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TGI Friday – Hoping the Weekend Brings Perspective

David Rosenberg is the special guest on CNBC this morning.

Sometimes I get the impression they intentionally counter-program any bullish point I bring up (we talked about Rosenberg in yesterday’s post).   As I did say yesterday – fear sells and CNBC is in the business of selling fear, driven by their own fear of declining ratings (new lows in the last book) and irrelevance.  I think one of the problems with CNBC is that they forget they are on television.  On the right, I am SHOWING you a chart of weekly unemployment – TV is supposed to be all about showing you things but the only things they show you are gigantic talking heads and the dreaded "octo-box" where the loudest guy with the best one-liner wins (I guess). 

It’s sad that anyone gets their information this way and I am relieved to see people once again picking up newspapers to get their news (or even the occasional financial blog).   The chart above is from Calafia Beach Pundit on Seeking Alpha and he’s trying to point out, as I am, that we have a tremendous amount of negativity that can take this MASSIVE improvement in weekly job losses and spin it as a negative.  I’m not saying it’s great – we need to put people back to work – but expecting job losses to fall from 650,000 per week down to 300,000 per week without so much as a bump along the way would not only be unprecedented but ridiculous. 

Another thing I like about blogs is the commentary and another SA Writer (who I happen to follow), John Lounsbury and a reader called Oil Finder, go back and forth on the merits of Pundit’s observation.  You can learn more about unemployment following this exchange than you will if you had watched CNBC 24/7 for the entire past decade!  Oil Finder makes the excellent observation that the track of the unemployment claims through the current recession is virtually identical to the track of our last major recession in the 70s (the one they blame on Carter, who took office in January of 1977). 

So if we take into account the overall expansion of the labor force since 1975, then it’s not terribly surprising that our Unemployment numbers are also higher this time around.  Back in the 70′s we had the oil crisis, the hostage crisis, Watergate the end of a pointless war that put the country in debt and government interference with the markets and the dollar (Nixon removed the gold standard).  In short – they were just as screwed up as we were

The Dow had peaked out right around Nixon’s re-election in late 1972 (and top tax rates were 70% back then!) at 1,050 but by late August of 1975, the Dow had plunged to 580 and then went even lower, to about 560 in December of 1975.  We recovered from there all the way back to 1,000 in early 1976 but then dipped back to 750 in the Spring of 1978 and we flopped along between 800 and 1,000 all the way through the Fall of 1982, when Reagan famously said "Don’t worry about the deficit,  its big enough to take care of itself" and lowered taxes and spent record amounts of money and managed to send the markets into orbit – even though his "Star Wars" initiative never really panned out.  

Other than the over-stimulated bubble top of 2007 - our market has fallen about the same and recovered about the same and is now pulling back about the same as it did in the last recession.  The real difference in the economy of 2010 and the economy of 1975 is the LACK OF STIMULUS as the born-again deficit hawks in Congress have done their best to prevent any actual aid from reaching the people they supposedly represent.  There is no point to the Fed engaging in Quantitative Easing, to put money into the economy, if that money isn’t spent.  There is absolutely no point to the Fed buying Treasuries to keep rates low if the banks aren’t lending and the government isn’t spending, is there?

Government spending in a recession is an INVESTMENT in our (the people’s) future.  We pay out Unemployment and Food Stamps to avoid catastrophe but that does nothing to CREATE jobs.  When business spending is lacking and people aren’t being hired then it’s up to the Government of the United States to invest in America.  China invested and continues to invest in China and they have to cool their economy down!  German invests in Germany and their GDP has now been revised to DOUBLE what the initial projections were.  The UK and the US, on the other hand, have 2 warring parties and the Conservatives of each nation have hamstrung the Government and both countries are stuck in the muck with their sleezeball politicians and special interest groups.

The only special interest this country should have is putting 10M Americans back to work so they won’t need Unemployment Insurance or Food Stamps or loan bailouts.  Even if those 10M people only make the $30,000 a year paid to the bottom 90%, rather than the $300,000 a year that the top 10% averages, that’s still $3Tn in new wages and that generates $1Tn in new tax revenues, which pays back whatever we invest in putting America back to work – not to mention all the Unemployment Insurance and Food Stamps etc that we are spending anyway.  And then that $3Tn flows back through the economy and Consumer Spending picks up and we once again have a strong economy – it’s not difficult – we just need the political will and vision to do what this country has successfully done many times before

As Gordon Long points out this morning, Big Business no longer invests in America, Big Business does nothing more than suck money out of America to pay their employees overseas and hide their profits in offshore accounts and you drones just keep voting for it to continue over and over again and actually rally to protect the interests of these wealthy corporations and their wealthy CEOs and stockholders as they repeatedly rape and pillage your neighbors (as long as it’s not you, right).  And why do you let it happen?  Because you want to be one of "THEM"?  Because sometimes when they trickle, a little bit of their wealth trickles on you?

The CPI was actually UP 0.3% this morning, not deflationary at all and Retail Sales were UP 0.4% vs -0.3% last month, when that report, among others sent us to back to 10,100 on the Dow and the S&P hit 1,056.  If you listen to the MSM, you would think we should be far lower than that today and has one single person on TV mentioned Germany’s revised GDP was up 2.2%, from up 1.2% expected and is their fastest growth in 4 years? 

No, you won’t hear any good news because good news won’t give tax breaks to the wealthy.  Only fear of a catastrophe like 9/11 or this deficit-laden economic collapse can have people who make no money voting for cutting jobs and humanitarian programs in order for the people who have all the money to keep more of it in their banks (where they refuse to lend it or use it to invest in America or hire American workers).  Welcome to the USS Ship of Fools! 

Our friends at Goldman Sachs say there is a 25-30% chance of the US falling back into a recession and maybe an optimist would say there is a 70-75% chance that we won’t double dip but the official quote is: "As signs of slower U.S. growth have multiplied, market participants have become worried about the possibility of a double-dip recession.  The probability is unusually high — between 25 percent and 30 percent – but we do not see double dip at the base case."  Notice that in Bloomberg, the "but we do not see double dip at the base case" has been omitted.  What a difference it makes where you get your news from!

Our levels are holding so far and our bets are still leaning bullish until we see 3 of 5 broken.

Have a great weekend,

- Phil


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  1. kustomz

    2005 all over again, but its not some sleazy mortgage company trying to lure you into speculating.. its uncle Sam(e)…looks like they are trying to spur some buying and selling in Manhattan real estate..

    The Federal Housing Administration agreed in March to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo. That enables buyers to make a down payment of as little as 3.5 percent in a building where apartments range from $820,000 to $3 million.

    It’s a government seal of approval,” said Gollinger, a director at the Developments Group of New York-based brokerage Prudential Douglas Elliman Real Estate. “We need as many sales tools as we can have these days, and it’s one more tool.”
    http://www.bloomberg.com/news/2010-08-13/manhattan-luxury-condos-embrace-federal-help-in-game-changer-for-sales.html

  2. ekor

    Phil,
      There is also the distinction between wasteful spending (ie. no-bid contracts to military contractors, big pharma, etc)
    & investing (ie. conservation, energy, education, etc.).  Best of luck in Washington this wknd.

  3. Cap

    2 Mergers this morning:
    BX … DYN
    IBM … someone
     
    could be rally fuel IMO.

  4. chyer

     What will be more scary is when they realize is QE2 QE3 is not going to work. What we need is new ideas, like economy friendly policies for a start.

  5. Cap

    kustomz … that is a sick joke ….absurd.

  6. Cap

    Phil, re: DC, if you want anybody of substance to pretend to listen to you, bring your checkbook !
     
    And if you are looking for O, get a map of the local private golf courses.

  7. matt1966

    kustomz, it’s as if the government wants to take over all lending when the private sector isn’t willing.  This might even be ok if it were just a situation of fear gripping the private lenders and stymying them into dormancy.  But it’s not just that.  There is also the problem of credit worthiness.  That is where the government makes its mistake.  They lower the standard for lending and wind up with a bunch of people taking money from them that can’t or won’t pay it back.  The government is essentially saying they can assess risk in the market better then the private sector.  I challenge anyone to prove that the government is better suited to do this then the private sector.  They are terrible at assessing risk!  I think the most egregious example of this is the recent decision to lend upto $50,000 for two years to unemployed homeowners.  The banks are taking over a year to take people’s homes as it is.. if they can’t get on their feet after a year and work out a repayment program what good is another year going to do?  I bet the repayment rate on these loans reaches a record low.. even lower then all the money they are ‘lending’ to students and the FHA ‘lending’ to strawmen set up to dump soured developments across the country.  It’s really getton out of control.

  8. exec

    Phil,
     
    Unfortunately, the sole source for financial information for the average Johnny lunchbox is CNBC or the like.  So let’s forget about them and look at what is important…….Us!!!
     
    If CNBC has once again shifted their spin to the negative, then you have to assume that the puppeteers that control them must have taken their short positions and it’s time to scare the masses so that they can scope up their profits with their big crane mounted money scoopers.
     
    Let’s face it……..they paid their dues with the last less that perfect trading quarter……it’s time for them to get back to a perfect trading record.

  9. matt1966

        Phil, re: DC, if you want anybody of substance to pretend to listen to you, bring your checkbook !
     
        And if you are looking for O, get a map of the local private golf courses.
     
    LOL Cap!  And Phil, if you want a good home cooked meal come to my house.  We’d love to have you!

  10. Cap

    Cartoon of the day:  http://twitpic.com/2eao5s

  11. matt1966

    As much as I’d like to take a stress free ride up the manipuvator today.. I don’t think consumer data is good.  I can’t get behind it.  Don’t want to get run over.. but don’t want to get duped either.  I’m going to try and sit on my hands~

  12. Cap

    Matt; DC area … I will be visiting one of my bro’s in northern Virginia on next Sat, staying overnight at a hotel, leaving Sun.  Maybe we can connect for a drink.  Not sure of my exact schedule; family visit for nephew 1 yr bday.

  13. kustomz

    Cap, I take it your not for subsidizing speculators :-)

    Things must be worse than we thought If they have to prop up Manhattan real estate with such sweet deals.I have to admit its tempting and just may have to take a look

  14. Cap

    kustomz; not unless the speculator is me !  And nobody is giving me free money.

  15. datuu

    kustomz, that is unbelievable --they have not learned a damn thing yet--no wonder fha’s foreclosure rates are skyrocketing!!!
    also in terms of unintended consequences --i was working on a real estate deal and everyone who looked at the property said yeah its great but we want the same terms from the owners that we can get from fha--totally killing the private market--how many private parties are stupid enough or able to loan at those rates--

  16. Pharmboy

    Pivot Points for August 13……on TOS

  17. ben1be

     Conservative whine-a -thon in overdrive this morning. Is it a full moon or something?

  18. jromeha

    Phil- califia beach pundit!!!? I haven’t read this past article so I cannot comment on it but califia beach pundit!!!!?from his past articles I can say that He produces some of the most shallow ‘articles’ on the site! I swear SA publishes him just to get people mad. His theme is consistent though, definitely a bull.

  19. kustomz

    matt, real estate must be saved at all costs..its the engine that drove our economy and markets to all time highs. We are slowly picking up steam on our way to becoming a 3rd world country. 25% of the population unemployed/underemployed and 40% living beneath the poverty line while 40+ million need food stamps to feed their families, while Government workers can afford to indulge themselves at Peter Lugers.

    The above mentioned statistics scare me, how can these people afford rising prices that Bernanke wants at all costs. Take a look at energy and food prices, double dip ammo if you ask me.

     

  20. Cap

    Friday the 13th ben…

  21. chyer

     Looking for buys after 10 unless sell-side momentum goes ballistic

  22. Pharmboy

    Going to pick up some more ARNA on the open today.  Currently 6.85, and hoping they bounce down to 6.75 range.  Order is in for 6.73……

  23. exec

    Matt,
     
    Good point……however…….please don’t construe anything the government…..aka….politicians do as a real desire to fix anything……..you must realize that everything…….EVERYTHING!!!!……they do is viewed through the prism of "VOTES"……..it’s a very simple formula……they run the equation…..then determine what is the best course of action that will get them…..or not lose them…..the most votes.  So don’t think for a moment that they are lending people money that can’t afford to pay it back has anything to do with them believing that they can pay it back.

  24. brooklyn

    FHA  – It is the Fed screwing itself  – Lenders are making too much borrowing at the Fed window and buying treasuries to make it worth taking the risk on a real estate loan at today’s rates with the risk of default they don’t trust themselves to accurately assess (so I guess they did learn something…).. Using FHA is essentially like finding a tax loop hole – making use of a government program meant for something else (to enable first time buyers afford to become home owners – sound familiar?) because Fannie and Freddie won’t lend in new buildings irrespective of a purchaser’s credit until the buildings are 71% sold – which means any new building opened after 2008 would automatically go BK. Ready for that, FDIC? Just changing the lending parameters for new buildings (conventional equity requirement & rate) would make it a reasonable band aid. Imagine what happens if rates went up and/or the Fed put limits on the window?

  25. jromeha

    You around JRW? Are you in TZA since you stated your opinion yesterday on what the over/under of 61.97 on IWM would lead to?

  26. matt1966

    Cap, I should be around next weekend.. it sounds like you have a tight schedule though.  I’m doing a drive by like yourself with my brother only this weekend in Richmond.  Let’s talk closer to then but I’m definately up for it if it works out.

  27. chyer

     Going thru mud again, not looking too good AAPL, FCX weak

  28. hanna5

     Little buying interest considering the sell-off recently. If we cant pick up soon, expect us to slide lower today…maybe back to 10200 

  29. acobra65

    exec/CNBC In my remembering a poll of CNBC demographics a couple years ago the viewers of CNBC were people with incomes exceeding $200,000 per year and if you view comments regarding polls taken during the day by them you would not guess the results to be the "johhny lunch bucket crowd".  I don’t believe most of the general population watch any market or economic news…. that’s part of the problem… very uneducated.  ie. recent poll showed 46% of people believe Obama initiqated the TARP program.  Besides… johnny lunch bucket should be too busy swinging that hammer… LOL Have a great investing day.

  30. Anonymous

    Phil, everything you say is true but there is no politicial will to change the status quo. We need structural change and redistribution of wealth, which ultimately means cracking down on the top 1%. Our consumption based model is unsustainable and the demographics don’t support it anymore. Boomers are done spending and taking risk (look at money flows into bond funds), Gen X is too small to move the needle, and Gen Y can’t find jobs; plus they are obsessed with socializing, too busy texting and screwing around on Facebook. So where does final demand come from to support 3.0-3.5% GDP? BRICs? That’s seems like wishful thinking. They don’t have the purchasing power to make up for drop in consumption in developed countries.
    So, do you think we are in a secular bear market? secular bull? or cyclical bull or bear? If we are looking at 2% growth for 2011, then why does the S&P deserve a high growth multiple?

  31. Cap

    sounds good matt …

  32. JRW III

    Good morning,

     

    IWM 59.04, 60.45, 61.23, 61.89, 62.38, 63.33 and 64.15

  33. acobra65

    Phil/Summers Do you ever read the economic analysis of Graham Summers on SA…he’s pretty much a perma-bear… but seems to have a respectible read on economics.  His investing advice is terrible.

  34. lvmoda

     Corporations exist and operate for the interest and benefit of three constituencies:  shareholders (capital), employees (labor) and customers (markets).  Fundamentally, there no basis for corporations to be nationalistic in any way, other than for their own self interest in maintaining access to markets and labor such that the corporation will benefit.   So, with the last 30 years of globalism and deregulation along with the evolution of finance as an industry and as an ends onto itself rather than an enabler,  capital and markets have trounced the third leg, labor.  This is the outcome of 30 years of corporate evolution….what we are currently witnessing in the state of industry and domestic tranquility (or lack thereof!).  
    Of course, Obama is trying to support the third diminished leg, labor.  And, this is ideologically driven by Obama…being the democrat he is.   I’m not a democrat and definitely not an ideologue, but my pragmatic macro view is that our own free market and globalist views America has promoted to the world for the last thirty years are now creating a significant disadvantage for America.  
    Our human capital development (labor) has been grossly ignored by the politicians, unions, corporations and yes, the ‘me’ generation which has ruled the cultural consciousness for the last thirty years.  We need a "Marshall Plan" for human capital development, from education through retirement, and a visionary yet conservative leader to bring it forth.   We are certainly at war, with ourselves, and of course, we are the toughest enemy to face.
    Sorry to encroach on market hours, but had to get it off my brain!

  35. Pharmboy

    From C. Payne:  CPI for July showed a 0.3% increase, falling in line with the consensus estimate. "Core" CPI which excludes volatile food and energy increased by 0.1%, also falling in line with estimates. The increase to CPI comes after three straight months of declines that had economists beginning to worry about depression-style deflation. For the headline number, a reversal in energy caused the index to go positive. There was also a 0.6% increase in apparel and a slight decrease in food and beverage.

    Today’s number brings some solace for the deflation concerns, but also is not a big enough jump to begin inflation panic talk (sometimes it seems like the pundits are afraid of both deflation and inflation at the same time). The increase is also not big enough to get the Fed to start thinking about re-raising rates. At least, this number will let us take one more thing off our minds… for now.

  36. Phil

    Good morning! 

    Still watching: Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635 - and the same reds as we had yesterday but our beloved SOX are up 1% this morning so there is some hope!

    We’d like to see AAPL get moving but they have been under attack all week and now they are flubbing Android numbers to make it look like IPhone is somehow losing market share by blurring the lines between an OPERATING SYSTEM (Android) that is on many, many phones, and DEVICE (IPhone), which is far and away still the market leader and still on 3-week back-orders (and no one gives a damn about the antennas anymore so kudos to Steve for dealing with it). 

