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Technical Tuesday – Greece in Crisis – Yawwwwn!

$USD WEEKLYWhat silliness in the Global markets this morning.  

The Hang Seng opened up nicely at 22,206 and fell 250 points to 21,952 just after lunch and came back to 22,062 – essentially flat for the day.  The Shanghai Composite opened flat at 2,760, also fell 1% by lunch to 2,736 and then rallied back to flat for the day.  The Nikkei, on the other hand – gapped so far up at the open (100 points) that even the all-day sell off left them up 70 points for the day at 9,648.  India, on the other other hand (and they have Gods with many hands so it’s OK), was pretty flat but they are up 5% for the week so all seems well over there.  

Europe is mixed (up) as well with the CAC and FTSE up about half a point but down from being up a full point in early trading, while the DAX opened at 7,167 and now failed to hold 7,100 and are down 0.2% at 7,093 (7:30 am).  What is Germany’s problem?  German consumer confidence is still high and the economic expectations index is up to 50.3, up from 46.1 in May – maybe too much as there’s simply no reason for Germany to maintain an easy-money policy and, of course, it’s their bailout money the rest of the EU is counting on

"The pace of activity is set to moderate in the coming quarters but today’s survey shows some resilience for consumer spending," the GfK said.  The income-expectations index leapt to 44.6 from 25.9, GfK said, adding that this "very positive development" is further boosted by the fact that price pressure on consumers hasn’t intensified any further of late. The propensity to buy index increased to 35.1 from 31.5.  "Positive economic results and extremely pleasing labor-market figures are improving consumers’ planning security, which plays an important role, particularly where larger purchases are concerned.

I already sent out an Email Alert to Members this morning pointing out that, last Tuesday, we had the same Greek uncertainty with the same protesters outside of Parliament with the same critical vote looming that was too close to call – and we had a huge rally.  We’ve been bullish since last Friday and we obviously had no reason to change our minds yesterday as we moved nicely over our 2.5% line on the Nasdaq and ran the NYSE right up for it’s test of 8,073 this morning – which will probably be our most critical pass/fail test of the week.  

At the time (6am) we were at the lows of the pre-market trading as an EU official said "There is no plan B," which sent the Dollar flying to it’s highs of the session and knocked down everything else.  Nonetheless, we maintained our faith in the manipulators to turn things around and we looked for a bullish play off the Russell 800 line in the futures (/TF) along with our standing play on Gold (/YG), which took us back down to $1,500 but bounced back nicely as the Dollar calmed down.  

Gasoline futures should be the most exciting play of the day as the new August contracts became the front-month this morning (/RBQ1) and I simply don’t see gasoline staying down at $2.764 so we were loving that for an upside play since last night’s Member Chat.  Our expectations are simple – the Dollar topped out at 75.90 in overnight trading and we don’t expect it to get back over there (other than a brief spike) and, probably shortly before we open for trading – we expect some kind of announcement that will take the Dollar down and goose the markets – JUST LIKE LAST WEEK!  Why change the play when it worked so well before?  

What will it be?  What will they say?  Who will say it?  It’s very exciting waiting to see who puts the knife in the Dollar’s back.  CNBC has Meredith Whitney scheduled for 8am and you know she’s going to go all doom and gloom on the Municipal Bond situation – that’s going to hurt Dollar confidence.  At 9 am we have what is widely expected to be another terrible Case-Shiller Report, followed at 10 by Consumer Confidence (or lack thereof), the Richmond Fed and the State Street Investors Confidence Report.  At 1pm, Fed Governor Fisher gives us "A Report on the Economy" at the same time as Treasury is selling $35Bn worth of 5-year notes so it’s going to be fun, Fun, FUN ’till Bernanke takes our T-Bills away!  

The goal for the day is to take the Dollar below the 75.50 line (now 75.85) and that should give the markets at least a half-point lift, which puts us in striking distance of our goal lines at the "must hold" levels we expected to hit this week (at least).  We’re not expecting last Tuesday’s 150-point pop in the Dow (12,200 was the top, which we shorted then) but a more subdued move that lasts through Friday and takes us, very likely, over that line.  Failure to break over that line by Friday will make us MORE bearish over the weekend (we already plan to be bearish, no matter what).  

Speaking of bears – I know someone who will not be happy that oil is moving back up as SOMEONE (not us, we’re long this week) made a MASSIVE short bet on XOP (Oil and Gas Exploration ETF) on September $54 puts (now $3.25) yesterday, purchasing about 20,000 in a ratio spread where 10,000 $59 puts (now $6.30) were sold to cover it.  This trade is very bearish as it takes quite a while for the gains on 2x the $54 puts to outpace the loss on the $59 puts that were sold (about $48 is break-even) so this guy needs a 12% sell-off just to get even.  Perhaps this bet was based on the poor report on the viability of shale drilling but we found it easier to go long on oil and natural gas ($4.20 yesterday) than mess around with an annoying bet like this one is likely to be.  On the bright side – if the player is SO WRONG that XOP ends up OVER $59 – at least he gets out even.  

I doubt the seller was Harry Hamm, who claims there are 24 BILLION barrels of oil in the Bakken Fields of North Dakota and Montana – that would be enough oil to supply the entire US for 1,200 days or about 6.5 years of imports or, even more important, about 21 years of what we import from countries besides Canada and Mexico (who’s asses we could kick any time and take all their oil!).  Hamm’s CLR is the largest owner of that land so perhaps his statement is a bit self-serving but, then again, he is the CEO of CLR and not likely to purposely make blatantly false statements either.  Extraction costs at Bakken are high – $50, so exploitation depends on either drilling costs coming down or oil prices going up but, long-term, CLR does make for an interesting play (now $60.50).  

You can sell the CLR Dec $55 puts for $4 for a net $51 entry – that’s a nice way to establish a foothold in Bakken and makes a nice hedge against long-term energy inflation.  If, for example, you spend $3,000 a year on gas for your family, you can sell 3 contracts for $1,200 to cut 40% off your fuel bill and if oil goes up, you have a nice upside buffer as the puts are very likely to expire worthless.  

If oil were to go down far enough to knock CLR under $51 (last time it was that low was last October, when oil was $75 and gasoline was $2.10) – then you would be saving (most likely) about $1,000 of your fuel bill and obligated to buy 300 shares for net $51 ($15,300) and then you could sell 2013 $50 puts and calls for (about) $8 and you put another $2,400 in your pocket and now you’re paying for (at $2.10 a gallon) your ENTIRE annual fuel bill with the proceeds from your CLR option sales.   Isn’t this a nice idea? 

Keep in mind your collection of $2,400 would be pretty much simultaneous with your assignment (if you don’t just roll the short puts) and you already had $1,200 in your pocket that you didn’t need because gas prices came down, not up – so your net on 300 shares of CLR at $55 – $12 collected is just $12,900 ($43 per share) and you short 2013 $50 puts could land you with 600 shares at an average of $46.50.  As I often say to Members – if you don’t REALLY WANT to own 600 shares of CLR at $46.50 (23% off the current price) then DON’T sell 3 $55 puts for $1,200 but, if the "downside" sounds appealing to you as a long-term investment – then this is an easy decision, isn’t it?  

Anyway, it’s time to work now:  Greece, Greece, Greece and maybe Housing will drive the day but then back to Greece this evening so we’re just going to watch our levels and have some fun while we wait for things to sort themselves out.  It’s all about the 75.50 line on the Dollar – over is bad for the markets, under is good!  

 


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  1. pentaxon

    Phil,
    Could you structure a trading idea: I think the swiss franc is 20-30% overpriced based on economic fundamentals. However apart from the economic side it has the same safe haven function as gold. Recently it even outperformed gold quite a bit, meaning the gold in swiss franc is as cheap as 14 months ago (!). I think if the panic increases gold will climb more that the swiss franc and if things ease the swiss franc will fall more than gold will. I see a potential of 10-20% maybe until the end of the year. Therefore I want to go short on the swiss franc (FXF) while going long on gold (GLD) with about the same delta. How would you structure this bet? Thanks.

  2. jabobeast

    Chipotle Mexican Grill (CMG) is able to pass on its price increases, and with commodities coming down, these increases will be pure profit. Cramer thinks this turbo-charged growth stock has plenty of room to run.
    FU Cramer!!

  3. BruceE

    Oh my God Phil – you are so amazing!  My futures trades just paid for my kid’s tuition this year.  Thank you, thank you, thank you!  

  4. pentaxon

    Phil you have a mistake in todays title. I think it should be "Tampering Tuesday" instead of "Technical Tuesday"

  5. jabobeast

    what knocked the futures up?

  6. pentaxon

    jabo: answer: what knocked the dollar down(?)

  7. jabobeast

    pentaxon—good point

  8. dday97

    Woke up late, what a day to miss futures. Oh well, I have a strange feeling USO is going to offer us an opportunity today.

    Broker: I still use optionsxpress. Haven’t failed me yet and gave me a good deal on commissions. But I’m not married to them so if I could find a better deal I would.

  9. Pharmboy

    PP for today.  Have a good one all.

  10. samz3700

     pentaxon asks about the trade Gartman is always tlking about – long gold in some other currency – unless you have the ability to buy gold in some other currency you hppen to hve seems like your only option is to short te us dollar against swiss franc and go long gold an equal amount  if you think aout it – if you short the swissie and buy gold directly you are going o hve to exchange your profits for dollars as some point even if you can directly buy gold woth the swissie – assuming you move there

  11. samz3700

     guess should not post with a BB  

  12. JRW III

    Good morning,

     

    IWM   77.90,  78.54,  79.19,  79.52,  79.77, 79.96,  80.18,  80.48,  80.81,  81.09 and  81.59

  13. pentaxon

    samz: if I sell FXF (swiss francs against usd) and buy the same amount GLD (gold against usd) then this actually is like buying swiss francs in gold (curr. triangulation)    USD/FXF * GLD/USD = GLD/FXF
    or am I missing something?

  14. lapper

    Thoughts on Q end.  Usually Q end gets jammed, but the last day of the month is actually negative, as funds jump the gun and start unloading after 3-5 days of gains.  This Q, however is special for 2 reasons.  First, the minor one, is Greece.  Most likely voted yes, most likely sell the news event just like the week ago.  Second, the major one, is the QE2 end.  Simply too big to ignore.  I would not be amazed if the sell-off will start earlier this time around, possibly right on Greek ‘news’.  Anything can happen obviously, but one is planning to short into the weekend, perhaps should watch for levels and establish toe-hold positions sooner than Friday.  Just my 2c

  15. pentaxon

    should have been USD/CHF * GLD/USD = GLD/CHF   (short FXF = USD/CHF)

  16. Phil

    Good morning!  

