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Thrill-Ride Thursday – EU Crisis Edition

Will the EU fix everything or make a bigger mess?  

Going by their track record – "fixing" things does not seem likely.  The markets put on quite a show yesterday but the NYSE and and the S&P (we said to watch them, remember) could not close the deal at resistance and now it’s all about jobs and whatever the EU is going to do.  Unfortunately, I will not be around today so I have no idea what’s going to happen but let’s review how we played this (aside from the obvious "cashy and cautious" position).  

I mentioned in yesterday’s post that we weren’t liking the rally and had flipped bearish into the close.  We got our $99 short entry on the oil futures (/CL) and rode those down to $97 and stopped out at $97.25 (up $1,750 per contract) as we got exactly the kind of inventory report we expected.  Maybe the oil markets aren’t fixed but it sure is nice that I can call a trade at 8:30 to do something at 10:30 that works out perfectly, isn’t it?

As we expected, the overwhelmingly bad news did lead to some profit-taking yesterday but, as you can see from the Big Chart – not all that much damage has been done but, if we can’t take back those "Must Hold" lines on the RUT and the NYSE today – it’s not going to be looking good into the weekend.  

In yesterday’s morning Alert to Members, we added a more aggressive play on the S&P with the SDS Aug $20/22 bull call spread at .55 (now .57), selling either WFR Oct $7 puts for .45 (now .41) to make a .10 spread or the JPM Sept $37 puts for .50 (now .53) for a .05 spread.  As long as you REALLY want to own WFR or JPM if they drop 10% – this is a very cheap way to speculate on a drop in the S&P.  Even better, SDS is already at $20.32 so any move down at all puts you well on the way to a 1,000% or 2,000% return on your net cash.    

Do you see the pattern this week?  When the market is testing the bottom of our expected range, like it did on Monday – we add some bullish hedges (our Monday SPY trade idea was up 615% as we flipped bearish on Tuesday and our SSO spread was up 3,350%).  With this kind of leverage – we don’t need to take a lot.  Allocating just $130 in cash and $7,500 in margin (selling 5 SPY Sept $120 puts) on our Monday SPY spread returned $930 the next day.  That’s 1% of a $100,000 virtual portfolio.  The goal isn’t to cover EVERYTHING – just to hedge so you have some cash to allocate towards adjusting positions that do go wrong.  

Just ahead of the oil inventories, at 10:24, we added USO Aug $38 puts at $1.12 and those gave us 20% on the nose as oil dove, topping out at $1.35 when we stopped out of oil at $97.25.  10 of those in our $25KP made a quick, virtual $230.  As I mentioned, a single futures contract made $1,750 on the same entry and exit – that’s why those are fun (but dangerous)!  We flipped bearish on FAS with our FAS Money trades and then, at 1:42, with the S&P bouncing off it’s lows – it was time to speculate to the upside with the purchase of 2 SSO Sept $55/57 bull call spread at .82 ($164), with the suggested offsets of selling 1 MO Jan $25 put for $1.25 ($125) for net $35 on the $200 spread or 1 MSFT Jan $6 put sold for $1.50 for net $10 on the $200 spread. 

These are very simple, small ways you can hedge a run in either direction.  We know we’re going to get a bounce and we know we have gains we want to lock in from our earlier short plays so why not take a leveraged long, using a small percentage of the profit, to lock in our gains?  That’s all this is about – it’s not too complicated!  I tell Members it’s like surfing – you need to make constant adjustments to maintain your balance but, once you get used to it, you can ride out all but the most violent waves in style!  

We re-shorted oil futures (/CL) at $98.50 as it went back up (predictably) into the NYMEX close – but there are just 22,731 open August contracts left on the NYMEX so we stopped out very quickly, very happy to take a quick quarter – so we collected an even $2,000 per contract on the day and now we will move on to trade the September contracts (but not at this stage of the cycle, when they usually run it up).  

Actually, I should print up this NYMEX chart so we can capture an image of this scam in progress.  Tomorrow is the last day of trading for the August contracts and there were, about 3 weeks ago, over 400,000 open contracts – implying a demand for 400M barrels of oil in August and, at that time, there were just 70,000 open contracts in September.  Now that the August contracts are winding down – they have rolled the August contracts and now September is filled with 377,000 contracts of fake demand, implying that America has a need of about 350M barrels more than we actually do in the month of September.  Faking this demand every month is expensive (they have to roll the barrels) but these contracts help set the price on Billions of barrels of global oil that are sold each month – jacking up the prices you pay at the pump by as much as 65% per barrel – isn’t that special?  

Click for
Chart
Current Session Prior Day Opt’s
Open High Low Last Time Set Chg Vol Set Op Int
Aug’11 97.95 98.35 97.90 98.10 * 20:07
Jul 19
98.14
-
28266 97.50 22731 Call Put
Sep’11 98.75 98.75 98.40 98.75 * 20:07
Jul 19
98.40
-
275522 97.86 377405 Call Put
Oct’11
-
-
-
96.89 * 20:07
Jul 19
-
-
48014 98.24 86533 Call Put
Nov’11
-
-
-
78.01 * 20:07
Jul 19
-
-
25733 98.68 69432 Call Put
Dec’11
-
-
-
101.31 * 20:07
Jul 19
-
-
33788 99.14 201652 Call 

We are very excited about that December barrel count – those are going to be really tough for the NYMEX crew to get rid of, maybe we’ll get a full-blown crash!  Let’s keep this chart in mind as we watch the shenanigans next month as they push those barrels down the line.  For now, we are rooting for them to get oil back to $100 or even $105, where we can load up on the short side and enjoy the ride down.  

$USD WEEKLYOur last trade idea of the day was the DIA Aug $122 puts at $1.22 with a stop at $1 – we’ll have to wait until morning to see how these play out but certainly we went into today’s close even more bearish than yesterday.  We have plenty of long-term, bullish plays, this is just short-term protection we’re messing with, of course.  Still, it’s a fun way to play while we watch the markets try to pick a direction…

Morning Update:  Wow, pick a direction is right!  Greece is fixed, Greece is defaulting, Greece is getting a loan – pick your rumor and, last night, it moved the markets!  The same nonsense was knocking the US around as Obama accepts a debt deal, rejects a debt deal, etc…  

Dow futures have gone up and down 100 points and are currently (5:45 am) down a bit as the Dollar comes off the floor at 74.80, back to 75.30 (see David Fry’s chart above).  So it’s the same nonsense we’ve had all week but they have changed  the narrative a little.  Sifting through the news, it seems like the EU will lend Greece money at 3.5% for 15 years so that can is getting kicked WAY down the road.  Now on to Portugal!

LIBYABut first, let’s stop in Libya (remember that crisis?), where rebels are knock, knock, knockin’ on Gadhafi’s door.  Unrest in Libya was good for about a $15 per barrel boost in the price of oil and the timing could not be worse for the oil crooks as we head into that huge build-up of December barrels on the NYMEX, possibly without a crisis to hold prices up.  

I’m liking the SCO Jan $51/56 bull call spread at $2, and that makes 150% by itself but you can pair that with the sale of the $37 puts at $3 for a $1 credit on the $5 spread so 500% potential upside playing that way and SCO bottomed out at $35.38 in late April, when oil was $114.83 so the crux of the bet is oil is not back over $110 in January and you make at least a buck, possibly $6!

Aside from "fixing" Greece and a possible debt deal, we have Jobless Claims at 8:30, Leading Economic Indicators, the Philly Fed and Home Prices at 10 am and Bernanke and others will be at a Senate hearing about the Dodd-Frank Act – but that doesn’t mean the won’t try to get him to say QE3 again.    It’s going to be an interesting day but, in the end, it’s all going to be about whether we are over or under those 2.5% lines

Be careful out there.

 


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  1. rehat

    Phil,

    Do you have a good trade for MSFT before earnings

    TIA

  2. roma_

    Congrats Pharmboy!

  3. drcraig

     Pharm- What are your feelings on OPK at the current price? Take profits now, or wait for a breakout to $5?

  4. Phil

     MSFT/Rehat – Sorry not at my set-up this morning.  I like MSFT long-term so hopefully they miss and give a good entry so I’d sell puts if they drop but no particular earnings idea comes to mind.

    I’ll be out all morning (late already) and hopefully back in the afternoon, will update later.  

  5. Lincoln

     Pharmboy: Large Cap
    I know you made recommendations in past but can’t find anything on the WIKI re: your thoughts for long term ABT, LLY, MRK or PFE. as a core holding or none o the above? TIA

  6. jerconn

    Pharm, you said something about ONTY rumors yesterday, any update on that and how to play it?  Thanks!

  7. terrapin22

    Phil or anyone – re the NYMEX oil contract discussion in the opener, why are the December contracts going to be harder to roll than any other month?  is there something about year end and difficult to roll into january? 

  8. rpme

    Terapin, I think it is because their are so many contracts already.

  9. kurtww

     What’s up with the dollar this morning? Any plausible reason for this dive or just propping up the markets? Thanks to stjean and Pharm I think who suggested we might go up… for once I’m not heavily short at the wrong time.

  10. pentaxon

    Kurt: the EUR is getting strength, that’s why the Dollar Index is diving.

  11. craigzooka

     @terrapin, the problem is that December is already full.  Look at how many barrels are in December already.  So, to make it out of December they are going to have to roll twice as many contracts as usual.

  12. matt1966

    Dollar down big time but now at some support.  Fade the open-

  13. jcaesar

    Anyone – Do you know how to insert/overlay Demark Analysis into Thinkorswim?  I’m trying to implement JRW’s Pivot Point strategy and this is one of the pieces.

  14. tuscadog

    Euro     Can anyone explain why having the ECB committ to bailing out the three little piggies, with over half a trillion Euros they have to print, is bullish for the Euro – they are just confirming they are in even bigger trouble than the US????

  15. revtodd64

     In this market environment, I find myself reading more behavioral finance than earnings reports.  It is easy for me to get shaken in or out of long term positions based on the passing news cycle.  I found this article on the three sources of Alpha through the Pragmatic Capitalist website.  http://www.fullerthaler.com/downloads/bfsoa.pdf
     
     
    It made me think about where my source of "alpha"  (the value that my trading creates over the expectations of a market index fund.)  It’s tough to get as a retail trader.  I’m usually reading all your great ideas at night or squeezing it in over lunch.  I am planning a blog entry on this as I digest the article later.

  16. edro00

     jcaesar -
    TOS calls Demark "Sequential" – it is a TOS study

  17. Pharmboy

    Matt – I think that is right.  Fade the open.  Tomorrow should be interesting (or later today) if they announce an EU AND debt ceiling fix.  Oh my!

     

    OPK – well, my average is a 5% gain, so I think selling the Dec 11 $5s is a wise move, full cover, which knocks the basis down to 3.64.  Looks like they could move higher though, but need to see the candle today b’c yesterday was a red hammer, and those are usually reversals.

    MRK/PFE/ABT/LLY – if you go through my posts, they are there.  PFE and LLY are my least favorites.  MRK and BMY are my favorites.  JNJ and ABT are fine, but a bit pricey for my tastes when MRK/BMY pay a nice dividend and have a pipeline.

    ONTY – well, the rumors are stills swirling.  I would do a bull call spread out in time.  IF true, they should fly, so how about November $11/12 for 20c.  I would not sell puts at this point b’c if false, they will be $2.  As a matter of fact, let’s take the money and run on them for now in our initial buy a few days ago and buy the above with the winnings!

