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Which Way Wednesday – Let’s Try Dylan’s Way!

Kudos to Dylan Ratigan for losing his temper and telling the TRUTH:

Ratigan is everything a reporter used to be in the days when integrity mattered.  He told CNBC to shove it rather than toe the line and push their snake oil and his show is a breath of fresh air in an otherwise stale media landscape.  I love the way he sits there listening to the same political BS as we all do from his panel for 3 minutes and 45 seconds and then literally explodes in RIGHTEOUS anger.  I often feel the same way and, as my Members know, I sometimes explode the same way but to see a host do it on TV (other than Jon Stewart) is just fantastic – it’s what this country needs if we are ever going to save ourselves – complete change in the system.

As Dylan says: "I have been coming on TV for 3 years doing this and the fact of the matter is that there is a refusal on both the Republican and Democratic side of the aisle to acknowledge the mathematical problem, which is that the United States of America is being EXTRACTED – it’s being extracted through banking, it’s being extracted through trade, and it’s being extracted through taxation and there’s not a single politician that is willing to step forward and deal with this."

Yesterday was a ridiculous day in the markets, with the Dow rising 250 points, then falling 500 points and then rising 800 points into the close for a net gain of 429 points on the day.  We had a lot of fun trading it but it’s sad to see our markets trading like a 3rd World country.  I have warned Members for years that: "If our government pursues Asian-style Central Banking policies they will subject our markets to Asian-style market swings" (see "Stock Market Crash – Year One in Review – The Gathering Storm").  In July of 2009 I warned:

SPY 5 MIN

Our stock markets have already started trading like those crazy Asian markets. Why? Manipulation is why. Control of the media by government and business allows focused messages to go out to the people so investors can be stampeded in and out of the markets at the will of the people who control the message.

You need to look no further than yesterday’s insanity to see how this madness plays out (chart by David Fry) as the Fed failed to deliver and explicit QE3 message at 2:15 and by 2:45 we were down 3.5%.  But then, a miracle occurred and someone threw the BUY switch at around 2:45 and the crowds stampeded the other way in the best Bugs Bunny fashion.  

Fortunately, at 2:46 I had already put up a note to Members in Chat to take the money and run on our bearish play (the IWM Aug $63 puts, up 66%) and we flipped bullish at 2:50 with the DIA Aug $111 calls at $1.50 and those made a nice double into the close (we went back to cash to be safe).  That’s 166% on two trades in two hours – which is why I just don’t understand why people are so unwilling to go to CASH!  

Cash is good, cash if flexible and, if the Dollar rises, cash is even a good investment.  This is a TERRIBLE market to be invested in.  Whether you are bullish or bearish you can lose 10% of your virtual portfolio overnight.  Even if the market comes back the next day, math becomes your enemy as $100 losing 10% becomes $90 but $90 gaining 10% becomes just $99 so you end up leaving $1 on the table which is, as Dylan points out, an EXTRACTION of your wealth by Wall Street.  

"THEY" don’t care if you win or lose – as long as you play the game.  That’s why hucksters like Cramer will run you in and out of positions until you are wiped out and then the Cramers of the World will wait a few days for the next bunch of suckers and do it all over again.  This is how the system is designed and, as much as I try to teach people to BE THE HOUSE, and not the gambler – there are still many many people who are gambling on these markets and, when the swings get this wild – the risks simply become unacceptable

We almost got back to Friday’s close on our expanded Big Chart and we have NO interest in taking bullish positions (other than working our way into very long-term positions we think are oversold) until we get back to our new "Must Hold" levels and those are still 10% away on the Russell and about 5% away on the rest.  Anything less than that is just noise as we bounce off a major downward move in the market due to FUNDAMENTAL changes in the long-term outlook for GDP, Debt, Unemployment and Corporate Profits.  

A lot of this stuff has always been with us, I was pointing out 10 days ago that: "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%."

As much as I love myself, I find it hard to believe I was the only analyst in America who figured out this was a BAD thing.  My commentary in that Monday morning post (8/1), when the Dow was spiking up to 12,200 was:

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!  

The next day, I was on TV and said we could have a 20% correction off the top and yesterday I said we should bounce 4% off that 20% bottom (sorry, not on TV).  Today we have to hold that 4% line (15% off the top for luck, our -5% lines) or we’re back to being bearish.  As I have to explain over and over again – I am not a flip-flopper – we are simply playing a very well-defined channel so try not to be surprised when I change my position at our inflection points and especially at the top and bottom of the channel (see yesterday’s post for channel charts) – THAT’S WHERE WE’RE SUPPOSED TO FLIP!  

The chart on the right was done by Pentaxon, one of our PSW Members and it illustrates how low the S&P has fallen when priced in a global currency basket.  This is INSANE folks!  We are back near our March 2009 panic lows in constant currency.  We had a very good time buying then and we will have a very good time buying again but that’s still another 10% or so down from here so, for now, we watch and wait – CASHY AND CAUTIOUS – because up or down – there will always be something to trade tomorrow if we keep ourselves flexible.  

Even as I write this, the Dollar is being pumped up almost a full point pre-market (9am) and that is knocking our futures down 3% but that’s only back to where they were before that idiotic spike into the close (where we sold into the excitement).  The goal of this WELL-PLANNED BS is to scare the retailers who caught a ride yesterday and keep them out of the down 2% open (and get the bears to place bets to be squeezed later) so Lloyd and the boys can flip the switch on the Bots and BUYBUYBUY.  Once they are loaded up (probably the EU close but maybe sooner) they trash the Dollar and send the markets flying back up.  Maybe they have some bullish announcements lined up in the form of upgrades or QE3 rumors but, whatever it is, it won’t come until after they print a scary open to keep Mom and Pop too terrified to pull the trigger as the market pulls away from them.  I know this sounds cynical but if I don’t tell you it’s going to happen before it happens, you won’t believe how corrupt the system is when Dylan and I tell you, right?  

PLEASE be careful out there.  


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  1. stjeanluc

    Oil Lines
    R3 – 89.80
    R2 – 86.42
    R1 – 84.03
    PP – 80.65
    S1 – 78.26
    S2 – 74.88
    S3 – 72.49
    Yesterday’s high and low – 83.05 / 77.28
    Breakout lines – 92.38 / 62.17 

  2. stjeanluc

    And please make Meredith Whitney go away…. 

  3. stjeanluc

    I don’t think that these predictions are really helpful:
    http://ftalphaville.ft.com/blog/2011/08/10/649416/bank-of-england-substantial-downward-risks/
    I could do the same with a dartboard! 

  4. dsheara

    JRW Stuff
     
    Someone asked about this again.  Here is the link I found.  Check chat comments (look for yellow) as he answers questions about his system sometimes.

  5. stjeanluc

    Strong words from Switzerland:
    http://ftalphaville.ft.com/blog/2011/08/10/649271/nobody-messes-with-the-snb/
    A conclusion from an analyst:

    I think this is huge, it increased the amount of liquidity by CHF90bn in total – almost 20% of GDP.

    20% of GDP…. It must be hard to be the last "real" currency in the midst of all the Monopoly money flying around! 

  6. Lincoln

     Phil: Investing??? 
    Yesterday was one of the most depressing days I’ve had, and it had nothing to do with making or losing money.  It was looking at that chart and wondering if this is a game I understand at all.  I’m not trying to trade every hour or day but was curious about the FOMC yesterday so at first blush saw no reason for a big impact.  I had people visiting so was away literally 90 minutes, come back and am dumbstruck.  While I envy you and and the others making bearish and bullish plays within an hour for quick profits that’s not me and am having doubts about any long term strategy not falling victim to the manipulators.  Maybe I should just do a big wide SPY strangle with Jan 13 puts and calls and set up an income play like you’re doing with FAS.  I’m not really looking for an answer just needed to write down my thoughts and vent a little to clear my head.

  7. jerconn

    Phil, can you recommend a couple of disaster hedges, one for a Nasdaq oriented portfolio and the other for a NYSE portfolio?  Or do you advise to go straight to cash and forget about disaster hedges?

  8. stjeanluc

    FAS Money Position Recap

     
    Long Strangle – Jan 12 12 Puts (3.25 now 2.84) and 2x 18.33 Calls (2.11 average cost now 2.76) 
     

    Weekly – Short August 22 Puts (2.87 now 7.00)
    Monthly – Short August 23 Puts (3.65 now 8.00) 

  9. dclark41

    Lincoln
    I hear you brother. I so appreciate Phil trying to help us navigate through this crap, but it really is getting kind of ridiculous. Perhaps that was Phil’s explanation for being in cash this AM. Does anyone really have a chance in this market if you don’t day trade? I am totally confused watching all of the gyrations….and we will have another this AM. Great for day traders.

  10. Pharmboy

    PP for today.  Lincoln…..well said.  It is a farce.  I think the buywrite strategy is the only way to go, but for now, besides what I already have invested, the rest is staying in cash.  We have several more years of bull__ to deal with, so sitting on the sidelines is just fine.

  11. nicha

    Lincoln, dclark – I concur…

  12. nicha

    Pharm – buy writes have also suffered in this market. Dflam for example.

  13. dclark41

    Pharmboy:
    I am holding a few shares of CRIS (flat now). IYO do you think it might be wise to get to cash and just wait for later entry. I can’t do anything about SVNT and DCTH at this point, but CRIS has held up well in this BS market. Thank you.

  14. gmarts

    OMG Dylan Ratigan!  Unbelievable, thank you, unfortunately he’s on MSNBC so nobody saw it.

  15. stjeanluc

    Apparently oil is oversold and gold is overbought:
    http://www.bespokeinvest.com/thinkbig/2011/8/9/bespokes-commodity-snapshot.html
    It’s not that apparent to me though! 

  16. dclark41

    nicha
    I am down to buy/writes, and a few short puts on stocks I want to own. Still have one TZA disaster hedge.

  17. tuscadog

    Phil / open   OK, so I think you’re telling me to sell my triple shorts at the open and mitigate some of yesterdays losses?

  18. flipspiceland

    @Felipe
    Thanks for the Dylan post..he has said everything that I believe in, particklelerly that BOTH parties are doing nothing but exacerbating our catastrophe WHICH both parties created.
    I’ll vote this one time if Ratigan runs for POTUS.  I’ll even campaign for him, contribute, write petitions, and any other thing a mortal man can do to have him for at least 4 years.

  19. 1020

    Good Morning!
     
    Great Rant!  You could say that Dylan was "spitting" mad  (code for pissed off)
     
    :)

  20. stjeanluc

     Could be a lot worse:
    http://www.bespokeinvest.com/thinkbig/2011/8/9/country-stock-market-performance-year-to-date.html
    Imagine being in Finland now… I guess Nokia is their Apple, although going in slightly different directions!
    As for Venezuela being on top, it’s tough to imagine anyone there being in the market besides Chavez’ cronies so it’s probably manipulated (although not as much as the US market as that would be remarkable!)

  21. Phil

    Good morning!  

    If you don’t read the morning post, at least read the last paragraph as that seems to be the game plan this morning.  That does not mean we jump in like idiots and BUYBUYBUY but let’s keep an eye out for bullish opportunities.  The danger sign for the day will be if we don’t hold yesterdays pre-Bernanke highs which I’ll call Dow 11,000, S&P 1,150, Nas 2,450, NYSE 7,100 and Russell 680.  Failing 3 of those and we have no choice but to take some bearish plays.

    I’m very encouraged by the fact that CNBC had Meridith Whitney on as a guest and Cramer and Co are talking doom and gloom into the bell – it supports my theory that this is all a set-up to screw the retail investors by keeping them out of the rally until it’s too late.  If this is a REAL rally, there is no way we don’t at least hold yesterday’s close today and tomorrow there would need to be at least 2.5% progress as much too much money left the markets in the past two weeks for it to only trickle back in.  A bad open can scare out a few Billion shares so the Banksters can load up without moving the makets but that trick is not likely to work two days in a row on big volume so anything less than a green close today is a very bearish sign.  

    Since that’s about 2% up from where we’re going to open, I am leaning towards DIA Aug $112 calls at $1.20 (guessing) because the Dow components, as I mentioned yesterday, should benefit from the current market conditions (low oil, low dollar, etc.).  

  22. 1020

    Phil – When you have a moment.  MOTR
     
    Overdone?
     
    Thanks

  23. David Ristau

    The market will never be bullish until we get the support of financials, and we do not have that.

    This morning we are opening down yet again.

    I think FAZ could be a nice trade to start off the day. Financials are weak, and we probably will have some more selling at the open and renewed shorting.

    Good Investing!

  24. stjeanluc

    It seems that we are doing the opposite of what needs to be done!
    http://www.businessinsider.com/richard-koo-the-ratings-agencies-may-destroy-the-global-economy-once-again-2011-8
    Key paragraphs

    As he’s famously observed before, in such recessions like these, spending cuts actually make deficits worse, and so he’s particularly dismayed by the counter-productive actions of S&P.

    Standard & Poor’s does not understand this and says America’s AAA* rating may be restored if the government succeeds in trimming its deficit by $4trn. The adoption of such a policy by the US government today would plunge the economy into another Great Depression.

    Moreover, the experiences of Japan and more recently Ireland show that once the economy slows as a result of fiscal consolidation, the credit agencies will issue another downgrade, this time citing economic weakness. Even worse, they will disavow any knowledge of the fact that it was the fiscal consolidation they themselves prescribed that sparked the downturn.

    They are all scumbags….

  25. Phil

    DIA $112s still a bit high at $1.41 but close enough to scale in if you are brave.  $113 calls are $1.05 and not a bad play.  These are RISKY but could work out very well if we pop back up 300.  

    Oil testing $80 but should be a good draw today  as many, many people wanted delivery last week as oil went back below $90 so best to wait until after inventories to play.   

  26. pat_swap

    phil,
    TBT and TLT looks again for reload?
    Thanks

  27. davew

    dclark
    I think even day traders must be getting sacked

  28. Pharmboy

    Sure buywrites are down, but one needs to start at 1/4 entries on those and let them sit.  The rest in cash.  I am as guilty as the rest on some of the things we are taught and don’t follow, but for big companies, JNJ, MRK, BMY, etc. that is the way to go.  let them sit and walk away.

     

    CRIS – if you are getting shaky knees, I would get out and wait on the sideline.  Any hiccup and they will retrace down.  I am holding them for now.  DCTH and SVNT are going to be all in 2013, so I have been rolling there for those, just trying to get the money back at this point.  Time will tell.

  29. rustle123

    In on Aug 112 DIA calls at 1.61, hoping the buttons for the bot buy programs are pushed soon.

  30. rustle123

    RUT coming back quickly which looks bullish, TNA racing back up.

  31. Phil

    OIH Sept $123 puts can be sold for $6.75 and when’s the last time you’ve seen me bullish on them?   Longer-term, the 2013 $110/130 bull call spread is $10 with a 100% gain at $130, even if you don’t offset it.  The 2013 $100 puts can be sold for $11.50 and then it’s a $1.50 credit on the $20 spread and the worst case is you are a long-term investor in oil services at net $98.50 in Jan 2013.  Let’s do 5 of these in the Income Portfolio!  

    TOS says net margin on the 2013 puts is $5,262.50 and risk is, of course, owning $50,000 worth of OIH at $100ish ($25,000 in margin) – That’s a good portion for a $500K portfolio. 

  32. JRW III

    Good morning,

     

    IWM  63.98,  64.39,  64.96,  65.60,  66.03,  66.65,  67.38,  68.10,  68.67,  68.98,  69.80,  70.11,  70.67  and  71.38

    We are already down 2 1/2%, so testing yesterday’s high maybe, but then……………………………….

  33. dclark41

    Pharmboy:
    The DNDN debacle has really hurt the biotech sector adding fear that any treatment, regardless of anything else, has to be priced to get through the new healthcare paradigm. What that will be based on nobody knows.

  34. stjeanluc

    As much as people are flying into Treasuries (take that S&P), there doesn’t seem to be the same level of enthusiasm for the dollar. Since March, the dollar has been stuck in a 72/76 channel while TLT has been steadily gaining value, making higher highs and higher lows going from 90 to 108! The last time TLT was at 108, was last August but the dollar was then 10% higher at 82 and change. Not sure what would happen now if we had a panic into the dollar…

  35. David Ristau

    Phil -

    What do you think of IBM?

    I am looking at the 160/150 Weekly Bull Put Spread to park some cash and make some income.

  36. kevinb63v

     Phil,
    Thank you very much for the advice yesterday regarding addressing positions piecemeal rather than all at once: the singles approach.
     
