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Monday Market Momentum (or Lack Thereof!)

It’s all about the Nikkie and the Fed this week.

I mentioned last week that we had to assume there is a 1,000-point tether between the Dow and the Nikkie and, in general, we can usually count on that relationship holding and we had several day (overnight) trades on EWJ that went well using that logic.  Today we should get a proper test of our connection as the two indexes are reaching their maximum gap once again with the Nikkei closing this morning at 9,572, 1,081-points below Friday’s Dow close at 10,653.  Europe seems to think it’s the Nikkei that needs to catch up to the Dow as the EU markets jumped 1.5% this morning – pretty much gapping up at the open and holding it through 8am, so far – that will lead us to go back in on EWJ for a catch-up trade if our markets make a similar move (with our target levels as easy indicators of a "real" rally).

Maybe Europe is right as the Yen was jammed all the way up to 85.8 to the dollar in our 3am trade and only fell back to 85.55 before being turned back up.  Both China indexes jumped 0.5% this morning as investors were happy with the Central Government’s decision to order 2,087 companies in 18 sectors to shut down obsolete plants in a decision aimed at streamlining industries that were polluting, energy-intensive and had excess capacity. 

This kind of makes me laugh at the talking heads on TV, whos think they are being clever when they call GM "Government Motors" as any fool reading the papers can see what real government intervention looks like – and the investors in China LOVE IT!  "This is very good news for the steel and cement sectors, as it will foster the development of these industries," said Chen Jinren at Huatai Securities.

Japan will close for a vacation next week and, of course, we have the FOMC rate decision tomorrow.  While no one is expecting a rate change, EVERYONE is now expecting some form of quantitative easing to pump more money into the US economy and we moved on and ignored Meredith Whitney on Friday afternoon – on the same day that we ignored some terrible jobs news:

China is not just managing their economy, they are managing ours as they risk their own growth in order to pull up the slack we were beginning to see as Factory Orders tapered off in July.  China is lagging behind a target for reducing the amount of energy used relative to gross domestic product, with only months to run in Premier Wen Jiabao’s five-year plan.  It must be nice to live in a country that has a plan…  “If the government has true resolve, then investors, especially overseas investors, may have not fully comprehended the implications of such policies on China’s heavy industry and demand for commodities,” UBS’ Beijing-based economist Wang Tao said in a note last month.

Never doubt the true resolve of the Chinese government and that means commodities may be getting far ahead of themselves.  We’re watching that $3.40 line on copper as what kind of rally do we have if Copper can’t even get back to it’s April highs?  Oil also isn’t looking too impressive under $82.50 and we sure aren’t seeing the kind of US demand that supports that level and China wants to consume LESS, not more oil and is taking DRASTIC steps to do so so what makes us think we have enough momentum to get through the roof (Dow 10,700, S&P 1,155, Nas 2,300, NYSE 7,350 and Russell 666) – where we had plenty of trouble last week?

Before we get too excited about Europe’s 1.5% gain at the open, let’s keep in mind they fell about that much on Friday and they are only changing their minds based on our "stick-save" close, as indicated on David Fry’s SPY chart:

That’s all Europe is doing this morning – getting back to where they were before they saw the jobs data we all seem to have decided to ignore as of about 2:30 on Friday.  We had been fortunate enough to select a couple of lovely day trades in Member Chat and Mr. Stick closed out our week with a bang but we went neutral into the weekend as we think the ENTIRE rally is based on nothing more than expectations of QE2 and expectations like that are very easy to disappoint – especially if investors think the answer to their prayers will be twitted by the Fed in between their normally tight regular policy statement.  

I’ll believe in QE2 when it’s matched by a big-gun stimulus program that creates JOBS FOR THE MIDDLE CLASS – a situation we discussed in detail over the weekend in "The Crisis of Middle-Class America."  We are not taking any positive moves in the markets too seriously until we see some improvement in the lot of the bottom 90% of our people.  We are bullish – in that we are betting the rich (Big Business) will get richer under current market conditions but the foundation of this country is still crumbling and that makes it kind of hard for us not to take all of these moves with a Lot’s wife-sized grain of salt. 

Speaking of how we are greedy, immoral bastards who are dooming ourselves:  Saudi Arabia agrees to lift the ban on RIMM’s Blackberry and, as a bonus, they get $30Bn worth of F-15s (84, made by BA) in the biggest arms deal ever!  When asked if there were any security threats to the US by giving Saudi Arabia our most advanced fighter jets – an official said: "Of course not, everyone knows that Saudi Pilots are very accurate with jets!"

Let’s all be careful out there!

 


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  1. lflantheman

     http://www.youtube.com/watch

  2. Cap

    Today is Chomsky Day !   :wink:
     
    What’s w/ the overnight pump action (again ) ?

  3. Cap

    Lots of good short opportunities today.   I am looking to go short AMZN, maybe pre market even.

  4. dezev

     I’m tired At 63
     Robert A. Hall is the actor who plays the coroner on CSI if you watch that show.

    This should be required reading for every man, woman and child in the United States of America  .

       
                            "I’m 63 and I’m Tired"
                              by Robert A.  Hall
     
      
     
    I’m 63.  Except for one semester in college when jobs were scarce and a six-month period when I was between jobs but job-hunting every day, I’ve worked hard since I was 18.  Despite some health challenges, I still put in 50-hour weeks, and  haven’t called in sick in seven or eight years. I make a good salary, but I didn’t inherit my job or my income, and I worked to get where I am.  Given the economy, there’s no retirement in sight, and I’m tired.  Very tired.  
     
     
    I’m tired of being told that I have to "spread the wealth" to people who don’t have my work ethic. I’m tired of being told the government will take the money I earned, by force if necessary, and give it to people too lazy to earn it.  
     
    I’m tired of being told that I have to pay more taxes to "keep people in their homes."  Sure, if they lost their jobs or got sick, I’m willing to help. But if they bought McMansions at three times the price of our paid-off, $250,000 condo, on one-third of my salary, then let the left-wing Congress-critters who passed Fannie and Freddie and the Community Reinvestment Act that created the bubble help them with their own money.  
     
    I’m tired of being told how bad America  is by left-wing millionaires like Michael Moore, George Soros and Hollywood Entertainers who live in luxury because of the opportunities America  offers.  In thirty years, if they get their way, the United States will have the economy of Zimbabwe  , the freedom of the press of China  , the crime and violence of Mexico  , the tolerance for Christian people of Iran , and the freedom of speech of Venezuela  .
     
    I’m tired of being told that Islam is a "Religion of Peace," when every day I can read dozens of stories of Muslim men killing their sisters, wives and daughters for their family "honor"; of Muslims rioting over some slight offense; of Muslims murdering Christian and Jews because they aren’t "believers"; of Muslims burning schools for girls; of Muslims stoning teenage rape victims to death for "adultery"; of Muslims mutilating the genitals of little girls; all in the name of Allah, because the Qur’an and Shari’a law tells them to.  
     
     I’m  tired of being told that "race doesn’t matter" in the post-racial world of Obama, when it’s all that matters in affirmative action jobs, lower college admission and graduation standards for minorities (harming them the most),  government contract set-asides, tolerance for the ghetto culture of violence and fatherless children that hurts minorities more than anyone, and in the appointment of U. S. Senators from Illinois.  
     
    I think it’s very cool that we have a black president and that a black child is doing her homework at the desk where Lincoln  wrote the Emancipation Proclamation.  I just wish the black president was Condi Rice, or someone who believes more in freedom and the individual and less arrogantly of an all-knowing government.  
     
    I’m tired of a news media that thinks Bush’s fundraising and inaugural expenses were obscene, but that think Obama’s, at triple the cost, were wonderful; that thinks Bush exercising daily was a waste of presidential time, but Obama exercising is a great example for the public to control weight and stress; that picked over every line of Bush’s military records, but never demanded that Kerry release his; that slammed Palin, with two years as governor, for being too inexperienced for VP, but touted Obama with three years as senator as potentially the best president ever.  Wonder why people are dropping their subscriptions or switching to Fox News?  Get a clue.  I didn’t vote for Bush in 2000, but the media and Kerry drove me to his camp in 2004.  
     
    I’m tired of being told that out of "tolerance for other cultures" we must let Saudi Arabia use our oil money to fund mosques and mandrassa Islamic schools to preach hate in America , while no American group is allowed to fund a church, synagogue or religious school in Saudi Arabia  to teach love and tolerance.  
     
    I’m tired of being told I must lower my living standard to fight global warming, which no one is allowed to debate.  My wife and I live in a two-bedroom apartment and carpool together five miles to our jobs.  We also own a three-bedroom condo where our daughter and granddaughter live.  Our carbon footprint is about 5% of Al Gore’s, and if you’re greener than Gore, you’re green enough.  
     
    I’m tired of being told that drug addicts have a disease, and I must help support and treat them, and pay for the damage they do.  Did a giant germ rush out of a dark alley, grab them and stuff white powder up their noses while they tried to fight it off?  I don’t think Gay people choose to be Gay, but I damn sure think druggies chose to take drugs. And I’m tired of harassment from cool people treating me like a freak when I tell them I never tried marijuana.  
     
    I’m tired of illegal aliens being called "undocumented workers," especially the ones who aren’t working, but are living on welfare or crime.  What’s next?  Calling drug dealers, "Undocumented Pharmacists"?  And, no, I’m not against Hispanics.  Most of them are Catholic, and it’s been a few hundred years since Catholics wanted to kill me for my religion.  I’m willing to fast track for citizenship any Hispanic person, who can speak English, doesn’t have a criminal record and who is self-supporting without family on welfare, or who serves honorably for three years in our military.  Those are the citizens we need.  
     
    I’m tired of latte liberals and journalists, who would never wear the uniform of the Republic themselves, or let their entitlement-handicapped kids near a recruiting station, trashing our military. They and their kids can sit at home, never having to make split-second decisions under life and death circumstances, and bad mouth better people than themselves. Do bad things happen in war?  You bet.  Do our troops sometimes misbehave?  Sure.  Does this compare with the atrocities that were the policy of our enemies for the last fifty years and still are?  Not even close.  So here’s the deal.  I’ll let myself be subjected to all the humiliation and abuse that was heaped on terrorists at Abu Ghraib or Gitmo, and the critics can let themselves be subject to captivity by the Muslims, who tortured and beheaded Daniel Pearl in Pakistan, or the Muslims who tortured and  murdered Marine Lt. Col. William Higgins in Lebanon, or the Muslims who ran the blood-spattered Al Qaeda torture rooms our troops found in Iraq, or the Muslims who cut off the heads of schoolgirls in Indonesia, because the girls were Christian.  Then we’ll compare notes.  British and American soldiers are the only troops in history that civilians came to for help and handouts, instead of hiding from in fear.  
     
    I’m tired of people telling me that their party has a corner on virtue and the other party has a corner on corruption.  Read the papers; bums are bipartisan.  And I’m tired of people telling me we need bipartisanship.  I live in Illinois , where the "Illinois Combine" of Democrats has worked to loot the public for years.  Not to mention the tax cheats in Obama’s cabinet.  
     
    I’m tired of hearing wealthy athletes, entertainers and politicians of both parties talking about innocent mistakes, stupid mistakes or youthful mistakes, when we all know they think their only mistake was getting caught.  I’m tired of people with a sense of entitlement, rich or poor.  
     
    Speaking of poor, I’m tiredof hearing people with air-conditioned homes, color TVs and two cars called poor.  The majority of Americans didn’t have that in 1970, but we didn’t know we were "poor."  The poverty pimps have to keep changing the definition of poor to keep the dollars flowing.  
     
    I’m real tired of people who don’t take responsibility for their lives and actions.  I’m tired of hearing them blame the government, or discrimination or big-whatever for their problems.  
     
    Yes, I’m damn tired.  But I’m also glad to be 63.  Because, mostly, I’m not going to have to see the world these people are making.  I’m just sorry for my granddaughter.  
     
    Robert A.Hall is a Marine Vietnam  veteran who served five terms in the Massachusetts State  Senate.

  5. yipcarl

    The question is….Is the Stimulus talk noise and BS or there is a viable possibility. I don’t see how they can do another one.  I thought the outcry would be to big.  I dunno we’ll have to see, because if they even hint at any the market goes higher.  It never ends the artificial pumping is the only thing that’s going to hold us up not an ‘organic recovery’.  Not even close to existing. 

  6. lflantheman

     Damn.   Best thing I’ve read in months.  

  7. Cap

    Here’s why the gov’t, and particularly states and municipalities are going broke:
     
    Overly generous pensions to public sector employees; who are engaged in massive fraud to game the system.
     
    Every day, there are stories like this:
     
    http://www.nypost.com/p/news/local/ex_cops_in_ych_out_4nU7DbYE1j3TsBLfeaCO3L
    and this:
     
    Assemblyman Harvey Weisenberg (D-Long Beach) collects both a legislative salary and a government pension totaling more than $173,000.
    Under a quirk in state law, the 76-year-old lawmaker was allowed to "retire" for pension purposes last year because of his age and years of government service — without actually retiring. He receives a $101,500 salary and a $72,144 pension.
    Critics say Weisenberg’s peculiar double pay is Exhibit A for why government pension costs have spiraled out of control.

    http://www.nypost.com/p/news/local/double_dip_li_pol_gets_paid_twice_g3IizU3wEWfmF5FMcg86YI#ixzz0w77Dyit2
     
     
     
    But hey, let’s all pay more in taxes to pay for this BS !!

  8. Cap

    dezev … that post is going up on hopeychange….

  9. yipcarl

    DEZ EV….thanks that pretty much nailed it. !  The only is Ron Paul and in the grand scheme he’s not much help either but better than than being a typical Dem or Rep.

  10. gmarts

    I think Mr Hall summed up the feelings of an awful lot of Americans, and I’ll include myself in that group.
     
    Thanks for the post Dezev

  11. diamond

    dezev - I’m tired of long post … try a link next time! ;-)

  12. 1020

    Quiet on the set!  This man needs some sleep…….

