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Two Trillion Dollar Tuesday – Still No Deal!

Hey buddy – would you like to buy a rally?  

For just $2,000,000,000,000 I can give you a 2% pop on the S&P, what do you say?  Am I talking about QE3?  No, QE3 would be cheap compared to the gang-rape that the Dollar is enduring this week at the hands of the Europeans, the Australians, Canadians, the Swiss (all-time high today) and the Japanese – who have been taking their turns pushing our beloved dollar down to the ground and having their way with it.  Not a pretty picture?  How about picturing the loss of 2% of your net worth in 5 days?  

That’s where we are this morning as $2Tn of US wealth has been extracted this week (via political dithering over our debt ceiling) and shipped overseas in the form of relative buying power for or foreign friends while our stock indexes and commodities "rally" – which is to say they re-price higher to reflect the  lower buying power of the currency they are priced in – the ever-declining green-back.  

As you can see from the above charts, which are our major indexes and oil adjusted for the Dollar – we’re critically close to failing our 20-day moving averages for the first time since early June, when the markets went into free-fall – also on the heels of an end-of-month run-up that took the S&P from 1,311 to 1,345.  1,345 just so happens to be where we topped out last week and where we topped out yesterday and where we popped to on the futures early this morning (3am, of course) as the Dollar was shoved a full percent lower in overnight trading.  

[Futures Trading, U.S., Composition by Type of Futures Contract, 1970 to 2004]We were all over this, of course, and I sent out a 3:55 am Alert to Members saying:

Dollar bottomed out at 73.69 and that should be it for our 3am "rally" with the RUT (/TF) at 835.6 and S&P (/ES) at 1,340, Dow (/YM) at 12,600 and Nas (/NQ) at 2,435 – all make good shorts here as long as the Dollar goes no lower (and I’ve already started the morning post with a chart that shows how dangerous this is getting).  

We rode that puppy hard – all the way down to RUT 830 at 5:30 (up $560 per contract), S&P 1,331 ($450 per contract), Dow 12,530 ($350 per contract) and Nasdaq 2,420 ($300 per contract) so, as usual, the winner is the Russell which is why JRW and I love to play them.  We just (7:47) took the opportunity to go short again in Member Chat as we crept back near the same highs – WHEN WILL THOSE CRAZY COUNTER-PARTIES EVER LEARN?  

Speaking of JRW – He nailed that down-turn on the Russell yesterday at 1:39 in Member Chat calling 1/3 in TZA (we scale in and out, of course) at $32.73 and fully in just 4 minutes later as our signals improved and ALSO called a perfect exit at at $33.43 at 3:27 – up 2.1% in less than 90 minutes!  Who says we don’t trade stocks at PSW (or at least ETFs)?  

Overall, we stayed slightly bearish yesterday, adding trade ideas like SQQQ spread in the Morning Alert, a BIDU earnings spread that will be cutting it close (selling 5 Aug $170 calls for $4 against 3 Sept $175 calls at $5.10 and the move is to take the Sept calls off the table at the open and ride the short Aug $170 calls out naked), got bullish on FAS, shorted oil futures off the $99.50 line (out at $98.50), shorted PCLN with a ratio backspread,  went long on IMAX at $25.50 with short puts, took a bear put spread on SPY, shorted NFLX (HUGE winner!), long on NLY (selling puts), long on BAC with a buy/write, long on HOLI with short puts (China train thing knocked them down), short on oil with an SCO bull call spread short on QQQ with the Aug $58 puts at .63 and short on XRT ($54.60) with a very bearish spread that was our final trade idea on a very busy Monday.   

Today we have a Dollar starting the day at 73.80 (8:25) and our indexes are a bit above yesterday’s open.  Lots of earnings and lots of data (see early morning chat for many details as well as a nice QLD hedge) but it’s all about the ridiculous drama of the debt ceiling but I’m getting sick and tired of Boehner and the other Economic Terrorists that call themselves Republicans as they lie themselves further and further into the corner to try to keep up the charade that this entire thing is about anything other than trying to make Obama look bad and score political points by sacrificing the Middle Class for the sake of their wealthy masters.  You don’t believe me?  Here’s Mitch McConnell laying it out for you:  

DifferingVisionThis is nothing but total bullshit at this point. The Republicans have thrown all credibility out the window, now rejecting the Democrats proposal for $2.7Tn in reductions over 10 years with NO NEW TAXES and NO CLOSING OF LOOPHOLES.  What the f*ck else can they possibly do?

Notice, on the right side, under Boehner’s "plan" that no actual cuts are identified to make up 60% of the $3Tn the Republicans claim their plan will save.   Not only that, but the Republican plan sets a goal of keeping this impass going through November and again in February as Congress will do nothing else but debate the "to be identified" $1.8Tn in cuts through the next election.  Is this fiscal responsibility or holding the economy hostage to do some electioneering?  

THIS is why people are losing faith in America – we look like circus freaks to the rest of the World – like Children who are, unfortunately, very dangerous, nuclear-armed children who owe the adult countries $15Tn and are planning to borrow $2.5Tn more to see us through for the next 18 months.  We have no job, we have no resources and we produce nothing of value and our plan to "fix" this is to cut back on spending by 10%, even though we are currently running $1.6Tn in debt out of $3.6Tn in spending (44%).  Doesn’t that just make you want to lend us money?  

I am also sick AND tired of hearing the Republicans blame this debt on Obama.  At first it was so misguided that Democrats didn’t take it seriously enough to refute but now the lie has been told so many times that people are actually starting to believe it.  The fact of the matter is that Barack Obama has added a grand total of $187Bn to the defict that ALREADY EXISTED the day he was sworn in in January of 2009.  This is a FACT and kudos to Teresa Tritch in the New York Times this weekend for laying it out so nicely in "How the Deficit Got This Big."

Please feel free to Email this to your friends because I, for one, am sick of hearing the endless lies in the media as our nation hurls towards what may be the biggest financial crisis in Global history based on the actions of a pack of lying weasels who wrap themselves in the flag and our constitution in order to turn America back into a slave state – only this time it’s class slavery, so everyone seems OK with it!  

The additional $9Tn in debt (oh sorry $8.813Tn as Obama added $187Bn) that Bush policies forced this nation into are a burden that this country will carry for decades.  That’s not even counting the LOSS of the surplus that had been built up under 8 years of Clinton, who also took more than 4 years to turn around the disaster caused by the policies of Ronald Reagan and the first Bush Presidency.  

Here’s another chart that lays out the cost of policy changes under Bush and Obama.  Even laying the cost of TARP on Obama (approved under Bush) and the extension of the Bush Tax Cuts (big mistake as he threw the Republicans a bone they won’t let go of) and even ignoring the fact that we have an actual economic crisis to deal with – the difference between the two administrations is STUNNING.    

Every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Bush’s policies and the effects of recession. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.

The second graph shows that under Mr. Bush, tax cuts and war spending were the biggest policy drivers of the swing from projected surpluses to deficits from 2002 to 2009. Budget estimates that didn’t foresee the recessions in 2001 and in 2008 and 2009 also contributed to deficits. Obama’s policies, taken out to 2017, add to deficits, but not by nearly as much.

A few lessons can be drawn from the numbers. First, the Bush tax cuts have had a HUGE, damaging effect. If all of them expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels – if we re-elect a Republican House or, GOD FORBID, a Republican President – that is not going to happen and we shall be DOOMED!  Second, a healthy budget requires a healthy economy; recessions wreak havoc by reducing tax revenue. Government has to spur demand and create jobs in a deep downturn, even though doing so worsens the deficit in the short run. Third, spending cuts alone will not close the gap. The chronic revenue shortfalls from serial tax cuts are simply too deep to fill with spending cuts alone. Taxes have to go up.

Let’s wake up America and smell reality.  It’s time to stop acting like children and start tackling our problems like responsible adults.  We can start by not making fun of our President when he tells us "we have to take our medicine" because WE DO!  Do you think voting out Obama or voting in political hacks who seek to undermine the people of this nation for the sake of their Corporate Masters is going to make things better?  You are simply voting for the sleazebags who tell you what you want to hear – let’s all grow up a little and listen to the people who propose real solutions and, as a hint – there is no real solution that does not involve increasing taxes – anyone who tells you otherwise is lying to you and counting on you being too scared to want to hear the truth or so bad at math that you will believe that less really is more.

It’s not – it’s time to get real! 

 


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  1. pentaxon

    Phil, inspired by your article I updated the "SPY in world curr." chart and added some MAs. These sure look interesting on the world currency part. The MAs are gathering with a strong resistance line vaild since mid 2009 (!). I guess this means fly or fail pretty soon…
    http://www.pentaxon.com/psw/spy_vs_worldcurrency.png

  2. csaw2

    sorry i botched it the first time
    Greece bailout:  a geostrategic view
    http://www.stratfor.com/weekly/20110725-germanys-choice-part-2

  3. rpme

    There is hope for mankind, very cool video.

    http://www.youtube.com/watch_popup?v=HSKyHmjyrkA&feature=email

     

  4. jabobeast

    Did  Cramer say NFLX should be bought???

  5. Pharmboy

  6. stjeanluc

    Oil Lines
    R3 – 101.24
    R2 – 100.50
    R1 – 100
    PP – 99.25
    S1 – 98.75
    S2 – 98
    S3 – 97.50
    Wow, so many lines right on the quarters! We are bouncing between PP and R1 right now.
     
    Yesterday’s highs and lows – 99.77 and 98.52. And Fib lines for a breakout – 101.80 and 96.50/95.25. 

  7. exec



    Phil/Gang Rape
     
    No, QE3 would be cheap compared to the gang-rape that the Dollar is enduring this week at the hands of the Europeans, the Australians, Canadians, the Swiss (all-time high today) and the Japanese
     
    I thought these guys were our buddy’s…….damn…..with friends like these, who needs enemies. 
     
    So the question is:  Why is our government allowing this to happen?  Is our debt so out of control that they can’t prevent it???……….or…..more likely…….like any seasoned whore……..our elected whores actually enjoy a good gang rape every now and again.

  8. kurtww

     Phil – thanks for your thoughts in the other thread. I realize that buying premium to offset making money from sold premium is not a good strategy. This particular trade got away from me at a bad time, I thought I would be able to work while traveling, but the reality of checking on the markets and trying to make some money had the total opposite effect from what I wanted (losing a bit of money, not as much time to enjoy the trip). Lesson learned! Sounds like I should have a decent chance of getting out even if we go down a bit more, then I’m walking away from the computer until I get back home!

  9. stjeanluc

    FAS Money (Weekly) – We are still short the 26 Puts (1.01 now 1.40). We cashed in our short calls yesterday for about $0.60 in our pocket!
     
    FAS Money (Monthly) - We are short the August 25 Calls (1.15 now 1.54) and the August 26 Puts (1.75 – now 2.19).

  10. Savi

    Phil--that is great you can be there Monday—will see how many members will stay thru Monday and also talk to lvmoda about availability of his place on the Oct 10th—

  11. Savi

    jabo—what say you on NFLX!!!!

  12. jomptien

    Phil, copied from yesterdays post:

    jomptien
    July 26th, 2011 at 8:08 am | PermalinkIgnore this user
    Phil/ EUO,
    I bought 400 shares a week or so ago at 17.48, waiting for a higher move to sell monthly calls in IRA – looks like wrong assumption. Wait it out for a move higher or is there a better solution you have? Thanks

  13. Phil

    Good morning! 

    Congrats to the shorts already and the SQQQ or QQQ puts can still be taken as the Nas is slow to drop so far but the other indexes are falling fast.   

  14. Phil

    Where was I?

    Oh yes, oil getting slammed back to $98.72 so tight stops on the short-term short plays there.  Dollar still weak at 73.87 and Cramer is pumping like mad on CNBC and the volume is low so clearly the powers that be want things to go up today so we should take our futures profits and run off this dump as well.  

  15. tuscadog

    Phil / Oil   Took a nice tumble.  Would you wait for more downside today or cash in on the short?

  16. jabobeast

    Savi—I will wait until 4pm to comment on NFLX. After CMG last week it still seems too early.. but so far so good ;-)

  17. stjeanluc

    Here is what we look like from the outside:

    "The irony of the situation at the moment, with markets opening tomorrow morning, is that the biggest threat to the world financial system comes from a few right-wing nutters in the American congress rather than the euro zone," - Vince Cable, Minister for Business in the Coalition government in Britain.

    And this guy is from the center right government! 

  18. jabobeast

    Is everyone selling NFLX and buying the other MoMos? WTF???

  19. stjeanluc

    Oil – 98 is S2. If that doesn’t hold, then S3 is at 97.50! 

  20. jabobeast

    Why is PCLN up $8 again???

  21. Pharmboy

    DCTH offering is at 5.05.  I want to try and get back to even with this pig, so today or tomorrow, we need to sell some Ps and Calls out a bit in time.  I think they will move up a bit, but the have squandered a very promising opportunity.  I am looking at the Sept $5 Ps and teh $6 Cs against the Jan12 $5s that I have…..any other Ps should be rolled out and down, looking to get back even.

  22. zeroxzero

    Oil dropping with dollar dropping?  Definitely time to load up the truck.

  23. Savi

    pharm--ARNA any catalyst coming up?
    Thx

  24. dday97

    Oil-congrats on all futures shorts.

    Vince Cable is center right? Really?

    He joined the Liberal Democrat Shadow Cabinet in October 1999 as spokesman on Trade and Industry after a spell as a junior Treasury spokesman. Until he was appointed to the Coalition Government as Business Secretary in May 2010, he had been the Liberal Democrat Shadow Chancellor from November 2003 and from March 2006 Deputy Leader of the Liberal Democrats.

  25. Phil

    TBT is dropping and that’s a sign that people are panicking into the Dollar, which is what we expected even though it’s our economy that is causing the panic.  Of course, this is another one of those weeks in which they need to sell lots of TBills so, once again, "coincicentally", a poor market is working out well for the Treasury as they print Mo’ Money!  

    Levels are what they are, today we’ll test them again but kind of boring as we’re mainly getting yanked around based on the rumors of the moment:

    Let’s keep in mind that EVEN if they "fix" the debt ceiling, our economy is NOT GOOD, the World economy is NOT GOOD and earnings aren’t even that good.   Sorry to be a downer but CASH, CASH and CASH are the best investments at the moment.  

    Speaking of cash, don’t forget that we ALWAYS sell into the initial excitement and those BIDU Sept $175s are $6.20 and we can leave the short Aug $170 calls (now $5) to rot.  

    Big data day and we’re not expecting the week’s data to go well.  UPS was disappointing, AKS was disappointing as was ITW, PCAR, VLO!, MMM, RF, PCX, CIT – this is NOT a good day folks, no matter what that jackass Cramer says…  

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Consumer Confidence
    10:00 New Home Sales
    10:00 Richmond Fed Mfg.
    10:00 State Street Investor Confidence Index
    2:00 PM Hearing: Fed’s role in economy (Hoenig) 

    Notable earnings after Tuesday’s close: ACEAGNC,AMZNCHRWDWAERTS

    GILDHTSIGTILMNJNPRKIM,LLTCLVSMTWNBRNSCPMTCPPDIRFMDTPXTSS

    At the open: Dow -0.31% to 12553. S&P -0.07% to 1337. Nasdaq +0.01% to 2843.
    Treasurys: 30-year +0.2%. 10-yr +0.05%. 5-yr +0.03%.
    Commodities: Crude -0.48% to $98.72. Gold -0.08% to $1610.90.
    Currencies: Euro +0.59% vs. dollar. Yen +0.28%. Pound +0.7%.

    Market preview: S&P futures +0.1%, as the debt ceiling standoff looms over the market. Strong earnings pull Ford (+1.9%) and Broadcom (+9%) shares higher, while Netflix -8.3% after warningabout subscriber growth. RadioShack (RSH), despite missing forecasts+17.7% after it says it will offer Verizon products. Later: consumer confidence, new home sales, Richmond Fed. 

