash, which was near 100% at the time as our dollars are up over 10% in buying power while TBT has fallen and that was kind of the point of the hedge – to protect all of our sidelined cash.  

    Parent’s/Kustomz – As SS starts failing to support older people then parents may find themselves supporting their kids AND their parents – not conducive for their own retirement planning! 

    BIDU/Rexx – I’ve never changed my mind that about $55 is the right price for them if GOOG is still in the market.  Easy to see $75 without GOOG but I don’t thinkk GOOG is going out of China. 

    Dow volume creeping up towards 90M at 12:30, that’s a little hot all of a sudden and not a good sign for bulls that volume picked up but we made no progress

  108. shadowfax

    gel1
    The baby boomers don’t expect social security, medicare, or even their retirement plan for the few that have one to be there when they need it.

  109. gel1

    Pharm/TBT
    I believe most everything you post, and I am not saying you might be wrong in this case, however there could be a flaw in your prediction. Should the equity markets start to show promise, and this certainly could materialize over the period of time you have cited, then LOOK OUT – the rotation out of bonds will be parabolic, as investors seek better returns. Who wants to miss the train? This rotation is self-feeding as the money out of bonds floods the equity markets with new money and buyers. I believe this is the historical pattern, and I believe it will be repeated. A change in the political balance in our government ( maybe November, eh ) could be the catalyst that puts this in motion.

  110. gmarts

    Can anybody explain what’s happening with GS today? Down .2% on a madly up-tape day?

  111. shadowfax

    JRW
    TBT is falling, what is the theory with IWM?

  112. gel1

    Phil/CGA
    I do not have the stats on their distribution profile, however they are targeting the ever expanding middle class that is now larger than our entire population. Revenue and bottom line profits are still tracking a very precipitous pattern. Their recent stock weakness was a result of a profound effort to short the stock. The company had been using a small accounting firm that they were comfortable with, but have recently engaged one of the "big four" for this purpose, which will put more confidence into the investing public. Their new $38 mil facility allows them to expand from 90 different fertilizers to 148. The Chinese economy is still expanding at close to 10%, in spite of the recent government induced contraction, but the middle class keeps getting stronger, and I have no concerns for the economy in general. China has just taken over the # 1 position as the top energy consumer in the world. There is still many terrific choices in China for equity investment, IMO

  113. JRW III

    shadow / TBT
    $ going into bonds (out of stocks) should indicate a move down; but it’s only trending lower, not failing so …………

  114. Cap

    BIDU if anyone is interested, from an analyst at a small research firm:
    Baidu, Inc. (Hold)
    While BIDU’s Results and Guidance Beat Consensus, Upside to Stock Price Becomes Limited
    Baidu, Inc. (BIDU, $73.31, $25,581mln Market Cap, Hold, $79.00 Price Target)
    BIDU (Hold) reported strong 2Q10 results that beat sell-side consensus estimates and provided 3Q10 guidance exceeding consensus expectations. We believe the earnings results and guidance have unified sell-side consensus and buy-side expectations. The unification, in our opinion, could signal that the stock has reached its upside potential. Therefore, while we believe BIDU can grow significantly, as we have modeled, due to aggressive sales force expansion and improvement in its search technology, we believe upside to the stock is limited. We maintain our Hold rating and price target of $79. In addition, we believe there is a fundamental issue in BIDU’s business operation — the lack of a thorough and effective system to prevent BIDU from becoming involved in illegal businesses conducted online, which presents an ongoing risk to the business and stock.
    · 2Q10 results exceed Street expectations, credited to FIFA event — BIDU reported strong 2Q10 results with revenue of $282.3M, 48% Q/Q growth and 74.4% Y/Y growth, above the high-end of guidance of $268.1M – $274.0M and the Street at $276.7M and our $272.5M estimate. GAAP EPS of $0.35 beat consensus of $0.31 but was in line with our estimate. The revenue outperformance was driven by the World Cup event, which generated additional traffic that led to a higher number of clicks. BIDU ended the quarter with an average of 254K active online customers, 15% growth from 1Q10 or 33K new customers while ARPU increased about 29% Q/Q to RMB7,533 from RMB5,852 in 1Q10.
    · 3Q10 guidance above consensus — BIDU guided 3Q10 revenue to a range of $324.4M – $333.3M, representing 15% – 18% Q/Q growth, versus consensus of $321.6M (16% Q/Q growth) and our estimate of $325.2M (19% Q/Q growth).
    · Tweaking top line, 2011E EPS remains unchanged — We have made slight upward adjustments to our top line projections. For 2010, we slightly raise our revenue estimate to $1,174.0M from $1,147.6M and for 2011 to $1,660.0M from $1,610.0M, representing growth of 79.2% and 41.3% Y/Y, respectively. Our EPS is unchanged at $2.08 in 2011, and our 2010 EPS estimate goes to $1.45 from $1.44.
    · Unification of views regarding BIDU’s growth from both sides of the investment community — We believe prior to BIDU’s earnings, the Street consensus was relatively more conservative in its projections for BIDU’s growth than the buy-side (consensus was based on the company’s guidance, which turned out to be conservative). However, post earnings, we believe the gap is likely bridged. As such, we believe the expectation for BIDU’s growth could be fully reflected in its stock price, and upside is limited.
    · Valuation — We maintain our Hold rating, as we remain concerned with regulation risks pertaining to BIDU’s business. Our $79 price target is based on a 38X PE multiple to our 2011E EPS estimate of $2.08.

  115. Cap

    JRW; I see 63 IWM as a pretty strong resistance area; and the action the past hour or so is confirming that.
     
    Given the FMD dynamic, will be interesting to see if they can break higher today or not.
     
    conditions still favorable; I expect a move by 2 pm, maybe 1:30.  For the market overall as well.

  116. chaps

    gel/TBT:
     
    Noises of China backing off treasuries is probably just that: noise. What is China going to do? It’s pretty clear they’re dedicated to remaining export driven. The trade imbalance is not going away any time soon. It was temporarily reduced by commodity stockpiling, but they won’ t do that forever. Now that the stockpiling is easing off, trade imbalances are increasing again.
     
    So they’ve already taken lots of dollars and stockpiled commodities. Stockpiling more and more gets very risky for them. They can sell dollars for other currencies or assets based in other currencies, but that just kicks the dollar problem down the road to someone else.
     
    Finally, they can swap US dollars to buy Chinese assets. That means instead of buying huge amounts of dollars for renminbi from Chinese exporters, the PBoC would switch to being a buyer of renminbi, causing the currency to skyrocket, wiping out the export industry and causing unemployment.
     
    US trade imbalances that the trade surplus nations (China, Germany, Japan, etc.) don’t want to address mean they must own dollars.

  117. biodieselchris

     FWIW it looks like the BDI finally put in a bottom. That was a long ride down though. 

  118. rainman

    gel1/phil/kids/competetive sports — that’s another one that burns me to the core. That "no one loses" attitude schools have now (which is why they don’t play competitive sports — someone has to lose!). I don’t know how that got going but it certainly isn’t helping. Do schools even use a bell curve anymore?
    Soda — I once saw a morbidly obese kid (well maybe 23) at a convience store at 4:30 in the morning buying 2(!) 64oz sodas. I couldn’t believe my eyes. These things were so big, you couldn’t hold them in one hand. I watched in amazement as he pushed the two cups to gether an got them off the counter without collapsing the cups. He looked to have experience doing it. At what point do you say "eh,… maybe one is enough"? Next they’ll be putting the damn things on wheels!

  119. biodieselchris

    Interest rates cannot stay at a 50-year low forever. That’s why it’s called a "50-year low." Buy a house, lock in the rate and always have TBT a few months out for sh*ts and giggles if nothing else. When the snowball begins to roll, go hard -Whether that’s tomorrow or 18 months from now.

  120. amatta

    That was certainly not fun… I knew I should have exited TZA after the persistent bounce at 62.90… Damn!

  121. biodieselchris

     FXY has more downside than up, maybe a few puts are a good idea.

  122. Phil

    YRCW/Rn – Yes, 1/2 out which makes the other half free so now we can just sit on them for a year (another 1/3 out at .50 locks in a double with 2/3 still on the table). 

    Puts/RMM – At least until 2:15 (or stops) - then fear of stick becomes too great.

    Thanks Jbur – Yes, it is counterintuitve because you have to accept the fact that you are fallable and that you have a very good chance of being wrong in your brilliant stock picks.  It’s a recognition that the market could go either way for any reason and it doesn’t matter how "right" you are.  Everyone likes to think they can pick things – that’s the reason we like gambling but no matter how great your edge through research or TA or entrails – you still will be lucky to go better than 60/40.  Even I have trouble accepting this, except in Biotech, which I firmly believe is a true quantum event every time and my plays reflect that.  

    Najarian making a good point that UNP numbers were fantastic.  What is wrong with investors anyway?  Buffett bought UNP, his biggest buy ever and what did people think – that he has totally lost it and was overpaying for a railroad at the beginning of the second Great Depression?   If there’s one thing that gave me confidence that we had seen long-term market bottoms – that was it and now earnings are confirming that Buffett is still on the ball (and he actually survived the first Great Depression).

    You are right Gel, the Entitlement mindset is rampant in the entitled class that buys their kids BMW’s to go to school because they take and take and take from this country and refuse to give anything back and then, when they screw up and wreck the businesses that their employees entrusted them to manage effectively (paying them a hefty portion of their labor profits to do so) they go crying to the government for bailouts and tax breaks.  We should cut them all off without another red cent by taxing all their excess profits and putting the morey back into the hands of people who really do want to work for a living rather than paying $15,000 for the leather interior on the kids’ beemers.  I have never agreed with you more!

