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Magical Monday – All “Fixed”!

SPY 5 MINUTEOh what BS!

Still, it’s BS we expected, isn’t it?  What did I tell you in Friday Morning’s post?  I said: "Our plan for the day (as we’ve been short all week) is to get back to cash for the weekend but I’m sure we’ll find some speculative upside plays (like USO at $37) to play (we already went long on Silver in the Morning Alert to Members)."  I followed that up with my 9:40 Morning Alert to Members, where my specific trade ideas for the morning, while the market was plunging, were:  

  • USO Next week $36 calls are $1.45 so 10 of those in the $25KP with a stop at $1.20.
  • TNA Aug $69/73 bull call spread is $2 and you can sell the $51 puts for $1.20 and that’s my favorite index play at the moment. Of course any bullish offset would work but this one is focused on the RUT and betting it won’t drop another 8% by Aug expiration (725).

How’s that for a bottom call?  That was right into the panic lows and,  at 9:48 I reiterated my call right at the dead bottom, saying to Members: "Volume is not very high – this is a retail panic so far. If you have short positions, strongly consider put tight stops on them (this includes the $25KP and Income Virtual Portfolio) as they put plenty of cash in your pocket and we can always find another layer of shorts if the RUT can’t hold 775."

UUP WEEKLYAt 9:50 my trade idea was selling PCLN weekly $545 calls at $3 which expired worthless that day for a 100% gain.  At 9:52 we picked up the weekly (that day) QQQ $57 calls at .72 and we had a 100% gain on those by 11.  At 9:56 we went short on the VIX with the Aug $19 puts at $1, at 10:16 we even made 5 bullish adjustments to our fairly conservative Income Virtual Portfolio, including  selling 50 DIA Aug $116 puts for $110 ($5,500) and we’ll be pulling those right off the table this morning – but I’m getting ahead of myself

At 11:25 we went for a Jan bull call spread on UNG and at 1:20 I put up my last long trade idea of the day, selling YRCW Jan $1 puts for .70 for a .30 net entry on the trucker.  At 2:10, with our 2 daily calls already done for 100% gains, I said to Members "Well if you don’t have Disaster Hedges, you sure should get some" and put up 3 trade ideas for 1,000% gains on SQQQ, EDZ and DXD – all of which should still be playable in this morning’s excitement.  At the close of trading, I suggested "As a toss, you can always just buy the QQQ Aug $59s for .80 as they were $1.20 yesterday so .50 would have to make you happy" and we should be at goal there (up 60%) at the open as well.  

Over the weekend, in Member Chat, we had a great discussion about the Debt situation and who’s to blame (see Paul Krugman’s "The Centrist Cop-Out") and we talked Poverty in America and about Big Business’ destructive influence on our Nation, where my point was very neatly made by example in the Documentary Film "GasLand," which is on HBO this week and is something everyone in America needs to watch before we’re all paying $4 a gallon for water too:

For our Weekend Reading, after going over the potential deals that were on the table I titled the post "Waiting to get Screwed" as pretty much all outcomes will be awful for America – although good for the top 1% and that led to a great discussion in Member Chat under that post as we continued our discussion about Poverty and I added a collection of charts illustrating the tremendous Income Disparity that is now far WORSE than it was during the years that led up to the Great Depression – those rich people thought everything was getting better too! 

It’s going to be an exciting morning as we got a huge spike in the futures on the "Deal" news and this morning’s Alert to Members went out at 12:50 and, over the course of the morning’s discussions, we are NOT liking the bullish action (futures up 1.5%) so we’ll be cashing in those bullish plays into the morning squeeze and pressing our bearish bets once again because it doesn’t really matter what games our Government plays (and there is no deal until Congress votes, so there is still a huge risk of a shocking sell-off this afternoon) – we still look like idiots and it’s EXTREMELY likely that our Sovereign Rating will be dropped from AAA status for the first time in our nations history:  

And, of course, all of this is just a huge distraction from our GDP, which is now running at an average of 0.85% for the first half of the year.  Keep in mind that our Government told us that GDP was 1.9% for Q1 3 months ago on Friday they said "Oops, did we say 1.9% – turns out it was actually 0.4%."  While no one should be shocked that our Government would fudge figures, 375% upside exaggerations to one of our most critical pieces of economic data is – hmm, what’s the word — CRIMINAL!  

Are you freakin’ kidding us?  How can you possibly MISS by 375%.  Are people being fired?  Is there an investigation?  No, of course not because that would mean that it wouldn’t ultimately come out that the people being fired were only following orders to fudge data and mislead – not just the American people, who are used to being dupes of the Government and the Mainstream Media, but the International Investing Community should be VERY PISSED OFF that they were misled into investing in this country under very false pretenses.  You hear pundits on TV all the time telling you that you can’t trust numbers out of China but did China every revise their GDP from 10% to 2% – THAT’s how much of a discrepancy our GDP was!  

See the red line on the above chart?  THAT’s the true line while the blue line is the lie they’ve been telling us until Friday.  Lucky for them the ridiculous Debt Ceiling story is all the media is focused on or people may ask questions like how can the World’s largest economy not have a clue in the World how it’s performing for almost two years and who is it that’s responsible for misrepresenting the GDP of the United States of America by a factor of 4.75 to 1?  Where is the outrage?  What the Hell is wrong with your people?  And I include my fellow Financial "Journalists" here as Woodward and Bernstein must be rolling over in their beds (they’re not dead so the phrase loses some of it’s impact).  

Enough of my outrage over the Government because Jim Cramer has the nerve to show his face on CNBC and THAT is an OUTRAGE!  He’s not even apologizing for cheer-leading the alarmists last week with advice on Friday to his Mad Money viewers that was SO HORRIBLY BAD that CNBC redacted the video clip of the show from their recap site.  Why does Cramer annoy me so much?  Because, when I’m out and about in the World (we both live in North Jersey), I am constantly being told "But Cramer says…"  As I mentioned, my take on Friday’s posturing was 100% opposite Cramer’s – a view I like to call "rational" and it’s very hard to defend rational when your opponent isn’t.  Maybe if I walked around with a sound effect board (is there an App for that?).

So this morning, Cramer is back to BUYBUYBUY and, amazingly, acting as if he expected this all the time after he stampeded his sheeple out of stocks at the bottom last week!  What am I saying this morning?  As I just posted in Member Chat – SELLSELLSELL!  Not all of it at once but let’s take half our bullish profits off the table and set reasonable stops on the other half and let’s add to Friday’s disaster hedges and we’ll even take some speculative short-term downside plays because "good" news is already priced into the morning pop but the Obama/Reid deal still has to get past the lunatics in the House and that’s a coin flip at best. 

EVEN If we do get a deal today – what does it fix?  We’re still in debt, our GDP is far worse than expected, unemployment is still out of control and NOW – we are CUTTING Government spending.  That is just BAT-SHIT CRAZY!  Austerity is not growth.  Again, look at the chart above – our $15Tn GDP is actually $13.3Tn, that’s 10% less than the benchmark both the Dumbocrats and the Republican’ts are using to base their income projections for the next decade.  A $15Tn economy that is growing is the number they are using to project jobs and exports etc. and it’s already off by 10% and SHRINKING!  This is lunacy folks – DO NOT GET SUCKED IN!  

And have a lovely week!  

- Phil


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  1. Savi

    I am now collecting $150 non-refundable deposit p/p for the meeting —Oct 8th 9th and 10th— (of course if the meeting is canceled the deposits will be returned--also any unused portion will be prorated and returned)
    I will do it via pay pal as suggested by one of the members--I think all you need is my e-mail--I will let you know when I have received the 10 deposits from the definites—the deadline to get it to me is Aug 5th

    Thx
    my e-mail is
    savi_ted@hotmail.com
    as of now--headcount --7

  2. dday97

    /CL. Well there was my 97.45. Short it down.

  3. jromeha

    Phil- saying Obama “Compromised to do what’s best for the country” is a cop out. The dems bent over and took it from the repubs like Ed Norton in American History X. Sry for the vulgar analogy but im pissed! No real revenue increases. O couldn’t even get an extension past 2012 virtually assuring himself a more challenging re-election bid against whatever moron the repubs decide to run….

  4. exec

    Good Morning,
     
    Phil,  I gambled and bought some TNA on Friday figuring the politicians wouldn’t want to risk being blamed if the market tanked due to their nonsense. 
     
    Question is, do you think this market has some room to run for a couple of days or take the money and run?

  5. jomptien

    Phil/SVU,
    I have a BW and late friday rolled to selling the 9 calls and 9 puts. to my surprise when I looked just now I am short the calls and long the puts. What is your suggestion – just sell double the amount of puts to equal them out? Thanks

  6. tuscadog

    Phil / Why the optimism     So, we appear to be headed to an agreement which will begin accelerating Gov’t austerity (if the vote passes).  Meanwhile, the US, based on 1st/2nd Q GNP is sliding into Ddip.  Europe and Japan reporting Ddip manufacturing #’s, China manufacturing slowing to no growth.  So, as our bankrupt consumers and accelerating unemployment in the public sector withdraw more spending, while housing tanks another 20% (G. Shilling), earnings revisions will become increasingly gloomy.  Obama has slit his wrists as he has approved short term austerity with no buy in to job creating fiscal / structural initiatives.  Unemployment must climb beyond the current ‘real’ 22%.
    So, QE3 is the only politically feasible alternative and we’ve seen how successful that has been for jobs and inflation.
    What happens next Phil?  Logically we are entering recession again and mkts should correct.  But, will QE3 yet again be used to prop up the mkts.  Every time I go short I lose money.  This rally seems like such BS following Friday’s GNP news.

  7. stjeanluc

    Oil Lines
    R3 – 98.53
    R2 – 97.91
    R1 – 97.42
    PP – 96.90
    S1 – 96.31
    S2 – 95.69
    S3 – 95.20
    Breakout lines – 99 and 93.27.
    All the lines are below 100 again! 

  8. dday97

    /CL. Out at 97.10. Made my dime back plus .25. What pisses me off is I had the right call early this morning but wasnt patient enough to wait for it.

  9. exec

    Tusca,
     
    It is BS……however……you know how these short squeezes go.

  10. kurtww

     dd – good job getting out with a profit, what the heck caused that $1+ spike in oil just now? 

  11. dday97

    And up oil goes again! Awesome swings.

  12. Phil

    Oil flying over $98 now,despite the Dollar back at 74 so must be a rumor pumping it up.  Definitely a take the money and run morning.

    When in doubt – sell half!!!  If you sell half at the open and set a reasonable stop at the rest, even if you are so wrong that your long positions double off the open (where you sell half), you’ll still get 50% more on the overall position as the half you didn’t sell would double.  That, of course, is not all that likely while if the half you don’t sell drops 50%, selling the other half at the open still locks in a 75% gain – even if you wait that long to give up.  That’s why:  When in doubt – Sell Half!   

  13. kurtww

     Stjeanluc – while you’re looking at the FAS money plays today, could you keep me in mind? I misread a post on Friday and sold the $23 calls for $1.22 instead of waiting for the $24s. I am also short the $23 puts, so they should offset each other, but I’m curious about the strategy to roll them, or just wait it out. Thanks.

  14. kurtww

    You can tell the rich are hurting, just look at the headlines on Bloomberg… Porsche profit up 59%, London luxury home prices accelerate, Harrods opening French Laundry at $400 for lunch, etc. Clearly we can’t raise taxes on those people. Sheesh.

  15. dday97

    Getting a quick bite. Will be shorting USO shortly.

  16. stjeanluc

    FAS Money Recap:
    FAS Weekly – Short 23 Puts (1.00 now 1.15).

    FAS Money (Monthly) - We are short the August 25 Calls (1.15 now 0.88) and the August 26 Puts (1.75 – now 3.70).
     
    I love it when it all works out as planned. As FAS looks like it will open up a dollar, our 23 Puts should look great and we should be able to sell a call in the excitement.
    Phil, last week we had some confusion on the positions a couple of time. This week I will just add a line with the current weekly position when we have just so that we are clear every time.
     
    Last week recap:
    On Monday we bought back the 25 Calls sold for around $1.20 so $0.60 collected there. On Tuesday, we sold the same 25 calls for around $0.75 but bought back the 26 Puts for $1.15 which cost us around $0.20 on average. On Wednesday, some of us bought back the 25 Calls for $0.25 collecting $0.50 of premium. These calls expired worthless on Friday for all the others who collected the full $0.75. We also sold the 24 Puts for $0.64. It gets complicated for these puts as the market moved quickly and some got out even (or slightly better) and others like me did a straight roll to this week 23 Puts (costing me $0.36 of premium). Overall, last week brought between $0.54 and $1.15 depending on your timing! Not a bad week…

  17. yodi

    dday97
    /CL curious to know what plyas you did on oil this morning I changed direction 8 times and I am up 630.00 playing between 1 and three contracts thanks

  18. yodi

    dday97
    I am out now

  19. stjeanluc

    FAS Money / Phil – My first instinct would be to roll the 23 Puts to the 24 Puts and collect $.035 and also sell the 24 calls for $0.85. That would cover us between 22.5 and 26.5 this week! Makes sense?

  20. dday97

    USO Aug38p for .90

  21. davew

    yodi
    I am curious to know what plays you did with 8 direction changes.  in what time span?

  22. Phil

    Good morning!  

    Things are looking good at the open and they’ll probably stay good until/unless we get negative noises from some Tea Party people or other indications the Bill won’t pass.  If the Bill does pass, Obama has already said he would sign it so we may not get much of a sell-off until/unless the ratings agencies weigh in with a negative outlook – which is very likely given the shallow and uncertain scope of this deal – especially in light of our downgraded GDP outlook.  