    ICSC Retail Store Sales: +0.3% W/W, vs. +0.4% last week. +4.2% Y/Y, vs. +4.5% last week. The hot weather gave a boost to seasonal sales. 

    Redbook Chain Store Sales: +3.5% Y/Y vs. +3.8% last week. The sales of seasonal goods, especially air conditioners and fans, are strong although the consumers seem unmotivated.

    May S&P Case-Shiller Home Price Index: +1.1% M/M-4.5% Y/Y vs. -4% prior.

    More on today’s home price data: S&P is hosting a virtual chat on the residential housing market on its blog. Included are Robert Shiller, Karl Case, and David Blitzer.

    More gang of 12 pumping at the bell:  With the greenback getting hammered across the globe, conventional wisdom has the reason being worries about a U.S. default/downgrade. However dollar-based assets – equities and bonds -  are doing just fine. An alternative explanation: a Goldman reportsaying inflation be damned, economic weakness is about to bring more QE

    How long will it be before the Swiss say "uncle" due to the surging franc – now hitting all-time highs vs. the euro and the dollar on a nearly daily basis. UBS has seen earnings fall and is cutting jobs, and domestic consumption is dropping as the Swiss cross the border to do their shoppingFXF +30% Y/Y.

    Greece’s debt swap will start in August. Private bondholders will have four options to choose from and will take a 21% loss on their holdings as part of a €37B contribution to Greece’s rescue. The International Institute of Finance has estimated a take-up rate of about 90%. (see also)

    JPMorgan says a 90% participation rate of banks taking part in the Greek debt swap is unlikely as current pricing makes it too tempting to just sell short-term paper. The supposed 21% haircut is called into question as well, with the bank’s analysts calculating the loss to be closer to 34%. (previous)

    Peripheral bonds slump and the starch is taken out of a European stock rally after weak Spanish and Italian bond auctions. "If you think that the market is buying into the EU summit of last week, then you’d expect to see better T-bill auctions," says a strategist. Stoxx 50 -0.2%.

    U.K. GDP +0.2% in Q2 vs +0.5% in Q1, in line with forecasts. Japan’s earthquake and the Royal Wedding may have knocked 0.5 percentage point off growth. Sterling rises against the euro and dollar on the news – it had been down prior to the announcement. (PR) (Telegraph live blog)

    George Soros’ hedge fund is returning money - at this point, less than $1B – to clients after a pretty fair 38 year run, and will cease managing funds for outside investors. The vast majority of the money in Quantum Fund – more than $24B – belongs to the Soros family.  More on Soros: The decision to return client cash was made because of new regulations that would require funds to register, report detailed information to, and be subject to periodic inspection from the SEC. (previous)

    The coalition appears to have completely thrown in the towel on its insistence Qaddafi be brought to justice, with the U.K. the latest to drop a demand for the strongman to leave Libya. "This is ultimately a question for Libyans," says foreign sec. Hague, coming to agreement with the French and the U.S. 

    Research in Motion (RIMM) is set to release its BlackBerry Bold 9900/9930 and Torch 2 models today, with Verizon (

  26. Phil

    Research in Motion (RIMM) is set to release its BlackBerry Bold 9900/9930 and Torch 2 models today, with Verizon (VZouting the former through a promotional video. Both devices will contain version 7 of its BlackBerry OS, which RIM is hoping will boost itscrumbling market share and rekindle diminishing consumer interest.

    More on AK Steel (AKS -5%): despite increased sales, the company misses Q2 estimates as raw material prices cut heavy into margins. The company says profits will be further pressured in Q3 as steel prices are expected to decline about 1% over the period, while raw material costs will continue to rise.

    More on Illinois Tool Works’ (ITWQ2: Revenue misses consensus by $65M. Guides for Q3 EPS of $0.95-$1.03, below $1.06 consensus. Guides for 2011 EPS of $3.72-$3.88 (exc. one-time tax benefit), below $3.92 consensus. Company long seen as barometer for industrial demand. ITW -3.5% premarket. (PR)

    More on UPS‘ Q2: Revenue beats consensus by $50M. Adjusted operating margin of 12.6% up 1.1% Y/Y. Average volume/day of 14.9M packages up 100K Y/Y. Domestic volume/day of 12.63M nearly unchanged. Guides for 2011 EPS of $4.15-$4.40, in line with $4.34 consensus, butconcerned about "economic conditions" impacting performance. UPS -2.5%. (PR

    Netflix (NFLX) tries to put the best face on its recent decision to raise prices for DVD subscribers who also stream videos,telling shareholders that nearly 75% of new subscribers signed up for the plan in Q2. Better love it or leave it: "We hate making our subscribers upset with us, but we feel like we provide a fantastic service…" NFLX -9.3% premarket. (earnings)

    Wal-Mart (WMT) launches its Vudu video streaming service on its website today. Although on-demand rentals – as opposed to subscriptions – Vudu is expected to be a serious alternative to Netflix (NFLX), especially given the highflyer’s recent price increase.


  27. matt1966

    WHOA!  That one got somebots attention!  Fully covered now waiting for clarity.   HHHHMMMMMMMMM….

  28. dday97

    I actually like USO 39 calls for .19 on a daytrade. Stop at .14

  29. zeroxzero

     What does "panic into the dollar" mean in the present context?  I don’t follow the logic; perhaps because panic is not logical.

  30. matt1966

    Uncovered half short TNA

  31. rustle123

    Phil, do you like selling 110 call on LNKD into earnings?  pays over 4 so protected over 10% on the upside.

  32. Phil

    SPY Chart/Pentax – That does sum it up nicely.

    Oil $98, that’s a very nice spot for a .25 trailing stop!

    Those are very cool RPme! 

    Cramer/Jabob – What a total sleaze that guy is!  To put people into that stock today is criminal…

    Buddies/Exec – There are no buddies once the ship begins to sink and there are no life preservers and sharks in the water.  They are all going to die but they’d rather not die first…

    S&P/Kurt – Yes, fortunately we’re not going higher but, we may still pop when they have a debt deal so you may be a victim of timing if it comes close to expirations.  

    FAS Money/StJ – I think we need to see if $15 holds on this drop to get a feel of what kind of roll we’ll be looking at.  

    Nas still holding up well.  Dollar 73.90 and very, very bad if it gets over 74 (even though that is still way too low). Copper oddly holding up at $4.46 so they are a good short below the $4.45 line (/HG) if the Dollar breaks higher.  

    Europe down 0.4% on FTSE and DAX with CAC down 1% but looking to go lower all around.  

  33. russellb73

    Phil
    Should we exit our QQQ puts? Take the profit and run…or maybe wait for more terrible numbers (I am guessing) like jobs numbers this Thursday?
    PUT (QQQ) POWERSHARES QQQ TR AUG 20 11 $58 (100 SHS)   bought at 0.63
    Leaning towards waiting a couple more days, don’t think debt deal is going to happen for at least another day.  Also watching the dollar.

  34. shadowfax

    82.29
    Target low yesterday , sold all IWM puts, waiting for the turn.

  35. sank1

     Phil / BIDU,
    Just so I understand correctly, should we go ahead and sell the SEP 175 Calls, and just wait for the AUG 170 Calls to expire (would be nice)?
    Thanks.

  36. csaw2

    there is a $3bn pomo scheduled for today
    http://www.newyorkfed.org/markets/tot_operation_schedule.html

  37. malsg

     hmmmmm what would happen if the Swiss, BoJ, ECB, BoE decided they wanted their dollar holdings to go up in value.  How many central banks does it take to change a currency.
    10am pop off 12505?

  38. Savi

    Phil--fool me once etc  :-)   got a second chance and got out of the FAS money calls

  39. zeroxzero

     Hoss make an interesting point last night.  What if the collective assumption that "they have to reach a deal" is wrong?  If Boehner is an ineffective hostage to Tea Party sentiment ["don't raise the debt ceiing, ever!"] and Obama has made all the concessions anyone could reasonably make in his position — isn’t is worth considering the possibility that Geithner’s deadline is just ignored?  Didn’t Newt Gingrich shut down the government more than once?  

  40. stjeanluc

    Good job Savi! 

  41. Savi

    Thx stj

  42. dclark41

    Pharmboy:
    Have you lost all faith in DCTH or just DCTH’s management? Do you see there ChemoSat system ever getting fully approved? I am concerned about some 2012 $7.5 puts I sold. I am not sure I want to roll if this stock is going to die on the vine.

  43. scotbraze

    Speaking of Vince Cable in the UK:
    http://sturdyblog.wordpress.com/2011/07/21/cameron-did-not-have-sexual-relations-with-newscorp/
    David Cameron removed the brief of the BSkyB deal from Vince Cable (who had made his intention to refer the merger to the Competition Commission clear), after a secretly recorded conversation revealed he had decided to “declare war on Murdoch”. It was inappropriate for the person in charge to have such strong preconceptions about the deal.
    He handed the brief to Jeremy Hunt, who had said in an interview: ”Rather than worry about Rupert Murdoch owning another TV channel, what we should recognise is that he has probably done more to create variety and choice in British TV than any other single person…” Some fairly strong pre-conceptions of his own, you must agree. An equally inappropriate choice. Unless one wanted the takeover waved through, that is.

  44. yodi

    Savi FAS
    Your are not a fool I got out at .50 patience is the name !!!!

  45. stjeanluc

    FAS Money / Phil – The 26 Puts are not looking good right now (down about $0.50). On the weekly trade, I guess we have to hang on for now as there are not many places to roll but August and I don’t think we want to do that! Or we could DD to the 25 Puts (actually putting money in our pocket at the moment) and hope for a debt plan (that was the original premise – we go down on Monday and claw back the rest of the week – the first part worked out, the second part, not so much so far).
     
    On the Monthly trade, the calls are OK now (losers but all premium) and the Puts are not so hot but still $1 of premium.

  46. terrapin22

    Savi / Vegas
    i will be out there for a different event that same wkend.  I should be able to attend some of the sessions.  definitely monday if we do trading then.  my email: thegeneral91@gmail.com

  47. Phil

    Vegas/Savi – Well I will be somewhere regardless.  Maybe we should chip in and get a totally cool suite at a hotel and "broadcast" from there…

    EUO/Jomp – I don’t play those things but I’d say this move down in the Dollar is overdone but you have to be willing to take more pain and if you’re not scaling in but you plan to keep them, then you should at least consider selling the 2013 $17 calls for $2.80 to lower your basis to $14.68 and shame on you for thinking you can’t possibly be wrong and risking an unhedged buy in an IRA in the first place!  If they head below $15, then you can consider selling 2013 $15 puts (now $1.60) for $2.50+ to drop the basis to $12.18/14.59 as you don’t really want to mess around selling monthly calls on an ultra-currency ETF anyway – that thing moves more than FAS!  

    That might be a playable bottom as 12,505 on the Dow held nicely.  Watch that 1,333 line on the S&P but, over that, I like 2x IWM WEEKLY $82/83 bull call spread at .54, selling 1x the RIMM Aug $26 puts for .93 for net .15 on the $2 spread so 10 of those in the $25KP as RIMM is rolling out their new stuff this week and might get a very nice pop and, if not, rolling won’t be terrible.  

    This is, of course, a bottom call for now at Dow 12,510, S&P 1,331, Nas 2,836, NYSE 8,328 and RUT 825 with the Dollar at 73.875 and is VOID if the Dollar pops back over 73.90 .  

    Oil stopped us out too, now $98.27 and makes a nice long with USO WEEKLY $38 calls at .70 with a stop at .50 – 20 in the $25KP

     

  48. Savi

    Thx yodi—but some days I swear for the life of me I cannot make the right decision

  49. lolobear

    Is there a play on AMZN at all for tonight’s earnings?  Their eps has been revised down to 37c from 57c. 

  50. samz3700

     Phil -
    I need some upside protection on my shorts for when we get a rally off the debt deal - 
    Any suggestions – I was thinking xlf – but if we get a downgrade before the debt deal – that might tank.

  51. shadowfax

    Money fow is in, a buy program, above 8EMA and 20 min SMA looks like the low for now is past.

  52. Phil

    Oil/Tusca – Don’t overthink it.  Generally you want a 20% of the profit trailing stop and, once you get to .75, you can go with a .25 trail but I like to set my stops at the .25 lines once we’re .10 past each one.  

    LOL StJ – Our right wingers appear nuts to any other global righties at this point. 

    Yipee – 73.77 – you just have to have faith in the evil, manipulating bastards…  8-)

  53. asaenz

    Nice call on the bottom Phil! and on oil too !

  54. jabobeast

    not that I am taking sides but didn’t he say this???
    “The fact that we are here today to debate raising America ’s debt limit is a sign of leadership failure. It is a sign that the US Government can not pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. Increasing America ’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

    -- Senator Barack H. Obama, March 2006            

  55. Pharmboy

    DD on ALTH.  Being bought by AMAG…so we can let it get to even (~2.10) and then sell it all (or at least 1/2).

  56. jcaesar

    Savi / Fool Me – I prefer George W Bush’s version:
    "There’s an old saying that says, fool me once, shame on — [pauses] — shame on you. Fool me — [pauses] — You can’t get fooled again!"

  57. Savi

    Vegas
    phil--that would be fine if everyone is willing to chip in--at the moment I was thinking a $150 deposit to cover equipment and food at cafe moda—lv also said he was going to look into his place for Monday --will chat more after hours

  58. Savi

    jcaesar--I saw that clip  :-)    :-)

  59. stjeanluc

    Wow, talk about that 98 line holding on oil… Springboard anyone! But there is no manipulation in this market. It was all based on fundamentals! 

  60. lflantheman

    BIDU……Sept 175/140  short strangle from yesterday looks very favorable.  Calls increased in value only 15% and puts decreased in value over 50% for excellent gain so far.  No adjustments are necessary right now on this trade.
    And please accept my apologies for doing the BIDU 155/160 bull call spread at EOD silently.  I usually post trades I’m doing if I’m active on the board so that others may comment and/ or participate .

  61. bobhu

    Phil/stjeanluc, for FAS money weekly, I am not quite follow the logic to buy back $25 calls yesterday.  Even we put $0.60 to our pocket to close it out but $0.60 left is all premium for 4 days to go.  I don’t know if FAS was going up from yesterday(as it was way down this morning ans stay $25 now), if it stays below $25 or go even lower, we will miss the chance to make extra $0.60 for 4 days to go and might get killed on the $26 puts if FAS go even lower.   Why not wait and see?   Thanks.

  62. asaenz

    30% in 15 minutes on that USO trade Phil !! thanks…

  63. asaenz

    38% percent now…

  64. Pharmboy

    DCTH/dc – I think we can do better things with our money.  Right now it is a faith in management thing, not a loss in faith of the device.  If the management cannot do the right thing, the science does not matter.  Now, someone could buy them out, and that is a possibility, but I am going to lighten up a bit on them as I think there are other opportunities that we could partake in.

  65. lflantheman

    DIS Aug 40 calls up 10% so I’ve covered them with Aug 42 calls to reduce cost basis.
    AAPL positions contiue to mint $ $ $   ………………………….is this against the law? 

  66. dclark41

    Thank you Pharm.

  67. Phil

    Good call on oil ZZ! 

    Liberal Democrats/DDay – They are less liberal than Labor.  Kind of like Tea Partiers actually, who are all about civil liberties.  Nick Clegg is their guy and he wants the Government to get off the people’s backs, etc..  In Europe, Liberal is more about being inclusive than about being "left" – It’s only in the US where Liberalism has been turned into a curse-word that means Communist (and only in America is "communist" something to be feared and hated, rather than just an alternative economic philosophy to counterbalance Capitalism) to those who can only think in black and white terms.  