     

    PP for today:

  18. stjeanluc

    Oil Lines
    R3 – 101.89
    R2 – 100.63
    R1 – 99.45
    PP – 98.18
    S1 – 97
    S2 – 95.75
    S3 – 94.57 

  19. rpme

    Tzoo back to $60, down 30%.

  20. jabobeast

    I guess this is why CMG wasn’t slammed yesterday;
    FU Stifel and FU upgrades!!!!
     
    Barclays raises Chipotle Mexican Grill price target to $265 from $247
    Stifel nicolaus ups Chipotle Mexican Grill Inc target price from $320.00 to $400.00,
    Jefferies ups Chipotle Mexican Grill Inc price target from $198.00 to $240.00, underperform rating
    Wells Fargo raises Chipotle Mexican Grill Inc to market perform from underperform
    Rbc raises Chipotle Mexican Grill price target to $260 from $220

  21. jabobeast

    rpme—i was wondering why PCLN was dropping… I hope they drop 30% also after earnings!!!

  22. Pharmboy

    The number of Americans filing new claims for unemployment benefits rose more than expected last week, pointing to a labor market that is struggling to regain momentum.

    Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 418,000, the Labor Department said on Thursday.  That’s gonna help, huh?

  23. lapper

    the funny part about debt ceiling resolution is that they will have to sell huge amount of paper, because they have been stealing money from SS etc.  As they will need buyers I would think the market tanks to drive capital into toilet paper bond and currency

  24. jcaesar

    Thanks Edro!

  25. stjeanluc

    FAS Money – We are now short 5 23 Calls and 5 24 Calls. Looks like it’s not going to be pretty at the open.  Phil is not here today but his advice yesterday was:

    On FAS Money, I won’t be here tomorrow but you’re either going to want to do a 2x roll to next week or, maybe, leave the 5 new calls until Friday (if we still think things get weaker into weekend – likely as there is no clear resolution) AND roll the other 5 to next week (but at a higher strike than you otherwise might have if XLF looks like it could go higher).

    So we’ll see what happens later, but it looks like at least rolling the 23 Calls to next week Calls. Not sure what strike yet! 

  26. matt1966

    jabo, really makes me wonder why there is so much analyst interest in CMG.  Surely there are more deserving companies for these analysts’ attention. 

  27. stjeanluc

     FAS Money (Monthly) – Yesterday we bought back the August 21 Puts with a profit of about $0.63 and sold the August 25 Calls for $1.15. Phil’s opinion moving forward was:

    Sell the Aug $25 calls for $1.15 because, even if FAS goes to $27 (now $24.23) we can pick up another $1 for the $26 puts (now $1.80) so we have more than $2 of premium off the $25 line.  To be clear – JUST the sale of the Aug $25s for $1.15 for now (and the buyback of the Aug $21 puts).  

  28. jcaesar

    Edro – Have you used the Demark indicators? Have you found them to be helpful?

  29. jasu1

     Anyone,
    Does it make sense to do the SCO 51/56 BCS with oil at 99.xx.
    Call spread can be had between .70 bid 1.70 ask.
    Thank you.

  30. bobhu

    Jim Cramer is on AAPL BIG TIME since the great report.  One year from now, he will say that "see, I told you."…lol

  31. jabobeast

    Matt-- I think Phil nailed it. They move that stock up and 5+ points with less than 50k shares. I guess you could say it is one of the easier ones to manipulate if they want to.

  32. jerconn

    Phil – that SCO Jan play is looking much better than when you wrote it – just executed the BCS at $1.60 and the puts going for $3.20 or more…

  33. exec

    They just love to make the market go up. 
     
    BTFD’s

  34. exec

    I guess it’s going up on this headline.

  35. jabobeast

    so much for pcln being down because of tzoo

  36. jabobeast

    WTF just happened???

  37. stjeanluc

    FAS Money – We are looking at a big jump in FAS now. The spreads on next week’s options are still wide to making adjustments is still tricky… And look painful! 

  38. snow

    Indeed – look at /cl popping.

  39. stjeanluc

    This is what happened:

     

    Europe is willing to let Greece default under a proposal that would involve a bond buyback and debt swap, EU sources said Thursday, as euro zone leaders began a crucial emergency summit.

    As I was saying yesterday, any sliver of good news could rally the markets….

     

  40. jcaesar

    Everyone thinks Europe just got solved I guess – http://www.cnbc.com/id/43838504

  41. matt1966

    Quite a market we have here.  Quite a market.  It’s all about shaking money out of the players.

  42. pentaxon

    It’s all financials: Euro Stoxx Banks Index is up 5,5% today.

  43. Savi

    David—-Thx for the NSC trade

  44. Pharmboy

    Gotta love this headline:  Banks Pay Back TARP Funds by. . . .Borrowing from Treasury

  45. pentaxon

    Where is the Master of the black juice (Phil) ? USO DD just got filled….  ;-)

  46. David Ristau

    NSC – Working well…taking some gains off the table

    SDS – Looking weak and we are pulling the plug. S&P might be ready to breakout.

  47. pentaxon

    As stupid as it might be, I wouldn’t underestimate the chance of a rally. More free money from EU and maybe US and chart technicals brighten up now. I think there is space for an upward movement.

  48. morxlntway

    pentaxon – i was watching the USO price but didn’t take the .88c because i got the impression from this mornings write up that the oil prediction was up, up, up to 105. Anyone have further thoughts on that?

  49. stjeanluc

    XLF is now hitting its 50 dma… 

  50. matt1966

    Ok, if UUP breaks 21.16 they got me.  This market is going to make my head explode and I need to get out-

  51. rainman

    July Philly Fed BEATS Expectations At 3.2

    Read more: http://www.businessinsider.com/the-july-philadelphia-fed-report-2011-7#ixzz1SkU9SLIy

  52. pentaxon

    morx: yes, I’m still not sure. if the dollar fails at 74.5, oil could go way up.

  53. jomptien

    Pex/Morx/USO,
    I thinbk he took the money yesterday and like Morx says Phil says up. BTW I just sold the Aug 42 calls for .25, seems safe. close out the 41 calls yesterday for +.25%

  54. rainman

    /CL breaks 100.

  55. jomptien

    Just looking for a safe looking place for all my margin

  56. JohnC1

    pentaxon and stjean:  Today’s morning write-up has confused me.  I also thought that the Aug USO 38P DD was still a live trade idea, but judging from today’s write-up, perhaps Phil has changed his mind.  So perhaps a quick trade back out on any weakness.  Any thoughts?  Thanks.

  57. asaenz

    anyone shorting oil here? USO Aug 38 Puts currently at .85

  58. jabobeast

    why the f did PCLN swing $16???

  59. rainman

    CNBC trying to push the bulls.

  60. rainman

    azaenz — I’ll be shorting below 99.50    

  61. jcaesar

    matt1966 – You hit your UUP mark – head explode?

  62. rainman

    /DX just took out 74.50 (74.41).

  63. bobhu

    Any one is buying USO $38 or $40 Put?

  64. tuscadog

    Manipulation    You have to smile.  The job #’s continue to be awful.  Philly #’s still indicate a moribund manufacturing sector with little prospect of job creation.  And, that’s before the public sector layoffs accelerate under the GOP’s ‘austerity push’.
    Still, it looks like the Europeans are about to launch QE3 and bail out their banks which can now buy more of our shares.
    Looks like they joined Ben in agreeing inflation is the only viable camouflage for this mess.
    Once our debt ceiling is raised I guess we’ll just party on some more?

  65. bobhu

    Sorry, $39 or $40 Puts

  66. pentaxon

    Took this dip to sell all USO puts, since I don’t trust the dollar-index today.

  67. edro00

     jcaesar -
    Demark – no, never found it useful ..

  68. asaenz

    thanks rainman, i just bought those uso puts for .85 (yesterday i sold those for 1.34) hopefully oil just topped at about $100….

  69. jcaesar

    Thanks edro – as I’m eyeballing it, it doesn’t seem to be much help.

  70. Jbur

    jcaesar/edro/Demark: I remember JRW mentioning Demark last year some time. Do we know that he still uses it?

  71. morxlntway

    I entered an .86c order to DD and went out to move my car out of the driveway and they filled. So now the goal would be to get half out at 1.10 or DD again.

  72. rainman

    /DX 74.32 — the rally is dollar driven, CNBC still pushing hard the bull case.

  73. rehat

    The day Phil and JRW are not there – these guys are taking us to the cleaners… So Fake…

  74. shadowfax

    Flying up
    Add a couple of sell signals, no confirm.

  75. rainman

    Weather caused MCD’s profit boost:McDonald’s Frozen Lemonade Boosts Profit

  76. Pharmboy

    USO – I would not start a new position at this point……if this is a break out, and it looks like it, things could get ugly.  I did DD, and may sell next weeks 39s to roll up with that money.  1% move down in the dollar.  THAT is impressive!

  77. 1020

    Good Morning!
     
    Pharm – Congrats on the buyout!  I thought I heard something last night…. ;)
     
    http://www.youtube.com/watch?v=wcW_Ygs6hm0  (the visual is solely for the Bears this morning)

  78. matt1966

    The dollar is a whore!  I’m out of my TZA for a sizeable loss and covered my TNA short.  Watch them pull it back now-

  79. asaenz

    @ Pharm, are you shorting something now? Thanks….

  80. Pharmboy

    Looks like the EU will allow a Greek Default….

    Europe is willing to let Greece default under a crisis response that would involve a bond buyback, a debt swap but no new tax on banks, EU sources said as euro zone leaders began a crucial emergency summit Thursday.

  81. shadowfax

    matt
    We have an overshoot on 83.15 but no follow through. I am expecting a sell confrim any minute.

  82. exec

    Matt
     
    WTF are you doing???
     
     They will never let this market pull back significantly before the election.
     
    Just keep repeating after me.  This market is fixed and designed to screw perma-bears…..this market is fixed and designed to screw perma-bears……this market……

  83. lol730

    I like indexes going parabolic.
    It gives SO MUCH confidence in magic power of our leadership!!! :) )))

  84. rehat

    Ok- Markets up, oil up and gold up.. what gives..

  85. jcaesar

    Jbur – I don’t know if he’s still using demark.  The last mention of it I can find on this site is from last year.  I was just reading up on his strategy from the post in the Educational archive.

  86. deano

     Any ideas why GLD & SLV are going down with the dollar going down? Risk off overrides dollar decline?

  87. jcaesar

    Shadowfax - You use JRW’s strategy, right?  Do you use Demark analysis?  Do you know if JRW still does?

  88. malsg

    Wow!  A reserve currency that can be tossed around like a paper boat in a hurricane and an EU country defaulting on its debt (albeit controlled … choke)
    I am baffled as to why this is good news.  Tomorrow will be Portugal.  You cannot stop this spreading if teh bond market is able to zero in on the next victim.
    The FTSE seems to be stalling in its relentless move upwards.

  89. JRW III

    As I said yesterday, waiting for the breakout !!

     

    IWM    82.59,  82.75,  83.07,  83.37,  83.69,  84.19,  84.47,  84.84  and  85.60

  90. matt1966

    Ok, I’m going to make them take out TNA’s high for the 14th.  I didn’t realize we were so close when I sold.  Should have waited.   But, it’s not much of a resistence point so won’t be suprised if it goes. 

  91. lol730

    WOW.
    now they stopped and no volume.

  92. Pharmboy

    IF AAPL did well, shouldn’t BRCM?

