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Tumultuous Tuesday – Waiting for the Fed

Wheeeee – this is going to be exciting! 

Yesterday we knew that the move up was fake, Fake, FAKE and we acted accordingly in Member Chat.  We had a nice QID cover play right in the Morning Alert that was an easy fill as the Nas went higher and higher all day.  It was the Aug $16/17 bull call spread at .42, and the $16 puts sold for .29 for net .13 on the $1 spread with a nice 669% upside if the Nasdaq heads sharply down on us.  Our stops on the play were a combination of Nas 2,300, Dow 10,700 and Russell 666 and we got the Nasdaq and the Dow over their marks but, once again, 666 proves to be an ominous barrier for the Russell.  

We put on our Stock Market Parachutes and went bearish on our Mattress Plays as well.  Not so much because we are long-term bearish but because the run-up ahead of the Fed decision seemed very overdone as pretty much EVERYONE is now predicting QE2 so what kind of market mover can it now be – even if the Fed does drop another Trillion or so on us this afternoon?  Later in the day we added an SDS spread, similar to the logic of the QID but longer-term (January).  As I said in my closing comment to Members: "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."

When we are near the top of our ranges (see Charts from the Future: 5% Rule Update) we can assume there will be upside resistance so we have less risk shorting the indexes we think are over-extended compared to the potential reward of what happens if the news that had been pumping up the market on rumors turns out to be a big disappointment and causes us to retrace. 

This is not contrarian investing nor is it trend following as we make our bets very much against the trend (ALWAYS sell into the initial excitement) – it’s simply our attempt to apply logic and statistics to a volatile situation.  Also, keep in mind we are still long-term bullish and that’s where the bulk of our open trade ideas are aiming so we lean towards shorter-term bearish covers to keep us safe through "events" like today

Looking at the pre-market - it looks like we lucked out and we’re getting a big dip (8am) as we race back to fill the gap we had hoped we were done filling on Friday.  As we expected, the overseers have been driving the wage slaves too hard and the wheels are starting to come off the wagon as Q2 productivity dipped 0.9% after putting up a stunning (and unsustainable) 3.9% gain in Q1.  Of course, no one was rewarded for their labor although the diminishing productivity raised the otherwise lower Unit Labor Cost by 0.2%, way up from the -3.7% in Q1 – when the whips were really cracking!

I know my Conservative friends will probably say that we are treating our workers far too well and we need to cut wages and benefits further to let them know we are serious about competing with India, China and Africa in the labor market in order to maintain the status quo (that being the status quo where the top 1% get very, very rich while the bottom 99% work themselves to death and are rewarded with lives of constant toil and debt until they finally die of something they can’t afford treatment for).  Sadly, this is the problem all slave-based societies reach at some time – you eventually get to the point where more whipping and less money spent on the workers just doesn’t add to the bottom line anymore and then you are forced to compete with the people who were investing in skilled labor and technology while you were busy squeezing the last drops of blood from a stone.

Supporting Big Business America in their endless quest to cut jobs and lower costs is MADNESS for our Government.  We must put people in this country back to work at GOOD jobs that pay GOOD wages.  We must reward companies that hire people and spend money on Research and Development that will keep America competitive in the 21st century.  Right now our government policy is essentially aimed at keeping the plantations open in the hopes that the slaves will appreciate their efforts – madness!

Mark Thoma has a good article this morning asking "Is the Unemployment Problem Cyclical or Structural?"  While the man on the bread line may not care WHY he is unemployed, Mark points out that the fact that there is SOME structural unemployment is no reason not to address the cyclical unemployment and that, CLEARLY, is something the government can and should be doing through stimulus measures.  It is not enough to "save" jobs – important though that may be.  Those jobs we are saving are paying less real wages and less benefits than they paid 5 years ago.  What we need to SAVE is America and the people of America need to wake up to what we need to be saved from!

Add up the earnings (and these do not include Capital Gains – the top 0.01% racked up over $2Tn in capital gains alone) of the top 10% and you get $3Tn.  Add up the earnings of the other 133M people and you find 10x more people fighting over the remaining $4Tn and that’s not including the 25M unemployed who are earning nothing at all or scraps from part-time work.  How can we expect to build a functioning country this way?  The bottom 90% are actually LOSING ground every year while the top 0.01% get raises in excess of 20%.   Why do they get these raises?  For cutting costs!  What is the number one cost of American business?  Labor!   

See how this game is played?   

Last quarter we had a market party as Q1 Productivity rose 3.9% while Unit Labor costs declined 3.7% – that is Capitalist Nirvana!  Increasing productivity is supposed to INCREASE the living standards of the workers but, as we see in this quarter’s record Corporate Earnings and this quarter’s Personal Income Report, ALL of that money is dropping to the bottom line.  Companies who hire are being punished by Wall Street and companies that outsource their labor to cust costs are rewarded.  The system is not just broken – we would be better off it it were broken.  The system works perfectly and the way it works is to turn the bottom 90% of American citizens into 3rd World wage slaves while lavishing huge rewards to those at the top who are willing to sell their fellow man down the river to win the great game of Capitalism. 

THAT is the structural issue we need to address in this country but it won’t happen until the bottom 99% (those making less than $250,000 a year) wake up and see where the political lines are really drawn in this country.  We’ll get a look later at what, if anything the Fed decides to do to "save" the economy but I’m beginning to wonder if this is an economy worth saving or if we, the people, would ultimately be better off letting it fall and building something better from scratch

The BOJ left their rates unchanged this morning, maintaining their 20-year status quo.  Chinese property prices rose 10.3% in July but that is the slowest increase in 6 months and is not going to be very supportive of runaway copper pricing (copper failing $3.40 was one of our key bearish indicators last week).  Also indicative of cool commoditiy demand, the US Refining Cartel did it’s best to maintain high gas prices by cutting processing rates down to 90.7% of capacity – about where we usually are AFTER a hurricane.  Gasoline stockpiles are still 6.9% above the 5-year average and the 5-year average is pretty high after 3 years of lackluster demand.  Oil supplies also are 8.9% above the 5-year average, highlighting how ridiculous the recent run back over $80 has been (we shorted at $82.50).  Distillate inventories are 25% over the 5-year average. 

This is what happens when you stimulate the top 1% and forget about the other 99% – there’s only so much excess consumption 13M people can pull off by themselves!  See, you may think these are political rants but they have investing ramifications – that’s why we know to short commodities when they have these silly, speculative rallies – there’s no base to support them

 


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  1. Pharmboy

    Pivot Points for Aug 10 – ShadowTrader @ TOS

    Pivot Points for Today - From ShadowTrader @TOS

  2. jomptien

    Thanks Pharm

  3. kinkistyle

    Gold falling.  You know what THAT means…

  4. exec

    as we race back to fill the gap we hoped we were done filling on Friday.
     
    Phil,
     
    Are you referring to 10,500 DOW?

  5. exec

    Kink,
     
    What does that mean?

  6. kinkistyle

    a vote of no confidence on QE by the inflationistas.  but then everything is down this morning…

  7. exec

    Kink,
     
    Wouldn’t Gold be up if they thought inflation was coming?

  8. kinkistyle

    exec:  thats right, so the fact that its down indicates maybe gold-bugs don’t believe QE is coming. but then again, it seems like Warren Buffett is selling his treasury and muni bonds and thats being thought of as an inflationary signal.  who knows…

  9. exec

    How are you playing this today?

  10. kinkistyle

    exec:  I took Phil’s recommended QID play.  Because I like Phil’s belief that the market is "priced for QE" so anything less than outright helicopter money drops will cause at least a mild drop in the market. 
     
    By the way INTC and some other chipmakers are getting downgraded by everybody and their mother today.  Looks like its time to BUYBUYBUY!!

  11. matt1966

    kinki, where did you read Buffett was lightening up on Tbills and munis?  Not that I doubt it-

    exec, sit tight for now.  Wait to see if we’ll likely melt up for the day or otherwise.  My hunch is they’re making it look like a melt up is still in play but we won’t.  That being said, a reversal is definately possible after an initial selloff.

  12. exec

    Thanks…..I’ll keep an eye on INTC

  13. shadowfax

    exec
    The play today should be open down, retrace back up some, then the BEN ? I will be out for that.

  14. Jbur

    Phil, All: You may find this piece from MarketWatch on class warfare, tax cuts, and how "GOP destroyed US economy" interesting.
    http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10

  15. kinkistyle



    Buffett Shortens Bond-Holding Duration After Inflation Warning
     
    "Warren Buffett shortened the duration of bonds held by his Berkshire Hathaway Inc. after warning that deficit spending could force inflation higher.

    Twenty-one percent of holdings including Treasuries, municipal debt, foreign-government securities and corporate bonds were due in one year or less as of June 30, Omaha, Nebraska-based Berkshire said in a filing Aug. 6. That compares with 18 percent on March 31, and 16 percent at the end of last year’s second quarter.

    ‘It may be a sign that Buffett expects interest rates to start rising, maybe sooner than the conventional wisdom,’ Meyer Shields, an analyst in Baltimore at Stifel Nicolaus & Co. who has a ‘sell’ rating on Berkshire, said in an interview. "

  16. Pharmboy

    NPR last night had a good interview with Alice Rivlin, senior fellow at the Brookings Institution and former Fed vice chairman on inflation….or lack thereof…

  17. David Ristau

    Hey all,

    I have two new positions this morning with a Buy in LDK and a Short Sell in Fossil (FOSL).

    Check out my analysis, entry, exit, and more here.

    Good Investing!

  18. JRW III

    Good morning,

     

    IWM 63.98, 64.97, 65.48,  66.10, and 66.92

     

    I will not be available today, good hunting !!

  19. yipcarl

    :) ;) :) :) yes!

  20. exec

    Good thinking Matt……I’m jammed with meetings all morning.  Think I’ll sit here in cash until this afternoon.

  21. yipcarl

    This is awesome!  Killing it!

  22. matt1966

    Playing for a melt up in FAS.  Stop below 22.62-

  23. hanna5

     Nice going yip!! :) My short positions also doing very well this morning. You gonna hold, or lighten up on some? I have a range of short stocks, as well as straight DIA 108 puts from yesterday afternoon…

  24. matt1966

    stopped out.  playing safe-

  25. yipcarl

    I have an IWM support line at 64.36 on my chart that is still in play.

  26. yipcarl

    Hann…. I lightened up 20%.  I’m playing this for a multi day fall, I always sell to early….not this time. 

  27. Phil

    Good morning! 

    Not looking good at all as suddenly the doom and gloom squad has taken over the microphone. 

    We’re pretty sure to fill the gaps from last Friday’s close, which were: Dow 10,500, S&P 1,106, Nas 2,260, NYSE 7,020 and Russell IS ALREADY BELOW 654!  

    So 654 Russell is what we need to get back to (let’s say 650) before we stop worrying now.  

    Below those we’re looking back to the old supports at Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635 – but that’s not really worth worrying about (I don’t think). 

    We’ll have to see where the crazy train comes to a stop.  Europe is down about 1-1.5% so we may be overreacting and once tghe gap fills I might want to look at something speculatively bullish (and it’s a good place to do some profit taking on short bets) ahead of a Fed statement that MIGHT give the people what they want after all. 

    Copper holding $3.20 is a positive sign and oil holding $77.50 seems likely and over $80 means there are still some bulls around. 

    Volume not very exciting at 23M in first 15 minutes on the Dow, not exactly a blow-off amount and easy enough to flip.  Keep in mind that 20% (of the drop) bounces are not bullish but once over 20% we need to take the moves up seriously.

  28. loopy

    Kink- in addition to "inflation leads to higher interest rates" argument, I have an additional take about shortening bond maturities and that feeds my gold take. 
    Shorter maturities take less of a  ’haircut’ in a restructuring.  At this point, Interest rates will only go up if they are forced up.  If rates kapoom up, we are in a very bad situation (i.e. trade war).  If that happens I think the Fed will use the nuclear option and control the curve.
    To that end, I can’t see how gold would be a very good investment.  I think the Fed, with complicit policymakers, has too much left in the policy bag…IMHO.

  29. Phil

    Nice chart Pharm – Thanks!  So much for S3 already…

    10,500/Exec – Yep!

    GOP/JBur – Nothing I haven’t been saying but thanks!

    Quick 5% rule note.  Since we expect a 20% bounce off a drop and since the our 5% line from 10,200 is 10,710 and the gap fill to 10,500 is 210 points below it, the bounce zone of 10,542 should provide resistance on the way down if we’re having a recoverable drop.  It’s not an exact science, of course but the bounce we just had a bit above where we expected was a pretty bullish indicator and will be much more so if we now hold our gaps across the board and move back to the 5% zone (between the tops and the gaps), which should be the next major points of resistance

    Wholesale inventories were up just 0.1%, which is less than 0.4% expected but no big deal so this should give us (hopefully) a bottom for the morning

  30. Phil

    Nat gas holding up at least. 