    Panic into the Dollar/ZZ – When global assets are liquidated, you run into the reality that 62% of all the money in the World is US Dollars.  People dumping Yen or Euro on economic uncertainty tend to spread their risk in a currency basket so they end up buying Dollars and, of course, commodities are priced in Dollars so all commodity sales lead to Dollar purchases.  Also, when Americans liquidate assets – they tend to stay in Dollars – I doubt very many people here have their broker put 1/3 of their cash into Euros and 1/3 into Yen, right?  

    LNKD/Rustle – I find the first earnings after an IPO are very dangerous times to short.  You have to figure they wouldn’t have timed their IPO to run into an earnings miss and, with these Momos, it’s very easy to juggle the books early on to show spectacular growth and then you get a whole quarter to have Cramer et al to herd the sheeple into the stock based on some ridiculous extrapolation and narrative which will include, I’m sure, infinite Chinese growth.  It’s a good trade if you are willing to roll with it but don’t get into anything you’re not willing to roll and DD on if it moves against you.  

    QQQ/Rustle – They went from .63 to .93 at 10:05 and we have 2 (TWO) Rules at PSW.  Rule #1 is: "ALWAYS sell into the initial excitement."  Had I not meant it, I would have made the rule "sometimes" or "once in a while" or added the word "consider" but no, I had one rule at the time and I went with the word "ALWAYS" and I used caps because, for some reason, people would STILL ask if they should sell or not when they got a 50% pop on a day trade.  So, I decided to make a Rule #2 and Rule #2 is: "When in doubt – sell half."  I had hoped that Rule #1 was clear but people kept asking if they should sell or not so I made Rule #2 in the hopes that, if for some reason the word "ALWAYS" was confusing to people, then they could fall back on the concept that, if they weren’t quite clear on Rule #1, they would AT LEAST take half off the table when they got a nice profit.  If there were a Rule #3, I suppose it would have to be – "If you ignored my Rule #1 AND my Rule #2, then why are you bothering to ask me what to do since you don’t f’ing listen YOU GREEDY LITTLE BASTARD!"   I’m still working on the wording but you get the gist of it…  8-)

    BIDU/Sank – That is the aggressive (and proper) way to play it.  What are we doing?  We are ALWAYS selling into the initial excitement.  Those Sept $175s have already dropped 10% and the Aug $170s are at $4.30, which is about what we sold them for so a winner if you kill it now and maybe put a stop on 3 at $4.50 and a stop on the other 2 at $5 to lock in at least a small gain from the longs.  

    Wow, oil back over $99.50 already.  Dollar 73.72 but Yen back on that 78 line and Europe closing soon so we could get another reversal at 11:30. 

    How many Central Banks/Malsg – Well it takes more than one or the BOJ would never let the Yen get this strong and the ECB doesn’t do anything without two weeks of meetings and the entire rest of the World, including China, don’t have the power to move the Dollar for more than a day.  Keep in mind that $4Tn of Forex trade daily.  China’s entire hoard of Dollars is less than $2Tn. 

    Wow, nice turn on XLF – maybe the fix is in?  

  68. yodi

    Savi
    Decisions you need luck it is like a casino! just about time to short /cl again

  69. sank1

     Phil / AAPL – QLD hedge,
    This is quite a learning for me in terms of how you’ve positioned for a win both ways. Question I have is "with the wide bid/ask spread on QLD 95 as well as 115 puts, do we really get a fill at about the mid-point ~ $12"?

  70. lflantheman

    Considering an AMZN short into earnings.  Anyone with an opinion?

  71. dday97

    USO 39 calls. No reason not to dump them for .40. Over 100% gain on those this morning!

  72. rustle123

    Phil/QQQ
    Wrong Rustle

  73. Phil

    Nice job Savi!   And aren’t you glad you did now?  

    Newt/ZZ – Yes but he shut down the World’s strongest economy in an economic boom when we owed less than $5Tn (1/3 of GDP) and were, in fact, beginning to pay it off.  No one took it very seriously at the time.  This is very different with the World teetering on the brink and probably dozens of banks will fold simply because they don’t get their expected interest payments from the US (not something you don’t count on getting in your budgets).   It simply can’t happen – the Reps can fail to make a deal but then the Dems and Obama will change the rules and thump their chest and say that the US will not default on their watch and the Reps will cry foul and fall right into the trap of working actively to MAKE the US default and maybe, finally, this will wake up Middle America to what kind of idiots they have been voting into office.  

    FAS Money – Let’s not get burned again and sell the Weekly $25 calls for .77 (full cover) and buy back the $26 puts for $1.15.  IF FAS breaks over $25.25, we can sell the $27 puts (now $1.99) but I think it’s going the other way.  

  74. Savi

    Phil--the QQQ aug 58s puts did not go to .93—.75 was the high—I was watching to get out around .88 and did not fill

  75. stjeanluc

    FAS Money / Bobhu – We applied the first rule, which is to sell (in this case buy) in the excitement. We had a 50% win in 2 days… I don’t know what Phil is thinking for the week, but I see some upside danger if they can get together and get a plan on the table for the debt ceiling. Last week, FAS ran to 26 and that would be it for your 25 calls… We only need about $0.35 for a double in 6 months. No need to be overly greedy at this point! Even we break even on the Put side and collect "only" $0.60 for the week, we are looking at over 375% for 6 months. What’s not to like! 

  76. sank1

     Phil / BIDU,
    Thanks for the confirmation. This is the first time I’m ever purely short on calls without a cover (as in a spread), and that’s why I didn’t comprehend and sought clarification. I understand the "ALWAYS sell into the initial excitement" now.

  77. eyezz

    hehe Phil,
    I love your Rule #1 rants, I for one am very happy with my "humble" 20%  :)

  78. kustomz

    US…must remember all the meds these people are on…
    The Conference Board’s Consumer Confidence Index edged up to 59.5 in July, from a revised 57.6 in June that marked a seven-month low in the measure. Economists had expected the July figure to fall to 56

    Canada
    The Conference Board of Canada’s consumer confidence index slipped in July for the third straight month, down 1.8 points to 81.3.

    Germany
    While GfK’s overall consumer-climate index refers to the following month, its subindexes—economic expectations, income expectations and buying propensity—refer to the current month, and all three fell in July. The economic expectations index fell to 44.6 points from 50.3 points in June.
     

     

  79. champ87

    Phil
    re: QQQ/Rustle: I don’t see where the QQQ Aug 58 Puts ever sold for more than .75 today (at 10:05 on TOS ), not .93 as you referenced. I haven’t sold them yet, but should we have bailed at .75? Your bottom call on the markets came at 10:29 when they were at .71. I’m afraid I’m confused (as well as  apparently a "greedy bastard). Thanks for clarification.

  80. etradingsignals

    bobhu: I have been playing the FAS money a bit differently. I took the profit off the table on the calls yesterday at around 0.55. I shorted the calls again at 0.85 later yesterday when FAS went up.  Took the profit again today at 0.53. Now I have a limit order to sell calls at 0.85 again.
    Just like you, I didn’t like the idea of leaving the naked puts overnight.

  81. Phil

    FAS/StJ – You have to stop trying so hard not to lose money ever.  That’s just not the way it works.  We sell our premium every week and some weeks we win and some weeks we lose but we ALWAYS sell more premium.  Over time, we will sell $30 worth of premium so we don’t sweat a .50 loss in one week or the other as it’s .50 out of $30 that we’re losing.  The only time we worry is when we think we may get SO out of position that we are not going to be able to sell another Dollar of premium next week.  Meanwhile, as above, when you make .50, you take it as those quarters add up very fast!  

    Speaking of things I really hope I don’t have to spell out:  USO weekly $38s hit over $1 and that’s that in the $25KP (up 42% in an hour).  

  82. etradingsignals

    Oops just noticed Phils note on full cover for FAS. Doing that at 0.75

  83. stjeanluc

    FAS Money – We bought back the 26 Puts (I got 1.18) for a $0.17 loss on that side.
     
    Phil, on the call side, as I was telling Bobhu, I am worried that we might run up later this week and get caught with these 25 Calls! 

  84. stjeanluc

    FAS Money / Phil – That was actually my argument to bobhu… 

  85. bobhu

    stjeanluc, thaks a lot, as Phil wants us to sell $25 call for $0.77 and your explaination, I learn something today. :-)

  86. yodi

    FAS weeklies any one. Does no one think the market will go up and we will still get a better deal on the calls 25 once therse bone heads agree on something

  87. jabobeast

    Goldman analyst Ingrid Chung said in a report she expects 2011 earnings of $5.12 per share, 2012 earnings of $7.69 per share and 2013 earnings of $10.80 per share. She also reiterated the "buy" rating on Netflix
    cnbc_comboQuoteMove(‘popup_nflx_ID0ERIAC15839609′);
    [NFLX 255.24 -26.29 (-9.34%) ]

    cnbc_quoteComponent_init_getData(“nflx”,”WSODQ_COMPONENT_NFLX_ID0ERIAC15839609″,”WSODQ”,”true”,”ID0ERIAC15839609″,”off”,”false”,”inLineQuote”);

    stock and set a six-month price target of $330 a share.
     Barclays cuts Netflix price target to $285 from 315;
    Wedbush raises Netflix Inc price target to $110 from $100
    Jefferies raises Netflix Inc price target to $265 from $240

  88. bobhu

    etradingsignals/FAS money, Thanks, you ARE a good trader.
     

  89. rainman

    From Ritholtz: Is the Market Topping?

  90. stjeanluc

    FAS Money / Etrading – You could indeed trade more often (using TA for example) but we are trying to avoid day trading too much! But we might be leaving some premium on the table… But as Phil says, a quarter, a quarter there and soon you have a nice win! 

  91. barfinger

    "liberal" does not mean communist. It means "statist". Which is why I remain opposed.

  92. dday97

    Phil/lib dems. Agreed on most points. My point was if quoted days old political rants are going to be used to create a stir, than leave the added spin at the end to try to add clout out. To say he is right of center because Clegg once formed a coalition with the Conservatives to build his party up and screw everone else doesn’t make them right minded, just politically savy. A review of their stances shows that. No more politics from me for today, back to trading.

  93. Maya1

    Lflan
    Nice trade call on BIDU puts
    I only sold the puts and got out today with 56% gain.
    Thanks!

  94. kustomz

    Whats up with GE today?

  95. dday97

    USO 39 calls. For those of you that got in at .19 and out at .40, congrats. Those were the hi/lows of the day so far.

  96. dday97

    Nice channel trading in oil Phil. I just missed my price for puts so I’ll just hang out for awhile.

  97. champ87

    dday97
    Nice call!! Got in a bit late and out a bit early, but still +45%. Thanks!

  98. shadowfax

    If 82.75 holds we should return to close open 83.05.

  99. strether

    Phil
    Is there an Aug SPY bull call spread that looks ok  now?
    Thanks
    Strether

  100. mrmocha

    Phil, thanks for the Soros link, I got a belly laugh out of the guy who wants open society and then shuts down his fund as soon as big government starts to look inside his own house…

  101. scottmi

    Oil – nice jam up!

  102. rustle123

    Savi
     
    My email is dbrapp@yahoo.com, I’m in for Vegas, can you just send me any details, deposit, schedule so forth.  Might’ve missed some info on the posts, but it’s OCT 8-10th correct?

  103. Savi

    rustle—yes, Oct 8-10th

  104. stjeanluc

    Oil on its way to 100.50 which is R2… These oil moves today seem to be disproportionate to the dollar moves! Not sure what is behind these crazy turns (besides manipulation). 

  105. tuscadog

    Phil / Oil   Got to short again at $100.33   This would ensure a Ddip.

  106. Phil

    AMZN/Lolo – I like them to disappoint but they are not high enough as they are already down $8 from last week.  If I had to pick a trade it would be 3 Oct $225 calls at $9.80 ($2,940), selling 5 Aug $220 calls for $6.60 ($3,300) and 5 Sept $190 puts for $4 ($2,000) for a net $2,360 credit on the spread.  I think AMZN is good long-term and the extra $2,000 will prevent you from getting burned to the upside as it’s plenty of money to add 2 more calls and roll the callers if they fly up.  

    Thanks StJ

    XLF/Samz – Well anything up may tank if we don’t get a deal.  SSO Sept $52/56 bull call spread at $2.30 is $2 in the money and can be offset with the sale of the something you really want to buy with a $1 or better put sale.  TBT Sept $32 puts are $1.20 and make a nice offset as a failure that tanks the markets is not that likely to have TBT going down too far (or certainly not for long!).  

    Thanks Asaenz!

    Obama/Jabob – Yes he did say it as he wanted to put a stop to the insane path that Bush was putting us on – kind of the whole point of what I was saying in the morning post.  Now that he is President and now that we are digging out of a crisis that forced him to continue the Bush madness for 2 years, he wants to get down to business and close a minimum of $400Bn a year of that gap and he’s willing to accept just $100Bn of taxes to go with $300Bn worth of cuts.  That would be more cuts in government spending than any Republican President EVER passed and far less of a tax increase than either Reagan or Bush I passed.  Who is stopping it from happening as our nation struggles to pay off Bush’s debts?  

    Vegas/Savi – I’m flexible, just thought it would be fun to get a suite with hot tubs and pool tables.  

    FAS/Bob – You can certainly wait them out, that’s more conservative and your choice but, if I see an opening where I think there is a better than 75% chance that we can profit on a turn, then I’m going to call it.  You don’t have to follow but half of the $25KP money was made making aggressive moves like that.   If you are not going to make adjustments, you should probably be playing the monthlies anyway.  

    You are welcom Asaenz – congrats on that one!

    AAPL $408 – good news from HIT on copying their stuff.  

    QLD/Sank – You can ask on the spread and, on an up and down day like today, you should get filled.  Also, you can try to time the entries and exits using my or JRW’s top and bottom calls to guide you if you don’t feel confident yourself.  Once you establish one leg though, you need to have very tight stops on the other.  

    Nice job on USO DDay.  

    QQQ/Savi, Champ – My bad, I had the weekly $60 puts.   Those topped out at .93.  The others at .75 but same thing with 20% as it is with 40% – you take it and run if it even twitches the other way or, when in doubt, sell half as that drops your net to .50 and you can put a stop back at .60 and then ride it out if you can’t bring yourself to take a 20% one-day profit off the table even though making 20% a day is 5,000% a year – not even allowing for compounding!  

    You’re welcome Sank.  I know you are new so forgive me if I make an example occasionally.  It’s not about the person who asks the question – usually it’s just that it’s a good time to make a point to everyone.  

    Good man Eyezz!  

    Going for $100 on oil again!  

    AMZN not waiting to drop….

    FAS/StJ – I’m just playing the range until the range breaks.  You can’t day trade out of fear of a possible announcement coming.  Once we KNOW there is a deal, THEN we can adjust our covers but the current reality is there is no deal and the Dollar is at an extreme low already and XLF has a very strong correlation with the Dollar so NOT making the adjustment is you deciding that "this time it’s different" and, how often does that logic play out?  

     

    GE/Kustomz – Worries about borrowing costs maybe?  

    There is NO volume to this run-up.  We traded over 30M on the Dow in hour one and now, 2 hours later, we’re at 52M – may as well be a holiday today.  

    Oil $100.50 but XOM flat – very strange.  

  107. Burrben

    Phil / Disaster Hedges
     
    My current portfolio is absent of any disaster hedges.  In the 3:55am post, you mentioned that you would be adding a few in the morning post and in chat.
     
    If you would be so kind as to recommend a few, I’d appreciate it.
     
    Thank you, Burr

  108. shadowfax

    Sold TNA no faith on 83.05 after 3 fails. Over 3% and waiting to see a direction.

  109. kevinb63v

     Phil,
    ISRG Jan 13 $270 puts, sold in March for $35.80 (when ISRG was $327) now $13.25 and GOOG Jan 12 $450 puts, sold in May for $16.30 (when GOOG was $534) now $4.10. Good candidates for capturing some more premium by rolling up to roughly the same 16% below current as original, or am I just listening to my inner GLB as you referenced in Rule #3? Both are obviously within your guideline of up 50% with more than 1/2 time left.
     