    As I said in the morning Alert: it’s not a real recovery until we take back our 50 dmas at least and that’s: Dow 12,321,S&P 1,310Nas 2,753NYSE 8,218 and Russell 816 – we were WAY over those before the debt BS began so ANY failure at those levels means something else is very wrong.  They ALL have to make it, now 4 or 3!!!  

    If you want to play this rally for more upside, you can still short the VIX (we did the Aug $19 puts on Friday for $1, now 1.20) or play gold down with the GLL Aug $22s, that are still .35 or the GLD Aug $155 puts at .72 BUT I’m not really believing things are fixed so these are SPECULATIVE plays to follow the rally – WHICH I DON’T BELIEVE IN.  Clear? 

    What I do believe in is shorting the Dow with DIA Aug $119 puts at $1.20 or the SQQQ Aug $21/23 bull call spread at .85, selling the Sept $19 puts for .55 for net .30 on the $2 spread.  

    USO Weekly $38 puts are .44, 20 of those in the $25KP for $880!  (longs are, of course off).

    Let’s be straight about that, all the short-term long, including the ones in the Income Portfolio – are DONE.  This was the pop we hoped for and now it’s done and back to cash!  

    On the FAS Money trade – let’s sell the Weekly $23 calls at $1.25 and leave the put side naked until/unless XLF gets back over $15. 

    No news as I see we’re already falling so better get this out fast!  

  23. davew

    dday97
    I think you need to get back to those 3:30 am workouts! :)

  24. stjeanluc

    FAS Money – OK, selling the 23 Calls now. We are already covered on the Put side with the 23 Puts. 

  25. dday97

    Yodi. I only made 3 trades. 2 up and 1 down. I rarely make more than 4 before 9am. The problem this morning is I made the call at 97 to buy knowing it should bounce to 97.45. Took much longer than I expected and I sold for a .10 loss b/c I got impatient and I had an important call. Of course it shot to 97.45 within minutes of me selling. I then went short at 97.45 and sold at 97.10 to make my loss back and then some. Bought again at 97.75 and sold at 98.20. So all in all I had a great morning. I try and get 4-10 contracts, sometimes more/less. It’s hard early mornings to get that amount for the price I want so I leg in 2 contracts at a time in that case.

  26. russellb73

    Anyone
    Any guess how ISM Index comes in?  Thinking flat to lower than expected.

  27. dday97

    Davew. I know, missed it today. Instead I had leftover pizza at 4am. Fricken gut bomb.

  28. JRW III

    Good morning,

     

    IWM   77.34,  77.84,  78.64,  78.98,  79.58,  79.89,  80.18,  80.52,  81.07,  81.22  and  81.85

  29. stjeanluc

    FAS Money / Kurtww – Looks like you are in sync now…. 

  30. BruceE

    Nailed it again Phil my man, thank you very much for a perfect morning!  You’ll be happy to know I am going to take your previous advice and go have a nice breakfast and not worry about the markets.  Thanks.  

  31. kurtww

     Thanks stj – not much of a rally to worry about after all!

  32. stjeanluc

    Some downgrade thoughts…
    http://ftalphaville.ft.com/blog/2011/08/01/638971/a-safe-haven-for-repos/ 

  33. davew

    dday97
    left over pizza.4am  + 12 hours and you coulda had the beer too!  Better stick with the omelets!

  34. stjeanluc

     It is expected that these new "employees" will not ask for higher wages or commit suicide…
    http://www.engadget.com/2011/08/01/foxconn-wants-1-million-new-workers-must-be-robotic/

  35. tuscadog

    Phil / Oil   Might be risky shorting this week as they are going to milk this new hurricane threat?

  36. Phil

    Cop out/Jrom – Well it’s all we have to hang our hat on at the moment.  Perhaps you don’t realize how devastating it would have been to actually not pass something by tomorrow.  Fortunately, we still may get a chance to find out as a friend of mind in DC tells me that the vote is far from certain in Congress.  Don’t forget Europe also kicked the can down the road and Japan kicked their can down the road 100% of their GDP ago (now 200% in debt).  This isn’t just the US, this is the entire planet drowning in a sea of debt that can never be repaid except by devaluing the currencies that the debt was issued in.  Globally we have no GDP growth so this is all just a great big game of seeing how long we can ignore the obvious and, as I said this morning – time is running out because what has been accomplished this month is that it has become very clear that the Emperor has no clothes and today he’s on parade with all the Republicans and all the Democrats shouting how beautiful his suit looks but all the Global Investors see is a naked, bloated, indebted Economy that’s obviously about to collapse.  

    TNA/Exec – See Rule #1.

    SVU/Jomp – Boy are you lucky they unspiked!  Just get out and do the right play, why mess around?  

    Optimism/Tusca – Do I sound optimistic to you?  Damn, I hope I don’t become pessimistic!  I was just playing the logical, bullish play based on Friday’s too early panic sell-off.  We knew they would at least pretend to have some kind of deal over the weekend and that would boost the market because all the sheeple have to do is hear the little bell and they start salivating (or was that Pavlov’s dogs?).   

    Oh now – ISM disaster – 50.9 (down from 55.3) is very close to fail!  Down we go and wheeeeeeeeeeeeeeeeeeeeeee!

  37. lflantheman

    GOOG, NFLX and AAPL all bought last hour Friday.  Sold into the excitement the first hour today for an average of 15% on the options.  And lots of them.  Thanks again Phil for teaching me so well.  And isn’t there a law against this.   :)

  38. yodi

    dday97
    ?CL thanks for the info

  39. msf65

     Phil, 
    I have Aug BA 70 puts, bought at 1.25 (now 1.9). Is it better to roll them to Jan 12 60 puts (now  2.11) or Jan 13 60 puts (now 6).
    TIA

  40. Phil

    Wow, Back to Friday morning’s lows already on Dow and S&P but RUT still higher so (/TF) is a good short below the 70.90 mark or IWM Weekly $78 puts at .80 with a stop at .65.  

  41. tuscadog

    Phil / Optimism   I was referring to the mkt, not you!  Anyway, thanks, I put my money where my mouth is and I’m holding a huge EDZ and TZA position – but I needed your pessimistic support :-

  42. stjeanluc

    That market was just looking for an excuse to sell off…. Got it! 

  43. Lincoln

     Savi: paypal
    my deposit would show as from tgolder, sent this morning

  44. Phil

    Oil/Dday – Do you now see why I thought it was a dangerous long today.  Doesn’t take much, does it?  

    FAS Money (Kurt and all) – You can take advantage of this dip and buy back the $23 calls for .72.   When you make .50 in 15 minutes YOU TAKE IT!  It doesn’t matter if we go lower, we can sell $22s if we do but .50 is .50 – ALWAYS remember that!  

  45. dclark41

    Phil
    Any way you can get us those USO calls a little earlier? :) I could never fill at .44 and decided not to chase at .51. So I will watch again! Great call ……again. 50% gain for those of you who got in BY THE WAY.

  46. seer

    Looks like I bought my shorts in too early. 

  47. yodi

    WOOO what happened to the green up run?

  48. dclark41

    tuscadog
    I too am holding EDZ and semi-large position in SQQQ. Thought I was going to be hurt’n this AM.

  49. jcaesar

    Is there a news item that’s precipitated this sell-off, or did the sheeple somehow get the message that the both the Senate AND House actually have to pass this thing before it gets to the president?
    Oh, I see, those ISM numbers for July aren’t great, but that only explains the last ten minutes.

  50. jackhound

    Arrggh, I’m short squeezed again! Thankfully it was small. Phil, I noticed IMAX is getting back to lows after a 4.5% pop this morning. Do you think its a good time to go long on IMAX, or wait until the dust settles?

  51. rustle123

    Went short oil this morning near the lows and got rid of longs.  Market moved so fast, had no time to buy DIA puts.  But still have small positions of my shorts I scaled out of from Friday at the highs so not a bad day at all.  Cramer is just spot on.  Now I know if I don’t listen to you Phil, I could just do opposite Cramer.  He’s Bizarro Phil.

  52. stjeanluc

    FAS Money – Buying back the 23 Calls (I got $0.80) so around $0.40 of premium collected. 
     
    Current position – Short the 23 Puts.

  53. jabobeast

    wtf????

  54. seer

    TBT hammered again too.

  55. Burrben

     Did anyone get into any of those 3 trades?  By the time I was able to setup the order tickets in IB, they all ran away from me.  
    Great calls Phil.  I was going to chase, but I figured I’ll just wait for the next set of bullets.

  56. Phil

    Rich/Kurt – It’s really insane, isn’t it.  And that is nothing compared to how much money Corporations are taking in tax free.  

    Dollar 74.35.  TBT $30.80!  This doesn’t seem "fixed" does it?

    Oil hanging on to $97 and gold shooting up so NOW those short gold plays are getting cheaper and more interesting but first let’s see how high they can spike it.  

    FAS Money/StJ – Generally, you only want to take profits unless you absolutely have to move the other side.  The $23 puts were .60 so just taking them off the table and waiting on a spike is the way to go if you are going to trade actively but, as you can see from the insane up and down action – there’s a lot to be said for ignoring the intra-day BS and waiting to see where things settle out.  As I said above, a quick .50, you damned well take the profits but .25 or less – you have to really consider whether you are overtrading or not.  I apologize because I lost track of the position, maybe if you post the current status at the day’s open we can all be on track for crazy days like this.  

    IWM went the wrong way.  No tears, just forget it and we’ll see where the net rumor takes us.  Now that the Dollar is at 74.35 and TBT is 30.60, they have a lot of dry powder to push the market higher by dropping the Dollar back down on the next "good news" from DC so be careful in either direction.  

  57. yodi

    davew
    /CL I trade the futures on TOS active trader This morning I started 6.46 by selling AUG for 97.00 until 6.40. Buying and selling goes sometimes with in minutes same as JRW use a simular system of stoch fast and stoch RSI as well as Momentum open interest. When you are trading this way you will have your finger on the trigger, do not use the bathroom! If you have to do something else close out. The system is set up that the order goes directly to the floor. No confirmation. This way you get instant fill even on limit orders.

  58. exec

    That was fun

  59. yodi

    davew sorry time is until 7.40

  60. pat_swap

    Phil,
    Is it a good time to buy TBT calls or sell puts? I now you don’t like buying premium much.
    thanks,

  61. Anonymous

    TBT/Phil – still shorting this under 32?

  62. jcaesar

    yodi – Which are the oscillators you rely on most?  I tried to set up JRW’s system but there’s just a lot of stuff to keep track of (and I’m not JRW).  I’m looking for a JRW-light setup.  Thanks in advance!

  63. asaenz

    @ Phil, these market swings are sometimes very hard to catch, i was able to sell into the excitement, but wasn´t able to enter the DIA puts, just the USO puts….with all the bad economic reports we have been getting, many people think its a sure thing we will be heading into a double dip, but like you said it a couple of times, bad is good (QE3)….. you have also said a few times that the second half might be good for stocks (because of inflation), do you still believe this? Thanks!

  64. angelcur

      it simply stuns me that the consensus was 54. the actual print was exactly at the bottom of the concensus range. who(tf) thought htere was growth like 54? I don’t get it

  65. sank1

     stjeanluc / FAS Money,
    Thank you for directing me to the link where you’d reviewed the whole strategy behind this. I’ve read, and I think I understand. OK for me to get into this now? I need to start with the JAN long strangle on FAS, correct?

  66. stjeanluc

    FAS Money / Phil – I do post a recap of the position every morning after my oil lines (see 9:29 AM). But as I mentioned this morning I will also add a line after every comment with our position to avoid confusion. I understand about overtrading and we don’t want to start creating rules but we’ll say, we take $0.50 when we can and wait (or discuss) on less… 
     
    Current position – Short 23 calls. 

  67. kurtww

     Phil – I am short some TBT Sep 32 puts (sold for $1.65, now $2.10), just looking at the pricing, should I consider rolling to 2x Aug 31 puts ($.99), or 2x Sep 30 puts (also $.99), or just sit tight at this point? 

  68. stjeanluc

    FAS Money / Sank – Long strangle (18.33 / 28) is correct. We are currently also short the 23 Puts on the weekly play and the current price is close to where we sold it (actually better), so you could actually get in now and be in sync… 

  69. dday97

    Oil/Phil. Nope. Doesn’t take much at all! The great thing about those big swings is much $ can be made without even having to trade past 9 or 10 am.

    Speaking of almost done. That USO 38P is now up over 50%! Putting in a TS order soon and am going to go drop the kids off at summer rec and take a bike ride.

  70. stjeanluc

    Pharm must be happy as his beloved TLT is getting close to 98.50… TBT on the other hand is below 31. It will be tough for Cantor to vote for that bill now…. 

  71. rustle123

    out of oil shorts, awesome profits today, wish I had full position but am not crying at all.  You the man, Phil.

  72. Phil

    You’re welcome Bruce! Enjoy breakfast…

    These bottoms seem to be holding for now at Dow 12,050, S&P 1,284, Nas 2,740, NYSE 8,040 and RUT 795 (/TF) is my favorite upside play.  That means oil (/CL) $96 is a good bullish spot. 

    This is on the assumption ther Dollar stops at 74.40, of course.  

     

  73. yodi

    jcaesar
    I have the chart set on two min. I mainly rely on the movment of the stoch fast 80 20 14 4 SMA and stoch RSI Wilder 14 3 1 SMA

  74. davew

    yodi
    thanks for the info. I’m trading /QM on TOS may move over to /CL as I get more experience in oil futures. Good morning for me today :)

  75. flipspiceland

    @0 X 0
    Thanks. 
    Your throwaway line Friday about buying CAT if there was no default, has just started my week off in fine fettle.
    BCS is up over $650. from my entry. 
    Even if if you don’t know CAT from a dog.

  76. brooklyn

    Pharm/TEVA – any idea how big a problem is the laquinimod miss for TEVA’s earnings?

