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Testy Tuesday – Back at the Bottom Already

A least we HOPE (not a valid strategy) it’s the bottom!  

Holy cow, what a mess the World has become in the past 7 days.  It’s amazing how the markets can ignore everything for two whole weeks and then freak out about the same exact stuff they freaked out about last time for another week and undo all of the progress of those two weeks.  

While we were on top of things, nailing the turn last Wednesday, we weren’t that aggressive on our downside betting as we thought those -10% lines would hold up without much trouble.  Today we’ll find out if we’re right or wrong but yesterday it looked like we were wrong already as Europe plunged about 5% in one day while the US markets were closed.  

All kinds of crazy stuff has been going on, including the Dollar rising to 75.53 WHILE GOLD IS GOING UP TO $1,900.  So what happens now if the Dollar goes back to 74 (down 2%) – that could be enough to lift gold over that magical $2,000 mark.  And why not – investors are fleeing every other kind of asset except, of course for German, US and Japanese bonds.  What a perfect scam the industrialized nations are running – able to borrow infinite amounts of money at virtually no interest despite their own insane debt levels – this could not have gone better if they had centrally planned it!  

Don’t forget that Governments and their Central Banks have lots and lots of gold.  In fact, the US has over 8,000 tons of gold, now worth about $500Bn, China 4,000 has tons while Germany has 3,500 tons, the IMF 3,200 tons, Italy (yes, Italy) 2,800 tons, France 2,700 tons…  Where do people think that GLD is getting all it’s gold?  That fund is growing at a rate faster than gold is being pulled out of the ground – those bars have to come from somewhere and I would not be surprised if our wise Central Bankers are going to pay off a little debt with some of that shiny stuff they have laying around.  

Switzerland also has plenty of gold (1,200 tons) and it’s the Swiss that are yanking the markets today with a MASSIVE currency intervention in which the Swiss National Bank has announced this morning that they will buy "unlimited" quantities of Euros to keep the EUR/CHF trade at 1.20.  Interestingly, that means the Swiss will find themselves printing money and buying Euros, which they will then invest back in Germany and France’s bonds so, once again, those Central Banks win – isn’t this starting to get interesting?  

Overnight deposits at the ECB jumped to €166.85B ($235.23B), reaching their highest level in more than a year as banks show increasing nervousness about the EU debt crisis. The figure was up from a 2011 peak of €151.1B on Friday.  EU shares had turned briefly positive following the SNB intervention but are back to flat to down at 8:30 and that’s not good with the CAC under 3,000, the DAX at 5,230 and the FTSE at 5,116.  For the DAX, 5,250 is a line that has not been crossed since July of 2009, when it market the early stage of a rally that took them to 7,600 in May of 2011 (up 44%).  The 2,350 point drop back to 5,250 is "only" 30% of 7,600 and this is where we went long on EWG a few weeks ago, catching a 10% recovery.  It looks like we can get $1 for selling the EWG Oct $18 puts and buy 2 Oct $18/19 bull call spreads for .65 each and that’s net .30 on the $2 spread, so a 566% upside potential if EWG can hold $19 through October expiration (45 days) and the worst case is we have a long on EWG at net $18.30.  

What if we fail to hold our levels though?  Our favorite disaster hedge, EDZ, is now getting away from us for new entries – up around $23.50 already, which is up 15% since Thursday, when our Disaster hedge was the Oct $19/23 bull call spread at $1, selling the $17 puts for $1.15 and that trade is already 100% in the money, on the way to a 2,766% gain off the .15 credit entry.  I hate to chase but I love to layer and we could add the Oct $22/26 bull call spread at $1 but I’m not keen on selling EDZ puts at higher strikes so we’ll look for some nice stocks we can sell puts against in Member Chat this morning.  Of course, just the bull call spread pays 300% if it finishes in the money and, for most traders, that’s a nice return – we’re just spoiled!  

In case you thought yesterday was a holiday, make sure you read Monday’s post, where we talked about how to use leverage to hedge risk as well as some trade ideas on BCS and XLF – both of which will give us MUCH better entries today than the prices we were using from Friday’s close (as expected).  

I also did a review of our trade ideas since the August 19th bottom and, right now, we are back where we were on the 19th so, if you don’t have time to read that whole post, at least read the summary from our Range Trading Review as there’s no point in identifying a trading range if we don’t take the time to study and review how best to play it, right?  I am, however, LESS enthusiastic to buy things now than I was on the 19th as we have broken our overall pattern and now it looks more like the August highs may have been nothing more than a weak bounce as we consolidate for a move BELOW our -10% lines.  Now we’ll have to be convinced that is not the case as our "Dead Cat Indicator" has flipped from the left to the right side of the bounce in the past two weeks:

As I said yesterday, with TLT at $114 and GLD at $185 and BCS at $9.50 and XLF at $12 (FAS below $12!), we are clearly trading at irrational levels but, also as I said yesterday (and Keynes said 100 years ago): "Markets can remain irrational a lot longer than you or I can remain solvent."  So let’s not go too crazy and maintain our Cashy and Cautious stance (see our cool, new allocation indicator in this week’s Stock World Weekly).  If anything, we are a bit too bullish (20%) unless we hold our line at Dow 11,000 and the Nasdaq can hang on at 2,473, then we’re going to have to add to our 15% bearish allocation because HOPE is NOT a valid strategy!  

Click to ViewWe can play gold $2,000 by picking up the Oct $185/195 bull call spread at $3.15, selling ABX 2013 $35 puts for $2.20 for net .95 on the $10 spread.  Rather than spending $3,700 on two ounces of gold, you can commit to owning 100 shares of ABX for net $35.95 and, if gold shoots up to $2,000 and holds it through October expiration, 2 bull spreads you can buy with the cash should hit $1,000 each for a $1,905 profit (2,005%).  If you had $3,700 worth of gold, gold would have to rise to $2,800 to make the same profit!  This is a good rollover trade from our last bullish gold play on the 24th which, as noted in the weekend review, is already up 225% (maybe more this morning) so we can set stops on that one and use the new trade to ride the continued craziness.  

Keep in mind I still don’t think gold will keep going higher but I’ve certainly been wrong about that one before and, since the downside on that trade is owning my favorite gold miner for 32% off the current price – I think that’s a hedge we can live with!  

We’re not trying to be heroes out there – this is a wonderful time to be in cash and just watch the carnage from the sidelines.  We get ISM Service data at 10 and Fed speak at 1pm.  Tomorrow we get the latest Beige Book and then not too much excitement this week other than Obama’s speech on jobs, now moved to Thursday at 7pm, after Wednesday’s Republican debates and AFTER Bernanke’s speaks at 1pm that day.  

Hopefully we hold our levels today and things get more sane — hopefully.  

 


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  1. kramer36350

    TLT over 114 – wow

  2. stjeanluc

    Oil Lines
    R3 – 88.10
    R2 – 86.98
    R1 – 85.46
    PP – 84.33
    S1 – 82.82
    S2 – 81.69
    S3 – 80.18
    Yesterday’s high and low – 85.84 / 83.20
    Breakout lines – 90.11 / 76.28 

  3. stjeanluc

    US Treasury 10 years rates  fell under 2% overnight! That’s what pushing TLT to 114 and now TBT poised to open around 22. We are basically getting free money on the short-term treasuries – 0.02% for the 3 months bills! Even the 30 year bonds only yield 3.2%. Bill Gross must really be kicking himself now!
     
    And that intervention from the Swiss Central Bank must have caught a lot of speculators with their pants down… The Swiss Franc was the only risk-off trade left and that was taken away. No wonder people are flying to the US treasuries even with our AA+ rating. Europe is really a risk of dislocating now – apparently the Spanish prime minister made a speech to union leaders a couple of weeks ago and admitted that they were at the threshold of needing rescuing… Berlusconi disses his own country, the Germans don’t want Merkel and bailouts anymore and Sarkozy is not exactly loved in France either. And now the Swiss have decided not to be the currency whipping boys anymore. That cannot end well.

  4. samz3700

    with yields so low is it going to be possible to justify QE3?

  5. stjeanluc

    Most sectors are oversold:
    http://www.bespokeinvest.com/thinkbig/2011/9/2/sector-and-other-asset-class-trading-ranges.html
    Except bonds, gold and silver. And it’s looking to get worse before it gets better! It look like we might need another shopping list soon! 

  6. Burrben

     Phil / All
     
    I’ve been trying to catch up on all the reading from the past 5 days, including the Sept Dozen.  Seems like the prudent thing would be to wait on the Sept Doz until there is a potential bottom in place (again).
     
    Would you agree that’s the correct course of action?

  7. stjeanluc

    BNY Mellon problems:
    http://blogs.reuters.com/felix-salmon/2011/09/05/bny-mellons-interest-rate-problem/

    BNY Mellon makes its money by managing $26.3 trillion in assets under custody. That’s a bigger number, I think, than is humanly possible to comprehend, but here’s a start: it’s about $4,000 per human being on the planet, or $85,000 per American, or $235,000 per US household, or five timesthe market capitalization of the S&P 500. It’s a truly insane amount of money. These aren’t BNY’s assets, of course — they all belong to someone else. But BNY looks after them, and reliably looking after that quantity of assets is an incredibly important and stressful and difficult and expensive thing to do.

    I just don’t understand how that much money can be entrusted to one institution…. 

  8. stjeanluc

    An analysis of that FHFA lawsuit:
    http://blogs.reuters.com/felix-salmon/2011/09/03/the-fhfa-lawsuit-league-table/

    I’ll have more on the substance of the suits later; suffice to say that they’re strong, and aggressive, and exactly what I’ve been looking for for a while. These banks lied to investors when they put together mortgage securitizations. And one way or another, they’re about to start paying for that. About time too. 

  9. Pharmboy

    Hell yes Burrben…can u pick a bottom?  No.  Put your bottom in, put your bottom out, put your bottom in and you shake it all about, do…oh, never mind….it ain’t in!

    PP for today, but do they matter?

    While the United States enjoyed a three day weekend, global trading resumed Sunday evening as noted on the chart above. As of this writing (Monday evening), EMini S&P 500 Index Futures Contract(/ES) is trading below the short term ascending trendline (magenta).

    As this week progresses, strength of the prior higher-low at 1111.25 could very well be tested. Failure of this level brings our "line in the sand" at 1077.00 back into play. The market’s inability to hold this level in reaction to news dissemination, particularly on Wednesday and Thursday, will be a clear indication of the direction of price’s next leg. Conversely, the market’s failure to make new lows on bad news will frustrate bears putting the "disappointment play" back onto the table.

  10. lvmoda

    I wonder when crisis fatigue sets in and the markets begin to capitulate to factor in the worst case for all of the current situations.  This would likely lead to a major overcorrection and another MOABO (mother of all buying opportunities).  It’s hard for me to buy into a trading range investment mentality when I don’t see any progress or leadership on the major issues at hand.   To me,  1100 will fail this week (or maybe even today), and then 1030 or so provides some support – but after that it’s a free-fall to the Mar 09 lows.

  11. stjeanluc

    FAS Money Recap
    Long Strangle –Jan 12 Puts (3.01 average now 3.20) and 15 Calls (2.75 average cost now 1.99). 
     
    Weekly –1/2 September 13 Puts (1.03 now 1.91) and 1/2 weekly 13 Puts (0.80 now 1.52)

    Monthly – 1/2 September 13 Puts (1.03 now 1.91) and 1/2 weekly 13 Puts (0.80 now 1.52)
     
    Recap of the last 2 weeks later today! 

  12. morxlntway

    Morning PharmB – your tone isn’t overly bullish, so i expect the spreads you posted Friday are "steady as she goes"?

  13. morxlntway

    Pharm again – on second thought, the weekly 116 short put will need to be rolled out and down?

  14. Phil

    Good morning!

    Cramer is excited about SODA this morning.  9,000 stocks at 2-year lows and this moron is talking about SODA?  Is it really that hard to trace down a pay-off???

    I still like those Dow (/YM) futures above 11,000 and, of course the RUT (/TF) over 666 with very tight stops below the lines.  

    An upside play on the Dow, using the same line, would be the short sale of the DIA Sept $110 puts at $3.  The premium on the puts and calls is ridiculous so fun to take advantage of it!  Another nice upside play on DIA is the Sept 30th $108.75/111 bull call spread at $1.30 on the $2.25 spread so a nice, potential 73% upside as a plain spread or it can be paired with any of the following offsets (including the short $110 puts):

    • X Oct $23 puts can be sold for $1.05
    • TLT Sept $118 calls can be sold for $1.02
    • BCS Oct $9 puts can be sold for .90
    • BK Oct $19 puts can be sold for $1.25
    • BAC 2013 $5 puts can be sold for $1.18 (bet with Warren)
    • XOM Jan $60 puts can be sold for $2.30
    • HPQ Oct $22 puts can be sold for $1.20.

    Damn, and I said I wasn’t going to get too bullish.  Oh well, what can you do – so many great-looking bullish opportunities and please see the main post for EDZ and GLD hedges – not too bullish but I’m still 20/15 bullish.  

  15. gucci

    Hi Phil Should I roll TLT sept 110 put to october lower strike, was 1.63 now 0.75 and DD

  16. Pharmboy

    Morx – the spreads are fine for now. The 120 calls are down $20/contract, and the puts are right on track.  Remember, this is volatility we are selling, and if we can get $20/contract on the other side, we are fine.  2-300/week is my goal on these, and we can roll down the calls/puts if they move too far against us. 

  17. Pharmboy

    the 2/300 per week is for 10 contracts FWIW.  I just did the SPY117 calls sell the weekly, but the others for ~83c debit. 