    Buffett/Kinki – I don’t think it means too much.  Buffett went long on bonds when they were giving unusually high returns.  Now that the returns are normalizing he is losing interest. 

    Good time for 1/2 sale of DIA $106 puts at $1.50 as mattress cover.  Also good as naked sell.

    DIA Aug $107 calls at .80 were $1.20 yesterday so a good play to make a quick dime, stop if we don’t get through 10,600 soon.

  31. datuu

    good morning --can someone please tell what the difference is between the XOM february, 2011 55 put that is selling for $1.85 and the XOM february, 2011 55 (AJ1) put that is selling for $12.05? what does (AJ1) mean??? thanks

  32. yipcarl

    In regard to that Wholesale Inventories number…
    However, Tuesday’s surprisingly small gain for June may mean that figure will be revised when the Commerce Department releases its updated GDP data later this month.
    And how about June’s GDP revision?  July’s number of 2.4 will be revised down to 1.9.  Still in a recovery?  I can’t wait to hear people say, ‘well geez, were not in a recovery I guess’.  

  33. Phil

    Hey JRW – Having fun, I hope!

    Wow Yip, you have to teach me to do those.  I can only get one face to work.

    XLF Sept $15s are .36 with a delta of .42 so lots of bang for the buck on a QE2 announcement.  If announcement goes bad, plan on turning to a 3/5 ratio backspread with sale of Aug $14s, now .77 and XLF $14.50 makes a good watch line.

    XOM/Datuu – Probaly something to do with their latest acquistion.  It looks like you are only getting 70 shares per contract plus $55 in cash on the long side.   You need to check with your broker as to specifics but those are best to stay away from as they can get very messy if you get assigned. 

    GDP/Yip – I wouldn’t count on it.   The closer we get to the election the less chance you have of seeing negative statistics. 

  34. datuu

    thanks, phil

  35. yipcarl

    Phil. Colon ) Semi Colon ) Colon ) LOL. I was short beyond my risk parameters which was stupid and that pop was needed for me badly.  Not doing that again.
    Revision Phil.  really?  That’s something I didn’t know?  Why is that?  They can lie about the numbers until we get close to election then stop for fear of repercussions? LOL. 

  36. Phil

    Tuesday’s economic calendar:
    12:00 PM Treasury’s Barr: ‘The Path Forward for Financial Reform’
    1:00 PM Results of $34B, 3-Year Note Auction
    2:15 PM FOMC Announcement
    5:00 PM ABC Consumer Confidence Index

    Notable earnings after Tuesday’s close: AONE, CFN, CREE, DIS, MYGN, SPWRA

    08:00 AM On the hour: S&P -0.73%. 10-yr 0%. Euro -0.6% vs. dollar. Crude -1.73% to $80.07. Gold -0.26% to $1194.40.

    09:00 AM On the hour: S&P -0.96%. 10-yr -0.01%. Euro -0.66% vs. dollar. Crude -1.85% to $79.97. Gold -0.63% to $1195.00.

    09:30 AM At the open: Dow -0.66% to 10628. S&P -0.61% to 1121. Nasdaq -1.07% to 2281.
    Treasurys: 30-year +0.02%. 10-yr -0.08%. 5-yr -0.12%.
    Commodities: Crude -2.04% to $79.82. Gold -0.7% to $1194.20.
    Currencies: Euro -0.69% vs. dollar. Yen -0.27%. Pound -0.96%.

    10:00 AM On the hour: Dow -1.18%. 10-yr -0.1%. Euro -0.92% vs. dollar. Crude -2.58% to $79.38. Gold -0.63% to $1195.00.

    ICSC Retail Store Sales: -0.2% W/W, vs. -0.1% last week. +3.7% Y/Y, vs. +3.9% last week. The report sees the full-month pace coming in at +3% Y/Y.

    Redbook Chain Store Sales: +3% Y/Y unchanged from last week. Back-to-school shopping will not be a significant factor until late August.

    Q2 Productivity and Costs: -0.9% vs. +0.3% expected and +2.8% prior. Unit labor costs +0.2% vs. +0.5% expected and -1.3% prior.

    Jun. Wholesale Trade (.pdf): Inventories +0.1% to $399.2B vs. consensus of +0.6%, +0.5% prior. Sales -0.7% to $347.4B. Inventory-to-sales ratio narrowed to 1.15 from 1.14 (revised) in May.

    The NFIB says its index of small business optimism fell 0.9 point to 88.1 in July. Some readings of current conditions showed small gains, but the expectations component of the index tumbled nine points. "We don’t have any confidence that the economy is going to get fixed," chief economist William Dunkleberg tells CNBC.

    The IBD/TIPP Economic Optimism Index fell 1.1 points to 43.6, a new 12-month low, vs. 44.7 in July. "The erosion of public confidence in government economic policies is behind the decline in optimism this month." TIPP President Raghavan Mayur says.

    The economy “is likely to deteriorate progressively starting sometime next summer," a new paper from the San Francisco Fed warns. Over the next two years, the odds are only slightly better than even that an already-tepid recovery will continue.

    Despite all the anticipation over today’s FOMC meeting, there’s little more the Fed can do to help the economy recover, Mohamed El-Erian says. "The country is facing structural issues and it needs structural solutions," he says. "Fed policy is not enough." The market’s reaction to any announcement likely will be bigger than any impact on the economy.

    BoJ holds its key policy rate steady at 0.1%, as expected, and maintains its credit programs for lenders. Though there was no direct mention of the yen, which is approaching a 15-year high and threatening a weakening economic recovery, the statement indicates concern about how overseas events are affecting the currency. 

    What global warming?  Russia’s blistering heat wave is doing more than causing fires and hurting grain supplies: Reduced output in areas like agriculture and industry could shave a full percentage point off Russia’s $1.5T economy this year, and at least 15,000 people may die from the heat.

    Shanghai’s index dropped 2.9% after data showed that China’s trade surplus surged to $28.7B in July, as exports soared 38.1% from a year earlier and imports rose a less-than-expected 22.7%. Soft Chinese demand for inbound goods and services could have negative implications for the global recovery.

    Intel (INTC) shares are under pressure after a Baird analyst cut the stock to Neutral from Outperform upon finding “a sharp deterioration in PC-related order trends over the past week, following a below-expectation July.” INTC -2.6% premarket.

    BofA (BAC) may add $13B to its book value: The lockup on its 11% stake in China Construction Bank ends in less than a year, so the stake, previously valued at original cost of $9.2B, will likely be reported in the bank’s Q3 earnings report with its current market value of $22.9B. Should help to take the sting off of this.

    Sixty-two money market funds in the U.S. and Europe nearly broke the buck during the financial crisis, according to Moody’s, and at least 20 firms that manage "prime" money funds had to inject at least $12.1B into their funds to preserve principal. Moody’s didn’t identify the funds.

    Berkshire Hathaway (BRK.A) is a "clear buy" and sports the "single best chart in the whole book," Jim Cramer says, also lauding six comeback stocks that he says will bounce back in the second half.

    LOL: "We owe a debt of gratitude to those (most notably Jim Cramer) who were scaring people out of BP, giving us what will probably turn out to be the best buying opportunity we’ll see this year," writes Whitney Tilson. "We certainly didn’t expect a 44% return in only six weeks — but under $30, this was a slam dunk." :  "We owe a debt of gratitude to those (most notably Jim Cramer) who were scaring people out of BP, giving us what will probably turn out to be the best buying opportunity we’ll see this year," writes Whitney Tilson. "We certainly didn’t expect a 44% return in only six weeks — but under $30, this was a slam dunk."

    Regulators in the U.S. and Britain are investigating the timing of Goldman’s (GS) disclosure that it was the subject of a federal civil probe. The timing of the disclosure is part of larger, ongoing investigations into the bank’s marketing of subprime CDOs.

  37. Jbur

    Phil, absolutely that is what you have been saying for some time. Your "Tale of Two Economies" was the first time I ever heard about class warfare. Farrel must be reading your material!

  38. savitri

    anyone--could you please explain 3/5 ratio backspread  want to be sure--Tx

  39. nicha

    savitri- back ratio on the XLF trade: for every 3 Sept 15 calls that you buy you wud sell 5 august 14 calls if QE is bad.

  40. RMM

    pHIL: YOU USUALLY PREFER  the S&P 500/SDS etc, is there a place for you for DOW and Nasdaq ETF ?

  41. savitri

    Merci- Nicha

  42. jdub929

     Great comeback on /CL

  43. rainman

    jdub/cl -- sure is, that’s an impressive slope.

  44. gel1

    Pharm
    I bought a position in IMMU ( Immunomedics ) that looks interesting. Sales growth has risen over 700% over the last year, with net profit around 60%. The stock is super cheap when compared to earnings. Also, the company is based in Phil’s back yard (NJ) so we can keep any eye on it. The company has targeted colon cancer and is awaiting FDA approval for its TF2 antibody treatment. Are you trading this one?

  45. jromeha

    Phil – your thoughts on shorting oil here? Im short 2 contracts at 80.54, Im just thinking we test 80 again before the announcement….

  46. jromeha

    Nevermind Phil – I already covered.

  47. Phil

    Revisions/Yip – The data points are so large that very simple rounding differences in key multipliers can give you tremendously different results.  There doesn’t need to be a conspiracy – just like in corporations if the people putting the reports together know that the "boss" wants to see a good number, then they will naturally round the occasional 0.495 up to a 1 when it’s not too outrageous and it doesn’t take many of those little "innocent" adjustments to make big changes in numbers as large as the GDP.

    Class war/Jbur – I’m glad it’s finally getting discussed.  It’s the root of the problems we’re having in this country.  It’s like the car isn’t going and they check and try to fix everything but the engine even though the "check engine" light is blinking away….

    Backspread/Savit – A 3/5 backspread is selling (in the XLF case) 3 of the Aug $14 calls (delta .83) to offset 5 long Sept 15 calls (delta .35).  I should have specified because it could be the other way but the idea here is IF we head lower, then we cover with at-the-money Aug calls and if we cover and they bounce back, then you can add more $15 calls and roll the callers to 2x or 3x higher calls or make other adjustments.  It’s just the fallback position on what we hope will be successful naked calls. 

    Backspread/Nicha – Usually we do 3/5 backspreads on earnings but that is when we are buying longer calls that have a proper value we expect to maintain and we are selling premium we expect to evaporate.  In this case, we are really covering the downside (5 x .35 delta) with the short sale (3 x .83 delta) and we sure don’t want to overdo it or we can end up way too bearish. 

    Dow/RMM – I think we did a DXD, a QID, an SDS and the DIA mattress yesterday so yes, there is a place for all.   At any given time, I’m usually just choosing what I think is the best bang for the buck after looking at all 5 indexes and their various ETFs (1x, 2x and 3x) and I try to find the most favorable put/call combo of the lot.

    Crude move not backed up by copper, which is up just .02 (0.6%) as oil jumped over $1 (1.25%) and gold also not getting very excited so I wouldn’t put much stock in the oil move.

  48. RMM

    Phil: help me please to configure this one:
    have DBA 2012jan calls 20, base 5.96, now 6.30. and oct callers 24, base 1.1, now 2.05,
    I cannot recall what this was meant to be.

  49. RMM

    Phil: when you comment on copper, what stock symbol are you looking at ?

  50. randers1

    1st time poster, long time reader. I am ex-LEH; But i only entered repo 105 trades- ( it was not my idea).
    Diamond – posted last pm on LQMT-  up + 65% today.

  51. jromeha

    RMM – /HG in the futures market if you have TOS

  52. slaimonas

    Phill,
     
    what do you think about    -   INTC   Jan 19/20 bull call spread for 0.55.
     
    Thank  you

  53. rn273

    Phil – XLF weekly 15 calls are for 0.05. Is this worth a gamble (all or nothing play) – a 2% jump from now will get these into the money.

  54. yodi

    Hi Phil,
    I have a bad apple with MSFT they never seem to come up again holding 3 long Jan 11 pd 3.45 now .31 !!!!
    short (SOLD) 3x Oct 29 p for 3.60 now 4.15 sold 3x Oct 28p for 2.95 now 3.25 sold 3x Oct 30 call for .62 now .07 I have been rolling and rolling the shorts but the stk goes nower. thks for your advice

  55. RMM

    jromeha: no, have not HG, but HG does not even get a hit elsewhere ??

  56. Phil

    11:00 AM On the hour: Dow -0.98%. 10-yr -0.1%. Euro -0.98% vs. dollar. Crude -1.88% to $79.95. Gold -0.57% to $1195.70.

    Stocks are retesting session lows (S&P 500 -1.2%); it’s almost as if someone leaked the Fed’s planned statement, or is the Bernanke put finally coming apart? The key question there is: What else can the Fed do? Now: The dollar up more than 1% against euro, pound, Aussie dollar, Swiss franc and loonie.