    Futures got a nice bump and we’re up BUT gold is not up on the down Dollar so that’s a concern that the move isn’t real or, perhaps it indicates that if the EU is "fixed" then a lot of EU investors are getting rid of gold they no longer think they’ll need on a Euro collapse.  That’s how the Dollar and gold can drop at the same time.    Silver is down too so the theory holds water but it doesn’t hold oil as that’s at $91.50 (rejected from $92).  That’s because oil is bought with Dollars and we buy a hell of a lot of it every day so a weak Dollar is always going to pop oil in the short run.  

    The Pound was rejected at $1.60 (bad) and the Euro tested $1.433 and failed and is now back at $1.4306 and a failure to hold $1.43 on the Euro will be bearish for our markets.  EU markets have cheered up with the CAC up 1.3%, FTSE up 0.85% and even the DAX turned around, now up 0.36%.  No major news except LaGarde has been endorsed to lead the IMF and I guess it’s good to have a known entity in place

    NYSE 8,073 is our goal of the day – not much else matters and, of course, we need to hold it.  It would be BETTER to slowly move up than to spike up like we did last week – volume would be nice too.  

    The Dow should be well over 12,100 so let’s call under 12,100 a problem and the June 30th DIA $121 puts should be .85 or less and those are the way to go for a downside cover with tight stops above 12,125.  Hopefully we won’t need it!  

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Consumer Confidence
    10:00 Richmond Fed Mfg.
    10:00 State Street Investor Confidence Index
    1:00 PM Fed’s Fisher: ‘A Report on the Economy’
    1:00 PM Results of $35B, 5-Year Note Auction

    At the open: Dow +0.3% to 12080. S&P +0.3% to 1284. Nasdaq +0.2% to 2694.
    Treasurys: 30-year -0.2%. 10-yr -0.13%. 5-yr -0.16%.
    Commodities: Crude +0.5% to $91.06. Gold +0.21% to $1499.60.
    Currencies: Euro +0.13% vs. dollar. Yen +0.08%. Pound -0.11%.

    Market preview: Benchmark S&P futures +0.5%, boosted by the first rise for the Case-Shiller Home Price Index in eight months, although retail data is mixed (III). European shares are also higher as German banks reportedly agree to roll over Greek debt. LinkedIn +5.4%after after positive analyst ratings (III). Later: consumer confidence, Richmond Fed. 

    ICSC Retail Store Sales: +2.9% W/W, vs. -0.7% last week.+3% Y/Y, vs. +2.2% last week. ‘Lower gas prices are encouraging consumers to spend on other goods especially seasonal goods and food’.

    Redbook Chain Store Sales: +2.5% Y/Y vs. +4.2% last week. A post Fathers day lull and heavy weather in the Northern Plains and Midwest slowed down the sales.

    April S&P Case-Shiller Home Price Index: 20-city index -4% Y/Y, the biggest drop since November 2009, -4% consensus, -3.8% in March. Home prices declined in 19 of the 20 metro areas tracked; Washington D.C. was the only market where home prices rose Y/Y. However, prices +0.7% from March for first M/M rise in eight months.

    Greek unions kick off a two-day strike against austerity measures, promising to fill the streets of Athens with protestors of all stripes. More than 5,000 police are expected to be deployed to contain the mayhem. 

    Plan B!  Possibly more likely as the source of the big move higher in the euro and European shares is a report that German banks have agreed in principle to the French plan for rolling over Greek debt. Euro +0.1% at 1.43. Stoxx 50 +0.6%.

    The EU’s Olli Rehn denies yesterday’s report officials are preparing a contingency plan to assure Greece doesn’t default should its Parliament not pass required fiscal reforms this week. Was it Rehn or Jean-Claude Juncker who endorsed lying as acceptable public policy … never mind, it was Juncker

    Sources say 10-15 of the 91 EU banks undergoing stress tests have failed the exams. Perversely, "a number in the teens" appears to have been chosen beforehand as a way to prove the tests’ credibility, with the unlucky lenders selected later … and the Chinese get a hard time for fraud? 

    WOW – THIS IS HORRIFYING!  Congress wants to now get rid of the SEC, who oversee our $40Tn markets, and let the Banksters police themselves!  Yeah, vote Republican – they’re really looking out for the American people, aren’t they?  This is what I keep telling you the plan has been for years – Break the budget, cut back Government regulation – commit rampant crimes – the main difference between Greece and us is that the Greeks are smart enough to know when their  Government is selling them down the river to Banksters:  Congress may replace the SEC with Finra in overseeing almost 12,000 investment advisers who manage about $40T. It would be cheaper than boosting the SEC’s resources, as Finra’s $877M budget is paid for by the brokers it regulates. A former regulator calls the idea "very bad."

    New Jersey officials are apparently in negotiations to secure a temporary $2.25B bank loan to cover a cash shortfall. The state needs the money to pay certain bills in between when its new fiscal year begins on July 1 and its usual late-summer bond offering. 

    Meredith Whitney sticks out her neck again, warning that July 1 will be a key date for the municipal bond market, since that’s when new state budgets take effect and will prompt aid reductions to many localities. "This is the sad reality of where we are… It will sting the sharpest when the states at the beginning of July cut aid off to municipalities."

    Oh, that’s OK, then:  "Everybody here knows that a Chinese company has 4 separate accounting books," says a local banker. Chris Rynning, chief of a Beijing PE firm, and once-burned himself, hires his own people to sit in the offices of his portfolio companies. "It’s not whether (fraud) happens, but how you protect yourself against it." 

    At a massively attended annual meeting, TEPCO (TKECY.PK) shareholders reject a motion for the utility to abandon nuclear energy. Accidents or not, the resource-poor country is heavily reliant on nuclear power to supply a significant portion of its energy needs.

    Moody’s cuts Toyota’s (TM) credit rating one notch to Aa3, saying increased global competition, a strong yen, and high raw materials costs will pressure company profits next year. The move will raise borrowing costs for the firm as it has about $85B in paper to roll over in coming months.

    In a Q3 trading update, Siemens (SI) says it expects sales to be up on the year but flat compared to Q2, as "the tailwind from the economic recovery is likely over. Now, increased efforts are required for continued growth." Shares -3.9%

    LinkedIn (LNKD) is initiated with a Buy at UBS, with a $90 price target. Shares +3.6% to $79.11. (see also: JPMorgan’s view)

  17. dclark41

    Phil:
    Good call on the dollar. They shoved it down below $75.60 and up we go. ……..but for how long?

  18. gucci

    Hi Phil – Nedd your rec.  Sina 11 Jan 80 short  put sold for 16.67, before I left for vacation I sold 5 July 90 short call for 4.20.  Should I roll 2x to higher strike or turn this into a spread. thx

  19. Savi

    Phil--is there a play on LNKD--short?
    Tnx

  20. stjeanluc

    Good morning/afternoon from Paris!
    Oil Lines
    R3 – 93.47
    R2 – 92.44
    R1 – 91.67
    PP – 90.64
    S1 – 89.87
    S2 – 88.84
    S3 – 88.07
     
    Really jet lagged now as I just got off the plane 3 hours ago and drove to my friends in Paris. Of course, there was a strike at the airport!

  21. Phil

    Swiss/Pentax – I don’t play currencies, just watching the Dollar lately because it’s moving the markets.  I agree with your take on the Franc but you are jumping ahead a bit assuming the EU won’t blow up (still a few hurdles to jump).  Options on FXF are VERY thinly traded (and I mentioned above that gold can now go down with the Dollar) but if you assume a move back to the 200 dma around 108 on FXF, then the Dec $114/110 bear put spread at $1 is a nice way to make 300% if you are right or you could aggressively go for the Dec $120/113 bear put spread at $3 and sell the $121 calls for $3.10 for a .10 credit on the $7 spread that’s $1 in the money (up 1,000% already) or, if you want to be bullish on gold (which I disagree with), you can sell the GLD Jan $136 puts for $3 instead for a free play on the short FXE if gold holds $1,360ish.  

    CMG/Jabob – That’s not a bad premise.  Keep in minds these are just Cramericans buying at the top and it’s probably a great time to sell the $300 calls for $9.30 as they can be rolled to Aug $320s even. 

    College/Bruce – That’s great.  I hope you made a nice, non-greedy exit – we don’t want your kid downgraded to community college if the Dollar pops!  8-)

    Tampering/Pentax – Good point.  

    Can’t get that Dollar below 75.60, let alone 75.50.  Somebody buy some Pounds!  

    What/Jabob – Dollar down since Whitney on realization we have plenty of troubles too.  

    Sell on the news/Lapper – For sure we will begin hedging ahead of Greece, no matter what.  We made the mistake last week of initiating hedges too early (although they all worked out in the end) so I’m trying to be more patient today.  

    Thanks DC!  I don’t know who, what, when or how but I do very strongly believe that , SOMEHOW, the Dollar will fail 75.50 today and the Dow will be up 100 again.  As I said yesterday, it’s like knowing that, SOMEHOW, Indiana Jones won’t die falling off the cliff – whatever silly, ludicrous stroke of luck happens to save him is all just part of the pre-ordained plot so we just sit back and enjoy the special effects.  

    SINA/Gucci – Well the Jan $80 puts are down to $13 but if you only sold one, that’s not much help, is it?  On the short calls – well you already sold the put so just roll ‘em out.  5 $90s are now $12.30 so you are just down $8 and you can roll them to the Aug $110s at $8.50 so I’m not even sure it’s worth doing unless that roll starts to go negative on you.  

    LNKD/Savi – Not the same day as JPM goes all bullish, nor during a week when the whole market is being shoved up (75.50 on the Dollar, by the way!) – being bearish on anything is silly right now.  

    75.49 and look at that S&P fly!  

    The little Dog laughed to see such a sport, And the Dish ran away with the Spoon

     

  22. flipspiceland

    @Felipe
    Having difficulty finding the NYSE volume stat. All the other exchanges make it readily available but NYSE doesn’t.
    Where do you find your volume figures during the day when you comment on the breadth (or lack of it) each day?

  23. Damion

     When do you think we should take profits on last week’s bullish spreads?  

  24. dclark41

    Phil:
    The banks aren’t participating? and sadly, nor is CSCO.

  25. Phil

    75.40 

    75.39 – ROFL!  That blatancy is astounding!  This should be a tough line to cross though so be careful.  S&P 1,290 and RUT 810 are hard to cross, as is NYSE 8,100 but, of course, these are 1% moves and we’re up 2% from Friday’s low so this is the pullback line off a 2.5% move (20% retrace) and SHOULD slow us down at least.  