  93. tuscadog

    Oil     I’m pretty sure Phil’s message this morning was that this is the wrong time of the month to go short oil.   I wonder if Phil is going to maintain or drop his bearish stock premise from yesterday pm and this am?  I placed some bearish hedges at the end of the day yesterday which are getting painful this a.m.  JRW seems to think we’re going to be manipulated to the moon, so maybe time to take the loss, or wait until Phil takes a look this afternoon?  I’m baffled as to why everyone thinks this Euro situation is so great?

  94. stjeanluc

    FAS Money – It might make sense to wait a bit as things have calmed down. A roll to the 25 Calls without adding contracts would cost about $1.00 now. There is just about no premium left in the sold calls. 

  95. matt1966

    Well, they took it out.. but not me.  That last spike in the RUT was designed for that exact purpose.  Popping the high on the 14th.  No other index did it.  Just the one near a recent high that would likely have a bunch of stops to bust.  Naughty billionares!

  96. rainman

    Not a good setup on /CL, didn’t take the short.

  97. rehat

    I just want to hear the magic words from JRW - 
     
    Fully in TZA…

  98. shadowfax

    jcaesar
    I use JRW’s system and I don’t use analysis systems, I really try to only react to what the market is saying and not even think. My IWM puts are down because I was thinking too much, that is why I swore that off yesterday in chat.

  99. tuscadog

    Kass short    Doug Kass has gone ‘all in short’.  Though, he’s been wrong more than right recently!

  100. rustle123

    10 points ago, Doug Kass said "Gun To My Head: the market at some point today – reverses at least half of 150 pts."

  101. David Ristau

    Hey all,

    Trading idea:

    The Oxen Group is bullish on LVS. We picked up stock. For options, we like the $47/$49 Bull Call Spread.

  102. JRW III

    Out of TNA with $2.44 off the failure of the IWM 84.19 line !!

  103. shadowfax

    Money has out flowed since 10:40

  104. jcaesar

    Thanks Shadow.

  105. hanna5

     Jabo – I just looked back through the historical stuff, and my notes. On here, we have been negative and shocked at CMG price since 140+, shocked by NFLX since 120, and amazed at PCLN since 300.

    In fact, we all talked about shorting NFLX at 200! Now, its almost 300.

    The lesson is not to pay attention to these stocks. If NFLX can go to 280, why not $400? Why cant CMG pull a PCLN and end up at $500? At valuations this crazy, there is no reason to try and predict when the madness will end. In fact, the stocks may not even be worth following.

    Meanwhile, gonna sell some covered calls on GOOG if it can get to 630 or so….meanwhile, AAPL is covered at 400.
    Adding to BAC. Still in RIMM, both of which are losers. But, will wait a couple months and re-evaluate. Good trading all.  

  106. jabobeast

    WTF is with this market?? I thought Greece was already fixed? Now it is fixed again and we are up 150 and close to multiyear highs again?
    FU Greece!!!

  107. rainman

    Hana — That’s a good realization. I gamble the MoMo’s on occasion and my only thought when I go against logic is "the trend is your friend".

  108. eyezz

    Anyone here besides me remember the good ole days of fractional quotes? When it was easier to play "market make"r on thinly traded stocks with perhaps a bid and ask of 20 1/4 x 20 5/8 by getting inside those quotes :) I suppose that is one reason the markets went to decimals,

  109. shadowfax

    Let Greece default is not a fix!

  110. jabobeast

    Hanna-- you are 100% right. I shorted way out of the money calls on these momos and now they are no longer way out of the money. Like I said yesterday, if I would have went long all the so-called "overvalued" stocks and short the so-called "undervalued" stocks from this board I would be having a great year. I am not complaining or even disagreeing with the analysis. It just has been dead wrong for a long time (like you pointed out). So frustrating!

  111. mrmocha

    stjeanluc and others on FAS Money – I’m away today so I went ahead and adjusted already; FYI I rolled my 5 weekly 23 calls to 7 next week’s 24 calls even, a decent roll.

  112. rpme

    I thought the dollar was supposed to hold 75?

  113. mrmocha

    jabobeastWYNN is another silly momo to hate, since I started selling calls on it, it just won’t stop going up.

  114. jabobeast

    mrmocha…I do hate it..
    FU WYNN

  115. kustomz

    Im baffled, how could GS be so wrong and MS so right? GS went risk off last Q. I would love to know how they are positioned for the next 3 months. There is no way they are wrong twice in a row.

  116. rehat

    Hanna,
     
    I agree with what you are saying – I have not played the momos for a few months now – I still have them on my watchlist and get tempted once in a while when they go crazy and the premiums in OTM calls are juicy – but I have really money that I have lost going after those.. 
     
    So now I just have them up there to tempt me and so that I can discipline myself.

  117. JRW III

    I also have a weak R/S line at IWM 83.86; if that holds, we may…………………………

  118. rainman

    Koch, Exxon Mobil Among Corporations Helping Write State Laws
     
    "Koch Industries Inc. and Exxon Mobil Corp. (XOM) are among companies that would benefit from almost identical energy legislation introduced in state capitals from Oregon to New Mexico to New Hampshire — and that’s by design".

  119. rustle123

    OMG, this is the scariest plan.  I can’t believe they are serious about this.  This new tax plan would be the end of the middle class.  It is blatantly saying, the poor and middle class will now pay for the rich.
    "The plan would simplify the tax code by reducing the number of tax brackets from six to three, lowering the top rate from 35 percent to somewhere between 23 percent and 29 percent. That could provide a windfall for wealthy taxpayers because the 35 percent tax bracket currently applies to taxable income above $379,150.
    To help pay for lower rates, the plan would reduce popular tax breaks for mortgage interest, health insurance, charitable giving and retirement savings."
    That would hit self employed people very hard and curtail alot of charity donations.

  120. matt1966

    Not looking good for a moon shot today buddy!  We’ve suffered enough-

  121. rustle123

    That would also negatively impact the housing market.  Another great move by Republicans to help the economy.

  122. David Ristau

    This is not going to be a popular post, but…

     

    What you call MoMos…they are simply growth stocks.

     

    If you look at each one, they are the leader in growth in their industry. With that, the market is willing to pay way more for that growth compared to their competitors. Take CMG…they are growing near 20% in a 1-3% growth market. People want to pay more for that.

    Sure, it is out of hand…but in an economy that has low growth, companies that are somewhat stagnant, investors pour into the stocks that are top growth.

    Over the weekend, The Oxen Group is doing a look at these twelve companies, showing you what prices they should be actually trading at…

    For CMG – we came up with $315 last week.

     

    This is the misunderstanding. Trying to short the MoMos is trying to short the only companies in various industries that have super growth. Once that growth catches fire…the market loves it. This is nothing new as well.

    It has been going on for a long time!

     

    My two cents as I see very often people getting burned trying to short NFLX, CMG, AMZN, CRM, etc.

  123. stjeanluc

    FAS Money / MrM – Thanks for the information. Next week 24 does make a good roll for this week 24 and last week 23, but you have to hope that they "unfix" Europe again and nothing happens in the US as it could be painful again! 

  124. strether

    Is volume light or normal or heavy on the DOW?

  125. jerconn

    David – very good and interesting point. For ages I have been watching people short these supposedly over valued companies only to lose their shirt.  On the other hand, what do you think of SODA?  It seems to me they are the "leader" in a category that they are trying to create and many are convinced it won’t work – home made soda?   What do you think? 

  126. loopster

     JRW. Thanks for all your help.  Following your style of trading.  Wanted to confirm the Pivot Points you have.  Am on Schwab, also, but PP differ from those on TOS.  Schwab has S 1 @ 82.74….PP @ 83.08… R 1 @  83.51.. and  R 2 @ 83.86.  Appreciate confirmation and any comments. Thanks again

  127. Troy

    JRW – 84.24 TNA…time to gamble!

  128. rainman

    David / Momo’s — Are you going to make your look at the 12 companies public? I’d like to see that. I agree with what you are saying. It is often the value investor that gets into trouble on these.

  129. revtodd64

     David/Momos – I think you make a great point.  The Investors Business Daily folks are buying these stocks every time they hit a new high or break out of a "cup and handle" pattern.  They can really drive these stocks up.  It may seem irrational, but of course, the market can stay irrational longer than I can stay solvent!  Some day they have to correct, but it may be a lot further down the road.  

  130. JRW III

    I should have shorted at IWM 84.19. Oh well, as matt says, a man has to know his limitations !!

    Buying TNA here (IWM 83.69) !!

  131. Troy

    JRW – out for 0.48…7 minutes…

  132. Troy

    How crazy is it that one can make 1 years CD rates in 7 Minutes…

  133. Phil

    Wow – fun day!

    I’m heading back, should be there around 1. I think relief rally in euro is probably overdone (so the dollar too low) so keep in mind how much more are the indexes up than the dollar is down. That is the “real” move and the rest can fall apart very quickly.

    On fas money, the idea was to cover with the short put if we went up. Maybe too late now as you don’t want to sell a put at the top.

  134. strether

    Phil
    I know you are out. Note that SPY AUG 126/128 put spread is only 23 cents. SPY 128 was the June low.
    Strether

  135. jabobeast

    FU David!!!  JK ;-)
    You are probably right. I just wonder if their prices will ever stop increasing at 15-20% every few months?
    Even growth stocks shouldn’t double or triple every year, right?

  136. judy

    Any thoughts on rbcn as a long term play. RBCN has really been crushed due to additional competition planning to come on line for the sapphire wafers.  Similar to what happened a couple years ago with polysilcon.  The JPM analyst has a target in the $30s and thinks its way overdone. The analyst keeps defending the target for the last few months as the stock continues to dive lower.  The argument is: rbcn makes the big wafers with higher demand, there are lots of issues bring new supply on line, even if it does become more commodity like rather than specialty, rbcn still makes a great product and will stay in the business. PEG ratio listed on yahoo is .16 implying noone believes the growth numbers. The sapphire wafers are used for LEDs.

  137. stjeanluc

    XLF looks like it might want to go higher this afternoon… We might need to initiate a roll of our FAS Money calls. Based on what Phil was saying yesterday, I would be inclined to roll to the 25 Calls. An even roll would require going to 15/16 contracts. Keeping only the 10 contracts we have short now will cost $0.88 to roll. We put $0.50 in our pocket with the puts yesterday so not horrible and we still have to sell puts this week. So for now, I call to roll 5 23 Calls to 5 next week 25 calls (cost $680) and 5 24 calls to 5 25 Calls (cost $195). Feel free to add more contract (6 should cover the roll) if you want to.

  138. rainman

    rev / jabo / new highs — One thing to keep in mind, which I believe generates momentum in these names, is that when a stock makes a new high, there are no longs with losses and every short has a loss. Sounds like IBD uses this to their advantage.

  139. JRW III

    loopster / Pivots

    There are several methods for determining pivot points, Floor, Woodie’s, Camarilla, and De Mark’s; mine of course are confluence lines.

    Confluence occurs when you take fibonacci projections off of multiple trends and get the same number and strengthens when it corresponds with other technical advents such as gaps, swing high/lows, chart indicators crossovers (MACD, RSI, Stochastics, etc.), trading congestion, etc. The more confluence, the more significant the level. I really take notice when I get two or more fib #s (say a 38.2% and 61.8%) to correspond with a gap in the chart or a swing high. Confluence is very powerful as it combines multiple technical analysis techniques to arrive at the same conclusion.