    Good job Jrom – holding overnight has been a disaster for bulls and bears lately.

    Stress tests/Rstu – Those could go either way.  EU companies and government people are scary honest compared to what we are used to.  David Cameron took a trip to the US and flew coach!  Not only that but they took the train from DC to NYC (at least it was the fast train).  Those guys are serious when they say they are cutting back – I think he really went to the White House to get a free meal….  8-)

    GS/Gmarts – They are very strange but I think weighted down by too much call buying and the powers that be are trying to figure out what to do with the callers before moving the stock. 

    CGA/Gel – They must have a lot more than 200 employees now?  I think China is a still a great investing premise but I’m not sure if feeding them is the number one issue.  I just don’t like Chinese firms because it’s so hard to do FA on them and also difficult to keep on top of news of the stocks you hold so I’m more comfortable with short-term directional plays than long-term holds.

    BIDU/Cap – I agree with that outlook.

    If we fail this run back to morning highs, then we can add more short plays I think.  1,100 should be tough for the S&P wihout a strong catalyst but the EU stress test is a huge wild-card.  The EU did get a stick at about 2:30 and all finished at highs of the day, up about 2.5% avg

    China/Chaps – Great points and people should keep in mind that, for China, 10% unemployment is 140M people walking around without jobs.  The are not going to do ANYTHING that even has the possibility of leading to more unemployment. 

  123. amatta

     JRW are you out too?

  124. cslanson2

     Phil,
    I’m looking at selling the Naked Puts on TBT at the $20 Strike Price for Jan/2012.  Is my calculation correct that to have the shares Put to me, the 10 year would have to be at or below 2.00 %?  Plan to use the proceeds to buy a $40-$55 2012 Call Spread?
    Thanks

  125. gel1

    rainman… yes, 75% of our population is overweight, many of which are obese. This is to some extent attributed to poor eating habits and nutritional imbalances, BUT, I believe the largest contributor is the lack of physical activity, and in turn replaciing this with TV watching couch time, and playing games (or watching porn) on a computer. It is no wonder that Mexican immigrants have taken over our building trades and landscaping service industry – it takes physical conditioning to do it well. Our natives are too fat and lazy to perform this physicially demanding work.

  126. kustomz

    BLK MA up big on vapors..every neuron in my body says these are a short, maybe I’m just crazy

     

  127. JRW III

    amatta
    No, I’m still in TZA; should have sold 1/2 back at IWM 62.90 but…………….I think we close lower, but if "they" break up (over 63.40), I’m all in TNA !!

  128. rexx

    BIDU/ how to trade that?
    remember BWLD -Sep 35 Put/ + Sep 40/45 C? Now coming back strong, thanks.  r u keeping or selling.

  129. gel1

    Phil/Corporate profits
    I love the model Apple is following… the CEO (Jobs) is not taking out huge income for himself and buying fancy clothes – the profits are organicially invested into new innovative products that expand the revenues.

  130. jdub929

     Sorry for this Phil, but now I’m totally lost on the mattress play.  
    So originally it was Dec 102 P w/ 1/2 Aug 102 P sold against it.
    Adjustments made which I have questions with:
    -Buy DIA 106 C for 6.90 and 1/2 Aug 102 P-you bought those 102 P right?
    -Rolled up Dec 102 P to 103?
    So is what we have Dec 103 P/Aug 102 P sold against it (2:1 ratio) AND DIA DEC 106 C/Aug 102 P (2:1 ratio)?

  131. kustomz

    "75% of our population is overweight, many of which are obese" music to Pharms ears ARNA :-)

    Its about frivolous Gov spending Phil, taxing us more is not the answer but I get your point on how the super rich game the system and 90% of the population pay for it. Like getting blood from a stone

  132. allan292

    Phil – What do you think of a bullish earnings play on CTSH next week? The theory is that: they’re an  Indian IT services outsourcer, have beaten expectations in all prior quarters and are trading at an all time high. If the sentiment on PSW is correct and US corporations are going to continue screwing the US populace by outsourcing jobs and cutting wages in the immediate short term this could be a good one. Thinking of an Oct call spread with the 55/60s for a net dr of 2 with Oct 45 puts as cover for .85 for a net 1.15 on a possible 4:1 payout. The stock hasn’t seen 45 since Feb, so I’m thinking that this may play out pretty well.

  133. Fein234

    Phil, etc. / Dow Volume / another reason TOS is awesome — You can watch real-time Dow volume in a TOS watch list along the left pane (or in its own window) if you customize the list to include volume. I have an indices watch list to track $DJI, SPX, RUT, COMP, and NYA to try to keep up with Phil’s levels. What’s even cooler is TOS’s ability to link to Excel through what they call "Dynamic Data Exchange" (DDE). The possibilities are basically unlimited, but for example, you could have real-time quotes for the 5 indexes with their volumes alongside, and with some basic excel conditional formatting, make these change to red/green at specified levels, etc. For more info on the formulas and how to activate it, check out this detailed blog write-up at the link below. Now, if TOS would only get foreign index quotes (I asked customer support and they have no plans to add this as of now.) http://readtheprospectus.wordpress.com/2009/09/06/linking-excel-and-think-or-swim-for-streaming-real-time-calculations/

  134. gel1

    Chaps
    I believe the sentiment for holding US treasury bonds by the Chinese,  will come down to the prevailing yield rate. They have some of the savviest bankers in the world, and their money will go where it gets the best return for their risk appetite at the time. They have been (of late) rotating out of the longer term treasuries into the shorter term stuff – they obviously are fearful of inflation on our shores, as the longer term bonds will be hit the hardest. With the debt levels we now are financing, we are at the mercy of the market forces as they evolve. The Fed can not absorb the largest share of the bond sales forever. The rates will definitely trend upwards, particularily when other asset classes start to look more attractive. Supply/Demand/Price will always be in play, and the markets will make the decision for us.

  135. 42laurel

    hold or sell dia 99 puts?

  136. jdub929

    Kass just tweeted he’s back long the TBT.

  137. lionel

    Watching this market is as exciting as watching a Computer vs Computer Pong game on Atari VCS2600.

  138. allan292

    BTW – I have 3 boys (ages 14, 6 and 3). The 14 year old is a star soccer player and just got accepted into a public charter engineering school which is one of Newsweek’s top 20 high-schools in the US. You know what I tell him every day? – You’re not competing with the 100 kids in your graduating class kid. You’re competing with the 100,000,000 strong graduating class of  2014 in India, China and Russia combined and those cute little "undefed and underpriveleged" kiddies are going to eat your lunch if you let your guard down even for a second.

  139. gel1

    kustomz… ARNA is a part of the solution… the big difference will come when the parents of these loads start to recognize the kid needs a baseball glove more than a new computer. Also take away the BMW and buy them a bike to get around on.- might be a good idea to teach them the dynamics of lawnmower operation. – one you push.

  140. gel1

    allan… RIGHT ON!

  141. rainman

    allan292/competing — Kudos!

  142. kururi67

    Seems like BAC and AAPL have a cap on them, can’t really break out… not sure what that means.

  143. jdub929

    Kururi--possibly weekly options

  144. rainman

    Fein234/TOS — don’t you think TOS’s commissions/Fees are on the high side? I’m not even sure I fully understand all of them. 

  145. kururi67

    Thanks Jdub!

  146. SeanC

    Phil: back to the question of a covered call situation where the stock has quickly run up past strike price:
    June 9, bot VOD at 20 and on June 23 sold Jan 2011 22.5 call for 1.15; now the stock is at 22.78, and the call is at 1.75.  three options:
    1. close everything: 11.6% return in 40 days
    2. wait till Jan 2011: will make 19.4% if the stock holds at 22.5 in 6 months.
    3. buy back the Jan 2011 22.5 call, sell 2012 25 call for 1.75.  total return 32.6% in 18 months, if the stock is at 25.
    I think you suggested option one: obviously that is the surefire way to 11.6%.  But I will have to deploy the proceeds somewhere, which will have risks. 
    Your thoughts?

  147. lflantheman

     Trading AAPL……Selling July 260 weeklies as covers over August 230s, for 1.35 or so.  Expect a pin at 260 tomorrow, but even without a pin we’ve gone up enough to expect a pullback tomorrow.  

  148. kustomz

    goldman, by frivolous spending I meant the salaries of Gov workers (Congress) ;-)

    gel, on point, parents are to blame and all the distractions (video games, social networks etc.) makes their job easier to offload their responsibilities. Short term its wonderful but in the long run when kids grow to be adults the effects will come back to bite the mommies and daddies in the butt.

    These big moves in the futures with light volume during the day never turn out well (print long candles) with that said volume is def in stick territory

     

  149. Phil

    Hugh Johnson is on CNBC – He is my favorite analyst name! 

    Notable earnings after Thursday’s close: AMZN, AXP, BUCY, CAKE, CB, CNI, COF, CPWR, CVA, CYBS, ETFC, FII, FLEX, INFA, LEG, MOS, MSFT, NCR, NFX, PMCS, QLGC, RMBS, RVBD, SNDK, SNV, STM, SWKS

    Bank earnings are bearing out my theory so far that you have to be beyond incompetent to lose money when you can borrow at 0.25% and lend 10x at 5%.  Doesn’t matter what bank you look at – they are making money.  And every dime of that money is YOUR money that your government is borrowing at 3% to lend the banks at a 90% discount to that rate (we eat the 2.75% as an eventual cost to the government) so the banks can lend it back to us at a 2,000% mark-up (levered 10 times, of course).  Ah captialsm….

    Note TRV is not a bank and can’t make money by putting their money into "safe" securities.