    JPMorgan Chase (JPM) buys $3.5B in multifamily and commercial real estate loans – about 3,800 in California, New York and Illinois – from Citibank (C), for undisclosed terms.

    According to EADS (EADSF.PK), the company’s North America chief and former NASA Administrator Sean O’Keefe was on a plane, also believed to be carrying former Sen. Ted Stevens, that has crashed in Alaska. NTSB says it appears five people on board were killed and four survived, but individuals’ fates are unknown. (WSJ)

    DBA/RMM – Too chasey after the Ag and oil run-up.  Better off with UNG, still cheap and yesterday was easy fill of Sept $7s at .54, selling Sept $8 calls for .17 and $7 puts for .33 for net .04 on $1 spread.  On the DBAs you have, just take $4 off the table rolling your callers to Jan $24s ($2.30) in case it pulls back.  Then you can let nature take it’s course on Oct callers and hopefully you retain more than $1 net to end up ahead.  If DBA keeps going up, you can add some Jan $27s (now .75) and do a 2x roll on the callers (Sept $25s are $1.05) but it doesn’t pay to worry now. 

    Copper/RMM – /HG

    Welcome Randers! 

    INTC/Salimonas – I’d give them another day to sell down.  If the Fed sends us lower, you’ll probably get the same deal on the $17.50/19 spread (now $1) which, by the way, you can pair with short-selling the $15 puts for .42 and that’s net .58 on the $1.50 spread that’s .80 in the money so I still like it better than the $19/20 spread. 

    XLF/RN – $15 is a very tough nut to crack but, for a nickel, it’s worth a toss but just recognize it for the gamble that it is.

  57. yodi

    Phil
    Are we still holding our guns on the RIG play short Aug 55c at 1.86 now 2.30 (1.30) premium and the 3 long Nov 60 calls at 2.87 now 3.60 thks

  58. dbarakat

    Phil,
    If Bernanke says everything that we expect him to say today (i.e. we will continue to keep rates low, the economy is on a slow recovery, there is uncertainty ahead of us, we are prepared to take necessary measures, blah, blah, blah).  What do you expect will happen to the major indeces?

  59. savitri

    Phil--would it be a good time to do the Buy INTC and Sell  the 17.50, 2012s calls and puts? Tx

  60. cmsosa

    Phil, thanks for the <UUP play, bought the Aug 23 call for 0.40 and exited today at 0.67 for a nice 65% in two days!!!

  61. chaps

    Possible portfolio margin trade on INTC: Intel has fallen below $20, a price that just recently we thought we might not see again. I’ll watch for a bottom to set in. The stock has had strong support at $19 for the last year. Right now, you can sell Jan $15 puts for $.41 on $.62 of net portfolio margin, and that ratio may get better before INTC puts in a bottom.
     
    INTC also makes a great artificial buy-write when it is beaten up (Phil had a play on during the last downturn.) Actually, I like buying the bull call spreads in Jan 2012 and selling Jan 2011 puts when INTC gets cheap. You then have a whole second year to sell puts if INTC is down during 2011.

  62. savitri

    Tx--chaps for the other ideas

  63. jomama

    phil, do you still like LMT?  I know that Gates just announced major cuts for pentagon budget, but is that priced in?  They are still selling F-15′s to our "allies"?
    What are your thoughts on IBM up here? toppy?  Thanks

  64. RMM

    Phil: your comment on my DAB, you meant rolling CALLS (not callers) from strike 20 to 24 ???

  65. Cap

    AMZN melted up again; got short north of 129; think its a good risk reward.
    Robots in control.

  66. exec

    Class Warfare Article……..Sad but true…….and he’s right……the majority of the American people will sit on the sidelines and watch it happen like a reality show.

  67. Phil

    Europe finished down about 1% on average but it was FTSE -0.7%, Dax – 1% and CAC – 1.3% so interesting configuration. 

    MSFT/Yodi – My Grandfather gave me some very good advice once and I’ll share it with you:  Don’t invest in companies that are run by idiots.  It is difficult for us ordinary humans to comprehend how it is possible to screw up Microsoft but Ballmer has pulled it off!  I would not put more energy into the upside and if you want to recoup, you can cash your 3 Oct $29 puts for $1,245 and roll the $3.30 Oct $28 puts down to 10 Jan $22.50 puts ($1.08) if you have the margin for it as THAT should be low enough were even Ballmer can’t take the company that low.  If you don’t have the margin, you can cover with 10 2012 $20 puts at $1.80 and that will cost $2,500 in margin with an excellent chance of retaining $1.25 on the long end and expiring the Jan puts worthless for a net .55 ($550) gain. 

    RIG/Yodi – RIG is only at $56.02 so there is a lot of premium in the Aug $55s and they can be rolled to the Sept $57.50s about even so no reason to bail now if you are still in them but good to add two more longs if they break over $57.50.  Keep in mind that if you can roll up $2.50 in Sept and Oct and Nov, you will end up with a $60/62.50 bull call spread at worst (if they keep going up and up and up) and any time they expire – you win! 

    Fed/Dbarak – There’s not much they can "say" as it’s generally a 2 paragraph statement.   They have to actually indicate both an allocation of capital and an intention to use it immediately to give us a rally, which is very possible.  Anything less than that will be a disappointment but that doesn’t mean we have any great reason to fail out gap as it’s Fed anticipation that took us over the Gap last week so somewhere between 10,200 and 10,500 is the "right" place for the Dow and 1,100 should hold on the S&P, which is about 10,450 so that’s what I’ll be looking for on Fed disappointment

    Last Fed statement (June 23rd) was this

    Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.

    Prices of energy and other commodities have declined somewhat in recent months (this has clearly reversed), and underlying inflation has trended lower. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

    The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.

    Market then did this:

    So the Fed needs to add a whole Paragraphe on QE2 with a plan and a BIG amount and a timeframe that starts SOON. 

    INTC/Savi – See above.  Best to just wait and see what happens.  Note major sell-off we had after last Fed day.

    UUP/Cmsosa – Very nice and very good job with your exits! 

  68. gel1

    I believe the Fed will give some good news for the markets, and we will see some upward movement for a few days – followed by a sharp move to the downside. I’m planning to load up on covered calls soon after the euphoria, as it won’t last long. This weak economy and the poor fundamentals will take a long time ( and maybe an election ) to turn itself around.

  69. Cap

    AMZN looking ready to break down …

  70. gel1

    Chaps/INTC
    Good strategy on this one – looking forward, this is a very good choice, as this company is near its bottom and has a nice future, I believe.

  71. Phil

    LMT/Jo – I don’t like any defense contractors on the cuts.  Investors are in denial thinking that Congress will change in November and start pouring money back into Defense again (or maybe Iran will do something or Israel… you know – the usual).  I believe the F15 deal was BA, not LMT.  Also, doesn’t matter what idiocy we engage in – ouside of the Saudis and China (where it’s a jobs program), the rest of the World is seriously cutting back military spending.  As to IBM – yes toppy but no way do I bet against one of my favorite companies. 

    DBA/RMM – Yes, taking $4 off the table out of YOUR calls by rolling them up. 

    AMZN/Cap – I agree 100% but after that time they burned us I just can’t pull the trigger on those guys. 

    Reality show/Exec – Good analogy.

    Fed/Gel – I agree.  Even if there is a rally on the Fed, it’s likely to be reversed.

    PCLN finally getting a tiny bit real.

    Oil had trouble at $80.50, gold trying hard to hold $1,200, copper at $3.31 on dollar weakening ahead of Fed.

  72. yodi

    Phil  Thanks it is a good move with MSFT. Good advice of your Grandfather actually I expected more of MSFT but as thoughs say if you let a monkey run your business you just receive monkey business, sadely to say about such a powerfull company.

  73. exec

    You gotta love these Bots……slow drift down…..quick pop up.
     
    Right off JR’s line.

  74. b1ll

    BYD – 5.5%

  75. rexx

    imho – I predict only a warm mention of QE2 today (too many hawks, they’ve only mentioned it for a few weeks, and really in a shadow punching way and who knows what good it will do anyone besides bond traders); but I’d guess they’ll compromise by somehow strengthening and extending their promise to keep the ‘extraordinarily long period of low fed funds rate’ even longer.  So I’m flattening short term long stock positions and selling a few  TBT put spreads and GILD call spreads, expecting bonds to sell off and gold too. Very short term, very small bet.

  76. datuu

    any good ideas how to trade around rig--i own some at about $70/share and with the fxe if you think the euro will continue to weaken?  thanks

  77. rexx

    I meant GLD call spreads, not GILD call spreads

  78. RMM

    Phil: my PGH stock went from 10.01 to 9.74$, also have oct putters 12.5 which went from 1.44 to 3$,
    does not look good, is there a improved strategy to be established,?? of course I get some dividend.

  79. RMM

    PhiL; is EWJ a buy ?

  80. Pharmboy

    IMMU/gel – looks interesting, but will have to dive into the mAbs.  I think they have competition for several of them, so that would be less attractive….get back to you.  P/B is .53c, so they are at a 6X multiple, which is a bit pricey for my tastes, but the future growth comes from the pipe.  Looks like they may have to raise some funds, as they have 25M in the bank but their burn may increase with the new mAb moving through the clinic.

  81. Pharmboy

    China’s going to have to tighten the yuan, thus gold will be getting hit IMHO.

  82. Phil

    BYD/B1 – Doesn’t look like anything they did in particular. 

    RIG/Datu – There is still a huge possibility they will be stuck in court for years and if they are found liable, they really can’t afford the cost.  I’d get out at $56 and look to make $14 back with the 2012 $45/60 bull call spread at $8, selling the $45 puts for $7 so you still have a $14 upside but you are already $11 in the money and your worst case is you own RIG again at net $46 so 20% downside protection for free.  As to the Euro – no, I don’t think it should be particularly weak other than the dollar bouncing back to 84-85 (about 2.5%) but the Euro is in a fair range at $1.30-1.35.

    $34Bn in 3-year notes were scooped up at 0.844% – very strong demand.  Bid to cover 3.31 about 10% stronger than normal.

    PGH/RMM – They just paid the dividend, that’s why they dipped.  All you can really do is roll the putters down to the $10 puts ($1), which is what you should have sold in the first place.  You can sell $10 calls for .45 too and that nets you out to about $10/10 all things considered.

    EWJ/RMM – Only when we have a REAL rally AND the Yen is improving (weakening) so today, as with most days, no. 

    Gold/Pharm – What if they tighten the Yuan by buying gold?

  83. Phil

    12:00 PM On the hour: Dow -0.81%. 10-yr -0.09%. Euro -0.9% vs. dollar. Crude -1.55% to $80.22. Gold -0.13% to $1201.00.

    1:00 PM On the hour: Dow -0.89%. 10-yr -0.01%. Euro -0.81% vs. dollar. Crude -2.15% to $79.73. Gold -0.34% to $1198.50.

    The Treasury sells $34B in three-year notes at 0.844% (.pdf), a record low yield. Bid-to-cover ratio of 3.31, vs. a recent 3.2; indirect bidders take 40.5%, vs. a recent 47.6%. Direct bidders take 15.8%, vs. a recent 14.5%. Shorter-term Treasurys gained a bit on an overall flatter curve: 10-year yield -0.02 to 2.82%; 5-year flat at 1.53%; 2-year +0.01 to 0.55%.

    The EIA’s latest oil outlook has WTI prices averaging $80/barrel in the rest of this year and rising to $85 by the end of next year. World oil consumption is expected to rise 1.6M bbl/day in 2010, mostly by non-OECD countries, particularly China, Saudi Arabia and Brazil. Currently: crude futures -2.1% to $79.80.

    The government wants a "significant increase" in bank capital to protect against catastrophic failures, Treasury’s Michael Barr says in a Chicago speech. He says the department is pushing hard in Basel III negotiations to ensure that firms have safe levels of capital before they reach a "point of no return."

    Following suit with New York, Florida will sue major LCD screen manufacturers (Samsung, HIT, SHCAY.PK, TOSBF.PK), alleging price-fixing.

    Boeing (BA -1.6%) is tackling new issues with the 787 Dreamliner, which the company says are related to manufacturing the plane, not operating it. Boeing still plans to deliver the two-years-late aircraft to All Nippon Airways by year’s end; 15 orders for the jetliner canceled last week.

    With Research In Motion (RIMM +1%) complying with requests, Saudi Arabia has backed off a BlackBerry ban, WSJ reports, citing a government statement.

    Netflix (NFLX +5.7%) broadens its streaming appeal through a deal with pay channel Epix to distribute films from Epix’s owners: Paramount (VIA), Lions Gate (LGF) and MGM – another step in what almost looks like Netflix’s transition into a premium TV channel.

