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Friday – The Blow Jobs Deal to the Market Could be Huge

SPY 5 MINUTEWill we blow our jobs numbers?

Even if we do get a big number, you never know how much of that is due to massaging the data so it would be premature to swallow the initial market move until we have time to get a good look at the size (168,000 expected) and decide if it's too big (over 250,000) or too little (under 125,000).  Under 125,000 and we'll have to bring in the Fed to see if we can do something to grow these numbers and over 250,000 is going to be too big for any more QE – no matter how much we beg for it

I did have some really brilliant analysis but there was a laptop mishap (I'm on the road) and I lost it so now we'll just have to wait and see what the NFP number is and, rather than speculate – we can see which way things break after the report. 

Just ahead of the Data we're about flat in our futures but oil just tested the low of $100.50, where we are long now in the Futures and, of course, THRILLED with our various shot positions in the Futures ($105, $104, $103.50…) as well as our various USO shorts and SCO longs – congrats to all the faithful on that oil trade! 

SPY DAILY8:30 Update:  Jobs came in at a totally limp 115,000 and that is 10,000 below the line that I said would be bad enough to be GOOD – as it's so anemic it should get the Fed just a little closer to considering additional QE.  HOWEVER – the Unemployment Rate was DOWN to 8.1% and that BS number is NOT Fed-friendly but, so far, after a very quick move down, the markets are loving the low headline number and rallying to the morning's highs on expectation of more bail-out bucks heading our way. 

I don't think these numbers are good at all and it's just more evidence that the economy is not picking up and still has significant weakness.   If suckers want to buy into these terrible numbers – let them, it's a good chance for us to add some more shorts because your entire bullish premise cannot be that the economy sucks so badly that our Uncle Ben might give us another Trillion to play with to distract us for another year.

We didn't allow ourselves to get sucked into the pre-market pump job yesterday, following through with our plan from the morning post to use a quick momentum trade (DIA) to ride out the morning move up and thank goodness we held those short positions as I really think we'd be missing them this afternoon (or Monday for that matter!).   

Oil ended up being the only short we cashed out of and we did pick up a few well-hedged longs but, on the whole, still very short-term bearish in our stance as it's not just jobs but Europe (elections on Sunday), China (very disturbing data detailed in this morning's news) and now Australia has officially cut their economic outlook from 3.5% to 3% growth.

There is word from Chineses papers that almost 500 Chinese shipyards out of a total of more than 1,600 may close because of falling orders and decreasing loans. About 80% of shipyards in the eastern Chinese province of Zhejiang either stopped production or ran at half of production capacity. New orders fell about 40% in the first two months of the year.  This did not even happen in 2008-9.

UK Commercial Properties are in their 2nd consecutive quarter of decline with values 31% below 2007 levels but the Global "mark to fantasy" system is still allowing banks to carry Trillions of Dollars of real estate asset losses off their books in hopes that they will bounce back before the borrowers default.  It would be exceedingly tragic if someone has miscalculated, wouldn't it? 

France has a property bubble that is about to burst with prices up 160% since 1998 while incomes are up just 35% and, like the US, over 80% of that 35% went to just 1% of the population.  "A number of clients tell me they think the market has topped and want to get out," said one French hedge fund manager. Standard & Poor's has told investors to brace for a 15% correction. Credit Agricole says prices may fall 12% by the end of next year, expecting a "gradual slide" that could last until 2016.  

Of course, with the election this Sunday – anything can happen in France and probably will, wich is why we thought it was madness to hold long positions over the weekend - so far, that's looking like a good decision on our part, especially with Hugh Hendry warning that the economic crisis is headed for Asia, with China struggling under its own bursting property bubble and tumbling demand for its exports from the austerity nations of the Eurozon as well as slowing Australia, Canada and the US. 

No wonder China is exploring other planets – they have run out of buyers on this one!

Have a good weekend,

- Phil


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  1. stjeanluc

    Oil Lines

    R3 – 107.52
    R2 – 106.42
    R1 – 104.55
    PP – 103.45
    S1 – 101.58
    S2 – 100.48
    S3 – 98.61

    All my indicators have a bearish stance but on to the job numbers!

  2. stjeanluc

    And as usual, Rick Santelli is a jackass…

  3. 1020

    …with an ever present cheese eating grin….

  4. stjeanluc

    Viewership of CNBC is down in the morning show and also with Maria in the afternoon and the guys at CNBC are wondering why Andrew Ross-Sorkin doesn't help the show, but they might want to look at guys like Joe Kernen and Rick Santelli. Andrew doesn't push a hard political agenda (at least not full time) but Kernen and Santelli just make the show unwatchable unless you are a card-carrying member of the Tea Party!

    The only way to change that is to stop watching them and watch Bloomberg. If numbers fall enough, maybe they'll make the changes needed!

  5. Pharmboy

    PP for today…and yeah!

  6. 1020

    CNBC needs to move the 9am crew back to 8am. Much easier on the eyes and ears  :)

  7. Phil

    Good morning! 

    Now we're getting a realistic-looking reaction.  The downtrend should last until they find some Fed-connected person to say that QE3 is on now – we'll see how it plays. 

    Spain once again gives up most of a huge open (0.45% now from 1.8% and falling) and oil once again is down 2.5% and once again not even bouncing – so much for poking at a long but I do like that $100 line (/CL) for a little bounce action just because it is a $100 line – that's usually reliable. 

    18 Mins to open means I'm going to get breakfast at that little cafe downstairs, back in a few.

  8. jacalynm

    Or maybe watch the BBC and get real insight into what is happening in the World  not the political spin of the "almighty" U.S….

  9. jthoma

    CNBC also needs to get rid of Cramer the idiot- many people have quit watching it because they refuse to watch such an idiotic clown!!!

  10. cslanson2

    stjeanluc
    I agree with you completely about CNBC. Because it sounds like a first cousin to Fox News I've gone to Bloomberg.

  11. 1020

    Cramer may be a clown, but his shtick does not include politics….

  12. dpastramas

    Twitter / StJ – Just to come back to the twitter list, you ready to work out the final list?

  13. stjeanluc

    Twitter / Dpas – I'll send you a list this weekend. Honestly, I find a lot of these Twitter feeds to be simply noise or self-congratulating messages about the trades that they don't post in Twitter! But some add value… 

  14. stjeanluc

    Cramer / 1020 – That's his only redeeming feature… The 9:00 AM crew with Carl, Melissa and David (sans Cramer) are more informative usually.

  15. morxlntway

    http://wallstcheatsheet.com/stocks/green-mountains-cup-is-half-empty.html/?utm_source=rss&utm_medium=rss&utm_campaign=green-mountains-cup-is-half-empty
    not sure if i should stick with the short put i sold yesterday. i was a dumb mistake. entered the trade with a high price thinking it wouldn't trigger then got up to get a bowl of cereal. oops. Any opinions on whether it will hold 25 or dive to 12? or how to cover a possible dive?

  16. Phil

    Almost made it back in time!

  17. jerconn

    Phil, with this jobs report, are you still expecting oil to bounce at 100, or lower?

  18. stjeanluc

    China – HSBC PMI Services – 54.1
    Switzerland – Retail Sales – 4.2% (1.1% expected)
    Italy – PMI Services – 42.3 (43.7 expected)
    France – PMI Services – 45.2 (46.4 expected)
    Germany – PMI Services - 52.2 (52.6 expected)
    Euro-Zone PMI Composite – 46.7 (47.4 expected)
    Euro-Zone – PMI Services – 46.9 (47.9 expected)
    Euro-Zone Retail Sales - -0.2% (-1.1% expected)
    USA Non-Farm Payroll – 115K (160K expected)
    US Unemployment Rate – 8.1% (8.2% expected)

    Not all sunshine out there!