    12,140 is THE SAME line we consolidated on last Tuesday morning as that 5% Rule trumps all other technicals!  At 11, we took off again and tested 12,200.  The S&P was right on the 1,290 line and powered on to 1,300 and the NYSE was higher, at 8,120 and topped out at 8,175.

    The Nasdaq, on the other hand – has blown past last weeks highs already (2,690) and is over 2,700 so we’re bullish until we lose that and/or 810 on the RUT, which was where they were rejected last week.  

    So we’ll watch the NYSE and if they’re grinding up to get over 8,120 – all is well.  

    75.35 – I am once again ashamed to be a participant in this sham of a market but – Wheeeeeeeeeeeee!  

  26. dclark41

    Wow, dollar now $75.35!

  27. Phil

    Volume/Flips – I only watch the Dow volume as it has less noise in it and, if one of the 30 components has unusual activity, it’s easy to smooth out the data.  I get the Dow volume on Power Erade Pro.  

    Profits/Damion – Good question, see my answer above.  We’re going to the moon at the moment.  

    Banks/DC – That’s because they have to give up and decide to pay us off on our FAS bets if they take XLF any higher (and the short XLF $15 puts).  I’m not too worried and I didn’t expect them to leap higher – just a nice grind back to $16.50 on the XLF over time.  As to CSCO – I think I’m going to call a moratorium on watching them until 2013 – then we’ll see how they’re doing.  

    75.31 – too slow DC!  8-)

  28. etradingsignals

    I was on Jul 16/20 EDZ spread for protection (which is net profitable as of now). It was mainly meant to be a hedge on my longer term portfolio. I want to roll it to a further out spread. What would you recommend?

  29. rainman

    "Finra’s $877M budget is paid for by the brokers it regulates". — ‘nuf said.

  30. angelcur

     the euro financial sector cds is up 4%…notice i-banks not participating today

  31. matt1966

    Phil, how can we dance while the world is burning?

  32. yodi

    For NLY players Stock down to 18 and the Jan 13 17.5 c can be sold for 1.06 .54 extr. value

  33. rainman

    One for you Phil — SHELL GAMES: A Reuters Investigation
    "At a single address in this sleepy city of 60,000 people, more than 2,000 companies are registered."

  34. lvmoda

    Amazing.   Dollar breaking 75.275.   Must be risk on!  Animal spirits watching the Greek riots?

  35. jerconn

    Phil, just watching our Friday bull calls:  those QLD 77 calls respond to nothing, it looks like, but the USO 35/36 BCS is doing nicely – do you still think USO has not much legs or let it ride?

  36. jerconn

    Sorry, Phil, just saw the question was just asked…

  37. yodi

    I learned a lesson on long puts they are there to protect your stock I bought the PUDA good chinies stk for 13.20 you can sell it today for 6.00 but no one is buying no trading!!! To cover my back I bought the 15p AUG for 4.00 so my cost now is 17.20. Well when buying a put and you excersise this put you lend up with 15$ short stock you not be able to trade any more. As I am normally not an option buyer Thinking well you have 15$ in your pocket However if you do not have the stock you are now short 100 shares @ 15$ I had the stock however and landed with a credit of 15.00 giving up the I bought stock. So my final loss was 2.20 per 100 shares.

  38. revtodd64

     Rainman – very interesting article, thanks for posting.

  39. gucci

    Hi Phil — SINA I sold 11 Jan short put not one.

  40. gucci

    One more question, I saw your comment flip bullish keep July 116/119 bear put spread or close it out thx

  41. terrapin22

    Phil / Gold miners – do you like HMY here or another miner and, if so, what spread would you recommend?

  42. tuscadog

    Phil / Perspective   So 50% of the Greek population are going to be committed to civil disobedience now.  So, austerity to save the foreign banks will be unenforceable, which means that the German and French banks will take a major haircut, whatever they call it, and this will now spread to the other PIIGS.  So, while this week’s Ponzi frenzy reaches it’s manipulated zenith, the reality will likely bite as soon as next week.  Also, in July, Meredith reminds us, the State cutbacks to municipality funding begins, under the new State Budgets, so watch the layoffs accelerate and the unemployment #’s deteriorate. 
    Euro slide, dollar up, oil and commods down, mkts down big?
    The UK has a big concentration of banks and commodity stocks and Ireland will be the next disaster.  Would shorting the Footsie via a triple short index (symbol?) be a good strategy to get max downside leverage?
    Sounds like you’re going to pull the short trigger on Friday morning?

  43. yodi

    tuscadog
    EUro bank haircuts I trade DB and they up 1.15 today

  44. angelcur

     france’s greek rollover plan conditioned on no deffault rating..just in from a friend

  45. jomptien

    Markets are crazy but others are living large – not just JRW

    *********************************

  46. jomptien

    OOps picture didn’t print, sorry

  47. acd54

     flipspiceland
    In TOS use the symbol $TVOL for NYSE total volume, $UVOL up volume, and $DVOL down volume.  You can make a Watch List with these symbols.

  48. Phil

    How/Matt – Oh great, now I have that stuck in my head!  

    NLY/Yodi – Good call, thanks!  

    Shell games/Rain – Wow, you know our system is broken when a US company uses this pitch right on their web site:  

    "A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy," the company’s website boasts. "A person you control… yet cannot be held accountable for its actions. Imagine the possibilities!"

    Dollar back to 75.45 and rejected did not kill the rally – that’s a very good thing as now they have some dry powder to drop the Dollar again and pop us over those resistance lines.  Volume is dreck, though – just 39M on the Dow at 11:11.

    USO/Jercon – If we can’t hold $91.50, I’d take that money and run.  On QLD, you just have to wait it out on the $77 calls but we’re at $84 so looking good!  

    EDZ/Etrad – If you can get out with a profit – do that by all means and then you can decide if you like an Aug or Sept set-up when/if we begin to falter (or Friday).  

    SINA/Gucci – Well that’s much better then!  Same deal though – just don’t let a roll get away from you but you have good upside coverage still.    Sorry on the 2nd part, I have no idea what spread you are talking about.  

    HMY/Terra – I don’t like them as much as I did at $10 but I still like them.  However, I find ABX more compelling at $42.50 and NAK is getting interesting again at $9.35.  So 3 plays on miners:  

    HMY 2013 $12.50/17.50 bull call spread at $1.50, selling $10 puts for $1.20 is net .30 on the $5 spread so 15,666% potential upside and the worst thing that can happen is you get assigned HMY at 20% lower than it is now (net $10.30).  

    ABX 2013 $30/50 bull call spread at $10.30, selling $40 puts for $5.50 is net $4.80 on the $20 spread that’s $13.82 in the money (up 187% to start).  Since you make $15.20 at $50, you can sell Aug $46 calls for $1.10 with a reasonable degree of safety.  Make 5 sales like that over 18 months and you have a free spread and the worst case is you own ABX at net $40.  

    NAK is just speculative but you can sell the Feb $7 puts for $1 and buy the Feb $7/13 bull call spread for $2 so net $1 on the $6 spread that’s $2.40 in the money and worst case is you own one of the World’s largest deposits of copper, gold and molybdenum at net $8.  

    Stop it Tusca – you’re depressing me!  It won’t all unravel next week.  If they pass the deal then it will take about 2-3 months to realize that they’re not collecting enough (and never will).  The fulcrum of the whole thing is the Dollar – why play EU markets when the Dollar flies up to 90 and takes the Dow back to 10,000.  Is the money you make betting the EU short better than the money you make playing the Dow short?  For myself – I just don’t want to watch 100 different things – I live in the US, I play mainly US markets and mainly US stocks because it’s right in front of me.  When you go flipping off to whatever hot-button market you’re looking at every month or so, you are bound to get burned by situations you fail to fully grasp (and I don’t mean YOU, I mean me, anybody..).  

    Thanks Angel!  

    We finally got rid of Europe so maybe now we can resume crushing the Dollar.  They seemed to be buying them while they were cheap into the EU close.  Now we have 75.42 on the Dollar, $1.436 on the Euro, Pound at $1.6015 and 80.85 Yen to the Dollar so, like yesterday, they can afford to take the Yen down from there but we’ll be happy just to hold the Pound over $1.60 (bearish signal if they fail it) and the Euro needs to bust over $1.44 for us to get a good leg up from here.  

    Oil is playing around the $91.50 line, hopefully just consolidating for a move up over $92.  /RB up to $2.803 already – huge move for a day at $4,200 per penny per contract!  Nat gas at $4.35, copper $4.11, silver rejected at $34 at $33.83 and gold back over $1,500 at $1,503.5.

    I’m still thinking this is the pause that refreshes the rally at the moment.  

  49. gucci

    Sorry DIA I have 25 bear put spread from last week your rec July 116/119 spread for 98c

  50. jabobeast

    when is the greece vote?

  51. Phil

    09:46 AM Don’t expect an up Tuesday after a big Monday. Bespoke notes that the last eight times the S&P has rallied by more than 1% on a Monday, it has declined on the following day. - These guys are losing it with their market history BS, that’s why I stopped reading them

    10:00 AM On the hour: Dow +0.59%. 10-yr -0.16%. Euro +0.24% vs. dollar. Crude +0.92% to $91.44. Gold +0.13% to $1498.40. 

    10:26 AM European share markets are melting higher, the Stoxx 50 gaining more than 1.5% over the last 90 minutes, now +1.3% for the day. Shares in Athens +2.5%. Violence in the streets says one thing, markets another. It appears the votes are there for Greece to pass necessary austerity measures this week. EZU +1.4%.

    11:00 AM On the hour: Dow +0.87%. 10-yr -0.23%. Euro +0.55% vs. dollar. Crude +1.08% to $91.59. Gold +0.54% to $1504.50.

    11:17 AM Treasurys are mostly lower after the Fed buys $4.62B in bondsof $17.888B offered by dealers, though they’re still holding up on the long end. The 30-year yield -0.01 to 4.28%; 10-year +0.03 to 2.96%; five-year +0.05 to 1.5%; two-year +0.04 to 0.44%. Just two shopping days (and $6B-8B in purchases) left in QE2

    10:02 AM June Richmond Fed Mfg. Survey: +9, to 3 (above 0 = growth). Shipments +12 to -1, new orders +16 to 1, jobs -2 to 12.