  77. hoss18

     I am beginning to have my doubts about QE3.  Looking at the GDP revision and Q2 data, it is fairly obvious that QE2 was a failure, except for increasing inflation, speculation and stock market prices.  As Phil says, prices NOT value.  Bernanke may be in a bind because the substitution effect, which the Fed has no control over, did not pass the liquidity to the overall economy…..it was hijacked…unless one subscribes the concept that it was supposed to be hijacked in order to save the TBTF/ibanks.
     
    So, Bernanke may be sidelined until we get our fiscal house more in order.  QE3 trades short term liquidity for a larger economic event in the future, and seeing how QE2 has not significantly moved the needle on the economy and still has not had it’s associated event, the Fed may be slower to react.  We are in a bind now, and the coils only grow tighter with time.

  78. jcaesar

    yodi - Awesome, thanks! 
    Last question, I promise. Do you trade options or shares of TNA/TZA?  I believe JRW trades shares.

  79. dday97

    I agree Phil, good call.. Out of USO puts at 96 oil. I’m cash and will check later to see if anything looks interesting. Have a great day all.

  80. exec

    Hmmmmm…..was the sell off legit or just setting the stage for another short squeeze.

  81. jabobeast

    Phil— you think there will be qe3 this year? 2012?

  82. yodi

    jcaesar
    I do not trade TNA as JRW does I hold tghe stock since it was trading at 38.00 and I play the options against it most ly selling one month out and buy it back and sell the same various times during the month.

  83. asaenz

    probably short squeeze…

  84. Savi

    lincoln
    burrber
    received deposit—Thx

  85. jcaesar

    Ok, thanks Yodi.

  86. Phil

    So much for oil at $96!  Dollar shot up to 75.56 but the indexes are holding up and that’s a good(ish) sign. 

  87. stjeanluc

    S3 is 95.20 on oil…  Not much support under that until 93 and change! 

  88. rainman

    Market is holding up well to the $ rally – /DX +.47% and moving up fast. What’s up with Italy?

  89. rustle123

    Phil, would you start taking a position in IMAX at this level.  Not really going down today and is oversold already.

  90. dday97

    Geez just checked oil. Actually liking the USO Aug38C for .66 now.

  91. Jbur

    FTR/Phil
      Just a heads up… got filled on buying back the FTR 2013 $7.50 for .60 as you recommended last Friday!

  92. jabobeast

    Will CMG ever go down???
    FU CMG!!!

  93. biodieselchris

     the "Gold is Down" story is already old news.
     
    1,630 and climbing

  94. yodi

    jabobeast
    CMG as long as you keep eating tacos they will not !!!

  95. drcraig

     Entered a weekly 605/610 bcs on GOOG. The bet is that once congress passes the bill the rest of the week will be all sunshine and roses, and a little bump in GOOGs close. Got in at $2 on the last test of 602.33. What a cranky market today.

  96. yodi

    Did any one say this morning gold is down ???

  97. rustle123

    JABO:
    I think Chipotle in Alabama does serve skunk meat.  It’s a delicacy there.

  98. yodi

    CMG I never seen the restaurant here in Mexico possible they would be serving rat meat here however my Sept I condor is looking good!

  99. rustle123

    If you think the market comes back, you can write the 70 TNA’s for $5.00

  100. rustle123

    that’s for this week.

  101. Phil

    Foxconn/StJ – Ah, the revolution will be glorious!  

    Volume at 63M coming into 11 which is about 25% over average.

    Oil testing $95 now and that’s a good time to take half on the USO $38 weekly puts at $1.20 as that’s up 170% and a stop at $1 on the other half locks in a very nice gain for the day!  

    Law/Iflan – I wish there were because the little we make does nothing to balance the global scales but, when in Rome…

    BA/Msf – Well BA is at $70.13 to that entire $1.90 is all premium.  Unless you believe BA will fall below your net (from $1.90) of $68.10 AND you absolutely would hate to own it for that price – there’s not need to do anything at all at the moment.  

    Good going Tusca!  

    Earlier/DC – Over time, it is my hope that you learn what kind of things we look to trade under conditions like this.  There was nothing special in that choice – USO spiked up, we know it’s over bought, we thought the Dollar would bounce and that made it a good short candidate.  

    IMAX/Jack – I think they are a huge opportunity at this price but it’s a LONG-TERM play, it may take a couple of quarters before their investments begin to reap rewards and your fellow investors have no patience for companies that dare to invest in their own future.  

    Bizaro/Rustle – It is amazing that he can look at the same market as us and draw a completely different conclusion so often.  He’s really a weather vane – he just tries to "predict" the short-term momentum because his feedback loop is based on being right the next day, not over time.  I’m more of a big picture guy…

    Chasing/Burr – Sometimes, if you miss a play on momentum, you can go for the next strike with a tight stop.  The move in the index and the change in the delta on momentum usually set up the same conditions but, of course, only if you think the move has legs.

    2nd time is a charm on oil off the $95 line, back to $95.20 already and we’re very happy to take a small victory that wipes out our previous bad entry so make sure you protect the gains!  

    Bathroom/Yodi – Great example today – could have been the Worlds most expensive bathroom break!  Down $3.50 in an hour is $3,500 per contract! 

    TBT/Pat – It’s always a good time to sell TBT puts when they are below $32.  You can sell Sept $30 puts for $1.06, that’s a very good deal.  If you want to be more aggressive, you can pair that with the Dec $30/33 bull call spread at $1.14 for net .14 on the $3 spread. 

    2nd half/Asaenz – That’s hard to say because now we and Europe are pursuing an austerity program and even China is cutting back so where will the inflation come from?   If we get QE3, then we can go gung-ho bullish but if this Debt Deal passes and no QE3 – I don’t see how we avoid a recession/depression down the road (if we’re not already in one after the next GDP revision).  I do believe the Fed will step in or the Government will find some way to do emergency stimulus but be careful speculating on it because clearly, we can’t trust these guys to take their hands off a hot stove.  

    54/Angel – Hence my new term:  "Economorons" 

    FAS/StJ – Sorry, I skimmed past that one.  Yes, taking a quick .50 (as opposed to one that grinds down) off the table is a good guideline. I don’t understand at 10:32 you say short $23 calls but I think you mean puts?  

    TBT/Kurt – You are in for net $30.35 and TBT is at $30.72 WHY worry?  The Aug roll is a fun, aggressive move and I do support it but make sure you realize you are pushing your risk by a lot as a real collapse here could send TBT even lower and THEN it would be a good time to press your bets but that would be hard if your are doubling yourself into too much margin.  If we don’t go lower, then the Septs probably expire worthless and there was never a need to move.  

    CBO says Debt Deal will cut spending by $2.1Tn, not $2.4Tn so down we go again!  

    WHAT A CATASTROPHE!  

    Gotta take a poke at oil here with the Aug $37 calls at .97 – 10 in the $25KP (done with the shorts, of course).  

     

  102. rustle123

    my mistake, those TNA were Aug 20th, knew it looked too good.

  103. stjeanluc

    FAS Money / Phil – My bad, short the 23 Puts now! 

  104. Phil

     Congrats to those who shorted Gasoline (/RB) off that $3.10 line – now $3.03 and it’s all greed from here on out so don’t say I didn’t warn you!  Nice at $420 per penny for $2,940 per contract!  

    Thanks Rustle, Dday and congrats on early profits. 

    $93.45 was oil’s low back on July 1st and we came close to that on the 12th but that was the bottom so let’s watch that line to see if this time is different.  $93.50 is the next spot to try a long off the futures (/CL) or if they cross back over $94.  

  105. jabobeast

    talking qe3 on cnbc?

  106. dflam

    Phil/ETN:
    In IRA account,I bought ETN at $52.83 (now $47.60) and sold Jan. $52.50 C at $5.60 (now $1.80) for net $47.23 .Thinking of rolling to 2013 $52.50 C at $4.50 for 12 % /yr ROI + 2.7 % dividend. Make sense?

  107. kustomz

    Bob Pisani traders taking profit from Friday? There were at least 15 people on CNBC telling you they were all in on Friday..
    CNBC and Wall St. = Monkeys throwing shit at the zoo!!

    Here’s another guy on the phone telling us he’s all in..

    Only positive, $ didnt break through 74.79 we may save this yet

  108. jcaesar

    DAX and CAC both off by more than 2%.

  109. stjeanluc

    Look at it this way, oil down $5 today is a nice tax cuts for the average Joe… I don’t think that it was the plan, but we’ll take it! And /RB is at 3.0077 now down about $0.14 for the day. Nice…. 

  110. Phil

    QE3/Hoss – They don’t have to do QE3 the same way and they do, eventually, have to do something – the trick is figuring out when.  As it is I just can’t believe these idiots in Government and the Fed allowed things to go this far – surely they knew the economy was a house of cards yet they turned on the fans full force with this debt ceiling debate and now everyone is surprised when the whole thing collapses?  MADNESS!  

    Goal at $93.50 but not feeling too confident at the rate we’re dropping.  Dollar at $74.65, Dow close to failing 12,000, NYSE did fail 8,000, S&P 1,277, Nas 2,725 close to fail, RUT 789 is pathetic!  

  111. kustomz

    Mini flash crash in the DAX!

  112. craigzooka

     Since I just completed my move to DC, any other PSW’ers out there based in washington DC?

  113. tuscadog

    Phil / Oil    Ok in at $93.67   They’ll probably use the next hurricane threat to Florida on Friday as ammo!

  114. stjeanluc

    Oil lows – We actually dipped briefly below 90 in June (23, 24 and 27). I have my breakout line at 93.27 and I didn’t think that we would get there (it’s rare and it does usually hold). 93.50 is the low in July…

  115. williex

    Phil
     
    based on the video you posted why would the gov’t morons even think people are having a hard time.  the politicians are making money hand over fist if the video is right.

  116. ethan2010

    Phil, would you short vix again? it’s coming back to last week high. thanks,

  117. tuscadog

    Phil / Oil    What’s your exit point target on the way back up?

  118. yodi

    SPX ICondor SEPT closed the short call leg for .70 sold for 2.25

  119. asaenz

    @ Phil, do you think we´ll get a BS rally tomorrow if they get the votes? (but not like the one from today that lasted about 10 minutes) the markets are so weak that it seems like they are going down forever, i think "they" need to set up a relief rally that lasts for a couple of days, or this thing might just get way out of control…thanks

  120. Phil

    Thanks DDay!  

    Good support call on oil at 10:58 StJ!  

    Italy/Rain – They are a disaster, all faith is lost in their banks.  

    IMAX/Rustle – See above, yes, long-term. 

    FTR/JBur – thanks for reminding us on buying back the 2013 $7.50 calls for .60 in Income Portfolio. 

    CMG/Jabob – Now THAT is incredible!  

    GOOG/DrC – I like that play! 

    ETN/Dflam – I’d buy back the caller for sure.  That leaves you in at net $49.03 and then if you sell the 2013 $45 calls for $7.20 and the $40 puts for $4.60 that drops your net to $37.23/38.62 and if you don’t want to DD from $49.03 to $38.62 (like buying 1x more for $28.20) then you should be getting out now of this stock you have no faith in.  If you can’t sell puts in the IRA, you can sell them in another account, right?  Either way, you’re in it for the Dividends so selling the 2013 $45s makes sense as a safe bet to protect yourself.

    LOL Kustomz – it is such a joke, isn’t it?  

    Well, we seem to be stabilizing now that we got rid of those whiny Europeans…  They dropped like a rock attached to an anvil at the close with the DAX finishing down 2.86%, down 4.5% from its open!  The CAC was no better and finished down 2.31% and the FTSE was the star at 5,774 (down 0.7%) but ALL pathetic and check out the 7% move in EDZ since the open on anticipation of a poor start in Asia tomorrow.  

    Hurricane/Tusca – Yes, NOW I can see the Hurricane getting used to get 50% of the drop back.  $96 is my target but not being greedy as we already got $94.45.  

    Politicians/Willie – That’s not by accident.  The best way to get a freshman Congressman to forget about the poor folks at home is to turn them into a rich folk right away.   That’s how the system is set up as they get their PAC funds and their offices and staff and non-stop free lunches, dinners, junkets etc…  Suddenly Mr. Smith goes to Washington and he’s trying to keep up with the Joneses instead of fighting them like he promised the suckers back home.  That’s why the best reformers are usually rich liberals like Roosevelt and Kennedy and not the poor people who fight their way in – it’s unfortunate but temptation is a powerful thing.  

    VIX/Ethan – Yes but you have to take an entry on the assumption you’ll have to roll and DD if this debt deal goes south.  

    Oil exit/Tusca – On USO calls, I’d look for $96 by Weds but on the futures, the rejection at $94.50 was a stop out and now that line would be a bullish reload or, maybe if we test lower again at $94 or $93.50.  

  121. thechaser

    Phil, I don’t know how I can thank you enough for your guidance this past week.  I’m up significantly in my portfolio and I’ve never been so relaxed watching the market panic.  Thanks once again for being here for us.  Do you have an update from your friend in DC?  He seemed to have the scoop earlier.  

  122. tuscadog

    Phil / rant    Glad I got my Ddip rant off my chest, the mkt seems to be finally recognising that we are fked and no jobs are coming.  What happens if Congress passes this bs bill tonight?  Should I hold my EDZ and TZA postions now and overnight?

  123. JRW III

    The big boys seem to think we’ve hit bottom; institutional buying:

     Stream_98eb3si

    Sold 1/3 TZA and will sell the rest on a break over IWM 78.82 !!

  124. davew

    thechaser
    that would be JRW friend :)
      I’m not sure how many friends Phil has in DC  lol!