  19. Pharmboy

    And lookie who is up 3% in the see of red (for now at least)….I will give you one guess….

  20. samz3700

    Wheeeeeeeeeeeeeee

  21. stjeanluc

    FAS Under $100….

  22. threeputt

    PCLN
     
    <3 !!

  23. stjeanluc

  24. jerconn

    Pharm – GMCR!  crazy…

  25. dclark41

    Phil
    Seems like a good as day as any to take the money and run on that June ($11)/May($12) (SQQQ trade before the reverse split next week.

  26. stjeanluc

  27. exec

    F/Exec – I would ditch the stock at $11 and, rather than spend .50 to buy out the 2013 callers that are 15% out of the money (and being the sucker paying premium), I'd sell the 2014 $12 puts for $2.50 and buy the 2014 $8/10 bull call spread for $2.30 so you have a net .20 credit and your break-even on the long end is net $9.90 (because of the $8 calls) and, at just $12, you pocket $4.20 more, which you wouldn't make on F unless it hits $15.20 from here.
     
    Schwab has a tab under options label Advanced Options which have subtabs labeled Write/Unwind, Rollout, Collar, Straddle, Vertical Spread, Calendar Spread, and Combo. 
     
    I've never bought a bull call spread and didn't see anything that looked like the Bull Call Spread in the advanced options so I was wondering if I am missing something or do you typically just buy and sell the options separately?  If so, how are you coming up with the 2.30 figure that you quote.  My math is coming up with a net 1.17.  3.30 to buy the 8's and 2.17 for selling the 10's.

  28. samz3700

    phil - 
    got any additional short plays for those of us who might be taking profits on the short side. 

  29. Phil

    How low can we go? 

    Gotta keep an eye on the rumor mill now but, as I said yesterday, if we begin blowing these lines of support, it's a pretty sharp move lower from here. 

    Dollar is DOWN at 79.20 so masking some weakness and oil is holding $100 so far so not catastrophic yet.  TLT at $117.50 and that's not panic, nor is VIX 18 so don't get all carried away until we see some propre moves. 

    On our LNKD spread, we take the money and run on July calls and leave the short Mays for now, of course.  In the $25KP we'll stand pat on the June puts for the moment. 

    Nothing much to do but whatch and wait, let's keep an eye out for those Must Hold lines to hold but the Nas just blew 3,000 and the RUT and the NYSE failed as well so we have very easy stop lines to watch on our bear bets (also good places to grab bullish momentum trades if they go back over). 

    Other than that – wheeeeeeeeee!

    Look for the VIX and TLT to rise and then we should begin to see some panic back to the Dollar but, if they top out here (18 and 117.50) and the Dollar stays weak (now 79.20) then the bulls have a chance to fight back although I still think it's nuts to go long into this weekend, it's also dangerous to be too short as someone may say something indicating more stimulus or Merkel may be seen kissing Hollande and everything old will be new again in the markets. 

    Bottom line:  ALWAYS sell into the initial excitement and when in doubt, sell half!

  30. Pharmboy

    GMCR…well, that is interesting…but my handle is Pharm….and PLX is up…sorry, thanks for playing.
     

  31. Burrben

    AAPL , just a FYI that I sold a Jan14 AAPL 390 put today at 31.  I'd be happy to buy AAPL at 359.

  32. samz3700

    The tza june 20 – 25 bull call spread for about $1 is looking appealing.
    This is assuming you already have short profits that you want to take off the table. 
    I cannot do any more in the money bull call spreads with put sales – already have too many and looking to close some of those out. 
    I.E. June tza 15 – 20 bull call spread with selling the June 16 puts. If you are still interested in this – you could look to sell the June 18 put instead – This was a $1 when originally put on.

  33. sagemm1

    exec/bcs
     
    look for a vertival spread and click to buy the call you are looking at and it usually poplulates the next higher strike which then you can adjust if you want so it would come up at buying the 8 and selling the 9 and then just adjust to selling the 10 provided thats the bull call spread that you want

  34. ccsincsd

    Exec/F
    The "vertical tab" is where you buy/sell your spreads.
    I think cost for the BCS Phil quoted was for the 8/12 BCS, not the 8/10.  F is down a bit so all prices are to your favor.  ie, the BCS is cheaper and you get more for the short Put.

  35. rustle123

    Phil, I noticed the last couple of days EDZ has not had a big pop up like some of the other bearish ETF's.  Do you think that will play catch up if we stay down around here going into the weekend?

  36. newbie

    RUT /  TZA
     
    Yeah!
    Drop, baby Drop  (I still have my TZA)
     
    Russell not looking very healthy this week!

  37. stjeanluc

  38. dclark41

    Phil
    A longer term short hedge that looks good to you? I have lightened up and need another short to get back to (nuetral/short) in portfolio. TIA.

  39. jerconn

    Pharm thanks for pointing that out, I'm playing PLX as well.  Yesterday I sold a GMCR put for $5500 (should have waited and NOT sold into the initial excitement, would have gotten $6000 but of course I follow all the PSW rules), so I have GMCR on my mind…as well as USO, since I'm such a "greedy bastard"…

  40. Phil

    79.15 and we've hit a little bottom for a bounce but not going to impress until they take back the Must Hold lines.

    BBC/Jacalyn -Good suggestion but, unfortunately, CNBC still moves markets.  They may not have regular viewers but they are still on in every trading room and they are the choice outlet for all sorts of nonsense that we do need to know about.  When the market isn't open, I prefer Bloomberg or BBC. 

    Twitter/StJ, Dpast – That's why I was hoping you guys would have a good list.  It's so annoying trying to find good people. 

    I am eating the most amazing almond croissant – just thought you should know.  I definitely have to move into this hotel full-time…

    Oil/Jercon – I expect a technical bounce off $100 but not a very interesting bet now.

    GMCR/Morx – I like them for holding $25, we did those bets yesterday. 

    Oh no – oil fails $100 way too easy – strap in folks, it's going to be a wild one!

  41. exec

    Sage/CC,
     
    Got it…Thanks

  42. stjeanluc

    SPX is the only Must Hold line still holding… Everyone else is failing!

  43. stjeanluc

    RBOB failing $3.00…. There is a fire sale on right now!

  44. dclark41

    and XRT is up!?

  45. stjeanluc

    S3 on oil is about $0.90 down so we could still get there. I am checking but testing S3 2 days in a row doesn't happen that often. Maybe a bit of panic?

  46. newbie

    I am eating the most amazing almond croissant
     
    gee, thanks for that……..I'm eating a rice crispie bar

  47. Phil

    More shorts/Samz – I like shorting LNKD on this pop and SQQQ is still cheap at $11.67 but now you are chasing a 5% move up in a day and you know I hate that.  I'd wait and see how the weekend shakes out,  If we are going off a cliff – it's a long, long way to the bottom. 

    TZA/Samz – Not a bad way to play.  You are right, putting some profits to work on a high-leverage play is a good way to get back to cash without feeling like you'll miss the party – just don't forget to stop out if it goes the other way. 

    EDZ is also still a good play at $13.61 and you can do the June $12/15 bull cal spread for $1.10 and sell the $13 puts for $1 for net .10 on the $3 spread that's $3.61 in the money to start! 