    BTW, I really like put sellling and, when conditions are again ripe, I hope you can add some. 

  110. Izega

     Phil, I am holding August USO $38 puts from $0.98 (now $0.69). Should I DD or roll?

  111. stjeanluc

    This time it’s different / Phil – Uh, never? 

  112. JRW III

    Good afternoon,

     

    IWM    82.24,  82.51,  82.72,  83.05,  83.39,  83.71,  84.21,  and  84.48

    Missed the TZA play from the open but am long watching the IWM 82.95 – 83.05 level to break or fail (I think breakthrough) This is all a game inho, the threat of default is being used by Jamie, Lloyd and the boys for multiple purposes; bottom line, we will not default, and the dollar is going to 71 !!

  113. yodi

    Phil SDS AUG 20/22 bull call are we still in this play ? thks

  114. Lincoln

     Phil GMCR backspreads
     
    I know you’ve put up a put spread but I’m already in a different put spread and am thinking of selling 5 Aug 95′s calls and buying 4 Dec 105′s sensible?  TIA

  115. kustomz

    The strong stock-market rally of the past year helped Arizona’s largest pension fund generate its biggest investment gain in a quarter-century.
    The Arizona State Retirement System saw its portfolio rise roughly 24 percent over the fiscal year that ended June 30, minus fees, said Paul Matson, director of the $28 billion fund.

    Read more: http://www.azcentral.com/community/phoenix/articles/2011/07/24/20110724arizona-state-retirement-system-reports-gain.html#ixzz1TENUUJ8n

  116. David Ristau

    Hey all,

     

    Just thought I’d let you know:

    The Oxen Group is selling the $55 Aug20 Puts on LULU for some income. Pretty decent premium and company has no earnings coming before expiration.

  117. jcaesar

    StJean / Yodi - Does Kojo usually leg out of the iron condors, like he’s asked us to for the August cycle?

  118. jabobeast

    Credit Suisse, who raised his price target on the stock to $310 from $280
    Atul Bagga of ThinkEquity also raised his target to $310 from $280
    Tony Wible of Janney Capital kept his sell rating and $170 fair value
    Morgan Stanley Internet and software analyst Scott Devitt reiterated his equal-weight rating on Netflix Inc

  119. tuscadog

    JRW / 71!   Wow JRW, how are the European going to compete?  The Euro is 25% over-valued on a trade weighted basis.  But, I guess the manipulators will profit from running up commodities again and scrwing the people, so maybe they can will get there.  I think you may have to wait for Ben to return on a Ddip to get to 71.
    All the news is crap, so it’s hard to find a logical case for stocks rising, other than dollar falling 8:

  120. Pharmboy

    I have been talking about this on the board now for several years….now the WSJ decided to write it up for the masses (excerpt from Fierce below):

    Generics firms and branded drugmakers are playing a sort of prince-and-the-pauper game. Copycat drugmakers are increasingly turning to branded meds as a way to supplement sales. Meanwhile, Big Pharma is doing the opposite: Diversifying into generics as a hedge against their loss of exclusivity on key drugs.

    The poster child on the generics-to-branded side, of course, is Teva Pharmaceutical Industries and its multiple sclerosis drug Copaxone--not to mention its impending acquisition of the branded drugmaker Cephalon ($CEPH). But there’s also India’s Lupin, which has been expanding its branded offerings, particularly in the U.S. And Dr Reddy’s Laboratories, which is plotting a move into branded meds, recognizing that, after the surge of generics growth from blockbuster drugs falling off patent, it will have to find a way to continue expanding.

    In Big Pharma’s corner, Novartis ($NVS) has long relied on its generics unit Sandoz to deliver strong sales. But other companies such as Sanofi ($SNY), GlaxoSmithKline ($GSK), and Pfizer ($PFE) have been beefing up their generics operations as well.

    As the Wall Street Journal Health Blog points out, however, it’s a dangerous endeavor for both sides. Some generics makers could find themselves in the same fix as Big Pharma, selling easy-to-knock-off brands such as contraceptives, in a market where payers are pushing patients to use generics rather than marginally better branded drugs. And branded drugmakers in the generics business may not be able to compete on a cost basis with seasoned--and often ruthless--copycat experts

     

    Someone talked about TEVA the other day.  I like them, but I would not be aggressive on their growth prospects.  CEPH deal and Copaxone going off patent (MNTA is their competitor here for Copaxone and we own them from $13), I would be careful with future earnings.

  121. jcaesar

    Daring David Ristau – Once more unto the breach!  ;-)

  122. shadowfax

    JRW
    You holding TNA? Looking to reload but my indicators are up down, who knows!

  123. yodi

    jcaesar RUT always take your money and run It cost you .05 to .10 cents to get out of the caller why take the risk as market COULD go up this week. If you make 50% on a month out condor I normally take the money do not look for 100%.

  124. rainman

    Anyone using IE9 having problems with refreshing the page not moving to the last read post?

  125. yodi

    / CL is hanging on to it’s gains waiting for the drop to come

  126. rainman

    Of course, as soon as I posted that, IE decided to fix itself. POS.

  127. jabobeast

    NFLX — BTFD??? you gotta be kidding me, right?

  128. jcaesar

    yodi / RUT – Thanks for the clarification.  I’ve been following the Benklifa book.  I guess it’s just a totally different strategy (being a further month or so out).  He doesn’t advocate closing one side if I remember correctly.

  129. Pharmboy

    This is why I like GSK (also in my writeup from last year – it is called a pipeline:

    GlaxoSmithKline ($GSK) was one of the first of the Big Pharma companies to concede that its R&D effort needed to be completely revamped. Over the last couple of years GSK responded by breaking its research ops into smaller teams, vowing to take a biotech approach to development that would allow the company to mount a swift response to changing circumstances in the clinic. And in today’s second quarter report the pharma giant hoped to make the case that it was beginning to profit from its new pipeline strategy, breaking the news that one of its late-stage hopefuls had posted positive late-stage data for a hepatitis C-related ailment.

    In its section on R&D activities GSK highlighted its success on Benlysta, the new lupus drug partnered with Human Genome Sciences ($HGSI). Benlysta finally paid off with a European approval, which followed an FDA OK in the first quarter. The epilepsy drug Potiga (in collaboration with Valeant) was approved in June and new data was released on Relovair. And while there was no new data posted, GSK announced that Promacta (eltrombopag) proved promising in the first of two late-stage studies for hepatitis C-related thrombocytopenia. Promacta was given an accelerated approval in 2008 for chronic ITP. And news of its success in hepatitis C also buoyed San Diego-based Ligand, GSK’s partner on the drug.

    "Promacta is a very important program for Ligand, and the expansion of the franchise into this indication could contribute substantial new revenue to Ligand in the coming years," said Ligand CEO John Higgins.

    GSK has 15 late-stage treatments in its pipeline, and it touted positive results for four out of 5 so far this year.

    "Multiple Phase III data read-outs are anticipated from the other 10 assets by the end of 2012," GSK reports, "together with additional Phase III data on IPX066, Votrient, Relovair and Promacta. Overall, by the end of 2012 we expect more than 30 further Phase III read-outs on 14 of the 15 assets."

  130. rustle123

    The reporter who broke the story on Newscorp hacking just got a book deal about his work.  Besides the reporter from Rolling Stone who had a great article on Goldman Sachs, can’t think of any reporters doing much investigation anymore or exposing anything except the identity of a CIA agent.

  131. Pharmboy

    LMT – must be making good money on the cost over-runs of the joint strike fighter…..they blew away earnings.

  132. yodi

    jcaesar Condor If I recall correct the book as well says you should take profit if you up and over 50% I just closed the Sept condor on our MOMO CMG for a 60% profit no one knows which way they go so always take the money you can always set up an other condor on a better day.

  133. Phil

    SPY/Steth – I don’t have enough faith in the S&P going up to play SPY.  Gotta have a couple of days over 1,333 first.  

    Soros/Mr. M – I think he sees a big opportunity coming and doesn’t want anyone to know his positions.  

    Oil/StJ – It’s early in the contract cycle and coming into inventories.  That’s why we took the SCO spread yesterday.  

    Good call on oil Tusca!  

    Disaster/Burrben – OK, a disaster hedge is generally on the assumption that you have something hedged to the long-side, like buy/writes, that protect you for a 15% loss at least so the Disaster Hedge is for drops greater than 15% that sustain and we usually run them out to the same expiration as the Buy/writes or, at least, through Jan.  Shorter-term hedges are to get over a scary patch in the market but they are much riskier as they tend to lose big when the market goes the other way.  

    With the Nas up so high, I like the SQQQ Sept $25/31 bull call spread at .50.  SQQQ is an ultra so this spread pays off 9:1 if SQQQ goes from $21.33 to $31, up 40% or down about 20% on the Nasdaq.  You can completely offset this by betting AAPL doesn’t fall 10% in 24 days and selling the Aug $350 puts for .45, which turns it into a net .05 spread that gives you $6 of protection.  Of course you could be more aggressive and sell and AAPL Aug $375 put  for $1.80 and that would pay for 4 of the SQQQ spreads.  I’ve also mentioned short calls on RIMM, GS, JPM and WFR recently as bullish offsets and another one I like today is UPS 2013 $50 puts at $2.10 – a very nice net entry on UPS.  

    Longer-term, I love my TZAs.  The Oct $39/51 bull call spread is $1.50 and pays $12 at $51, which is up 50% on FAZ but that’s just a 17% drop on the RUT.  Same offsets would apply on that one.

    EDZ is always a favorite because, if we go down, everyone goes down.  Also a 3x ETF at $17 so +60% is $27 and the Jan $16/23 bull call spread is $1.70 and has the bonus of being $1 in the money.  You can be a smart-ass with this one and short the BIDU Jan $100 puts at $1.75 for a .05 credit on the spread that’s in the money and if BIDU drops 40%, you can be pretty sure you’ll be collecting that $7 from the EDZ spread because something would have to be very rotten in Denmark or Dalian, as the case may be.  

    ISRG/Kevin – The idea of taking profits when up 50% is to WAIT PATIENTLY for a pullback to re-establish hedges – not to roll yourself into more potential danger rather than wait for the almost sure thing of your remaining premium to expire.  If you only sell puts after a 20% pullback, you will greatly increase your chance of success.  

    USO/Izega – Aug is still a  long time (24 days) so a DD drops your net to 84 and it doesn’t take much to get a drop that lets you get 1/2 back out even.  The alternative is spending .40 to roll up to the $39 puts (now $1.10), putting you in for net $1.38 and not too far away from break even but you’d still want to DD if oil breaks over $100.50 or consider a cover and roll.

    SDS/Yodi – It’s still a good hedge.  We don’t jump in and out of spreads unless they make or lose 50%, at which point we take our money and run or we adjust by rolling our calls.  

    GMCR/Lincoln – I like it but I am super-bearish on them.  Long-term, I think they will be another KKD.  

    Arizone/Kustomz – Score one for the good guys but it does seem they might have taken a few risky bets to get there.  

    LULU/David – Good trade with no earnings to drop them.  

    Good note on generics wars Pharm.  LOL on LMT – very concise analysis…  

  134. JRW III

    shadow / TNA

    Yes, I got 1/3 out on that drop but I wasn’t prepared for it and as I gave Jake the day off again today (I didn’t think I would be trading)  I have to do it all and I’m not 100% today !!  Smiley   As I’m writing I’m now all out, disappointing, got away with $1.10 or 1 1/2% !!

    Will probably reload at IWM 82.42ish, fwiw !!

  135. shadowfax

    The 82.61 line still has a say on direction.

  136. stjeanluc

    Condors / JCaesar – I agree with Yodi, the books does mention closing the trade when you get to 50%! I am waiting another 10 days to open October spreads. 

  137. strether

    Phil
    Thanks. Got it.
    Strether

  138. shadowfax

    JRW
    I have bought some on the way down, full in at 82.42 ish sounds good, maybe? Thanks!

  139. shadowfax

    JRW
    Have you noticed the the zig doesn’t have the same meaning lately?

  140. yodi

    Phil on the SCO play I tried to match the month as it was not given and I set up the play for OCT 43/47 only after you told an other member it was Jan 12 I rolled the long part to Jan 12 but the short part is still in OCT does it matter to roll it now , or wait a while thks

  141. stjeanluc

    It’s not going to end well:
    http://ftalphaville.ft.com/blog/2011/07/26/634811/britain-isnt-just-in-very-deep-trouble-its-doomed/
    New term – vortex risk!  

  142. stockbern

    Phil   Matt    our new theme song

  143. Phil

    12:17 PM Just like old times: In the biggest operation post-QE2, theFed buys $3.12B in Treasurys maturing 2018-2021 of $10.58B offered by dealers, using reinvested principal. Bonds are holding gains: the 30-year yield -0.035 to 4.28%; 10-year -0.04 to 2.96%; five-year -0.03 to 1.485%. 

    01:00 PM On the hour: Dow -0.49%. 10-yr +0.24%. Euro +0.84%vs. dollar. Crude +1.09% to $100.28. Gold +0.18% to $1615.10.

    June New Home Sales: -1% to 312K vs. 321K expected, 315K (revised) prior. Months’ supply 6.3 vs. 6.2 prior. Median price $235,000.

    July Consumer Confidence: 59.5 vs. 55.3 expected, 57.6 (revised) in June. Expectations 75.4 vs. 71.6 (revised). Present situation 35.7 vs. 36.6 (revised). "Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated," the Conference Board says. 

    July Richmond Fed Mfg. Survey: -4, to -1 (above 0 = growth). Shipments flat at -1, new orders -5 to -5, jobs -10 to 4.

    Yentervention!  Japan officialdom begins to weigh in on the yen’s strength (continuing near all-time highs vs. the dollar), as pressure mounts to act. Hiromasa Yonekura, chief of Japan’s largest business lobby, calls for the government to "take appropriate steps in a timely fashion," and newspaper editorial pages are calling for intervention.FXY +0.4%.

    Facing the threat of a downgrade from AAA status one year ago, the U.K. chose to take steps to retain that rating. The cost – at least in the short term – is sluggish growth. The U.S. is also about to face austerity – either enforced by the government or a bond-market crisis. 

    If you’ve lost Larry Kudlow, you’ve lost conservatives in America, as the CNBC economist grills Rep. Eric Cantor hard on why the GOP couldn’t support Sen. Harry Reid’s plan, which Kudlow says is based on Republican ideas, doesn’t include new taxes, and requires one debt ceiling raise instead of two.

    The ISDA declares the U.S. would have 3 days to make up for missed debt payments before triggering CDS on its bonds. Given this group recently announced it sees nothing in the Greek restructure/default that would trigger CDS on its paper, the decision sounds at least a bit political.

    Finra issued an alert yesterday warning investors about the danger of chasing yield into structured products that promise higher returns than more traditional investments. Brokers are jamming these products down people’s throats, Josh Brown says, fearing that investors are "marching themselves into a black hole in the name of yield."

    weak auction for Spanish Treasury bills sent Spain’s short-term cost of borrowing to 3-year highs, while an Italian auction for 6-month notes produced the highest yields since 11/08, when the financial crisis was raging. In addition, Deutsche Bank (DB) stated in its Q2 results that it’s cutting its exposure to "peripheral eurozone countries." - WTF are people buying for? 

    The high-speed rail crash may serve as the moment when the shortcomings of state-driven investment in China were laid bare. The Ministry of Railways took on a debt equivalent to 4.6% of GDP to build the network – money likely never to be recouped. For 2010, fixed investment in China totaled 46% of GDP – it’s hard to spend even a fraction of that prudently.

