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Thursday Thought – Don’t Tax Oil Companies – Nationalize Them!

I would like to report a crime

Yesterday, $112M was stolen from US consumers.  It will happen again today and probably tomorrow and that is on top of the $800 Million PER DAY that is being overcharged by oil companies in America alone, ACCORDING TO EXXON’S CEO.  

That’s right, Rex Tillerson himself just testified to Congress that "based purely on supply and demand- should be in the $60 to $70 a barrel range." The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds.

Other disclosures were made in last week’s testimony that may interest you:  

  • The average cost of producing 1 barrel of oil was $11 (THAT IS ELEVEN, NOT A TYPO!); the average price of the oil in the marketplace–$92– some 8.5 times the cost of getting the oil out of the ground.
  • The profits for the big 6 oil companies was $36 billion in the year’s first quarter. A large part of the $36 billion was used to buyback shares or pay dividends to shareholders.
  • The deduction for intangible drilling expenses was given to the oil industry in 1960 when a barrel was worth about $15-17. So, why do they need this favor when oil is $100 a barrel?  

Clearly there is no shortage of oil, the US has 1.75Bn barrels of oil in storage, enough to offset 186 days of imports (9.4Mbd) and 60% of those imports come from Canada and Mexico, not OPEC so our 1,750 MILLION barrels of storage would offset over 500 days worth of imports from the Middle East and Africa – even if it was TOTALLY cut off.  

Florida GOP Lawmakers Live For Big Oil ImageNonetheless, oil shot up from $95 on Tuesday to $101 this morning, costing US consumers an additional $112M per day but that’s an UNDERSTATEMENT – when we buy gasoline at $4, we are paying $168 for a 42-gallon barrel and, of course, rising oil prices also impact our home energy bills and even our food.  The cost, in fact is more like $250M PER DAY per $5 increase in oil – and that is just for the US.   Globally we’re over $1 Billion per day that is removed from consumer’s pockets for each $5 over that $60-70 range that the CEO of Exxon says (under oath) is the correct price of oil.

Fortunately for Mr. Tillerson, I wasn’t a US Senator because I might have said "Gee Rex, you own the reserves, you build the wells, you own the refineries and you own the gas stations – it’s nice to blame HFT Bots and Hedge Funds but have you looked in the gold-plated mirror of your 1,500 square foot bathroom lately?"  There used to be such a concept, under Capitalism, of an excess profits tax as well as a windfall profits tax – Big Oil’s situation is a little of both but it’s also something far more sinister – it’s market manipulation!  

Oil jumped yesterday, as it often does, on a draw-down in oil inventories which Criminal Narrators Boosting Crude play off as an indication that demand is picking up.  This could not be further from truth!  What CNBC, the WSJ or any kind of real journalist COULD do, in roughly 30 seconds, is LOOK at the ACTUAL EIA Report.  Doing that, they would see that the net drawdown of 100,000 barrels (yes, really, 100,000 barrels is what’s now causing us to pay another $112M a day, which happens to be enough money to buy another 1.1M barrels PER DAY – are you not outraged by this?) was caused by Net Imports of crude dropping from 10.62Mbd last year to 9.42Mbd this year.  

Perhaps it would take more than 30 seconds to have teams from MIT and Harvard pour over this data but, if they did, they would eventually discover that the reason our inventories are down 100,000 barrels in a week is not because demand increased but because they are shipping us 1.2 Million barrels per day LESS than last year EACH DAY or (and here’s where the MIT guys really come in handy) 8.4 MILLION barrels a week less oil.

That is (and I cannot emphasize this point enough) 8.4 Million barrels LESS oil PER WEEK (11.3%) being imported than this time last year, WHEN OIL WAS $67.15.  $67.15 is, of course, right in Mr. Tillerson’s sweet spot, the other $34 a barrel IS YOU BEING RIPPED OFF.  When I say you – I mean you, me and every other US and Global citizen who consume 88 Million barrels of oil per day.  That is an overcharge of $3Bn PER DAY or over $1Tn per year – JUST FOR THE OIL.  Add in refining costs, home energy costs, food costs and other items and we are talking about a $2.5Tn global rip-off (See "Goldman’s Global Oil Scam Passes the 50 Madoff Mark!" as well as "Fake-Out Thursday – Oil Scam Continues Unabated")  

While we in the top 10% may not care much whether a gallon of gasoline is $2 or $4 or whether our home electric bill is $300 or $500 or whether a bag of groceries is $100 or $200 – those of us in the business of selling something to consumers other than oil should be outraged!  Those are OUR customers that are being robbed!  That is $2.5Tn of precious discretionary spending money that they could be giving to US instead of burning it up in our customers’ gas tanks. 

What we need to do is organize EVERY OTHER business into a lobby to put a stop to this outrage.  We are being impacted by this every day – not just in what we pay for oil-related products in our business and personal lives but the energy sector is sucking $2.5 TRILLION dollars out of our customer’s pockets every year.  

That would be as much money as ALL US Corporations reported in profits last year and, if you take out the $1Tn of profits in the energy sector and $800Bn of profits in the financial sector (their partners in crime) – that leaves only $700Bn in profits for the rest of us.  So, to be clear – that money is being stolen from every business owner in America because if they steal it from our clients at the gas station – they don’t have it to spend when they walk into our stores!

The effect on GDP is even worse because that money is being removed from the bottom of the chain and being spent on a consumable item of no lasting value (we literally burn it up as soon as we buy it).  Had my customer not spent $60 for a tank of gas, they might have spent $49 for my newsletter (you can subscribe here) and then I might have taken that $49 and gone out for pizza and Kim, my waitress would have had $5 more to spend tomorrow at the club and Mina, the owner, would have had $30 to buy some more bread and the baker would have had $20 to buy some wheat and flower and maybe go out for some pizza himself.  OR – my customer could have burned that $45 driving back and forth to work.  What do you think is better for our nation’s economy?  

High oil prices give us trade imbalances, they weaken the dollar by flooding the World with them as we exchange them for oil at the rate of $1.8Bn per day or $657Bn per year.  That is the ENTIRE GDP of of Turkey, which is the 17th largest economy in the World and, keep in mind, that is just 40% of what the oil ultimately costs us as it pushes through to other items we use every day.  Now my business is global so I look at the US consuming just 1/5th of the World’s total and I want to cry.  $3.2 Trillion a year spent on oil alone!  That’s 65 Million newsletter subscriptions!  That’s right, I’m a Capitalist so I worry about how things affect me – even when they are global tragedies that are causing hundreds millions of people to live in poverty so one man can have a 1,500 square-foot bathroom (allegedly).   

And, by the way, if you think giving $45 to the gas station puts money into the economy, you could not be more wrong.  The local gas station makes very little on each transaction (it’s a volume business, that’s why they sell food) and half of that money goes directly overseas to pay for our imports and the other half goes to Exxon or whatever big oil company owns your gas station or supplies it.  

Now, if you have a business that makes gold-plated mirrors for executive bathrooms (with the cool TV screens behind the glass) – you will be thrilled or, if you are Exxon stock you will be thrilled because XOM bought $19Bn of their own stock back in 2009 (it was a rough year for all of us) and paid out $8Bn in dividends but what they didn’t pay was one penny of US taxes on $310Bn in sales.  

That’s right, although XOM paid $34.7Bn in taxes in 2009, that was only paid to foreign governments who know how to collect money from Big Corporations – the United States Government is either too stupid or too corrupt to tax corporations properly so a company like Exxon can do 65% of their business in the US and make 70% of their profits in the US but pay no taxes in the US.  Oh, sorry, I forgot to mention – AND WE PAY THEM SUBSIDIES – so they can pollute our air and our water (anyone in Alaska or the Gulf may know what that means) and use our roads and our electrical grid and our police protection locally and our military protection globally ($1Tn a year for US to keep that up to protect Exxon’s interests overseas) and we educate their employees and we fund their retirement so Exxon doesn’t have to and XOM gives us – NOTHING.  Sorry, not nothing, they do give us a $300Bn bill for their service.  

Although I am making this a free post and encourage you to send it (and "like it" in Facebook and Twitter it and whatever) – to people to make them aware of this scam - including your Congresspeople and especially those turncoat Democrats who refused to vote against oil subsidies on Tuesday - I am not saying that any change in policy is going to help.  This situation is too far gone, the energy industry has it’s hooks too deeply in our politicians and they have WAY too much control over our daily lives.  That means the logical thing to do, when faced with an out-of-control vital service that is gouging consumers and damaging our economy, our environment and working against our national interests – is to NATIONALIZE THEM.  

That’s right, we HAVE TO Nationalize the energy industry.  Oil should no more be a profit center than water (and they are trying to privatize water, so soon you will know what a gallon of that costs too!) or air.  It is necessary (some form of energy) for life in the modern World and that is why these greedy, bloated, corrupt organizations are able to hijack our economy and siphon of 50% of the planet’s disposable income in order to mark up a barrel of oil (according to Exxon’s own CEO) 850% and that ends up being 1,360% at the pump.  

Clearly the current situation does not lead to oil companies developing safer, cleaner, renewable means of energy – they’ve had 100 years to do it and we’re still using oil.  In fact, their massive profits lead them to undermine those developments when they occur and to lobby against sensible measures like conservation or pollution controls.  The oil scam is just too damned profitable and the money is too corrupting so, if the American people want to stop losing this game day in and day out – WE HAVE TO END THE GAME!  

While the Big 6 oil companies may claim not to have a monopoly, they clearly have an oligopoly and prevention of a monopoly is the strongest argument in favor of nationalization of an industry.  Clearly there is no price competition when Tillerson admits he can pull a barrel of oil out of the ground for an average of $11 but, by the time it gets to the refiner’s door – it costs $101!  Sure, you have to put it in the barrel and you have to drive the barrel to the refiner (or ship it from overseas) but that’s about it.  To claim that "speculators" are entirely responsible for the $90 mark-up is obvious BS.  

Meanwhile, back to business.  We are, of course, speculators (indirectly) in the energy market.  I called a top yesterday at $99 and, so far, so wrong but we are just making short-term covers on our long bets because – until someone does put a stop to these criminals – the scam WILL continue.   

Back in December, I wrote a post (available to all subscribers on Christmas Day) called "Secret Santa’s Inflation Hedges for 2011" and, in that post I said:  

Gasoline prices are once again creeping up and, if you are the average family, you buy about 1,000 gallons of gas per year ($2,500) and spend another $1,500 heating your home.  That’s $4,000 a year spent on energy and it’s already up over $1,000 from last year – pretty annoying, right?  

XLE is the ETF for the energy market and it’s currently trading at $67.41.  If you want to guard against another $1,000 increase in the price of fuel next year, you can, very simply buy 2 Jan 2012 $55/60 bull call spreads for $2.60 ($520) and offset that cost with the sale of 1 2013 $50 put for $4 ($400) for a total outlay of $120.  If XLE simply maintains $60 for the year (11% lower), you make $880 (733%). 

We’re only in May but XLE is already at $74 and the Jan $55/60 bull call spread is now $4.40 ($880) and the 2013 $50 put is down to $2.60 ($260) for net $620 – already up 416% and, more importantly, up $500 on the $120 investment so far, with another $380 expected if we let this trade play out.  These ridiculous, out-sized returns on speculation are why the investing class does not give a crap about the suffering inflicted on the bottom 90% by higher energy prices.  We don’t just buy 2 contracts, we buy 200 and we make enough money to buy a yacht and put 1,000 gallons into it for a weekend cruise.  That increases demand and makes the little people pay even more money for fuel and WE MAKE EVEN MORE MONEY -Muhahaha!  

If this seems fair to you – then congratulations, you are "one of us" but, if you have no way of taking an XLE bull call spread offset by selling 2013 puts short – then you are the guy whose pockets XOM(and we own them too) is reaching into and stealing the money from on our behalf.  Where do you think that $500 profit came from – it came right out of your wallet at the pump!  As I said, it came out of mine too and, since you are reading this, then you are either a customer of mine or a potential customer so I will either teach you how to play so you can profit from the oil scam or I will (and this I feel better about) tell you what needs to be done to put a stop to this obscenity.  