    June Consumer Confidence: 58.5 vs. 60.5 expected, 61.7 (revised) in May. Expectations 72.4 vs. 76.7 (revised). Present situation 37.6 vs. 39.3 (revised). "This month’s decline in consumer confidence was driven by a less favorable assessment of current conditions and continued pessimism about the short-term outlook," the Conference Board says

    June State Street Investor Confidence Index: 99.2, down 4.9 from April’s 104.3. North America dropped 5.8 to 100.4, while Europe rose 8.5 to 87.9, and Asia-Pacific slipped 3.7 to 93.2

    Nice Dollar Dropper!  ECB President Trichet looks to have confirmed another rate hike in July, telling a news conference, "we are in a very strong vigilance mode," … ‘strong vigilance’ being ECB-speak for higher rates. The euro continues higher, but it’s all about Greece for the moment. FXE +0.4%.

    Slightly Euro bullish:  Portugal’s new government, finding the previous administration misrepresented the true condition of state financial affairs, plans to speed up austerity measures to meet goals set by the EU/IMF. Details on a 4 year fiscal reform program are due out this week.

    On to Plan B: With California’s fiscal year set to begin Friday, Governor Jerry Brown says he and Democrats in the legislature haveclosed the state’s $9.6B budget gap without GOP support (though the plan assume $4B more in revenue than earlier forecasts). With no new taxes, the plan relies on one-time items – meaning that even in the best case, the can is kicked to 2012.

    Traders continue to push the Swiss franc to new records vs. the euro and the greenback, unafraid of intervention by the SNB. The central bank, under political pressure due to major losses from last year’s interventions, is seen as handcuffed from stepping into markets now. FXF+0.9%

    HSBC (HBC) chief Stuart Gulliver says to expect the yuan asone of the three main reserve currencies in 15-20 years, along with the dollar and euro. China’s former central bank chief Dai Xianglong agrees with that timetable: massive yuan trade settlements, then free convertibility, then reserve currency.

    The moderate slowdown in China isn’t hitting all sectors equally. Inventory heavy sectors like steel, copper, and cotton are taking the brunt of it. Folks still have to eat though, and domestic feed prices – notably corn and beans – have barely budged. 

    In an open letter to Spreadtrum Communications (SPRD -27.1%), Muddy Waters says it’s "identified a number of issues in SPRD’s filings," and believes "there is a high risk of material misstatement in the reported financial since the time of Dr. Ping Wu’s resignation." Spreadtrum makes wireless handset chips.

    Brean Murray downgrades JA Solar (JASO -2.3%) and ReneSola (SOL -2.6%) as weak pricing power in cell and wafer components is expected to adversely impact margins in H2. The firm upgrades Yingli (YGE +0.2%), saying the margin erosion has already impacted its bottom line.

    Google’s (GOOG +1.9%Andy Rubin says 500,000 new Android-powered phones and tablets are being activated worldwide every day, and growing at 4%/week – figures that would seem to leave Apple (AAPL+1.1%) "in the dust." If Android were to grab a dominant market share, Apple would become increasingly marginalized, and eventually the value of iOS as a platform would plummet.

  52. rainman

    Dashboard: State of the Economy

  53. shadowfax

    JRW
    Do you believe that your 81.59 line is the top today and then what? Thanks!

  54. smala766

     Phil what do you think of goog for 2011? HAve you some idea about that stock? Thanks

  55. Phil

    Dashboard/Rain – That’s super-useful, thanks! 

    DIA spread/Gucci – Well, you can still salvage $1 from the $119 puts so you may as well roll them to the Aug $118 puts at $2 (+$1) if you want to buy a bit more time.  The Delta is the same and if you put a stop on 1/2 the $116 puts (now .50) at .65 then you shouldn’t have any trouble and you only run the net of the longs up .325 by taking out the 1/2 the short puts.   If this is covering your longs, it’s worth spending money to roll for time but if it’s just a bet – not really worth putting more money in.  

    Greece vote/Jabob – I believe tomorrow after market.  

  56. lvmoda

    Today’s trading time is a weird combination of tension and boredom for me.   Low volume and high uncertainty combining to make things risky, but there really isn’t much movement (other than the dollar this morning).   I suppose this is all posturing for the G-votes, QE2 ending and Q2 ending.  Quite a bit of newsy action for this week.

  57. ricktao

    Phil:
    The youtube embedded tag about Indiana Jones seems to be malformed. 

  58. angelcur

    http://www.businessinsider.com/bachmann-not-ready-to-be-president-former-chief-of-staff-write-in-scathing-op-ed-2011-6
    i know this will SHOCK lots of folks who dont realize this is a very slow person…

  59. shadowfax

    New holdout!
    Why go to the Cayman Islands when we have 2710 Thomes Ave, Cheyenne, Wyoming! 1,700 sq ft brick home 1 female worker who smokes and sorts mail for 2,00 corporations.

  60. Savi

    Phil--I have 10, TZA july 38/42 bcs @ 1.95 ( now .74 ) offset by short 10, dia Aug 113 put @ 1.67( now 1.04)—should I close out or roll —looks like you are bullish right now?
    Tnx

  61. flipspiceland

    @acd54

    Thanks a lot for the referral to TOS.  I have TOS but I don’t use it except for futures trades so I didn’t notice its NYSE volume charts.

  62. Jbur

    Phil: A simple rolling question. I am short TBT July 34 calls ( for .30). They are now at about 0.61 and all of it is extrinsic. Would you roll out to Aug 34 puts, or out and up, or just wait it out a bit? I really don’t feeling like buying back all that premium, and it seems like every time I do I end up being a sucker. My apologies for asking the kind of question I know you have heard a thousand times. Thanks

  63. flipspiceland

    @YODI
    Ditto, thx,  on the NLY januaries. I just had 1,000 called away @ 17.50 having sold those calls last month.  Missed the dividend but the premium more than made up for it.  

  64. dflam

    Phil/GE: I know 2013 is a long way away,but I have an initial position of ten GE 2013 $17.50 C at $4.80,(now $2.46),paired with the sale of $20.C at $3.23,(now $1.45),and $17.50 P at $1.57,(now $2.60 ) for net -0- on $2.50 spread.With the calls down 55%, should I go to 2x the position or just add a stop on the $20 C ? Thank you.

  65. flipspiceland

    A corporation cannot be a real person because, number one,  a Corporation cannot be Executed, by electric chair or chemicals, or the guillotine for savaging the people as Goldman Sucks, Bear Stearns, Lehman Bros, and Morgan Stanley, Countrywide, and a host of other corporate entitites have done. 
    A corporation is more like a government (or vice versa) in that it cannot be penalized in any way for its boneheaded errors, its intentional malfeasance, or its rape of the proletariat. 

  66. jomptien

    Jbur/TBT, Just my $.02, but they still have almost $1 in premium to burn off so why roll now?

  67. shadowfax

    flip
    You need to talk to our supreme court.

  68. rainman

    jomptien / TBT — I think you’re looking at the wrong option. Jbur is short the July $34. I’d roll to the Aug $35 and get paid 0.25 to improve the position by $1. That collects 65% of your potential loss. If this is a cover, even better.

  69. livingfull

    Shell Games/Reuters
    Sobering but worth reading that series by Kelly Carr/Brian Grow.  The bad guys in public view, saying yeah and so what?  I have told colleagues for years I have no problem walking onboard a ship and seeing cockroaches scatter off the deck.  It’s when I walk onboard and they don’t scatter that gets down right creepy. 

  70. rainman

    Oops, Sorry Jompt, you’re right on the $1. I misread the quote.

  71. Phil

    5-year auction not so hot.  TBT shot up to $33.87!  2.59 bid to cover was lowest in a year (no demand).  

    01:04 PM The Treasury sells $35B in five-year notes at 1.615% (.pdf), slightly higher than pre-auction. Bid-to-cover ratio of 2.59, vs. previous 3.2 and recent average of 2.83; indirect bidders take 37.6%, vs. recent average of 41.6%. Direct bidders take 10.2%.

    Didn’t take down the Dollar so far – I’m not sure we have enough fuel for another try if we can’t make it over this time.

  72. shadowfax

    livingful
       Cockroaches sounds like the 1970′s driving across Nevada and suthern Idaho when there were so many jack rabits that you could crash on the slippery carnage in places.

  73. Jbur

    Jomp and Rain: thanks for input. Good to hear how others think through the puzzle. Been trying to ride this bucking bronco for over a year.

  74. lvmoda

    Phil – do I have my logic right:   a weak treasury auction would raise market interest rates and strengthen the dollar, all other things being equal?   I’m noticing a slight fade up on the dollar and shorting some oil at 91.69.   Thanks.

  75. rainman

    Jbur / ride  -- Do you keep a spreadsheet of the position like I posted the other day? It’s the only way to keep the trade straight IMO.

  76. terrapin22

    Go TBT!!!

  77. drcraig

    Bought some IWM calls near the close yesterday in anticipation of a continued run up into the end of the quarter. Just sold out. May get back in if we pop and hold 815 on the RUT tomorrow. The Greek vote is concerning…. 

  78. Jbur

    Rain: Yes I use a spreadsheet with all trade information, opening/closing trade, costs profit, and loss on trade. What I like about yours better is how it will update the cost basis for the position automatically. I’ve had to do a little addition and subtraction. Do your have yours in Xcel, and maybe  template that you might share. When I opened your it was in GoogleDocs. Thanks for suggestion

  79. Jbur

    TBT broke the 5 day two days ago, the 20 day yesterday, and looks like it’s making for the 50.

  80. craigzooka

    I realize I have been only lurking for the last couple of weeks, I am currently driving from Cleveland to Washington DC to sign the lease on a new place to live.  In addition I have to prepare for job interview at White Oak Technologies, just in case any of you have heard of them or happen to own them ;)
     
    Phil, interesting theory here,  maybe we can use it to our advantage.   We have bought a crap ton of FAS calls which, in my opinion is keeping FAS from going any higher.  I believe this has allowed our weekly premium selling business to be more profitable then it otherwise would be.  Is this a situation we can take advantage of due to the size of PSW?
     
    By selling a large number of options at a particular strike we create artificial resistance in the direction of that strike.  We then use that artificial resistance to unload tons of weeklies on the suckers buying premium.
     
    Not sure if this is legit or not, I just thought it was an interesting phenomenon.

  81. JRW III

    All out of TNA; buying 1/3 TZA here (IWM 81.59) !!