    Three lunchtime reads:
    1) Economy lost momentum while I pulled weeds
    2) Permabears gain cachet
    3) FHA insured mortgages, a disaster in the making?

    An hour before the Fed and CNBC’s lunch-time report is on Pop-Tarts

  84. yipcarl

    Phil what can very strong demand for a 3 year .84% rate mean?  Either they are playing a bond pop and further decrease of rates or they would rather earn less than 1% than be in this market.  Bonds tell the story.

  85. gel1

    Sold some INTC January 19 puts naked for $1.37. The economy might be weak, but inflation will eventually make my naked put sales profitable, as I will roll as needed.

  86. shadowfax

    yipcarl
    Those IWM puts did good, but should have sold half, 50% trigger happy!

  87. David Ristau

    Hey all,

    I have a new Overnight Trade for us to play today. We are looking at SunPower Corp.

    Check out my analysis and more here.

    Good Investing!

  88. gel1

    With the economy exhibiting much weakness…. the consumer is in a state of shock and fear. At present the consumer is now saving 6% of their income, compared to .5% prior to the downturn – big difference, and not good news for an economy that derives 75% of its revenue from the consumer. No wonder house sales are so dismal.

  89. datuu

    thanks phil--very helpful

  90. Pharmboy

    Curis was punished on the stock market for the second time in as many months yesterday after releasing a disappointingly opaque announcement on a phase II trial of its lead candidate, the hedgehog pathway inhibitor GDC-0449, in ovarian cancer. In what could politely be described as a vague statement, Curis said further analyses are needed before a decision on continuing development can be taken.

    This has prompted investors to conclude that study has, or will, fail and comes at an unsteady time for Curis, following so soon after the drug’s failure in colon cancer (CRC) in June (Prickly response as Curis’ hedgehog candidate disappoints, June 17, 2010). However, it is worth bearing in mind that Roche is pitting this first-in-class candidate in numerous tumour types and phase II data from the most promising setting, basal cell carcinoma, has yet to be seen. The drug’s potential might seem to be narrowing, and it certainly remains high risk, but it is too early to completely write it off, something that the stock market appears to be doing.
     

     

    Yuan/Phil – I think China already bought their gold reserves from the IMF in Q1, (and they also like silver)for their own inflation bet (wages and RE), and tightening against the dollar will make gold prices go down in dollar terms (I think?).

  91. yipcarl

    Shadow…WHat do you mean you ‘should have’.  IWM is at it’s low?  you mean NOT SELL?  I’m holding I think the fed does nothing and we are at 10200 by tomorrow or Thursday.  I sold 20% because my risk reward was stupid.  That should also mean, that I sold 20%, that the market should implode.  OR Kaboom!  I also like, ‘down goes frazier’

  92. yipcarl

    Gel you always have something insightful to say, thank you.

  93. s3

    Hey, pharm, have you ever looked at CYTR?  If, so, what did you think of it?

  94. yipcarl

    Sorry 3rd post in a row..
     
    Gel…there is a double whammy.  No saving and credit card spending = good consumer
    12x as much savings not spending, and credit has contracted more largely than ever before in US history.
    Sure things are great.

  95. nicha

    gel1- I was looking at selling the Jan 2012 $20 puts for $3.40. The margin difference for me between the Jan 11 and Jan 12 is only $200 more. Any drawbacks.

  96. gel1

    Pharm/IMMU
    Thanks for your insight… I’m in for a 1/2 position (stock) and will add more going forward if they continue to show strength… Their sales and earnings are significantly beating estimates.

  97. shadowfax

    yip
    Sold too early should have only sold half, the rest 10 minutes ago!

  98. nicha

    gel1- the above trade is for INTC.

  99. Phil

    Demand/Yip – It either means people are still very fearful and willing to put money in something that pays 0.8% for 3 years rather than risk it in the markets or it means the Fed is still buying whatever the Treasury is selling to pretend that people think tying up money for 3 years in US dollars at 0.8% isn’t one of the stupidest ideas in the history of investing. 

    INTC/Gel – Nothing wrong with net $17.63!

    House sales/Gel – Mainly it’s that homes are no longer seen as "good investments" and it will take years to get that mentality back.  The other thing is that people who are upside down on mortages (pretty much everyone) can’t trade up because they have no deposit to flip.  No possible way to restart the housing market without new buyers (jobs, immigration) or a massive systemic bailout that puts the consumer back in the game. 

    Yuan/Pharm – China raising the Yuan (per US needs) LOWERS the dollar which makes Chinese goods more expensive to export (Japan’s problem) and cooling off China’s economy while making their imbalanced trading partners happier.  Side benefit for China is it lowers their commodity costs (while raising ours).  Money is complicated stuff!

    I like 5 DIA Sept $108s at $1.35 ($675), selling 3 Aug $107s at .82 ($246) which is net .86 per long with easy rolls to a vertical if the Dow is very bullish and 2 more calls to sell if we fail on the Fed.  You can take the Sept calls first and set a sell-stop if the Dow fails 10,600 on this run.

  100. Jtiff

     But Phil, it’s a Pop-Tart Store.  This is big news because people have been saying for years now that what this country needs is a place to get pop-tarts on the go.  Look out SBUX! 

  101. matt1966

    Dang!  Been tide up in meetings and covered my short way too early today but worst of all.. I missed the piece on PopTarts!  What did they say??

  102. Phil

    I would think the odds are pretty good going bullish on USD/JPY (Yen goes higher) right now as we’re at 85.76 and they usually try to pump it back to 87 anyway and it’s not very likely the Fed will say ANTYTHING to make the dollar go UP in value.. 

  103. Cap

    AMZN covered on the drop.

  104. Pharmboy

    CYTR/s3 – have homework now, so I will look into them.  They are working on some very tough cancers……

  105. yipcarl

    Shadow…Prepare to reload. 

  106. yipcarl

    Cap, nice trade.

  107. RMM

    YIP: IWM at S3, very low, watch for move UP ????

  108. lapper

    Have an extra $1000?  bot 100 ABX Aug’46 calls for 9 cents.  Should pay 15:1 if QE comes.  Just for laughs.

  109. s3

    Thanks, Pharm, good luck with the homework!

  110. RMM

    Phil: SDS stock, I sold 1/2 this am,  even with the drop, hold on as hedge  or close the rest ???

  111. Cap

    yip; thanks; now I can watch …

  112. Phil

    Did you guys here the guy on CNBC before who said the top 1% are spending all the money and if we tax them they may not spend and THEN the economy would be bad.  So the whole economy rests on not taxing the top 1% an extra 4% next year – that is not really a confidence builder! 

    This is the problem

    That’s the global distribution, the US distribution is WORSE (see above post) with 75% going to the top 10% alone.  And here’s how the government does spend our tax dollars – Hmm, where can we cut????

    LOL Jtiff – I guess as long as paramedics are standing by…

    ABX/Lapper – Very smart.  A little off-center so shouldn’t get hurt too bad if it goes the other way but should participate nicely in gold rally.

    SDS/RMM – I think we’re going to be disappointed.  Worth a gamble.

  113. yipcarl

    RMM…who knows this decision is going to trump any normal extended IWM.  We shall see.

  114. Phil

    New Statement!

    Bullish enough to take us halfway back but then what?

     

  115. gel1

    nicha/INTC
    Your play is very good… my decision was strictly based upon income, and the closer in put sale has a faster decay rate, therrefore a quicker profit in the pocket. I do not see any risk, for either of our plays, relative to assignment. I also chose INTC, as I plan to own the stock long term.

  116. rainman

    Jtiff/tarts — didn’t they stop making pop-tarts back in WWII along with spam and twinkies?

  117. gel1

    This should be good for TBT down the road

  118. dbarakat

    Did someone have a case of fat fingers again?

  119. matt1966

    More money printing! 

  120. yipcarl

    Sell Sell Sell!

  121. Cap

    crazy moves; shorting AMZN again …

  122. stjeanluc

    Talk about lifting all boats – euro, yen, pound, gold, oil… Cocoa and orange juice are down though. The correlation might not be as strong!  

  123. Phil

    Fed Changes

    Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

    Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.  They took out language on energy and commodities but left the inaccurate conclusion???

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

    To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.

    The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.

    Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee’s ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve’s holdings of longer-term securities at their current level was required to support a return to the Committee’s policy objectives.

    1. The Open Market Desk will issue a technical note shortly after the statement providing operational details on how it will carry out these transactions.

     

    So it’s "take money and run" on those short-term, long plays – that’s about it I think.  Nothing to see here, this is wishy-washy BS that people will read what they want into but it solves nothing

    The dollar took a total dive and I just realized my logic was right but my direction was wrong on the Yen trade as I should have been looking to SHORT the USD/JPY ahead of something that was going to be dollar-weak!  This is why I don’t play currencies – too confusing!   Now they are down to 85.26 Yen to the dollar and I do still like the upside on the support issues.

  124. Cap

    covered; quick 60c + …. love it !

  125. rwvjx5

    I think the fed is a disapointment and this market will see selling through tomorrow
    triple digit down tomorrow is my guess

  126. jromeha

    Phil
    August 10th, 2010 at 1:54 pm | Permalink  
    I would think the odds are pretty good going bullish on USD/JPY (Yen goes higher) right now as we’re at 85.76 and they usually try to pump it back to 87 anyway and it’s not very likely the Fed will say ANTYTHING to make the dollar go UP in value.. 

    GREAT CALL PHIL!!!! Anyone who went long in the futures or currency wouldve made a ridiculous amount of $$$!!! Not happy with the rising membership fees but when just one of your little tidbits can make a person 1k per contract I can see why you’re raising rates!

  127. yipcarl

    Cap me to Dow up 30 to 60 OUT..
     
    Still holding all other shorts.

  128. matt1966

    So the goverrnment gets to spend more money it doesn’t have AND not have to pay it back in today’s dollars.  And who knows.. if they buy 10 year notes with the money.. maybe they won’t have to pay it back at all because we will have defaulted by then.  Awesome!
     
    We now have a situation where they are busy putting lipstick on this pig of a market to look good.

  129. willsons

    Out of TNA at iwm 65.05 line

  130. yipcarl

    Matt…..The market is going to figure it out this time.  We may even break 10800 over the next day, I doubt it BUT a top is forming,……

  131. jromeha

    PS – I meant long Yen futures (I dont trade currency….yet), I understood what you meant even with the typo….

  132. Cap

    short AMZN again

  133. gel1

    Phil
    Your graphic (Chanpagne glass) is accurate – one must go further and analyze why this disparity exists. I would like to offer the following – Those that are still in the upper earning and wealth distribution range are unique. They, for the most part, are OWNERS of the enterprises and wealth resources, for the reason they were the risk takers and entrepreneurs of the past, and therefore are merely getting paid for their risk capital.  Economics 101 – "profit is the reward for risk taking". For those that made no investment in their probability of sucess through education, and sacrafice through saving financial resources, and later investing the same, then they shoud not be so suprised by the disparity. Does this not dovetail into the principles of a free enterprise capitalist motivated system? ( get smart, try harder, and make decisions that will assure you of the life you want to follow)  Ignoring these guidlines will assure a widening gap between the classes. Substituting a capitalist influenced society with a economic system that is found in dictator controlled countries (Venezeula, Cuba, N Korea et all) will place EVERYBODY is dispair, so which is worse?

  134. ben1be

     Phil,
    Thanks for this mornings DIA play. It never stopped out and I closed it for 40% +.

  135. cmsosa

    What is this? QE2ish…

  136. RMM

    yip: hope you went in at the IWM level I mentioned, I just got out, too early.

  137. deano

     wow – almost like today never happened. I’m a believer in "rangeish"  - now what green at the close? Major stick action?
    Half cover on the DIAs or back to naked?

  138. Cap

    You have to laugh at this joke of a market !

  139. Cap

    can you believe I have IWM 65 calls at 0.91; now 1.44

  140. matt1966

    They kind of have to close at high of day for anyone to even begin to believe in this rally.

  141. roma_

    jromeha

    hahaha

    If someone will misunderstand wrong advice, it can turn out well

  142. lapper

    look at TBT.  Yeah buy me some of them long bonds :)

  143. RMM

    Cap : I had IWM calls too for a nice gain in 5 minutes. Much easier to work with than TNA or IWM stock.