    What would you do with these Pus that I sold: Jan 13 $65 puts on RIG, Jan 12 $5 puts on HOV and Jan 13 $5 puts on HOV. Both the HOV sold puts were done as the offset to $2.50/$5 bull call spreads?
     
    My biggest problem is RIMM, where I’ve lost faith after doubling down (15 sold puts at $35 for Jan 12) and doubling down again would be too much of a committment. Frankly, I’m sorry, but I didn’t understand the play that you recommended yesterday as a fix. Perhaps if you have some time after hours today we could go over it.
     
    Thanks again for all your help as it’s much needed at this time.

  37. Phil

    $25KP – 10 GLL Oct $22 calls at .50 can be rolled to $20 calls for .70 and then a DD at $1.20 becomes net 20 at avg $1.92 ($3,850).  

    Dollar at 74.58, Euro collapsed to $1.423, Pound joined them at $1.618 and the Mighty Yen is at 76.36.  France is this morning’s freak-out in Europe (gee, who could have expected that?).  

    Investing/Lincoln – This is not an investors market.  It’s fine if you are a real long-term investor and simply ride out the monthly BS but if you are trading in a way where the daily or even weekly charts matter to you – as I said yesterday, it’s just an ulcer waiting to happen.  I advocate trading like Buffett – the VAST MAJORITY of your portfolio should be in long-term (ie. you plan to hold 20 years) positions that you are ALWAYS happy to buy more of if they drop 20%.  If you have a long-term position that you aren’t going to be THRILLED to buy at 40% off (assuming no specific bad news), then you shouldn’t be in it – that’s pretty simple.  Your short-term trading can be opportunistic, of course, but ALWAYS with an eye towards protecting your long-term gains.  So, the higher the market goes, the more you should be looking for ways to make bearish profits, like shorting MoMos or disaster hedges or just finding overbought sectors.  

    At the moment, the Dollar is 74.65.  We topped out yesterday at 74.80 but yesterday the indexes were 7% lower when that happened SO THERE IS NOTHING BEARISH ABOUT BEING DOWN 2.5% with the Dollar up 1% – it’s just more currency games to mask the real trading activity.  Volume on the Dow at 10 is 57M – no panic, just retailers bailing into Bots so far.  

     At the open: Dow -1.18% to 11107. S&P -1.23% to 1158. Nasdaq -2.55% to 2419.
    Treasurys: 30-year +0.41%. 10-yr +0.1%. 5-yr +0.05%.
    Commodities: Crude +1.66% to $80.62. Gold +1.71% to $1772.80.
    Currencies: Euro -1.01% vs. dollar. Yen +0.89%. Pound -0.71%.

    10:00 AM On the hour: Dow -2.92%. 10-yr +0.23%. Euro -1.29% vs. dollar. Crude +1.2% to $80.25. Gold +1.8% to $1774.40.

    Market preview: S&P futures -1.5%, indicating yesterday’s remarkable rally appears fleeting, especially as European shares have turned red after early gains. Capital One +1.9% after confirming it’s to buy HSBC’s (-4.2%) U.S. credit-card business for $2.6B; Disney -5.1% following earningsTreasurys and gold continue to rally. Later: Treasury budget, BofA CEO faces investor call.

    MBA Mortgage Applications: +21.7% vs. +7.1% last week. Thirty-year fixed mortgage rate decreased to 4.37% from 4.45%.

     June Wholesale Trade (.pdf): Inventories +0.6% to $458.7B vs. consensus of +1%, +1.7% (revised from +1.8%) in May. Sales +0.6% to $395.8B. Inventory-to-sales ratio remain unchanged at 1.16.

    More from Goldman, whose interpretation of the Fed’s statement yesterday looks to have triggered the breathtaking rally: "What’s lost in the noise is that the U.S. economy is contracting … this would probably mean more QE." Of the 3 dissents: It’s a signal Bernanke is more concerned with "renewed easing" than "consensus decision-making."

    It’s always Fitch – the lapdog of GS, scaring retailers:  The source of the rumors about France looks to be a note from Fitch saying (courtesy of Google Translate) the action of CDS on "France and Germany could be a sign that markets are increasingly concerned about the ability of the eurozone countries to support the weakest of the EU."

    Societe Generale’s (SCGLY.PK) decline is accelerating, now -11.8% in Paris. In Milan, individual shares are being halted, reopened, and then re-halted on a regular basis. Fiat (FIATY.PK) has been suspended, -6.25%. Intesa Sanpaolo (ISNPY.PK-10%.

    Societe Generale (SCGLY.PK -15.5%) is in freefall, now quoted -17% in Paris as rumors swirl of an emergency meeting with President Sarkozy. FT Alphaville posits that the bank’s exposure to the rocketing Swiss franc could be a source of its troubles. 

    Trading is halted in several Italian stocks: Intesa Sanpaolo, Fiat, Enel, Fondiaria, Eni, Monte Paschi, UBI. Italy’s FTSE MIB -3.7%, at its lows of the trading day. 

    Snapback rallies are the norm, Josh Brown writes – "accept them and enjoy them – but know them for what they are." Bulls shouldn’t get too excited, he says: GDP estimates are being ratcheted down, and the decrease in government spending can’t be answered by the private sector right now. The likely result is a compression in P/E ratios and downside risk to earnings estimates.

    DEFLATION?  10-year TIPS yields fell into negative territory late yesterday following the FOMC’s two-year rate commitment, reflecting traders’ expectation inflation will hover over 2% for the next ten years. Holders receive an inflation-kicker along with their coupon. TIPS yields: 5-year -0.93%, 10-year 0.02%, 20-year 0.65%, 30-year 1.03%.

    In its August inflation report, the Bank of England says the pace of growth has slowed and "vulnerabilities, especially within the euro area" have increased. BoE now believes inflation could reach as high as 5% in the short-term before dipping below 2% in late 2012. Sterling -0.5% vs. the dollar.

    The IEA trims its 2011 global oil demand forecast by 60K barrels per day because of higher oil prices and slowing economic growth, but raises its 2012 estimate by 70K bpd on higher expectations for oil-based power generation in Japan. Global oil demand is now expected to average 89.5M bpd 2011 and 91.1M bpd in 2012. 

    China’s trade surplus widenes to $31.5B in July from $22.3B in June and beats expectations as exports climb 20.4% year on year. Economist Brian Jackson says the strong exports suggest that the yuan, which is at a record vs. the dollar, "has room for further appreciation."

    The yuan increases to a new record of 6.4170 to the dollar vs. 6.4404 on Friday – prior to the S&P downgrade – amid speculation China might allow the currency to appreciate further to combat inflation. While the rise isn’t dramatic, it’s larger than usual for the yuan.

    Maybe overdone with oil falling:  Airline stocks (FAA -2.%) continue to gyrate wildly, declining wider than the broad market as investors fear a profit squeeze for carriers. Early losers: UAL -5.9%DAL -5.8%JBLU -8.3%LCC -6.4%

    Whuck?  Shares of Walt Disney (DISfall 5.5% premarket despite its Q3 earnings beat. A Janney analyst says the results do not look bad, but finds cause for concern due to decelerating ad rate growth.

    Cisco Systems (CSCO) is "not out of the woods," but the stock appears to have discounted the worst, Gleacher’s Brian Marshall says in upgrading shares to Buy from Hold ahead of its FQ4 earnings report this afternoon. Marshall sees results roughly in line with Street consensus, at $10.98B in revenue and $0.38 EPS. CSCO-0.4% premarket.

    There can be only one!   Apple’s (AAPL) iTunes claims another victim as Wal-Mart (WMT) will shut down its online music store at the end of the month. The store – which offered music at a lower price than iTunes – was once thought to be a legitimate threat to Apple’s service. 

    Sterne Agee’s Shaw Wu, who recently predicted an iPhone 5 with a larger screen, is issuing another bullish note on Apple (AAPL). Wu thinks the company could double or triple its market share in the mobile phone and PC markets over the next few years, and believes shares are cheap at an estimated 9x 2012 earnings (exc. $81/share in cash).

  38. matt1966

    Well JRW’s statistics just made me real nervous about my play for the near term!  Those are pretty incredible stats JRW-  how do you mine the data for a given scenario?  Pretty cool stuff.  Thanks for sharing.
     
    Anyway, building upon what Phil said in his article, I am taking a stab long here.  I’m finally taking a stab at a process I’ve seen repeat many times.  That is:  1) I sense a reversal 2) I see the reversal 3) I stand there like a deer in the headlights 4) I think if I’d only gone long and set a stop below the flush I could just walk away and be golden.  So here goes!  If they take me out, I’m out.  But I really think that ‘they’, as Phil said, try and scare the bejesus out of you so all you can do is chase after they’ve built the foundation and the first 10 floors of a reversal.  That being said, if I had the time to watch the market the next few days I’d wait.
     
    But there is no reason JRW and I can’t both be right.  His premise is we close down at some point soon from yesterday’s close.  I would agree.  I’ll just cover some of my shorts.. assuming it’s not below yesterday’s low!  If we break yesterday’s low.. I think we’ll go much lower.

  39. angelcur

     socgen -21% now

  40. angelcur

    you see report that n korea sent team inside s. korea to assassinate defense minister? now reports of firing on border…just what we need.

  41. Phil

    Disaster hedges/Jerconn.  I would wait and see if my premise is right at 11:30 but the TZA Sept $61/73 bull call spread is $2 for the $12 spread and that’s 500% upside right there so you can risk stopping out at $1 to make $10 and you can offset with anything you REALLY want to own like VLO Sept $18 puts at $1.03 or DIS Sept $29 puts at $1.15, or T Sept $28 puts at $1.  

    Get on your toes folks – Dollar not holding 74.80!

     

  42. JRW III

    matt,

    We are looking like a Bull Flag on the 1 minute chart, we’ll see !!

    Here’s a good chart from SHJ !!

  43. jcaesar

    /ES and /YM now lower than /TF (at least for the moment).  Odd.

  44. dclark41

    thanks angelcur. :)

  45. Phil

    VIX 43 – Keep in mind that your wrong-way options would be doing much worse if the VIX wasn’t pumping up their value!  

    Dollar NOT failing, now 74.82 as the EU panics out of their stuff.  

    QQQ WEEKLY $53 puts at $2.13 have very little premium and make a nice momentum play on the Nas below 2,400 so a stop at that line (about $2) if you think you are too bullish but I still think 74.80 is a top for the Dollar so I’m more interested in the DIA Aug $112 calls at $1.20 now so 10 of those in the $25KP.  

    And Shadow – you are one lucky bastard on those puts – don’t push it!

  46. dclark41

    Phil
    That big gold bubble keeps getting larger and larger. Going to be a hell of a pop when it goes.

  47. sns1

    DEAR ALL-
     In case you missed it, SocGen trading down 20%…rumor is that they are on wrong side of swiss franc trade…taking euro banks down (creates counter party risk, etc)…plus also rumor french AAA to be downgraded…never gets dull!

  48. JRW III

    This should be the push !!

  49. drcraig

     JRW – Do you have a position yet? I went long early on, expecting a swift test of yesterday’s close, obviously that didn’t happen. My sense is that this turbulence resolves to the upside, as a lot of money was spent on that mega-stick yesterday. I don’t expect that to go to waste. I haven’t been trading that long, but these are the highest nyse trin numbers I’ve ever seen (4-5.5), and the chart reflects the disorder. 

  50. Phil

    Oil/StJ – I can see that.  Oil is actually used and, long-term, even if they fall to $60, it will eventually get over $80 again so a good long-term set-up here, much as I hate them.  Gold is just shiny bits of metal that primates find fascinating – not a good investing premise.  

    Huge draw in crude of 5.2Mb, gasoline down 1.2M and distillates down 700K – that SHOULD send oil back to $82.50 and give the markets a pop.  I’m not really interested in playing oil bullish though as we’re in the last two weeks of the contract and the squeeze will be on soon:  

    Click for
    Chart
    Current Session Prior Day Opt’s
    Open High Low Last Time Set Chg Vol Set Op Int
    Sep’11 81.90 82.30 79.30 79.30 20:08
    Aug 09
    79.30
    -2.01 561597 81.31 302179 Call Put
    Oct’11
    -
    -
    -
    87.30 20:08
    Aug 09
    79.67
    -2.03 143573 81.70 166120 Call Put
    Nov’11
    -
    -
    -
    78.01 20:08
    Aug 09
    80.14
    -2.06 60885 82.20 113612 Call Put
    Dec’11
    -
    -
    -
    101.31 20:08
    Aug 09
    80.61
    -2.09 96134 82.70 202326 Call 

    ROFL – SOCGEN RUMORS REVEALED FALSE!!!   What did I tell you – perfect screw job!    

  51. sns1

    Phil- Somalia and Yemen issuing travel advisory warnings to UK!! You know the world is upside down now!

  52. JRW III

    drcraig,

    I’m 1/3 in TNA waiting for resolution at IWM 68.10 !!

  53. BruceE

    Nice call Phil, thanks!  I went heavy on those DIA calls, you are amazing.  Let us know where to get out please.  TIA.

  54. ssdirk

    Can we all admit that this is pure gambling?  They have made casino odds better than this stupid crap.

  55. rustle123

    VIX sucks, the 112 DIA calls went from 1.60 when Dow was down 310, the dow then goes to 276 and the calls are 1.44.  As the Dow came back, the calls went down.

  56. barfinger

    I bought some TIPS (symbol IPE) nearly two years ago at 46.40, and it now stands at 58.20, for a whopping profit on what I intended to be ballast for my margin portfolio. As some TIPS rates just went negative, I suspect this would be a good time to sell. I am still getting a decent yield on my original entry price, but the price has nowhere to go but down, wouldnt you say?

  57. tuscadog

    JRW / TNA  You 1/3 in?

  58. dsheara

    Oh sure, 1.4% reversal in 10 minutes on the Dow.  This isn’t a market, it is a casino game.
    Good call by JRW btw.

  59. rustle123

    Europe getting destroyed.  DAX down 5.6%

  60. JRW III

    Sarkozy Holding Emergency Meeting

    Sarkozy on beach
  61. Jbur

    VIX/rustle: I have this feeling that the VIX is just another tool that they can manipulate to bludgeon us with. Just another lever to flush us with.

  62. JRW III

    tusca / 1/3

    Yes, at $40.41 !!

  63. rustle123

    @Jbur
     
    Couldn’t believe it, watching options get right back up and as the Dow moves higher, I’m watching the options drop like .20.  Insane.

  64. gmarts

    I’m sorry but that girl is just too skinny…no handles, nice beach though.

  65. rustle123

    Europe now coming back quickly

  66. gmarts

    C testing yesterdays lows

  67. Phil

    Open/Tusca – Well my strategy was to wait for the bottom and go long but yours works too as long as you get out on the turn.  

    Dylan/Flips – Amazingly, I agree with you 100%.  8-)

    LOL StJ!  

    MOTR/1020 – I have zero opinion on a micro-cap like that.  They don’t seem too exciting and I wouldn’t catch a knife but, if you like them, the Jan $3/4 bull call spread is .20 and, if they go lower, you can probably sell the $1 puts for .20  or more so a cheap way to gamble on a recovery.  Essentially, I’d play them like a biotech awaiting FDA approval.  

    TLT/Pat – Absolutely.  $105 is my fundamental top.  As we saw in the news, that’s where TIPS turn negative as well as some short-term notes.  You can’t sustain negative.  Eventually, the idiots giving you money simply run out!  I like the TLT Sept $104 puts at $2, selling the $112 calls at $1.87 (if you have the margin).  On TBT, I like the Aug $24/25 bull call spread at .53 for a nice almost double if they just hold $25 next week.  

    Dollar back at 74.80 – not good.  Looks like we’ll have to wait for 11:30 again.  Great demonstration of the value of taking quick 20% gains off the table! 

  68. angelcur

    paulson down 31 % ytd

  69. prof

    LOVE the Dylan Ratigan clip, now THERE is a man of integrity!
    Are we seeing the re-pricing of America?  Are the markets predicting severe austerity measures here in the U.S.A.?
    The 30-year Treasury is at 3.5%!!!  Good Lord – the world is lending to an inept free-spending debtor at miniscule rates.
    Meanwhile, the most-cash-rich-in-history S&P 500 companies are dropping to even more compelling valuations.
    Has the whole financial world gone crazy?  Are we living in a bizarro world?  This is beyond crazy.

  70. jcaesar

    Anyone – I’m trying to plug in the symbols for the European exchanges into Thinkorswim, but symbols like "DAX" or "GDAX" don’t work.  Does someone know where I can find the symbols?

