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Winning Wednesday – Markets Make Sense to Charlie Sheen

Winning!  

Whatever crack the stock market is on we do know the answer to all questions is WINNING.  6 of the past 7 weeks have been in the red but – WINNING – somehow is the attitude as we dress the windows into the end of the quarter so that GS et al can pass around the pipe and lure in a whole new round of suckers to play the game in the second half.   How many times can the market rally on the same news – news that we know is nothing but BS number shuffling out of Europe that pushes the Greek crisis back for a year or two and nothing more?  Well it’s been about 5 times so far as the average US "investor" has about the same attention span as the average crack addict – although the investors need to get their fixes more often...  

I pooped the party this morning and sent out an Email Alert to Members saying it was time (7:10) to take the money and run in the futures.  At the time we were up about 0.6% pre-market and Greece hasn’t even had their vote yet so it just wasn’t worth risking the ill-gotten gains – JUST IN CASE the "sure thing" backfires.  Now it seems like the vote won’t happen until 9 or 10 so we’ll have plenty of time to place our bets once the news breaks – no sense in playing the rumors until then – especially as those bullish positions could be quickly whipsawed on a NO vote.  

We hedged our bullish WINNERS into yesterday’s close with DIA June 30th $121 puts at .50 and the SQQQ July $25/26 bull call spread at .50, which was offset by various bullish short puts plays on some stocks we like that should mitigate the cost of the bearish spread if the market keeps WINNING.  As I said in this morning’s Alert:  

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.

That’s right, despite Greece being "fixed" (assuming the vote goes through) I maintain that we are only on course for the move I predicted last week – that we would hold the bottom of our range, run back over our "Must Hold" levels and then fall off a cliff after the July 4th weekend.  So far, following our chart for the past 2 months has been a WINNER – so why stop now?  

Look how perfectly the market obeys the 5% Rule!  Both the Dow and the S&P pulled up just short of their goals yesterday but we’re well over now in pre-markets and the Nasdaq should be over 2,740 as well.  The RUT already broke through and it’s the NYSE that we expect to give us trouble as they are the broadest index and the hardest to manipulate so we can expect some serious resistance at the 8,280 mark and there’s no way they’ll pull a 2% bump pre-market, even with a yes vote.  So we’ll watch out for that today as well as the Dollar on the 75 line.  As I said to Members this morning, I don’t see the Dollar failing there without QE3 being announced or perhaps a $1 Trillion raise in the debt ceiling – something profound to weaken it, not just Greece being "fixed."   Barry Ritholtz sums up my other concerns very nicely, saying:

Are we making a major turn? Has psychology become so bad its a contrary indicator? Has the 200 day moving average proved to be inviolable?  Perhaps any of those explanations might prove to be the case, although I have my suspicions otherwise. I suspect it is simply a case of funds marking up stocks into the close of the 2nd quarter.

What data supports this thesis? I would point to 2 things: Psychology and Trading Volume. Most metrics are showing psychology is either neutral or optimistic. This tends to be supportive of a short term trading bounce, and not a longer-lasting rally.

Second, the volume has been anemic, even by the unusually low levels we have seen all year. The overall volume on Monday was well below the 30-day average on both NYSE and Nasdaq. Tuesday was even lower. Rallies on increasingly lighter volume are not signs of aggressive institutional buying. Rather, it supports the Window dressing thesis.

Also supporting the markets is the LACK of bad news.  Check out the front page of the WSJ – where’s the bad news?  Greece set to vote on Austerity Plan – YAY!  BofA Agrees to Pay $8.5Bn Settlement – YAY!  Dow Looks to Extend Win Streak – YAY!  NATO Copter Ends Kabul Siege – YAY – Afghanistan is fixed too!   Even "Wall Street Wielding the Ax" sounds nice but it’s really about layoffs – perhaps the only negative news story that made the on-line cut this morning.  

It’s 8:47 and the Greek Parliament is voting and you would think the CNBC girl is reporting from a war zone.  She has a mask on to stop the tear gas and you can hear screaming and explosions on the street below her as the police throw smoke bombs at the crowd and the crowd throws rocks and molotov cocktails at the police in an exchange of "ideas" in the capitol.  

Is this Democracy in action or is this what happens when a Corporate Kleptocracy takes over a Government and denies the people a true voice?  Don’t worry, we’re likely to find out the answer to that one soon enough as America reaches its own end game.  

As Charles Smith points out (Monopoly board image by WilliamBanzai7): "This is a classic description of a kleptocracy: a financial and political Elite which skims and concentrates the wealth of the nation via corruption and embezzlement while being protected by the winking complicity of their fellow plunderers who hold civil and financial authority."  That pretty much sums up our country, doesn’t it?  Unless you slept through the entire Financial Crisis and missed the part where the US Citizens took on an additional $5Tn in debt to pay for the Banksters’ losses (including the Fed’s $2.3Tn giveaway that we’ll be billed for later) then you realize we’re in the same boat and you MUST read this Austerity Package that is being forced on the Greek people today (courtesy of Zero Hedge).  

There is NO WAY the Greek Government will be able to enforce this.  If I were your banker, and you were unemployed and up to your eyeballs in debt and 3 months behind on your mortgage and I offered to lend you enough money to cover the past 3 months and the current month as long as you agreed to pay me 10% more 60 days from now because surely you’d have a high-paying job by them – you would take that deal, right?  Taking the deal isn’t the issue – whether or not you are able to live up to our new agreement IS.  That’s all this is – more extending and pretending and the negotiations on the US debt ceiling – as I mentioned on Monday – is more of the same.  

9am Update:  Austerity WINS!  NOW let’s see if the markets pop on this news.  I’m feeling good about my early call as we’re off from the 7am highs still and we expected this to be a bit of a "sell on the news" event.  Too bad it didn’t happen while the markets were open but we have 30 minutes to go and it should be a very interesting day.  The S&P futures (/ES) are right on the 1,300 mark and if they can’t get the Dollar below 75.25 (now 75.27) down they will go so it’s a great line to short OR long off using the Dollar as a key play.     

I’m betting short but then I’ll still expect a rescue of our markets into the end of quarter but, after that – well, let’s just say we are expecting to change those "Must Hold" levels to breakout levels and drop the whole chart at least 5% from there.


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  1. jabobeast

    took my wife out for her b-day last night. after dinner we walked around an outdoor mall and it was the perfect night. then, we walked past a Chiptole resturaunt around 845pm. It was pretty crowded. Ruined the night ;-)
    FU CMG!

  2. jabobeast

    Lululemon (LULU), Netflix (NFLX), Chipotle Mexican Grill (CMG), Amazon (AMZN), Fossil (FOSL)
     
    Shorting turbo-charged growth stocks Lululemon (LULU), Netflix (NFLX), Chipotle Mexican Grill (CMG), Amazon (AMZN), and Fossil (FOSL) is like jumping in front of an oncoming train, Cramer said. With the rest of the market growing slowly, the multiple expansion phase has begun, as investors will flee to stocks that are growing aggressively. Cramer says he dislikes phases like this because he doesn’t like to be accused of being a momentum buyer or someone who "pays up for stocks in the belief that you are going to pass them off to someone dumber who is willing to pay more than you." Cramer says it is not a game or a trick buying stocks that have great fundamentals and long-term growth stories, and it is worth getting in ahead of Big Money, who will snatch up the stocks sooner or later. "I want to help you beat these managers at their own game."

  3. Savi

    jabo--t’es amusant toi   :-)

  4. Pharmboy

    PP for today.

    SPX chart.

  5. jabobeast

    Savi—say what???

  6. rustle123

    What’s the update on Vegas?

  7. nicha

     rustle/Vegas – last I heard, Savi is paying for the trip for all of us :)

  8. rustle123

    Thanks Savi

  9. matt1966

    Can’t wait to find out who buys Greece’s state lottery.  Who wants to bet its NOT GS?

  10. exec

    Phil/Greece,
     
    That’s a great photo of the Greek security force member going up in flames.
     
    Perhaps they should start using their people as an alternate energy source.  This would definitely help with their budget problems as it would lower their energy cost, reduce the public employee burden, and stimulate employment with the instant need to fill those vacant security positions.

  11. Savi

    nicha/rustle—les conneries
    rustle-- Vegas update see end of yesterdays posts—

  12. JRW III

    Good morning,

     

    IWM    79.96,  80.18,  80.48,  80.81,  81.09,  81.49,  82.28  and  82.75

    Heavy confluence at 82.07 area; I’ll be looking to short unless there is a massive push !!

  13. JRW III

  14. Phil

    Good morning! 

    Tough play this morning.  Greeks won their vote – so what?  The Yen flew up on the vote about half a point but not much movement from the other major currencies so all up in the air but we had our 2.5% run (counting the futures) and now we should get a 0.5% pullback (back to yesterday’s close).  If that holds, THEN we can look up again but, for now – I feel much better in cash!  

    The ONLY things that will get us more bullish are the Dollar failing 75 or the NYSE getting over 8,280.  I’m not sure either is very likely.  If ANY of the other majors fail to hold the 2.5% lines – that’s a huge bearish signal but that’s a long way away now so we’ll just see if the Must Hold levels hold up – assuming they last into the open as the pre-markets are selling off pretty hard now (9:26)!  

    Hopefully you got my earlier Alert to kill the longs in the futures – that was a nice top call so we’re not going to be in any hurry to go long again until we see some real firmness back around those lines today.  

    I’m not advocating a gung-ho shorting as we still have a couple of days left for shenanigans but, as I said yesterday and also in this morning’s post – it is certainly time to start laying down some disaster hedges.  

    TZA Aug $34/40 bull call spread is $1.90 and that pays 4:1 so a good stand-alone and we can pick an offset after we get more information.  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    10:00 Pending Home Sales
    10:30 EIA Petroleum Inventories
    12:00 PM Fed’s Raskin: ‘Rebuilding the Road to Financial Stability’
    1:00 PM Results of $29B, 7-Year Note Auction
    3:00 PM USDA Ag. Prices 

    At the open: Dow +0.21% to 12214. S&P +0.28% to 1300. Nasdaq +0.26% to 2736.
    Treasurys: 30-year -0.03%. 10-yr -0.13%. 5-yr -0.05%.
    Commodities: Crude +0.09% to $92.97. Gold +0.42% to $1506.50.
    Currencies: Euro +0.07% vs. dollar. Yen +0.59%. Pound +0.22%.