  125. willsons

     Phil and Stjeanluc.   Thank you for the oil trade.  Very Fun$$$$$$  Kinda wild

  126. JRW III

    From Steven Vincent:

    At this time, the stock markets have been consolidating in a sideways pattern for nearly six months. The pattern appears to have completed or is near completion coincident with the development of significant watershed moments in the US and European debt situations.

    It also corresponds with the heart of earnings season (and the resolution of the NFL players lockout, the latter being of the highest order of importance to this trader). The pattern, whether viewed from an Elliott Wave or more traditional technical analysis perspective, is more likely to resolve bullishly than bearishly. Tape action--market responsiveness to news, earnings and technical events--has been largely bullish as well. Psychology appears to be sufficiently negative to support a bottom as well.

    Full article !!

  127. loopster

    JRW.  Used Friday’s lines, worked fine, up 3.2% today, Thanks

  128. David Ristau

    Phil -

    Wouldn’t treasuries rise on a downgrade of US debt as they would have to return more for people to be willing to invest? Am I misunderstanding…or is the move down on TBT done and treasuries have priced in any gains?

  129. matt1966

    I think today’s action can simply be attributed to never letting a good opportunity go to waste.  ‘They’ are looking to unload.  No doubt about it.  With all the debt deal buyers plunging in today it gave them the perfect opportunity.  I still think we rally once the deal passes.  Assuming it passes!  I will be very suprised if we don’t start to turn up here- 

  130. asaenz

    Nice article JR! Our charts are pretty close to those from last summer. Do you agree that we might be hitting bottom here? (liked what ir said about the nfl lockout, da bears!)

  131. JRW III

    ARMs Index at levels that often precede a bounce !!

  132. JRW III

    loopster,

    I added 78.64 this morning !!

  133. Phil

    At the open: Dow +0.89% to 12251. S&P +0.86% to 1303. Nasdaq +1.29% to 2792.
    Treasurys: 30-year -0.17%. 10-yr +0.01%. 5-yr +0.03%.
    Commodities: Crude +2.89% to $98.47. Gold -0.79% to $1618.30.
    Currencies: Euro -0.1% vs. dollar. Yen +0.42%. Pound -0.4%.

    10:00 AM On the hour: Dow +0.07%. 10-yr +0.15%. Euro -0.44%vs. dollar. Crude +2.2% to $97.85. Gold -0.36% to $1,625.40.

    10:03 AM Things are disintegrating quickly in Europe, the Stoxx 50 -2.1% after being up 1.5% earlier. It’s another day at the office for Italy, now -4.0%, after being up 1.5% this morning. Intraday swings of at least 2-3% have become the norm since the nation became the latest focus of EU debt issues.

    11:00 AM On the hour: Dow -0.64%. 10-yr +0.47%. Euro -1.32% vs. dollar. Crude -0.79% to $94.94. Gold -0.09% to $1,629.80.

    12:00 PM On the hour: Dow -0.96%. 10-yr +0.42%. Euro -1.3% vs. dollar. Crude -1.41% to $94.35. Gold +0.04% to $1631.80.

    June Construction Spending: +0.2% to $772.3B/year vs. consensus 0.1%, +0.3% (revised) in May.

     July ISM Manufacturing Index: 50.9 vs. 54 consensus and 55.3 prior. Prices index 59 vs. 68. Employment 53.5 vs. 59.9. Inventories 49.3 vs. 54.1. New orders 49.2 vs. 51.6

    Eurozone unemployment came in at 9.9% in June, unchanged for the fourth month in a row. Spain tops the list with 21% unemployment; Austria is at the other end with 4%.

    Eurozone factory activity almost stalled in July as PMI fell to 50.4 from 52 in June, its lowest level since September 2009. New orders, an indicator for future prospects, fell to 47.6. The slowdown echoes similar trends in the U.K., where PMI contracted, China and other parts of Asia.

    "Alarm bells are ringing for the U.K. manufacturing sector" as U.K. PMI unexpectedly contracted in July, falling to 49.1 from a revised 51.4 and marking the first monthly drop in two years

    Nothing focuses a legislator like sliding financial markets. Thinking back to equities’ reaction following the failed TARP vote, could today’s reversal just be the market’s way of assuring the votes will be there for passage of the debt limit legislation? 

    The S&P 500, pushing down on its 200-day moving average, is in the "danger zone," writes Josh Brown. Whether one is a fan of technical analysis or not, the fact is asset managers keep a close eye on this metric to decide on their equity allocation.

    Ron Paul opines on the debt limit bill, saying there are no cuts, just reductions in planned spending increases. "Akin to a family saving $100K in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates … (sticking with the) serviceable Honda." 

    Paul Krugman believes the debt deal is a "disaster" and a "catastrophe on multiple levels" that "will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana republic status." - Too bad this Nobel-Prize winning Economist is vilified by the right to the point where people are afraid to listen to him – he’s the only guy that has a clue actually

    The debt ceiling deal is merely a "band aid… certainly not a game-changing breakthrough," and keeps alive the possibility of a rating downgrade, Barclays chief European economist Julian Callow says. "S&P’s credibility is at stake here… it will prove hard not to follow through and downgrade U.S. debt,” Danske Bank’s Allan von Mehren adds.

    One thing Dodd-Frank was supposed to do was clean up the mortgage market and put an end to the freewheeling practices that made, then lost, lots of money. But Gretchen Morgenson says the mortgage industry is fighting a new rule that might prevent a repeat of the disastrous lending binge.

    The market’s fear gauge is starting to oscillate with bigger swings on more economic uncertainty after sitting passive for the last few months. The CBOE Volatility Index (VIX) shot past 25 early before settling back, and is the 3rd most-traded option contract for the day.

     EU/IMF officials launch their first review of Portugal’s budget progress since receiving its initial bailout in May. "Initial" may be pejorative, but given events in Greece, there exists the assumption both Portugal and Ireland will need additional rescues.

    Cyprus looks to be next on the EU bailout train, its largest bank saying "there is an imminent threat" if the state doesn’t take urgent action to repair its finances. Though accounting for just 0.2% of eurozone GDP and unlikely to strain EU finances, Cyprus is a reminder of the larger issue of contagion.

    Behaving decently most of the day, Italian bonds give up the fight late, the 10 year hitting 6%, now 64 basis points higher since the July summit deal at which the EU went all-in to stop this contagion. Banking shares are underperforming the broader index, -4.3% shortly before the closeEWI -3.9%.

    Brazil’s PMI falls to 47.8 in July from 49 previously. It’s the lowest print since May 2009 as tight monetary policy and a surging real continue to take effect. Up 1.1% premarket, EWZ is -8.9% YTD. The currency ETF, BZF, is +11% YTD. (PR)

    Russia’s July PMI sinks to 49.8 from 50.6 in June, the first reading below 50 since December 2009. The slowdown in the eurozone is clearly affecting Russia, where trade with the EU accounts for about 50% of export activity.

    India cuts its official growth estimate for 2011 to 8.2%, still higher than private economists are predicting. More data to chew on: the July PMI prints at 53.6 from 55.3 previously, the 3rd consecutive decline. With inflation continuing above 9%, its unlikely monetary policy will soon stray from its tightening path. 

    Shares of health-care providers tumble after Medicareannounced late Friday that it will cut payment rates to skilled nursing facilities by 11.1% next fiscal year. The decision adjusts for an "unexpected spike" in nursing-home payments this fiscal year. SUNH-54.3%KND -25.5%SKH -39.2%FVE -8.5%ENSG -16.9%SRZ-2.9%NHC -12%, AMED -

  134. loopster

    JRW, Thanks.  This is my only trading, TNA or TZA- that it.  Like it

  135. Phil

    Shares of health-care providers tumble after Medicareannounced late Friday that it will cut payment rates to skilled nursing facilities by 11.1% next fiscal year. The decision adjusts for an "unexpected spike" in nursing-home payments this fiscal year. SUNH-54.3%KND -25.5%SKH -39.2%FVE -8.5%ENSG -16.9%SRZ-2.9%NHC -12%, AMED -2.3% (earlier).

    Healthcare REITs with exposure to nursing-care homes are also taking a hit on Medicare’s rate cut announcementHCP -4.4%,HCN -6%HR -2.4%OHI -11.8%.

    Net Applications’ July data show Microsoft’s (MSFT) Internet Explorer to have only 52.8% of the browser market, down from 67% in August 2009. Google Chrome’s (GOOG) share rose to 13.5%, and Apple’s (AAPL) Safari to 8.1%; the latter is benefiting from heavy Safari use by iPhone and iPad users. Firefox’s share fell slightly to 21.5%.

    Three lunchtime reads:
    1) The U.S. economy on pins and needles
    3) Using the VIX to spike August returns
    3) "Great Recession" far worse than we had been previously told

     
  136. JRW III

    Phil /  Krugman

    It does seem like 1937 all over again !!

  137. CanuckBob

    Oil – thanks Phil,
    got in late at  0.53 on the 38p today, set a sell for 0.75 and took the dog for a walk – 70% gain and more than enough $$ to buy dog food.  Congrats to all who hung on longer.
     
    TZA Aug 35/40 BCS  – closed out for a 100% gain in under a month – thanks again for introducing me to these trades.

  138. JRW III

    I have a trend line at IWM 78.40ish, and will buy back that TZA I sold below there !!

  139. Troy

    Reid said "Hell Yes!"…too funny, reality TV at its worst.  It would seem the markets are not buying the "sugar coated satan sandwitch"!  The food sucks at Satan’s Snack Shack in DC…perhaps time to break out some "Freedom Fries" and sing God Bless America on the front steps of Congress???

  140. craigzooka

     David I think you have it backwards.  A treasury is just a piece of paper that pays a fixed dividend, so if I pay less for the paper the effective intrest rate i am getting is higher.  So if we default, i wont invest in treasuries unless they pay me a higher intrest rate, which means their price needs to go down.

  141. JRW III

    Or sell the other 2/3s on a bounce off !! We are at average stadard deviation for the day !!

  142. strether

    In early fall of 1937 the Dow crashed sharply by about 35% before hitting a temporary panic bottom the second week of October.

  143. Phil

    You are very welcome Chaser.  I much prefer a more relaxed style of trading myself…

    EDZ/Tusca – I wouldn’t chase them now.  At the moment, I think cashy and cautious (neutral) is smart because we could shock in either direction.  I like playing oil up and gold down as a pair trade because if things are "all better", then oil still may go up and gold may go down. 

    DC/Dave – Hey, I have friends too!  I just have more enemies than JRW probably does…  :)

    Treasuries/David – The rates will rise but that makes the value of the treasuries fall as they are (as a basket) issued at lower rates and therefor less desirable than newer issues.  TBT is going down and TLT is going up on a flight to quality of low-yeild treasuries, regardless of their status as there simply aren’t that many places to keep cash – especially with commodities so ridiculously over-priced.  

    1937/JRW – I wish!  We may be right around August 1929 at the moment. 

    You are welcome Canuck!  Good job taking profits. 

    Dollar hugging 74.58 and Reid pretty much saying there won’t be a vote until after market hours so more limbo to hang in overnight.  As I said on the weekend, the process doesn’t even allow for this thing to pass and get signed in time to meet the Tuesday cut-off at this point and that’s IF the House votes it through.  The CBO saying the math is bad on the bill puts the whole thing in doubt but that’s no reason we can’t rally off "good news" anyway so I remain bullish into 2:30 and then we’ll see if the sellers come back or if Mr. Stick tries to put lipstick on this piggie.  

    01:00 PM On the hour: Dow -0.74%. 10-yr +0.34%. Euro -1.11% vs. dollar. Crude -0.97% to $94.77. Gold -0.12% to $1629.20. 

    With the greenback weak and sentiment overwhelmingly negative, Peter Brandt notes the chart structure of the dollar index today is nearly identical to the 2008 lows. "Tell me something bearish about the dollar today that I do not already know," says Brandt.

    Before the real estate bust, rising prices enabled buyers to start small and climb the ladder. Those "move-up" buyers are disappearing from the market, with home sales in the $200K-$800K category down 25% Y/Y. When the move-up chain is broken or doesn’t begin due to a scarcity of entry-level buyers, then the whole dynamic of the marketplace is affected.

    Insiders selling at unusually fast pace (Market Watch)

     How Google Dominates Us (NY Review Of Books)

     “The Believing Brain: Why Science Is the Only Way Out of Belief-Dependent Realism” (Brain For Business)

  144. Phil

     

  145. stjeanluc

    JRW / 1937 – I was thinking that this morning as well as they chose the austerity route then also while the economy was still reeling from the great depression… Bernanke should know better, but they don’t listen to him anyway. They actually don’t listen to anyone or look at facts to make their decisions. It seems that we never learn from our mistakes (at least the politicians and us for voting the same guys in all the time). Scary times… 

  146. Troy

    I’m showing 1282 as 200sma intraday…is that correct?

  147. Troy

    796.50 200sma Rut….not good!

  148. kustomz

    12:59 data post makes the market look over priced..reality has bitter taste

  149. matt1966

    wow.  weak action.  looks like more downside to go- 
     
    tomorrow we dance?

  150. Troy

    Matt - you must be in euphoria…reality matches realtiy, at least for a day.  May I have the first dance? =)

  151. Troy

    JRW - as of 1:12 there is no real volume…you still think a break above 78.72 is a TNA go?  Congress is going to talk soon…

  152. exec

    Matt’s probably all in long today.

  153. jcaesar

    Depression Talk - Oh come on guys!  Look on the bright side. This debt deal will give American businesses that needed dose of Republican-inspired confidence that they’ve been lacking since Obama took office.   Now our businesses are off to the races and are going to invest and hire like it’s 1999!  Right??? ;-)

  154. Phil

    I am concerned at my own lack of calling for bullish plays off this "bottom".  I’ve looked at about 100 different things and then said "Nah" every time – that’s not good…  As Kustomz says, reality is very scary looking.  So what if they "fix" things tonight and we pop tomorrow morning – all that would do is put us right back where we were this morning – waiting for the beautiful sheeple to stop buying so we can go short.  