  144. tuscadog

    Phil / So they confirmed we’re in deep doodoo and they don’t know what to do other than
    a) buy long dated Treasuries to head off a failed auction as foreigners become more leary, and
    b) keep money free to the banks while the housing crisis unfolds. 
    So, we all wait now for the ‘structural’ fiscal initiatives we’ve been discussing, like Pickens, solar etc  – if they can get the Republicans to sign on?  If they can’t get them to vote yes, then we head into depression.  The Republicans may just be that stupid based on their new found obsession with austerity (as long as that doesn’t exclude starting another war).
    Seems like gold (ABX) is now a buy with more money printing, spiralling deficits and little recovery ahead?  Doesn’t mkt now have to go down as corporate outlook worsens with 25% unemployment, declining spending power/increased savings, and the foreclsosure tsunami ahead -UNTIL they (hopefully) actually announce the major structural initiatives (which they should have announced 2 years ago)?
    Would it be wise to now, on a flat day, reduce remaining longs, increase my cash position, buy some gold miners,

  145. chyer

     We still got economic issues  while Big Ben plays monopoly money. Still cant figure out what good it will do with this timing, still got a global slowdown to deal with. I still think we will trade a new low before we go higher may end flat for the year. Need action from the govt regarding taxes

  146. microflux

    Phil what happens to TASR when states have to lay off thousands of cops because of short falls ?
     
    thanks
    david

  147. ashmoret

    cmsosa/Quantative Easing 2ish.

  148. matt1966

    That’s a great read by Paul Farrell on MarketWatch.  Thanks for the link.  I agree wholeheartedly.  The end game is a race to the bottom.  How can expect free trade to prevail when you have country’s like China who keep their citizens down, destroy their environment and manipulate their currency on the ‘open’ market?  Answer:  You can’t!  And we continue to believe the politicians who say we can.  And why do they say we can?  Because they are put in office by the few companies that benefit from exports.
     
    So who hear thinks the bond market is right in pricing in for a double dip or worse depression and who hear thinks the stock market is correct in their pricing?  Me:  Bond market without a doubt.

  149. Phil

    Pop-Tarts/Rain – Yes, they’ve been banned since the 40s but they last forever and they had Billions in storage so they still package them and send them out…  8-)

    TBTGel – The only thing that will be good for TBT is reality and good luck finding that!

    Currency/Jrom – Might be the right logic but I was thinking of it as a bullish play on that contract so the wrong(ish) call for all the right reasons.  I either have to practice my currencies or avoid them!

    Listen to Cramer – "Fed said good things so we buy."  Too funy, outside of the QE paragraph, about 10 words were changed. 

    10-year/Matt – They are selling a ton of Mayan calendars in DC – most people are counting on the World ending before it becomes an election issue that year…

    Despair/Gel – I’m a big fan of capitalism but if you don’t put a CAP on it then you inevitably wreck the system.  Communism has the same problem the other way.  If you give equally to everyone you reward the lazy and then have resentment of the top 90% (in terms of effort) for the bottom 10%, who put forth little effors.  Capitalism simply flips the relationship to treat the entire bottom 90% as if they are worthless, lazy and undeserving, which is how the top 10% justify their grossly unequal shares.  You can dress it up as being your good looks or your education or your superior risk-taking ability but, either way, when you throw away food while another man starves then you are participating in a wasteful and unjust sytem.  When you have rooms in your home that you don’t use for a week and a family of 4 is sleeping in a car – there is something wrong with the way we allocate resources.  I’m sure you could never have been the kid in the car or, if you were, you would have overcome the cold and the hunger and left your loser family and taken a job in the factory and worked your way up and created a new system and started your own factory and won a substantial portion of the market and become wealthy because that’s just who you are but most of those kids aren’t as super-human as you and they end up malnourished, undereducated or just dead without ever having a chance to follow that dream you keep peddling as the universal cure-all. 

    Play on a level playing field and I’m 100% for Capitalism as the best system ever to generate success but we haven’t had proper capitalism for decades and when you let the top 10% suck 75% of the CAPITAL out of the system of Capitalism – isn’t it obvious that you leave behind a broken joke of a system for the other 90%?  Even worse, when you tell me that that 10% will leave the ENTIRE 75% to their children, who will then use that Capital to suck more capital out of the game from the lower classes – then what is the end game for the bottom 90%?  Poverty – there is no other possible outcome. 

    Money doesn’t grow on trees (I would think you know this).  Wealth is DISTRIBUTED, either fairly or unfairly in the system and, since wealth is distributed and the top 1% have more "merit" than the bottom 90%, then the wealth is TAKEN from the bottom 90% and DISTRIBUTED to the top 1% as surely as if you kicked in their doors and put a gun to their heads and, eventually, if that’s the only way they can get it back – history shows that’s pretty much how this will all end:

    Well that rally was nicely overdone.  And the funny thing is it’s 3pm and only 132M shares were traded on the Dow in a day we dropped 150 and recovered almost all of it

  150. mattlev32

    TBT is taking off on NY Fed plan to buy 2 to 10yrs. Thank God, I was getting killed on 2012 calls.

  151. jromeha

    Phil – are we going to get a little sell off to end the day? Thinking of going long treasuries as a daytrade…

  152. ravalos

    I wonder if Phil would consider raising subscription fees following the Obama’s model proposal for the tax increases.. only those with portfolios above 500K (or 250K to make it the same threshold) which is the top 1% of members should experience the increase and the rest the fees should remain flat.. :P LOL I dread that moment when they go up.. I won’t be able to afford them and it’ll be a very, very sad moment for me.. to each its own. I need to build a bigger portfolio and then come back in about 10 years.

  153. Pharmboy

    Matt – I have been 1-0-0% on that train since May.  It has been painful at times, but bond markets do not lie….and it was something I did not appreciate until I looked at the TBT pricing for inflation and could not understand why it was going down.

  154. chyer

     The better thing for the FED to do is threaten QE2, if we still trade down shorties will get agressive

  155. kinkistyle

    China and Japan are not gonna like this…

  156. yipcarl

    Ravalos… I think Phil should put his money where his mouth is… hehe.  Damn how could I resist there.

  157. rainman

    Phil/40′s  — Oh, I forgot, candy corn too: http://www.youtube.com/watch?v=3BVPOEn6_oY

  158. Pharmboy

    Top 10 Generic Drug makers FWIW…

    1. Teva Pharmaceutical 
    2. Mylan
    3. Sandoz
    4. Watson Pharmaceuticals
    5. Greenstone

  159. ravalos

    yip, how about Phil throws a much needed stimulus to the bottom 90% of this board.. QE2 for PSW members :D

  160. jdub929

     Pharmboy or Phil,
    Thoughts on AMED here?

  161. snow

    You don’t suppose they’ll do a stick today, do you? It seems kinda pointless, but the stars do seem aligned so it would be easy…..

  162. chyer

     We need to break above the range to remain bullish IMO today

  163. shadowfax

    Phil
    A couple months ago I think you said existing members stay will stay the same, Yes?

  164. hanna5

     That run up to 10700 was CRAZY! Oh well, added some shorts.

  165. yipcarl

    Rav…funny, or actually if your believe in it, it shouldn’t be! still funny.

  166. Pharmboy

    AMED/jud – not buying anything in here.

     

    Top 10 Generic Cos.

  167. srfrog

     Shadow – I saw the same post about existing members staying the same… hence why I was surprised about all this vague talk about rate increases… and some complex system of "referrals" to keep rates for existing members "close to the same".  That wasn’t mentioned back then.  Truth be told – I have no referrals and doubt I will be having any anytime soon as I don’t know many friends or family in the financial position to join.  It is actually a stretch for me the way it is – but I do learn a lot and see the value of the service… at a higher fee though… it won’t be doable.  

  168. acobra65

    geli
    As you write in your post…"one must go further and analyze why this disparity exists"…. There is a very good reason(s) for this disparity outlined in Jbur’s posted at 9:31 linked at marketwatch.com above.  This article was written from the comments of David Stockman of the Reagan administration, a person very familiar with the Republican philosophies and actions in the whitehouse and Congress for the past several decads.  I would be interested in hearing your assessment after reading this article…….    

  169. ravalos

    srfrog, I also have the same problem with referrals.. nobody I know (seriously) would be able to join this service.. except maybe for the report membersip. It’s a stretch for me as well but I do know the value of it, but given my portfolio size it’d simply kill my yearly ROI. :( we’ll see what happens.

  170. RMM

    Yip: what period on EMA is best to have for prediction of trend ?? is it 40 ?

  171. deano

     All
    Follow up on   Phil in Vegas – we are far short of our number here – (maybe I’m bad at marketing). Let me know if you’re interested. Should be one good put sale for the trip!

    deano     ban2 dflam
    nicha      gel1
    snow     gmarts
    humvee4me      CaFords 
    jromeha     Cap 
     
    Jbur     HHFIV
    terrapin22     1020
    rainman       Maya1
    Pharm     rvnelson 
    rdn4evr     willson

  172. snow

    Fees/all – I see the tension here, between what we can afford and Phil’s (reading between the lines &  maybe misinterpreting)  wish to be able to maintain a community of a size such that the advise requests don’t overwhelm him – so clearly he wants to keep this on a level where we all sort of know each other as we do now. One thing I really appreciate that I fear fee raises would change is the variety of voices here…..speaking of which, where’s Revtodd?

  173. Cap

    AMZN; the bots are keeping that around R2.  My very last short has been a struggle; but I  have had a bunch of nice gains to the short side on that today, and at 130 (almost) this thing is looking very very toppy, no matter what the bots do.

  174. shadowfax

    srfrog
    Exactly I really question if this is worth $500 per month and I don’t know anyone we any money that will talk to me, it’s the crip thing and disability check for me.

  175. snow

    Fees/all – on the other hand, in addition to that other stuff I laid out, maybe Phil’s trying to teach us to fish and hoping we’ll graduate…..or flunk out, as the case may be. ;-)

  176. Phil

    40% Ben – Very nice!

    ABX/Tusca – Well gold shot up to $1,207 but that hardly matched the dollar drop so I would not be making much of a long play on Gold.  I’ll have a better feel for stimulus timing after this weekend but I’m thinking not until Sept, when Congress comes back.  They just made a big deal about $26Bn to stop the states from laying off 140,000 teachers so I don’t think they have anything better to crow about this week.

    TASR/Micro – That’s already happening because there is no budget for new weapons.  This is not going to be their year and neither is next year likely to be but it’s early in the decade and I still like them long-term.

    TBT/Mattl – There was certainly nothing said by the Fed that was bullish for TBT – be careful.

    Sell-off/Jrom – As I said above, Fed notes good for 50% retrace and that’s where we should finish.  Then we think WWAD (What Will Asia Do) and the Fed "reinvesting" in TBills isn’t really doing anyone any good at all unless they were worried about the US being able to keep borrowing money but judging from the bid/asks we’ve been getting in note auctions and the way people still fly to the dollar every time a banker in Spain sneezes – I don’t think very many people were worried anyway so no major effect and that means we revert to our means around the 2.5% rule (10,450 on Dow) in absence of some other catalyst

    Subscriptions/Rav – I will say this again, people who are CURRENTLY subscribers will be able to continue at near the old rates.  I like you guys!  It’s more people I’m trying to avoid…  Still, I think current members who don’t meet the threshold of understanding the new policy should be eliminated, don’t you?  8-)

    Candy corn/Rain – LOL!  Now that is a different issue.  Much like fruit-cake, the SAME batch of candy corn has been given back and forth to people who don’t really want it since it was first invented in some terrible industrial accident. 

    AMED/Jdub – Huge scandal, stay away.

    Stick/Snow – I think there are too many guys who would love to dump out into a stick today.  Safer to pump up the overnights, let Cramer sucker in the retailers (like he did at 2:30) and then dump it all on the sheeple. 

    Yay!  Shadow wins the membership rules comprehension award!  He gets to stay…  Sr Frog also a winner (maybe).  I’ll clear that one up – it will be referrals of FREE trial subscriptions to our new newsletter.  If you do not have anyone who likes you enough to accept a FREE subscription – then I cannot help you but we do need to do some marketing when we launch and that’s the way we got the original PSW Report going. 

  177. mattlev32

    Phil, you a fan of Charles Hugh Smith? You seem to share a lot of his views. I enjoyed his book. I came up with a new drinking game after reading it — drink everytime he uses the word "simulacrum."
    Like I mentioned, I’m down on some 2012 calls. I bought before joining PSW so didn’t sell covered calls or puts, etc. What would you recommend to reduce losses?

  178. flipspiceland

    "….profit is the reward for risk taking."  is only fractionally true, with other possibilities being…
    "Your Profit is other people’s ignorance",  laziness, lack of interest, bad timing, bad luck, carelessness, etc, 

  179. ravalos

    Snow, I actually understand the rationale behind an increase (whether inflation or just flushing out some members so Phil can keep up with the answers, which is way reasonable). That’s why if I can’t afford it, well I simply step out.. and I’d return at one point in the future when I can really afford it without a detriment to my portfolio situation or overall budget.

  180. ravalos

    NFLX is way too excited.. I attempted to short Aug $130s @ $3.00 but they never reached it.. although I think @ $2.50 premium is still quite good!