    Copper bounced off $3.25 on Dollar strength in overnight trading and the Yen came back from the 3am low at 86.1 all the way back to 85.6 at 6am but is now back to 85.85 on Japan’s last day of trading before their vacation next week (why don’t we get those?).   Oil is $75.90 and needs a good day for the markets to pop and gold is $1,217 and is not likely to calm down into the weekend but I still like the GLL Sept $37/39 bull call spread at $1.75, selling the $37 puts for .80 for net .95 on the $2 spread that’s .35 in the money so any gold finish under $1,220 will be a good one

    The Shanghai was up 1.2% and the Hang Seng was flat and the BSE gained half a point. Europe had a really strange morning as they gapped up almost a point at the open but then fell over 1% and are down about half a point now.  That all happened way before we opened so nothing to do with our reports.  

    So I am bullish until evidenc of 3 of 5 of our levels broken proves otherwise but that may make for a tricky stance into the weekend if we don’t get a pop back over 10,450 and 1,100 on the S&P (which is kind of doubtful on a Summer Friday).  We’ll have to see what happens after Europe closes and adjust accordingly.

  37. confused_trader

    UoM 69.6

  38. Phil

    Speculating/Kustomz – Damn, that’s a good deal.  I’ll have to race Cap over there! 

    Investing/Ekor – Of course, that goes without saying. 

    Rally fuel/Cap – You would think.  There are tons of big M&A deals around but they sweep them under the rug as if they didn’t matter when, during the rally, they would tout every single Billion dollar deal as if it was definitive proof that the market was STILL undervalued. 

    QE2/Cheyer – The easing works but you can make a pile of money to the moon and it isn’t going to do a thing for the economy unless somebody spends it.  All the Fed does is give it to the banks and the Treasury and the banks don’t lend and the Senate Filibusters every stimulus bill so the EZ money just sits there. 

    Michigan Confidence 69.6, better than expected.  Looks like they haven’t beaten all of the life out of the citizens yet – that means we can expect someone from Pimpco to come on CNBC and gloom things up by lunchtime!

    Business inventories are up 0.3, vs. up 0.2 expected and May Inventories were doubled up from 0.1% to 0.2% and that affects GDP in a positive manner

  39. JRW III

    Capt.

    Open was evenish so no position yet but I’m seeing a BUY program which may give us a good shorting opportunity !!

  40. chyer

     Not liking the response in US and Euro so far. This kind of news should make us fly up like crazy on short covering

  41. rn273

    JRW – And you would short at your 61.89 level? Do you think option expiration could interfere with your levels (since a historical trend need not be followed today)?

  42. kustomz

    Waiting to see what 10350 1088 brings, sellers or more buyers

  43. kinkistyle

     AAPL weekly 250 puts selling for 2.20 two days ago.  They went ITM today and were only selling for around a buck. Gotta respect theta. Shoulda sold a few.

  44. chyer

     When the market gives you time to shop on good news is bad action

  45. JRW III

    rn273 / opex

    Absolutely, as was pointed out yesterday, we should be 3% higher for Max Pain !! Still no position.

  46. Phil

    Checkbook/Cap – Actually the trick is to GET PAID, they listen a lot better when they are spending money!  8-)

    Government/Matt – How about the National Housing Acts of 1934 and 1937, which established the FHA and the FSLIC?  When lenders WON’T lend then the Government needs to act.  I’m sure you hear my housing plan, and I’d rather see something like that than more silly loan programs but SOMETHING needs to happen and I’d rather see a little wasteful spending than no spending at all.  Even Bush-boy Paulson said "don’t let the perfect be the enemy of the good."  THAT’s the attitude of a guy who knows how to get things done!

    CNBC/Exec – They haven’t been right in the last 3 bottoms.  They may WANT to cause a panic and send the markets into oblivion so their owners can get more free money and foreclose on some buildings which they can write-off (after getting bailed out for the losses) so they can pay no taxes until 2025 while they move the rest of their operations to China but they can’t cause a bottom below the floor and that’s my overriding premise – we have a floor and reclycling and re-packaging the same old bad news over and over again isn’t going to lower it.  You can panic the suckers – there seems to be an infinite amount of them but you begin running into real, long-term investors who can’t be spooked by El-Erian or Rosenberg or Whintey or Roubini. 

    Cooking/Matt – Is that invite for Cap or me?  You should have both of us over and tape the debate for pay-per-view!  I’m booked solid – the only way I get to eat is to schedule meetings at restaurants…

    Look where we are now, right at Pharmboy’s SPY center point at 108.42 but I don’t get why the S&P pp should have such divergence.  DIA also bang in the middle along with the Qs and IWM so I’d say let’s keep a firm eye on which side of 10,340, 1,084 and 615 we end up on for the tone of the afternoon

  47. deano

    Phil & Cap
    Debate should be a fun session in Vegas – but we’re still below the halfway point for attendees. C’mon guys, are you up for a Phil weekend in Vegas? Signed on so far:
    deano
    ban2
    dflam
    nicha
    gel1
    snow
    gmarts
    humvee4me
    CaFords
    jromeha
    Cap 
    Jbur
    HHFIV
    terrapin22
    1020
    rainman
    Maya1
    Pharm
    rvnelson
    rdn4evr
    willsons

  48. savitri

    RN—Tx for posting your IWM trade yesterday

  49. chyer

     Pharm/ ARNA seems to be tanking on some Jefferies comments. At what level will be good to buy??

  50. kinkistyle

    Vegas/deano:  Want to go, but wife is expecting so I am out of commission for like 2 years.  *sob*

  51. stockbern

    Deano,  Vegas   a little more info please

  52. dmankoff

    ok, phil, even Doug Kass is buying TBT now like crazy.  what is the best trade to go low TBT at this level?  eventually it wil be a buy, the 20 year cannot go down to zero interest rate !

  53. dmankoff

    to go long TBT I mean

  54. gel1

    The administration keeps screaming we need to do something about the 10% unemployment – we do, but they think the jobs that were lost can just come back – not so. Those jobs are for the most part gone forever, as they represented the "slush" in a inneficient economy.  Corporations have tightened their belts and purged the employees that were marginally beneficial to the operation.  Construction trades have taken a hit because they were building houses for people that had no intention or ability to pay for them.  Government at all levels had the worst inneficiency, by employing people to fill jobs that were not essential,l and at levels of compensation that was not affordable by the taxpayer.  We still have further to go in this massive "wash-out" of waste. The most important policy the government should follow at this time ( but it is the one they do not understand, or embrace) is to incentivize new entrepreneurship through tax policy.  New employment will be coming from this area only, and not any of the "pie in the sky" stimulus crap that has been deployed and failed miserably.  Phil…. this is the message you need to spread around town when you get to DC.

  55. confused_trader

    Helpful link to see  World Markets
    http://www.allstocks.com/markets/World_Charts/world_charts.html

  56. David Ristau

    Hello all,

     
    We have a new midterm trade in Suntech Power (STP). We are looking for the stock to grow 4-6% through Tuesday. We are looking to enter at 8.85 – 8.95 today. 
     
     
    Good Investing!
  57. rn273

    IWM/Savitri – did you get out of it? I think you should sometime now, if you are not yet out.

  58. datuu

    deano,
    i am new to the group (2 weeks)--don’t know anything about the las vegas event--can you please post the info or link
    thanks

  59. jromeha

    Pharm – I like your entry on ARNA. Already had a bunch but bought more. Bought and sold some covered 7$ August calls for .25. If it tanks more next week Ill sell the 6$ calls so i think that it’s a pretty safe trade. Unless some crazy news comes out or what not I should at least break even and if it gets back up to 7 I’ll have made 7%+ in a week.

  60. stockbern

    JRW   are you in anything yet?

  61. savitri

    RN--yes I did get out of the sold 63s--but still have some IWM 64 calls

  62. ben1be

     Gel
    I have been building houses for 35 years and never had a client that did`nt intend to pay for it or could`nt afford it. I don`t know where you come up with this garbage, but its not reality based.

  63. rn273

    Buying IWM next week’s 61 calls for 1.25 as a cover for some short positions (very temporary play)

  64. jromeha

    Ben1- republicants like to debate in a fact-free nospin zone!

  65. lvmoda

     Gel1,  to my earlier point – those jobs are not coming back.  Many of the knowledge worker jobs are now being outsourced to India and the Philippines (I just returned from 2 weeks in the Philippines – NO recession there!!).   Does Dell or Citibank really care if the customer cannot understand the accent or that they need to spend three times as long on the phone due to poor call scripts, misunderstandings, etc.  Of course not.   Workers there cost 15% of what they cost here.  Why?  Because there are no SSI, FICA, Medicare, Food Stamps or other mandates that drive up our labor cost index.   To make matters worse, our educational standards are LOWER than our competitors in the knowledge industries!
    Do you support any policies to protect or develop any of our industries in which we currently have a competitive advantage, or should we just let our standard of living index fall to meet the emerging countries halfway (or worse)?   As we learned from the Japan era in the seventies and eighties, once the balance of power in competitive advantage shift, they are nearly impossible to reverse.   laissez faire, anyone?

  66. kustomz

    82.832 watch that line on the dollar, if it takes off from here looks like the BOJ is hell bent on killing the yen

  67. rainman

    JRW/IWM — did you just short? :-)

  68. nicha

    Pharm: followed you in ARNA today. Bought at $6.79. Sell puts? Not a good day to sell calls…

  69. escohen5

     Deano — count me in for Vegas!

  70. Phil

    Wine-a-thon/Ben – LOL!

    Pundit/Jrom – I don’t usually read him but John made a bunch of comments on him and I saw those and that made me look at the article but it was a valid point and it was the commenter who made the real points that got me thinking, not the article author. 

    Real estata/Kustomz – I don’t know that it’s "saveable" if saving it means getting back to our crazy, overbuilding levels.  We have no population growth, we chased out all the immigrants and shut the doors to new ones and we destroyed the only savings 80% of Americans have, which is the equity value of their homes.  Without those deposits to intiate upgrades, people will stay in homes longer and the demand for new housing will continue to be near the lows.  Stagnant unemployment also kills that market so it all goes back to the same thing – we either take putting people back to work much more seriously or prepare for the same thing that happened as we flubbed around for the entire decade of the 70s – STAGFLATION (also caused by the dollar dropping during record unemployment).  Only when home prices pick up enough to wash out the loans against them will people be free to buy new homes again.  

    Oh yeah, happy Friday the 13th!

    Good point Brooklyn!

    Russell just cannot get out of it’s own way!

    Summers/Acobra – Yes, he’s not bad.  I think it’s funny that his firm is called Phoenix yet all he can ever see is the ashes.

    Corporations/Lv – That’s right but that’s why we (the people) need to realize that corporations are enemies of the state and that the state needs to play hardball with them, through taxes and regulation to allow them access to our markets.  Some of that hardball includes requiring them to employ Americans if they wish to sell things to us.  America doesn’t have many bargaining chips left but we do have access to the World’s biggest spending population so that’s what we need to use for leverage.  I’m sorry but I think visionary and conservative (not to mention leader) are oxymorons and what we need is a "New Deal" for the American People - not more of the same.

    Vegas/Deano – Perhaps if you take the group you have and figure out a good weekend to go (maybe MLK day weekend, when the markets are closed but not a major holiday for travel) it would help give people a better idea of whether they can go.  Market Holidays

    2 years/Kinki – What is she an elephant?  Oh sorry, no disrespect but they have 2-year gestation periods….  8-)

    TBT/DMan – While TBT has generally sucked, we can set up a "don’t care" spread to allow for them to go lower.  The 2012 $35s are $5.90 and the $45s are $2.80 so you can buy BOTH of those, with a combined delta of .93 and sell.  1/2x the Sept $35 puts for $1.15.  Since you have 17 months to sell, collecting net .50 per month pretty much pays for the longs and you can always add a few more longs if TBT takes off and, of course, as long as you are 1/2 covered, it’s an easy 2x roll to a higer strike (the Dec $38 calls are $1.20).  It’s a good bet that if Kass is now pumping it, there will be plenty of suckers buying it up on occasion, whether with or without true merit.

    Jobs/Gel – Yes, we need NEW jobs.  Not to try to revitalize dead industries (see above comment on housing).  I really liked Gordon Long’s post (main page) as he neatly summed up all the stuff that I’ve been saying about R&D spending and education for years and how it’s just killing this country because we don’t invest in ourselves.  We make/made lots of things for people who don’t need them – it’s been the basis of our economy for years.  What do people need?  ENERGY.  What is our biggest import?  ENERGY.  This is not rocket science to connect the dots.  Energy and transportation infrastructure are things you can build that will employ millions of people and cost Trillions of dollars (a good thing if we keep the money in this country) and create an asset benefit for this country for decades to come.  Incentifying entrepreneurship is a great idea but you do it through promoting job creation, not tax cuts – an entrepreneur needs people to build a business and, hopefully, profits will come in time but giving tax breaks to "entrepreneurs" is just a code-word for creating loopholes where rich people can hide their money (and I would think you are well aware of this). 

    LOL Jrom! 

  71. doro165

    Deano, sign me up!

  72. lvmoda

     Phil,  I’m in complete agreement with you about equalizing the legs of the corporate stool.  If government does not protect industries and jobs in an intelligent way, we will just continue our slide into oblivion.  As it is,  we probably have lost the boomers dreams of retirement, but its not too late to focus on our young people to be able to compete globally in the next ten or fifteen years.   I think we need a conservative leader that believes in the value of human capital and long-term planning along with fiscal caution exactly to convince conservatives that it is the best way to achieve security, independence and economic prudence by investing in our human capital.  I know, its an oxymoron, but do you really think a progressive can bring this country together?   Clinton pulled the ideological shift afterhis mid-terms….if he could do it I’m sure a Republican could do it also  :)

  73. Cap

    AAPL looks like a weekly pin to 250 if you ask me.

  74. cwan120

    TBT / Phil: The TBT play you recommended above, do you also sell some calls besides Sept $35 puts?  Or maybe you meant Sept $35 Calls?
    And why buy two sets of calls, 2010 $35 & $45?

  75. acobra65

    Deano/Vegas After checking with my "probation officer" LOL it looks like Vegas is a GO !!! Sign me up !! As long as we don’t stay at the "Roach Infested Hotel and Casino"… LOL.

  76. gel1

    Phil/ ENERGY
    We have enough energy resources RIGHT HERE in our own country, which has been thoroughly documented. There are enough proven oil and gas reserves to keep us independant for the next 100 years. All it would take to put this in motion is a simple bill passed by the Congress and signed by the President. NO – they want new electric innovations that do not pencil out. Why not nuclear? NOPE – our government is one again in the way. The changes that are needed to solve all of our problems are unfortunately political. Until that happens, why even discuss the matter. If you have a log jam caused by beavers building dams - you dont re-route the river, you remove the beavers. Makes sense, eh?  The analogy is from one who was originally from Canada (me).

  77. lvmoda

     Aug APPL 140 puts for 1.20 look like a reasonable 5-day sale to me.

  78. kustomz

    ben with respect to your many years in the business, the last 6 years of real estate have been based mostly on speculation of rising prices and flipping..so yea the incentive was to borrow cheaply and sell for profits in a matter of days..40% of the market was pure speculation in 2005 and did not peak until 2007 where leverage hit an all time high.

  79. drumkeerin

    GEL
    you mentioned Dec calls on ICE a month or so ago. See anything hqppening by then?

  80. rainman

    Santelli — is he the only person on CNBC that understands something about the market?

  81. acobra65

    Ben1be/Real Estate: Gel1 has made some very good points.  Everyone’s personal experience is not necessarily a read of the marketplace.. Philosphy 101.  In my own experience in Phoenix during the past 8 years as a Real Estate and Mortgae broker many people bought houses based upon a "shoestring" financial picture on option ARM mortgages and liar loans.  There has been a lot of fraud and misrepresentation in mortgage applications. Many brokerage companies which advertised constantly during the day to get mortgage business are no longer in business.  In addition, now that our economy is based upon 2 income families the loss of 1 job usually spells disaster. Just my experience….   

  82. Phil

    Big sell-off into EU close.  Them guys is scared!

    08:00 AM On the hour: S&P -0.3%. 10-yr +0.14%. Euro -0.19% vs. dollar. Crude +0.08% to $75.80. Gold +0.12% to $1218.20.

    09:00 AM On the hour: S&P -0.14%. 10-yr +0.07%. Euro -0.12% vs. dollar. Crude +0.09% to $75.81. Gold -0.15% to $1214.90.

    09:30 AM At the open: Dow -0.16% to 10303. S&P -0.19% to 1082. Nasdaq -0.34% to 2183.
    Treasurys: 30-year +0.12%. 10-yr +0.09%. 5-yr +0.03%.
    Commodities: Crude -0.09% to $75.67. Gold +0.05% to $1217.30.
    Currencies: Euro -0.19% vs. dollar. Yen -0.03%. Pound +0.05%.

    10:00 AM On the hour: Dow +0.18%. 10-yr +0.05%. Euro -0.11% vs. dollar. Crude +0.18% to $75.88. Gold +0.07% to $1217.50.

    11:00 AM On the hour: Dow -0.09%. 10-yr +0.1%. Euro -0.5% vs. dollar. Crude -0.24% to $75.56. Gold -0.16% to $1214.70.

    July Retail Sales: +0.4% to $360B vs. +0.4% expected, -0.3% in June (revised from -0.5%). Ex-auto +0.2% vs. +0.3% expected, -0.1% last month.