Don’t worry about us, we’ll make money whether oil goes up or down but let’s all worry about our country and our planet, which has been taken over by bankers and commodity pushers, who have organized against us to take every penny out of our pockets they can get their hands on.  If all you do is read this and feel mildly upset – then you are just a mark but the worst kind of mark – the kind who comes back to the con again and again and again until you have nothing left to lose.  I don’t mind if you make that choice as an individual – but it’s high time we stood up as a country and said – NO MORE!  

Please – send this around – let’s get a conversation going and make this an election-year issue.  It has to stop….

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  1. vic55

    Interesting article!!
     
    Think prices are high? Just wait’til summer

    Read more: http://www.nypost.com/p/news/business/think_prices_are_high_just_wait_e8UQsYRLzapNcvWe0cgEIO#ixzz1MnjnA6QL

    In a phone conversation I had soon after a 0.4 percent increase in consumer prices for April was announced last week, this expert — who I can’t name — confirmed that the CPI is again understating energy prices.
    And, again, the computers at the Bureau of Labor Statistics, which collect this data, will correct that mistake in the next few months. ….

  2. BertII

    Phil Are we shorting Oil at 100 or 101 today if the Dollar cooperates

  3. Pharmboy

    PP for today.

    There isn’t anything bearish about the recent price action by the /DX since our last analysis in the 05/13/11 issue of the ShadowTraderPro Swing Trader. Yes, price has pulled back lower off the 50.0% level of the Fibonacci extension study, but so far it has moved lower in a flagging type pattern as opposed the large red bodied reversals we have come to know this year (orange circles). From this perspective, it appears the DX is setting up for another attempt to break the 50.0% level.

    Price action of the /DX is important for traders to stay abreast of because it does influence the movement of stocks. A move back higher by the Dollar will take steam out of the stock market’s attempt to move through overhead resistance and reach new highs, while a follow through lower by the Dollar means a higher probability of price appreciation in stocks.

  4. morxlntway

    how exactly does one send the article? Just copy the link and paste in the email? They won’t get stopped at the gate? Would it be  more used if you had articles re economy and politics and the like copied on a blog for people who say, "i’m not interested in stock stuff" and skip over it? Maybe a catchy title like Phi’s Consumer Concerns or News for the Average American…

  5. rpme

    Phil, anything in mind to sell and offset the 200 Jan IYR puts we have?

  6. angelcur

    phil isnt that number 845000 b less a week not 8.45 million less y/y?

  7. JRW III

    Good morning,

     

    IWM    84.98,  84.38,  84.06,  83.73,  83.46,  82.96,  82.61  (and only $2 Bill of POMO)  !!

    Gap up is NOT enough this morning to get over resistance at 1345ish on the S&P, so I’ll be shorting (unless there is a major Buy Program); here’s a chart:

    Courtesy of S Jack

  8. angelcur

    nope youre right i was looking at imports

  9. angelcur

    assumming weeekly is calculated on 7 days not 5

  10. rustle123

    Steve Liesman is the real life version of Kevin from "The Office".  I guess every entertainment show like CNBC needs their comic foil.

  11. jabobeast

    Phil--which direction do you think we see in the markets today?

  12. alik

    Hello Phil, would you recommend selling my position in INTC (on GS downgrade)? Thanks.

  13. rustle123

    Phil, are you looking at 12700 or 12750 levels before buying DIA puts again?

  14. topher7

    pharm…  TLT.. ..  scooped some june 91 puts yest..   93 still a target ?

  15. JRW III

    Phil,

    From Zack’s, sounds like CNBC !!

    1)        Why did the market bounce continue on Wednesday? Because the
    reasons for its recent decline are ridiculous. Plain and simple
    the economy is expanding. Corporate earnings are exceeding
    expectations. The Fed is still accommodative. And valuations are
    reasonable. All other concepts are noise and nonsense. 

    2)        Will stocks continue to go higher? In the short run…that
    is anyone’s guess. This bounce may have a little more legs. But
    I still think volatility is the name of the game this summer.
    Looking out to years end we will likely press to new highs above
    Dow 13,000. When that sustained move takes place is a mystery.
    So don’t try and solve it. Just stay invested.

     

  16. Pharmboy

    topher….yes.

  17. Pharmboy

    SPPI – buying stock here.

  18. jvest

     FAS May $28 short calls in the red. What’s your recommended roll?

  19. matt1966

    Wholy $hit.  WTF?

  20. bobhu

    Phil, what’s your take on RUT at short(1-3 mons) term?  Thanks.

  21. gmarts

    Bad Housing Sales data. Surprised?

  22. matt1966

    Well blow me down and tickle my a$$ with a feather!  I AM suprised!  But not by what you think-  I just passed my first test.  I BTFD!!

  23. hanna5

     Anyone see LNKD! LOL. Up $45 after IPO to almost $90. 

    Meanwhile, selling some MGM and GLUU on this run-up, and buying some more RIMM August calls on the pullback.

  24. flipspiceland

    @Vic55
    You don’t want to post or even mention anything about corporations raising prices dramatically here.  This is a Tax Corporations only Zone.
    Short WOR.

  25. matt1966

    This market it sooo fake.  I mean really.  Who the hell can get there information EXACTLY at 10am, decide to buy, sell or hold and then take action on it ALL within 1 minute?  Cuz by 10:01 then selling stopped.
    Besides, the LinkenIn IPO just started and its rocketing up!!!!!!!!!!!!!    Ohh…. my head is starting to hurt.  I realy can’t buy into this FAKE, FAKE market. 

  26. JRW III

    The Waiting may finally be over !!

    0518-surreal

  27. kustomz

    JRW …hysterical

  28. Pharmboy

    flip – come’on man.  It is dead.

    JRW – LOL.  Saw that yesterday on Slope. Too funny.

  29. gmarts

    LNKD…. "Give them bread and circuses"

  30. matt1966

    Group vote:  Is there ANYWAY they can get this donkey show back up passed today’s highs?  TNA and FAS, to name a few, were perfectly at the top end of their downward sloping trendlines when that ‘news’ came out.  I just don’t see how.  But I’ve been made the fool too many times to go all in short.  Like JRW mentioned yesterday, it’s a ‘brave’ new world we trade in. 

  31. gmarts

    Then smack ‘em with housing sales data reality while they’re eating popcorn and watching the dancing bears…

  32. willsons

     JRW     You occassionally buy long term puts on iwm.  Any thots or recommendations?

  33. tuscadog

    Phil / Blood pressure     How do you keep your blood pressure down dealing with all this bs.  FCS how can this housing data be a surprise?  The consumer is between a rock and a hard place with no way out, declining equity and negative equity, no jobs, eliminated pensions, state and local cut backs, massive personal debts, a 5 year supply of residential and commercial construction.  Liesman talks about demographics!  FCS the only population growth is uneducated illegal immigrants and poor minorities – how the hell are they going to buy a house on minimum wage without a 100% mortgage?
    Construction was such a massive driver of our economy I just don’t see how we avoid a DD without major fiscal, mercantilist and structural intitiatives from Congress and Boehner is not going to let that happen.  So, when do you see these cheats finally confirming that we are DDipping?  And that is probably the tipping point for this fake mkt.  Mind you they’ve lied about the real unemployment problem for years, so we have to assume they’ll continue to put lipstick on this pig, like they do with the inflation #’s.  Sorry but I’m getting pssed with all this BS.

  34. Phil

    Good morning! 

    Very important main post today - please Email it to others or post it in other places.  

    Once again they take the Dollar up into the open (while holding thinly-traded pre-markets higher) in order to jam it back down after the bell and give the active market a push higher.  This was easy to do yesterday because we had a natural bounce that gave us upward momentum anyway but I’m not sure how much higher we can go as a lot of people who bought yesterday found they were unable to sell into the close without sending prices down pretty fast.  

    Also, it’s kind of hard to keep the Dollar down, despite Goldman’s best efforts to dis it and it’s also hard to keep oil over $100 because people simply can’t afford it (which is why I do not have a new suggestion for a bullish oil hedge at this time).  

    It’s all about the 75.50 line holding on the Dollar.  As long as that holds, I don’t think we have much further to go but – on the other hand – if we hold these levels, we REALLY have to stop thinking and just go with the flow.  Thinking is your enemy in a technical market – especially one that is fueled by endless supplies of free money AND a declining currency and a Transport sector that goes UP while oil goes up (total madness).   Transports are now up 3.5% in two days as oil goes up 6.5% – as I’ve said before – those planes must MAKE fuel when they fly to justify these moves!  

    Note on the chart we are already up for the major test at our 4% levels of Dow 12,688, S&P 1,365, Nas 2,877, NYSE 8,487(2.5% for them and they’ve been lagging all month) and RUT 845.  Crossing those back means that dip was nothing more than a blip in a bullish run that should be ignored and failing to cross those only means we are consolidating for a run up unless and until we fail our 2.5% lines again.  

    Before someone asks – we have to cross at least ONE of those 4% lines before I feel like making bullish bets again.  None of the fundamentals that led us to SUCCESSFULLY shorting the market at the end of April have changed and it was high commodity prices that triggered our more bearish calls in the first place so repeating they cycle does not get a different reaction 3 weeks later.  

    The Nasdaq is thrilled that Linked In is having an IPO.  I’m on Linked In but I don’t know why, it seems pretty useless to me but, then again, so does Groupon, OPEN, NFLX, SODA – it’s a new dot.com boom on the Nasdaq and this party will probably end as badly as the last but that doesn’t mean we can’t join in and have some drinks and perhaps even get laid before the sanity police show up and the whole party comes crashing down.  

    So, generally, it’s a frustrating watch and wait but the general plan is we want to roll and add to our puts on the test of the 4% lines but then we have to be ready to flip long once we cross them as we’re very likely to get back to 5% (where we’d probably want some more shorts) and then go mega-long if we punch over those 5% lines.  I very much doubt this will happen but I promise to smash my head repeatedly until I am babbling BUYBUYBUY and we can start scooping some crap up at ridiculous prices in hopes it gets to even more ridiculous prices down the road – how’s that for a plan?  

    Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    8:30 Fed’s Dudley: Economic Outlook
    10:00 Existing Home Sales
    10:00 Leading Indicators
    10:00 Philly Fed Business Outlook
    10:30 EIA Natural Gas Inventory
    12:00 PM Fed’s Dudley: Economic Outlook
    1:30 PM Fed’s Fisher: ‘Federal Reserve Functions and Economic Update’
    1:40 PM Fed’s Evans: ‘Economic conditions and monetary policy’
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

    Notable earnings before Thursday’s open: GMEMFMPEL,ROSTSHLDWSM 

    Notable earnings after Thursday’s close: ADSKAROARUN,BRCDCRMFLGPSINTU

    At the open: Dow +0.21% to 12587. S&P +0.2% to 1343. Nasdaq +0.32% to 2824.
    Treasurys: 30-year -0.7%. 10-yr -0.45%. 5-yr -0.31%.
    Commodities: Crude -0.21% to $100.35. Gold -0.46% to $1488.90.
    Currencies: Euro -0.06% vs. dollar. Yen -0.73%. Pound +0.04%.

    10:00 AM On the hour: Dow +0.48%. 10-yr -0.38%. Euro +0.12% vs. dollar. Crude +0.14% to $100.70. Gold -0.26% to $1491.90.

    Initial Jobless Claims: -29K to 409K vs. 425K consensus. Continuing claims -81K to 3.711M.

    Apr. Leading Indicators: Leading Index -0.3% vs. 0% expected, +0.4% prior. Coincident Index +0.1% vs. +0.2% prior. Lagging Index +0.5% vs. +0.4% prior.

    Apr. Existing Home Sales: -0.8% to 5.05M vs. 5.23M expected, 5.09M prior (revised). Inventory of unsold homes +9.9% to 3.87M; months supply 9.2. Median sales price -5% Y/Y to $163,700. "Unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations," NAR’s Lawrence Yun says.

    WOW – This SUCKS!   May Philly Fed Business Outlook: 3.9 vs. 18 expected and 18.5 prior.

    Wheat prices jumped 7% to $8.17/bushel Wednesday and are up 91% in less than a year, an ascent that threatens to escalate pressure on fragile Middle East governments that import the grain and pass it along at deep discounts to feed their people. Countries such as Tunisia, Egypt and Algeria are among the world’s largest wheat consumers.

    Wheat’s march back towards early 2011 highs near $9/bushel is aided by ongoing drought in Europe, causing repeated cuts in production forecasts. With stocks of all grains near record lows, a weather event could trigger an explosive move this year. JJG +8.0% this week.

