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Which Way Wednesday – Probably Down

I love it when a plan comes together!  

We promised you M’s and it’s M’s we have but let’s take a closer look at what’s going on.  EVERYONE blew their 2.5% lines yesterday and we had a bit of a recovery but only because the Dollar went from 76 at the open down to 75.35 at the close.  That’s a 0.85% drop and what did our markets do?  Other than the Nasdaq they all finished in the red.  If an almost -1% pullback in the Dollar can’t move the price of equities up even half a point – the VALUE of those equities must seriously be questioned.  

I set the following retrace lines for Members at 2:18 in Member Chat – these are what we call "weak bounce" levels off our 5% Rule – anything less than this and we remain bearish:

  • Dow 12,505 (the 2.5% line) – needs 26
  • S&P 1,333 (the 2.5% line) – needs 5
  • Nas 2,767 (the 4% line) – over by 13
  • NYSE 8,362 (the 4% line) – needs 29
  • RUT 823 (the 4% line) – needs 5 

$USD WEEKLY The Nasdaq close was SUPER FAKE yesterday as was the take-down of the Dollar but fake is effective in this joke of a market and David Fry made a good comment on the action

With markets now at least short-term oversold bulls took a stab at perceived value and/or defended open long positions late in the day. But sometimes this type of buying is wasted buying power against a poor economic backdrop and with earnings season done. This leaves only QE to get them buying.

Note on Dave’s Dollar chart, that we were soundly rejected at the 76 line, which is to be expected on a first attempt but not all the way back to 75.35 – that’s overdone by any stretch so we woke up early this morning and shorted oil (the new July contracts) at $99 on expectations the Dollar will come back today.  

It’s very easy to shove the markets around after hours and in pre-market but it’s very expensive to do so once the bell rings and the Fed is stingy today and tomorrow with the POMO, with just $2.5Bn scheduled to be handed out to the Banksters each day – barely enough for Lloyd to tank up the limo!  Friday they make up for it with $8Bn and then next week it’s 8+7+6+7 = $28Bn into the holiday and another $18.5Bn even on the short week following.  

THAT’S when we want to be a bit more bullish, not today.  Hopefully we get another shove down and we can do a little bottom fishing but, if we do pop 3 of 5 of our bounce levels – we’ll have to take some short-term bullish positions there, using the 3 of 5 rule to stop back out if it doesn’t stick.  It’s been a bad week for the markets but, in the grand scheme of things – it’s just a 20% pullback off the 30% POMO run since September – still bullish if we hold those reference levels:  

 

Notice that declining green line on the chart is our Dollar – the thing you get when you cash in those "amazingly performing" stocks.  Pretty much, as fast as your equities move up in price, Benny and Timmy will print more Dollars and they’ll keep it going for as long as they can because, when they stop – where are the Dollars going to come from when you want to cash in your "valuable" shares and commodities?  Certainly the bottom consumers don’t have any and the top 1% are busy giving $60Bn worth of funny money to Glencore – a commodity IPO that marks the height of insanity if ever there was one.  

It’s brilliant really, the IBanks ramp up commodity prices, triple the "value" of Glencore and then take them public so they can remove $60Bn perfectly good dollars from circulation (and take a $6Bn fee plus warrants) that are now invested in the hopes that commodity prices go even higher and make that $60Bn near worthless – very much like all the builders and REITs the retail schmucks were being herded into at the top of the last rally.  Oh yeah – and Ethanol! – case closed….

Here’s a quick summary of investing in companies like Glencore in a bad market:

You are one of 100 people on an island and you all make a decent living and you are in the top 10%. Glencore comes along and corners the fish market and begins charging double for fish.  After a while 50 people go bankrupt but you are in the top 10% and earn 3 times more than the the bottom 90% so you don’t really mind paying double for your fish because Glencore sells it under the label "Whole Fish" and tells you it’s better for you than the other fish used to be and, of course, not being a fool – you only buy the best stuff.  

Now there are only 50 working people left on the island and Glencore is making $2 per fish but selling less fish so they buy up the coconut and pineapple farms as well and now all food comes from Glencore and, to fund the acquisitions, they start charging $3 per fish but they tell you that’s because there’s a shortage and you believe them because you are rich and too lazy to check whether there is a shortage or whether Glencore is lying to you to rip you off.  Still $3 per fish is fine and you are making even more money now because 50 bankrupt people have driven wages down for all of the new bottom 10%. Incidentally, since 50 people are effectively out of the economy, the bottom 90% is now 45 and 5 of the former top 10%’ers have also died but that’s great for you as you get to charge what you want for goods and pay what you want for labor.  In fact, things are going so well, you invest in Glencore.  

That’s about where we are now and if you think the next stage of this farce isn’t going to affect you, then you must truly believe you are "one of them" and will never be concerned about looking for a job or inflation or health insurance or in any way, shape or form taking responsibility for your nation’s debts (because, when there’s only 25 working people on the island, the Debt will still be there and goes up every day if the Government tries to keep the other 75 people alive).    

That’s why the current strategy in Congress is focused on NOT paying for those 75 unemployed people – this IS the direction this country is heading so the quicker the top 10% walk away from supporting the bottom 90% the better because we already stopped hiring them or giving them raises or paying for their health care, helping them get housing or lending them money so now we need to stop buying them food and and stop educating their children (ours can go to private school – why can’t they?) and stop providing them with emergency medicine and NO FRIGGIN’ WAY are we going to pay them not to work or, even worse, RETIRE!  

So God bless Paul Ryan and all those other hard-working Congresspeople for looking our for our interests – otherwise we may end up suffering for profiting off the system that impoverished everyone else.  

It’s not just Congress, of course, never let it be said that our Senators don’t give us our money’s worth as well.  Just last night the Senate only voted 52-48 (60 votes were needed) to block the evil Democrats proposal to end tax benefits for the 5 leading oil companies, who made $35Bn in Q1 alone.  Mark Begich of Alaska, Mary Landrieu of Louisiana and Ben Nelson of Nebraska were the only Democrats to vote no while Sue Collins of Maine was the only Republican to vote yes.  

We have to stand up and say, ‘Enough is enough,’ ” said Senator Al Franken, Democrat of Minnesota. “While oil prices are gouging the pocketbooks of American families, these companies are on a pace for a record profit this year.”  Under the proposal, Democrats would have eliminated five different tax breaks enjoyed by the multinational oil companies, producing an estimated $21 billion over 10 years.  That’s 10 years in which the 5 oil companies are projected to make $1.5 Trillion in profits.  More than $12 billion would have come from eliminating a domestic manufacturing tax deduction for the big oil companies, and $6 billion would have been generated by ending their deductions for taxes paid to foreign governments.  

Critics suggest that the companies have been able to disguise what should be foreign royalty payments as taxes to reduce their tax liability.  It has also been pointed out that those 5 companies spent $137M on lobbyists last year – a total of $274,000 per elected official – and that’s not including campaign contributions but still, it’s a return on investment of 14 times their lobbying investment in the first year alone!  And let’s not forget they already took another $60Bn in tax cuts off the table just to get this bill to a vote.  Now that, my friends, is how you buy yourself some good Government!  

When you are done being mad at oil companies, try reading Matt Taibbi’s new article on how Goldman Sachs flat out lied to their clients and lied to Congress or, better yet, you can just check out this short video that explains it well:

Shenanigans everywhere, including a convenient (for oil bulls) fire up in Calgary, Canada that is probably going to shut in 100,000 barrels a day of production.  I told Members last night to expect some Rent-A-Rebel action to support the contract rollover at the NYMEX but arson is a new one in their bag of tricks.  Sure, you might think 100,000 barrels a day would matter little in a World that uses 88 Million barrels a day, especially to a country that has 1.4Billion barrels in storage like America but that won’t stop CNBC from making it seem like the Apocalypse today – mark my words…

We have oil inventories at 10:30 this morning and there was already a "mix-up" on Rand Squawk, where they reported a draw-down of 1.479Mb of crude when, in fact, the API report showed a 2.7M barrel BUILD.  Hey, what’s a 4.2 Million barrel swing between friends.  Still, that and the fire are doing wonders to hold prices up at the NYMEX open, despite the Dollar testing the critical 75.75 line.  

Perhaps we should all go buy some XOM today…. 

We may as well join ‘em because we sure can’t beat them, right?  Fed minutes will be out at 2pm and, if nothing else, that should be able to kill the Dollar so bottom-fishing it shall be as we celebrate inflation and the destruction of our American Dollar.

Enjoy.

 


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  1. Lincoln

     Phil: general  strategy

    There have been several instances where the underlying moves relatively quickly so as to leave me in a  spread with little premium left to decay and you have suggested an adjustment  something along the lines of the following,  I was long Jan 12 DBA 20 calls covered with Mar 11 27’s.  when DBA moves to 32 you suggest something like buying 10 additional Jan 34calls and selling 20 July 11 32’s putting  me into  a long butterfly except with different expirations.  I’m less confused now when you suggest such moves but I want to make sure I understand the reason to do so and not just blindly follow your suggestion, although I would if I didn’t worry about Warren making you an attractive offer someday.   
    In such cases what I am doing is buying the OTM longs instead of simply paying to close the caller, enabling me to sell 2X callers that are mostly premium.  Thus looking to profit from the premium decay rather than the direction of the underlying.    Since the callers have earlier expiration I also have more flexibility than a straight butterfly.   So my mindset should be;  I started off bullish on a position, it has moved  beyond the point I agreed to sell it so I’m now either “agnostic” about it and want to collect more premium,  still bullish and willing to hold to expiration for small remaining premium or ready to move on and accept less than max return on the spread.
    Am I understanding this correctly?  TIA

  2. jomptien

    Good job with the levels Ilene – helps alot.

  3. exec

    Phil/TBT,
     
    I’m still eyeballing the Jan puts.  Now up to 2.70.
     
    You still like them?

  4. pentaxon

    I appreciate your PP very much. But today it’s the wrong attachment?

  5. peedlew99

     What does PP stand for?

  6. Pharmboy

    USO – 6K strangle on them in June $40/37 C/P.

  7. Pharmboy

    Woops!  Pivot Points for today (again)

  8. Pharmboy

    Thx Pent – at least I know someone is paying attention!

  9. stjeanluc

    This morning’s action does confirm what the article that I linked to mentioned – that 3:00 AM pump job was just unreal. And since then, dollar, oil, gold, silver all making moves. Algos must be taking advantage of thinner volume.

  10. peedlew99

     Oh, sure.  The chart threw me off.  By the way Pharma, don’t know if you remember, but a few weeks back you cleared my head and portfolio of TBT… THANK YOU!

  11. stjeanluc

    Oil Lines
    R3 – 103
    R2 – 100.75
    R1 – 99.50
    PP – 97.29
    S1 – 96.11
    S2 – 93.85
    S3 – 92.67 

  12. Pharmboy

    Peedlew – I remember and UR welcome.  It’s not that Phil is wrong (TBT)…he is just way early to the party!

  13. Pharmboy

    Spanish Protests…..from Mish.

  14. rehat

    Phil,
    UUP/ Yesterday you gave the following trade for the 25KP - 
     

    So let’s call that a buy on the UUP June $21 calls at .13, 20 in the $25KP.
     
    But the June 21′s are at .65c it is the June 22s that are .15c now. Which one are you recommending to buy?
     
    TIA

  15. diamond

    "I’m starting to think this game is rigged!"

  16. Pharmboy

    This is what it is all about.

  17. matt1966

    Strange after hours action since yesterday.  Was psyched at 8pm last night for a nice pop this am but it all vanished.  Not trusting this at all.  Changed my sentiment from going long to going short.. but trying to stay agnostic.

  18. sns1

    Pharm- trouble interpreting your chart…please calrify (sorry for being a dumb-ass)

  19. Pharmboy

    sns – 1320/1322 needs to hold……otherwise the channel is intact and UP it is.

  20. peedlew99

     I too blind to read that chart.  Is the 200 DMA right at the bottom of the channel?  

  21. Pharmboy

    Here is a big version.  50d MA is red.  100d MA is green (buried in the blue lines).

  22. Phil

    Good morning!  

    Crazy move back over $99 on the new oil contracts (Junes are still $98.50) but it’s a dangerous short today that went great this morning but fully reversed already.  Now we need to watch the Dollar at the 75.75 line – above that is bearish for the market and below 75.50 is bullish so we’ll see which way we pop out of that range.  

    Siver keeps testing and failing $35, gold the same at $1,500 but copper is $4.05 so they are the star of the metals and very bearish if they can’t hold $4.  Gasoline is $2.9585 and we have inventories at 10:30 that might show a draw in gasoline because barge traffic has been shut on the Mississippi for days now and they substitute trucks – and that’s a lot of trucks!  

    We had a lot of good conversations in yesterday’s Member Chat since 3am so lots to read there as well.  Today is all about making it back over our bounce lines and they are:

    • Dow 12,505 (the 2.5% line) – needs 50
    • S&P 1,333 (the 2.5% line) – needs 6
    • Nas 2,767 (the 4% line) – over by 14
    • NYSE 8,362 (the 4% line) – needs 37
    • RUT 823 (the 4% line) – needs 1 

      

    So the RUT is making a big effort but others are losing ground with the Nas holding on so far.  On the whole, our indexes are doing OK as the Dollar is up to 75.75, robbing them of about half a point they might have gained otherwise – or at least a quarter.  

    Fed at 2pm is a game changer so tune in for that one! 

    On the whole, I still think down is the "right" direction as we should at least get a proper test of our reference levels on the Nas, RUT and NYSE before I think people can get serious about calling it a bottom.  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    10:30 EIA Petroleum Inventories
    2:00 PM FOMC minutes
    7:15 PM Fed’s Bullard: ‘Measuring Inflation’

    At the open: Dow -0.13% to 12463. S&P -0.07% to 1328. Nasdaq -0.08% to 2781.
    Treasurys: 30-year +0.02%. 10-yr -0.01%. 5-yr -0.05%.
    Commodities: Crude +1.72% to $99.11. Gold +0.84% to $1492.50.
    Currencies: Euro -0.18% vs. dollar. Yen +0.12%. Pound -0.66%.