    One bank that lost money: Credit Suisse (CS): Q2 net profit of 1.6B Swiss francs ($41.5B) vs. 1.23B franc consensus. Weak fixed-income trading dragged on earnings. Recorded a tax credit of 522M francs. CS -1.9% premarket.

    EXC beat by 10%.  You know that analysts haven’t got a clue in the world of what’s going on in the economy when they can’t tell you what a power company is going to make.  Same goes for UNP, who beat by 15%. 

    Help – Apple kicked our asses and we can’t get up:  The situation at the high end of the smartphone market is very tough, embattled Nokia (NOK +6.6%) CEO Olli Pekka Kallasvuo says on the company’s conference call, and unlikely to improve in Q3. The dividend remains the company’s main priority. (earningsDoesn’t affect the stock though as disaster was already priced in.

    Yeah times must be tough: Royal Caribbean Cruises (RCL): Q2 EPS of $0.28 beats by $0.10. Revenue of $1.60B (+18.7%) vs. $1.61B. Shares +9.1% premarket. (PR)

    XLF testing the magic (and very resistant) $14.50 mark once again – very worth watching.  Copper down to $3.158, oil still under $79, nat gas at $4.61 and gold rejected at $1,200 – back to $1,194.

    09:00 AM On the hour: S&P +1.32%. 10-yr -0.19%. Euro +0.89% vs. dollar. Crude +1.04% to $77.36. Gold -0.44% to $1186.50.

    09:30 AM At the open: Dow +0.84% to 10206. S&P +0.69% to 1077. Nasdaq +1.39% to 2218.
    Treasurys: 30-year -0.19%. 10-yr -0.22%. 5-yr -0.16%.
    Commodities: Crude +1.88% to $78.00. Gold -0.51% to $1185.70.
    Currencies: Euro +0.7% vs. dollar. Yen +0.31%. Pound +0.51%.

    10:00 AM On the hour: Dow +1.59%. 10-yr -0.3%. Euro +1.1% vs. dollar. Crude +2.16% to $78.21. Gold +0.65% to $1199.60.

    11:00 AM On the hour: Dow +2.13%. 10-yr -0.29%. Euro +1.22% vs. dollar. Crude +2.76% to $78.67. Gold +0.49% to $1197.60.

    12:00 PM On the hour: Dow +1.97%. 10-yr -0.33%. Euro +1.18% vs. dollar. Crude +2.63% to $78.57. Gold +0.37% to $1196.20.

    12:52 PM Stocks have pulled off morning highs, but 2% gains all around still make a broad rally, with advancers outpacing decliners six to one, and up volume over down volume by the same proportion. All sectors have strong gains, but transports are standouts after strong results from Continental (CAL +3.8%) and UPS (UPS +5.9%): UNP +6.2%; FDX +5.5%; CSX +3.5%

    01:00 PM On the hour: Dow +2.07%. 10-yr -0.24%. Euro +1.12% vs. dollar. Crude +3.06% to $78.90. Gold +0.4% to $1196.60.

    Initial Jobless Claims: +37K to 464K vs. 450K consensus. Continuing claims -223K to 4,487,000.

    June Existing Home Sales: -5.1% to 5.37M vs. 5.66M prior, 5.2M expected. Months supply 8.9. NAR’s Lawrence Yun: "June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months."

    May FHFA Housing Price Index: +0.5% month-on-month, vs. +0.9% (revised from +0.8%) in April. Year-on-year, prices are -1.2%.

    A few more graphs on home sales from Calculated Risk, including Y/Y inventory – which is not seasonally adjusted, and happens to be very heavy. (existing home sales)

    June Leading Indicators: Leading Index -0.2% vs. -0.3% expected, +0.4% prior. Coincident Index flat vs. +0.4% prior. Lagging Index +0.1% vs. -0.1% prior.

    EIA Natural Gas Inventory: +51 bcf vs. consensus of +53 bcf. Futures +2.2% to $4.615.

    Ken Feinberg is set to release a potentially embarrassing report as early as Friday detailing the payouts to financial firms’ top earners during the period when some of them were receiving funds from TARP.

    Regional banks generally are holding up well vs. their big-bank counterparts, without the same worries about how new financial regulations will crimp their business. Regionals including SunTrust (STI), BB&T (BBT) and PNC Financial Services (PNC) are paying less for deposits, which helped fuel higher 2Q profits. (ETF: RKH)

    Even if third-quarter growth lags the first half, the double-dip risk is "slight," NY Fed’s William Dudley says in a regional update. Nationally, manufacturing has been a key growth source in the recovery, behind an unusually pronounced inventory cycle.

    The Treasury supply announcement comes in with plans for $104B in auctions next week: $38B in two-year notes, $37B in five-year debt and $29B in seven-year notes Tuesday-Thursday. It’s the third straight month of lower offerings, vs. $108B in June and $113B in May.

    EU officials’ overt confidence that their countries’ banks will easily pass stress tests has left analysts anything but reassured. "All banks passing the tests would mean the tests were useless," London economist Marie Diron says.

    The euro has passed its biggest stress test, rising 8% from a four-year low last month, but its rally may be little more than a summer fling. Many believe it reflects concerns about the U.S. economy more than improved sentiment toward Europe. "There has been a big dollar component" to the euro’s rally, a Nomura strategist says. "The market changed its assessment of the dollar fairly dramatically."

    Peru’s central bank may buy a record amount of dollars this year to prevent an "avalanche" of investment that would spur gains in the sol and overheat the country’s economy, according to Banco de Credito, Peru’s biggest bank. (ETF: EPU)

    U.S. airlines predict the new financial law will cut their fuel costs as it curbs speculative commodities trading – "a multi-billion-dollar benefit to this industry," Air Transport Association’s James May says.

    It’s who you knowNew stock-picking metric: shares of companies whose CEOs lunch with Obama. Since becoming president, Obama has held seven lunches with small groups of chairmen and CEOs – in four of the lunches, the guests’ companies outperformed the S&P. It’s not a coincidence, some analysts say.

    With the ink drying on a reform law that mandates exchange trading for OTC derivatives, five firms plan a Monday launch of an exchange for interest rate swap futures – a possible boon to CME Group (CME +2.8%), which will clear the venue’s trades.

    The European Medicines Agency defers a decision on GlaxoSmithKline’s (GSK +0.9%) diabetes drug Avandia, which has been linked to heart attacks. The regulator now plans to finish its review in September; the U.S. FDA will also make a decision in coming months.

    Three lunchtime reads:
    1) Tweedy value fund: Skip BRICs, look to Europe, Japan
    2) Three companies with high profits per worker
    3) Reich: The one-and-a-half dip recession

  150. pstas

    Tax cuts- Not surprised at all but I have to enjoy the very juicy irony  --  the seekers of the leftist Holy Grail; that source of most evil in the world, past and present, namely the Bush Tax Cuts; being  bollixed up and it is …………………
    http://www.youtube.com/watch?v=nKxyoud_c-E

  151. Pharmboy

    TBT/gel – long term sure, short term no way.  Japan has been low for years……why, b’c their population started saving and putting those bills in bonds.  What are we doing….putting our money in bond funds and saving, not spending.  I don’t see rates moving anytime soon.  My uncle was the largest bond seller to China, Middle East, pensions, etc.  He sees status quo for the rest of the year ….

  152. Cap

    REITs ridiculously strong today; wassup w/ that ?

  153. Maya1

    Iflantheman,
    sorry, but what’s a pin regarding your last post on AAPL?
    Thanks.

  154. dbarakat

    I think that the government should have given the banks an adjustable rate loans!

  155. rainman

    Phil/EXC -- "beat by 10%.  You know that analysts haven’t got a clue in the world of what’s going on in the economy when they can’t tell you what a power company is going to make.  Same goes for UNP, who beat by 15%."
    They must have forgot to factor in the unemployed using more energy by staying at home! ;-)

  156. 42laurel

    Phil, did I miss reply on hold or sell Aug 99 puts?

  157. shadowfax

    dbarakat
    What’s good for the masses should be good for the banks with teaser rares and ugly resets!

  158. Pharmboy

    Iron Condor from TOS: SPX, Sell August 1135 calls and 1040 puts and buy the August 1140 calls and 1035 puts for a credit of $2.20.  Break-even points: $1037.80 on the downside and $1137.20 on the upside.   75% probability in this trade that at August options expiration that the SPX will be above the $1040 level.  79% probability that the SPX will be below the $1135.00 level at August options expiration.  There are 20 ‘trading days’ left until the SPX August options expiration.

  159. RMM

    Phil: what is hedge of the day ? need more downside protection .

  160. kustomz

    "Bank earnings are bearing out my theory so far that you have to be beyond incompetent to lose money when you can borrow at 0.25% and lend 10x at 5%.  Doesn’t matter what bank you look at – they are making money.  And every dime of that money is YOUR money that your government is borrowing at 3% to lend the banks at a 90% discount to that rate (we eat the 2.75% as an eventual cost to the government) so the banks can lend it back to us at a 2,000% mark-up (levered 10 times, of course).  Ah captialsm…."

    You know how to get my commie juices flowing!! I’ve got the lighter fluid you bring the torches, we’ll teach those capitalist pigs!!!

    They Live – The moment of revelation …guy at the news stand looks just like Jamie Diamon
    http://www.youtube.com/watch?v=BA8drfZwnXQ

     
    Barney Frank …just released statement

    "The problem is that the president and Congress are oriented to growing government and not to growing the business economy, which creates private-sector jobs. President Barack Obama has elected not to take actions that would have encouraged business to create jobs and has generally done the opposite.
    For example, the president could have used the stimulus money to reduce taxes on business. He could have fought to reduce the regulatory burden on business and could have tabled the carbon tax agenda until better times. Unfortunately the president is driven by his progressive ideology and his drive to nurture government and redistribute wealth, rather than encourage wealth to be created by the private sector."