  71. cwan120

    Holy Cow!
    Did anybody play that Aug DIA $112 call, in Phil’s Alert sent as email?
    I was really busy in the morning.  Didn’t have time to read the post.  Saw his email alert.  Put in a limit order to buy $1.20.  It was filled.  I immediately put a limit order to sell at $1.44 (20%), as I had to leave my computer for 10 minutes.
    And when I came back, the sell limit order was filled in, like, 10 minutes!  Wow! +20% in 10 minutes!  I wished I had the guts to buy more!  (Only bought 5 contracts.)
     
    Uncle Phil, can we play the same game again?

  72. shadowfax

    Phil
    I sold the IWM puts.

  73. stjeanluc

    Grantham / JRW – He also said that:
    http://ftalphaville.ft.com/blog/2011/08/10/649506/the-grantham-manifesto/
    And the guy is no commie!
    Key comments:

    but the U.S. continues its odd and long history of fl owing all economic gains to corporations and the very rich and basically none to the average hour worked
    If we want to dig out of our current morass, don’t we have to change this equation and isn’t the most direct way of doing this to divide the pie more evenly? That would mean lower income and sales taxes for the bottom 75% of earners and higher taxes for the top 10%! We have allowed the vagaries of globalization and the plentiful supply of cheap Chinese labor to determine our income distribution, which has become steadily steeper, to the point where we have become one of the least egalitarian developed societies. Wouldn’t it be better for us to decide deliberately and by ourselves that income distribution which creates the best balance of social justice and incentive to work?
    Twenty years is a long time, so most investors think that dipping to fair value for a minute and bouncing is normal. It is, in fact, highly aberrant historically. Markets staying down and washing away a whole generation’s false expectations, high animal spirits, and excessive risk-taking – that would be normal.

     And he has a very good track record as an investor! I think that he does see what’s wrong with the system and is not afraid to lay it out. We need to make a change and also adjust our expectations!

  74. biodieselchris

    8 silver quarters ($2) could fill a tank of gas in 1964 and 8 silver quarters ($56) can fill a tank of gas today.
     
    Coincidence?

  75. JRW III

    Dollar hit resistance a falling to goose the market (a coincidence I’m sure) !!

    If they can’t break through on the third attempt, I may bail and go short; I didn’t get the memo about today’s game plan  8-)

  76. angelcur

     european financial sector cds just took out march 09 high…at 212 bps…+17%…italy, spain, belgium sov cds now up 10% today

  77. angelcur

    false rumors still down 17%..good thing they arent true!

  78. ssdirk

    JR – Here’s the game plan.  If you bet, bet small.  The swings are incredible.  If you are lucky you can take the quick 2-3% and be happy.  If you are wrong it won’t kill you.

  79. cwan120

    You can sell SPX $800 Aug Puts for > $1.  That’s 30% below market, expiring in 8 days.  But you have to have PM!

  80. kustomz

     buy orders in again AAPL 300

  81. stjeanluc

    DAX / Jcaesar – Can’t find it. But you can find it in Yahoo Finance for example (^GDAXI) 

  82. JRW III

    Out of TNA with a loss of 13 cents !

  83. Troy

    JRW – Can’t get Algo Futures to work this morning…you having any issues?  Oh, also…Sarkozy looks like a walking marshmallow in that picture…but I’d give his significant other a 9.5/10!  Extra ".5" added for the model quality "runway walk"… 

  84. jcaesar

    stjean – Yeah, that’s where I usually check the European markets.  Just can’t believe it wouldn’t be available on TOS.  Maybe because no options/futures are traded on them?

  85. 1020

    Phil/MOTR
     
    I found it interesting because of the business it’s in and Carl Icahn owns a 15% stake….

  86. JRW III

    Troy / AF

    Having issues this morning !!

  87. drcraig

     Phil- How do you assess whether it is "Europe" that holds our markets down? Is it an assumption that they are panicking into the dollar as they near their close based on the "down europe indicies/up US dollar" pattern?

  88. Phil

    There is no good way to play the VIX short with options other than buying VIX Sept $45 calls for $1.45 and selling VIX Aug $45 calls for $1.40 – that’s .05 on the spread but it’s not really a spread as there is no underlying to connect the contracts, so dangerous play.  

    IBM/David – I like the trade but don’t go thinking it’s not risky.  The entire stock market could go up or down 10% while you sleep right now, "parking" money as if it’s in a sweep account is not a good idea – there are no guarantees at all and a bull call spread is not an investment, it’s a timed bet that can be wiped out with zero recovery.   So, again, a nice trade idea but a gamble nonetheless.  

    Puts/Kevin – The way the spreads are on RIG, I would not be too keen to do anything at the moment.  Figuring $22.50 on the 2013 $65 puts it’s still $7.50 in premium if you wait.  You can roll them to 2x the Jan $55 puts at $10 and those can get rolled back to 2013 $45 puts (now $9.50) as that premium expires so it’s a nice way to knock $20 (33%) off your entry – worth going 2x for that.  HOV is a catastrophe but the $5 puts can be rolled to 2x the $2.50 puts for about .70 per long and isn’t it worth .70 to have twice as many shares put to you for the same price.  On RIMM – how about get out of the box completely and take the 15 $13.60 Jan $35 puts ($20,400) and roll them to 20 Jan $24 puts at $5 ($10,000) and then you sell 30 VLO Jan $17.50 puts (or something else you REALLY like) for $2 ($6,000) and see how those go and work on that last $4,400 later?  

    Amazing how well those DIA $112 calls are holding up, still $1.30!  

    Dollar at 74.81 again with 15 mins to EU close.  Dow volume a nice 131M at 11:15.  

    Russell/JC – I think it may be ready to reassert itself as a leader on the way up.  That would be a bullish sign.  

    Grantham/JRW – He needs to adjust for the Dollar.  

    ROFL – RUT Futures hit 666 again.  

    Travel advisory/Sns – Now THAT is funny!  

    DIA/Bruce – Well, as I said above, great illustration of why you don’t look a gift 20% in the mouth.  Had you just taken half off the table at $1.50 without asking, you would have had 1/2 left with a net .90 and THOSE you could have let fall back to $1.20 and you still could get out with a 10% gain (or decide to go back in and have 1x again at net $1.05).  PLEASE do not wait for me to tell you to do the right thing – there is no possible way, in this crazy market, that I can keep up fast enough.  

  89. sns1

    Phil- 11:30…it’s coming up, trade ideas?

  90. flipspiceland

    @Felipe
    You actually agreed with me 100% the other day, as well, in that finally you concede that "Corporations pay no taxes", but you didn’t quite notice.
    re:   Pulling the trigger on BRK.B
    At what point would you sell puts and how far out?   You mentioned the other day that it was getting in range and along with last years comment then,
     "how would you like to tell everyone that you own BRK.B at $70.00?"

  91. biodieselchris

    TBT 27 calls are down 50% from yesterday.
     
    Not a bad gamble (but man, is TBT a friggin gamble these days)

  92. angelcur

     rumors that europe is working on euro-wide short-selling ban…uh oh…remember when short-selling bans happened last time

  93. flipspiceland

    @BIODC
    Sure it’s a coincidence.  Just like Goldman Sucks alumni just happen to be Big Jefe’s at every single crucial financial nexus in the world, and in the galaxy.
    Good catch.

  94. angelcur

    mcconnell…tommey kyle and portamn to panel
    boehner…upton and hanserling

  95. kustomz

    Possible… 10620 on the dow futures if they do not step in like they did yest. What im seeing in the charts

  96. Troy

    CNBC’s Rick Santelli and Meredith Whitney, Meredith Whitney Advisory Group debate over munis, in a heated exchange.
     
    http://www.cnbc.com/id/44088318

  97. Troy

    ^^^Watch the video on the link above ^^^

  98. ssdirk

    JR – I have today’s IWM channell thus far identified I think.  Do you see it?

  99. rpme

    Phil, i own 2000 shares of TBT @ 30.50 and have been hanging on thinking they cannot go lower. Should I start buying puts to cover?

  100. Lincoln

     Phil: hear Ya
    Like I said earlier I was just trying to clear my head and it is comforting to hear others feel the same, which by the way I feel is an added value to this site.  I’ve got your long term message already, sorry to make you repeat it, and is in fact how I’m positioned.  Yesterday didn’t hurt me financially it just puzzles me.     ;)

  101. Troy

    Europe closed…now the bots can take control…

  102. kustomz

    another coincidence is that Jamie’s face is on TV when banks are being sold off and Europe is on the verge..

  103. rustle123

    CNBC has the dumbest article on their site.
     
    http://www.cnbc.com/id/44085903
     
    They are talking about Obama should give substantial tax cuts to solve the problem.  Great idea, let’s take in less revenue which caused a large chunk of the problem when we’re running at a deficit.  It’s scary that congressman listen to idiotic ideas like this.

  104. barfinger

    Phil, you may have missed my question about whether now is the time to sell IPE (TIPS)…

  105. Phil

    Casino/SS – That’s why you need to sell risk to other people, no buy it yourself.   MO 2013 $20 puts can be sold for $2.  That’s a net $18 entry so $9 margin at most to make $2 if they hold $20 (20% down).  MO did go down to $12 in the 2008 crash but, of course, you can roll your net $18 entry to 2x the 2015 $12.50 puts about even and you’d still be entering MO in 2015 at net $11.50ish.  MO has a p/e of 15 and pays a 6.2% dividend and never missed a dividend, even during the crunch they paid .32 per Q and you can own them for $11.50.  Is that a casino?  It’s a casino to the idiots who get conned into selling you a stock for that price but not for a person who understands VALUE.  

    Well, I guess we’re at a bottom because this is what happens at bottoms – I end up talking members off the cliff and pounding the table on blue chips that are ridiculously underpriced!

    DIA/Rustle – Well you bought very high but your goal should be a DD (because I know you ALWAYS scale in) at $1.20 and then get 1/2 back out at $1.40.  

    74.85 – sucks!  

    Europe closed down 5% on CAC, Down 4.3% on DAX and down 2.4% on FTSE.   Very ugly – no wonder we couldn’t get a rally going!  All finished around lows of the day.   Logically, if Europe is collapsing and Japan and China are scary and everyone might default – where is the safest place to put money?  Blue chips!

    Oh and gold, I guess…

  106. stjeanluc

    Gee, we are building a large block of big candles on these charts… Is it Hannukah yet? 

  107. angelcur

    ANYBODY worried at all that all this derivative shit and computers and technicals could just drive us to zero by accident? wow

  108. JRW III

    I lost a post, 2/3 in TNA at $40.04; target IWM 69.51 !!

     

    ss / Chanel

    Well, if that’s for today I’m taking the day off, as that would be fairly narrow to trade !! 

  109. angelcur

    dax tanks another 1% into last 15 minutes of trading…closed down -4.61% italy closed down -6.7%..DIMON ON CNBC…

  110. palotay

     GE Buy/Write – Stock at $15.19 sell the 2013 $15.00 Puts/Calls gives us $9.76/$12.38, plus another 6% a year in dividend.  Seems like it is worth a stab.

  111. stjeanluc

    Short selling / Angel – In a lot of places, you already can’t short stocks (and banks in particular)! At least retail investors can’t. That’s scary when you see them down 10% and more. 

  112. gmarts

    siver busting up huge, short squeeze possible

  113. gmarts

    Silver that is of course.

  114. stjeanluc

    Gold might close above $1800 today… Quite remarkable the damage in 3 days! It was at $1500 back on July 1!

  115. rustle123

    Doug Kass wrote this morning:
     

    There have been 22 occurrences when these conditions coexisted (large volume and greater-than-13% price drops in under two weeks). The mean return after six months was 10.2% and over 20% a year out. If one ignores the data points during the Great Depression, the gains would have been more pronounced. This is one of the reasons why I suggested that a bottom was put in place this week.
    I then proceeded to discuss my bottom call.
    I am on the same page as my idol Sir Dennis Gartman who presciently told the "Fast Money Halftime Report" team that an up move in the markets was imminent. Unlike Denny, however, I don’t see a likely retest of Monday night’s lows.
    I go back to my playbook that I discussed on "Fast Money" that led me to call for a generational bottom back in March 2009. Similar to then, today I look at four swing factors that are trending in the right direction:

    sentiment/panic/risk-aversion;
    the "aha" moment;
    risk premiums; and
    fundamentals.

    He goes into each one in more detail, but too long to post.  He was off on Monday.

  116. rustle123

    Kass did say that currently he is in the highest net long that he has had in a long time, though he is nowhere close to being fully invested.  Sounds ike him and Phil are on the same page.

  117. rustle123

    Paulson’s funds are down over 25% for the year so far.

  118. button

    There goes the $

  119. gg67

    bears went to lunch

  120. eyezz

    Thanks Phil on those DIA 112Cs
    Very nice day trading around that 10,800 (DIA) in and out  1.15 – 1.30  on those 112 calls but I was hoping for a bigger bump up after Europe closed but hey, those nickles and dimes add up nicely year in and year out, I guess I am a grinder but I do love the occasional "home run" ie yesterday’s BS run up into the close :)

  121. biodieselchris

    MSFT P/E = 9.04, MC = $203 B
    AMZN P/E = 87.60, MC = $90.1 B

  122. Phil

    Tips/Barf – Wow, I didn’t know they moved that much.  I would take it off.  You can always get back in if they break $60 but it seems like a big move for 2 years to me.  Very good investment!  

    Sarkozy/JRW – Is that his wife?  I feel like I should get him a congratulations card…

    Crazy/Prof – I agree but it’s a huge opportunity, again, to build a nice blue-chip, long-term portfolio.

    DAX/JC – I don’t think they have them. 

    DIA/Cwan – Now THAT is the way to play it!  EVERYONE TAKE NOTES!  Sure, we can do it again right now.  

    Thank you Shadow – I, for one, am relieved!  

    Silver/BDC – That’s a good analogy.  Meanwhile, how about a share of XOM in 1964?  

    MOTR/1020 – I’m going to watch it now. 

    Assessment/DrC – I watch their action and the currencies and the volume over here etc. and then I guess.  You can see their moves directly impacting the Euro and Pound and then you can see the Euro and Pound impact the Dollar which then moves our indexes – you just need a lot of screens!   Unlike US, the EU LIKES a strong currency and their markets go down when the Euro gets weak.  

    11:30/SNS same DIA idea I liked at 9:30.  

    100% /Flips – Taking a statement out of context does not count as agreement Flips, don’t get greedy – I’m amazed it happened once!  On BRK.B, $65 was my magic number and they hit that Friday, then flew back to $73 on Monday and now back to $68.  They can go much lower in a crash so I’d go with the short Jan $65 puts at $4.60 for a net $60.40 entry as that’s one you can DD or roll on if they fall to $50.  

    TBT/BDC – I like shorting TLT better at the moment.  

    FAS weekly $13/14 bull call spread at .46, selling the $12 puts for .54 is a .08 credit on the $1 spread.

  123. eyezz

    Ahh, looked away for a couple mins and nice little pop here ;)

  124. angelcur

    i think gold may have made a tradeable top…gulp

  125. Pharmboy

    If 76% of the firms did not report forward looking guidance, is that not a problem?  I think nibbling on blue chips is still risky at this point.

    Valuation is never a very good timing device but is a useful barometer nonetheless to assess if you are buying low enough. Forward P/E’s right now are irrelevant because the analysts have yet to take down their estimates so the multiples are inflated. But if you are looking at really cheap markets, then consider that Germany and France are now trading at 8x forward multiples and China is at 10x. As for the S&P 500, the best that can be said is the market is not expensive and the dividend yield is starting to approximate the yield on the 10-year U.S. Treasury note.

    If I am still not enthralled with equities as an asset class, it is not really the valuation metrics that have me unnerved as much as where we are in the business cycle and how fast recession risks are rising and what that will mean for earnings revisions going forward, which the equity market is very responsive to. For equities, it is not so much the valuation metrics that have me unnerved as much as where we are in the business cycle and how fast recession risks are rising – and what that may mean for earnings revisions going forward, which the equity market is very responsive to. To be sure, the Q2 earnings season had been stellar, but the lack of guidance —two-thirds of reporting companies did not provide any — points to reduced visibility.

    When the goal posts are widened over the economic outlook (recall that the Fed just cut its economic projections a few weeks back) that augurs for a lower fair- value P/E multiple. The market may be less-cheap than it appears. According to research cited in the FT, nearly 70% of the few (76) that have provided guidance have reduced it, and in the most cyclical names as well (Tyco, Illinois Tool Works, Netflix, Texas Instruments).