    The impact of rising oil prices on the global economic recovery is cause for ‘serious concern,’ says the IEA, as oil’s rise is widening global imbalances, reducing household and business income, and putting upward pressure on inflation and interest rates. Crude -0.3% to $99.77.

    U.K. consumer confidence falls in April from 45 to near a record low of 43. A flatlining economy, and no wage growth with near 5% inflation tends to sap citizen’s exuberance. Consumers also expect continued housing price declines over the next 6 months.

     Lost in the debate over the effect of the end of QEII and when the Fed might raise rates is the growing likelihood of QEIII, writes Scott Minerd. Likely fiscal tightening in 2012 and the break in commodity prices will give Bernanke the political cover to continue pumping the money supply. QE might just be getting started.

    Top 10% Company:  Williams-Sonoma (WSM): Q1 EPS of $0.30 beats by $0.02. Revenue of $771M (+7.4% Y/Y) beats by $5.6M. (PRWilliams-Sonoma (WSM) reaffirms Q2 EPS guidance of $0.33-0.36, and raises FY’11 EPS guidance to $2.13-2.21 vs. $1.95 last year. 

    Bottom 90% Company:  Sears (SHLD): FQ1 EPS of -$1.58 misses by $0.17; adjusted loss of $1.39/share. Revenue of $9.7B (-3.4%) misses by $0.1B. (PR)

    Better strategy for bottom 90%:  Dollar Tree Stores (DLTR): Q1 EPS of $0.82 beats by $0.07. Revenue of $1.55B (+14.3% Y/Y) beats by $0.04B. Shares +0.8%premarket. (PR

  35. Phil

     

    World’s 2nd largest consumer of oil:  Japan’s GDP shrank a larger-than-expected 3.7% in Q1, following a revised 3% drop in the previous quarter. Economists had expected a 1.9% contraction, underestimating the impact of the March earthquake on an already-shaky economy. Further contraction may follow

    Denmark?  Nobody even told us to worry about Denmark!  Moody’s cuts the ratings on 6 Danish banks after February’s failure of a regional lender triggered the EU’s first senior creditor haircutsThis action “clarified that the Danish government would favor market solutions in future bank bailouts,” a no-no in the rest of the world. Danske (DNSKY.PK), -0.5% in Copenhagen.

    Any mention of a term related to restructuring is drawing immediate sharp rebuttal from the ECB, which feels it puts Greece on apath to a default. Walking out of meetings where restructuring is discussed and less than diplomatic statements are some of the recent ECB responses.

    Defying a ban on pre-election demonstrations, thousands of Spaniards set up camp in Madrid to protest austerity measures that have exacerbated the economic downturn. The ruling Socialist party is expected to suffer deep losses in local elections on Sunday.

    Amazon (AMZN) is selling more books on Kindle than hardcover and paperback books combined, less than 4 years after introducing the product. "We never imagined it would happen so quickly," says CEO Jeff Bezos. (PR).  Good for AMZN, bad for BKS, BAMM and BGP

    Cody Willard’s "best two pick-and-shovel stocks for the Cloud Revolution:" Riverbed (RVBD) and Cisco (CSCO). "If you are wary of picking the winners in the Internet bubble 2.0, stick with Cisco and Riverbed for the cloud bubble 1.0," Willard writes. "Cloud services have not yet matured – not even close."

    Owners of Android smartphones are warned to avoid public WiFi networks after researchers in Germany find a security flaw that could affect most devices based on Google’s (GOOG) software. The researchers say it’s "quite easy" for hackers to intercept data from Google’s photo-sharing, calendar and contacts applications using a flaw that affects 99% of all Android devices.

    After going off the grid on March 11, China MediaExpress Holdings (formerly CCME) will resume trading on the pink sheets this morning (CCME.PK) after Nasdaq denies its request for continued listing.This article was the final nail in CCME’s coffin. 

    Certainly I still like yesterday’s shorts, the QQQ June $57 puts at .69 are attractive as are the DIA June $123 puts, now $1.11 but, as I said, we should watch and wait and maybe get a test of the 4% lines and, if not, a failure at the 2.5% lines is a good signal to get more bearish.  

  36. flipspiceland

    @Pharmboy
    OK.  I get it.  Phil can write ‘don’t tax corporations’, (I’ve been saying that for months, providing insight and perspicacious reasons why it does no good that you’re only taxing yourself and get no agreement) VIC55 can post about historic price increases by nearly every corporation, but Flipster must stay mum on both these subjects.
    At least I added a short on WOR to make some folk—who choose to-some money.
    Its only dead as far as the Flipster is concerned.  Right.
    WADR.

  37. JRW III

    Careful, support here (IWM 82.96, then 82.74 and 82.63) !!

  38. JRW III

    wilsons / puts

    Phil has posted on that subject; I currently have none !!

  39. 8800

    Phil,
    Aren’t we just below the 2.5% lines now (3/5 – RUT, NYA & Nas)?
    we should watch and wait and maybe get a test of the 4% lines and, if not, a failure at the 2.5% lines is a good signal to get more bearish
    Thanks

  40. JRW III

  41. Manimal

    JRW – Would you mind putting in a sentence or two commentary (time permitting) in with your charts?  I hate to admit it but occasionally they are way over my head. 

  42. Phil

    Sorry, had a problem with the comment – I guess there is some kind of limit to how long one can be….

    Summer/Vic – I hope not, look at the obvious (to anyone but the Government, analysts, the Fed and the MSM) damage that is being done already in the above news items.  There is no way we can take the damage of further increases.  That’s why we crashed in ’08 – the disposable income was stripped away and people kept cutting back on things and then there was suddenly nothing left and – SURPRISE – EVERYONE reports a bad Q at the same time – even the commodity pushers.  

    Shorting oil/Bert – Absolutely below that $100 line in the futures – that’s a great place to play it.  We also did the USO puts yesterday, it was the June $39 puts and they are still $1.30.  

    DX/Pharm – There isn’t anything bearish at all if you assume the Dollar is being shoved down to manipulate the markets.  I think it’s very bullish that all of GS’s attacks haven’t been able to get them back below 75.50, let alone 75.  Europe is a mess and Japan is a mess – we are a mess TOO but that means we should get back to parity with the others as we’re no worse off – certainly between 78 and 80 seems about right.

    Sharing the post/Morx – I added some sharable links to the bottom, which are always visible on the main page and yes, you can always just copy a link and past it in EMail if I make it "Immediately Available to Public", which I don’t do that often but usually when I have a rant and want other people to read it.  Fine idea on another section or blog but I have no time – feel free to make use of any of my old posts as long as I get the writing credit and there’s a link back to the main site.  I never understand people who don’t want to share old posts – once a we’re done with the trades, what do we care who reads them? 

    IYR/Rp – I thought we sold short puts against those?  

    Very nice shorting call at 9:28 JRW – you are the man!  

    Imports/Angel – Good catch, I clarified the language thanks to you.  It is a 7-day week for the averages (we drive every day).  Actually did you know that it was the oil companies that lobbied to end blue laws and get people to shop (and drive) on Sundays.  It was a whole day when people weren’t focused on consuming and it had to be stopped.  Bergen County, NJ is the county next to me and they still have blue laws and it is SO NICE!  Having a day when nobody works is a GOOD thing (restaurants, movies, supermarkets and gas stations are open) and, interestingly enough, they have one of the highest-grossing malls in America – even with the 1-day handicap.  

    Direction/Jabob – Now it’s looking right but I’d like to see all of yesterday taken back as well because it was all BS.  

    INTC/Alik – Long-term they are still good.   GS is right on that one, they got a bit ahead of themselves but $22.50 should be solid.  

    DIA puts/Rustle – I think at 12,631 we should bet everything on a short play.  (just kidding in case someone reads this later, that’s where we topped out this morning).  

    Zachs/JRW – I stopped reading them a couple of years ago, they went way downhill.  

    FAS/$25KP, Jvest – We WANT the short calls to be red.  Hopefully they expire worthless as we originally planned.  

    RUT short/Bob – Notice my short picks are very tight.  I expect a pullback but that does not change the fact that we have already been flooded with money and that money is already causing inflation.  What I expect is for the markets to fall, commodities to fall and then the cash moves into circulation again and that leads to some spending but next cycle people won’t trust commodities so money will finally go to real things (just like it isn’t going to financials and housing now) that will actually produce jobs and goods in our economy.  THEN the market has a chance to improve.  

    LNKD/Hanna – Man, that is funny!  They must be pissed to have left so much on the table.  

    Fun, isn’t it Matt?  

    Blood pressure/Tusca – I get my frustration out by writing actually.  At least I feel like I’m doing something…  I’m sure you’ve noticed I tend to vent when the markets get too stupid in either direction.  Good summary by you too – does it make you feel any better?  

    More bearish/8800 – Yep, we have to watch those 2.5% lines now at 12,505, 1,333, 2,808, 8,487 and 835.  So the Nas is right on the line (and that is not coincidental support) and which way it goes from here is telling but keep in mind they just dropped 20 points to get here (from the morning high) so a 20% bounce of 4 means 2,812 is a weak bounce off support and not a bullish sign until they get past that.  

    So, besides the above puts, the DIA MAY (tomorrow) $125 puts at .42 are a fun way to play the Dow below 12,550.  Probably a nickel loss if they go higher vs about .20 gained if they drop below 12,500.  

  43. willsons

     PHIL     Thanks for the USO Trade   Jumped out at 1.54

  44. Phil

    Sweet potential gap fill on oil if we fail to hold $98.50.  On USO it’s $39, with a gap down to $38.50 (1.25%) so another $1 down for oil if we fail it.  Same deal with an intraday bounce off strong support, we fell about .80 from the top on USO so $39.16 (20% of the drop bounce) is where we expect a weak bounce and we don’t cover until that breaks – then we can go short again when they fail $39.  

  45. rpme

    Phil, you sold 100 May $57 IYR to cover and that we would continue to sell $5000 each month.

  46. angelcur

    linkedan…lol..the social networking companies are one of the pocket bubbles fed has created.

  47. goober

    pocket bubble, that’s a good one

  48. goober

    Swanzilla has ruffled feathers this AM

  49. bobhu

    Great post Phil as usual, just emailed to my friends.  Took me lomg time to read it. :-( .

  50. b1ll

    Phil, the multi-day charts of refiners trading right along with USO, what happened to input costs?

  51. JRW III

    Manimal / chart

    It just went with my previous post, a visual of the coming suport to watch !!

  52. Phil

    Great timing Willsons and great, non-greedy exit!  

    IYR/RP – Good, I thought so.  VIX is low and IYR is high so we wait a few days to see if we can do better.  

    11:00 AM On the hour: Dow -0.1%. 10-yr -0.15%. Euro +0.01% vs. dollar. Crude -1.4% to $99.15. Gold -0.51% to $1488.10

    11:12 AM Longer bonds trade slightly lower in the wake of today’s light Fed POMO purchase of $1.92B in Treasurys, of $5.679B offered by dealers. The 30-year yield +0.01 to 4.31%; 10-year +0.01 to 3.19%. - $5.7Bn – just about enough to buy up LNKD – VERY SUSPICIOUS!  8-)

    Stocks give up early gains and hover near the flatline, as investors look away from the LinkedIn (LNKD) IPO bubble and focus on the three ugly 10:00 economic reports (IIIIII). "Any relief or optimism that investors may have had after the jobless claims report has now been erased," GFT’s Kathy Lien says. "All of these numbers confirm that the U.S. recovery is moving at a glacial pace." 

    Foreclosures fell to 4.5% from their record high in Q1 with "significant" declines, the MBA reports: "Real estate markets reflect what’s going on in the rest of the economy." The "serious delinquent" rate also slipped a half-point to 8.1%

    Commercial paper expands for a fourth week, up $24.3B to $1.183T outstanding – seasonally adjusted. But excluding that, the market shrank $9.8B. Much of the increase came to finance mortgages, credit cards and consumer loans. 

    Norway stops payment on a $42M check to Greece, saying the country has failed to fulfill the conditions set for receiving the money. Not part of the EU, Norway does help fund development projects in other countries in return for eased access to the single market.