  140. David Ristau

    All -

    This story will be on PSW on Sunday as well as my site.

    The companies we are looking at are:

    - LNKD, SODA, CMG, NFLX, AMZN, CRM, GMCR, BIDU, LULU, UA, and still deciding on two more

     

    On SODA – company has combo of growth and spec (winning combination). They are growing at estimated 60% in two year…vs. KO at 35%…PEP at 15%+…HANS at 35%+. Have to compare them to the soda companies for now. Lack of competition and economic moat with patent. This is what I’m talking about though. When you discount KO you give them a 3-4% residual growth…SODA is growing at close to double …. their residual has to be 6%.

  141. David Ristau

    Jabo -

    That’s what I hope to find out. Going to figure out what growth has to be happening to obtain these prices as well as what we expect and compare. Find those that are truly trading like they should be versus those that really are just trader’s delights and don’t have the fundamentals to back it up.

  142. jabobeast

    david what about PCLN or WYNN?

  143. stjeanluc

    FAS Money / Phil – We talked about selling Puts in the monthly FAS play if we moved up higher. This morning move was too sharp (as XLF opened over $15.18) to adjust quickly. We can still roll the calls to 25 today and see what happens tomorrow or even Monday to sell puts in the weekly play.

  144. rustle123

    @David
     
    OPEN is a MOMO that is not showing the growth anymore, it is down over 40 points from it’s high so market is realizing it but would be curious on your take on that.

  145. David Ristau

    Will consider PCLN, OPEN, WYNN…other ideas are welcome

  146. rainman

    jabo — short TZOO?

  147. rainman

    david  — how about LULU

  148. shadowfax

    Careful money flow is out after a small inflow!

  149. Phil

    Fas I will check as soon as I hit the desk. Not worth panicking until the aug rolls look bad.

  150. David Ristau

    Rain – LULU is on the list.

  151. jabobeast

    rain--didn’t have the guts to short TZOO
     
    FU me!!!

  152. willsons

     jabobeast      You make me laugh!

  153. jabobeast

    FAS flying now. News?

  154. ssdirk

    IWM’ers – Pay attention to the ascending channel with support from Monday and Wednesday’s lows and resistance at Tuesday and Today’s highs.  When in doubt only trade in the direction of the overall trend.  In an ascending trend at or near the bottom (TNA) to the top and in a descending channel at or near the top to the bottom (TZA).  This will give you the highest chance of success.  If the channel is broken get out quickly.  And stay away from the middle with new entries.  If your entry is near the top or bottom of the channel then your risk is defined.

  155. Troy

    Budget Deal Close

  156. rainman

    Debt "nearly" fixed. Stick it!

  157. willsons

     JRW    Thanks for the lines and entry.  Much appreciated.  We are out with nice profit. 

  158. JRW III

    Simply amazing, isn’t it !!  Smiley
     

  159. JRW III

    Out with another $1.06 !!

  160. Troy

    AHHHHHHHHHHHHHHHHHHH………NO DEAL…………..AHHHHHHHHHHHHHHHHHHH

  161. rehat

    wow look at the 12:50 candle on /ES
    Unbelieveable

  162. kustomz

    News is wrong not close to a deal, buy gold!! TBT!!

  163. Troy

    JRW – close to ya…made .20ish both ways on the pump and dump "deal" scam.

  164. rehat

    It feels like – the NBC Deal, No Deal… Deal? — No Deal!!
    this is just political hogwash

  165. rainman

    Unbelievable. "Boehner also states there is no agreement.", right after the prez said that. On CNBC "So they are in agreeement then?"!

  166. kustomz

    Nix that sell gold and buy TLT, no wait sell the financials and buy tech, wait wait buy oil sell the dollar, whoops have to go long insanity and sell reality!! Good lord!

     

  167. rainman

    kustomz – :)

  168. Troy

    ssdirk/channels - agreed, good points on the three day trend lines, nice acending channel in which we are about at the middle currently.  I’m decent at predicting a short term reversal in the micro markets for .10 to .50 in a few minutes…the macro not so much, which is where the big money is to be made.  Trying to merge my methods with JRWs macro market skills…not easy, as it takes some brass balls to hold for the time periods that JRW does, especially with the amount that he is trading!  Also working on charting the buy programs to give me a predictive advantage, although the news spikes are the real danger with day trading, and not predictable via charting… UNLESS you are privy to insider news.  Glad to see you back at PSW…learning much from both you and JRW and the rest of the crew…

  169. tuscadog

    Phil / Oil   When you get back could you confirm my read that you don’t want us to short oil yet, even at $99.83 as it’s too early in the monthly cycle.  That was the jist of your am post.

  170. Pharmboy

    This is SO much a sell the news piece…..Too afraid to go short though.  matt….what say U?

  171. shadowfax

    Political spikes and crashes
    Very dangerous too trade.

  172. Troy

    Does anyone remember the days when fake news to pump the markets was illegal?  Deal-no Deal /\/\/\/\/\-> weeeeeeeeee…….

  173. Troy

    Pharm/Shadow/Danger – looks at IWM volume…10-20k/minute…them BAM…10 fold increase with news hype!  BOth dangerous to grade with tiny volume, and pump-n-dump news alerts!

  174. Troy

    ^grade=trade^

  175. Pharmboy

    Medco/ESRX merging.   Nice.  Less choice for consumers….and pricing power for them.

  176. terrapin22

    Pharm / OPXA – any news?  keeps drifting down. 

  177. bobhu

    Phil/FAS money weekily,
     
    I sold Weekily FAS $23 call(full) for $0.70 before your recommendation to sell half of $23 call(my mistake).   How should I roll them?  Thanks a lot.

  178. topher7

    The manipulation on a daily basis is frightening…

  179. rainman

    jabo / momo — my momo list is 12 of 14 in the red! You didn’t just go long did you?

  180. lol730

    topher
    What are you talking about?
    Daily manipulation?
    It’s every half an hour at least.
    It’s already micromanagement

  181. lol730

    Momos/growth stocks are often good forward indicator.
    Keep eye on it

  182. morxlntway

    AMAG at 16 last I looked.

  183. kustomz

    I’m inclined to believe if and when a debt deal is reached and we get a spike in bond prices, then we get a very unexpected sell off and yields rise.

  184. lol730

    "Pharm"
    I’m concern that if too many smart people short in anticipation of "Sell the news" – we can get really huge short squeeze
    I’m not keeping any big un-hedged position for next several days and not keeping futures overnight.
    It’s possible to get really rich, but the same chances to move into box under a bridge.
     
    Probably buying both puts and calls may work. if we get huge move in any direction one leg may well cover losses on another.
    But they also may drug it long enough to burn all the premium?! :(

  185. topher7

        SPY’s trading almost .90 cents ABOVE it’s R3 resisitance (133.79) as per today’s pivot points..    
     134.06 is the VWAP ..   ..there has to be a little breather, NO????

  186. Pharmboy

    OPXA – U are still in?  We got out of those eons ago.

     

    Sell the news – yes, I know.  I am really mad as I bought 135 SPY weekly calls at close yesterday for 9c.  Got out today on the move up too early.  I don’t know what to think.  I want to know how much of the profits from all the beats were from dollar manipulations vs total sales last year.

  187. snow

    MoMos/David – I don’t see old favorites PCLN and WYNN in there. Do those work?

  188. Phil

    OK, I’m back!  

    No time to read back so please re-ask anything important.  

    Thanks.

  189. jabobeast

    i had to put pharm on ignore to get the new messages. how do i get him off ignore?
    very funny rain ;-)

  190. stjeanluc

    Phil, FAS Money will need some attention… I had advised on rolling to the 25 calls but that will cost unless we expand the number of contracts. 

  191. malsg

    Jabobeast
    untick him .. boxes are just below the comments cox

  192. JohnC1

    Phil:  Was the Aug USO 38P DD at .88 still a live trade idea for today? Judging from your morning write-up it may not have been.   So would you recommend a quick trade back out on any weakness for those of us who did DD.  Thoughts?  Thanks.

  193. Pharmboy

    AMR missed, would that help PLCN…..

  194. jomptien

    Bloomberg reports that a study was done on CEO’s – the study shows that 1 in 25 are phycopaths – Lack of empathy, ability to lie convincingly, narcesistic.

  195. hanna5

     Actually, I think that a selective default on Greece is a solution! A great one! Cut some debt, lengthen some maturities, and lower some rates! Spread the pain thin and equal. Do it for Greece, portugal, and ireland all at once. Boom! Then the austerity measures will loosen a little, and these countries will grow. Any other option is a non-started. 

    Phil and others : What do you all think about BAC and NVDA at these levels? I am buying both, just stock now. Advice?

  196. Phil

    I see in my magic mirror that the Dow Transports are up 2% even though oil is at $100.  Though it is a very tempting short here, beware that today is contract rollover day and you can’t trust anything you see and early in the contract month, they are most able to push oil higher.  If you still have AUG puts, I still like them but the Futures are extra risky.  That being said, after 2:30 I would like a short on the SEPT (/CLV1).

    The Dollar hit 74.29 this morning and is still 74.36 so down over 1% from yesterday and the markets are up 1.5% – not too impressive yet.  The Euro is $1.437, the Pound is $1.63 and the Yen got slammed down (stronger) to 78.34 before recovering to 78.54.  

    Nat gas took a huge dive from $4.55 to $4.39 on, what I assume was a poor inventory report but it’s right back at the exact same price as copper again so who knows..  Gasoline is down at $3.11, which makes that oil short look right, Gold still $1,589 – which we expected as there shouldn’t be as much to worry about if everything is fixed and, keep in mind, priced in Euros – gold is down about $30 more than it looks to us!  Silver in the same boat at $39.19, down 2.5% from the morning high at $40.35. 

    20 SPY Weekly (tomorrow) $135 puts at .79 with a stop at .59 in the $25KP.  

  197. jerconn

    Phil, is your early morn SCO play still in play?  It’s more for long term, plus the entry is much better now, so even tho it’s short oil I assume it’s in play, pls correct if not…

  198. Phil

    FAS Money/StJ – What is the current position and basis?

    Thanks Malsg.  

    BAC/Hannah – I liked them better last week when they were 10% cheaper!  I’d let things settle out next week rather than buy into a big rally.  NVDA I’m not big on because INTC is incorporating video on chips and that’s fine for most people and AAPL doesn’t use them so they are selling into a declining market, right?  

    Gosh, the second I sit down the market retreats?  I don’t know how to feel about that…

    SCO/Jercon – Oh yes, this is nothing more than contract rollover nonsense for oil accompanies by a weak dollar.  Does Greece being fixed mean you can now afford $100 to fill up your tank?  If not = still bearish at $100!  

  199. Savi

    gee Phil   just keep jumping up and down--we will try to co ordinate our trades  :-)

  200. stjeanluc

    FAS Money / Phil – Short 5 23 Calls (cost $0.68) and 5 24 Calls (cost $0.59). I think that they could be rolled even to 17 or so next week 25 Calls.