    The Jefferson County Commission in Alabama hires big-time bankruptcy attorney Kenneth Klee to assist as it mulls what would be the largest municipal bankruptcy in U.S. history. A meeting is scheduled for Thursday at which a decision could be reached. 

    The U.S. Postal Service, running out of money and fast-approaching its own $15B borrowing limit, may close more than 10% of its post offices.

    Receiving little attention as a hedge against a possible U.S. default are high-yielding blue chip stocks, Mark Hulbert writes – odd, since such companies should provide a hedge in the event of a default, and excellent upside potential if default is averted. "Take Wal-Mart (WMT), for instance: Do you really think people will stop shopping in the event of a government default?"

    R&D is an excellent predictor of earnings growth, and stocks with low price-to-R&D ratios generally outperform. Smart Money‘s Jack Hough likes three companies which spend at least 10% of sales in R&D, have boosted R&D spending by at least 10% in the past year, and have price/R&D ratios below 30: KLA Tencor (KLAC), Abbott Labs (ABT), Analog Devices (ADI). 

    Three lunchtime reads:
    1) Hearing a lot of bad economic news? Ignore it
    2) Apple needs to loosen its purse strings; here’s what it can buy
    3) Frenemies: Rivals hold Greece’s debt-laden fate in balance

  144. dday97

    DT. Grabbed USO Jul38p for .12 & .13. Could be a quick trade with lots of contracts. Thats the only way to make small moves work.

  145. JRW III

    Thanks STJ

    Well said………………from FT

    What really happened in 2008… was less a matter of intervention per se but of government stepping in to sustain the aggregate level of borrowing once mortgage and credit expansion collapsed. The expedient of replacing private with public borrowing was always time-limited and has now reached end-point, but there has been no recovery at all in private borrowing.

  146. ssdirk

    JR - I would be surprised if  IWM didn’t test 82.05 at some point today.  Of course that would be on a normal day.  Not this headline-grabbing, knee-jerk reaction casino.

  147. shadowfax

    The BOTS are selling and clearing stops!

  148. shadowfax

    Money flow appears to be reverseing.

  149. shadowfax

    ssdirk
    I also expext that 83.05 ish and have some money on it now! There is no reason to go down more today baring world chaos.

  150. ssdirk

    Shadow – no, I said 82.05.  Although we are closer to your 83.05.

  151. JRW III

    ss / 82.05

    I don’t know about today, but 81.76 – 82.07 is srong support; I would be ready to go long there !!

  152. kurtww

     Savi – count me in on the Vegas trip. My email is kurtww@gmail.com. Let me know about hotels, deposit, etc. I’ll be there for all of Sunday and Monday. Not sure when I’ll fly in and out yet, but I’ll definitely be there for the trading both days. 

  153. shadowfax

    ss
    Sorry if you said 82 I assumed 83 I really believe we will go up towards EOD.

  154. JRW III

    Well 82.46 is close, 1/3 TNA !!  (dollar making new low)

  155. Savi

    kurtww-great

  156. pahurik

    Savi, I am in Vegas all days too. My email is hendrek@tt.ee

  157. rainman

    Mr. 2pm Stick makes an appearance right on time.

  158. kurtww

     Phil and/or Stjeanluc – the FAS Money play has worked out very well for me so far, thanks for doing it. What is a reasonable percentage of your portfolio to devote to it? 10%? And how do you calculate that? The cost of the original spread, which was around $400 per contract? Or devote some extra reserve money to buying back if needed? 

  159. Troy

    ssdirk - 82.05-82.15 has, as JRW would say…heavy confluence!  Check out this lunar SPX chart…lines up exactly with my mid August auction glut fear play thesis…do do do doooo…HAHA!  Perhaps they can sacrifice the markets to keep the moon Gods happy…=)  Yeah, I’m bored…

  160. shadowfax

    JRW
    I’m in 2/3!

  161. Savi

    pahurik--thx

  162. Troy

    lunar SPY chart

  163. shadowfax

    Maybe a buy program will bring it all together? I sure hope so. My Biorythms have been dead on today.

  164. JRW III

    2/3 TNA on order flow going green !!

    "They" must be programing the bots; taking longer than usual, must be a really big push coming !!

  165. stjeanluc

    FAS Money / Kurtww – Just playing with 10 contracts ($4800 for the strangle) and another $8 to $10K of margin for the short options (depending if you have PM or not). So about $15K tied up. I would certainly not put more than 10% on that play! This started as Phil was talking about something generating what we get from the iron condors on the smaller portfolio (around $1500/month) with 15K in the condor. 10 contracts should work, but it’s not a laid back trade.

  166. Phil

    Wow, 73.65 now on the Dollar – I guess there is no bottom.  Yen down to 88.85 (stronger), Euro $1.452, Pound $1.64.  Dollar now down 5% since the 15th.   What’s scary is that the market isn’t moving MORE on this kind of Dollar weakness.  

    SCO/Yodi – It’s fine as a Jan/Oct spread but my comment yesterday was pretty clear when I said:

    Oil/David – I like the SCO Set $43/47 bull call spread at $2.05, selling the XOM Jan $75 puts for $2 for a free crack at a $4 spread with 7,900% upside if SCO is back at $47 which is around oil $92.50 and, of course, if oil doesn’t get below $92.50, those XOM short puts will be looking good.

    Oil/Matt – The above SCO play or you can widen it to (and I think we already did this one) the Jan $43/48 bull call spread at $3, selling the XOM 2013 $65 puts for $3.25 for a .25 credit on the $5 spread and your worst case is you own XOM at net $59.75 (29% off), which is about as low as they’ve been in 3 years (and not for long last summer). 

    UK/StJ – No worse off than we are really – but that’s pretty damned bad!  

    FAS Money/Kurt – No more than 10% as it’s a very speculative play.  It needs to be an amount where losing $300 per contract in a week won’t phase you.  Not so much the cost of the long spread but in what you may have to shell out (from cash) to a caller or putter if something major happens and we get caught.

    Moon/Troy – That’s worth watching!  

  167. scottmi

    DLX/Phil – earnings coming up on the 28th. offer 4% dividend.. considering a buy write, looking at either the Jan 22.5 put/call or the Jan 25.  Thoughts on Deluxe and is there a play to make before earnings, or wait untl after?

  168. cwan120

    It’s almost 2:30pm now.  Dow volume is about 73.66M.  Isn’t that figure super low?  How does it compare to the volume yesterday?

  169. Pharmboy

    Interesting chart… AUD is indicating the Dow moves (much like that of the EUR….)

  170. shadowfax

    cwan120
    That is on vacation! Yesterday?

  171. jjennings

    Phil – I’m short the /QM futures at 100.50.  I never know when to get out of a futures trade.  Seems whenever I set a stop it gets triggered and then takes off the other way……or gets taken out overnight in thin trading.  Any insight on how to play this would be much appreciated.

  172. JRW III

    Russell not moving with SPX, looking weak "they" need a Buy Program here !!

  173. Savi

    dday97—are out of your uso DT?
    thx

  174. shadowfax

    JRW
    Dollar down, wiess green, 8EMA? SMA looking good, and as you said give us a buy program!

  175. jabobeast

    wtf?? NFLX recovering when a new competitor is announced and they have weak guidance. This POS company was at 245 a month ago!!
    FU NFLX!!!

  176. shadowfax

    Full on TNA, plan is start out at 83.95! Maybe less but lower makes no sense to me now.

  177. strether

    Phil
    If the debt ceiling is raised, won’t the market surge to make up for the degree to which the dollar has dropped since July 15 but the market has not correspondingly popped?
    Strether

  178. lol730

    Pharm
    What do you think about ARIA at current price level?

  179. Phil

    Interesting Herb Greenberg on CNBC making sure to mention that Sam Antar is a convicted felon to knock down his credibility in attacking GMCR but doesn’t mention that GMCR is being sued by it’s shareholders for accounting fraud so it’s not exactly one or two crazy guys with an agenda…

    Volume/Cwan – A normal day (whatever normal is) has 50M at 11 and 20M each hour through 3pm (130M) and then about 40M in the last hour.  75M at 2:30 is, as I said earlier, about what you expect on the Friday after Thanksgiving.  

    Futures/JJ – Yes, you just take .50 and run, or, in this case, .75 by setting a mental stop at $99.75.  When we cross below $99.40, you can drop the stop to $99.50 and so on.  You don’t go to sleep with open futures contacts (or even into the close of futures trading) unless a $3 move in either direction would be something you are able to joke about on the weekend.  Oil has gapped $5 on many occasions and, at $10 per penny per contract, that’s $5,000 per you are risking any time you take your eyes off it.  Especially with oil inventories coming tomorrow, you are very fortunate to have a nice gain into the NYMEX close although it is very possible that the move to $100.50 was an attempt to spike out the shorts ahead of the first inventory report that will reflect the release of the SPR.  

    NFLX/Jabob – Is there no point at which you take your money and run on these stocks?   

    Lower/Shadow – I don’t see the Dollar getting back to 73.50 so it’s hard to get enthusiastic about a move up from here without some sort of major announcement.  .  

  180. shadowfax

    Hope this is the flush!

  181. jcaesar

    jabo / NFLX – that earnings issue was so last night.  The market seems to be over it now.

  182. tuscadog

    Phil / Oil inventories   Do you think they’ll push up oil overnight into the 10am inventories?  So, better to cash in oil shorts before the close today?  (You’ve turned oil into an ATM Phil!)

  183. lol730

    JRW
    "order flow going green"
    What is "order flow"?

  184. z401

    Phil & anyone
    question for after hours. TOS has a dealing desk associated with their forex trading.  should this be a red flag when looking for a forex broker? your thoughts please, and as always thank you for your time.

  185. jjennings

    Thanks for the advice….and I second tuscadog’s comment. 

  186. shadowfax

    Stickers
    Everything is looking at a stick and the republicants need to boost the EOD numbers, makes no real sense but that is my take. Hope you see my view Phil. Hell hope I’m right!

  187. angelcur

    phil jabob is our ce lo green

  188. JRW III

    lol730

    Here !!

  189. rustle123

    Phil/SCO
     
    SCO would be around 47 with oil a little over 95, not 92.50.  Just confirmed it on the charts.  So your play is even better than you thought.

  190. flipspiceland

    @Pharmboy
    Good catch on the AUD/DJI.
    Any chance of magnifying the chart to see by how many days the AUD moves up or down before the DJI?

  191. rpme

    Phil, FWIW regarding volume, Insider Monkey reports that Hedge Funds are at the highest cash levels since 2008.

  192. JRW III

    $ Bashing works for our allies as well !!

    Without the respite affronted by the falling greenback, the euro area would be in a still more parlous state. It’s an intriguing throwback to a comparable period eight years ago when pressure on the dollar helped shore up Europe’s single currency fortunes. An apt reminder that the euro’s tribulations, whatever Europeans’ attempts to bolster self-sufficiency, are still inexorably linked to the waxing and waning of the U.S. currency.

    From Market Watch

  193. Pharmboy

    ARIA – luv ‘em lots.  I think they blow up through the 13.50 range in the coming weeks.  Selling the Aug and Sept $12 Ps (trying to anyway).

     

    Flips – sorry, not my chart, but here is one you can look at.  Just make your browser bigger to scale in.

  194. ssdirk

    Shadow – they can’t retake the open price so I expect down….still.  If they can’t retake the open by this time of day it is rarely retaken

  195. Troy

    Alert – White House to veto Boehner bills…

  196. Troy

    What timing…we were close to a breakout of the channel!

  197. David Ristau

    Yeah awful timing by the White House…

  198. pstas

    Pharm- DEPO- any news you know of to account for todays move?

  199. livingfull

    What have you boys done?  This is exactly why your mother and I can’t relax when we’re away.  We can’t even take a well deserved three week break without you boys bringing the world to the brink.  I would not want to be you when your father gets home. 
    Well the most hopeful news is Kudlow grilling Cantor.  Patrick Daniel Moynihan is smiling down on his former senate run campaign staffer.  If the bullies lose Kudlow and other Reagan fiscal moderates hope isn’t DOA.  But as we say unfprtunately Hope is not a plan.

  200. shadowfax

    Troy
    Breakout yes but why?
    ssdirk
    Veto threat leaves a need to have respect close. I will be a winner even if we close down 250!

  201. shadowfax

    Dollar LOD!

  202. JRW III

    Well that was embarrasing; out of TNA for a 3 cent loss !!  ( 1/3 81.46, 1/3 80.92 )

  203. kustomz

    JBLU getting clobbered.

    Just compared XRT to DJT DOW NAZ S&P..XRT really needs to come back in line..if we get a substantial slow down its going to be a huge winner..

  204. matt1966

    I don’t know how they can justify it but… I predict a doji for TNA’s close today unless 80.78 is taken out.

  205. topher7

    amzn /iflan..    You have an earnings play?

  206. kurtww

     JRW – for once I got out with decent timing, I made .20 on that one. Thanks!

  207. shadowfax

    JRW I am loosing previous gains!
    Down about .40 on this latest S______!!!!! Holding out !

  208. Pharmboy

    DEPO – no se.  Xenoport is only down 4c, so someone must be hedging.  I would say the move is overdone.

  209. topher7

    Phil / Short swiss franc and/or yen????..    puts in FXF or FXY make sense??

  210. zeroxzero

     Phil: " It simply can’t happen."  The Tea Party appears to have an iron grip on the imaginations of GOP legislators. They’ve scattered like pigeons.  "Leave it to the states."  None of them have the stones to break from the crowd — safety in numbers.  As I wrote earlier, what if?

  211. shadowfax

    $30 from bailing to maintain $1,000 today which is OK!

  212. Phil

     Oil/Tusca – Yes, absolutely out of shorts at $99.50 (other than longer-term ones).  Not worth the risk.  

    Dealing desk/Z4 – I do not play Forex so couldn’t tell you.

    Although, speaking of Forex – how about UUP Dec $21 calls at .53, 20 in the $25KP.  

    SCO/Rustle – Always estimate conservatively (and allow for decay on ultra-ETFs). 

    Cash/Rpme – I know I am too!  

    Veto/Troy, David – That’s not news, Obama said no way before they started.  It was a total waste of time.

    Moderates/Living – Unfortunately, moderates are few and far between these days.  

    Franc/Topher – I don’t play that stuff but I like the UUP play. 

    What if/ZZ – If we default it will either be a non-event or it will quickly cascade the World into hell in a way that will make the LEH bankruptcy look like a picnic.  We can’t default.  There’s no one to save us.  Random banks will shut down, countries will fail, global commerce will cease – it’s ridiculous.  It’s like saying that if China crosses into Taiwan we will unleash our nukes and force them back to the mainland.  Sounds nice but, in practice, it would be insane.  

    Dollar is masking a market exodus by the big boys.  

  213. stjeanluc

    No need for a veto from the White House

    One of the most influential conservatives in Congress says he’s confident his own Speaker John Boehner (R-OH) will lack the votes to pass his plan to raise the debt limit in the House of Representatives. 

    They can’t even pass it in the house…

  214. lflantheman

    Against the grain/NFLX………Bought Sept BCS  260/270 for 5.10   Pays 10 at exp. if NFLX > 270.

  215. zeroxzero

     If they can stick this close, they can stick any close.

  216. shadowfax

    ZXZ
    The volume is below I’m on vacation!

  217. Troy

    Right now would be a good time for "them" to move us up…

  218. etradingsignals

    Phil:  Two 25KP questions
    1) Whats the exit target u have in mind for the weekly IWM bull call spread we initiated?
    2) Any adjustments to the CMG trade in 25kp?

  219. shadowfax

    I confess, wish I sold at 14:20.

  220. rainman

    Yikes! 3:30 clubbing.

  221. Pharmboy

    Way too orderly a descent…..

  222. matt1966

    Going net long here on TNA stop below 80.74

  223. JRW III

    Last 1/2 hour Stick ?? Looks like a Sig Rune………. or a Bull Trap !!