  13. Jtiff

    I’m tired of telling those damn kids to get off my lawn.

  14. lflantheman

     Trading AAPL and GOOG/ Pinning/        AAPL pinned Friday at 260.09, GOOG at 500.22.    I would suspect that weeklies sold at 270 and 510 are fairly safe for this Friday.  My est. odds on AAPL under 270 and GOOG under 510 are 90% and 70%. 

  15. 1020

    I’m not a doctor, I only play one on T.V. but it would seem that Mr. Hall has a case of low testrosterone and perhaps sleep apnea as well……..

  16. 1020

    jtiff/kids  :)

  17. Cap

    short $amzn here …

  18. kururi67

    I’m Kururi67 and I’m tired of gas-bag right wingers like Robert Hall who rant about all America’s woes being to blame on Obama and/or left wingers. I’m also tired of people wasting valuable chat space by posting such long-winded drivel. Tt’s your right to do so. It’s also my right to tell you that you are full of crap when you post BS like that. 

  19. 1020

    So if this morning I am "bright eyed and bushy tailed" I must be a liberal?……  ;)

  20. 1020

    Stock question: Phil, are we going up or down this week?  :)

  21. redlog

     That guy sure sounds like he’s playing Archie Bunker.  Only he’ more tired than Archie!  

  22. hanna5

     Adding some shorts for a DOWN day – should lose some of those points we gained friday from the lows, just on longs lightening up ahead of (fed risk) tommorow…

  23. ben1be

     I`m tired of the whining conservative martyr mentality.

  24. Cap

    $1.50 candle on AMZN at open … why ?  b/c the robots can !

  25. Phil

    Good morning!

    I do like selling HPQ puts on the Hurd resignation but it’s not looking like they’re going to be down too much, unfortunately. 

    Dez – much as you like your post, especially during the week – a quick summary with a link for those who are interested is the way to go – not reprinting a whole page article in comments. 

    Looks like we have a nice, bump at the open with Nas making that 2,300 mark but no one else looks very serious so far.  Breakout levels remain: Dow 10,700, S&P 1,155, Nas 2,300, NYSE 7,350 and Russell 666 - I don’t think we have enough to get through it this morning and if we don’t get QE2 tomorrow, then down we go so make sure you are well covered – just in case.

    QID Aug $16/17 bull call spread is .42 and is .42 in the money and you can sell $16 puts for .29 to drop the net to .13, which is a nice way to play the Nas down and we can kill the trade if we get green on the Russell (666) and the Dow (10,700) for a small loss vs. a potential .87 gain (669% upside).

  26. gmarts

    I’m waiting for one of you to refute his points, rather than call him names.

  27. nbdog

    I’m tired of right wingers who can’t write their own rants but only hit the forward button. If Mr Hall was drafted, then thank s for his service. If he enlisted then it was his career choice, quit bitching!

  28. ravalos

    Phil, you’ve got to watch "The Other Guys".. if you stay after the movie is over, they show EXACTLY the same figures you’ve been writing about all this time.. the cost of the bailout to the taxpayers, the inequalities in income since 1930 between CEOs and the rest of the people, the top 0.01% vs the rest, etc.. it was as if you were the one who added those numbers during the credits presentation at the end.. it was very funny. Anyone else has seen that movie?

  29. kustomz

    If markets dont get the great news..QE2.. we are going to get a mother of a squeeze in the dollar

  30. exec

    Phil,
     
    Is there any big news on the calendar this week?

  31. DKGuy

    dezev – great post. Thanks

  32. Pharmboy

    QE2 – good article here in PSW (closed the tab, but I think it was Karl Dnd cannot find it again)….saying basically that it won’t happen until later in the Q when ‘they’ have more data that the slowdown it happening….

  33. deano

     Phil
    Are you back to naked on the DIA’s?

  34. gmarts

    SPY gap closed. Now which way…….

  35. jromeha

    Exec – yahoo’s got a good calendar – http://biz.yahoo.com/c/e.html

  36. fjd10595

    Sold HPQ Jan 2011 $35 puts for 1.17 before Phil posted his idea.  I like the risk reward as there is about .30 cents of premium in the options over and above what HP was trading at prior to the resignation.  The shares are down a bit  since my trade so you can probably sell the option at $1.20 now.

  37. Maya1

    Tried selling HPQ puts ( the Aug 42′s for $0.50) but got online message that this was not possible and to call the broker for an explanation at 800-544-6666.

  38. acobra65

    Kururi67/Hall:
    AMEN !!!!
    Right Wing.. Left Wing.. Right Wing… Left Wing… Right Wing… Left Wing…. "Sarah Palin for President" ?????? BLAH BLAH BLAH !!! After taking my Geritol…..Now on with the investing day

  39. nicha

    Pharm- is selling $7 puts in ARNA still a good idea?

  40. Phil

    Stimulus/Yip – It’s more of a necessity.  They are already extending $10Bn a month of unemployment benefits so what does stimulus really cost (if it works)?  They are paying hot potato with the unemployed as they can’t extend benefits constantly.  Well they can but it’s going to cause a new market panic every time it comes up and the number of people who they’d be cutting off gets bigger and bigger and, if they ever finally pull the plug, it would be catastrophic for the economy – including banks and CC companies, who would be cut off from those payments too. 

    Pensions/Cap – So tighten up the pension rules.  Having people cheat the system doesn’t argue for it’s elimination or should the fact that some people aren’t paying the full amount of the Bush tax cut net mean we should immeditately eliminate them or should we reinstate the inheritance tax back to 70% because some people do things to avoid paying it all in their "massive fraud to game the system" (I hear it’s so rampant that they even have people called "estate planners" who help people avoid the law by gaming the system!).  

    Why is it that conservatives tend to feel the need to post whole articles while liberals are content with links?  Maybe the same reason Conservatives feel the need to shout at rallies and have huge signs with gaint words —- would make an interesting study…  8-)

    Weeklys/Iflan – I’m just worried about the Fed tomorrow.  Who knows what those nutballs will come up with?

    This week/1020 – Up then down.

    Other guys/Rav – Adam McKay (the Director/Writer) is one of those evil NY Liberals.  He wrote Ferrel’s George Bush on Broadway show and is VERY on top of those numbers. 

    HPQ Sept $40 puts fetching a disappointing .80 but the Jan $39 puts for $2.10 make a very nice sale.  TOS says it’s $4,680 in net margin to make $2,100 in 5 months (10 contracts) - not a bad way to tie up some cash.

    Calendar/Exec – Good question!  Nothing today but we have Productivity and Wholesale Inventories tomorrow along with the Fed at 2:15.  Weds is Trade Balance and the Treasury Budget (-170Bn for July).  Thurs is the normal 450K unemployed and Import/Export Prices and Friday we get CPI, July Retail Sales, Michigan Sentiment and June Business Inventories so that’s our big day after tomorrow. 

    Mattress/Deano – Yes, back to naked Dec $109 puts is the way to go here UNTIL we break over 10,700 on the Dow and it’s confirmed with 2,300 on the Nas and 666 on the RUT, then a 1/2 cover with Sept $106 puts (now $2.30) but we really don’t want to do that if we don’t have to

    Copper $3.377, oil $81.18, gold $1,206.  Gold will have a big tumble if no QE2 tomorrow but we probably won’t notice it what with the massive market drop that is likely to accompany it. 

    Ags are calming down after last "wheat’s" madness.

  41. Cap

    AMZN shorts working out nicely ….

  42. mattlev32

    Phil, do you still like the insurance play on SDS -- call spread Jan $32/$37 and sell Dec puts at $26? What about something similar on DXD?
    I don’t understand how we hold these levels after all the bad news. How long can the bots and weak dollar trade buoy the market? What would QE2 accomplish anyway?
    Also, can you explain in detail how you arrive at 1100 as fair value for S&P? Maybe after the close.

  43. Pharmboy

    nicha – bit late on them if you are referring to the Aug $7.  Need to see the EOD action/vol, and maybe the $8 P.  Just not sure.  I may lighten up on shares and see if I can then have them P to me.  Not doing anything for now.

  44. yodi


    Maya1

    You can sell the HQP Aug 42 for .67 at TOS but your margin is 3,900.00  8% in  2 weeks but close to the stk price and by the way the stk is up .85 !!!! 42.71
    Maya1
    August 9th, 2010 at 10:13 am | Permalink  
    Tried selling HPQ puts ( the Aug 42’s for $0.50) but got online message that this was not possible and to call the broker for an explanation at 800-544-6666.

  45. roma_

    Phil,
    What do you think about backspread on SPWRA? For example, sell 5 sep $14 puts and buy 3 jan $14 puts

  46. dmankoff

    hi, phil, ok, any play on TBT today?  sure looks like a good low entry price to me..

  47. loopy

    Pharmboy what do you think of MELA?  The skin cancer drug application is off ’till November but can you tell if it has a chance?

  48. jomptien

    Phil, VZ
    I bought 300 shares average 31.39; when it was about 27 sold 3 2012 25 puts for 3.70 – now 1.95 and 3 2012 25 calls for 3.70 – now 6.90. Adjust or too early to sweat. Maybe sell some close calls? Thanks

  49. hanna5

     loopy / MELA :  Interesting device. My concern with them is that as far as I understand, they offer an alternative to skin biopsy…but a skin biopsy is a relatively cheap, low risk procedure. Also the consequences if one melanoma is missed is terrible. The product would have to have enormous sensitivity, and be very cost effective to gain widespread use. That said, I have not looked at the data yet. Keep me posted! And, would love to know what pharm thinks. Melanoma/moles is/are a huge industry…

  50. jvest

    WFR - any/all, please critique this slight modification on Phil’s WFR play.
     
    Mid-last week I bought the Jan 2012 $5/10 bull call spread ($2.82), selling the $7.50 puts ($1.27) for a net entry of $1.55. I chose the $5 call instead of the $7.50 call because it has half the premium, while still providing 2x the leverage compared to purchasing the actual stock.

    If WFR finishes over $10, gain is 322%
    If put at $7.50, you still make $2.50 on the call spread (net $0.95)
    Breakeven is WFR $7.03 (call spread $2.03 in the money – $1.55 cost – $0.48 loss on puts)

     
    So far so good, WFR has risen from $9.45 to $10.13 and the spread is up 25%. If this early rise keeps up I may have to cash it out long before that 322% gain…

  51. z401

    PHIL
    i used your admin e-mail address for a post referencing my upgrade to yearly subscription and to discontinue the monthly. Did you get the e-mail? If not which e-mail should i use?

  52. Phil

    08:00 AM On the hour: S&P +0.42%. 10-yr +0.13%. Euro -0.27% vs. dollar. Crude +1.05% to $81.55. Gold +0.33% to $1209.30.

    09:00 AM On the hour: S&P +0.42%. 10-yr -0.05%. Euro -0.22% vs. dollar. Crude +0.98% to $81.49. Gold +0.23% to $1208.10.

    09:30 AM At the open: Dow +0.02% to 10656. S&P +0.17% to 1124. Nasdaq +0.44% to 2299.
    Treasurys: 30-year -0.17%. 10-yr -0.05%. 5-yr -0.07%.
    Commodities: Crude +0.59% to $81.18. Gold +0.07% to $1206.20.
    Currencies: Euro -0.25% vs. dollar. Yen -0.34%. Pound -0.03%.

    10:00 AM On the hour: Dow +0.04%. 10-yr +0.01%. Euro -0.3% vs. dollar. Crude +0.35% to $80.98. Gold -0.1% to $1204.10.

    Notable earnings after Monday’s close: CLNE, CTRP, GSS, MBI, MDR, NUAN, QGEN, RAX, TWTC

    July Employment Trends Index: 97 vs. 96.7 in June, the 14th straight month of increase. “The growth rate of the [Index] slowed sharply in the past three months, suggesting that employment growth will remain too weak to keep up with the increase in the working age population,” The Conference Board says.

    Paul Krugman says the political class essentially must choose between asking the top 2% of earners "to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation’s foundations to crumble… they’re choosing the latter. It’s a disastrous choice… those state and local cutbacks are a major drag on the economy."

    Yves Smith takes issue with a WSJ article that discusses how some employers are having trouble finding workers despite high unemployment. It’s not that potential workers are too fussy, as the article seems to suggest; much of the problem, she says, is the breakdown of the employer-employee relationship due to "cost cutting and short-term earnings fixation."

    The U.S. recovery is losing a “considerable amount of momentum," writes Goldman Sachs economist Chiwoong Lee, cutting his 2011 growth outlook to 1.9% from 2.5%, while leaving 2010′s forecast unchanged at 2.7%.

    Stocks typically drift higher in August, but low volume can magnify the impact of unexpected news. August is quirky because so many business, financial and government leaders are on vacation, so stocks tend to move up with the bigwigs out of town. But if something out of left field makes the market fall, the drop can be a doozy.

    Uh oh!  The Fed is set to downgrade its assessment of U.S. economic prospects when it meets tomorrow, FT reports, but it is unlikely to agree big new steps to boost growth. The FOMC will ensure its policy is not constraining growth and use its statement to signal greater concern about the economy, but will wait before considering a major new round of asset purchases.

    Fewer Americans are facing underwater mortgages, a positive sign that could mean fewer defaults and foreclosures down the road, but a lot of the "improvement" stems from the high level of foreclosures from the stock of negative equity homes.

    For the first time since Aug. 2007, U.S. investors own more Treasurys than foreign holders, with 50.2% of the $8.18T market in May. The climb in U.S. demand for Treasurys reflects the current stagnation in consumer spending and income and the increasing savings rate.  Nice, we are going to end up being the bag-holders on our own debt! 

    German exports rose a seasonally adjusted 3.8% in June to a preliminary estimate of €86.5B ($113.9B), just €2.2B behind the record high set in Oct. 2008. Imports reached their highest-ever monthly level of €72.4B. The numbers add to expectations that Germany will report surprisingly strong Q2 growth on Friday.