  201. rpme

    Phil, what are your thoughts on the dollar? All the technicals say sell, and all the sentiment is bullish…

  202. Phil

    By the way – TZOO is EXACTLY why you short Momo stocks when they go too high.  It’s all very nice to follow the lemmings at IBD all the way to the edge of the cliff (in this case $90 for TZOO) but you will never see more people wiped out more quickly than Momo players (or, as David calls them, "Growth Strategists"  on a Black Monday.   If CSCO drops 50%, I am happy to double down and wait because I KNOW CSCO is worth more than $15 over time.  If TZOO drops from $90 to $45 (now $55) are you sitting on an opportunity or realizing what a complete schmuck you were for jumping on board a trend?  The people who got burned the most in 2000 were exactly the bears who finally capitulated and "went with the flow" at the top of the rally.  I am not saying to short all MoMos – they are very dangerous – and I’m not saying not to go long sometimes but I am saying you should sleep with one eye open if you are holding a stock with a p/e over 50 based on it’s parabolic "growth prospects".

    FAS Money – We’re still on track for my original plan which is sell the Next Week $25 puts (10) for $1 ($1,000) and roll the 5 this week $23s ($2.67, $1,335) and the 5 this week $24s ($1.65, $825) to 10 $25 calls at $1.20 ($1,200) and that’s net $40 in your pocket plus the $635 already collected so not so terrible.  

  203. Troy

     

  204. brooklyn

    Phil/IR – down on earnings. Jan $35ps are up close to 50%. Sell into the initial enthusiasm or wait?

  205. Phil

     

  206. rehat

    anyone having problems with TOS working in Mac OS Lion. It just does not load for me.. help..

  207. kustomz

    rehat exactly why I havent upgraded, contact TD for info

  208. JRW III

    Something went wrong with the site, but I think I’ve got it fixed !!

     

  209. jcaesar

    Phil / Anyone - I may be way off, but I don’t see any possibility of a debt deal being passed.  The leadership on both sides may announce some compromise, but if it has any revenue increases, the Teabaggers will just say no.  And Obama has said there must be something in the way of a tax increase (and his base will not support him if there isn’t).  Aren’t we all just waiting for the talks to fail, after which Obama will invoke the constitutional option? 
    BTW, I’d love to be wrong about this.  Maybe they’ll be able to pull off some smoke and mirrors magic trick.  Hope springs eternal!

  210. strether

    Phil
     
    What do you think of AUG SPY 128/128 put spread here?
     
    Thanks Strether

  211. strether

    126/128

  212. Troy

    JRW/PHIL/something wrong – PSW site?  I got locked out for about 1.5hrs…although my backup phone connection worked.  Does anyone know how to get a touch screen keypad phone to work at the PSW forums…just updated to a 4g phone with virtual keyboard, and it doesn’t seem to allow text typing versus using a keyboard phone?

  213. doro165

    Phil, on the FAS Money moves above are you rolling the call side now and waiting to sell the next week 25 P (currently .55) or did you mean the next week 26′s which are about a buck now?

  214. champ87

    Having problems also.

  215. Troy

    Mine locked up when Pharmboy attempted a 1:20 post, after his 1:18 post.  Strange, the post is gone now…

  216. Savi

    Phil--fas money  p roll for next week 25 or 26?
    Thx

  217. jasu1

     Phil,
    Have MS at 22.32:
    Thinking of selling the 2013 30 call for 1.43 and later selling the Jan 2013 17.5 Put?
    Any better option than this strategy? Didn’t sell the puts yesterday…was expecting poor earnings.
    Thanks

  218. champ87

    My problem same as Troy’s. Thanks

  219. stjeanluc

    FAS Money – Next week 25 Puts are $0.54. The 26 Puts are $0.97. Did you mean selling the 26 Puts then?
     
    In the meantime, we roll the 5 23 Calls and 5 24 Calls to next week 10 25 Calls – cost of roll is about $1.00. 

  220. Phil

    Dollar/Rpme – We were heading into a triangle squeezy thing in the chart I posted this morning and we could have broken either way but breaking up would have been very nasty for stocks and commodities so, coincidentally, Europe has a deal and we have no deal and the Euro goes up and we go down but do YOU think you should cash out all of your Dollars, convert them to Euros and put them in a European bank because everything is fixed?  If not – best to give it more than one day before declaring the next major trend is in place….  

    Note the VERY THICK line of resistance at 74 – get below that and THEN I may start buying some gold, otherwise, we’re in a 5% channel between 74 and 78 and this (74) would be the WORST time to get bearish on the Dollar (or bullish on stocks and commodities).  Now, perhaps this time IS different and everything is fixed and those 418,000 people who got laid off last week have better things to do and 3.2 on the Philly Fed is ONLY 40 points off March’s level (but it IS an improvement over last month’s -7.7 so it does deserve a pat on the head for not sucking) and we did have one other month this year that was worse in our leading economic indicators – so we can be proud of that too!  

    Category JUN MAY APR MAR FEB
    Total Index 0.3% 0.8% -0.3% 0.7% 0.9%
    Manufacturing Workweek -0.07% 0.07% 0.00% 0.07% 0.13%
    Initial Claims 0.00% 0.04% -0.33% 0.02% 0.29%
    Cons. Gds Orders 0.01% -0.01% -0.11% 0.22% -0.14%
    Vendor Performance 0.04% -0.32% -0.21% 0.27% 0.06%
    Nondef. Cap Gds Orders -0.04% 0.10% -0.11% 0.09% 0.09%
    Building Permits 0.06% 0.21% -0.05% 0.19% -0.16%
    Stock Prices -0.14% 0.02% 0.08% -0.05% 0.11%
    Real M2 0.36% 0.15% 0.02% -0.03% 0.09%
    Interest Rate Spread 0.31% 0.32% 0.35% 0.34% 0.36%
    Consumer Expectations -0.14% 0.23% 0.11% -0.41% 0.07%


  221. rehat

    Sarkozy talking about a EU fund to backstop banks.. Here goes the dollar…
    actually it should be the other way since now there will be more Euros swimming around and will make the dollars more valuable.. anyways.. I don’t care anymore.. just losing my shirt here.

  222. shadowfax

    JRW
    Thanks for fixing it, for the rest I warned all about the chip stocks and hope only shorts on AMD.

  223. rdn4evr

     Troy, Champ, etc., if you’re using IE, this site gets locked up all the time by posts with complicated graphics.  I had to switch to Chrome to avoid the mess.  Now, My Schwab SSEdge doesn’t like Chrome much, so I run both IE and Chrome, but that seems to drive my graphics card crazy and take up a lot of bandwidth, not to mention crashing even with the extra memory I put in.  Since I never have problems with TOS, I was just thinking about upgrading my system to a MAC and only using TOS, but now i’m reading about the MAC OS lion problems with TOS.  It never seems to end

  224. shadowfax

    BTW
    No position on INTL, AMD, or any chip stock, Just be careful!

  225. Phil

    Speaking of the Dollar – Nice blow-off spike down to 74.21 but right back to 74.35 means I like those SPY puts!  

  226. kustomz

    If this spreads…
     
    The banks boosted the buffer that protects AAA securities from loan defaults by increasing the amount of lower-ranked debt that is first to absorb losses, according to people familiar with the transaction. The so-called credit enhancement on the highest-graded debt has been raised to 20 percent from 14.5 percent, which was the least since sales of debt tied to commercial property loans revived in November 2009.
    Buyers are demanding better terms as banks have to unload as much as $10 billion in real-estate loans they have been stockpiling for sale as securities amid some signs that the U.S. economic recovery is stalling. Goldman Sachs and Citigroup also increased yields, after S&P held a call with investors including MetLife Inc. and CB Richard Ellis Investors LLC on July 18 to address concerns that the credit enhancement levels were low.

    The extra yield investors demand to hold the safest portion of commercial mortgage bonds has risen to 222 basis points, or 2.22 percentage points, from 2.09 percentage points at the end of June, according to a Barclays Plc index. Investors are demanding higher relative yields after the U.S. unemployment rate rose unexpectedly to 9.2 percent and as European leaders seek to contain its debt crisis.

  227. shadowfax

    Screwflation!
    Drive the dollar dow and stocks will rise until they don"t!

  228. strether

    Phil
     
    What do you think of of AUG Spy 126/128  put spread at $ .23?
    Sending again because site scroll was down.
    Thanks
    Strether

  229. kustomz

    millions of innocent kittens killed on the bounce in financials..There was nothing to like in the earnings and MS taking the most risk is nothing more than pure luck. Wonder what propels the markets going forward once Europe and the US gets fixed. They better conjure up a new crisis.

  230. Troy

    "They" are going to lose the last 45 minutes if "they" don’t hold here…time for a super sized buy program or bust!

  231. flipspiceland

    @JRWIII
    ??   You don’t want to be short the Euro currency, the dollar, or the Stock market?

  232. Troy

    Super Sized Buy Program…weeeeeeeeee!!!  What are you playing JRW?

  233. flipspiceland

    @Felipe
    re:   questions…. I couldn’t find an answer in the archives, or on Google (except for some tasteless definitions relating the female body) for this term: 
    " triangle squeezy thing".

  234. rainman

    flip / squeezy — "Triangle Squeezy Thing" is a technical term.

  235. rustle123

    Will we soon be at the point where the dollar compared to the Euro will look like the Peso compared to the dollar and the Peso will soon be worth more.

  236. lapper

    Phil,
    When US started printing the dollar went into the toilet,  Now Euro is printing and gets stronger… why?

  237. sank1

     Phil / SPY Puts,
    Hold overnight? Thanks.

  238. JRW III

    flip,

    The Euro. Retailers are buying equities, so this may be a giant set up by Jamie and da boyz !!

  239. snow

    Lockups – FWIW I’m running Firefox v5.0 on a desktop and have had no problems.

  240. JRW III

    Troy,

    I’m in cash waiting for an entry !! If this were not rigged, we should end up at IWM 83.69-80 !!  Smiley
     

  241. rainman

    lapper / Euro — Didn’t get stronger from printing, it got stronger from the commitment that the ECB will continue to rape the eurozone by kicking the countries which are hurting the most while they are down. This means those countries will have to privatize which means even more raping and pillaging.

  242. shadowfax

    JRW
    Exactly, it is rigged! Do you have a clue how?

  243. dclark41

    Pharmboy:
    Any updates on DEPO? Hold the Sept 7.5/10 BCS. Thinking of going naked until Sept.. Not much left with the 10′s.

  244. Phil

    Thanks JRW!  

    Debt deal/JC – Hard to imagine these fools even agreeing on Chinese or Italian for dinner but, at some point, a compromise has to be made.  Even the most dysfunctional countries have working budgets – they get there somehow…  

    SPY/Streth – I don’t like that at all – it’s inflexible and out of position.  You’ll notice I almost never take a put or call spread without an offset.  That’s because you sell premium when you buy an offset and that mitigates the GAMBLE you take on the spread.  Often, when we get a big win quickly, it’s more because the short put (or call) we sold lost money, not the spread.  Spreads like that are inflexible and highly tageted and should be used sparingly.  The biggest problem with an index put spread like that is that, if the market goes down, the VIX goes up and if the VIX goes up, your short putter will gain more premium than you do – that’s not good.  

    Site Locked/Troy – I think there was some kind of bad data from that comment of Pharms that JRW seems to have erased.  The administrators are able to put things like spreadsheets and images in their comments but that also allows for some ugly code to get in sometimes (very rare).  The quick solution is for one of us to delete the comment.  

    FAS Money/Savi – I meant selling the next week $26 puts (now $1) earlier.  

    MS/Jasu – Looks to me that if you sell the 2013 $25 puts and calls for $7.30 you  drop your basis to net $15.02/20.01, which is a worst case of 10% lower than your current basis so would be like you doubling down at $18.  If you don’t like MS enough to DD at $18, why on earth would you be in this trade?  If you get called away at $25, you make $9.98, which is a 66% gain on cash.   If you aren’t satisfied with 66% in 18 months – why do you own stocks – they are not meant to be lottery tickets….  