    Market preview: Stock futures, the euro and Nymex crude all trim gains after the Greek parliament passes its crucial austerity bill. S&P now +0.3%, euro +0.2%, crude +0.5%. Back home, BofA +3.6% after itagrees to pay $8.5B to settle mortgage claims, while BJ’s Wholesale+4.8% on news it will be acquired for ~$2.8B. Later: pending home sales.

    MBA Mortgage Applications: -2.7% vs. -5.9% last week. Thirty-year fixed mortgage rate decreased to 4.46% from 4.57%.

    The vote in Athens has passed. Needing 151 votes, the bill receives 155, with just one ruling party member voting against the legislation. Stoxx 50 remains just under morning’s highs, +1.9%. Euro giving up a little bit of its gains, +0.2% at $1.44. 

    The price of a conscience:  PASOK MP Kourouplis, the only ruling party member who ended up voting against the austerity bill, has been ejected from the party

    Next!  The U.K. faces its own austerity protests as 750K public workers will walk out on Thursday, kicking off a summer of discontent that union leaders hope builds into the largest strikes in decades. The government is praying the whole thing devolves into a summer of hard-headed acceptance.

    Canada’s inflation rate jumps to 3.7% in May, the highest level since March 2003. Expectations were for a 3.3% rise. Core inflation moved to 1.8% vs. an anticipated 1.5%. The loonie spikes higher to $1.0283, +0.9%.

    The Fed, ECB, BOE and other key central banks extend existing dollar-lending arrangements for another year. The programs were put in place during the financial crisis to meet the demand for dollars by foreign banks. The agreements had been due to expire on August 1.

    The number of Google searches in China for "ying zhuolu" – Chinese for "hard landing" has spiked recently. Researchers from Macquarie suggest a slowing economy is "filtering into the public consciousness … (contributing) to the very slowdown they fear."

    BofA (BAC) and Countrywide agree to pay $8.5B to settle mortgage claims. BAC +3.05% premarket. (PR"This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us," says BofA (BAC +3.7%) CEO Brian Moynihan. "We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide." (PR)

    U.S. automakers push government officials for a slower pace to proposed higher fuel-economy standards. The industry has agreed with a 35.5 mpg standard by 2016, but voices concerns over hitting a 56.2 mpg target by 2025 set by regulators and the White House. Premarket: F+1.2%GM +0.7%.

    The AFL-CIO union is set to announce today a plan to make$10B in union pension money available over the next five years to fund infrastructure projects. The move is part of an effort to boost jobs in the construction industry, where unemployment is 16%.

    Family Dollar Stores (FDO): FQ3 EPS of $0.91 misses by $0.04. Revenue of $2.15B (+7.8% Y/Y) misses by $0.02B. Sees FY’11 EPS of $3.08-3.16. (PR)

    General Mills (GIS): FQ4 EPS of $0.52 in-line. Revenue of $3.63B (+3% Y/Y) misses by $0.04B. Sees FY’12 EPS of $2.60-2.62. (PR)

    KB Home (KBH): FQ2 EPS of -$0.89 misses by $0.58. Revenue of $271.7M (-27.4% Y/Y) beats by $25.1M. Shares -4% premarket. (PR)

    Monsanto (MON): FQ3 EPS of $1.26 beats by $0.15. Revenue of $3.59B (+21.2% Y/Y) beats by $0.21B. Sees FY’11 EPS of $2.84-2.88. Shares +3.3% premarket. (PR)

    Apple’s (AAPL) entry-level iPhone strategy will include cutting its iPhone 3GS to zero (on contract, $399 unsubsidized) in conjunction with an expected September iPhone 5 launch, RBC believes. Proprietary survey data says 14% are very/somewhat likely to buy the 3GS for free with a two-year contract, exceeding buying interest for the iPad (13%) and original iPhone (9%).

  15. dclark41

    phil:
    I know you might bail on FAS, but don’t you think it prudent to do it now or cover at least 1/2? The next week $25 are .83.

  16. jerconn

    PHil, ‘looking for things to sell and I’m wondering what your thoughts are on GGP?  You were an early proponent if I recall, but any reason to hold on to the stk now?  And what about their spin-off, HHC?  Thanks for your opinion!

  17. rainman

    Vegas — I think Phil was suggesting turning it into a Ponzi scheme using the deposit of later people to pay off the early depositors :)

  18. angelcur

     greece cds +2.0% to 2,078 bps

  19. bobhu

    rainman, I was thinking the same thing..lol.

  20. Pharmboy

    Window dressing….or salad dressing.  Both make things look better…..but is it really good for you?  OK, now off to Topeka, Kansas.  Why?  Oh, Grandma & Grandpa are there….and nothing much else.

  21. jerconn

    Pharm what hap to CRIS and results last week?  No hear…

  22. jromeha

    Pharm – truer words were never spoken about the MW…. However, living in Omaha for 4 years and Dayton for 2 years has given me a greater appreciation of the coasts… So happy to be in Boston now!
    Phil, Im in training this week and can trade a little bit during the day…. Do you like ANY bullish plays for the rest of the week?

  23. nicha

    rainman – I followed you in on DE a few days ago selling Jan $80 put for $8.10. Its now $6.60. With the expected downdraft coming, wouldn’t it be better to lock in 18% return in 10 days. What do you think? Are you looking at it from a LT angle? Just wanted to understand your thought process? Thank you.

  24. jromeha

    Let me qualify my last statement. I am super bearish and getting destroyed, just looking for some bullish cover….

  25. matt1966

    Could be a total bear trap but based on the high volume of selling premarket and this spike down, I’m inclined to say we will fade today.  Rally over.  As always, don’t sue me if I’m wrong!  Should know by the end of the day.
     
    8-)

  26. matt1966

    Damn JRW!  I missed your post!!

  27. Phil

    CMG/Jabob – If you are going to take their day to day movements seriously it’s going to be hopeless.   They have a $10Bn market cap and trade $300M worth of shares daily so up or down 3% a day is nothing on these guys.  The only thing that saves you from these stocks is REALITY – they have a p/e of 51 and a forward p/e (assuming smashing growth) of 36, about double the sector norms but none of that matters until you get to an earnings report because, in general, restaurant stocks are BORING!   What’s going to happen day to day with them?  They announce a bigger fajita?  Their price increase was a MAJOR announcement but they are actually only going to "try" it in various markets – the bigger announcement will be when they have to roll it back.  Meanwhile, they had massive issues with immigration this quarter and their margins were squeezed so hard that they had to increase prices.  Of course they are putting the squeeze on the shorts ahead of earnings – otherwise they’ll have to pay you off on the way down.  

    Cramer/Jabob – So what is he saying?  Buy the momentum or don’t buy the momentum.  Doesn’t matter because, whatever happens, he’ll use the same statement to say he called it.  

    Greece/Matt – GS doesn’t want the stuff, they just want to broker the deal and get the fees.  

    LOL Exec – How many miles per officer can you get in a Range Rover?  

    75.35 on the Dollar, $93.23 oil.  

    FAS/$25KP, DC – The Aug $23s are $2.90 at the moment and I think we may get a pop this afternoon (and into Friday for that matter).  If we get ugly, then I may reconsider but I want to be in a position to cash out on a run-up so I don’t want to mess around with a short call.  I mean, have a little perspective – FAS is up almost $1 from yesterday morning – if it drops back a bit – so what?  Pull your chart back from the 1-minute view and we’re still on a very nice upward path.  What was the Big News today – Greece is fixed.  Who does that directly benefit?   The banks and insurance companies like AFL, who panicked out of EU debt last week and spooked the XLF lower.  Now that seems silly so maybe our entire drop from $25 was silly and now we’ll head back over.  $26.50 is the declining 50 dma and that would be a great spot to sell if we get that kind of move.  

    GGP/Jercon – I don’t know how they are structured anymore post spin-off but remind me on the weekend and I’d be happy to look them over.  They sure have had a nice run back from .50 though!  That was a very interesting play when they were going down – this is what we did at the time:  

    GGP was paying (not kidding) 41% dividend at this price  ($5.65) but they suspended it for Q4 and you can cut that $5.65 down to $1.95 by selling the 2011 $5s for $3.70 and collect those dividends.  You can even turn it into a no-lose trade by also picking up the 2011 $5 puts for $3 or less at which point you are in for $5 with a guarantee of selling at $5 in 2011 and any premiums you pick up (.50 was last paid on July 15th) are your profits.  This is another one of those companies where insiders were forced to sell on margin calls, driving the price down hard.

    GGP paid $3.589 on November 10th so the stock less the short puts and calls was free (and GGP crashed so the caller got screwed) AND we collected $3.589 AND it came back and we got another $5 – how’s that for a fun trade.  Why did it work?  We SOLD into the initial excitement.  The gamble was whether or not they paid that dividend more than anything else but why wouldn’t they – the board and management are shareholders too and the cash was there.  

    Bullish/Jrom – I’d roll up the bear side at this point and go for a tight DIA or IWM cover on a move up to offset losses.  

    Fade Matt – looking weak.

    Dollar 75.40 – DANGER!  

  28. nicha

     A post from Opt’s page - Interesting call on the steel stocks.

  29. rustle123

    I don’t think I ever typed in orders so fast in my life to buy DIA puts when we were hovering around up 30 pts.  Got 195 DIA Jul 122, now just hoping to we can fall 50 or 60 more points and I’ll call it a day.  12200 seems to be a tough point on this market.  Got some EDZ at 18.49 also hoping if we go down, it spreads tonight.

  30. dforster2

    What should we do with DIA weeklys that we bought yesterday for around .50 as a gamble? of course we lost the short term bet but they aren’t doing terrible today but if we aren’t going o get some serious downward movement by Friday they are worthless. Should we sell and salvage what’s left of them today?

  31. jerconn

    PHil, yeah I rode GGP up from $2 plus the spinoff so super profitable but now no dividend and basically they’re going nowhere for the last year (aside from the HHC spinoff), so I’m thinking to bail at this point, but I’ll wait for your thoughts over the weekend…thanks!

  32. Phil

    10:00 AM On the hour: Dow +0.15%. 10-yr -0.2%. Euro -0.02% vs. dollar. Crude +0.44% to $93.30. Gold +0.27% to $1504.30. 

    Winning!  May Pending Home Sales: +8.2% to 88.8 vs. -0.6% expected, -11.6% prior. "This solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace," NAR’s Lawrence Yun says.