    Oh look, a BUTTERFLY !! (From 99er)

  82. yodi

    I am a bit lost on the FAS play what is the present status??? weeklies pls

  83. rainman

    Jbur / Spreadsheet — you can download it into excel. I got pissed at Microsoft for dropping support for stock quotes and moved to google docs. Google docs will run calculations on their servers even when the doc isn’t open (using triggers), so you can essentially setup a free web service. Nice for market alerts, which are nearly real time. You can get more fancy with alerts than typical brokerage alerts since you can base the alert on custom calculations. Unfortunately, they don’t provide option quotes so I pull those from yahoo and they are 20 minutes delayed. Caveat emptor: Google isn’t much of a software developer and the quality of their software us usually beta quality at best (IMO).

  84. shadowfax

    JRW
    I bought TZA 1/2 about the same time, what do you expect the drop to be? Still 1/2.

  85. rainman

    craig / White Oaks — ag products?  http://whiteoaktechnology.com/ :)

  86. Jbur

    Rain: Thanks a lot.

  87. samz3700

    Rainman -
    I have also noticed that google software is really beta at best and i am not much of a tech guy. Why is that?
    With all the money they spend, you would think they could improve software.
    This really keeps me from using many of their offerings. 

  88. Phil

    Tag/Rick – Hmm, that’s strange.  Oh well, was just a clip from one of the movies. 

    Why won’t they leave my Mishy alone Angel???

    TZA/Savi – The idea of the trade was to cover the possibility of a big sell-off either this week or next week.  As it was meant to do, the short Aug puts mitigated the loss on TZA and the VIX drop and RUT rise caused the shorter-term TZAs to lose value faster than the DIAs but if you take it out now, you turn a .28 potential loss into a .58 loss, which isn’t too bad if you’ve lost faith in it but I wouldn’t be able to sleep well this weekend without a hedge like those TZAs. I’m bullish until Friday (or if we get rejected at 12,200 and 1,300) – THEN I’m bearish.  

    Dollar 75.55 keeping a lid on the rally but still building up dry powder that can be used to boost us if they can take it back down later.  

    TBT/Jbur – Short TBT calls?  That’s playing with fire!  I don’t know what to say to that because you can get totally burned overnight for a few bucks with that trade – we’ve been nothing but long on TBT forever and $34 is the top of their range but, if they pop it – there’s really no resistance up to $36.  Now it’s .71 so you can roll them up to the Aug $36 calls at .69 and hope that holds – maybe pair it with the far more sensible sale of the Aug $32 puts at .80 (or substitute it).   Betting TBill rates will hold record lows after the Fed stops buying them – NO THANKS!  

    Good playing on NLY Flips and very good patience waiting for a good re-entry – that’s exactly how to play those.   Thanks again for the heads up Yodi.  

    GE/Dflam – GE is at $18.25 and you make .75 at $18.25, why would you change it.  They have 18 months to improve and, if they don’t – then it will be even cheaper to add money to the position.  There’s no such thing as up or down 55% on trades like this – there is only ON or OFF TARGET – nothing else matters.   Save your DD money for a position that is actually in trouble. 

    Corporations/Flips – Hey, that’s actually a good idea.  We should have a death penalty for corporations and jail for corporations (periods of time they are not allowed to conduct business) – I’ll bet that would cut down on corporate crime. 

    Good point Living.  

    Auction/LV – Well raising rates is a given but the demand for the dollar is temporary (probably) and caused by people jumping in and buying TBills (demanding dollars) as they spike up in price after the auction.  If this trend continues, rates go up and people who have low-yield TBills begin dumping them, flooding us with dollars and driving rates even higher (inflationary cycle).   Of course one auction means nothing but if we start stringing them together – this can be a BIG problem but it’s also the one we’ve expected for over a year (relentlessly long on TBT).  

    Go LULU!  

    FAS/Craig – I’m pretty sure that would be illegal so let’s not talk about that (ie conspire!) – we will just try to make the best plays we can in our virtual portfolios and hope the market agrees with us.  

    FAS/Yodi – We’re naked in the $25KP (80 Aug $23 calls) and we sold the $24 puts and calls in the FAS Money trade after profiting .30 on a previous sale that we cashed the same day so we sold almost net $2 this week at the $24 line so I wish we had done the same in the $25KP but we couldn’t sell 80 puts, could we? 

    Watch that Dollar – if they can press it back under 75.55, then oil pops $92 and the Dow pops 12,100 in the futures (12,170) and the S&P makes 1,290 in the futuers (1,295) and we’re off to the races again.  NYSE still not over 8,1120 and that is a MUST or they drag us down.  

  89. JRW III

    shadow / TZA

    No idea; I just don’t see more upside yet. Consolidation would be a good thing for the Bulls !!

    Next resistance is at IWM 82.28, support at 81.14 !!

  90. shadowfax

    JRW went the rest in
    $36.28

  91. snow

    Hmmm, the volume on that dollar drop peaked at 1:56. Reminds me of a certain dollar drop last week, except I think that was at 2:56. Someone’s bots like that :56, maybe?

  92. rainman

    samz / beta — can’t really answer that, but having seen the evolution of software in the 90′s, I think, google, like microsoft, end up getting into a bureaucratic  morrass due to having so many fingers in so many pies. It makes it difficult to stear the ship. Apple doesn’t have that problem because they have a cohesive focus for the company that makes it easier to determine where the ship is heading. Apple expands in a spiral fashion, whereas google and msft expand more like spokes from the hub.

  93. lvmoda

    What a massive spike in oil out of nowhere! 

  94. dflam

    Phil/GE : the voice of reason prevails. Thank you.

  95. JRW III

    shadow,

    Somewhat dangerous calling a top: I’m only in 1/3, waiting for a signal !! Good luck !!

  96. tuscadog

    Phil / Oil   Yesterday you confirmed to me that the only way we’ll see any meaningful GNP recovery / consumer spending / jobs is if we get oil down to $70 to $80.   Oil at $92 is still a huge problem, which the mkt is not reflecting.  I’m tempted to short oil again at $92.59???

  97. Phil

    $92.50 on oil – Goaaaaaaaaaaaal!    

    Was Obama Right About The SPR Release? (Forbes)

    02:00 PM On the hour: Dow +1.03%. 10-yr -0.8%. Euro +0.52% vs. dollar. Crude +2.24% to $92.64. Gold +0.25% to $1500.20.

    Already depressed Treasurys leg down sharply after a lackluster auction of five-year notes: the 10-year yield +0.10 to 3.03%; five-year +0.14 to 1.59%. Following on yesterday’s weak two-year auction at a record low yield, it looks like the market is waiting on Greece, and making room for supply.

    A survey of Canadian consumer confidence declines to its lowest level in 2 years, the Nanos Research expectations index falling to 112.8 from 125.6. This jibes with recent comments from BoC Gov. Carney, who says the powering loonie is taking the starch out of the recovery.

    The French plan to rescue Greece is doomed to failure because it still requires severe austerity measures added to an already tanking economy. "Greeks aren’t Germans," says Peter Tanous, "they will take to the streets and the country will crumble." And don’t forget Fitch’s position: "If it looks like a default, we will rate it as one." 

    Greek Yields: “Certain Default, But Not Yet”  (Hussman Funds)

     U.S. Money Funds Risk Losses if Europe Crisis Spreads (Bloomberg)

    El Pais reflects on the change in Europe’s reaction to a visit by a Chinese Premier, noting such events were "synonymous with protests and debates on human rights." Now it’s about getting a piece of the Chinese boom and securing additional funding for the EU’s debt-ravaged states. 

    Gold miners are outpacing market gains after the morning’s unusual call-option activity in several of them, occurring close enough together to look like the work of a large investor or two. Gold Fields Limited (GFI+3%; AngloGold Ashanti (AU+2.9%; Barrick Gold (ABX)+1.5%. But Agnico-Eagle (AEMdown 4.3%. Gold futures +0.25% to $1,500 even.

    First BanCorp (FBP +23%) soars after receiving a $175Minvestment from Oaktree Capital in its effort to raise fresh capital.

    Kraft Foods’ (KFT +1.1%) stock enjoys a tasty gain after anSEC filing reveals that Nelson Peltz, the investor known for shaking up food-related companies such as Wendy’s (WEN) and Heinz (HNZ), bought 12.2M shares. But Peltz may have a tough road if wants to shake up Kraft; he’d have to win over Warren Buffett, Kraft’s biggest shareholder.

    Down more than 30% earlier on a Muddy Waters report, Spreadtrum (SPRD) bounces all the way back to unchanged on the day.

    IntercontinentalExchange (ICE +1.6%) psychs up traders withnews of a mobile app that next Tuesday will provide for dealing its products on iPhones and iPads (AAPL) and Android devices (GOOG). (The BlackBerry (RIMM) service is still in beta.)

    This just in: no one can predict future commodity prices. Commodity research has value by figuring out what moves prices and how that could change, but forget about the forecasts. Glencore became a commodity giant, not by betting on direction, but by focusing on everything but that.

    Monster (MWW +8.8%) takes a swipe at LinkedIn (LNKD),launching BeKnown, a networking app designed to allow Facebook users to establish a professional network and find career opportunities.

    Who Amongst the Rich Doesn’t Pay Federal Income Taxes (Legally) (Economix)

    Three lunchtime reads:
    1) Why the Treasury crash won’t happen
    2) The shadow banking problem in China
    3) The "strong-dollar" policy of the U.S.

  98. asaenz

    @ Phil, the USO Bull Call is looking great, at the moment my gain is about $2,500 (of the $5,000 possible) …. whats the plan with it? thanks….

  99. jvest

     white oak technologies / craig – I’ve heard of them. Someone there contacted me once about working for them. 

  100. shadowfax

    JRW
    Went back to 1/2 on .05.

  101. Phil

    Now our finish is all about the 75.50 line on the Dollar.  NYSE REJECTED at 8,120 so far, Dow futures can’t top 12,100, S&P futures can’t take out 1,290.  Pound is just below $1.60 at $1.59956 and MUST get back over that line.  

    Obama/Angel – Having dinner with someone doesn’t mean you are kissing their ass – just ask John Boehner, who was told to shove it last week (very nicely) at the golf outing.  

    GOOG/Samz – They are brilliant with that.  They set their software up to be debugged by millions of people and they modify it based on feedback.  Maybe no fun in the early going if you need it for serious work but a fantastic development system for Goog.  

    75.49 – oil $92.85!  

    :56/Snow – That does happen a lot – same program but an hour earlier.  

    Oil/LV – Not out of nowhere, more like 3 days before a holiday weekend.  

    You are welcome, Dflam!

    Oil/Tusca – I wouldn’t bet against it going into the holiday.  No matter what kind of build there is tomorrow, they will blame the SPR.  I agree on the macro side but that doesn’t mean it’s a good trade in the next 90 minutes.  