    Market Preview: Futures point slightly higher, boosted by Dell’sstrong results after the close on Tuesday. Benchmark S&P +0.2%. Staples down sharply after an earnings miss and lowered guidance, while reports are floating around that the Fed wants annual stress tests for banks. Commodity prices are rising broadly in Europe. Later: Parsing the FOMC minutes. 

    MBA Mortgage Applications: +7.8% vs. +8.2% last week. Thirty-year fixed mortgage rate decreased to 4.60% from 4.67%.

    No surprises here, but Japan’s service sector in March saw itssharpest fall in 22 years following the March 11 earthquake and tsunami. The index was down 6%, and all 13 categories registered significant declines. 

    More on Deere’s (DEearnings: "Markets for construction equipment in the U.S. and for farm machinery in Europe are in the early stages of recovery" and sales of large farm machinery, particularly in the U.S., Canada and Brazil, are continuing to support the company’s performance. (PR

    Staples (SPLS) is now down 12.6%. Investors are clearly rattled by the company’s below-par earnings performance and a reduced outlookwhich assumes "very little improvement in the economy, continued investment in our growth initiatives and competitive pricing in the contract market."

    Minutes (.pdf) released this morning show the BoE once again split 6-3 at its last meeting to keep rates unchanged. Outgoing MPC member Andrew Sentance called for a 50 bps hike; Martin Weale and Spencer Dale called for 25 bps. 

    Antsy over her political future, Angela Merkel steps out of character, blasting the Club Med countries for their low retirement age and lengthy vacations at a CDU event. "We can’t have a common currency where some get lots of vacation time and others very little." Why not? The U.S. does. 

    Possibly trying to deflect attention from its own foibles, the IMFsteps up the rhetoric on Greece. "The government program is not working," says Poul Thomsen, "without a determined reinvigoration … the program will run off track." 

    Moody’s downgrades Australia’s four major banks, saying they are too reliant on overseas funding. "The GFC has underlined the speed with which shifts in investor confidence can impact bank funding." Bank shares are unaffected, but the aussie is lower, -0.3%, despite a "risk on" day. 

     Portugal sells €1B in 2 month bills, giving the country some cash until the EU/IMF bailout loans begin to be disbursed. Though the rate to be paid is relatively high at 4.657%, there was demand for double the amount auctioned.

    Chinese property price hikes slow in April, rising at a 4.3% Y/Y pace vs. 5.2% previously. No doubt a cooler figure, the number is unlikely to assuage anyone – Chinese officials or otherwise – concerned about bubbly real estate conditions. 

    "The cracks are spreading on the facade," says Jim Chanos about China. "You’re seeing real estate firms shutter, sales offices closed down." While others are willing to concede a slowdown, Chanos says a cut back in construction makes the numbers "go negative real fast."

    The Fed is working on draft rules that would require banks toundergo annual stress tests, and would let the Fed veto dividend payouts if capital buffers are too low. Bank execs have been in talks with the Fed about the proposal, which could be out for public comment within weeks. 

  23. JRW III

    Good morning, nothing new,

     

    IWM    84.98,  84.38,  84.06,  83.73,  83.47,  82.96,  82.61,  82.17, 81.55, 81.00  (and only $2 Bill of POMO)  !!

    As I have said before, we either go Up or Down from here !!

    Courtesy of S Jack

    I’m long now !!

  24. hanna5

     RIMM on fire this morning! :)

  25. peedlew99

     As I have said before, we either go Up or Down from here !!
     
    isn’t this always the case!!!

  26. goober

    Nope, could also go sideways

  27. jomptien

    JAG going nuts up +16% finally

  28. JRW III

    Out of TNA with $1.02 (Thanks to David Fry’s rule about the first 15 minutes) !!

  29. jabobeast

    PCLN flying again?

  30. rustle123

    Phil, I noticed over the last week that DIA was about .10 lower than the Dow levels and now it’s .14 higher.  What is the cause for that?

  31. Phil

    Agnostic/Lincoln – Yes, generally you are just flipping your delta positive and then, if it heads lower, you can stop out your original calls and flip bearish and, if they keep going up, you shouldn’t lose (as you have a positive delta) and you are set up for a 2x roll.  That’s all there is to it.  

    TBT/Exec – Yes, no change in the fundies.  Only QE3 can do that and how can they have QE3 with oil at $100 and the market up 20% in 6 months?  

    Morning/StJ – The dollar and commodity moves are strange today but it seems to be driven by the contract rollover on the NYMEX.  I think they are just taking it up as high as they can before they have to sell but maybe they are done selling and rolling already – it’s very hard to get good intra-day info on the NYMEX if you are not a floor trader – that’s how they protect their turf.   Obviously, someone is betting very heavy that they’ll  get a good report in a half hour, we’re up 5% from yesterday’s $95 low already so the pullback would be to $98.60 if there is going to be a retrace test and that’s just our old $98.50 s/r line anyway.  

    Spain/Pharm – Still not a word from CNBC or the WSJ.  

    UUP/$25KP, Rehat – Damn, I meant the June $22s, not the $21s.  That’s too bad because now they are .15 so we’ll have to wait for a pullback to buy 20.  

    Rigged/Diamond – Oh don’t by cynical. 8-)

    Daily/Pharm – So clearly that red line will be crossing the bottom of the range next week.  Doesn’t that suggest to you an inevitable technical breakdown ahead?  

    Up or Down/JRW – I agree.

    Of course Goober could be right too…

  32. rustle123

    Phil, at what levels today do you buy DIA puts?  If we don’t break through 12505?

  33. pahurik

    I am not seeing any news for JAG…

  34. Phil

    Dollar heading back to that 75.50 line, giving the markets a very nice push.  If they can pull off a bullish oil inventory at 10:30 and ditch the Dollar below 75.50, we could get a really nice pop so I like the DIA May $124 calls at $1.17 with .24 of premium as a play over the 12,500 line but out if we can’t hold 12,475.  

  35. kustomz

    Concerted effort to take the dollar down

  36. Phil

     Keep in mind that’s a defensive play so we don’t have to quit otherwise bearish positions!  

  37. goober

    Sideways is the lesser of the three choices, no doubt but there none the less and powerful at times. Perhaps not now though. I agree with down and then up, but when? That is the question. JRWs point carriers more weight, generally.  

  38. Phil

    PCLN/Jabob – There were very good survey numbers on people planning on taking a vacation this year.  

    DIA/Rustle – The DIA follows the Dow but also gets weighed by sentiment.  It usually trues up on expiration day but then it depends on whether there are more bulls or bears on board.  Don’t forget the bet is where the Dow will be on expiration day, not the day you are watching. 

    DIA/Rustle – Yes, you could, alternatively, short the Dow on the same line.  Unfortunately, the May puts have too much premium so I’d go with the June $120 puts at .90 for a ride down.  

    JAG/Pahur – I don’t know anything but they were so cheap they may have a buyer (or a credible rumor of one).  That’s the problem with my value picks – they keep getting bought!  

  39. Peter D

    SPX and RUT short strangles for May – let’s take the money and run!  We’ve been waiting for this week to realize the profit for the month and the opportunity to close out May shorts is here today.  The market is manipulated, but it’s in our favor this week.

  40. pahurik

    Phil, I have EGLE sept call spread 4/4,5 for 0,2 I understant that I sell 4 and buy 3 for 0,3 but 4,5 I do nothing?

  41. Phil

    10:00 AM On the hour: Dow -0.15%. 10-yr flat. Euro -0.08% vs. dollar. Crude +1.83% to $99.21. Gold +1.18% to $1497.40. 

    S&P opines on the supposedly new and improved European bank stress tests, saying politics makes it impossible for regulators to assume true stress, i.e. a sovereign restructuring. The agency notes bond yields on the periphery exceed even the most severe assumptions in last year’s tests. 

    Spin of the day:  The U.S. Treasury market will navigate the end of QE2 with little trouble since "there are plenty of buyers" to step in to take the Fed’s place when it ends its $600B buying effort in June, St. Louis Fed President James Bullard tells Bloomberg. He says the central bank probably will begin a policy tightening by allowing its balance sheet to decrease. 

    Oil inventory will be interesting with the conflicting reports of the draw (4Mb up or down) or build.  Gasoline is actually heading down and they did have a nice draw – we’re back below $2.95 and that’s a great up/down line to play in the futures but keep in mind those contracts get expensive fast!  

    5 Minutes to inventory and July contracts are holding $99 with the dollar at 75.625 – dead center of our range!  

  42. rustle123

    May puts were too close to the fire for me anyway, Junes look good.

  43. rainman

    JAG — released earnings last night:

  44. Phil

    $25KP position adjustments: 

    • 40 FAS May $28 calls sold for .42 (-$3,000), now .56 – if they keep going up tomorrow, we’ll look to roll to next weekly $29s.
    • 40 EGLE Sept $4 calls at net. 50 ($2,000), now .15 – down $1,400 - rolling down to $3 calls for .15 
    • 10 HOV May $3.50 calls sold for .20 (-$200), now .05 – up $150 – should expire worthless
    • 10 C May $4 calls at .75 ($750), now .15 – Roll to July $46 calls (now .36) for .21 and DD at .36
    • 10 GMCR June $60 puts at net $5.10 ($5,100), now .50 – may as well DD at .50
    • 20 XRT May $54 puts sold for .45 ($900), now $1.15 – will have to play by ear
    • 20 SDS May $20/21 bull call spread at .36 ($720), now .55 – stop at .40 or 1,333 on S&P
    • 10 POT May $55 calls sold for $2.70 (-$2,700), now .38 – stop if POT is over $54.25
    • 5 AMZN May $205 calls sold for $3.10 (-$1,550), now .15 – should expire worthless 

     EGLE/Pahur – I don’t understand the question.  You have a bull call spread at .21?  Is that correct?  

  45. rehat

    Peter D,
     
    When did you set up the Strangles. Would like to study them as I have been doing well with IncomeTraders RUT Iron Condors.
     
    Can you also have a separate thread for your strangles so that those of us who want to follow you have a way to easily do so and manage the trade with you.
     
    TIA

  46. rainman

    Buy JAG @ 5.10 sell June $5 p/c for 0.75 for a 13% gain in one month if it holds 5 or an entry of 4.68.

  47. Phil

    Inventory is flat on oil down 15K, gasoline up 119K and distillates down 1.16Mb and that’s good enough for them to head higher as it’s a net 1Mb draw.  

  48. pahurik

    Phil, yes I have  sept bull call spread 4/4,5 for 0,19 (0,34/0,15)

  49. Phil

    Don’t forget $99.50 is the 5% rule so a good spot to play for a pullback if we cross back under.  Game on for the Dow longs, of course as that’s what they needed and if they can shove the dollar under 75.50 – it’s a trifecta!  

  50. msf65

     Phil what do you think about DOW here?

  51. Lincoln

     Peter D: Ditto what Rehat asked
    TIA

  52. Lincoln

     JRW: what is David Fry’s 15 min rule?
    TIA

  53. matt1966

    They sure are making it look like risk is back ON.  They prolly just wanted to shake out the weak hands in premarket.  But, there aren’t any real breakouts yet so ever vigilante! 

  54. b1ll

    JRW / What’s David Fry’s rule about the first 15 minutes ?

  55. willsons

     Lincoln     Daves’s rule is the first 15 minutes is usually the wrong direction for the day  

  56. rehat

    They are tanking the dollar – but the market is hardly moving in last 15 minutes.. something is fake…

  57. msf65

     Phil regarding DOW I was thinking Jan12 buy write : sell $35 C and P for $7.7 for net $28.83/ $31.92
    TIA

  58. Phil

    JAG/Rain – I’d sell the calls first and wait for a pullback.  Worst case is you buy to cover and roll the caller.  

    EGLE/Pahur – The same move applies, you can roll down $1 in strike for .15  so why not.  If you aren’t 6:1 payoff bullish that they get .15 above $3 then you should be cashing in the $4/4.50 spread, right?  

    DOW/Msf – I’m not sure we’re done with our correction yet.  They do seem to be in the bottom of a rising channel and they pay a 2.7% dividend so I do like them as an accumulate, even if they head lower but they are not "cheap" at $37.  I like selling the 2013 $30 puts for $3.85 as net $26.15 is a very nice entry and you can play a little more bullish with the $35/40 bull call spread at $2.20 so you carry a net $1.65 credit on the $30 puts (net $28.35) with a free look at $5 of upside from here and, if they cross $37.50, THEN you can buy stock to cover and you have the stock at $37.50, with the 2013 $30 puts sold for $3.85 and the $40 calls sold for $4.35 and that’s net $29.30/29.65 AND you’d have the $35 calls at $6.55 which would be up (because you only bought in .50 higher than it is now) which you can stop out no worse than even.  

    Holy COW!  Dollar jammed under 75.50 and oil pops $100 for the first day of the new contract – isn’t that GREAT?

  59. JRW III

    David Fry

    His rule is to wait to trade for 15 minutes as the first direction is often the wrong direction,but a corollary is that an early bot program will last 15 minutes (9:35 – 9:50 in this case), then back to my 82.17 line and off again, probably for the rest of the morning anyway !!

  60. Phil

    NYMEX dumped a lot of shares from last night (first chart) but still a lot of work to get rid of that June contract by tomorrow’s close.   