    Jul. Consumer Price Index: +0.3% in-line with expected, -0.1% prior. Core CPI +0.1% in-line with expected, +0.2% prior.

    "This takes some pressure off the Fed in terms of deflation," one economist says in response to the first U.S. cost-of-living increase in four months. Rents, the biggest component in CPI, increased for a second month, and the cost of clothing and used cars climbed, diminishing the risk of a protracted drop in prices that would hurt the economy.

     Jul. Real Earnings: -0.2% for real average hourly earnings M/M, +0.4% Y/Y. Real avg. weekly earnings +0.2% M/M, +1.6% Y/Y. Avg. workweek +0.3%.   Wages suck but climbing workweek is predictive of employment – the best we can hope for without major stimulus is to be a fully employed 3rd-World nation…  8-)

    Aug. Reuters/UofM Consumer Sentiment: 69.6 preliminary vs. 69.3 expected and 67.8 in July. Expectations 64.1 vs. 63.7 expected. "The gain was too small to represent a meaningful improvement," the survey said. "Consumers have increasingly come to expect lackluster income and job growth for an extended period of time."

    Jun. Business Inventories: +0.3% to $1,359.9B vs. +0.2% expected and +0.1% last month. Sales -0.6% to $1,080.5B. Inventory/sales ratio rises to 1.26 from 1.24 in May, and vs. 1.37 a year ago.

    Since extending the Bush tax cuts would add trillions to the total debt, Simon Johnson believes letting them expire would be "the single biggest step our government could take" toward achieving the goal deficit hawks say they want: "a credible commitment to long-term fiscal sustainability [that] should reduce interest rates today, helping to stimulate the economy."

    If consumers have become so clueless and overstimulated, Larry Ribstein suggests that everyone must apply for a license to shop, and dunces could shop only at the safest, government-approved stores. Even more radical: "We could shed the notion that markets must be perfect in order to be good."

    Germany’s GDP grew an adjusted 2.2% in Q2 vs. Q1, marking the strongest growth in 20 years on the back of healthy contributions from exports and investment. GDP was up an adjusted 3.7% Y/Y. Consensus had been for +1.4% and +2.6% respectively.

    Thanks largely to Germany’s strong growth, eurozone GDP grew at its fastest pace in four years, expanding 1% in Q2 vs. Q1 and up 1.7% Y/Y. The consensus estimates had been for 0.7% and 1.4% growth, respectively.

    OPEC boosts its 2010 world oil demand growth forecast by 100K b/d to 1M b/d, with China, India, LatAm and the Middle East seen as key growth areas. Given the current supply/demand outlook, the overhang in inventories is not expected to change significantly in coming quarters, OPEC says. Crude futures recently +0.3% to $76.00.

    The financial services sector "look(s) more like a grind" with expectations for a weaker recovery and longer-lasting low interest rates, which make loan growth less likely until next year, Goldman tells investors. Preferred in the group are "high quality" stocks such as JPMorgan (JPM), BlackRock (BLK), Simon Property (SPG) and Northern Trust (NTRS).

    Johnson & Johnson (JNJ) sells $1.1B of debt at the lowest interest rates on record: $550M of 10-year notes at 2.95% and an equal amount of 30-year bonds at 4.5%, a testament to the plunge in corporate borrowing costs and J&J’s sterling credit.

    PayPal (EBAY) is betting on online micropayments, with plans to make it easier for consumers to buy anything from access to a single news article to a virtual item in a video game. The payment platform should be up and running by the end of the year.   I like this a lot.

    LOL, now Chambers sounds too bullish?  People need to make up their mindsIn the wake of yesterday’s 10% selloff, Cisco (CSCO -0.1%) shares might seem attractive, but perhaps investors should be as cautious as the company’s CEO sounds. John Chambers projects long-term organic revenue growth of 12%-17%, but those projections may be tough to meet, since Cisco averaged only ~8% during 2004-09.

    In a surprise move, Oracle (ORCL) sues Google (GOOG), alleging Google’s Android violates seven Java patents and related copyrights. The suit seeks unspecified damages and an injunction against "continued acts of infringement."

    Tech companies should stop their secret gloating over RIM’s (RIMM) India woes and start watching their own backs: The FT reports India has made a closed-door decision to raise similar security concerns with Google (GOOG), Skype and other communications services.

    The U.S. Department of Justice is conducting a broad investigation into the activities of big pharmaceutical companies to see if they have been involved in corruption or bribery, FT reports. The companies include Merck (MRK -0.8%), GlaxoSmithKline (GSK +2.1%), Pfizer (PFE -0.7%), Bristol-Meyers Squib (BMY -0.2%), and Eli Lilly (LLY -3.4%).

    Shares of Eli Lilly (LLY) are -4.4% premarket after a District Court judge ruled its patent for ADD drug Strattera, which would have expired in 2017, is invalid, causing LLY to lower its 2010 revenue growth outlook by 3%. CEO John Lechleiter: "Assuming a launch of a generic version of Strattera in the U.S., the loss of revenue will undoubtedly add to the challenges we will face during upcoming patent expirations on other key products."

    BP agrees to pay a record $50.6M fine for failing to correct safety hazards at its Texas City oil refinery after a 2005 explosion killed 15 workers.  Oh, I predict they’ll be shattering that record real soon! 

    BP has been trying to hide dead birds and other sea life to avoid fines of $50K per dead animal, Washington’s Blog alleges.

  83. jromeha

    Datuu- basically we were thinking of having a little pow wow in Vegas to discuss trading ideas, meet the people who we chat/debate with on the site and get away from the wives/husbands, ect :) Besides, who needs an excuse for Vegas!  Phil said to have something like that he would want at least 50 people committing. We have about 20 something now…

  84. deano

     Phil
    Good suggestion for the MLK weekend – guys what about it? 

  85. acobra65

    lvmoda/conservative  I’m not one for labels…. part of the problem with the dialogue today.  I would be interested to know which possible Republican candidate on the scene today would bring about this change you talk about which I agree with….

  86. kustomz

    Hoenig statements potential fuel for a short squeeze in the dollar 

  87. datuu

    jromeha--depending on the date count me in--thanks

  88. dflam

    HI Phil: take a look at this position please & let me know how I can improve it.thanks
    Bought INTC 15 Jan. $20 c at $1.59 ,now $1.33,sold Oct. $21 c at  $.54,now $.42, sold  15 JAN. 2012 $17.50 p at $1.56 now $2.51

  89. chaps

    Vegas: roughly what time frame? Phil coming too?

  90. Pharmboy

    ARNA/All – I have bought my share, and am going to add Ps ($7 Augs for 60c).  The "boys" that missed want in as I noted a few days ago, and they want better prices to scare retail out so they can ride it up to 9-10 range b’f Sept 15.  On the charts, the support is in the 6.35 area.  DCTH, QCOR and others did this type of move, so just be patient and use it as a buying opportunity and don’t go crazy.  Buy in small lots!

  91. confused_trader

    lvmoda
    August 13th, 2010 at 11:16 am | Permalink  
     Aug APPL 140 puts for 1.20 look like a reasonable 5-day sale to me.
    Did you mean AAPL, if so where are you seeing Aug 140 for 1.20?
     

  92. lionel

    Pharm/ ARNA what about Oct  calls at 3.10?

  93. bobhu

    Anyone trading LQMT?  Time to buy???
     
    Thanks.

  94. jromeha

    Thx Pharm Im definitely buying, already sold a lot of puts….

  95. shadowfax

    The original conservative has been gone for a long time. There is not arepublican in the country that realizes that creating a better corp bottom line is not ever going to hellp the masses and unenployment. The insentive then is only make more money and let the country go to hell. Making everything somewhere else boosts corp profits and employs their people. If you look at the expanding countries and ask them what they want? More consumers. It doesn’t matter if they are foreign or domestic as long as they buy the products they make. The balance of payments tells the real story, our money goes out to them and stays out. What works? China, they sell sell sell and the money comes in in in, then they have the brain power to loan it back to us and malke more money. A very simple solution would be the first lession in engineering, coppy first, life is not long enough to make all the mistakes over again. The expanding countries have done that, first they coppied our inventions, now they improve them because they actually work on them while building them. We just buy it and have no idea how anything works including how to employ our people or sustain real growth. How long does it take to realize what we have been doing doesn’t work? It is either take a look at what worked in the past or TRY SOMETHING NEW! The republicans only want more money and Greed kills everyone. The worst part is they don’t realize when the masses are broke they can’t buy anything and then they don’t make any money either, lowering prices never ever worked and will not even sustain the want a be rich.

  96. jromeha

    Lionel – Oct is after the decision by the FDA. I think Pharm has been recommending spreads for anything after August options. 

  97. rn273

    Entering a speculative long position on IWM, long next weeks 61 calls for 1.23, short 61s expiring today for 0.43 in a 5:3 ratio (5 longs for every 3 shorts). Have a TZA hedge to cover the drop. If IWM goes up, this combo with the long 64 calls should make a good chunk

  98. lionel

    Pharma/ ARNA
    Sorry forgot a bit in my last post
    buy Oct 5 calls 3.10 and sell Sep 7 puts at 2.50 for a net .60

  99. rexx

    QLD Sept 50 Puts have a buyer right now…any idea to work off them?

  100. ben1be

     acobra65 
    You`re right. My personal experience  is not a good read of the marketplace…Philosophy 101. But YOUR experience in Phoenix, now that`s truly enlightening. 

  101. lvmoda

    Acobra/Candidate —   Well,  I’m not sure he/she has really surfaced yet.  Before the candidate surfaces, I think we need the blueprint.   Conservative think tanks need to drop religious, social and tax policy development and pull together a human capital development blueprint that encompasses the whole lifecycle from education standards to targeted industrial policy and restructuring frameworks (training and labor mobility) through to economic security (retirement, unemployment, etc).  Without this blueprint, no candidate will really have the substance to combat the entrenched interests and ideologues.
    That said, someone like Tim Pawlenty, who comes from a progressive environment (Minnesota) and knows how to communicate across lines.  He is a strong advocate of education reform, has undertaken fiscal reform and has visionary characteristics.   That said, he may have a tough time with his own core republicans more than with swing independents and democrats.  
    Again, the key is the depth and quality of the reform blueprint…republicans may win in 2012, but without it they will look just as inept as the current administration.  If Obama has taught us anything, it’s that incrementalism will not save us from ourselves!

  102. lionel

    Jromeha/ ARNA fed decision is on the 16th, Sep options expire on the 17th
    So to capture the full runup Oct calls are well timed. I choose  ITM calls to have less premium (1.40) and I sell the same $ amount of premium with puts ATM (6 or 7)

  103. savitri

    rn273--following you in
    Tx for posting

  104. mattlev32

    I agree with you Phil. The U.S. is a corporate state, has been for a while now. Top 1% owns all prodcutive assets and feeds off of middle class consumers. We need structural reform but there is no chance in current political environment. Repubs are bought and paid for by big business. They’re hopeless. Dems are a collection of sissies, afraid to tell public the truth and afraid of losing power. So they play the same game, just more subtle.
    I don’t understand why you’re so bullish given all the headwinds. Why should I buy the S&P at current levels if GDP is going to be 2% or less going forward. Demographics suck -- stick a fork in the boomers, Gen X is too small, and Gen Y is broke and living off their boomer parents. Where does final demand come from? the BRICS? That seems like wishful thinking. They don’t have the purchasing power and they aren’t consumption oriented, yet. Do you think S&P will earn $95 in 2011? I suppose at some point this discussion, as it relates to the stock market, comes down to valuation. I don’t understand why the S&P is a good buy at these levels considering the poor growth prospects for developed economies.

  105. lvmoda

     Confused/AAPL —  Yeah,   my fingers and brain don’t really cooperate that much.   Should be Aug AAPL 240 puts selling for 1.20, expiring next Friday.   Now 1.16.

  106. loopy

    Phil, do you like GLW here?  Seems to be up against support.

  107. nicha

    Pharm/All- ARNA, sell $7 puts for .60c, right?

  108. datuu

    confused trader
    i think Ivmoda made a typo--i think he meant the $240 puts

  109. swellesley5

    wow..phil, you are really painful!  good trading ideas..which is why i subscribe!!  i spent 30 years on wall street in the bond business…guess what..a 2.75% ten year means the economy stinks worse than we know and the fed knows it…thus the raining dollars…get your guy obama to stop the class warfare rant and , put the basketball down, and put forth some wpa like job programs…giving money to teachers and the seiu is a vote getter..but doesn,t do much else…can you say.." jimmie carter"

  110. acobra65

    Basic Rule of Life… We all do not follow…. till we figure it out…"If it is working for you… keep doing it"… Most everyone keeps doing it when it is not working… And continues to argue it (idealogues) But, keeps doing it anyway… Fact of life…. I am sure Confusious has a saying for this simple Rule of Life….. 

  111. Pharmboy

    My only fear is that volatility continues to go up, and that those Sept/Oct ones will have a spread that you can drive a truck through.  Again, I do not advocate selling P in October (yet) even though the date is after OPEX.  I have a few Sept 6 C that I sold last week on the run up for this exact kind of play with them pulling back the stock.   Be very careful in here.  On the daily chart, the 20d MA is holding the stock up.

  112. matt1966

    This market is undboubtedly in sell off mode today.  They are just being extremely stealth about it.  Not sure how low we’ll go..

  113. Pharmboy

    Yes, sell $7 Aug P for 60c or better.

  114. lionel

    Volume inexistant/ in full buy-bots realm in TNA at 35.99 until 61 89 watching 61.60 for descending SMA 200

  115. ravalos

    NFLX has finally stopped its relentless upward move! I was tempted to short more Aug $135 calls BUT next week is VERY LIGHT on economic news so the market might go up like crazy..

  116. kinkistyle

    wife/Phil: lol. a little baby is going to bring the ball and chain around my ankle go over the carry-on weight limit to Vegas :’(

  117. datuu

    pharmboy
    i am new to the group and just started reading your handbook on technical analysis--i am finding it not only extremely helpful but enjoyable to read--just wanted to thank you for all your work and for making it available--

  118. Phil

    I’m curious, is no one disturbed by the omission of the end of the sentance in the Goldman quote in Bloomberg (last paragraph of today’s post)?  It’s not like they didn’t have the quote – Businessweek is the same company!  You could literally have 2 guys debating the health of the economy using the same figure (25% chance of recession or 75% no chance) and the two different versions of the quote as "evidence."  This is just a really good example of the crap I see in the media every day – perhaps because I read so many different sources and I look for the differences, I’m acutely aware of it but this is not news – it’s spin! 

    Leadership/LV – Good luck with that!  There is no "Conservative" way out of this since we NEED to put 10M people to work, no matter what it costs and we need to clamp down on corporate greed and we need to become energy independent or we will just cycle around again next time commodities spike.   This country spends $2Tn a year on energy (40% petroleum products) and we consume twice as much per capita as Europeans and close to 10x what the average global citizen consumes.  Why is that?  Lack of public transportation, ridiculously large homes, low consumption taxes and we actually incentivize the purchase of low-mileage vehicles.  It’s policy suicide!  You think a "conservative" is going to fix this. 

    I don’t even think the current government can fix this because you have to tell big oil to go to hell and, of course, the financials make much of their profits from commodity trading and that won’t fly either so it will take RADICAL changes to push through what needs to be done to get this country healthy.  What’s sad is that it’s so easy to fix – Employ 5M people building wind farms and solar farms and wave farms for the next 10 years and out all of our imports (1/2 consumption) and set goals to drive consumption down by 33% over 10 years (still 50% more than the EU per capita) and we end up consuming 1/2 the domestic oil we currently consume (so it lasts longer and is cheaper) and we import NONE – flipping our entire balance of trade positive, strenghening the dollar and turning us back into an export economy.   Cost of paying 5M people $50,000 a year = $250Bn.  Is that really too much to invest in America’s future? 

     

    AAPL/Cap - It is starting to get that way, isn’t it?  Ever since the weeklies came out. 

    TBT/Cwan – I’m sorry, I did mean selling the $35 CALLS – not selling puts at all.  The idea of buying the 2 sets is you have a backstop in case TBT spikes up, but we don’t really think it’s going to do that so it’s not worth spending a lot on.  Having the $35s vs 2x the $40s gives you better leverage against the at-the money calls you are selling and the $45s will pay off quite nicely if TBT takes off. 

    Energy/Gel – I’m in favor of developing any energy that is cleaner, on balance, than what we have now.  Nuclear is great too as they have newer, smaller, safer reactors that we should be approving in every state asap but you have to educate a populaiton that has only been educated to respond to fear so a tricky task ahead there.  Anyway, long-term, what I like about developing renewable energy is that we can quickly build industries that export the technology – it’s an entire multi-million man industry we can build from scratch right here in the US and, if we keep up with the R&D, we could end up dominating the space the same way we dominated autos for decades. 

    Speculation/Kustomz – The way I see it, we have about 100M homes in this country for 300M people so about 3 people per home so no need for new ones other than replacements and if we figure 50 years is a good life-span for a home, then that’s 2M homes per year are "needed" in this country plus a little for population growth.  Everything else is nothing more than people swapping homes with each other (can’t happen when mortgages are upside down) and speulators flipping to each other.  If you really want to fix it, you give automatic citizenship to anyone who buys a US home for cash – we’ll get about 5M new citizens, pay off 5M morgages, bring over $1Tn into the country and knock out our housing overhang. 

    INTC/Dflam - There’s not much to do, INTC is at $19.35 so, as long as you REALLY want to own INTC at net $16ish, what do you care what the PRICE of the 2012 $17.50 put is today?  Whether it says $2.50 or $1.50 or $25 – all they can ever do with it is sell you INTC for net $16. 