    Now Japan says they can’t take it anymore on the Yen (77.21) and they WILL intervene.  They mean it this time – I guess…

    Let’s call SSO Aug $48/50 bull call spread at $1.25 a nice stab at the upside, selling the $47 puts for $1.24 for net .01 on the $2 spread with 19,900% potential upside at $50 (and SSO is $49.71 with S&P at 1,280).  

  155. cwan120

    Phil:
    UUP Dec $21 calls at .53, 20 in the $25KP
    It’s up about > 25%.  TMAR or not?  (TMAR = Take Money And Run.)

  156. David Ristau

    We are concerned about upside potential overall but downside seems a bit limited as well…I think 8 days down is really screwing with our minds.

    So what did we do:

    380/360 AAPL Bull Put Spread…pays pretty nice premium for not too much margin…3.25 for about 2500. Safe haven in reality that can rally or stay afloat at least even on moves down (like today) and then it will rally well if we do get a bullish move off this vote slash relief.

  157. JRW III

    Troy / 78.82

    I will sell the rest of my TZA on a break above there; depending on all factors a may go long as well !!

  158. nicha

    David R/AAPL – what month is that?

  159. tuscadog

    Phil / Oil   Took my long profits at $94.83 on news the Japs will prop the $

  160. David Ristau

    August

  161. jcaesar

    stjean – I’ve been itching to initiate a couple ron condors for almost a month now and I would have done so if only for this debt nonsense.  Sometimes it’s difficult to be patient.

  162. rainman

    Phil / "I am concerned at my own lack of calling for bullish plays off this "bottom". I’ve looked at about 100 different things and then said "Nah" every time – that’s not good…"
     
    I’ve been getting that same feeling. I’ve been receiving a lot of alerts on stocks that have broken down below 200 dma’s and/or recent support. Of course that support then becomes resistance. Looking at the charts, it would appear to me that until resistance and the 200 dma’s are violated to the upside, there is a better chance of more downward movement. Upward movement will be restrained until these levels are taken back so why enter here? I’m sitting on my hands and practicing some day trading while I wait for confirmation of direction (in either direction).
     
    What’s the next MSM topic after the debt debacle fades? Are we going to sit around for weeks and pull the entire thing apart point by point?

  163. jcaesar

    That would be "iron" condors.

  164. angelcur

    BOEHNER NEWS CONFERENCE POSTPONED UNTIL 3:30..he doesnt have the votes clearly

  165. tuscadog

    Phil / Big picture    With austerity in vogue, what can now stop a steady slide into Ddip in the US, Europe and Japan?  Then Brazil, Aussie and Canada fall over with the swoon in commodity demand.  Is it time to take some stabs at large short positions in some of these mkts, anticipating a major decline?   Or, do you still think Ben has a viable rabbit in his hat and will continue to sabotage any attempts to bring down / short this mkt?
    Re: your 11.50 comment "MADNESS"    Why haven’t Bama and Timmy been scaring the bjesus out of everyone letting us know that GNP is collapsing and that GOP budget cuts now will plunge us into Depression.  Don’t these idiots have access to the #’s? 

  166. jcaesar

    angelcur – I read earlier that he was aiming to deliver "30 to 35" Republican votes.  Most yes votes would therefore coming from the Democrats (voting for a Republican bill no less!).  He can’t get even that many out of his caucus? 

  167. JRW III

    Smiley
     

    I’m closing out my last TZA for a gain on the day of 8% and taking the rest of the day off !!

    Good hunting !!

  168. Troy

     http://www.zerohedge.com/news/ron-paul-exposes-deficit-plan-lies-cuts-are-illusory-not-current-amounts-spent-projected-spendi
    No plan under serious consideration cuts spending in the way you and I think about it.  Instead, the "cuts" being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases.  This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda.  But this is the type of math Washington uses to mask the incriminating truth about their unrepentant plundering of the American people.

  169. Phil

    UUP/$25KP, Cwan – Tempting but I think we should take the BOJ at their word and keep the upside play on the Dollar. 

    NFLX having a bad day but HOV holding on along with C, CAT, BAC, JPM, T, TASR, UNG, VZ, LVS, WYNN…  interesting collection…  Oh and AAPL, of course!  

    Oil/Tusca – Wise move.  Nice re-load at $94.50 again too but not looking too good with 20 mins left to trade. 

    Chances/Rain – I don’t think we can say that until the news washes over us.  We were up on a rumor, now down on a rumor and who knows what next but there hasn’t been time or volume enough to establish resistance levels.  What can be done in a single day can always be undone the next day and we’ve seen Greece saved enough times now that we should be willing to believe the USA can be saved at least twice…  Watching and waiting is the best plan…  I think you are right, once we have a deal, the deal will be dissected but then we will be distracted by the next EU crisis and the game will start all over again.  

    DDip/Tusca – I think we’re firmly on that path.  Without infrastructure spending to create jobs we’re just a dead economy walking – way too deeply in debt (see cylinder chart above) to play this game anymore and the idea that we’ll ever fix this mess without taxes is simply juvenile (and suicidal, at this point).  We are $210Tn short over the next 40 years ($5Tn a year) and these idiots are fighting over $1Tn in cuts – it’s ridiculous!  But, then again, it’s so ridiculous that we can only ignore it, right?  We’re all going to die and the universe is going to implode as well so not even our graves will remain but we still get up every morning and do stuff in an orgy of existential futility so why shouldn’t the markets be allowed the same joy of denial?  

  170. strether

    Time for a Jackson Hole speech

  171. Troy

    JRW - you bought in the first 5 minutes of trading?  Sounds like something I would do…crazy stuff, thought you were more cautious than I.

  172. jcaesar

    Phil - Why you fail to address the importance of improved business confidence and the boom just around the corner is beyond me.  I mean that’s why we’re doing this silly deal, right?  Now come on!

  173. stjeanluc

    Condors / JCaesar – Still holding. I will most likely open an October RUT condor on Friday after everything clears up in DC… Right now, the following strikes would match my criteria – 640/650/890/900. Gives you about 15% protection on the downside and 12% or so on the upside. But no rush…

  174. jcaesar

    stjean / condors – Looks good – indeed no rush in this environment.

  175. malsg

     CNBC Tort Reform?  Has anyone in the US Government read the Handmaids Tale?

  176. strether

    Phil
     
    Is there a SPY put disaster hedge?
    Thanks
    Strether

  177. rustle123

    c’mon stick, one of the very few times I am rooting for you.

  178. stjeanluc

    Well, made it back all the way to 95 on oil at the close of Nymex… 

  179. Phil

    Dollar failed 74.50 – a little bullish if it keeps heading lower

    Yes votes/JC – This is the same thing as when the Dems had to pass TARP even though it was the Republican Administration’s idea and they were against it.  The Reps love this as they get to blame the Dems for passing terrible legislation that they pushed for but I HOPE the voters aren’t that stupid again (Oh who am I kidding, they are idiots!).

    Good plan JRW, congrats.  

    Business confidence/JC – They are going to have to be pretty damned confident to make up for the loss of $1Tn in Government spending, not to mention that most of that Government spending is in the form of transfers to the bottom 80% so that’s $1Tn that consumers won’t have to spend so I guess the Republican formula is that you cut $1 of Government spending and business steps in and spends $2 at least (and spending it overseas on factories, labor and materials does not count!).  Yep, that will happen….

    02:00 PM On the hour: Dow -0.62%. 10-yr +0.42%. Euro -1.08% vs. dollar. Crude -1.18% to $94.57. Gold -0.47% to $1623.50.

    The Dow, now -105, would be faring much worse if not for the resilience of Caterpillar (CAT +0.6%), one of only five Dow stocks in positive territory despite awful factory data and worries about global growth. "Perhaps one silver lining in the report was that exports improved, however slightly, helping companies with global reach, like Cat," Mark Gongloff muses.

    flash crash in DAX futures shortly after German stocks closed looks like nothing more than a fat finger triggering stops, says Goldman. After German shares closed -2.9%, the September futures contract fell an additional 90 points – a 1.3% move – in one second.

    Pay little attention to pronouncements such as "we’re not worried" about a double-dip recession when a wide range of companies says something else. The latest warning, from Armstrong World Industries (AWI -4.6%): "We now expect our residential and commercial end markets opportunity to be slightly lower as the domestic economic recovery appears to be delayed."

    Nikkei reports Japan is gearing up for currency intervention and that the BoJ may take additional monetary easing steps at its meeting later this week. The paper calls the U.S. "open" to the idea. (Registration req’dFXY -0.1%

    India lifted restrictions on the sale of cotton overseas in a move that could help keep prices lower in tandem with lackluster global demand. Working on the bullish side for the price of cotton are crop production issues in the U.S. and a potential unleashing of demand at the right price entry points, says one analyst.

    China makes a big commitment to solar power by officially offering a feed-in tariff to developers who supply the grid. The move could help prop up solar manufacturers suffering from a steep drop off in global demand. Today’s gainers: TSL +1.6%YGE +0.2%LDK+0.7%JASO +0.2%

    Used car sales exploded 13.5% Y/Y last month, the best July since 2005, and the run may not be finished, FusionIQ writes, favoring Penske (PAG -3.3%), Asbury (ABG +0.2%) and Group 1 (GPI -2.2%) in the sector. All three may need to consolidate or pull back a bit to work off short-term oversold conditions, but Fusion doesn’t expect shares to pull back much.

    Following soft Q2 data from many chip companies, the Semiconductor Industry Association (SIA) estimates Q2 chip sales fell 2% Y/Y. However, the SIA stands by its forecast for 5.4% full-year growth, and thinks new U.S. fuel economy standards will create opportunities. STMFSLNXPI, and ONNN are some chipmakers with meaningful auto industry exposure. 

  180. drcraig

     Birinyi put out an interesting bulletin titled "what if?". The punch line is that the market fell about 9% when the house failed to pass TARP, and then rallied back almost 6% when it passed. 
    Hmm.. SPY weekly 123 puts for $0.35?? 

  181. etradingsignals

    What is the time frame u have in mind for the SSO Aug $48/50 bull call spread? Day trade or Wait until the bill passes through

  182. jabobeast

    fu stick!!

  183. kustomz

    Not a stick jabo, its a crawl higher on a weakening dollar with very little volume…watch what happens when/if the dollar turns in the other direction

  184. jabobeast

    kustomz--you are probably right … i was looking at CMG ;-(

  185. kustomz

    stop it jabo…you’ll go blind doing that

    They keep flirting with 74.44 support and like I said $ shorts wont get nervous until 74.79 breaks on volume…

  186. Maya1

    Phil
    Good afternoon
    I own 1000 shares of AAPL in a non retirement account that I would prefer to keep and not have to pay tax on by selling.
    What would you suggest as a hedge down to $360, over the next 2 month period?
    I have margin ability for another 1000 shares if needed.

  187. biodieselchris

     why not buy the PCLN Aug 20th for 25 and sell the weekly for 20?

  188. jcaesar

    The Hill newspaper’s current whip count for the House – http://thehill.com/homenews/house/174649-whip-count-house-leaders-seek-votes-to-pass-debt-limit-deal
     
    42 Yes or Likely Yes
    21 No or Likely No
    Everyone else is undecided / still reviewing / unclear.

  189. stjeanluc

    FAS Money / Phil – Anything strikes your fancy on the call side in the final 1/2 hour where we are naked now?
     
    Current position – Short 23 Puts 

  190. Phil

    Interesting action on oil and other stuff since 2:30.

    Dow volume pretty ordinary at 122M but should get interesting with Boehner at 3:30 and Dems at 4:00. 

    Handmaid/Malsg – Wow, that’s a flashback from college!

    SPY/Streth – I wouldn’t chase one now, we just double tested a nice bottom range but, if you really need protection, DIA Oct $110 puts at $1.50 will do very little (delta .19) on a small move up or down but, as the Dow falls, the delta will rise so a 500 point drop should get you almost a double while a move up 500 points, should only cost you about 25% so it’s good for riding out some uncertainty but they are pretty useless on less than a 300-point drop.  

    Now the rumor is Boehner and Pelosi will come out holding hands and singing Kumbaya.

    SSO/Etrad – That’s a bullish play that will either work or not.  If we get a deal and the market likes it, it should stay in the money through expirations.  

    AAPL/Maya – Why not just sell the 2013 $330s for $100.  It’s effectively a sale at net $430 but you are selling $34 in premium along with getting protection down to $296 from here and you’ll pick up about 1/3 of the $34 in premium decay by Jan or less if you sell it sooner.  The High VIX makes this a fun trade right now as the premium should not be this high on something so deep in the money. 

    PCLN/BDC – Are you asking me?  I’m not a big fan of spreads with no time to roll and your delta is almost the same so what if PCLN spikes higher and wipes out your premiums and you have to pay the caller $40 to get rid of them and then it spikes back down and your longs are worth $15?  It can happen (anything can with momos) so I’d be very careful with that one.  

    Unclear/JC – That’s a lot of unclear!  This is the problem when you don’t test your Reps for reading comprehension….Actually my friend in DC says it’s going through with a good amount of votes, that market crash did the trick and scared the crap out of most.   

    Boehner is late – markets losing faith fast!  

    03:00 PM On the hour: Dow -0.36%. 10-yr +0.32%. Euro -0.91% vs. dollar. Crude -0.56% to $95.16. Gold -0.48% to $1623.40.

    The Dow Jones Economic Sentiment Indicator fell to 41.5 in July from 44 in June and 46.6 in May – that’s the largest two-month decline since the fall of ’08. In addition to the debt ceiling standoff, high oil prices, a soft housing market, and weak corporate earnings also hurt sentimentToday’s manufacturing data probably won’t help matters.