    USO/Asaenz – On the weeklies?  Just pray they hold it but don’t be a schmuck if they fail to hold $92, some profits are always better than no profits.  

    Partying like it’s 1999:  

    Zynga could file for its much-anticipated IPO as soon as Wednesday, and is expected to raise $1.5B-$2B and potentially value the company as high as $15B-$20B, CNBC reports. A fundraising round earlier this year tagged the maker of popular Facebook games such as FarmVille with a valuation of $10B. Morgan Stanley (MS) has been selected as lead underwriter.

  102. jabobeast

    stick into the close?

  103. dclark41

    Phil
    What play would you do now on TBT? Still only sell puts? Thanks.

  104. JRW III

    Just bailed my 1/3 TZA position for a 13 cent loss !!

  105. shadowfax

    JRW
    All out toop silly!

  106. shadowfax

    Phil
    What about that oil, almost $93?

  107. angelcur

    ah phil having dinner with someone and paying them 35k for your place at the table  you exceeds that level (ass kissing) by a factor of multiple penetrations..i don’t object to it at all..i like daniel..i prefer cafe boloud and its alot cheaper than 35k per head (sorry)…who told bonnie bohner to shove it?

  108. shadowfax

    JRW
    We drink the cool aid!

  109. biodieselchris

    anyone brave enough to call a bottom on CSCO?

  110. willsons

     Bottom

  111. angelcur

    csco is out of favor period..i own it i keep wondering if i am the only one.. mid-cap growth is beating large-cap value by 120 bps today..that is HUGE discrepancy…

  112. Phil

    SQQQ July $25/26 bull call spread is .50 with SQQQ at $26.24 and can be offset by any of the following:  

    • CSCO July $15 puts at .34

    • INTC July $21 puts at .28

    • MSFT July $25 puts at .25

    • WFR July $8 puts at .25

    • RIMM July $26 puts at .46

    • AAPL FRIDAY $325 puts at .63

    • GOOG FRIDAY $475 puts at .60. 

    Stick/Jabob – You are very greedy.  We’re in the middle of a 2-day stick now…  Just holding this to the close would be a huge victory for the bulls.  

    They are having a lot of trouble getting the Dollar below 75.45 and that’s a rally killer.  Pound is right on the line at $1.6002 but Euro can’t get over $1.44 (now $1.4363) and Yen is really hurting us at 81.159 (we need them stronger/lower).

    Oil/Shadow –  Perfectly good retrace off the drop from $113 to $90 = $23 so 20% is $4.60 = $94.60 is where we hopefully can short them again but you have to allow for 40% back to about $100 which should be exactly the declining 50 dma by the time they get back there.   See how nicely everything works out if you’re patient?  

    Boehner/Angel – That’s why we had an "impasse" this week.  Turned out there was not much compromise and some serious arm-twisting by the Prez and now everyone is digging in but at least there’s no question about where the lines are drawn.  

    CSCO/BDC – I am – $15.  

    And what Willsons said.  

  113. jvest

    CSCO / bdc – well let’s see, we called a bottom at 21, 20, 19, 17, 16.50…. now that it’s been dead at 15 for a while I’ve been doing short strangles to try and recover some of the money I’ve lost on my longs.

  114. shadowfax

    CSCO
    They need to sell servers, nobody is expanding, and then there is congress ready to shut down the world.

  115. Phil

    03:00 PM On the hour: Dow +1.13%. 10-yr -0.85%. Euro +0.53% vs. dollar. Crude +2.47% to $92.85. Gold +0.27% to $1500.40. 

    Ugly chart of the day: Investors seem pleased that home pricesrose slightly in April on a non-seasonally adjusted basis, but a graph of Y/Y declines for the 20-city Case-Shiller index shows things are getting worse, not better.

    Vote PRE-MARKET tomorrow!!!   Greece’s parliament will vote on the austerity package on Wednesday at 2 PM in Athens, 7 AM ET. Based on the action in the euro and shares the last 2 days, the probable result is fairly clear.

    Next: Moody’s warns of downgrades on Spain’s regional governments without "sustainable improvements in their fiscal positions." The agency believes many regions will exceed a targeted deficit/GDP ratio of 1.3% in 2011, and getting on by not paying bills isn’t a sustainable solution.

    Nice cheerleading:  Dallas Fed President Richard Fisher says economic growth islikely to pick up in the months ahead, adding that it would not be "unimaginable" to see 4% growth in the second half, more than twice Q1′s tepid 1.8% rate. 

  116. shadowfax

    JRW
    My feeling is we must hold to close and go up again tomorrow to sustain the ralley. I don’t believe it will happen. What is your view? Thanks. I lost exactly .13 also on last half also.

  117. lvmoda

    At exactly 2pm on NYMEX, the oil contract volume surged ten-fold, shooting oil up about $1.  Yup, it’s all about supply and demand…criminals!

  118. David Ristau

    Phil –

    On those hedges, you selling those puts?

  119. rainman

    CSCO — I don’t see anything on the chart that would indicate a bottom. Quiite a bit of interest at $15 though. I’d look again when it breaks the down trend on the top of the chart. i.e. the top of the sideways triangle squeezy thingy.

  120. kustomz

    GS now trading below BV, hmmm maybe a pop on some short covering?

  121. Phil

    DIA June 30th $121 puts at .50 are a nice way to gamble on Greek no vote.  Very risky though as they can get wiped out on yes vote euphoria.  

  122. jvest

    google now testing their latest "facebook-killer" …
    http://plus.google.com

  123. Phil

    75.50 on Dollar is a good sign to take the money and run on short-term longs!  

    Hedges/David – The idea is to sell the puts in a stock you REALLY want to own at the net price to offset the cost (or most of the cost) of the hedge.  So if the Nasdaq flops CSCO may go to $14.50 but you make net .84 on the SQQQ spread and you owe .50 of it back on CSCO (assuming you don’t want the stock) and you net .34 on .16 laid out – that’s pretty good.  Of course, if we do a good job picking the puts or we REALLY want to own them anyway and take the assignment, then the SQQQ spread is just a free $1.  Or, you could just take the spread for .50 and make 100% if SQQQ holds it’s current price (Nas below 2,725).  

    CSCO/Rain – I don’t care what the chart "says".  They have $40Bn in sales, they make $8Bn in NET profits, they beat their last 4 earnings estimates by 2.4%, 5%, 5.7% and 13.5% last Q and they are TELLING YOU that earnings will be up another 10% next year ($8.6Bn).  You can buy that company for $83Bn and they pay you a 1.6% dividend while you wait.  Why would I care what pattern a bunch of squiggly lines are making?  Do you buy a car with a chart?  A house?  Do you hire people based on a chart of their salary?  Every year, a million businesses are bought and sold that never had a chart and maybe 200 are sold that do yet so many people are fixated on these ridiculous charts as if they have anything at all to do with the value of a business.  This is one of the major things that is wrong with the markets…

    Energy stocks have been a primary source of strength this session, as August Nymex crude jumps 2.5% to $92.89/barrel, highest in a week, to finish at session highs on a sharp rise in volume after the ICE Dollar Index turns negative. Oil services (OIH +4.1%) shares climb across the board: HAL +5.7%NBR +5%SLB +4.7%

  124. samz3700

     JRW sure can call a line – iwm 81.59

  125. dflam

    Yodi/NLY : bought stock at $17.99.( NLY went ex-dividend today of $.65) . If I sell 2013 $17.50 C at $.89,my net is $17.10 which is a $.40 spread from the $17.50 strike price. With the dividend at $.65, this quarantees I will get called for a $.25 profit which doesn’t seem to be worth the effort,especially since NLY  typically rises 4-5 % in the weeks following dividend distribution.What am I missing here? Thanks

  126. stockbern

    NLY    The otherthing

  127. snow

    lol! I love the juxtaposition of samz3700′s comment right after Phil’s rant about charts.

  128. stockbern

    NLY    The other thing I don’t understand about the options is that the 2013 calls are only about five or six cents higher than the 2012′s .  There doesn’t seem to be much extra premium for going out another year

  129. rainman

    Phil / ouch! — Sorry, didn’t mean to salt a wound! I aways use both charts and fundies.  The best is when they align. We all know the markets get out of whack and we count on them reconciling the "out of whackness". For what it’s worth, I sold th May 2011 $18 puts back in Feb for $0.75 and got assigned at $17.25 which should have had a squiggly line advantage (support level). I since then shorted the Jan $15 calls and puts for a $2.69 credit so my cost will be 14.60/14.80. So, fundamentally, yes, I believe they are worth $15 easy, but you know "the markets can stay irrational longer you can stay solvent" so I covered my ass the best I could, but that doesn’t mean the trade will be solvent in January!

  130. angelcur

    hey charts ‘work’ for some great traders fundies for others..don’t get doctrinaire about an approach unless you employ it and it works OR doesn’t..i use a combination of lots of technicals and fundies ..the p and l is the final arbiter..its probably all an amalgam ..of both that results in having savvy..

  131. rainman

    Whoa, didn’t expect a shove to the highs! Nice.

  132. Phil

    NLY/Dflam – If you can "guarantee" that we can spend net $17.10 and get $17.50 back in 24 hours then I can put together a few Billion to make that trade but you’ll have to back up that claim, of course…  Let’s see, .40/$17.10 = 2.34% in 24 hours = 854% ROI – yep, I’m pretty sure I could round up investors based on that guarantee.  

    Dow volume just 91M at 3:45 – that is SUPER LOW! 

    NLY/Stock – High-dividend stocks get like that.  That’s why sometimes it’s just better to do an artificial, like the CSCO 2013 $12.50/15 bull call spread at $1.38, selling the $12.50 puts for $1.22 for net .16 on the $2.50 spread with about $2.50 in net margin so your straight ROI on $2,500 (10 spreads) is $2,500 at $15 (CSCO’s current price) for a 100% gain and you also have 18 months to create your own dividend by selling, for example 5 Aug $16 calls for .32 ($160) for another 6.4% every 2 months (38.4% a year) which is a bit better than NLY pays.  Of course, you know – CSCO – yuch, who would want that?  8-)

    Salt/Rain – You just caught me at a time I feel like pontificating on that subject.  TA works because so many people follow it – that’s all.  People love to see patterns – pattern recognition is hard-wired into the mammal brain, it’s how we learn things pre-language but it also causes us to look for patterns that aren’t there and to "see" patterns that don’t exist (gambler’s fallacy, etc.).  The more something is followed – like indexes – the better they "obey" their charts, simply because there are 10 Million other idiots staring at charts and using lines to decide their entry and exit points.  Think about how much print/web space Dow and S&P charts get and how little attention is paid to things like the p/e of the Dow or the S&P.  So it’s TA 100: FA 1 in the amount of attention people pay to the fundies – which is what gives a fundamentalist a huge advantage in this market but only if he’s patient enough to wait out the TA crowd once they latch onto a "trend."   As to irrational – I’m not talking about CSCO as a 1 or even 2-year hold but as a stock you retire with in your portfolio.  Until they come up with something else to steer web traffic – I think they’ll be fine and even IBM survived the death of typewriters, didn’t they?  