    Automakers are angling for consumers in India, where rising disposable income is driving car sales and low auto ownership rates means growth in the market could be substantial. Local car sales climbed 38% in July from the year before, to an all-time high of 158,764 cars.

    McDonald’s (MCD) reports global comparable sales growth of 7% in July. Africa, the Middle East and Asia/Pacific led with 10.1% sales growth. U.S. sales were up 5.7%, and France, the U.K. and Germany led Europe’s 5.3% growth. Shares +1.1%. (PR)

    Speaking of Robert HallThe "faltering" jobs market doesn’t mean the economy is sliding back into recession and may instead reflect productivity gains, NBER’s Robert Hall says. But then again, NBER never actually said the first recession ended.

    Speaking of SingaporeSingapore’s economy (ETF: EWS) grew a sizzling 17.9% in H1, putting the island in the running to be the world’s fastest-growing country in 2010. But PM Lee Hsien Loong says growth may "moderate" in the coming months, with full-year growth of 13-15%.

    Denver’s public schools are in financial trouble thanks to complex derivatives JPMorgan (JPM) sold the school district right before the financial crisis, NYT reports. Denver essentially made the same choice some homeowners made: opting for a variable-rate instrument that offered lower monthly payments with the risk that they could rise, instead of a conventional, fixed-rate instrument.

    Antennagate claims a casualty, as Apple’s (AAPL) Mark Papermaster, the executive responsible for iPhone and iPod hardware, leaves the company. It’s unclear if Papermaster voluntarily resigned or was ousted.  Imagine if Edison Labs fired Edison every time one of his 1,000 patents didn’t work the first time…  What idiocy! 

    Just three months ago, Bank of America (BAC) and JPMorgan Chase (JPM) were perfect (trading to a profit every day of the quarter), but perfection’s harder to come by in Q2: BofA lost on 12 of 63 days and JPM lost on eight of 65 days. Still, financials overall haven’t been hurting: up 3% as a sector in the past three months, vs. the S&P 500′s -0.6%.

    Bank of America (BAC) is looking at options for its main prop-trading desk, including a possible sale of the $3B business, as the bank braces for regulatory changes. Goldman (GS) and Morgan Stanley (MS) are considering similar changes.

    Berkshire Hathaway (BRK.A): Q2 profit -40% to $1.97B, or $1,195/share, on a decline in derivative bets on equity indexes. Operating earnings of $1,866 per Class A share beat estimates of $1,456. The financial reform law is not expected to have a material impact on the firm’s finances. (10-Q)

    The NYT takes a close (and long) look at the Minerals Management Service, finding it was plagued by more than just petty corruption. The fallout from the Gulf spill exposed the degree to which the agency was put under pressure to produce results: "Washington got oil and royalty fees; Louisiana got jobs; and the agency got frequent reminders of the need to keep both happy." (more)

    The static kill has been successful and a relief well is on target for Aug. 15, but BP’s (BP) costs to date have risen to $6.1B and show no signs of slowing down.

    In a development that could be potentially significant in the blame game between BP (BP) and Transocean (RIG), the Sunday Times says it gained access to an internal BP audit, conducted seven months before the Gulf spill, which detailed the rig’s severe safety shortcomings. Half of the audit’s 60 pages contain a detailed list of items that "do not comply with BP policies and standards."

    Newfield Exploration (NFX), a smart energy play with cheap shares, boasts technical savvy, the ability to shift output to oil from gas as prices dictate, and vast chunks of acreage that could dramatically boost its crude output in coming years. These are just some of the reasons Barron’s calls this stock a buy. (See other recent Barron’s picks.)

    Target (TGT) has crafted a comeback plan that’s winning the company fans on both Main Street and Wall Street, writes Barron’s Lawrence C. Strauss, and is set to grow whether the economy double dips or not. "Its shares, like its wares, are now cheap and chic," and could rise from a recent $52 to $65 in the next twelve months.

    Barron’s makes a bullish case for Visa (V), with its beaten-down share price and a base business that continues to grow quickly. Plus, the company’s growth prospects are good in fast-growing emerging markets and in the digital-currency business. If the economy continues to recover slowly, shares could rise from a recent $72 to $115 on the next 12-18 months.

  53. Maya1

    Good morning Phil
    Re: AAPL
    I went back to your advice to me regarding protection of a large position.The confusion arose from your advice post on Thursday.
    You stated “bear call spread” in that post. so I did not understand that and thus my fidelity rep got confused, I guess.
    Question/Suggestion: While this site is for experienced investors, and I have SOME experience, I have been managing a portfolio in the millions, and think mistakes can be avoided if perhaps you preface advice with the letters c and p and B and S for the buy or sell of the representative trade. you do that SOMETIMES, but at other times it’s guesswork, and I know some of the people on your site have been confused.
    I do not expect the members to be that clear, although it would be sure ‘nice’.
    That is my $$0.02 (stealing YOUR quote there) worth of observation over the past 4 months

  54. jomptien

    Put me down as on the left of the political argument. I think theat there is no more left really, only the moderate right and far right. I can not express my feelings as well as Shadow, et all but I am in that camp. Of course Phil is the silver tongued devil when he assesses the situation. His compassion for fellow human beings is uplifting. Actually I don’t know why the right thinks it has religion on their side when Christ taught us "do unto others…. and the meek shall inherit….the right seem to be in the opposite camp even the preachers as all they seem to be concerned with is abortion, not compassion for the poor. I remember a good line someone said of the conservatives when it came to capital punishment: "They want to save the "life" of the unborn but after they are born want to fry them in the chair." Or something like that.

  55. Pharmboy

    MELA/loopy – well, they are a device company that just raised $$ at $7.50/share.  Now, they did it in the wake of knowing that the FDA needed more time.  They also priced them for a discount by my reading.  That type of stuff makes me wonder why they would discount the shares – R they confident and lining their pockets, or R they hiding something?  Delayed until Nov, so selling the Sept 6 P for 30c (1/2 order JIC they fall back to the low).  Chart says they may move a bit lower, so I would wait on the stock purchase until they hit at least $6.

  56. humvee4me

    Phil:  ya I saw how well behaved the libs are in Arizona, you make me laugh with your misperceptions.

  57. kinkistyle

    BTW kudos to Jromeha for calling the 300 top on PCLN!

  58. rexx

    PCLN – send in the Price Liquidator!

  59. Pharmboy

    Phil – ‘Nice, we are going to end up being the bag-holders on our own debt! ‘  Umm….can we say Japan?

     

    MELA – OK, looking at the data:  In a clinical trial at seven locations across the U.S., scientists/doctors used MelaFind to study more than 1,800 skin lesions from 1,300 patients.  They found that MelaFind’s ability to accurately rule out skin cancer was 2.5 times greater than that of dermatologists. The new photo technology accurately detected 98.3 percent of melanomas and reduced unnecessary biopsies by 90 percent, says Dr. Darrell Rigel of the New York University School of Medicine and a consultant for Electro-Optical.

     

    For a device and a CPT code (when/if there is one) – the product could be quite large.  It is still a gamble, but what is the FDA doing delaying the info?  Can’t find out why, and it gives me a bad feeling, kinda like APPY…..

  60. savitri

    Phil--if I want to sell my CPO stock and do a stock replacement what spread would I look at--Tx

  61. bobhu

    Thank you very much for the great post…. Dezev.

  62. jomama

    Pharm, I did a lot of reading/research on ARNA this weekend.  i think that the biggest risk may be ineffectiveness of the drug rather than side effects – in other words, not enough weight loss.  Having said that, they have suceeded so far with the side effect profile, which is usually the bigger problem.  It’s still a gamble, but i like the risk/reward.

  63. shadowfax

    jomtien
    You expressed something I have thought and explains my Bi-Political. There is the center and the far right, Phil slightly left, he may disagree.

  64. mSquare

    SNY – Covered Aug short puts at over +175%. Taking profits. Expect a decline more on the chart as below than making their $20B acquisition.
     http://finviz.com/quote.ashx?t=SNY&ty=c&ta=1&p=d
    No new news items regarding their GENZ buy for over $70, but given that GENZ is down to $68s, it may be time for those long GENZ to restart the rumor mill in an effort for SNY to pay more than the $70 as rumored…

  65. dmankoff

    Phil, you ‘ve got great plays when stocks are stuck, selling option premium….
    TBT anyone?  or did we all give up on trying to play this?  seems like it’s stuck at this level of 36,

  66. RMM

    Phgil: last week I asked where the JRW comments are held – in a separate place: either I never received an answer or I missed it.
    What is the situation ?

  67. loopy

    Pharmboy- Thanks.  I guess we have a few months, I will keep following…

  68. shadowfax

    RMM
    don’t know about JRW comments but miss his levels I am useing
    65.70 65.35 64.80 63.75 63.25 today unless he posts his are always better

  69. blue

    Where is JRW?   I sure missing seeing his levels each morning.

  70. hanna5

     Bumping right up against our levels now. lets see what happens…

  71. Phil

    Looks like we’re going to be pinning this top through tomorrow. 

    SDS/Matt – Sure, now you can do the Jan $31/35 bull call spread for $1.50 and sell 1/2 March $27 puts for $2.60 which is net .20 on the $5 spreads that are .20 in the money to start.  You can sell 5 of the March $27 puts for $1,300 and about $5.5K in margin and buy 10 of the spreads that pay $5,000 if the S&P drops about 5% (to below 1,070).  The $27 puts are almost 15% below so about a 7.5% gain in the S&P to over 1,200 by March for this to be put to you.  Anything less than that is VERY cheap insurance.  As to 1,100 – I wrote a whole post about it a while ago so remind me later.

    SPWRA/Roma – I mainly like backspreads to play the earnings volatiltiy, which is Aug 10th.  They missed by a mile last Q and expectations are low so I’m not in love with such a bearish play on them.  Looking at them objectively, it would be a shame to waste the .72 offered for the Aug $13 calls so I’d go for a straight calendar spread on the Jan $12.50s ($2.15) and the Aug $13s (.72) to be net $1.43 on the .50 spread with 4 months to roll and plan on putting more money into the longs, either to add some more if SPWRA does well (maybe 1/2 x to roll callers to 1.5x a higher strike) or to roll down cheaply on a dip (where you can THEN sell a ratio of Sept calls)

    TBT/DMan – The day before the Fed reiterates their Free Money policy?  Wow, your timing is the worst!  You can sell the Sept $35 puts short for .78 as it’s not a bad entry (net $34.22) as it’s lower than they’ve been at the bottoms by about .40.

    VZ/Jomp – You are in at net $23.99/24.50 so not much of a win to look forward to but at least you don’t lose and you get the dividend.  If you are feeling more confident, it’s just a question of spending $1.80 to roll the pair up to the $30s and that puts you in for net $25.79/27.90.  On the whole, if you intend to stick with the stock long-term then just keep collecting those dividends and wait for 2013 or 2014s to print and look at the rolls then.  All they can do in between is call you away at $25 and no damage there, of course. 

    WFR/Jvest – Perfectly good way to play.  Very nice with the quick 25%! 

    Email/Z4 – Greg will be back tonight and catching up on Emails. 

    Letters/Maya – It’s been tried and this is the way I’ve been writing things for 20 years so your idea is for me to change to a system I am not used to?  That doesn’t work at all and leads to infinitely more mistakes.   You will learn the lingo over time and even on that spread, you came back and questioned it because the numbers did not add up so it wasn’t that unclear.  Any time the numbers don’t match what I said or the play seems odd, feel free to double check but there’s a reason the New Members Guide suggests following along for 3 months and paper trading – YOU need to get used to the terms and the types of plays we do. 

    CPO/Savi – Not always the right strategy.  CPO only goes to Jan so you can do a simple Jan $30/35 buy write at $2.85 and sell the $30s for $1.75 for net $1.10 on the $5 spread with a worst/case that you are back in it at net $31.10.

    Left-leaning/Shadow – I don’t consider myself leftish but that probably sounds like Cap saying he’s an independent.  I am not big on the morals/religion thing so I tend to look at what policies will have the best long-term benefits for our country and if that sounds "left" then so be it.  I think one main difference is that I place little concern on my own situation since I am a bit of a historian and I look at America as a continuing entity that is getting into it’s 240s soon.  I think that’s why Europe is more liberal/socialist today as well – taking a long-range view of nations leads one to very different conclusion than taking the view that ends at the bottom of your bank statement. 

    JRW/RMM – No separate place.  He went somewhere last Thursday and didn’t come back yet.

    Kudlow’s going to tell us if Tiger’s slumping golf game is going to impact the PGA - thank goodness for CNBC!

    Europe flat-lined all day (after gap-up open) and closed up 1.5%.

    11:00 AM On the hour: Dow +0.34%. 10-yr -0.05%. Euro -0.26% vs. dollar. Crude +0.83% to $81.37. Gold -0.24% to $1202.40.

    Freddie Mac (FMCC.OB -4%) lost $4.7B (a $1.85/share loss) in the second quarter and requests an additional $1.8B from Treasury, as former derivative gains turn to losses and the company struggles with still-souring home loans. Nonperforming assets have risen to $118.7B, compared with a year-ago $75.6B.

    Chrysler (FIATY.PK) posts a net loss of $172M as – a year after emerging from bankruptcy – it’s seeing a smaller sales bounceback than rivals. An overhaul of the carmaker’s lineup still won’t hit dealerships until later this year, and Chrysler has been depending on less profitable sales to rental fleets to keep momentum.

    Though analysts expected a net gain, Dish Network (DISH -11%) lost subscribers this quarter, with consumers "strained" from competition and Dish trying to upgrade customers ("I think they let a lot of low-end subs go"). (DISH earnings)

  72. loopy

    Phil, I thought your weekend post was great.  From that and other readings, I’m looking to short spotty education companies, CPLA seems to be the ‘best’ of the bunch.  Would you look at the options or short with stops?  Or synthesize something?