    Another reason stock traders are bracing for a "horrendous" non-farm payroll report at the end of the week: A new Conference Board survey shows vacancies advertised in internet job listings fell by 217,000 in July, leaving 3.22 job seekers per opening. Another way of looking at it: There are 9.7M more people out of work than advertised openings.

    The yield on 10-year Treasury notes hit a 2011-low level of 2.74% on heightened economic concerns, marking the lowest intra-day yield for the benchmark bond since last November. A fixed-income analyst at Stone & McCarthy sees the 10-year yield fallinganother 20 basis points to 2.55% within the next two months. 

    "Stuck in history," is how Jim O’Neill describes typical equity benchmarks that continue to place most of their weight on the growth-challenged G7. "The neutral position for the BRIC countries … needs to be raised significantly," says the man who coined the acronym. His favorite BRIC: Russia, which replaces Brazil.

    The prospect of potential Medicare cuts in a debt ceiling deal pressures hospital and managed-care stocks, negating Humana’s (HUM -2.3%) solid Q2 results. The deal includes preset cuts that kick in if Congress doesn’t adopt sufficient savings in a second wave of deficit reduction. Among hospitals: HCA -7.2%, [[UHS] -8.2%. In managed care, HUM and UNH -3.8% slip.

    Consumer spending may be anemic in a macroeconomic sense, but Time Magazine notes three companies still stand out withsurprisingly brisk sales. Economic downturn? Don’t say that to the loyal customers at Amazon (AMZN -1.4%), Expedia (EXPE -2.1%) and Starbucks (SBUX -1.6%) who keep coming back for more and more.

    Apple (AAPL +1%) shares gain after Piper Jaffray says its survey points to a "significant pent-up demand" for the next iPhone, particularly at Verizon (VZ). A delay in the launch of iPhone5 to October would cut Q3 profit, but iPhone market share "could more than double throughout the next round of phone purchases." Also, Canaccord raises its price target to $515 from $510. 

  191. Phil

    FAS/StJ – Nope, when we hit a floor we wait to see if we bounce or things get worse.  We’ll find out tomorrow I guess.

    Wow, Reps trying to make lemonade out of lemons here.  You would think they cured cancer after being forced to adopt the Senate Bill because they couldn’t get together.  

    Anyway, that’s a lock – they wouldn’t get up and take all this credit for the thing they didn’t do if they were only going to go and shoot it down late.  

    Cantor is quite the moron: "With 9M people out of work, now is not the time to raise taxes"  How does that make sense?  The 9M people don’t pay taxes – they NEED money!  That money NEEDS to come from somewhere!  We already have low taxes – that is NOT creating any jobs so, at this point, cutting back on the money the Government gives them is only going to help transition those 9M unemployed to 9M homeless but then I guess they are officially off the unemployment rolls and they can claim victory on that front to (as they are already ignoring 27M underemployed and out of workforce people in those figures).  

    Oh well – All fixed – let’s PARTY!!! 

  192. jerconn

    Phil – hold the USO Aug $37 calls overnight, or too dangerous?

  193. Phil

    Once again Reps get the unlimited attention of CNBC – even when they are just standing around at a podium answering random questions.  

  194. snow

    Morons/Phil – but isn’t it Cantor who’s holding all that TBT?

  195. Maya1

    Phil/AAPL
    thanks!
    I guess that’s one way to do it.,. Not what I was thinking, but that’s why we have you!
    I thought you were going to suggest some other fancy index options like TNA, TBT, FAS or some such thing, that I do not understand…

  196. sank1

     Phil / PCLN,
    Your thoughts on the PCLN play you’d recommended? With earnings coming up on Thursday…. Thanks.

  197. stjeanluc

    Here is Jared Bernstein take on the budget deal:

    If your conclusion is that Democrats got rolled because the President is a lousy negotiator, I disagree. Not on his negotiating skills…as someone said in comments, I wouldn’t want him in the auto showroom with me when I’m bargaining for a better price. I disagree that better negotiating skills would have made a big difference. The problem goes much deeper.
    ….If too many Americans don’t believe in or understand what government does to help them, to offset recessions, to protect their security in retirement and in hard times, to maintain the infrastructure, to provide educational opportunities and health care decent enough to offset the disadvantages so many are born with…if those functions are unknown, underfunded, and/or carried out poorly, why should they care about how much this deal or the next one cuts?

    Those of us who do care about the above will not defeat those who strive to get rid of it all by becoming better tacticians. We will only find success when a majority of Americans agrees with us that government is something worth fighting for.

    Oh well… 

  198. Phil

     USO/Jercon – When in doubt, sell half!   Officially, in the $25KP, I’m willing to go for it with just 10 as we’re up 20% so far so we’d have to drop 40% just to lose $200 and there is a chance that we get back to the morning high of $1.90 tomorrow morning so it’s risk losing $200 to make $800 more is a worthwhile risk/reward since we think the Debt Deal will pass and there will be another relief rally (which we’ll sell into!).  

    Cantor/Snow – Yes and that’s why he wants a deal now.  I had said at the time that he didn’t understand the dynamics and that the lack of passage would cause TBT to go down, not up.  

    AAPL/Maya – I am mysterious that way…  ;-) 

    PCLN/Sank – I’d sell 4 weekly $570 calls for $11 against 3 Sept $605s at $11 for net $1,100 credit on the assumption they don’t go all the way up to $581 and, even if they do, you should be able to roll to the Aug $585s at least and then 5 more weekly rolls before you hit trouble and you can DD on the long calls and do a 1.5X roll if they gain more than 10% but I super doubt it so let’s do one set in the $25KP.  

    Well that was an exciting day.  More fun tomorrow, I suppose!  

  199. stjeanluc

    And now Maria tries to analyze the debt deal CNBC…. Please make it stop! 

  200. jabobeast

    phil--remember PCLN earnings this Thursday after the close…

  201. lflantheman

    I simply LOVE this market.  I want it to go up.  Then I want it to go down.  I want it to do BOTH, day after day.  And I don’t care which stocks go up, nor do I care which stocks go down.   I just want to FIND those that are going up today, down tomorrow, up the next, and so on, so that I can PLAY them like a fiddle.  I am totally INDIFFERENT to the nature of the companies that I’m playing.  AAPL?  Sure.   NFLZ?   Why not.   CMG?  Of course.  GOOG? Certainly.  I don’t want a BULL market.  I don’t want a BEAR market.  I want an UNCERTAIN market, an UP and DOWN market upon which to play my option music.   I LOVE this market.    :)

  202. malsg

    Phil, Its a story I always liked and feared in equal amounts.  I hoping that our friends in the GOP stop at the line but as you point out, anything is possible!

  203. escohen5

    CNBC is sickening.  Endless back-slapping and "relief" today about no taxes being raised.  When was the last time anyone came on and even questioned the Republicans’ "job-killing tax hike" mantra, or even suggested that there is little -- if any -- relationship between "cutting taxes" and "job creation"?  Gee, I can’t wait for Kudlow…..

  204. sank1

     PCLN / Phil,
    Pardon me if the following are a bunch of newbie questions…
    a. I was referring to your recommendation on Monday, July 25th "I’d go for 5 Oct $465 puts at $14 ($7,000) and sell 4 Aug $500 puts for $12.50 ($5,000) for net $2,000 which is $4 per Oct $465 put." And on Wednesday, July 27th, you added "and you can add 4 short Aug $565 calls for $10 to put another $4K in your pocket and turn it into a net $2,000 credit"
    Given where we are now, should we take the profit on the Aug $500 Puts, and wait out the Aug $565 calls?
    b. Your recommendation from today (4:05 pm) is very interesting as well. Any link that you can point me to where I can read up on this strategy of yours (rolls, weekly rolls, DD on long calls and 1.5X roll) would be very useful. I’m not sure that I picked this up in the New Member’s Guide.
    Also, when I try to execute this on tos, it comes up with a Buying Power effect of just over $18k. Thoughts on how one does this trade in the $25KP, please.
    Thanks for your patience and guidance.

  205. Troy

    LOL…AGREED!  It is fun to watch though, no?
     
    stjeanluc
    August 1st, 2011 at 4:08 pm | PermalinkIgnore this user
    And now Maria tries to analyze the debt deal CNBC…. Please make it stop! 

  206. ilene

    Today’s levels. One week was added to the charts to keep the +5% lines in view on all five charts.

  207. Phil

    PCLN/Jabob – Yes, that’s why we get the premiums!  

    Great attitude Iflan – you are officially a trader…

    PCLN/Sank – My strategies don’t have names from books a lot of the time.  That one is my version of a ratio backspread, which is my general term for selling more front-months than you buy longs as a credit spread (although not always a credit) and the plan is to take advantage of a premium crush on earnings or some other big news.  In theory, people are using the Wiki to make topics like this but I don’t think anyone did with backspreads.  As to buying power, if you read the $25KP entries back to the beginning, these are NOT meant to be trades for someone who ONLY has $25,000 – that would be crazy.  This was meant to be a $25,000 risk allocation (and actually began with $10K last year) from a larger portfolio.  If you are running a large portfolio using our buy/write strategy or the Income Portfolio strategy – you should never have a shortage of margin.   

    As to the PCLN spread.  It was an earnings play with a pretty delicate balance.  The Aug $500 puts are still $12, so no profits to take – you have to let these kind of trades play out through earnings when all the premium disappears but, if you are working with a small portfolio – this is not a trade you should be in at all because it can slam you on margin and force you to liquidate at terrible prices on an earnings spike.  With this trade, we’re playing for them not to go up past $575 and not much below $500 so they are kind of in a perfect spot right now and we’re rooting for a flat-line.  

    At the close: Dow -0.09% to 12132. S&P -0.41% to 1287. Nasdaq -0.43% to 2745.
    Treasurys: 30-year +0.54%. 10-yr +0.27%. 5-yr +0.12%.
    Commodities: Crude -0.43% to $95.29. Gold +0.01% to $1621.80.
    Currencies: Euro -0.98% vs. dollar. Yen -0.08%. Pound -0.63%.

    Market recap: Stocks pared losses as optimism growsthat the debt deal will pass the House, easing the pain of a weakmanufacturing report and more European troublesFears of Medicare cuts clubbed healthcare stocks, and nursing home firms werecrushed after Medicare said it would reduce reimbursement rates. The dollar fell again, and yields on 10-year Treasurys hit new 2011 lows

    The selloff in midcaps may be signal the "end of the run" for the broader post-crisis bull market. Now that the debt ceiling impasse appears to have ended, investors are turning their attention to the global economic weakness, and they don’t like what they see. After gaining 22.4% during in the past year, the sector is looking expensive, with a PE ratio of ~20.

    More Gang of 12 Market Bashing:  JPMorgan’s Michael Ferolli warns of further downside riskto his already below-consensus NFP forecast (his number: 45K, the Street: 90K) following the weak ISM print. Of particular note in the ISM report, he says, is the employment index, plunging 6.4 points to 53.5. - When "THEY" warn you to get out, it’s probably time to get in!  

    Aside from Medicare-dependent firms (III), defense contractors (PAA -1.2%) also have much to fear from "devastating" cuts via a debt deal. The Pentagon would take fully 50% of cuts imposed by any triggered second round of $1.2T in cuts, Lazard analyst Michael Lewis warns. LMT -1.7%RTN -0.9%NOC -1.5%,GD -0.9%SAI -2.7%LLL -3.2%.

    The debt ceiling deal isn’t official yet, but FT Alphaville has already dissected the proposed agreement to see who stands to gainfrom the protracted resolution. Winners include: (1) Bondholders; (2) Municipalities; (3) Millionaires; (4) Defense stocks; (5) Swiss Franc; (6) The power of the Legislative branch vs. the Executive branch.

    The House is expected to vote on the debt ceiling bill tonight, and the Senate will vote on Tuesday. The House began debate this afternoon, and voted 249-178 on a procedural measure to allow final debate on the bill; the procedural vote is considered a test of support for the underlying bill.

    Maybe something is getting lost in translation. Accusing the U.S. of "living like parasites off the global economy and their monopoly of the dollar," Vladimir Putin nevertheless praises Congress for a debt deal that only assures continuing papering of the world with excess greenbacks.

    Good entry if they sell-off:  Time Warner’s (TWX) last Harry Potter installment became the first in the series to pass the $1B mark over the weekend. The firm is expected to post a small increase in profits when it reports on Wednesday, a number that will only include marketing costs from the Potter movie and not the box office windfall.

    Longtime tech engineer and entrepreneur Steve Kille thinks Google+ (GOOGwill beat Facebook for four reasons: Google+’s integration with other Google services; its stronger privacy controls; its "asymmetrical model," which allows users to follow each other without confirmation; and its superior photo-sharing capabilities.

  208. stjeanluc

    Wow, what’s next? It’s been hailing for the last 30 minutes here in S Jersey! 

  209. rustle123

    actually nice here in North Jersey near the GWB.

  210. CanuckBob

    Phil/Others,
    trying to create a $Cdn trade similar to the LEAP strangle you recommended last week re: GE ($5 million  in one stock as I recall).
    I was thinking BCE at $36.46, sell both Jan 2013 36c ($1.80) and 36p ($ 3.10) for a net of $4.90 plus dividends (6 x 0.5175) of $3.10 for the period. 
    I must disaster hedge this (funds are proceeds of wife’s rental condo sales and needs to replace monthly rental income) and was thinking BCE Jan 2013 30p $1.42.  Note:  these are TSE not NYSE quotes.
    Comments?