    The euro goes barely negative on the day, nearly 100 pipsbeneath its pre-vote high. European shares remain sharply positive, but well off of their highs. FXE flat. Stox 50 +1.4%.

    Black Swan Author Taleb: Greece is ‘Peanuts,’ the U.S. a ‘Time Bomb’ (WSJ)

    Splashing a bit of cold water in the face of euphoric markets, ZH reminds of the action subsequent to the initial bailout of Greece (and stock rally) 13 months ago – a slide of 7.5% for the S&P 500 in the following 2 weeks, which wasn’t recovered from until the Fed announced QEII 3 months later.

    Is Brazil’s economic boom a bubble ready to burst? (BBC)

    Financial stocks (XLF +1.1%surge to the top of the early leader board after Bank of America’s (BAC +3.1%deal to pay an $8.5B settlement to mortgage investors. Prevailing sentiment: "If BofA can settle on $424B of bonds for $8.5B, that’s 2%, which is a screaming bargain." Also: C +2.4%JPM +2.1%WFC +1.2%

    Shadow spreading across international banking (FTsee also Basel Regulators Said to Scrutinize Banks’ ‘Flawed’ Risk-Weighting Methods (Bloomberg)

    Biggest Tax Avoiders Win Most Gaming $1 Trillion U.S. Tax Break (Bloomberg)

    Almost time for bottom fission: SHAW is downgraded at Stifel Nicolaus following a disastrousearnings report late yesterday. The company expects to show a loss in Q3 as nuclear-related projects dry up in the wake of the TEPCO disaster. Shares -10.6%.

  33. CanuckBob

    your thoughts on a s/t hedge, SDS aug 22/24 for a net of approx. $0.53?

  34. 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?

  35. Phil

    Bear trap/Matt – I still think we somehow go higher but I don’t feel the urge to participate.  Just using the pops to layer in some Disaster Hedges for now until/unless the NYSE impresses us with a big move.  

    Steel/Nicha – Lot’s of conflicting opinions on the Global economy.  

    EDZ/Rustle – Great idea, they got smacked down this week.  EDZ Aug $18/22 bull call spread is $1.10 and the usual suspects can be used to offset them or selling the Aug $17 puts for $1 turns it into net .10 on the $4 spread (3,900% upside potential) and the Aug $17 puts can roll to the Oct $15 puts ($1.20) and the Jan $12 puts (.95) and if we’re having that much of an emerging market rally by January, then I’m sure we’ll find some longs worth protecting with EDZ at net $12.10.  

    Europe/Angel – Not fixed at all.  Just a band-aid over a gaping wound.  

    DIA/Dforst – Sell it of course!  It was a gamble on the Greeks rejecting the vote and we’re LUCKY to get out at .40.  The Dollar just got smacked down to 75.27 again – going over 75.40 was a no-no and that means the manipulators still have control so I don’t think it’s worth the risk.  

    GGP/Jercon – From $2 you should have taken $15 and ran long, long ago!  In the very least, you can sell 2013 $12.50 calls for $9.50, which is like selling it for net $22 and you get almost half now and the rest then but, of course, $9.50 is  57% of the current price.  

    SDS/Canuk – I like it but it’s risky and it would be good to have a bullish offset.  

    Huge draw on oil of 4.4Mb, gasoline down 1.4Mb, distillates up 256K – Biggest draw in ages right ahead of the Holiday Weekend – what a great coincidence, right?   Oil flying back over $94, gasoline (told you so) $2.875 and climbing (/RB should be good over that line to $2.90 at least).  

    EIA Petroleum Inventories: Crude -4.4M vs. -1.7M prior. Gasoline -1.4M vs. -0.5M prior. Distillates +0.3M vs. +1.2M prior. Futures +1.7% to $94.98. 

  36. JRW III

    Busy morning, this was the bounce off my 81.49 line:

    Now, let’s see if "they" can push us through that 82.07ish area !!

  37. rainman

    nicha / DE — <Brain dump> I made that trade in a roth IRA, where I take less risk and this was to be a fire and forget trade. You certainly could collect the $1.50 (18%  of the potential and a 2% return if cash covered), is a good return for 10 days,  but I don’t have anywhere else to put that money to work so I’ll let it ride until I find something that looks better. Do note that there is a gap to $72.50 from Oct which might make it appealing to take the trade off but I’d go for 2x if we get there (based on what I think is a mega trend in ag). $72 just so happens to be our cost basis on assignment ;) In theory, we should be able to get another 10% in 6 months giving us a second entry at $65 in june/july ’12 and an average of $68 which also appears like a support line as well. I think at this point, I’d be more interested in taking the trade off if it fails $82 which formed a nice support and to really fail, it’ll need to break the secondary support at $80. I have an alert for a drop below $81.90  to start paying attention again. On conservative trades, I try to make 1%+/month and this trade still has 8% left to go for 6 months so still on track. </brain dump>

  38. yodi

    Phil I see your comments on FAS but it is not clear to me. We entered weekly plays. Now you talking about AU 24 calls. I am still holding the weeklies 23 and 24 c of this week short. Next weeks weeklies will be only out tomorrow. So what will be the next move. Possible I am missing something???

  39. jromeha

    Phil – did you happen to catch how much LESS fuel was delivered this week as opposed to last week?

  40. etradingsignals

    Yodi: Phil is talking about the 25KP portfolio where we are holding Aug 23 calls

  41. asaenz

    @ Phil, just closed the USO (weeklies) Bull Call, nice call on that! I was wondering when will it be ok to short oil again, any option trade on tha? it might be too early but maybe we can DD if oil climbs a little more, which seems pretty unlikely…

  42. revtodd64

     Phil/ DXD Hedge –  I put on a DXD July $17/18 call spread you suggested a couple weeks and ago and covered by selling USO $34puts, which are now down to about .15.  I’m thinking about buying back the puts since they have already covered half the cost of the spread and I don’t really want to be assigned USO if we get a drop.  Then I’m think I could sell something else I really want to cover the rest of the cost of the spread.  Any reason not to go through with this plan?

  43. matt1966

    Wow!  The selling miraculously ended at 10:05!!  What a blessing!!!  Must be all those homes pending to be sold!!!!

  44. Jbur

    Good Morning Phil and All. Phil, thanks for the great explanation this morning on stops and rolling callers. Was able to roll the TBT July 34′s to the Aug 36′s for even money on the slight pullback this morning. Whew!

  45. shadowfax

    JRW they hit 82.07 ish
    I got out,did you?

  46. yodi

    etradingsignals
    FAS Thanks but we have a weekly and monthly play as well ???

  47. JRW III

    shadow

    I sold 2/3 at $79.84; still 1/3 in TNA. If "they" can break North, it could get crazy !!

  48. drcraig

    End of quarter BS- why would ‘they’ waste all that firepower not to go all the way into Friday? The question is, how much is enough? Clearly they have a lot of ground to make up for a + quarter.. wouldn’t it be insane if they went all the way? In this market the insane happens often enough to seem likely.

  49. angelcur

    greek ministry of finance…on fire

  50. Phil

    Copper testing $4.20 – that’s legitimately bullish if they push through and hold that.  FCX already miles up from our pick. 

    GOOG/Japar – Well my decision on AAPL is what price do I REALLY want to own AAPL.  Included in that decision is why is APPL at (in that case) $250?  In AAPL’s case, it is going to be Jobs dying (and I’m prepared to wait that out), a competitive threat (been waiting since the IPod for that to happen) or perhaps some global shock (doesn’t make me not want AAPL).  A supply disruption isn’t going to drop them $100 so the cases in which they trigger my short put are all cases in which I would want to buy AAPL and would be happy to DD on them if they drop another 40% ($150 for 2x at net $200 with the stock at $150) as I feel that a combination of time and option sales will work things out on that trade.  I don’t have that level of comfort with GOOG, which is why I pick that same short AAPL $270 put play over and over and over again and not GOOG, who only pay you $30 for the short 2013 $400 puts with a net $370 entry but GOOG won’t drop $125 (25%) because one person dies and they have a MASSIVE competitor in MSFT who are like the 800-pound company with the brain (CEO) of a gorilla but, if that ever changes, GOOG could be in trouble.  Also, GOOG is being investigated for monopolizing search – which is silly but, MSFT spent years in court and it didn’t matter if they were guilty or not (they were) – it’s a huge drain on the company.    So, the bottom line is – IF GOOG drops 25%, I don’t REALLY want them because I won’t want to DD at $300.  If, however, GOOG dropped to $350 – THEN I’d be really excited about buying them.  

    If you want to play GOOG bullish, the way I would go is the 2013 $500/600 bull call spread at $35, selling 2/3 July $515 calls for $5.90 so you net about $4 per long with a little wiggle room on the 1/3 uncovered and the goal, of course, is to string together $35 worth of short calls and get a free ride on $100.  If you have to cap margin on that trade, you can buy the Sept $600 calls for $1 as you expect $8 of sales to offset it so no biggie.  

    FAS/Yodi – I’m talking about the $25KP, where we have 80 Aug $23 calls.  I intend to cash that Portfolio out this week and start with a fresh $50,000 in July.  On the FAS Money trade, we have long puts and calls and we sell weekly puts and calls for income.  It doesn’t matter on that one which way FAS goes as long as we collect our premium.  My trade was to short the $24 puts and calls – I have nothing to do with $23s and I said over and over last week I thought they were a bad idea and, if that didn’t get the message across, maybe our naked stance in the $25KP might have been a hint or perhaps my saying on Monday that it was a mistake to have FAS covered.   So, what do you have and what is your basis and tomorrow, hopefully, there will be a roll where you can fix it.  

    Delivery/Jrom – I did not see anything yet, I thought you had to wait until 1pm for that data?  

    USO/Asaenz – As I said yesterday, certainly not shorting it into the holiday weekend.  We’ll see how $95 does and we’ll see what the full IEA Report looks like at 1pm.  

    USO/Rev – Absolutely you want to buy back the puts.  Why risk such a nice gain over the weekend?   As to selling something else – how about TBT Aug $30 puts for .30?  Also, I had a bunch of short put ideas in yesterday’s post.  

    75.19, oil $95!

    TBT/JBur – That’s great.  Much easier to sleep with a little cushion.  