    2/3 TZA !!

  224. lvmoda

    Being the contrarian that I am, I’m expecting no agreement on the spending/tax/debt deal by the deadline.  An emergency resolution to provide a small debt ceiling lift will be approved avoiding a default event but no tax increase nor spending cuts.  And, most certainly the credit rating will be downgraded from AAA.  The only question to me is whether the ceiling increase will get the country through 2012 or not.   Seems just like another incremental step in the destruction of this country;  I think people are in disbelief that is happening so fast right before their eyes!

  225. Troy

    Pharm - The same Program(s) has had control of the decent since 12:30…last channel formed at 2:20.  The chart is perfection today…but they do keep testing the upper limits so watch for a mini-stick!

  226. JRW III

    Only 1/3 so far; I should really not be trading !! Will bail on a break North of IWM 82.55 !!

  227. Pharmboy

    Story here.  Shadow inventory continues is ascent….

  228. matt1966

    I would love to laugh in their faces right now, they missed me by a penny, but we’re running out of time for that doji..

  229. zeroxzero

     Buying GE down 2.35%

  230. lflantheman

    AMZN/……….Expect  good stock price movement with earnings (one way or the other) Bought long strangle July 29 220/200 for 7.60.    Just a couple, just for fun.  

  231. matt1966

    And out.  Net short now.

  232. shadowfax

    matt
    They are trying to take  all my day profits and I have  a plan, hold overnight!

  233. JRW III

    Well, at least that worked out well !!    Image

  234. Troy

    Bottom of channel…looking nasty…cliff or stick?

  235. stjeanluc

    FAS Money / Phil – I have to say that I keep on getting impressed by your instincts so far… These 25 calls are looking good now (0.75 now 0.50).  

  236. malsg

     JRW … if you were 100% right all of the time we would have to change your initials to JPM 

  237. dday97

    Yes. Out of USO 38p at .17. Up 4.5 cents or close to 40%.

  238. shadowfax

    OK, lets see that DOW 12,470!

  239. Troy

    JRW – they going to park it at S1 1330?

  240. shadowfax

    Troy
    Higher!

  241. asaenz

    Dow and S&P right at our levels…

  242. Phil

    $25KP/Etrad – That’s my homework  assignment for tonight.  I have to see how we’re balanced to decide.  CMG is still being silly – I’m hoping it will stop.  

    CDS/StJ – Like I said yesterday – who’s going to buy a 7-year note on Thursday when we might default on Tuesday?  

    Disbelief/Lv – AFTER BSC died on March 16th and CFC and IndyMac died in July and FRE and FNM went down on Sept 7th, and MER died on the 14th – we could not believe LEH would fold even on the night it folded (Sept 15th).  The next day, AIG went down and on the 18th they floated TARP (and the Reps killed it at the last minute and sent us off a cliff – also unbelievable).  

    WM went down on the 25th, Wachovia on the 29th and finally, on Oct 1st, they approved TARP but, by then the crisis was in Europe and the Dow lost 22% the week of October 6-10 even though on the 6th, the Fed lent $900Bn to banks and on the 7th it made another $1.3Tn in loans to all sorts of other companies so, with TARP, the Government threw $2.9Tn at the economy in the first week of October and we still fell 22%.  

    Once you allow a crisis of confidence to begin – you don’t get to just throw a switch and shut it off.  You would think the idiots in Congress would have learned that lesson by now but, then again – the only lesson they seemed to have learned is how to get $2.9Tn handed to them in a week and it looks like they are back for more by engineering the next pointless crisis.  

    FAS/StJ – Just gotta find a channel and trade it until it breaks.  

  243. Troy

    Out of TZA…you guys can have the last 10 minutes, I’m hiding under JRW’s chair!

  244. nicha

    malsg/JRW – so true!

  245. Jbur

    ZXZ/GE: When you mentioned buying GE it brought back fond memories. I bought 10K shares between 9/11-11/11 and scaled in. My average CB was 21.76/share. On 3/2/09 the stock hit a lower of $5.38/share. And this was before I knew a thing about hedging a position. I’ve come a long way in my education. And THANKS PHIL.

  246. shadowfax

    Buy signal in a sea of red.

  247. JRW III

    And out with 24 cents !!  I’m done; 2+% on the day.

  248. rustle123

    The QQQ’s just don’t want to join the party.

  249. zeroxzero

     Jbur:  "It can’t go any lower" is truly a kiss-of-death refrain, thanks!

  250. stjeanluc

    FAS Money / Phil – I would be inclined to grab that $0.25 now and buy back the calls! Tomorrow is another day!  

  251. shadowfax

    The end????????

  252. flipspiceland

    Haven’t paid much attention to the Debt Ceiling/budget shenanigans going on, but one thing I can’t avoid noticing is how all the usual suspects in media, political parties, and blogsters have managed to keep y’all riveted to this yet another fiasco. 
    If I were inclined to do so, and Google it, I’d likely find a trillion listings posted in the last  two weeks alone.
    It’s as if the Middle East has been resolved, Cancer is cured, Mortgages are all at par, and LiLlo has completed the full course of treatment in rehab and is ready to resume her career with relish.
    Before Felipe jumps all over me about how important this is to investors, and has been especially critical of the idiots (primarily in the republican end of the spectrum) that have adopted robust, thrusting names like, "Gang of Six"….. I mean, really???….who thinks that a default would not already be priced in, with prejudice?
    Come on…..this is just more Theater from Absurdistan.

  253. JRW III

    malsg

    Clearly I did not get JPM’s playbook for today………….. Smiley
     

  254. asaenz

    mini stick, just enough to hold our levels…this is setting up nicely for the rally when "super" obama finally gets the debt deal done….

  255. matt1966

    Well that close cost them plenty!  Someone was duuuummping right into the stick.

  256. Jbur

    SS: IWM  did almost get back to 82.05!

  257. zeroxzero

     Scalped a dime on GE, paid for my ticket to "Absurdistan — the Movie."

  258. Troy

    matt/close cost - um, you meant cost "them taxpayers" plenty, right…=)  Pomo lite day…

  259. Pharmboy

    OK folks, I will be spotty the rest of the week, so have fun and C U on the other side….

  260. Phil

     FAS/StJ – I have no reason to be bullish into the open and we have a solid plan to sell put premium to cover so better to let the XLF prove it isn’t going to pin $15. 

    Priced in/Flips – A US default is not priced in.  A Greek default isn’t even priced in.  You remember that chart of all those interconnected loans – put the US on that chart and we dwarf all the other pipes.  We borrowed 1/4 of the planet’s GDP – you can’t price that in other than to drop the global markets by 25% – at least.  I don’t believe we will DEFAULT but, even a hint of US default would be devastating – it’s not priced in the same way the Moon crashing into Europe isn’t priced in – no one believes it would happen and, if it does – we’re all screwed anyway so what’s the difference trying to play it?  

    Wheeee – that was fun!  Time for more earnings…

    Oopsie on AMZN – not so hot.  

    Have fun Pharm!  

  261. shadowfax

    LOD/ no. Other indicators/ no. The House? NJot a chance. The senate, no way, Jose! Ending down? Open up ! MAYBE!. Onen down? most likely! Place your bets!

  262. Phil

     Wow, now AMZN revised from .31 to .41 – that’s quite different and a nice beat.  Can’t believe they gave the wrong number and tanked the stock at first…

  263. Pharmboy

    AMZN makes 41c, at 224/share.  6 mo ago, it was 91c at 168/share.  Makes sense.

  264. lvmoda

    Flip – If a default were priced in already, would the ten yr bonds be going for sub 3%, and actually dropping today, along with a successful 2yr note auction today?   I think Phil’s point is well taken:  disbelief has been suspended and unfortunately we headed for another rude awakening of how STUPID our elected representitives really are!   Remember, most of the market is now Wall St insiders, not retail investors – so the conspiracy between Wall St and government must be recognized when considering whether default is "priced in".   It is in no ones interest to be ahead of the game, however there are very itchy fingers on the trigger!

  265. nicha

    Pharm/ARIA – how much are you looking to sell the P’s for? Thanks.

  266. stjeanluc

    Put away the veto pen… the GOP plan not gonna happen:
    http://www.washingtontimes.com/news/2011/jul/26/house-gop-revolts-against-boehner-debt-plan/
    And according to a CBPP analysis:

    The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.

    Complete analysis there - http://www.cbpp.org/cms/index.cfm?fa=view&id=3548
    This guy is usually not given to hyperboles. I think that these guys in Washington are now so detached from reality that they can’t make a rational decision. Even when Wall Street guys (not really bleeding heart liberals) tell them that a deal needs to be made, some insists that a default would actually do some good… States and municipalities will be paying more interest as their bonds will get lower ratings! The GOP governor of Virginia was talking about that the other day! It’s just insane…

  267. flipspiceland

    @Felipe
    I should have stated it the other way:  The fact that a Default  IS NOT priced in means that there will be no default. George Soros has likely marshalled all his forces KNOWING in advance that there is not going to be a default and will succeed once again with his his inside knowledge. As will all the other insiders that jockeyed their maneuvers accordingly.
    We who are not privy to this can worry, discuss, debate, fulminate, criticize, point fingers at who is responsible for what, as apparently has been going on for months, getting ever more clamorous.  It reminds me of K2 when all the bloggers and supposed experts were running around like chicken little.  And that’s exactly how CONgress and the White House ALWAYS play these faux crises, then magically they come in and rescue the fair lady from the railroad track and pat themselves on the back for AVOIDING DEFAULT!.  yay.

  268. jcaesar

    StJ – I find the House GOP revolting as well.

  269. stjeanluc

    And even Douthat is losing patience:
    http://douthat.blogs.nytimes.com/2011/07/26/getting-to-a-deal/ 

  270. JRW III

    Political promises are like most others; we have hope when we vote, but then…………………

    Keep in mind the difference between Promises and Reality……

    0726-promises

  271. Troy

    JRW III
    July 26th, 2011 at 3:57 pm | PermalinkIgnore this user
    malsg
    Clearly I did not get JPM’s playbook for today…………..
    ————-
    Yeah, one more day like today JRW and I’m placing you on ignore….as you’re clearly screwing up my ability to lose money!  Now if we could just get you to move to the East coast so you would get on the forums before noon…=)
     

  272. pstas

    AMZN- well, they made it. $225 is now 100X trailing 12 mos earnings. Quite impressive.

  273. Troy

    JRW pic – oh man, that taco hell taco sure looks good!  I’ve got an real urge for some ground up cardboard in a a genetically mutated corn-like shell…mmmmmmmm!

  274. kirb_ck

    Pharm - NSPH do you still like it?

  275. deano

     JNPR getting spanked after hours on a miss. Looks like they’re not taking too much of CSCO’s market share, at least not yet. I think someone awoke the giant and he’s angry.

  276. Pharmboy

    ARIA – nothing filled, as started trying on the dip.  I would do the Sept 12 Ps for 70c or better.  Jefferies has them pegged at 16, other are higher.  Not sure, but I would say they are going to continue to head up.  Just scale in.  Right now the 13/12 Jan12 C/P combo is >$4.  That is a good place to start for a new entry.

    NSPH/kirk – yes, they are a long term play.  So scaling on 20% pullbacks.  We are about even for the initial entry.

     

     

    Later all.

  277. ilene

    Today’s levels.

  278. angelcur

    both sides are just so stupid..most of those guys couldnt get jobs in middle management anywhere..the crime is we all are to blame lefties righties….we elected them..i was looking for any reason not to vote for the featheweight in charge..but i am probably going to as the alternatives are horrific…its a sad time…dollar assets did fine today….how did everyone like the ratings agencies getting the shapiro today?…they should have been shitcanned in 08 simpering toadies that they are..but i think when righties and lefties are this angry its a good sign for america..because we have a common point of disgust..our elected officials….really pathetic….

  279. dday97

    Good job with oil today. Up about 138% on USO alone. Tonight should be fun with /CL. I’m off to listen to Hannity. Need to equal out the left views here with the right views there. I should end up somewhere in the middle.

  280. qcmike

    JRW III
    Looks like a scene from Michael Doulas movie
    Falling Down
    I WANT BREAKFAST

  281. topher7

    Pharm/BSDM …  a name with you?.. sorry, i didn’t check the archives…

  282. deano

     ilene
    Looks like a couple of colors (Dow & S&P) should have turned red - 

  283. CaFords

    AMZN vs. AAPL – It’s official, if AAPL was only smart enough to report operating margins of 2% then I see a 100 p/e in AAPL’s future with a price target of $2500. Just surreal.

  284. strether

     Yes, the level chart colors are incorrect.

  285. Phil

    Boehner/StJ – This is like trying to deal with a psychopath at this point:

    In short, the Boehner plan would essentially force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor — or letting the nation default early next year. The plan would do so even as tax breaks, including the many lucrative tax breaks that go to the wealthiest and most powerful individuals and corporations, are protected by Boehner’s pledge that, in the highly unlikely event that the special committee proposes tax increases, House Republicans would vote down its budget package.

    Avoiding default/Flips – I think this is all playing out just fine.  The last Government shut-down was caused by power-mad Republicans who thought they had a mandate and they were smacked right back out of office on the next election.  Looks like a nice replay to me.  I don’t think Americans have gotten THAT much stupider in the last 20 years that they won’t make the same decision after witnessing this irrational behavior from the GOP who are still, by the way, fielding the most pathetic group of challengers for the Presidency since the Dems ran Mondale/Ferraro against Reagan in ’84.  

    LOL JC! 

    Or you could learn to sleep late Troy….

    Burgers/JRW – That’s funny, I had to look to see if that was just one add but it’s not, they routinely make their burgers look like Fudruckers or something and the actual product looks essentially no different from the rest of the crap they serve:

    This kind of stuff used to be illegal in America but pretty much nothing Corporate America does to consumers is illegal anymore and the Supreme Court has busted class action to make sure there’s no avenue for the injured parties to pursue.  Actually, the whole concept of "Angus" beef is just marketing BS as Angus beef has been the dominant beef in the US for over 100 years to the point at which they had to do some radical genetic cross-breeding about 5 years ago because all the inbreeding was causing genetic disorders.  Not only that, but a cow only has to be 51% Angus to be "certified" – just a freakin’ joke of a way to overcharge people for the same thing that used to be half the price before they repackaged it…

    Uh-oh – Big chart showing those nasty M patterns forming again.   Dow, S&P and Nas right on those 2.5% lines with the bigger (and harder to manipulate) NYSE and RUT already flashing major danger signs.   Check out the RUT right on that 1.25% line on the button – scary when the 5% rule works out so exactly…

    Pathetic/Angel – Yes it is and we’re clearly going to be in the "lesser of two evils" mode on the next election.  The kind of stuff Boehner and company are pushing for is nothing short of the final destruction of the middle class and the American way of life.  4 years with those guys in charge will push us so far off a cliff that it won’t really matter who you elect after that.  I’m furious at Obama and the Dems, who blew their 2 years of majority rule trying to "compromise" with these assholes – hopefully they’ve learned a lesson and will circle the wagons and ram legislation through that won’t be so easy to undo 4 years later – kind of the way Bush did with the mess we’re still trying to clean up.  What’s really scary is that I can see myself giving up if the Reps win.  

    There’s going to be no point in fighting it if they get another turn at bat – it will be so easy to put this country on a path to $25Tn in debt by 2020 by simply extending the Bush Tax Cuts again and our GDP will likely shrink (if we avoid hyperinflation) as the middle class collapses and then there will just be us and them in this country and, no matter how hard you try, once the bottom 80% have less than 10% of the wealth and income – it’s no longer possible for even 1/2 of the top 10% to have much impact on their situation.  That’s the plan of course – make the conditions of poverty so intransient that there is no longer any resistance to the dominance of the wealthy – even from within.  That’s how slave societies develop – over time you create just 2 classes, "us" or "them" and, eventually, there is no one in the "us" category that has any interest in changing the status quo.  