    Symbol:
    CPLA
    APEI
    ESI
    CECO
    APOL

    P/E:
    24.93
    19.57
    7.24
    8.32
    8.32

    P/S:
    4.01
    3.57
    1.86
    0.92
    1.57

    P/B:
    6.5
    5.84
    15.96
    1.96
    4.44

    Price:
    $80.03
    $28.96
    $70.92
    $20.55
    $42.45

    Fair Value:
    $ 53.54
    $ 24.34
    $ 132.25
    $ 36.17
    $ 69.57

    Margin Of Safety:
    -49%
    -19%
    46%
    43%
    39%

  73. shadowfax

    Not over 10,700 #1

  74. loopy

    darn it, it was supposed to be a table!!

  75. 1020

    Phil, when you have time, can I have your thoughts on DRWI and TNDM?  Thank You.

  76. stockbern

    Phil , new thoughts on VECO?    20% lower from last time I asked

  77. fortep

     Phil—as a play on possible nonQE2 tomorrow with maybe the real thing down the road, what about a GLD backspread:  selling SEP 116 calls (5) and buying JAN 120 calls (3) for net .15 credit? 

  78. roma_

    Phil, thanks

    But I think, that such put backspread (sold 5 sept, bought 3 jan) is a  bullish play not bearish. Am I wrong?

  79. ilene

    Following WFR?  CEO bought almost half a million dollars worth at $9.76 on 8/6 (it’s now around $10.18). 

    Not sure if you can open this page without being logged in, but I’ll post a screen shot of the buying in the Insider Zone next. 

    http://www.insidercow.com/history/company.jsp?company=WFR

  80. jromeha

    Gracias for the shout out kink, just wish I had the cojones to sell more than a couple calls….

  81. matt1966

    lol!  Look at the volume of this market!!  I love how Reuters, which is used by Yahoo among others, had an article posted at 4:30am trumpeting the futures being up.   So much about QEII has been pontificated, by almost everyone with a mouth, smoothing the way for the Fed to ease that it’s now getting to the point that if they don’t, there will be hell to pay.  It’s an outrageous conspiracy. 

  82. gel1

    Jo/ARNA
    I agree with your comments regarding safety, I think that concern is in the rear view mirror, however "effective" is still a FDA benchmark that has to be met. I like the gamble, and have sold some puts that are Jan $5. I think I will buy some October calls. How have you played this one.

  83. stockbern

    I think today would be a good day for selling UNG  October or December  puts

  84. kinkistyle

    QE2/Phi:  Concerning the FOMC tomorrow.  If the Fed does indeed hint that it will start considering easing strategies, do you think we see a huge pop?    If those anticipations are already somewhat priced into the current market, won’t the upside move be subdued compared to the downside potential to bad news?

  85. Phil

    Interesting way to look at it:

    Copper is not confirming this move up, now under $3.37.  Oil also looking weak under $81.50. 

    I am having a huge amount of trouble finding upside plays I like!

    More from Goldman’s Lee: A falloff in stimulus measures and slowing export growth will bring Japan’s real GDP growth in 2011 to 1.4%, downwardly revised from 1.7%. Japan’s 2010 GDP will come in at 3.3% instead of 3.4%. (see also)

    CSCO has earnings on Weds and just popped their 200 dma, which is keeping the put prices a pit higer than they should be.  The Oct $24/Aug $25 calandar spread is $1.11 and you can sell the Oct $23 puts for .59 for net .52 on the $1 spread with lots of time to roll.  CSCO has 50 dma support at $23

    CPLA/Loopy – I don’t know that they are ALL bad but I wish I had known that one was 40% owned by GS as I could have guessed!  I think the shorts are very dangerous as there may be stimulus that has an education component (probably pushed by GS cronies).  Maybe just go with a speculative put like Dec $70 puts at $3.50, looking for bad news but I don’t see them as an exciting short now that they’re already down 20%. 

    DRWI/1020 – I have no idea what they do.  Same for TNDM, they are small and techical and I couldn’t possibly tell you if they have good or bad models. 

    VECO/Stock – I don’t think I liked them then either did I?  I think we looked at a backspread into earnings that obviously did well and I think $36 was my downside expectation (the 200 dma) but holding it for a day is not very impressive – especially in a strong market. 

    My computer is way slow – I have to reboot.

  86. rainman

    Good morning (what a weekend) ! Afternoon for some.
     
    jtif/lawns — I’m tired of lawns, period. One of the most wasteful things I know of.
     
    Interesting lack of fireworks at 10,700. This week must be about the fed.

  87. jromeha

    Phil/Gel – I know it’s had a HUGE runup but do you like going long the Yen right here as a daytrade? Logically (although this market is far from that), one would think that people would be a little risk adverse going into the end of day/tomorrow morning

  88. rn273

    Pharm/ARNA – How about the Oct 10-15 call spread for 0.9 – 1?

  89. rn273

    That should be ARNA/Pharm :)

  90. snow

    Man, there’s some grass growing in my yard….need a little excitement; think I’ll go watch it.

  91. gel1

    matt
    If we get a decent QE the market will move significantly upward for about a week, I believe – then drop. No QE and I look for a weak market for a period of time to come. The only good news we have going is the sustained earnings that are reported. Otherwise I do not see anything going forward that is optomistic. Unemployment still going in the wrong direction, threat of tax increases is a real damper on corporation expansion and consumer spending. Add in the card check legislation and global warming legislation and we will see some great short opportunities going into late fall.

  92. boobearsdad

    /DX (Dollar Index futures) beginning to jump.

  93. Pharmboy

    ARNA/jo – the efficacy is the biggest concern to me, but 5% is the cutoff, and no matter how you slice it, they make those in their combined trials.  I am least concerned about safety, as they have proven in 2X the number of patients that the heart valve risk is non-existent with their drug.

  94. jromeha

    Gel – what about repubs taking the house and the ensuing gridlock. Bad for America, but usually good for the market…

  95. David Ristau

     Hello all,

    I have a new position we are getting involved with as a Play of the Week in Nvidia Corp. (NVDA). The company is a chip maker that competes with Intel and AMD. We are looking for a 4-6% gain this week. 

    Check out my analysis, entry, and exit here!

    Coming up we are going to have a full portfolio update and Long Term Position update.

    Good Investing!

  96. jomama

    Gel, I like call spreads better on ARNA because i really don’t want to buy them at 4$ if they don’t get approved – i like the defined risk.  I still like the 7.5/15 Jan 2012 Call spread.  I bought for 1.2 – I figure if it fails i can probably get out at .5 or .6, so i like the risk/reward.
    Phil, what are your thoughts on IBM – they look very toppy at this level.  I know they are on the top of their range, i guess they could bust through but i think they will go back to 128 before they go to 135.  So thoughts on Sept 130 puts for 2.25?  Maybe sell Aug 130′s for oneish to knock down the cost?

  97. ed3524

     does it make sense to use 32" (or larger)  HD TV as a double monitor?
    health hazard? 
    is anybody using TV instead of monitor?

  98. yodi

    HI Phil, I ask myself where is the beef below?
    Oct call cost me 1.48 the Aug short call pays .37 and the Oct short putter pays .63 on 5 contracts
    I receive 492.00 and it cost me 744.00. the margin TOS runs in to 2927.00  I still have a net of 252.00 to be made up.
    Thanks
    CSCO has earnings on Weds and just popped their 200 dma, which is keeping the put prices a pit higer than they should be.  The Oct $24/Aug $25 calandar spread is $1.11 and you can sell the Oct $23 puts for .59 for net .52 on the $1 spread with lots of time to roll.  CSCO has 50 dma support at $23

  99. jdub929

     Hi Phil,
    UNG taking a hit today.  Time to reload?

  100. Pharmboy

    ARNA/rn – I like my Jan11 6/7.5 bull call spread for 65c, selling the Aug 7 P for 30c for a net 35c.  Then you know the risk/reward, and the FDA is VERY skiddish right now.  Abbott is going ahead of them for Merida…..

  101. 1020

    Phil/no idea  Just a couple of "tips"  Thanks anyways!

  102. harip

    Phil,
    Do you think V is a buy at this levels??

  103. exec

    Thanks for the info Jrom

  104. rainman

    VIX — what was that?

  105. Pharmboy

    Good article on the safety profile of ARNA.  Retail is all over this stock now, hence my feeling that they will continue to go up in the coming weeks.

  106. yodi

    Phil
    I don’t seem to come out of the SCCO deal I am long Jan 11 30 call pd 6.90 now 3.35
    35 jan call short sold 2.01 now 1.27. It looks to me copper never will go to 35 so selling the long caller now and holding on to the short caller would reduce my loss to 1.54. Or increase the margin and sell more putters but still it does not make up for the decaying long caller. Your thoughts pls.

  107. Cap

    Pensions/Cap – So tighten up the pension rules.
     
    Phil, I am afraid you are in denial … your ideology doesn’t permit you to see what a massive problem this is.  Created by politicians bought and paid for by the unions.  Sweet deal; rape the taxpayers; pad the unions; get elected.
     
    The only guy right now seriously trying to "tighten up the pension rules" is your governor who you vehemently oppose.

  108. Cap

    Got a new bike yesterday; sweet ride.  Just came back from a ride in the park; hot day; good break ….
     
    http://www.trekbikes.com/us/en/bikes/bike_path/fx/71fx/

  109. chaps

    Here’s a portfolio margin play on PG, similar to the one I posted on WMT last week. Buy the Jan 2012 $57.5/60 bull call spread and sell Jan 2012 $47.5 puts for net credit of $1.57. Gross (portfolio) margin is $4.71, so net margin is $3.14.
     
    The trade pays $1.57 between $47.5 and $57.5, and pays up to $4.07 at $60 and higher.
     
    If put to you, you pay around $46. At its very worst in Q1 2009, PG touched around $45.

  110. terrapin22

    Pharm / ARNA – i think i recall you mentioning that your target marketcap for ARNA is $2 billion.  so after roughly a double from today’s levels ($900MM mcap) should we be selling?  Thx. 

  111. shadowfax

    cap
    I see two problems with pensions, first only a few are collecting on multipal pensions, they are politicians as they get exceptions others don’t, second all insurance companies are rippping off their customers. Unions are a small part of America. They were but this tune is very old and worn out. The only solution is vote everyone out and if the new do the same, vote them out, sooner or later they will get the message.

  112. datuu

    hi, i am new here and have what is probably quite a dumb question in regards to one of Phil’s favorites WFR--i would appreciate any & all feedback in terms of my thinking--the stock is currently at $10.22, you can sell the 1/2012 $10calls for $2.63 (24% return in 18 months) and sell the 1/2012 $10 puts for $2.25--you immediately collect 48% and the worst that can happen is that you have to buy more stock for a net cost of $5.34 --and the stock hasn’t been that low since january, 2002--do i have this right or am i missing something—-thanks

  113. boobearsdad

    datuu,
    Almost.  Your net cost on the first round of shares you bought will be $5.34 ($10.22 – $2.63 – $2.25).  If put in 2012, you’ll have another round of shares at $10.00, so your average cost would be $7.67.  (That’s often written here at "net $5.34/7.67".)

  114. nicha

    datuu- phil recommended that exact play sometime back on WFR and I am in it.

  115. knuklhead

    Follow up on IRA trading rules with TDA:
    I begged the Account Rep to point me to something in writing that explained TDA’s trading rules for IRA accounts.  He couldn’t (or wouldn’t).
    He did tell me that the rules are different for TDA and TOS (which TDA now owns?).  So, by using TOS, I was able to sell cash-secured puts out of my IRA account.
    This whole thing has been very frustrating.  It’s hard to believe that they don’t publish the rules up front.
    Thanks, Phil and all who commented.

  116. chaps

    datuu – You’d pay net $5.34 when you enter the trade, so that’s your cost for your initial position. If the $10 puts are put to you, you pay $10 on those and you’ve doubled your position. So you’re either called away at $10 off of a basis of $5.34, or you end up owning 2X with a basis of $7.67.

  117. jromeha

    An early stick before the selloff tomorrow? I know I shouldnt fight this but Im gonna put on my Matt hat for the day and short this BS.

  118. shadowfax

    datuu
    Chip stocks in general have made a good run. The problem is they will start disappointing by noot making huge gains going into next couple quarters because the economy is flat. Ilene reported inside buying and that can be long term or propping the price.

  119. jomptien

    Cap, big business is buying congress not the unions.

  120. gel1

    jromeha
    I am agnostic on the Yen going into tomorrow as a trader. I do believe the odds favor Yen strength however. If the markets drop tomorrow because we get no help from the Fed, then the Yen will strengthen,but the dollar might strengthen as well as it will mean the dollar has not been diluted through easing.
     
    Regarding the possibility of a Republican control of the House, or a significant pickup in the Senate…. either means gridlock for the following two years. This is very positive for the markets, and relates somewhat to the practice of medicine – "make sure no damage is done" as a primary concern. Stocks are valued based primarily upon earnings or potential earnings, so therefore it the harzards to income generation or the increase in taxes are eliminated, then this is positive and can influence the p/e of a stock. Risk always lowers the price of an equity. Just my $.02.

  121. kustomz

    Here we are 2+ years later waiting on a big announcement from the Fed to help the economy get out of this rut. More free money to jack up prices while jobs continue their decline. May June 08 was the last time markets were at this level of disconnect from deteriorating economic data. Companies were reporting great results from operations and any down turn seemed manageable. Last thing I want to do is get too comfortable thinking Bernanke will somehow save us, again.

  122. Cap

    jomptien -
     
    they both are, in diff ways.
    business gets TARPs, bailouts, tax breaks.
    unions get special work rules; pension benefits, make work jobs (stimulus ?  let’s build roads , fix potholes, bridges to nowhere, etc). 
    not all unions get their benefit s at the federal level; state and local ones eat at the state and municipal level.

  123. shadowfax

    CONGRESS!!!!!!! That is the problem, the latest bidis?