    FAS Money/StJ – Yes!  Selling the next week $26 puts for $1 – sorry about that!  

    EU Fund/Rehat – This is all just rumors and such and THEN they have to ratify it.  So silly…

  245. mrmocha

    shadow - it’s rigged to specifically take my money, that’s how!  I’m in big for the stick today so there will be none.

  246. JRW III

    Shorting HERE !! (IWM 84.04)

  247. strether

    Phil
    Got it.
    Thanks

  248. Troy

    JRW – the 3:18 buy program moved us from decending channel to ascending…yet the 3:29 sell program is concerning, as the bots seem to fighting each other today. Concerned they will park it at 1340…as 84.07 is too strong!

  249. b1ll

    JRW III , what do you feel are % outcomes of cup formations , as opposed to longer trend?

  250. Troy

    Strike the channel…back at lower limit of decending channel now!

  251. mrmocha

    It looks like for seven of the last ten days we opened higher than we closed, I think someone discussed buying the close and selling the open a few weeks ago as a strategy, looks like that game’s still good.

  252. Troy

    Bouncing the 200sma on 1 minute…must hold here or I’m with JRW at channel breakout!

  253. acobra65

    JR/Puts
    What is your outlook on the iWM Puts – still holding them… adding to them….. 
    Thoughts/// Thanks

  254. stjeanluc

    FAS Money – Thanks Phil! Should we also look to sell the August 26 Puts for the monthly play?
     
    Position update (weekly) – we are now short the 25 Calls (entry at $1.21) and 26 Puts (entry at $1.01)

  255. shadowfax

    mrmo
    It has totally screwed me so far but I have faith that BS turns to market drops and then I am out of the options hedging business for day trading!

  256. zeroxzero

     Just off a plane, I’m short Euros but I was a lot longer Petrobras, up 3%+, I hate it when the farther I am from my screen, the more money I make, still lucky rather than smart.  Uh, are we long or short at the close, guys?

  257. JRW III

    b1ll

    70% up

  258. shadowfax

    The IWM puts distraction is causing me to miss the money, it may be happening to you!

  259. matt1966

    Ok.. who broke PSW?
     
    Pharm / Sell The News:  In a perfect world yes.  But this market is only perfect for those who control it.  So what I think will happen is a huge squeeze to the upside followed by a selloff.  Kind of like when they officially announced QE2 last November.  There was a huge spike and then the bottom fell out for the next few weeks until really taking off in December.  However, that part won’t happen.  The US is finally going to have to try and pretend to live sorta within its means and it’s gonna hurt!

  260. shadowfax

    matt
    We are both aparently wrong!

  261. Troy

    matt/broke PSW – well I’m not going to rat him out as he is still celebrating his company being sold…that would simply be wRoNG!

  262. shadowfax

    Why doesn’t anyone tell me they will release oil reserves today!

  263. kustomz

    matt Im asking myself, does the market really want to go higher or are they just playing the scenarios. Are Europe and US a hindrance or just a reason to pump and dump the market?

  264. joel

    Someone please give me a reason to be bullish here.  Even if hyperinflation is a possibility how can the valuations get much more skewed?  Buying time can only work if a counter balance for progress is being made.  Someone please help me understand some kind of fundamental justification here.  Hot potato with stocks as the world economy rolls over equals what QE3? I’m slow and on the wrong side of this, I just don’t get it.

  265. zeroxzero

    joel:  My wild guess is because equities are the best of a very bad bunch of investment options right now.

  266. matt1966

    This market is so detatched from reality that I’m starting to think a default will cause a rally-  The govt is totally controlling this thing.  Wouldn’t want the citizens to lose money in their precious IRA / 401ks now would we?  We have been so insulated from the real world we don’t know what to think-  It’s just best not to and trade what they put in front of you.  Right JRW?

  267. Troy

    If I had control of the puppet strings, I’d slow melt this market up on low volume until about Aug 10th…then crash it down in order to move $600B in maturing and new treasuries.  August auctions are going to get interesting…

  268. Phil

    I’m starting to think MSFT will disappoint on lack of laptop sales and less workers creating less need for other software products.  On the other hand, big benefit from weak dollar so I wouldn’t bet against them.    Maybe Ballmer announces he’s retiring and stock doubles…  8-)

    Credit enhancement/Kustomz – There’s going to be a Hell of a reckoning one day….

    Sorry Filps, the proper technical term (as far as I know) is "Triangle Squeezy THINGY" – that’s where you get a wedgie thing (fun to look up in image search) that runs into a proper support line (like 74 on the Dollar) and you see the index’s channel compress down right into the tip of the triangle until it bursts out one way or the other.  It’s a great indicator of coming volatility but not a great indicator of direction.  

    And what Rain said!  

    Euro/Lapper – It’s all relative.  Euro was more weak on fear of collapse than fear of inflation.  Collapse is gone so that fear (maybe 2.5%) goes away and maybe it will be replaced by another 1% fear of inflation as people start doing the math but the Euro is a saint in Money Supply compared to us and Japan. 

    And what Rain said! 

    SPY/Sank – Yes, overnight hold – that’s why I went with the high ones that are in the money by .50.  Very dangerous play though!  

    Thanks MrM – We needed that anti-stick!  ;-)

    FAS Money/StJ – Oh yes, sale of $26 puts on both plays! 

    Close/ZZ – Short but only to test the waters.   

  269. JRW III

    Well, 9 cents on a 1/3 position; waste of time !!

  270. cwan120

    Default / Matt:  Maybe you got a point that US default will cause a rally.
    We’ve been talking USD down = market up.  So, US default -> USD down big time -> market shoots the moon.
    No?

  271. mrmocha

    JRW, you said it, ‘waste of time’ -- they pinned the close exactly where I bought for the stick at 1, so three hours of nail biting just to get in and out even so my broker could get more commissions!

  272. mrmocha

    And Pharm, big CONGRATS on your business success!

  273. cwan120

    JRW,
    What do you think tomorrow?  Markets up or down?
    Thanks.

  274. rainman

    MSFT — looks like a big beat!

  275. matt1966

    HAHA!  Held my TZA.  Will dump it AH.  There has been a lot of volatility lately.. what with those thinking things are really bad and potentially catastrophic and those who are thinking that they can’t afford to have others thinking things are really bad and potentially catastrophic.
     
    joel, there is no bullish justification.  Hyperinflation is not here.  Not even close.  The only upside to the market is due to the downside of the dollar.  That’s it.  Now on the other hand, the list for market negatives is HUGE!!!!

  276. stjeanluc

    Quote of the day from Felix Salmon at Reuters:

    I’m beginning to think that the most politically corrosive movie of the past 20 years was Ivan Reitman’s Dave, from 1993, where the president, armed with nothing but his neighborhood accountant and a couple of bratwursts, manages to fix the budget over dinner. 

    Entire article here… And some good quotes about responsibility!
    http://blogs.reuters.com/felix-salmon/2011/07/21/the-personal-finance-metaphor/

  277. stjeanluc

    FAS Money (Monthly) – Selling the August 26 Puts for $1.75 or so 

  278. rainman

    SNDK beats as well.

  279. rustle123

    @Matt
     
    couldn’t agree with you more

  280. JRW III

    cwan120

    Barring any news events, we should revisit the top and then fade, imho !!

  281. stjeanluc

    And Europe’s plan for growth – more austerity!
    http://krugman.blogs.nytimes.com/2011/07/21/1937-1937-1937/
    Krugman’s conclusion:

    The Serious People are determined to destroy all the advanced economies in the name of prudence. 

  282. JRW III

    4% on the day; see you all tomorrow !!

  283. Phil

    Bullish/Joel – Stocks are the best hedge against hyperinflation in the long run.  It’s not about "value" it’s about the "E" in p/e getting bigger.   Stocks are, in the end, a commodity, they are a finite piece of a company that produces (hopefully) something of value.  Of course some companies suffer from inflation but others do very, very well.  

    Reality/Matt – Government certainly doesn’t want campaign contributors to lose money – that’s what really matters.  I noticed that Charitable Donations are under the Senate axe but I bet Campaign Contributions will still be deductible.  

    August/Troy – That is a good plan and we do need to seriously watch that.  

    MSFT with a big win – that should hold up the indexes after hours and Asia should be happy so more of the same maybe tomorrow unless something horrific happens in Europe (again).  

    Dollar slapped back down to 75.25 to add to the effect.  

  284. matt1966

    …and the squeeze continues.  Bastards.

  285. kurtww

     rehat – did you get your TOS problem on OS X Lion resolved? I was going to upgrade soon, but I’ll hold off if this is a real issue. 

  286. ssdirk

    IWM’ers -  walked it right to the support line of the multiday ascending channel.  On normal days that’s a very high percentage entry for TNA; however, no stick today. 

  287. Pharmboy

    Damn, I leave and lock things up.  I only pasted a link this time…..!!  Sorry all.  Firefox does not have issues on locking up and i think it was the link to the EU debt on market watch.

     

    I notice spikes down in AH, so I bought tomorrow’s SPY 133 Ps. 

     

    2 pm PST (I hope)……..’tis the time of the news release….

  288. rpme

    I never have problems with FIrefox. MSFT heading down……

  289. cwan120

    I swear I saw MSFT up to $27.70-ish right after the earnings announcement.  But now down to $26.80, only 20 minutes later??  Seems to be quite actively traded AH.

  290. topher7

    SPY’s trading up .40  AH already…  It just never ends…
    S&P up almost 50 handles since Monday’s intraday low.. (that’s like 72 hours ago…)..here we go again..

  291. Phil

    At the close: Dow +1.22% to 12725. S&P +1.36% to 1344. Nasdaq +0.72% to 2834.
    Treasurys: 30-year -0.55%. 10-yr -0.45%. 5-yr -0.25%.
    Commodities: Crude +0.84% to $99.23. Gold +0.16% to $1589.60.

    Currencies: Euro +1.14% vs. dollar. Yen +0.44%. Pound +0.9%.

    07:34 AM The excuse for the dive in the euro are comments from Eurogroup President Juncker that selective default for Greece could not be excluded. Of far more import are longer term thoughts of why any debt shenanigans for Greece should be positive for the currency.

    07:56 AM Jean-Claude Trichet’s resistance  has apparently brokenand he has "reluctantly" accepted a new bailout for Greece that may trigger a selective default. Euro – 0.2% (previous) 

    08:17 AM European shares and the euro are moving sharply higher now. ECB chief Trichet’s apparent green light for Greek default could be the reason as this means the bank would continue accepting the country’s paper as collateral, thus preventing an implosion of Greece’s banking system. Stoxx 50 +0.7%.

    08:22 AM Leaks out of the Brussels summit show the EU going forthe "full monty." Leaders call for a "Marshall Plan" of investment to stimulate growth in Greece. The EFSF will be able to purchase sovereign debt in the open market. as well as recapitalize troubled banks. Shares and the euro are rocketing higher. Stoxx 50 +1.5%.

    08:48 AM A look at the reaction in a couple of EU bond markets tonews from the summit: Irish 10 year yields -29 bps to 12.77%, 2 years -84 bps to 21%. Nearly touching 6% earlier this week, Italian 10 years -15 bps to 5.45%.