    Dollar coming back may give us a nice additional leg down.  79.30.  Watch 79.40 for it to stop again (if we get past .30).

  48. Inkarri1982

    DIA Puts – Aren't this July $122s almost back to even(making up for loses on the May $129s I mean)?  Time to close out at even?

  49. Inkarri1982

    SQQQ – Let's not forget the stock spilt on May 10th.

  50. morxlntway

    GLL not phased. (or is that fazed?)

  51. lolobear

    Wow, look at AAPL taking a beating.

  52. 1020

    NOK now selling for less than their cash….can they be that bad?
    Should one consider the sum of its parts?

  53. jerconn

    Morx – fazed…although you may want to phase into GLL…

  54. yodi

    Phil should we not get out of this play??
    Inkarri1982
    May 4th, 2012 at 10:24 am | PermalinkIgnore this user
    SQQQ – Let's not forget the stock spilt on May 10th.

  55. yodi

    looks like AAPL is dropping of the tree!!!

  56. dclark41

    Phil
    In the 5k those TNA May $60 are down to .70. The July $67 are $1.90 or the $68 are $1.65. Which would you roll to?

  57. kustomz

    The blow jobs deal deal to the market could be huge
    Love the title and…
    Wheeeeeeee

  58. newt

    SQQQ- some of these BCS's are 60% up and that's not including the premium from the puts sold to decrease ND…

  59. 1020

    Could MSFT buy NOK phone business?
     
     
    http://finance.yahoo.com/news/nokia-ceo-carrier-resistance-skype-140828835.html

  60. scottmi

    SQQQ/dclark – i second that getting out before the split. i won't soon forget the illiquidity of the last ultra shares that pulled that on me (TZA last year).

  61. morxlntway

    thanks jerconn – i am phased in which is why i want them to be fazed. :)
    trying to get half out but they're not getting there.
    I spend alot of time helping refugees with English and other things. It drives me crazy that it is so much to learn. Then they put them in high school and make people from Vietnam take Spanish! I'm sure they could offer Vietnamese online. Now they are weak (week) in both languages.
    oh well. back to gold

  62. dclark41

    scottmi
    I bailed on that one. Broke a little ahead on it and moved on. The extra payoff for holding until the 9th wasn't worth the risk. One word of QE will turn SQQQ back up hard.

  63. Phil

    EDZ/Rustle – Good instincts!

    Longer-Term/DC – EDZ still my favorite.  If China blows up, EDZ shoots up and Brazil is a mess and India was down 2% this morning and who's the other one?  Russia???  ROFL!   July $13/17 bull call spread is $1 and you can sell the $12 puts for $1.10 for a .10 credit on that $4 spread.  Even if China comes back and you get it put to you – owning EDZ for $12 (now $13.60) means you can sell something like the July $14 calls, now $1.60, which is a nice 3-month sale against a $12 ETF while you wait for that bounce anyway. 

    S&P/StJ – That would be amazing if they didn't bounce off their lines but a long way down (1% more) to 1,360.

    XRT/DC – What a joke that thing is.

    Rice crispies/Newbie – We're having a seminar here in the Fall – you know where I'll be staying.  I was at Venetian last time, Caesar's is so much better. 

    By the way, Vegas is PACKED this weekend.  I guess Cinqo de Mayo, the WSOP and the fight this weekend but most crowded I've seen it since the crash.  Was a little easy to get show tickets but the prices have gotten so silly that I can see why people are skipping them (or waiting until last minute to get 1/2 price deals, like NYC).  I played poker at the Mirage until 1am (doubled up, thank you!) with the bracelet crowd, which was great as you don't usually get such good players in cash games.  I don't think I'd run out and buy a condo here but I sure would consider filling one of the empty shops (not many) at the casinos in anticipation of the crowd levels returning over time.

    DIA/Ink – We're going for Dow 12,800 next week on those. 

    SQQQ/Ink, Yodi - Damn, I keep forgetting.  We do want to be out on the 9th on those.

    GLL/Morx – Pure aniticipation of QE, maybe last chance to short gold at $1,650.

    NOK/1020 – It depends what you think they will do with that cash.  No phone company yet has pulled out of a death-spiral once their hot product peaks.  Will be interesting to see how long AAPL can keep it up and if they can buck the trend and find footing if they do get unseated. 

    TNA/DC – Yep, looks like we won't be needing that protection anymore.  Roll too expensive for $5KP but makes sense if you have the money.  I have not decided yet what to do in $5KP. 

    Blown jobs/Kustomz – I wanted to see if SA would run it.  If they do, it would likely end up that way on the major news sites and you know I love to cause trouble…

    79.40 – lets' see what happens.  VIX 18.73, TLT $117.60. oil $98.45 – smells like we go lower to me.  Hard to believe as it's been so long since we had a really strong sell-off. 

  64. dclark41

    Wow, oil dropping off a cliff!

  65. newbie

    AAPL is back down to the level it was two days before their blowout earnings two weeks ago. Talk about "Wheee"….

  66. 1020

    LEAP is at an all time low – JPM states their spectrum alone is worth 2.1B
     
    LEAP market cap – less than 400M…..

  67. scottmi

    Oil – wish i added puts this morning! now just can't bring myself to chase..

  68. newbie

    — "We're having a seminar here in the Fall"
     
    for the cost of a trip to Las Vegas I can buy a lot of Very Good croissants here in Minneapolis…………
     
    phil said  "you know I love to cause trouble…"
     
    THAT is why we get along!  Nothing I love more than "causing trouble" (just ask my local City Council)
     
    Are you a Capricorn by any chance?

  69. newt

    SQQQ- so we wrap the BCS up by the 9th.  HOw about the puts? Buy the back or let them expire?

  70. kustomz

    V showing strength most of the morning through the selling..

  71. sagemm1

    these ultras suck to get out of, any ideas trying to leg but cannot get out

  72. 1020

    Phil/NOK  With thousands of patents, telecommunications biz, cash, reach(?)…
     
    Much to consider. They are certainly in the right business.

  73. 1020

    XCOHNO!  ;)

  74. shadowfax

    Trendline support @ 78.65

  75. Phil

    79.50 – fireworks if we break it but more likely back to test 79.40 first so watch for a bounce.

    LEAP/1020 – Interesting concept but if no one is buying, it's not worth anything. 

    LOL – Gold rejected hard and fast at $1,650, back to $1,634 very fast.

    Capticorn/Newbie – No, I'm the best sign – Aries!

    SQQQ/Newt – We'll have to see if it's worth it but the puts probably fine to leave. The whole thing can be left if deep in the money – it's only a liquidity issue if we need to roll them.

    Ultras/Sage – Yes, ALWAYS sell into the excitement.  That means try to sell things when you have the momentum and then buy what you have to when it slows or goes the other way.  Even in a big down market – there's still a tradeable channel if you take a step back, take the emotion out of it and just watch for a pattern to form.

  76. sagemm1

    Phil/LNKD
     
    Not that I like them but don't you think some of these newer techs stay inflated due to Facebook IPO?

  77. newt

    SQQQ/Phil- Thanks- I'll hold fast.

  78. jromeha

    Glad I stayed with the USO puts! I sold 1/2 to protect profit but I will be riding oil down to 95…. Great call Phil!
    Phil – My bestfriend is a real estate broker in Vegas, if you are ever looking to buy or look around the area to see what is out there let me know.