    I think this is one of the most misunderstood parts of these plays – the only risk on the put side is owning the stock at the net of the strike and the put.  Unless you, for some reason, have changed your mind and no longer want the stock for that net price – it can and should be ignored the same way any long-term investor ignores short-term market fluctuations.  Yes, it’s annoying to see a big negative number in your portfolio but you have to be smarter about options than the programmer who wrote that function and understand that 100% of that "loss" PLUS ANOTHER $2 of additional cushion you still have – are ALL PREMIUM and have no real effect on the value of your portfolio. 

    Only your capitulation for a loss – paying the RIDICULOUS $4.50 in premium in order NOT to be forced to buy INTC for $17.50 in 18 months can possibly make that loss real.  Now, looking at the $20s, you can roll them out to the Jan $17.50 calls for net $2.50 so you pick up $2.50 in position plus 17 months to grow for $2.50, which goes back to the question – how much do you like Intel???

    ARNA 2012 $2.50/7.50 bull call spread is $1.70, selling Jan $4 puts for $1.45 is net .25 on the $5 spread that’s $2.17 in the money – a nice way to gamble on them.

    Well said Shadow!

    IWM/RN – Be careful as Dow volume is just 60M at noon so not at all like yesterday, when we were too heavy for the stick.

    QLD/Rexx – As a percentage play I like that.  It’s a bet the Nas doesn’t drop 5% by next Friday! 

  119. acobra65

    lvmoda/Candidate: Pawlenty… interesting choice.  As far as the conservative think tanks… Godd luck on that one… In my opinion, centuries of religious entrenchment engrained in developments of societies have only created unrest and wars.  In  my opinion and experience, most of these people (not all) are closet hypocrites "do as I say not as I do"……….   

  120. mgr1

    Hi, new member, been following the comments for a couple of months and learning lots, thank you to all contributors.   I have to comment that the level of pessimism expressed has recently risen dramatically.   Yes, there are problems in the US, but these problems, and far larger, exist all over the world.   Your standard of living is among the highest in the world, and the complaint about wealth distribution concentrated in the top 10%, 1% or .1% is meaningless.   Where is there a better level of wealth distribution.   Western Europe?   Russia?   Japan?   China?   Under developed world?   The concentration of wealth in most of these places is significantly higher, with far more barriers of entry to those seeking to move up than in the US.   Be thankful for what you have, and strive to keep all markets open to vibrant healthy competition otherwise they will stagnate and over time die.    

  121. datuu

    phil and/or anyone have any thoughts on HPQ-- pretty much at 52 week lows ahead of wednesday earnings announcement?
    thanks

  122. rn273

    IWM/Phil – It is a play for the stick. If we stick, the weekly 61s go up (with almost a delta of 0.8-0.9), the next weeks 61s go up with a delta of 0.56, and the next week 64 go up with a delta of 0.13. Net delta (due to the ratios) is still significantly positive.

  123. snow

    GS Quote/Phil – Well, Bloomberg omitting that final bit is odd, but GS including it in the first place is even odder. Aren’t they supposed to be more biased than that?

  124. Maya1

    lvmoda
    instead of AAPL, $240 p for 1.20, how about the Aug $21 CSCO puts for $0.24, risking only 40% the margin requirement of AAPL, on a beaten down stock already, with less volatility?

  125. Pharmboy

    HERE THEY GO!

  126. snow

    Home life span/Phil – Phil said " if we figure 50 years is a good life-span for a home" – lol! The house I lived as a kid, in the Panorama City area of Van Nuys, is an 1100 sq ft 3 bedroom stucco tract home built by Henry Kaiser after WWII to accomodate  all the hoosier GIs moving out to sunny southern California. My dad bought it new in ’48 for $9k; dang thing is still standing, no additions, and I think is priced around 200k.

  127. kustomz

    Quick .20 on ARNA!! Thanks Pharm!

  128. kururi67

    Snow, I like that story. And I bet you guys were just fine and content living there. And the place was probably better constructed and more durable than most of those 5,000+ square foot mcmansions out there.

  129. Pharmboy

    jefferies Rumour on ARNA….does someone have a link?

  130. Jbur

    Phil, I have been looking at V and MA and would appreciate your perspective on them. I am entertaining the idea of a conservative bull put on V. Thanks

  131. pahurik

    I buy HERO 2,15 yesterday, and sell half 2011jan 2,5 calls for 0,7 and today half for 0,75. Ithink that is pretty good risk/reward. I am not lose money to HERO 1.45

  132. confused_trader

    Hey Snow,
    Greeting from Redondo Beach, are you still in SoCal? Any others here in Socal?

  133. ravalos

    Phil/Bloomberg, I was actually QUITE disturbed about that.. I immediately sent it to my friends. It confirms VERY WELL what you’ve been always saying that MSM is completely manipulated to say what is best to them… impressive. The problem now is who do you trust? Only PSW? =D

  134. matt1966

    Phil, as our emmisary from PSW, and one of the older members here.. I hereby give you carte blanche to advocate this weekend on my behalf with the Democratic muckety mucks to work towards America’s energy efficiency and developing home based energy solutions.  As for anything else that might come up, unless it’s repealing the 14th Amendment, permission denied!  And as always, thank you for your service.  8-)

  135. kustomz

    Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) has had its price target lowered to $5 (from $6) by Jefferies & Company, whic believes that the Lorcaserin heart valve safety analysis didn’t meet the FDA cutoff, given the history of this class of weight loss drugs.
    Arena Pharmaceuticals will release safety data documents on September 14, which will be re-evaluated as Jefferies remains on the sidelines after witnessing a 100% stock appreciation from the company.
    Arena Pharmaceuticals, Inc. closed yesterday at $7.17 and is maintained as "hold".

  136. Maya1

    confused Trader,
    Am located in heavenly San Diego

  137. terrapin22

    Pharm / ARNA – I’m holding on!  thanks for your commentary and insight. 
    CRIS – what’s your target/rationale?  thx. 

  138. lvmoda

     phil – "Employ 5M people building wind farms and solar farms and wave farms for the next 10 years and out all of our imports (1/2 consumption) and set goals to drive consumption down by 33% over 10 years."
    Good idea, but it will take at least five years to secure land, budget and procure PPE, staff and develop resources, etc.    So that ten year plan is really 15-20 years away from helping the employment problem.   That’s why I really think the 10M unemployed are SOL since the prospects for their rehire to their original jobs are low and time required to retrain and mobilize will leave them out….Our version of the ‘lost decade’…
    Nuclear needs to be the interim solution, at least for economic and security reasons, since the technology is mature, the utilities have the plans drawn (I’d be surprised if there isn’t a plan for a reactor for every state sitting on a shelf somewhere).  Government has the ability to fast-track the plans using national security laws to sideline environmental impact studies and political roadblocks.
    Somehow, I don’t see a dem getting behind nuclear as a 20-30 year bridge to the future and making the "emergency" imperatives happen to make energy independence in ten years a reality.

  139. rn273

    Out of curiosity, how many here are in NY/NJ?

  140. ben1be

     Phil
    I like GLW. Would really like it below $14 in Jan 12
    I placed the order for a Jan 12  17.5/15 strangle for a $5.45 credit (has`nt filled yet) The stock order is conditional.
    So, I get the stock today for $11.55 and if I`m lucky, I get another 100 shares for  $13.28 if assigned. 
    Seems like a good deal to me. Did I miss something? 
    Thanks

  141. Cap

    AAPL/Phil — yep.  But we can figure it out and profit from it !
     
    Acobra/LV — conservative candidates.  The $64,000 question.  Tim Pawlenty ?  Nope.  Too liberal.
    Biggest up and comer I see is Paul Ryan …. smart; dynamic; bold; good ideas … but not 2012 I think.
    Dunno who it will be, but I will know it when I see it.
     
    Swellesley — WELL SAID !

  142. rexx

    Sorry Phil I was looking out a month (Sept 50 Puts, not Aug 50 Puts).  If bullish maybe sell those at 1.55 vs buying some Sept QLD 54/58 call spread?  That would cost (net about .50) for a $4 call spread that’s 1.50 in the money.
    Of course you lose if NASD goes down 5% which could easily happen, since that’s the bottom of the range.

  143. Cap

    EOG … i highlighted yesterday.  In the midst of a brutal 25 hour selloff, good volume today; reasons not clear at all.
    I still think this is a good play from here (94) … take a look.

  144. lvmoda

     Maya1/Volatility  Actually IV for AAPL is less than CSCO (30.35 vs. 32.43).   I’m not too concerned with margin as opposed to risk, and AAPL has been ranging 250-260 for the last 2-3 weeks whereas CSCO is only stabilizing today.   

  145. Cap

    unfortunately I bought some yesterday in the high 95′s.  bot more today around 94.20.

  146. confused_trader

    Hi Maya,
    SD, is a beautiful place might come down your way in two weeks when the Phillies come to town to play Padres. I am a newbie on this site so its good to connect with others in my general area.
     
    Jerry

  147. cmsosa

    DLB/Phil
    Phil, how do you like DLB, it has come down all the way from 70′, almost 20% off, it has a strong balance sheet, it is an industry leader, no debt and good mgmt, still a bit high PE at 26 but it`s growing steadily at a 50% yearly….worth a play?

  148. Phil

    Candidate/LV – Yeah, what we need is some kind of blueprint for America

    Bullish/Mattl – I’m not that bullish on America, the chance of this country waking up and waging a revolt against the top 1% is pretty slim as 50% of the bottom 99% don’t know what to think and the other 49% are so bitterly divided that all we end up doing is sending the same idiots back to Washington every 2 years.  We don’t need term limits, we have them – it would, in theory, be called intelligent voters.  This group of Congressmen didn’t solve our problems so they ALL go – 2-year term limits.  It won’t take more than 2 cycles of that for Congress (even the Senate) to figure out that if they don’t actually accomplish something, they won’t be coming back to DC after the next election.  Rather than blaming one party or the other, it would be nice to have advocates who hold Congress generally accountable to social benchmarks like reducing the deficit and improving jobs and wages etc.  If they don’t do that, then it’s the voters responsibility to change their representation – they can elect another Democrat or Republican – just not the same guy! 

    Anyway, I’m bullish on THE PIRATES, not the townfolk.  I’m betting they will keep raping and stealing and not paying taxes and making huge profits and I’m betting there’s not a damn thing you can do to stop them because this country has been sold down the river and hypnotized by the Conservative machine into believing that corporate profits benefit the customers and the more they make, the happier the customers are and, as long as we refuse to educate our children and as long as we run our nation with a house divided then, as Lincoln said:

    Under the operation of that policy, that agitation has not only, not ceased, but has constantly augmented.  In my opinion, it will not cease, until a crisis shall have been reached, and passed. "A house divided against itself cannot stand."

    Let any one who doubts, carefully contemplate that now almost complete legal combination — piece of machinery so to speak --  Let him consider not only what work the machinery is adapted to do, and how well adapted; but also, let him study the history of its construction, and trace, if he can, or rather fail, if he can, to trace the evidence of design and concert of action, among its chief architects, from the beginning.

    Unless the power of the present political dynasty shall be met and overthrown. We shall lie down pleasantly dreaming that the people of Missouri. are on the verge of making their State free, and we shall awake to the reality instead, that the Supreme Court has made Illinois a slave State. To meet and overthrow the power of that dynasty is the work now before all those who would prevent that consummation. This is what we have to do.

    Our cause, then, must be intrusted to, and conducted by, its own undoubted friends-those whose hands are free, whose hearts are in the work-who do care for the result. Two years ago the Republicans of the nation mustered over thirteen hundred thousand strong. We did this under the single impulse of resistance to a common danger, with every external circumstance against us. Of strange, discordant, and even hostile elements, we gathered from the four winds, and formed and fought the battle through, under the constant hot fire of a disciplined, proud, and pampered enemy. Did we brave all them to falter now?-now, when that same enemy is wavering, dissevered, and belligerent? The result is not doubtful. We shall not fail-if we stand firm, we shall not fail. Wise counsels may accelerate, or mistakes delay it, but, sooner or later, the victory is sure to come.

    So I believe that until we have another Lincoln, a man willing to take a bullet to throw off the chains of corporate oppression, that the perfect machine that is Big Business America will continue to grow and expand their profits and, while I think this is terrible and tragic for the World at large – I don’t see it as any reason not to bet on the outcome

    GLW/Loopy – I like them in general.  The are "right-priced" back around $16 so a nice dip at the moment but I’d rather see how next week plays out because if they can get back over $18, then they are a good breakout buy anyway so better to see which way the next $1 move goes. 

    Jimmy Carter/Swelles – There, I said it, do I get a prize?  I don’t have time to re-educate you today but make sure you do your homework and read the last month of posts and comments so your stale Fox soundbites don’t seem so tired and lame when you are trying to get a zinger in.  Thanks!  We are all for intelligent debate around here (preferably after market hours or on weekends) but if all you have to say is "basketball" and "vote getting" and "Jimmy Carter" then what are we really learning from you?  Spending 30 years in bonds should probably have given you a pretty good idea of why bonds go down and who’s buying them.  People are scared and as long as they are scared they will buy bonds, which they think are safe and an entire generation since we had real inflation and an entire generation of sub-standard education means the average citizen has no clue what tying up money in TBills means.  Add to that the fact that the only money raining out of the Fed is going into bank valults and into sucking up those low-rate notes and the current bond market says NOTHING about the actual economy.

    NFLX/Rav – You can sell 5 Sept $135 calls for $7.50 ($3,750) and buy 3 March $145s for $16.25 ($4,875) as a nice ratio backspread.  Just make sure you are ready to add two longs if they break over $135

  149. confused_trader

    Anyone playing AAPL  in this 240/280 channel with spreads or condors?

  150. rainman

    Phil/misquote — Phil, I’ve gone the complete opposite way than you have with MSM. I read/watch very little of it and ONLY use it to look for the spin. Is it disturbing? YES! Surprising? NO! Even more disturbing are the BS stories that the entire country will focus on that have zero impact on the viewer, mostly the humanitarian crap, the child in a well, etc. Gigantic waste of celluoid or whatever the equivalent would be. The problem is, no one sees it as a waste and everyone buys in on it. I didn’t know who the Hilton girls were until about 2 years after they became "news". When someone made a comment about them to me and I said "who?" I got the response "you’ve got to be kidding me!", I’m glad I didn’t waste the time that person did and they think I’m foolish because I didn’t!
     
     
    I still get news but it’s filtered by time and the crap falls to the floor before it gets to my ears. I mostly watch/read educational type stuff like the discovery channel, history channel, pbs, etc. The same BS happens there and is passed off as hard science or written in stone history. It’s amazing. It’s also the same BS on the internet. Have you noticed the correlation between peoples belief in "old wives tales" and the rise of the internet? It’s astounding to me and incredibly wasteful. We have become a voyeuristic and incredibly gullible country of group thinkers that can’t tell the truth from fiction and can’t formulate an orginal thought. Mass communication has become mass group think that no one spends the time to determine what’s what. It was amazing and quite disturbing how many people thought "pro" wrestling was/is REAL! It’s also amazing to me that ‘emails’ with an ‘s" is considered proper. Did you ever get "mails" in your mailbox? How about ‘fad words’? "Uber" was one for awhile, it appears "absolutely" is taking off now. Ugh… </rant before heart pops>
     
     
    Sorry for the jumbled thoughts and non sequiturs but the branwashing of the country though the MSM is one of those "don’t get me started! topics".

  151. stjeanluc

    Nice quote from Bruce Bartlett:
    "In my own mind, I have the same political philosophy I’ve always had--basically libertarian but tempered by Burkean small-C conservatism. But I am no longer a member of the Republican Party and no longer consider myself part of the "conservative movement." That’s not because I changed, but because I believe that they have. The Republican Party of today is not the party of Jack Kemp and Ronald Reagan that I was once a member of; it stands for nothing except the pursuit of power as an end in itself, with no concern whatsoever for what is right for the country. In a recent interview with The Economist magazine, I characterized the Republicans as the greedy, sociopathic party. I stand by that," - Bruce Bartlett, economic adviser under Reagan and H.W. Bush. 

  152. lvmoda

     Cap/Pawlenty –  Yeah, too liberal for the hardcore republicans but he could pull the independents and bluedog dems in the general If he could get through the primaries…(nope)!   Ryan, can he talk across the lines?   Also, Obama has burnt the "bright young kid" bridge!    
    I’m looking for the plan before the personality….don’t see anything out there yet.

  153. rexx

    Also Phil, Vegas sounds great, but would you be up for an east coast junket sometime? This might satisfy your gambling impulses (and it might be time to short AC again)
    cityroom.blogs.nytimes.com/2010/08/13/a-plan-to-bring-casino-gambling-to-the-city/

  154. Pharmboy

    Jeffries – sly little devils.  Why didn’t that come out on TOS?  So, today’s volume is WAY UP compared to the past few days.  Sick sick sick.  And they lower their target from 6 to 5?  Come one, come all to the greatest show on earth

  155. gel1

    drum / ICE ( Intercontinental Exchange )
    Oh, yes…. I really like this one. On August 4th they reported record profits for the second quarter – surge in earnings of 34% on a 18% increase in revenue…. Second half of the year looks supurb as well. December, I like for all equities, as the summer doldrums will be behind us, and Santa Claus never forgets to treat us well – the gift I’m expecting this year will be change in the dirty laundry in our nation’s capital.
    Back to ICE – This is a rock solid equity, that will benefit from the recent financial regulatory changes that are coming. Even without this new "transparency" effort, the ICE business is booming. Sales have grown an average of 56% a year for the past five years, and the earnings are flying up. We must remember – stock price follows earnings, and there is no doubt the price will follow the anticipated earnings growth.