    After reading these 20 "really wacky statistics about the U.S. real estate crisis," you may never want to own a home again. But that’s not stopping foreigners from swooping in to pick up cheap U.S. real estate, made even cheaper once exchange rates are figured in.

    Not a major surprise, French Finance Minister Christine Lagardeemerges as the frontrunner to replace DSK as head of the IMF. Lagarde would be the first woman to run the organization. "She is enormously impressive, politically astute and a strong personality," says former IMF chief economist Ken Rogoff

    LinkedIn (LNKD) is off to an astonishing start on its IPO debut,up 83%.  "At this rate, LNKD will be bigger than 136 companies in the S&P 500," says Bespoke on Twitter. Of those buying at "tree-top tall prices," David Menlow of IPOfinancial.com advises to "put those people on suicide watch.”

    OK. This is almost hilarious. P/E Ratio for $LNKD right now: 1,221 – SERIOUSLY?! Yes you are reading that correctly," says Bloomberg’s Cris Valerio of LinkedIn’s (LNKDdebut. Stock did soar to over 100% but is now a mere +90%.

    From Jens Heycke, the top 5 things you could buy with $4B (um, make that $7B) instead of LinkedIn (LNKD +90%).

  53. b1ll

    Phil, USO fail $39 for how long ( touched $38.95) ?

  54. lolkha

    Delta Cuts Capacity Forecast, Citing Japan, Fuel Prices
    (http://online.wsj.com/article/SB10001424052748704461304576216490407868426.html)

  55. rustle123

    Wow, oil has been like an ATM machine for me in the last couple months and I’m sure almost everyone else on here.  Waiting to go short again.  Have to say, I do feel better about shorting oil and rooting for it to go down than the opposite.  Probably why I haven’t gone long oil in about 3 months.  Phil, your commentary this morning put things in perspective pretty well.  Too bad you don’t have a column in a newspaper where once a week you can call out all the BS in the system.  Have you ever considered that?

  56. amatta

     Phil, 
    On 25K C I see you posted roll to July 46 Calls for .36. Today they are .22, or was that a typo and it was the 45′s? Otherwise should I go with the 45′s currently .36?

  57. lolkha

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    LinkedIn is not that useless.
    My friend, who is in works marketing (for some other company) says that he heavily uses LinkedIn to find key people in particular company, which helps him a lot to close sale.
    I don’t know how much they charge and how to value the business, but they are source of valuable data for certain purposes

  58. rustle123

    @lolkha
     
    I agree, I don’t use linked in at all and thought it was basically just an online place to put a resume, but my brother own a hedge fund service provider company and he uses it daily for marketing and sending out other emails.  Says it’s invaluable to them.

  59. kustomz

    LNKD….I cant Imagine what the FB ipo is going to look like…insanity..like the .com bust never even happened

  60. goober

    LNKD may already be a good short ?

  61. kustomz

    My Mother just called telling me to buy LNKD!!!

  62. bobhu

    LNKD/Hanna5, $90?, try $122 than $107 now.

  63. matt1966

    LinkedIn is a tool for headhunters.  Not much else.

  64. kinkistyle

    The chart for LNKD looks like the one for Silver.

  65. rehat

    JRW,
     
    The IWM seems to be swimming just under your 82.96 mark. Are you still short or out to see the direction the RUT takes?
     
    Thanks.

  66. amatta

    Phil, 
    I have the short 37 TBT May puts, should I wait or roll them today? It looks like I still need to go to the June 37′s if I want to keep position sizing. (I sold 15) What do you recommend?
    Thx 

  67. lori13

    Phil I missed the roll in Xrt.  I have 5 June 53 puts at net cost 3.55.  Should I just stay the course.  Have any ideas on how I could fix this?
    Also have the 4-21 SDS june 20/22 BCS. 
    Any help woulkd be appriciated.

  68. drcraig

     Phil/USO – Thanks for the tip on this one. Just took profits at 1.53. Got in at 1.18! What a crappy week in NY. I’m on vacation and trying to enjoy the city, but the weather’s got me itching to stay in and trade. Had dinner at Lincoln last night. I was hoping for a Per Se on-the-cheap experience with Jonathan Benno cooking, but it left much to be desired. Certainly appropriate for the price point, but not particularly memorable. Scarpetta was much better for fancy Italian, with an EPIC bread basket. Haven’t been to Babbo, or Del Posto yet. Having lunch with a friend today at Maialino, and then dinner at Franks in the LES. Kind of overdoing the Italian here, but I digress.
     
    JR- Max pain on IWM is 84. Do you have a reading on which way we’ll ultimately break? $83 calls are pretty cheap so I’m holding a few for fun. Birinyi put out some stats on put/call ratios. Historically when the P/C ratio has been as high as 1.15, the SPX tends to close about 3-4% higher within a month in 4/5 occurrences. Only one predicted a correction. 

  69. rehat

    JRW.
     
    The market moved as soon as I sent the question.

  70. JRW III

    It appears that the Bulls game plan is to consolidate at support (here) giving back 50% of yesterday’s gain; I think sideways to up from here……………………..

  71. lpjblb

     Phil--I’ve always been bothered by your liberal rants. But I was willing to dig through the fluff to get intelligence on the market, industries, and companies. However with today’s column, I question the "intelligence". I retired after 42 years in the oill industry, so I thought I knew a little about the business. I ignored the ignorance about "rent a rebel" and burning facilities, but suggesting that the government nationalize the industry is so ignorant that I question what you really know about other things that I’ve been paying for. Thus, I’m gone. 

  72. bobhu

    CMG Jun $310 call can be sold for $1.55 and Jan $300 call can be sold for $3.10.  I think I will go for $310.  Anybody with me?

  73. jabobeast

    PCLN,CMG,and NFLX closing in on their all-time highs again

  74. JRW III

    rehat

    I cashed out an hour ago after 2 posts about upcoming support !!

    I am now 2/3 in TNA, fwiw.

  75. amatta

    Phil, 
    On GLW play from the Income portfolio, I am trying to leg into it, got the 25 Calls for .20 better, looking to get the same for the puts. Do you still feel it is a good entry without any cover?  The idea I imagine is to start selling premium each month against the 25 calls?  Is there a variation that is a little less hands-on? 

  76. lolkha

    Matt,
    I’ve gave you another example from people who use it. Don’t discount it.
    (I don’t imply that it worth the current valuation. But sometimes we tend to ignore use that we don’t understand. That would be mistake)

  77. Phil

    Sorry Bob, I get a little long-winded when I get pissed about things.  

    Refiners/B1 – I’m not understanding that question.  Do you mean why do refiners not do better when oil is cheaper?  It depends on gasoline prices too and that’s the "crack spread" but it’s more complicated than that because, for example, VLO buys oil all the time and let’s say their refinery does 1Mbd of oil and usually has a 5-day supply in storage.  So what happens when they are holding $105 oil and oil and gas go down?  They must make the oil (crack the barrel) and then that gasoline or whatever gets shipped at TODAY’s price and if that’s lower than yesterday – tough luck.  That’s why the refiners often go up when oil is going up, as long as gasoline is going up too.  At the inflection points, like this, the arb guys like to jump in to play the possibilities but, in general, they will tend to follow oil because it’s easiest for most traders to follow.  

    Fail/B1 – My rule of thumb is seeing 2 10 minute candles form below a line before I take it seriously.  I know that is torture to all you people who start at 1-min charts all day but, other than entires and exits, I almost never look at anything shorter than 10-mins.  

    DAL/Lol – Yet the Transports are still up 0.5%!  

    Newspaper/Rustle – Feel free to be my publicist but I’m pretty booked up time-wise.  My stuff goes out to AOL, Google Finance, Yahoo Finance, Market-Watch and 100 other blogs who pick us up whenever I release an article and some tracking people said I have about 250,000 daily readers (unfortunately, not all here at our main site).  That makes a problem for papers who want original content like the Times but there are plenty we could supply to but someone would have to handle it – no way I have time.  

    C/$25KP, Amatta – Wow, I’m glad you asked, that was the price from the night before, they came in much lower and you could have gone to the $35s and, if you didn’t do it yet, obviously those are better.  Good job, you are learning!  

    Linked in/Lol – I understand how people who want to sell something would love it but to me, who doesn’t, it just seems like a fancy Craig’s list where I’m forced to disclose my information to loosely-connected strangers I have no interest in hearing from.  Anyway, I’m a bad example because I hate twitter and I don’t even like Facebook without my Flipboard.  This blog is, by far, my favorite means of communicating with people.  It just fits the way I like to read and communicate ideas.  

    Facebook/Kustomz – At least that one I get.  People watch that more than TV so I can understand the value of the eyeballs.  Plus they do interact with those games and they have that whole viral thing when people "like" something that’s hugely effective – even I will "like" something when I think it’s interesting.   So I see the value to that for sure and I think it blows Linked In out of the water and if they did a better job of coordinating business and personal pages I don’t think Linked In would even be necessary.

    LNKD/Goober – Wait until Cramer herds his sheeple into it, that will probably be a top. 

    Oh damn, you guys forgot to remind me about SODA this morning!  The Cramer crowd got it right to our $55 target and the $55 calls were $1.35 at the open but back to .50 already.   

    Nice smackdown of the Dollar giviing us a pop back up – Nas fully recovered already!   

  78. Phil

    Now it’s time to go back in the QQQ and DIA puts (USO too risky) and watch the Dollar at 75.25 for a stop as well as Nas day high of 2,828.  

  79. JRW III

    Out of TNA with $1.55 !!

  80. goober

    Phil – I was thinking in a few days maybe a week or two ? Not here, see how it holds up at such insane opening ratios. This one seems obvious to me so timing will be the issue in near time frame IMO.
     
    Interestingly , the huge USD drop did not pump per plan ?

  81. JRW III

    Well, it looks like rally exhastion, but maybe not; still in cash, waiting………………………………………………………….

  82. rainman

    JRW / out — What triggered your sale? The extension above your line followed by a 3 minute candle below?

  83. exec

    Typical…..the rally stalls at JR’s line and the drop the dollar to push it over.

  84. Phil

    TBR/Amatta – They are at $2.50 and your roll is going to be to the June $37 puts, now $2.70 so a .20 credit.  The net delta on the 2 is 0.04 so a $2 move in TBT will cost you .08 which means you should ask for .25 on the roll and be happy if you get it but, if not, there’s no particular reason for you to hurry either.  

    XRT/$25KP, Lori – If you made the sale, it’s fine.  As it sits, we’re not too far out of the money but you’re not likely to get $3.55 back on the June $53 puts (now $1.12) so best to spend $1.15 to roll up to the $55s (now $2.27) and DD there and then you are in 10 for net $3.49 and $1.18 out of the money with a .72 delta so a $1.70ish drop should get you even (and out at least half even).  The whole point of rolling and doubling down is to create a situation where you have a stronger probability of hitting your goal on a realistic move. 

    SDS/Lori – We stopped our May spread out yesterday.  I’m not to impressed with today’s look so I’d give that one the weekend before bailing.  

    USO/Dr. C – Congrats!  Like I’ve been saying for a while, I am starting to feel bad for our counterparties.  Of course, they are the idiots manipulating oil so not really bad – in fact it’s super-satisfying to take their money (because we "sell" to them while they drive oil stupidly high and then we "buy" when it’s cheaper).   NY sucks in the rain but the temperature’s been great for walking.  I very rarely like those celebrity restaurants other than Nobu and Boule – both earn their rep.  If you can get into Rao’s – that’s great Italian!  

    I’m sorry to hear that Lp.  I would have been very interested to hear your insider’s side of the story.  I’d even be wiling to concede that the fact that rebel attacks, pirate attacks, pipeline bursts, fires and spills often happen on Sunday nights pre-market when near key support levels is a total coincidence and we can move on from there.  You have to admit though, it is kind of strange when I can predict an attack on Friday based on a trendline and then, 2 days later, it happens.  

    CMG/Bob – I like it. 

    GLW/Amatta – It’s a good trade as long as you have a stop entry on the longs.  Figure out what price you can live with as a net, maybe $20.30 and just make that your entry point and keep a sharp eye if they test $20.25.  Other than that, the naked play works in your favor.  

    LNKD/Goob – If they had options, I’d like it but just shorting insane stocks doesn’t appeal to me.  It’s the premium sales I like.   Dollar won’t affect them now, they are not part of an index and they are moving on their own accord, certainly not on market fundamentals.  