  126. Pharmboy

    How about buying VIX Aug $25 P for a roll of the dice.  If this is bottom, VIX should drop like a rock (or continue to do so….

  127. topher7

    MOTR/ FWIW…  Cramer was lovin the stock in the low teens( down from 30).. 

  128. Pharmboy

    TWO pays a nice dividend and should continue to benefit (like NLY) from the low rates….assuming businesses continue to stay afloat…..

    Did someone mention them here yesterday?

  129. flipspiceland

    @Felipe
    It’s not agreeing that matters;  it is the substance of  what is agreed upon.  
    We can agree or not on whether Carla Bruni is light years more attractive than say, Sofia Vergara. It matters little in the end because they both have their relative merits—I lean towards Sofia as a matter of principle, because she is not as lean as Carla is. So what?
    To agree upon a fact—--the earth is round, not flat—carries us far more towards consensus and material reconciliation than some triviality.
    But I’ll take what I can get.
    Will do on the BRK.B  Jan 65s.

  130. asaenz

    @ Nice ideas Pharm, i think im buying some vix puts also (but maybe september)….i own NLY, do you like TWO better? They have about 3% more on div. yield….i was able to buy NLY at a very low price, so i am planning to keep them until the FED changes its mind about the low rates….

  131. angelcur

    i love that article it sound PHILosphical

  132. angelcur

    right flips in otw we look not at the mantle while tending/poking the fire

  133. rustle123

    As much as I hated George Bush, Jeb Bush had excellent ideas and programs for education.  He was considered the bright Bush but after 2 of them, how much can you trust a 3rd?

  134. Phil

    TBT/RPME – You are down about $10K so I’d get out ($60K off the table) and sell 30 March $25 puts for $3.05 ($9,150) and pick up 20 March $24/29 bull call spreads for $2 ($4,000) so you won’t curse me out if you miss a recovery.  Worst case is you have 3,000 shares put back to you at net $75,000 less $5,000 of net sales so about $10,000 more to own 50% more TBT (average, including your original loss would be $26.66) is your worst case.  

    Message/Lincoln – Don’t take that personally, sometimes people mention something that makes me think it’s a good time to make a general point for everyone – you picked the right time!  I’m glad you have a good perspective.  It’s a stupid, manipulated market but that’s the game we play because it’s the only game in town.  I voted to change it and Dodd-Frank put in 30,000 pages of regulations but they’ve all been watered down by lobbyists and their pet politicians and all the appointments for financial regulators who might actually regulate are being blocked and Sheila Bair has been driven out of town by a Republican lynch mob and Paul Volcker said he was getting too old for this shit and they cut Marcy Schapiros budget in half…  all the normal crap that goes on in Washington that makes a joke of the whole process.  That’s why it doesn’t make sense – you assume that Congresspeople are representing your interests – a flaw in the basic assumptions!  

    Accidental zero/Angel – Every day! 

    Good trading plan JRW.  

    GE/Palotay – Nice buy/write.  

    Grinding/Eyezz – Ty Cobb won the 1909 triple crown with 9 home runs – all inside the park.  But he batted .377 and had 107 RBIs – never a need to swing for the fences if you know how to hit for average – the home runs come on their own…

    Forward earnings/Pharm – That goes back to whether or not you are a long-term investor or not.  Do I think people will stop smoking in the next decade?  No, I’m pretty sure they’ve thrown everything they can at people to get them to stop. Maybe a loss of market share for MO to pot but, on the other hand, if they get to sell pot they will double their revenues.  

    Then there’s T or AA (no more aluminum used?) or BA ($59!) or DIS or INTC or KO or PFE or T – I don’t care what their guidance is for next quarter or next year.  I hope it sucks!   I hope they drop 50% so I can buy twice as much in the next round for half the price but why on earth would I not buy them now just because some analyst thinks they might get cheaper?  

    I’m investing in a BUSINESS that makes a PROFIT – sometimes it may make more than others but, over time, with companies like these – I have a very high degree of certainty that they will be around to make profits for many years to come.  

    Great flips, we can agree on that (not the girls though, I have no idea who either one is).  

    China/Angel – That’s the pending catastrophe no one talks about.  

    Jeb Bush/Angel – Oh noooooooooooo!  

  135. jabobeast

    Phil—still think we recover today? Or am I wishful thinking?
    POMO schedule today at 2:00???

  136. Kwan

    This market is too nutty for me to deal with on a day to day basis. Maybe things will settle down over the next couple of months…I think that’s my new timeframe for the interim.

  137. angelcur

    seriously believe me he is being floated..

  138. topher7

    JRW…    you in TNA still???

  139. JRW III

    Well, that was unexpected, did something happen ? Out of TNA with 17 cents !!

    I think I’ll go for a drive and come back around 1:30 !!

  140. barfinger

    Phil, you might appreciate the timing on this. I bought the IPE 3/10/09, sold (just a piece so far) today for a gain of 20.3%. It never got to 60, but im trying to sell at 58.59. and can reload later if the TIPS yield goes above zero.

  141. champ87

    Phil
    Carla Bruni is Mrs Sarkozy. Former model, now a popular singer. Nice looking (close up and far away!)

  142. Troy

    JRW/drive – funny you mention that…my plan is to trade 8:30 to 11:30 daily, come back around 1:30-2:00 more regularly…as I’ve always made better money when I’ve done that in the past.  Why sit all day when 75% of the  moves are morning/afternoon? 

  143. shadowfax

    JRW
    Wow! They are going for the BIG FISH!

  144. nicha

    shadow – please explain "BIG FISH"?

  145. kimisk

    Phil — following on from your MO idea — what about AA 2013 puts to be sold for $0.32?
    And — Pharm, I don’t know if you saw this -- re: TWO, NLY, and AGNC et al --  http://seekingalpha.com/article/286286-agency-mreit-dividends-the-obvious-winner-after-fomc-interest-rate-announcement?source=yahoo.

  146. angelcur

    gold 22 off the high

  147. Phil

    Watch that 666 line on the RUT, that needs to hold. 

    74.85

    Recover/Jabob – I do but it is still techically bullish if we simply finish higher than Monday’s close (the lows) but it won’t be excitingly bullish, will it?  

    IPE/Barf – Good move. 

    12:00 PM On the hour: Dow -3.44%. 10-yr +0.3%. Euro -1.26% vs. dollar. Crude +1.53% to $80.51. Gold +2.52% to $1786.90.

    EIA Petroleum Inventories: Crude -5.2M vs. consensus of +1.1M. Gasoline -1.6M vs. consensus of +0.2M. Distillates -0.7Mvs. consensus of +1.1M. Futures +1.6% to $80.65.

    Job openings were flat in June at 3.1M, the Labor Department reports, and the hiring rate remained steady at 3.1%. Private-sector hires fell to 3.79M from 3.87M. Openings were 1M higher than at the July 2009 trough, but relatively flat since Feb. and well below the 4.4M openings when the recession began in Dec. 

    European shares close for the day: Stoxx 50 -6%, Italy -6.4%, Germany -5.3%, France -5.3%, Spain -5%, Switzerland -4.1%, U.K. -3.2%. French banks (ADRs still trading): Societe Generale -16%, BNP Paribas -10%, Credit Agricole -19%. European financial ETF: EUFN -7.3%.

    The market begs to differ with the ratings agencies, pricing French CDS at the same level Italy’s hit in July

    Fitch downgrades Cyprus to BBB with negative outlook from A- previously, anticipating the EU state "will be unable to access the international debt markets in order to refinance an increasing debt maturity profile in H211 and H112."

    The euro and the greenback move a bit higher against the Swiss franc as comments from the SNB’s Thomas Jordan hit the wires. He says the bank has adopted a sort of "Swiss quantitative easing," and that the franc exchange rate is extreme. FXF -1%.

    Though rising to its high of the year at 26 basis points, the TED spread has yet to reflect much in the way of financial distress. From August 08 through May 09, the spread was nearly always at triple digits, jumping to over 400 bps post-Lehman. 

    Forget the TED, CNBC says listen to Meredith!  Coming up next, Roubini:  The top U.S. financial institutions have become "zombie banks" that will need a decade to adjust to a new regulatory environment that will demand banks change focus and cut size, Meredith Whitney tells CNBC. The situation reminds her more of the 1970s than 2008 "because it’s a constant beatdown… huge swings in the face of uncertainty."

    Stock market declines could be a precursor to even sharper drops in commodity prices if history repeats itself, writes Stuart Burns at MetalMiner. Metals sensitive to economic production are especially at risk. Commodity decliners today: Aluminum (ALUM)-1.4%, Copper (JJC-3.9%, Tin (JJT-1%, Steel (SLX-3.7%.

    With the S&P down ~18% from its April peak, it’s clear that investors’ concerns long predated the downgrade, Casey Mulligan writes, and the real news is the weak economy and its poor prospects. Several leading economic indicators – stock prices, housing prices, consumer spending, and consumer durables – have fallen or remained stagnant for months.

    Ceridian-UCLA Pulse of Commerce Index slipped 0.2% in July, offsetting some of June’s relatively strong 1% gain. “In July, the U.S. economy remained in ‘she loves me, she loves me not’ mode," PCI’s Ed Leamer says, representing "a continuation of the idling economic conditions that have persisted for over a year."

    French banks are on the front-burner as a major concernfor money market fund investors in the U.S. The exposure of retail and institutional money funds to European sovereign debt has beenreported before, but looks especially ominous with ratings agencies feeling their oats lately.

    Hedge funds are getting hammered by bank stocks, sending even the most seasoned managers into cash. John Paulson’s two flagship hedge funds have lost an estimated 25% so far this year, in part due to big holdings in BAC and C. Bill Ackman’s fund was down more than 4% at the end of July; some of his biggest bets have been C and JCP.

    Looking for any sliver of good news? Yesterday’s roller-coaster stock market ride helped generate the largest number of contracts ever traded by derivatives market-clearer CME Group – surpassing the 25.3M contracts changing hands on the day of the infamous Flash Crash – all without imploding the system. 

    I guess Cramer watches Dylan too:  Jim Cramer views the U.S. as "politically bankrupt," and doesn’t believe an economic recovery can happen before significant political change takes place. However, Cramer doesn’t expect a doomsday scenario for Europe to unfold, believing its problems are out in the open, and that central bankers have learned some lessons from 2008.

    Republicans for the "Super Committee" are set: House Speaker John Boehner chooses Reps. Jeb Hensarling, Dave Camp and Fred Upton, and Mitch McConnell selects Sens. John Kyl, Rob Portman and Pat Toomey. Harry Reid yesterday picked Democrats from the Senate; House Democrats have not yet been named.

    Shares of Walt Disney (DIS), down as much as 14%, are now 11.4% lower as investors digest the prospect for strong theme park attendance and advertising revenue in a sputtering economy. RBC Capital checks in on the stock by reiterating its Outperform rating, and dropping its price target to $43 from $48.

    Shares of Boeing (BA -4.5%) suffer along with the rest of the market, but the firm picks up a tidy $3.3B order from Hong Kong-carrier Cathay Pacific for delivery between 2013 and 2016. The airliner says it received "significant price concessions" from BA to lock-in the order.

    Apple (AAPL), which just received a preliminary EU injunction banning the sale of Samsung’s (SSNLF.PK) marquee tablet, is also claiming Motorola’s (MMIXoom tablet infringes on its IP. However, Motorola might prove the one leading Android manufacturer able to effectively return fire on Apple, given the strength of its patent portfolio.

    Three lunchtime reads:
    1) The Fed’s weak medicine
    2) Uncertainty, indecision threaten BofA and global markets
    3) Does the equity premium still exist?

  148. angelcur

    bac cc w berkie

  149. flipspiceland

    @Felipe
    Carla is the one pictured in JRW’s photo this a.m. where you asked:  "is that his wife?"
    Sofia has talents and many pointed attributes Carla does not possess, and never will"
    http://goofygifs.com/wp-content/uploads/2010/09/celebrity-blog-sofia-vergara1.gif

  150. jr_mints

    Phil –  how about a trade on BA, now may be the time to take a nibble.

  151. shadowfax

    nicha
    JRW trades large numbers.

  152. drcraig

     Bailed on my IWM calls at a small loss- just getting tired watching us fail 67.50 repeatedly. Made back my losses on bullish TF trades taken in the 66.73 range. Looking to short a push over 67.50 again. Rallies just don’t seem to get a footing with a high TRIN (I seem to be the only one who watches this). Oh, there she goes!

  153. Phil

    Wow, we had a good 10-year note auction, what a shocker….   $24Bn at 2.14% with a 3.11 bid to cover (very high).   They should have sold $75Bn while they had the chance.  

  154. angelcur

    odd move in tips spread today up 12bps

  155. angelcur

    yield curve pounded again -13 bps to 192 bps

  156. angelcur

    o to meet with bernanke today…

  157. rustle123

    Is O, Oprah?  She’s pretty influential.
     
    angelcur
    o to meet with bernanke today…

  158. exec

    Oh My……traveling all morning.
     
    I left the house and everything was all rosy…..the one commentator on CNBC was predicting another 400 t0 600 point up day.
     
    What went wrong?

  159. kustomz

    O and Bernanke, very interesting since Obama dropped this mess onto the Fed and the Fed returned the favor yesterday.

  160. exec

    Phil,
     
    They’re defending 666 like it’s the Custer’s last stand!!!

  161. Pharmboy

    Those auctions are going to continue for some time Phil.  My 2% is almost here….then I will go for 1.5% when 2% is breached.  Japan has it right on that end of the curve…we just don’t have the manufacturing base anymore….

  162. nicha

    flip – sofia (y)

  163. asaenz

    @ Phil, is there any european bank worth buying? or are all of them just crap? some of them are already at 2009 levels, quite the temptation…thanks!

  164. jromeha

    Phil- Have a play you recommended awhile back and i was curious what you would do/if you would do anything? Im not flipping out or anything and only have a small position. Bought HCBK at an avg of 8.22 sold the Jan 12 9$puts for 1.35 (now 2.90ish) and the 7.50 calls for $1.10ish..

  165. angelcur

    rbob is silly today

  166. drcraig

     Rats! Missed my long entry while making a smoothie. By the way, I’d highly encourage all of you to watch Fat, Sick, and almost Dead on Netflix. It got me into the green smoothie thing and I can’t believe how much more energy I have. Losing weight too.

  167. biodieselchris

    Pharm, VXX is a real bleeder of an ETF. Maybe a good way to play a VIX crush.

  168. nicha

    flip – sorry, I meant Sofia (thumbs up)

  169. kustomz

    You guys seeing this, someone trying to send the bots into a buy program and its getting sold into

  170. augrusot

     drcraig, green smoothie thing?

  171. angelcur

    ewt put volume 5500% higher than normal (china shorting)

  172. gmarts

    Robot wars, wow!

  173. gmarts

    If one side capitulates this could move big.

  174. rainman

    drcraig / green — Getting the ingredients at WFM?

  175. zeroxzero

     Just got online, wow, nice day!  Are we short or long at 340 down, gentlemen?

  176. angelcur

    this is like hearing a fuse sizzling and noticing that your rear end is getting warmer

  177. msf65

     Phil, 
    I have Aug 11 $70 BA puts, that I sold for $1.25 (now $10.50).  I also have stock that I was assigned with avg. price $72.45.
    Is there anything I can do right now to lower the base price? At the time I bought it seemed like a good price but now I would rather be assigned at $60 than $70.
    TIA

  178. willsons

     drcraig – interesting, I will look into that. 

  179. kustomz

    Odds going up that Bernanke is gone…soon.

  180. Phil

    Carla Bruni/Champ, Flip – Wow, I learn so much here! 8-)

    AA/Kimisk – AA could very easily fall below $10 on a global slowdown so I’d rather wait on them.  They hit $9.72 last year and, you don’t miss as much if they pop as you do with MO.  Also – the dividends…

    BA/Jr – As above, I’m driven by PFE and MO dividends more than anything else.  I don’t care if I own a stock at net $11.50 and it falls to $5 as long as they keep paying me $1.40 a year in dividends, right?   I do love BA but they have gone to $30 so be aware.  I would just go for the short 2013 $50 puts at $6.60 as that’s a nice net $43.40 entry and TOS says net $5 in margin so better than 100% upside on margin is a fair way to establish a position.   Keep in mind that with MO, I need Billions of people to buy hundreds of cigarettes but with BA, you need less than 100 potential buyers to come up with Billions in financing – that’s why they fell to $27 in the financial crisis.  