     

    Month 

    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jun 11
    -
    -
    -
    98.00 May 17, 17:18 96.91 -0.46 354159   97.37 165081   Call Put 
    Jul 11
    -
    -
    -
    97.77 May 17, 17:18 97.43 -0.42 227272   97.85 372506   Call Put 
    Aug 11
    -
    -
    -
    99.85 May 17, 17:18 97.84 -0.41 44371   98.25 90941   Call Put 
    Sep 11
    -
    -
    -
    100.14 May 17, 17:18 98.19 -0.40 30921   98.59 88220   Call Put 

     

     

    Month 
    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jun 11 97.57 99.58 97.46 99.27 May 18, 10:41
    -
    2.36 113807   96.91 102731   Call Put 
    Jul 11 98.18 100.00 97.97 99.71 May 18, 10:41
    -
    2.28 104818   97.43 386598   Call Put 
    Aug 11 98.28 100.30 98.28 100.04 May 18, 10:41
    -
    2.20 19737   97.84 91254   Call Put 
    Sep 11 98.89 100.53 98.79 100.30 May 18, 10:41
    -
    2.11 12721   98.19 89077  

    Call Put 

    This is good for them as they can actually sell the barrels, rather than roll.  The new front months only gained 16K while they dumped out of 63K so they were able to cash 47Mb worth of oil ($4.6Bn) on this rally.  BUT, 100Mb worth of contracts is still a lot to lay off for those who did not wisely sell into the initial excitement and the Dollar is not playing dead under 75.50 so we could get a big snap back down in oil.

    Therefore, how about 10 USO June $39 puts at $1.33 in the $25KP.  

     

  61. Phil

    Done being bullish as the Dollar crossed back over 75.50.  

  62. Phil

    Ah, spoke too soon, they kicked right back down to 75.42!  

  63. rainman

    That was a hell of a kick!

  64. kustomz

    Im thinking we get the opposite of yest and the dollar gains strength around 11:30

  65. Phil

    All the indexes are now over the weak bounce lines, mostly just barely but if we hold it, then the great May sell-off is over and the bulls are back in control.  I’m still not buying it until I see the dollar go up and the markets hold their price though as we’re up 0.5% and the dollar is down form 75.75 at 9:30 (the high on the button) and we just bounced off 75.40 so .35 is 0.5% so today’s move is NOTHING but a move down in the Dollar.  There’s almost no sense in playing stocks at all – you just short the Dollar and that takes care of it…

    11:00 AM On the hour: Dow +0.13%. 10-yr -0.17%. Euro +0.09% vs. dollar. Crude +2.52% to $99.89. Gold +1.18% to $1497.40.

    EIA Petroleum Inventories: Crude -0.015M barrels, vs. consensus of +0.7M. Gasoline +0.1M barrels vs. consensus of +0.6M. Distillates -1.2M vs. consensus of +0.5M. Crude futures bump up again,+2% to $99.39.

    Commodities are green across the board, regaining some of their recent lost ground. Of particular note is copper, which jumps $0.14 in less than 24 hours, pulling Freeport McMoRan (FCX +3.5%) off of levels it hasn’t seen since October.  Oh Duh!  It’s Glencore IPO day, of course they are going to jam up commodities!  

    Incredulous the world is so reliant on a "repressive, communist regime employing command and control economic management," Mark Lapolla sees similarities between China and 1920′s U.S. or 1990′s Japan. His "Game Over" thesis sees a wage/price spiral in China ultimately causing another deflationary collapse. 

    As municipal bond prices recover and investors move back into the market, Meredith Whitney shifts her focus a level higher to the "hidden state financial crisis." Opaque state financial statements mask the extent of underfunded pensions, she says; "The real issue… is the enormous over-leveraging of taxpayer-supported obligations at a time when taxpayers are already paying more and receiving less."

    U.S. companies are racing to borrow, selling $19B worth of investment-grade bonds in the past two days, on fears that low rates will rise once the Fed ends its support for financial markets next month. "It’s hard to see them going much lower, but it’s easy to imagine them going higher," says the CFO of Texas Instruments (TXN), which sold $3.5B of debt in its first offering since 1999. (earlier)

    Research in Motion (RIMM +3.1%) moves higher after anupgrade from Bernstein, who believes current thinking reflects "the bleakest possible outlook for the company." RIM’s key product, e-mail, "has become a commodity," making any long position in the stock strictly "tactical."

  66. Peter D

    rehat & Lincoln,
    We have short strangles open all the time.  As for a separate thread, I have time limitation and not able to do it yet.  May be in the future.
     
    Depending on market conditions, we either have more or less shorts.  I’ve been using Income Trader strategy too as it’s excellent for smaller accounts.  Once you get to a $500k portfolios, it’s hard to sell and adjust 250 contracts of Iron Condor (risking $250k), so you’d need to use Phil’s buy/write, short strangles, or synthetic spreads that can handle large accounts.  The short strangle potential return is less than Iron Condor, but we can make it safer with the ability to roll out of trouble quickly.  We’ve been aiming to make 1-3% a month on Portfolio Margin, and laying low until VIX gets to about 25, then we’d increase the number of contracts.
     
    For June, we are looking at SPX strikes 1200 – 1220 for the short puts that gives a 9-10% cushion, and 1390 – 1400 for the short calls.  We usually reserve $25k for each SPX contract sold for Portfolio Margin (PM) account.  It was $20k when SPX is at 1,000, but SPX has gone up requiring more margin.  One SPX contract control roughly $133,000 worth of index as of today’s price, so we are leveraged about 5 times, which is the 20% margin allowed for short options in Reg-T accounts.  If you don’t have PM, you’d need to reserve about $60k per contract to allow 1 doubling down or rolling 2x, and still leave you with $10k available margin.

  67. JRW III

    Not going to be easy here, unless the dollar falls out of bed !!

    Russell:

  68. matt1966

    Phil, the entire rally since last August has been built on the dollar dropping.  The recent drop in equities correlates with a strengthening $.  Why now would you question a rise in equities that correlates to another drop in the $? 
    To me, this move up is pretty textbook and it’s the first one I’ve actually seen coming.  Will it last?  Dunno.  It could all be about OE.  But I’m not fighting it this time.

  69. b1ll

    JRW / Re: Fry
    Thank you

  70. rainman

    RIMM — Wow. That IS bleak if e-mail is their key product! For some reason, I thought their key product was little electronic devices.

  71. rustle123

    might be going against the grain a little but bought the dia puts at 12505, not breaking that number that easily.
    Phil, would you wait till after 2 at this point to short oil?

  72. JRW III

    Remember, max pain on SPY is 134, as Pharm has pointed out, so not that far to go, but then………………….

  73. morxlntway

    So is it exit SDS time?

  74. Lincoln

     Peter D: Thanks
    I’ve been trying Income Traders plays and know you have more detail in archived articles so I will go back and read those again.

  75. stjeanluc

    Not happy with copper warehousing, now there is aluminum. What is next Bazooka bubble-gum?
    http://ftalphaville.ft.com/blog/2011/05/18/572046/please-wait-10-months-for-your-aluminium-thank-you/ 

  76. asaenz

    @ Phil …. are you still holding our shorts? or do you think the markets have found bottom? how about oil? those uso puts are now 1.19 …. Thanks!

  77. Phil

    Europe finishing up about 1% but only because they spiked the close.  

    Dollar/Matt – Well I question, at this point, the legitimacy of the dollar being worth (relative to the Euro/Yen basket) 75.  That’s the difference.  IF people are willing to buy our paper at 3%, THEN the Dollar must be considered a good buy.  THEREFORE the Dollar should not be going lower and – IF the only reason the markets go higher is because the Dollar goes lower, THEN the markets are done going up.  

    We just went through a month of earnings and NOTHING moved the market but the Dollar.  So, if the Dollar is the sole catalyst, then I don’t have to listen to all this BS about growth or jobs or p/e ratios at the moment, I just have to think about where the Dollar will end up.  Today is a Fed day and the BOE just indicated they have no intention of raising rates or reigning in their QE and expectations are now for the Fed to say the same.  Of course, today is minutes, not a statement and they aren’t really saying anything but the tea leaves will be read a certain way.  We already know there was no dissent so I really can’t imagine what’s going to be in those minutes that is more bullish (dollar bearish) than what we already knew on 4/27, when the Dollar bottomed out at 73 but then went up to 76 in absence of other bearish info. 

    Oil was $114 at that Fed meeting and now $100 so I guess this "proves" the inflation is transient but they might have kept it down just one more day for show?  The dollar is only up 4% since then so not a big move and we’ve got the moves you see on our chart – 2.5% to 5% sell-offs.   Now the dollar pulls back 0.5 and oil goes up 5%?  We’re right back where we started – we can’t afford these oil prices, we’re doing irreparable harm to US consumers and exporting massive inflation that the rest of the World can’t afford either.    I agree – we can’t fight it but I wouldn’t get into an positions you can’t get right out of either. 

    Shorting oil/Rustle – Looking hopeless at $101 now, isn’t it?  I think waiting on the Fed is prudent but I also don’t think $105 can hold so I don’t mind accumulating here as long as you are scaling into the shorts.

    SDS/Morx – Yes, we’re over 1,333.  You can’t let what you think/hope will happen later stop you from taking logical stops.  With 2 days to expirations, we don’t get a second chance on those.  

    Arbs/StJ – That’s all a lot of funds do.  

    China/Angel – Yet another issue that’s swept under the rug.  

    And don’t forget Fed Gov Bullard is speaking tonight about how to measure inflation (hint, not by looking at oil or food) – so they are already planning to spin the minutes to assure the market that the Fed has no reason to ease up.  

  78. kurtww

    Peter D – When are you looking to open the June strangles? Will you post more exact numbers when you execute the trade? I’ve been following IncomeTrader also, and I was reading Tchayipov’s (and your past posts) this weekend with interest. 

  79. kurtww

     Phil – I understand we’re closing May SDS hedges. Last time I asked you suggested waiting until the end of May to see about closing June SDS (I have about half 19/22 and the rest 20/22 BCS). Leave them be for now, or close out some? I also have TZA June 37/42 BCS. I’m not protecting any longs here really, just playing for a correction (I’m a pessimist at heart). Thanks.

  80. terrapin22

    Phil / TBT – thanks for the roll idea which i executed yesterday.  finally going up today!  I’m at a UBS conf and the interest rates guy there thinks treasury yields may decline for another month or so until QE2 ends but that should be the bottom.  His argument for near-term rally – the Fed is still in buying mode – $350bn in planned purchases vs. net issuance of $140bn.  Most of the investors and bankers he spoke to in past few weeks were short.  About 3 out of 90 investors were long. 

  81. button

    Phil,
    I got into a CSCO bull call spread May 17 / 18 along with selling the May 17 P for a cost of $0.02 a few weeks ago.  It looks like the calls will expire worthless and I am taking all the loss on the 17 P.  How would you roll this and is now the right time – should have done it a few days ago. I was surprised by the continued move down today.

  82. Phil

    Bazooka/StJ – Back in the day, Bazooka and Levis were better than cash in Russia.  You could make great trades for either.  

    Oil/Asaenz – Sure, that’s just a first round on June USO puts.  I will be very, very surprised if they hold this but, then again, they’ve done it before.  They’ve also had a prop job like this and tanked back to the open so fast you don’t have time to hit the button!   In fact, last Thursday, USO was right about $39.85 at 2pm and was back to $39 and the next day they were back to $38.50, which is where we gapped up from last night.  On the puts, they were $2.40 yesterday and we’ll be thrilled to get $1.80, not even halfway back.  

    Poor VIX having a bad day because this week hasn’t been volatile at all, has it?  

    11:15 AM With stocks making their move up – S&P 500 now +0.4% - Treasury yields have stayed up as the Fed buys $1.81B in bondsmaturing 2028-2041, of $6.095B offered by dealers. Ten-year note futures now -0.17%

    12:00 PM On the hour: Dow +0.16%. 10-yr -0.19%. Euro +0.18% vs. dollar. Crude +3.42% to $100.76. Gold +1.18% to $1497.40.

    Boosting oil, same crap as yesterday:   Iranian President Ahmadinejad’s decision to represent his country at OPEC’s June meeting is unlikely to affect key decisions about oil production, but that doesn’t mean he can’t stir up mischief. Might OPEC officials be figuring out a way to persuade him to pass?

    Sounds responsible:  Ahead of a likely ban on the practice, Citigroup (C) is pumping profits from its hedge fund that bets on mortgage debt - the asset class that nearly took the bank down. Citi may jam in new investors before the Volcker rule stops its prop trading. 

    The China Federation of Logistics and Purchasing showsinventory of finished goods rising this Spring – a time when they usually drop. It could mean manufacturers are optimistic about sales, or they’re stockpiling ahead of price increases. Either way, a slowdown in final demand will leave firms with a lot of product on their hands.

  83. matt1966

    So, what?  We just stay here till Friday afternoon?  They’re really testing 21.55 in UUP.  If that breaks, we dance-

  84. sbrownA

    Morning Phil,et al.
    Scott Brown from Sabrient just dropping in to say hi and see if anyone has any questions that I might be able to assist with.  I learned last week that I am not a road warrior any longer.  I accepted a last minute invitation to fly to Texas on business and didn’t think twice about the red eye/2am arrival or fact that I would need to be up at 6am ready to roll.  Did think twice about the 6:10am return flight on US Airways which was kind enough to board and un-board 3 times for the same flight.  Then when I arrived in Santa Barbara at noon it hit me.  I am not a young road warrior any longer.  I felt like I just went 12 rounds with a young Mike Tyson.  Of course, the last 11.99 rounds laying on my back.
    Anyway, I am recovered and happy to assist in any way I can.  I like DFG and ASYS for long exposure at these levels.
    Best,
    Scott

  85. angelcur

    glencore what a joke marc rich lives…that whole thing stinks

  86. angelcur

    unreal with citi.. just not right to expose a commercial bank…part of the US payments system to that type of risk.. segregate!

  87. JRW III

    This is my target, so 1/3 out of TNA, ready to sell the rest, AND the dollar is touching on support !!

  88. rainman

    Scott / ? — I have a question you can answer. Why did US Air board 3 times??

  89. Phil

    SDS/Kurt – It’s not a breakout until we hold it so I’d just go by tomorrow’s open.  If we’re still over 1,333, then you may as well bail until the next cross.  You can leave the short bear sides on naked if you have the margin for it and just stop them out if we cross but dangerous if we flash crash, of course. 