    Charts/Angel – See above.  It’s just a little frustrating to make a value call and have a dozen people say "I don’t know, it doesn’t LOOK good on the chart." 

    And there’s the Bell!  Mission accomplished by those who wished to paint a pretty chart!  Hopefully we won’t gap down 200 tomorrow on a Greek no vote…. 

    Oh yeah, and then there’s the reality of the "Austerity Plan":  An initial attempt to unload €50B of Greek state assets draws little interest. "Even in good times, Greece is not a country that attracts investment," says a PE chief. Most of the assets are land for development, which no one wants to touch because of the difficulty of actually making that happen in Greece. 

    Greece, the debt ceiling, horrible housing… Ed Yardeni takes a tour of the recent financial press landscape and finds plenty of scary headlines, which he views as a contrarian indicator of better days ahead. "If the financial press is losing all hope in the long-term outlook, then maybe the future will be better than expected by the consensus of doubters.”

    Bankia – Spain’s 3rd largest lender – is moving forward with a July IPO to raise €3-€4B. A sign of the times: a source says the shares will be offered at more than 50% off book value. Bankia was created in 2010 by the folding together of 7 of Spain’s troubled regional savings banks. 

  133. thechaser

    Another huge winner Phil, thanks.  I’m back to cash, didn’t want to risk Greece tomorrow.  Will you be up in the morning for a call on the futures?  

  134. angelcur

    i hear you phil..its like listening to that guy peter eliades…and let’s remember that ‘the stone age didn’t end because they ran out of stones’!

  135. rvnelson

    Phil
    Just an FYI on Cisco.  I have been completely aligned with you on Cisco value and this one surprised me.  This weekend on a fishing trip i was visiting with my son-in-law, a networking engineer for a major insurance firm in St Paul, about the decline in Cisco stock price.  He said it did not surprise him at all.  They were all Cisco forever but recently have switched to Juniper and HP devices.  He said they are eating Cisco’s lunch on very comparable or higher quality items at substantially less cost.  He also  said that Cisco got pretty "chippy" with his people over the drop off in orders but also didn’t match prices.  Hopefully that will change! I also realize that this is a sample of one but  a valid one for the amount of gear they purchase. Maybe others could chime in with their opinions.  Thanks as always for the terrific guidance in this off the wall market.

  136. matt1966

    A few more days like today and I think you could call it a rally-
     
    I predict a big gap up at open after a ‘successful’ vote and then fading throughout the day. 
     
    The Greeks need to throw out their govt in a hurry.  It’s their only hope.  If this stuff goes through.. it’s only going to be the start of it.  Before it’s over, private investors will own the country and the Greeks will have severely dimished income potential and skyrocketing costs on things they used to take for granted due to the vultures raising their prices.  It’s best to nip this in the bud now.

  137. rpme

    I am always amazed about this contrarian thing and wish I could have used it in my business. Sales are down, great contrarian indicator that the business is thriving. Employees quitting, excellent, we are no longer profitable, well I have been waiting for this day because according to stock market analysts it the best time to invest, lets hit up some VC guys.

  138. lvmoda

    Ah…there’s the explanation for the oil spike.   API reports inventory decline of 2.7mm barrels for last week.  Released at 430pm.   Tell me it wasn’t leaked onto the floor at 2pm to drive that spike in oil.  

  139. ethan2010

    phil, why is there always a big kink right after market closes? thanks,
    http://www.marketwatch.com/investing/fund/dia

  140. ilene

    Today’s levels

  141. Phil

    You’re welcome Chaser!  I plan to be up in the morning, that’s for sure but who knows when the vote will actually happen.

    Futures already getting messed with – Dollar back down to 75.43 and that’s bumping things up a bonus few points.   Oil $93.18 but gold is still mellow at $1,502.70.  Gasoline finished at $2.8154 – that’s a big one!

    Stones/Angel – I also remember a great line Danny Devito once said in a film where he played a VC guy and he said "I’ll bet the last company that made buggy whips made the best damned buggy whips in the World – so what?"  Oh wait, I found it.  You tube is amazing.    

    CSCO/RVn – I agree they are going through a rough patch.  Their products were skewed to 2006-type companies, who had cash to burn and wanted the best while HPQ and JNPR essentially copied (and maybe improved on) their old-line equipment and price is everything at the moment.  Their new mega-routers won’t be as easy to copy and will sell very well when we get out of this cycle (if ever).  Don’t forget this is a rapidly expanding pie as well and CSCO is in a position of being the quality sale so they can’t come back on price to match – not unless JNPR and HPQ really start hurting them for market share but JNPR sells $4Bn worth of equipment and makes $600M (15%), while CSCO makes $8Bn on $40Bn (20%).  JNPR has a p/e of 27, CSCO has a p/e of 10 (HPQ is not comparable because they do so much stuff but their p/e is 8 and I like them too!).  

    Here’s a nice CSCO video.  

    Nip in the bud/Matt – I wonder how this will play out.  They can agree to Austerity but that doesn’t mean it will work, just like a company can agree to a workout with a bank and everyone shakes hands and declares victory until 30 days later, when the company misses their next loan payment… 

    Contrarian/Rpme – To some extent you have to go along to get along.  The main advantage we have is we KNOW it’s a sham, so we are wise enough to always stand next to the exit door and get out at the first sign of trouble – like taking those two put plays this afternoon because we topped out into the close (and because the vote is a wild-card tomorrow).  

    Leak/Lv – I don’t think they needed facts to drive oil and gasoline prices up 3% into a holiday weekend.  The NYMEX crooks are sitting on 318M August barrels that they bought for a LOT more than $90 and this weekend is their best chance to actually sell some to real consumers at a decent price.  

    Month 
    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Aug 11
    -
    -
    -
    90.85 Jun 27, 20:07 92.89 2.28 266522   90.61 318472   Call Put 
    Sep 11
    -
    -
    -
    100.14 Jun 27, 20:07 93.46 2.29 72952   91.17 173915   Call Put 
    Oct 11
    -
    -
    -
    96.89 Jun 27, 20:07 94.01 2.31 39630   91.70 71401   Call Put 
    Nov 11
    -
    -
    -
    78.01 Jun 27, 20:07 94.57 2.33 26800   92.24 58726   Call Put 
    Dec 11
    -
    -
    -
    101.31 Jun 27, 20:07 95.06 2.34 57574   92.72 186463   Call Put 

    Kink/Ethan – What’s a kink?  If you mean the volume spike and a sudden move – that’s the end-of-day settlements that traders jam in in the last few minutes.  At 3:45, volume was 90M on the Dow and it finished at 135M so half the day’s volume was put through in the last 15 mins.  There’s no way to settle all that out live so it all bunches up until the bell and then they all clear at the closing price and then the mis-matches cause a move up or down after the close.  

    Look at that Chart!  Isn’t it glorious?  How can we not pop through those Must Holds and make nice "W" patterns on the Dow and the S&P?  The RUT’s already over the line and the rest are already trying to get over in the futures so tomorrow (unless Greece screws things up) will be all about NYSE 8,280 – a 150-point move for them in order to hit goal by Friday.  I don’t see them doing it though because the Dollar would have to be down around 74.50 and that seems a little extreme.  

  142. sparky123

    Phil
    I’m trying to understand the artificial on CSCO.  I see the  2013  puts at 1.21, but not the call option. If you have time, could you tell me which call purchase goes in that spread? Thanks   

  143. Phil

    At the close: Dow +1.21% to 12189. S&P +1.3% to 1297. Nasdaq +1.53% to 2729.
    Treasurys: 30-year -0.97%. 10-yr -0.79%. 5-yr -0.59%.
    Commodities: Crude +2.51% to $92.88. Gold +0.09% to $1501.50.
    Currencies: Euro +0.55% vs. dollar. Yen -0.27%. Pound -0.01%.

    Market recap: Stocks rallied ahead of the big Greek austerity vote, with Germany apparently on board with France in helping Greece shore up its finances. Energy shares led gainers, as oil and other commodities surged on a falling dollar. Yields on 10-year Treasurys jumped back over 3% after a second straight weak auction. NYSE advancers led decliners nearly three to one. 

    For those keeping track, crude oil rises another 2.8% today to $93.18/barrel, and within sight of where it stood before governments tried to send prices lower by releasing oil stocks. For now, crude is a risk asset – if you know where equities are headed, oil is likely going that direction too. 

    With the key austerity vote hours away, senior lawmakers from both main Greek parties are working the phones and the backrooms tokeep their ranks in line. Worries of the ruling Socialists losing enough ‘yes’ votes for the measures not to pass appear to have eased in recent days.

    The news from Pres. Obama’s Wall Street fundraising dinner last week was who was not there: no Jamie Dimon (JPM), no Lloyd Blankfein (GS). The conventional wisdom is that Wall Street has forsaken Obama out of frustration with his supposedly anti-business rhetoric, but Andrew Ross Sorkin says many bankers are actually supporting him - just very quietly.

    Bruce Bartlett talks about who does and doesn’t pay federal taxes, and the results may surprise: More than 100,000 filers with incomes above $200,000 will pay nothing this year. "It’s not socialism to ask them to pay something," Bartlett writes, adding that "the growth of the non-income-taxpaying population is largely a result of Republican tax policies."

    And so it begins:  Moody’s lowers its outlook on Connecticut’s GO bonds to negative, citing a slim chance the state can replenish its depleted reserves. With relatively high fixed costs and post employment benefits, Connecticut doesn’t have a lot of wiggle room to trim its outlays.

    Companies are starting to spend some of their record piles of cash, but for most, the cash is still piling up faster than they are able or willing to spend it. Half of executives in a new survey said their cash balances would hold steady in the coming year, 29% said the balances would increase, and 21% said they would contract. 

    DELL announces plans to buy back an additional $2B in stock over FY11, on top of the $1.6B it’s already purchased this year. The announcement comes just a day before its scheduled analyst meeting. Shares +0.4% AH.

    "What Apple (AAPL) does really well is put everything into one box," says Gene Munster, who believes the company may start sellingTVs in 2012. Munster says the company has several TV-related patents, a possible precursor to actually offering one. 