    EOQ/Dr C – It’s not about the Q/Q number – they want to show up for the year – think about it in terms of the brochure some sleezebag "investment adviser" shows you to try to convince you to hand over your cash – that’s what it’s all about – printing nice-looking brochures…

    75.15 – HERE WE GO!  

    75.11!   

    11:00 AM On the hour: Dow +0.51%. 10-yr -0.19%. Euro +0.18% vs. dollar. Crude +2.21% to $94.94. Gold +0.4% to $1506.20.

    Investors may be the ones who get hurt if Congress moves ahead with a cost-cutting plan that would give self-funded FINRA oversight of ~12,000 investment advisers. “It’s a very bad idea to expand the notion of self-regulation," a former state regulator says. "They’re supposed to oversee the activity of the industry, but they are industry." 

    The IMF warns against the conventional wisdom on yuan revaluation, saying job losses would be more severe and not limited to just the low-margin manufacturing industries. Everything is linked together, and it would be a mistake to believe services would not be affected by a slowdown elsewhere. Full report (pdf).

    Morgan Stanley’s (MS) big inflation bet may have cost the firm big money. Traders at the bank bet that inflation expectations for the next five years would rise in Treasury markets, while forecasts for the next 30 years would fall, Bloomberg says; MS reportedly lost at least tens of millions of dollars on the trade.

    Spain holds its first wireless-spectrum auction, hoping to raise €2B it can use to pay down some debt. Telefonica (TFE), Vodafone (VOD), and France Telecom (FTE) are among the companies bidding on 58 blocks. The bids are in by now, but results won’t be known for about two weeks.

  51. JRW III

    Out at $79.82 !!

  52. jromeha

    Copper exploding up. Im short at 4.22, this is such bullsh!t

  53. shadowfax

    Went 1/2 for 2 min regained my lost .13 from yesterday, all cash.

  54. dclark41

    Phil:
    Very impressive work this week!

  55. Savi

    Phil--great call on USO spread—just got out nice profit

  56. angelcur

     ecb raising rates makes spain collapse more likely…which will collapse the euro…tricchet has to see that

  57. shadowfax

    Today was a USO day, very good to all but me.

  58. angelcur

      on top of the fact that it boosts oil/food prices which are plunging millions globally into poverty

  59. Savi

    Kudlow really is annoying

  60. angelcur

     gold and silver best performing sector today…..yeah! go europe!

  61. shadowfax

    Money flowing out of IWM and S&P

  62. jcaesar

    Phil – You’ve mentioned cashing out the 25k portfolio and starting again in July.  Do you mean next week?  Or are you going decide when to do this based on market conditions?

  63. Phil

    That was goal on gasoline at $2.92, of course.  Nice .05 pick-up at $4,200 per penny!  

    Fire/Angel – That will be the first of many.  

    Thanks DC, Savi! 

    Trichet/Angel – He’s out the door – like Greenspan in 2006 – making an exit before it all hits the fan.  

    Amen Savi.

    $25KP/JC – No, we’re at goal and I said it in the last update.  If I can get us to $50K cash, that’s mission accomplished for the first half and we can start fresh in Q2 going for another double in the 2nd half – hopefully without all the drama of the FAS play.  That will give more small players a chance to play along as we’ll try to stick to a series of targeted trades.  

    75 held on the Dollar so far – putting a top on the markets back at our 7am highs.  

  64. jcaesar

    Understood.  Thanks Phil.

  65. JRW III

    2/3 in TZA at $35.58 !!

    Sell signal !!

  66. rpme

    Phil, I was over covered and sold the 100 IYR Jan $50p. Looking at reentering as a short side play, thoughts?

  67. angelcur

    cnbc has the US Debt ticker by O’s head as he speaks..hahaha

  68. dclark41

    Phil:
    If not for the 25k, would you continue to work the 25k FAS play? Just curious if you think the risk/reward is decent continuing the FAS trade further out (on my own). I am only 1/4 the size of your long position. Thank you.

  69. Phil

    I love how CNBC now runs the Debt Clock next to Obama whenever he speaks.  If we get a Republican President again, I wonder if that practice will continue?  

    Even if a deal is struck that would reduce long-term spending with a boost in the debt ceiling, Lawrence Lindsey believes deficit projections nevertheless will be revised upward in the years ahead. For starters, normal interest rates, rather than current near-zero rates, would raise debt service costs $4.9T over 10 years, dwarfing the savings from any potential budget deal. 

    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." 

  70. jabobeast

    phil--where do you think the mkt goes today? do you think there is any chance it closes down for the day?

  71. angelcur

    my god phil cnbc is the most friendly to the party (dems) ever..dont’t worry about a republican president with the buffoons running for the gop..even a president as vulnerable as obama will get re elected

  72. angelcur

    don’t get me started on your girl mishy..whats the female equivalent of a putz?

  73. angelcur

    ah wait a vutz!

  74. JRW III

    Out of TZA with 5 cents, dollar nose diving !!

  75. Lincoln

     Phil: 50K portfolio
     
    I look forward to a fresh start as the 25k became so FAS-centric.  I know you all made that trade work over time but it involved a pace of trading I was ill prepared for and didn’t anticipate. 

  76. Phil

    I love Obama, he can speak intelligently about anything they ask him.  Although Michelle Bachmann will be fun too!  

    IYR/Rpme – You confused me with saying you sold puts and now you want a short play.  What is the IYR position you actually have?  

    FAS/DC – As a trade, I still like it.  It makes money.  it makes it slowly and painfully and right after you make money you have to put most of it back in to improve the position but, over time, you can push that sucker back to a very nice spread (3+ months) and then the real cash-out is when you take those last 3 months of calls (12 sales) without putting it back into the long position.  The problem is – in chat – too many people freak out about a move up and then a day later they freak out above a move down and then an hour after that they freak out about a move back up and then it flatlines and they panic – it’s just no fun for me!  

    Today/Jabob – Europe finished up about 1.7%, no reason we shouldn’t be up over 1% other than the Dollar holding 75 so it’s all about getting below that line.  If it holds on the next test though, I’ll be wanting some momentum shorts but then I still think they turn it around into the end of the week so up is safer than down to bet.  

    I don’t think "putz" is gender-specific Angel…

    Pacing/Lincoln – Yep, as above, it was annoying me too but that is what you have to do to save a trade that doesn’t work if you over-commit.  In the 2nd half, I will try to make better use of stops to stay out of that situation.  

  77. gmarts

    Phil, I’m in the AUG TZA 35/43 bull (bear) call spread at a net 3.00.I have no puts sold against the position, as I was already a bit too long.
     
    Would you recommend any adjustment at this point?

  78. Phil

    I think USO is about done here ($37.50) and we can use that line to stop out the Friday $38 puts at .75 – 20 in the $25KP with a stop at .60.  

  79. Phil

    Also in the $25KP, I’d rather take the money and run on all 80 Aug $23 FAS calls at $3.20 ($25,600).

  80. JRW III

    Shorting off the 82.28 line (1/3), and waiting !!

  81. rpme

    Phil, sorry that was confusing. I closed out the IYR puts we had from the Income Portfolio and was thinking of buying them back, as the future, through your eyes anyway, looks bleak.

  82. angelcur

    whats the over under on a deal getting done here?…

  83. Phil

    TZA/Gmarts – You still have $3.70 on the $35s so no biggie.  You can add $2 and roll out to the Jan $45s at $5.70 and turn it into a spread you can work over time.  Once you burn the Aug premium, the next $2 you sell goes back in your pocket and the next 2 pays for a roll down.  Even though you’ll have a higher strike, you still have a 50% delta advantage so no worries about getting burned by the short puts (still lose a bit if TZA falls though).  

    IYR/Rpme – Ah, no position at all!  We bought the IYR Jan $50 puts for about $2.70 and sold 1/2 front month $60 puts for $2 to knock $1 off the net.  That was our initial entry but we took it when we expected that $60 would hold as a bottom.  Now it’s a tough call but the Jan $50 puts are just $1.45 now and you can sell the Aug $55 puts for .53 with a stop on 1/2 at .65.  You only need a few good sales to have free protection.  The premise is that if Real Estate collapses – it won’t be short or small and those $50 puts are not that far away.  

    El-Erian attacking on her first day Angel?  That’s not nice…

    TBT sneaking up to $34.10 again.  

    75.10 on the Dollar, oil $95.35.  

  84. angelcur

    el erian is making sure that that money is there for he bill and the greenster…this news conference is getting like waterboarding…

  85. jasu1

     Phil,
    Currently have the XOM Aug 75 put at 1.99. XOM at 80.26, put at .93.  Greedy me has 53% gain?
    Take the Money and RUN or does XOM have farther UP to go? 
    Thanks

  86. jbaker2447

     Phil — good call yesterday on NAK, I see they’re up 6.79% today! 

  87. hoss18

    Anyone else notice that BoA’s $8.5Bl settlement is MORE than all their profit since the bust? And does NOT relieve them of further obligation from lawsuit? It’s up today, but could be ouchy….

  88. rj_jarboe

    Phil,
    My only disaster hedge is the tza July $38/42. I am in at $1.80. I can roll the calls down to the $36 calls for around $0.50, but if we don’t fall the next 2 weeks I am just throwing money away. Does it make more sense to roll out instead of down. I do think we fall, but am not sure they won’t dress the start of the quarter. Doesn’t make sense that they would dress us up only to let things fall apart before retail investors even read the End of Q numbers.

  89. Phil

    Deal/Angel – Well to get a deal done you have to count on Republicans acting responsibly and agreeing that some tax increases will be necessary to close a deficit on a $3.6Tn budget that has just $2.2Tn in revenues – so 50/50 at best.  

    XOM/Jasu – I think it’s a safe line but just put a stop in at $1.15 and you end up with .85.  You know they are going to have great earnings so no worries there – it’s really a matter of oil holding $92.50, which is doubtful so it depends what happens first (earnings or oil pullback).  If you REALLY wanted to own XOM net $73, then there wouldn’t be a question when they’re 10% over target, right?  That’s why you should never sell a short put in a stock you don’t fully intend to buy – it makes it so much easier to stick with.  

    11:19 AM More down trading for Treasurys as stocks pick up steam. In the wake of the Fed’s purchase of $2.456B in bonds of $7.573B offered by dealers, the 10-year yield +0.04 to 3.08%; five-year +0.10 to 1.68%.