  18. JRW III

    Good morning,

     

    IWM   64.74,  65.09,  65.56,  66.03,  66.33,  66.63,  66,94,  67.47,  68.10   68.69,  68.97,  69.40,  69.70

    SPX 1145 should hold for today; I’m in TNA, sold my TZA that I held over the weekend !!

  19. 1020

    Good Morning!
     
    :)

  20. leonf675

     Phil,  reposting the below question from Monday’s chat.  Of course, the current prices are a little different now.
    Phil, would appreciate any advise on adjustments (if any) to my losing TBT position.   Here are the details:
    + 10 Jan 2012 $20 calls bought for $15.45 (a while back), now $4.20.  
    I have been selling selling premium monthly against this long.  
    At this point,  i have these short calls:
    - 3 Sep $28 sold for $.28,  now $.09
    - 7 Sep $32 sold for $.40  now $.02
    I also have :
    - 14 short puts at $32 strike rolled from August.  Premium collected was $4.64.   These were $9.12 on Friday.
    So I am looking at around $32k in margin at this point, and would not want to expand the position to more than 50k.   I was wondering if it’s prudent to DD and lower the strike on the short puts now or save the "gun powder" and simply roll the short puts horizontally in time instead.  Also, wondering it makes sense to convert the diagonal call spread into a vertical  or just kill it to extract at least some premium from the long call.   Please share your thoughts…

  21. peedlew99

     JRW,
     
    Could you update me on your butterfly?  Are you looking for the euro to continue lower?
     
    thanks!

  22. Phil

    VIX back at 40 just makes bullish plays too darned attractive:

    CAT 2013 $80/95 bull call spread at $6, selling $55 puts for $5.55 is net .45 on the $15 spread.  That’s too good not to put in the Income Portfolio  - 5 spreads at net $225 with $2,700 in margin makes $7,275 at $95 and worst case is owning CAT at 1/2 that price!  

    DIS at $31.50 makes a nice buy/write, selling the 2013 $30 puts and calls for $9.80 for net $21.70/25.85

    HOV back at $1.45 but 2013 $1/2.50 bull call spreads are just .40 with a 225% upside at $2.50.  I would pair that with the sale of the Nov $1.50 puts at .40 for a free ride if they can top $1.50 at Nov expiration.  

    JPM is being sued but, at $33.23 it’s very attractive.  2013 $30/40 bull call spread is $4.30 and the $25 puts can be sold for $3.45 for net .85 on the $10 spread.  Risk is owning JPM at net $25.85.

    SKX is silly low again at $14.54, a buy/write with the April $13 puts and calls sold at $5.25 puts you in shoe business at net $9.29/11.15.  Getting called away at $13 (10% below the current price) is a 40% gain!  

    T is still T and, if you are a long-term investor, you can look past this little incident with T-Mobile.  At $27.83 you can do a buy/write with the 2013 $27.50 calls sold at $2.50 and the 2013 $22.50 puts sold for $2 for net $23.33/22.92, which makes the dividend close to 7.5% (assuming it stays at $1.72).

    ISM Service was a beat so here we go! 

  23. exec

    Interesting morning.
     
    They have a lot of room to pull back the dollar to prevent things from getting out of control.

  24. dflam

    Phil/EDZ: Friday,just before closing I added 10 EDZ Oct. $21 C and sold Oct. $24 C for net $.94 for more protection. With DOW down 224 points, this spread is now $1. Doesn’t seem right spread is only up $.06. Did I do it correctly?

  25. Phil

    Hmm, not too much reaction from ISM report so far – people sure are gloomy!  

    FTSE is up 1% but DAX and CAC down 1% each.  UK was very smart not to join EU…

    Oil plowed up to $85.  

    Europe/StJ – There was a good article in the Times this weekend making a point I had made a while ago that what the EU is going through now is no different than what the US went through when it first formed and it turned out that they needed to give up on individual states rights and form a strong central government.  That’s what the EU needs to do.  It’s that or break up and I’m sure people in the late 1700s predicted America would break back up before Virginia farmers were forced to pay for the New Jersey welfare state – people underestimate the determination of the EU to live.  

    QE3/Samz – Read Stock World Weekly, they make the case that QE3 is already in effect with "Operation Twist"

    Shopping list/StJ – You mean like the one above?  I can’t help myself – if things look cheap I have to say something!  

    Prudence/Burr – No, the idea of the September Dozen was to buy them when they got cheap.  Today they got cheap!  Also, I like the above aggressive and longer-term trades but only as part of a well-hedged set because we certainly are NOT out of the woods yet

  26. GSsucks

    Phil – As the markets are getting 2008-like again, do you think it would be possible/plausible to set up the daily chat in a way where premium members get email alerts every time you post [or at least every time you post something that includes a trade idea]? 
     
    During work hours, it’s difficult to stay on the daily chat page and keep refreshing it (sometimes every 90 seconds lol) but I don’t want to miss out on any trade ideas you might "throw out" during the chat.  The market can change in a hurry and seeing one of your posts an hour later is sometimes too late for a trade (GLD puts climbing enough to break even for about 30 minutes around noon last Tues or Wed is a good example….they were back to being down 25% after 30 minutes). 
     
    Getting alerts for your daily posts (which most of us can set up to trigger text messages on our cell phones) would allow the working stiffs to get your posts and trade ideas without being glued to the site the whole day…allowing us to get some work done WITHOUT missing out on profitable trades.
    Just an idea…..and if one of the hurdles is $$$ it would cost to put such an infrastructure in place, I’m sure most of us would be willing to pay more $ (I would) to get instant alerts every time you posted something.
    Thanks in advance for hearing me out and hopefully considering the idea.

  27. JRW III

    peedlew99 / Butterfly

    It calls for a test of SPX 1093 by Friday !!

  28. Phil

    TM finally getting back to a price where I like them, 2013 $55 puts can be sold for $4.30 for a net $50.70 entry (25% off).  

    Dollar 75.75 – what a mighty currency we have!

    BNY/StJ – Good call on them, also undervalued. 

    Back at 666 and 11,000 – very weak sign.  

  29. stjeanluc

    Europe / Phil – I would agree that a tighter integration is needed and that has been the argument of many of the Euro "fathers" to begin with. In fact, many thought that the creation of the euro would be the impetus to tighter fiscal integration. That has not played out that way for many reasons – one of them being that there are still very nationalistic tendencies in many of the countries. Heck, some countries actually divided themselves like the Czech Republic and Slovakia and others are facing large independence movements like Belgium (who can even get a government going – and by the way, that seems to work anyway) and to a certain extent Spain! I was reading over the weekend that the lower class see the extreme right party in France as a safety blanket against a Europe takeover! And look at the euro sceptics that got elected in Finland! And the anger is rising in Germany and other countries. We are currently going in the opposite direction of what is needed… One crisis and suddenly it all for themselves. It’s going to get worse before it gets better and it might then be too late for a large euro zone.

  30. angelcur

    think about the situation in europe…everyone sees what we see….so everyone is just HOPING that it unravels later rather than now…but things are really starting to spin out of control…italy rasing vat to 21% STUPID

  31. flipspiceland

    "….give up on individual states rights and form a strong central government."

    Yeah, that’s the ticket. 
    Completely disregard the horrific financial meltdown over that last few years caused by a central government owned by the investment banks.
    The opportunity to have a different country or three on this part of North America, the contiguous disUnited States is one I would happily trade the current setup for.
    One hopes Europe is not reading PSW for great ideas of how to solve their problems.

  32. stjeanluc

    It’s already the 12th 1% down gap on the S&P since April 29th:
    http://www.bespokeinvest.com/thinkbig/2011/9/6/another-big-down-gap-for-the-market.html 

  33. Phil

    Crisis fatigue/Lv – That’s what’s strange about this drop, long and slow slide to a lower trading range is NOT like 2008, when basically people got out and out and out.  Possibly that’s because no one was in in the first place so there simply aren’t enough sellers to give us that big crash.  I still think that this is an engineered sell-off with the Big Boys doing their best to chase the last of the retail shareholders out of the market before it’s time for the Santa Claus rally but this crappy reaction to way better than expect ISM numbers indicates we may not be at a bottom yet.  

    FAS Money/StJ – I guess we picked the wrong time to be bullish there!  Just have to wait and see how much actual damage is done – selling calls still seems silly.  

    There goes SODA already – dropping like a rock off the Cramer pump job.  Look how many people bought on his word this morning – how is it possible that these people never learn?  

    TLT/Gucci – I would go for the Oct $116/114 bear put spread at $1.10 just to try to get the .90 back.  You can DD but maybe wait in case it gets cheaper to do so (or maybe buy out the $114 puts if they get silly cheap on a run to $120.  

    Europe getting worse with one hour to go.  FTSE now up just 0.3%, CAC and DAX down 1.3%.

  34. lflantheman

    Buying AAPL Oct 360 and 370 calls.

  35. rustle123

    Between Europe down yesterday and today, I don’t see how we escape being down at least 400 pts.  I’m covered but wish I bought more puts when we were down 200 on the Dow.

  36. gucci

    Hi Phil — VXX Sept 45/40 put spread with sell 45 call net 71 credit — is it good to scale in today. thx

  37. exec

    JR
     
    Are you looking for a bounce?

  38. JRW III

    exec / bounce

    I’m getting back into TNA (2/3 in now) !!

  39. stjeanluc

    FAS Money / Phil – You said that last move was aggressive…. In hindsight, we should have covered all the short puts when the market starting moving against us and we covered the first set with a win! Things were looking very weak technically then. In any case, no sense crying over spilled milk now!

  40. exec



    JR
     
    This dollar is complicating things.  Probably after Europe closes they’ll pull the plug.

  41. Phil

    TBT/Leon – Essentially, you have 10 uncovered Jan $20 calls with a $10,000 loss and 14 short $32 puts (Sept I assume) that are down about $7,000 with $32K in margin used.  So the question is really, how can you make $17,000 on TBT/TLT using $34,000 in margin?  While I think TBT is crazy low, the money is in playing off TLT being crazy high.  People are paying us interest to hold their money.  That can’t last long.  For one thing, at a certain point, our rates take all their money and they have none to reinvest.   TLT topped out at $122 in the great panic of 2008 and held it for less than a month – I think the Jan $120/110 bear put spread at $5.50 is a good way to go with $16,500 there (30 contracts) returning $30,000 if TLT finishes lower than $110 (now $114.66).  You can sell 2013 $95 puts for $5 to offset – selling just $10 knocks $5,000 off the price of the bull spreads for about a $10K margin.  Ideally, TLT will fall but not too much and we can trust our Government to defend $90, as they have this whole time so far.  

    TBT/Leon – Also, rather than just selling your Jan $20 calls for $3.60, you can sell the Jan $16 calls for $7 which is $3.40 more and the most you can have to give back is $4 so you risk .60 to make $3.40 more and, of course, I mean as an offset to the short TLT play as the only way TLT make $120 is if TBT is much lower.  Certainly I don’t like it as a stand-alone play as I think TBT SHOULD go higher as TLT falls to a more realistic level ($105ish). 

  42. jerconn

    Phil, I have Sept. USO $34 puts, in at .85…what is your theory on these and how low oil might go today?

  43. csaw2

    Europe/Phil – i would add to stj comments that contrary to the US where the people at the time were fleeing tyranny and had an imperious necessity to make the ‘thing’ work , there is a long history -of resentments – between the european nations. I think that even if this fiscal integration is implemented , this will be cause of the next -not too distant- conflict. The Greeks will never forget that the pain they would endure would be to placate the Germans and the Germans will never forget that their treasured Deutschmarks would have been sacrificed for lazy southerners. Just to put things into context, the europeans have never forgotten that the Germans have never payed a penny of all the destruction they caused during WW2. So who’s to give lessons ?

  44. b1ll

    anyone follow / comment on EZPW ?

  45. David Ristau

    I like this article a lot:

     

    http://www.marketwatch.com/story/why-the-young-jobless-will-ruin-your-portfolio-2011-09-06

     

    Says a lot about my generation…

  46. 1020

    Pharm – Do you have a take on GERN?
     
    Thanks

  47. Phil

    EDZ/Dflam – Since you are selling more premium than you are buying, the 15% jump in the VIX messes you up.  That’s why you need to focus on whether you are on or off target on spreads, not the price your broker tells you.  If EDZ does not improve between now and October, you will collect $3.55, not $1 – it’s all a matter of timing!  Also, note you can sell the Oct $21s for $5, which is way more than you could make on the spread (+$4 in your pocket) and then you can buy the April $23/28 bull call spread for about $1 (or buy 2!) and you keep $3 in your pocket and then the Oct $24s would have to finish at least $3 in the money ($27) before you even have to worry about them and that, of course, puts you on track to make another $4 on the new spread.  If instead,  EDZ dies down and finishes below $24 in Oct, then the short calls expire worthless, you keep the $3 in your pocket (75% of max gain) plus whatever value is left on the April spread.  

    Chat changes/GS – We already have that.  At the bottom of each post (above the comments) is a link for the RSS feed for the day’s chat.  I don’t know anything about them but, apparently, you can adjust them all sorts of ways, including setting filters to get whatever you want as frequently as you want via your RSS reader.  

    Euro Zone/StJ – What they need is a good invasion to rally them all together. 

    Italy/Angel – That’s what austerity measures are.  You can’t physically cut 100% of government despite the Conservative fantasies in this country so, ultimately, taxes must be raised – that’s where the road to austerity leads you.  

    Good timing Iflan!  

    VXX/Gucci – Sept is a tight time-frame.  Sept $45 puts are still $3.20 and the short $40s are just .85 so you can roll the $45 puts to either the Sept $48 puts for $2 if you want to be more aggressive or back to the Oct $44 puts ($5.50) for $2.30 as that sets you up for another sale (the $38 puts are $2.20, which pays for the roll and gives you a wider spread with more time).  As to the short $45 calls, they are all premium at $2.25 and, as you can see above, I’m still bullish enough to believe that 40 won’t hold in the VIX so I’d hold off on the roll but keep an eye on the Oct $60 calls (now $2.15) and, as long as that roll doesn’t cost more than .50 – why worry?  