    Conference/Terra – Thanks, I always like to hear what’s going on at those.  You say 3 of 90 were long – do you mean in the market or TBT?  

    CSCO/Button – So it’s a free trade other than the obligation to buy CSCO and I take it you didn’t REALLY want to own them, right?  You can roll to the Aug $16 puts at .70, which is better than even and $1 further down or you can assume this is a real rally and just roll straight over to June, which are .79 so .16 in your pocket means you lower your b/e to $16.84 with the stock at $16.38.  If you pick up .15 a month, you’ll have a free put in 4 more months too!  

    The idea of selling a short put is you WANT to own the stock at the net price.  If you begin with a 1x scale position, then if the stock drops below your net $17.02 price to $16.32 – then you can assume the assignment and sell the 2013 $17.50 calls for $1.95 and that drops your B/E down to $15.07, which is the place you’d want to sell $15 puts to knock another $2 off your basis and put you into roughly a $13/14 buy/write where your worst case is you have 2x CSCO at net $14.  If you sell the short call, the only thing you have to worry about is say, if we go over $16.75 you buy in and then you have a $16.75 stock, the $17 short put you are no longer worried about that you sold for .50 or whatever and you can then sell another set of long puts to knock you down $2 more (the 2013 $15 puts are $1.85) and you are in for net $14.25/14.63 with the stock on the way up.   IF you sell stocks you REALLY want to own – almost nothing it does is going to bother you as you adjust into the position.  Only when you sell naked puts in stocks you don’t absolutely want to own do you get in trouble!  

    It’s funny, the VIX is 16.64 but the VIX itself was at 19 yesterday morning so a 12.4% move in one day while the Volatility Index tells us there is none – kind of like when Bernanke can’t see any inflation…

    Welcome back Scott!  I used to love traveling for business, now I hate it but part of that is the nightmare that airports have turned into.  I used to always do the OJ routine in the airport, running through the gate just as it was closing – now it’s a 2-hour thing just to get on the plane.  

    Reuters reports the U.S. is to sanction Syrian president Assad for human rights abuses.

    Canadian home prices continue to climb, with April figures up 8% Y/Y. The CREA cautions the numbers are skewed by "surging multimillion dollar property sales" in Vancouver, which is skewed by aflood of money from Asia (mostly China).

    Three lunchtime reads:
    1) How to buy the right dividend stock – at the right price
    2) The eurozone after Strauss-Kahn
    3) Why we’re nowhere near a bottom in housing 

  90. matt1966

    Selling TNA and going short with a tight stop.

  91. Pharmboy

    Generics…generics….generics…

    New projections for global drug sales [1] look pretty for generics makers--but not so pretty for brands. The growth in generics is expected to depress overall pharma sales growth, as lower-priced copies replace top-dollar brand names. In fact, global sales growth could be reduced by half over the next five years, Reuters reports.

    According to new numbers from IMS Health, average annual sales will grow from 3 percent to 6 percent through 2015, to nearly $1.1 trillion. That may sound good, but it’s slower--perhaps much slower--than the average annual growth of 6.2 percent during the last five years.

    As one might expect, given the numbers on emerging markets, future growth will be weighted toward the developing world, with U.S. sales projected to rise by 3 percent at the most per year, and perhaps not at all. European sales are projected to increase by 1 percent to 4 percent. What’s more, that growth will come in the form of increased generics sales; branded drug sales are expected to be mostly flat.

    "There are unprecedented dynamics at play, which are driving rapid shifts in the mix of spending by patients and payers between branded products and generics," as IMS Health’s Murray Aitken said. Too few novel drugs are winning regulatory approval to offset that big shift in spending mix, he added.

    Internationally, the share of drug spending will shift markedly, too. The U.S.’s share of global drug sales will drop to 31 percent in 2015, down from 41 percent in 2005. The top five European countries, which accounted for 20 percent of spending in 2005, will make up only 13 percent. But the 17 "pharmerging markets," led by China, will account for 28 percent of total spending by 2015, up from 12 percent in 2005. In other words, those emerging markets will surpass the top five Euro-markets--and will be hot on the heels of the U.S.

  92. morxlntway

    Phil – i have the SQQQ May 24/25 bcs for .51c. The bid and asks are pretty far apart so maybe could get out even. Is that what i should try for?

  93. Pharmboy

    This is a chart…..BCR

  94. angelcur

    the conundrum is that the market loves it short-term when commodities soar.. yet commodities soaring is what is killing emerging markets through inflation.. rising rates and increasing odds of hard landings…course that’s transitory!

  95. angelcur

    anybody noticing how growth is trouncing value today… true growth stocks…and im not talking the bs global infra plays that people think are growth…those that can growt well even in slow economy are VERY cheap relative to value.

  96. etradingsignals

    Thanks for the DIA 124 call long trade.  Got in at 1.13. Had to be away from the computer, so set exit limit at 1.37 – so got out with a small profit. Should have set a trailing exit limit instead – feel like I left money on the table.

  97. exec

    JR.
     
    Are still long?  Chart looks like a FMD.

  98. Phil

    Speaking of scaling in.  YRCW looks like fun at $1.13 as the flooding in the Mississippi should lead to an increase in truck utilization.  You risk them going BK but the Oct $1 puts can be sold for .55 and that’s net .45 with about .50 in margin so a 90% return on margin in 5 months is worth a small risk.  

    Generics/Pharm – TEVA still good then?

    SQQQ/Morx – Yes, with just 2 days left they are technically worth .60 so I wouldn’t panic out (you can always roll your calls to June and leave the caller, then sell again) but even is good as it seems not to be working but the Fed may change that though I wouldn’t count on it as people liked the statement when it came out (we were up for the rest of that week).  

    Growth/Angel – That’s why I love my blue chips – even CSCO.  

    DIA/Etrad – Hey, do that every day and it adds up to something, right?  

  99. etradingsignals

    Phil: 25KP:
    "20 SDS May $20/21 bull call spread at .36 ($720), now .55 – stop at .40 or 1,333 on S&P"
    S&P at 1335. Should we bail out of the SDS spread? Or did u mean S&P 1333 at close?

  100. Phil

    Good story about India short on coal.  ACI June $28s are $2.07 – a good way to see if the story has legs.  You can pair it with a short sale of the July $27 puts at .88, which is a nice entry and, if you stop the calls at $2.20, your worst case is owning ACI at about $27 (now $29.47).  

  101. biodieselchris

    sure glad I hedged my short therm PCLN puts with a call purchased at yesterday 499. I had a bad feeling these thing would pop back up like a Fred Flintstone punching bag. THERE IS JUST NO KEEPING THIS GARBAGE DOWN AS LONG QE2 CONTINUES TO EXIST. 
     
    General economy:
    Here’s an interesting comment:
    "Corporate profits have commanded this large a share of national income only twice before: in 1929 and 2006. Those years preceded the past century’s worst two financial collapses."
    Article

  102. pentaxon

    Phil,
    About the VIX decay: I developed a trading system, that worked excellent until POMO stepped in. I could even proof that the system had a strong negative correlation with the weekly amount of POMO thrown into the market. That fact sort of saved my self-confidence, but not my account…. trying to fix the system with other inputs I found one rule, that was sort of helpful: don’t take short positions when the VIX tumbles (compared to a weekly average).

  103. Phil

    S&P/Etrad – That was 1,333 on the S&P for a stop.  We spoke above about this one and the answer is still yes to get out although NOW, it’s below .40 so you may as well wait as it’s .40 in the money and you may as well wait to see if it holds or not rather than give up here.  Maybe .35 now for a stop, currently .39 with a net delta of .6 so maybe 2 more S&P points of leeway (1,338) before you REALLY have to get out.  

    Corp profits/BDC – Yep, I’ve been saying that for a while but what does the market like to see – corporate profits.  It’s always brightest before the crash, I guess.  Congrats on PCLN – nice move. 

    VIX/Pentax – Yes, I think you are right, I missed that yesterday but it was a good sign.  

    1:00 PM On the hour: Dow +0.28%. 10-yr -0.29%. Euro +0.19% vs. dollar. Crude +3.47% to $100.81. Gold +1.08% to $1496.00.

     In a "massive proposal," sweeping new rules from the SEC wouldoverhaul the debt-rating business - forcing Moody’s (MCO +1%), S&P (MHP +1.2%) and Fitch (and seven smaller firms) to provide more detail on ratings, bar participation by their salespeople, and review for revision any ratings done where an employee is later hired by a rated firm.

    Angela Merkel’s desire to replace Strauss-Kahn as IMF chief with another European is hyprocritical and in grave error, writes Thorsten Benner from Berlin. A greater role for EMs is long overdue and Merkel’s stance shows Europe will stop at nothing to defend its "prerogatives from the old world order."

    The PBOC will increase the role of interest rates in suppressing inflation and tweaking aggregate demand, according to its latest 5 year plan. Also mentioned, "gradually liberalizing the pricing rights of some financial products." Currently bank deposit and lending rates are fixed by the government.

  104. jomama

     Bought some weekly aapl 330 weekly puts for .25 – Major craps roll, but wouldn’t take much to bounce apple down this week.  Remember last week?

  105. dsheara

    Peedle:
    I try to keep common abbreviations in the wiki under the book project at http://www.philstockworld.com/wiki/index.php.  PP stands for pivot point.

  106. matt1966

    Well, pretty clear evidence of our direction.  Stopped out of my short.

  107. angelcur

    i agree phil..lulu aapl..vrx..and de look like good entry points here

  108. asaenz

    hey Phil, are we long yet? seems to me we have been holding very well out watch levels….not sure if i should sell our shorts with a small lose, or would you wait a little bit longer?

  109. JRW III

    exec

    Yes, 2/3.

  110. hanna5

     BDC – the problem with calling PCLN a high-flyer / MoMo is that they may/should actually earn $25/share in 2012. So at $500 they are 20x earnings, with a solid business model, growth, and attempting to expand internationally. So, unlike OPEN, LULU, CRM which are in the 50-100x earnings range, PCLN is much more reasonable…..Thats not to say that i would buy it here, i think its overvalued by 20%….but, i think CRM is overvalued by 100%. 

  111. sbrownA

    Hi Rainman,
    The flight was boarded for its original take off time of 6:10am.  After everyone was seated the Captain advised us of a maintenance issue that would take an hour to repair.  So they got us off the plane to wait.  At 7am USAirway announced that they had borrowed the part from the plane used on the 8:25am flight to Phoenix (yikes for those guys!).  So back on the plane we went.  Once we were uncomfortably seated the Flight Attendant came on and said that too many people had rebooked for a different flight or left and now USAirway was cancelling this flight due to lack of passengers.  So, we were taken off the plane.  Now the really "funny" part comes in.  The 6:10am flight was to Phoenix and I was connecting through to Santa Barbara.  The next flight after the now cancelled 6:10am flight was the 8:25am flight which now was missing a part :) .  So, the fast on their feet USAir reticketed everyone scheduled for 8:25am on to the 6:10am plane for the 8:25am flight.  So now, 2 hours later, I was in my 3rd different seat on the same plane and off to Phoenix.
    While waiting on my connection I was amused by the flight 2 gates down from mine where the lady at the counter announced that the Captain of that flight had "checked out" (which means he isn’t coming) and a replacement Captain had called in at 9:23am and it was now 9:37am.  Company policy is that the Captain has 2 hours to report after "checking in" and they couldn’t board until he arrived so find a seat.
    So that is how I ended up being boarded 3 times on the same flight and building a bad image of the USAirway brand all in about 3 hours.
    Scott

  112. revtodd64

     All About Trends – Three nice calls yesterday on LULU, IPGP, and PLCM all bouncing off support.  They are all up nicely today.

  113. rpme

    Hanna5, I agree on CRM but have not been able to figure out a good way to short it and timing.

  114. Phil

    Gold having a surprising amount of trouble at $1,500.  Silver at $35.25, copper proudly at $4.11.  Gasoline at $2.9621, very nice return off that $95 line!  Nat gas at $4.205 and July oil is $101.075 with June oil right behind at $100.65 and it will be interesting to see how this closes because my theory is that, as this spread widens, there will be a little panic selling in June as they don’t want to turn it into an expensive roll.  

    AAPL/Jo – Fun trade.  Would be a market tragedy for you to hit it but sure.

    Thanks Dsheara, that’s a good thing to do.  

    Everyone should visit the PSW Wiki and contribute what you can.  It’s totally fine to past stuff from posts or chat there.  

    Matt got spiked out, that’s a good sign for the bears….

    Shorts/Asaenz – I’m never comfortable selling into a sharp spike when there’s no clear reason.  I suppose there is anticipation of the Fed minutes, which is logically silly but that doesn’t stop us from going up on it anyway.  Still, let’s review our expected levels vs. where we are now.  

    • Dow 12,505 (the 2.5% line) – needed 26 at open, now 31 over 
    • S&P 1,333 (the 2.5% line) – needed 5, now 5 over
    • Nas 2,767 (the 4% line) – over by 13 at open, now over by 38
    • NYSE 8,362 (the 4% line) – needed 29, now 33 over
    • RUT 823 (the 4% line) – needed 5, now 7 over 

    So, on the whole, we are about as far over the line after this "massive rally" as we were under it at 9:30.  I guess you would have as much reason to go bullish now as you did to go bearish then but, on the whole, I would prefer to see the lines held for at least 24 hours.  I am starting to think we’re set to repeat the rally we got off the 4/27 Fed statement, which actually hit our highs on 5/2 (12,950 on Dow) but it was up from 12,600 on the 27th so 300/12,600 is 2.4% so back to 12,801 (the 5% level) would be the Dow goal as they were down 2.5% coming into the day.  

    So, if this rally is real, we expect to see those 5% lines retaken but we haven’t even hit a 4% line yet so I just think A) It’s a bit early to get excited and B) We can go long on the laggards like the RUT if someone else breaks 4% (probably the Nas) and participate in a great run as the lagging index catches up.  