    To a large extent – I would think LNKD is boosting much of the Nas, which makes the Nas the way to short LNKD at the moment.  Back to the SQQQ June $23/24 bull call spread at .50, selling QQQ NEXT WEEK $57 puts for .18 as you would make .50 before the Qs hit $57 and, of course, if the Qs don’t drop, then net .33 on the spread and we can do it again the next week.  

  85. JRW III

    rain

    See screen shot; Stoch, RSI both turning down volume dropping, and we had just touched my 83.42-6 line !!

    1/3 back in TNA now buying another 1/3 !!

  86. lori13

    Phil any thoughts on a long in UUP? 

  87. rustle123

    I thought you couldn’t short LNKD because IPO’s aren’t able to be on margin for the first 30 days.

  88. goober

    Agreed options would be better but there will likely be a play there in not too long and some one will post on a good method, maybe me ? I would like to see it run back up past  $123 but any where beyond its open will work given a little time IMO. So maybe there will be options down the road sooner than we think ?

  89. goober

    Good point on the NAS/LNKD realationship
     
    Not sure about time frame limits but there are some on IPOs. That should make it even better possibly as it will give the pumpers time to pump it up and at least give it a false underpinning for the mases to ride into oblivion.

  90. Phil

    12:00 PM On the hour: Dow -0.05%. 10-yr -0.13%. Euro +0.05% vs. dollar. Crude -1.53% to $99.02. Gold -0.41% to $1489.60.

    1:00 PM On the hour: Dow +0.23%. 10-yr -0.17%. Euro +0.38% vs. dollar. Crude -1.38% to $99.17. Gold -0.19% to $1492.90. 

    1:06 PM The Treasury sells $11B in reopened 10-year TIPS at 0.887%(.pdf). Bid-to-cover ratio of 2.66 vs. a recent 2.91; indirect bidders take 40.7% vs. a recent 40.3%. Direct bidders take 3.1%, vs. a recent 3.6%.

    1:16 PM Treasurys add to losses after the 10-year TIPS reopening; the 30-year yield +0.03 to 4.33%; 10-year +0.03 to 3.21%; five-year +0.02 to 1.87%.

    New York Fed President William Dudley: Despite progress, growth risks remain – including oil/commodity price effects on spending, new home price declines, and fiscal cuts that would dampen economic growth. Headline CPI is high but with "limited" pass-through. Labor is recovering regionally and nationally but unemployment is still "unacceptably high." 

    President Obama speaks about his vision for U.S. policy towards the Middle East and North Africa. Watch live here.

    Bonnie Liu from Macquarie estimates 25% of China’s Q1 copper imports were due to a scheme firms are using to obtain cheap credit, rather than true end demand. Part of the plan relies on high Shanghai copper prices – if they continue to fall, there will be a lot of folks long the metal needing to get out.

    The real scandal regarding the IMF is it’s an opaque, arrogant, unaccountable bureaucracy where groupthink reigns and expressing contrarian views can "ruin one’s career." An independent audit details the goings on as the IMF stood aside while the credit bubble inflated.

    An EU plan for nuclear reactor stress tests is blocked by Germany and Austria who say the tests aren’t demanding enough and need to be performed by experts from outside the nuclear industry. "We’re against white-washing of the atomic industry," says Austria’s environmental minister. 

    Longtime indexer Russell Investments finally launched its own ETFs after a drawn-out regulatory process. The six products (all priced at 0.37%) mimic what Russell claims are the most prevalent professional investment strategies: aggressive growth (AGRG), consistent growth (CONG), growth at a reasonable price (GRPC), equity income (EQIN), low P/E (LWP) and contrarian (CNTR). They compete with other strategy ETFs

    Three lunchtime reads:
    1) How far will home prices fall?
    2) Are oil futures markets being manipulated?
    3) Will Fed’s asset buys lead to higher inflation? 

  91. lori13

    Phil so what I really would like to Know is do you think XRT is headed down still..  does it make sence to DD now for June?
    Is there a way to sell something tohelp with the cost?  In a little over my head on this one.  Thanks.

  92. rainman

    JRW — thanks for the patience, been here awhile but haven’t tried to watch your system. Can you repost the link to the post with the description? Thanks.

  93. rpme

    Where can I get up to the minute Dollar prices? The best I can find is 30 minute delay.

  94. scottmi

    CERS/Pharm – any news/updates on this one?

  95. rainman

    rpme / TOS — open a Think or Swim paper trading account.

  96. jabobeast

    Obama the moron—will go down as the worst president in history (sorry for the politics but he is insane)
    http://news.yahoo.com/s/ap/20110519/ap_on_re_us/us_obama_mideast_palestinians_1

  97. scottmi

    FAS/$25KP – may $28 short calls. to roll or not to roll? i’m thinking, "to roll"..

  98. jvest

    FAS May $28 short calls/Phil – when I said they’re red, I meant our position is red. The calls themselves are obviously up. (We sold at about 41 cents, and they’re currently around 67 cents)
     
    I guess there’s still a day for FAS to fail though.

  99. matt1966

    Boy oh boy, this casino is something else.  Back from a run at lunch.  Thanks for the heads up on resistence JRW.  I didn’t heed it.. but it was dead on! 

  100. yodi

    Pharmboy Hi any take on MAKO was recommended to me at 28.50 now up to 30.19 thanks

  101. Phil

    UUP/Lori – We did that yesterday, the June $22s are still .10.  That way it says fun. 

    LKND/Goober – Even GOOG pulled back off a double at $200 (to $160) but it took them 2 months to get there, not two hours!  This is nuts.  

    XRT/Lori – I like the roll and DD as above.  I think this rally is based on a weak dollar (75.25) now because the IMF got a new guy and we have Euro relief as well as QE3 talk and our poor data (which keeps the Fed on the table), Goldman’s Euro upgrade and commodity pump and, of course the 100% day gain on LKND that’s got the Nas up 0.4% today.  Other than that, we’re still weak and certainly nothing exciting coming from retail other than very high and very low end and the consumers are bleeding to death with every new bit of data we get.  

    Dollar/Rp – Get a paper trading account on TOS, very nice live Forex and Futures charts.  

    And what Rain said. 

    FAS/Scott – I think we need the protection.  

    Oh no, Dollar bounced off 75.25 – too much for the markets to stand up against….  PATHETIC!  

    FAS/Jvest – At the moment, FAS is at $28.52 and the $28 calls are .63, why would we pay them .11 premium just because we don’t want to wait a day?  I’d rather use the .11 tomorrow to pay for a roll to the next week $29s (now .46).  

  102. lolkha

    With $ down – market movement looks weak.
    On the other hand there was no panic selling during morning (you can see a lot of steady green)

  103. JRW III

    rain,

    This may also be helpful; it’s not in the main post !!

    The setup that will probably be the most help to you is my 3 minute conformation chart, as my 1 minute has proprietary software. Basic settings are 2 day, 3 min, candlestick chart of IWM (I never watch TZA or TNA). Overlay TBT on the chart and add pivots, 40 and 200 SMA’s, Bollinger Bands, an 8 or 9 EMA and my daily confluence lines. In sub-screen 1: MACD,Stoch/RSI14momentum and Signal line. In sub-screen 2: Volume.

    This will give you good results by simply changing position based on a breaking engulfing candle followed by another engulfing candle on the new side of the EMA. You will be late on entry and exits as compared to the one minute chart, but you will have fewer false entries !!

    Also, understand that I have 6 screens and am  always watching dollar futures, Weiss Order Flow, and a myriad of other contributing factors as mentioned here.

    I would highly recommend paper trading until you are comfortable with the system !!

  104. mrmocha

    Pharmboy, see that flash crash on ARIA today?  Made my heart stop, I’ve got a lot of it.

  105. pentaxon

    Rpme,
    There’s a free dollar index web chart:
    /www.forexpros.com/quotes/us-dollar-index-advanced-chart
    I compared it with my livestream once and it was ok.

  106. JRW III

    How did "they” let this get out ?

    And not only is POMO ending in early June, but from 2007 to 2009 we had a 16-18 weekly cycle from low to low.

    Now that cycle has shortened on the upside to about 15 weeks.

    Counting 15 weeks from the 2009 low, we are topping roughly every 15 weeks (Intra-week top).

    6/12/09 + 15 weeks =
    9/25/09 + 16 weeks =
    1/15/10 + 15 weeks =
    4/30/10 + 15 weeks =
    8/13/10 + 12 weeks =
    11/05/10 + 15 weeks =
    2/18/11 + 15 weeks =

    6/3/11  !!
     

  107. hanna5

    LNKD – Keep in mind, that they only sold 350 million or so in the IPO, which is why it was so oversubscribed. The value was 4.2 billion (now about 10 billion), but the float on the open market is small. Even if hedge funds dabble in this name, the stock can be driven up like crazy.

    Also, the insiders kept a considerable portion of stock for themselves (not selling at $45), suggesting that for some reason they still like the risk of holding on (of course, maybe they’re just blinded by the CMG/NFLX/OPEN/LULU action lately).

    Anyways, almost like a casino to play this name short or long until we see how high it can go….if it gets to CRM like valuations, we should see it near $200 shortly. :-)

  108. lolkha

    (Reuters) – Americans will cut other expenses rather than forsake highway holidays this Memorial Day weekend, travel group AAA forecast, with near-record $4-a-gallon gasoline seen having little impact on vacation plans
    http://finance.yahoo.com/news/Vacationers-undeterred-by-4-rb-2071238881.html?x=0&.v=5

  109. stjeanluc

    Uummmm, manipulation?
    http://ftalphaville.ft.com/blog/2011/05/19/573026/vix-settlement-weirdness/
    It’s probably just me and many others being paranoid!

  110. exec

    JR,
     
    Perhaps they let it out because they are intentionally trying to tank the market so they can justify QE3.

  111. rustle123

    SODA is ripping like it wants to test 60.  If it gets there, should be overbought enough to sell the June 60 calls.

  112. matt1966

    JRW, you are on a roll today with the pics!  Interesting premise on June 3rd.  Don’t suppose you could gin up a chart to see what that might look like..   I am very suspect of pieces in Reuters.  They seem to have an agenda.

  113. JRW III

    Careful here, I just sold my 1/3 of my TNA off the 83.73 line

  114. jabobeast

    JR—great pics!

  115. exec

    JR,
     
    Sell more…..I’m I bought TZA at your line.

  116. biodieselchris

     I agree with JRW
     
    June is the month. Even if you’ve lost a lot of dry powder waiting for the pullback [like me :(   ], make sure to have something in the market by memorial day.

  117. JRW III

    All out now !!

  118. exec

    Thanks JR. 
     
    I’m back to cash…….let the dollar manipulators do what they want.

  119. kustomz

    TLT on the rise, thinking the dollar should rise…

  120. jabobeast

    Phil—the stick or dead stick today???

  121. diamond

    Phil – NatGas plays?
     
    USATODAY.com 
    Fierce forecast: Feds predict up to 10 Atlantic hurricanes in 2011

  122. rainman

    Ha ha ha!!! Cramer losing his voice! :)

  123. kustomz

    Pakistan buying more jets from China and not the civilian kind. Most likely using some of the that much needed US aid money. While India spend most of its military budget in the EU….This country is a $@&^ joke!!

     

  124. Phil

    June 3rd/JRW – Well that is scary! 

    LNKD/H5 – Very smart to create a scarcity up front.  Also don’t forget brokers hold their share so they can do "favors" for clients later.  At the end of the day, they will rank the people who whined about not getting the IPO and give their favorites a chance to buy in.  That’s a game I stay far away from.  It was fun in the dot.com days, when up was the only possibility for an IPO but now you can end up with a lot of ugly paper!  

    Vacations/Lol – That’s what they SAY but when they actually call the airline and find out what airfares are now – I doubt those numbers will hold up.  I drove to upstate NY last month and let me tell you, getting somewhere and having to pay $75 to fill your tank back up does not put you in a spending mood when you realize it’s going to be another $75 to go home to – so much for a cheap trip!  

    VIX/StJ – Well, we know it’s messed up – doesn’t really have anything to do with volatility anymore, simply moves against the market.  Still fun to play, though…

    Wow, even Cramer thinks Linked In is too high…  

    SODA/Rustle – Be very careful, they have way more legs than they should, although probably from LNKD and not because they are so good.  