  211. seer

    Jobs are no longer a concern because businesses need more H1B visa (slaves are not enough-you need indentured servants too!)
    http://online.wsj.com/article/SB10001424053111903999904576470212661178134.html?mod=WSJ_Careers_CareerJournal_4

  212. rustle123

    Phil
    I currently do not own a position in HOV and seeing the recent drop was looking at it as a possible play.  One main thing has me concerned though, even though they have close to 350 million in cash, they are burning 340 million a year right now.  The housing market now looks like it could be going down a little again or at least not improving at all if we double dip into a recession.  What are your thoughts on it?  Would you leave it alone for now or do you think they can turn it around in the next couple quarters?  I know you have roots in the real estate market with the software you created and thought you’d have a better handle on how to play the company or just stay away from it altogether.

  213. Peter D

    lflan,

    That’s funny!  And you are a physician too, and that made me LOL while thinking of the possibility when you try to explain your options tricks with the patients.  For instance, If a patient has headaches for five days on the row, when the market goes down, they are tooooo long.  They would be too short if it’s the opposite.

  214. Phil

    They are voting!  

    50 Reps have voted no already!  They need the Dems now or this vote fails – how ridiculous.  152 yes Reps, 50 Nos, 37 left.  19 Dems said yes so far, 53 no, 121 left to vote.  Looks like the rest of the Dems are waiting for the Reps to commit but they are way shy of what they need (217).  

  215. sank1

     Phil / Portfolio allocation
    Thank you for the clarification.
    Any pointers to the allocation that I could use across your different strategies with a 100k portfolio? Let me know when I’m crossing the line with elementary questions (if I haven’t already done so!).

  216. Phil

    Gabby Gifford came to vote!  Even Larry Kudlow is happy to see her.

    It passed!  

    And the futures are doing nothing so far.  Oh well…

    269/161 with 3 not voting in the end.  Dems split 94/95, Reps 174/66

    Futures generally up 0.25%.  Dow 12,075, S&P 1,282.75, Nas 2,352, RUT 789.  Oil $95.27, gasoline $3.05, Nat gas $4.19, gold $1,622, silver $39.24 and copper $4.41.

    Dollar is 74.53, Euro $1.425, Pound $1.63, Yen 77.44.

    Now we’ll see what games they play from here.  Very weak response in futures so far.   

    The debt-ceiling deal passes the House, 269-161. The plan is a two-stage raise of the debt ceiling by $2.4T while cutting spending by about $2.7 trillion over 10 years. The Senate may begin debate tonight but is likely to vote on the deal tomorrow. 

    The debt ceiling deal (III): "First big step toward fiscal rectitude" by the U.S. government, or a "blank check" paving the way for ever higher levels of federal spending?

    States and cities may not be defaulting in waves yet, says Meredith Whitney, but they’re cutting back spending and heavily contributing to signs of a double-dip recession. Job cuts announced by non-financials such as Merck are about to get a lot worse as municipalities are "forced to cut back on issuing contracts."

    Believing that "the steep yield curve is forecasting better times ahead," Raymond James’ Jeff Saut says investors should stick with energy, consumers, and gold. Energy is Saut’s favorite sector, and he reiterates the case for EV Energy Partners (EVEP), up 75% YTD yet still boasting a 4.3% dividend yield, plus Linn Energy (LINE) and Resolute Energy (REN).

    One asset manager who used this morning’s and this afternoon’s market strength to continue lightening up is Barry Ritholtz, who has taken his client’s cash positions up to far higher than normal levels. Still worth holding: large-cap, dividend-paying shares.

    Sanford Bernstein’s Brad Hitz thinks Goldman Sachs (GS) and Morgan Stanley (MS) will likely take a hit should Treasurys getdowngraded. Hitz believes a downgrade would hurt the fixed-income, currencies, and commodities trading revenue of the firms, as credit spreads widen and investors reduce holdings of dollar-based assets.

    Boston Properties (BXP): Q2 FFO of $1.23 beats by $0.04. Revenue of $436.5M (+11% Y/Y) beats by $28M. Expects Q3 FFO of $1.23-1.25 vs. $1.17, and full-year FFO of $4.78-4.83 vs. $4.68. (PR)

  217. seer

    Apparently it passed 269-161.  Looks like a lot of dissension probable in future negotiations.

  218. Maya1

    Phil/ Mysterious
    Yep! One way to keep em guessing!
    But seriously, I am now in “doing my stuff and checking my rear by running things by you” mode!
    So far so good! Still learning… It will stop being fun when I stop learning, I guess! THEN, will stop.
    OR, if ADD kicks in before learning stops!
    Thanks!

  219. jackhound

    Thanks for the great articles super information. On IMAX, I am looking at them long term and so happy to get in today.
    I would also like to get your thoughts on TBT, slightly longer term. Despite Cantor’s recent losses, seems like a high probability for hefty profits in the medium to long term (maybe up to 1 year, perhaps more)? I bought TBT today so for better or worse $30.50-$30.70 is my entry (scaled, sort of). I was motivated by seeing them close to all time low. I know there is possibilty for super easy monetary policy given economic weakness, but didn’t rates rise with QE2? Also with the Fed overnight rates are at near zero, seems like there is only one way to go in general for rates, medium to longer term. Even though TBT a levered ETF, I dont see any decay or contango (though a pretty substantial expense fee of 0.95%). I havent researched the Barclays (Lehman) index, but no reason not to think tied to real market rates longer term. Thanks!!!!!

  220. cwan120

    Hi, Peter D,
    Are you adding new strangle positions in the last few days?  If so, what month & strikes?  With all the uncertainty going around, and people warning about the risk of markets going way up and way down, I am reluctant to play strangles.
     
    Maybe I should go see lflan, and let him diagnose which parts of me are too long or too short. :-)

  221. doro165

    Thanks for the USO directions today. Made it 3 times (up/down/up) for a very nice win. 

  222. jcaesar

    Alas, this is a day that will live in infamy.  A determined minority with an absolutist, non-compromising view of politics has manipulated the democratic process and imposed its agenda on the rest of the country.  A true Triumph of the Will for the Tea Party.  Unfortunately I think we’re still in the beginning stages of this nightmare.  Much more to come!

  223. jackhound

    Phil,
    I meant to direct my prior comment to you but failed to address it to you (sorry; although actually my comments about the super quality of the articles and information certainly applies to all commentators).
    I had a couple of additional thoughts on TBT medium to longer term, which are bearish for the security. The biggest threat to TBT to me seems to be the rush to treasuries, so there are some real issues like the European situation which could trigger this (who what have thought talk of a US default would have, WTF!). Also, perhaps, after such extended periods of easy monetary policy and projected future of much of the same, long time rates will actully come down while short rates do not go down, on the view that we are into a new paradigm of permantly ultra low US rates LONG TERM (20+) rates.
    I wish government could actually rethink rates and creation of money through the banking system. To me it makes sense to have a seperate type of banking system for the mortgage market. Our predecessors saw it fit to closely and relatively permantly link the creation of new money (the out of thin air kind) to the creation debt. While the system worked for their times we need to rethink these systems in light of the present day. The US mortgage market has turned out to be one of the most fundamental credit markets in the world. Why this gets gleaned over escapes me until I remember the golden rule, vested interests win!   Rome broke by the weight of its own fabric!!!!!!!!!!!!!!!!!

  224. angelcur

    you know caesar thats just not the issue from my perspective..the issue is that neither of these parties wants anyhthing but the status quo..i am suprised to be saying it but why would the democrats agree to this..to save the country?..they had two years with massive majorities..the republicans have been playing this game for ever its like a play where the dems are romeo and the rep juliet..they just kill each other over each other and do nothing for the rest of us..as long as they are at war they dont have to do anything uncomfortable you think it a coincidence that o never steps up and gets into the absurduty of the tax cutting job creation non correlation.he doesnt do it.because he doesnt want to..we need a coalition of the sane one problem! they are all sullied and co opted..quit the blame game…or change your name to cato ;)

  225. angelcur

    i mentioned to phil today who is going to panic no one is an odd lotter anymore..ts all instis..so its not in theri interest to tank anyhting…i suppose if  we keep seeing stuff likeThe Italy sovereign cds has soaring +114 bps in 7 days. The Spain and France sovereign cds continue making new record highs today. Italy is right near an all-time high. The Eurozone Financial Sector CDS Index is very close to record highs, as well…then it will be tsunamai of a shitstorm..i would stay bullish until something is obvious because theres no discounting anymore..its crashes when the fan gets sludged

  226. angelcur

    i meant tshitstorm

  227. jcaesar

    anglecur – I agree with some of what you’ve said, but obviously not everything.  You really think the two parties just want the status quo – that they’re just the same thing (or are supporting the same objectives)?  Define the status quo.  Also, American parties have traditionally NOT been like European parties where obedience to party objectives takes precedence over other issues (local ones for example).  They’re composed of individuals who have, more or less, unique and varying objectives, morals, sense of duty etc.  You’re "they’re all the same" argument sounds like a bit of a cop out to me (no offense).  I’m sure if we elected a coalition of the "sane" as you suggest, you would quickly find them to be just as bad as the Democrats and Republicans, and we’d be back to saying "they’re just all the same." 

  228. angelcur

    i suppose youre right caesar..i think i continue to seek the pony at the bottom of the pile of horse shit in th ecorner..its not there i dont care what their messages are i care about where we are and seem to be going and i just dont see A party to blame i think its a collective ‘cop out’ i just never beleived what i was seeing..like nafta..what a job gutter..we all need to be more cynical and less doctrinaire..i think i am very unsure of much in terms of the end game here i am just sure they will prop it up until it blows up…so here’s to playing the  prop…what a sad group of idiots we have governing us…

  229. 1020

    Hi Phil, thought you would like to spend 10 ninutes, watching a man with his hair on fire….
     
    It’s a great rant:
     
    http://www.youtube.com/watch?v=Fm5bGdprxnk

  230. jromeha

    Phil – "Something to hang our hats"…. THat’s not good enough for me. Obama has been no different than Bush and this isn’t the change I voted for. Maybe he was forced THIS time, but he had a chance to save what, $500 billion+ by letting the Bush tax cuts expire!? What was the republicans threat, to cut 10 million unemployment checks? He had a chance to be the bully. To force them to cut checks to 10 million people b/c the rich weren’t getting continued tax breaks… Who wins that PR battle? I would’ve thought most americans would’ve sided with him and the Republicans would’ve gotten destroyed in the next election…. Instead, the dems and my President cave in…
    Anyways, on to something more positive. Your calls today, AMAZING! Selling longs after initial pop, shorting oil, going long oil at bottom….A person with a 25k account could have paid for his/her yearly membership fees just off the plays today!!!!  Killing me that I was in meetings all day and unable to participate in these amazing calls.

  231. 1020

    Americans coming out of the "Socialist" closet….
     
    http://www.youtube.com/watch?v=8rjYuaQ1Zho
     
     
    Can anyone come up with a term for "Socialist/Capitalist"? 
     
    It’s what many of us are….

  232. Troy

    Phil/Futures Falling - "We seem determined to take our best shot at recreating the great Depression"--> Krugman Bloomberg Interview  Asian shares not looking good either.  Perhaps Wall Street understands that the passage of the debt ceiling bill could actually make the economy worse.  Plus now they can focus on Europe and our the horrible recent US economic data.  What we really need this week is the Bernank giving a hint of QE3…along with the rating agencies saying they won’t touch our credit ratings (beyond the Moody puppets).

  233. escohen5

     1020/Olbermann — excellent rant…Keith is better than ever!

  234. Troy

    Per Ron Paul - The bill also assumes large tax increases in its revenue projections, with the expiration of the Bush tax cuts at the end of 2012 calculated into the “baseline” numbers.  This assumption will make it very difficult politically for Republicans to extend current tax rates beyond 2012.
    ——
    It was surprising to me that Obama extended the Bush tax cuts for the wealthy, but now I’m beyond confused that he would put in jepardy the middle class tax Bush tax cut extension.  I smell major tax reform coming, starting in 2013…and if you are not in the bottom 30% or the top 2%, expect to pay more.

  235. Peter D

    Hi Cwan,
    I would love to add new short strangles in the past few days, but I had to refrain myself.  What I did though was to roll 2X on some puts.  Since I get a credit for the roll, it’s basically adding small positions at a lower strikes.  VIX at 23+ is very tempting!

  236. mb22

    I spent my twenties working and drinking in DC, and always tell people its not a place to go if you have serious problems with it (or controlling yourself while using it.) Very much a part of networking, but probably similar to other big cities.  
    And our elected officials need something to do while they wait to cast their vote at late night sessions. :)

  237. cwan120

    Hi, 1020,
    "Socialist/Capitalist"?  How about SocPitalist?  Or, more appropriately, suck-piss-it!
    :-)

  238. Troy

    Phil/ Cramer Sound App – Ask and you shall receive – http://www.cnbc.com/id/18724672/ 

  239. cwan120

    Hi, Peter,
    You are right.  It’s really tempting!
    But, just like you, I still have some Aug puts that I’m patiently waiting for the magic of time decay.  The summer month of August is really long!

  240. Phil

    Good morning!

    Big Chart levels are very ugly, never a good sign when Elliot has to stretch time to keep the 5% line in play (ie – been a long time since we rock and rolled).  No joy in Mudville until we’re back over those must hold levels and it’s all down to the 5% line if the Nas fails to hold 2,740 (right on the line).  

    Futures weak and getting weaker as we head into the 3am trade.  Dollar was hugging that 74.50 line until 2:30 but made a sharp turn higher and is now (2:45) 74.65.  Indexes have been fading since Asia’s open (9) anyway, down about half a point from the vote.  Oil failing to hold $94.50 is a surprise but gold is still $1,628 so Asians are still panicking into gold (and their markets are down about 1% across the board).  

    Love this picture of Boehner on the front of the WSJ – now they are even lighting him for saintly effect:  

    What can we say?  Women want him, men fear him!  And anyone who thought he was a nutball to keep himself tan like that – here’s the payoff as he looks fantastic in a shot like this…  I would love to know the how and where of this shot as it’s right out of PR film school.