    This is all technical, of course because, fundamentally, we should have gone down 1% today, not up!  

    Speaking of fundamentals – Dollar back over 75.50 – now let’s see what they can hold…

  115. JRW III

    82.96 again, either it’s a floor, or not. Either shorting here or going fully long !!

  116. terrapin22

    Phil / Conference – Only 3 out of ~90 investors he spoke with were long duration and expecting a further decline in rates. 

  117. rehat

    JR.
     
    Give us a shout out when you commit to a direction on the RUT
     
    I feel it is waiting for the 2pm FOMC minutes to break out into a rally -- 

  118. Peter D

    kurt,
    There is no set time that I would open the June short strangles.  Looking at my portfolios, some got open in mid-April, a bunch was open a couple of weeks ago when VIX was higher and a few got open today because of the rolling from May to June.  For instance, I would roll the SPX May 1290 short put, which is at $0.325, to Jun 1250 short put with a 10 to 1 ratio (10 May contracts to 1 June contract), for a $1.45 credit today.  Folks would ask why buying back the 1290 putters, which look set to expire worthless, but the market can drop 5% any time, can’t it?  I would lose $20 or $2000 a contract in such a drop, so I wouldn’t risk it. 
     
    VIX just dropped today, it’s not a great time to open short strangles, but the longer we wait the more theta decay that we don’t get.  There is no obvious time when we should open short strangles, except when VIX spikes 5-10 points.  However, at that time, the market has dropped big and fear has taken over, so it will take some nerves to sell short strangles into the negative headlines.  In addition, we could see a large paper loss right after we sold short strangles as VIX may continue to rise, so money management is critical.

  119. Pharmboy

    Teva/Phil – I like them, IPXL, MRX and PRX, in that order.  Look at the volume in TEVA’s May Options.  What is up with that?

  120. Phil

    Gotta love the VIX down here, June $15/17 bull call spread is $1.20, pays $2 if VIX gets to $17 (expiration is Weds of expiration week).  

  121. rainman

    Scott / US Air — Wow! I was laughing reading your story due to the stupidity but I’ve been there and it is extreamly frustrating to me an doesn’t give me that warm fuzzy feeling when I fly. Sorry to hear about the trouble. If you really want to get down on the airlines watch "Frontline: Flying Cheap". I warn you though, you just might never fly again!

  122. Phil

    Of that group, Angel, I like DE the best.  Selling 5 DE June $80 puts for .92 raises $466 for the Income Portfolio.

    A longer way to play DE is to sell the Jan $75 puts for $4.45 and buy 2x the Jan $80/85 bull call spread at $2.80 for net .58 per $5 spread that’s starting out 100% in the money and the worst case is you own DE at net $76.15.

    Sounds like fun Scott.  

    3 of 90/Terra – Wow, that’s very interesting.  Will be a very interesting dynamic if that goes the other way then.  

    TEVA/Pharm – Always with the rumors on those guys,. I just figure they are solid and buy on the dips. 

    Wow, no one waiting for the Fed minutes to go higher….

  123. JRW III

    rehat / direction

    I went long at the open, and again at 10:00, dropped to 2/3 and now am back fully long !! (see my posts) !!

    Last meaningful resistance on a FMD !!

  124. Phil

     IWM $82 calls at $1.35 as long as the RUT holds 831.50 (now 831.75) so tight stops but playing for the Fed pop. 

  125. shadowfax

    Phil FED mins.
    What goes up goes down when they don’t get the extension yet!

  126. zeroxzero

     VXX is at $23.  It’s not VIXY or any others I can see.  What instrument are you trading for June call spread?

  127. Pharmboy

    This is not commodies led. GDX has been sloppy.  I ain’t buying it.

  128. Phil

    Fed Minutes:  

    They talk about exiting QE2!  

    Reducing size of balance sheet through series of announced sales.  

    They emphasize it will not happen soon. 

    This is not that bullish really.  

    I don’t get this – there’s nothing bullish here that was not already known and rallied over.  We’ll see if the end of QE2 boosts the buck but it’s also not anything we didn’t already know.  

  129. Phil

    VXX/ZZ – No it’s VIX in TOS at least (VIX110615C15)

    Buying it/Pharm – you don’t have to, the Bots are doing it for you.  They were going to go up no matter what those minutes actually said.  

    Now the Dollar is getting punched down to push the rest, testing 70.40 on news of QE2 not just winding down but reversing.  

  130. tuscadog

    Phil / $   This apparent hesitancy in endorsing QE3 now should be pushing the $ up??? and mkt down???

  131. jabobeast

    phil--isn’t this the mirrror image of what happened the last time the minutes were released?

  132. shadowfax

    Phil
    Maybe it is time to double short?

  133. rainman

    Hey! Who the hell keeps leaning on that up button? Step away from the switch! Haven’t seen multiple sticks like this in quite some time. Kind of exciting but it’s keeping me awake. :)

  134. hanna5

     rpme – CRM – have been eyeing the August 120 puts at $6. Have not pulled the trigger yet. The chart does not look as bullish as it once did. Also, these guys might earn 1.55 next year, and maybe with awesome growth $4 in 2015? Revenue is 2.5 billion in 2012. They are an 18 billion company NOW. Trading at 30+x 2015 EPS if they can avoid being crushed by MSFT, AMZN, GOOG, etc entering their space. MSFT pricing is better. They will suffer margin compression, and i think growth estimates are too rosy. 

    A less cash intensive way to play for an implosion would be the August 100 puts for 2.3 or so. If it drops to near 100 anytime in the next couple months you should get out for a triple. And, the IV in this stock is so high, that if you close the position at a new ATH (up $15 from here) you should still be able to get $1 or so….so a decent risk reward, and a value play. 

    Again, thinking about a bunch of things with it, but have not excecuted yet. Does crazy things on days like today. Very bouncy stock….

  135. matt1966

    LOL!  Boy oh boy can they make the market go where they want it to go… even on super low volume!  

  136. Phil

    Logic/Tusca – Very dangerous to think too hard about these things….  On the whole, I’d rather be bearish and I will be relieved to see the longs stop out and for the market to get a little rational.  It’s still the Dollar that’s moving things:

    Take the dime and run on IWM, I think, this is just nonsense.  There is nothing here to justify this move other than the manipulated Dollar.    

  137. matt1966

    Checkout the last 20 mins volume for FAS.  YOu don’t see that very often.  In fact, I can’t recall ever-

  138. willsons

     Phil     Should we roll XRT covers yet or give it another day?

  139. goober

    More so on low volume

  140. Savi

    Phil--back to trading—tx for the  IWM trade--in and out

  141. kustomz

    These guys are running out of ammo when it comes to sending the $ lower

  142. Phil

    Mirror/Tusca – Not yet but we could get there if we sell for 3 days back to our lows.  

    Short/Shadow – If you don’t have any shorts, I’d get one.  How about QQQ $59 puts at .97 with just .08 premium and a stop at .90 so risk .07 on the trade?  

  143. Phil

    Volume/Matt – Good point, Dow volume just 100M at 2:23, not much for all this excitement so far.  

    Good job Savi!  

    Wow, Dollar just leaped up to 75.60 in a mighty move off 75.40 – I hope you got those QQQ puts!  

  144. asaenz

    Wow nice calls Phil, just got out of the IWM calls with a nice gain, my USO puts are now positive, and my other SPY puts are almost even…..

  145. matt1966

    Wow, look at the buck go-  did they just stop out the longs before taking her higher?  Could what the Fed said possibly be news to ‘them’?  Up until 20 mins ago I thought this was all about opex.  Now, I’m not so sure.  It’s been so long the market reacted to news the logical way I don’t know what to make of this..

  146. bobhu

    Look like SODA will be next MoMo stock.

  147. lolkha

    Fed,
    basically they lean to hike rates before unloading balance sheet.

  148. BertII

    Considering the move the dollar just made Oil not following very well

  149. Phil

    Look at SODA fly on this prop job on CNBC.   Cramer will put his guys in it tonight and I smell a short opportunity!  

    ROFL – SODA is a great buy because it’s cheaper than GMCR.  Now that’s the kind of logic we expect from CNBC.  

    Thanks Asaenz!  A tricky day for sure…  

    Oil/Bert – Today and tomorrow are rollover days, they are working very hard to support the contracts into the close.  

  150. Savi

    Phil--If you have time after hours I had a horrible 100K loss on some IPO’s that I had forgotten that I had put in for while away--and thus did not keep track of until I returned--would appreciate any help
    Tx

  151. lolkha

    Dollar bounced tonight and during the day from several supports (50 SMA and 23.6 Fib re-tracment from last run) . it’s just below 5 SMA)
    Would it close above it? We’ll see

  152. rpme

    Thanks Hanna5.

  153. angelcur

    In its latest Semiannual Economic Forecast, ISM expects manufacturing revenues to increase 7.5% in 2011, up from 5.6% six months ago.  Non-manufacturing revenues, however, are expected to rise 2.1%, down from its previous forecast of 3.4%.  Whereas manufacturing is "experiencing significant growth," non-manufacturing "will continue on the path of slow and sustainable growth for the balance of 2011."

  154. Phil

    15 minutes later, volume is 104.5 so 4.5M shares in 15 mins means no one is selling yet – be careful.  

  155. yodi

    Interesting observation. This morning I had in the one acc 200 shares of TNA 81.00 value. Just left them as ususal.
    In acc b. I used the 400 shares and traded up and down and up pd the broker a good deal of commission and my profit up to now is 1000.00 In the first acc doing nothin profit is 512.00. You take your own conclusion.

  156. JRW III

    Out of TNA for $2.50, shorting !!

  157. rustle123

    Cramer massively pumping Netflix.

  158. silentstorm44

    Phil ,sold JAG at 5.15    Will buy back if it drops back into the 4.30 range. (sell into excitement   8-)

  159. shadowfax

    Phil
    I agree and already bought the 59 QQQ P, We go down or I hold till tomorrow. Thinking together is a good thing!

  160. amatta

    Phil, 
    On XRT, would you do the roll now to the june’s (I am short naked May 54′s (sold for .44) as I see you are feeling this might not be the start of a rally back up on the indices

  161. tuscadog

    Phil / Volume   Is the weak volume on this selling telling you that ‘they’ know it’s all Fed bs and they know QE3 is inevitable given the lousy economy and no jobs (tomorrow?).

  162. rustle123

    I don’t think they can afford to do a QE3 because oil would be back at 115 a barrel if not higher and you would do way more damage to the economy.  QE2 was a major failure, QE3 would be a disaster.  They would never admit that QE2 didn’t work but they do know it.

  163. Phil

    Time/Savi – I’ll be out the door at the bell but back later.

    NFLX May $245 calls can be sold for $1.90 – fun if you have margin.  

    Dollar/Lol – Very much up to how Asia and the EU interpret those Fed minutes but, as I said, their money is worse than ours so I think this will give them confidence to buy more dollars.  That might not be good for TBT but, on the other hand, if the Fed ain’t buying notes, I’m not sure how else will (at these rates, anyway).  

    ISM/Angel – Do you have a link to that? 

    2:00 PM On the hour: Dow +0.51%. 10-yr -0.27%. Euro +0.15% vs. dollar. Crude +3.9% to $101.23. Gold +1.16% to $1497.10. 

    FOMC minutes from the April 26-27 meeting show a clear division on when to begin tightening monetary policy, with some officials saying that an exit might come sooner than expected while others were concerned early rate hikes would stifle any recovery. Some said they would only support QE3 if there was a significant change in the economic outlook. 

    More FOMC minutes: Most Fed officials prefer to raise interest rates before selling assets when the time comes to tighten policy: "A majority of participants preferred that sales of agency securities come after the first increase in the [Fed's] target for short-term interest rates… [many] also expressed a preference that the sales proceed relatively gradually… over perhaps five years." 

    More "transitory" talk from the Fed: "Participants viewed the weakness in first-quarter economic growth as likely to be largely transitory, influenced by unusually severe weather, increases in energy and other commodity prices, and lower-than-expected defense spending. As a result, they saw economic growth picking up later this year… Inflation was expected to recede over the medium term." 

    The dollar catches a bid in the wake of marginally hawkish Fed minutes. As has been the recent case, the euro is most volatile, sinking 60 pips in minutes, now -0.2% at $1.422.

    Lender Processing Services’ "first look" mortgage report shows a sudden increase in troubled loans in April, with mortgages 30 or more days delinquent or in foreclosure rising 2.3% from the previous month, to 6.38M. The jump comes after an 11% drop in March. Delinquencies are still down 16.3% Y/Y; overall, 7.97% of all loans in the LPS database are 30 or more days delinquent.

    An April survey shows deepening pessimism among homeowners, with more than half saying housing won’t recover until at least 2014. The number expecting a rebound by next year fell to 15% from 27%. CoreLogic estimates a shadow inventory of 1.8M homes has yet to hit the market

    Richard Barley argues a massive privatization program will be Greece’s best shot at exiting its massive overhang of debt. Optimistic projections have the country raising €50B, a significant amount, but still leaving a debt/GDP ratio of 134%. Isn’t the forced sale of assets to pay down debt called liquidation? 

    The warning from Sony (SNE -1.2%) CEO Howard Stringer that he can’t guarantee the security of any network in the "bad new world" of cybercrime may be more prescient than he expected, as the company’s PlayStation Network reportedly has been breached again. There’s no evidence yet that the bug is being exploited by hackers.

    Deere (DE) said all the right things in this morning’s earnings, but the stock’s still off 1.5% and lagging the market this year after rising just shy of 50% over the past year. Higher steel and copper prices may play a role, but also: Is the U.S. saturated with tractors

  164. lolkha

    Reason for JAG – earnings (est was 0.01 – reported 0.12)

  165. craigzooka

    First, let me tell you what the plan is, I hope to run a little introduction to Robotic Forex trading course this summer.  The idea being, during the week I will work on a post, have you guys take a look at it for me to work out the kinks, then each weekend put it up on the front page.  Ideally, by the end of the summer or sooner, we should have a collection of posts which will develop all of the tools needed to construct our any kind of Robotic Forex strategy that you can think of.  
     