    ROFL!  Microsoft (MSFT) shares jump more than 1% in the seconds before the close of trading on an apparent unfounded rumor Steve Balmer is stepping down as CEO. Shares -0.12% AH.

    Shaw Group(SHAW): FQ3 EPS of $0.39 misses by $0.28. Revenue of $1.5B (-17% Y/Y) misses by $0.2B. Shares -11.8% AH. (PR)

  144. Jbur

    Phil/TBT: Thought I posted this earlier, but I guess not. The July 34 callers are a partial cover for a large positive delta I have in TBT with a lot of moving parts. Even though I was down on those callers today, I overall made $ and plan to move the callers tomorrow. I appreciate the help and and am pretty sure we are all going to make $ WHEN TBT moves up substantially.

  145. Phil

    CSCO/Sparky – The trade is a bull call spread on CSCO at $12.50/15 – that’s buying the $12.50 calls ($3.65) and selling the $15 calls ($2.27) for a net cost of $1.38 on the $2.50 spread.  Then you sell the $12.50 puts for $1.22, which used $2.50 in margin and you apply the cash to the net $1.38 and you end up with a net cash outlay of .16 and you make money as long as CSCO is over $12.50 because the puts expire worthless and you get paid whatever amount between $12.50 and $15 CSCO gets to but, once over $15, you owe the $15 caller money so that caps your gains.   Or I could just say:  "CSCO 2013 $12.50/15 bull call spread at $1.38, selling the $12.50 puts for $1.22 for net .16."

     

     

  146. Phil

     TBT/JBur – Well that’s much better than but, if covered, you could have just stopped out 1/2 and let the premium burn on the rest ahead of a 2x roll.  

  147. Jbur

    Phil/TBT: I’m not sure I get the tactic. Would you care to expand a little?

  148. matt1966

    Phil,  looks like they’ve got a lot of ground to make up if they want to close the quarter flat.  The Dow looks possible as does the Naz.  But SPX will be a stretch and no way on the RUT.  Probably not on the NYSE ether, right?  What’s interesting is if they do make it on the Dow and Naz, it will be right at the descending trendline connecting the opens of May 2nd and June 1st.  Would be a perfect place to short.  Almost too perfect.  Instead, I think if they plunged it tomorrow they’d catch more folks off guard.  At this point, everyone’s looking for the end of quarter.  As for the year, everything is comfortably up so there isn’t much to be gained there by going higher. 
     
    I’m going to take a small stab by uncovering a little tonight.

  149. yodi

    dflam
    NLY Phil has given part of the answer to this. Yes it is not a fat return but your purchase is at 17.10. I look at it still a bit further have sold the OCT 18 p for 1.00 so now I am down to 16.10 Even the Jan 12 19p  I sold for 2.40. So if called I make on the put as well and if assigned I receive the div of the stock. Take as well in to consideration That these companies like AGNC and NLY are highly leveraged meaning they get their money near 0% and loan it for what ever. Once inflation kicks in and the Gov. ups the interest rate the value of their div. will go down stongly. So we will see what gives. OCT will be the next show down. The example with CSCO is very good on paper but like one other member said already the bottom was 21 than 20 17 16 and now they can not lift out of 15. Even my China stock HRBN has lifted itself during 14 days from 5$ back to 16.00. Looking at CSCO they did not even make .50. Time will only tell.

  150. sparky123

     And then you sell calls for 18 months covered, because you could call the stock at $12.50. That’s pretty cool. 
    Awesome! Thanks

  151. Savi

    Vegas— an update
    definite————————————————--maybe
    bioieselchris                                                     rainman
    chaps                                                                stjeanluc
    escohen
    jakester
    lvmoda
    nicha
    pharm
    rdn4evr
    rustle
    savi
    meeting—-Las Vegas --Oct 8th & 9th-- (Phil not sure if he will be there on the 10th)
    need a deposit from the definites—not sure how much or how to to collect this--Phil do you have an acct where we can send the funds ?
    That is where it stands

  152. jromeha

    Savi – add me to the maybes….

  153. pakdog

    Our ever vigilant deficit hawks in Congress somehow missed this doosey.
     
    http://www.npr.org/2011/06/28/137394348/-1-billion-that-nobody-wants

  154. hoss18

    Phil – thought for you to ponder….what’s the chance that Greece is the diversion from the US problems, not to cover how bad things are in the US, but rather to cover the shift of money from bonds into stocks? The Greece situation pushed the dollar upwards, temporarily, so that money coming out of bonds(look at today’s auction, pretty bad…probably because brokers know they can’t flip to Fed next week in the POMO lambada anymore, so don’t want to play), can find haven in stocks?

    Thesis for a real rally, well real in the sense the the dollar tanks again driving markets back up to God knows where in the continued raping and pillaging of the middle class….if so then looking for a rally in safe haven names and solid dividend players…JNJ, MSFT, CSCO…….

    Bond money going to stocks could be significant flow?

  155. lol730

    Also commodity money going into stocks may drive them up.
    However if inflation accelerates – it would mean money moving to circulation. From where? from capital markets! Which actually may lead stock lower later in inflation cycle

  156. scottmi

    GMCR/Phil – i have a july 70/75 credit put spread (bot the 70′s, sold the 75′s) in for net $1.24 in my pocket. working well right now with GMCR ramped up like it is. However, damn momos usually burn me more than reward me so I don’t trust it not to drop on me if hold it as is. Considering either closing it right out OR flipping it to regular put spread by rolling the july 70s to july 80s for $.55.  (or even rollign it all to a july 80/82.5  put spread for $.51  As a general rule, is doing a flip like this a good protective move while leaving the trade net positive and giving downside hedge coverage, or is messing with a trade like this just trying to be too clever?  i’m tending toward ‘take the money and run’ but would appreciate your comment on this.

  157. Phil

    Good morning!

    Still waiting on the Greek vote but the signals are the vote will pass so things continue to move higher.  

    Dollar all the way down to 75.1 and that’s pushing futures up over half a point.  Oil over $94 now, gasoline $2.8687, nat gas $4.33, gold $1,509, silver $34.48 and copper way up to $4.17.  

    The vote is taking much longer than expected and they are now saying as late as 10am – maybe something is wrong but the markets are treating it as if it’s a lock.  

    The Hang Seng was flat, the Shanghai down 1.1%, the Nikkei up 1.5% and the BSE up 1.1% while the European markets are up about 1.5% across the board.  As far as the futures go – I’d take the money and run at this point because if there’s a no vote, we’ll drop so fast your head will spin and if the vote is yes – so what – we’ll just be moving on to the next crisis.  

    Of course there’s no change in our general view that we keep climbing through Friday but, the higher we climb, the more we want to take off the table and the more we want to begin adding those disaster hedges for after July 4th.  

  158. rossmanmd

    Phil – FAS/$25k - Leaving for vacation on Friday, returning the next Friday. Should I fully or 1/2 cover with next weeks FAS $24C tomorrow? Thanks.

  159. Phil

    TBT/JBur – When you sell covered calls for income and you dont’ want to get called away, you should always set a stop on 1/2 of what you sell prior to a 50% loss.  A more sophisticated system would stop out 1/4 at 25%, 1/4 at 50% and 1/4 at 75%.  If you sell 10 calls for .50 and they go to .75 and you stop out 5, you are only giving back .75 out of $1 you collected but you are capturing the gain of the stock against your longs.  When the upside momentum stops, you still have a 1/2 cover at .75 or greater (so 75% of the downside protection you originally wanted) but now that cover can be rolled to 2x whatever gives you the best premium/position.   TBT, for example, the July $34 callers went from .26 last week to .85 yesterday and settled at .75.  Had you, at some point, stopped out 1/2 the callers or even if you take off 1/2 now, you still have 1/2x of .75 to burn (and it’s still all premium) and that can be rolled to 2x the July $35 calls (now .36) or to the Aug $36s (now .73) – when you stop out your callers on a move up, you are buying flexibility!  

    Vegas/Savi – I don’t want people sending me money.  Just figure out what you guys need and collect checks.  It shouldn’t be too much, right?  I’d say if the first 10 people pay, for example $150 – then anyone else who comes can pay $120 and $10 of it goes back to the first 10 people who made the early investment and the rest pays for more beer.  

    Coins/Pak – Man that is stupid!  

    Flows/Hoss – I think Greece is the reason money flows from bonds to stocks but I don’t think it’s a cover for it.  To me, this is a fine example of how dangerous Pimco is, who move their Trillion here and there (bigger than any single sovereign bailout to date) and disrupt the international bond markets in addition to using their considerable influence (Gross, Greenspan and El-Erian) to further influence the markets to their advantage.  PIMCO didn’t sneak out of US Bonds – they boldly announced it over $500Bn in bond sales ago (3 months) and left Bernanke to pick up their bill.  They rolled into Europe, drove the PIIGS rates to record highs and now they’ll be cashing out of Greece and moving on to their next victim – maybe they will just move on to Portugal, Spain and Italy or maybe they’ll find a new victim – wherever there is an injured gazelle, you can be sure PIMCO is stalking in the bushes…   

    Greece doesn’t actually fix things enough for the Dollar to blow 75 – Europe is still a disaster and commodities have lost their luster.  That does make US Equities the safest bet and inflation is still a very high probability over here – also good for stocks.  So a flow into stocks is just logical.  US Bonds make no sense at all at the current rates (as we’ve seen from this week’s auctions) and that is likely to undo us as POMO winds down and the rates over here begin to fly.  Who knows – maybe we’re ready to be PIMCOs next victim…  

    Money/Lol – The money is already out there, the Fed created $2Tn – it’s the VELOCITY of money that is near zero.  This is why we are likely heading into hyper-inflation.  Corporations have $2Tn in cash, the Fed printed $2Tn consumers are spending about $1Tn less than usual yet so much money has been pushed into the system that our GDP is flat.  What if that $5Tn moves one time?  That’s a 30% bump in GDP!  That’s also MASSIVE inflation if all that money chases the same supply of goods and services.  It’s like a ticking inflation bomb that could go off at any moment.  

    Oh yeah, there’s another Trillion locked up in commodities!  

  160. Phil

    FAS/Ross – I’d cash out if we’re over $3.  We’ll see this week but if we’re over $50K, that’s first half goal in the $25KP and I’m going to be inclined to cash out over the weekend.  

  161. japarikh

    Phil,

    Would you endorse an Apple-like play on Google? I was thinking of selling the 2013 $350 put for $17. How do you decide what strike to sell?

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