  79. dclark41

    Phil
    I did a small entry on your FAS 109/119 play. They are July so not a huge worry yet, but should I adjust or just leave it alone? The whole premise of the trade was BEN RIDING NAKED ON A WHITE HORSE SAVING THE DAY. The naked part was to get a better reaction because each round of QE provides less and less otherwise it's a really gross thought! :)

  80. stjeanluc

    RBOB is down almost $0.50 since early April… That's one heck of a move! It's also a positive for the economy (and bad for political campaigns I guess).

  81. stjeanluc

    Good job with USO Jrom – that was risky with the job numbers today but I am glad that worked out for you! 

  82. angelcur

    "Greece will exit from euro", a senior official of Greek Ministry of Finance said

  83. Inkarri1982

    Jobs – Zerohedge reporting that in April, 812k full-time jobs were lost and 508k part-time jobs were added. 

  84. stjeanluc

    $25KP Update

    The SCO June 30 Calls are up 117% now!
    On the other hand, the short SCO May 34 calls are down over 100% as well. Still 14 days though!

    The DIA puts are closing on 50%!

    The SQQQ Jun Calls are also a double now!
     

  85. cslanson2

    lflantheman
    I followed your lead yesterday into LNKD using the two sided calendar spreads.  How do you plan to exit these positions?
    Thanks

  86. oburlacu

    Stjean:
    The DIA puts are closing on 50%!
     
    Since they were a roll I believe the b/e on them is 1.70. The plan was to close half at 1.70 from what I remember right?

  87. dpastramas

    So guys here is the dilemma: i have a May 31/39 SCO bought for 4.23$ currently at 5.90$… What do i do? Do i cash it in? or wait two more weeks? i am inclined to sell it, they will push oil up later this month, any opinions?

  88. Phil

    NOK/1020 – Yes, I like them for all the same reasons I liked MOT and RIMM when they were melting down.  Burned twice, I am now skeptical. 

    LNKD/Sage – Yes but if FB disappoints, watch the whole Nas drop 10%.   If FB does well, where does all that money come from?  Out of other tech bets.  Part of FB's pitch is they can put LNKD out of business. 

    Congrats Jrom!  Thanks on Vegas but I wouldn't be a buyer.  I'm interested in getting an apartment in Veer, where a $1.5M 2Br condo overlooking the strip is $2,500 a month.  Of course, realistically, even when I wear out my comp welcome at Caesar's, it's still cheaper for me to just get a room when I'm here (10 days about $3,000 and maybe I'm here once a quarter).  The suite I'm in now is ridiculous for one person and, frankly, I'm a simple guy – it's not like I need to have my stuff with me other than what I can carry on a trip. 

    I'm very surprised at how much I'm enjoying the time thing.  I get up at 4am, which is 7am but, if I stay here a while, I could be up at 3 regularly and that gives me plenty of time in the mornings to get all my reading done.  Then I can go relax or nap at the pool from 1-4 and then I still have my whole night ahead of me – it's a good thing!  

    XLF still trending down, testing $15 maybe.  Oil trying to take back $98.50 and that's a good stopping point for you greedy short players. 

    FAS/DC – I'd wait until next week but worth investing $1.40 to roll down to $105s if you intend to keep a bullish hedge. 

    Europe down 2%, closing near lows for the day.  We may make that next 1% down leg yet! 

  89. stjeanluc

    DIA / Oberlacu – Correct, the b/e is at $1.69 in my spreadsheet, but close enough! And we might get there.

    But worth pointing out as some might want to take the money anyway!

  90. Phil

    Leap/1020 – Thanks.

    Euro testing $1.31 at close, Pound $1.616, 79.88 Yen to the Dollar has sent the Nikkei down 100 to 9,165 in Futures.  EUR/.CHF still $1.201 – so silly. 

    Silver magically hanging on to $30 so far.  Dollar just popped 79.50 so can I get a wheeeeeeee!!!! 

  91. angelcur

     TZA, QID, SCO…ALL SEEING BIG VOLUME…makes it harder for large msb-induced rally in afternoon
    i just cant get over the dumbness of this market…it ignores stuff for weeks and then all of a sudden nothing new.. but it matters….everyone thought jobs report would be weak and europe has been intensifying again for weeks…then today it matters….so ridiculous.

  92. angelcur

    jabob we need a fu on efficient market theory!

  93. 2can

    DIA puts / StJ 
    The DIA puts are closing on 50%!
    Are you forgetting the cost of the two rolls to get to the JULY 122's?

  94. dpastramas

    CHK / Phil – Just a question on the new BCS. I see CHK is coming back up and we short a 18 May Call.  Should we close it while still green? 

  95. 2can

    StJ / Or are we just working out the loss on the rolls in the Bottom line P & L column of the portfolio?

  96. kevinb63v

    Phil,
      Wouldn't CHK be a good buy for a portfolio that lacks option privileges?

  97. sagemm1

    Anyone notice the sham that is VXX?

  98. Phil

    Greece/Angel – That's code for Greece will default on $500Bn worth of bailouts and remaining bonds.  $1.30 on the Euro is way too kind!

    SCO/StJ – Tempting to leg out but very risky with the global markets cliff-diving.  Oil can go back to $85 pretty easily if we have a bad week next week too.  Those DIA puts I'd like to keep, I think they can more than double if we don't get QE next week and, if we do, then it's a good thing we have the TNAs.

    DIA/Obur – That's a good point, we should be resonsible and sell half but let's see what happens on the EU close.  I think we head lower, not higher. 

    SCO/Dpast – I'd take the $7.50 off the table on the $31 calls and put a stop on the $39s at $2 (now $1.40) – maybe oil comes back in the afternoon and knocks the caller down .50 or so.  – This is what I mean about working a channel from earlier discussion….

    Ridiculous/Angel – And hugely profitable.  The hardest thing to get used to is how long we have to wait for the markets to see what is obvious to us for weeks or months….

    Costs/2Can – It is never the responsibility of your current position to pay for your past mistakes.  Once you have a run like this – you need to be sensible and take a little off the table, no matter how much you "need" to get even on an old score. 

    CHK/Dpast – I wouldn't, that's our price target and there's been no new information that would lead us to change it. 

  99. 1020

    Phil – The Left Coast is calling!
     
    http://www.sdchamber.org/
     
    :)

  100. sagemm1

    Wow SPX looks to be headed with the gang to must hold!

  101. dpastramas

    SCO / Phil –  Very interesting suggestion.  I dont htink though i have the margin to keep the short 39 calls uncovered. But will keep your advice for future cases!  Oh and SCO keeps going up..  Maybe oil do falls to 85$ and i can sell it for full the credit (Yeah you wish :-) )

  102. stjeanluc

    At least they have a sense of humor…

    http://www.nytimes.com/2012/05/04/business/us-chose-better-path-to-economic-recovery.html?_r=1

     

    “We’re not implementing the Basel agreement, as anyone who takes a look at this text will be able to tell you,” said George Osborne, the British chancellor of the exchequer. “Every bank analyst, every financial journalist, every other finance ministry in the world would say that.” He added, “I am not prepared to go out there and say something that would make me look like an idiot five minutes later.”

    Rather than argue with him on details, one finance minister simply asserted that looking like an idiot was standard procedure for ministers.

  103. stjeanluc

    A sea of red…. Update intraday Big Chart!

  104. sagemm1

    Bucky off to the races!

  105. 1020

    Phil – This is what I have for those reeeal early mornings.
     
    http://www.usa.philips.com/c/light-therapy/hf3318_60/prd/en/
     
    30 minutes and a cup of coffee and I feel like making breakfast and cleaning house ….before 6am

  106. stjeanluc

    On the job numbers:

    http://jaredbernsteinblog.com/jobs-report-first-impression/

    –State and local governments continue to shed jobs.  They would be my first target for stimulus in a sane world.  Last month, local education jobs were down 11,000 and they’re down about 100,000 over the last year.  Next time your friendly politician is jawboning about a) the benefits of austerity and spending cuts, and b) the importance of education, please point out the hypocrisy. 