    FAS Money/StJ – The month isn’t over yet.  As I often say – I love the smell of capitulation in the morning…  It smells like – opportunity!  

  48. asaenz

    @ Phil, if i entered one of the September dozen bullish plays (MRO), would you recommend closing it today? Or wait and see if we hold our Aug lows? Thanks.

  49. Phil

    Those pops on the RUT Futures are good for 4 points each time ($400), great if you are not greedy.  Dow (/YM) just crossing 11,000 now as we finally put those damned Europeans to bed.  

    USO/Jercon – Seriously with a week to go you can’t take 100% and run?  Seriously?  If you are compelled to keep gambling, take the $1.75 and put that in your pocket and buy the $33/32 bear put spread for .40 and that makes you another .60 (70%) if it hits and at least that way you are risking less than half your gains to make 70% more.  

    Lessons/Csaw — Yes because reparations worked so well the first time!  

    EZPW/B1 – Some nonsense with a buyout deal that’s been aborted is all I know.  That business is too detestable to invest in and that’s from a guy who like MO!  

    MRO/Asaenz – No, I think we bounce here and I think we should give it a day before joining the masses in panic (see above video).  

  50. jerconn

    Phil, I can "seriously" definitely take 100%  and run on the USO puts, but I don’t want to be a fool and leave money on the table.  I have seen enough of your calls on USO and QLD and AGQ, etc to know that you have upside and downside targets – do you not sometimes base your buying and selling on those targets (usually based upon TA), rather than on percentage profits?   Or put the question another way, when do you base your selling on targets and when on actual profit margin? 

  51. asaenz

    SNDK holding up pretty good!

  52. brooklyn

    Phil/TBT – trying to work off some Sept puts and take advantage of the vix spike – what do you think about buying back the $35 puts (today? wait for a lower vix day?) and selling 50 MAR 22/19 put spread  for $7k with $8k of margin and a B/E of $20.59? 

  53. csaw2

    Germans-make them pay/Phil Yes that was the reasoning for not make them pay, but i am talking how things are -still- felt in the heart of ordinary people. The european unconscious – and that’s what will matter in the long run. This is the first big crisis after the ‘reconciliation’ and it’s in dire times you really know your friends..

  54. gucci

    Hi Phil — DIG — is this a good bcs to start a small position — thx oct 37/45 BCS and sell sept 37 short put for net 1.25

  55. pstas

    TLT- Phil, I don’t see any specific reference to the TLT plays from Friday. Are you holding on for now or did you kill these and I missed it?

  56. alik

    CVV was 5.8% up on Friday and is 2% up today – both on big volume and no news. Looks like someone big is trying to build a position in this micro cap.

  57. Phil

    USO/Jercon – I may have a target when I begin (we were hoping for $82.50 and we got $83 last night which held, but that goes out the window as you get closer to expirations and there’s money on the table.  See the strategy section re. setting stops and scaling out of a profitable position – sorry, but even if you ask nicely, I can’t go making exceptions for your special case of greed.  

    Parade/Angel – Hey, he was just firing in the air.  In Texas, that’s how they say "hello."  Meanwhile, did you catch this:  

    By noon today, a total of 46 people had been shot in the city since Saturday morning, authorities said.

    Gotta love that 2nd ammendment! 

    TBT/Brook – See above note to Leon.  TBT is not the best path to redemption on that trade anymore, not with TLT so high.  

    Germans/Csaw – I know what you mean, I was just saying…  Very strong parallels to early American all around.  Our country was hardly harmonious either at the time.  Also, people underestimate how much the Germans value their free trade with the EU.  If anything, the other countries should wise up and kick Germany out so they can float a loose currency and whack Germany for import duties.  Maybe Germany and Japan (both major exporters) can set up a trade alliance with each other -forming a sort of Axis across Europe and Asia…  8-)

    DIG/Gucci – It’s oil and gas and you are coming into the slow season.  If the Dollar keeps going up, it will hurt them and they have been as low at $25 (for much of last year) so it’s a pretty dangerous trade in an uncertain market. 

    TLT/Pstas – I haven’t even had time to look at old trades but, at the moment, I still have faith that it’s a passing fad but just happy to see a pullback for now rather than throwing good money after bad without better evidence.   Look, even gold is actually pulling back a bit.  

    CVV/Alik – That was a great call last week!

    Dollar 76.02 not killing us (more).  

  58. jerconn

    Phil – thanks for the answer on USO..Next question; the GLD Oct $160 puts are back to even (1.40)…seeing that gold is just all over the place, does it make any sense to roll up to higher P’s?  Or wait for these to be profitable and then roll up? 

  59. dflam

    Phil/EDZ: I’m confused about your previous response stating  max. profit is $3.55. If my cost of $3 spread is net $.94, I get $2.06 profit. How do u arrive at $3.55?

  60. shadowfax

    Phil
    What good does it do to take guns away from the good? Do you think the bad guys will turn theirs in? Maybe you should be buying SODA also, guns are not the problem, what if most good people carried guns? Just maybe they would shoot a few bad guys for free!!!!!!!!!

  61. GSsucks

    RSS reader / Phil -  I’m not sure the RSS feed can be set up to send out emails.  Even in an RSS reader, one has to constantly keep looking through the new messages [including useless ones like mine] to see if you [Phil] posted anything.  To the best of my (limited) knowledge, one can’t set up an RSS feed to trigger based on messages by a certain user, only messages/posts in general. 
    I was wondering (hoping?) all your posts could be sent out as PSW alerts in the same way your 9:44 AM post was sent out as an alert this morning. 

  62. celesteschein

    JRW
    I am in TNA at below $37. Would you cash in your gains today or hold for the week expecting a pop?

  63. Lincoln

     Phil: TBT
    Your earlier comment to Leon "I think the Jan $120/110 bear put spread at $5.50 is a good way to go with $16,500 there (30 contracts) returning $30,000 if TLT finishes lower than $110 (now $114.66).  You can sell 2013 $95 puts for $5 to offset" what made this the preferred approach vs selling OTM calls to offset.  TIA

  64. csaw2

    Axis/Phil Then we’ll really have gone full circle 8-)
    Once i read in the Times too , that the only thing shared by all the europeans was the American culture (meaning Hollywood, MacDonalds, and Coca-Cola). That’s a bit over the top but there is some truth in that nonetheless.

  65. Pharmboy

    Cat play – unless Obama goes for it all and tries to hit a grand slam, I would not enter any play in the infrastructure game.  When CAT makes it to 70, then, maybe time to dip our toes.  Just my take on the fundamentals.

     

    SGEN – 1020, they were mentioned in the SWW.    Game on with them.  I have the stock and sold the 15 Dec strangle.

  66. leonf675

    Phil, thanks for the advice. 
    Just to clarify,  are you recommending that I buy to close thes short $32 puts and just realize whatever losses in exchange for freed up margin, as a part of this adjustment/switch to the TLT bear-put-spread?
    I will also consider turning the TBT position into a bear call spread as per your suggestion.   Thanks again.

  67. Phil

    At the open: Dow -2.52% to 10957. S&P -2.75% to 1142. Nasdaq -2.31% to 2118.
    Treasurys: 30-year +0.06%. 10-yr -0.24%. 5-yr -0.12%.
    Commodities: Crude -2.74% to $84.08. Gold +1.12% to $1895.35.

    Currencies: Euro -0.32% vs. dollar. Yen +0.79%. Pound +0.5%. 

    09:23 AM With stock futures pointing to sharp losses, the NYSE puts into effect "Rule 48," which is designed to smooth the opening of stock trading on days that are expected to be volatile. The rule allows market makers to not disseminate price indications ahead of the opening bell.

    12:00 PM On the hour: Dow -1.85%. 10-yr -0.45%. Euro -0.78% vs. dollar. Crude -2.47% to $84.31. Gold -0.31% to $1868.65

    The big banks being sued by the FHFA are taking a beating, exacerbated by the aggressive selling in European banks:SCGLY.PK -13.9%CS -12.1%RBS -12.1%DB -8.9BCS -8.9%,NMR -7.6%BAC -6%C -5.1%JPM -4.5%HBC -4.5%GE -4.4%,MS -4.3%FHN -3.6%GS -2.8%. (also)

    In return for a multibillion-dollar payment, state prosecutors have offered large U.S. banks a deal over inappropriate foreclosure practices that could effectively release them from legal liability for any misconduct relating to mortgage bonds, sources say.

    August ISM Non-Manufacturing Index: 53.3 vs. 51 expected and 52.7 prior (>50 denotes expansion). Prices index rose to 64.2 from 56.6. Employment fell to 51.6 from 52.5. New orders rose to 52.8 from 51.7. 

    August Employment Trends Index: +4.1% Y/Y to 100.8, vs. 101 in July (revised). The recent decline in the index "is still not as strong as it was in the months leading to previous recessions," The Conference Board says, still expecting moderate job gains in coming months "but not fast enough to lower the unemployment rate." 

    Falling equity markets and interest rates have caused the funding deficit in the pension plans of S&P 500 companies to hit $388B, a study from Credit Suisse shows. The hole is larger than at the peak of the financial crisis, with schemes now holding assets worth just 77% of their liabilities.

    Barack Obama yesterday gave a preview of the jobs package he is formulating, telling a rally in Detroit that proposals would include an extension of payroll tax cuts, as well as projects for rebuilding roads, bridges and other infrastructure. Obama is due to provide full details to Congress on Thursday.

    Citigroup expects profits for the S&P 500 to rise just 4% to $101/share in 2012 vs. consensus estimates the bank says are about 20% too high. Though not expecting any sharp government cutbacks, Citi says the economy will have to deal with no increase in federal demand.

    Brazilian inflation for August rises 0.37%, against expectations for a 0.36% increase. The Y/Y pace of 7.23% is the fastest in more than 6 years. Seemingly worried more about slumping demand than prices, the central bank unexpectedly cut rates 50 bps last week.

    Now closed for the day, Europe mostly adds to yesterday’s losses. Stoxx 50 -1.1%, Germany -0.8%, Italy -2.2%, Spain -1.5%, France -0.9%. It’s good to have your own currency: U.K. +1.3%, Switzerland +4.4%. The euro -0.6% vs. the dollar, +8.3% vs. the franc

    To Bruce Krasting, the key central bank statement today was not the SNB’s, but the ECB response: "(We) take note of this decision, which has been taken by the SNB under its responsibility." "The SNB has just committed suicide," writes Krasting, "draw(ing) a line in the sand," and going it alone.

    This isn’t the SNB’s first rodeo. Frustrated at years of failed attempts to halt the franc’s rise in the 70s, the bank set a floor under CHF/DEM (deutsche mark) in 1978. The move worked, but at the cost of exploding inflation – which went from near nill to 6.6% over the next 3 years. 

    The SNB’s move promises to relieve pressure on eastern European economies where the franc’s sharp rise threatened to crush consumers. In Poland and Hungary, more than 50% of mortgages are denominated in francs (effectively making the average homeowner a currency trader with a massive short in the swissie). 

    Excepting gold, "the yuan may be the ultimate safe haven today," says JPMorgan’s Rebecca Patterson, reacting toSwitzerland’s action today. Hey, just because the SNB says it won’t allow the euro to trade below CHF 1.20, doesn’t mean the franc’s going to zero.

    A chart of the S&P 500 against the U.K. (EWU), Germany (EWG) and the Stoxx 50 (FEZ) indices since late July shows justhow dramatic the outperformance of the U.S and Great Britain has been.

    Technicians see recent ugly market action portending more ugliness. Michael Kahn thinks the Dow is following a pattern that could take it well below 10,000 in the near future, and BofA’s chief technician Mary Ann Bartels says a retest of the S&P′s recent low of 1020 could be coming, and that the market’s violent swings are not healthy signs.

    The CBOE Volatility Index tacks on a 16% gain after investors decide to head to safer waters. Digging into trading on VIX futures trading, Schaeffer’s Investment Research’s Adam Warner finds the market is pricing in high volatility and big market moves for several more months.

    History is repeating itself with Warren Buffett’s rescues: BofA (BAC) opens -5.2% at $6.87, or $0.11 below its value before Buffett injected $5B. BofA had surged to $8.80 the day afterwards. The same happened with his investments in GS and GE, although he still made money on them.

    "At the edge of the abyss," is how Spanish PM Zapatero – in a meeting with union leaders - described the situation on August 17. The meeting occurring just a few days after the ECB had intervened to buy Spanish and Italian paper, Zapatero said the nation had been dangerously close to needing a bailout. 

    Seemingly oblivious to Germany’s growing impatience

  68. Phil

    Seemingly oblivious to Germany’s growing impatience with it, Greece reportedly asked to receive all of its second bailout by the end of 2013 rather than by 2014 in order to cover its wider-than-expected deficit. The answer was a rather predictable no, and anyway Greece has denied the report.

    Up a few basis points today, CDS on Italian paper at 449 bps is priced at the same level as Portugal’s back in February (when Portugal was no Ireland). At 187 bps, French CDS are at the same level as Italy’s in early July.

    The EU’s top court backs up a no-tolerance policy on genetically modified organisms by saying even honey containing trace amounts of genetically-altered pollen cannot be sold without special approval. The ruling is seen as a potential blow to Monsanto (MON -2.9%) – if collateral damage from its genetically modified corn limits production. 