    Breaking news ….. Nancy Pelosi’s head explodes.. luckily there was very little debris and no one else was injured.
     

  161. 42laurel

    Phil, correction, DIA Aug 99 puts

  162. rexx

    DBARA/ Its already adjustble – "Ben, we can only pay you 0.25% this month. Understood?"

  163. JRW III

    Out of TZA at $35.19; TBT climbing. Ready to reload. That was the most disappointing 40 cents I think I ever made !!

  164. lflantheman

     maya1     a pin is where the big boys sell or buy enough stock to hold the price at a certain level, so as to collect on their calls or puts.   It’s like fairies.  I believe it occurs but I can’t prove it.  

  165. lionel

    Come on push team! Let’s move out of this range

  166. lflantheman

     Sold GOOG Sept 480 calls for 60% profit in under a week.  Expecting a pullback on GOOG, then reload.  

  167. rainman

    kustomz/Pelosi — That got a laugh out of me.. I think someone should doctor a youtube exploding head video with her image.

  168. amatta

     JRW, 
    You still have a feeling of an anti-stick? 

  169. Maya1

    Iflantheman,
    thanks!

  170. gel1

    Pharm/TBT
    I have to compare PSW to "Sagebrush", as it is composed of much "Sage" advice. I believe experience trumps theory, and your uncle may very well be accurate in his opinion. I, with all due respect, think it will a long time before the US "shop til you drop" consumer will become interested in saving their financial resources. The average consumer is maxed out on their credit cards, and our population is driven by the the very clever advertising dominance we experience daily.  Even high school kids have to carry the latest cell phone. (thanks Apple for doing your job so well). They don’t need it – it is just a status symbol.  I bet none of them brag about their savings accounts.  Our society is so different than the more responsible Asian culture. – just my "less than expert" opinion.

  171. acobra65

    Yes… teaching your kids… I grew up on  farm in the midwest working before and after high school and working my a** off in the summers and during college for college tuition, room and board. It is difficult for kids today to duplicate this experience in the city, especially with the peer group around them.  When my oldest daughter of 4, now 25 was 17 and wanted a car. my bargain was… "I will pay for 1/2 and you work, save and pay for 1/2… I will not buy you a car!!!  All her friends have MB, BMW etc.  When it came to buy the car, I bought a 74 E420 MB in excellent condition at 20% below wholesale ($7,500) on Ebay in Maryland.  We traveled by bus at night through Chicago, Cleveland to Maryland, so I could introduce her to the unfortuante people with less…. And we discussed this topic on the return trip in her "brand new car" how fortunate she was to own her own car with no payments.  The car lasted her till age 24 during college and after and she sold it for $2,250.  For several years, her friends thought "she was SO LUCKY to have her dad buy her a MB". BUT, she informed them without hesitation… she bought the car with her money. Today, after graduating from AZ State, she works two jobs, drives a newer MB (bought on Ebay at 10% below wholesale) and makes sure it meets all maintenance and keeps it spotless….. cleanest car I have ever seen.  Guess she learned something………..  

  172. stjeanluc

    Phil, any suggestions for earning plays on AMZN, MSFT and AXP. AMZN is always good for some fun around this time! 

  173. gel1

    Out of my AN positions with nice profits… rolled it into BTU March short puts, for what I think will be a nice ride.

  174. JRW III

    amatta / feelings
    I try not to have them when it comes to the market !!  I’m hoping for a great opportunity at IWM 63.40; I really don’t care which way.

  175. kustomz

    Oil should be over 80 tom, storm brewing and everyone upping guidance…XOM still looking cheap?

  176. yodi

    Hi Phil
    On the mattress play shall we buy the rest of the aug 102p 50% profit to resell again on the next drop down or shall we hold to experation thks

  177. Pharmboy

    Gel – LOL!  Oh yeah, we agree there!  And UR expert opinion is most welcome anytime!!  Now, back to the gambling table, er, the market.
     
    What’s going on with RDY? 
    BIIB from the other day is ROCKIN"……

  178. lflantheman

     Note YRCW pop today.

  179. jomama

    Pharm, quick question – so i couldn’t tell from your response yesterday but do you think GSK has a viable HIV drug?

  180. savitri

    Hi Phil
    what do you think of dxd-- jan 11 25/29 call for 1.40 dr --sell jan 25 p for 1.95-- net cr of .45--am i looking at this wrong--as a hedge
    also what do you think of rrc

  181. amatta

    Yea I meant since it is bouncing back from the 63.39…

  182. Cap

    Remember; FMD … don’t be a hero ….

  183. rainman

    SPX — I’m thinking those gaps in the most of the indexes on that last runup/down are the bots testing the waters for something…

  184. yodi

    JRW III Hi,
    are you in TNA at 13.56 ??? thks

  185. gel1

    I believe our society will be in decline, until we focus our efforts to influence our offspring.  After they are able to walk, we need to develop their brain and body with equal importance. Later on, work on values and character, and instill the benefit of competitivness. Unfortunately, we have religated this responsibility to educators, nannies and the influences of the kids they believe to be roll models. If you can train you dog to respect, love and obey you, then why not do the same with your kids. They can be made into whatever you want them to be, and you will do this if you have graduated from parenting 101 – not a drop-out!

  186. edro00

    Fein
    Must be me but I just spent 10 minutes looking on TOS on how to customize the watch list gadget  to include volume- never found it.
     
    Please – instructions, thanks

  187. gel1

    Sorry for all the rants today…. but it is a subject that frys me – watching our greatest resource totally squandered.

  188. pstas

    TBT/inflation/deflation:
    Timely and good discussion of this issue as I have been slowly tossing in the towel (albeit , piece by piece) on TBT. I made good money on the way up and now am giving it back and maybe then some. Just seems like I am fighting the tape despite the fundamentals.
    For those interested, I read a good piece on this subject from a fund- East Coast Asset Mgmt-
    http://www.marketfolly.com/2010/07/consensus-versus-variant-perception-in.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MarketFolly+%28Market+Folly%29
    Some interesting points especially on the "flood to fixed income"
    It strikes us as absurd to agree to receive 3% plus a record low corporate spread (145bps) to loan
    money only to receive your depreciated fixed principal back in the future. Yet, investors
    have moved over $450Bl of net new funds to this asset class over the last 16 months. If
    yields move from 3% to 7% which we believe they will (at the very least) and corporate
    spreads widen to 350bps from 145 bps, we expect the Barclays Aggregate Index with an
    average maturity of 7 years to correct between 25 – 40%. This will be a catastrophic
    shock to the unknowing individual investor who has allocated out of “risky” equities and
    into “safe” bonds.

    Perhaps wishful thinking on my part but maybe  – if someone starts beating the drum on the potential "catastrophic shock", there may be some movement on TBT, etc. despite the FED.
    Also interesting point regarding hedging for the ‘inevitable inflation" – no mention of shorting Treasuries nor bonds in general- just invest in quality companies whom have pricing power going forward. So, the premise stands but the vehicle changes?
    So, who has pricing power? XOM certainly; others?

  189. augrusot

    Phil, What do you think about Visa?

  190. kwan

    ToS/Excel – nice link fein234

  191. Pharmboy

    Jo – yes, SK1349572 (integrase inhibitor) is the only standalone agent in the pipeline to withstand the dominance of cross-class fixed dose combinations (GILDs drug).  It is a better Isentress (MRK).

  192. Pharmboy

    Remember, PFE and GSK integrated their HIV franchises into one unit…..

  193. mtan

    edro00
    Right-click on your column headings in your watchlist gadget and go to customize….

  194. JRW III

    Come on !!!!!  We’re at the 5% rule from Monday, a Major Trend Line; we should reverse !!
     
    In TZA at $34.66

  195. lflantheman

     JRW….Agree

  196. JRW III

    yodi / 13.56
    What is that??

  197. amatta

     JRW,
    What’s your take here?… a lot of chop around the level huh?… got burned quickly on TZA on what I thought was a bounce off the 63.39 level. Then it just broke upward…

  198. matt1966

    Did someone just decide this nonsense has gone on long enough?

  199. yodi

    NFLX down 13.59  11.3% !!!!!

  200. kustomz

    Every major currency weaker to the dollar/yen and gold higher..hmmm

  201. yodi

    JRW III
    July 22nd, 2010 at 2:41 pm | Permalink  
    yodi / 13.56
    What is that??  NFLX is now down 14.75  today  trading at 104.80 for any one trading the stk
     

  202. JRW III

    "They" are in control, "they" control the horizontal, "they" control the vertical……………….
     
    Out of TZA at $34.86; not in TNA yet, but…………..

  203. ajaytoo

     Fein234 / TOS – Wow, cool. I just started playing with the gadgets and saw the Live CNBC TV feed too.

  204. Phil

    TBT/Cslan – Actually figure TBT will drop 2x the % of the move in treasuries so a 20% drop in the 20-year to about 2.5% would knock TBT down 40%.  That is the theory but the ultra-ETFs also decay over time so you won’t get a perfect track.  Even using TNA won’t give you an exact result.  We weren’t worried about it because we were thinking rates would more likely go to 4-5% range and shoot TBT much higher. 

    BLK/MA/Kustomz – Not crazy in logic but crazy to jump in front of moving train at the moment. 

    So a big dip into 2:30 stick that breaks us to new highs would be a perfect finish – let’s see if that’s the program that’s running.

    BIDU/Rexx – No way to play them right now, could go 20% either way.  As to BWLD, it’s on track, nothing to do really. 