  107. shadowfax

    Phil
    Silver wire to hook up my MC transformers coming from Isreal stopped me cold last weekend, $30 per foot. I'm using my copper wire. By these prices you would think silver was up at gold's prices and it is not used for much.

  108. dpastramas

    DJI – StJ – Noticed in the chart that the DJI is right on the 50MA.  Maybe expect a bounce??

  109. shadowfax

    Go oil! can you give me an $80?

  110. newbie

    TZA up 6% on the day, so far

  111. projectwise

    CTXS / StJ – That earning play is now in the green for anyone that took it !

  112. angelcur

     one thing that could cause a couple of months of rally would be if oil/food drop enough over next few weeks that China could aggressively ease….which would be a massive disaster for them longer-term, but in our short-sighted stupid ass market…we would definitely rally

  113. stjeanluc

    CTXS / Project – Thanks. A little patience is all we need! Closing my position and taking the 50% win!

  114. stjeanluc

    DJI / Dpas – We have actually breached it already. It would seem logical that for technical reasons they'll try to rally around there. My guess is that algos are programmed that way because so many of us look at these lines!

  115. sagemm1

    Alright this could be crazy talk but I am long VXXJun 16 calls after buying back my 18s I am considering selling half my position by rolling 1/2 to may 16s thus staying long my full position but at the same time capturing 100% of todays gains…anyone have any thoughts on that strategy?

  116. stjeanluc

    Speaking of 50 DMA, I would like to point out that the 50 DMA in the RUT and NYSE is now going down!

  117. palotay

    CMG – Anyone still in the CMG long puts?  I still have the June $390's, and am sitting on a decent $1,200 gain.  Should I hold out for lower?

  118. shadowfax

    Trend line support and confuence lines all merge @ 78.60 ish. FWIW

  119. scottmi

    VXX/sage – you mean that VXX only goes up half as much as the VIX when that rises, and drops at 60+%?  yes, another corrosive derivitve. better used for shorting i think. my current position is probably the third and last time i will play this thing…it is pure speculation, at least twice removed from the already fantastical "reality" of the markets.

  120. sagemm1

    Scott my ass hurts from this damn ETF I am wiggling out of a 2 month hole, can you say never again, again?

  121. shadowfax

    BTW There is volume in this sell off.

  122. Tarpoon88

    Phil, downside target on the RUT still in the 775 region, or would you hold out for more of a drop over the next week? 

  123. jabobeast

    Phil—what is your gut telling you for the rest of the day? Mr stick or broken stick?

  124. Phil

    FAS Money – I'm not to worried about coming back by Jan and we look good on the short calls so no change.

    IWM Money – Same thing, I'm very pleased with this set-up. 

    $5KP – DMND holding up well today.  GLL I have faith in, EDZ a no-brainer to me.  SQQQ no way do I want to pay .50 for that caller

    •  DIA at $1.75 but if we get Dow 12,800 that's another 250 down and that's about $2.20 so .50 more to make isn''t worth keeping over the weekend so let's just cash out here at $1.70.  That goes for the $25KP as well.  
    • TNA – Let's spend .50 to roll to June $64 calls and see if we get a bounce. 
  125. scottmi

    Wire/Shadow – silver is just not needed. Belden 5T00UP is the best copper out there.

  126. gardling

    Excuse my newbie question but what does "stick" mean ?

  127. sagemm1

    gardling…the typical end of day rally by the bots on no volume…although it does not have to be bots but as of late (the last year) it has been that way

  128. Phil

    $25KP – Tricky spot as we could have violent moves either way next week.

    • DMND – Fine.
    • XRT – A joke.
    • BBY - Joke on us but I want to see earnings.
    • SCO – Not worth rolling May caller ($4.80) and June $30s are $8.70 and that's 100% on our spread so let's kill it. Short puts can expire worthless.
    • SQQQ – Still a long way to even but we can give it next week.
    • FAS – I'm fine with those.
    • GLL – So annoying but we have until June.
    • DIA – As above, done at $1.70.
    • CHK – Looks good but didn't we DD?
    • PCLN – $16 is a good price to sell 3 and keep the last 2 for fun through earnings.
    • EDZ – High Hopes
    • SQQQ – Looking good.
    • TNA – What a great call that was! 
    • LNKD – Ouch.  No change, pretty much they just beat us and we'll be happy to get $2 out.
  129. lvmoda

    Phil – knowing a little about your sleeping habits, you definitely could be a "vegas" guy!   It's a 24hr town and once you get used to that it's hard to return to "regular" places.   I would encourage you to not consider investing in anything with City Center…the whole thing is very troubled and will be for a long time.   They are planning to knock down the failed Harmon Hotel, pending a lawsuit resolving who is going to pay for construction defects.   There are many other better options like MGM Grand Villas, Turnberry, Trump and other high-rises that will beg you for a sale..maybe rent with a 3-year option to buy.  Glad to hear that Caesar's still knows how  to do it right!  They are the godfather of vegas, imho.

  130. shadowfax

    scottmi
    I was trying to keep things constant but as I said I will use what I have which is silver plated copper with Teflon insulation. I do have a bunch of Belden mostly coax cable left over from when I was in business. I will never run out of wire. Thanks

  131. stjeanluc

    Gartman on FAS Money saying that one of the factors for oil going down now is because CME is raising margins on its members and that will reduce speculation which is bad for liquidity! 

    If bad liquidity also gives us oil at $70, I am sure we will find something else to play with! 

    And BTW, he is also making the argument (unwillingly) that speculation was good for liquidity but bad for prices (and bad for the economy)….

  132. stjeanluc

    $25KP CHK / Phil – Correct, we have 6 of the Jun Calls.

  133. JohnC1

    Phil:  PBR is getting close to its October low.  They have huge, albeit hard to develop reserves, and at this price pay a 5.33% dvidend.  Do you have a play to suggest, or would you avoid the company because of its operational issues, and the risk of a decline in oil prices, which would make its deep-sea reserves less economic to develop?

  134. palotay

    LNKD – Phil's earnings play on LNKD is in the green now!

  135. lvmoda

    If they are successful in driving down CME speculation through margins and regulation, Obama will have his election when oil is back at 85…

  136. mrmocha

    SLW - Yesterday Scott and I were chatting about this, we both like it down here.  If you can't sell puts, I just bot the SEP 28/34 BCS for $2 for my IRA, it's a reasonably priced fire-and-forget-it play.  If there's another QE pre-election pump, this will be a three-bagger.

  137. Phil

    Son of a bitch – I just lost a post again.  I have to get a normal computer to take on the road – this is killing me!

    I can't even begin to catch up now so please reask anything important I've missed. 

    I was just saying that the Big Chart shows that Dow and S&P should be drawn to their next lines down like a magnet now, 

    Dollar 79.60 is off to the races, VIX 19.21 (watch out at 19), TLT 117.89 (117.50 is worry line for bears), oil is failing $98 so that's the new stop.  Dow has 250 points to go to the DMA, that's about 2% more to fall but Dollar should be rejected at 78.60, as it is on each cross briefly

  138. scottmi

    DIA approaching trendline support at about 129.80. break that and next eyeball lines look like 129.50, 129.22, 129.06, 128.75…

  139. sagemm1

    Sorry for the repost but you asked for it Phil,
     
    Alright this could be crazy talk but I am long VXXJun 16 calls after buying back my 18s I am considering selling half my position by rolling 1/2 to may 16s thus staying long my full position but at the same time capturing 100% of todays gains…anyone have any thoughts on that strategy?