    74.73 at the EU bell!

    Dow Futures (/YM) are a good long above the 12,000 line for the 3am trade, as is S&P (/ES) 1,275 with tight stops, of course and out if the Dollar is over 74.75 but the theory of the 3am trade is the BOJ shoves the Dollar up in to the Nikkei close and we get a drop from here in the Buck which boosts stocks and commodities.  

  241. Phil

    Wow, Dollar slammed up to 74.80, smacking the markets lower.  That’s why you have to take those Dollar stops very seriously but Dow holding 11,997, which is a good sign for those longs.  S&P down to 1,273 and oil (which I did not like long) fell all the way back to $94, where it is now getting interesting (/CL) as a long off that line.  

    Italy down 1.5%, Spain down 1%, Switzerland down 2% and the rest down 1% or less at the EU open.  

  242. dday97

    /CL ducked below 94.5 returned to touch it and then nosedived to 94.03. This just missed my buy line of 94. So I’m still waiting right now, if I can get a touch n go off 94 I’ll buy. If it blows through it I’ll wait and re-evaluate every .25 move to see if I buy or sell. Same goes if it never gets that low and hits 94.25 instead.

  243. dday97

    Beat me to it Phil. Typing on the iPhone isn’t so fast :)

  244. dday97

    BTW. That was my buy off 94.23. I like it here for at least a quarter move.

  245. dday97

    Leg 2 at 94.17

  246. Phil

    BCE/Canuck – That’s a nice stock.  It’s a little aggressive selling the $36 puts and calls and, unfortunately, I can’t see what you see on the US options as we only have December and March.  As long as you pick a net cost that you would be happy to double down on, the concept is fine.  In your example, your net is $31.56 (net of short sales)/33.78 (net cost of 2x if 2nd round is put to you at $36).  If you REALLY want to own 2x at net $33.78 – there’s nothing wrong with this trade but the fact that you are concerned about it and feel you have to hedge it makes me think this is not safe enough for your goal of income replacement.  

    I think people get too kooky over dividends sometimes as you are willing to jump through hoops here to get a $3.10 dividend over 18 months but then you want to spend $1.42 to hedge against a loss so what’s the point?  If you don’t trust a stock enough to play it without buying protective puts – you are better off in cash as you’re just betting against yourself (and you’re down 10% before the puts protect you anyway.  In your trade, you are willing to risk 10% ($3.78) or, arguably, $2.15 (assuming your dividends get paid net of the puts) to make, possibly, $6ish.  That’s not a bad overall risk/reward but you are tying up $36 for 18 months to do it so about 1% a month net ROI. 

    How about, instead, NOT buying PFE for $19?  You can sell the Jan $19 puts for $1.44 and, since PFE is much cheaper than BCE, you can sell 2x for net $2.88 collected in 6 months and you have built in 10% downside protection.  Of course, if PFE heads lower, you can roll the Jan $19 puts to the 2013 $15 puts (now $1.15) and, if you want to be very cautious, you can buy the 2013 $12.50 puts for .58, which drops your net collected to 2x .86 ($1.72) but that’s still very good for 6 months and, assuming you are forced to roll, you risk about $1.50 per long but, of course, you can always roll to 2014, etc.

    I like that because it leaves a lot of margin free for other things (net margin on the short Jan $19s is $3.75 so you tie up, on 2x just $7.50 to make $2.88) and, if put to you, PFE pays a nice 4.2% dividend and has very liquid options to sell.  If you do end up owning PFE at net $17.56 (now $19.01), you can sell the Sept $20 calls for .23.  8 sales like that a year (as the Sept calls are 45 days out) is $1.84 back on $17.56 for 10.4% plus the 4.2% dividend is 14.6% ROI by just selling calls (no puts).

    Don’t forget, even if you are cautious and take those 2013 $12.50 puts for protection, that charge is only against your first sale, after that, you get a clean $1.44 (or whatever) each 6 months – now THAT’s an income producer!  Of course, if PFE flies up to $25, it may become unattractive to sell $25 puts if we don’t think it can hold it on the next round so you have to constantly review these positions and make new selections but something is always on sale if you look around and look at all the spare cash you have on the side to take advantage of it with this strategy!  

    Damn, Europe straight down off the open, down over 0.5% already.  Our indexes also down about half a point and gold flying up to $1,631 so you can tell they are panicking again (still).  

  247. Phil

    Don’t forget to leg out as well DDay.  I am always thrilled to get back to 1x and have a lower basis after being forced to go 2x or 4x.  

  248. dday97

    Leg 3 94.05

  249. dday97

    Legging out for sure! Base is now 94.12.

  250. dday97

    1 leg out 94.37. +.25

  251. dday97

    Paired off what’s left of what I didn’t want at 94.32. +.20. Now I have the contracts I want at a base of 94.12. Not bad heh.

  252. Phil

    Headline you will never see/Seer – "US Business Leaders Press Senate Panel for More Scholarships and Funding in Science and Engineering to Make US More Competitive"

    "I think we will have more jobs and be more competitive as a country if we make the default setting that you are welcome if you possess skills and knowledge that we need to solve problems and create solutions for the economy," Mr. Greifeld said.

    Whuck?  How does bringing in people from Asia to displace American workers help us exactly?  I understand, that in the short-run – we simply don’t have enough qualified people in this country as we have neglected the sciences in school for many years (hard to create young scientists when schools are forced to teach creation theory in equal time with evolution, isn’t it?) but Schumer is right – if you attach a green card to a diploma, all you will do is fill up our colleges with foreign students (displacing US students) who will then move on to take jobs so it’s a long-term policy of turning more Americans into hamburger flippers.  

    In this article AND the follow-up article titled "What’s Wrong with the American Job Engine" it does not once occur to the WSJ that, PERHAPS, we need to work harder at educating our children to be competitive BEFORE they go to college.  We also need to level the playing field and encourage Entrepreneurship as THAT’s the way jobs used to form in this country – NOT through waiting for some multinational corp to post a job opening!  The SBA has been gutted since Reagan and, of course, health care costs are out of control for small businesses, which makes it hard to compete with bigger businesses and then there’s patent and copyright law, which has become Draconian and allows big businesses to use the courts to club small businesses into submission.  

    In 1960, when this country invented something new and significant almost every day, there were about 130,000 patent applications were filed and 10,000 approved.  Last year, over 700,000 patent applications were filed and 145,000 approved!  It is so hard these days to start a manufacturing business in the US but you’ll never hear Conservatives complain about this one as it favors Big Business.  The process of getting a patent is long and expensive but Big Businesses have armies of lawyers on staff who churn out dozens every day and they also troll every new patent that is filed looking for people to sue.  We all know China succeeds because they largely ignore our patent laws .  More so than expensive labor, patent laws make it impossible to rebuild a manufacturing base in the US.  

    How can you make a car or a TV or a phone or a microwave or an air conditioner, etc. without violating someone’s patent along the way?  Even if you don’t – they can still take you to court for a year or so and cost you tens of thousands of Dollars to "prove" you have a different idea in our "guilty until proven innocent" litigation system.  Small businesses don’t have the time or money to fight those battles, so they are snuffed out of existence while the Corporate Media washes the brains with BS article that never touch on what’s really wrong with the American Job Engine.  

    HOV/Rustle – Builder mathematics is a very tricky field.  HOV took advantage of the times to take massive write-offs and it will be many years before they have to pay taxes again.   They have bought over 15,000 lots in the last two years and generally expect to turn 500 units a month (was well over 1,000 in 2007) with a normal profit of $15,000 per home as the market comes back.  That’s $90M a year on a $180M company when things get going.  They dropped $138M to the bottom line in 2006 and showed a loss of $2.5Bn in 2007-2009 and broke even last year.  If that trend is your friend – this company is VERY CHEAP!  37% of their 19,000 lots are 80% or more finished so it’s all a question of whether you believe HOV was wise to buy over the past couple of years and gear up for selling in 2012 on.  

    I would not look for a quick turn around – this is a long-term hold.  You can buy HOV for $1.94 and sell the 2013 $2 puts and calls for $1.45 for net .49/1.25 and, if you wan tot play it more cautious, you can buy the 2013 $3/2 bear put spread for .70 and sell 1/2 the Sept $2 puts for .30 and if you get a few good sales, you have an extra $1 of downside protection for free.  

    Allocation/Sank – Under the Portfolio Tab, if you go back in time, you’ll find 3 articles titles "Smart Portfolio Management". 

    Don’t stop learning, Maya – that’s how senility sets in…

    TBT/Jack – It’s a tough one to get a win on.  As an ultra with high turnover, you do get some decay over time and people keep running to TBills from Europe and Asia and keeping the rates down, even without QE2 chipping in to buy them.   So, I only like to play them by selling puts and let some other sucker each the premium.  As long as there is fear in Europe or Asia – TBT will stay low.  Now that we’ve "fixed" our debt, maybe even more so for a while.  

    Very nice Doro – you’re welcome!  

    Oil with a re-entry at $94 (/CL).  Dow with a re-entry at 12,000 (/YM) and S&P at 1,274.5 for a re-entry any second (/ES).  Dollar at 74.666 – that’s Lloyd’s signal!   8-)

  253. dday97

    Started legging in over again. Basis now 94.04.

  254. seer

    Phil
    The other reason we don’t have as many kids majoring in engineering and science is that the pay is artificially suppressed by the cheap H1B labor.  Why would anyone who doesn’t need a green card pursue those fields and get paid less when they can major in finance?  Almost half of all MBA candidates are engineers changing careers because they discovered that engineers get the shaft even more in corp America than most other slaves.

  255. dday97

    Pawned of all my newest leg ins at an average of 94.40. Up .35. Still holding a few contracts.

  256. pat_swap

    Phil,
    If the debt gets fixed, won’t money start moving to markets (at least for a very short term) from treasuries and that will move TBT up?
    Thanks.

  257. Phil

    Engineers/Seer – I blame Dilbert.  Things were fine until that cartoon made engineers seem less cool!   

    Infamy/JC – I agree.  There’s nothing worse than getting everything you want and that’s what the Reps have now.  America’s grand experiment in austerity will probably go about as well as it did when they tried it in the 30s – only this time I don’t know if we’ll be "luck" enough to have WWIII put our nation back to work.  Maybe a new civil war between rich and poor will refresh the tree of liberty with the blood of tyrants….

    Good thoughts on TBT, Jack.  Not quite the slam dunk when you consider those factors but, over time, inflation will take its toll.  

    2 years/Angel – Yes and they wasted those two years trying to build consensus – what a joke!  

    Status quo/JC – To a large extent, the parties have been subsumed by Big Business.  The individual is purposely crushed out of the equation and that is made possible by making money the most important variable in the election equation.  It’s very funny to pretend you have an equal representational Democracy when the fact is that the average Representative spends over $4M to get elected and the average Senator spends $20M.  Have you guys ever tried to raise $4M?  Try to do it when you are unemployed (because you have to quit your job to run) and trying to challenge an incumbent.  MONEY is EVERYTHING – if you don’t have money, you can’t play the game.  And who has 84% of the nation’s wealth?  The top 10%.  And who has the most discretionary income to decide who will be chosen to lead us?  The top 1%.  So they may not be all the same but they are all, by design, cut from the same cloth and that’s the way the top 1% want it. 

    See that HUGE jump in mid-term spending.  THAT’s what it cost to get the Dems out of office in the House last year but BOY was it worth it because yesterday was PAYDAY!  

    Olberman/1020 – Very apropos.

    Thanks Jrome! 

    Thanks Troy, now I just need it on my IPad or IPhone so I can press it when people ask me for street advice. 

    Wow, we’re super-weak still in the futures.  Off about the same as Europe though so I’d say it’s their fault and they may not believe the Senate will vote yes  so maybe too cautious today.  We’ll have to say. 

    Still running Olbermann – he’s hitting most of my talking points…  That’s why I don’t watch him, I think – no point in watching someone I totally agree with – nothing to learn…

  258. yodi

    dday97 /CL watch the futures going down to 7.5 and -8 /cl goes down the same

  259. yodi

    /CL out at 94.31

  260. dday97

    Yodi. I’m misunderstanding what futures you’re talking about concerning 7.5 & 8? Sounds like you’re tracking /CL with something just didn’t pickup what.

  261. jcaesar

    Phil – Futures down because of anxiety over Senate vote or just our crappy economy?

  262. angelcur

    europe is a mess italy is running out of cash its interesting that we aren’t hearing about that..hopefully we own’t ride to the rescue we have our own fraud to perpertrate!

  263. angelcur

    that was in response to caesar’s comment

  264. jcaesar

    Phil / FAA – Just heard that 4,000 Federal employees and 90,000 contractors have been furloughed / temporarily laid off because of not funding the FAA.  If a good number of these 94,000 filed for unemployment insurance, that would have a big impact on the unemployment numbers for this week.  We’ll see, I guess.

  265. jcaesar

    Angelcur / Parties - First of all, good morning.  I agree with you and Phil that big business has to a great extent subsumed the major parties (as Phil says).  That said, I KNOW that there are still real and important policy differences between the two major parties (e.g., women’s reproductive health, maintenance of the social safety net, etc.), and those things matter.  However what got my ire up so much yesterday was the abuse of the democratic process by the Republicans that we witnessed real time.  Why vote for ANY party or politician (corporate funded or not), when a determined minority can make an end-run around the system and simply impose what they want?

  266. dday97

    Out of /CL 94.42. Up another .38. Had a very good night.

  267. yodi

    dday97
    sorry went out was talking about the standard and poor

  268. dday97

    Yodi

    Interesting. Don’t use that as one of my metrics but I’ll take a look. Thanks

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