  181. gel1

    ravlos/rates
    Phil is a very astute businessman, and PSW is a business (fees for services). I believe that Phil is a believer in the concept of market forces – ie, when demand goes up, then the price of the product or service follows. The reason for the increase in demand, is the success of the PSW community.  I think Phil is right in raising rates, if the perception of the site is providing better guidance, and benefits to the subscribers. I would like to offer a caveat – green shoots are tomorows profit base, so I would like to suggest Phil recognize this concept and keep the entry level suscribers at an affordable level, so that they could later grow into the more expensive subscription level through their education and success at PSW.  Everybody wins!

  182. yipcarl

    RMM it depends on what time frame you’re trading.  Day trading….. 1m and 5m chart for me and I like the 12EMA.

  183. jdub929

     Thanks Phil & Pharmboy on AMED

  184. matt1966

    Herculian effort being made to prop this pig up!
     
    The Fed said, we’re printing moeny  “to help support the economic recovery in a context of price stability,”  Sounds like they are afraid of DEFLATION~  Normally that statement pertains to keeping a lid on inflation… not this time! 

  185. aclend

    Newer members,
    Phil had some pretty generous promo offers on referrals in the past so hopefully his benevolence (or pity) will re-ignite come marketing time…and there are other benefits. I just noticed an extra 10% off for being a member for one year. I am up to 38.5% off full price and I think there are some members here who are totally free for life by now. PHIL, PHIL, PHIL!!!

  186. Maya1

    Deano
    For the LV trip, I think if you put in a plug for it every hour or so every day, people will be interested more an more.
    you may not have time etc to do that, though.

  187. pstas

    AKAM- I have been out of this for a while as I thought it was getting too pricey. So,I am surprised to see insider buys at $38/39 just last week. I tend to put a fair amount of credence to insiders buys, especially officers. Any thoughts here?

  188. deano

     All
    The few referrals I’ve made to PSW have been well received (although no-one that I referred participates as much as I do). I’d strongly suggest it for anyone with a brain and a few $$ to invest, as its good for you and good for them.

  189. snow

    Rates/aclend "I just noticed an extra 10% off for being a member for one year. I am up to 38.5% off full price and I think there are some members here who are totally free for life by now."
    Wait, this sounds like one of Phil’s buy-write deals, where you end up owning stock at a huge discount. So we can buy, or even better, sell options in Phil?

  190. deano

     Phil
    DIA position into the close? I’m getting better at this, but today has been quite a ride!

  191. Phil

    Site economics/Snow – I am constrained to about 300 comments a day to read and respond to and even that gets a little much if it’s every day.  That puts an upper limit on the number of possible Premium Members at about 500.  If I want to build the web site up and add more authors and staff – we need revenues.  I know it is a radical concept in US Business but I try to make sure revenues cover costs. 

    So we did some marketing in the Spring and added some members to the point at which we maxed out comments.  Then we stopped marketing and nauturally, there is some attrition as people move on for whatever reasons (we average about 4 lost members per month (<1%)). 

    We are restructuring the memberships to redefine basic and premium as to level of chat participation and we will be adding a "Voyeur" membership that will allow us to add many more people who wish to have essentially a basic view but with a 1-hour delay and no chat participation at all.  That will allow us to generate revenues to add more writers and more features without crowding out chat – which I’m pretty happy with as is. 

    We haven’t defined it all yet but that’s the outline and we will use that to develop other authors like Optrader and Oxen and we are substantially beefing up the newsletter to have an edited weekly version and that too can be sold to many, many more people than our inside subscriptions.   This format is fun but it is very limited from a revenues standpoint and since I am happy with the people now (well, MOST of you) and since some will leave over time anyway, it makes sense to replace them with more expensive people since we are now dealing with a very limited commodity as we pretty much can only add new Premium members as replacements for people who leave. 

    So that’s the basic plan.  I’m much more motivated to have a $49 Newsletter go out to 20,000 people per month than have 500 people per month pay for an inside subscription but if I didn’t enjoy this I simply wouldn’t do it so, as long as it works out for everybody, we’ll keep this inside part of the site humming along.

  192. ravalos

    Phil/current members – I understand current members will enjoy the preference.. but it’s the "near old rates" part that scares me a bit.. that’s why I said "we’ll see" :)

  193. drumkeerin

    phil
    I have a 2011 CHK 25-30 call vertical at 1.23 and sold half of  the Jan 22.5p at 2.  With 5 months to go, but not much sign of life in gas, what do you recommend? Thanks

  194. yipcarl

    CNBC Headline
    STOCKS CUT LOSSES AFTER FED ACKNOWLEDGES SLOWING GROWTH.
    kaboom.

  195. jbaker2447

     Thanks, Phil.  I really appreciate your sentiment and commitment!  Just want to thank you for what you do for all of us.

  196. gel1

    Just entered a new currency trade… Short the NZD/USD (1/2 position)   Stop at .7350

  197. kinkistyle

    Wow what a day.  Like I wrote in a mail to Phil, you can’t get this type of excitement at the movies, and thats $12 for admission, so $12 times 22 days comes out to $264 a month, so PSW is relatively cheap — thats not including profitable advise from Phil.   So even a $150 increase/month in membership fees is within the realm of reason IMO. 
     
    But anyhoo, who knew the Queen of England could move markets like that? :D   have a good day y’all.

  198. matt1966

    I don’t know what it means from a TA standpoint, but we haven’t had this many dojis all year.  Looks like folks are getting out and then they are jamming it back up to sustain the selloff.  Question is, who will exhaust first?  I think you have to go with ‘them’.  But what do they want?  I think we go down until after the election.  History is on my side!

  199. jromeha

    Gel – I do futures so are you betting on NZD stregnth or weakness?

  200. gel1

    acobra/David Stockman
    My reaction after reading the article submitted by Jbur was supportive of the writers opinion that partisan politics is toxic to a workable solution. This tug-a-war is killing our economy, as I believe Stockman has inferred.  Each side is trying to "buy" the votes of the populace, and placing a debt level that will eventually bury us all. Stockman is a very bright guy, and has been around long enough to see the long waves of destruction, and he, better than anyone, with his financial expertise has seen the inevitable forming.( self inflicted suicide). I believe the summation is more likely than not, true, and is stated in very graphic terms.

  201. deano

     
    SunPower Reports Second-Quarter 2010 Results
    - Q2 2010 revenue of $384 million vs. $347 million in Q1 2010 
    - Q2 GAAP gross margin of 22.9%, Q2 Non-GAAP gross margin of 26.3% 
    - Q2 GAAP EPS loss of $0.06, Q2 non-GAAP EPS of $0.15 

  202. jakester

    Deano, I’m recent to PSW but been trading quite a while. So far, I really like the site.
    I would be interested in the Vegas trip depending on the dates.

  203. gel1

    Phil
    I have to confess – my educational experience relative to stock and option trading has been a total success while a member of PSW.  My conservative bias to political matters is still in its original form, and only those that have read my posts can evaluate my progress in this regard.

  204. shadowfax

    Thanks Phil for the explanation and tomorrow I say we play up to 10,700 on the dow, S&P over 2,300, and Rut won’t hit 666. You can all hate me tomorrow.

  205. DKGuy

    Have been a member for about 6 months or there abouts. Signede up for a quarter at first and then for a year.
    To me, and it’s only my opinion, it’s an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect :-)

  206. Phil

    Smith/Mattl – I read "Of two minds" once in a while.  I like his stuff.  As to the calls – it would help if you were a LITTLE more specific than "some 2012 calls."  8-)

    Profit is the reward for risk-taking/Flipps – All this is is a replacement of "might makes right" – we have only evolved to the point where the guy with a bigger brain (and often less morals) takes whatever he wants from those who are less cunning or whatever you want to call it and the profits are measured in cash rather than women and trinkets (although what do you end up buying with the cash?) and that’s about how far we’ve evolved from bashing each other’s brains out with rocks and sticks in the last several million years…

    NFLX/Rav – See above news item.  They are morphing into a sort of Premium channel service so you can’t go by the model you imagine them to be in.  I think they are a dangerous short because they are selling a sexy growth story and their current model doesn’t suck either (and their main competitor, Blockbuster, is busted). 

    Green shoots/Gel – That’s what the voyeurs will hopefully be.  They will have access to educational posts and such as that’s the expected level for those memberships.  Also, once we have an editor, we’ll probably put together a whole small portfolio Newsletter for people who actually work for a living but still would like to make some money.

    See, AC gets it! 

    AKAM/Pstas – I liked them when they got whacked to $36.  A little chasey now at $43 – you might want to wait for the next time they screw up because they should have tested the 200 dma (now $33) and I would think they will some day as a 50 p/e is a bit hard to keep selling in this market, even if they do make forward targets of 27.

    Discounts/Snow – Oh all members get 10% off for each year they stay up to 35% without doing any referrals.  I love that model of paying less over time.  What we’re going to do for current members is accellerate the time discount somewhat and add a bonus referral component so anyone who is motivated to send out a few Emails can work their way back to the current price

    DIA/Deano – Oh, sorry for not mentioning earlier but I’m happy with the 1/2 cover from earlier

    CHK/Drum – Nat gas was up today and CHK is cheap at $22.24 but you don’t own the stock, just the vertical, which, fortunately, you didn’t pay for.  I would take out the $30s for .21, which raises your net on the $25s to .44 and they are now $1 so up 100% on that leg and if we don’t get a hurricane by the end of the month, you may want to pack it in and, if we do, you can sell into the excitement.  On the puts, they are $2.35 and all premium and they can be rolled about even to 2012 $17.50 puts or 2x the Oct $22 puts ($1.20) looking for a more immediate hurricane to wipe them away (or you can roll 1/4x to 1/2x) ahead of schedule.  

    You’re welcome JBaker! 

    God save the Queen Kinki!

    SPWRA/Deano – Respectable but not enough for big gains unless the whole market takes off (doubtful).

    Don’t worry Gel, we’ll get you there eventually! 

    Thanks DK!  I love to hear that and, don’t worry, I won’t give up on the other half of your education…  8-)

  207. Pharmboy

    I am one of the older members here (2.5 years _ I think Cap and Matt are longer that I), and I find this board as any investor should, a forum for smart money management.  We have all walks of life here and different sized portfolios (min is relatively small), and experience(s) in different fields (Drs., programmers, techies, oil, etc).  That is something that no investment broker or manager can offer.  Yes, the brokers have access to tons of data, but they are no smarter than those on this board that offer their advice.  We are not always right, but if we are right 60% of the time, then one can have a nice balanced portfolio for years to come (and for our kids!!!).  Politics after hours is great, as it gives insite to both sides of an argument. 

  208. deano

     Phil
     
    No problem on the DIAs – that’s what I went with – I must be learning.

  209. mattlev32

    Sorry about that. I am holding TBT Jan 2012 $35 and $40 calls. Really suffering on $40s as I purchased them at the end of May, and added to my position at the end of June. Ugh.

  210. senninha

    Shadow – I certainly will hate you if the S&P gets over 2300 tomorrow.

    Is that your 30 contract open interest on the SPY AUG2 120 Calls ?
     

  211. senninha

     ;)

  212. acobra65

    gel1
    Thanks for your comments…. I agree Stockman is a very bright guy… I saw him on several cable programs discussing his op ed piece last week.  He directly lays the blame for the situation you describe at the feet of Republican policies and "losing htier way" as discussed in this article….Do you come to the same conclusion ???  

  213. ekor

    ditto DKGuy
    Phil,
    So lack of emminent  QE2, keeps us range bound for the near future,  with a dip bias ?
    And editor/newsletter/future site : I don’t even try to keep up with you guys in the fast lane, & am loathe to sell Puts/ buy obligations  but am doing pretty well  using TA & cashing out 20-50% returns consistantly.  Your Levels watching &
    relative value comments are just  great.  I don’t know how you do it without a support staff.

  214. gel1

    jromeha
    re my call on short NZD/USD… this is a TA call, and applies to only this pairing specificially. This is a play that favors the USD going up against the Kiwi. If you are bullish on the NZD, then I would pair it against a different currency.

  215. shadowfax

    senninha
    No that wasn’t me, 50 contracts IWM 65 calls, 1/2 in so I won’t hate myself if your right tomorrow. If your wrong hold on my view is down Thursday and or Friday. I may DD after open but will get out of this tomorrow no matter what because I agree with yip, matt, cap, and Phil down end of week..

  216. craigzooka

    Hey guys, what do you think of this trade on USO.  First, we all know that USO suffers from pretty bad contango, so even if oil prices dont budge, USO still gets hammered.  So lets do a sell/write. 
    -100 USO at 35.80
    -1 OCT 36 CALL at $1.80
    -1 OCT 35 PUT at $1.52
    puts our breakeven at anything below $(35.80+(1.80+1.52)/2)=$37.46 at OCT expiration.  Our profit maxes out with USO below $35 in OCT at $(1.80+1.52+.80)=$4.12.
     