    09:52 AM More details on the proposed overhaul of the EFSF: The rate charged to bailed out countries could be lowered to 3.5%, and the maturity lengthened to at least 15 years from 7.5 years. The fund will also be able to recapitalize banks in countries not being bailed out (hint: Italy and Spain). The key to making this all work is the ECB reversing policy to allow "selective default." 

    10:48 AM The Telegraph has received and published a leaked copy of the communique from the EU summit. No surprises, it just confirms what was previously leaked.

    12:48 PM Stocks renew their surge on a NYT report that President Obama and House Speaker Boehner are close to a major budget deal. Update at 12:51: The White House tells CNBC there is no budget deal, NYT headline is "wrong." - Don’t let the facts get in the way of a good rally, though…

    S&P again warns of a 50% chance of a downgrade to the U.S. credit rating within the next 90 days, saying an agreement on the debt ceiling with no meaningful deficit reduction would likely result in a cut from AAA to AA. (previous)

    Market recap: Stocks surged on better-than-expected reports from companies including AT&T and Morgan Stanley and renewed optimism that Europe was resolving Greece’s debt crisis. Obama and Boehner denied reports they were nearing a debt deal, but NYT stood by its story. Oil ended at a five-week high, while goldturned lower. NYSE advancers topped decliners more than two to one.

    Here’s the next thing "THEY" want you to pay $4 a gallon for:  Citigroup economist Willem Buiter says the water market will soon become hotter than oil, arguing that the concentration of the world’s population and increasing standards of living will drive up demand. He recommends investors play the urbanization trend bybuying into water companies such as DHRITTNLCPNR and ROP.

    Hong Kong records inflation at its highest level in three years, registering 5.6% Y/Y in June on high costs for food imports and private housing. A government rep says inflationary pressures remain notable. 

    Concerns about the accounting practices of U.S.-traded Chinese companies are now extending to solar panel manufacturers, leading to names such as LDK Solar (LDK), Trina Solar (TSL), and ReneSola (SOL) trading at very low multiples relative to their forward earnings. Of course, weak demand and pricing aren’t helping much either.

    The HSBC China flash PMI for July comes in at 48.9, showing contraction for the 1st time in a year, and the lowest reading in 28 months. Assets levered to hot Chinese growth – the Australian dollar and copper to name two – drop sharply on the news. Shanghai -1%.

    The eurozone July PMI falls more than expected to a 2 year low of 50.8 from 53.3 previously. "Excluding the financial crisis, the July survey was the most downbeat since the Iraq War in 2003," says Markit’s chief economist. Full report from Markit (pdf).

    The euro temporarily skies to new highs for the day as France’s Sarkozy talks about the establishment of a European Monetary Fund with the ability to recapitalize banks and intervene in bond markets. FXE +1.1%

    The money quote from French President Sarkozy: "What we will do for Greece, will not be done for any other country in the eurozone." Maybe next week, maybe next month, or maybe next year, expect markets to put that statement to the test. 

    More from Sarkozy: He expects the private sector’s contribution to debt relief to be €135B over 30 years. He hopes for Greece’s rescue loan rate to be lowered to 4.5%. Ireland and Portugal will also receive lower rates, but that is the extent of additional support to those 2 countries.

    Here’s the most disturbing part of the eurozone rescue plan for Greece, according to Paul Krugman: "Deficits in all countries except those under a programme will be brought below 3% by 2013 at the latest." Krugman’s reaction: "The Serious People are determined to destroy all the advanced economies in the name of prudence."

  292. Phil


    A little cold water on the "europhorians," as Natixis’ Abdullah Karatash says there are major outstanding issues – mostly political – that can’t be resolved quicklyAlso, there’s little trading and weak liquidity behind the rally in peripheral euro-zone debt. "The moves are coming in big gap-like movements. That shows that the rally we have may not be sustainable."

    The Swiss franc leads the pack of shadow currencies used by traders and investors to hedge against global uncertainty, writes Buttonwood. The currency stands overvalued against the Euro and dollar, but Switzerland’s mix of low inflation, stable growth and budget surplus make it a tempting bet.

    What’s up with the yen? Supposedly one of the go-to assets in times of risk aversion, the currency is moving higher even as the financial world seems saved for the moment. At ¥78.59, it’s near an all-time high vs. the greenback, a level sure to draw protest from Japanese exporters, if not intervention by the government.

    Let the re-education begin:  Getting underway on Capital Hill is a briefing of House Republican freshman by S&P on the consequences of default should the debt limit not be raised. Many of these members are part of the so-called "default caucus" – those unwilling to raise the debt ceiling under any circumstances.

    A GAO audit leaves the door open for Fed-bashers by finding the central bank awarded many of its largest contracts on a noncompetitive basis, and should improve conflict-of-interest policies. Senator Bernie Sanders jumps right in saying, "this is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else."

    Borders’ liquidation will increase available U.S. retail spaceby 6.3M square feet to an industry already struggling with near-record vacancy rates and stagnant rents. Many of the bookseller’s 399 stores are in regional malls, where vacancies are at 9.3%, highest since data collection began in 2000, and rents are down

    Continuing high jobless claims combined with recent job cuts at Cisco (CSCO), Lockheed Martin (LMT), Goldman Sachs (GS) and Borders add up to an unwelcome trend: Layoffs are accelerating - in fact, companies are laying off employees at a level not seen in nearly a year

    Auto sales lag due to production slowdowns in Japan repeats the mantra from the automobile industry, but ConvergEx’s Nicolas Cage questions the logicHe sees a fundamental downward sloping trend in SAAR numbers influenced by consumer sentiment and unemployment, instead of supply-chain issues.

    Japan looks to be getting back on track, with exports falling a less-than-expected 1.6% Y/Y in June.This helped the country unexpectedly post a trade surplus of ¥70.7B ($898M), the first in three months

    With few analysts surprised by Intel’s (INTC -1.3%2011 PC forecast cut, estimates and price targets are moving higher following Q2 results. Needham is encouraged by strong pricing, and MKM Partners touts Intel’s "dominant technology position." However, Nomura believes Q3 guidance is too optimistic, given Seagate’s (STX-16.1%weak forecast.

    DigiTimes reports Taiwanese passive component makers will be seeing lower-than-expected growth  in Q3 due to weak orders from notebook and motherboard manufacturers, which in turn is affecting pricing. This could also be a negative for U.S. passive component makers Molex (MLX) and Amphenol (APH)

    Rental stats show Mayor Bloomberg’s hope for NYC as Silicon Valley is already happening. The proportion of renters employed in tech has risen from 7.2% to 11.6% since 2005, while finance workers have fallen from 58% to 45%,. "Within a decade, the American workforce will be unrecognizable to those who thought the FIRE economy would last forever," writes Josh Brown. 

    At $9.85/share, Bank of America (BAC +2%) finished yesterday with a market cap of $99.8B - just 49% of its $205.6B book value, Jonathan Weil observes. "As far as the market is concerned, more than half of the company’s book value is bogus, due to overstated assets, understated liabilities, or some combination of the two."

    LG Display (LPL +2.2%reports a $20.2M Q2 net profit - down 96% from last year, but ahead of the ($79.4M) consensus. The company doesn’t see demand improving much until early 2012, given weak LCD TV sales, and is cutting its 2011 capex forecast by $948M - not good news for equipment makers such as Applied Materials (AMAT). (PR)

    Microsoft (MSFT): FQ4 EPS of $0.69 beats by $0.11. Revenue of $17.3B (+8% Y/Y) beats by $120M. Shares +2.3% AH. (PR

    SanDisk (SNDK): Q2 EPS of $1.14 beats by $0.14. Revenue of $1.37B (+17% Y/Y). Shares +1.5% AH. (PR

    Seagate’s (STX) sharply lower outlook, burdened by spiking commodity costs for certain materials used in drives, sends shares -14% premarket. “Prices [for rare-earth materials] have increased significantly,” in recent weeks, CFO Patrick O’Malley tells Barron’s. “And prices have gotten highly volatile." U.S. debt talks are adding to the caution, CEO Steve Luczo says.

    Good story to go long on:  Safeway (SWY -9.7%) blames the Easter bunny for holding back Q2 sales, saying consumers spent for the holiday but held off buying for the next three weeks awaiting their next paycheck. In the soft economy, the difference in sales between the beginning and end of pay periods is exaggerated, CEO Steve Burd says, "approaching double digits" percentage-wise. 

    As HP (HPQ), Microsoft (MSFT), and RIM (RIMMdream of enterprise tablet dominance, Apple (AAPL) may have already beaten them to the punch. Mobile device management firm Good Technology says over 25% of activated devices in Q2 were iPads. During its FQ3 CC, Apple said 86% of Fortune 500 companies are testing or deploying the iPad.

    When will Apple (AAPL) overtake Exxon Mobil (XOM) as the world’s most valuable public company? At the current pace, in less than 12 months - assuming analysts’ estimates are on target, and so far, they’ve been consistently too low. - And then, when will CMG overtake AAPL? 

    Apple (AAPL +0.5%) has accumulated $76B in cash, and investors are starting to ask what it intends to do with the hoard. Apple’s longtime policy is that it wants to be ready for strategic opportunities, but this is "a level of cash that’s preposterous by any metric," and the company, which has no debt, could easily borrow money at low rates to make a large acquisition, an analyst says. - I think they should buy CMG while they still can!   

  293. russellb73

    At some point when this crazy rocket ship stops shooting up and lands on the moon….
    what about buying puts on BBY?  Stock has dropped a lot already but just seems like PC sales down so much and they have a lot of exposure to US consumer.
    (can’t imagine us workers will have any disposable income left to buy anything….well hopefully they will leave enough for food)

  294. asaenz

    @ Phil whats your overall opinion of STX? After today’s monster dive, i have them on my watch list….

  295. nicha

    Any dentists on this board? I have some questions if you have a few mins. Thanks.

  296. ilene

    Today’s levels.

  297. Pharmboy

    OK….now you know!

  298. strether

     The ramp in the markets over the past 6 weeks is a challenge for the methods presented here, which are wonderfully hedged but would be great if they might  identify larger opportunities to also benefit from multi-week moves—even if not as large as AAPL 400 calls-- 70cents to $12 in that timeframe.

  299. nicha

    Pharm – so, you got a big chunk of $325 mil coming your way. That’s enough to send your boys and my girl to college :)

  300. Pharmboy

    No no no….I get a very itty bitty teenie tinsy tiny sliver of a single Ben Franklin that the VCs decide to give to ALL of us……….they made an f’in BUNDLE.   :)

  301. Pharmboy

    Interesting take from C.H. Smith:

    We know two things: 1) the official policy of the Federal Reserve is to engineer and maintain inflation and 2) inflation is theft. As I have recounted here many times, in nominal terms, it looks like average wages (earned income) in the U.S. have been rising smartly for decades. But measured in purchasing power, i.e. adjusted for inflation, earned income has declined for most workers, especially in the past three years.

    Measured in purchasing power, i.e. the number of gallons of gasoline or loaves of bread an average worker could buy with one hour of labor, American workers have experienced a steady decline in the value of their labor for the past 40 years.

    Whenever a pundit scoffs at the idea that the dollar might lose 95% of its value, readers remind me it already has lost 95% of its value in the past century.

    The dollar has lost most of its value just in the past 45 years; according to the BLS inflation calculator (which very likely understates real inflation), it takes $7 2011 dollars to buy what $1 bought in 1966, at the top of the post-war Bull market.