    74.88

    LOL Rustle!   I wish Oprah would get involved!  

    What went wrong/Exec – France (the next domino).  RUT 666 is the last stand, we should go bearish below there.  

    74.90

    1.5%/Pharm – If they would just refinance people’s homes at that rate this economy would take off like a bat out of hell. 

    EU Banks/Asaenz – It’s too hard to know what’s real and what’s not but I think if they are back at 2009 lows, then worth a toss.  

    HCBK/Jrom – Yeah, they really crapped out.  As they have no 2013 contracts yet, I’d just wait or you can buy back the calls at .35 as they’d still be .20 in a couple of months so what’s the point, they can only hurt you…   In reality, your net (without buying back caller) is $5.77/6.64 so, at $6.28 it’s hardly off track.  

    When you are scaling into a position with a buy/write, your goal in round one is to simply establish a cheap position.  In Jrom’s HCBK spread, the stock was at $8.22 so he bought that and sold the $7.50 puts and calls for $2.45 to drop the net to $5.77/6.64.  If the stock is assigned below $8 and he has 2x for net $6.64 then mission accomplished on round 1.  Now, on to round two and let’s say he was assigned today at net $6.64.  What would we do?  We sell the Jan (as far out as it gets) $6 puts and calls for $1.50 and drop the net to $5.14/5.75 – Another 20% off and down (at $5.75) 30% from the initial entry. 

    If we began with $2,500 to allocate and we went in with 100 shares at $8.22 ($822) and sold the $7.50 puts and calls for $1.50 ($1.50) then that’s $672 out of pocket in round 1.  The shares are assigned and you need $750 to buy two more shares ($1,422 total) and then you sell 2 $6 puts and calls for $150 ($300) so back to $1,122 committed.  If another 200 shares are assigned at $6 – then you are in for net $2,322 on 400 shares (avg $5.81 per share) and let’s say you don’t want to risk another DD.  The Jan $6 calls are .90 – that’s a 15.4% return in 5 months.   

    The key to enjoying buy/writes is developing a REAL long-term outlook and strategy.  You can’t just say you are a long-term investor much the way you can’t plant an orchard and give up the first time a gopher gets at the saplings.  

    Green smoothies/DrC – What’s in them?  

    VXX/Nicha – Good idea.  The VXX Sept $36/32 bear put spread is $2.50 and you can sell the Aug $38 calls for $1.55 for net $1 on the $4 spread that’s $2 in the money.  

    Bots/Kustomz – I agree, very expensive defense of 666 et al so far but, as I said, retailers running as the Dollar is held high to keep prices low to mask the Bots buying in.   Also possibly some fund capitulation – losers selling to eventual winners. 

    Long ZZ. 

    BA/MSF – Sure, take advantage of the high VIX.  You can roll the Aug $70 puts to the 2013 $57.50 puts ($10) as long as you are truly a long-term investor in BA and I’d wait for a run-up but keep you eye on the sale of the 2013 $62.50 calls at $8 as that lowers your basis to about the same and you can always roll them later or sell more puts.  Ideally, you want to sell $70 calls for $10 on a move higher.  

    74.78.  

  181. jabobeast

    POMO schedule in 10 minutes?

  182. JRW III

    Well, that was fun; I’m back and buying 1/3 TNA  !! ( another 1/3 on a break above IWM 67.65  , and all in above IWM 68.10) !!

  183. drcraig

     augrusot/rainman/green smoothies – I live in Bangor, ME currently, so no WFM here. Not even a CMG if you can imagine that! This place is short on suburban amenities, and long on natural beauty and relaxed living. My medical practice is great here too. Gives me plenty of time off to fart around trading with you guys. I’ve been reading about the benefits of a MOSTLY raw fruit/vegetable diet for years now, and watching that documentary pushed me over the edge. I went out and bought a Vitamix blender (totally worth $500 btw), and started making concoctions of spinach, kale, chard, broccoli, etc combined with various fruits to render them palatable. My goal is to be 75% raw. People who do this claim all kinds of interesting improvements in their health (no migraines, better arthritis, improved skin conditions, better sleep, improved blood lipids/triglycerides etc). I had blood work done just prior to starting this, so I plan on repeating it in 3 months to see if there’s an obvious difference. I would encourage everyone to watch the documentary Fat, Sick, and Nearly Dead (http://www.fatsickandnearlydead.com/), it’s a real eye opener. Doing the smoothie thing works well for me because it’s such an easy way to get all the veggies you’d otherwise go nuts chopping, preparing, chewing.. etc. 

  184. thechaser

    Third time was a charm on the DIA calls for me.  Can I keep them Phil?  

  185. rustle123

    Phil, thanks for advice, now have calls at net 1.42.

  186. JRW III

    Target still IWM 69.51 !!   Dollar starting to roll over !!

  187. ultyguy

    Got out of the DIA 112 C at 1.45 entry was 1.20.  Thanks Phil

  188. jr_mints

    Phil – thanks, good advice and will look elsewhere.  The whole global economy may be slow for a while so will look at MO.  When in France this summer I noticed everyone seemed to be smoking….incredible with all the warnings. 

  189. angelcur

    dcraig i am a l/a native..my dad is from ellsworth

  190. stockbern

    Check out the insider page on FINVIZ.com.  Insiders buying like crazy.  The page is almost all green.  About a month ago it was almost all orange (selling)   Tell me insiders don’t know a bargain when they see one.

  191. revtodd64

     Relative Strength ETF Portfolio –  I moved my IRA/401K holdings to EMB, PCY, TIP and SGOL on August 1.  The portfolio is up 4% in 10 days.  Honestly, I do better when I just touch my portfolio once a month than trying to deal with all the volatility.  You can click on the user name to see my IRA strategy.

  192. stjeanluc

    The last 2 trading days, 115 has been a tough line for SPY – except when we flew through yesterday. But Monday and Tuesday morning, it turned out to be resistance… Going through would be a good sign. 

  193. Phil

    Smoothies/DrC – I like making fruit ones but I’d rather eat my veggies.  

    DIA/Chaser – As I said above, if you sell 1/2 at $1.50, then you have 1/2 at net .90 so then you can let it ride because, if you stop out at $1.20 at least you are still up 12.5%.  Then, when you reload at $1.20, you have a .12 buffer before you lose money on the re-entry.  So far, as you note, we’ve had several nice chances to make .30 but $1.50 has topped us out so far and isn’t it nicer to make .30 3 times than having held this yo-you all day?  You don’t HAVE to sell at $1.50 but I’d sure stop 1/2 at $1.40 and the rest back at $1.20 with the hopes of getting to $1.65 and setting a .25 trail on the whole thing. 

    $1.42/Rustle – Keep in mind the point is to get 1/2 back out even.  

    Smoking/Jr – Not to be overly dramatic but nothing to live for for a lot of people.  Horror movies were very popular in the great depression and also in the cold war and now there are vampires, witches and werewolves all over TV shows – people’s psychology is remarkably similar over the decades.  

    Insiders/Stock – Yes, that’s been picking up nicely since last week.  Surprised companies didn’t announce buy-backs.  That would be a nice market booster.  Maybe tomorrow to completely incinerate the shorts…

    Good job Rev and a good lesson for all!  

    Meanwhile, Kojo (Income Trader) may have played this dip perfectly by walking away for 2 weeks!  

    SPY/StJ – You mean like that?  8)

  194. David Ristau

    I love these posts. You guys are all smart. Its nice to read through all your different ideas and everything.

  195. nicha

    drcraig – I follow a part raw and a vegetarian diet. I also have eliminated dairy (except for a tbs of milk in tea) and gluten. I used to have IBS, but with my diet I have been healthier.

  196. cjji

    Phil, time to turn bearish on those DIA Aug 112 options now?

  197. scottmi

    oil?

  198. rainman

    drcraig / smooth  — I’d like to hear your results over time. I’ve been moving closer to the "vine" on all my foods including meats and have noticed significant improvements in well being. Basically trying to eat the least processed/chem’ed foods I can find (including trying to cut high fructose corn surup – not easy, and since when has sugar been renamed to "dehydrated cane juice").  Also switched to a whole food vitamin (not a brand) and can now take them on an empty stomach! There are a ton of good flix about our food complex on Netflix. Try "Food Inc.".

  199. kustomz

    Now it gets complicated if we fail to hold here as the $ gains..that was a very early stick

  200. sampuran7

    palotay
    Here is another Buy / Write idea
    WM  bought the stock earlier for 29.15    sold Jan 13 puts and calls for $8.90 credit    with the 4.6% dividend 1.34   it should produce an annual return on net invested of 39%    similar numbers to your GE idea     which I did as well    Thanks!!!!

  201. angelcur

     bac saying wont rule out ch. 11 for countrywide unit

  202. drcraig

     Okay, hit a nice round number on my account, which was my goal for the day. So I’m out! Time to drive down to Portland for some real food!

  203. rehat

    Phil,
     
    About Kojo, On a more serious note. I did not follow him on the put side of his Iron condor as I was suspecting a crash for the last six months. But I cannot imagine how unnerving it would have been if I was in that trade and the guy who helps you set up and gives you advice on buying insurance etc, just disappears. 
     
    I think it reflects very badly on you, that one of your contributors just abandons his responsibility. You need to have people like Opt and not like Kojo as your guys. FWIW

  204. palotay

     Thanks Sampuran, I’ll take a look.

  205. palotay

     Anyone else having issues with TOS? 3rd time I have been kicked off and hand to restart.

  206. biodieselchris

    I ran 14 miles sunday morning and pounded a homemade organic fruit smoothy afterwards (the wife has a juicer…)
     
    I might as well have been on heroin for the rest of the day, it felt so good. Who knew moderate exercise and good wholesome food in your body was the way to go??   :)

  207. jcaesar

    palotay / TOS – No problems for me.  Were you doing anything in particular when it happened (with TOS or other application?) or did it just crash?

  208. Phil

    Bearish/Cjji – No, I don’t see a need to play both sides.  I think it’s about riding up, stopping out and reloading on the next pullback now.  

    Food/Rain – Notice how expensive it is to eat healthy.  Always good to have that competitive advantage to keep us in the top 10%, right?  That’s why WFMI does so good, once you try stuff there you realize it actually is better. 

    Big breakout in the Dow at about 11,050 – clean sailing back to 11,300 from there.   Willing to hold the DIA calls in the $25KP but keep in mind it’s a VERY AGGRESSIVE portfolio.  

    WM/Sampur – Very nice trade idea.

    Won’t rule out/Angel – May as well have just announced it.  

    Kojo/Rehat – Oh I agree, he’s out – already in the works.  I don’t put up with that crap! 

    TOS/Palotay – Not in NJ.  

    LOL BDC.  

    Gotta get that buck below 74.60 to break on through.  

    CFC preferred shares dropping like rocks.  I can’t believe people were holding them!  

    74.64

  209. nicha

    rainman – what is the name of that whole food vitamin. Also, I am looking for a toddler’s whole food vitamin.

  210. rustle123

    Calls/Phil
     
    Already got rid of half when I wrote that.

  211. zeroxzero

     Phil:  Do you think Disney [DIS] is a reasonable long term?

  212. enni_82

     Phil,
    Thank you for the DIA trade.  Bailed out early at 1.42 but a quick 20% was enough for me!

  213. palotay

     TOS – I’m in California, and the quote stream just pauses for 20 seconds, every couple minutes, happens on my phone too, which is on the cellular network.  Makes me think the west coast server is having issues.

  214. palotay

     I’m in 4 /ES contracts looking for another 15 points, which makes TOS issues VERY scary.

  215. gmarts

    out of TNA

  216. topher7

    JRW/TNA..  out of TNA on the3min /8ema crossover???  

  217. rainman

    nicha / vitamin — Swanson’s house brand

  218. dflam

    Phil :Thanks for your help & advice . Here"s another one :
    Buy 300 shares of BK at $25.40,now $20.14,sell 3 Jan.2013 $25  C $2.90,now $1.92 and sell 3 2013 $25 P at $4.20,now $7.40  . Willing to ride it out since my net is $18.30.$21.65 but if you have any comments, I ‘ll appreciate it.
    I did learn that the P & C  dont’ appreciate/decline in same ratio.

  219. biodieselchris

    WFM is losing it’s health luster to the corporate bottom line. It’s more of a fad now than anything.
     
    The Sunday farmer’s market is UNBEATABLE. If you don’t have one in your area, that is too bad, and you should consider finding one or moving. Seattle has an awesome one in Ballard every Sunday, all year round.
     
    And there’s no fat-cat corporate MoFo’s stomping on the minions to pay off. Just the good ol’ fashion American way: cash* directly to the farmers, to feed the cows, to pump up the great organic beef, and back to the plate, the way God intended. Oh, and vegetables and stuff …  :O
     
    *note: cash coming from DIA puts I bought at $0.80 I might add: ah the good ol’ fashion put option going to work for me!!!

  220. cjji

    Phil, thanks to you I got into DIA Aug 112 at 1.12 and out at 1.43. Was a really fast ride :) That’s why I was wondering if it was time to go the other direction. Wasn’t intending to play both sides. See your logic on the reload though as it is coming off again!

  221. angelcur

    he shoulda have made it his first act when he assummed th eceo’s office

  222. jabobeast

    any hope for a stick save ;-(

  223. manitowocdave

    Got out of the DIA 112 C at 1.41 entry was 1.20.  Made profits on DIA yesterday and today and TBT yesterday.
    I joined this past weekend and am very glad that I did!  Your service has been top notch!
    Thanks a million,
     Phil

  224. asaenz

    i dont think we are done going up

  225. gmarts

    back in TNA @ 42.60

  226. palotay

     Email back from TOS tech support.  West coast performance issues are a known issue, that they are working on fixing.  

  227. rehat

    This should be show in every school – actually I guess in every voting booth
    http://youtu.be/eEzVkwO4To8

  228. angelcur

    stick save what do you think we have been getting ALL day

  229. JRW III

    Did the site go down or was the problem on my end ?

    Was all long, we tested IWM  68.10 as a floor, it held, then we formed a Bear Flag, I sold 1/3 TNA at IWM 68.45 ,I am keyed in for the sale of the rest on a BREAK of 68.10 !!

  230. Phil

    Strange oil inventories, there are 7.6Mb missing unless I’m just not seeing something:

  231. Phil

    Dollar going the wrong way, stopping out of DIA $112 calls at $1.40 in $25KP (and I bet I regret it!).

  232. easy

    Phil/rehat,
    I’m in that Aug -745/+735 Bull Put Spread side of whats left of Kojo’s Aug iron condor. Down BIG..this is my first IC. What or my options now?
    Got a response from Kojo last Thursday saying "don’t roll or buy insurance, there was time left"
    TIA

  233. Phil

    DIS/ZZ – Yes, I like them a lot but if we don’t have a nice finish, they will probably get hit by the downgrade police on macro issues and then I will REALLY like them.  

    Good call Enni.  

    74.76 – now we need a good rejection at 74.80 and a failure of 74.60 to give us the classic stick save.  

    Meanwhile, the prudent short is USO Aug $32 puts at $1.05 as they had a stick finish that might evaporate.  

  234. alik

    Phil/TLT Should we also stop out of September TLT 104 Puts?

  235. JRW III

    All out of TNA with 2%; buy program was too early to be that weak !!

  236. gmarts

    I’m overtrading… Out of TNA @ 42.20

  237. biodieselchris

    Phil, now’s your chance to make sure the White House hears your ideas on the mortgage/foreclosure mess.
     
    Here’s the link.

  238. rainman

    bio / market — You’re observing one of the mega trends I believe in — back to the farm. It’s one that could help turn this country around. Maybe "farmer" will actually go back on the census as a profession. I don’t think WFM has been reduced to fad status quite yet.  As you note, farmers markets aren’t available everywhere and there is a convenience factor to consider. They also still ship food but ephasize local. Until we learn that winter veggies are what you eat in the winter and summer veggies are what you eat in the summer, there will always be a space for a WFM over local markets. Of course, like Phil notes, the expense will also keep the big markets in business but the price of oil can tip the scales in the other direction. 

  239. Phil

    BK/Dflam – They’re on target, the only adjustments you can make would involve you being the sucker buying the premium.  The trick with these is generally, unless you are 20% below your entry, there’s really nothing to bother with (until there is another year to roll to).  

    Oh no – SocGen says they will report earnings early.  That never worked last time (2008).  