    LOL Angel.  That Blodget hits it once in a while.  Of course, I doubt he’s willing to cheerlead a MoMo stock these days. 

    Nice finish on the NYMEX – That QMM1 contract finished down at $98.45 so congrats to all who stuck that one out!  It’s really hard to have faith in the logic of them having to clear the contracts – especially when they can jerk it up and down like a yo-yo, even on the last day of trading.  In theory, USO can go up now because the drag was the June contracts getting dumped more so than anything else but the Dollar could upset that plan if they head higher.  

    TLT/Kustomz – Good call! 

    Sticks/Jabob – I believe at 109M on the Dow at 2:43, that we are very stickable but the Dollar will have to fail $75.40 on this run otherwise it’s going to be tricky.  

    Nat gas/Diamond – Yes, this will be year 3 that we will hope for hurricanes that never come…

  125. JRW III

    Back in TZA (2/3)…………

  126. rehat

    JRW
    In TZA.. off the 83.46 line..
    Am I getting a hang of this??

  127. JRW III

    rehat

    Good job, you’ve been studying !!  8-)

  128. rehat

    LOL… 
     
    Now I just have to see it I have jinked you. My Master.

  129. rehat

     sorry – I meant jinxed

  130. willsons

     PHIL    Should we roll XRT covers or wait till tomorrow??

  131. Phil

    2:00 PM On the hour: Dow +0.47%. 10-yr -0.05%. Euro +0.46% vs. dollar. Crude -1.01% to $99.54. Gold -0.17% to $1493.20. 

    Maybe Dick Bove (alone in bearishness among 25 GS analysts) is right and Goldman Sachs is losing it - the firm sold its entire near-872K stake in LinkedIn (LNKD +131%) at the offering price of $45. Meanwhile, though, investors seem to be shrugging off a growing stack of legal and other troubles at the big bank. 

    More on the controversial relationship of earnings to valuation: Investors have turned attention from EPS, but it looks more and more like revenue is gamed just as much. Meanwhile, forward estimates are getting less accurate, not more accurate

    "There’s no institution better positioned in (emerging markets) than Citi (C)," says chairman Dick Parsons, believing this holds the key to the bank returning to "pre-crisis levels of earnings." On LinkedIn’s (LNKD) surge? "I have my doubts for a couple of reasons," says the former AOL/Time Warner chief.

    Sears (SHLD -2.6%) offered up the usual litany of excuses - including that old retail standby: bad weather – for its dismal Q1 that saw a big loss, falling revenue and rising inventories. But its troubles run much deeper, as S&P Equity describes in its Sell rating: "We are doubtful that SHLD’s apparel sales will improve with warmer weather and also remain concerned by weakness in Kmart’s core staples business."

    teep drop in shares of Green Dot (GDOT -5.6%) and Netspend (NTSP -5.8%) is attributed to news that Florida’s AG is investigating and has issued subpoenas to the prepaid debit card companies and three other firms for failing to disclose fees.

    The real battle for smartphone combatants Apple (AAPL) and Google (GOOG) may not be against each other – it may be against dumbphones. While smartphones now account for a record 27% of phone shipments, that means the other 73% of the market has yet to be penetrated. Which means it may be less predictable (and less discountable) than expected.

  132. rpme

    Pentaxon, thanks for Forexpro, nice site.

  133. yodi

    Phil ACI Bought stk at 34.70 sold the May call 34 for 1.19 stock is down now to 29.23 to recoup the loss on the stock I am looking to sell a Jan 12 or Jan 13 30 call  3.50 or 5.50 to recoup the loss on the stock. Is this a wise idea?

  134. hanna5

     Added some more RIMM here, again, August ATM calls. 

  135. JRW III

    I’ll be getting out of TZA if they break North of 83.46 !!

  136. Phil

    Pakistan/Kustomz – If they are going to buy arms, they should have to be US and we should put special remote kill switches in that can turn off their weapons at will.  

    XRT/Wilsons – We may get a stick so waiting.

    ACI/Yodi – We just got into them yesterday so I like this for a bottom.  I’d go with 1/2 the Jan $30s at $3.35 because you can roll those to 2x the 2013 $45s (now $1.80) and, if we break below $28.50, you can sell the Jan $29 calls (now $3.80) and put a tight stop on the $30s – so more flexible.  

    USO barely holding that $39 mark.  Good time to go long if you are bullish (with a tight stop)

     

    Chicago Fed President Charles Evans says the Fed is not yet at the point where it should pull back its monetary stimulus. "Slow progress in closing resource gaps and a medium-term outlook for inflation that is too low lead me to conclude that substantial policy accommodation continues to be appropriate," Evans says

    Better buy Cisco (CSCO -0.4%) at current "depressed levels" than wait to see the actual improvement, Sterne Agee says, expressing faith that it will “make the right moves” to restore investor confidence. A sum-of-the-parts analysis suggests the stock is worth $27-$28. Latest restructuring speculation: Cisco plans to sell its Linksys consumer router business and possibly its WebEx brand. 

  137. kustomz

    I wouldn’t call 139 for GS shrugging it off, that’s a big hit… What ever GS did we can be sure all the Ibanks did the same thing, maybe we should get REALLY bearish on the financials

    By the way if GS does not recover here, 135 then 130 shortly thereafter..I cant imagine the rest of the markets holding it together if that happens

  138. rehat

    wow – i can never call these…  now that I am out – it will move down

  139. Phil

    Rally fuel!  Chicago Fed President Charles Evans says the Fed is not yet at the point where it should pull back its monetary stimulus. "Slow progress in closing resource gaps and a medium-term outlook for inflation that is too low lead me to conclude that substantial policy accommodation continues to be appropriate." 

  140. JRW III

    If you are swing trading (as opposed to day trading) and are short, the stop would be IWM 83.61 and rising, not 83.46.

  141. jabobeast

    the stick?

  142. goober

    I think teh large USD plummet earlier was a big sign of overall weakness. The breadth of drop had little effect on markets and so far DOW has actually pulled back a bit ?
     
    And Nikkei #S last nite were terrible. Not sure how long this entire facade can be maintained but certainly watching . MY NKD short was on day off, actually about 8 hours off and now back to even. Debating whether to get out later today , so will watch as asia approaches open later and see ? I guess………glue and duct tape are all holding it together , but for how long ? Apparently Swanzilla decided not to come out today and stayed in the nest although irritated !

  143. kevinb63v

     Phil,
      Is there anything I can do with a May SDS 20/21 BCS at this point, other than salvage a little from the $20 call?

  144. scottmi

    USO/Phil – if you are now suggesting going long on USO, should we close our $25KP USO puts fora 40% gain in one day?

  145. drmtv10

     Hi Phil,
    Need help with rolling forward following positions in ABX:
     
    July 45C $4.26, currently at $2.21. x5 (-$995)
    Short May 45C $0.78, currently $0.42 x5 (+$117)
     
    short May 50P $0.95, currently $4.7 x8 (-$2980)
    long June 42P $0.68, currently $0.46 x8 (-$195)
     
    Net realized gain: $1490.
    Net unrealized loss: -4053
     
    Currently behind by about -$2600, as I tried to roll (on my own) these positions in April/May and ended in short May 50P position at the wrong time. Had I stayed with original July 45C and written calls, it may not been so bad.
     
    What would you recommend as near term (June-July) and longer term?  
     

  146. Phil

    NKD/Goober – That has got to be the most dangerous futures contract of them all.  I routinely see 100-point gaps in that one.  Do you play them overnight?  

    3:00 PM On the hour: Dow +0.47%. 10-yr -0.05%. Euro +0.46% vs. dollar. Crude -1.02% to $99.53. Gold -0.16% to $1493.40.

    Yes, LinkedIn’s (LNKD +117%) $10.5B valuation is "crazy," but that’s just one of three reasons to be deeply concerned about the LinkedIn euphoria and the health of IPO markets. The others: Most of the value is going into the pockets of speculative investors, and private markets may have proven themselves incapable of accurately measuring the worth of IPOs such as Facebook or Twitter.

    The presence of Groupon is inspiring a wave of start-ups and venture funding in Chicago. The nexus of this renaissance is the 1.5M square foot former Montgomery Ward warehouse on the Chicago river where many of these firms are located. Could this shift the economic power of the city away from LaSalle Street? 

    McDonald’s (MCD) CEO Jim Skinner responds to recent ads calling for Ronald McDonald’s retirement and to stop marketing junk food to kids. Ronald is "an ambassador for good," neither Ronald nor the company advertise unhealthy food to children, and it’s up to parents to make healthy choices for their kids, Skinner asserts. 

    Run-don’t-walk to see Jim Bianco’s fascinating discussion on Understandings Earnings Estimates.

     LinkedIn (LNKD) is the Most Expensive Stock in America (Smart Moneyand that was before it opened +90%!

    Eric Schneiderman: One Lawman With the Guts to Go After Banksters (Nation)

    Collateral Damage: the True Cost of a U.S. Default (Barron’s)

    Welfare-queen states (Washington Post)

  147. kirb_ck

    JRW…On your TNA and TZA trading do you use options or stock or both? Thanks

  148. goober

    Phil – yes I do and have pretty much found success lately. It has become part of my USD trades. I play it because of the big swings and all you have to do is wait 8 to 16 hours and it will go other way if you got it wrong, which I did . Mostly I was staying up late and getting up early to watch it and then crashing from 1PM to about 3 or 4PM to catch up on sleep and of course technicolor dreams with me as lead star !  Ha Ha Ha

  149. Phil

    SDS/Kevin – No, not really.  That’s why we got out yesterday, too risky if they’re now well in the money the day before.   You still have .25 on the $20s and we still think the S&P can go lower so how about just rolling to the June $21s (.39) for .14 and let the caller expire and maybe you’ll even feel like staying naked over the weekend and, if not, you can roll down and cover to do it again.  

    That dollar at 75.25 needs to make you very nervous if you are bullish – they can trigger that any time and it’s up 0.5% and the markets are down that much at least.  We got here because Evans just announced that the Fed has no intention of tightening in the near future and that inflation is "too low."  Since we know this is BS and we’ve heard it all before – that is not likely to shove the Dollar below 75, which means odds still favor it going up, not down – and that will not be good for the markets or commodities.  

    USO/Scott – Just a quickie trade, mostly for the futures players.  I’m still overall short on them (see above) but, at that particular juncture, I felt they would hold $39 and get a little pop – which is nice for a day trade.  

  150. JRW III

    kirb_ck

    I only post on the stock; options are Phil’s purview !!

    Please read my 1:44 post !!!

  151. deano

     all
    anyone know which indexes are cash settled? Any special handling I need to be aware of?

  152. angelcur

    gluu…a hedgie just mentioned it on cnbc as social networking play…no bubble here.hahaha

  153. Pharmboy

    CERS/scott – not change.  Holding.

    MAKO/yodi – no idea at this point. Have to look into them.

    ARIA/mrm – yes, tried to buy it.  Missed it by a nickle. :(

  154. Savi

    Phil--what do you think of AUO?
    Tx

  155. Savi

    angelcur—OPT has been playing this stock

  156. JRW III

    Almost 6% on the day; uptrend should continue for the first half of tomorrow at least !!  See you all then.

  157. Savi

    playing it well I might add

  158. topher7

    …JRW,   another gap up open in the am?

  159. angelcur

    my only point was gluu makes games… its not a social networking play..just struck me as odd that the folks at cnbc would tout it that way…

  160. Phil

    ABX/DrMTV – I have a headache looking at that?  What were you trying to do?  I like them here at $45 but I’d like them a lot more at $40.  I think July is a terrible time-frame because we’re expecting a short-term correction to $1,250 on gold when the market crashed (maybe $1,100)  and then we will BUYBUYBUY so let’s just see what can be done.  Your loss is entirely the $50 puts and you have to move them so I’d roll them out to 10 Jan $43 puts at $3.60, which should be about even.  The short May caller you can just buy out and the long June put is a bit of insurance for now and then you have to hope gold improves by July but, if not, at least that ABX manages to hold around $40 by Jan so you can roll to 2013 whatevers (the $35 puts are currently $3.30).  

    8-16 hours/Goob – LOL, that must be fun!  Well it is if it’s affordable, right.  Just keep in mind that they MIGHT still have a failure at Fukushima and evacuate Tokyo and then you can wake up to a 10% down market.  So, if I were to play them, it would be more to shorting them at the top of the range as I could never sleep holding longs overnight.  