    Analysts are expecting Texas Instruments (TXN) to cut its Q3 guidance during Thursday’s mid-quarter update. Stifel Nicholas is cutting its estimates in advance, citing weak orders and pessimism regarding 2H demand. Rival analog chipmaker Fairchild (FCSwarned earlier today, though shares are now up 0.7%, a sign the bad news was priced in.

    Goldmans’ Heather Bellini expects Microsoft (MSFT) to distribute all and maybe more of the $15B in domestic cash flow it will generate this FY back to its owners. She believes the board (meeting this month) will bump the dividend from $0.16/quarter to $0.18-0.20, and authorize a new $40B share buyback program.

    AutoNation’s (AN -3.8%weak August sales report looks like it hit a raw nerve with investors already nervous about companies depending on the auto industry. Prominent decliners: Goodyear (GT -6.4%), Bridgestone (BRDCY.PK -5.7%), Autolive (ALV -3.9%), KAR Auction Services (KAR -3.3%).

    Best Buy (BBY -3.9%) shares slide after Piper Jaffray cuts its rating to Neutral and lowers its price target to $26 from $39. Valuation is intriguing, Jaffray says, but shares will remain weak due to its positioning in consumer electronics industry product cycles: 40% of sales are in flat-to-declining TVs and PCs, with a much lower share in tablets and mobile phones.

    Happy HOLI-Day!  Hollysys (HOLI), a Chinese maker of industrial automation and control systems, is up 12.7% after announcing several members of its management, including its Chairman and CEO, have jointly purchased 725,467 of the company’s shares.

    Pascal-Emmanuel Gobry thinks Amazon’s (AMZNnew tablet will be a "blockbuster," given demand for cheaper tablets, and Amazon’s brand, retail reach, and media ecosystem. Though with a 7-inch display, it could be less of a challenger to the 9.7-inch iPad (AAPL) than to the Android-based Nook Color (BKS), which hasbecome a major rival to Amazon’s Kindle. 

    In the face of increasing warning signs about the health of broader consumer tech sales, Canaccord’s Milk Walkley is raising his PT on Apple (AAPL) to $545 from $515, citing strong iPhone 4 sales at AT&T (T) and Verizon (VZ). Walkley is also lifting his 2011 and 2012 iPhone shipment forecasts, and his 2012 iPad forecast.

    DigiTimes Research sees smartphone shipments rising 60% Y/Y in 2011 to 462M units. It expects Apple (AAPL) to become the world’s No. 1 smartphone vendor on the back of 82% shipment growth, and Nokia (NOK) to fall to No. 2 thanks to a 26% decline. Samsung (SSNLF.PK) is expected to post 191% growth, and Research In Motion (RIMM) a mere 13%. (previously

    Did somebody say CHINA?  An Apple (AAPL) device with 3G high-speed wireless data capabilities reportedly was issued the network access license needed for the company to begin official sales of iPad2 in China. Apple is aggressively expanding in the country, where it will open new stores this quarter in Hong Kong and Shanghai.

    CHINA, CHINA, CHINA!!!  Starbucks (SBUX) plans to triple the number of its coffee shops in China during the next four years, according to its Asia Pacific president. Jinlong Wang says Starbucks plans to operate 1,500 outlets in China by 2015 from its current 470, and expects to open 700 coffee shops in South Korea from 370.


  69. shadowfax

    GSsucks
    You could ignore everyone except Phil.

  70. shadowfax

    I have 6 indicators that a drop below IWM 66.94 might start a sell off.

  71. amatta

    Phil, 
    TBT, so what would you recommend based on above comments TBT/TLT. I have 1000 TBT put to me at 31 basis and a 2013 37/45 BCS with short 34 puts (net 0.50 credit). 
    Thanks

  72. rustle123

    Knowing the news in the last week, how in their right mind can anyone be buying NFLX.  That’s insanity.

  73. 1020

    Pharm/SGEN
     
    Sorry Pharm, I was asking about GERN…
     
    Thanks

  74. JRW III

    celesteschein / overnight
     

    I’m in cash EVERY night (except a 3-day weekend play as I did Friday) !!

    I’m currently in TNA at $37.15

  75. Pharmboy

    1020 – no no no…my bad.  I just went back and looked at the post….glasses may be something I need!

     

    GERN – yes, they popped, then pooped.   For a small allocation, they are fine, but stem cells still have a long, long way to go.  Buying here and selling teh Dec $3 Calls and 2 puts for 45c would be fine.  Again, just a small allocation to see how they hold up in the midst of all this termoil.

  76. scottmi

    PLX/Pharm – still liking these?

  77. JRW III
    Quote of the Day

    "I think that the SNB has just committed suicide." and it may take us with it !!

    Read more: >http://brucekrasting.blogspot.com/2011/09/on-swiss-move.html#ixzz1XByr2SsH

  78. Pharmboy

    SPY 116 Put calendar from Friday is 1.40.  We bought it for 1.15.  Close it out for 1.38 or better.

  79. Pharmboy

    PLX/scott – really?  I don’t like TBT…me likey ikey PLX.  Just scale in (if you have not already) and give them time.

  80. bobhu

    Phil,
     
    I also have Sep. TBT short Puts, 10 for $37 and 20 for $34, should I roll them to 2X or move to TLT?  Thanks.

  81. stjeanluc

    Swiss / JRW – Good article, thanks! As I was saying this morning, the SNB just removed the only risk-off trade left! That can only lead to chaos… 

  82. williex

    Shadow
    Guns:  I grew up and lived in Chicago for 45 years although I went to college in ames Iowa and I now live in rural wisconsin. 
     
    What most gun enthusiast miss is that the problems of the big cities are very different from other areas.  I have no problems with guns in the area where I live currently.  the bad people with guns are outnumbered by the decent people with guns.  The inner city is probably 50/50 or even worse (My guess).   Even friends who own guns for their protection have no training and are really rather stupid with their thought process with regard to the whole concept.  You can see it in their faces and hear it in their voices.  There is a little bit of dirty harry in the back of their minds.  I was taught guns from my father and my uncle both farmers and poor when they were young.  Guns were for putting food on the table first and security second.   
     
    I guess what I am saying is that the cities have a problem and the gun enthusiast won’t let them figure out away to deal with it.  When Chicago banned guns the fed stepped in an told them they could not do that.  How is what the city banning guns in the city limits a threat to gun owners?  most of the people I know would either break the law or move to the suburbs. 
     
    When I lived in Chicago I lived near Wrigley Field where the Cubs play, an up scale neighborhood.  yet when you read the local paper the crime section was almost filled with gun involved (rarely a shooting).  every addition had 20 or so crime incidents and 15 to 16 had gun involved. Mostly it was 2 drunk groups having an argument on the street late at nite.  
     
    While having a gun might make me feel safer the reality is I don’t want to be in a gun fight because some idiot is drunk or because a moron thinks I insulted his ego.  
     
    While I respect the gun lobby I think they do a disservice by not working with the cities to help them figure out a solution for their problems

  83. stjeanluc

    Latest rumor from Barry – BAC to spin off Merrill:
    http://www.ritholtz.com/blog/2011/09/long-overdue-bofa-to-spin-out-merrill/
    This is still a sick bank!

  84. JRW III

    Taking $1.85 profit on TNA if it fails here again !!   (IWM 67.47)

  85. stjeanluc

    And more about Europe:
    http://blogs.reuters.com/felix-salmon/2011/09/06/europes-lethal-uncertainty/
    They need to move a little bit quicker…. The fun stuff:

    There’s still a lot of weirdness going on in Greece’s debt, especially at the short end of the yield curve. Consider this, for instance: the Greek bond maturing on January 11 is trading at par — the market expects it to be paid in full, and the yield on the bond is in single digits. But the Greek bond maturing on March 20 is trading at about 63 cents on the dollar, for a yield well into triple digits. Meanwhile, the bond maturing on May 15 is trading in the low 80s, for a yield of around 30%.

    There might be a good explanation for why short-dated Greek debt is trading so oddly, or it might just be an artifact of illiquidity. But the general chaos and uncertainty that’s reining in Europe right now is very reminiscent of the height of the financial crisis. Crises of confidence are always self-fulfilling, and the longer governments take to react to them, the worse they get. Europe, by its nature, moves slowly. And that’s bad news for global markets. 

  86. matt1966

    Hey folks, how’s life in the trenches?
     
    JRW, congrats on history repeating itself!
     
    Algo update:  After posting 9 straight days of simulated gains I decided to go live on Friday.  Wouldn’t you know it lost?  This weekend I toned down the morning logic to play it safer.  It’s just too damn crazy to model… so far.  I’m back to testing my changes today.  Maybe I’ll roll it out again tomorrow.

  87. kurtww

     Maybe it’s just luck, but it seems like spread execution is getting better again with ToS. I just closed out the SPY calendar spread and an HPQ spread, and they executed at the mark in less than a minute. Hopefully they’ve fixed something.

  88. cwan120

    Hi, Phil,
    As you recommended last Friday, I bought AXP Jan $35 puts for $1.04 as a hedge against my long financial positions.  It’s now about $1.18.  Not quite 20% gain yet.  What do you recommend?  Sell now?  Or Hold?
    Thanks.

  89. JRW III

    Out with $1 90 !!

  90. matt1966

    The blog on SNB’s move was interesting.  It left me with this thought.. I said a while back that when the Fed started printing there would be a global race to the bottom.  Now it’s happening. But what struck me new today is what about the countries who manage there affairs effectively?  Unfortunately, I think they will be screwed just like the American citizens who live withing their means, pay all their bills on time and aren’t underwater with their mortgages.  The world seems to be on a path where it is searching high and low for ways to keep the losers in the game.  To do this, they have to f with the winners.  The Swiss have always had expensive stuff.  But with everyone driving up the franc, how can their exports expect to survive?  The moral of the story?  Spend like there is no tomorrow. 
     
    ps.  German companies should start paying their employees in gold.  They are soooooo screwed.

  91. Pharmboy

    Willex – Cyclones suck!  Go Hawks! 

  92. GSsucks

    RSS / Alerts – Thanks for the suggestion Shadow.  It would make the process of looking for Phil’s posts a lot simpler.  However, it would still require me to log in and refresh that day’s page every few minutes (or seconds) to see if Phil posted anything new and that won’t exactly help productivity at work.  I’m hoping I can find some way of monitoring the page (difficult to do with most rss/alert tools since the Premium area is password protected) and sending me an email whenever Phil posted something.
     
    Kwan – I have a feeling you might be able to help me out with this predicament.  Any ideas?

  93. williex

    Pharmboy
     
    I would retort but it is true.   I always seem to choose the 2nd choice.  Chicago is the 2nd city and Iowa State is butt ugly 2nd cousin twice removed college in Iowa but I love them.  I now live in the state that appears to be 2nd to texas because our governor is trying to copy the texas miracle :(

  94. Pharmboy

    Sorry Willex…couldn’t help myself with the game coming up.

  95. Pharmboy

    Actually I have fond memories of Iowa State.  I am from Kansas, and playing them in basketball was always a good game, with Jeff Gray, Hornesek, etc.  But State has the Hawks hands tied in Football (I did my graduate work at U of I), but my undergrad was at Beloit!

  96. morxlntway

    GS – i kinda do that on my iphone. I can hide the morning article, then when i click refresh i get only posts and suppose i could hide everyone else. Still requires a click.

  97. exec



    JR
     
    Typical….you bail and they dip the dollar to push it through.

  98. JRW III

    Well, it appears that I was a little hasty on that TNA sell !!

    Buying 2/3 back at $ 39.22

  99. zeroxzero

     Phil:  I compliment you on your stock calls, they are really holding up quite well.  I reflected that your strength, leaving aside your supernatural abilities to dance with options, is your fundamental analysis.  That leaves you relatively helpless in the face of psychological phenomena like gold, a worthless rock, admittendly — until someone offers to buy it from you at stupid prices.  On balance, you’ll win, I suspect.  But you are stubborn to keep shorting stuff that goes against  your tendencies — "tendencies" are very dangerous in any martial art, which investing certainly is.

  100. JRW III

    All in TNA at $39.26 average !!

  101. jabobeast

    we need mr. stick!!!

  102. scottmi

    PLX/Pharm – thanks.. just seeing your SWW writeup now.. ;-)

  103. gmarts

    Pharm and williex, Gawd, I thought I was the only Moo U alum in these parts I’m an old Cyclone myself, but If I ever enter Iowa again it won’t be of my own free will. (we always secretly envied the cool kids over at Iowa City)

  104. williex

    Pharmboy
     
    I went to highschool with Jeff Hornacek He was a good guy but we all thought if any honacek was gonna make it his younger brother was the one.  Hornaceks dad was a highschool coach I don’t remember what he coached but all his kids were great atheletes.  They were good students also. 
     
    I remember when we ran into each other at Iowa state he told me a lot of thought went into choosing their basketball program.  Smart Dad.

  105. Pharmboy

    SPY 118 Call calendar spread weekly sell, month buy, for 89c or better.  Should be able to pick up on the run up and a few cents for the ON hold.  The 120s are holding up nicely.

  106. williex

    Pharm
     
    Funny you should mention Beloit as I am wearing a Beloit t shirt as I type.

  107. Pharmboy

    Money = mouth.  Buying PLX here. 

  108. cwan120

    Hi, Pharmboy,
    I’ve been busy or out of town, and haven’t been able to read posts for a while.  So, I missed your discussions on this strategy.  Can you explain your SPY plays, such as "SPY 118 Call calendar spread weekly sell, month buy"?  Are you betting that SPY will go up soon?  And then exit both legs together?  What if SPY moves against you?
    Thanks.