    If you want to follow along, the first thing you need to do is get a free demo account and get Metatrader4 up and running.  Here are instructions for doing that.  Here is a link to the first "lesson".  If you guys could take a look and let me know what you think I would greatly appreciate it.  

  166. Pharmboy

    TGT getting its arse handed to them. Almost back to a 52wk low.  How does retail do it?

  167. kustomz

    Phil/TBT, all the money chasing commodities have good reason to do so.. the end of QE2 will bring money back into bonds as some risk is taken off the table..they’ve made their booty and I’m sure they dont mind parking a few billion back into bonds waiting for signs of QE3 to do it all over again

  168. Pharmboy

    MITI June options are moving.  Still around my entry range.

  169. topher7

    TLT… off pretty good today… more downside from here???

  170. asaenz

    Phil are you planning on staying short overnight?

  171. Pharmboy

    TLT/topher -  is holdling the 5d MA.  I put the info into Max Pain and they spit out $93!  I bought the 96 May Ps to protect my gains.

  172. Pharmboy

    TLT should hold ~$95..but who knows?

  173. bobhu

    Pharmboy,
    Sold MDVN May $20 Calls for $2.05 few weeks back, now is $2.5/$2.8, should I take loss or roll?  Thinking about roll to 1.5X Jun $22.50 calls, maybe other rolls? Thanks.

  174. Phil

    30 Minutes later and volume is 109M – just this little bit of selling is hard to do.  No real buyers now the bots are done running us up.  

    JAG/Silent – Congrats – that’s the right way to play!  

    Qs/Shadow – If it’s a nice gain and you’re not protecting anything, why risk it?  

    XRT/$25KP, Amatta – Well we have the $55 puts, now $2.20 and we can roll the $54 puts (now .70) to the June $51 puts at .52 and that’s spending .20 more to make a $4 spread so, if we are still going lower tomorrow, then that’s the roll we want.  

    Volume/Tusca – The weak volume, to me, indicates that a ton of retail traders fell for this rally and now they are all stuck in pumped up positions and not finding buyers so no one is selling – which is fine until someone panics.  This is why I keep saying we need to see tomorrow – one day is very hard to figure out.  Of course, it’s all about the Dollar and they will almost certainly make a run at 75.75 tonight and maybe even 76 and if they break over that, then we’re right back to a sell-off as no one wants to trade dollars that are going up 4% per month for stocks that are going down 4% per month.  

    Notice CNBC is spinning the Fed minutes as not that bad.  That’s helping to keep things together.  

    QE3/Rustle – No doubt it would be terrible but so was QE2.  The economy would be a lot better off if gas was $3 and companies felt that, to make more money, they should hire and grow – rather than leverage cheap dollars to buy out competitors and downsize in a market that richly rewards that kind of behavior (and what’s the number one thing you can "save on" when you acquire someone?  American workers, pension plans and benefits).  

    JAG/Lol – Very underestimated miner.

     Good plan Craig, thanks! 

    Bonds/Kustomz – It’s a smart trade now, dump commodities for lots of weak dollars, put the weak dollars somewhere safe until they get stronger.  

    Short/Asaenz – Not with short-term trades.  Too dangerous, better to just bet once you see something worthwhile during the day.  

    Thanks Angel!  

    3:00 PM On the hour: Dow +0.56%. 10-yr -0.36%. Euro -0.04% vs. dollar. Crude +2.89% to $100.25. Gold +0.94% to $1493.90.

    Day 3 of major bullish statements by GS:   Goldman’s Jim O’Neill is unconcerned about a second-half slowdown, blaming recent disappointing economic data on supply-chain disruptions following Japan’s earthquake and tsunami. Although there’s room for stocks and commodities to decline a bit further, he expects 3-3.5% growth in the second half. "If I am right, stocks will recover and Treasurys will fall." 

    If his 13F is any indication, hedge fund manager David Tepper may seeing a bottom in the housing market. His latest filing shows him aggressively buying shares of Beazer Homes (BZH), D.R. Horton (DHI), KB Homes (KBH), Pulte (PHM) and Ryland (RYL)

    It’s a tale of two commercial property markets in the U.K. whereLondon is cruising along while the rest of the country struggles. A shortage of new space promises to drive London rents and values even higher, while Lloyds (LYG), RBS, and Ireland’s NAMA still have loads of property to unload outside the city. 

  175. topher7

    TLT…..thanks pharm

  176. tuscadog

    Phil / Rigged   Maybe all these Fed minutes are irrelevant.  Behind the scenes Ben has probably told Lloyd not to worry, I can’t let the economy slide into a depression, we’ll just keep printing until something happens.  Hard to trade against the insiders who already know the script.  Am I being too cynical?

  177. JRW III

    Out of TZA, looks like we’re heading higher !!

  178. Pharmboy

    Give ‘em til tomorrow.  Then I would roll, yes.  I really do not like that company.  Meanwhile, VVUS is back with their ED drug getting good P3 results.  Too bad that there are 3 others on the market, and one is about to go generic.

  179. JRW III

    If we close up here, we could have a runaway gap up open tomorrow !!

  180. craigzooka

     If anyone else is interested, another strategy I am running, just for fun.  Buying a long PUT and long CALL 2 months out.  Putting in GTC orders to buy $1 worth of position for $.50 on both the PUT and CALL.  Then selling half the ATM weekly options every week.  Looking to double down on the weeklys.   I am curious to see how this strategy works out over the course of the next 2 months.  

  181. Phil

    See, now this is why we take the money and run – especially on the short side.  You are just lucky if you catch any 20% gain on the short side of things!  

    Rigged/Tusca – You have to watch that Cramer video and realize he’s just one guy with a small fund and then think about all the people like him with bigger funds and more power who see you as the enemy that they just want to crush and steal your money.   You know they are rigging the markets and then you have the Fed, who pretty much work for them – so they are rigging the market too.  That’s all fine though – as long as we recognize WHAT they are rigging – we can go along for the ride.  Meanwhile, though, I can have a midget football league and I can get John Elway to be quarterback but that doesn’t mean I’m going to win if other guys drop the ball – the Fed is mighty but not almighty and you can drive a truck through that difference.  

    Good timing JRW!  

    Meanwhile, 20M Dow shares traded in the last hour.  Volume at 3:25 is 120M so very stickable regardless of the Dollar now.  If we get back to our highs, I would like to re-enter a put play into the close – just for fun on the premise that Asia and the EU bid up the Dollar, which has been smacked back down to the bottom of our range at 75.55 once again.  

    Buying more good Government:  The South Carolina House passes a bill exempting Amazon (AMZN) from collecting state taxes until 2015. The legislation now moves to the Senate. The failure of this bill to pass last month led Amazon to threaten to pull out of the state, even though it had already begun construction of a distribution center.

    Intel (INTC +1.7%) unveils plans to introduce more than 10 new tablet models that run on its own chips, aiming to expand beyond its PC stronghold into mobile devices. The move comes a day after Intel reaffirmed a bullish view of the PC market and said it would cut power consumption to target smartphone and tablet computers and streamline future designs for laptops.

    Jeff Immelt says he wants to shift General Electric’s (GE +0.9%) focus from acquisitions to buybacks and reduce the share count to the level it was before he sold new shares to raise cash during the financial crisis. Major shareholders seem to approve: "Historically, buybacks that are over 5% are significant and really help the stock." 

  182. Phil

    For a short play into the close, I like the QQQ June $56 puts at .48 – won’t pay too much but won’t hurt too much either.  

  183. Phil

    Still not hard to see what’s driving the market

    Glencore prices its IPO at £5.30/share ($8.60), according to a source familiar with the matter, valuing the company at $62B. The $11B share sale will be the largest ever in the U.K. Near the top of its post-IPO agenda may be the acquisition of the 66% share of Xstrata (XSRAY.PK) Glencore already doesn’t own.

    SodaStream (SODA +23.2%) shares soar after the company reported blowout earnings and increased its 2011 revenue outlook, citing strong growth across all regions, particularly in the U.S. where sales were up over 150%. "This is not a fad," Jim Cramer gushes. "This is sweeping the world… Everybody in the world loves soda but doesn’t like to carry it out." 

  184. hanna5

     The fact that states are gonna give AMZN a pass is crazy! in 10 years when huge amounts of buying/selling are done online, and sales tax revenues are plummeting, whats gonna happen? Also disgusting the way AMZN is "blackmailing" these states by threatening to pull centers/jobs if they have to collect sales tax….yuck.

  185. dclark41

    Wow! How easily they forget all the negatives of the past few days. All is well again…..just like that! SODA for everyone!

  186. Phil

    Just a normal stick but with low volume.   

  187. rustle123

    They actually have some moron on CNBC discussing how AMZN has not done well this year and it has even recently pulled back at 205.  Yeah to only 197 and it’s up in the last year from 105.  Guess almost 100% return according to the CNBC crowd is underperforming.  He also likes NFLX, go figure.

  188. JRW III

    If this was a normal market (the old days) we would not be here; but it seems in this brave new world, one only needs to keep faith in the Lloyd !! (Max Pain)

    Only in this brave new world, would this NOT be an obvious short !!

  189. JRW III

    Ben needs to be careful now; the bond market is much larger than the stock market !!

  190. Phil

    Blackmail/Hanna – Well isn’t that what all corporations do as they get the tax code written their way?  In fact, we have an entire political party dedicated to the idea that corporations should be left alone and not taxed or regulated in any way.  This is why I don’t hold out much hope for this country recovering – one party works for Big Business and the Dems only kind of don’t but, when push comes to shove – the vote to tax oil companies 1.3% of their profits can’t even get a unanimous vote from the Dems – it’s pathetic.  

    LOL DC!  

    Well that was very exciting – I have to run – keep an eye on that dollar, back near our mid-point at 75.57.  

    Obvious/JRW – Right you are about that.  So tempting but so dangerous.   

    At the close: Dow +0.65% to 12560. S&P +0.88% to 1341. Nasdaq +1.14% to 2815.
    Treasurys: 30-year -0.62%. 10-yr -0.38%. 5-yr -0.25%.
    Commodities: Crude +2.75% to $100.11. Gold -0.11% to $1494.10.
    Currencies: Euro +0.04% vs. dollar. Yen -0.26%. Pound -0.53%.

    New York Times (NYT +9%) CEO Janet Robinson says she’s "very encouraged" by its move to charge subscriptions for online content. So far, more than 100,000 subscribers have signed up for NYTimes.com, she says, and 728,000 home delivery subscribers have linked their accounts to digital accounts to ensure free access. – Totally worth it!  

    A U.K. bookmaker puts odds on a list of possible contenders for the top job at the IMF. Leading the pack at 5-2 is former Turkish finance minister Kemal Dervis. Notably, several non-Europeans are given solid chances of getting the nod. 

  191. dclark41

    Phil
    Can you think of any catalyst that can drive this market up to the previous highs (5% levels)? Seems like we have seen this before. There is an amazing ability to overlook everything and drive the market up. Staying mostly in cash still sounds pretty good to me.

  192. flipspiceland

    I’m amazed at the lack of sophistication on this board, from top on down, about corporations regarding their costs.
    Why can’t—-all those of you who can’t,— get it through your thick skulls that corporations either immediately or thereafter, have their customers pay ALL their costs?
    Why is this so hard to grasp?

  193. JRW III

    4 1/2% on the day !!  Have a good evening .

  194. rdn4evr

     Uhh Flip, I think that’s cause we don’t agree….

  195. augrusot

     flips,
    Corporations will always pass on whatever expenses they have (input costs, taxes, …). But speaking as someone who does not live in the US, I think the US system is broken. Debt needs to be paid off. I’m not sure if higher corporate taxes are the way to go, because someone will always find a loophole. Europe has a VAT (value added tax) and Canada has a GST (Goods and Services Tax). I like that kind of tax because I can control it. If I want something I have to pay a tax. If I don’t think it’s worth it, then the choice is mine. For a country the size of the US, the tax could be pretty low. In Canada, it’s 5 percent and some provinces (states) add their own tax as well and call it a harmonized tax. I prefer this over additional income tax or service cuts. Also, the rich can’t get around not paying the tax and because they spend more, they pay more.
    There was an uproar when the tax was initially created, but everyone is used to it now. The uproar in the US would be much greater and whoever is in power would not be very popular, but no pain, no gain. Good luck, you guys are going to need it.
     
    Tony (who’s portfolio is in rough shape, but his house and property value keep climbing)

  196. rpme

    Flip, quite simply you assume unlimited pricing power, which does not exist and never has. Frankly, you are vastly over simplifying a very complex issue.

  197. rj_jarboe

    Flip,
    The problem is that you can’t grasp the concept of doing without. Those of us who are familiar with this concept know that there are limits to how much we are willing to pay for a product before we stop buying. This is playing out now in the gasoline market as people are turning to mass transit and are refusing to drive because it is too expensive.

  198. davew

    rpme   EXACTY!

  199. davew

    :)

  200. pstas

    Flip is absolutely correct on  taxes. It IS very simple- cash in less cash out = cash left over.
    To be more precise, all corporate  taxes are shifted, not necessarily to the customer via higher prices. they are paid ultimately by the shareholders/owners; customers; and / or employees.
    It is a cost of doing business.  All the rest is politics and social engineering.

  201. hanna5

     flip / gotta go with rpme on this one – you have vastly oversimplified the issue. Margins change, even in a single business. If what you say is true, margins would never compress – they would just "pass on the costs." I am not saying that adverse business laws will not be passed on to the consumer in some regard – but, costs would be "eaten" by the corporations in many respects, and thus they would be paying part of the burden.

  202. Pharmboy

    Flip – agree with rpme & hanna.  Much too complex.  Second, just Let it be.  We know your position, you know others on the board (including Phil’s).  Is it really worth it? 