    I have been try to model exactly how much value gets pulled out of USO due to the contango but I am having a little trouble since it is different every month that they have to roll.  But note, the last time we were at 80.26 in /cl USO was on May 6th and USO was trading at about $38.20.  So 3 months resulted in a $2.60 decay in USO.

  217. Cap

    AMZN; up even more after hours.  Wow.  Why ?  No reason it seems, other than AMZN NFLC and PCLN all up I guess.
     
    But somebody wants in after hours, they keep bidding, not major volume, but thousands of shares.

  218. roberthjrfl

    Does anyone trade the S&P Futures like the /ES?  i have some questions about futures, liquidity and expirations.  Thanks

  219. shadowfax

    jel1
    How is the Apple working for you, I still try to but a used Apple and liked the 4 screens at once on a large monitor but without explorer is a trading handicap and parellels sucked for trading although ran my CAD programs perfect. Since you are changing rather than a devoted Apple Pie I really want to hear about your experience. Thanks

  220. jromeha

    Cap-AMZN has a good business model….And they get bonus points for being from Seattle.

  221. gel1

    acroba…. Conclusion, yes I agree.  Same for the Democrats. Neither party has the best interests of the country in their sights. Each is using the treasury as a carrot to get re-elected, and furthermore they believe they are among the few that have been "blessed" with the judgement and intellectual capacity to direct the minions (us) to reach nirvanna…. oh, thank God they are looking after us schlubs!

  222. shadowfax

    gel1
    Sorry I called you jel but I agree with your last post to acroba.

  223. Cap

    jrohema – Phil has a good business model too ….but a much more reasonable valuation.  And he’s from NJ, mega bonus points for that !

  224. gel1

    Hey shadowfax!
    So far so good with the Apple experience.  I have set up my Macbook and will visit the Apple store this weekend to get the Mini and the two screens. I am very optomistic this will turn out well ( big improvement to current setup). You say four screens – nope, not for me – my brain has limitations that I am aware of, and this would be an overkill, and beyond my attention level.  I’ll keep you posted and let you know of my progress and sentiments.

  225. redlog

     Phil: Despair/Capitalism  As someone who has been an entrepreneur since I was 28, (almost 30yrs), and having had the good fortune to prosper I know a few things for certain.  The fact that I have succeeded where others have not has as much to do with the environment I was fortunate to be born into, some modest intelligence and LUCK!  The hard work cliche is unfounded as well since I know that the vast majority work harder than me.  Unless there is a system that will distribute luck equitably to everyone at birth I agree with you that we would be better off making capitalism work better, for all of our sakes.

  226. pahurik

    robert, what you want know?

  227. barfinger

    redlog? a successful entrepreur never makes it without a measure of luck, and frankly it is a common observation that once you figure it out, you dont work all that hard. I mean, isnt that the point? make a living without killing yourself?
    I worked  very hard for a very short year or so to figure out my scheme, and then, only rarely again. Same thing since I retired, and "invented" short strangles. lol. i actually figured that out myself, although amazingly, i am not alone :)
     
    The label "hard-working" applies to a very small percentage of the population, and certainly not to the ones the democrats want to paint as our national "victims".

  228. boobearsdad

    roberthjrfl,
    I’ve traded /ES in the past, though not at much volume (one or two contracts at a time, mostly).  Not sure I’d know the answers to all your questions, but I’m happy to take a shot at it.  (I may not be back for a few hours, though.  Am teaching a couple of classes in a little while.)

  229. roberthjrfl

    Thanks guys, i am curious about expiration.  The SPX options settle to cash but how do the futures options work?

  230. Pharmboy

    IMMU/gel – I know they are a long term hold, but my 2c:

     

    IMMU/gel – Picture below of the pipeline:

    Epratuzumab – targets CD22 on B cells.  CD22 is is found on the surface of mature B cells and to a lesser extent on some immature B cells. Generally speaking, CD22 is a regulatory molecule that prevents the overactivation of the immune system and the development of autoimmune diseases.  IF it is a go, should be right behind HGSI/GSKs Benlysta.  Crowded field though, with many players in the Lupus field.
    For Lupus: There are currently no approved targeted B cell therapies for the treatment of systemic lupus erythematosus.  Since they are in such an early stage (entering PIII, I think it is wise to wait until next year and try to get in at a better price.  Data are encouraging from PIIb, but still very early in the process).  As for the revenues, it appears to me that it was a milestone payment from UCB, but it is hard to see the breakdown FWIW.

    Veltuzumab  (IMMU-160)–licensed to NycoMed – an  anti-CD20 mAb.  It is a Rituxan replacement that has some tough roads ahead.  CD20 expressed on all stages of B cell development except the first and last; it is present from pre-pre B cells through memory cells, but not on either pro-B cells or plasma cells. It is found on B-cell lymphomas, hairy cell leukemia, and B-cell chronic lymphocytic leukemia. It is also found on skin/melanoma cancer stem cells.  It is the target of the monoclonal antibodies rituximab (Rituximab sold by BIIB/Roche and now Dr. Reddy), Ibritumomab tiuxetan (Zevalin developed by BIIB – SPPI now owns (as do some of us at PSW), and tositumomab (Bexxar sold by GSK), which are all active agents in the treatment of all B cell lymphomas and leukemias.  Additional anti-CD20 antibody therapeutics under development (phase II or III clinical trials) include AME-133v (Applied Molecular Evolution), Ocrelizumab (Roche) especially for rheumatoid arthritis, Ofatumumab (Genmab), and TRU-015 (Trubion).

    Clivatuzumab is a humanized monoclonal antibody targeting a mucin antigen expressed in most pancreatic cancers, but not pancreatitis, normal pancreas or most other normal tissues.  The yttrium-90-labeled antibody has Orphan Drug status in both the United States and the European Union and fast track status in the U.S. for the treatment of pancreatic cancer.  Everything is fast tracked for this disease, and IF one works, then…..BOOOM!  Ways to go though and VERY RISKY.

    Milatuzumab is a humanized monoclonal antibody targeting tumors that express the CD74 antigen.  It is the first anti-CD74 antibody that has entered into human testing and is currently being studied for the treatment of multiple myeloma, non-Hodgkin’s lymphoma and chronic lymphocytic leukemia.  Milatuzumab has received orphan drug designation from the Food and Drug Administration in the United States for the treatment of multiple myeloma and chronic lymphocytic leukemia.  Just went into patients this past June.  Will be awhile b’f they see any data.
     

     

    Hope that helps.  Up next CYTR.

  231. shadowfax

    redlog
    I did the business thing 3 times and for me my wosre case was break even after 8 years that did support 2 people. There are lots of bad ideas and because of my success I get the ideas everyday and I just got off the phone with another lame one that would not listen to the basic fact that he had not bothered to make a business plan, good ideas fail every day and I will hear from him again. Great to hear all ended well for you. I am a year older than you and disabled but the mind doesn’t shut off with the body and the result is I am comming back. Great post of the optomistic side.

  232. Pharmboy

    CYTR – Pipeline below:

    Bafetinib - The treatment of chronic myeloid leukemia (CML) has changed dramatically with the emergence of the ABL tyrosine kinase inhibitor (TKI) imatinib mesilate (aka Gleevec; NVS). However, primary and secondary imatinib resistance has been frequently reported, particularly in patients with advanced-stage disease. To override imatinib resistance, three second-generation ABL TKIs, i.e., dasatinib (Sprycel; BMY), nilotinib (black box warning for heart complications) and bosutinib ( in trials by WYE/PFE), were developed.  Bafetinib (INNO-406, NS-187) is a dual ABL/Lyn inhibitor developed by our team at Kyoto University Hospital in collaboration with Nippon Shinyaku.  Long way to go, but and competition is abound.  How well it works for the resistant/mutations remain to be seen.

    Tamibarotene is a retinobenzoic acid (think Vitamin A; or Retin-A for acne), is orally active, synthetic retinoid, developed to overcome all-trans retinoic acid (ATRA) resistance, with potential antineoplastic activity.  It has been around for a while, and approved in Japan for the treatment of relapsed or refractory treatment of APL.  Again, early in the process, but possibility to do well. 

     

    The others are too early to even think about, as they may fall out after PI/II, so not worth mentioning.  If the stock gets back to 65c, might be worth a flier….
     

  233. shadowfax

    To Everyone,
    Just my oppinion but as much as I think the money approved today for maintaining teachers the additional for law enforcement is totally out of line as if they do what they are paid for, we only continue to put people in jail that only really want to be productive. This will only continue the unsustainable cost of restricting the people that are not approved. Do you really want your tax dollars spent that way? This only produces unproductivity at an out of control cost. This is backing the loosing drug war. The law needs to only pursue people who do harm to others. By the constitution we are free as long as what we do does not stop others from doing what they want and vise versa. This is part of the problem.

  234. gel1

    Pharm/ IMMU… thanks for the analysis…. a lot of work for you, but hopefully a good investment for us.!

  235. shadowfax

    Teaching is an investment in America, stupid law inforcement is a cost, and those posted as paid 200 to800,000 dollars per year, put they in Jail!

  236. shadowfax

    them in jail sorry

  237. gel1

    redlog… I have to disagree with your assesment for the input of luck.  Unless you are a member of the "lucky sperm club" and fall into a resource of capital, then I believe our system works in a very fair way.  Luck is something you have a lot of control over, and you have to put yourself into a position to receive it.  Yes, there are those that are gamblers and lottery winners, but that is very rare. Same goes for bad luck… it does exist, but many who are, either beneficiaries to good luck, or victims of bad luck are for the most part a contributing factor. One has to do the best they can to create their own good luck, and put themselves in a position to receive it.

  238. shadowfax

    gel1
    Although I agree with your luck remarks, the reality is most would rather be lucky than smart. Great ideas go down the drain because of lack of backing, timing, or many reasons. Now the overpaid government workers get a 1.4% raise while social securitiy gets again 0 while medicare costs, it is not free, increase 10%.These people including me paid for this security with cost of living raises that have been stopped. Why is this fair or even just?

  239. gel1

    Here on the West Coast, the sun is setting for another difficult trading day, and the bars are starting to show some exuberance, and I will join the excitement with a final thought. – It seems to me we are surounded with a shroud of fear, given the negative news that prevails almost every day. The markets are fearful and skittish… so what do we do? Remember Warren Buffett’s words when you get this feeling – "Be fearful, as traders, when investors are greedy (tech bubble etc), and be greedy when investors are fearful"….. I guess it is time to get greedy and take advantage of the emotional climate!
    Good evening to all!

  240. shadowfax

    The sun has not set in the Mountain Time zone and all is well except the sun setting west of here!

  241. HHFIV

    Is anyone tuned into the futures (i.e., /ES, /TF and /YM)? All three are down. A quick search for news to substantiate the drop turned up empty. A belated response  to the Fed?

  242. ashmoret

     Phil,  Since CREE has reported, what’s your evaluation and price target?

  243. boobearsdad

    roberthjrfl,
    As I understand it, futures options settle to contracts (long or short positions, depending).  So, for example, if you were to short a contract and then buy a call that expired in the money, the option would exercise automatically and become a long contract, closing your short position automatically.  (The only time I ever used a futures option, this is how it worked out for me.  Wasn’t the brightest trade I ever made, but I’ve done a lot of dumb things and learned from them, so I guess we’ll call it tuition.)  If you had no position and you sold a call that got assigned, you would presumably wind up short one contract.
    The one counterexample to this is when the option expires the same day that the futures contract does.  (They don’t always; the September contracts have August and September options.)  In that case, I would presume that it would settle to a long or short position that would in turn settle to cash in one fell swoop.  I haven’t done that before, so I’m not certain about it, but I don’t see any other way for it to work.

  244. shadowfax

    9:56 PM eastern 7:56 PM mountain, sun is still up!

  245. humvee4me

    HHFIV:  I sometimes follow the futures in the evening and at this time, they seem to be driven by markets open.  I see that Australia is down more the 1%, the rest of the world maybe doesn’t have the rose colored glasses on  that we do?

  246. boobearsdad

    gel1,
    I agree with a lot of what you said about making one’s own luck — and most definitely that being born into capital is a huge advantage — but I completely disagree that the system is fair.  Children of affluent parents attend better schools (not only private schools, but, at least in California, better public schools, funded by higher property taxes and more donations).  Children of affluent parents have the affluent parents to set an example of success for them, so that they see the range of what’s possible in life early.  Children of destitute parents have multiple disadvantages — quality of education, access to resources not provided at school, anyone in his or her family who’s ever gone to college or set a successful example, three square meals a day in a lot of cases! — that can’t simply be waved away with "the system works in a very fair way."  It’s a "very fair" system that is a whole lot more fair for some than others.
    Of course, this is not to say that it’s impossible to rise above one’s circumstances.  Of course, it’s possible for someone born into positive circumstances to wind up as a screw-up.  But it’s vastly more difficult for someone who is looking to achieve success in a family where no success has been had, as opposed to one who’s been groomed for success (and armed with resources) from the very beginning.  No amount of government can overcome that problem, ultimately — people who can buy things will always have advantages over people who can’t — but the idea of distributing wealth more equitably is a very good step in the right direction.