    Farmers market/BDC – In NJ we have Whole Foods – no more farmland…

    Both sides/Cjji – At this speed (which is not normal) you are better off staking out the side you believe in (long for me) because, if you get burned, at least you have the faith to roll the position and add to it.  If we took short positions and got burned to the upside – would you be willing to press the bet.  That’s why I was double-checking oil before making that short call.  I don’t want to short the indexes but, just in case we’re having a sell-off, oil was weak at $82.50 at the NYMEX close and those inventory numbers (which they are rallying off) don’t add up and oil was down at $75 yesterday so that was a more attractive short than one of the indexes, which I still want to reload on.  

    You’re welcome Manitow and welcome to PSW!  

    DIA $113 calls back at $1, 20 in $25KP, stop at .85.  

     

  240. exec

    They better start printing money.  Our dollar is too strong.

  241. Phil

    Cancel DIA, we broke down while I was typing it!  

  242. JRW III

    BDC / Foreclosures

    Just give everyone the GI Bill !!  3% down, 2x the 30 year as a rate from the FED !!   (based on income qualification and 2 appraisals, no social engineering)

  243. Phil

     Now we would rather get re-entry at $1.20 on $112s but only if the Dow tests 10,800 and holds that (now 10,815). 

  244. jabobeast

    broken stick?

  245. zeroxzero

    Went to WFM yesterday, first time in a few years.  Very efficient and well-run from the look of it, and I thought the quality difference in products exceeded the price differential; I was expecting a higher tab.  

  246. mrmocha

    CMG - Q’s drop like a stone and CMG just sits there, perhaps a telegraph that this mojo is about to gogo again?

  247. rehat

    easy,
     
    I would wait to see if there is a bounce as you have 8 days to go. Income trader had a rule where you buy insurance when the Delta on the short strike (in your case 745) breaches .2 and then look for a roll. But the movement was so violent that I think Kojo just gave up and went to sleep.
    Since now you are deep ITM on your Bull put vertical your options are limited. I would roll once to September and hope it comes back up - 
     
    But make sure you get Phil’s input on this.
     
    I wish you the best.

  248. jabobeast

    FU CMG!!
    FU broken stick!!
    FU TZA!!
    FU FAZ!!

  249. seer

    WFMI got hammered in the downturn due to the price differential and has been focusing on being more competitive without sacrificing the quality.  I thin they have been successful.  There is also a fair amount of local stuff in there as well.  I do have some gripes about them, but they are far better than the health food stores that you used to have to use before WFMI came on the scene (if you go back that far!).

  250. Phil

    Sorry, that was confusing, I meant the Dow futures (now 10,815) so figure 10,850 on the Dow and that’s being tested now so we want to re-enter the DIA Aug $112 calls at $1.20 or less when and if the Dow crosses back over that line.  10 in the $25KP. 

  251. JRW III

    I will be shorting at a failure of IWM 66.70 !!

  252. zeroxzero

     Confused me, but that’s easy to do. I’ve got ‘em.  Let the market g-ds reign.

  253. asaenz

    @ JR dont you think we get a stick? a break above 67.65 maybe?

  254. mrmocha

    ERX - I made good money on SCO spreads on this downturn so I’m going try the opposite trade in case the oil pirates return.  Bot the ERX SEP 55/60 BCS for a buck and covered the cost with a half sale of the SEP 30 puts.

  255. jcaesar

    easy / Iron Condor – I echo rehat’s suggestion and would look to Phil for confirmation or other ideas.  With 8 days left and being so far ITM, it’s a very difficult position.  Sorry this happened.

  256. asaenz

    here we go…

  257. Phil

    Site/JRW – Seems to be some west coast server issues – been fine over here. 

    Condor/Easy – At the moment, wait until next Wednesday and, if that doesn’t help, then try to roll to a lower Sept strike.  So, "don’t roll or buy insurance, there is time left."  On the bright side, you can’t be more screwed!  

    TLT/Alik – I still like those for a proper ride down.  Maybe not today, maybe not tomorrow but on day…  

    White House/BDC – Oh please.  I handed Timmy my post on the subject at our Meeting last year.  He looked it over and said it wasn’t politically feasible.  

  258. cwan120

    Wow!  You kids have fun with that DIA Aug $112 play?  Uncle Phil is nice, huh?  Sorry.  I’ve been busy.  Can’t play with ya this afternoon.
     
    But seriously, I only have a few minutes.  Saw a few comments on selling puts, buy/writes.  Are we calling a bottom and go gung-ho?

  259. revtodd64

     bio/rain – I love to see the farmer’s markets making a comeback here in the Hudson Valley.  We have a good food co-op too where you can get a share of vegetables for the whole summer.  They have kept our shelter in fresh produce all summer as well.  We don’t have a Whole Foods within 90 minutes in any direction, but we do have a local grocer with 3 stores in the county who buys lots of local produce, cheese, bread and so on, which keeps several small local producers in business.  We pay more for it, but in terms of food value, it is actually less expensive than a lot of the crap we are sold at the Super Price Chopper.  One of the major problems with our health care costs is that we have forgotten how to grow, cook and eat properly, thus leading to billions do to diabetes and heart problems.  It doesn’t matter what kind of health care system we have if we are eating ourselves to death.  (See "Big Food vs. Big Insurance" by Michael Pollan.)  
     
    I have Crohn’s Disease and it just about killed me, but I switched to a mostly vegetarian diet and havent’ had a problem in 4 years.  

  260. Troy

    THat was a very limp stick save…=D

  261. rustle123

    White House/Phil
     
    Very sad when logical and feasible can’t be done because it’s not politically feasible.  And that’s why the country is a mess.

  262. JRW III

    asaenz

     I try not to think too much, it costs me $$  !! 

  263. jabobeast

    it feels like 2008 again

  264. jabobeast

    look at the financials..wow  ..GS

  265. mrmocha

    SLW - sold some weekly 37 calls here hoping this nice run flattens. Prepared to roll if not.

  266. gmarts

    Epic bot battle underway!

  267. gmarts

    RUT defenders holding up so far, but can they withstand the attack?

  268. zeroxzero

     Is there a target on the USO Aug 32 puts?

  269. rainman

    Nice coincident levels 10,800, 2400, 666, 1132, 7000

  270. kustomz

     I think the Fed is stepped in. Are dip buyers really that crazy?  10620 is it possible in ?YM

  271. Phil

    03:00 PM On the hour: Dow -2.92%. 10-yr +0.14%. Euro -1.17% vs. dollar. Crude +3.68% to $82.22. Gold +1.97% to $1777.30. 

    Yentervention:  The BOJ has stepped up its purchases of ETFs in recent days, buying a record ¥25.6B worth on Tuesday, following ¥24.1B each day the previous week. The BOJ claims the buys are not of sufficient size to influence the market, raising the question as to why the bank is doing it? 

    Rally killer (3:16):  Moody’s delves into student loans – a credit bubble untouched by the events of 2007/08/09 – noting growing delinquency rates are masked by a continuing surge in fresh credit. The economy of the northeast, buoyed by the non-stop flow of newly indebted students, is particularly vulnerable to the inevitable bust. (pdf

    Rally killer (3:09):  Signs of a deteriorating consumer spending environmentcontinue to grow. First Data reports a decline in credit card spending and discretionary purchases; Consumer Edge Research is seeing an early-August decline in consumer confidence; and consulting firm BDO USA sees a weak back-to-school shopping season coming up.

    Cullen Roche differs with Goldman’s read of the Fed statement, seeing the bank’s comments as a possible admission QEII was a failure, thus making another such program less likely. "Focus on the real economy and not the voodoo economics of the Fed." 

    Viewers are canceling or forgoing cable and satellite TV subscriptions in record numbers, according to an analysis of quarterly earnings reports, but it’s not clear how much of the decline is caused by people adjusting to tough economic times or if they’re watching cheap internet video. Analysts place the number cutting the cable cord during Q2 at 380K-450K.

    The biggest risk to bond investors is an improvement in the U.S. outlook, says one bond strategist highlighting the irony of theflight-to-quality. The strange dichotomy is nothing new for holders of the $9.4T in Treasury debt, but you can count on the U.S. growth and job reports being watched even more carefully.

    As shares of SocGen (SCGLY.PK), Unicredit (UNCFF.PK), and other leading European banks plummet, fears of a new credit crunch are gaining steam. Banks are increasingly turning to the ECB for short-term borrowings, and prices for credit-default swaps on their debt are taking off, though they still remain well below 2008 levels.

    Key points off the call so far from BofA’s Moynihan: The franchise is sound, no capital raising is necessary. The bank will meet regulatory requirements by aggressively selling non-core assets, Merrill stays. Bad mortgages continue to be cleared out, with risk being lowered each quarter. BAC -5%.

    Research from the San Francisco Fed finds the share of Chinese produced goods in U.S. consumption is not nearly as high as widely believed: just 2.7%. Even that overstates the true share of China’s imports, since most consumer goods are the product of many hands, and properly accounting for what is made where further reduces the share of “made in China.” 

    Car sales in China rose 6.7% – a disappointing number for a market that clocked 48% growth last year – after strict ownership rules in Beijing and other metro cities saps demand. The sales figures from India are even worse as high fuel costs contribute to a 15.8% drop in sales, marking the first decline in 2.5 years

    Solar stocks are one of the day’s few pockets of strength, boosted by Jefferies’ upgrade of First Solar (FSLR +4%) to Buy from Hold, citing the lowest cost-per-watt among solar module makers and the lowest cost of capital on projects thanks to U.S. government loans. Among other solar names: SPWRA +1%STP +4.1%TSL+2.5%LDK +6.5%.

    Morgan Stanley’s list of five healthcare stocks that could climb more than 20% over the next 12-18 months is led by United Health (UNH), whose stock price could increase 38% to $62/share after falling nearly 10% since July 29. The others: CareFusion (CFN), Coventry (CVH), Express Scripts (ESRX), Pfizer (PFE).

  272. zeroxzero

     Someone with a giant foot stepped into QQQ

  273. biodieselchris

    Market off 3-4% and CMG is up.
     
    That sucks.

  274. gmarts

    Looks more like a PPT put, than a stick per se.

  275. rainman

    rev / CD — Good for you in not taking the "easy" way out (a pill) and thanks for the link!

  276. dclark41

    No stick with the dollar surging.

  277. dclark41

    Phil
    WFR showing nice strength today. I know you just posted a story in your last post about solars. Regardless it is showing decent resounding strength over the last 2 days (up 20% and 4%). Least we know it’s worth more than $5.

  278. Phil

    Gung ho/Cwan – Not at all.  Today’s action very disappointing.  We need at least 3 of 5 of our -5% levels to come back.

    USO/ZZ – If you need it, it’s a good overnight hold as this whole thing might still fall apart but I’m generally bullish – just wanted something to guard against a melt-down, which already looks like we’re avoiding but still – I like them overnight to balance out bullish bets.  

    GS $111

    74.87 is what’s killing us.  

  279. asaenz

    ok so lets see if we can stay above monday´s close….

  280. zeroxzero

     Thanks, Phil, my USOs are up, will hold, need the balance.

  281. jcaesar

    Crumbling into the close.

  282. lflantheman

     AAPL traders:   Sold to Open AAPL 380 weeklies for .95.   Now hold short strangle 2 days from expiration    340/380.  

  283. jabobeast

    WTF??
    How could the market be up 400 then drop 500?
     
    Is it 2008 again?

  284. gg67

    ok, well, i’ll wait till tomorrow. but looks like next stop is down.

  285. rpme

    How can this not be Bearish?

  286. Phil

    Volume not that heavy into EOD today – not sure if that’s good or bad but this is a crap finish.  This is why we don’t jump out of our disaster hedges until our breakout levels are confirmed!  

    WFR/DC – $5 is a joke.  If you sell .10 of calls a month it’s a 20% return.  

    Nasty, nasty close now!   Very disappointing.  

    USO puts at $1.34 already but the protection seems necessary overnight.  

  287. rainman

    jabo / +400, -500 — You’ve accidentally switched your chart to the 1 minute :)

  288. lflantheman

     I’ll see you guys on Friday.  I’m going camping!    Be careful!  

  289. gmarts

    Gold and silver closing within a whisker of their daily highs…..

  290. exec

    So much for yesterdays rally.

  291. eyezz

    Brutal close, opps, forgot I had a small VIX put order out there, got filled EOD at about the LOD. Maybe a morning bounce gets me out with + a dime. Lesson X: DONT watch too much stuff all at once and let orders slip through the cracks!

  292. exec

    Does anyone know how or why TNA jumps almost a buck the instant the market closes?

  293. stjeanluc

    I requoted Peter D’s advice yesterday and it’s worth repeating often…

    Keep in mind that bear market rallies are fast and furious.

    It’s possible that yesterday was such a bear rally and that we are going down more. We certainly didn’t get any confirmation on the upside today and the technicals are not promising. In addition, money is flying out of stocks and into treasuries that pay 0%. It is possible to be oversold for long periods of time. But I fear that we might be losing the retail investors for a while again with these shenanigans!

  294. eyezz

    Nice, CSCO at least beats the est

  295. Phil

    Bearish/Rpme – It’s not bearish because if you look at DAILY charts, we have a 3-day consolidation on essentially the same bottom and what matters now is how we finish the week.  As long as we keep a long tail at the bottom, it doesn’t matter if we come back or not – it will then be up to next week to tell the tale.  

    1,100 must hold on the S&P – I’d say that’s key.  Below that we’re back to 1,000 so another 10% below here if we don’t hold up and then the Government has lost control and it’s anyone’s guess how bad things can get so, like I said yesterday, it would be crazy for the Fed not to announce QE3 but they already blew that so now they have to look like idiots and announce it after the fact in reaction to getting spanked by the markets.  

    TNA/Exec  - CSCO earnings, I think.  Pretty good.  

  296. exec

    Jean,
     
    Are there any retail investors left?

  297. stjeanluc

    OK, so CSCO beat again! Now let’s wait for John Chambers comments to take down the stock! He does seem like a nice guy and generally doesn’t hide the truth, but in this environment, saying less is sometimes better!

  298. exec

    Is there any data coming out tomorrow?

  299. stjeanluc

    Retails / Exec – I meant the few that came back after 2008 ;-)  

  300. Phil

    I take it no one filled those DIA calls on $25KP as we never got back over 10,850.  Let me know otherwise I will not be paying attention to them.  

    Chambers/StJ – LOL – I forgot about that!  We need to muzzle him…

  301. angelcur

    WOW!…that thar was breathtaking and given way to a breathylizin!

  302. dclark41

    Phil:
     
    Interesting thought on WFR. Thanks.

  303. cwan120

    Uncle Phil <sob…sob…>
    Why is my beautiful house of cards built by Uncle Ben and Uncle Timmy crumbling today? <sob…>  They promised they used Super-Super-Glue! <sob…>
    Little Johnny next door, who traded that house for my marbles?  The marbles came from Uncle Obama.  <sob…>  Little Johnny left them outdoor in the yard.  After sunshine and rain, the marbles crumbled into <sob…> clay!
    We want them BACK! <CRYING LOUD…>

  304. Phil

    At the close: Dow -4.64% to 10718. S&P -4.43% to 1121. Nasdaq -4.09% to 2381.
    Treasurys: 30-year +1.32%. 10-yr +0.43%. 5-yr +0.11%.
    Commodities: Crude +3.15% to $81.80. Gold +0.5% to $1793.20.

    Currencies: Euro -1.35% vs. dollar. Yen +0.36%. Pound -1.15%. 

    Canadian stocks decouple from the U.S., rising 1% on the strength of commodity prices and less direct exposure to the plight of European banks. Other major indices in the Americas: Mexico+0.1%, Argentina -0.9%, Brazil +1%, Chile +2.4%

    Market recap: An ugly finish wiped out yesterday’s big gains, as investors were spooked by the European crisis that has broken through the periphery and attacked the core. Volatility seems the new norm until the worldwide debt crisis is solved – and that’s coming, when exactly? Gold touched $1,800, and Treasury yieldsflirted with record lows. NYSE losers led gainers five to one. 

    Bank stocks (XLF -6%) near their lows of the day: C -9.2%,BAC -8.7%JPM -4.7%. Analysts point out that U.S. banks aremuch better capitalized than they were in 2008, but with European banks smashed on scary rumors of banks at death’s door, investors don’t seem to care right now.

    Part of my Blue-chip buying premise:  As Treasury yields continue to plummet in spite of S&P’s downgrade, blue-chip companies are taking advantage by issuing debt on favorable terms. Berkshire Hathaway (BRK.ABRK.B), Procter & Gamble (PG), Baker Hughes (BHI), and WellPoint (WLP) are among the names that were due to sell bonds today. 