  124. gucci

    Hi Phil — as we get close to 10700, would this DXD spread ok for hedge  Oct DXD 25/30 bull spread for 1.18 and sell oct 24 put for 95 with a net 0.23 for $5 spread . thx

  125. ravalos

    Phil, I hold 15x Jan 2012 LDK $5 Calls. I paid for them $2.8 a while ago, and now that the stock has appreciated a lot from $5 to $7.4 prior to earnings, I’m seriously thinking on covering them with Dec $9 Calls @ 0.6 (I already covered 1/2 @ .48). I believe in this company LONG-TERM, but I still think they are not completely out of the woods yet and in a clear path to prosperity.. but I do believe they will slowly get better and better until they become the lowest-cost producer of Solar Wafers.. do you agree with my idea of covering them with Dec $9 Calls prior to the earnings announcement tomorrow? Thx

  126. yodi

    datuu
    WFR the net you possible will receive out of the straddle will be 4.85  This covers you between 5.15 and and 14.85
    The problem you could run in to the stk will go over 14.85! As the stk is trading already over 10.00 you are ITM with you short caller and without having the stk, I would not enter the trade as such.

  127. jromeha

    Gel – thanks for the info regarding the Yen. Those were kind of my thoughts as well. I bought and will be looking to sell tonight and/or tomorrow morning before the announcement (maybe at EOD if we get a sell off in the market).

  128. yodi

    Phil,
    The SSO play you had set up some while ago has played out exellent!!! Do you have any new ideas on this play? thks

  129. Jbur

    Chaps,  thanks for posting the portfolio margin plays. Well defined entrance, exit, risk levels and reward. Conservative stock selection too!

  130. jomptien

    Cap, Yes, some of the local pensions are silly and negotiated when real estate taxes were pouring in and the federal employees have it good also but a far cry from the millions that the high execs. get when they retire.

  131. Phil

    GLD/Fortep – Well if we have none tomorrow, gold should fly down but the danger of it going up is pretty high so that’s a very bearish bet.  You are probably better off simply speculating with a put or two.

    SPWRA/Roma – Yes, it’s bullish but cautiously so.

    WFR/Ilene – Screen comes up fine.   I hope his timing is good!

    Conspiracy/Matt – Not much more so than a bunch of people standing around a burning building and speculating that when the fire department gets there it will most likley put some water on the fire.  Does that chatter "cause" the Fire Department to put water on the fire or is it simply the logical response to the problem?

    UNG/Stock - Huge disappointment at lack of promised storm activity to date by impatient investors.  Hard to see why buying the Jan $6/7 spread for .60 and selling the Jan $6 puts for .34 is a bad idea as that’s net .26 on the $1 spread that’s $1.21 in the money now.

    Hints/Kinki – I think we need more than a hint.  We’re up about 5% in anticipation of Fed action now.  I do think a move up will be subdued while a move down could be hard and fast so the percentages favor making downside bets. 

    Yen/Jrom – Someone in the BOJ said something about intervention so I’d stay away at least until our usual 3am spot and, of course, tomorrow is kind of a wild day to bet against. 

    Watching grass grow/Snow – Very Zen!

    TV/Ed35 – I’d be worried about the effects of long-term staring at TV on the eyes.  They don’t have the same refresh as a real monitor and could cause eye-strain.  I used to always get eye-strain until I got my Mac Cinema HD Display, which seems to have an NVidia (speaking of!) GeoForce 6800 with 256Mb and it’s set at 2,560 x 1,600 – pretty much as good as staring at paper. 

    Beef/Yodi  – What???  I do not understand your question.  The net cash outlay is $252 (.504 per long) and of course you have margin on the short put.  That’s all there is to the play, if CSCO goes up, you make $1 or better on the spread and net $500 or bettter (with additional call sales) cash back on the $252 outlay. 

    V/Harip – I think the global consumer is too uncertain still.  Until jobs really start to turn around, I’m not seeing a lot of growth but I sure wouldn’t short them either (MA we do like to short when they get too high). 

    SCCO/Yodi – With the dollar this low you are lucky you have what you do on this one.  You can stay in by rolling the caller to the Sept $31 calls at $1.40 and, if that works out you can pick up $1 per month, which is better than liquidating for net $2.  If copper heads lower, you can move to March at a lower strike but just make sure you collect $1 per month in premium, which would have been the better way to work this trade from the start. 

    Pensions/Cap – I don’t oppose Christie although I’m not happy about him dealing off chunks of the state to his buddies – that’s kind of par for the course in NJ.  Loopholes should be shut – obviously.  It was never intended for people to draw double salaries and, of course, you can blame every administration since Roosevelt for letting it happen but no one ever wants to make the changes.  Once again, the need for granting me full Dictarorial powers is evident…  I have one of those nice bikes – could have sold you mine – barely used after 10 years!

    Good PG play Chaps!

    WFT/Datuu – Assumiong you mean owing the stock as well as the short straddle – that’s exactly how we like to play it (and note Boobearsdad’s and Chaps’ notes on the "put-to" price.  Isn’t it crazy that you can give yourself that kind of discount when buying a stock?

    Rules/Knuk – If they write them down it make it harder for them to randomly change them.  8-)

    Bernanke/Kustomz – It’s not about whether he CAN save us again but if the markets believe he can and I’d say we’re poised for a big break-out on QE2, which we would then want to short once it runs out of gas but betting against it now is EXTREMELY dangerous.

  132. tuscadog

    Phil / QE2  Members are posting a range of expectations and expecting a major mkt reaction tomorrow.  But, surely the Fed doesn’t react that quickly (they’re academics).  Aren’t they just going to repeat "years of free money ahead".  Additional actions, like purchasing more Treasuries will likely be announce at a later date, maybe to coincide with an Administration announcement of new structural employment initiatives (which I suspect the Administration is working on but not yet ready to announce).
    Not sure I see why folks are expecting any major announcement tomorrow.  And, I’m not sure why non news tomorrow fundamentally changes existing mkt valuations.  Corps stay lean and mean in minimal growth environment and everyone knows that large Fiscal initiatives will likely be forthcoming at some point in response to the ongoing lack of job creation.
    So, as I read you Phil, since I don’t anticipate any big new news tomorrow, should I go ahead and cover my unhedged long positions?

  133. snow

    somebody’s bot just hiccuped!

  134. flipspiceland

    @PHIL
    Where do I find a reference to the ’3 am JPY spot’ that you occasionally refer to?

  135. yipcarl

    Hey as far as I’m concerned they need to take all the pensions away or decrease them by 80%.  Hey United Airlines pilots had to take a pension pay cut why can’t a city official that did next to nothing be banking 20k per month?  No Way.

  136. shadowfax

    yipcarl
    You have outdone all, who gets $240,000 per year pension?

  137. kustomz

    Phil, agreed and I’m sure the administration would love to see the Fed work its magic. Considering home prices continue to decline I believe this will be their main focus, save housing and they save the economy. It would be financial suicide to bet (big) against what the markets perceive as a positive move but it would be stupid not to put a little bit towards a possible sell on the news, timing it just right of course.

  138. yodi

    Phil Not quite clear on the below do mean to roll the long Jan 30 caller back to Sept 31 long caller ? thks
    SCCO/Yodi – With the dollar this low you are lucky you have what you do on this one.  You can stay in by rolling the caller to the Sept $31 calls at $1.40 and, if that works out you can pick up $1 per month, which is better than liquidating for net $2.  If copper heads lower, you can move to March at a lower strike but just make sure you collect $1 per month in premium, which would have been the better way to work this trade from the start. 

  139. datuu

    thanks, boobsbeardad, nicha, chaps and shadowfax--your help is greatly appreciated           

  140. ed3524

     Thank you very much, Phil  (TV vs Monitor)

  141. Pharmboy

    ARNA/terr – by all means take off profit.  I like many of the spreads to reduce risk and know WHAT you can lose.  Valuations are meaningless for now, but I see them being bought for double here IF they get approval – 15 range by Eisai.

     

    QE2 – I agree tusc, I don’t think it comes tomorrow but rater later in the Q3/4 when they really see the slowdown starting.

  142. stjeanluc

    These guys are good – they get hammered for having perfect quarters of trading so they hire new programmers to add a loss here and there. Brilliant! 

    Goldman Sachs Group Inc., the bank that makes the most revenue trading stocks and bonds, lost money in that business on 10 days in the second quarter, ending a three-month streak of loss-free days at the start of the year.

    Losses on Goldman Sachs’s trading desks exceeded $100 million on three days during the period that ended June 30, according to a filing today by the New York-based company with the Securities and Exchange Commission. The firm also disclosed that trading losses surpassed its value-at-risk estimate, a measure of potential losses, on two days. 

  143. Pharmboy

    One other thing to consider, and I know it is an unpopular one (and I cannot remember who posted it about bond traders), but bonds lead the way.   Consider this:

     

    The yield on the 10-year note hit its nearby peak on April 5, at 4.01%, and has since plunged nearly 120 basis points.
    Declines of this magnitude very often presage the onset of bear markets and recessions. Typically, equities and then economists are late to the game. Nothing we are seeing is any different from the past, at least on this score.

    What is key to note is that the bond market is the tail that wags the stock market’s dog — it leads.

    The 10-year note yield peaked on May 2, 1990 at 9.09%. By December 12, 1990, the yield was all the way down to 7.91%. The S&P 500 peaked on July 16, 1990, the same month the recession started. So Mr. Bond led both by over two months — the 120 basis point slide in yields by December provided ratification (though there were still some, including Alan Greenspan at the time, who still believed a recession had been averted).

    The yield on the 10-year T-note peaked at 6.79% on January 20, 2000 — the stock market peaked less than eight months later on September 1. By November 28, 2000, the yield had plunged to 5.59% — down 120 basis points (as is the case today), again providing ratification that we were not heading into some routine soft patch. Indeed, the recession started in March 2001, so the bond market again played the role of the real leading economic indicator, not the stock market.

    Then in the most recent cycle, the 10-year T-note yield reached its high on June 12, 2007 at 5.26% — by November 21, it was all the way down to 4.00%. The S&P 500 peaked on October 9, 2007, three months after the peak in the bond yield. Yet again, a 120 basis point slide was the smoking gun for the economic downturn — it was called the ‘hard landing’ then, though the plethora of economists decided to look the other way; and today it is called the ‘double dip’ and once again this view is met with widespread ridicule from the economics intelligentsia.

  144. Phil

    DXD/Gucci – It’s OK but keep in mind that you are taking a big risk since a 5% rise in the Dow, to 11,200ish, would knock DXD down 10%, to about $22.50 and, of course, it can get much worse so that’s a fairly bearish position if you are selling close to the money puts but, as long as you are comforatble with that risk, that’s a fine way to play. 

    LDK/Rav – I would rather sell 1/2 Dec $7 calls for $1.40.  If they head up, it’s a 2x roll to the Jan $9s (now .70) and if they head lower, you can slap on some more covers quickly to absorb the downside. 

    SSO/Yodi – I’m not buying into the upside story here so not today.  If we get QE2 tomorrow and we break 3 of 5 of our levels and hold them, then we can play on the S&P to catch up on a 1,155 or better run.

    Tomorrow/Tusca – No, I think whatever the Fed is likely to say in the parameters of their statement is already baked into the market so we are ripe for disappointment.  Clearly there has been a TREMENDOUS week-long effort to keep us rubbing against our upper levels so it does seem that there is the intention of popping us over tomorrow afternoon (or maybe earlier if there’s a pre-announcement) but then what?  To me, if there is a strong Fed announcement tomorrow, it will be followed up over the weekend with some serious stimulus – anything short of BOTH of those events happening is not going to be bullish enough to sustain 10% over our mid-points (10,200, 1,100 etc.).

    JPY/Flips – That’s just the standard USD/JPY trade we always watch, where "THEY" tend to push the Yen down (driving this spread up) during Nikkei market hour and it usually peaks out between 3 am and the 4 am Nikkei close.  After that, through our own pre-market, the Yen tends to rise again, sinking USD/JPY to lower levels, which tend to bottom out around 8 am.  Observationally, I’d say that this trade pays off better than 3 times out of 5 and it’s pretty easy to know when it doesn’t pay off as ANY move up after 4am nullifies the trade. 

    $240,000/Shadow – Forget it, he’s rolling8-)

    Oh great, CNBC back on the $200 Oil bandwagon.  Becky’s lead-in logic is great – "Oil is up over $80 for no reason at all so what if there is a reason?  Can $200 oil be far behind?"  Isn’t that the same logic that had people buying 2Br homes for $1M?

    SCCO/Yodi – Buy back the Jan $35 (not $30) short caller for $1.30 and turn around and sell the Sept $31 caller for $1.30 and that’s an even roll that expires the caller in 6 weeks.  Once that premium is gone, you can roll them or sell a new caller and if you pick up $1 in Oct, Nov and December, that’s $3 back against whatever value you retain in your long calls. 

    Bots/Stjean – They were on the verge of another investigation if they had another perfect Qtr. 

    10-year/Pharm – Yes, we did have that drop and we did have a recession but now the bonds are arificially kept low so hardly as good an indicator as they would be in an untampered market (what is that?). 

  145. Pharmboy

    What time is the fed tomorrow?

  146. rainman

    Unreal. CNBC talks about Iran’s subs and oil rallies.