    Settlements/Deano – I can never keep track, I just make sure to be all out before it happens.  

    GLUU/Angel – You forgot to mention that gave them a 20% pop!  Oh yeah – we are partying!!!  

  161. JRW III

    topher7 / gap up

    I would not be surprised; however we open, I think we go up for at least the morning, we’ll see !!

  162. hanna5

     Woooooo! GLUU!!! Just sold the stuff i bought a couple days ago on Opts recommendation at 3.25….at 4.15. Thats like a crazy % move for a stock in a couple days. Wow. :)

  163. JRW III

    IWM 83.46, Hmmmmmmmmmmm !!

  164. Pharmboy

    another nice hedge that I have started is the SPX 1320/1300 July spread for 5.50 or better.  It is a bet on a move down, but one can sell OTM calls against it for reducing the costs.  Since many of us are betting on a correction after QE2 sooner rather than later, then this is a good risk reward.

  165. angelcur

    gps just missed badly

  166. angelcur

     brazil almost straight down for 2 months. -10% ytd…the brics are supposedly propping up global economy, yet if djia was down -10% ytd people would be talking new recession…go figyah

  167. jabobeast

    250 stick
    CRM flying

  168. rpme

    Somebodies been sniffing GLUU…they make Poker Games?

  169. rpme

    Pharm, you still like KERX?

  170. JRW III

    On the other hand, black bars occur at both tops AND bottoms, so we could fall from the trend line; it is Friday after all !! (It’s good to be in cash every night) 8-)

  171. goober

    I expect a failure at Tokyo and have actually figured out a twice a day trade on NKD which I will post as I get it dialed. KInda like oiul has been lately , if you are paying attention it is all visible on the charts and predicated by USD twice a day.
    Whwn all is said and done I was only not watcjng it may 3 0r 4 hours and mostly during europe. So long as I get my overall sleep I am fine and have spent years in broken hour sleep and totally adjusted to it. Although a good 10 hour on weekend is sweet. Somebody posted about sleep being boring, I love my sleep and love my dreams. I could not disagree more as I think dreams are something to pay attention to for good reason. Check out Edgar Cayce’s thought s on dreams. 

  172. Phil

    AUO/Savi – I’m not clear on what they are selling (new-style LCDs) and who is buying  them so I’m kind of in stay-away mode with a lot of those companies.  The problem is that the suppliers have to choose sides in the phone and tablet wars and imagine the hit people who fabbed up for Zune manufacturing took.  That’s going to happen a lot because you’re not going to turn down the NOK contract and I’m sure when they demo their tablet it will look cool and then you will gear up production and order what you need for their first million (which they pay for) and the million after that (which they cancel) and then you are eating a whole lot of custom parts for a tablet or phone that no one wants.  So that’s where I get concerned in this sector.  AUO is very diverse though and not small so, as long as you are willing to accumulate them over a rough patch (like the one they are in) then maybe something not too committal like Oct $7.50 puts sold for .70 for net $6.80 and if they flop back to $6 it’s not so bad for a 1x entry.  

    Well played today JRW, have a good one.  

    GPS/Angel – Something people can put off buying and marketed to bottom 90% – bad combo.  

    Brazil/Angel – That’s why I cringe when all these bulls talk about the emerging markets driving the global economy.  That’s a TERRIBLE investing premise – kind of like saying you have 3 flat tires but HEY – one brand new one – so go hit the highway and don’t worry about a thing!  

    Don’t forget it’s expiration day tomorrow – very likely we flatline, which makes sense as we’re right between our lines.  Dollar 75.25 on the nose! 

    At the close: Dow +0.47% to 12619. S&P +0.27% to 1344. Nasdaq +0.41% to 2827.
    Treasurys: 30-year -0.25%. 10-yr -0.05%. 5-yr +0.01%.
    Commodities: Crude -1.02% to $99.53. Gold -0.16% to $1493.40.
    Currencies: Euro +0.46% vs. dollar. Yen -0.09%. Pound +0.28%.

    Market recap: The roaring success of the LinkedIn IPO showed the risk appetite out there, as investors overlooked a raft of weak economic data to push stocks higher. The data impacted commodities, however, as crude oil fell to $98.44, and gold and silver slipped. Natural gas sank 2.5% on a surprise inventory buildup. A strong auction failed to lift Treasurys. NYSE advancers led decliners

     Where have all the bulls gone? In the latest AAII sentiment survey, bullish sentiment drops below 30% (26.7%) for the first time since August 2010 when the QE2 rally began. Another case of the individual investor being the last to get in and the first to get out?

    The Treasury Department hopes to find bigger suckers for the upcoming AIG offer than themselves, Jonathan Weil writes. "AIG’s executives have gazed into their crystal ball and concluded that the company’s prospects don’t look good. That dim outlook may help explain why [it] seems so anxious to begin reducing its 92% stake in the bailed-out insurance company."

    Accusing underwriters of digging out their late 1990s playbook, Jim Cramer describes the LinkedIn (LNKD) IPO as "preposterous." By offering just a sliver of the company, the promoters purposely created a frenzy for the shares. "It’s a toxic way to price, it’s a terrible thing to do."

  173. zeroxzero

     Angel:  I’ve been scratching my head about Brazil as well. Japan [EWJ] is only down @ 9.1% YTD by comparison. Is is all about expectations regarding natural resource prices? Aside from being one of the world’s largest and most resource-rich countries, it is pretty well run, compared to most EM countries.

  174. Phil

    Dreams/Goober – I have dreams, they are better than movies so I do enjoy them but I don’t need to spend 10 hours sleeping to have one.  Actually, that’s usually when I wake up – right when I realize I’m dreaming – usually because something too bad or too good is happening to be real!  Cayce not my favorite, I prefer Jung. 

    Brazil/ZZ – Good project, we should all try to figure out what’s up with Brazil and come up with a long-term outlook.

  175. jomama

    Pharm, I have SPY Sept 130 puts – I keep selling Weekly 133 puts against them – it started out as a hedge – now it is just a income producer. Looking to add some Spy Oct Calls and will do the same. Will be a ghetto straddle that i will sell weekly premiums against. I am a awful market timer, so this kind of works for me.

  176. zeroxzero

    Agree Phil about EM "driving the global economy."  Only when they spend years learning how to borrow and spend more than they earn will that happen.  It takes quite awhile for a culture to forget what it’s like not to have enough to eat or a rain-proof roof over their heads and take up shopping-on-credit as a national pastime.   

  177. bobhu

    Phil, 
     
    I will get assigned 1X of HOV at $4.00(sold $4 put for $0.40), thinking about buy 1X more at current price($2.57), average will be $3.09, sell 2X Jan.12 $3.00 straddle for $1.05.  Cost base will be $2.04/$2.52. 31% if called away.  Thought?  Thanks. 

  178. goober

    Some have said Jung and Freud were both drug addicts ? I have long questioned their crdeibility for numerous reasons, but oh well !

  179. Pharmboy

    CRM – wow.  P/E of over 100……..

  180. jbaker2447

     Hi Phil,
    I loved your main post this morning and I like the idea of an illuminating conversation on the topic.  How about an Op-Ed for the Times or something similar?  What would be your suggested reforms to put forward in such a piece?  Your post did a great job of describing the situation but what would be some constructive suggestions to end the game?

  181. Pharmboy

    KERX – yes.  Like AEZS better as they are cheaper and own the rights to KERX lead drug.  Otherwise, play a BCS and sell Ps.

  182. jabobeast

    pharm—does P/E even matter anymore? esp. if you are a MoMo?

  183. rpme

    I have been getting some info on Brazil that says the economy is booming put inflation is out of control. The example they used was a Honda Civic costs $24,000 in the US and $34,000 in Brazil.  Lots more info, how do we come up with an outlook?

  184. rj_jarboe

    jomama,
    Do you always sell 100% cover with the weeklies?

  185. zeroxzero

    Interesting opinion piece on Obama/AIPAC.    http://english.aljazeera.net/indepth/opinion/2011/05/201151783043474842.html
     
    The article opines that, despite the occupation of the West Bank being the principal point of Muslim sensitivity worldwide, and Gen. Petraeus’s belief that it represents a threat to national security and our energy supply, Obama has decided to speak at this month’s AIPAC conference, a pretty fair indicator that he has thrown his weight foursquare behind Netanyahu,  The author, M.J. Rosenberg, believes this has nothing to do with the "Jewish vote" in the U.S., which is consistently 75% Democratic based on domestic issues.  The author’s interview with Obama on the subject of AIPAC in 2007 is rather enlightening.

  186. exec

    JR,
     
    Thanks….your lines worked well for me today!!

  187. hanna5

     CRM – unbelievable!!! Beat lowered guidance by 0.01, with EPS of 0.28 (yes, thats right, they may earn $1.20 this year if they fire on all cylinders)…..and the stock is UP $10 to $145!

    There really is no reason to try and think in this market. When something goes down, just buy it! Specially if others are talking about it, and you think its over-valued. 

    Maybe we should all buy LinkedIn? Double our money in a couple weeks? hmmmmm

  188. zeroxzero

     Brazil:  The Brazilian Real 40 day MA has risen from @ 42.5 to @ 60 since January 2009 vs. the dollar — @ 40%.
    The Euro, during the same period, moved from @ 132.5 to @ 1.43, @ 8%.  One would think a 40% increase in BRL would be enough to limit imported inflation, i.e., high prices for imported goods.
     
    A very brief perusal of the data [I am no economist] has not produced an obvious answer, other than the fact that Braziian growth has been very uneven, with average wages in urban coastal areas having risen to more than 7X the wages in rural areas.  The flash picture is of an economy that has developed so fast that wage inequality has increased tremendously, leaving a large percentage of the population with stagnant wages and huge increases in prices, relatively speaking.  I’m not sure why this would affect Bovespan, but the fact is that it broke through 70,000 in November, 2009 and bounced off that number 4 or 5 times, and has now fallen to 63,000.  Still confused.

  189. JRW III

    exec,

    You are most welcome  8-)

     

    Phil,

    Thank you!!

  190. pstas

    Pharm- any info on this one?
    Founded in 1996 and based in Lincolnshire, Illinois, BioSante Pharmaceuticals Inc. (NasdaqGM:BPAX) is a small-cap specialty pharmaceutical company focusing on female sexual health and oncology treatments.

  191. revtodd64

    Goober – Freud/Jung drugs  
    Back in the day cocaine was quite fashionable and not illegal yet, even in the original ingredients of Coca-Cola.  Freud was actually more interested in being a medical doctor and was working on a new form of anesthetic that would allow for operations to be performed on the eyeball.  He was very close to completing his work, but had to break off for a few days to see his fiance.  He fell behind a rival who perfected the procedure before he did, and the rest is history – he became obsessed with sexual behavior as the predominant cause of human emotions and actions; and famous for it, though not much appreciated by most mothers.  Apparently he imbibed with his prior supply of anesthetic material, which would explain some of his paranoia and selfish delusions of grandeur that ruined relationships with most of his colleagues.  But the guy was doing the first major exploration of the unconscious motivations of human behavior.   Pretty amazing work even if flawed. 
    I don’t think there is evidence that Jung used cocaine, he just had an extraordinary unconscious.  The guy used to have dreams whenever Winston Churchill set foot on continental Europe.  Sounds weird, but not as weird as a former client who would tell me quite seriously that she had Dean Martin stuck in her ass.  Other than that she was mostly "normal."

  192. ilene

    Today’s Levels

  193. revtodd64

     Since we are now off hours, did anyone see this article by John Bogle of Vanguard in the New York Times?  
    http://www.nytimes.com/2011/05/15/opinion/15bogle.html?_r=1&scp=1&sq=John%20bogle&st=cse
     
    "SHOULD Home Depot’s board report each year on the company’s political policies and spending? In a groundbreaking vote at the company’s June 2 annual meeting, Home Depot’s shareholders will have the chance to vote on a nonbinding resolution of support for the company’s policies on, and future plans for, political contributions."
     
    Interesting idea.  Make corporations accountable to the shareholders for political contributions.  Of course, if you are getting a 2700% return on investments, (quoted from Phil’s posting on the weekend about the oil industry) many shareholders might want the contributions to continue.  But Bogle points out many of the shareholders are institutions whose constituents are directly affected by the issues in a negative way.