    Can we buy 7 times more goods and services now? Or can we actually only buy 6 times more goods? If so, then our earnings have actually declined by 15%. Put another way: 15% of our earnings have been effectively stolen via inflation.

    The Federal Reserve robs savers every day of millions of dollars, which it then transfers to the "too big to fail" banks by paying interest on those banks’ reserves.Savers earn .01% on their cash while banks are paid 2% interest. The difference is what is stolen from savers and funneled to the banks.


  302. pstas

    http://www.nationalreview.com/articles/272325/green-shovel-ready-stimulus-100-years-ago-victor-davis-hanson
    "Unemployment is still at 9.2 percent, with nearly 50 million people on government-subsidized food stamps — even as American infrastructure is crumbling, the private sector is moribund, and national timidity prevents any new large, visionary construction. Prior generations gave us space projects; ours ends them. Boeing once ruled the skies; now the government sues to stop Boeing from opening a new plant."

  303. doro165

    Congratulations Pharm, amazing that you are able to this active on the blog and still manage your company.
    Well done.

  304. pstas

    More……
    "How did our ancestors — poorer than we and with limited technology — so quickly create such a vast project, which today probably would pose insurmountable challenges to their far richer, high-tech descendants?
    Quite simply, Big Creek could not be built today in the United States. Environmentalists would claim that the pristine nature of the San Joaquin River would be unnecessarily altered, citing a newly discovered colony of spotted newts or dappled dragonflies in the way of the proposed penstocks. Unions would demand blanket representation without elections — and every imaginable compensation for such hazardous duty. Workers would apply for stress-related disability benefits given the dizzying heights and the dank subterranean digging. Government regulators and inspectors would outnumber project engineers. Private entrepreneurs world never risk such a chancy investment without ironclad government guarantees of profits despite enormous cost overruns. And the public would be as skeptical of the risky project’s success as they would be eager to enjoy its dividends when completed."

  305. Jbur

    Nicha/Dentist: How can I be of assistance?

  306. jackhound

    JWR III - please post MORE!

  307. jackhound

    sorry, I meant JRW III – thanks for the great commentary!!!!!!!!!!!!!!

  308. Pharmboy

    OK, PLX is supposed to resubmit their NDA to the FDA.   I am going to sell the Nov $7.5 Ps (1.60), and use the proceeds to buy the Nov $7.5 Cs (80c).  One can also sell the puts and buy either the Feb $5/7.5 BCS for 1.20 or for more bang for buck the Feb $7.5/10 BCS for 65c.  Both result in a net credit.  Coupled with any EU info by years end, I expect them to be ~$10-12 by then.  FDA notes will take 2-6 mo, so by years end we should know.

  309. Troy

    Does anyone else get the biggest kick reading this stuff…as good as comedy central, if not better.  Something big could hit markets Friday on the debt ceiling.  Possible "win-win" for the markets no matter what they do, as long as they do something…
    ——--
    President Obama’s goal of giving the GOP everything it wants continues to be thwarted by the GOP.
    ….if the chained CPI were enacted in December 2012, in 2021 the tax liability of low-income workers with incomes between $10,000 and $20,000 would increase by 14.5 percent, while those with incomes of $1 million and above would see only a 0.1% increase, according to the report." And then there’s the cut to the mortgage deduction. [HuffPost]
    It’s all bullshit anyway. David Dayen: "How in the would do you lower rates, cancel the AMT, get nothing from the corporate side, promise not to nix the biggest tax expenditures, and raise at least $3.5 trillion? That’s the cost of the AMT, $1.7 trillion, plus the revenue raising targets, $1.8 trillion. I’m NOT EVEN COUNTING the money you would have to make up for lowering the individual rates. You’d have to tax Wall Street trades or add a carbon tax to get to that number." [FDL]

  310. Troy

    Speaking of trader tax…perhaps they can dig up that 2009 trader tax bill…the one that would cost a daytrader over $100,000 extra in fees per year, making 5 round trips of $50,000 daily.  That would raise $240Billion/year…yes we can…never trade again…
     
    By levying a small fee when stocks, futures, swaps, options and other securities are bought and sold, supporters of the tax believe the government can take in between $120 billion and $240 billion annually.
    http://money.cnn.com/2009/12/02/news/economy/financial_transaction_tax/

  311. Troy

    And for anyone who says a trader tax can’t happen:
    ————-
    Such a tax is not unprecedented. The United States used to tax all stock sales and transfers at 0.2% to 0.4% from 1914 to 1966.
    England currently levies a tax on stock sales and transfers at 0.5%, which brings in about $40 billion a year.
    ————--
    ……….but look on the bright side, I hear McDonalds is hiring!

  312. diamond

    Troy  - A visualization of US Debt in 100 dollar bills

  313. Phil

    Good morning!

    Ronald Reagan on the debt ceiling: "Unfortunately, Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the federal deficit would soar."

    People Support Higher Taxes to Reduce the Deficit by a 2-to-1 Margin (Capital Gains and Games)

    Check this stunning visualization of the various types and layers of U.S. debt, including a $114T skyscraper of unfunded liabilities. "If you still think the government are the best people to manage your money after [seeing] this, please come and see me about some magic beans I have to offer you."

    Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined (The Onion)

    Consumers Use Credit Cards for Necessities as Inflation Cuts U.S. Incomes (Bloomberg)

    Robert J. Shiller: Debt and Delusion (Project Syndicate)

    Will GOP Filibuster of Consumer Financial Protection Bureau Head Be The End Of The 2010 Voter Revolution? (Forbes)

    WTF? Banks Pay Back TARP Funds by. . . .Borrowing from Treasury (Yahoo Finance)

    BBY/Russell – They are already beat up.  Maybe they go lower but good news of some sort could shoot them up too so not the kind of thing I’d want to risk.  

    GMCR, on the other hand, is very tempting.  The Jan $92.50/77.50 bear put spread is $6.30 and you can sell the Sept $100 calls for $4.50 for net $1.80 on the $15 spread.  I really think Sam is onto something – there’s certainly a lot of smoke and maybe there is a fire!    

    STX/Asaenz – Doesn’t matter what I think, THEY think their business sucks.  I’d stay away unless they get to some crazy low like $10.  

    Woo-Eeee, look at that Big Chart!  Who called that M pattern the other day – looks like we’re right on the money for another one!  I love that the entirety of this rally was a 100 point gap open on Tuesday followed by another 50 points at the open, then a 100 point leap at 1pm, nothing on Wednesday (day of rest) and then a 100-point gap up and another 100 point gain at the open – that’s 450 out of 320 net Dow points gained.  Think about it….

    I like shorting the Futures here:  S&P (/ES) at 1,346, Nas (/NQ) 2,415, Dow (/YM) 12,720 and Rut (/TF) 842.6 – as long as 74.20 hold on the Dollar, we should get a bit of a sell off so these are levels to look for as the Dollar heads back over that line but we can scale into position between 75.20 and 75.10 but, below that, too dangerous!   Oil is good too below $99.50 with tight stops (now $99.66 so a patience game) – couldn’t quite get back to $100 ahead of the EU open.  

    Friday’s economic calendar:
    10:30 ECRI Leading Index 
    Comment!

    Notable earnings before Friday’s open: HONUSG,

    EU Leaders Offer $229 Billion in New Greek AidEuro-area leaders redoubled efforts to end the 21-month sovereign bond crisis as they erected a firewall around Spain and Italy and risked temporary default to lighten Greece’s debt burden. After eight hours of talks in Brussels, leaders announced 159 billion euro ($229 billion) in new aid for Greece late yesterday and cajoled bondholders into footing part of the bill. They also empowered their 440-billion euro rescue fund to buy debt across stressed euro nations after a market rout last week sparked concern the crisis was spreading. The fund can also aid troubled banks and offer credit-lines to repel speculators. The euro strengthened as officials drew concessions from Germany, the European Central Bank and investors for a twin- track strategy to support Greece and ensure its woes don’t spread.

    The Fatal Flaw In Europe’s Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP.

    Democrats Balk at Potential U.S. Debt-Limit DealDemocrats reacted angrily to reports that the White House is cutting a deal with House Republicans to boost the U.S. debt ceiling and reduce deficits by about $3 trillion over 10 years without immediate revenue increases. The officials, who described outlines of the plan on condition of anonymity, said the leaders were told it would cut spending while calling for a future tax overhaul that could raise $1 trillion in additional revenue. Obama met with Democratic leaders from the House and Senate at the White House for about two hours. The administration and House Republicans remain divided over the fate of the cuts for top earners passed during President George W. Bush’s administration and how much revenue would be raised to trim the long-term federal deficit, said two Democratic officials familiar with the negotiations. Obama wants spending cuts to be gradual, with the fullest effects not felt until 2014 and beyond, to avoid shaking the still-fragile recovery, the officials said, briefing reporters on condition of anonymity to discuss the closed-door talks. While discretionary spending cuts could be immediate, changes in the tax code and entitlement programs would be worked out over the next year, the officials said.

  314. Phil

    Small victory already, Dollar at 74.30 so quick profit taking (when in doubt, sell half!) if they are rejected here and stop the other half out even and it’s a winner…

  315. Phil

    By the way, of course you can reload if you get stopped out and the same set-up repeats.  That’s the whole point of thin-futures trading – you just go for little victories as it wiggles back and forth and, sometimes, you accidentally get a big one!  

  316. matt1966

    Wow, those Germans REEEEAAAAALLLLY don’t like inflation.  Instead of having the Greek and other PIIGS debt monetized, they have agreed to shoulder the lionshare of the bailout.  I guess they consider it war reparations?
     
    The Europarliament, ECB and IMF may have won their Pyrrhic victory today… But what happens tomorrow when every German (in a population of 82 very efficient million) wakes up to newspaper headlines screaming that their country is now on the hook to 32% of its GDP in order to keep insolvent Greece, with its 50-some year old retirement age, not to mention Ireland, Portugal, and soon Italy and Spain, as part of the Eurozone? What happens when these same 82 million realize that they are on the hook to sacrificing hundreds of years of welfare state entitlements (recall that Otto von Bismark was the original welfare state progentior) just so a few peripheral national can continue to lie about their deficits (the 6 month Greek deficit already is missing Its full year benchmark target by about 20%) and enjoy generous socialist benefits up to an including guaranteed pensions? What happens when an already mortally wounded in the polls Angela Merkel finds herself in the next general election and experiences an epic electoral loss? We will find out very, very shortly.
     
    http://www.zerohedge.com/article/fatal-flaw-europes-second-bazooka-bailout-82-million-soon-be-very-angry-germans

  317. malsg

    Matt 1966 – Agreed, not to mention a large number of very angry Greeks who are continuing to riot in the streets.  At least Germany can export well made riot gear and tear gas to Athens to soften the blow.
    For anyone not watching Japanese 10 year Bonds are not exactly responding to this "rally" .. Last night the yields dropped.  I’m not sure if this is currency/dollar related but don’t they usually drop back to the 140 – 138 mark when everything is fixed?

  318. yodi

    Good morning Phil question on AAPL I have done very well on my plays but now I am looking at longs OCT 395 c long bought for 9.31 now 17.20 I have used these calls to play against selling short call. However OCT is coming up fast and my thought is to roll these calls out as far as Jan 13. I as well was lucky enough to stuck my gun to the long OCT 415c which were very much down at some time but I was lucky enough to close them at a profit. It is my intention to carry on playing AAPL so your thoughts are apreciated. thks

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