  109. etradingsignals

    Phil/GSSucks
    It will be great if the site features an option on send every post by Phil or JRW or Pharmboy (and other contributors) as an email alert. For some people it might be too much. But for others, like me & GSSucks, who can’t stay on the site all the time, it would help be notified when a post occurs. One could have a 2 level alert system – the regular alert that comes every morning when Phil sends it out to all members, and a 2nd alert level which sends out posts of contributors as emails.

  110. williex

    gmarts
     
    I have fond memories of Iowa state where men are men and the sheep are nervous

  111. exec

    JR/Target?

  112. JRW III

    exec / Target

    IWM 68.50ish, but they have to get through 68.10 first !!

  113. Pharmboy

    LOL Williex!

     

    SPY/cwan – play is using the delta neutral, but theta decay.  I usually pick a 0.3X delta on the weekly (sell) /monthly (buy) moves.  If it goes against me, I roll the weekly, leaving the bought call or put alone.  If it goes DITM, then I wait for the end of the week and then buy it all back, usually for a small(er) profit.  Weekends have been the best, as the decay kills the weeklies.  I do two legs, depending upon the movement of the market (call or put).  Biased to the down direction here, but starting to accumulate the calls with the push up.

  114. jromeha

    Taking a quick break from work, god I hate this market. Phil, where are you shorting oil at off this ridiculous run-up?

  115. shadowfax

    matt
    The Swiss are totally out of price site. They produce a $37,000 pre amp, $50,000 power amp, and a $70,000 phono preamp for your listening needs. No sourse included but Germany and Australia have $100,000 plus turntables and England a $80,000 CD SACD player to go with that. You still need speakers and cables, at least $250,000 for that, hell ya, you can even buy speakers made in Utah for that and employ a couple Americans, but that isn’t kool enough for those .01%ers.

  116. exec

    JR/Dollar
     
    Where you watching the dollar on that last drive upward.  It really is laughable how they gap the dollar down to push through the resistance.    Must be the same guy behind the curtain that has his finger on the dollar switch who is controlling the RUT.

  117. jabobeast

    WASHINGTON (MarketWatch) — It’s "unlikely" the data the Federal Reserve will examine at its next interest-rate setting meeting will justify additional accommodation, Minneapolis Fed President Narayana Kocherlakota said in a speech to the University of Minnesota on Tuesday. Kocherlakota was one of three Federal Open Market Committee members who opposed the Fed’s decision in August to pledge to keep rates low through the middle of 2013, so his stated objection to further easing isn’t surprising. His speech otherwise was similar to one he delivered last week.

  118. sank1

     GLD / Phil,
    I’m in the Sep 176 Puts at an average of $2.15. They are $1.80 now. Cut and run, or do you expect an improvement in the situation, and a return back to "rational" levels? Thanks.

  119. Phil

    GLD/Jercon – It made sense to roll higher when GLD was $1,900 this morning and the roll was cheaper but now, better to just be happy not to be burned.   

    EDZ/Dflam – I was thinking the $20s.   Point is at $23.55, you were $2.55 in the money and I was not talking about your profits but the intrinsic value of the calls you own.  All the more reason to cash in those ill-gotten gains, as I suggested!  

    Guns/Shadow – I’ll bet you that there weren’t 46 people shot in all of the UK and Japan combined in ANY weekend last year!  I don’t mind it if you think guns are great but don’t be ridiculous and start saying that if more people had guns there would be less problems when there are many civilized societies that DO control their guns and clearly have less crimes by factors of 10 compared to the US.  

    And what Willie said! 

    Alerts/GS – Sorry but we’d have to have more full-time mailing servers for that and I doubt there’s a market for the extra costs (and if we sent out that many mailings a day we’d be marked for spammers constantly).  I’m very glad you hang on my every utterance like that but perhaps adopting a slightly calmer trading style would be a better solution than attempting to catch every comment I make instantly…

    And what Shadow said!  

    TNA/Celest – Nice timing!  If you liked your entry at $36.50ish and aren’t satisfied to take $39.45 off the table, you can sell the Sept $37 calls for $5.20 and the Sept $35 puts for $2 and that’s collecting another $4.75 by next Friday, which is about as much as you would make if you caught 2 more great runs like this while your only risk is a reentry at $35 less whatever profits you have off your current net $29.30(ish) entry.  Otherwise, if you want to be greedy but less complicated, you can take $1 of your $3 profits and buy the $38/41 bull call spread and then you can make another $2 at $41 while risking just 1/3 of your profits but you actually lose less ($1) on a fall from $39.45 than you would if you stuck with the stock on the same pullback.  

    TBT/Lincoln – Because he had margin concerns and because he’s already behind so this bet is protected by the gains on the bear put spread and, of course, the fundamental long-term target of TLT.  As a straight-up trade, I love selling the naked calls from this ridiculous level.  

    Culture/Csaw – Actually it breaks my heart how homogeneous European cities have become.  It used to be you could blindfold me and drop me on a street in Europe and I could immediately tell where I was but now it’s the same friggin’ chain stores on every high street (America became one consumerist lump decades ago) and it’s really sad.  Then people wonder why tourism is down when there’s no difference between one downtown and another.  

    CAT/Pharm – I like them long-term.  Doesn’t matter if they dip a bit more, it’s already a good price.  

    TLT/Leon – Yes, chasing TBT at this point trying to get even will take forever and for TBT go get back from $22 to $30 would  take an almost 20% drop in TLT anyway and that would be below $95 anyway.  Just a 10% drop in TLT takes them below $105 and that only pops TBT to $26.40 (less whatever decay) so where does it make more sense to play TLT short?  

    TBT/Amatta – Yes, same thing, I would get out and just work TLT to make whatever losses back.  The point is that TLT is now 5x larger than TBT and doesn’t have a decay issue so, even though TBT is 2x a 10% move in TLT is $14 but a 20% move in TBT is $4.40 so you get 3x the move in TLT on a dollar basis that you do in TBT.  

    NFLX/Rustle – Forget NFLX, they are buying SODA again!  

    SNB/JRW – I don’t know.  If everyone else is devaluing their currency and your country is able to print money just to keep your exchange rate at a level that allows exports, what’s the harm in doing so?  As long as you buy intelligent assets with your newly printed money you are adding wealth to your nation for free.  Now, the fact that they are buying Euro Bonds is a bit questionable (of course they could also print money to buy CDS insurance) but if they were instead buying Greek Islands or EU Oil companies on the cheap – I’d think that was a brilliant strategy.  

    Think about the mechanics of what the Swiss are doing.  They want to price CHF at 110 and the SNB wants 120 so they print 110Bn CHF and buy 100Bn Euros in notes that pay 4%.  What did it cost them?  They wanted their currency down at 120 and it was much lower before all this idiocy started so it doesn’t harm their people but the SNB stick 100Bn Euro note in their vault and collect 4Bn Euros a year in interest.  If the exchange rate moves back to 110, they print up another 110Bn Francs and buy another 100Bn Euro notes at 4%.  How is that suicide?  I wish the US could commit that kind of suicide rather than printing up Trillions, giving it to the Banksters and getting NOTHING in return except for higher commodity prices. 

    Speaking of high commodity prices – Oil flying to $86.35 – good thing some of us were not greedy!  8-)

    TBT/Bob – It’s too dead, only TLT is interesting now.  

    BAC/StJ – That was beginning last week (that they would refinance Merrill separately). 

    Model/Matt – Hard to judge performance in this insane market.  

    TOS/Kurt – I hope so! 

    AXP/Cwan – Things are improving a bit so you are lucky to have a gain.  They were a lot better this morning, opening at $1.24 but you did not sell into the excitement but now you feel you are "owed" 20% anyway?  That’s not how it works.  Think of it more like they were up 20% and now you are lucky to catch 15% and then you can go find something off the list that hasn’t fallen although, if you still need the protection, then perhaps make sure you find a horse you want to switch to before you shoot the one you have!  

    Spending/Matt – That’s the inevitable outcome – global hyperinflation.  A Rolex may be $3,000 now and the average US family making $48,000 with $4,000 of disposable income can never afford one but run inflation up 10x and the Rollex may end up at $25,000 (because the Swiss manage their currency) and that family will earn $480,000 a year and have $40,000 in disposable income but suddenly also $500,000 in equity in their $2.5M home so ROLEX’s FOR EVERYONE!   It’s BRILLIANT!  

  120. zeroxzero

    Sea change?  The Tea Party, and the Republican politicians that cater to them, may have gone a bridge too far for the American people.  If Obama were a stock, I’d be selling his puts.  Jimmy Hoffa’s war cry may be a signpost.  And I’m a conservative [small "c", not to be confused with my actual voting record, e.g., Obama] , so this is not a Democrat’s wishful thinking.  http://online.wsj.com/article/SB10001424053111903648204576552371834713688.html?mod=WSJ_hp_LEFTTopStories

  121. gmarts

    Williex…. Sheep, goats, sows, heifer calves…… I thought I’d never get that wooly smell out of my boot tops.

  122. revtodd64

     Pharm/ Williex/Cyclones – I grew up near Ames and used to play pickup ball with Grayer and Hornaceck.  (I am Hornaceck’s age and Grayer is two years younger.)  Grayer was actually the only guy that just dunked right over the top of me.  Made me realize I belonged in Div. III ball, not Div.I !!  I loved watching those guys.  Too bad Grayer blew out his new in the NBA.  Did you know Hornaceck was a walk-on at Iowa State?  Amazing for a guy who had a great NBA career and is still the career assist leader in the Big 8/Big12?/Soon-to-be Big 8 again.

  123. shadowfax

    Phil
    Rolex watches can cost $20,000 today. My gun point is we have the 2nd amendment and the bad guys already have guns. If they had a little fear of who might shoot back it could be a good thing, laws and cops have not worked.

  124. celesteschein

    Hi Phil-didn’t want to be greedy with the TNA.  Cashed out at $39.30 for a nice gain today.  I am holding Oct 22 $13 XLF calls.  I am in them for .59 but I have a lot of faith they will do well between now and October 22nd.  I have to say, I played the USO puts last week on your rationale and did really well.  Almost got shaken out of my puts on 9/1 by the manipulation but hung in there and made a nice 60% on 9/2!  Thanks for all your guidance, I’ve learned a lot over the past year.

  125. Pharmboy

    revTodd – from the weekend/post on mental health, send me an email at pharmboy123 at gmail.  Thx.

  126. rustle123

    Phil/Shadowfax/Guns
     
    these are hard facts with States and their gun laws and rate of shooting deaths per 100,000.  This should clear up the debate:
     
    http://www.thedailybeast.com/galleries/2011/01/10/deadliest-gun-states.html

  127. oknoman

     Pharmboy/Beloit: What year did you graduate from Beloit? I was in the class of ’89.

  128. Pharmboy

    ’93.

  129. jabobeast

    Phil—any hope for the stick today???

  130. JRW III

    Out of TNA with a loss of 41 cents, disappointing, but that’s what I get for chasing !!  (and trying to tack at the same time)

  131. Pharmboy

    Down, oh, down….

  132. Phil

    RSS/GS, Etrad – I know nothing about RSS feeds but I open IE, push the feed into the URL thing and it comes right up and says right on the top right, in a standard box "Sort By" and says "Date, Title Author".  I’m sure there are more sophisticated readers with better capabilities that will take care of your special problem without us re-configuring our site and risking security violations.  

    Tendencies/ZZ – Those are often the worst calls until they become the best calls – as oil did for us in 2008.  The question is whether we can remain solvent longer than the market is irrational or not.  

    Oil/Jrom – Too dangerous to short below $87.50 and $90 is much better (as we saw last week).  We didn’t make $82.50 during trading hours so the bias is up at the moment, not down.  

    Speakers/Matt – I have Snell Type A’s with dual mono Tandberg amps from the day’s when I used to care about such things.  

    Kocherlakota/Jabob – Thanks.

    GLD/Sank – It’s a highly speculative bet and the clock is ticking.  The dollar is up at 76 and could fall and pop gold back up so I’d at least sell the $175 puts for $1.60 to drop the risk to .20 and maybe you pick up .80 and net $2.60 back on the trade (20%) vs the risk of a .55 loss (25%).  

    Rolex/Shadow – Not one I would pay for but it shows you how long it’s been since I’ve priced a watch!  And the point about guns is that it’s only the "right" to have guns that make things confusing.  In Japan or the UK it’s very simple – if you have a gun, you go to jail.  If you sell a gun (or bullets), you go to jail.  Citizens don’t have guns, police and criminals do.  I understand that when you are 100 miles from the nearest police station, that’s a problem but, in the cities, when you are less than 2 miles from all 46 of those shootings in a single weekend – it’s not just the criminals and the armed populace that’s at risk.  Even in the Wild, Wild West they used to have rules that guns could not be carried in the city limits and nobody called them weak-assed liberals for trying to have a little civilized society in the heart of the wilderness.  When did everyone go so insane?  

    XLF/Celest – Congrats on USO!  With XLF, the Oct $13s are down to .42 so not terrible but not good either.  It’s always a terrible thing to sell premium as you need $13.59 to break even and we’re now at $12.23 with 45 days left so you need to make about .21 per week progress just to get even (2%) so just make sure you are net on track this week (off to a bad start, down 2.5% today).  Rule of thumb is if you fall 2 periods behind (4%) then it’s time to bail.  Technically, you are already there from your entry so don’t fool yourself, this is a discretionary hold and, if you don’t full intend to press this bet with a DD or roll by the time it’s down to .30, then you are probably wasting the next .12 of your losses.  

    Guns/Rustle – This list may be cherry-picked but it does make the point:

    Interesting that more people kill themselves with guns than kill others.  

    Stick/Jabob – Volume is light enough but I think we already had a stick that saved us from joining the rest of the World, which is a good 10% down from us over the last month.  

    Damn, RUT heading back to 666 again!  Dow 11,031 so no progress at all in the end.  Dollar 76.10 not helping.  