  247. diamond

    Sergeant Phil Esterhaus: "Hey, let’s be careful out there."
     
    iPhone users have the most sex
     

  248. hanna5

     Phil / Others : Nikkei is down 220 as i write this, to 9330. Dow closed today at 10650. Now +1300 points apart. Anyone considering a long Nikkei, short dow as a reversion play?

  249. humvee4me

    Cap:  great read, thanks for sharing

  250. qcmike

    Cap
    That was worth the time to read
    thanks

  251. humvee4me

    boobearsdad:  i know your heart is in the right spot; but at  some point we have to realize we can’t win the war on drugs, afganistan, or poverty. 

  252. boobearsdad

    humvee4me,
    I completely agree that we won’t win any of these wars.  I don’t think I was making an argument that we could win the war on poverty (and I certainly wasn’t saying anything about drugs or Afghanistan, but you couldn’t be more right about those).
    My argument was more narrow; you cannot argue that a system is fair if it renders judgment on us for decisions we make as children, and especially if it renders judgment on us for decisions we didn’t make.  The idea that America is a meritocracy is a sham.

  253. jromeha

    Cap – come on now, it’s located in the GREAT Northwest. No other region is called great. You have the SW, the midwest, the rust belt, sun belt, dirty south, east coast, and the GREAT Northwest. Obviously being from there Im biased but still…

  254. shadowfax

    humvee4me
    We can’t win but howe much do we loose. It’s 8:46 PM mountain 10:46 PM eastern and 7:46 PM pacific and right now the sun is setting in the mountain time zone. Did it set in the pavcific zone over 2 hours ago? That is your right wing problem, sorry gel1!

  255. humvee4me

    Shadowfax:  its setting right now at 8:00

  256. humvee4me

    boobearsdad:  i agree you’re argument was in regards to a narrow point; life isn’t fair and never will be; even with equal opportunities  there will be different outcomes.  If the rich can’t push their kids to the front of the lines, why be rich anyways; we all do the most for our kids and some parents don’t.  I sure don’t want to live in a country where the government is so intrusive so as to make sure that all kids are getting an even break.  I think that these problems are part of a larger underlying problem; the pernicious decay of our culture, but that’s a whole ‘nother story. 

  257. shadowfax

    humvee4me
    The underlying problem is the LIE!

  258. boobearsdad

    humvee4me,
    No society can or should try to ensure equality of outcome; that makes no sense and could never work.  Equality of opportunity — or, at the very least, ensuring that there is enough opportunity for those nearer the bottom of the ladder — is something that a sensible society should strive for, as all kinds of good come from it (even for people nearer the top).  I’d like to see people be able to get through some doors; I’m also fine with the idea that they should have the freedom to screw up once they get to the other side of them.

  259. humvee4me

    I agree!!

  260. randers1

     Cap- that was a good parting letter. Any ideas on how to invest in hemp ?

  261. yipcarl

    Futures look good Shadow!!!
    Cap your AMZN short will be just fine.  I tried to get some shorts from one of my platforms and there wasn’t any…..

  262. kustomz

    Nikkei down 2.5% (9298), if this is any indication of bad monetary policy then I suspect our markets will shortly follow the same direction. Data doesn’t lie, bond markets have been right In the past. Equity markets are usually late to the game. Bank profits derived from trading, mark to fantasy and little else. The jig is up and the Fed has capitulated, deflation has taken hold..this is not a test.

    Speculators driving up prices, not hedgers. Speculators are over leveraged in an atmosphere of declining demand. Look at Wheat, sugar, orange, cattle, lumber, lean hog, cocoa, corn, coffee, oil, copper, dow, s&p, naz all peaked last Wednesday/Thursday. Industrial output in China has been slowing since March. Dismal back to school sales may be the nail in the coffin.

    Looks like Japans central bank is freaking out and buying up dollars, we may get our dollar short squeeze yet.

    It has begun…..cut to food stamps, let them starve as teachers (union) eats steak (desperate for votes)!! The number of Americans who are receiving food stamps rose to a record 40.8 million in May as the jobless rate hovered near a 27-year high, the government reported yesterday.


    The House passed legislation giving states $26 billion for Medicaid and teachers today. The Senate had already passed the legislation, so now it’s off to the president’s desk.
    The end product has, after three months of negotiations and compromises, less than half the $50 billion-plus the House originally wanted. Moderate Senate Republicans forced the legislation to be fully offset, so the bill shifts money around rather than injecting new money into an economy that needs it. One of the offsets was a $12 billion cut to the food stamp program.
    And the bill will help, but not enough. "In fiscal year 2011, state budget gaps are about $121 billion, and by the time the fiscal year is over, they could exceed $140 billion," says Jon Shure, deputy director of the State Fiscal Project at the Center for Budget and Policy Priorities

    2006 Fed balance sheet 800b, today 2.4 trillion. Yea things are just dandy while some say they may need to expand to 5 trillion

    “We’re heading towards a double-dip recession,” said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. “The party is over from fiscal support. These hard-money men are fighting the last war: they don’t recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again.”

    So let me get this straight, print more money and get it into the system and create inflation out of no demand…did it work the first time? I think we all know the answer.
    Mr Bernanke has fought off calls from FOMC hawks for moves to drain stimulus by selling some of the Fed’s $1.75 trillion of Treasuries, mortgage securities and agency bonds bought during the crisis. But there is little chance that he can secure their backing for further purchases at this point. “He just has to wait until everybody can see the economy is nearing the abyss,” said one Fed watcher.  

    Nearing the abyss, lmao…nearing the abyss cost us 6 trillion the last time, I think we’re out of bullets and need to let nature take its course.

  263. yipcarl

    Kust…
    your words to Gods ears.
    As I have been saying it’s unavoidable.

  264. senninha

    Is it any wonder when the arsonists are trusted to put out the fire ?

  265. exec


    gel1
    August 10th, 2010 at 2:39 pm |
    Permalink  
    Phil
    Your graphic (Chanpagne glass) is accurate – one must go further and analyze why this disparity exists. I would like to offer the following – Those that are still in the upper earning and wealth distribution range are unique. They, for the most part, are OWNERS of the enterprises and wealth resources, for the reason they were the risk takers and entrepreneurs of the past, and therefore are merely getting paid for their risk capital.  Economics 101 – "profit is the reward for risk taking". For those that made no investment in their probability of sucess through education, and sacrafice through saving financial resources, and later investing the same, then they shoud not be so suprised by the disparity. Does this not dovetail into the principles of a free enterprise capitalist motivated system? ( get smart, try harder, and make decisions that will assure you of the life you want to follow)  Ignoring these guidlines will assure a widening gap between the classes. Substituting a capitalist influenced society with a economic system that is found in dictator controlled countries (Venezeula, Cuba, N Korea et all) will place EVERYBODY is dispair, so which is worse?

     
     
    Gel…..good comments…..I’d agree with these statements…….what I find interesting, is the class warfare strategy that has overtaken our politics uses key words like "top 1 percent" or some broad phrase to define people that have money and attempts to paint everyone else with an equally broad brush that somehow suggests that they are being cheated or deprived of something by those top earners. 
     
    What is lacking in this class warfare arguement is exactly what you pointed out.  As a general rule, the people that do well are the risk takers who put their "skin" in the game to become successful.  I have no problem with the people that want to show up at work at 9 and leave at 5 and never give work or all the problems that go along with work a second thought.  This goes for all the government workers that could give two shits if something happens today, tomorrow, a month from tomorrow or two years from tomorrow.  It’s fine to have this attitude, but you can’t expect to be on the upper limit of the pay scale if this is your mindset. 
     
    In my view, the politicians have broke the code and figured out that there are a lot more "voters" that want the easy life and have figured out that demonizing the successful is a good strategy for capturing there votes.  The only problem is that in the long term, it takes people to take risk and bust their asses to make this system work and if you take the incentive out of working hard and taking risks, your going to wind up with a country full of takers and no contributors.  Take a look at Europe.

  266. Phil

    Good morning!

    Perfect test of our 2.5% rule already in futures, everyone falling back to support so a nice test today.  Obviously we’ll be looking for a 0.5% bounce back to 10,450 (10,500) and 1,100 (1,106) so those are going to be our watch levels. 

    Oil at $79.50, gold $1,199, copper $3.27 (still strong) and the dollar is up against the Pound ($1.567) and Euro ($1.301) but the poor Yen is still super-strong and bounced off the 85 line with a lot of support but too late for the Nikkei, where they abandoned ship, all the way to 9,292. 

    PCLN shorters will be happy to know that Thomas Cook and TUI Travel both issued profit warnings on weak demand.  

    TBT/Matt – And worse today as TBills are making new lows!  Of course it’s 2012 so too early to panic.  I don’t know your basis but the $35s are $6.40 and the $40s are $4.30 and you can sell the $40s as a full cover and roll them both to the $30s to set up a $30/40 spread.  You can also (or just) sell the Sept $36s for $1.20.  A 1/2 cover raising .60 a month isn’t too risky and raises $9 if you do it 15 times between now and 2012. 

    Dip bias/Ekor – I guess we’re seeing that dip bias this morning.  We didn’t get the firm program we needed so now the ball is in the government’s court to provide real stimulus but we have to let the market have it’s little temper tantrum over not enough free money.  Also I have a great support staff – that’s you guys.  Look at all the great information we exchange here from all these different people with all these different specialties.   I would put our level of information-gathering up against most major hedge funds.  By working together and "meeting" every day and exchanging ideas in this giant round-table, we are becoming very effective at catching trends very early in the curve and that helps us all ride the waves (and boy, these seas are rough!). 

    USO/Craig – Nice play but beware the hurricanes.  Note on buy/writes we generally go more conservative and you can do this one artificially with the Oct $38/34 bear put spread at $2.05, selling the $37 calls for $1.35 and that’s net .70 on the $4 spread that pays $3.30 at $34 and you only risk being assigned 1x short at $37 vs 2x short at $35.  This thing about contango is it’s not a constant and can actually (not usually) flip to backwardation in a rising market.  There’s also a huge amound of fees incurred from the churning, which drag down the fund too.  Here’s a good way to look at USO and WTIC together over time (drag the box around).

    /ES/Robert - Futures are super-liquid during market hours but nasty to trade large amouns overnight.  The ES contracts don’t expire but they can make violent moves as they adjust to rollovers but more so the Dow (/YM) than the S&P.

    Luck/Red – Very nice to see someone who appreciates that aspect of the game.  Luck is always a factor.  What I say to people is that success is based on being in the right place at the right time.  Of course there are always some lucky (or unlucky) bastards that are struck by lightning at random and some die and some get super powers but, to me, it’s all about hard work, good thinking and determination for most in that we (if we are clever) identify (possibly through trial and error) "the right place" and then through a sustained and determined effort, we endeavor to keep ourselves at the right place UNTIL it’s the right time. 

    That is what I believe is the key to serial entrepreneurship – many people believe they lucked out and some take that as a reason to be generous (because it could have happened to anyone) and some become so fearful their luck will change and they will become one of the poor again that it shapes their actions in a negative way.  Some people delude themselves that it’s all hard work and most of those people treat their fellow workers/employees as "losers" who should have tried harder if they wanted a piece of the pie.  Also in that group are the "drill seargent" types, who give seminars and tell people that ALL they have to do is work hard and they will be successul.  Not that hard work doesn’t greatly increase your odds but, to a large extent, it’s like telling the rat on the wheel to run faster if he wants to get somewhere when the real solution is to step off the wheel.

    Putting yourself IN the right place WAITING FOR the right time in order to "get lucky" is, to me, the real key to success.  I have many show-biz friends and I see it all the time there were raw talent only gets you so far and the rest is that determination to get up every day and do another audition and give it your all over and over and over again – taking 100 nos for every yes but the ones who stick with it end up succeeding the vast majority of the time.  Fear of failure, fear of loss, fear of "missing your chance" are all things people need to get over in business and in trading.  We don’t always win – it’s what we do after we lose that defines us. 

    Nice job Pharm!  You know you can right-click on the images to adjust size?   650 is about the biggest width that fits.

    Oops, 7:40, gotta get my post up!

  267. cmsosa

    CAP/
     
    Cap, thanx for sharing that article(the good bye letter)!!!

  268. ashmoret

    PHIL, what’s your evaluation on CREE since they have reported?  I purchased 250 Aug 60 puts on monday, and I’m looking to take profits, but would like to know what’s a good value for them.  Thanks

  269. 42laurel

    Phil;   sell  Apple Jan. $220 puts at $10.75. what is your opinion?

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