    12:00 PM On the hour: Dow +0.62%. 10-yr -0.29%. Euro +0.41% vs. dollar. Crude +2.81% to $95.50. Gold +0.84% to $1512.80.

    01:00 PM On the hour: Dow +0.6%. 10-yr -0.25%. Euro +0.33% vs. dollar. Crude +2.36% to $95.08. Gold +0.64% to $1509.80.

    After wavering a bit following the Greek vote, European shares stage a strong rally into the close, finishing near their highs for the day.EZU +1.9%EWP +1.7%EWI +2.1%EWG +1.7%EWQ +2.1%EWU+1.7%. Greek shares plunge late, finishing +0.5%.

    Up another 2.7% to $95.40/barrel, oil moves higher than it stood before the government attempt to drive prices lower just 4 sessions ago sent crude temporarily plunging. USO +3.2%BNO +3.4%.

    The IMF says U.S. economic growth will not top 3% at any time through 2016. Why so much more pessimistic than the Fed’s recent prediction of accelerating growth? One key difference is that the IMF regards housing as a long-term weight on the economy that will depress consumer spending.

    Dismal economic figures out of Ireland show the effects of heaping austerity measures on an already weak economy. The unemployment rate of 14.2% looks even worse when a peak is taken inside the numbers, and retail sales are plunging. The bailout isn’t working, but when will EU leaders acknowledge this?

    Italy’s austerity budget will include a tax on banks’ prop trading profits of 35% as well as a so-called Tobin tax on financial transactions of 0.15%, according to a government source.

    Credit agencies are warming to the French plan for dealing with Greek debt, with sources saying bankers have received positive signals the deal won’t be considered a default. "It’s not rocket science … a debt exchange won’t trigger a credit event," says a derivatives expert involved in the talks. 

    Here’s why you stay away from Junior Miners!   Rubicon Resources (RBY -15.5%) gets hammered after thepreliminary assessment of its F2 gold project discloses another drop in total resources. Although the mine is still viable, it’s going to take longer than expected to pay for construction costs out of production.

    The fine for stealing BILLIONS is… Millions (IF you are caught and IF you are found guilty in a $5M trial – so consider yourself warned for next time, young man!):  A federal judge approves JPMorgan Chase’s (JPM +2%) $153.6M settlement with the SEC over allegations its Squared mortgage CDO product defrauded investors at the time of the housing market collapse. The settlement echoes on a smaller scale Goldman Sachs’ (GS) $550M settlement reached last July over its Abacus CDO. 

    Three lunchtime reads:
    1) Why austerity alone risks a disaster
    2) Housing: Patience will be rewarded
    3) TrimTabs: Insider buying betrays skepticism

  90. willsons

     Go TBT

  91. stjeanluc

    Sorry I have not been around for the FAS Money chats as and update as I was on the road in France this morning. Wanted to show the Versailles Castle to my daughter this morning but got stuck in traffic for about 3 hours as I heard that some taxi drivers were on strike to ask for better rates as gas prices are getting out of sight here. So Tuesday, baggage handlers at the airport, today, taxis drivers. The mood is not that great around here!
     
    On the other hand, my 20 year old daughter loved Versailles and thought that the Galleries des Glaces would make a great party room for her wedding. Wonder what the security deposit is for that! They don’t build them like they did then!
    Oil Lines today are:
    R3 – 97.02
    R2 – 95.21
    R1 – 94.06
    PP – 92.25
    S1 – 91.10
    S2 – 89.29
    S3 – 88.14
    R1 was holding this morning until the dollar decided to tank! R2 is now support and has been holding since noon.

  92. angelcur

     devastating polls for him last two weeks…kneejerk is always to talk more…he’s very good in that open air free range discussion..unllike..bachy..sorry phil i know that hurts you and your mishy thang

  93. willsons

     We should be buying tear gas stock.  Greece boys are using truckloads!

  94. JRW III

    Just not a day for Bears, out of TZA (1/3) with 4 cents !!

  95. stjeanluc

    FAS Money – Obviously as Phil mentions, selling the 23 straddle last week was a bad idea. On Monday I pointed out that I bought back the the puts for a profit and Phil said that it would be prudent to also cover the 23 and at least 1/2 the 4 calls on the move to 15 by XLF. All these positions should have been covered yesterday. For me, another teachable moment! There is just no stopping this market especially when it is manipulated to that extent.

  96. David Ristau

    Phil – Went with a TZA Bull Call $34/$40 spread this morning at 1.89. Down obviously. Wondering what to do with it? Could buy back the $40s for a nice gain right now…leaving on the $34 calls…but that would be naked. Any advice would be helpful.

  97. David Ristau

    Those were for July by the way…on expiration.

  98. kustomz

    JRW, strange action in the markets. Seems the bulls dont need to fight hard to move the markets. Why arent they moving? Not much selling going on. If they wanted to, they could whisk this market away and not look back now that everything is fixed. Theres a lack of enthusiasm.

  99. JRW III

    David Ristau

    You might hold until the end of next week; based on the last 4 months !!

  100. Phil

    Oh no – Now the 7-year note auction went poorly with 2.62 bid to cover (2.89 avg), worst since November (before QE2 began) and TBT was $38 last November!  Moving nicely now at $34.37.  

    NAK/Jbak – Speaking of junior miners!  Be careful with those small ones because there was no news on them so it’s probably just us buying.  I generally avoid small caps because of that but they are such a good deal under $10 that I have to point these guys out when someone asks about long-term gold.  Keep in mind, they don’t make any money or generate any revenues – they are just sitting on a MASSIVE and expensive to extract pile of gold, copper and moly.  Long-term, either extraction gets cheaper or materials get more expensive – that’s the play on them.  And, of course, every 6 months or so there’s a buy-out rumor…  

    BAC/Hoss – Yes but the $8.5Bn could have been worse.  Stupidest acquisition… EVER!  

    TZA/Rj – Buying time is much smarter than buying position on an ultra.  TZA ranged from $31 to $43 in the past few months so the best thing you can do is give yourself time to be right, rather than throwing good money after bad into a rapidly ticking clock.  The only reason to roll down in a play like this is if you were positioning to sell a call that would pay for the roll – otherwise, what you are effectively doing is paying more money for better health insurance coverage because you’re healthier than you thought.  The premise is logical but timing is always questionable – they may keep it up through expirations…. 

    Trip sounds like fun StJ!  

    75.075 on the Dollar, $95 oil. 

    Free Range/Angel – Are you calling Michelle chicken?  I dare you to debate against the master!  (Keep in mind that she’s #2 in the polls and also keep in mind that these are the people that are CHOSEN to represent their party).     

    Bears/JRW – They are working SOOOOOOOOO hard to keep things up here.  

    TZA/David – It’s not a one-day thing, you know!  There’s nothing to do with it unless it turns way against you, then maybe a roll but the idea was to sell a bullish offset to keep it neutral.  I kind of like the risky play (buying back the $40s) but realize it’s a huge risk into the EOQ.  As I said this morning though – I don’t see them getting the Dollar below 75 and that’s going to cap the RUT at about 825.  I’d leave the callers and see what happens tomorrow, $4 is plenty to make if it goes well.  

    Oh July?  That wasn’t our spread, ours was Aug.  Sure then, may as well take out the July $40s for .70 and halve the $34s at $2.38 and pray the Dollar holds 75 but it’s very risky.  

    Dow volume just 75M at 1:25

  101. jromeha

    Im putting an order in shorting /HG at 4.24. If they choose to run it up into close it usually falls back after 1430. Ill do the same thing at 96$ for oil. Like Phil says, if these jack@$$e$ want to pretend they want commodities at these high prices, Ill sell to them….

  102. David Ristau

    JRW – Thank you.

  103. David Ristau

    Phil – Yeah I went a little more aggressive…ha. Didn’t work in my favor. I’ll see how that action works out the rest of the day.

  104. angelcur

     it boggles my mind that opec thinks it is smart to keep oil at this bubble-inflated level….within 5 years…oil will be in a multi-year secular depression.

  105. rustle123

    McClellan Oscillator getting to the top of the range.

  106. kyw206

     Uso/Phil   Phil, do you suggest that we close out the USO July 35/36 spread (.87) from last week (.59) or let it run longer

  107. rainman

    Major Index Correction Retracement Levels (May highs to the June lows)

  108. angelcur

    yes i would debate her on any issue of her choosing including tax law..john wayne gacy and meat packing..

  109. angelcur

    http://www.youtube.com/watch?v=1v7LOCEotWk&feature=related
    this is your girl..

  110. sunilram

     Dear Phil,
    Ref: Citibank  I have  about 5000 shares in my pension plan.  Avge cost 47.80. Should I sell some calls here in case it goes back down? 

  111. rainman

    More American Companies Bring Factories Back Home From China

    Read more: http://www.businessinsider.com/more-american-companies-bring-factories-back-home-from-china-2011-6#ixzz1Qgki2y15

  112. JRW III

    OK, back in TZA !!

  113. Phil

    Holiday weekend Jrom – be careful.  

    OPEC/Angel – They are as dumb as we are – they spend more than they have and their entire economy is based on selling oil – eventually we’ll be at that asset sale too.  

    USO/Kyw – Well, USO is at $37.50 but only .13 left to gain and now you’re risking .87 to make .13 (15%) whereas you already made .28 on .59 (47%) so not really a smart risk/reward considering oil has already shown us it can drop $5 in a day.  If you think you are going to have sellers regret, you can pick up the July $38/39 bull call spread for .16 and put a stop at .10 so you just risk .06 of your gain and maybe make another $1.  

    75.04 – this should be the last big push down.  They actually got to 79.995 for a second but REJECTED!  Oil appreciated the effort and went back to $95.50.  

    Retracements/Rain – Thanks:  

    Debate/Angel – Here’s her and Barney Frank going at it.  Ah, you pulled a video too – see, she’s fascinating!  

    C/Sun – Whether it goes up or down, why not sell calls?  Your net is $47.80 and you can sell Jan $43 calls for $3, which drops your net to $44.80 and, if C goes over $44, you just roll the calls (the 2013 $45s are $5).  If you plan to own C for 20 years and you sell $3 a year in premium, that’s an extra $60 generated by the stock whether it goes up, down or sideways.  The "worst thing" a $43 caller can do to you is give you the $3 and then give you another $43.  If I told you I would give you $46 for your C today – would you tell me no?  