  147. jromeha

    Yip – You mention decreasing pensions b/c of a few fox news stories of abuse? Yes, I will admit that allowing city/state/Fed employees to double dip aka retire 2x gives them VERY generous pension packages and those should be reduced but eliminate all/reduce by 80%?!? Sometimes it’s better to think twice before you write crap like that. Teachers get paid crap and deserve a decent pension. Also, As an AD military guy I get some of the best retirement benefits out there…MAYBE a little too much. However, we have to move our families every 2-4 years and don’t get to decide where we are moving to (I know I wouldnt have chosen to live in friggin OMAHA for 4 years!). Then there is deployments – I volunteered to deploy to Kyrgyzstan and during the middle of it I was told that as soon as I came back I would be going to Oklahoma for 7 weeks of training with the army and immedietely going to Baghdad for another 180 days. I wouldve missed the birth of my first child (as well as her first 4 months of life). I asked if there was anyway I could switch with someone for the same deployment and go during the nex t cycle but was told no. I was lucky and somehow the tasking was moved to another MAJCOM (it was an administrative thing, not done to help me out), but many others havent been so lucky. I’ve spoken with many people in the Army who have been deployed for 4-5 YEARS since the Global War On Terror (GWOT) began.  They’ve lost their wives, missed births, sons’/daughters’ weddings, high school graduations, ect…. You think we should cut their pensions by 80%?
    I know you’re angry at an abuse that’s made news but you should really read what you type before submitting.
    THat’s why the big man/woman upstairs gave us 2 ears and one mouth…. Of course in this instance that doesnt really work b/c we have two hands! Sorry for the rambling, was up  on and off all night grinding away a small gain with the Yen trade :)

  148. gel1

    Jo
    I was able to enter the 2012 spread on ARNA…Thanks   As I mentioned, I like the odds, and I’m thinking this drug could, ( if approved ), really  take some wind out of NTRI sails. ( as well as sales) – might make a nice short once we know the outcome on ARNA.

  149. Cap

    jomptien; the corp execs you speak of — their pensions are not paid by you and me.  big difference.

  150. loopy

    Good interview about the international climate….
    http://www.madhedgefundtrader.com/august-4-2010-george-friedman.html

  151. Cap

    I have one of those nice bikes – could have sold you mine – barely used after 10 years!
     
    Why am I not surprised !  LOL.   Get out and ride w/ your girls.

  152. gel1

    jromeha… you guys can never be "paid too much".

  153. rn273

    ARNA/gel1 – what did you get into the spread at? Mine isn’t getting filled…

  154. mSquare

    Pharmboy,
    Great posts on ARNA and other Pharma stocks.

  155. chaps

    re: They were on the verge of another investigation if they had another perfect Qtr.
     
    It’s like when the British broke the German "enigma" code during WW2. They were smart enough not to utilize the gained intelligence all the time, so as to not tip off the Germans that their code had been hacked.

  156. Cap

    shadowfax; there are way too many getting six figure pensions; some in the 240k range like yip suggests.
     
    The guy that is head of one of the SUNY colleges, retired from NYCERS (NY Common retirement fund … public employees), with $200k pension; then given job as head of one of the universities for $300k +, plus new pension possibility.   And he’s not the only one.

  157. Phil

    Oil getting it’s usual stick save into the NYMEX close (2:35), up from the day’s low to just under the pre-market high so far.  Our indexes are pumped too. 

    12:00 PM On the hour: Dow +0.37%. 10-yr -0.08%. Euro -0.3% vs. dollar. Crude +0.84% to $81.38. Gold -0.12% to $1203.90.

    1:00 PM On the hour: Dow +0.29%. 10-yr -0.01%. Euro -0.38% vs. dollar. Crude +0.4% to $81.02. Gold -0.27% to $1202.00.

    2:00 PM On the hour: Dow +0.35%. 10-yr +0.01%. Euro -0.39% vs. dollar. Crude +0.68% to $81.25. Gold -0.27% to $1202.00.

     Wheat’s Russian roulette: Planting decision time for farmers.

    No wonder CNBC is pumping again:  Hedge funds boosted their bets on crude to a 13-week high, expecting Tropical Storm Bonnie to delay imports, before jobs reports last week put a damper on prices. Analysts expect more softening in oil prices this week. Currently: crude futures +0.5% to $81.09.

    It may not be the high-flying dot-com days, but Luxembourg-based telephony provider Skype has filed for an IPO of American depository shares. Net income for the first half was $13M, though much of it was from interest income.

    Honda (HMC -1%) recalls 384K vehicles due to a faulty ignition system that could allow the car to be switched off without being placed in park, increasing the chance the vehicle could roll. The recall affects Accord and Civic 2003 models and Element 03-04 models.

    Three lunchtime reads:
    1) Fed: Waiting for nothing?
    2) GSEs: The third rail of housing policy
    3) The AIG bailout scandal

  158. gel1

    I’m curious… with the upcoming IPO planned for GM – is it possible for me to recover a portion of the $65K the government took from me, and gave to the unions? ( end of sarcasm font )

  159. Cap

    Cops and firefighters are retiring on disability (with like $70-80 k pensions), 90% of ‘em are.  They have a whole network of doctors and rules that politicians signed off on.  Any illness you might have, you are PRESUMED to have gotten while on the job, which most are not.  So bingo — full disability.
     
    There have been stories about a couple of these guys on long island.  One is a triathelete.

  160. jromeha

    Gel – appreciate the comment… I dont do anything exciting though. Im a desk jockey and right now Im getting paid to go to school full-time – learning how to Cost so we can stop buying 5000$ toilet seats :)

  161. matt1966

    Don’t anyone follow me in this trade but I think we are being set up for tomorrow.  It is like a conspiracy when the MSM all seem to make it out to be a foregone conclusion that the Fed will ease tomorrow.  Besides, how many times does the market do the opposite thing of what you think it should do?  I think either way we go down tomorrow after the announcement.  They can spin it any number of ways.  Not enough easing, the economy must really suck and easing will have delayed impact.. blah, blah, blah.  But the action for the last couple of weaks has been faker then fake.  THEY are behind this move up and THEY will profit when they sell before most people can react.

  162. cwan120

    Hi, Peter D,
    Are you around?  I’ve been busy in my day job, and can’t read PSW as much as I’d like.  But be rest assured that I’m still a die-hard follower of your SPX strangling plays!
     
    So, I have Aug 1180 & 950 strangles.  VIX is quite low right now.  I’m wondering if I should roll Aug 950 putters (about $0.25) to Sep 950 putters (about $2.40).  Or, buy back the Aug putters.  And deploy later?

  163. jromeha

    Cap – agreed – the disability system is a joke – Im in FINANCE and we had two troops get out for ‘migraines’ on 100% disability (the accounting gave them headaches?). Can’t prove they don’t have them, it’s sad….

  164. trice

    phil – dumb question . but do you relly think the fed is going to announce QE2  tomorrow ? really?

  165. tuscadog

    Phil / SKX   Don’t understand the price action, down 8% today?  Bought another 2000 shares as the MM has divorced the price from the company’s performance.  Sales and margins are great and SKX is attacking a growing GLOBAL mkt with an aspirational fashion fwd product.  Now I hold 5000 shares, maybe I’m dumb?

  166. yipcarl

    JR and Shadow.  Perhaps you are not paying attention to what’s happening in California?  There is a police chief making about 450k and a city council person making over 800k.  Some that have retired have pensions from this city paying them over 200k per year. I read 2 articles on it last week I’ll try to find them.
    JR… I beg your pardon what are you talking about?  Did you misdirect your post?  I have no idea what your life and so forth has to do with my post?  My brother is an Army Ranger and Iraq war veteran what does that have to do with my post?  I’m not eluding to any specific group of people and I’m certainly not speaking about soldiers?  I have no idea how you construed my post to fit what you wrote.  I’m simply making another point about our joke of a system that many of you on here think is just fine.  PS I don’t watch Fox news EVER.  Again I read your post and I’m laughing.  Teachers should have triple the pensions they have.  I’m not referring to teachers or soldiers for that matter.
    This market is a sick joke. Up Friday and Today on terrible numbers and no improvement however many of you are so far from vantage point if I turn out to be right I’ll be more annoyed than if I’m wrong. 

  167. kinkistyle

    Got a big resistance at 66.1 on IWM

  168. bgbigelow

     Phil at what point do you cover the dia mattresses?

  169. gel1

    Cap/Cops
    I have a relative that is a Cop… nice guy but has to take his shoes off in order to count to 20.  He makes $200K per year which includes a part time security job.  He soon will retire at 75% of last salary amount and he is in his early 50′s. I have to laugh, he has been buying Las Vegas residential real estate over the past four years ( all leveraged ), and this genius just lost it all.  Oh well…. the pension will soon kick in, and he can do it all over again. (and probably will). 

  170. yipcarl

    Matt I 110% agree with you.  This is a joke, a total joke, all I can do is laugh.  This yet another PUMP AND DUMP set up. I wouldn’t be surprised now if we broke 10800.  Smoke is thick and the Mirrors are all over the place.

  171. yipcarl

    IWM Resistance level I have is 66.

  172. yipcarl

    GEL thank you for waking up the slumbering.

  173. shadowfax

    matt1966
    I am with you now over 10,700 were will we go, I went short!

  174. dflam

    Phil I bought SDS March $40/$48 bull call spread for $1.22 ( now $.91) and sold Dec. $26 P for $.90 ( now $1.03) .Do u recommend any changes.
    What does the term "QE2" mean in relationship to Fed ? 

  175. jromeha

    "Hey as far as I’m concerned they need to take all the pensions away or decrease them by 80%.  Hey United Airlines pilots had to take a pension pay cut why can’t a city official that did next to nothing be banking 20k per month?  No Way."
    How am I SUPPOSED to take this comment? What exactly are you ALLUDING to? You’re reading my post and laughing? Don’t tell me you’re still bitter about me calling you out with your mancrush on JRW! lol

  176. David Ristau
    Hey all,
     
     
    We are up over 55% this year with our Buy Portfolio…pretty groovy!
  177. hanna5

     If we go up another 60, 70, 80 points today…then i dont see anything tommorow short of fantastic amounts of free money that could goose this market any higher. It seems like we’re baking in any positives.

  178. jdub929

     PCLN pump job in full force.

  179. yipcarl

    JR if you read the string we were discussing the pension atrocities not teachers or soldiers pensions? To add to this string of thought.  Mark Hurd of HPQ breaks the rules and he may get a 40 million severance?  Really?  OK well he isn’t a city official or police chief because he was running a massive multinational company however he breaks the rules, leaves the job, and gets 40 million? A policeman should make 200k in retirement?  Come again?

  180. pstas

    Cwan-Strangles- FWIW- I am holding my Aug positions for now- no new Sept positions- looking for a bit better VIX to sell in to.

  181. kinkistyle

    Yip:  Yeah, 660 is a natural level.  I also have some fib/level confluence at 66.1 – 66.2

  182. gel1

    dflam… QE2 is the second round of quantative easing ( aka – money printing )

  183. yipcarl

    Kink as do I. This area has A LOT of resistance overhead. 

  184. pstas

    GILD- Pharm- news item:
    NEW YORK -(Dow Jones)- Gilead Sciences Inc. (GILD) said it may receive a warning letter from the Food and Drug Administration after an inspection of its San Dimas, Calif., manufacturing and distribution facility found a number of problems.
    Is this type of thing of any importance or just "noise"?

  185. shadowfax

    yip kink
     I have the same liness and my feel is anti stick close!

  186. pstas

    GENZ- down 2% today- any info anyone?

  187. shadowfax

    TBT dropping!

  188. savitri

    Phil-- I bought  TZA sept 34/39 bull call spread  for net $2.05 ( presently net $ .80) and sold sept 30 puts for $1.85 (presently $3.15)--do I change roll etc or just leave it as is for now
    Tx

  189. jromeha

    Phil – stick or anti-stick? Im short TF but a very nervous short :(

  190. jvest

    Phil, need advice on a DXD hedge adjustment. Around 7/14 you suggested and I bought a DXD Oct $26/30 bull call spread financed by sale of Jan 2011 $25 puts. When I first bought it, I saw some moderate gains and probably should have closed it out then, but I kept it around as a medium-term hedge. Now the spread has fallen out of the money and the put sale is almost at the money. How would you adjust based on what we know today?

  191. aclend

    I agree on the tenuousness of the rally but it seems there are increasing numbers of bears to squeeze as we grind our way upward and more and more people protest that "it shouldn’t be this way; I’m shorting it!!"

  192. cwan120

    Hi, pstas, RE strangles,
    What’s your outlook short term?  I am thinking that we are more likely to get a pullback in the next few days.  So, I am debating whether buying back a small number of putters EOD today, and maybe redeploy if we do get a pullback.  On a pullback, I buy back my callers.  In other words, legging out the putters & callers separately, instead of taking out putter+caller pairs together.

  193. acobra65

    Pharmboy/BondMrk
    Thanks for the history… excellent post. This fact is usually forgotten by most only intent on equities.  

  194. yipcarl

    Shadow I mean ya think?  This is craziness. CRAZINESS.  The only justification for this is they add another billion dollars to this market as a result of QE2.  If that happens who knows AND if that happens how people can say we are doing fine and are in a recovery hurts my brain.

  195. cmsosa

    hi Phil,
    I`m planning to buy the Sept XLF 13/16 bull spread for 1.86 and sell the Mar011 14 put for 1.10 so net 0.76 in the 3$ spread as a way to play QE2…do you think it is OK? I woudn’t mind owning XLF for today`s price in the worst case, would you? thx

  196. pstas

    Cwan- I am neutral to slightly bearish near term. So, taking out the putters for possible later re-sell makes sense. I may do the same now that I look at it.

  197. rainman

    Woo Who!!!! Dora the explorer closes the market today! Are kids watching the markets these days? Sure moves about in a childish fashion.

  198. rainman

    matt/fed — I think the action (or lack of) above 10,700 is agreeing with you.

  199. shadowfax

    yip
    Plan B is if we don’t retrace I will hold IWM puts overnight.

  200. hanna5

    This market scares me. If we get bad news tommorow and volume sellers come out, we could drop like crazy. i wonder if we could fly up in the same fashion…

  201. jomama

    rainman, probably pretty appropriate -"Swiper, no swiping!!"

  202. snow

    IWM puts/Shadow – yeah. Ive got some of them too that might be useful manana por la manana.

  203. jromeha

    SHadow, yeah Ive bought a decent chunk of FAZ, and phil’s QID play. And re-entered my short TF at 659

  204. chaps

    BIDU running up close to $88.

  205. diamond

    Phil - BAC and JPM … the "big dogs" (as in: let the big dogs eat) are being held back today. What if anything do you make of this?

  206. Phil

    Fed/Farm – 2pm.