  140. stjeanluc

    Speaking of earning plays, lflan's LNKD play must be doing well today!

    Lflan – That play is actually a good template for earning plays in the future as it allows more protection than a straight strangle, can be implemented with little margin and is usually more profitable than a condor. The drawback is the 4 legs which makes it more commission heavy!

  141. angelcur

     Greek Banks' Bad Loans Rise to 17% of Total. Greek banks collectively saw the level of non-performing loans rise to 17% of their total loan portfolio at the end of the first quarter from 14.7% at the end of the third quarter of 2011. Bad mortgages climbed to 16% of the total, or 12.5 billion euros, from 14%, citing Greek banking officials. Bad consumer loans increased to 29%, or 9.6 billion euros, from 26.4% and bad business loans rose to 15%, or 18 billion euros, from 13%, it said.

     http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/05/2012_440375

  142. dpastramas

    Dr Shaq in a suit.. plain wrong

  143. angelcur

     so we have fitch saying italy/portugal/spain/ireland/cyprus would be downgraded immediately if greece left eurozone…and a high level greek official saying there is no way they stay…market is connecting dots finally…if that is true all hell breaks out in second half of year
    also, next crisis germany/france are really going to clash so the bandaids will be much harder to come by

    http://www.bloomberg.com/news/2012-05-04/majority-of-germans-back-merkel-s-european-austerity-welt-says.h

  144. scottmi

    SLW/mrm – nice! i took that Sept 28/34 BCS at 1.99, and paired with a sale of the Sept $24 put at $1.10 for net .89 (or .91 after commissions) entry on the potential $600 gain..  a 548% win if we get QE.  if we don't, and silver languishes, goes nowhere, max $91 loss all the way down to where SLW last saw 24 in Sept 2010 and silver was at $19-20/oz. 

  145. palotay

    Phil/TZA – I have a May 17/21 Bull call spread on TZA.  I'd like to lock in some of the gain, but avoid having to buy back the caller.  Can you suggest something?  Should I just roll the long call to June, and leave the May caller?  And plan on selling another cover after the May call expires?

  146. shadowfax

    scottmi
    I noticed your DIA post and Phil's comment so the IWM is at a makes no sense level and unlike the others below it is hanging out at S2. It seems to need to go lower today just to catch up with norms and the NASDQ.

  147. shadowfax

    Phil
    Maybe the workshop needs to develop the triple folding laptop!

  148. Phil

    I just lost everything I wrote since the last one. 

    I have no idea why but it seems to randomly refresh the page so I'm going to do lots of short posts and tomorrow/Monday I will swtich my set-up as this is driving me nuts.

    Anyway. getting a little bounce now as Dollar is rejected at 79.60 but same thing happened at 79.50 and then we popped it. It's 1pm already but plenty of time for a stick.  Oil still $97.84, gold $1,642, copper $3.72 and gasoline $2.957.

    VXX/Sage – I wouldn't do the roll.  It seems like fun but if someone puts QE3 on the table over the weekend in an attempt to calm the markets – it will probably work .  What's so bad about June? 

    Downgrades/Angel – Makes perfect sense, they are all in the same situation so why would any be kept and Greece leaving zone to print money is an effective default anyway so that means EU/ECB certification of debt is now meaningless – it's a catastrophe either way. 

  149. lvmoda

    All this Euro situation same as what we knew in December and nothing has been done since then except for second greek bailout that everyone knew would not solve the problem.  So I wonder why the whole market moved up so much in Q1?  Never made sense to me, still doesn't.

  150. Phil

    TZA/Palotay – That's the downside to verticals, no easy exits.  You can take $2.85 off the table and pick up the June $20/25 bull call spread at $1.10 so you pocket $1.75 and you have pretty good protection to the caller while you wait for them to expire.  As long as you retain net .55 on the longs, you come out ahead. 

    BBLaptop/Shadow – Part of the problem is I'm a lefty and if I accidentally touch the track pad while I'm typing – strange things happen on this machine. 

    Why/LV – Because they wanted to bring in the bag-holders before dropping the market.  Even now – idiots are buying the dips just because we stopped dipping after a 2% drop in the Nas in one day.  We aren't even close to weak bounces yet. 

  151. jabobeast

    FU PCLN!!!
     
    should be down 20 ;-(
     
    grouchy Jabo now ;-)

  152. dpastramas

    NOK / Phil – Just to share a very interesting discussion i had with some friends ex NOKIA and veterans in the mobile industry. Apart from the cash and the patents, there is one more thing that might work for Nokia, they are already in bed with Microsoft.  MSFT have seen AAPL vertical (hardware and software) model success and industry people are sure they will be looking to reapply.  I heard that NOK has already started divesting various categories like Vertu.   Also dont forget current NOK CEO is ex MSFT… Coincidence?
     
    I would be looking for a Jan 13 BCs just for a fun play.  But not today.  Probably will wait till monday for europe to sell of some more…

  153. 1020

    Lefty – well that explains it!  ;)

  154. alik

    Why BBVA, STD, NBG, LYG are all up today? Is there any meaning in that?

  155. shadowfax

    jabobeast
    Next week you may get AAPL at $550 which is what I placed their fair value at earnings. Only problem is AAPL tracks like a triple ETF without diversification.

  156. Pharmboy

    LLY….buying June puts.  Their valuation is ridiculous.

  157. scottmi

    INTC – why this such a sharp drop?

  158. lvmoda

    phil – go to your control panel and disable the touch pad and just use usb mouse.  I'm lefty too.

  159. shadowfax

    I will verify the dips are buying the dip, not a single big player.
    Was that the up flush?

  160. scottmi

    LLY – does look like coming off a double top. and struggling to get above it's 5ma… looks like a good SWING setup!

  161. alik

    Pharm, I am thinking about shorting REGN. What do you think?

  162. dflam

    HI Phil: Yesterday ,I got exercised on the July $37 C on the following position on LINE :
    Buy $July $34 C at $3.41,sell July $37 C $1.36 and sell July $36 P at $1.85 for net $.20 on $3 spread.
    I'm now short 500 shares and the $.725 dividend was deducted from my account.
    I'm thinking of buying 500 shares to cover the shares I'm currently short and selling the $38 C for $1.55. What's your advice? thank you.

  163. stjeanluc

    Next week, FAS has options all the way to 114 but only down to 97… Someone got caught a bit too bullish!

  164. stjeanluc

    FAS Money / Phil – In a big sell-off like today, would it make sense to sell some puts in the excitement now to balance our short calls?

    Same with IWM Money and selling some TNA puts!

  165. edro00

    From Stanton Analytics
     
     
    HEDGE FUNDS BAIL ON NEW CME MARGIN REQUIREMENT
    Since the CME notified customers that it would be their intention to fully margin speculative positions and add an additional 10% to the formula, the managed and hedge funds have been dumping energies in the petro complex and buying Nat to eliminate some of the danger. Hedge funds are bailing because they feel that the new margins will stifle their activity. It shall reduce liquidity. It will be interesting to see how this affects the high frequency traders. We hope with the lower liquidity it affects them as much otherwise the volatility will soar and trading will be even more frustrating.
    This has no doubt led to the margin selling. The normal modus operandi of the margin clerks is to be to sharpen their pencils by 10:30 EDT so that another round of selling hits the market. This is not a buy the dip market unless crude oil is sub-100. It is a sell the rally market. This is liquidation by massive longs. Irrespective of any other consideration they will most assuredly be selling the bounces. They have no choice.
    There is also angst regarding the European elections this weekend. How will the electorate face the austerity that these leaders will impose is anybodies guess, but at this point it appears that the pole action has been to vote the “bums out.” These elections will in some part affect the euro-dollar trade and as a result the trading in energy. Can it be that a trend is finally developing? If it is the risks are to the downside.