    BofA analysts see long-term value in Citigroup (C +2.8%), upgrading the shares and noting that "stock weakness post May 6th reverse split has provided an attractive entry point." A caveat: Citi won’t reach new Basel capital requirements until 2013, and returns will be "limited" until the 9.5% target is passed.

    I agree with that timing JRW. 

    01:04 PM The Treasury sells $29B in seven-year notes at 2.43% (.pdf). Bid-to-cover ratio of 2.62, vs. a recent 2.88; indirect bidders take 32.2%, vs. a recent 46.5%. Direct bidders take 11.8%, vs. a recent 8.6%. The showing is unsurprising after weakness in this week’s two-year and five-year auctions. 

    01:23 PM Treasurys are now off across the curve after a lackluster seven-year note auction ends a bearish week for government bond sales. The 30-year yield +0.04 to 4.36%; 10-year +0.09 to 3.12%; five-year +0.14 to 1.72%; two-year +0.02 to 0.49%. 

    Fed Governor Sarah Bloom Raskin says financial inequality resulting from stagnating incomes for most Americans and rapid growth in wealth for the richest 1% is undermining the recovery. The disparities help “drag down maximum economic growth and are anathema to the social progress that is part and parcel of such growth."

    S&P managing director John Chambers tells Reuters $30B in U.S. T-bills maturing August 4 will immediately be slashed to D – selective default – if the government fails to pay them off on that day. "They don’t have a grace period."

    Shares of Monsanto (MON +4.2%) shrug off word of an SEC investigation into its herbicide business, and move higher after it beats Q3 estimates. The company says it’s cooperating with a probe centering on customer incentive programs under the Roundup label.

  114. biodieselchris

    Companies buying their own stock while insiders sell. What a great scam, spend investors money to up-sell your own stock based compensation packages.
     
    I’m sure this ends well for the bagholders ….. CMG, PCLN shareholders, are you listening?

  115. David Ristau

    What dollar index does Phil use – ANYONE?

  116. biodieselchris

    The BDI bottomed in Feb and the dollar in May. 

  117. kustomz

    David /DX he made a boo boo on the level thats all

  118. angelcur

    why do i get the impression that more liberals want her to run than conservatives..coz of her fascinating..fargo like numbness  ‘noooo dout’…why not little grannie fannie

  119. jbaker2447

     David — I’m pretty sure he follows the /DX

  120. samz3700

     That down trend over the last three months on iwm is really holding – looks like we hit resistance at the end of the last two months and then plunged on the first - 

  121. Phil

    OMG – The oil apologist on CNBC is out of his friggin’ mind!  

    Buybacks/BDC – Usually it’s a terrible use of cash.  

    Dollar/David – /DX on TOS.  Seems to line up with levels better than /DXY.  Oh, I see, I meant 74.995, not 79….

    Liberals/Angel – Oh I’ll register Republican if it can help her win the primaries for sure!  

    .95 on the USO $38 puts in $25KP – DO NOT come whining to me if you blow it!  If you sell 1/2 here and set a .85 stop on the rest, you lock in a .15 gain so that’s the play (sell 10 at .95, stop on 10 at .85).  

  122. JRW III

    5 day support trend line here (IWM 81.90) ; be careful !! Support R/S at 81.49 and 80.48.

    I’m fully in TZA , probably until EOD !! (or a cross of the 8EMA), or HERE, of coarse !!

  123. Phil

    Looks like we picked the right time to get out of FAS….

  124. angelcur

    hahahaha! thats too funny..now i know why my wife is sporting a bachman bumper sticker and she is a former greenpeace director ..tryin to suck me in!

  125. Phil

    See how that fake demand on oil goes – as soon as we step up and start calling their bluff,  they fold up their tent and run for the hills!  It’s literally the electronic version of 3-Card Monty – as soon as someone catches on to the game, they fold up the table and scatter.  That’s all these NYMEX creeps are for the most part – street hustlers with id badges….

    Only 10 mins to NYMEX close and now they don’t want to fake their orders because they ran into real sellers.  Very likely our put buying scared the crap out of them.

  126. rustle123

    almost even on my puts from this morning.  What a difference a little more patience would’ve made.

  127. Savi

    Phil—on FAS and USO—-french says it much better--vous homme merveilleux

  128. JRW III

    6+% on the day so far; YeeeeeeeeeHaaaaaaaaaah !!

    And out of TZA !!

  129. JRW III

    I may have been too early off the SMA !!

    Let’s see if we fail at the trend line (IWM 81.99) !!

  130. matt1966

    Good job JRW-  You’re back in the saddle!

  131. JRW III

    matt,

    Thanks, and if we close hereish, we have a DOJI on the day, and this could be you tomorrow !!

  132. matt1966

    LOL!

  133. shadowfax

    Looking good matt! Bad bears!

  134. JRW III

    Finger on the trigger, one set for TZA, two for TNA; buy this trend into the close !!

  135. Phil

    Patience/Rustle – Hardest thing to learn.  Key is always having a backup plan for what you do if something goes further against you – knowing what your action will be cuts down anxiety that makes you quit too quickly.  

    Merci Savi! 

    Dollar rejected at 75.10 – yet another attempt to stick the close? 

    02:00 PM On the hour: Dow +0.57%. 10-yr -0.38%. Euro +0.42% vs. dollar. Crude +2.37% to $95.09. Gold +0.74% to $1511.30. 

    03:00 PM On the hour: Dow +0.52%. 10-yr -0.38%. Euro +0.39% vs. dollar. Crude +2.27% to $95.00. Gold +0.62% to $1509.50.

    The U.S. Court of Appeals for the 6th Circuit upholds as constitutional the healthcare law that requires Americans to buy insurance, in the first decision at the appeals court level that likely will be ultimately decided by the Supreme Court. 

    A report by Capital Economics pegs Canada’s housing prices as 25% overvalued relative to disposable income – "approaching the level of excess that the U.S. market reached at its peak in 2006." Like the U.S. the coming downturn in prices "will lead to a marked decline in housing-related activity and employment.

    Raymond James (RJF +2.2%) agrees to buy back $300M of auction rate securities and pay a $1.8M fine to settle charges with the SEC. The firm was accused of marketing the securities as safe, liquid alternatives to money market funds prior to the 2008 crash. - You know they got off easy when the stock pops on the decision!  

    Credit Suisse slashes forecasts and price targets and sees arocky road for Goldman Sachs (GS +2.3%) and Morgan Stanley (MS+3.1%), but maintains Buy ratings. Both banks will suffer from “difficult market conditions, weaker than expected client activity levels and a decline in risky asset prices," the analysis says. 

    Fertilizer company shares climb after Monsanto (MON +4.3%) sets the tone with strong earningsPOT +3.8%MOS +4.7%AGU+1.2%CF +2.4%.

    Bye bye old Facebook:  News Corp. (NWS +1.2%agrees to sell Myspace to Specific Media in a deal valued at $30M-$40M, WSJ reports, well below the $100M it was seeking for the troubled social media site. News Corp. will retain a small stake. Myspace has begun laying off more than half of its ~500 employees in conjunction with the transaction. 

  136. rustle123

    patience/Phil
     
    Only went in with 1/3 position so prepared if I was off.  Never go in full position, you emphasize that.

  137. tuscadog

    Phil / Oil    Are you holding off shorting oil again (at $95) until we get through tomorrow’s month end manipulation?  $95 oil is still a recovery killer, so has to give.

  138. JRW III

  139. Phil

    Wow, gasoline got to $2.94!  That’s a mission accomplished for the weekend.  

    Fed just gave banks a huge break with higher than expected swipe fee caps at .21!   Great for V, MA, COF.  COF slowest mover, July $52.50 calls at .95, 10 in $25KP

  140. JRW III

    Remember the Long Weekend Rule, if we have a big (either way) day tomorrow and Friday, 85% chance of follow through next week !!

  141. shadowfax

    Small TZA

  142. kustomz

    Looks like MA V halted

  143. JRW III

    shadow,

    Careful, I’m waiting for the cross back below 81.99, or a Buy program push , fwiw !!

  144. doro165

    JRW, who is the chart you just posted?

  145. Phil

    Oil/Tusca – Yeah, I was just looking for the top-out into NYMEX close, not too interested now.  Which has to give?  Oil or the recovery?  

    V & MA halted limit up 10%!  EBAY loving it too.  

    COF ran into some real hardcore selling at the $52 line so let’s put a stop on them at .85 and try to take $1.20 off the table in the $25KP.  

    The Fed proposes increasing the debit card swipe fee to $0.21, from an initial cap of $0.12. Visa (V) and Mastercard (MA) say "yes." The new rule would go into effect on October 1. V +10.1%MA +9.2%.

    Follow-through/JRW – I don’t see that.  My main issue is the Dollar.  I don’t see what they are going to do next week to get the Dollar under 75.  

    Not unexpectedly, an FDA advisory panel votes 6-0 that Roche’s (RHHBY.PK +0.9%) $1B drug Avastin – the world’s best-selling cancer drug - isn’t effective in treating breast cancer. Avastin got accelerated approval for the treatment in 2008, conditional on the two follow-up studies that the FDA considered today. Insurance firms may stop covering the drug for 17,000 patients. 

    KB Home (KBH -15%) gets pounded after reporting expanded 2Q losses, with revenues plunging 27%. The company’s backlog, an indication of future business, fell 24%, while cancellation rates edge up to 25% due to tightened credit standards. (PHM -4.5%

  146. shadowfax

    JRW
    I have the sell up, out at 82.10?

  147. JRW III

    Phil / Follow through

    You missed my point, follow through (EITHER DIRECTION) but only following a big move. I expect to be down tomorrow and flat to down Friday !! And to prove that I occasionally look at a time frame more than 3 minutes, here is the big picture (15 year):

  148. shadowfax

    JRW
    They got $100 back, still a good day.

  149. JRW III

    Shadow,

    I’m still waiting; really expected a drop !!

  150. biodieselchris

     today’s winner

  151. shadowfax

    What I need to remember is never trade OEX week.

  152. jcaesar

    Phil – the pending home sales report this morning was very positive.  Seems to fly in the face of what we’ve been seeing recently (i.e., other housing reports).  Now we see the news about KBH.  What do you make of housing right now?

  153. JRW III

    doro / chart

    SPX, and it’s invalid now !!

  154. shadowfax

    JRW
    Was a great day that proved what you say, follow the trend, better rich or for me up than right!