  156. stjeanluc

    And the Economist interview of Bruce Bartlett – fun reading!
    http://www.economist.com/blogs/democracyinamerica/2010/07/bruce_bartlett_deficit_economy_and_vat 

  157. gel1

    stjean… I’m with you on your political observations… lets start a movement!

  158. shadowfax

    mgr1
    One thing is for sure, we do not have free open markets! They are FAKE FAKE FAKE!!!!

  159. Pharmboy

    I am going to sell the $7 Aug C for 25c or better here.  If they want to mess with the pricing on entry, and the volume is VERY high, that tells me at least that they may want even better pricing going into Sept.  Be careful here and sell the Ps that you WANT TO OWN JIC.    We have made 15c on the ones sold earlier (that is 25%), so I would lighten up a bit!!!!

  160. gel1

    Phil… Our current political system is not serving us well… maybe we need a dictator for a period in order to cleanse the coruption and incompetince.  I notice Palin is posturing for something – is a lady dictator in our future?

  161. lvmoda

     Confused/AAPL     I’m short the AUG 240P, and expect to roll to SEP 240P next week and strangle with SEP 270C, but only if volatility (IV) continues to drop (which might not happen if VXX continues its move up).

  162. Phil

    Oh goody, it’s another CNBC bear vs. bigger bear moderated by 3 more bears debate on "Are we heading for a lost decade?"

    Meanwhile, Hoenig says:

    The U.S. economy is recovering and the Federal Reserve needs to raise interest rates, lest it leave in place a policy that will only fuel future financial imbalances, Federal Reserve Bank of Kansas City President Thomas Hoenig said Friday.

    We need to get off of the emergency rate of zero, move rates up slowly and deliberately,” which will bring policy in better alignment “with the economy’s slow, deliberate recovery,” the official said. While the markets may like the current stance of monetary policy, Hoenig said “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short cut.”

    “Economic conditions are far from satisfactory, unemployment is simply too high, and we want a stronger recovery,” the official said. But, this “modest” recovery, tempered by “mixed” results, is “proceeding as many economists earlier this year outlined that it would,” and the gross domestic product is likely to rise by 3% through the rest of the year, he said.

    “While monthly data may be mixed, the trend data are consistently positive,” the policy maker said. “Private job growth has been less than hoped for but positive nonetheless,” and “we are experiencing a better pace of recovery this time than at this point in our previous two economic recoveries.”

    Hoenig also doesn’t expect another fear about the direction of prices to come to pass, saying “I find no evidence that deflation is the most serious threat to the recovery today.”

    As he has done in the past, Hoenig advocated raising the ged funds rate target from its current 0% level to 1%, taking stock of economic and market conditions, and then moving to 2%.

    “I agree that the Federal Reserve needs to keep its policy rate accommodative,” and modest rate rises won’t conflict with that, Hoenig said. “For a while longer, it should remain even below the long-run equilibrium rate. However, the economy is improving and is growing at a rate faster than the last two recoveries,” and policy needs to respond.

    Markets need to adjust to that, as well. “Of course the market wants zero rates to continue indefinitely: They are earning a guaranteed return on free money from the Fed by lending it back to the government through securities purchases,” Hoenig said.

  163. mattlev32

    Michael Darda always looks annoyed when he appears on TV. It’s funny.

  164. Pharmboy

    Wow, that OPEN trade yesterday is rocking…..

  165. mgr1

    shadow, that may be, but is there any market that is better?

  166. 42laurel

    phil;
    hewlett packard, looks good for a bounce up, if new ceo named, what is your take ?

  167. shadowfax

    gel1
    Are you serious, Palin?

  168. rn273

    JWN/Phil – From yesterday’s backspread, I guess this would be a good time to roll the Aug 34s (now down to 0.06) to the Sept 34s?

  169. shadowfax

    mgr1
    More wrongs many more still does not make anything right.

  170. rainman

    Phil/Dow Crashes — the similarity between the 2001 and 2007 crashes and recoveries is striking. Obvious the bot programs haven’t been modified since 2001.

  171. chaps

    RE: Anyone playing AAPL  in this 240/280 channel with spreads or condors?
     
    I always maintain short strangles on AAPL. I generally do one 2-3 months out, another 6 months out, using portfolio margin. I currently have Oct 210/280s and (more) Jan 190/310s. Generally, I do stock (versus index) short strangles on a select group of stocks, and generally with at least 4 months until expiration. (AAPL is about the only exception, due to AAPL being AAPL.) I adjust the spreads generally when I get 50% ahead on one side (e.g., sell for $1, buy back for $.50), or if there is a significant move on the stock.
     
    The absolute value of gamma is too high for shorter-term short strangles for me (too risky, scary-looking P/L curves.) And with portfolio margin, the premium/net margin ratios are good on longer-duration short strangles on certain stocks. It can be sort of a steady-Eddy premium generator, IMHO.

  172. rainman

    shadowfax/wrongs — that’s correct but three lefts make a right.

  173. b1ll

    Phil BYD WYNN MGM not really showing upside with the market moves although LVS is ?

  174. shadowfax

    rainman
    That is the main point in 55 alive classes and then you get a discount!

  175. jvest

    acroba wrote: "In my own experience in Phoenix during the past 8 years as a Real Estate and Mortgae broker many people bought houses based upon a "shoestring" financial picture on option ARM mortgages and liar loans."
     
    You knew this, and you still let them do it? If so then you are an accomplice to the lie, assisting others in gambling away their lives so you can make a buck. Mortgage brokers should be locked up for this. Apologies in advance if I’m misunderstanding your involvement.

  176. boobearsdad

    confused_trader,
    I’m another SoCal resident.  I’m in Orange County.

  177. Maya1

    lvmoda/AAPL
    Thanks for sharing those volatility numbers.
    perhaps, someone after hrs, you can share where you get them?

  178. stjeanluc

    Gel, we would have to make compromises on some of our values, but hey, that’s the way it’s supposed to work! 

  179. rainman

    stick probing for the club at 10,350

  180. Jbur

    Chaps: With all of these great ideas, I beginning to think maybe you should have your very own PSW color!

  181. rainman

    here we go, no club…

  182. Pharmboy

    WIN – has moved down to their 200d MA.  They have a 8.8% yield, and the company is growing at 21% Q growth.  They provide telecon and data to rural areas of the US.  Not sexy, but not horrible either. Buying a few here, selling the Nov10 $11 P for 51c and the Feb11  $12.50 C for 21c.

  183. cwan120

    Hi, Chaps/Phil/All, RE Chaps’s PG play (Buy the Jan 2012 $57.5/60 bull call spread and sell Jan 2012 $47.5 puts)
    Is there any advantage buying the bull call spread in an IRA account, and selling the puts in a PM account?
    My thoughts are: By paying the money for the spread in IRA, I preserve the money in the PM account for other plays.  I thought this would maximize the utilization of the combined margins of two accounts.  Am I too naive?
     
    Of course, this assumes that I can keep track of things across accounts.

  184. hanna5

     jvest / mortgage brokers : A foolish thing to place so much blame on mortgage brokers. You assume that these products were foisted upon poor unsuspecting suckers. This may have been true in some cases, but in many cases was not. As one of the suckers, I have to say that I bought a condo in 2006, met with my broker, and demanding a 7-1 interest only ARM. This was in no way his fault. When he didnt ask for any documentation of earnings, do you think i got some and gave it to him anyways? Do you think he should have stopped me? I would have just gone somewhere else.

  185. gucci

    Hi Phil — what is the Dia mattress position into the weekend. Thx

  186. acobra65

    Shadowfax/Palin:  Yes…. Palin for Presidential Dictator and John McCain for Backup….. LOL Phil has already volunteered to be "BENEVOLENT DICTATOR"….. (My Suggestion)…  Quite frankly, I think it’s a great idea… 

  187. gucci

    Sorry is August 104 call trade still on or it suppose to closed out end of day yesterday.  I still have the trade for a small loss

  188. gel1

    shadowfax / Palin
    Just tongue in cheek –  hope I did not shock you, my friend.  We could do worse, and have!

  189. gel1

    Jbur… I agree, Chaps is one of our best traders, IMO

  190. kururi67

    Wow looks like BAC will break about a 9 day losing streak today…. Meredith Whitney’s got only about 1 hour to get on CNBC and shoot it down. RUN MEREDITH RUN, BILL GROSS IS RIGHT BEHIND YOU.

  191. hia_5

    Be careful newbies.  Sometims Phil will recommend a trade and when it goes down, will forget about it.  Or say maybe you should double down and if it goes down further he will forget about it.  Then when you prod for what  you should  do, then he will say you should be paper trading.

  192. cwan120

    Phil: What’s your stance into the weekend? 60/40 Bullish? Or the other way around? Or Neutral?
    Thanks!

  193. rainman

    Timmer is bearish:
     
     
    Director of Investment Research Jurrien Timmer looks at recent movement in the stock market—and what could come next: https://guidance.fidelity.com/viewpoints/markets-in-limbo

  194. shadowfax

    How to avoid an accident? Never turn left but then your stuck with 3 rights turns into a left!

  195. jvest

    hanna5 – why stop with just the mortgage brokers? Lock up the lenders too. No wait, never mind, let’s give them a cool $trillion instead. That’ll fix things.
     
    Phil, since you’re going to DC, and you mentioned recently that Warren Buffet has Obama’s ear — is anyone important even talking about Buffet’s Import Certificates proposal these days? That seems like it would do a lot to create jobs here in America.
     
    "We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties--either exporters abroad or importers here--wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance."
     
    "The likely outcome of an IC plan is that the exporting nations--after some initial posturing--will turn their ingenuity to encouraging imports from us. Take the position of China, which today sells us about $140 billion of goods and services annually while purchasing only $25 billion. Were ICs to exist, one course for China would be simply to fill the gap by buying 115 billion certificates annually. But it could alternatively reduce its need for ICs by cutting its exports to the U.S. or by increasing its purchases from us. This last choice would probably be the most palatable for China, and we should wish it to be so."

  196. gel1

    Chaps/AAPL
    I have been trading my spreads in a similar way… I take the short side on and off as the market gyrates – but never touch the long side, as this is evidence of my sentiment long term. I do the same with the short puts as my expectations dictate. I wish my GOOG convictions were more defined.

  197. rainman

    Wow, it’s amazing how little volume is being used to push this thing around.

  198. edro00

    chaps -
    What other stocks do you like short strangles on??
    Thanks

  199. rn273

    IWM 61 weekly premiums (bid and ask) now less than 10cents (bid ask – 0.51-0.54, IWM at 61.47). Might buy back and sell next weeks 61s (to close the trade) once both premiums fall below 5 cents

  200. shadowfax

    hana
    Thanks you get my point trade balance is an answer!

  201. acobra65

    jvest/Mortgages:  "Accomplice"… go look up the legal term…. Any observer knowing anything about the business could have been aware…… Most any consumer knows someone who purchased a house with less than perfect credit or marginal financial circumstances.  My observation on fraud and misrepresentation are based upon comments of persons I knew in the business and marketing practices of high pressure shops.  Maybe, you are under impression I was processing or working in a shop watching this activity… WRONG!!! I am an independent contractor and worked as me, myself and I. Also, I am not the "policeman" of the industry…that is the job of consumer protection divisions of county Attorney and state Attorney General’s offices… 

  202. ravalos

    I always wondered whether there are women on the site.. I always catch myself thinking that only men are exchanging trade ideas on this board..

  203. shadowfax

    jvest
    sorry that was you that has the point to hana!

  204. morxlntway

    hia 5 – and maybe we should. But i would alter that a bit, try combining Phil with JRW’s "never loose money" rule. I have learned (the hard way) that if it starts going against me i get out with a small loss and have a good nights sleep. Also, trade these suggestions in very small lots if you do intend to DD.

  205. kustomz

    jvest, so lock up the average guy/gal trying to make a living in a market that was flawed due to Gov policy that was in place to benefit the bankers on Wall St. and tax collection by States!! How you came to your conclusion is beyond me and is in no way indicative of available information on the subject. MB’ers worked with the tools they were given and most did so without the intent of robbing the poor schlub that listened to Bernanke spew his garbage about no housing bubble and sustainable growth that gave said schlub the green light and the means to sink us all into a black hole while Wall St. gives out billions in bonuses. Really? Maybe you don’t know many in the business but I do, and I have seen the honest ones with families suffer tremendously through the downturn who put their whole lives into their business just to watch it get raped and pillaged by the few who benefited from their demise.

  206. exec

    Matt,
     
    Oldest???  How old are you?

  207. Phil

    Wealth distribution/Mgr1 – We are actually ranked very close to last in global income distribution, only sligthly ahead of a few dictatorships and sheikdoms.  I take it you are from a poorer country and of course we have a generally great lifestyle but well-treated slaves are slaves nonetheless and it used to be that Americans strived to set an example to the World that we truly believed that ALL men were created equal and had the right to life (maybe health care?), liberty (from debt?) and the pursuit of happiness (if no vacations then at least a reasonable retirement?).  From a more selfish, national standpoint, the people of this country have allowed our multi-national corporations to funnel 50 years of our intellectual property including the decades of trial and error that have led to their corporate success.  Now that the rest of the World has been brought up to a sufficient level of education and infrastructure to man the machines – they are tossing aside the US labor force like an old shoe and leaving us for greener pastures – taking their (used to be ours) IP and capital with them to invest in other lands.  We can either choose to bend over and take it or we can fight back but the odds are heavily stacked against us as the corporations have bought and paid for our government and co-opted our laws for their benefit, leaving us just as screwed as the dozens of banana republics we did the same thing to in our nation’s 200-year history.  

    HPQ/Datuu – I think we went for selling puts the other day.  Still the way to go, I think, you can get a nice $2.10 for selling the Jan $37 puts or $3.90 for selling the 2012 $35 puts, which looks like a net margin of $2.15 to make $3.90 in 17 months or you own HPQ for net $31.10 (25% off) so what’s not to like?

    IWM/Rn – I don’t think it’s a bad play, just be careful if we get a big stick or it’s less fun.

    GS/Snow – It’s hard for them to control every analyst but that report was well-reasoned and balanced.  I agree there is a 25% chance of a double dip, which is why I’m generally bullish but a bit cautious – just in case. 

    If I thought there was a 10% chance of a double dip then calling for 65% cash would seem pretty silly, right?  My outlook is that by playing it fairly safe UNTIL we break our range one way or the other (doesn’t really matter which but we root for up becasue we love our country and want to see it prosper, not fail) and the cash keeps us flexible and allows us to be aggressively bullish with our commitments as we have our hedges and we have plenty of cash to deploy to the downside if we fail our levels.  Of course, last time we hit the bottom of our range – we went from 25% to 35% invested on the bull side at 9,600 so it’s going to take a bit more than testing 10,200 to flip us over

    Homes/Snow – The funny thing is that in much of Europe, there hasn’t been any such thing as homebuilding or population growth for ages.  Pretty much all construction is replacement construction and they live in homes that we would be putting historical plaques on.  That’s another reason I’m advocating NOT pressing to re-invigorate the housing market.  We are simply moving into a more mature phase of national development and we’re not inviting people into the country and our population is following the general trend of developed nations towards low birth-rates and the largest segment of our population is now hitting their 50s at the bottom end and 70s at the top so most are probably on their last home anyway.  That means betting our future on housing is simply foolish and will waste resources better put towards things that we really need for the next 50 years. 

    V/Jbur – I like V better than MA but they both worry me with unemployment this high and the new FinRegs that have yet to really bother them but will.  To me, they are both stay aways based on uncertain outlook and really not all that cheap with p/es in the high teens. 

    HERO/Pahurik – Good catch, they are well worth $2.28.  I like them straight up or you can sell the 2012 $2.50 puts and cals for $1.80 for net .48/$1.49.

    Weekend/Matt – Sorry but I think the ammendment that overruled the 1857 Supreme Court decision that black people could not be US citizens should probably stay on the books!  If you really want to own someone, I hear there are many pacific islands where you can go and rent some people to see how much fun it was in the old days.  I assume you are "just" hoping to use it to throw out immigrant babies that are all the rage at Tea Party discussions now.  Did you know it also says:

    The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

    So getting rid of the 14th would be a nice way to begin the process of denying Social Security payments that are due to our citizens.  Man those Conservative stategists are smart cookies, aren’t they? 

    Plan/Lvmoda – I’ve already laid out my plan somewhere around here.  Step one is hiring 2M people to put solar panels on 50M roofs.  Add another 1M people in manufacturing, adminstation, transportation and support and that will keep us busy for 5 yerars while another 1.5M people are deployed doing all the things that can be done now and the smartest 500K people can work in R&D labs and universities bringing down that time-frame on the rest.  What kind of defeatist BS attitude is it that the Unitied States of America can’t accomplish a simple, straightforward goal like this in one decade?  What the hell happened to this country that you can say a thing like that?   Have we gotten so weak and pathetic that you don’t belive we can accomplish what Samsung already committed to this year on a 5-year plan?  What has turned you so sour on this country? 

    GLW/Ben – No, that’s great.  I just think they head a bit lower but even if they drop $1, best you would do is drop basis to perhaps $10.50/12.50 and you can always pay to roll or add if the opportunity is there later.

    QLD/Rexx – I still like it as I think we hold the line but if this is all we have today, we may still have a blow-off bottom to come next week.

    EOG/Cap – Nat gas is stuck in the mud.  I think that’s why people are so worried.  Also, don’t forget there is a lot of questioning on shale drilling (environmentally) and EOG is 80% gas. 