  166. stjeanluc

    Interesting thoughts about labor participation and why it's going down now:

    http://tpmdc.talkingpointsmemo.com/2012/05/labor-force-participation-is-lower-than-it-has-been-in-30-years—-why-it-matters-and-why-it-doesnt.php

    And also some comparison with other countries:

    Despite Rick Santelli's rant, there is no political conspiracy in the job numbers…

    Other factors have combined to bring it down. The country’s aging population means we have an aging workforce — and that means a bigger-than-usual segment of the labor force is retiring in large numbers. Compounding that is the fact that large numbers of young working age men are not working. The Chicago Fed explored these trends in greater detail and concluded that the labor force participation rate will continue to decline well into the future.

  167. Phil

    NOK/Dpast – Fine for a flyer but I couldn't believe no one bought MOT or RIMM either. 

    Banks/Alik – That's very interesting.  Expecting more bailout? 

    INTC/Scott – They are just clearing the decks today.  INTC is overweight in the Nas so if the Qs are being sold, the ETF has to shove a lot of INTC into the pipes. 

    Pad/LV – Er, what mounse? 

    LINE/Dflam – So now you are short the stock and you have the July $34 call ($5) and the short $36 puts (.55).  Didn't that guy do you a favor putting you short at net $38.36 when it was $40 yesterday?  Even with the Dividend, you made out.  If you buy back to cover, then you're in a buy/write essentially.  Nothing wrong with that but the markets are very uncertain into next week so an odd time to be making a big commitment unless you are really opposed to having cash. 

    FAS Money/StJ – It would make sense if I didn't feel 70% sure that we go down more.  At $14.50, I'll be excited to sell puts but not so much at $15.10.

  168. stjeanluc

    Keep in mind, Germany has an unemployment rate that is 1.5% lower than the US but with labor participation at least 6% lower. There are other factors at play:

    “The differences with other countries are primarily women, young people, and old people,” Baker says. “We are pretty much in the middle of the pack in LFP for prime age men (25-55). We have higher rates of LFP for women than southern Europe, equal or lower than northern Europe (nordic countries are highest). For the young, we are very high. Students work in the U.S., they mostly don’t in Europe. This is conscious policy. They have stipend, we expect people to work. The same story applies to older workers. Most other countries have much more early retirement, people often can stop working in their late 50s. That is much rarer here.”

  169. rpme

    Pharm, why do you think the valuation is poor on LLY? When you look at their metrics against their major competitors they look pretty good, except growth.

  170. escohen5

    Phil/SCO — I just made a non-greedy exit on my SCO May 32/36 BCS at $3.50, leaving my May 33 short puts to expire.  What a great day to have SCO long!  
    Is it a good idea to enter into a June trade, or would you wait until after the weekend?

  171. l4real

    Phil/Laptop
    Phil, 
    Try using a separate bluetooth keyboard and track pad. I'm doing it with my Macbook and it works out fine. That should help eliminate the problem IMO.

  172. jasu1

    Pharmboy: I have LLY@33.25 with sale of Jan2013 40 call. How should I position the recommended Put BUY. Thanks 

  173. stjeanluc

    Computer / Phil – When you work with your laptop you should probably use Notepad to type your comments and paste them in WordPress! If you screw up comments in Notepad, you can always Undo! Not the best solution, but beats losing hours of work since yesterday!

    I have not a lefty (well, some people would disagree here) but I have the same problem with my touchpad when I travel. It's usually the way I hold my hand when I type since I am not a touch typist. It frustrates me to no end!

  174. dpastramas

    NOK / Phil – Well RIM was considered by Oracle but now they are the odd one out.  And google is all over motorola (mobility).  The pair NOK-MSFT makes business sense.   

  175. scottmi

    Oil/phil – did 'they' roll what they needed to stop the drop and let us run up again, any sense for what's nect?

  176. diamond

    Phil – RE: "… Part of the problem is I'm a lefty …"
     
    Not to worry … you can be reprogrammed to be normal. ;-)

  177. stjeanluc

    Idiotic quote for the day courtesy of Mitt:

    “Just this morning there was some news that came across the wire that said that the unemployment rate has dropped to 8.1% and normally that would because for celebration,” he said. “But, in fact, anything over 8 percent, anything near 8 percent, anything over 4 percent, is not a cause for celebration.”

    I am going back in history to see how often the unemployment rate was cause for celebration when the GOP was in charge…. Oh yeah, well never! The last time was when Clinton was president! Idiot.

  178. David Ristau

    A trade some of you might find appealing that we entered at Oxen Group:

    Long Dick's Sporting Goods (DKS), Short Johnson Controls (JCI)

    DKS looks strong into earnings, JCI looks weak after earnings and total meltdown today. Pair trade here. Look for the spread long DKS and short JCI to increase 3% before selling.

     

    Large_jp8ia5k

  179. stjeanluc

    Trading Rule # 4 – Learn to take a loss…

    http://kiddynamitesworld.com/trading-rule-4-learn-to-take-losses/

     

    This is another rule that could vie for the “Most Important Lesson for New Traders” title.

    Just because a position has moved against you doesn’t mean you can’t sell it.  Learn to take losses.

    This rule sounds simple, but is one of the most difficult psychological concepts for human beings – it’s one of the main reasons trading is so hard in my opinion.   I’ve traded for about 15 years, and I’m STILL trying to get better at this concept.   The best traders have absolutely no problem at all “locking in a loss.”

    The better you are at selling a stock whose thesis has failed (see Rule #2), the more money you will make.  The greatest mistake that rookie traders (and veteran traders!) make is being unwilling to take losses.  We rationalize in a number of different ways: “oh, it will come back my way,”  or “I was wrong on the timing – I’ll give it a few more days,”  or “oh, now it’s a value play – even though I bought it specifically for an earnings trade, it’s now so cheap that I have to hold it.”

    This gets back to Rule #2 – when you know why you’re in a trade, you will know when to exit it – but Rule #4 is the implementation of that.  You have to be intellectually honest with yourself, and not turn losing positions into bigger losses.

  180. stjeanluc

    Looks like austerity was not the correct path for Europe:

    http://www.nytimes.com/2012/05/04/business/us-chose-better-path-to-economic-recovery.html

  181. stjeanluc

    Ominous signs for phone makers:

    Image

  182. Phil

    11:58 AM The headlines will point to economic data, but maybe nervousness over the outcome of this weekend's elections sends Europe sharply lower today. Stoxx 50 -1.8%, Germany -2%, France -1.9%, Italy -1.4%, U.K. -1.9%. Spain outperforms, +0.5% as the head of Santander grabs the ear of the ECB.

    12:00 PM On the hour: Dow -1.26%. 10-yr +0.36%. Euro -0.49% vs. dollar. Crude -4.44% to $97.98. Gold +0.25% to $1638.85.

    1:00 PM On the hour: Dow -1.23%. 10-yr +0.38%. Euro -0.49% vs. dollar. Crude -4.73% to $97.69. Gold +0.44% to $1641.95.