  194. zeroxzero

     Goob:  We didn’t know you were once in the mining business.  Any opinion on coal?

  195. goober

    Zero –  I think Brazil ahd a few sources of great optimism in the last 2 years. One was a huge oil find in an offshore deepwater resource and the other was agriculture related and ethanol. More recently Mining contracts with China.  All three could peter out and likely will to some degree as some of it simply is not sustainable given world markets, especially China’s demand for copper and iron ore. A lot cheaper to ship from Austrlia as well. And the deepwater find is full of major technical problems as well as ethanol has its own inherent problems related to ag markets displacements. It is possible a bubble of swanzillas has been created in Brazil as well.
    Also you Israel link, seems to me just pandering for votes no different than pandering to illegals for latino votes ! They have all done it and I you speak out you are of course a racist…………..hogwash. PRAVDA has one well, brain washing most.
     
    Phil – I basicly agree with your points this AM on post, but Nationalize is not an answer for me. Some how we have to make the politicians responsible for their actions and I believe it can be done by prosecuting some of the worse offenders and getting rid of all lobbying and term limits. So if Obama is the guy you say he is why is he doing the same as the other guys ? What about the Rezko RE dealings ? Just saying I have seen lots of dirty dealing here as well.  Hugos solution is NOT my solution, many Venezuelans would agree with me and that admin will come tumbling down as well……….by the way, I am in to dreams within 5 to 10 minutes at most, sometimes less .   Its agood thing.

  196. goober

    Zero – I don’t know much about coal except that it is dirty. Coal releases lots of nasty stuff when burned. I have done quite a few mass excavations and that is all strip mining is. Then whatever you are processing for is setup to screens and weight reduction methods for tumbling/seperation. Its really very basic to extract, but don’t forget you have to reinstall the overburden and that cost as much or more than the original excavation. The most economically successful operations are in countries that are very lax on rebuilding the original geologic structure to any degree. Not a good thing except for profits today !   

  197. doro165

    RevTodd- ROLF!
    "Dean Martin stuck in her ass.  Other than that she was mostly "normal."" Where as things used to be a pain the ass they shall now be a Deano in the ass.

  198. angelcur

     In the prospectus Linkedin shows a proforma from last year showing earnings of $0.17 per share on 92M fully diluted shares. so closing price of $92.5 divided by $0.17 gives you a PE of 544x…sorry

  199. deano

     I will not comment further on the "deano in the ass" – other than to say –  if my wife ever get hold of that I’ll never hear the end of it!

  200. goober

    Thought this was kind of interesting on the international front
    http://www.zerohedge.com/article/step-aside-us-pakistans-new-best-friend-china-provide-karachi-50-new-jf-17-fighter-jets-expe
     
    This links up with the Chinese army troops now in Pakistan on the India border. In case you did not know, they have been there for a while. One of those little factoids we don’t see here in us because PRAVDA does not want you to know about it.

  201. deano

    Rev – thanks for the link to the Bogle article, the supreme court’s decision on the matter gives me more cause for concern than any of the other troubling issues that our society faces. Our country was supposedly founded on a fight against “taxation without representation” but is being unwound by a common practice of “super-representation without taxation” which certainly distorts the needed political checks and balances that our founding fathers intended.

    I really have no hope that the corporate

  202. deano

    Sorry – mobile issue – as I was saying – I have no hope that corporate shareholders can enhance the democratic process, as only the top 10% have any shares to speak of, and institutional money hasn’t exactly been brilliant in the past few years.

    If we don’t get the aristocracy out of congress, or the supreme court to reverse this decision, we are IMHO, doomed.

  203. zeroxzero

     Curious coincidence that I should write a few hours ago that Obama would continue U.S. support for Israeli occupation of the West Bank because he had agreed to speak at AIPAC soon, only to have him come out almost simultaneously for a return of Israel to its 1967 borders.
     
    I think it’s a pretty big deal.  It shows that Obama / U.S. policy is not entirely blind to the implications of the "Arab Spring."  Israel is a lynchpin to U.S foreign policy in the eastern Mediterranean — Stratfor recently did a great analysis of the Levant:  Israeli Geopolitics: Ancient & Modern.  
     
    The U.S. is going to have just one chance to switch horses from Arab monarchies and dictatorships [Saudi, Yemen] to newly-emerging popular regimes [how "democratic" remains to be seen].  The Palestinian issue is one of the few pan-Arab issues that unite sentiment against the U.S..  A U.S. that genuinely acts as a supportive and honest broker, instead of being seen to tolerate indefinitely the cruelty that is the Gaza Strip and the festering sore of illegal but unopposed settlements in the West Bank, has a chance of a reset with the entire Muslim world on arguably the only issue upon which Muslims from Indonesia to Arabia make common cause.  That would be better than killing a thousand Bin Ladens.
     
    "Bibi" Netanyahu is a hard-ass, no doubt.  But Israel needs to take a hard-ass look at what’s happening around them and wonder whether it might not be in their enlightened self-interest to alleviate the Palestinian issue to an extent that will permit Israel to continue an effective divide-and-nullify policy against its enemies, and allow Iran to become the focus of Muslim [certainly Arab] ire as the neighborhood bogeyman.  Even the Iranian mullahs are looking stressed out from watching the Arab Spring drama playing out on Al Jazeera these days. 

     

  204. zeroxzero

    Goob:  My coal comment was tongue in cheek.  As is this one.

  205. morxlntway

    not good WFR news esp since i own it at 13.50.
    http://www.tradershuddle.com/20110520231962/Candlesticks/candlesticks-bearish-engulfing-memcelectronics.html

  206. pstas

    Nationalize them!
    I have been eagerly awaiting the groundswell of support emanating from this group for  this proposal.
    Where is drumbeat of enthusiasm? This is bold  forward thinking. 
    C’mon, ride to the sound of the guns, people.

  207. goober

    Still don’t know much about coal, except its dirty .

  208. goober

    BIG PUTs were a big winner .see what happens in AM

  209. zeroxzero

     Phil:  You mentioned Taleb in a reply awhile ago, some dismissive of his banging the "black swan" drum.
     
    And so he does.  But I came across this from his recent book, which has some resonance.
     
    "Taleb: The map into this terrain is quite difficult to follow. You have to avoid having things fail too late. You have to avoid debt because debt makes the system more fragile. You have to increase redundancies in some spaces. You have to avoid optimization. That is quite critical for someone who is doing finance to understand because it goes counter to everything you learn in portfolio theory…. I have always been very skeptical of any form of optimization. In the black swan world, optimization isn’t possible. The best you can achieve is a reduction in fragility and greater robustness. You may have heuristics, but not an optimization rule. I hope the message will finally get across because I haven’t succeeded yet. People talk about black swans but they don’t talk about robustness, which is the real lesson of the black swans.

  210. jabobeast

    phil--any opinion on CRM?

  211. Phil

    Good morning!  

    Dollar hit 75 and oil hit $100 – that is a GREAT spot to short the futures! 

  212. Phil

    Brazil – Inflation is only good when you are in the country that’s inflating and don’t care what’s going on in the rest of the World, which is possible for Americans and probably to Brazilians, so we can weather a good deal of inflation (having food is key).  I would like bottom-fishing Brazil AFTER we pop the commodity bubble because that will hurt their exporters but then it will be good for the country itself and they can go back to growing and planning for the Olympics, which is one of the things that got people all interested in China years ago. 

    HOV/Bob – Sounds perfectly reasonable to me.  It may take a few years for builders to come back but if you don’t mind eventually having 4x at $1.50 then no biggie.  Keep in mind, when you get a basis down to $2, then all you have to do is sell a .05 call each month and that’s .60 a year on $2.  That’s why I love owning cheap stocks that aren’t going to go BK (hopefully).  

    Whee!  Oil $99.55 already.  Euro selling off so Dollar and Yen catching bids but Dollar at light resistance at 75.31 so careful here but if oil blows $95.50 we’ll be looking good!  

    Jung/Goober – I’m pretty sure Freud was a known coke user (snuff at the time) and prescribed it to others.  Jung I do not believe did drugs.  

    Nice – Oil below $95.50 now so it’s a stop there and .25 trailing after that.  75.387 is next goal for the buck and, if they get over that, we could see $98!  

  213. revtodd64

     Deano – I like that phrase "super-representation without taxation."  I agree, we are doomed if this is allowed to stand.  Its hard to figure a way out.  How about one house of Congress is done by lottery like jury duty?

  214. Phil

    Constructive/JBak – Well it’s an extreme position of course but I have learned that the best way to get a conversation going in the MSM is for someone like me to take an extreme position and then the conversation (hopefully) will move towards some kind of rational reform.  Clearly what we’re doing simply does not work and it’s a global issue.  The Times won’t take an Op-Ed unless it’s original, unfortunately and I always write here first but it’s already getting picked up all over the place and SA asked for special permission to run it so it’s already getting attention I suppose.  That’s all I care about – getting the ball rolling is satisfying for me.  As far as being constructive – oil companies, globally, need to be regulated like utilities.  They can be private but there should not be an incentive to maximize profits based on charging as much as consumers will bear and, of course, speculation must be stopped.  I always find it silly that OPEC has any power at all – they NEED our money as much or more than we need their oil.  Organize a buyers strike between us, Europe, Japan and China and they’ll agree to pretty much anything within 10 days.  How about reinstating blue laws?  Close businesses on Sunday and encourage people not to drive (minimally drive) one day a week and maybe knock fuel usage down by 5-10% globally.  

    Israel/ZZ – Always a tough situation for Presidents.  Keep in mind that, strategically, if it wasn’t for Israel, the Saudis would be our only "friends" in the entire region and they sure aren’t going to spy for us or let us run missions out of their bases.  In fact, aside from the CIA, the Mossad warned us in August of 2001 that "it had picked up indications of a "large-scale target" in the United States and that Americans would be "very vulnerable.""  Of course we ignored it but it’s nice to know that at least someone is looking out for us in that part of the World.  Kind of hard to trust the Saudis when that’s where 15 of the 19 hijackers were from but they didn’t know nothin’ about it.  

    Speaking of Saudis – Prince Alwaleed is CNBC’s special guest this morning!  He’s going to tell them what he’s going to spend our money on…

    CRM/Hanna – I think we have to assume that any company that’s relying on the Web for a business model and has even the possibility of claiming they can function in China is going to get outsized valuations.  This is what happened in 1999 because, as more and more analysts capitulate to higher valuations – they tend to adjust just one or two factors 

    $99 oil!  It’s good to take 1/2 off here as it’s so unlikely we don’t bounce that it’s not worth chancing it. 

  215. Phil

    Dollar rejected at 75.50 and now we see if they hold 75.38 going the other way (which would be bullish).  This is the same BS every day, they ramp up the Dollar into the open while they can hold the pre-markets up on light trading, then the ditch the dollar while the market is open to pull in the EU money while the big boys sell.  If I’m right about this kind of manipulation – it means we are heading for a very large and very sudden sell-off at whatever point the Big Boys are out (and don’t forget still being in but having bought cheap puts to cover is just as good because you can dump the rest of what you own with no consequences).  

    Bovespan/ZZ – It’s the same problem the Russell has.  The small-cap companies are subject to the same inflationary cost increases and have to sell to underpaid workers who are suffering from inflation so margin gets squeezed.  I wouldn’t buy the Brazil index but exporting companies are likely to be the winners once a correction in commodities is done.  

    Here’s one for you Rev:  

    Also, this is cool, the original, original 1902 ad for Coke:  

    At least back in the day, they were honest about sodas being drugs….  

    Contributions/Rev – Hmm, I guess that will now be an issue.  And then it will be an issue for CEO candidates and board members whether they are Republicans or Democrats because shareholders will not want someone at the helm who will divert company profits to politicians they don’t support – this can get very messy.  

    Dreams/Goob – How do you know when they start?  I only know I’m having one if I wake up at the time.  Anyway, do you know what a gallon of gas costs in Venezuela?  9 cents!  Enough said….

    Dollar just crossed $75.50 and gold just dropped $10 in 10 minutes.  Morning trading is so much fun!  Oil still holding $99 for the moment.  

  216. Phil

    Got to work now, if anything urgent, feel free to bring it up in next post.  

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