    Over time you can imagine that they will try to deny the poor an equal education so they pose no threat to the wealthy masters and they will make it so the poor are easily identified by having the wealthy favor fashions that are unaffordable to the lower classes and they will tax them out of their neighborhoods and out of the "good" schools and, of course, once a prole has outlived their working life – there’s certainly no point in trying to keep them alive, is there?  Thank goodness a society like that is at least another election away…  

    Hannity/Dday – Yep, that will "cure" you.

    Speaking of taking things away from the poor.  Cutting back the post office is going to mean that poor people can’t communicate with each other on the same level as rich people.  Very useful for lawsuits and foreclosures as losing a day can often deny you your rights and poor people are busy trying to earn a living Mon to Friday so lack of Saturday hours is a big problem for them and, of course, poor people can’t afford to have their lawyers handle things for them….  If just 1% of the 8M people in foreclosure lose their homes because they fail to make a filing on time, that represents about $16Bn worth of bonus victories for the banks!  

    AMZN/CaFords – Experience indicates that AMZN makes a great short after an earnings pop.  

  286. strether

     Phil
    The dollar has declined 5% but the S&P has not bounced correspondingly—it should be at 1368, not 1331.94 if the correlation holds. Do you think that if the dollar declines toward 71, the S&P will snap upward toward 138 or higher to catch-up?
    If so, the short term bounce could be significant.
    Strether

  287. Phil

    At the close: Dow -0.72% to 12503. S&P -0.4% to 1332. Nasdaq -0.1% to 2840.
    Treasurys: 30-year +0.5%. 10-yr +0.29%. 5-yr +0.18%.
    Commodities: Crude +0.25% to $99.45. Gold +0.18% to $1619.70.
    Currencies: Euro +0.95% vs. dollar. Yen +0.45%. Pound +0.82%.

    Market recap: Stocks slid in light trading as investors continued to worry over the ongoing debt talks. 3M’s earnings reportweighed on the Dow and may foreshadow further economic sluggishness. The dollar sank, helping send oil prices higher; gold notched another record high. Treasurys were bolstered by a strong auction. NYSE decliners led advancers two to one.

    The dollar is making new lows, easily taking out the 78 level vs. the yenAt the same time, Treasuries and commodities are rocking, while stocks remain at multi-year highs. One could be forgiven for thinking it’s QE3, not a possible U.S. debt default/downgrade that is dominating the news.

    scary thought from MKM Partners: "The current debt ceiling impasse has the same feel to it that the TARP vote did back in 2008. Back then, TARP failed to pass the House on the first vote, but went through after the DJIA fell nearly 1,000 points in a single day as a result." Such a scare might be the only way to spark bickering lawmakers to pass an otherwise "unpassable" plan

    House Speaker John Boehner’s debt plan is going nowhere, as it faces opposition in his own party and Pres. Obamathreatens a veto. Sen. Harry Reid’s plan, or a modified version of it, that even Larry Kudlow seems to like now appears to be the only remaining way out of the impasse.

    The sky hasn’t fallen, and the Obama administration’s persistent warnings that the market would react negatively to the debt ceiling crisis may have undercut its negotiating position. “They have lost all credibility,” former TARP chief Neil Barofsky says. “It’s so typical of the way Treasury and the Fed treat everything – always to warn that Armageddon is coming.” 

    The Treasury can only run out of money if the Obama administration decides that’s what it wants, posits John Carney. There appears to be no law that forces the Fed to bounce a Treasury check if there is no cash to back it up, i.e. the U.S. "enjoys unlimited overdraft protection from the Fed." The ball is in your court, Messrs. Obama and Geithner.

    Treasury rates would rise by 60-70 basis points in the long term if the U.S. loses its triple-A credit rating, JPMorgan’s Terry Belton predicts. “That’s a long-term, permanent increase in U.S. borrowing costs, another $100B a year,” Belton says, reckoning that the psychological impact of a downgrade on foreign Treasury buyers would hike borrowing costs.

    The CME has ended the risk-free status of Treasury bills, subjecting them to a 0.5% haircut when used as collateral, and thereby increasing borrowing costs for banks who use them as such. With downgrades from S&P and Moody’s quite possibly on the way, the CME’s move could be a sign of things to come

    "It is not the Fed’s job to pave the yield curve with guaranteed returns for any sector … we should not be guaranteeing a return for Wall Street," says outgoing KC Fed chief Hoenig before a House committee. Believing that nothing trades efficiently at a price of zero, Hoenig thinks the Fed should hike to about 1% and reevaluate. 

    Another 11M mortgages are likely to default, Amherst Securities’ Laurie Goodman predicts, as banks eventually are forced to liquidate tons of bad loans. For now, banks are refraining from such liquidations in the hope that bad loans turn good, thus the shadow inventory keeps rising - ominously.

    The majority of jobs being created in the recovery are lower-paying ones, while higher-paying positions have been slow to return, according to a new report from the National Employment Law Project, suggesting a "good jobs deficit" that has hollowed out many of middle-wage job opportunities, the study’s co-director says.

    American Capital Agency (AGNC): Q2 EPS of $1.41beats by $0.10. (PR)

    Amazon.com (AMZN): Q2 EPS of $0.41 beats by $0.06. Revenue of $9.9B (up 51% Y/Y) beats by $0.5B. Expects sharply lower operating income in Q3 of $20M to $170M, but revenues of $10.3B-$11.1B vs. $10.35B. Shares +1.3% AH. (PR)

    More on Amazon.com (AMZNearnings: Worldwide media sales up 27% to $3.66B; Worldwide Electronics sales up 69% to $5.89B. Kindle sales growth sped up sequentially and the Kindle store has more than 950K books. North America and international sales both up 51% Y/Y. Shares now up 5.2% AH. (PR)

    Construction materials firm Carlisle (CSL) is down 9.2%after reporting Q2 revenue and EPS of $870.8M and $0.87 – the former figure beat consensus by $40.5M, but the latter missed by $0.04. The company is blaming margin weakness on higher raw material costs and "production inefficiencies" related to the startup of a tire facility. (transcript)

    Las Vegas Sands (LVS): Q2 EPS of $0.54 beats by $0.10. Revenue of $2.35B (+47.1% Y/Y) beats by $131M. Shares+3.5% AH. (PR)

    Following its Q2 revenue shortfall and soft Q3 guidance, Goldman is still confident Netflix (NFLX -6.5%) will be able to grow its average revenue per user in Q4, while Citi is positive on the prospect of declining postage costs. However, Morgan Stanley is concerned about Netflix’s ongoing lack of U.S. social media integration and middling Canadian growth.

    Norfolk Southern (NSC): Q2 EPS of $1.38 beats by $0.10. Revenue of $2.87B (+17.9% Y/Y) beats by $120M. Shares+0.6% AH. (PR

    Even energy companies can’t make money:  S&P is joining Fitch in cutting its rating of Sunoco’s (SUN -1.2%) debt to junk, claiming the company’s "business risk profile is materially weaker" as a result of its planned full spinoff of SunCoke Energy (SXC). As of 3/31, Sunoco had roughly $1.84B in cash and investments, and $2.47B in debt. 

    The upcoming Dunkin’ Brands IPO (DNKN) is beginning to raise similar questions that Groupon has recently, as to whether its intent is merely to 

  288. Phil



    The upcoming Dunkin’ Brands IPO (DNKN) is beginning to raise similar questions that Groupon has recently, as to whether its intent is merely to enrich its early investors. Dunkin’ insists the funds will go exclusively to retire debt and free up enough cash flow to pay dividends. But who gets the dividend? Why, 80% goes to the private-equity investors, of course.

    General Electric (GE -2.1%fails to auction off its railcar leasing business, marking the second time in three years it has tried unsuccessfully to sell the unit worth ~$3B. GE says it decided to keep the business after seeing a pickup in demand for railcars; other sources say bidders were not comfortable with financing terms. 

  289. Phil

    Dollar/Streth – Be careful, that’s a false assumption.  Reality is more likely the S&P had fallen 5% but it’s not visible because the Dollar masked it with a 5% fall.  When the Dollar does bounce and pulls back the curtain, the S&P will be revealed to be much weaker than realized when measured in a weak dollar.  Think of your observation as taking the temperature of someone with a 104 fever with a Celcius thermometer and finding out they went down to 40.  Do you assume that when you go back to the proper measurement their temperature will come down just because it measured 40 in Celcius?  Go by the chart above and also look at the correlation from this weekend’s Stock World Weekly – it was a perfect mirror all of last week.  

  290. strether

     Phil
    Now I see. Got it. Very interesting/important insight.
    Thanks
    Strether

  291. Phil

    More Boehner fun:  

    Mr. Boehner’s problems were compounded late Tuesday when the Congressional Budget Office said his plan, which was intended to initially cut $1.2 trillion in spending over 10 years and raise the debt limit by $1 trillion, would actually only cut $850 billion. That forced him to begin rewriting the bill.

    Before the CBO news broke, Republicans lining up against Mr. Boehner ranged from Rep. Jim Jordan of Ohio, who objects to Mr. Boehner’s proposal for a committee to recommend future cuts, to Sens. Rand Paul of Kentucky and Jim DeMint of South Carolina, tea party favorites who say the plan doesn’t cut enough.

    At least 13 GOP House members said they would oppose Mr. Boehner’s plan, and many more said they were leaning against it.

    Thirty-nine House members have signed a pledge saying they won’t raise the debt limit unless certain conditions are met, including congressional approval of a balanced budget amendment, which suggests they won’t support the speaker’s plan.

    "We’re not a bunch of knuckle-dragging, mouth-breathing Neanderthals," he said. "We are interested in answering what we perceive to have been the [election] mandate, which is to stop the spending."

    GOP House leaders worked frantically to round up votes Tuesday. They argued that "this is the last Republican train leaving the station," in the words of an aide, and a loss would be a victory for Democrats.

    Several conservative groups, including the Club For Growth, Heritage Action, and the National Taxpayers Union, came out against the Boehner plan Tuesday. Other groups, including the U.S. Chamber of Commerce, supported the proposal.

    Mr. Jordan, who heads the Republican Study Committee, a group of conservative lawmakers, suggested the plan would go down to defeat. Sens. Paul and DeMint sent a letter to House Republicans urging them to vote against Mr. Boehner’s plan.

    Senate leaders were watching these maneuvers with interest. Even if Mr. Boehner’s plan passes, Mr. Reid plans to hold a Senate vote to "table" it, a move that requires 51 votes and cannot be filibustered.

    Then he will argue to GOP senators that his plan is the only remaining vehicle for avoiding a default.

    Mr. Reid said his plan, which includes no tax increases, meets every GOP demand. "It’s everything Republicans have demanded wrapped up in a bow and delivered to their door," he said. "Now they say it’s not enough."

    Republicans countered that Mr. Reid’s plan relies on gimmicks, such as counting $1 trillion in savings from ending the wars in Iraq and Afghanistan.

    Mr. Reid may be unable to attract the seven Republicans he needs to pass the required 60-vote threshold in the Senate.

    There it is in a nutshell – the Republicans consider a plan to end the war and saving just $100Bn a year (25% of the current cost) to be a "gimmick" – we are so doomed!  

     

  292. mrmocha

    Pharm, last year you said about CYTR - "If the stock gets back to 65c, might be worth a flier…."   We are under .65, do you stand by your prior suggestion?

  293. russellb73

    Phil
    LOL its always nice to get confirmation when you do something stupid.  I didn’t know earlier what the puts went too, working a day job so hard to take a quick look…..more painful too know what they were worth.  No need to rub it in, painful enough.  Hopefully can sell soon…Was not a good day at work either.
    Particularly helpful driving home the point is this post …
    …..QQQ/Savi, Champ – My bad, I had the weekly $60 puts.   Those topped out at .93.  The others at .75 but same thing with 20% as it is with 40% – you take it and run if it even twitches the other way or, when in doubt, sell half as that drops your net to .50 and you can put a stop back at .60 and then ride it out if you can’t bring yourself to take a 20% one-day profit off the table even though making 20% a day is 5,000% a year – not even allowing for compounding!
    BTW nice call on AMZN!   

  294. russellb73

    Pharmboy
     
    I used to work for XenoPort.  Before and through IPO….the best company I have ever worked for.  Sorry they got decimated due to delay of XP13512 (I think that is right if I remember correctly), which was ultimately approved.  Hope they can regain some of their momentum.

  295. Troy

    Bloomberg Poll summary:
    A Washington Post-ABC News poll of 1,001 Americans showed 45 percent “strongly disapprove” of the way Obama is handling the budget deficit. The July 14-17 survey showed 77 percent said Republican leadership has been not willing enough to compromise on the issue.
     
    Disapproval of Obama and lawmakers also is rising.
     
    A CNN/Opinion Research Poll July 18-20 found that 54 percent of people disapproved of the way Obama is handling his job, compared with 46 percent in an April 29-May 1 poll. The survey showed 55 percent had an unfavorable opinion of the Republican Party, compared with 48 percent in a March 11-13 poll. The poll showed 49 percent had an unfavorable opinion of the Democrats, compared with 48 percent in the March poll
     
     
    Pinning Blame
     
    The July CNN poll found that 51 percent of those surveyed would blame Republicans if the debt ceiling weren’t raised, compared with 30 percent who would blame Obama.

  296. Maya1

    Phil
    Good evening
    I see your hedging strategies on this site.
    Would you please explain, how you pick the type of hedge?
    And how do you calculate how much hedge to put in place?
    For example, let’s say I own 1000 shares of AAPL, and want to protect down from $400 to $360.
    The time period of protection is let’s say two weeks.
    What hedge do I use, and how much?
    I know your feelings about the particular equity I used in this example, but let’s say I cannot sell right now…
    Appreciate this site, BTW!

  297. kustomz

    Gotta love Dylan..watch the Rep James Lankford interview
    http://www.msnbc.msn.com/id/21134540/vp/43900803#43900803

  298. Cap

    Howdy.
    Still working on my next trick – make the momo stocks go down.
    Big challenge.

    Mcp zagg lulu lnkd gmcr soda

    How bout AMZN ? 0.41 in non gasp earnings. Real earnings less.
    Sucky margins – 2%.

    So let’s give them a 100 PE as they sell lots of stuff for little profit.

    AAPL with a 15 PE and retailer AMZN with a 100. ??

    Give me a break.

    And NFLX
    And CMG ?

    This market is completely fubar.

    Hope y’all doing well

    And how bout that govt of ours ?

    A pox on them all, but especially you know who…

  299. hoss18

    I think we are in for a real mess in the next several weeks.  Obama miscalculated the political anger and backlash over the 2008 crisis, and how much blow back he took from it.  This formed the back bone of the tea party, which was quickly co-opted(or so we are led to believe by the media) by the Republican party.  Now, those core votes desperately needed by Obama to get the debt ceiling lifted are not there, and he’s left with few options but stand aside and let the Republican leadership make a farce out of the whole thing, and then blame them for it.  
     
    For the Republicans, the old school ones are stuck, like Boehner, unable to compromise a deal they can get by the new Tea Party wing, who are sticking to their guns and not spending anymore.  Boehner and Obama, strangely enough, find themselves on the same side of the argument for once as they plead for a deal, some deal to be made.  However, it’s not happening, and my sense is there’s a certain amount of retribution in not getting a deal done.  A number of people I have spoken to lately are very much against raising the ceiling, even though it could mean ALOT of economic damage.  The reprise I heard most was, "I already lost it all once, they didn’t lose anything, let’s take it to them!"  Or something to that effect.
     