  203. Pharmboy

    Anyone have an opinion on CLNE?  Got into them on the charts awhile ago, and they are back in the 13.50 area after a miss on earnings.  Seems to me that they would be a growth stock if they could get more NatGas cars on the road.  Pickens started them, but not sure if they are a real player or a fad?

  204. Pharmboy

    OPTR/pstas – I saw UR note to me on them under the write up.  I think they get approval, I just don’t know how much is baked in to the price.  They also need labeling to be favorable for extended use, so that will be a catalyst.  I am only in the BCS and the 12.5 Ps.  All june.  I am out of the stock.

  205. hanna5

     I’m thinking about doubling down on my position in RIMM. If they bottomed at 42, now at 45.43. This is a stock that can move $10-15 in a month. They were $69 on February 18. The August 45 calls are 3.90…..

    If history is any indication – they bottomed at 42.5 last august 31. By November 1, they were at $57 again. So, if they can bounce like that again (and there is a higher short interest this time, i suspect, which should speed a bounce) – then our 3.90 calls should be 10 around June expiration. Hopefully, if sooner, we can sell the June 50s or 55s to cover (for $2+), and then roll into a $5 or $10 call spread (for free – collecting 3.90 along the way?) – betting RIMM will be 55 or better at August expiration.

    OK, thats the plan. Someone please talk me out of it…. :-)

  206. flipspiceland

    As a courtesy to Pharmboy I’ll let it be, but  I have previously stated that WHERE pricing power exists, etc……
    e..g. Corporations are recording Record profits, last year and this year, their margins are reaching the moon.  If you want to deny that they are passing on ALL their costs, and more in anticipation of higher costs,  including taxes so be it.   Live in denial and rant about trying to rein in their profits. And good luck with that.

  207. flipspiceland

    @Felipe
    Good ‘call’ on NFLX.  That new Weber Performer, w/Rotisserie attachment, is now paid for.
    Got any more like that?

  208. Pharmboy

    hanna – you have been recommending some good trades as of late!  My only issue with RIMM is that decline in revenue.  Andriod is eating them alive, and then there is AAPL.   I see RIMM as a NOK, or Ericsson over time.  PE should be higher as NOK is 13, so 9-10 should be fair vaule, no?  That puts them at 55-60ish, right in your range.  If they cannot make earnings, then they are pretty much there…….how about MSFT taking them over?  or INTC?

  209. ilene

    Today’s levels.

  210. drmtv10

     UAL Jan 20P can be sold for about $1.55.  Good trade?

  211. peedlew99

     Pharmaboy,
     
    Does today’s action change your view of tbt/tlt?
    TLT busted thru the bottom of it’s support fairly convincingly.  Pardon if you’ve discussed all day… I’m just back to my computer.
     
     
    paul

  212. pstas

    OPTR- thanks Pharm, just wish I held on for few more days. BTW, what the story on MDVN- They can’t seem to get over $25. Got burned twice on shorts . Any thoughts?

  213. flipspiceland

    @Pharmboy
    Read the S&P 400 scenario. 
    I think anyone can put together a combination of circumstances to create any eventual outcome and propose it as a possibility. 
    I wonder what his past predicitons would yield.  If he’s only been half right it makes the likelihood of 400 a flip of the coin, a null situation.

  214. lolkha

    WOW
    so now to drive us higher they resort to this?
    Goldman Downgrades The USD  (http://www.zerohedge.com/article/goldman-downgrades-usd)

  215. Pharmboy

    TLT/p – not yet.  Pull back off of feds ‘hinting’ at raising rates.  Lots of range in the 95 are from the past week or so.  If they move through 94, then somehting els of a concern.  5d MA is still up.

     

    pstas – yes, I sold the covers on them a bit soon, but oh well.  MDVN is driven by hedgefunds.  I have the Jun $15 P for 11c, hoping for a crash.  Otherwise, the spreads are wide.  Just a waiting game.

     

    Flips – yes, just a craps roll, but even an 800 print to me is significant, as I am still net short this market, painful as it has been.

     

    Mish as another on corporate profits and wages here

  216. zeroxzero

     Phil / Your comment early today:" So many things can go horribly wrong…" 
     
    U.S. political stability and defensive capabilities are a U.S. asset that is alternately discounted and revalued depending on the geopolitical climate.  The geopolitical climate isn’t that good in Europe & MENA.  The U.S. is looking pretty cheap.  The Chinese are buying up Vancouver.  An Italian woman showed up in my neighborhood and bought four [!] not-inexpensive properties yesterday.  Your notion that much can go wrong and only extraordinary luck would avoid that is, IMHO, somewhat alarmist, which is not to say that it might not be true..
     
     I don’t argue with your facts.  I question whether cheap [in DXY terms] U.S. real estate, companies, or even employees are quite as undesirable as you portray to someone holding Euros worth 1.4X in dollars even without DSK cooling his heels in Rikers. And Emerging Market is a lovely term, but if you live in one, it would probably not be your first choice of words to describe it.  Dangerous, authoritarian, corrupt, underdeveloped — others come to mind.
     
    This is not a political point, but simply about how relative value is perceived from a foreigner’s standpoint. I think you will be surprised at how quickly the U.S. will revive economically once the dollar is seen to be reaching a bottom.  An initial influx of overseas investment, and any acceleration upward in the dollar, will likely feed on itself quite rapidly, and perhaps become a self-fulfilling prophecy.  There is nothing inevitable about the U.S. economic outcome going forward.

  217. pstas

    zeroxzero- remember, fear sells almost as well as sex.

  218. vic55

    Hey Pharm,
    After reading your posts for some time I see a lot commonalities between your vision of the markets and Bob Prechter.
    Am I right?

  219. Pharmboy

    vic – good to know I am in good company…..which I subscribed to ElliotWaves. :)

  220. kurtww

     Peter D – Thanks for the more detailed info. I am enjoying the stability and hands-off nature of IncomeTrader’s trades, but I have been hesitant to put a ton of capital at risk because of the lingering fear that it might go horribly wrong. I’m going to go back over your previous posts with the specific SPX numbers you mentioned earlier in mind. I like Income’s easy trades because I’m still learning, but there’s a lot of value long-term in understanding the trade fully. 

  221. dclark41

    flips:
    As a small business owner I can tell you that there can and does exist situations where a business may not be able to pass on additional costs such as taxes.  Your assumption only holds true when a business has pricing power. But what happens when a business operates without pricing power say in a highly commoditized business. I have seen businesses give up margin (excess hopefully) to pay the added burden because the market simply will not bear higher prices without negative consequences.
    For example. in the state of Michigan we had to deal with an ominous tax called the Michigan Business Tax formerly known as the Single Business Tax. Regardless of the name, no one including the state that imposed it could tell you exactly what it was for or how it was to be used.  This tax was increased significantly around 2008 by former Governor Granholm. Additionally, the tax was difficult to determine. It took us a full year to determine the net effect of the increase ($8000). Now, as you believe, we could have easily passed on this costs to our customers. But it isn’t always that easy in reality. We did eventually raise published prices, but the bulk of our business is won through a bidding process and I have yet to see winning bids come in at higher prices because of the tax increase. I guess if the tax was larger and applied equally a general increase in prices may result. But most of these taxes are not applied equally and are viewed differently by each and every business. Additionally, someone with double-digit margins may be more willing to eat the costs for a competitive advantage than someone operating with single-digit margins.
    The bottom line is that the market determines whether or not added expenses can be successfully passed on dollar for dollar. Businesses with pricing power and strong demand will have no problem passing on costs or eating the costs (if the increase is viewed as insignificant) to gain competitive advantage. But many will have to deal with a squeeze on their margins because their market won’t support any price increases without losing sales to a more desperate competitor.

  222. Phil

    Catalyst/DC – Sure, just the Dollar falling will do it.  Metals and oil are already coming back, if someone upgrades the Financials, you’ll have almost 50% of the S&P moving up at the same time.  All we can do is go with the flow.  I was re-reading today’s post and I realize that between the time I put in a title (before 8:30) and the time the market opened I had changed my mind from "Probably Down" to probably up as we saw the oil nonsense play out.  XOM did indeed go up 2% on the day so we should have bought it.  I wasn’t sure enough to call a morning trade and by 10:11 we ended up with a bullish DIA trade.  Unfortunately, that’s how we have to play it – whichever way the wind blows we go along for the ride.  

    Actually it’s funny, I FELT bearish all day but we had a the long DIA, the long IWM, DE, DOW, ACI and YRCW with USO, UUP, NFLX, QQQ and VIX plays on the bear side (with the early DIA put that never triggered as we held the line).  That’s pretty well balanced with the upside momentum plays done and the Qs still on).  No wonder I felt so busy!  

    And we Flips, are amazed by you!

    CLNE/Pharm – Well they sound good and are part of the Pickins Plan , which is why they are so overpriced at the moment but sales keep growing and costs are coming down so there just may be a business in there!  They do keep selling stock for money though and that’s a bit disturbing but a good portion of their money goes to Cap Ex and they seem to be building returns over time, which is the right model for this kind of company.  With a company like this (early stage, new sector), you have to look at the cap ($1Bn) and think about the likelihood of getting to at least $50M in earnings to justify the valuation but that seems doable for these guys if we assume they hit $300M in 2 years and drop 1/3 of the gains to the bottom line ($30M) then they’ll be right in the neighborhood.  I think it’s the kind of stock I’d want to be cautious with but not too cautious so maybe the 2013 $7.50/15 bull call spread at $3.60, selling the $10 puts for $1.80 for net $1.80 on the $7.50 spread with $2.80 in margin to make $5.70 if the stock gains 10% over 18 months.  

    RIMM/Hanna – I wouldn’t go too crazy, they have some serious issues as it’s not just AAPL kicking their asses – they are pretty much an also ran in phone and tablet at this point.  They are living off a rep and an installed base that made me like them enough to sell puts last week but I don’t see $65 in their future but maybe $55 over time.  

    NFLX/Flips – Congrats on that.  Maybe SODA tomorrow after the Cramerites test $55 – that one is just ridiculous – by the logic they use, all orange juice would be Tang and all iced tea would be instant.  The main selling point for them is the soda cans are SO heavy to carry from the store (because they’re really not much more expensive when on sale than making it with this system).  While it seems like fun and they can make sales – the sales require demos and that limits the mass market push to some extent and anyone can sell CO2 cartridges or soda packets so I’m not even sure how they are going to protect the "razor" part of their sale long-term.  Of course, if logic was enough reason to short a stock, OPEN would be at $45 so I think just a quick trade against SODA with their $1Bn market cap.  

    S&P 400/Pharm – Let’s hope not or this market will be a ghost town (not to mention the developed World).

    So far, we are not getting the move up in the Dollar I expected.  The BOJ is totally asleep at the wheel I guess as this was their best chance in a week to get the Dollar back to 82 Yen and the Nikkei certainly needs a push as they are death crossing below the 200 dma at 9,826.  

    UAL/DrMTV – I don’t like airlines with oil over $100. 

    Goldman/Lol – Wow, that’s 4 days in a row now they’ve said something major to boost the markets.  Things must be getting desperate…  Meanwhile, those guys flip-flop more than Cramer.  I love it when they site long-term macros like the trade deficit, which has been going on for years and is actually better, as their macro reason for shorting just a week after they were long.  Did an intern just discover the trade deficit and now it’s new information to GS?

    Goldman’s Thomas Stolper renews his call for dollar weakness, raising his estimate for the euro to $1.55 within a year. Until manufacturing picks up and the trade deficit comes more into balance, the path for the greenback will be lower. The main risk to his forecast: "asset weakness," i.e. the "risk off" trade would give the dollar a powerful bid. 

    Wrong/ZZ – Ah, you come up with a lot of interesting stuff!  How much should we take into account our ability to kick ass?  It didn’t do much for the Ruble, even back in the day.  China can nuke us out of existence but, more importantly, they can raise an army the size of our entire population – that would not go well..  I think it could be argued that both China and Russia are more stable politically than we are because we elect one guy and then 8 years later elect a guy who think the other guy is an idiot and then 8 years later we go the other way again and our Congress keeps changing all the laws from one extreme to another depending on who’s in power – if it wasn’t for the Corporations pulling the strings and holding the real power – this country would look less stable than one of those African nations who have a leader of the month.    

    Anyway, assuming the US is desirable and stable to an outsider, I don’t really like the logic that we are so screwed up we look like a bargain.  Rich people will always speculate on real estate but Japan buying our assets in the the 80s didn’t so much help us as it did screw them although I guess you can argue it freed up cash but there’s a difference between a little speculation and the mega-billion money drops the Japanese used to do.  Still, this is all part of that fortunate series of events that I’m worried about counting on – you say "Oh Phil, you forget real estate is so bad it’s good and our $1Tn a year spent on the military keeps our currency from being used as toilet paper" and those are just another couple of things that NEED to go right or this whole thing unravels pretty fast.  

    By the way, I’m not saying anything is inevitable but I am saying a lot can go wrong and that it’s a bad idea to be gung-ho bullish BECAUSE things CAN fall apart with a single misstep.  The job of the Fed is to guide those steps and make sure we don’t slip, no matter how tricky the path we have to walk so we can only pray that Benny and Timmy have covered all the angles – even Greenspan admits he made a few mistakes that sort of kind of destroyed our economy – oops.  

    America in 2025: still the world’s biggest economy, but net foreign ownership of U.S. assets jumps fivefold, and the rest of the world owns ~$13T more of U.S. assets than the the U.S. owns of the world’s. "We’re going to have a gong show." That what dollar depreciation and living large could do.

    The NAR reports foreigners accounted for about $82B of housing purchases in the 12 months up to March 2011, roughly 8% of total sales. Foreign buyers tend to buy on the higher end of the market and tend to pay all cash. The majority of realtors report activity tends to increase as the dollar falls.