    Pensions/Jrom – They cannot pay you enough for what you do!

    Enigma/Chaps – Oh yes, those guys are amazing at covering their tracks. 

    Stratfor/Loopy – Well they lose me as soon as they say $500 oil but MHFT is known for making outrageous statements…  I love how people can arbitrarily say $5,000 gold and $500 oil and no one challenges them when it’s no different from me saying "I like coke, which will be selling for $10 a can as soon as people realize there’s a shortage."  A shortage is not enough to alter the price of a consumable – you must have people willing and able to pay the new price for a sustained period of time or the price collapses under it’s own weight.  People have been speculating on oil based on the imminent breakdown of the US/Iran talks since 1973…

    Bikes/Cap – Hey, I taught them HOW to ride – now they are on their own…

    SUNY/Cap – So you have about 12 examples of $200K pensions and there are 2M examples of former teachers and police and firemen etc who live on cat food – this is a ridiculous discussion without proper statistics.  What is wrong with you people with your ridiculous anecdotes to attempt to sway policy discussions?  It this really how you form opinions and make decisions?

    $65K/Gel – Good idea, let me know if that works out!

    $500 toilets/Jrom – I would say for a start that the army would be a hell of a lot more popular with the locals if they built more of their bases (when possible) from local supplies bought from local merchants.  No one would be looking for you to leave a base if they stocked up with trips to town and dropped 1/3 of the $1M a month they usually OVERspend to ship things from the US to the base that could be bought for 1/10th the price locally.  Of course, the contractors wouldn’t like that one bit and what would be the point of deploying troops at all if they werent’ going to be supplied by contractors??? 

    Tomorrow/Matt – Let it be

    QE2/Trice – I really think they will announce another measure to pump more liquidity into the system as the lending is still frozen and that is the traditional solution.  I don’t think it will mean much and certainly not enough on it’s own to justify a major rally but that doesn’t mean we won’t have a major rally anyway. 

    SKX/Tusca – Retail often makes no sense.  My poor CROX were beaten all the way down from $10 to $1 and I was telling people it was ridiculous all the way through but it lasted for months.  There’s nothing you can do but dollar cost average in and ride out the dips for the LONG TERM.  My logic with CROX was that someone like NKE would at least toss them $50M to buy $200M in sales, even if it ended up being a marginal line – you have to find the absolute bottom and make a stand.  At $30, SKX is trading at 1x sales so not really a no-brainer with $54M in profits on a $1.4Bn cap (p/e 28).  They could drop back to $15  or even $10 and that’s where you’d better be willing to add 5,000 more shares, not down 8%. 

    VIX up 1.3% today – interesting.

    Mattress/BGB – We haven’t got 666 on the RUT yet so the risk/reward favors rolling up to the Dec $110 puts and staying naked through tomorrow.  If we are over on 3 of our levels tomorrow, then we can cover with 1/2 Aug $107 puts (now $1.30) and 1/2 Sept $107 puts (now $2.55) with a stop on the Augs at the 10,700 line. 

    A little sell-off into the close – interesting…

  207. jomama

    May dip my toes in SBUX puts based on MCD earnings tomorrow.  Good McCafe sales may drop sbux.

  208. yipcarl

    Shadow, I’m short and holding. I do think we could see a fake out up to 10800 tomorrow AM before kaboom.  I don’t think this 10700 is going to hold as resistance.. I truly feel it trades above this level which will get people less short and others long just before kaboom.

  209. kinkistyle

    Aaaah frick.  My QID putters only got half filled. 

  210. rainman

    Phil, can I borrow your keen insights for a look at CTB (Cooper Tire) on a fundamental level? Thanks.

  211. shadowfax

    It’s Texas holdum my feelings have been we either open down or drop after Ben’s same old story that the market doesn’t buy. I do like the kaboom idea but no fear on big losses!

  212. yipcarl

    kaboom shadow!

  213. jromeha

    Phil – Yes, it would be nice if we could buy more stuff from the locals. We actually have many locals working in our bases in Iraq/Afghanistan, but buying stuff locally is VERY tough. For instance, food is nearly impossible due to various regulations, health/safety standards ect…. We actually do buy ‘local’ office furniture. Rich Iraqi businessmen import furniture from China and sell it to the US for a ridiculous mark up!

  214. shadowfax

    yipcarl
    Do your KABOOM dance tonight! Phil’s comment was naked puts so our leader is with us!

  215. Phil

    SDS/Dflam – Not worth messing around with unless you WANT more.  These are INSURANCE plays.  Do you call your life insurance broker and say "hey, I lived through July and I feel fine, maybe I should DD on dying in August."  It doesn’t work that way.  You are giving up a percentage of your expected upside gains for the piece of mind of having a hedge against downside losses.  You can roll the $40s to the $35s for $1 and that buys you a lot more protection for a little but that’s a much more aggressive play and the $1 is very likely wasted.  

    TZA/Savi – Hopefully you did well on the opposite side of that trade.  The insurance is essentially free if TZA holds $30 (just .20 lost on the spread) but if you cash the $34/39 spread now you take .85 off the table and then if TZA holds $30 you make .65 on the play and your break-even is $29.35 on TZA.  Ideally, at the point where you are unwinding your hedge, the long plays you were protecting should be mature enough to take off the table or to self-insure by selling deeper calls against them. 

    TF/Jrom – Any short is very dangerous.  "THEY" have been pumping up this market since the middle of July with a relentless upward move through last Monday and, since then, pulling out all the stops to keep us here.  Maybe it’s all a set up for a huge drop so the market can throw a temper tantrum if they don’t get MORE FREE MONEY tomorrow…

    DXD/Jvest – See above.  When all you guys start capitulating on your short positions I usually figure that’s a great time to get aggressively short because the end is probably near.  Keep in mind we are trading a range and right now we are at the top of that range so hedges like DXD are going to get stressed.  If you do not need the protection, of course take it off the table but if you do need downside hedges, then a simple roll on the call side can give you a much bigger upside

  216. aclend

    Does anyone feel comfortable enough writing up the system that JRW uses for the rest of us who did not follow all the bits and pieces of its explanation? I recall a few of you seemed to have it mastered in its theoretical underpinnings, if not the practical application….just looking for a couple paragraphs. Don’t be shy; step right up!  Thanks.

  217. cwan120

    Hi, pstas, RE SPX strangles,
    I bought back a small number of Aug SPX putters.  If the markets continue to be flat, I look forward to closing out the month of Aug.

  218. yipcarl

    YES!  I love it! I never thought it would happen!!!!!  I was just about to post something about that!
    Damn now watch us all being wrong. :(  

  219. Pharmboy

    GILD/pstas – yes, that could be a problem.  FDA warnings on inspections last a long time and the FDA does not think kindly of them.  If they confirm tomorrow, I might even buy some Ps.

  220. shadowfax

    aceland
    I will tell you what I do, I depend on JRW’s lines even when he doesn’t post. I write down levels every day and today I extrapilated from his common numbers, there was also a post of alternative numbers but after a week I decided that they were not as good. Then the hard part, keeping those IWM numbers in mind first watch faststok on the 1 min chart with a 5 to 10 min EMO, volume, enveloping candles on the 1 then 3 min charts and inlude what seems to be going on like DOW, S&P, and of course IWM. When you have eveloping candles, volume up at those lines move on the direction. I personally watch for 2 identical candel tops followed by a direction indicator and another of my watches is lagre up or down wicks that usually indicate reverse direction. JRW’s  big word is cofuence (spelling) which is most indicators in the same direction. TBT usually follows IWM up and down but today went mostly astray, I overlay that also. Maybe someone else can add to this

  221. pstas

    Cwan- I closed some RUT and SPY- August. and will also close out the remainder if we continue. Probably a fair chance we get a pullback here soon so we have plenty of dry powder  for Sept sales.

  222. yipcarl

    Shadow…your exactly right.  The S/R levels can totally change in a week.  The major levels still work but the more intermediate and shorter term levels have been overwritten with new price. 
    I think you briefly explained it well. 

  223. redlog

     Phil: with the VIX low I’m leaning to do more artificial buy-writes with 2012 long calls relatively cheap and selling near term calls to knock out premium quickly.and then start the calls rolling. i.e.   INTC $20.70 bought the 2012c15′s sold the Oct 21′s net $5.57  Since I’m feeling cautious this feels better than  a buy/write w/puts.  I know I’m giving up more upside and/or discount with trades like this but does it make more or less sense relative to low volatility?  

  224. tuscadog

    Phil / SKX  You picked up the 2009 net to come up with you high p/e ratio.  The trailing 12m p/e is reported as 9.81x and the analysts fct (and co guidance) for 2011 of $4.20 per share gives a 7.12x fwd p/e (and the co has $6 ps cash and no debt).  So, I hope you’re being a bit pessimistic with your $10 to $15 downside price call.
    The international growth prospects look interestng to me, same reason I bought TUP, and the shares look cheap now at $30.16
    Insiders sold 28% of their shares this year, exercising $8 options, and that seems to have created some retail investor concern.  I can never get my brain around the degree of mkt manipulation though.  This stock has bounced around like a yoyo during the past two weeks and there’s a 14% short interest.

  225. Phil

    XLF/Cmsosa – I’d rather buy them when they sell off.  See Whitney’s comments (video link) in the morning post. All you need is one bank to screw up somewhere and you get a big discount on XLF so patience is key.

    Dora/Rain – Hey GS will take money from anybody!

    BAC, JPM/Diamond – I think they are trading accurately and it’s the rest of the market that’s being boosted.  Same goes for a lot of big caps, which made modest gains compared to other sectors.  Why can’t the Dow hold 10,700 when we were over 11,200 in April?  Why can’t the NYSE break 7,200, when it was up at 7,700 last time oil was $82 and copper was $3.40?  The Nasdaq was 2,5535 in April and the RUT was 745 last time gold was over $1,210 – if this is a rally, it’s a very strange one and, of course, the last time we were at those 5% higher levels – we dropped like a rock over 10% in 2 weeks so what on Earth is everyone getting excited about???

    Anyway Diamond, the only dogs you should be listening to are the Diamond Dogs!

    CTB/Rain – Auto sales stil suck so not much of a story there.  They are not overpriced per se but the fact that they are 10x more expensive than they were in a panic makes this a "stay away" for me. 

    Locals/Jrom – Yes, I’m sure the food is a problem if you can’t trust the locals but if they have local stores and you guys just go shopping…  Maybe doesn’t work in Afghanistan but we have hundreds of bases spending Billions of dollars and boosting the local economy is always a way to win friends – even pirates knew enough to congregate in certain port towns and win over the locals by spreading a little gold around!

    Naked puts/Shadow – Did you mean on DIA?  That’s just playing the odds.  We have most of our indexes at resistance so perhaps we risk .50 by not covering on a 100-point move up but the possiblility is there for a much larger gain if things go bad and, since it’s an insurance play, we take that chance. 

    If someone reminds me in the morning I can pull the IWM lines off TOS, which are off a bit from JRW’s study but not too much.  The trick is you then have to ask me what I think as we approach the S/R lines as I don’t sit here staring at it all day!  On the whole, though, it’s no different than watching my oil charts.  8-)

    Check out how well the 4-hour (I know, what’s that) chart behaves:

    Notice we blew S2 on Friday but made it back to S1 on the stick and all up from there to R1 today and, overall, we simply move mainly from S1 to R1 and back over time (the lines move but they continue to be significant when tested.  That’s the 4 Hour view over 2 weeks – much calmer than what you guys usually follow but still very violent!

  226. matt1966

    You have to go back to the week between Christmas and New Years to find a lower volume for the day in FAS/FAZ.  Amazing.

  227. aclend

    I like that Phil. I mostly trade from a laptop now so it is difficult for me to toggle back and forth between windows rapidly while interpreting multiple variables and watching different indicators. My charting package is bare-bones. I’m trying to figure out if I can daytrade this system in a way that doesn’t take split-second executions. It seems there should be an effective way to do it on longer time-frames.

  228. diamond

    Phil – Diamond Dogs … clever! :-)
     
    I may be wrong, but I think the Fed is going to goose the financials (QE2?), hoping that they (the financials: Bac, JPM, GS, etc.) will begin to take on a leadership role … 

  229. Phil

    Artificial/Red – It makes good sense but still, like any naked put – as long as you REALLY want to own the stock at the net entry.   If you are nervous about the maket, it’s a good way to make a lower commitment but still get a nice return while you wait for sanity to return to the makets (good luck!). 

    SKX/Tusca – Yes, I have this terrible habit of looking at ACTUAL earnings when I value something as opposed to hoped-for earnings.  If I don’t know a company well, I look at last June (-$6M) and this March (+$56M) and I’ll assume either one could happen any time so avg $25M and that’s in line with the other two recent quarters so I have no reason to doubt it.  That would give them a p/e of 14 if all goes well but clearly the people who invest in SKX don’t think it will so, in absence of good information to the contrary – I’ll take their word for it. 

    I’m not saying they WILL drop to $10 (again) but I am saying they could and, if you want to stick with this company long-term, you need to be realistic about that prospect and have a plan for what you want to do at $15 or $10 because having $150,000 worth at $30 with no contingency plan can cost you a very quick $30K if you capitulate on the next "senseless" drop.   14% short interest isn’t very much as it’s only 4M shares and this stock turns that in an average day.  If you are looking for potential short squeezes, you want to find stocks were 3-4 days worth of turnover are sold short. 

    They beat low expectations of .44 last Q by a mile (.82) but that has led to expectations for $1.17 next Q, which is more than 100% up from last year, when they were trading at $17.50 through October so they are already priced for huge improvements.  If you are looking to be bullish on a stock, you need to be looking at reasons to be bearish and vs. vs. and only if you can’t find enough good reasons to go away should you buy in.  For me, seeing a stock that’s 50% over the pre-crash average with only slightly better sales than 2007 and earnings that MIGHT be 33% higher is nothing I’m going to get all excited about.  