  155. hoss18

     Yay!  Just got back from oncologist, the stem cell transplant is still holding and I remain in remission.  Six more months till my next round of CT scans.  That makes 3 years in remission!  WOHOO!!!
     
    Anyway, to follow up on the BAC point I started to make earlier, the remaining exposure could hurt earnings for the forseeable future…..could spell trouble.
     
    love the chart JRW, think you’re right…..June’s rally may be the farewell kiss till QE3 in Aug/Sept…so taking this oppty to trim positions, raise cash and layer in a few hedges…could still be an ugly summer…

  156. shadowfax

    Now it drops!

  157. rainman

    Congrats Hoss!

  158. dclark41

    Congratulations Hoss! That is certainly good news.

  159. JRW III

    Hoss

    Be well !!

  160. Phil

    15 years/JRW – Very impressive!  Still, I’m saying that no matter what – they’ve probably fired their final booster rocket and we have failed to achieve escape velocity.  

    Never OEX/Shadow – Good rule actually.  

    V now up 15.5%, MA up 10%, COF limping along – let’s take $1.05 and be happy in $25KP. 

  161. shadowfax

    Thanks Phil!

  162. JRW III

    Well, that’s it for me today, not as spectacular as Mondays call, but more profitable !!   8-)

  163. kustomz

    MA and V sent the markets into a short covering rally.

  164. Savi

    Hoss—great news

  165. Phil

    Pending homes/JC – Sampling is too small and you’ve got tons of seasonal effects – can’t go by one report.  I would think KBH’s actual (poor) results are a far more reliable indicator.  

    Nice going Hoss – Congrats!  

    A series of weak auctions and Greece relief combine to push 10-year Treasury yields up – now 3.12% – by the most in a three-day period since February. But Wunderlich trader Michael Franzese is buying here, as euro-zone debt problems are far from solved, and economic data in many countries is weak. He sees 3.18% as the key resistance level; a rise above it would push the yield to 3.25%.

    A big beneficiary of the decision on debit card fees: Shares of eBay (EBAY +5.5%), owners of the PayPal system, spike on a large volume increase. 

    Lindsay (LNN +5%) gains after reporting 3Q profit more than doubled on strong sales. Surging crop prices in recent months have been a boon for equipment manufacturers, as farmers take advantage of windfalls to make purchases.

    CAT CEO Doug Oberhelman expects consolidation in China to leave one or two large players that "will emerge as a serious rival" to his company in the next few years. He is pushing for Congress to move on trade deals with South Korea, Panama, and Colombia in order that China doesn’t get the business.

    Boeing (BA +0.1%faces accusation it overcharged the U.S. Army $13M for helicopter parts, according to an internal Pentagon report released by the Project on Government Oversight. The company ‘voluntarily’ paid back the funds, but the report also found $200M of future Boeing orders that can be filled from Army inventory.

  166. qcmike

    Hoss
     
    Great News !

  167. Phil

    Another fabulous day in the books – I’m ready for my vacation!  

    Note the timing of the Fed meeting and uber-bullish announcement – just another way they give the markets a little shove here and there.   That being the case and with the Dollar at 75.04 – I am not at all impressed with this close.  We’re miles below the EU and the NAS is right on 2,740 – not over and, of course NYSE is still 44 points (0.5%) below the line.  If Nas is rejected in the morning, will not be a good thing.  

  168. nicha

    rainman – thank you for the detailed explanation of DE in the 10:41am post. I had a couple of questions:
     
     
    1) In October, I see a gap from $72.40 to $74.13 but you mentioned that it gapped to $72.50. Am I looking at it incorrectly?
     
     
     
    2) What do you mean when you say  "…In theory, we should be able to get another 10% in 6 months giving us a second entry at $65 in june/july ’12…"

  169. Troy (^_^)

    Hey Guys, I’m baaaack (prior tag "goldman").  Moving from focusing on my land investments back into stock trading.  Looking forward to swiping a few Wall Street bonuses while enjoying the PSW comaraderie…=)
    JRW - Still working with 5-8k share sizes?  I’m still fine tuning my systems.  Bought a test chunk of TZA at 3:45 and it spiked $0.08 instantly (got scalped for $0.03)…so I dumped it back for $0.05 gain.  Do you route your trades or use "auto" routing?  Look forward to learning from the IWM master again!!!  Nice calls today!
    PHIL - Hope all is well your way.  Looking to get much more serious with options.  Can you point me to your most recent member only updated list?

  170. JRW III

    goldman,

    Welcome back !!

    I split my orders into uneven thirds, trying to stay below Bot radar !!  8-)

  171. zeroxzero

    ZZ checking in, hi Phil, hi guys.  I’m offline and flat in my account this week, don’t seem to have missed the Apocalypse — yet.  Not much bullish optimism at PSW,  from a quick perusal of the comments.
     
    My away-from-the-market perspective has been shaped by some extraordinary price movements in "stuff the 1% buy." Art auction records are being set every week now — Lucien Freud, Egon Schiele, Warhol [Mao] this week in London, along with the Stradivarius, Klimpt and other stuff over the last month.  Currency insecurity, it would seem.
     
     Yesterday, a scarce piece of beachfront in an upscale community sold for a price 250% above its 2005 price — which was, at the time, the top of the market "before the crash."  Not Americans, I don’t think —  Russians and Germans have been the biggest buyers.  I guess when you dislike Euros, distrust dollars, don’t really want a commodity currency like CAD/BRL and think there’s way too much gold in the ground that can be profitably extracted for $1,500 per, you’re stuck with equities or need to find something they ain’t making any more of.
     
     Spanish high-end apartments in Madrid and Barcelona, on the other hand, are in a 100% buyer’s market — only there are no buyers, so the stuff is renting at 2% yields or worse.  
     
     Nothing surprising here, in terms of the trend, but the magnitude of the spike in beachfront real estate prices is a bit of a shocker.  It may not be a harbinger of inflation, but it is surely an index of inflationary fears.  Given the dedication of the U.S. and Euro governments to maintaining the purchasing power of their currencies, I can’t imagine why.

  172. rustle123

    Congrats Hoss and glad Bush didn’t kill all stem cell research.

  173. rainman

    Nicha / DE
     

    Chart Here (click to download for full image)
    All things being equal (and they won’t be) we sold a 6 month option for a 10% discount. Our breakeven is $72. Anything above and we can repurchase the option and take a profit (less than 10% unless over $80). If we are at $72 and take assignment, we should be able to sell the June/July $72 contract for around $7 (10%) giving us a $65 entry for our second allocation and an average of $68.5 on the position.

  174. rainman

    Phil / # — That was supposed to be a numbered list in my post above. It showed up as such before submitting.

  175. drcraig

    ZZ/beachfront property – Given the likelihood that global warming will raise sea levels I’m not sure I understand the appeal of beachfront property as an investment- unless you consider people’s need to cool off without spending money on air-conditioning!
     
    Welcome back Goldman! I took a hiatus for a while too. Although I am always following the commentary, and enjoy the camraderie of this board, I don’t post unless I have something out of the mainstream to say. Usually Matt sums up my thoughts pretty well!

  176. rkpagadala

    Phil, What do you think of selling into excitement on MA or V

  177. rainman

    drcraig / beachfront — What’s the first thing a person says that had their beachfront house wiped out by a hurricane? "guess I’ll rebuild". The appeal is that we evolved out of water in the past so we have a closeness to it and many want to de-evolve back into it!

  178. kustomz

    Friday -- The ISM’s manufacturing index comes out at 10 a.m. ET, with economists looking for a reading of 51.1 versus May’s reading of 53.5..
    Investors will also get May construction spending figures from the Commerce Department as well as the final read on University of Michigan’s May consumer sentiment survey.
    The major auto makers such as General Motors (GM, Fortune 500), Toyota (TM), and Ford (F, Fortune 500) are scheduled to report their May sales figures starting at around 11 a.m. ET

  179. Troy (^_^)

    zerozero/drcraig - land values – Midwest farm land values are starting to get frothy.  I have seen them increase 20% in the last 1.5 years alone.  Bankers and land investment companies/investors are pushing it up, along with dramatic increase in crop prices giving farmers a temporary wealth effect.  Oil/Coal/NG producing land getting boost from energy speculation.  I don’t see how it can continue at the current rate, completely unsustainable.  I’m seeing residential land holding values in certain southern states, and actually increasing substantially on large and/or rare parcels located in wealthy neighborhoods.  I personally avoid beachfront property, as I believe the global warming cycle will result in increased hurricane activity over time, which will take a toll on property values.

  180. nicha

    rainman – thanks so much!

  181. ilene

  182. pstas

    Land values-
    http://www.chicagotribune.com/business/ct-biz-0619-farmland--20110619,0,1232398.story
    Interesting story about investing in what one knows and waiting for the fat pitch.

  183. pstas

    Beachfront property- it is always too expensive until 10 years later.

  184. zeroxzero

     pstas — Very funny, very true.

  185. zeroxzero

     DrCraig:  On a geological time scale, we’re all goners.

  186. zeroxzero

     Rainman:  I know quite a few people whom are quite far along in their devolution already.  The friends you keep… (:

  187. zeroxzero

     Troy:  Hurricanes are definitely a bigger problem than rising sea levels.  We are protected by the highest mountains in North America east of the Rockies — no storm track has crossed here since 1871, and that was a tropical storm.  If they are big enough to be damaging, they are either deflected or ripped apart by the 10,000+ ft. peaks.  I have lived in coastal regions all my life — East coast, Mediterranean, South Pacific/South America, West Coast, Maui — and raced a lot of sailboats, so I picked my present location very carefully.  But there are no absolutes in respect of weather.

  188. strether

     Phil
    Is it time for some VIX calls?
     
    Thanks
     
    Strether

  189. jromeha

    Dollar down ANOTHER .5%!? Are you F$CKING KIDDING ME!?

  190. stjeanluc

    Interesting figures:
    http://ftalphaville.ft.com/blog/2011/06/29/608991/a-deleveraging-detail/
    However, with a caveat! Obviously the ones that have their houses foreclose are now highly deleveraged! 

  191. stjeanluc

     I guess problem not solved yet…
    http://ftalphaville.ft.com/blog/2011/06/29/608956/waiting-for-a-chinese-local-debt-disaster/

  192. Phil

    Good morning!