    You can almost see steam coming out of the ears of bond traders trying to figure out how to play the Treasury market. The Bill Gross-led bear camp sees risk with no income, while the bullish side envisions profits from holding T-bonds as the U.S. follows the Japan roadmap. Round and round it goes.

    Perpetual Fed-basher Ron Paul weighs in on the Fed’s decision yesterday calling the bond market a "bubble," and continuing his mantra the U.S. dollar is doomed.

    Mark Cuban: What Business is Wall Street In ? (Maverick)

    Euroswiss futures contracts rise above 100, implying 90 day interbank rates will turn negative in the coming weeks. While likely not unprecedented,  this may be the first time such an occurrence has happened in a major developed economy. 

    Global Economic Downturn: A Crisis of Political Economy (Stratfor)

    London riots: the underclass lashes out (Telegraph)

    The U.S. Economy Feels the Pull of Gravity (Businessweek)

    Earnings: The Last Economic Bright Spot (Slate)

    How to ‘fix’ a market (NY Post)

    The Danger to China’s Economy (The Diplomat)

     

    Barry’s take:


    Yesterday’s 40 minute 600 point swing was rumored to be driven by the Vampire Squid (GS) buying emini futures on their expectation of QE3.

    Today’s action shows that you can only prop up/drive/manipulate markets so far before they collapse under their own weight.

    S&P500 expectations of $94 for 2012 at a 15 multiple gives us a prior price target of $1400 on the SPX. If that falls only $10 to $84, and the multiple contracts to 12, we are at 1020. And if we really get whacked, and earnings drop to $75 at a 10 P/E, well, you can do the math.

     

    No! Bad market! You do that outside!

    No! Bad market! You do that outside!

  305. ssdirk

    Hehehehehe.  What was Uncle Warren’s warrants on GS?  He may think about cashing them in before he has to make another injection.

  306. Troy

    Phil/Bad Market - LOL…I wonder how many people talk to their screens…not that I do…honest…really…ok, maybe a little…:D 

  307. nicha

    revtodd/Crohns – try cutting gluten out of your diet. Should help.

  308. amatta

    Phil, 
    Closed my hedges as per yesterday’s comments that you did feel we had established a bottom. My main hedge was 3500 shares of EDZ, I sold for 27 today, could have rebought at 25.50 but went with the premise that you espoused and I have heard almost every single expert say, THAT this has to be a bottom (at least for the short term), we don’t fall in straight line… Would you buy EDZ again now (seems its around .25 higher than what I sold it…in AH. I hate to shoot myself in the foot (yesterday I lost a good chunk of the recovery from that EDZ and a TZA hedge). 
    Thanks

  309. cwan120

    Retail investors / exec:
    How many PSW members do we have?  That’s the number of retail investors!
    :-)

  310. nicha

    Troy – don’t know about talking but I did scream and almost kicked at the screen. I would have broken it but then I would have to buy a new one and after today can’t afford to.

  311. ilene

    CFO bought 65,000 shares of GLW, and the insiders there were previously selling tons at higher levels. It’s got a huge market cap so it’s not likely to move the stock but it’s a large buy - $876,642.00 - http://www.insidercow.com/history/company.jsp?company=GLW

  312. nicha

    Teens in India playing the stock market.

  313. kustomz

    Made a decent return today, my fear of Bernanke keeps from going big and not following my gut is costing me $$$$!
     

  314. BruceE

    Phil, I have to thank you for "yelling" at me at 11:19.  Had it not been for you pounding that lesson in, I would have lost money on that last DIA position.  As it was I stopped out even, I’m back to cash and looking forward to another profitable day tomorrow.  Thank you.  

  315. stjeanluc

    Damn, CSCO up nicely AH… That’s one stock in need of some good news! 

  316. eyezz

    Hmmm, yeah CSCO up during the CC. Sure glad I bought to close, my CSCO calls today.

  317. button

    CSCO could be setting up a nice double bottom back to the 2009 lows and yesterday’s breach of those lows.  Lets hope the AH move holds and builds over the next few months.  I am loaded up on short puts, stock, and bull call spreads.

  318. ilene

    Today’s levels.

  319. Pharmboy

    Watching those phantom bars on the SPY up to 117.XX.  Yesterday they shot them down to the 112.15 area….so I think it would be wise to watch for an up day tomorrow.  The delta neutral calendars are working quite well if one goes down to the 0.33 delta and selling the Aug/Sept spreads.  I have them now and I am even on them, but the decay is moving against the short month.

  320. kustomz

    More good news…
    BofA in talks to sell big China bank stake-sources
    http://www.reuters.com/article/2011/08/10/bankofamerica-china-idUSN1E77915Q20110810

  321. rustle123

    Rustle Kass is calling a bottom here.  At least I hope.  But if I’m right, I will constantly refer back to this post.  If I’m wrong, I will be like Cramer and post a new low tomorrow.

  322. jabobeast

    kustomz--isn’t that good news?

  323. eyezz

    HeHe rustle, yeah if cramer is good for anything, he is good for that! He should win the "contrarian indicator award" to go along with his already garnered "baffoon of the market" award.

  324. button

    Just going through the math on the CSCO call.  They have $8.26 in cash per share (44.6B). Bought back 95,000,000 shares last quarter and committed to being more agressive if market price remains low. Earnings going forward look decent.  Seems like a good buy here!

  325. matt1966

    Hi Folks, been gone all day.  I see JRW’s statistic for a pullback when the VIX drops by more than 18% the day before still holds true.  But I think it’s telling that the NYSE didn’t breach yesterday’s open and my order to buy TNA at 38.24 was missed by $.03.  So, I still feel that yesterday’s low won’t be breached before we go higher.  fwiw.

  326. JRW III

    matt / Yesterday’s low

    I’m not saying it will be breached……………………

  327. rpme

    According to Bill Meridians Astrology based financial newsletter which is one of the top performers through July, up 19%, we will not see the bottom until Aug 26, this is all according to Mark Hulbert.
    I am off to the Palm Reader, I want to catch the bottom.

  328. Canuck

    CSCO/Button:
     
    CSCO @ $13.73 — if you did a 2013 buy/write at $12.50, netting $5.04 for the call and put, your cost is now $8.68 and the cash per share is $8.26 — unless my math is off or there is a better combination to write.  Comments??

  329. kustomz

    jabo, is it? :-)

    A bank NEEDING to sell assets is never a good thing, especially in this climate..big red flag. Like I said last week and yest. during the run up..the financials stink worse than a cavemans a$$. The guys breaking the banks aren’t on the attack because their bored. There’s blood in the water and plenty of potential victims. Credits going to get tighter than a frogs butt if they dont stem the bleeding. All about collateral and its value.

  330. Canuck

    Kustomz/banks-red flag —
    I was involved in a commercial real estate refinancing last year.  100% occupied, 15 year lease, 60% LTV, tenant is in an anti-recessionary business.  Bank would only offer to refi at 1.5% above market rates — basically telling us they didn’t want to be in the commercial RE market.  The tenant/equity investor threatened to pull his deposits out of the bank if they didn’t renew at a fair rate — they wouldn’t and he pulled his deposits, which where about 8x the value of the loan — serious impairment to their capital ratio which they were apparently trying to fix by getting their initial loan back..  I am highly suspect of the stability of the banks for this and many more reasons.  FYI – This was one of the big, national banks.

  331. matt1966

    JRW, lol, can you generate statistics for every day in the market?  I like the odds on today’s action better… but unfortunately it’s over.  So, I’ll take the 77% probability for tomorrow’s.  Thanks!

  332. barfinger

    I entered HCBK with a buy/write at 9.46, collecting 2.42 in premiums. I will be put my second piece at $10, so without doing the math, lets just say im somewhat underwater. On the other hand, if I understand it right, this bank does old fashioned banking, and they hold the loans they make. I assume they are being trashed with the rest of the banking industry, which is not terribly relevant for them. I figure at worst, I wind up with a full position at somewhere near $6. Should I be unhappy?

  333. stjeanluc

    Maybe that was the plan all along…
    http://www.economist.com/blogs/freeexchange/2011/08/monetary-policy-1 

  334. stjeanluc

    Well, duh! We need more adults in the rooom:
    http://walt.foreignpolicy.com/posts/2011/08/10/wanted_a_few_grown_ups 

  335. stjeanluc

    And please make Kudlow go away! 

  336. sns1

    PHil- I’ve been trying to figure out the bond market action…isnt the strength we’re seeing in (bond and USD in general) simply the reverse effect of the carry trade?…the USD (just like the JPY for many years) has become a funding currency of choice for risk trades…so perhaps the bond strength is a temporary phenomenon?

  337. jackhound

    Phil, thanks very for the Ratigan video. You really find the gems out there dont you? I couldnt agree more Ratigan. Unfortunately, the way I see this playing out is we plung again to the abyss. Neither our Prez nor Congress is able to anything really meaningful becuase its impossible for them to do so (oh and Fed isnt going to stick its neck out either this time). Then in 2012 Tea Party/reps wins BIG TIME. They takes control of government and then huge major fundamental reforms start to get done (thats ther plan right). Perhaps we rocket off then, but what kind of policy do we end up with? There is no good way out this time. Where is Obama’s change? He is spineless politician which is why he doesnt do what Ratigan is suggesting. FU hope!

  338. jackhound

    Can anyone tell me if there is a spellcheck feature for message board comments. I am addicted to it and cant seem to write decently with out it now. Thanks!

  339. sampuran7

    Canuck / Phil
    CSCO   I have been wondering about this as well      you will be $2.50 better off being called away from the Jan 13  15 call     unless you think that in 17 months Cisco is going to implode      12.50 obviously the better strike in that case     I assume we wouldn’t let it come to that      Phil which strike would give you the most flexibility?   Are we down to red or black or is some other factor at play?   To Canuks point buying a major if somewhat tarnished tech player for close to book value does seem like a no brainer    

  340. cjji

    Phil, please continue to monitor DIA Aug call $112. I am operating fr Asia. Watched the market till 3 am my time then set to buy at $1.13 before going to bed. It is now $0.88. Any suggestions for tomorrow?

  341. Izega

     Grown ups / Stjeanluc.- good article. 

  342. matt1966

    Boy.  On the ride home tonight I listened to the radio, as I often do, and there was not much talk other then the 500+ pt drop in the Dow.  Then, the article on here about the record outflows from mutual funds and I’m left wondering.  I’m wondering how the heck are they going to engineer a turnaround?  I mean, I know they don’t really need a reason but they usually have some kind of cover story for their moves.  What could it possibly be?  Another fix for Europe?  QE3?  Even with those lame excuses I don’t think retail will bite.  They’ve killed their goose.
     
    I will stick with my premise of the S&P having reached its near term low.  But wow.  They really have their work cut out for themselves.  In summation, if I’m wrong, I think I’ll REALLY be wrong.  But I still think I’m right-

  343. jakester

    Jackhound/Obama- Sorry, there was a spelling error when the Tshirts were printed. They should have read "Hype" not Hope.

  344. jackhound

    Jakester, how right you are! Wish I knew.

  345. matt1966

    Just watched the Ratigan clip.  I agree with his identification of the problem.  I disagree with his solution.  The only way to take the money out of politics is by a grass roots drive to amend our Constitution.  We the people have to fund our politicians campaigns.  The only thing I can’t work out is how we keep every Tom, Dick and Harry from thinking they could then run because it wouldn’t cost them much-  there needs to be a filtering system.  Right now, that filtering system is money.  What can we replace that with?  That’s the riddle of our time.  Any ideas brilliant Mr. Davis?

  346. jackhound

    Phil/DrCraig, Here in Miami Whole Foods is the only good choice for non mass crap food and I feel lucky to have them (and the local farmers market is a very bad joke). FL is a major agricultural state so we still get mega avocado and mango in our own yards, especially this time of the year.

  347. revtodd64

     Nicha – When I had active Crohn’s I tried a glutton free diet, even made bread out of almond flour.  It helped and I would recommend it to anyone with serious active Crohn’s, but it was a lot of work.  Fortunately, getting away from meat and eating a lot of vegetables has made a huge difference and I have not had any problems for four years.  I like a good Pastrami sandwich or a chicken parm here and there, but just keep it to a minimum.  

  348. flipspiceland

    If it isn’t clear by now, it will eventually dawn on y’all that the nation is too big to be governed for the people, by the people and of the people. 
    Either break it up  or scream into the abyss for the rest of your lives for all the good it will do you.  It’s certainly more productive to use your time and energy to set yourself up in the best possible situation you can devise and that more each passing year is devising an exit from the country strategy while there is time. 
    Felipe has tipped his hand and, for the future, favors an Isle of the coast of England. 
    Most people with an option to do so, wouldn’t do badly imitating his exploration to get out of the disUnited States. The billionaires already have, the multi-centimillionaires have, and the regular run-of-millionaires have too.

    See a pattern there?

  349. jackhound

    Yikes Flips, I’m not of the Monte Carlo or Coast of England league, I guess I am doomed. Sorry while I blast around Biscayne Bay on my shinny windsurfer rig saying Hi to the dolphins and sea turtles! Not kidding.

  350. drcraig

     Everyone/food – When I lived in NoVA last year I used to go to WF almost every day and spend at least $60 for two people. On bigger days I’d spend $200 and it might last 4-5 days. We ate well though, lots of fresh produce, very good meats, cheeses, etc. I would end up wasting a lot of produce though because I’d get too lazy to find interesting ways to prepare it (and I like to cook). I joined a CSA, and would have farm fresh stuff delivered literally to the doorstep of my apartment, but same problem. I swear these veggie smoothies are like heroin as BD said. I had a great run yesterday and pounded a cantalope-mango-strawberry smoothie when I got home… I felt warm and fuzzy all night! Damn, I kind of want one now, and I’m staying in a B&B in Portland tonight. 
     
    I agree farmer’s markets are the best. I did my fellowship training in Sacramento and OMG… the markets there were just beyond any comparison I’ve seen elsewhere. I am SO envious of Californians for the level of produce they get to enjoy daily. If you’re reading JRW, do they have good farmer’s markets all the way up in Tahoe? I have a good friend who’s now on faculty at UC Davis (pain division) and must find some time to get back out there for a trip. September would be about perfect for wine country!
     
    My mother lives in Boca, and I do agree with Jackhound that the farmer’s markets there are lacking, but she’s got a place called "The Boys" (in Delray, I think) that’s pretty solid for produce. There’s a "Girls" too, they just sell strawberries. 
     
    I can’t believe I left just before the best action of the day! I’m not encouraged by this talk of problems with TOS servers. No problems EVER on the East coast? I want to get more serious about futures trading, but I want my platform to be rock solid, and have some redundancies. I’m even thinking of springing for a backup internet connection.

  351. topher7

    Jamie Dimon seems like a good guy… but I am sick of CNBC talking him up as the anointed one..  I mean, really… is he in touch with us?..the regular folks tryin to scrape out a living ..  save the  rah rah America BS and how JPM is  doing it’s share opening  400 branches  etc..  I am just tryin to pay my bills and take my kids to the beach a few times this summer…and be happy.. 
    Sorry…no offense Jamie,  just sick of guys worth 300 million $$$ telling me how great everything is ,and stay the course..

  352. kustomz

    Canuck, which bank? Your telling me one guy did damage to one of the major banks!

     Icahn recently offered 80 per share for CLX its now trading 65ish.

  353. Phil

    And we’re off again!  

    Futures up 1.5% on a fairly small drop in the Dollar to 74.67.  Yen spiked to 77.2 but fell back to 76.61 but the Nikkei is happy (up 1.5%) because the US futures are happy and they got some good data too – maybe the BOJ will get the message and just suck it up back to 74.  Euro bounced off $1.41 (finally!) and Pound held $1.61.

    Options markets may be signalling a near-term bottom in the equities markets. The three-month put/call premium on S&P 500 Index options dropped to 50% yesterday, a decline of 34% off its high of 84% recorded on July 19, when the recent selloff began. Historically, the S&P 500 has rallied over 6% on average in the month after the premium gap narrows 10% or more. 

    Oil jumped back to $82.67, gasoline $2.77, Nat gas still $4 and so is copper!  Silver $39.05 and gold $1,786.  

    Richard Fisher and Narayana Kocherlakota, two of the FOMC dissenters from yesterday’s meeting, don’t take the bait when asked about Bernanke and Fed policy by the WSJ. Instead, the Fed presidents offer up support and some rather empty platitudes.Thomas Hoenig where are you?