    AAPL/Gel – All CEOs should be limited to 10x average pay and all other compensation should be in stock.  I don’t know why shareholders put up with anything else. 

    DIA/JDub – No.  I don’t know why it says buy DIA $106 calls, that has nothing in this world to do with a Mattress play.  The current stance, and it really doesn’t matter what you started with or what you had or what you rolled or what you didn’t roll at the time…  is 1x Dec $105 puts, now $6.95, with 1/2x the Aug $102 puts sold against them, now $1.90.  Now that we spent $1.30 rolling Dec $102 puts to $105 puts, we REALLY need to sell something else and our goal is to sell the Aug $104 puts (another 1/2x), now $2.71 but we only want to be 1/2 covered so, at the close, we would buy back the $102 puts and sell the $104 puts, effectively rolling the $102 puts up for $1 if possible and leaving us in 1x the Dec $105 puts with 1/2x the Aug $104 puts sold short

    Taxing bad behavior IS the answer Kustomz.  The more the top 1% impoverish the bottom 90% the more the government needs to take from them to address the imbalance.  If this behavior becomes set (not overturned every 4 to 8 years) then corporations will eventually learn it does not pay to destroy everyone else’s lifestyle and they will learn the benefits of elevating the middle class to reduce the needs burden of the lower classes (just like they learned between 1935 and 1975 when top rates were 70-90%).  That’s another major problem we have with any policies, they only last until the next President so nothing is ever structurally changed.  Yet another reason to have a revolution and start from scratch….  Taxing bad behavior also works on other socially undesirable things like fuel consumption and even soft drinks and junk food and behavior can be changed by government policy but our "freedom to do stupid things" society doesn’t put up with the government acting "in loco parentis" – even though that’s what they are supposed to do in a civilized society. 

    CTSH/Allan – I don’t like them because they are at ATH with a pretty steep earnings expectations.  Currency issues may hit them – I doubt they are as good at managing exchange rates as IBM and they took a big hit there.  If you want to go bullish – why not JUST buy the bull call spread and be happy if they go up and IF they sell off AND yoiu still like them long term, THEN you can sell the puts for a much higher price?

    TOS Volume/Fein – Thanks, I’ll give that a try!

    DIA/42Laurel – Looking pretty grim as we come up to 2:30 target and they are down to $1.03 but they are holding up pretty well so I think stop at 10,350.  S&P still has not made 2.5% (1,097) and volume is now 109M on Dow at 2:22 so stickable but also anti-stickable.  I don’t see us rallying that big ahead of EU stress tests but you never know so back to cash with a nickel loss if we have to.

    Kass/Jdub – Not as influential as I would have thought.

    OH NO – HURRICANE!!!!   Now we have $70 oil. 

    Pong/Lionel – If you and a friend both put on shock collars that are tied to the scores it makes watching the pong game much more exciting8-)

    Competing/Allan – That’s a lot of pressure.  I just teach my girls Mandarin and get them to appreciate Asian cuisine and tell them there’s 20M Chinese millionaires out there and hardly any local girls to compete with so all they have to do is remember to cover their mouths when they laugh and life will be a cakewalk…   8-)

    VOD/Sean – There’s always risks.  How about option 4, sell the stock for $22.75 and buy the 2012 $22.50 calls for $2.80 and sell the 2012 $20 puts for $2.55 so you cash out and spend net .25 to cover the caller and your absolute worst downside case is you are back in VOD at net $20.25 (still with your $2.75 profit) and, to the upside, of course you will be able to roll the caller to a 2012 vertical which will have no pressure on you whatsoever. 

    AAPL/Iflan – That’s interesting, are we going to get weekly pins now?  AAPL is 20% of the Nas so the whole index can get pinned with them. 

    Enjoy your little fantasy Pstas – I am loving hearing all the media dogs howling over this one as if they just got a big, meaty bone.  You guys go from fantasizing about one victory to the other, ignoring every defeat you are handed in between. 

    REITs/Cap – Haven’t you heard?  Everything is fixed today! 

    Home/Rainman – What homes?

    Aug puts/42L – Nope, I’m just behind but you did miss my comment that I was willing to DD at .95 and only take a loss after that. 

    Condor/Pharm – Interesting trade. 

    Hedge/RMM – Anything from the 5 Plays list – we’re in the right spot for them and the VIX not too bad.

    LOL Kustoms – That video wins the obscurity award for the week!  That’s kind of funny because that is how I see the world…   

    Good job Acorbra!  You can be in charge of getting my girls’ tranportation!

    Earnings plays StJean – Not today.  Too iffy to play.  My earnings plays work because I pick the ones that seem obvious, nothing obvious about any of those guys. 

    XOM/Kustomz – Always cheap under $60. Buying XOM is like buying 75Bn barrels of oil for $280Bn ($3.75/barrel).  These are not dumb guys and you have to put Steve Ballmer in charge to mess something this good up over the long run.  They pay a 3% dividen at $59.60 and you can sell 2012 $57.50 calls for $7.90 and $55 puts for $6.50 for a net $45.20/50.01.

    DIA/Yodi – Switching to 1/2 $104 puts on short side by close.

  205. RMM

    Phil: is keeping these DIA and IWM puts for tomorrow ok ?

  206. lflantheman

     Anyone have a good overnight short in mind?  You KNOW they aren’t going to push this higher tomorrow, ……..don’t you?

  207. JRW III

    In TNA at $40.22; I can’t believe it !!

  208. Pharmboy

    Selling Aug10  IWM 66/68 C for 54c.  Hard line to cross there if I am not mistaken.

  209. lflantheman

     AAPL/Weekly pins…..I think they might try to do it.  We’ll see.

  210. lionel

    What a waste of our time!
    It would be much simpler if we go back to the previous morning fixing system. And we could trade SPY at 1095 all day long :)

  211. edro00

    mtan – thanks, works great

  212. drumkeerin

    phil, do you have a backwardization play on AMZN today?

  213. Phil

    DXD/Savit – Keep in mind that $25 on DXD is just down 10% and that’s 5% up on the Dow so you have a VERY strong chance of having it put to you ar that price.   Fine as long as you make plenty to cover it and you REALLY want to hold them for long-term protection.   RRC I don’t pay much attention to but they are land-based so I do like that.  They do not look cheap though.

    NFLX still falling! 

    Safety trap/Pstas – I agree with that 100%.  I’ve been warning people about it for 2 years now and people act like I’m from space telling them that bonds are not safe.  Will be a major shock when it hits (not if).  People don’t get that about stocks – blue chip stocks, even taking into account failures at GM, F, AIG, C, BAC etc are still the safest place to put money and guard against inflation.  They are not good if you sit there like an idiot and watch them go up and down but if you collect 10% selling calls each year against them then they kick the ass of any other investment class by a mile. 

    Visa.Aug – They are good but not cheap.  We shorted MA a couple of weeks ago but I wouldn’t short V because I think they are better but, unless they sell off hard back to the mid $60s, I have no interest long and I certainly wouldn’t short them. 

    Speaking of DXD – I like selling the Aug $27 puts short at $1 as an overnight cover that can be rolled to Sept $26 puts with the money used to buy an eventual bull call spread if the Dow heads back to test 10,500 but I really think we get a pullback from 1,100 on S&P so there’s a 100-point drop in our future somewhere

  214. Cap

    They may jam it higher … 10400

  215. lionel

    Phil/Great movie.
    I totally forgot about that scene. Unlike James Bond I have given up on playing this market up or down.
    I have converted to "their" religion. Now I firmly believe that after a quick 2.5% run up it is perfectly normal to be pinned on the 1095 line for almost 4 hours…

  216. Pharmboy

    Ahh, but with bonds, U get your money back (barring bankruptcy) when you keep ’til maturity.  Now, the money may not buy as much….but it still sounds good to many people right now who invested in the market and lost their tails, options or not!

  217. kustomz

    iflan,  believe they are holding AAPL down so they can jam up the markets tomorrow…

    Bankruptcy filing in Conn up over 20%
    http://www.journalinquirer.com/articles/2010/07/22/business/doc4c487498664e6200788310.txt

    Massachusetts’s
    Bankruptcy filings in Massachusetts soared by 25 percent in the first half of the year, compared to the same period in 2009

    From January through June, 11,847 filers sought protection under Chapters 7, 11 and 13 of the U.S. bankruptcy code, up from 9,461 a year earlier. A Chapter 7 bankruptcy filing is the most common option for individuals seeking debt relief because it can eliminate most obligations after non- exempt assets are used to pay off creditors. It accounted for 77 percent of all bankruptcy filings for the first half of 2010.

  218. snow

    Revolution/Phil
    Here’s one radical glad to see you getting with the program……"Yet another reason to have a revolution and start from scratch…"
    Let’s see, I like parliaments, myself, with a PM instead of a president, and maybe an aristocracy so the moneyed can give themselves titles and provide gossip fodder.

  219. JRW III

    R2 seems to be a bit of a problem, but we still have 1/2 hour to go !!

  220. Phil

    Currencies/Kustomz – EU traders hedging the stress tests.  Gold may collapse if the banks pass.   Check out the bid/as spreads on GLL – they have gone insane.  If you can get GLL Sept $44 calls for $1.20, I like those.

    VMW STILL going up!

    DIA/RMM – I’m keeping mine but maybe a bad idea – very risky of course but covers long-term bullish plays into EU stress tests and I’ll want cover over the weekend anyway. 

    Overnight short/Iflan – Above DXD and, the DIA $99 puts are now $1.02 and soon we should be able to sell 7/30 puts against them

    AMZN/Drum – Not a good way to play when a stock can pop more than 10%.   Especially AMZN, which caused us so much pain on irrational move last year that was relentless. 