    DLB/Cmsosa – I hate that logic that 20% off a spike (weekly charts!) is "20% off" – no it’s not, it’s "back to reality".  I like DLB conceptually and they drop great money to FCF but I think that a 25 p/e is rich and their process is good but not unique and once the 3D fad dies out in the movies – where will they be?  For me to like a company with a 20+ p/e, I’d want to be pretty sure they will double earnings in 3 years and I’m not sure they can pull it off.  If they hit the low $40s, then I like them much more. 

  208. roberthjrfl

    Chaps, do you adjust your SS on stocks like AAPL in the way Peter D outlines or do you use a different method for stocks?  Thanks for sharing.

  209. exec

    Where’s the volume……

  210. lapper

    looks like everybody left for the weekend.  Time for bots to do their sweet thing.

  211. Cap

    acobra … you stole my thunder as I hereby throw my hat in the ring to be Benevolent Dictator.

  212. Cap

    And on this Friday the 13th, I give you all yet another example of the sheer hypocrisy of the do as I say, not as I do left, epitomized by the Democratic party and their paymasters, the unions (in this case, the powerful United Federation of Teachers.
    UFT employee is FIRED for wanting to unionize.
    Fired employee Jim Callaghan said he personally told UFT head Michael Mulgrew (a militant leftist if there ever was one – cap) on June 9 about his intention to try to organize nonunionized workers at UFT headquarters.
    "I told him I want to have the same rights that teachers have," said Callaghan, 63, of Staten Island. "He told me he didn’t want that, that he wanted to be able to fire whoever he wanted to."
    The UFT has long strenuously resisted city efforts to make it easier for school administrators to fire teachers.
    "This is the exact antithesis of what they preach, and Michael Mulgrew is the biggest hypocrite out there," Callaghan fumed.
    Callaghan said he’s planning to file a complaint with the National Labor Relations Board against the UFT for illegally blocking his unionizing effort, and he added he would slap the union with an age-discrimination lawsuit.
    Read more: http://www.nypost.com/p/news/local/this_oughta_teach_him_rQamwIU0sNZxyrmyNBxz4L#ixzz0wVmqVOEs
     

  213. rexx

    Mortgage brokers/ the real screwup was in deregulating the S&Ls, and then leaving the regulation of mortgage lending to each state’s “consumer protection agency”. 50 different state bureaucracies suddenly had this duty thrust upon them – formerly lending standards were left to ban regulators. Many of the states didn’t have the people or budget to do the job(‘starve the beast’) if they even knew they had this duty. And then of course if someone tried its much easier to lobby down a regulator in a state capital than in Washington.

    So there was a chain of screw ups. But it started at the right wing think tanks where people are hired to write that government is bad.

    I have no doubt some mortgage brokers played hard with the rules, as did the rating agencies, and wall street. But you wanted “creative destruction”, didn’t you? Welcome to it.

  214. acobra65

    hanna5/Mortgages:  I can’t measure "how many"…. I don’t tthink anyone has that information.  If you read carefully what I said, I am not talking of all or most brokers…. your interpretation.  In my opinion, the industry was flawed with product.. ie> an option ARM which based the interest rate upon a monthly to one year subsidized rate (charging 6.0% and customer paying 1.5% with balance of interest amortized on backend of the mortgage, a product designed to blow up). And yes, this product was foisted upon consumers (highest commissions) by high pressure shops in all major cities.  For myself, I did not market this loan.  Your 7 Yr ARM is a pretty traditional product.  As for qualification, purchasing a "No documentation" loan is your choice… you just pay a higher rate.  If, you have assets and don’t want to go through the hassle or are "wealthy retired rich" LOL that documentation is fine and saves a broker his time.  Also, most people do not read the paperwork…. but attorney’s or title officers for closing have an obligation to point out salient parts of the loan and most do. As in any profession or business in finance the broker should educate you to the product and it’s ramifications…. unless you have all the answers….but you make the decision..   

  215. ravalos

    Phil / NFLX: On your recommendation for a ratio backspread, tell me what you think of this:
    Ever since I became member (actually before I became member I was already following your newsletter for quite some time) I find it hard for me to BUY PREMIUM. Over time, I’ve realized that buying the premium results in my portfolio account reflecting red numbers as the time progresses.. on the other hand, selling the premium almost inevitably results in green numbers all over my portfolio (confirming indeed the whole premise of being the house in a casino). As such, I don’t like following ratio backspreads.. I’m more inclined and willing to sell naked calls for stocks I believe are super overvalued.. even with strong fundamentals that support such high expectations. Since I’ve learnt my lesson of leaving plenty of leeway (margin/cash) to be able to ride the wild swings/waves of the market, I am more comfortable selling naked calls than spending money on buying premium. UNLESS, of course, it’s a nicely hedged 10-20% discounted (buy/write synthetic or real) investment on a beaten down company that any other time has proven to be a great business.. only there I like to buy premium. But, following along on my example, I still prefer to sell the premium and be willing to roll, roll, roll until the stock finds a top ceiling. It’s gotta find it eventually.. but IN THE CASE where a stock is too strong that it just keeps rising (and I’m talking of doing this when market conditions are volatile, uncertain like these times, and not during clear BULLISH trends like the one we experienced last year), I know that any stock cannot sustain a STRAIGHT, UPTREND move/line AT ALL TIMES.. it’s impossible, never seen that.. and if I have one, well I was just unlucky at that moment like the house in the casino that loses ocassionally. So, since a stock cannot sustain this type of move, I’d wait until there’s a pause, or a quick reversal as a result of some temporary market panic for the stock to move down AND THEN COVER.. only at this time I would buy the premium on a further month out (longer than the month I’m shorting) on the premise that the stock is so strong that eventually will allow me to convert the short naked calls into a nice bull spread…
    But starting since the beginning with a ratio backspread before the company proves that will keep rising and rising for a long time is not something I like to do.
    What do you think?

  216. chaps

    roberthjrfl:
     
    Different for indexes than for stocks. I trade SPX strangles very similarly to Peter D (the guru), but with my own set of rules I’ve developed over time, to fit my comfort zone. Roughly, my SPX rules are:

    Always be at least 15% out of the money on the puts and never own puts after their price falls below $1. If there are no such puts in the current month, you shouldn’t have short puts in  the current month.
    I tend to quasi day trade and take 50% profits when I can. In this gyrating market, you can make more that way.
    I always own at least one put vertical for every short put. I always calculate how far I can roll on an over-night 5% drop combined with a 10% rise in volatility.
    I maintain negative delta (more protection on the put side.) In this market, moves up are generated by the bots and are a slow grind, while the downturns can be sharp and fierce. I just roll callers and putters up in an up market, making sure I sell as much as I buy.
    I don’t like short strangles with a VIX under, say, 20. You can roll out in a crash, but you tie up a lot of money for a long time, potentially.
    If TOS tells me I’m projected to make more than 4% in the current month, I use that as an indicator that I’ve sold too much.
    I also look at the margin hit from a 5% price drop, 10% volatility rise. Though I know I can get out of that margin hit by selling the put verticals and using the money to roll the putters down.
    Realize that TOS (in my case) calculates PM on 12% down and 8% up from the money. This means you can often make good money with relatively lower risk by trading in the month after the current month – staying outside of the PM range, especially if you take profits after a healthy gain (quasi day trading.)

  217. mattlev32

    Phil, so you anticipate more downside next week if we close at these levels? Never know what will happen after 3pm but market has been listless with crap volume. What will move this thing? And what will get us out of this trading range?

  218. deano

     Funny – I think I could live with either Phil or Cap as dictator. 

  219. pahurik

    sry Phil, of course I Sell  HERO 2012 Jan 2,5 call, thanks

  220. ravalos

    Of course, I know that this methodology prevents me from having unlimited gains.. but I’m more comfortable managing risk than scoring those big gains. However, I believe that in times like today, when we are not THAT bullish, this strategy, albeit slow (but not too conservative since you’re selling naked calls) works very good.

  221. rexx

    Pharmboy/WIN.  How do you see WIN relative to FTR?

  222. shadowfax

    Dictators
    Do you have enough guns?

  223. chaps

    edro: GOOG, AMZN, BIDU, VNO. For instance, a month ago I sold GOOG Jan 280/650 for about $6. It currently is worth about $4 and ties up about $7.11 in gross margin. I consider that a pretty big field for GOOG to run around in. And if it gets close to one of the fences, time to roll.

  224. Cap

    why thank you, Deano.  :grin:

  225. Pharmboy

    Rexx – both are about the same.  if you have FTR…then they should be fine.  Both have little cash and lots ‘o debt.  WIN has revenue growth QoQ, FTR is not really growing that much.

  226. chaps

    edro: Forgot, I’ll also do these types of trades on RUT. Peter D likes to apply his methodology to RUT as well as SPX, but I don’t enjoy it. It’s too volatile for me. But it works well with a 4-6 month time frame. Put premiums seem high to me for indexes that are 4-6 months out at "end of the world" strikes.
     
    Also, I tend to make the put strikes at prices at which, as a value investor, I would be happy to own the stock.

  227. JRW III

    shadow / guns

    Rule #4:  You can never have too much ammunition !!

     

    This makes no sense but in TZA at $37.06 off a TBT trigger ( I’ve got to follow the system )

  228. edro00

    Chaps –
     
    Thanks again…

  229. yipcarl

    What’s up peeps…short again… 60%  This market is going lower.  Matt I’m surprised your waiting… I guess if your in cash every night that makes sense but I think August is going to be a blood bath with Sept to follow. and I’m going remain short all month unless we get a 20% correction.

  230. jromeha

    Deano – that’s like saying your could live with Obama or Bush as a dictator! There would be a big difference in the way they ‘tated…..

  231. Cap

    Speaking of Rep Paul Ryan:
     
    Op-ed in today’s Washington Post – ‘A Roadmap to Saving Medicare’ – http://bit.ly/b4zjhz

  232. JRW III

    Phil,

    If there is no volume (all GS & JPM) and "they" want max pain, why not push over pre-market and then squeeze?

    "They" are letting (or making) this fail; to what end, QE II ?

  233. rexx

    Now short QLD puts; trying to buy QID (the 2x Bear) put spread as it seems more liquid than QLD call spread.  Same kind of math paying .60 for a spread now worth .85.  Just need to do a lot more since prices are completely different.

  234. David Ristau

    Hey all, we have a new Longterm Position we are looking to enter today in Brazilian utility company SBS. 

    Check out my thesis and valuation on SBS here!

    Good Investing!

  235. kustomz

    JRW I find it interesting that TZA has underperformed VXX today, TZA needs to play ketchup

  236. roberthjrfl

    Chaps, thanks for the great explanation.  What do you typically find you can roll after the 5% drop with the 10% increase in volatilitity?  Does it make a big difference using strikes outside the -12% / 8% for an index like SPX?  I appreciate the comments.

  237. shadowfax

    JRW
    Not only do I have plenty of ammo, I have thousands of used shells, power, primers, bullets, and the loading press. 30 years ago it was only to get more accurate ammo, today security! I also have a few custom guns that 500 meter head shots are a given and the sheriff had to give them back to me. I am better at shooting than trading or walking!

  238. mgr1

    Phil   I was talking about wealth distribution, going through your list of billionaires there are many, probably the majority,  that did not come from wealth.   Just look at the tech guys, Walmart, MacDonalds etc. all created in the past 40 / 50 years.   No where else in the world do you have this kind of wealth distribution.  
    The income distribution you mention is probably caused by the obscene amounts paid to top executives of public companies that distort the entire income curve.    The cause is fragmented shareholders of large corporations and management that have hijacked the boards of directors by getting their buddies appointed.   Easily cured, just get shareholders, all members of this site, to demand shareholder approval for the top 10 earners every year.   The shareholders have to be informed of the total package and how it is made up to be able to evaluate and approve or disapprove.   This change will not be easy but once implemented, balance will quickly be restored.  

  239. Phil

    MSM/Rain – Aside from the fact that I have two young girls, I do think it’s important to keep up with pop culture and other such nonsense as it is part of the investing equation.  As to "uber" – I like that one!  It’s all part of the de-education (like that one?) of America that began with the great school defunding under Reagan and has now peaked out under "no child left behind," which pretty much assures that all our children wait around for the slowest ones to catch up.   Now the party that panders to the uneducated proles seeks to portray teachers as overpaid and education as a waste of taxpayer dollars better handled by the church (who run most private shcools) to make sure all forms of thinking are as strictly constrained as possible.  As the great Elvis once said "I used to be disgusted, now I try to be amused…"

    Bartlett/Stjean – Let’s see, it’s 2:19 and I’m just catching up to your 12:59 comment but I’ll bet Cap has already chimed in with slap against Bartlett…. 

    East Coast/Rexx – I’m going to say no because that would greatly dillute the Vegas crowd and it’s very easy to meet in Vegas for people from all over the country but asking people to come to NYC or AC is a very expensive hassle for people west of the Mississippi.  Maybe if this year’s goes well in Vegas a year later we try NY if there is plenty of interest. 

    Politics/Gel – When their enemies were at the gates, the Romans would suspend democracy and appoint one man to protect the city. It wasn’t considered an honor, it was considered a public service – that’s what we need, but not Sarah! 

    HPQ/42L – I like them, see above.

    JWN/Rn – That trade was net $522, now $348 for 4 Oct $35s and $35 for the Aug $34s ($314 for a $208 loss so far) but I don’t see the point in rushing.  Let the Augs expire and maybe they move back up next week for a better sale.  Having an Oct/Sept spread that’s that far out of the money is not very appealing…  If you are brave you can pick up .40 by rolling the callers to the Aug $32s.

    Crashes/Rain – I think the large-scale crashes are the result of global funamentals that haven’t changed much since 1929 – they just all happen faster now. 

    AAPL/Chaps – We tried to go long on Thurs and it was a bust. 

    LVS/B1 – I’ve said many times that I wouldn’t trust Shelly to give me the correct time while getting a correct quarterly report out of him is not even a possibility.  Trust nothing that LVS says or does at any time ever and you will be fine. 

    Split accounts/Cwan – Sounds good but I’m not sure it’s tax-efficient to the downside as you make a short-term cash gain in the account that gets taxed and take a loss in the account that doesn’t.  On the upside, though, it’s great as you make the gain in the tax-free account and take the loss against short-term gains so think about that from a balancing standpoint. 

    Brokers/Jvest – I agree with Hannah.  There were good ones and bad ones but, ultimately, the real criminals are the people who design the system to encourage the behavior – not so much the rats who run through the maze.  Banks paid mortgage brokers big fees because they were making far bigger fees and they set the parameters up and say "your job is to sell these or we fire you."  For 2 decades, brokers would sell any crap home and get nothing but thank you’s and referrals from their clients – hard to blame them for getting caught up in the game.   I say this from the perspective of running the 2nd largest title data service company in NJ for 10 years where we handled roughly 2,000 real estate transactions a day so if I tell you I’ve seen it all at least twice – belive me…

    By the way, for the people who were interested in our new RE data service (I’m sorry, I forgot who), please tell Greg (admin at philstockworld dot com) and he can get things out now.

    Mattress/Gucci – Well we never made it back to 10,350 so it’s still 1/2 x Dec $110 puts and 1/2 x Dec $102 puts with 1/2 x the Aug $104 puts sold against

    DIA/Gucci – Too risy to hold the Aug $104 calls

    Come on Gel, do you really think Bush was worse than Palin?  Hard to say, of course because she only had her 15 mins of fame to indicate she would probably be the worst President ever while he has 8 years of rock-solid evidence backing up his claim to the top spot….

    LOL Kururi – I still think we could make a lot of money if we knew who CNBC’s guests are going to be well in advance. 

    Paper trading/Hia – Yes, if you have to ask whether you should take a 20% loss and get out you should only be paper trading. 

    Weekend stance/Cwan – off this disappointing two-day run I’d say as neutral as possible over the weekend.   I do think we need a good blow-off bottom now because we blew our chance to turn it around on volume yesterday.  

    ICs/Jvest - That is not something I am hearing a lot about.  Trade is a strange puppy.  Best think to do is make it less appealing for companies to shift jobs overseas and, of course, for us to stop bying so much damned oil! 

    3pm volume is 94M – Just a little higher than when the market is closed!

  240. Pharmboy

    CRIS/Terr – I see the target as one of the most promising of many small molecule cancer targets that is out there in clinic right now.  Many oncologists are very high on the pathway (Hedgehog), as it is involved in many cancers.  The question remains though, how important is it in the cancer, and can the cells overcome the inhibition of the pathway?  They had 20 trials ongoing, and 2 have failed, the two most difficult.  They only need to show some promise in one, and the stock rockets back to $2 or more.  Anything else is gravy.  I have been a buyer in here, selling above 1.70, and buying again below 1.50.  That is not chump change.

  241. jvest

    acroba, you said, "For myself, I did not market this loan." and frankly that’s all I need to hear. I think what had me concerned is when you said earlier, "In my own experience … as a Real Estate and Mortgae broker many people bought houses based upon … liar loans."
     
    On second read I assume you’re just using liar loans as an insider colloquialism for no-doc loans. Hopefully you didn’t actually know whether or not the applicant is lying. And in that case, if the bank doesn’t ask you to back it up, then I suppose the fault is all on the bank.  Somebody give that bank a $trillion! dollars!  :)
     
    kustomz / lock up the average guy? – I’m talking about the brokers who knew beyond a reasonable doubt that their clients did not have the income they stated, yet assisted them anyway. Yes, it would be a good start to lock them all up, but before doing that offer every single one of them generous plea bargain sentences of zero days jail if they help indict a few others along the way.
     
    Suppose some guy is caught on camera during the L.A. riots looting stores for a loaf of bread and a big screen TV. It’s okay, right? I mean, everyone was doing it, that makes it okay. Right?