    Now, granted my methodology is not scientifically sound, nor nearly a large enough sample, but the chorus was quite clear.  Middle and lower classes have already been so hard hit, they really don’t care if we default.  What’s the saying, "Fear the one who has nothing to lose…."  The pols and Wall Streeters blew it when they didn’t respond strongly enough to the crisis(ie nobody’s in jail still), and that created a backlash that manifested itself in a new part of the Republican Party that’s willing to blow this whole thing up.  And if they aren’t careful, that new part may just break off and become it’s own party by 2016.  The disappointment with both parties is only GROWING.  
     
    Obama better start figuring out how to truly lead instead of just punching the other guys, because we’re about to need REAL leadership.  From what I have seen so far, he doesn’t have the moxy.  He’s so hung up on winning a second term, he’s going to lose it by not seeing the forest through the trees.  He should have been thinking about this calculus months ago and working on how to get cuts in place that could potentially buy more time before a vote.  He didn’t, now they’re screwed.
     
    So, if the US does not raise the debt ceiling, how does this play out?  Does the market rally at first as cash floods out of bonds looking for yield, then drop as reality sets in?  Do credit markets seize up again, making the dollar the safety play, thereby tanking the markets?  Or does the Fed step in again in a massive way and save the day, driving markets upwards out of this range?  
     
    I’m not sure, and that uncertainty doesn’t bode well for my sleeping at night.  Better go check my hedges….

  300. oknoman

    Cap: I’m always happy to hear someone say pox, and I’ll second a pox on the Momo’s and all of the politiicans and add a pox to the especially. Let’s call it a triple pox.
     
    How are the weekly premium sales treating you?

  301. oknoman

    Hoss: Well said regarding the ‘man on the street ethos’, I can completely relate to that feeling, and have experienced that type of reaction from many I know as well, particularly small business owners (like myself) who found themselves on the brink with very little recourse (I will say that my friends in Banking don’t agree), but they are still unlikely to grant an extension to our lines of credit, LOL.

  302. zeroxzero

     Hoss:  Great point: "nothing to lose but their chains."  I’ve been wondering what this obsessively-referenced but politically nebulous "Tea Party" abstraction actually meant — if anything.  I think you have defined it with great precision — those citizens who feel so disenfranchised politically that they’ve become anarchistic: "let the government crash & burn, along with all that seek to benefit from it’s continued existence — we’ve already lost everything."
     
    That would mean that "Tea Party" is not a political party in any sense — it is an anti-party.  They have no political position beyond eliminating a political system that has abandoned them to their fate.  Can’t blame ‘em.
     
    What to do [as an investor]?  Cash out. Look to Europe.  European equities are trading close to 2009 lows relative to earnings and book value.  If the Euro gets smacked down — which must happen sooner or later, because its present level will prohibit all-important Euro employment from recovering indefinitely — Euro equities will rally.  There’s an ETF or two for that.

  303. dday97

    Well it looks like Boehner has seen the errors of his plan (hopefully) and is doing a rewrite.  I didn’t like how it read and apparently not many others did either.  Altough I would like to see Obama’s plan instead of his consistent "frameworks" and things we should shoot for.  From what I understand he’s not a man that likes to be questioned or crossed so if that’s the case grow some stones and show me what you want, something concrete; feed me some real numbers and information instead of rhetoric, fear tactics and propoganda.  I would like to believe he’s capable of doing something other than being condescending.  If he wants to blame Bush still, fine.  That still doesn’t erase the fact that he got nothing done when he had total control over everything for two years.  Those years were wasted on Obamacare (which is a great concept that was poorly crafted), and setting his legacy and re-election on overdrive.
    You fear the increasing debt if Reps get elected? Wasn’t it the 111th congress (2009-2011) made leader Pelosi the distinction of becoming the highest spending House leader in history.  They spent more than the first 100 combined.
    Don’t worry though, you still have a shot in 2012 because the GOP can’t find a leader and they all talk like they’re on the JV team.  But here’s your button anyway.

  304. dday97

    Article about oil in the WSJ in case you haven’t seen it.  The best statement in there is that vehicle miles traveled in the U.S. was down 2% in May.  If that’s the case than why isn’t oil 80 dollars?  Unfortunately we all know that sad truth to that.  Supply and demand, yeah right.
    http://online.wsj.com/article/SB10001424053111903999904576469874042982208.html?ru=yahoo&mod=yahoo_hs

  305. pstas

    Wow, so many getting their silk boxers all knotted up over this debt ceiling circus. One would think the doomsayers never engaged in a hard ball negotiation or played poker for that matter. It’s politics. All sides smell blood in the water and are acting accordingly. What is that old saw about democracy and sausage making? Indeed, many moons ago I had a job doing exactly that in what remained of the old Stock Yard area of Chicago. Killing the cows, dressing the carcass, grinding the meat and packing the casing -the process is messy but the end result can be quite satisfactory – depending on one’s taste.

    There will be no default. Give the inflammatory and adolescent rhetoric a rest. Characterizing those with opposing views as "assholes" and "economic terrorists" says more about … well let’s just leave it at that.

    Hoss, as is often the case in the past, you have brought forth a sensible perspective. Finally, someone "gets" the Tea Party notion- to a degree. I have been often mystified by the anger and ridicule heaped on this amorphous group. Law abiding , tax paying , hard working citizens subjected to all sorts of ridiculous criticism for advocating basic values of individual liberty and personal responsibility. My, how quant.

    My read is not so fatalistic, however.

    I see it as simply introducing and element of "no more business as usual".

    You hit it out of the park regarding President Obama. While I hold no truck with his brand of politics and ideology I am saddened by his floundering and flailing. He is fulfilling his critics profile of a guy in over his head. Very bad for the country. The leftist, statist wet dreamers along with the corporate kleptocrats are busy fighting the last war. The Tea Party element has thrown a wrench in the works. This may still be an historic opportunity if he can rise to the occassion.
     

  306. kustomz

    pol·i·ti·cian/?päl??tiSH?n/Noun
    1. A person who is professionally involved in politics.
    2. A person who acts in a manipulative and devious way, typically to gain advancement.
    #2…enough said

  307. dday97

    Alright, it’s about that time again.  Lets get these /CL plays in order and make some money.  Already missed a line I wanted to short because I was screwing around.  Right now I’m looking at 99.11 or 99.56 to start the madness.  Currently we’re at 99.25.

  308. dday97

    I’m going to try and papertrade on MBtrading simultaneously.  Testing their platform/software.  Anyone ever use this co.?

  309. BertII

    dday
    are you just shorting oil or are going long as well

  310. kurtww

     dday – I used MB Trading during the internet bubble but haven’t really tried it since. I signed up for a trial but got a little turned off by their LightWave or whatever they call it trading-for-dummies thing. I’m still interested in finding a good system that lends itself to automated trading/scalping, but I haven’t pursued it recently. I’d love to hear feedback on MB if you try it out.

  311. matt1966

    Hoss, this part of what you wrote really spoke to me:
     
    The pols and Wall Streeters blew it when they didn’t respond strongly enough to the crisis(ie nobody’s in jail still), and that created a backlash that manifested itself in a new part of the Republican Party that’s willing to blow this whole thing up.  And if they aren’t careful, that new part may just break off and become it’s own party by 2016.  The disappointment with both parties is only GROWING. 
     
    I am firmly in this camp.  I predicted Obama would be a one termer as soon as he left the financial crisis and started harping on healthcare.  It was almost like Bush taking us to war in Afghanistan and then all of a sudden started to talk about invading Iraq. 
     
    If what you are saying is true, and there are significant numbers of ‘me’ out there, what will be so ironic is that the Dems, in an effort to ‘make evvy thing al betta’ for the people actually made madder.  I can only hope that the segment of Americans sick and tired of politics as usual and thus looking for a radical change to the way things are being done has grown to the point where its become a critical mass.  Unfortunately, the best way to direct this anger is towards a new constitutional amendment severely restricting campaign financing and NOT by ruining the credit rating of our country.  That’s where I part ways with the Tea Party.

  312. Phil

    Good morning! 

    Dollar at 73.73 and not much happening in the futures.  At the EU open but they are down about half a point already and we’re testing our floors.  Most likely we head higher on the 3am trade (dollar strongest at 3am) but a tough day to call as there is so much bad news AND STILL NO DEBT DEAL!  

    Oil at $99 – dangerous on inventory day but playable on the long side or short side off that line with tight stops (/CL), watching the Dollar above or below 73.75 for a directional clue (with oil going opposite).   We HOPE they go back to $100 at inventories (10:30) and THEN we can short the Hell out of them (assuming a build).    

    Oil Company Subpoenas Said to Be Readied by FTC in Gasoline Price ProbeThe U.S. Federal Trade Commission is preparing to issue subpoenas to oil companies and refiners as it probes rising gasoline prices, a person familiar with the matter said.

    The Euro is $1.448, Pound $1.642 and just 77.65 Yen to the Dollar left the Nikkei finishing at the day’s low (10,047) and means the BOJ could step in at any moment to push the Dollar up, which would not be good for our markets.  

    Gold is $1,627, silver $41.21, copper is diving back to $4.456 but still holding that $4.45 line from yesterday, below which we like them short (/HG).  Gasoline (/RB) is game on below $3.10 this morning but also very tight stops as they would follow oil higher so once they get back over $3.10 just forget it.  Nat gas is $4.338 so maybe that’s our goal for copper.  

    If the Dollar is over 73.75 on weakening Euro or BOJ intervention then we will likely begin to break down below yesterday’s lows and things could get very ugly so more of a watch and wait morning to see what holds – be very careful at this inflection point!  Down is much easier than up right now and will remain so at least until there is a debt deal (if that even helps).  

    Huge earnings day today plus durable goods so nothing matters until 8:30!

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    8:30 Durable Goods
    8:30 Chicago Fed Midwest Mfg. Index
    10:30 EIA Petroleum Inventories
    10:30 Results of $35B, 5-Year Note Auction
    2:00 PM Fed’s Beige Book 
    Comment!

    Notable earnings before Wednesday’s openAETAN,ARWATIBACOP

    CPDALDOWDPSECLELNENREXC,GDGLWHESHSPIACILM

    LVLTLZMCOMTMWVMYL,NDAQNEENOCPXRESROCSOTEVA

    TMOTUPWLP,WYNZMH 

    Notable earnings after Wednesday’s closeAEMAFL,AKAMAMKRAMPARRS

    AVBBDNBMCCBGCCICINF,CLFCMOCOGCROXCTXSDOXDREDRYS

    EFXEQRGG,GMCRHMAIDCCISILKBRKEXLOGILRCXLSIMUROI,OIIORLY

    SEESTRSYMCTERTMKTQNTUHS

  313. Phil

    A Reading List for Following the Debt Ceiling Drama (Pro Publica)

    Thomas Friedman: Make Way for the Radical Center (NYT)

    Debt Crises, Real and Fake (Economix)

    Republican Leaders Voted for Drivers of U.S. Debt They Now Blame on Obama (Bloomberg)see also Bruce Bartlett: Are the Bush Tax Cuts the Root of Our Fiscal Problem? (Economix)

    Fed Policy of Holding Rates Near Zero Subsidizes Large Banks, Hoenig SaysThe U.S. central bank’s policy of holding interest rates near zero is a subsidy for large banks and redistributes wealth from savers to debtors, said Thomas Hoenig, president of the Federal Reserve Bank of Kansas City

    Watch Kansas Fed’s Hoenig Explain Why He Is Not A Fan Of QE3 And Why He Believe Buying Government Debt Is Dangerous.

    Greece is likely to need a new and bigger debt restructuring within the next two years, senior S&P exec David Beers tells CNBC, adding that a further downgrade was "pretty certain." His comments undermine EU hopes they’d grasped the Greek nettle once and for all.

    Dilbert’s Scott Adams: How to Tax the Rich (WSJ)

    [ADAMS LEDE]

    It’s not paranoia when they really are watching you!  The Government Just Admitted For The First Time It Is Using Cell Phone Data To Track Your LocationA group of Senators questioned the general attorney for the National Security Agency Tuesday about whether U.S. intelligence agencies are using cell phone geo location data to track U.S. citizens without their knowledge. 

    Chinese Luxury Price Inflation Is Even Crazier Than Overall Price InflationHuRun, which calculates an alternative luxury index for a basket of 61 high-end goods and services (38 of which are imported), said the prices of luxury goods in China were up 7.73% this year, compared with a 6.4% inflation rate for consumer goods overall. Notably, yachts and jets have seen the largest price surges, rising 22.1% over last year’s prices. The cost of cosmetics and accessories have risen 16.6%, while luxury property prices have jumped 14.4%, HuRun said.

     

    click or interactive graphic

    “Accompanying an article on the changing family dynamic, The New York Times provides aninteractive graphic that lets you see how many households in America are like yours.

    You start with the primary residents in your household such as single male or married couple, and then add those who live with you, such as a parent or child. The graphic updates as you do, showing the U.S. count and percentage on top and the breakdown by time, race, and household income on the bottom. Simple and straight to the point of interest.”

    >

    Source:
    Households like yours
    Flowing Data, June 20, 2011

     

     

  314. pentaxon

    Morning Phil,
    up so late? ;-)
    did you really mean 75.75 on the dollar, that is way far from here (73.75?, 74.75?)

  315. flipspiceland

    @Felipe
    Excuse me if this has aleady been posted.  20 years ago Sir Goldsmith called it in every respect.  This should be seen and heard by every advocate for the people:
     
    http://www.youtube.com/watch?v=YW6KkF6aa_A&feature=related

  316. Phil

    Thanks Pentax, that was, of course, 73.75. 

    Goldsmith/Flips – I liked that guy.  

  317. kurtww

    Interesting article from Mark Hulbert in using blue-chip stocks as a hedge against default. He recommends looking at high yield companies that will have a higher rating than the US, like KO, CL, JNJ, OMC:
    http://www.marketwatch.com/story/stocks-as-safe-haven-in-event-of-default-2011-07-26
    Phil, I know you think we’re not likely to get any kind of meaningful deal and therefor a big rally is unlikely. But what about a no-deal scenario that sends people to the safety of blue-chip stocks? Does it make sense to do some buy-writes in some of these companies to hedge against that? I am basically 100% in cash except the two outstanding legs of my spreads, one on the S&P at around the 5% line and the other on the RUT at a much higher level (920/930), expiring in September. I’d hate to see a head-fake rally or a real rally that takes the S&P over that line. I have tons of cash that I need to deploy eventually. For example, I could do some buy-writes in my IRA that could offset any unpleasantness if I have to roll my S&P spread. I have been holding off doing that anticipating a correction, but perhaps it makes sense to ease into some positions now. Thanks as always.

  318. dday97

    Bert- Sry, missed your question. I buy and sell but this morning I only made one quick trade so far. I shorted at 99.10 and got out at 98.96. Kind of a boring morning. Off to throw a kettlebell around & eat some eggs.

  319. pat_swap

    Hi Phil,
    Good Morning!
    How do you come up with the prices of the ETF by looking at the underline prices for e.g. price of USO by looking at the Oil price? Is there any formula or is it derived by overlapping the price charts? Same for TZA and RUT or SQQQ and SPY.
    Thanks

  320. rj_jarboe

    The markets are supposed to be forward looking. Earnings reports have been pretty decent, especially for those able to take advantage of the low dollar. Forward guidance has not been nearly as good. With guidance not being exactly stellar coupled with slowing growth in the US and in Europe, I have a hard time seeing why equity prices would rise at this time. If you throw in a possible rise in the US dollar, which would negatively effect the multi-nationals earnings, I see an even gloomier picture for the end of next quarter. I too have cash to deploy, but I am having a hard time going long at this time.

  321. pentaxon

    Pat,
    There is no formula for ETFs of course. ETFs usually have some fees or intrinsic costs (like VXX), some are leveraged (TZA for example) and some have bad management.
    It all depends on the ETF. However for intraday movements basically just the long or short leverage is important (TZA: -3 x RUT, SQQQ = -3 Nasdaq 100, ….)

  322. flipspiceland

    ok, Felipe, I’m eating peas for breakfast…

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