    Converting/Lionel – Good man.  Joining them is so much more profitable than trying to beat them. 

    Tails/Pharm – Only if you have a very short-term view.  Even if you are very unluckly and begin buying in 2006, what difference does it make if you continue to buy in 2007-10 and average out?  If you are retired and fully invested in early 2008 and not hedged and we crash – then you are screwed but there were still plenty of fixes through option sales when the VIX was over 60.  When I leased my first office, I got a beautiful building right on the water that was totally vacant because there had been a huge flood.  The last flood before it was 75 years before and we were in the place for 12 years and never even had a puddle in the parking lot but my least started at $6 per foot because of the "risk."  That’s what stocks are like – if you are a true long-term investor, unless the world ends, people will still shave and brush their teeth and wipe their butts and order happy meals and they’ll probably put gas in their cars and watch a little TV when they get home.   They do these things in countries where the per capital GDP is under $1,000 so I don’t really see the risk in investing in blue chip stocks with p/e’s below 10.  So what, if the p/e goes to 20 I get 5% ROI vs 10%?  Still better than bonds.  Add option income to that and it’s not even in the ballpark for comparison. 

    Aristocracy/Snow – Now there’s something we haven’t tried in a while! 

  221. Pharmboy

    Couldn’t agree more Phil, but the reality is they are not investing…..and probably won’t for a very long time.   This crowd here is the few, the proud…the PSW Members.  And the crap they pull like right now as I watch it move DOWN is one more good reason why.

  222. hanna5

    Anti-stick?

  223. Phil

    Wheee!  That was good timing! 

  224. rainman

    Phil/Planting trees — every time you reference watching that movie, I get this feeling someone’s watching me. I’ve been planting 500-700 trees on my acerage every year for 10 years now. I figure I’ve got another 3-5 years and I’ll be done. The results are coming in and I’m liking it!
    Man, rock ‘em sock ‘em (ro)bot’s the last few hours. Whoops! Someone’s getting off this ride .

  225. kustomz


    Phil anyone concerns on this list? Mostly small cap and tech, nothing really to move the markets

    Notable earnings after Thursday’s close: AMZN, AXP, BUCY, CAKE, CB, CNI, COF, CPWR, CVA, CYBS, ETFC, FII, FLEX, INFA, LEG, MOS, MSFT, NCR, NFX, PMCS, QLGC, RMBS, RVBD, SNDK, SNV, STM, SWKS

  226. JRW III

    Out of TNA at $40.46; getting into TZA at $34.56

  227. Jbur

    The sound of hot air leaving the balloon…

  228. samz3700

    LOL – thanks JRW and iwm traders -
    away all day and just made some "fast money" on the downside!

  229. samz3700

    Nice cross on the 3 min stoch right before 3:30 pm

  230. gel1

    Sold naked puts on XOM for a net entry of $54.10 – January 57.5

  231. gel1

    Lloyd giveth and Lloyd taketh away…. just GS doing its thing

  232. acobra65

    rainman:
    What kind of trees are you planting.  My grandfather born in the late 1800′s said to plant acres of walnut trees and you would not have to worry about anything……. Simple solution for simple problems… 

  233. RMM

    Phil: keep my IWM puts62 for tomorrow ?

  234. Phil

    02:00 PM On the hour: Dow +2.06%. 10-yr -0.23%. Euro +1.15% vs. dollar. Crude +3.1% to $78.93. Gold +0.23% to $1194.60.

    03:00 PM On the hour: Dow +2.07%. 10-yr -0.24%. Euro +1.11% vs. dollar. Crude +3.45% to $79.20. Gold +0.27% to $1195.00.

    Sorry PstasGeithner says the administration plans to allow tax cuts for the wealthiest Americans to expire, despite calls from a growing number of Democrats to delay any tax increases, and to extend estate taxes at 2009 rates. He also says Elizabeth Warren would be an "enormously effective leader" if chosen to run the new consumer finance agency.

    And they give it to the poor!  The House passes the $34B bill to extend unemployment benefits, the final step before sending the bill to Obama for signing.

    Vitaly Katsenelson’s charts present a compelling case that the next major country to drop is not Greece, Spain, Ireland or the U.S. – it’s Japan. For starters, its debt to GDP is by far the highest in the developed world.

    Russia’s finance ministry wants to raise the extraction tax on oil and natural gas by 61% next year, followed by smaller hikes in 2012 and 2013. The tax hikes, particularly on natural gas – where Russia holds a quarter of global reserves – "would certainly cause tremors globally," even more so "if Russia inspires America to increase its energy sector taxes."

    "Ladies and gentlemen, the recession is definitely over," Airbus (EADSF.PK) sales chief John Leahy gushes after wrapping up the Farnborough Airshow and winning 130 contracts worth $13B. Combined with Boeing’s (BA) 107 orders worth $10B+ to amass more than three times the number a year ago, some execs declare the global slump over.

    Signs point to a strong quarter for Microsoft (MSFT +3.3%) as companies get around to buying computers after a two-year drought, but its stock may continue to find tough sledding against worries about what will spark growth in the coming years. A dividend hike could provide the needed boost.

    Despite strong one-year performance by top holding Apple (AAPL) – up 66% – in the Tech SPDR XLK, Rydex’s Equal Weight Tech ETF (RYT) has greatly outperformed its cap-weighted peer, returning 24% vs. 13.7%. Offsetting AAPL’s influence on XLK returns is no. 2 holding Microsoft’s (MSFT) return of just 4%. MSFT reports earnings after the close.

    BP’s (BP +0.1%) efforts in the Gulf of Mexico to permanently stop the oil leak are delayed by a storm building over the Bahamas which has developed into a tropical depression. The National Hurricane Center issues warnings for the Bahamas and south Florida. Crude +3.6% to $79.30.

  235. gel1

    rainman… I did the same planting… mine were all AAPL trees…. lots of green fruit.

  236. acobra65

    The country needs Phil as our "BENEVOLENT DICTATOR"…. to give guidance and skip this gridlock in our "Democratic System"……

  237. acobra65

    Second Thought…. Phil would not like the BS in the job and they don’t pay enough………

  238. Phil

    List/Kustomz – CAKE I really like.  AXP may have some default issues or late pay issues with businesses.  COF with retail as they push those cards on anyone.  The Ags I don’t think did so well and SNDK will probably have some pricing pressure.   After this run, the market will not be in the mood for even a hint of bad news from COF or AXP – another reason to be cautious into the close. 

  239. JRW III

    Out of TZA at $ 34.75; too close to EOD !!

  240. kustomz

    AAPL gel… thats a good one :-)

  241. kururi67

    Sold Aug AMZN 130 calls at 2.40……

  242. gel1

    Phil
    The administration will let the tax relief expire, which panders to their base. The forsight of not keeping the tax easing in place until the recession abates just shortens their tenure. We are not out of the abyss by a long shot – why take that kind of a risk for just re-election purposes, when the economic risk and eventual DD will kill your chances for any re-election anyway.

  243. rainman

    acobra65/trees — I think walnuts are good for killing underbrush. Pretty sure their leaf litter is toxic to other plants. Not a bad idea. I’m planting Doug Fir, Western Red Cedar, and Alder. They’re really for my enjoyment (plus a massive tax break on the property — I pay about $1.65/year/acre (how do you make that sunglasses icon?), but they can turn out to be an investment if I need to log them down the road. All my heat comes from wood (house, water, hot tub, shop) so I make use of thinning the stands as well. It all goes into the outdoor wood furnace.

  244. Phil

    IWM/RMM – Same as DIAs, of course. 

    Benevolent dictatorship/Acobra – Like any Caesar, I would heed the call of the people and do my duty.  Anyway, Obama has the right idea – don’t even bother going to concerts, just have everyone come to his living room and play live – that’s a job perk that wouldn’t bore me for 4 years at least…  I would hold court in the Rose garden and I would sit at a desk flanked by an executioner holding a massive axe and the sign on my desk would say "Axe Me Anything" – all those who don’t get the message will be gone in my first 100 days and we can get on with making some real changes….

    Risk/Gel – I agree, why risk letting even more money uselessly pool in the pockets of the top 1%.  The sooner the better! 

  245. dflam

    Pharm : Do u know why ABC is getting pounded?

  246. jromeha

    PRetty ballsy Kururi – they definitely have really high expectations going into earnings so it will be easier for them to disappoint than surprise. We’ll see.

  247. gel1

    rainman… I am curious – What kind of trees are you planting, and what is your plan financially to capitalize on this very aggressive activity?

  248. Pharmboy

    ABC/d – no idea.

  249. kururi67

    Jromeha…. will just roll up and out if they pop too much… plus I have plenty of longs in play elsewhere (AAPL, BAC) to offset…. surfing…..balance…… 

  250. Pharmboy

    SPY weekly expires???? Today or tomorrow?

  251. JRW III

    Well, that sucked; still 5% day but somehow doesn’t feel like it !!

  252. rainman

    gel1/trees — see 3:54

  253. kustomz

    Pharm trade begins on Thursdays and expire the following Friday

  254. Pharmboy

    Thx kust.  Gonna take a shot at a few P to see if they are gonna squeeze ‘em down in the AM.

  255. kustomz

    SNDK getting lumped up along with AMZN

  256. kururi67

    and down goes AMZN…. R.I.P. those 130 calls….;)

  257. Jbur

    JRW, / Anyone,   do you have an idea of what that down spike on the IWM (1 min) at 3:51 was  about?

  258. fjd10595

    wow, some day.  Hard not to expect a pullback tomorrow.  Like someone else said here earlier, I also sold my Google calls  today for good profits.  I think Google goes up medium term, but  it has moved about 6% in 4 days.  Will look to re load after a pullback.