  242. acobra65

    Shadowfax/Dictators:  Benevolent Dictators do not use guns… they are "bobbies" in Great Britian… they use night sticks…  BTW did anyone notice… CNBC is going secretly toward "socialism" b/c new additions to the team are Simon and Mandy (you know the one with the cleavage this week) AND now Ron Ansana is having a spat with Rick Santelli…. LOL I love these "guys"…

  243. Cap

    Bartlett; why bother.
    He’s a liberals favorite conservative, a former conservative.
    Beyond that, he’s entitled to his opinions even if they are wrong.

  244. chaps

    robertthjrfl: I currently have all Sept putters ranging from 930 to 920. With a drop of SPX to 1030 and a 10% volatility increase, I can roll all my Sept puts to 900, which would be about 12.5% out of the money.
    With less than 15% downside, I just find myself hustling too much on downturns. With options, I never like feeling I "must trade something now" to get myself out of trouble. If I’m in such a situation, I feel I made a bad trade to start with.
    If you use TOS, you can use their Theo Price functionality to do these calculations on your own. If you don’t use TOS, I’d use it with a paper account just to get hold of their "what if" functionality. TOS analytics are a gift from God.

  245. Cap

    Worst president ever; by the time his 4 years are over and done with, O will have given Jimmy Carter a run for his money !

  246. deano

    Actually I’m certain that cap’s much smarter than bush. Cap would be small govt, fiscal conservative, virtually no social services. OK by me. Pretty sure he would have not gone to war in Iraq.
    Phil would be intelligent, creative, innovative, but more social services, also OK by me, as he actually would pay people to work, not stay home. If we create an industry of the future (solar, wind whatever) and get govt out, that’s fine. Its the investment in the industries of the past, or industries that failed, (banks, autos) that paid their employees too much and went out of business, or raped the american taxpayer that pisses me off.
    Our apathy is our greatest enemy.

  247. Cap

    Can someone tell me what "shredding the nar nar" is.
    The stupid commercial runs like 50 times a day on CNBC, and its completely annoying.

  248. gel1

    Chaps
    Following up Edro’s comment – Do you have a critera for selecting the stocks you apply the short stradles to, such as AMZN BIDI VNO, as you mentioned.  Could it be range stability?

  249. jvest

    Phil/Import Certificates & oil demand - well Buffet seemed to think ICs would both stimulate commodity exports and create jobs.
     
    "If aluminum, for example, was selling for 66 cents per pound domestically and ICs were worth 10%, domestic aluminum producers could sell for about 60 cents per pound (plus transportation costs) in foreign markets and still earn normal margins. In this scenario, the output of the U.S. would become significantly more competitive and exports would expand. Along the way, the number of jobs would grow."

  250. shadowfax

    When the real dictator stands up he will need me not you! Protection at any cost, Love It!

  251. Cap

    I would have Phil in my cabinet … get him to work on fixing problems without raising taxes or spending.  
    Make the gov’t agencies run like an efficient business.
    And as a Benevolent Dictator, I would not outlaw Congress, although I would require a record of actual professional accomplishment, ethics, background checks, limit the amount of lawyers that can serve; cut their salaries in half; get rid of their perks; Pelosi’s plane, etc.  and cut their staff’s dramatically, and make them actually read legislation they vote on and NO PORK !

  252. kustomz

    Jvest, will stick with my original retort and only add that MB’ers were not required to fully document whether or not the potential buyer could or could not afford the loan. They werent required to know, you need to focus your anger on the people that made it an absolute and not the people that were doing their job. LA riots,  those guys need to head down to DC and raise some hell, break some windows and take home some politicians cause they arent doing us any good.

  253. Cap

    Shadow … where do you live ?   I need to make sure I stay far far away from you and your arsenal.
    Unless of course you head my security detail.

  254. rainman

    cap/nar nar — I have no idea but if you have a TOS account, the CNBC gadget doesn’t have commercials it’s amazing the amount of silence there is that way!

  255. pstas

    "taxpayer dollars better handled by the church (who run most private shcools) to make sure all forms of thinking are as strictly constrained as possible. "

    Geez, Phil, there are so many things to choose from but I nominate this statement as one of the silliest I have  heard.
    You certainly are hitting on all cylinders today.

  256. gel1

    acobra / CNBC
     Something is up with the addition of these "Brits". They seem to be informed and intelligent, but the accent is "grating" when you are trying to assimilate the data.  I’m spending more time on FBN for a more pallitable exposure to breaking news.( that cleavage on Mandy is refreshing tho )

  257. kustomz

    Phils you think theres more in the dollar?

  258. shadowfax

    Cap
    If you win, I’m your right hand man, Phil also if it’s him, but I would never turn on my tradeing brothers!

  259. Cap

    Weekly Option Pinning Update:
    AMZN 125
    AAPL 250
    GOOG  490 ?

  260. pstas

    Chaps- can you elaborate on your TOS margin calculation re: 5 % down/ 10% volatility rise?
    Thx

  261. exec

    JR,
     
    What’s your thoughts on holding  TZA through the weekend?

  262. Cap

    The NFLX PCLN insanity continues today …

  263. Pharmboy

    CISG – 6000 P open at the Oct10 $20, 7K open at 20 Sept… humm, buying a few Octs for 80c.

  264. gel1

    Cap.. The first appointment you should make is the Cabinet Secretary of Export – send all of our Socialistic failed ideas back to Europe. Might want to export all of the O’s appointees, as they will enhance the package.

  265. yodi

    HI Phil.
    On the RIG play I stocked up the other day 2 more 60 Nov calls holding still short the 55 Aug call sold for 1.86 now trading at 1.15 RIG trading today at 54.38 I do expect the market will take it’s normal up turn on Monday so Rig will go over 55. In that case shall we wait and possible roll next week. Your thoughts pls.

  266. escohen5

    Speaking of ads on CNBC, I can’t figure out why that "we’ll buy your structured settlement" ad keeps running ad nauseum.  Does that company believe that people who have structured settlements and "need their money now!" watch CNBC?  Not exaclty the "investor class."

  267. chaps

    Cwan: re: Hi, Chaps/Phil/All, RE Chaps’s PG play (Buy the Jan 2012 $57.5/60 bull call spread and sell Jan 2012 $47.5 puts)
    Is there any advantage buying the bull call spread in an IRA account, and selling the puts in a PM account?

     
    I think it doesn’t work, at least for this trade. And I know I tried this in the past, and later concluded I had made a mistake. With PM, TOS currently says you need about $5.21 in gross margin if you do the whole trade in the non-IRA account, but you need $5.94 to just sell the put in the non-IRA account – i.e., more money. That’s because PM calculates margin on the whole trade, and the break-even price on the artificial buy-write is actually a little lower than just selling the put.
     
    So, if you then buy the bull call spread in an IRA account, you’ve tied up an additional $2.50 in margin on top of the $5.94, versus $5.21 to do the whole trade in the non-IRA account.

  268. acobra65

    jvest/loans:  No Doc loans are used by people with sufficient assets where the qualification is based upon assets not income.  The required documentation is "a letter from your accountant making the statement you have sufficient assets" It becomes a liar loan when your accountant is not telling the truth…….. Ususally, verification of assets and income are suppose to back up statements made on the application…. Anyone fabricating this information would be subject to prosecution… But, the requirement only for the "No Doc" loan was the accountant;s statement. I did not mean to imply "most" people purchased property with liar loans… I think it was a small portion of the bad loans. A better loan ( best for the consumer ) you will never see in most cases is one offering client control and accelerates the principal balance through use of your net income and daily crediting of interest….. Don’t think the banks would go for this because they would not be receiving their ANNUITY INCOME FROM INTEREST PAYMENTS….. the number 2 biggest heist put on the American public… 30 year mortgage.    

  269. lapper

    PIMCO Total return fund cuts US gov’t debt to 54% in July vs 63% in June.  And this douche is on TV screaming buy bonds.  In August it will be 40%.  All I want is me, him, and a phone book in a room for an hour.
    So, lets start the poll:
    AT what price of TBT Phil will start buying the bull spread and selling puts again?  I would say 33.

  270. chaps

    pstas: Do you mean how I calculate what I can roll to if I cash out my put verticals and use the money to roll down the putters?

     

  271. JRW III

    exec / weekend

    Holding is NOT my forte !!

     

    Out of TZA at $37.30

  272. Cap

    gel; I’ll just send those bozos to speak at conferences like the one at Davos, so they’ll think they are still important and doing something useful.  I’ll just expand the number of conferences and have them all overseas.

  273. Phil

    Mortgages – What do you guys think of requireing an accountant review a home loan on behalf of the buyer?  Maybe add $500 to the cost of of a mortgage that would be split on closing proceeds?  Many states require lawyers, I think an accountant would be a lot more helpful. 

    NFLX/Rav – The primary use of a 5:3 backspread is to backstop that "just in case" think where it turns out that a company can go up and up and up.  Your logic is fun untless you run into SKF (for example) during the Nov and March crashes, where it ran from $100 to $300 – ultimately, it went to $16 but would you have survived that long?  The big danger in naked shorting is your stock gets bought out and there is no chance to come back.  GOOG is another stock that has liquidated the accounts of many naked shorters and we fell victim to an AMZN run last October, when they shot up from $90 to $145 so fast and hard that we were lucky to roll to $125s and then sweat it out for 4 months.  They may never have come back, they could have been ISRG, who fortunately we were long on a at $90 and they flew to $160 and then to $220 and then to $375, pretty much up and up and up all the way.  So it’s not even "hardly ever" as things like that happen a lot – especially if your stock selection is to attack high-flying momentum stocks – those are the most likely to make major break-outs.  If you don’t want to "buy" premium, then be a little more aggressive on the fron-month sale or less aggressive on the long calls of a backspread but selling naked calls is something you should only do in small doses when you have REALLY good reasons to take the risk.  As I said earlier, I think NFLX is a risky naked sell but PCLN we liked the naked sell on up around $300. 

    Good rules Chaps!

    Trading Range/Mattl – I was counting on QE2 AND a stimulus announcement by next week.  After the weekend we may have neither so it’s really going to be all about watching our levels in absence of any fundamental market forces.  Monday we have the NYFed and NAHB Housing Index.  Tuesday is Housing Starts, Building Permits and a PPI that will also be BTE along with Industrial Prodcution (probable disappointment) and Cap Utilization (dragged down by refiners).  Thursday is Leading Economic Indicators and the Philly Fed and that’s it for the week so, once we get past housing, the newspaper is more likely to move the markets than the data points.

    Phil or Cap/Deano – Hmm, that could be tough as I would plan on having cap suspended from a soundproof cage and wearing a jester outfit and we’d ask him his opinion only in order to make sure we’re pretty much doing the opposite…  8-)

    I agree Rav – very sound overall.  Slow and steady actually does win this race!

    Max Pain/Gel – This is max pain for those who bought calls last OpEx day.  That’s the ones the big boys care about, they roll over just like we do and yes, it is very possible that we are back to a Manic Monday with a huge gap up but it’s hard to bet on with the Nikkei way down at 9,253 and the Dow pretty much NEVER gets that far away from the NIKK and they are closed next week (one mother of an EWJ move up though if they get squeezed).  Don’t forget the side motive of the IBanks – they want FREE MONEY and Ben didn’t give them any so they would rather let the market die than let the Fed think they don’t need their free money any more. 

  274. jvest

    acroba – I did like your idea about saving money by using a HELOC style loan with a revolving rate. (I think you mentioned it a week or so ago.) Also, Phil mentioned something like that once too — saving a ton on your mortgage by using a variable rate instead of fixed. The problem is, Bankrate pegs HELOC rates at 4.8% right now. Where’s the savings in that? when you can get a 30-year fixed for the same rate? I guess that’s the scam you’re talking about, and I’m on to the game a little bit — I recently refi’d an investment property using a 10-year interest-only ARM so that I could keep money-in-pocket for 10 years rather than pay someone else to insure my rate for years 11-30.
     
    I’m still waiting for that account at Phil’s Bank World where I can get a variable-rate mortgage at the fed discount rate…

  275. redlog

     mgr1/top ten   totally agree with you re: top ten highest earners at public companies

  276. srfrog

     I’m saying pattern recognition on SPX… 6/21 to 6/28 on the daily chart looks awfully similar to what we’ve seen the past 4 – 5 days…. especially yesterday and today.  Take a look at what happened on 6/29!  I’m preparing for a huge drop Mon or Tues based on that (plus this markets inability to push higher even on the low volume today)… among other reasons.

  277. pstas

    Chaps- perhaps I am confused on this. You said you "look at the margin hit from a 5% price drop, 10 % volatility rise"
    I know that the margin change in TOS is evident with the slices chart. Do not understand how the volatility comes in to play. I always assumed this margin change did not take VIX change in to account? Am I incorrect on that?

  278. gel1

    Phil / worst choice
    Not thinking of Bush… but one that is more contemporary, and will not be with us for too much longer. The data we live with every day supports my point.

  279. srfrog

    I was bearish for a while now, but saw low volume today and decided to bet on a stick… Big mistake – luckily I got out about 3:30 and switched back to bearish before this last clubbing here!

  280. exec

    JR/ Weekend
     
    I hear ya……but my spidie senses thinks there’s going to be a catastrophe this weekend.

  281. hanna5

     Hmmm. Not looking like a strong close. In fact, looking terrible.

  282. srfrog

     exec – see my post (2 posting ago) about that pattern… if that pattern repeats – catastrophe it is!

  283. exec

    Phil,
     
    Is it possible that these BOTs are so sophisticated that they’re playing the Techies?  Close with a Doji……get em all thinking we have a reversal symbol…..run it up on Monday while they sell into it?

  284. exec

    This volume is laughable……the GS BOTs must be fornicating with JPM BOTs……took the afternoon off for one big computer generated cluster f**k!!!

  285. cwan120

    Hi, Chaps,
    Great rules on SPX strangles!  Thanks a lot!!
    You said you maintain a -15% cushion on the put side.  What’s your cushion on the call side?
    Do you reduce your cushion size as it gets close to OpEx?

  286. tuscadog

    Phil / Are you meeting with anyone snr enough to get a read on the probability of major structural fiscal initiatives – which is the only thing which can save the economy and mkt?

  287. Phil

    Distribution/Mgr – We are a young country and our economy grows by $1Tn in a good couple of years, the top 1% get 2/3 of it so about $350Bn a year goes to the top – that still leaves a lot to be grabbed but it’s too much by too few no matter how you slice it.  If anything, what you are calling wealth distribution is really an example of how quickly money gets pooled up to a single individual without improving the lot of the other 99.99% one bit.  Shareholder revolts are great-sounding ideas but the reality is we are not, for the most part, shareholders – we are traders and we really don’t care enough about who pays who what to get involved – most stock in the US is owned by pension funds and insiders with retailers taking an extreme back-seat and that’s the way the big boys like it because the last thing they want to see is some sort of democracy forming in America! 

    I did not notice Simon’s cleavage Shadow – I will look closer next time.  8-)

    Bartlett/Cap – Oh that was very disappointing…

    ICs/Jvest – It would be nice to have SOME mechanism that works.  Surely the status quo does not. 

    Perks/Cap – I agree on that one.  When you take a job in Washington, you move to Washington.  You don’t shuttle back and forth and spend a total of 100 days actually working (if we’re lucky).  In this day and age, Congresspeople can have video conferences with their constituents and then get back to work!  Reading the legislation I’m not so sure about – would screw up the whole process…

    Silliest/Pstas – Thanks, I guess…

    Dollar/Kustomz – Oh yes, BOJ was not joking.  Look at USD/JPY at 10:30ish.  Totally ridiculous run-up and that dollar stregth, if we get a big move – will tank commoidtites and give us that bottom next week (also, don’t forget we expect oil to tank next week as they dump the Sept contracts). 

    Right-hand/Shadow – I’ll set you up in a crow’s nest in Congress and give you the nod when I decide someone’s "time has expired."

    RIG/Yodi -  I’d let the premium expire.  Its $1 and $1 out of the money – that’s a lot.

  288. exec

    Screw it JR…..I’m holding……………BTW……we had some laughs at your expense while you were AWOL……….I was planning on taking your advice and cashing out…….until someone told me about rule #8……………………..be weary of daytraders wearing pink race suits with knee pads that listen to their wives.

  289. chyer

     watch at the Jun 28 daily candle today mimics the same pattern, Monday could be a bad day

  290. Phil

    Well that was a pointless day.  

    Have a great weekend everyone.  I’ll be around a bit tomorrow but then off to DC!

    - Phil

  291. acobra65

    jvest/HELOC:  The Equity loan I am speaking about is NON TRADITIONAL…. It is not offered in USA except for one mortgage broker and they have a pending patent on it.  This loan will dramatically reduce principal IMMEDIATELY if set up properly by the right person.  This structure should be an option for all financing of residences, commercial and equipment by small business.  BUT, as I said in the weekend post… the banks will never create or market this product…. according to Phil… too many obstacles by the authorities that be…….

  292. jdub929

    Phil,
    You going for that $100K in DC?  LOL
    Have a great weekend everyone!

  293. chaps

    pstas: TOS allows you (under Analyze/Risk Profile or Analyze/Simulated Trades using the Theo Price functionality) to change the volatility of a theoretical position. I believe what’s going on is it takes the current implied volatility of any leg in your position, which is expressed as a %, and adds the % change you’ve indicated. You’ll then see the price of your position change as a function of the volatility change you’ve entered.
     