  133. oknoman

     Pharm/Beloit: I’m sure we know a bunch of the same people, many friends from the class of ’91, ’92 etc.

  134. rustle123

    Phil/Guns
     
    That link I posted shows states with the most lax gun laws on average have much higher shooting deaths per 100,000.  NY and NJ which you would think would have higher crime rates have some of the lowest averages of shooting deaths and some of the tightest gun laws.

  135. JRW III

    Back 2/3 in TNA at $38.32 off the IWM 66.93 line; may we have a Stick, please !!

  136. leonf675

    Phil, sorry i thought I was done with questions about the TLT postion, but for education sake, can you please explain why you proposed converted the short puts TBT puts into a TLT bear put spread as opposed to, say, selling something like the same number of  Jan $110/$120 bear call spreads for $4.15 – $4.20?
    At first glance,  the put and call spread seem to have similar risk/reward profiles with the call spread being a sale of premium vs buying the premium.   Just trying to learn the right way to think about these things.   Might be useful for others.

  137. williex

    gmarts
    I lived in the towers and when the wind blows the wrong way the sheep farm had a way of reminding you that it was there.  Ya gotta love sheep. LOL
     
    Rev
    In highschool Hornacek was a year behind me and as a junior he was the number 2 man behind a senior.  when he was a senior I understand he was #1 on the team.  This was not a great HS team.  It should have been much better as this school had over 4000 students, grades 9 thru 12.  It was also an upper middle class suburban school.  known more for education than athletics.  But still 4000 kids to choose from should have provided better players.
     
    I would never have thought he would end up a pro much less one of  the top players during his time.  I’m glad it happened though he was a nice guy.

  138. williex

    Phil
     
    Hate to beat a dead horse but I too have tbt but Dec 30 puts would you recommend the same TLT strategy or is this far out enough to wait?

  139. deano

     2013 TOT jan 45 puts can be sold for 8.80 with TOT at 44.75.  They are currently paying a dividend of 6.6%.

  140. JRW III

    Well, I made back that loss; out at $38.79 !!

    Now I’m going to start on lunch, good hunting !!

  141. oburlacu

     I see TOT dividend as $1.37. That’s 2.9% not 6.6.  The put selling in TOT looks attractive tough

  142. oburlacu

     Nevermind my post about TOT. Looks like Yahoo finance is wrong on this one

  143. GSsucks

    Phil – Sorry for the misunderstanding; I’m in way asking you to mess with your security settings or or change the site.   I was just wondering if it would be possible to get the trade ideas posted throughout the day as PSW alerts (similar to the ones you already send) but if it can’t be done or doesn’t make sense, no worries.  PSW is still the best site in the world for trade ideas; email, chat or otherwise.  Keep up the great work.

  144. Phil

    TLT/Leon – I prefer bear puts spreads to bear call spreads, that’s all.   Clearly I’d rather risk $5.50 to make $4.50 than risk $5.80 to make $4.20 for one thing.  At $115, if I own the $120 puts, I keep $5 and lose .50.  At $115, if you sold the $110 calls for $4.20, you give back the $4.20 plus .80.   Also, in between, with a bear put spread, you are selling premium and, with a bear call spread, you are the sucker buying premium.  In the end, that difference will grind you down, trade after trade..

    Euo $1.398, Pound $1.593, 77.7 Yen to the Dollar so the BOJ is happy, at least.  EUR/CHF pinned at 120 all day – when those guys say something – they mean it!  

    TBT/Willie – See above, I just don’t think the chances of TBT going back up enough to save a position are as good as those of TLT coming back down so TLT is currently the smarter play.  Keep in mind that TLT MIGHT go back to 122 or, who knows – some other new, insane high but that would suck for TBT anyway so it’s a question of choosing your poison and I think the math says TLT has better opportunities to profit from a small sell-off.

    TOT/Deano – Very good one, they are a good oil company.  We haven’t played them since 2009 but they’re not too much higher now ($37 was the low).   

  145. gmarts

    Williex, the Towers, well, LA-DI DAH!   High rise with elevators and air-conditioning… I was sweating it out on the top floor (walk-up) of Friley Hall with no AC, hissing steam radiators and 4000 of my closest, sweaty, friends.
    This luxury was  followed by a succession of frozen shared farmhouses. Fortunately I was young and durable back then.

  146. jasu1

    Phil,
    I have 3 positions that I need your expertise on when you have the time:

    HOV:
    Bot 1000 shares at                               @ 6.60
    Jan 2012 Sold 10 contracts   $5 Call    @    .70
    Jan 2012 Sold 10 contracts  $5 Puts    @ 1.60

    Was thinking buy back  $5 Puts for  @ 3.80
    Sell 2013 Jan $2 puts                       @  1.20×3

    RIMM:
    Sell Sep 47.5 puts:  5 contracts for     @  2.05
    Buy back                                             @17.15
    Sell 2013 32.5 puts                             @  8.5×2

    TBT
    Sold 34 puts  10 contracts                   @    2.19
    buy back                                              @  12.00
    sell Jan 2012 26 Puts                           @   5.1×2
              or
    Sell Jan 13  24 puts                              @ 5.35×2

    Your thoughts/ better inputs… please. Thanks

  147. williex

    gmarts
     
    Friley!!!   my god the envy of the towers across the street from campus.  no mile walk at least twice a day.  Brutal in those lovely Iowa winters.  of course  I only walked it round trip twice a day on the days when I carried 60 pounds of books so i could study on campus.  of course there were the 3 times a day when you wanted to go to town and get a beer or see a movie or meet a group in the union. 
     
    of course we did have the farm animals mooing us to sleep everynite.
     
    Class of 85

  148. Pharmboy

    ACI back to July 2009 lows.  Selling some puts on them.  Jan12 12 Ps for 62c.  They never made it there, but if they do, then the world is definitely ending.

  149. cwan120

    Switching horses:
    Phil, I have some Sept hedges expiring soon.  I need to switch horses.  What do you recommend?

  150. williex

    gmarts
     
    When I was there I don;t remember A/C  but that was a long time ago.  I do know that A/C was something schools were putting in after I had graduated.  I just don;t remember having it at Iowa.  I could be wrong.  I wasn’t as sissified as I am now. 

  151. Pharmboy

    What an e’ffing joke.

  152. shadowfax

    Phil
    I don’t know how the states can be compared but my idea is more of an trained armed group of citizens that can be in more places than the police. They would have to have permits and guns hidden to be effective. The bad guys would fear almost everyone and after a few get shot they will think twice about crime. Where I live everyone knows I have lots of guns and the result is my only problem is the cops don’t like it. WY changed the carry law this year to no law and I hope the Teton county sheriff dept. is sweating bullets now after all the tasering. Maybe they stop carrying assult guns like the military in Iraq. The biggest crime in Jackson is a bar fight.

  153. flipspiceland

    @Felipe
     
     
    Investment tips for 2011
     
     

     
    Watch for these consolidations later on this year:
     
     
     
    1.) Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W R. Grace Co. Will merge and become: Hale, Mary, Fuller, Grace.
     
     
     
    2.) Polygram Records, Warner Bros., and Zesta Crackers join forces and become: Poly, Warner Cracker.
     
     
     
    3.) 3M will merge with Goodyear and become: MMMGood.
     
     
     
    4. Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining will merge and become: ZipAudiDoDa.
     
     
     
    5. FedEx is expected to join its competitor, UPS, and become: FedUP.
     
     
     
    6. Fairchild Electronics and Honeywell Computers will become: Fairwell Honeychild.
     
     
     
    7. Grey Poupon and Docker Pants are expected to become: PouponPants.
     
     
     
    8. Knotts Berry Farm and the National Organization of Women will become: Knott NOW!
     
     
     
    And finally…
     
     
     
    9. Victoria ‘s Secret and Smith & Wesson will merge under the new name: TittyTittyBangBang

  154. gmarts

    Williex, Class of ’80… I would never have guessed that one day I would be sitting on a high finance options trading board, discussing my gnarly shameful lowbrow roots…. with others that share them!
     
    Well to quote Joe Walsh, "Lifes been good to me so faaarrrr"

  155. gmarts

    Williex, maybe I only THOUGHT you guys up the hill had AC. And to think I’ve been resenting you all for it all these years.

  156. Pharmboy

    Total gamble.  SGEN 20 Sept Cs.  10c.  Few.

  157. rustle123

    now that was a stick

  158. angelcur

    yah my accountants ‘Laybak and Whacket"

  159. angelcur

    my aottorneys "Mc cann Hurtz and HOwe"

  160. JRW III

    Well, I guess I should have waited on lunch, but 9% on my first two TNA plays and 8% the the 1/2 TZA 3-day play for 13%………………not bad for being on holiday !!  8-)

  161. rpme

    Norfolk RailRoad and Amway….Norfolkanway

  162. exec

    JR
     
    What do you see for tomorrow?

  163. JRW III

    exec / tomorrow

    Fish !!

  164. exec

    JR/Fish,
     
    What kind?  Landed a few Walleye this weekend.

  165. 1020

    Great Job JRW!
     
    "Not bad for being on holiday" is right!
     
    :)

  166. Phil

    Alerts/GS – It would be a hassle for me as there are extra steps to send out an Alert and then there’s the issue of loading up the mail servers and then it’s the issue of having our Alerts tagged as spam when they go out that frequently.   I have subscribed to many, many services and have never been in one or heard of one that sends out Email alerts pretty much on the other.  Every time a service decides (arbitrarily) that we are a spam server, we have to spend time and resources to get our names off the list.  If we sent out the quantity of Emails you are proposing, that would require a full-time staff just to keep the mail flowing.  RSS is a very standard system, we DO put out a fed, you CAN use that feed and find a reader with filtering capabilities that will constantly update the stream.  http://www.curiostudio.com/feature.htmlhttp://morphine.sourceforge.net/presence/projects/rss/features.html,  http://www.getwebreader.com/best-rss-reader-features/

    Stuff/Jasu:  

    • HOV you were in 1,000 at net $4.30/4.65 and now you are very likely to be assigned 2,000 at the average $4.65.The question is really, how do you make up a $6,000 loss on HOV, not – how do you save HOV after it’s dropped 75% on you.  I won’t lecture you on the fact that they SLOWLY fell from $5 in Jan to $4 in Mach to $3 in May then back to $1.84 in June then back to $2.66 in July, then $1.20, then $2.04 and all that time you did nothing – it’s a bit late for pointing that out so let’s just consider HOV.  The 2013 $1/2 bull call spread is .30 so $3,000 (100 contracts) pays $10,000 at $2.  If you want to stick with HOV and get $6,000 back, that’s probably the best way to go.  I’d do that and sell 30 Nov $2 calls for .15 ($450) to get back about 1/4 of your cash as it’s unlikely HOV flies up past $2 and, if it does, you can roll to 2x a higher strike.  If you don’t mind selling the puts, you can sell 20 2013 $2 puts for $1.30 to raise $2,600 to fund the whole thing but, of course, you risk getting re-assigned.  
    • RIMM I take it that you mean you will do a 2x roll to the $32.50 puts.  That seems fine to me but make sure you have a plan to cover if RIMM fails to hold $30.  It’s also a similar situation, you are trying to win back $7,500 by taking on a risk of losing much more while you can actually just put $6,750 into 60 2013 $25/27.50 bull call spreads at $1.35 and selling 20 2013 $20 puts for $2.50 ($5,000) and you then risk $1,750 in cash to make $15,000 and your worst case is getting stuck with 2,000 shares of RIMM at net about $21.  Huge difference as you max profit 10% lower than RIMM’s current price and your break-even is about $25.50.  
    • TBT as above, we have given up on and TLT short plays are the preferred way to try to get $2,000 back.  

    ACI/Pharm – Good one but BTU low enough where I’d rather back the big dog.  

    Hedges/Cwan – I like the EDZ from earlier, of course and the Gold hedge if you think that helps balance.  

    Armed citizens/Shadow – We had that in New York for a while with Bernie Goetz, there were mixed results.  Also the Guardian Angels – no guns but they would beat the crap out of criminals.  I can see you are a big fan of vigilantism so I won’t try to convince you that there may be something to be said for due process…  

    Tips/Flips – Very helpful thanks (for at least waiting until the day is over, that is).  

    Huge stick hitting the futures!  

  167. Lincoln

     Phil:  TBT/TLT
    Seems like there is a group of us that needs to stay after class or come in on the weekend to catch up with the rest of the class on this topic :)
     I hope we can keep this topic open as I need to really think through some of your comments today and look at my overall positions with these two.  I for one have been working with both 2013 TLT puts and TBT for a year, knowing full well a panic could do what is happening now but felt selling premium and managing through the panic would put me in  a profitable position by Jan 13.
    have a good evening

  168. williex

    gmart
     
    whats wrong never thought to take the hike to the lofty towers to check out if we had a/c

  169. Phil

    Excellent prediction JRW (fish).  

    At the close: Dow -0.85% to 11145. S&P -0.67% to 1166. Nasdaq +0.11% to 2170.
    Treasurys: 30-year -0.42%. 10-yr -0.39%. 5-yr -0.674%.
    Commodities: Crude +0.05% to $86.49. Gold +0.23% to $1878.65.

    Currencies: Euro -0.67% vs. dollar. Yen +1.04%. Pound +1.06%. 

    Market recap: The spreading European debt crisis sent investors scurrying away from risky assets, but stocks bounced well off early lows. Shares of European banks fell sharply, dragging down U.S. financials. Yields on 10-year Treasurys touched an all-time low 1.9%. The euro and the dollar soared vs. the Swiss franc after the SNB set a minimum exchange rate. NYSE losers led winners two to one.