    They got the Dollar all the way to 74.54 at midnight – glad I wasn’t watching or I would have gone short on the market but we’re back to 74.77 and that took oil and gold down a bit but had no effect on the indexes, which are currently up a quarter of a point.  

    Oil topped out at about 11:40 yesterday at $95.84 and is now $94.50 again.  Gold topped out at midnight at $1,515 and is now $1,508, which is very lame with the Dollar this low.  Silver topped at $35.16 at midnight, now $34.855, copper topped at $4.262 at 4am, now $4.249, gasoline hit $2.954 at 3am, fell to $2.90 and bounced back to our predicted $2.9237 but I think they are going for $3 into the weekend.  Nat gas topped out yesterday early morning at $4.378, plunged to $4.275 at 9, then back to $4.37 at 11:30 and generally downhill since then to $4.276 now.  They have inventory today and I think there must be a rumor that it’s going to suck.  

    The Euro is at $1.447, the Pound is super-weak at $1.598 and they Yen is strong at 80.397 so the Yen and the Euro are keeping the Dollar down at the moment (and guess who is buying all those Euros to keep them up and the Dollar and a linked currency to be named later down) but something killed the Pound as the UK opened trading.  It wasn’t LYG, they’re up 5%:

    Lloyds (LYG) will substantially reduce its international presence and cut another 15,000 jobs, with the aim of saving $2.4B a year by 2014. Expectations for 2011 remain unchanged, as revenue is set to fall but so are costs and impairments. Shares +5.1% in London. (Lloyd’sstrategic review

    The FTSE is up 0.6% on good banking news but the economic news is not good (including the layoffs at LYG) and other signs of economic weakness are likely keeping expectations that that the BOE can’t afford to tighten policy:

     

    U.K. Services Sector Contracts

     

    City of London Leasing Drop Poses Hurdles

    After a surge of office leasing in London last year, activity has declined, raising challenges to developments that have just opened or are under way.

     

     

     

     

    TMX, LSE Terminate Merger Deal

    TMX Group and London Stock Exchange Group terminated their trans-Atlantic tie-up, saying they had determined they wouldn’t receive enough shareholder support to complete the deal.

     

     

     

    U.K. Faces Mass Strikes

    Widespread disruption to schools, border controls and other state services is expected when thousands of public sector workers go on strike Thursday over plans to make them retire later and pay more towards their pensions, participating unions said.

     

    So the weak pound is driving the FTSE higher.  The Dax is up just 0.14% and the CAC is up 0.3%.  China’s markets were both good with the Hang Seng up 1.5% and the Shanghai up 1.2%.  The Nikkei was flat and the BSE was up 1%.

    I don’t think we’re going to be missing much – it’s good to be in cash coming into the holiday.  Today is the official end of QE2 and, more importantly, the end of Q2 so they may not wait until the holiday for us to go off the cliff.  Despite the official end of QE2, there are still $3.5Bn in purchases scheduled for July 6th and July 11th but it’s listed on the schedule as "Completion of $600Bn Purchase Program".  

    We took some disaster hedges yesterday in Member Chat, we will take more this morning – Cash is king TODAY – if the market is still heading higher next week – then we can use our cash to buy nice things but we cashed out FAS in the $25KP (a little early ahead of the nice CC news) and that puts us over the $50,000 mark and we will start fresh next week with CASH – looking for another double in the 2nd half.  And, we are not alone in our caution:  

    Institutional Investors Pull Most From Prime Money Funds Since March 2010Institutions pulled out of U.S. prime money-market funds at the fastest pace in 15 months, shifting to funds that invest only in U.S. government-backed securities out of concern the European debt crisis would worsen

    A Huge Number of Americans Believe The Economy Has Now Entered "Permanent Decline"39% of Americans believe the US economy has now entered "permanent decline" according to a new poll from CBS and NYT.

    24% Says U.S. Heading in Right DirectionSixty-eight percent (68%) of voters say the country is heading down the wrong track, up three points from last week and the highest level of pessimism since mid-April.

    Any failures of our must-hold levels INCLUDING the failure of the NYSE to make 8,280 is bearish and TODAY is the end of the Quarter so maybe we drift into the weekend or maybe the rug is pulled out tomorrow (as the manipulation has been so blatant going up, why bother to cover it up now?).  Maybe someone heads for the exits early, taking advantage of those who want to paint a pretty chart.  Of course it’s not THAT pretty anyway, we’re down about 2% for the Quarter with the Dow and Nasdaq closest to being even (about 1%) but, for the year, we’re up about 5% on the Dow, 4% on the RUT and 2-3% on the other indexes.  

    Bespoke has a good chart of sectors and their trading ranges – technically none are oversold yet but fooling the technical indicators is what this low-volume rally has been all about.  Our own technicals are VERY SIMPLE – we MUST HOLD our Must Hold levels so keep this chart in mind and, be careful out there:  

    The Dow is our leader but we don’t want to short them as there is a flight to quality issue if people begin to panic out of the markets in general so we’re back to the RUT as our primary hedge. Our last long TZA hedge (other than the one in yesterday’s morning Alert) was in Chat on 6/20 and that was the TZA Jan $40/50 bull call spread at $2.25 offset with BA Jan $60 puts at $2.15 for .10 on a $10 spread with 9,900% upside.  The BA puts are now $1.90 (up .25) and the Jan spread is $1.50 (down .75) so a .50 loss (so far) on a 5% move up in the Russell.  

    That’s not bad for insurance is it?   So this trade pays $9.90 on a 5% move down in the RUT (now needs 10% as we went 5% the other way) but it only lost .50 on a 5% move up – that’s a good risk/reward profile!  Also, keep in mind that if those short BA puts expire worthless then the Max loss is .10 and if you stop out the bull call spread for .10 or more AND the BA puts expire worthless – then you don’t lose anything and the bull call spread is STILL worth $1.50 so you have a long time to get confident those BA puts will expire worthless.  

    On the 24th, we ran another, shorter term Aug TZA series with various covers along with an SQQQ Aug spread as well – those are the kind of trades we’ll be going for this morning for holiday/tomorrow coverage.  

  193. kramer36350

    JPMorgan Scores Victory for Repeat Offenders: Jonathan Weil
    http://www.bloomberg.com/news/2011-06-30/jpmorgan-scores-victory-for-repeat-offenders-jonathan-weil.html
    As part of last week’s settlement, the SEC accused the same JPMorgan subsidiary of again violating the same section of the law. However, the commission’s complaint didn’t include any allegation that the company had breached its 2006 cease-and- desist order. An SEC spokesman, John Nester, didn’t offer an answer when asked why not. A JPMorgan spokesman, Joseph Evangelisti, declined to comment.
    “This is inexcusable on the part of the SEC not to push this, and it shows how pathetically eager it is to hang up part of the scalp, close an investigation, point to a remedy, and then move on,” says James Cox, a securities-law professor at Duke University School of Law. “They’re just indicating that these orders don’t have any future impact. That’s too bad for the public interest.”

  194. CanuckBob

    Re:  Phil made a note a while back about never making market orders, always hit the bid/ask — as I was adding into an existing hedge yesterday on SDS, as SDS was down I noted the ask was higher than the day before and it should have been lower — the spread on the bid ask was ridiculous, so I put a bid in 30% lower than the ask and got hit immediately.  Be careful out there, those pro traders can eat you alive on your trades.

  195. stjeanluc

     Apparently, austerity is not an answer at the state level either…
    http://thinkprogress.org/economy/2011/06/27/255010/chart-states-cut-most-spending-jobs/

  196. Phil

    Welcome back Troy!  As we expect a downturn, we don’t have any current Buy List but there is an Income Portfolio under the Portfolio Tab and we’ll be starting the $25KP with a fresh $50K of cash next week so that should be fun into earnings.  

    Nice report ZZ, thanks!  

    Amen Rustle! 

    MA & V/Rkp – I think that news is very good for them so I wouldn’t jump in front of a speeding train but maybe selling July calls if they head higher today could be fun, remind me in the morning.  

    Rebuilding/Rain – Rebuilding a $5M home is fun when it’s just 1% of your assets (plus you get some insurance money).  

    VIX/Streth – They did sneak back down to 17 so yes, that should be fun – remind me in morning. 

    LOL Jrom – It’s amazing isn’t it?  

    Deleveraging/StJ – A pessimist may say we have a very long way to go before normalizing.  

    Handy char, thank StJ: 

    What people don’t think about is that if China’s GDP stops growing or shrinks – it will rocket into Belgium’s position or worse very quickly – the same for Brazil, which a lot of people are worried about already.  

    SEC/Kramer – There’s a reason for that – the SEC doesn’t have the money to stay in court.  This is all part of the de-funding Government scam.  JPM didn’t cut their legal budget but the SEC got slashed but they’ve been running in shut-down mode for months now.  All part of the plan!  

    The SEC is not out of the woods yet, however. Under the original Republican $100-billion bill, the regulator would have endured a $188 million cut from Mr. Obama’s budget request – and a $48 million reduction from current funding. It’s likely to take a big hit under the latest budget agreement as well.

    The Dodd-Frank Act, which was signed into law in July 2010, promised a doubling of the SEC’s $1.1 billion budget. But that money is subject to congressional appropriations, which don’t look as if they will materialize.

    In addition, the next budget battle will revolve around a fiscal 2012 spending plan offered last week by Republicans that would pare back the SEC budget to $906 million, a cut of $501 million from Mr. Obama’s fiscal 2012 proposal and a reduction of $212 million from the agency’s fiscal 2010 budget.

    In a speech Friday to the Society of American Business Editors and Writers Inc., SEC Chairman Mary Schapiro said that the budget cuts are impairing the agency’s ability to ensure market integrity – even though the SEC collected $1.5 billion in fees last year, exceeding its $1.1 billion congressional appropriation.

    She said that the agency has had to curtail hiring, cancel IT initiatives and take cases to court without expert witnesses.

    “Insufficient funding for the SEC means an investor protection effort hobbled at a time when the events of the last decade have proved that effective enforcement of the securities laws is more important than ever,” Ms. Schapiro said.

    And, of course, they are also finishing up a massive smear campaign against Shapiro to run her off here post as she has not proven to be Bankster-friendly.  

    Good point Canuck!  

    Gosh StJ, you would think this would be obvious but, sadly, it’s like religion and you can’t get the Reps to believe it no matter how much evidence (or, perhaps they do get it but their agenda is not to create jobs but to destroy them):  

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