  259. bobhu

    Great trade…kururi67.

  260. drumkeerin

    GEL- do you still like ice?and how are you playing it? thanks

  261. kururi67

    thanks bobhu…. now i just need for my woeful BAC to come back…

  262. rainman

    JBur/spike — hard to say but there’s got to be something to the after hours spikes that correlate to previous/next opens/closes. Have a look at the 5 day with after hours.

  263. 1020

    Todays Youth/Kids  It’s nice to see there is a subject we can ALL agree on…… :)

  264. JRW III

    Jbur / Spike
    Take no prisoners !!  The bots flushing up stocks cheap ahead of their planned move up tomorrow. ( Flushing positions with hard stops)

  265. matt1966

    JRW, that did suck.  I was busy most of the afternoon so had to set a stop for covering FAZ.  Of course it got tripped $.02 from the low of the day before turning the other way.  What’s your feel for tomorrow?  Do you think they bumped on resistence with IWM as hard as they could without breaking it or are we no above the downward channel?  thanks-

  266. dflam

    Phil : Thanks for the SDS $40/$48 Jan.hedge. With the market up today ,I got  the March $40 call at $3.70 whichis the same price for the Jan. $40 ( Don ‘t know why) Unfortunately,Schwab will not let me sell the $48 call to create a vertical spread in my IRA account. I can sell something else against cash.Can u recommend something. thanks again. 

  267. JRW III

    matt / tomorrow
    No idea; but somethings going to happen so don’t be late to the party !!

  268. kustomz

    Geez MSFT could be a monster if they could only get their act together and hire Steve Jobs, even the fake one would do :-(

    Pharm your all over the place man, got a question on ARNA…hold.. sell some or buy more? I dont mind putting some of my profits back into the stock if you feel confident, but looks like a top here short term..maybe i just answerd my own question..

  269. jdub929

     Phil,
    Thanks for the Mattress play explanation. I got the 106 C from one of your earlier posts:
    Mattress/Jdub – At the moment, it’s DIA Dec $106 calls, now $6.90, 1/2 covered by Aug $102 puts, now $1.85 and, if we hold up today, we need to add 1/2 Aug $104 puts, now $2.67 and and put $2 stops on the $102 puts

  270. jdub929

     AMZN being taken to the woodshed…anyone say "NFLX" like?

  271. Jordan

    Wow, AMZN fighting with $100.  Surely drop is overdone?

  272. kustomz

    Anyone buying AH TZA QID etc..? JRW matt?

  273. jdub929

     Jordan,
    Will depend on what’s said during the call.  100 has been resistance before..so it should hold on it’s first test since last yr.  for my sake, i hope it goes up to 110 (i will be happy even with 105).  Sold volatility and bought double calendars. 125/110--and i was toying with the idea of 130/115. whew!

  274. Pharmboy

    Kust – all over the place?   ARNA – I sold the Aug 6/5 straddle for 65c.  And a LOT of them.  If they pull back, fine….I buy more.  If they go down, so does the Pharm…..at least b’f Sept 15.  I will lighten up around then, which is why I am playing Aug. Septembers will be some spreads.

  275. matt1966

    kus, prolly not AH.  I’m not sure what to think about today’s action.  Surely it was programmed from the get go.. but what are they trying to tell us.. and why?  Too many questions for me to feel confident about something at this point.  Of course.. my gut is telling me it’s all a ruse, ie squeeze and we’re goin down.  But tryin to take a more elightened approach-

  276. goldman

    kustomz – I was wondering the same thing…anyone else play the AHs?  I purchased the VXX today, and just sold in the AHs for a 1.2% gain.  With some of these stocks, there is ample liquidity…especially routing through ARCA and NSDQ.  I’ve got to trade AHs so I can catch up with JRW’s daily percentage profit!!!

  277. gel1

    drum/ICE
    I played this one BUYING the Dec 125 calls. I am looking for a big upswing, as this one is a profit machine. The recent passage of the fin-reg bill plays right into their hand. I look at this one as a no-brainer ( which fits me in many ways) I feel confident to recommend this one!

  278. gel1

    A disappointing 50K today with this runup…. will soon need to join JRW for better returns, if I can stand the intensity.

  279. stjeanluc

    Good thing Cramer was telling everybody to buy AMZN at $145… 

  280. jromeha

    I bought AMZN stock at 101.70 looking for a little bounce, will sell at end of day but HOPING that they can at least make it back to 105!!!!

  281. kustomz

    Pharm was referring to your SPY puts…

    ARNA, nothing near term to move the stock substantially lower except if markets as a whole tank…gotcha

     

  282. 1020

    Kustomz/A.H  DXD@27.48  :)

  283. rstuart4201

    Matt,
    My feeling is this….
    If Europe’s stress test news is extremely positive, the market is setup to break past the upward range resistance and put cheap long calls at the top of the next range within striking distance for big profits
    If Europe’s stress test news is not good enough, then the market is at the top of the range so there will be a tumbling towards the bottom of the range in which profits will be made on all of the cheap shorts purchased at the end of today
    Both scenarios, the machine runners could profit highly from…they use a bunch of money to move stock prices and risk 5-15% of the stock value, if there scenario involves selling the stocks to set off a market drop, while they have short options that can explode and make 40%+….but, if the market goes up, then their stocks held go up AND their options go up so they are making big there as wel…at least, that’s what I would do if I had the power to move the markets

  284. Pharmboy

    Nice little head and shoulders pattern on the DIA dailys, or if one moves it over a hump, inverted H&S.  Hummm…..10,400 (200d MA) needs to be cracked I guess, then 10,560 which is the low of the flash crash and the high of the reversal day o 6/21.  OK, drinky pooh time, oh wait, in a few hours I guess for us left coasters.

  285. rstuart4201

    I re-read what I wrote and it is a lot of word vomit….long day today…I apologize for the jumbled thoughts and terrible grammar…let me know if it isn’t comprehensible and I’ll rephrase

  286. roscoe

    MATT/ "I’m not sure what to think about today’s action."
    I read somewhere that 70% of volume is due to high frequency machine trading.  I do not believe that all of a sudden, all of the individual investors ( who are at work) drove this market up. Yet, almost all stocks are up.   Seeing is believing, yet,  I am puzzled and skeptical.

  287. flipspiceland

    @rainman
    You mention a ‘massive tax break’ on your acreage.  Today I also overheard two people talking about a tax break for property over 10 acres. 
    To hear and see this twice in one day is unusual to say the least. 
    If you have a minute would you clarify for me?

  288. JRW III

    kust,
    We will see tomorrow; we are at the top of the channel. We either drift back down or rocket higher. Tomorrow I’ll play; tonight I’ll sleep tight, in CASH !!

  289. jromeha

    And Im out. THat will make up for the 150 Oct Calls I bought. SHoulda known better, their expectations were ridiculous

  290. matt1966

    rstuart4201 not sure I’m following it all but sounds about right.  At least the part about if you had the money to move the market you’d use it to take everyone elses!  I don’t think the stress tests mean anything.  But that’s probably all we’ll hear about.
    roscoe, I wouldn’t be suprised if HFT accounted for 85 – 90% of all trades.   It’s upto whatever they want to do.. which is whatever they think they can get away with.
     
    pharm, drinky-poo?  I’m with you!  -out.

  291. flipspiceland

    PHIL
    "…people will still wipe their butts and order happy meals…"
    Hopefully not in that order…

  292. jdub929

     jromeha: nice one
    flip--i agree..LOL

  293. Phil

    Earnings are messy but futures not too bad so far. 

    Finally got link to the yesterday’s interview HERE.  It’s a lot of basic options stuff in the beginning and then my usual ramblings about the economy

  294. Phil

    In that order/Flips – That reminds me of a joke I played once.  There was an open mike nite at a comedy place in Boston and all my friends were going up so it was my turn and I’m not a big joke teller (I’m funny but not with memorized jokes) so I went up on stage and walked past the tables and shook everyone’s hand on the way up…

    Then I said:  Boy that bathroom is crowded back there.  Do you know what I find strange about bathrooms?  I think it’s strange that people wash their hands AFTER they go to the bathroom.  I don’t know about you guys but I KNOW that I washed myself this morning and I’ve been keeping it in my pants all day – it’s my hands that have been out getting dirty.  That’s why I wash my hands BEFORE I go to the bathroom – nothing unclean is touching me down there.   Also, it saves time because I don’t have to wash after…

    As I said that I moved over to the far side of the stage and said to a girl sitting at the table and said: I’m sorry I didn’t get a chance to shake your hand….

    Well the reaction from her and everyone else was great and all the people who weren’t in the front row thought that was very funny (I got 2nd prize).  I got out it well too because I said:  Don’t worry, I’m a lefty!  

    So it’s funny that you said that, I haven’t thought about that night for years…

      

  295. kustomz

    Damn futures havnt budged! Im with JRW, sit and wait ..

    Can bonds traders be wrong, I know Phil’s answer (not that hes wrong ;-) ) but usually those guys right and know how to read data opposed to HAL buying blindly.

  296. fjd10595

    People and hedge funds are buying because Bernanake said that he will do what is necessary to keep the economy going.  Translated: the fed will continue to place a floor under stocks, and despite the day to day noise the bias is up.  Phil, I did not literallly mean that the fed will continue to push interest rates lower.  I meant that the Bernanack’s statement that he will support growth is evidence that the fed will continue easy monetary policy and this will support the flow of money into stocks and out of bonds.  Exactly what the statement ‘the fed will support growth’ means is another story. If my understanding of what happened since the crash is correct, the fed itself and its 400 traders is one of the ‘machines’ that pushes stocks one way or another on a regular basis, with its bias being to push stocks up.  The traders at the fed have also bought mortgage backed securities and have grossly distorted the bond market.  So as I see it, the fed itself does not want stocks to drop to the all time lows and will attempt to place a floor under them.  That fact, and the problems that abound, support climbing the ‘wall of worry’ and a summer rally.