    Spain and Portugal aren’t worries, but "If Italy goes, God help us all," says a source with knowledge of stress tests from a possible EU default conducted on U.S. banks. One byproduct of the tests is that the Fed has far more knowledge of bank exposures than it did before the 2008 crisis, hopefully allowing the bank to fly a little less blind through this one. 

    "The average Italian doesn’t know what a spread is or the difference between a bund and a bond," says an economist, explaining the detachment of the average citizen from the tumult in the markets. The average American didn’t know what subprime was, either. The ignorance provided no comfort when the whole thing unraveled. 

    During its FQ4 earnings call, Cisco has stated it expectsFQ1 revenue growth of 1%-4%, implying a range whose midpoint is slightly above consensus. The company also mentioned its VP headcount has been cut by 17%, and that switching and routing orders were strong at the end of the quarter. CSCO now +7.8% AH. (previously)

    A variety of networking, optical component, and communications chip names are up AH on the heels of Cisco’s FQ4 results and FQ1 guidanceJNPR +1.6%BRCD +3.9%

    ALU +2.8%.AMCC +5.6%JDSU +4.4%CIEN +2.6%CAVM +4.1%FNSR+3.5%

    The CME hikes gold margins 22% from $6,075 to $7,425, effective Thursday. The news knocks a few dollars off the price of the metal, but it still remains over $1,800/oz. (PR

    Responding to rumors about its creditworthiness, Societe Generale (SCGLY.PKofficially requests France’s market watchdog – Autorite des Marches Financiers – open a probe into the origins of the chatter, saying it has been “extremely harmful to the interests of its shareholders.” 

    Societe Generale’s (SCGLY.PK) Frederic Oueda takes to CNBC to defend the bank against "stupid and unfounded rumors." SocGen has "limited exposure" to banks in Spain and Italy, he says, and is on pace to have enough capital set aside to meet Basel III by 2013. On France’s AAA status: "I find it a bit surprising [that] just because one country is downgraded… that others should follow."

    Japan’s core machinery orders rise 7.7% in June, easily beating the 1.8% increase economists had been expecting. The government raises its assesment, saying the series is in a definite recovery trend.

     Responding to critics who says the Bank of Japan has been slow to react to signs of an economic slowdown, BOJ Governor Shirakawa says Japan is actually ahead of the U.S. in its attepts to ease monetary policy. He notes "the Fed’s latest commitment is close to what we already have in place." 

    Another testimonial for austerity!  Brazilian president Rousseff – facing a rebellion in Congress over her plan to keep spending reined in – tells her alliesausterity is the best way of keeping the global tumult from hurting the country even more. Stung by a combination of a strong currency and worries of a credit bubble, Brazilian shares, EWZ -25% YTD, are among the worst performers this year.

    Delaware has joined the state of New York in opposing Bank of America’s (BAC) $8.5B settlement with mortgage bond investors, stating that "the proposed settlement does not adequately remedy the harm suffered by beneficiaries of the covered trusts.”

    File under investing for the long-haul: Low interest rates arestoking the fire for 100-year bonds as USC plans a $300M issuance, and Mexico is expanding its own $1B offering. Yields on existing century bonds run as high as 5.6% for Norfolk Southern’s (NSC) issue. 

    Jeremy Grantham writes that his prediction of "7 lean years" made in 2009 is looking optimistic. He laments the growing income gap in the country (no longer masked by ever-increasing debt), and wonders how to expect consumption to grow without growing wages. The market crash coming after the report was written, Grantham adds a P.S. that his shop is modestly buying shares for the first time since mid-2009.

    Tusca and Amatta should be pleased:  After a string of losses, Jaguar Mining (JAG) reports a Q2 profit on an increase in production. Revenue soared 64% Y/Y, as the gold miner benefited from high prices and heavy demand for gold. Shares +12.8% AH.

  354. Phil

    Buffett/SS – I’m pretty sure GS redeemed those last month.  

    Hedges/Amatta – I think that was a brilliant thing to do!  Keep in mind that my premise WAS that the 20% lines should make a bouncable bottom, NOT that this HAS to be a bottom.  We got our bounce and if we don’t make those -5% lines by Friday, that’s bearish!  Please stop selectively listening to me.  We have a range, we play the range until it breaks – then we  trade very carefully (cashy and cautious – you may have heard that phrase) until we get comfortable that a new range has been established.  There are visual accompaniments for you every day (Big Chart) to help illustrate this point.  At no time, EVER, do I think it’s a good idea to be completely unhedged but, if you have a hedge that’s well in the money and you think we’re going to bounce – it is a good idea to lighten up.  Until and unless we actually break below those -10% lines, I’m not going to be very enthusiastic about new bearish bets but – if you have things to protect – it’s not a bet – it’s INSURANCE and you should have some all the time.  

    Note this morning we had 2 bullish trade ideas (DIA, OIH) followed by 3 bearish (GLL, TZA, QQQ), then 2 bullish (shorting TLT and VIX), then two more bullish (BRK.B, FAS, VXX short) and then, since we had too many bullish ideas, a USO put and then an attempt to go long DIA that failed (for better or worse).  The idea is to BALANCE your portfolio if you are too long – look for a bearish idea you agree with and if you are too short, look for a bullish one that fits your portfolio.  BALANCE IS THE KEY – Not being all bullish or all bearish.  

    The market goes up and down and, as long as you believe in the premise on each side, you simply take off your winners and work on the losers that you still think are worth holding onto and, the way this market swings – you may be able to take profits off the table on both sides during the same day!  

    Fear/Kustomz – It’s a healthy fear.  

    You’re welcome Bruce.  Good job adjusting.  

    HCBK/Barf – I like them.  As I said, as long as you can collect 10% or more of your basis in a combination of dividends and options – what do you care what the price of the stock is?  

    Bonds/Sns – It’s a flight to safety, pure and simple.  Do you trust Japan to hold your money with their 225% debt to GDP ratio?  Do you trust Europe, which may not exist as a Union next year?  Do you trust Australians with your money?  Canada?  I know people do it all the time but when I consider putting money into foreign banks I get shivers as you never know for sure what’s going to happen to your money.  That’s the security we sell in the US.  We sell stability and it’s that stability that Congress felt free to mess with this month and now we are suffering the consequences to some extent (not much considering).   Money has been flowing out of stocks and into bonds – eventually it will turn – we are not Japan – yet.  

    Ratigan/Jack – Someone here found it for me last night.  Dylan is not a tea party guy and, of course, neither am I.  Being sick of Government business as usual doesn’t mean we want to insert any wacko into the chair, does it?  I am, however, rooting for Michelle Bachmann or Sarah Palin (maybe a combined dream ticket) as I just think it would be a great way to show the World, once and for all, that they really do need to unite against us before it’s too late…

    Spellcheck/Jack – Chrome has it within the browser.  

    CSCO/Samp – If you intend to hold it longer than 2013, it really doesn’t matter as you’re only going to roll to 2015 whatevers.  I tend to error on the side of caution unless I think a stock is way oversold AND the market looks strong (yes to 1, no to 2).  

    DIA/Cjji – Remind me in the morning – hopefully there will be a pop to get out even at least.  If not, can be rolled into a spread.  

    Congress/Matt – Sure, it’s called votes.  Instead of one primary and one election you have a sweet 16 sort of thing where anyone who can get 100,000 signatures or whatever gets their name on the ballot and they are allowed to spend, for example, no more than 0.10 per voter in their district or state (if Senator).  That first round cuts down to the sweet 16 – who get $100,000 each to spend, then 8 – who get $250,000 each to spend and must do 2 televised debates, then 4 – who get $500,000 each to spend and must do 2 televised debates, then the final two, who each get $1M to spend and must have 3 televised debates.  So voters will see their last two candidates 7 times over, perhaps 3 months and should have a really good idea of who they are by the time they make the final selection.  Oh, voting would have to be available on-line and through interactive cable or phone.  Everyone gets a code, sets a password (if you don’t know how to do that, you shouldn’t be voting anyway) and votes – just like American Idol!  Actually, maybe that’s a better idea.  The final 16 candidates engage in a sort of political Survivor where they have to deal with all sorts of crap on camera, without a break, for 40 days.  Hmm, I’m liking this idea…

    The Boys/DrC – I went there, very nice.  

    Dimon/Topher – I liked today they had him on some main street and pointing to all the little people whose lives he’s destroyed and saying how well they were doing.  It was such aloof crap – he waves his arms and says how good it looks – as if that’s how we determine whether or not a local economy is thriving.  I’d love to know where he was standing so I could do a walk-around on Google maps and count the empty storefronts….   Other than that though, he is making my point that the entire global financial economy could collapse and tomorrow morning, 7Bn people would still wake up and go to work as if nothing happened while a few hundred thousand "financial professionals" would have to learn to remember to ask "would you like fries with that?"  

  355. scottmi

    Retail Investors/Matt – there are plenty out there on the sidelines, and have been wating for just this kind of correction/fall. One friend emailed me yesterday asking if i thought was a good time to get back in as he was getting quite interested again. I sent him the "S&P500 is only worth 950" article… but i think he’ll be in before long no matter what.  ;-)

  356. amatta

    Phil, Hedges/JAG,
    OK, so hopefully it looks like a good decision if we open up big as it is looking like. So I"d look to put in a disaster hedge again on the bounce. What do you see as a good option at this point? Looks like that Aug 53/60 TZA will be possible tomorrow for $2 or so… So again to protect a good chunk of $8K per 100 dow points of losses, I guess I’d need to do around $12K of this?
    JAG, yes finally coming back! 

  357. acobra65

     Dimon/Phil
    All Jamie Dimon is interested is creating an empire BIGGER, his menntor,  than Sandy Weil and maintaining the status that CNBC grants him on a regular basis.  In Arizona, JPM runs radio spots on loaning money to "buiding a center" for single people trying to get back on their feet after losing a job or home….. how touching…..AND JPM is building new branch banks on every available corner……. The government should have liquidated all of them 3 years ago…… Jamie, wouldn’t look so intelligent then, as that being part of his resume…….Oh, I forgot…. they like GS didn’t REALLY need the money… 

  358. matt1966

    Phil, You nailed it!  Political Survivor-  that’s awesome!
     
    But in all seriousness, your process of elimination sounds doable.. and down right democratic.  The televised debates would be free for the candidates.  All broadcast stations should be required to carry them to maintain their licenses.  And with 7 debates in total for the winner and runner up, we’d be learning more about them then we currently are with the 2 or 3 they agree to now.  Got the following below so can’t vouch for its accuracy but if true:
    The 26th amendment (granting the right to vote for 18 yo) took only 3 months and 8 days to be ratified.  Why?  The people demanded it.  That was in 1971.. before the internet and instantaneous communication.  Of the 27 amendments to the Constitution, 7 took 1 year or less to become the law of the land… all because of public pressure.
     
    So, how long do you think it would take to get our 28th amendment ratified?  It might take a little longer because it would have to come from the people up rather then the top down.. but with all the communication tools at our disposal these days.. I’m not so sure it would take even a year.  There is so much anger out there the effort could easily go viral.

  359. Phil

    Good morning!

    Dollar flat as a pancake overnight at 74.64,  Euro $1.424, Pound $1.616 and 76.50 Yen.  

    The Nikkei ended down 0.63%, the Hang Seng fell 1% and the Shanghai was up 1.27% but came 2.5% off the bottom.  India was flat at 17,163.  

    Europe is up across the board:  FTSE 1.75%, CAC 2.32% and Dax 2.71%.

    Our futures are still up about 1.5% and that’s not really good if that’s all we can do.  Oil flew up to $84.50 but was rejected there and now back to 83.35.  Gasoline $2.79, Natural gas and copper $3.985, silver $39.11 and gold $1,789.  

    Overall, this is too weak to get us over the hump and we are going to have to lean a little more bearish unless we can follow Europe up 2.5% or more.  Our charts will turn from "spiking low on volume" to "consolidating for a move below 20%" very quickly if we don’t gets something bullish going by tomorrow.  

    Thursday’s economic calendar:
    8:30 Trade Balance
    8:30 Initial Jobless Claims
    10:30 EIA Natural Gas Inventory
    1:00 PM Results of $16B, 30-Year Note Auction
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

    Notable earnings before Thursday’s open: BRKSSSLE,SODATHIWEN 

    Notable earnings after Thursday’s close: AGDAR,DVJWNMCPNVDARENN

    European shares open higher after yesterday’s chaos, buoyed pledges of further French austerity, and reassurances about its AAA rating and SocGen’s (SCGLY.PKliquidity. EURO STOXX 50+2.6%, London +2.3%, Frankfurt +2.9%, Paris +2.1%, Milan +1.7%, Madrid +2.6%

    Moody’s and S&P yesterday confirmed France’s AAA rating with a stable outlook amid rumors the country is next in line for a downgrade, which sent global stocks plummeting and French bond yields rising. The affirmations added to that of Fitch earlier in the day.

    Nicolas Sarkozy yesterday pledged to reduce France’s budget deficit from 7.1% last year to 3% by 2013 "whatever the evolution of the economic situation". His ministers have a week to formulate new measures amid rising concerns over its prospects for growth and its ability to meet the deficit target.

    SocGen (SCGLY.PK) shares in Frankfurt +5.8% in early trading after yesterday’s plunge, with the market buying into the reassurances of CEO Frederic Oudea that a variety of rumors, including about SocGen’s liquidity, were "absolutely rubbish."

    Temporarily linking the Swiss franc to the euro to curb the franc’s gains would be legal, the SNB’s Thomas Jordan reportedly says. The bank can also ease monetary policy further without selling the Swissie. The franc is -1.1% vs. the euro and -0.5% vs. the dollar. (previous)

    The Fed is reportedly formulating regulations for the U.S.’s largest banks that won’t be more stringent than global capital standards agreed to under Basel III. "There will be a sigh of relief" that the Fed is staying within the Basel framework, says one former Fed official.

    The Government wants to give land confiscated from poor people’s to the investing class – isn’t that special?  Plans to sell state-owned foreclosed properties to investors in bulk and at discounts, and for conversion to rentals, gets mixed reviews. Some approved, as demand for rentals is rising even as prices decline, while others pointed out that buyers pay close to list prices for repossesed homes.

  360. Burrben

     Phil / Income Port
    I was just wondering how the income port was doing in this market downturn?  I haven’t been tracking it.  I’d guess that if I would like to start entering some of the short put / long call postiions on the stocks recommended it would be a good time, once some type of bottom is in place.
    What do you think?

  361. Phil

    Hedges/Amatta – I was hoping it wouldn’t come to this but it is time to start layering in our disaster hedges so see the new post.  Remember – adding new hedges means putting very tight stops on the old ones!  

    Ammendment/Matt – Not quite sure how we’d word that one but it’s worth thinking about.

    Income Portfolio/Burr – My hopeless optimism, plus the idea that it was a low-touch portfolio had me putting off adjustments.  We’re only about 1/3 invested so good opportunity to add longs but scary sell-off in progress now as the Dollar rockets back to 75 and Europe once again falls off a cliff with 2-3% declines since the bullish open.  As you said – ONCE some kind of bottom is in place – we’re still looking for that place.  

  362. Canuck

    Kustomz/banks:
     
    No, one guy did not cause problems for the bank — my point was the classic left hand not knowing what the right is doing.  I am reading into this, but it seemed that the loan side of the bank had a clear mandate to call in loans regardless of how the loans have been performing, vancacy rate, and regardless of the clients deposit assets.  When he threatened to remove under a $100 million in deposits over a $10 million loan, the loans guys basically said go ahead — they didn’t care about how the removal of deposits affected the company as a whole — their mandate seemed to be to reduce exposure to RE and call in money — makes me suspicious and very cautious —

  363. snow

    Farmers Markets – there are some serious programs in California supporting and promoting farmers markets – for example – http://www.cdfa.ca.gov/is/i_&_c/cfm.html – it’s not just that we have a load of produce, it’s that there are substantial infrastructure and financial incentives in place. Further, once people get used to going to these, the demand rises, likely to a certain market level, but stays there pretty solid. In Pasadena there’s the usual Saturday morning market next to a high school, but there’s also a little Tuesday  morning market in a working class Latino neighborhood, so it’s not just the yuppies shopping at these places.

  364. angelcur

    i owuld much rather see a "slow" start to the day than up 20 spu points…be aware(fwiw) that at some point i believe the markets force germany and france to abandone the eruo bailing exeercise which will of course exacerbate the disintegration of europe..but i can’t see a choice…just be lucky this corpses arent running our world=moribund 

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