    CROX, by contrast, is still trading at less than 1/2 where it was pre-crash and they were losing money then anyway and sales are now getting back near that level AND they’ve actually learned how to make a profit at these levels so there’s potential for improvement down the road AND I’M STILL NOT INTERESTED ANYMORE because retail sucks and if something isn’t RIDICULOUSLY CHEAP, I find staying away is generally the most profitable decision you can make. 

  230. Jbur

    Phil/Chaps- regarding Chaps posted portfolio margin plays (WMT and PG). I know that we want to sell premium when the VIX is high. But on plays like this, would there be any benefit to waiting for a higher VIX before opening the positions? It would seem to me that the bull call spread, as well as the puts sold would all be worth more…. so net there may or may not be any net benefit. Trying to get a understanding of market context for a play like this.  Comments?

  231. Cap

    Phil – This is not a serious comment by you …. you are either not paying attention or you are in denial
    SUNY/Cap – So you have about 12 examples of $200K pensions and there are 2M examples of former teachers and police and firemen etc who live on cat food – this is a ridiculous discussion without proper statistics.  What is wrong with you people with your ridiculous anecdotes to attempt to sway policy discussions?  It this really how you form opinions and make decisions?

  232. Phil

    Volume/Matt – Creepy low and Japan will be closed next week and half of Europe is on vacation too so good time for shenanigans. 

    Laptop/AC – Try TOS, they pack a lot of things into one screen with all their tabs.  I’d say that the best way to play is to wait for one of those nice spikes down and then go long when IWM rejoins the fat body of the candle and use that as a stop line.  It will take a little patience to wait for the right times but look how many "set and forget" opportunities there were doing that. 

    Waiting/JBur – You will always do better if you wait for a big pullback but what if the pullback never comes?  WMT and PG are both stocks that are great long-term holds and, outside of something catastrophic, we don’t really expect and major sell-offs (although PG was the key stock in the flash crash and fell 33% in 5 mins).  Chaps is right to take advantage of the recent pullback in PG as a buy opportunity.  If you have spaces to fill in your portfolio, then you have to go for the best available.  If you can afford to be more patient, that’s always good but it’s been slim pickins through earnings finding good deals as most things go up after reporting.

  233. Cap

    Bill Gross: The low 2-year Treasury yield signals that credit markets believe the Fed won’t begin to raise interest rates for at least 2 years.

  234. dflam

    Deano: haven’t recd your response re Vegas/ Phil date.  When is it & is it a firm date. thanks?

  235. Cap

    Street_Insider 
    hmmmm

    KKR won’t proceed w/ IPO

  236. shadowfax

    Phil
    They are IWM puts, today it was for a nice pop if we go down on open or by Ben. I don’t  have a single hedge now except TBT for part of my 85% cash. I have held puts overnight as insurance for about 1.5 out of 5 days for 3 weeks since I sold the TZA spread for 30% Thank you very much. Made about the same on MON and RIG last week. Thanks your the best of spreads. I made 1 winner on my own on KLIC .50cost on a $1 spread at expireation. I do like DIA and IWM because options have a small spread, I have only been burnt 1 time on Market buy and only .03 on that. IWM doesn’t like 100 contracts.

  237. shadowfax

    Phil and The Rest
    My Day trades are only with pure profit from day trades, tonight is 75% of that profit on puts. I also don’t day trade more than 3 days a week based on gut feeling of I’m in doubt, STAY OUT!

  238. diamond

    Speaking of NY cuisine …
     
    Pop-Tarts Store Pops Up in Times Square

  239. goldman

    Per CNBC
    Goldman Sachs issued a report saying a weak U.S. economic forecast has prompted the firm to raise its 2010 EPS estimate for the S&P 500 to $81 from $78, but to lower its 2011 EPS estimate to $89 from $93. Nearly 90 percent of firms have reported second-quarter earnings and 75 percent beat expectations.
    Goldman also lowered its 2010 forecast for the S&P 500 index to 1200 from 1250. The firm’s 12-month target for the S&P is 1250, about 11 percent higher than today.
    —————-
    If we run the simple calcs on forward SP 500 targets:
    8 P/E x $89=712
    14 P/E x $89=1246
    The market wants to move up, obvious today.  IWM 66.38 was a reversal point on 7/26 and 8/4..and the PP R1 for Tuesday morning.  IWM 66.76 is going to be difficult…we will definately need some help to get past that area.  Going to be a wild ride on Tuesday!
     

  240. Jbur

    Phil and/or Chaps:  Regarding portfolio margin plays like Chaps WMT and PG plays, is there anything to gain by waiting for an increase in the VIX? On buy /writes it’s obvious an increased VIX is helpful. But on a play like this where we are buying a bull call and selling puts, it’s not clear to me. Comments? Thanks.

  241. fjd10595

    Phil said that he would stack up the larger number of cops , firemen and teachers living on cat food against the smaller number making 200k pensions.  As to living on cat food, maybe those who retired in 1975- not today’s retirees.    In the Northeast, lower NY State, NJ and CT, these groups generally earn pensions that are extremely rich when compared with the private sector. Not 200k  usually, but very rich.  The same for their working salaries.  I don’t know what the comparable salaries and pensions are in the South and in the West.  I would guess that they are much lower. 

  242. Jbur

    Apologies for posting same question twice!

  243. goldman

    Phil/Slow computer - Here is the HP elite I picked up at newegg.com for 25% less than what the HP web site sells the same exact system, plus free shipping and no sales tax (not that I won’t pay it on my taxes later..wink, wink).
    http://www.newegg.com/Product/Product.aspx
    It is fast, and the graphics card is capable of running three monitors.  I have a Display Port to VGA pasive adapter on order, needed for a third screen, as I’m getting rid of multiple computers and running 5 screens on only 2 computers in the future…I’ll let you know how it works.  The graphics card is the AMD 5770 Radeon, with the AMD eyeinfinity software that allows you to arrange the monitors any way you want.  AMD sells a 5900 series graphics card for about $600 that runs 6 monitors, yet you have to buy $400 of active Display port adapters to hook all six monitors up…not worth the price for upgrade as you could buy a second new computer for $1000…

  244. goldman

    ^^^"ATI RAdeon", Not "AMD"…was just looking at the amd puts chart today…lots of action on those Oct $8 puts!

  245. gel1

    shadowfax
    selling puts today???? – remember my friend – PSW stands for "Put Sellers Win"… sure beats buying them!

  246. diamond

    (Que the M.A.S.H Theme) ;-)
     
    The Rise of the Permabears – NYTimes.com
     

  247. rj_jarboe

    I find it interesting that you guys will debate all day long on the pensions of some teachers or other working class people who have worked their entire lives in an honorable profession, but have no comment about a CEO who could walk away with a $40,000,000 severence package after doing something less than honorable.

  248. boobearsdad

    goldman,
    California is a more aggressive about use tax collection than it used to be.  They’re now auditing U.S. Customs import forms and harvesting use tax on things bought and shipped from out of the country.  (Well, maybe they’ve been doing it all along, but I just got a letter not too long ago about something I bought in 2007, so I’m guessing that this is a fairly new thing.)
    I’m now wondering if they’ll be able to find an investigative angle on things bought from other states in the U.S.

  249. diamond

    OK … that should have been:  "Cue"

  250. flipspiceland

    @rj_jarboe
    That’s easy. Mark Hurd is paid by a corporation.  You don’t like Mark Hurd’s agreement with the compensation committee, sell your stock, and he no longer affects you.
    "Public Service" pensions are paid by the taxpayer. If you don’t like what the teachers are doing, tough.  You must eat it.  And long ago these jobs ceased being about public service and have morphed into positions without consequence for the senior level staff. If you want to fire that councilman in California with a multimillion dollar pay package, tough. Eat it.
    $40,000,000 wouldn’t cover the expense of one year’s contributions to a state pension fund for tens of thousands of teachers (police, fireman) on the payroll, and retirees.
    The control that the people have over their "public servants" has been hijacked by unions and the people are the losers.

  251. kinkistyle

    goldman: AMD actually owns ATI, so you were right the first time ;)

  252. Cap

    but have no comment about a CEO who could walk away with a $40,000,000 severence package after doing something less than honorable.
     
    My comment:  a) Shareholders should sue the company if they don’t like it ( and I wouldn’t like it if I were an HP shareholder; b) taxpayers don’t pay for it and its not causing states to go broke c) seems outrageous for sure; although HP may be constrained by what they can do vs. would like to do due to contractual issues.  Certainly another example for excessive CEO compensation.
     
    I bet we see lawsuits over that pay package.

  253. Cap

    Flipspiceland:  Well said …

  254. snow

    Unions/Cap/flispiceland – I see your points about private vs public pensions….the structure and corporate nature of unions could be an interesting weekend or late evening topic. I do wonder, though, Cap – at first blush the idea that shareholders, not taxpayers, pay for exorbitant CEO packages seems obvious, but I bet a little digging would show taxpayers kicking in on that as well.

  255. humvee4me

    Teachers:  another factor to consider is that there were 6.2 million teachers in the USA 5 years ago; so the math adds up really fast. 
    http://jd2718.wordpress.com/2009/08/29/how-many-teachers-are-there/
    I hate how much Hurd is going to walk away with, but  same goes for the producers/actors in hollywood, sports figures and supermodels.  
     

  256. lumpenprole

    Good point there-- that maybe someone should do something for the people who did more than "make deals" and skim as they "worked" and created EVERYTHING THERE  Am I the only totally pessimistic one who sees the PR for the Owning Class as being almost totally successful? All the people who would benefit from positive programs don’t seem to have the remotest understanding of economics ( I work with people with doctorates in non-financial field and they are completely clueless about how Congress gutted the FInancial Reform bill IF THEY KNOW THERE WAS ONE AT ALL!) The Lumpenproles have a vague idea that the rich get richer, ahve no intention or idea what to do about it,  the brainwashed tough-guy rural people who have bought the Owning Class anti-socialism hook, line and sinker-- they think everything would be solved by firing all gubmint workers and cutting Social Security. Except for their parents and them. HOw can the Owning Class lose here, unless they try to take away an overweight nation’s Fritos and large-screen TV’s?

  257. diamond

    From the comment section of the above article:
     
    "It’s clear that Apple is now working on building the shape changing robot from the second Terminator movie." :-)
     

  258. diamond

    Liquidmetal – Technology demo
     

  259. goldman

    boobearsdad/Internet Sales tax  – New York, NC, Rhode Island, CA, and Hawaii have interstate internet sales tax laws…other states are following.  You are right, you need to pay internet sales taxes and I will too (I can write it off on one of my biz!)…I was kidding about the wink wink.  I’ve seen the worst of the IRS before,  when in doubt, I send them extra money to keep them happy!
     
    Kinkistyle/AMD – I forgot they bought then out…and soon when Intel buys what is left of AMD after the price wars, they will own ATI next…=D

  260. occam

     It makes perfect sense that Apple would build the Terminator out of this "new alloy, stronger than titanium"   Isn’t that the way--we love the company, it’s the company America is proudest of, and they go create Armagedon.  I suspect it will happen when Steve jobs passes away (cancer--yeah right!) and either Tim Cook or Forestall is a cyborg plant.  But hey, that should help stock performance for the long run.  

  261. boobearsdad

    goldman,
    I hear ya.  An accountant told me that there’s only one organization you should more concerned with, as a Californian, than the IRS: the Board of Equalization (who, among other things, collects the use tax).  Needless to say, a valuable lesson learned.

  262. kwan

    Where’s the V-shaped jobs recovery everyone’s missing? Here. Essentially one of the arguments goes like this:
    "Even the knowledge of a potential extension in unemployment benefits might put off the acceptance of a job offer. An unemployed person might wait (we would) until after he knows whether or not he will receive extended government benefits before taking a job with pay equal to or lower than his benefits. Thus as job openings rebounded, as shown in the middle chart above, many Americans may have decided to hold out due to hopes of extended unemployment, thus keeping unemployment high despite a rebound in job creation."
    The other argument suggests employers may need to raise salaries to offset the extended unemployment benefits. As an armchair psycho-economist, I’d like to see a chart of the number of unemployed people vs the number of months they been on unemployment.

  263. kwan

    I love wolframAlpha. As of July 2010:
    - unemployment average duration: 34.2 weeks (mean 22.2 weeks)
    - unemployment duration over 27 weeks: 6.6 million people (45%)
    - unemployment duration 15-26 weeks: 2.2 million people (14.7%)
    - unemployment duration 5-14 weeks: 3.1 million people (21%) 
    - unemployment duration less than 5 weeks: 2.8 million people (19.4%)
     
    That should roughly total 14.6 million people, minus rounding errors. If you go here and click the more button at towards the bottom of the page, there’s actually a nice plot per month from 2008 – 2010 of the unemployment trends for each category. The average and median durations have been steadily increasing, but there are generally fewer unemployed people now than there was at the beginning of 2009 in each category, with the trend decreasing. EXCEPT for people unemployed over 27 weeks, which has steadily increased over the same time frame.
     
    So these data say there aren’t as many new people filing for unemployment and staying on it for short periods of time compared to early 2009, but the number of people on unemployment for 6 months or more is increasing. And presumably the previous post illustrated it’s not because jobs aren’t available, which does in turn suggest people are content with the benefits they’re receiving from the government versus working for them like everyone else and getting an equivalent amount or less.

  264. Pharmboy

    Pivot Points for Tomorrow

  265. PeterD

    Hi Cwan,
    Yes, the SPX Aug 1180 & 950 short strangles is a big win.  I would roll 10 950 August putters to 1 950 putters so that I don’t spend out of pocket money buying them back.  Since the margin is improved by reducing the number of contracts from 10 to 1, you have plenty of fire power to sell additional contract.  Same for the caller side, but the ratio may be different.

  266. yipcarl

    wow more bad news out of Europe and Asia.  Futures down almost a percent…..  reality?  is it possible?

  267. matt1966

    Whheeee goes my overnight FAS short!  The party has started a little early, huh?

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