    Minneapolis Fed’s Narayana Kocherlakota clarifies that he likely will oppose any move to ease monetary stimulus at the next FOMC meeting, after last week’s comments he now considers "imprecise." One of three members who opposed the Fed’s pledge to keep rates low into 2013, he says the Fed action was “inconsistent with its declared intention to keep inflation at 2% or a bit under.” 

    The so-called "Fed Model" fell to a negative 0.56% during the day, indicating 10-year notes are at their most overvalued level ever. The model – created by economists at the Federal Reserve and called a "useful guide" by Ben Bernanke – factors in interest rates, growth and inflation to valuate Treasury yields. 

    Keep an eye on Dow 11,090 (the current level as this is typed). A close below that means the index will be down more than 4.5% in the first 3 trading sessions of the month – the biggest drop in its 115 year history.

    Told you so!  Back of the envelope on how much the SNB made today: With about $300B in foreign exchange reserves and a roughly 8% drop in the franc, the bank has cleared about $24B. By several orders of magnitude, the biggest one-day trading profit ever.

    DOOM!!!  Nouriel Roubini, who earlier predicted a "perfect storm" would hit the global economy in 2013, now thinks such an event may happen sooner, and believes "massive stimulus" is needed ASAP. Roubini suggests investors keep their assets in dollars, or in the bonds of countries with relatively sound fiscal health, such as Canada and Australia. (last week)

    Beware of buying into these dips, advises Art Cashin, likening recent market moves in the face of the European turmoil an “ostrich rally”: “If I can’t see it, it can’t hurt me.” He says stocks will continue to be “very volatile and shaky,” as investors turn their attention to Thursday when President Obama speaks, but, in the end, “Europe is still driving this bus.”

    And what he said:  Count Brian Wesbury among the dwindling number ofoptimists, particularly after the ISM services index that broke a three-month streak of slower growth. “The economy is weak, but it’s not slipping into recession,” Wesbury says. “We’ve already priced in a recession in the stock market… We can have a very powerful snapback in the second half of this year."

    Bill Gross questions supposedly imminent Fed policy to lower long term rates even more. A flatter yield curve makes lending less profitable, meaning lower long rates could perversely choke off credit creation. This has already happened up to 2 years out, and "operation twist" threatens the rest of the curve. 

    While only a few expect a rate cut from the BoC at its Wednesday meeting, continued rate hikes – all but assured not too long ago – appear off the table. An unexpected contraction in Canada’s Q2 GDP plus turmoil elsewhere have rate markets pricing in the near-certainty of lower rates by year end. 

    Italy intends to auction 5 year Treasury bonds on Sept. 13 as well as repoen sales of other non-benchmark paper. As expected, no longer term bonds are being offered as the ECB is buying only up to the 10 year area of the yield curve. The amounts hoped to be sold will be announced on Sept. 9.

    See Conservatives – it’s ALL connected:  The U.S. Postal Service’s plan to cut spending by as much as $1B could hit the top-line of firms with lush USPS contracts. Postmaster General Patrick Donahoe is set to announce a plan to cut costs on Sept. 15, just ahead of a potential insolvency. Leading suppliers to the USPS: FedEx(FDX -1.1%), Northrop Grumman (NOC-0.7%), Siemens (SI -5.8%), H-P (HPQ -4.5%).

    Credit Suisse is cutting EPS estimates and PTs for Goldman Sachs (GS) and Morgan Stanley (MS). However, the firm isreiterating its Outperform ratings, believing Goldman and Morgan shouldn’t be trading below their respective book values of $122 and $27, given their healthy balance sheets, strong liquidity, and manageable asset and litigation risks.

    Goldman Sachs cuts estimates and price targets on homebuilders (ITB -1.3%), citing weak job growth and volatile financial markets that likely will result "in flatter housing demand than we had previously anticipated." Goldman drops PulteGroup (PHM -3.9%) from its Conviction Buy list but remains bullish on the stock, saying the firm is in the early stages of a turnaround.

    Automobile stocks (CARZ -8.8%) fall hard, led down by steep declines from European manufacturers Fiat (FIATY.PK -10.1%), Volkswagen (VLKAY.PK -6.6%) and Daimler (DDAIF.PK -8.8%). The plans of European carmakers to sell heavily in India and China have fallen flat, seen as a bad omen for U.S. counterparts.

    Moody’s upgrades its outlook on the global reinsurance and U.S. commercial insurance sectors to Stable from Negative. The ratings agency cited improved risk management and a bottoming-out of insurance rates as drivers for the move.

    Don’t expect Nestle (NSRGY.PK) to complain about the SNB’s intervention: the food giant, which has noted the impact of a strong franc on its results, saw its shares rise 3.65% today on hopes that a weaker franc will boost its profits.

    Barrick Gold (ABX +2.1%) gets a boost higher today after Jefferies initiates the stock with a buy on valuation, setting a price target of $65. 

    Peter Kafka confirms the Financial Times‘ report that theformal bidding for Hulu is down to AMZNYHOO, and DISH. However, Kafka also claims Google (GOOG) is interested in making a bigger deal than the one Hulu’s owners have been trying to swing – perhaps for "more content, for a longer period of time," and at a higher price.

    CHINA – ROFL!  Shares of Harbin Electric (HRBN -2.7%) and Deer Consumer Products (DEER -17.2%) move lower following Alfred Little’s latest post that says Chinese government officials confirm "multi-million dollar land fraud" at the two firms. Shares of HRBN were higher earlier after the CEO reaffirmed the "going private" offer at $24/share. 

    Broadcom (BRCM -4.7%denies a report that it has installed a temporary hiring freeze due to recent macro concerns. CFO Eric Brandt reportedly tells analysts today that the company has the financial wherewithal to continue investing in its business while smaller rivals may not, adding that it has "hundreds" of job openings.

    South Korean antitrust regulators have raided Google’s (GOOG) offices in Seoul. A source links the raids to concerns about restrictions the company places on uses of its Android operating system. "We will work with the KFTC to address any questions they may have about our business," says Google in a statement. 

    Good example of Big Business shutting down the free press one acquisition at a time:  TechCrunch’s Michael Arrington, who last week resignedas editor, is accusing AOL of stripping TechCrunch of its editorial independence

  170. Phil

    Good example of Big Business shutting down the free press one acquisition at a time: TechCrunch’s Michael Arrington, who last week resignedas editor, is accusing AOL of stripping TechCrunch of its editorial independenceArrington demands AOL restore said independence, or sell the company to its original shareholders. AOL’s TechCrunch woes follow editorial resignations at Engadget, and reports of discontent at Patch and The Huffington Post.

    UBS is out with its latest list of 15 most shorted stocksbased on the highest concentration of its clients, and it includes some blue-chippers: AMZNJCPGMCRESRXPBICRMFTR,ECLBXPSLGUAVZJNJGSIBM.

    Three lunchtime reads:
    1) A season for portfolio insurance
    2) Recession or not, a tragedy by any measure
    3) The truth about the September swoon: Watch junk bonds

  171. zeroxzero

     Well, just as I was touting my centrist credentials, the gun topic raises its copper-clad head.  I don’t think people should be allowed to walk around cities with handguns;  I have been in many tight situations without a gun, [living in Bogota, Colombia, e.g., tends to create them] and it was better to use gab than hollow-points, because in a gun fight at close range, almost everyone takes a round. I spent 10 years in NYC, and also ran into those situations, also talking myself out of them [it takes practice].
     
    On the other hand, six years ago I was followed 14 miles up a narow canyon by two idential black Hondas with blacked-out windows that kept getting in front of me and brake-checking me.  Since it was snowiing lightly, after a long chase I managed to make a quick turn toward my house that caused one to spin out briefly, giving me about a 100 yard head start to drive into our circle, open my garage automatically, and pull a loaded .45 out of my gun safe.  The two cars followed me onto my land.  This was not a "talk your way out of it" situation.  Professionals will all get out of a car at the same time; these were amateurs, junior gang bangers, apparently.  The driver of the lead car got out alone, silhouetted by a light behind him — I couldn’t see his face nor race.  If he had had a gun in his hand I would have fired.  He didn’t.  I put a round in a snow bank over his head — a .45 produces quite a fireball at night.  He jumped in the car, they left.  Note that there is no police station nor any officialdom within a dozen miles of here.  It would have ended differently had I not been armed.  Dogma regarding guns is no more accurate than dogma about anything else — they have legitimate uses.  Don’t kid yourself about Europe being a crime-free paradise — after fifteen years there, I can assure you they have violent crime — they just use knives.

  172. Phil

    Selling premium/Lincoln – It very likely will and if you have the margin for it, that’s the way to go but a lot of people have already doubled down and rolled more than they wanted to and also, as noted in the above news, Treasuries are at all-time highs and, as I’ve said, at these rates, people have to pay the Government to hold their money for them.  Things like that have a finite amount of time they can last and that means, rather than rolling back to 2013 and tying up cash and margin for 15 months, there’s an excellent chance of managing a better resolution in the near future.  

    Legitimate uses/ZZ – As I said, I completely understand why people who live in the sticks would want guns but in cities, they do more harm than good by a long shot.  Chris Rock still has the best solution:  

  173. williex

    0X0
     
    sounds centrist to me.   City is different than country.  One rule does not fit all.  Common sense should prevail.

  174. shadowfax

    Phil
    Do process is dead even for European bank bosses, did you know even when charges are dropped they hold the arrest record forever. And I do think our military is too big, too many people are in jail, and most of all we have way too many cops with too much power. The only solution is comming and I doubt it will be peaceful. The solution is not in courts but equality for all. This country is all about control and that is why we need an armed militia. Government control has gone too far and ranting shure hasn’t worked.  I am doing the first thing since March this weekend. I am going to another cat show to mellow out and hopefully grand my only non-granded cat, he only needs 9 points. The last time I took hin March 2010 he got 38 pts. The breeder will be happy as this gives his dad a distinguised merrit award for so many offspring granding.

  175. shadowfax

    BTW Phil
    I hope this shocks everyone. I was arrested for posession of leagal drugs, all charges dropped but driving on I80 in IL I was stopped for maybe not using a signal on my third truck pass. That BS got me and my truck searched, they actually threw my stuff back in the back of the truck, lots of damage,  PO’d not finding anything. And I have not forgotten, if it happens again on the way back my plan is to lock myself in and if they must go to jail, I am that sick of the abuse. That is why I think as I do!

  176. stjeanluc

    Something is going to give…
    http://www.bespokeinvest.com/thinkbig/2011/9/6/10-year-treasury-yield-moves-below-2.html 

  177. amatta

    Phil, so you think that was it? (double bottom)

    Didnt feel like capitulation… No panic spike on Vix or into gold (although dollar kept
    It from going up but that hasn’t stopped it in real panic)

  178. stjeanluc

    Phil, here is a good explanation on why it’s going to be tough to get everyone on board in Europe:
    http://motherjones.com/kevin-drum/2011/09/eurobond-conundrum 

  179. Nkhan

     Phil,
    The problem with the 2nd amendment is that we have misinterpreted it. See for yourself. . .

  180. Kwan

    GSSucks – this link in the wiki will return all comments only by Phil for the past day. You can monitor that page for changes automagically with an auto-refresh browser plugin and your eyeballs, but if you want notifications to sent to an email address…that’s a bit trickier. There may be a browser plugin that will notify you when the contents of a page changes (I’m sure there is some where), but that’s a browser specific solution and I’d have to dig a bit more to figure it out. 

  181. shadowfax

    Nkhan   
    I really hope you mean that it only works if not controled, the reason for it was to stop what is happening today. Industrial military complex, banker control, and removal of civil rights! Those who give up freedom for security deserve neither!

  182. csaw2

    look-alike cities/Phil – Don’t make the assumption that wearing the same sneakers and listening to the same music makes people think the same. The lack of a common language is a major drag on true pan-European relations. There exists at least one big divide : the one between North and South Europe. This results from the fact that Germanic and Latin cultures never fusioned. Of course, the young generations don’t seem to care as much but just consider Bosnia to see how things can turn really nasty very fast. Bosnia where inter-cultural marriages were wide-spread but it didn’t help her for long. Europe has given 70 year without a war , but what does this mean for a 20-something ?
    In fact to think about it : It’s not Europe that has given peace to its members: it’s  the more ‘offending’ nations, Germany and France that stopped invading their neighbours. Why ? Because by creating Europe that were getting for free what they were trying to get for generations with their armies.

  183. elliotteldrich

    Today’s levels.

  184. nicha

     php

  185. nicha

    Phil – looks like a small M forming in the charts. Maybe after we complete the M, we get the leg up to complete the W hopefully conciding with or a day after Obama’ speech.

  186. shadowfax

    nicha
    Looks like a M to me although I don’t care which side is up.

  187. kylegeorge

    Anyone have any insight to the NZD? I used to live over there and have watched in amazement as it has almost doubled against the dollar since 2009. Is pegging the CHF to the Euro likely to send people into other small, stable currencies?

  188. Kwan

    Amazon takes on the US Post Service with locker box test. Not sure I completely understand the logic, but someone at Amazon does I guess. 

  189. stjeanluc

    Apparently Carol Bartz is out at Yahoo:
    http://allthingsd.com/20110906/exclusive-carol-bartz-out-at-yahoo-cfo-interim-ceo/
    Fired over the phone! I though it only happened to peons…. Time are tough!

  190. stjeanluc

    Another move at BAC:
    http://www.thereformedbroker.com/2011/09/06/must-hang-sallie/
    I wondwe what is going to be left of Countrywide and Merrill when they are done. All that money down the drain! 