    Speaking of our screwed up Government:  The apparent collapse of the so-called Gang of Six, the group of U.S. senators who have tried to craft a budget compromise, crushes the chances of a serious budget solution, Joe Weisenthal writes. If this moderate group who actually tried to thwart their own parties couldn’t do it, he says, "the odds of Obama, Boehner and the Tea Party agreeing to anything are officially 0%." 

    "Bond market vigilantes remain invisible," as 10-year Treasury yields recently slip back to just above 3% – further evidence refuting the onset of serious inflation. Tim Duy worries that Fed officials will learn the wrong lesson and "could pat themselves on the back for a job well done, rather than worry that [a] move toward tighter money was once again premature." 

    Expecting stocks to provide negligible returns over the coming decade, Robert Shiller is bullish on farmland, claiming it has and will continue to hold up because there is a limited supply. If real estate falls far enough and corn goes high enough, plows and backhoes will be sure to create more land supply.

    Could be seen as bullish:  Chrysler has lined up investors allowing it to pay off $7.5B in loans from the U.S. and Canadian governments. Details should be finalized by Thursday morning, but the company is set to receive $2.5B in bank loans and issue $3.5B in bonds, with Fiat (FIATY.PK) kicking in $1.3B. The deal will substantially lower the automaker’s interest costs. 

  223. dclark41

    hanna5:
    Did you catch this earlier? I liked your assessment from yesterday, but got cold feet after reading the article below from Phil.  What is your take after reading (short) article?
     
    "Research in Motion (RIMM +3.1%) moves higher after anupgrade from Bernstein, who believes current thinking reflects "the bleakest possible outlook for the company." RIM’s key product, e-mail, "has become a commodity," making any long position in the stock strictly "tactical."
    http://business.financialpost.com/2011/05/18/broken-brand-analyst-upgrades-rim-as-things-cant-get-any-worse-for-now/

  224. amatta

    Phil, 
    You had asked us to remind you to look at some put sales for June on the Income portfolio. 

  225. vic55

    Pharm,
    I do too. I was a subscriber to Financial Forecast for some time but dropped it about a year ago. Now I have only Prechter "Eliott Wave Theorist" monthly subscription. It is nice to have his bird side view even once a month.

  226. hanna5

     dclark/pharm : RIMM : Thanks! Yes, have had some good trades lately…. sure it’ll end soon ;) I was just looking at a NFLX short if it tests 250 again. That should end my good streak!

    I dont have any particular opinions on the long-term (2+ years) integrity of the brand Blackberry. They will need to make strides in terms of new products, software, etc to be viable. But, i think the market has basically doomed (and priced) them to failure already.

    They are a 23 billion dollar market cap now. They have 4.6 billion in EBITDA, which is dramatically increased in the past 2 years (2.8 billion --> 3.2 billion --> 4.6). Yet, you would think from the stock reaction that this company is dead. The only thing i am banking on is that this company is CHEAP (and so a good risk/reward), oversold….and just maybe, slow to change but not dead. If the former is the case, i think the stock could bounce to the mid 50s-60 by August. If the later is the case (rumors now of 250k first month playbook sales), and the company recovers or has a new product (or great playbook sales), i dont see why we couldnt see 70 by the end of the year.

    And, we have the benefit of liquid options, and not so many call buyers so premium that seems reasonable. And, we have a defined place to trade against…. i.e plan to close the trade if it closes and sustains a price under 42.50.

  227. zeroxzero

     Phil: GS is lowering its three-month dollar estimate to 1.45 from 1.40 vs. the Euro, 1.50 in six months and 1.55 in 12 months.  London-based Thomas Stolper of GS agrees that the U.S. is not as attractive as I might personally tend to believe — although he leaves EuroMENA turmoil out of his calculus:
     
     “For the dollar to stabilize or even to rally, investors need to be convinced of the case for additional long-term investments in the U.S.,” the analysts wrote. “With unemployment still high, fiscal consolidation looming and continued weakness in the real estate sector, the growth outlook remains less compelling in the U.S. than in many other regions or countries.”
     
    He doesn’t mention QE3, but I think it is safe to say that a 1.55 dollar rests on that assumption.

  228. zeroxzero

     Correction:  "Stolper argues…"

  229. lapper

    what’s the matter Phil, got to old to be up at 3 two nights in a row?

  230. Phil

    Good morning!

    Dollar’s back at 75.62 after being knocked down to 75.3 around midnight.  Might just be the 3am move to prop up the Nikkei (Japan GDP was -3.7%) and may reverse now as GS is banging the drums in Europe to short the Dollar.  Keep in mind Japan’s quake was on the 11th so, to some extent, they have an excuse but 3.7% is down A LOT – it doesn’t seem like Japan was exactly healthy ahead of the quake either but, as with TM, it’s a great all-purpose excuse.   Don’t forget Q1 was down 0.9% anyway so this is officially a recession for Japan and they aren’t "fixed" this Q either.  

    "Experts" had predicted a 2.2% drop in Japan’s GDP and I continue to be stunned by how wrong these people can be when their entire job is to look over the numbers and make an estimate.  It’s not like they don’t get to revise it up to the last minute…     

    Oil (July is now current contract) is $100.35 and we held $100 all night, gold is $1,491 and we tested $1,490, silver just blew $35 and oops, just got it back and oops, just blew it.  Copper is $4.0825, gasoline back to $2.95 but not feeling the long today and nat gas is $4.178 with inventories at 10:30 and they should be good as we are getting into pool heating season.  

    The Euro is $1.423, barely budging from yesterday despite Goldman’s endorsement.  The Pound is $1.614 and a Buck gets you 81.87 Yen, about 0.17 up from yesterday.  Makes you wonder what it would actually take for the Yen to drop, right?  

    Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    10:00 Existing Home Sales
    10:00 Leading Indicators
    10:00 Philly Fed Business Outlook
    10:30 EIA Natural Gas Inventory
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

    Notable earnings Before Thursday’s open: GMEMFMPEL,ROSTWSM 

     Notable earnings After Thursday’s close: ADSKAROARUN,BRCDCRMFLGPSINTU 

    Dominique Strauss-Kahn resigns from the IMF, but still vigorously defends his innocence. Deputy Director John Lipsky will take over as IMF chief until a permanent replacement is found.

    Put sales/Amatta – I think we had one yesterday but I got disinterested because I thought the rally was a bit fake.  We don’t want to force something just because of a date but do remind me to take a look later, especially if we get a move down and the VIX moves up (making it more attractive for us to sell something). 

    Good attitude Hanna!  Sometimes we get in a zone and we see things clearly – sometimes we don’t.  Learning that about ourselves stops us from making mistakes when we’re not as sure.  On RIMM, I think the death of PALM is weighing heavily on investors’ minds – probably a lot of fund managers who used to like PALM switched to RIMM and are now reliving a nightmare.  I went through that with MOT – I loved the company, loved the management and figured that, if they came out with the Razr (coolest phone ever at the time with IPhone-like sales), then they HAD to have another trick up their sleeves.  Turns out they didn’t…  

    GS/ZZ – We talked about that earlier.  This is how GS pumps their commodity pick (and stocks) from earlier in the week.  Not that his range is any great stretch as the Euro was $149.40 at the beginning of the month but I think the Dollar is done with 73.  We’ll see how the Euro handles the 50 dma at 1.43 – if they can’t bust that with Goldman’s backing (for a currency, that’s a big-money move they are predicting), then GS are the pack of manipulative jackasses we assume them to be and this currency statement is nothing more than a manipulative fraud aimed at trying to maintain commodity pricing.   

    Yay – here comes the Dollar!  75.67 – go Bucky, go!!!   That finally got oil under $100 (4:50) and a nice line to short the futures, of course….

    Ah ha Lapper – I’m up, just writing and researching….

  231. Phil

    I’m usually up around 4 unless I go out late the night before.  If I think things are going to be interesting, I tend to wake up earlier (no alarm, I just don’t sleep much).  Although I love my IPad, I can’t really "see" what’s going on until I get to my little command center with my TV and all my screens.  I have 8 full-page windows open as I write this plus the TV (2 TVs actually, the one in the kitchen is on Bloomberg and the one at my desk is on CNBC) so, once I wake up and wonder what’s going on – it’s hard for me not to get up and go to my office….

    Dollar with a normal rejection at 75.70, now 75.65 but they need to take back 75.75 today to show strength.  If I were an EU investor, I would be lightening up on Yen and moving to Dollars, or at least the Aussie or Canadian versions but I think both of those are a bit high now and a bit dependent on commodities and both have housing price issues so that brings me back to the US Dollar – yes it sucks but not as badly as everything else!  

  232. Phil

     From Barry:  

    The Economic Collapse has put together a stupendous list of 20 startling facts about the US housing market:

    1. According to Zillow, 28.4% of all single-family homes with a mortgage in the United States are now underwater.

    2. Zillow has announced that the average price of a home in the U.S. is about 8% lower than it was a year ago;

    3. U.S. home prices have now fallen a whopping 33% from where they were at during the peak of the housing bubble.4. During the first quarter of 2011, home values declined at the fastest ratesince late 2008.

    5. According to Zillow, more than 55% of all single-family homes with a mortgage in Atlanta have negative equity and more than 68% of all single-family homes with a mortgage in Phoenix have negative equity.

    6. U.S. home values have fallen an astounding 6.3 trillion dollars since the housing crisis first began.

    7. In February, U.S. housing starts experienced their largest decline in 27 years.

    8. New home sales in the United States are now down 80% from the peak in July 2005.

    9. Historically, the percentage of residential mortgages in foreclosure in the United States has tended to hover between 1 and 1.5 percent. Today, it is up around 4.5 percent.

    10. According to RealtyTrac, foreclosure filings in the United States are projected to increase by another 20 percent in 2011.

    11. It is estimated that 25% of all mortgages in Miami-Dade County are “in serious distress and headed for either foreclosure or short sale“.

    12. Two years ago, the average U.S. homeowner that was being foreclosed upon had not made a mortgage payment in 11 months. Today, the average U.S. homeowner that is being foreclosed upon has not made a mortgage payment in 17 months.

    13. Sales of foreclosed homes now represent an all-time record 23.7% of the market.

    14. 4.5 million home loans are now either in some stage of foreclosure or are at least 90 days delinquent.

    15. According to the Mortgage Bankers Association, at least 8 million Americans are currently at least one month behind on their mortgage payments.

    16. In September 2008, 33% of Americans knew someone who had been foreclosed upon or who was facing the threat of foreclosure. Today that number has risen to 48 percent.

    17. During the first quarter of 2011, less new homes were sold in the U.S. than in any three month period ever recorded.

    18According to a recent census report, 13% of all homes in the United States are currently sitting empty.

    19. In 1996, 89% of Americans believed that it was better to own a home than to rent one. Today that number has fallen to 63 percent.

    20. According to Zillow, the United States has been in a “housing recession” for 57 straight monthswithout an end in sight.

    Source: The Economic Collapse: :”Don’t Buy A House In 2011 Before You Read These 20 Wacky Statistics About The U.S. Real Estate Crisis

  233. Phil

    Very good article: "Some Simple Deficit Reduction Arithmetic" – someone should save this for the Wiki

    pyramid

    Apple IPad’s ‘Buzz Saw’ Success Cuts PC Sales at HP, Dell (Bloomberg)

    Corn, Soybeans, Wheat Futures Soar as U.S. Planting Delays Threaten YieldsCorn futures rose the most in six weeks, wheat had the biggest gain in two months, and soybean and rice prices surged as adverse weather from North Dakota to Louisiana to Europe threatened to erode crop production

    Levin in ‘Real Hope’ of Fresh Goldman(GS) Probe. Carl Levin, chairman of the U.S. Senate Permanent Subcommittee on Investigations, said there’s "real hope" law enforcement authorities would follow up his panel’s report, which accused Goldman Sachs Group Inc.(GS) of misleading clients, citing an interview with Levin.

    Greek Debt Talks Cast Doubt Over Sovereign CDSIn one sense, Greece may be about to get its revenge on the speculators blamed by politicians for exacerbating the country’s debt crisis. If eurozone leaders press ahead with plans to extend Greek bond maturities in a “soft” or voluntary debt restructuring, then traders in credit default swaps could be one of the main casualties.

    IMF Tells Greece to Stop Dragging Its Heels Over ReformThe International Monetary Fund has told Greece to step up its efforts to sort out its finances in the most stern warning yet from the bailed-out nation’s rescuer. The Washington-based lender is worried the country will not meet the deficit-cutting targets agreed as part of its €110bn (£97bn) IMF/EU aid package. "The view that seems to be taking hold is that the government programme is not working," said Poul Thomsen, head of the IMF mission currently in Greece to measure the country’s progress towards tax and spending goals. "The programme will not remain on track without a determined re-invigoration of structural reforms in the coming months," he told an Athens conference. "Unless we see this invigoration, I think the programme will run off track."

  234. Phil

    Last day of June contract and they have cut it down to 69Mb – notice how the fun begins again in July, where they pretend to want 408Mb but, by the last day, will order only 30Mb at most.  Still 69Mb seems heavy for the last day of trading – I can’t imagine traders actually want to get stuck with $100 barrels of oil next month so they have a lot of selling left to do on QMM11.  Fortunately, they are knocking the dollar back down, right on schedule and that’s keeping the prices up so they can get their rolls.  Hope springs eternal with summer driving season kicking off in 2 weeks.  

    Month 
    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jun 11 99.76 100.56 99.39 99.76 May 19, 05:40
    -
    -0.34 9170   100.10 69390   Call Put 
    Jul 11 100.23 100.99 99.83 100.22 May 19, 05:40
    -
    -0.34 18026   100.56 408953   Call Put 
    Aug 11 100.57 101.29 100.17 100.53 May 19, 05:40
    -
    -0.36 1396   100.89 89836   Call Put 
    Sep 11 100.84 101.38 100.50 100.75 May 19, 05:40
    -
    -0.41 498   101.16 90249   Call Put 

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