    I wouldn’t take these numbers to the bank. It’s all just math model stuff, but it’s better than nothing and probably relatively accurate. What you’ll generally see, which I think is true in reality, is how sensitive strangles are to volatility changes. Peter D has talked a lot about this in the past – and I think "woe be unto him" who isn’t terrified of this. :)

  294. yodi

    Phil Hope you have a good time i DC and to all members have a nice week end See you Monday

  295. jvest

     acroba, a pending patent on a type of loan? doesn’t sound like a recipe for wide adoption…

  296. rexx

    SYSTEMS opinions? Whats best broker/ set up these days? I keep getting killed waiting for either the cable or options epxress to update stuff  I also have TOS but find it a little too pretty.  And etrade has some new app now.

  297. rainman

    srfrog/club — I was bullish as well but after volume dried up trying to head over 10350 and we started heading down, I got out. Got bullish again at 3:30 when the TBT had its 3rd leg down and volume was starting to pick up. Had to chase the bots a bit to get out in the last 5 minutes. I thought I was going to be a bag holder over the weekend. I guess I should make 3:50 my cutoff. Did about 6.5% or so. Makes for a nice dinner this weekend and then some!

  298. barfinger

    If you want to offer some advice on mortgages, I say put an end to the HARP fiasco and allow the pre-existing loan modification programs the banks offer to go forward as before. And no bailouts to mortgage lenders, which might improve their eagerness to modify troubled mortgages. It is absolutely NOT about preserving home values, it is about getting the housing industry to find its proper level.
     
    If you want to help people stay in their homes, calculate a modification based on "minimum payment" methodology somewhat like what credit cards do, but with a prime+1 interest rate. Perhaps time limited.
     
    I hate outright gifts because of the distortion to incentives that produces.

  299. rexx

    Accounts to review mortgage apps from buyers perspective? That could reduce unemployment by 0.1%.  HR Block will love it.  R you lobbying on that?  If you are, I have an idea…

  300. redlog

     Phil: opposing views  I try to watch/read/listen to a certain percentage of sources I assume I am predisposed to disagree with.  Now all I need to do is read these comments and I fulfill my quota in one place.  Plus, I’ve learned a thing or two re: the markets.  It looks like that is true for others here as well.  

  301. shadowfax

    Thanks Phil
    When all our money goes to the rich but even they get worried, they will make you as dictator, by then they will know you were right all along and ask you to save them. But you will remember and give the nod, then their gosts can fight over the richest dead man in the cemetary! Non of them wins!

  302. Phil

    Structured settlements/Esco – Lawyers and accountants watch and they want to get paid so they tell their clients about it. 

    Margin/Chaps – Good point!

    Biggest Heist/Acobra – Did you read my article on that

    LOL Lapper!  I know, it’s so annoying that they can get away with this, isn’t it?

    Conferences/Cap – That’s like the ship in the Hitchiker’s Guide to the Galaxy where they put all the consultants and lawyers and such and told them how vital they were to the survival of the Planet and then sent that ship straight into the sun…

    Mortgage/Jvest – I think we have enough people here to start a bank…

    Bots/Exec – That’s actually my assumption.  It’s very easy to get TA people to do your bidding by painting the chart picture that gets the response they want.  That’s what "head and sholders" mania was all about a few weeks ago.  It was such a perfect H&S set up that it HAD to be fake – and it was…

    Meeting/Tusca – I am not trotting out in front of bigwigs so much as working with the people they look to for anwers.  My goal is to push conversations forward and come up with talking points that the average Congressperson can understand (a low bar) - about as much as you can expect to accomplish unless you are Buffett or Blankfein…  I have learned in politics that it is better to aim for being a lower-runged person’s most important meeting of the day than a higher-up person’s least. 

    $100K/Jdub -  That’s  "B-A-T-T-L-E-C-A-M," right?  Actually I hear Michelle already locked the prize in… 

    Accountants/Rexx – I just thought of it as we were discussing. Worth talking about. 

    Quotas/Red – I love it when we have CIVIL discussions like this.  I think we all learn a lot and it’s even better as we all get to know each other over time.  Such an amazing thing to be able to talk to people from so many different backgrounds from all over the country like this – I still have a deep appreciation for the Internet and what it gives us. 

    I feel the need to close that last comment with "Al Gore be praised" – just to piss Cap off.  8-)

    Well Shadow, I hope it doesn’t get that far..

  303. mSquare

    ARNA – I seem to see a news item (sorry no link) – Was this THE reason for the price drop today ?
    (ARNA:$6.63,00$-0.54,00-7.53%) is down after The New York Times reported late Thursday that results of a huge study published Thursday found that the obesity drug rimonabant did not lower the risk of heart attacks and other cardiovascular problems when compared to a placebo.
    The trial was cut short because of concern that rimonabant could increase the risk of suicide, leaving at least some question as to whether the drug would have made a difference in cardiovascular health if people had taken it for a longer time.
    ARNA is one company trying to bring new weight-loss drugs to the market in the next year so study results could be important for ARNA.

  304. JRW III

    Well, if you bought TZA on the lower open and sold at the close you would have made about 1.5%; I should have taken my own advice !!  A frustrating 2% on the day; now for a bottle of Veuve with lunch  8-)

  305. rexx

    JRW thats what I did except I sold at 1030. Same return.  Thanks for yesterdays advice.

  306. hanna5

     mSquare / ARNA – the drop today was caused by an analyst at Jefferies that downgraded the company’s price target to $5 from $6. He cited the 100% increase recently. But, more importantly, he also said that he "recalculated" some of the data relating to valvulopathy (heart valve problems): quote:
    "Jefferies analyst Thomas Wei conducted an alternative analysis of available data and believes that Arena’s data doesn’t rule out heart-valve risk to a level wanted by the FDA. He said he believes his method will be preferred by the agency over the company’s, citing two guidance documents from the agency and feedback from an FDA consultant statistician."
    I don’t think his method, as far as I can tell, brings anything new to light. He basically looks at the data a little differently, and asks if Arenas data is solid enough to transfer to a large number of people. I still think lorcaserin gets approval; there is NO data supporting valvulopathy. The issue here is how many people do we have to give the drug to in order to know beyond a reasonable doubt that valvulopathy would not occur when this drug is released on the public.  But, thats why this is still a $7 stock, and not a $15 stock….

  307. srfrog

     rainman – what were you trading today to get the 6.5%… IWM options, or was that w/ just TNA/TZA stock?
     
    chyer – yup, you see what I’m talking about
     
    phil – do you see that pattern on the SPX daily chart from 6/27 – 6/28 that looks like yesterday and today?  What’s your take?

  308. chaps

    gel/stocks for short strangles: I look for stocks where you get a spread with a lot of breathing room combined with a high ratio of premium to initial gross margin. The techs like APPL, BIDU, GOOG, and AMZN are good candidates. All are good businesses, but their stock prices are hard to estimate fundamentally (i.e, through fundamental analysis.)
     
    We all know APPL is a wonderful company, but they’re not immune from trouble, while at the same time you wouldn’t be surprised if they came out with some new great product and all the APPL lovers bid it up to well over $300 in the next several months. GOOG is similar. It’s really hard to do a fundamental analysis on GOOG. These companies are obviously a lot different than somebody who’s servicing a mature market.
     
    This means these companies clearly have a floor (I’ll buy GOOG at $350 and APPL at $180) and a lot of upside that may, or may not, pan out. That translates into statistical volatility in the stock price and higher option premiums. That, in turn, translates into fat premium-to-margin ratios on conservative spreads. Look at the GOOG play I outlined. I think it’s not too difficult to manage a six-month $280/650 GOOG short strangle. That’s because, fundamentally, I’m confident GOOG is worth at least $280, and I can manage a climb from $500 to $650 over six months, if that is what transpires.

  309. chaps

    cwan/call rules on short strangles: I don’t sweat them that much, because I feel it’s easier to adjust short strangles in an up market. I don’t like having obligations on options that get really expensive (a call that’s currently $3 can become $6 very quickly), but I tend to roll up calls one-for-one and pay for the role through put selling/rolling up puts. It seems like it’s almost always workable.
     
    I also pay attention to the market. For instance, SPX is having a really hard time sustaining anything over 1120 lately, but there are still have been good Aug calls to sell above 1120. So, even though my rules dictate that I’m currently out of Aug short puts, I’m happy to be in Aug short calls. I think the risk/reward on those are currently good.
     
    When the market is really spooked (like in June, I think), nobody pays anything decent for front-month calls. So I was selling calls in the next month.
     
    Bottom line is I don’t have a % cut-off for callers.

  310. Pharmboy

    Well said hanna.  Agreed.  I would go so far to say it is a $10 stock as when phentermine (speed) is put with locaserin, then the data will show weight loss compared to locaserin alone.  Docs will approve both, in concert.

  311. tuscadog

    Phil / White Swans, a contrarian view.    GNP growth is down to close to zero now, with retail now softening and stimulus winding down. Foreclosure tsunami waiting in the wings.  So, mkt sentiment is increasingly negative and few expect any positive economic developments, so the mkt is now grinding down as expectations decline – thanks Chambers, and the Admin is staring at the rising prospect of a DDip and tough elections.
    But, we bears could be sideswiped by several potential ‘white swans’:
    Administration Announcement of huge fiscal stimulus initiatives, like Pickens Plan, solar, infrastructure, grid etc. targeting millions,( maybe tens) of new US jobs etc., pre-empting a gridlocked congress, challenging them to adopt and ‘help the real people of America’. (elections focus the mind).
    Corporate tax rate reduction , huge Capex incentives, Bush tax extension for those below $250k (psychological impact rather than substantive).
    Import tariffs favoring US industries.
    Pulling troops from Iraq and Afgan and slashing military spending, while reinforcing the Mexican border.  (We can use them to fight the Mexican exedus/invastion when the Drug Cartels finalize their takeover).
    While the single biggest black swan could be a Euro country default and Euro collapse (China less likely imho), my gut says shorting right now is very risky (Matt?) since everyone is now negative, yet there is tremendous political pressure on Obama to now do something dramatic quickly (he’s only got 6 weeks to salvage the Dems position of strength).  The massive bond portfolios with negligible returns could provide dangerous ammunition for the equity markets if Obama can actually get his finger out of his ……  Maybe Phil would be better off explaining where jobs come from to Michelle this weekend?  (Summers has been a huge disappoinment).  
    A dangerous trading enviroment folks with all of these political dynamics out there.

  312. Pharmboy

    Tusc – those are all quick fixes that can be weathered.  Until real unemployment starts to decrease (employment outlook gets better), I do not see anything that can be done.  This country is insolvent plain and simple.  The real difference b’w Japan and the US is Japan owns its own debt….the US does not. 

     

    The Solar plays are ones I am trying to hedge for as well as the dividend payers, but not optimistic too much on solar b’c of the GoP wanting to keep energy going……plus, it is prohibitively expensive for the general public.  Military spending, ain’t gonna happen with either party, esp. when CA is dependent upon it for a big portion of their income (Dems/GoP alike).

  313. Pharmboy

    I think Brazil and India (currency plays) are ones that we should look at, but I am not one that knows enough how to play them……

  314. aclend

        Cap and all others — noticeably silent,
    "Shredding the gnar-gnar" comes from the snowboarding culture…as in "shredding the gnarly powder" that evolved (devolved?) into its popular, current form. Don’t shoot the messenger. I report, you decide. Am I the only one here under 35?! I bet that exiled 12-year-old could have answered it too.  :-)

  315. Cap

    Conferences/Cap – That’s like the ship in the Hitchiker’s Guide to the Galaxy where they put all the consultants and lawyers and such and told them how vital they were to the survival of the Planet and then sent that ship straight into the sun…
     
    Now that’s funny !  Perfect plan … never read the book or saw the movie.

  316. Cap

    Hey aclend, don’t harsh my mellow, ok ?
    LOL.
    Just kidding.
    Thanks on the gnar gnar.  I haven’t used "gnarly" since Fast Times at Ridgemont High.

  317. kururi67

    But Cap your politics posts always read like someone is on some serious gnar gnar! Just kidding ya;)

  318. Stark

    Phil, do you have any thoughts on the US starting more military conflict, as it concerns the markets? Our stupid administration really seems to have it in for Iran, and China relations aren’t exactly improving either. I’m afraid there’s nothing I can do to stop this nonsense, so I’d like a position that would profit in such a scenario if it happens. I know oil would skyrocket if Iran is attacked, but if the market continues to slide oil could plummet due to evaporating demand. 

  319. kustomz

    Stark…Having a tin foil moment. What if the flood into UST has more to do with a possible Israeli/Iranian conflict? I know, I know, but what about the price of oil? Maybe "they" are driving the price lower to get in cheaper and not to create panic.
     

  320. gel1

    Chaps / Short Strangles
    Thanks for the comments.  My objective in PSW membership is to profit and learn. I have learned much from you, and will try to profit from this exposure to your trading discipline.  Many days I do not gain profit, but if I’m able to learn new trading strategy, I feel very satisfied – today was one of those days.. I execute a lot of strangles as a trading tool, but have never established a "hard " guidline to follow – mostly just gut feelings from watching the movement of a stock over a period of time, and the general market temperment  The structuring of the short straddle strikes is really a science that has to interface with your risk tolerence, which varies with each individual stock. I like Peter’s strategy to limit the risk by concentrating on just a few candidates, and following tight rules in managing the strangles.

  321. gel1

    Stark…. The very best place to be in a conflict of this nature is GOLD, GOLD, GOLD – it will up like a covey of quail that just witnessed a hunting dog’s nose in their nest.

  322. ekor

    my .02
    Stark – this "stupid administration" has not started any international conflicts. you must be thinking of the prior administration. Hilary has done a great job, & the world gave Obama the Nobel Peace prize just for not being Bush, I did read something about the Navy moving into the area couple weeks ago, probably in support of Israel bombing Iran. EFA puts or EDZ calls would pay off nicely, or slowly erode if nothing happens.
    Pharm – I think you’re entirely too pessimistic.  As Clinton said "we are a great nation,"  & "there’s nothing wrong with America that can’t be fixed by what’s right with America."  How’s your farmland bunker doing ? Anywhere near Ames or underwater ?
    Phil - great stuff all day today. I’d probably become a premium member if you go ahead with that soundproof  cage LOL.
    Is  there anything worse than whining millionaire lawyers ?  They need to get out in the real world once in awhile.

  323. matt1966

    exec – from early Friday, I guess I should have said longer members and not older members.  I’m in my 40′s which is where the ’1966′ part of my moniker came from.
     
    Phil, 14th ammendment.. there you go again getting all technical on me!  Allow me to rephrase my statement regarding repeal of the ammendment, I think we should no longer REWARD children of parents who are not US citizens with US citizenship.  Plain and simple.  No more, no less.  It is being taken advantage of and once again.. we are being played as saps.  Here’s another one.. I work with a US citizen who emmigrated from S. America.  His wife is a pediatrician.  She’s see’s MANY cases where a women comes in with her children under medicaid and claiming to be single so that she can qualify for the greatest amount of aid for her children.  The supposedly single mother can get away with it because she was married outside of the US and their is no reciprocity on marriage licenses.
     
    JRW, I agree, it does seem that the market is being taken down.  And very deftly I might add.  I need to stop being so hesitant.  The fade seems to be the desired approach for doing it.  As for motivation to do so, there are a couple of things I can think of.  1)  deflation/DD and 2) the mid term elections.  I think that gives ‘them’ more then enough reason.

  324. pstas

    Chaps- following up on your strangle posts from Friday- another question.
    What is your rule or guideline for picking strikes and the spread for the protection/put verticals? For example – on SPX Sept – 1200/930 (which I sold the other day when 930 was 15% out) – where would you place the vertical put spread? I have been placing them somewhere between 5 to 10 % below actual – no set formula- Do you have a method which may be more precise?
    Thx.

  325. gel1

    ekor
    Just my $.03
    I do believe to are blinded by a severe case of idealogical missinformation that leads to a poor analysis of the facts as they, like it or not, exist in the real world.  You  are impressed by the Nobel Peace Prize for Obama?  The prize is meaningless, and is awarded as an anti-establishment statement.  Are you as equally enamoured with Carter, Gore and so many more recipients that are nothing more than an embarassment.?  As to Hillary, PLEASE name anything that she has accomplished in her entire carreer that benefited anybody but herself.. Whining millionare lawyers ???? – I did not know you were a lawyer.

  326. Cap

    the "world" gave Obama the Nobel Peace Prize ??  Ha Ha, that’s funny.
     
    In reality, a few Norwegian leftist elitists gave Obama the Nobel Peace Prize as a political message of their approval of Obama being the anti-Bush.
     
    Meanwhile, peace is breaking out all over…. all hail Obama.  all hail J.
     
    On a related topic, found a great comment today about where we be:
     
    Monty Pelerin’s recent American Thinker article captured the essence of the problem:

     

     

    The political class’s survival is at stake. Eventually, anything that extends their rule will be tried. It is not concern for you or the economy that is driving policy, but the preservation of power of an increasingly wounded power elite. Their survival is now driving policy. Unfortunately, what benefits them is generally harmful for the economy

  327. gel1

    Cap
    The piece from Monty Pelerin is "dynamite" … really awakens you to the possibilites of a gloom and doom scenario that could become reality in 2012.  His conclusion, – the "political class" elites will do anything to perpetuate their existance, even at the peril of the economy is one hell of an accurate statement.  It is in play today, through the passage of so many wasteful bills that are really nothing more than "voter appeasment" efforts to solidify their political base, guaranteeing success in the voting booth. The recent Health Care bill is trash, and the administration knows it, but it serves their selfish purpose. The coming card-check legislation, and amnesty for the illegals effort all falls into this same objective. ( self-preservation ), at the cost of economy.

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