  191. Nkhan

     Shadowfax,
    I meant the vid to be comic relief only. However, I do feel that we have a gun problem here. The problem is that we have too many. Guns should be harder to acquire in the first place. But, the horse is out of the barn on that one.
    As part of a "self cleansing" year (to offset some bad karma) I taught at an inner city public middle school here in Miami. 8th grade science in the roughest part of town. You would be amazed how easy it is for even a 13 y/o kid to get their hands on a gun. I am convinced that it is because of supply, and thats the only way we can solve the problem. By controlling the supply side (Gun buy backs, tighter restrictions on gun makers, restricting ammo sales. . .)

  192. Kwan

    Groupon is delaying their IPO as they ‘re-evaluate’ their originally planned date to go public.

  193. joemayo

    Interesting chart on the dollar
    http://blog.kimblechartingsolutions.com/2011/09/what-would-you-do-answer-5/

  194. zeroxzero

     csaw:  Your German/French remark is very true.  Germany has managed to accomplish with "monetary union" what it failed to accomplish in two world wars,  I am less sure about the French part, however.  They lost the Franco-Prussian war of 1871 badly, and were never the equal of Germany in leadership, training, tactics or battlefield success afterwards.  
     
    The interesting question you raise is whether or not that is still true.

  195. leonf675

    Phil, sorry again to keep beating on the dead horse. Really i am just trying to learn to think correctly as i am sure there is a flow in my logic. Refering to your reply quoted below, i have 2 follow-up questions.

    1. Actually it appears that at the end of the trading day today, selling the bear call spread would result in a credit of $4.2 while buying the bear put spread would cost $6.0. So at $115, you lose $0.80 with the call spread and $1.0 with the put spread. Does this change your preference in any way?
    2. Regarding the “in between” comment, were you refering to selling premium via front month short puts or something like the 2013 $95 puts you recommended earlier? If yes, then why can’t I do the same to offset the call spread? Directionally it seems the same. If not, what does “in between” mean?

    “TLT/Leon – I prefer bear puts spreads to bear call spreads, that’s all.   Clearly I’d rather risk $5.50 to make $4.50 than risk $5.80 to make $4.20 for one thing.  At $115, if I own the $120 puts, I keep $5 and lose .50.  At $115, if you sold the $110 calls for $4.20, you give back the $4.20 plus .80.   Also, in between, with a bear put spread, you are selling premium and, with a bear call spread, you are the sucker buying premium.  In the end, that difference will grind you down, trade after trade..”

  196. Phil

    Good morning! 

    Futures looking bright and fluffy this morning.  Dollar still at 75.72 but markets are flying, with our futures up about 1% and moving higher an hour before the EU open.  

    Asia seems pretty happy in their afternoon – up about 1.5% with India lagging, up 0.8%.  

    Gold is down another $40 to $1,842 and silver is down to $41.45 again (copper $4.09) but oil is up at $86.79 with gasoline at $2.83 and nat gas at $3.92.  

    Headline in the WSJ on-line this morning is "Investors Run From Stocks" so it must be a good time to buy!  

    We were super-bullish yesterday morning in Member chat with our upside plays on DIA and RUT futures and that last cross was the charm yesterday afternoon as there has been a massive move up since.  We also had some aggressive DIA plays, short-selling 7 puts to offset (not all 7 but any of 7) and then, right after the Morning Alert, I put up 6 more long-term trade ideas, followed by 3 more bullish trade ideas later in the day.  

    That’s 19 bulls and no bears yesterday and I hope, if you have been following our "Range Trading" notes – that you know that means I’ll be looking for bearish opportunities as we get back near our Must Hold line but, for now – we’ll probably just be content to roll our existing EDZ trades but TZA will get interesting again as we near 700 – just in case they fail again and, of course, we LOVE to short oil when it shoots up into inventories (tomorrow at 11).  

    Don’t forget today is the Beige Book at 2pm and tomorrow we hear from Bernanke and Obama but they should both be saying nice things so really it’s just the BBook that’s going to be our last obstacle to get through on the road to recovery if all goes well.  

    Keep in mind that nothing has actually changed  - the news is all the same, it’s just the attitudes that are turning around a bit (assuming the EU even is happy at their open).  All we’ve done so far is bounce off our floor again, so let’s not be too greedy – as it’s not a real profit until you take it off the table!  

    How your emotions can cost you money (CNN Money)

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    2:00 PM Fed’s Beige Book 

    Pres. Obama prepares to announce his jobs package with his weakest-ever approval ratings, as a new WSJ/NBC News shows just 44% approval, 73% saying the U.S. is moving in the wrong direction, and 70% believing the economy hasn’t hit bottom.

    Obama Says His Jobs Plan Will Push for Rebuilding Nation’s Infrastructure (Bloomberg)

    Finally my plan is getting some traction:  For the Economy, the Real Slam Dunk Is Debt Forgiveness (Bloomberg)

    Occupy Wall Street will lay siege to U.S. greed (Market Watch)

    The exposure of U.S. banks to Greece, Ireland and Portugal is "manageable" and "quite small," Bernanke told U.S. senators in a July letter, but a Greece-style default could hurt the U.S. by affecting a “broad range of markets and financial institutions.” The Bank for International Settlements’ reported $200B exposure captures only one side of banks’ CDS exposure, Bernanke says.

    Are the markets really undervalued? It depends on which way you look at it, observes Mark Hulbert. The current trailing 12-month P/E for the S&P 500 is 14. Looking backward, using a 50-year trailing P/E of 19.0, we appear to be trading at a whopping 26% discount. However, if we use a cyclically adjusted P/E ratio – arguably a much more accurate forecasting method – over that same period, we actually come out 3% overvalued. You be the judge.

    Dow headed below 10,000 as cyclical bear begins (Market Watch)

    Are stocks undervalued? (Market Watch)

    As markets swooned in August, hedge funds became more bearish, with a monthly survey conducted from 8/23 to 8/25 showing negative sentiment rising to 42% from 27%. Meanwhile, Merrill Lynch estimates short interest on the S&P 500 rose 7.7% in mid-August, the largest increase since June 2008

    ”History doesn’t always repeat itself but it seems to often rhyme,” observes Dennis Gartman. His investment advice for September and October: "stay away." He recommends wating until the end of October before even considering buying stocks.

    Something we’ve noticed (and played for!) for quite a while:  The near entirety of the S&P’s fall since early July has occurred while European markets are open. Once Europe shuts down at 11:30 ET, American shares are faring pretty well – today being a perfect example. Now if we can just get pesky Europe to shorten its trading hours.

    The German Constitutional Court is set to announce tomorrow its decision on whether the nation’s contribution to the permanent bailout facility (ESM) is legal. The betting is that the court – not wanting to knock another leg out from under EMU – will rule in favor of the Greek bailout and the ESM, but add stipulations for future actions. The ruling is expected at 4 AM EST.

    Under pressure from eurozone officials, the IMF will substantially back off its estimate that €200B will be required to recapitalize EU banks, according to a source. In conjunction, the EUhas no plans to inject more capital into banks beyond the current rescue programs for Greece, Ireland, and Portugal. 

    IMF: global economy faces a ‘threatening downward spiral’ (The Telegraph)

    The Eurozone Could Break Up Over a Five-Year Horizon (Credit Writedowns)

    Europeans Talk of Sharp Change in Fiscal Affairs (NYT)

    China’s S-Shaped Threat (The Diplomat)

    The CME bumps up margin requirements on Swiss franc futures by a total of 50%. On Wednesday, the Exchange will raise margins for hedgers and speculators each by 25%, followed by an additional 25% again on Friday.

    The "only sane way" to fix Bank of America (BAC) so that it is "restructured, ready to support growth [and] support leverage" is through a classic Chapter 11 bankruptcy, Chris Whalen says. His point: Countrywide’s bond trusts are worthless, and BofA is on the hook for them, so while its subsidiaries are well capitalized, the parent company is bust.

    The FHFA defends its lawsuits, saying Frannie’s sophistication isn’t the issue, it’s bank misrepresentations. As for the suits potential to harm the economy, the agency wonders what kind of financial system we can have when investors can’t trust securities issuers to follow the law. (pdf)

    Mortgage rates are said to be at 50-year lows, but good luck in getting those rates. Lenders aren’t really offering them because, well, they don’t have to. The mortgage market is not the cutthroat business of years past, and there’s still plenty of demand given that rates are still historically low. Lenders are perfectly happy to make loans that, while still cheap, are more profitable.

    Economic Rx: More Refinancing (WSJ)

    After Carol Bartz’s phone firing, what next for Yahoo (YHOO)? Aside from a 6.3% gain AH in U.S. trading, Yahoo Japanrose 1.9% in Tokyo trading, and co-controller Softbank (SFTBY.PK)rose 2.9%. And what about employee direction and morale? Ex-VP Brad Garlinghouse’s tweet of "ding dong the witch is dead" may sum up the feelings of employees who had a 33% approval rating on Bartz.

    We’re going to get a lot of this in Q3!  Darden Restaurants (DRI) says its preliminary FQ1 estimates will be short of analyst expectations due to the adverse impact of Hurricane Irene. It now expects to earn $0.78 per share, below consensus estimates of $0.88. Shares -4% AH.

    Go RIMM!  Research In Motion (RIMM +2.8%) has caught an upgradefrom Scotia Capital, which now rates the stock an Outperform and has set a new PT of $46.50. Scotia thinks a pending EU ban on Samsung’s (SSNLF.PK) popular Galaxy smartphones will give RIM a lift, and believes its recently-released Bold 9900 is already selling well in Europe. (earlier

    A decade after the 9/11 attacks, Americans live in an era of endless war (Washington Post)

  197. Phil

    Cats/Shadow – Tina used to breed and show cats, she’s very excited about your granding and wanted to know if it was something or something else that I can’t remember (but I think it was about the cat league or whatever you call it).  

    Friggin’ Europe open hurting us again.  Dow (/YM) Futures are a good protective short below the 11,200 line with VERY tight stops.  May just be some profit taking at the open as we’ve popped a mile since the EU closed yesterday (300 Dow points). 

  198. Phil

    Abuse/Shadow – That’s why I stay out of the middle of this country!  

    Was that it?/Amatta – I believe that the entire thing was an artificial construct designed to panic retailers out of their holdings so the IBanks and fund managers could scoop them up cheap ahead of Obama and the Fed (and probably the EU and China and Japan) injecting a new and massive round of stimulus into the Global economy.  The reason the VIX didn’t spike is because "THEY" were prepared for the drop (as were we!) so there was no reason to load up on puts and there was no major capitulation because no one who counts was actually selling their shares….

    Europe/StJ – Come on, that’s a silly simplification of the issue.  Of course there would be rules and trade-offs etc but again, this is like saying that TBills would never work because California doesn’t know how to control their spending – meanwhile, people are paying us to hold their money in those instruments…

    Comments/Kwan – Makes me think I talk too much!

    Europe/Csaw – I agree on the divide but how is that really different than the US.  I think Germanics and Latins have more in common than Conservatives and Democrats in this country or Red and Blue states.  I don’t understand why everyone looks at Europe, which has been working for 20 years, and declares it can’t possibly work just because we hit our first bump in the road.  I guess people just love to tear things down by nature…

    Small M/Nicha – Now you are stretching to find patterns!  It’s actually encouraging because we have a series of 3 higher lows and two higher highs so, if we hold yesterday’s bottom (looking very likely now) then we are drawing a lovely rising channel that should retest the Must Hold and consolidate under it for a proper breakout at some point.  

    Pegging/Kyle – I think NZD is up for very good reasons as they are a low-debt, export economy with a low level of long-term social obligations, not something you can generalize to small currencies.  So much of the currency (and metal) markets are a function of global panic at the moment, I would be VERY careful about betting on non-Euro currencies at the moment.  As I noted above – everyone is looking at the EU as if it’s about to fall apart – what a catastrophe for Euro bears if it doesn’t.  

    Locker boxes/Kwan – It was my understanding that was to deliver product.  Good way for homeless people to shop on-line!  

    Dead horse/Leon – Obviously the numbers change every few minutes so it’s a moving target (and it would be irresponsible to accept that pricing in the first place) but no, not really as you are still buying premium in one case and selling it in another.  I would strongly suggest you paper trade pairs and follow them over time – it’s the best way for you to see the difference rather than an endless series of "what ifs".  In between referred to the period in between the time you buy it and expiration day.  Yes, you can sell puts to offset (or calls going the other way), I like those plays as you have a naked put sale (which we like anyway) with the added hedge of the bear spread to protect your downside.  

  199. kramer36350

    German Court Rules EFSF/Bailouts Legal But Hurdles Remain
     
    *RULING NOT A `BLANKET-AUTHORIZATION’ FOR NEW FUNDS, COURT SAYS


    *GERMANY’S TOP COURT SAYS RULING NOT A `BLANK CHECK’ FOR FUTURE


    *KARLSRUHE CT SAYS BUDGET COMMITTEE MUST APPROVE NEW GUARANTEES
     
    http://www.zerohedge.com/news/german-court-rules-efsfbailouts-legal-hurdles-remain

  200. kramer36350

    Yahoo CEO fired over the phone . . . contempt at all levels, excellent for morale (jk)
     
    “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward,” Bartz said in the email.
     
    http://www.firstpost.com/business/yahoo-ceo-carol-bartz-fired-on-the-phone-77812.html

  201. barfinger

    I think a lot of us have played TBT ever since you were touting it heavily (with what seemed like impeccable logic). Those of us still in it have taken a huge percentage beating. In my case, I have rolled several times only to find myself further behind. The management of these trades is straightforward, and we have techniques to come out whole. I had already rolled some short puts on TBT to short calls on TLT, and things appear to be a bit better. But here’s the question:
     
    Phil, do you still believe in the premise that T-bill buyers will someday insist on higher real returns, as in NOT NEGATIVE? Or should we give up and admit that we have become Japan?

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