  297. drcraig

     Okay Phil, I’m no infectious disease specialist, but your nether regions (and mine, and gel1′s, JRW’s, even flipspiceland’s and ammata’s) are warm and hospitable places that bacteria love to grow. Even if you do a spectacular job washing in the morning (and based on some of your rosy AM posts… uhh never mind), you’re going to miss some. Those badass bugs that managed to survive the onslaught of your anti-bacterial triclosan infused Dial, will grow and multiply. So when you shake it off about 15 minutes after the Europe close, guess what’s now on your hands? If I ever have the honor of meeting you in person (and I’m moving to NY next month, so who knows), we can just wave!

  298. drcraig

     Oh, you were joking. I just scanned the post. Doh!

  299. JRW III

    higher sales but a lower profit in the second quarter ended June 19.
    The Pleasanton company (NYSE: SWY) earned $141.3 million on sales of $9.52 billion, compared with a profit of $237.3 million on sales of $9.46 billion a year earlier in the same period. A year ago, Safeway got a tax boost worth $57.8 million in the second quarter.
    Safeway’s profit works out to 37 cents a share in the second quarter, down from 57 cents a share a year ago (including 14 cents from that tax boost). But Safeway had some 36 million fewer shares outstanding in the most recent quarter. Companies sometimes buy back their own shares to increase that per-share figure, which is watched closely by analysts and investors. Safeway bought back 7.1 million of its own shares during the quarter.
    Steve Burd, Safeway’s chairman, president and CEO, said the results were what he and his executives expected, but said the company is lowering its guess about future earnings due to worries over deflation.
    Burd said he doesn’t expect deflation to ease until the fourth quarter.
    Safeway now guesses it will earn $1.50 to $1.70 per share this year. Earlier this year, the company guessed it might earn $1.65 to $1.85 per share.
    Same store sales, an important retail measurement, fell 2.5 percent, not counting sales of fuel.
    At quarter’s end, Safeway had 1,712 stores in the United States and Canada.

    Read more: Safeway worries about deflation; profit down in Q2 – San Francisco Business Times
     

  300. nicha

    Phil- have you ever thought of having a yearly conference ala Warren Buffett and Steve Jobs where we get to meet you and (Opt, Pharmboy, JRW, matt, David) and get to hear you and take pics, etc. I think that would be so much fun and a great learning experience.

  301. Cap

    Phil you are hilarious; more so in writing than in person …. no stand up career for you !

  302. shadowfax

    PHIL, That was a great interview, you may even get acouple of new members from Texas that will hide in basements in their underware, don’t count on any passing on how to succeed, they have guns down there, self servival!

  303. humvee4me

    Nicha:  great idea:  how about a weekend in Vegas with a texas holdem game too!!

  304. humvee4me

    Phil:  I started to listen to your broadcast, my wife asked  "Who the hell is that"; well I’ll listen later….

  305. nicha

    humvee – Vegas sounds good!

  306. humvee4me

    I’m all in for that; now we need to get Phil on board; maybe do it in the winter when its 1000 below zero in Jersey? 

  307. gel1

    cwan
    I just entered a JPY play – the first in a long time…. Buy ( long) GBP/JPY @132.88, Stop @ 132.22 and take profit @ 133.21

  308. cwan120

    Hi, gel1,
    I just saw your post on GBP/JPY.  I haven’t followed GBP lately.  What are your premises behind the play?
    I bought some USDJPY, betting that it has bottomed.  USDJPY is usually a good risk sentiment indicator.  USDJPY up = risk on.  USDJPY down = risk off.  But it didn’t move much today.  I was expecting it to go up along with the US markets.  Strange.

  309. humvee4me

    Harry Reid is terribly disappointed and has dropped "cap and trade" legislation!

  310. jromeha

    Yeah Phil, you SHOULD have some weekend convention or something. Vegas would be PERFECT!!!!

  311. gel1

    Phil/hands
    ha, ha…. I hope you dont mind that when we meet, I won’t be removing my gloves!

  312. gel1

    cwan…. this was a TA play only, hopefully for a pop – it is not going the right way, so it looks like I’ll be stopped out.

  313. humvee4me

    Phil:  great interview, but the interviewer- i think i could hear his eyes glaze over occasionally, was over his head.  btw my underwear is not expensive…..  I absolutely loved your fervor about starting new corporations and about how we don’t have true capitalism now.  You did tiptoe around the socialism discussion.  Again great interview!!

  314. cwan120

    Hi, Peter D,
    I have some SPX Aug 1150 callers.  I sold those calls at an average price of about $2.00.  Now it’s about 5% away from the market.  Do you think it’s time to roll up?
     
    For the sake of exercise, let’s suppose that we do want to roll up in the same month now.  I can see that I can roll approx 1:2 to 1165.  Or about 1:3.5 to 1175.  How would you do it?
     
    Thanks!

  315. kustomz

    Revolution
    China Internet user base grows to 420 million at end of June 2010, says CNNIC
    The number of Internet surfers rose by 9.4% from half year ago and was equivalent to a penetration rate of 31.8%, CNNIC indicated. Of the Internet surfers, 363.81 million or 86.6% used broadband fixed-line access modes and 276.78 million or 65.9% used handsets for mobile access. The average time of using the Internet a week per surfer was 19.8 hours.

    =======================
    GLW expanding …in the same space as LG
    http://www.digitimes.com/news/a20100722PR203.html
    LG Display shipped a total of 6.45 million square meters of display area in the second quarter, an increase of 5% compared to the previous quarter. On a revenue basis, TFT-LCD panels for TVs, monitors, notebook PCs and mobile applications accounted for 53%, 23%, 19% and 5%, respectively, in the second quarter.
    http://www.digitimes.com/news/a20100722PR206.html

    SEOUL—The chief executive of LG Display Co. said the company isn’t currently able to supply all of the flat-panel orders it receives from Apple Inc. for its iPad tablet computer.
    http://online.wsj.com/article/SB10001424052748703467304575383941257969742.html?mod=googlenews_wsj

    ===========================

    Cloudy horizon ahead for solar module market in 2011, says IMS
    http://www.digitimes.com/news/a20100723PR200.html

    =============================
    Strong channel demand for Apple’s iPad and iPhone has resulted in tight supply of touch panels, and with the IT market entering the third quarter, the traditional peak season, the pressure is expected to continue rising, according to sources with touch panel suppliers.

    ==========================

     

  316. gel1

    cwan
    I gotta laugh…. just as I posted  on the GBP/JPY play, the direction changed and went straight up to my limit profit stop and am now out with the anticipated pop. I have been doing much better with the currencies than equities. It is a much safer market, as manipulation is impossible. Who can manipulate a $4 Trillion market?

  317. diamond

    Phil – I have to hand it to you, that is one funny story! :-)

  318. diamond

    gel1 – Did you get an Apple monitor yet?

  319. gel1

    Phil
    I have to share a short story with you – my company was a manufacturer of pharmaceutical products, and we always exhibited in major trade shows in the months of January & February (cold and flu season). We manufactured ,in miniature size, an anti-bacterial hand sanitizer and handed out this free at our trade shows as a perk to get crouds at our exhibit.  It was always jammed, as the paranoid were more concerned about catching the flu than learning about new products. It was fun to watch most of the attendees use the product after shaking hands with folks in the exhibit hall.

  320. gel1

    diamond….. not yet, but plan to go to the Apple store late morning tomorrow. Can’t wait!

  321. diamond

    gel1 – Check out the Mac mini. One unit can drive two of the Apple LED Cinema Displays, and if you get the VESA Mount Adapter Kit (2) you can have both monitors up off of your desk.

  322. kustomz

    Who can manipulate a $4 Trillion market?  gel, i hear the Swiss are pretty good at it ;-)
     

  323. jomptien

    Phil, Just listened to your interview – great stuff.

  324. Pharmboy

    Well, many have asked about GILD, and the company’s stock performance has been a question often on the site, so I thought I would do some hard digging into the pipeline as well as the financials….Here is fruits for all to read…when I started the write up, I was pretty high on the hog….when I finished, I realized the title could be misleading…but it is getting late on the left coast, and I have decided to leave it.
     
    To make a long story short, I think GILD is a takeover candidate (not mentioned in the article), but time will tell…..
     
    Jomama – that is dedicated to you!

  325. fjd10595

    gel, I saw your message yesterday that you were just the ‘messenger’ on that study on oil reserves, etc.  Thanks, I understand that.

  326. pstas

    Pharm- good info on GILD. I was not aware of the tie-in to JNJ. Interesting coincidence since I was about to ask your opinion on JNJ’s pharm and device lines plus the outlook on the recent plant shutdowns and recalls. How serious?
    RE: GILD- seems, at best , a neutral stance here as the pipeline may or may not be improved plus a takeover/buyout is always a dicey proposition as an investment thesis. I always view such possibilities as a bonus. The target company must be good on its own, IMO. So, is your conclusion "neutral" until more direction is clear on the HIV front?

  327. Pharmboy

    pstas – JNJ survived the tylenol scare, they will get through this.  I think they need ‘something’ else, but their pipeline is something I am going to write about next……overall, watch the trends on them and then they would be ok to buy, still not my favorite though.  BMY, MRK, GSK
     
    GILD – neutral.  Might be good to see juicy premiums on as they were in the past.

  328. 1020

    Drcraig/nether  I prefer a "fist bump" myself  :)

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