    2:00 PM On the hour: Dow -1.15%. 10-yr +0.36%. Euro -0.52% vs. dollar. Crude -4.17% to $98.27. Gold +0.57% to $1644.05.

    The relative calm seen in the stock market early in the year is looking more like a mirage, as worries about Europe's debt troubles and a slowing U.S. economy have brought the return of "risk on, risk off" trading and increasing the correlation between individual stocks. Bad news for investors trying to pick winners and losers; perhaps even worse, it could stay that way for some time.

    "Not enough jobs, not enough pay, not enough policy solutions," tweets Bill Gross in response to the jobs report, cryptically adding, "10-year Treasury to stay below 2% until June 30. After that?" Is Bill Gross trying to warn people out of Treasurys again?

    Canada's Ivey PMI for April dives to 52.2 from 65.0 previously, and against expectations for 61.0. The loonie tumbles 0.5%, but remains above parity with the greenback at $1.0071. It's the latest in a string of weakish numbers from up north and may cease rumblings from the BoC about rate hikes.

    More evidence the euro is about to explode out of its tight trading range (which way TBD): The implied volatility of the euro/dollar exchange rate has collapsed, sharply diverging from its relationship with EU stocks. This sort of action may not last for too long. Today is seeing a bit of breakout – to the downside. FXE -0.5%. (see also)

    Perhaps what's really roiling markets today are weekend elections in France and Greece. Greece looks particularly ugly, with true economic collapse in Athens potentially paving the way for the neo-Nazi Golden Dawn party to take 5-6% of the vote (2009 election: 0.23%). The communists are polling at about the same. "Be very worried," says Credit Suisse.

    Merkel and team look to have accepted the inevitability of a Hollande victory in France, as finmin Schaeuble says Germany will allow the new President to "save face" back home. Not too much face though, as Schaeuble insists the fiscal pact has been signed and must be honored no matter who occupies the Elysee.

    Maybe this is helping:  The UAE completes and expects to have operational within 90 days a pipeline which will allow it to bypass the Strait of Hormuz for its oil exports. The pipeline offers a key alternative route in the face of Iranian threats to block the Strait. USO -4.4%.

    YRC Worldwide (YRCW -6.1%) falls off after missing the estimates of analysts with its Q1 report and restating 2011 results to reflect accounting changes to how prepaid tires are booked.

    Fitch Ratings lowers its outlook on Chesapeake Energy (CHK +1.2%) to negative from stable, citing CHK's aggressive capex program in the face of weak natural gas prices; the rating is maintained at BB. The ratings firm estimates CHK's 2012 spending plans will create a ~$10B funding gap that would pressure credit quality.

    The Obama administration announces tightened rules on fracking, requiring the disclosure of chemicals used in the process when done on federal lands – opposed by the oil and gas industry – but not requiring disclosure until work is completed – which angers environmentalists. The government says the proposal would add ~$11,833 in costs per well in 2013.

    Green Mountain Coffee Roasters (GMCR +5.1%) finally turns north after it effectively played a bad joke on investors by conducting a 2-for-1 split without distributing the shares. Shorts taking profits and comments out from Starbucks CEO Howard Schultz that K-Cup sales are seeing gains could be behind the rise.

    Airliners have been quietly raising baggage fees since last September, according to a USA Today survey. While Spirit Airlines (SAVE +0.1%) is the clubhouse leader with a whopping $100 carry-on fee, other carriers are sneaking in extra fees on extra bags and international flights after seeing bottom lines gains trump consumer complaints. Raking it in: DAL, UAL, JBLU, ALK, LCC, ALGT. Bags fly free: LUV.

    This year's plunge in NAND flash memory prices, which has taken a toll on SanDisk (SNDK) and Micron's (MU) margins and stock prices, continued in the second half of April thanks to weak purchasing activity from Chinese buyers and muted end-market demand. The industry hopes strong demand for solid-state drives and mobile devices will offset weak sales of memory cards and USB drives.

    An internal JPMorgan sales document for Facebook's (FB) IPO cites Mark Zuckerberg as a "risk factor," reports Charles Gasparino. Is this an outgrowth of banker frustration with Zuckerberg's handling of the Instagram deal? Update: Gasparino adds Zuck is unlikely to take part in Facebook's roadshow, citing security concerns. (more on FB)

    Wedbush isn't waiting for Facebook's (FB) IPO to start coverage with an Outperform and $44 PT, well above Facebook's $28-$35 IPO range. The firms says it expects Facebook to take share from both offline and online advertisers, and thinks it will make the expanded use of Facebook Credits (currently dependent on Zynga and a few other game developers) a 2012 priority. The PT is based on 22x Wedbush's FY15 (!) EPS estimate of $2.

    Nokia (NOK -6.4%) execs did their best to defend the company at its annual shareholder meeting in the face of crumbling sales, profits, market share, and debt ratings. But Robert Chmielinski is one investor who clearly isn't satisfied. He's filing a class-action suit against Nokia, alleging it misled investors by promising Windows Phone sales would strengthen its smartphone position. Nokia declares the suit to be without merit.

    Three lunchtime reads:
    1) Earnings vs. dividends: Which is more important?
    2) Tumbling homeownership marks a return to normal
    3) 10 insights I learned from Benjamin Graham

  183. BertII

    STJ / Rules #4
    Yeah I need that one tattoed on my hand
    Went long oil thinking I was smart just gave them back all the money I made so far this year

  184. Inkarri1982

    STJ – Austerity in Europe?  Aren't most of the EU government running deficits just like we are?  In my mind(I may be completely wrong), true austerity would be not running deficits at this point and maybe even running surpluses to pay back the debt.

  185. kustomz

    Was austerity a choice? Germany and the IMF forced the austerity.

    Samsung is gaining traction, there can only be 2.

  186. stjeanluc

    Austerity / lnk – When you go from a 6% deficit to 3% deficit, it does imply spending cuts somewhere! Look at Greece for example – would you say that they are running a stimulus program even though they still have a high deficit. 

    Running surpluses is what we should have done between 2001 and 2006 when the economy was doing better. And that is where Keynes is usually misunderstood (or misinterpreted for political reasons). He said that government should run deficits to alleviate recession but run surpluses in good time to pay for future deficits. Instead, we went on a spending and tax cut rampage.

  187. stjeanluc

    Austerity / Kustomz – It was a choice for some, but not all obviously!

  188. Phil

    SCO/Esco – Congrats but it will be  awhile before I want to short oil again.  I am more than satisfied with a move down to $98.50, it's the next level down from the $102.50 we did expect in this round.  $95, $92.50, etc. need some more funamental changes, not just because we broke down one day.  The change in CME reqirements seemed to drive this move – not sure how long that will last in effect. 

    Separate stuff/L4 – Well doesn't that pretty much defeat the whole concept of having a laptop?   I think disabling the track-pad and just getting a mouse is the way to go. 

    Thanks 1020.

    Frustration/StJ – Yes, my old laptop did not do this too me.  This one is different in a bad way.

    Oil/Scott – I'm not sure on the barrel count but this seems to have been driven by the margin requirements as well as the data and lack of more fear from Iran.  All things we expected to happed to knock oil down from $105 – we just didn't think so fast. 

    Normal/Diamond – In England the nuns used to hit my father on the hand with a ruler whenever he tried to write with his left hand – it simply was not allowed! 

    Mitt/StJ – The more he talks, the more Obama's chances go up. 

  189. scottmi

    VXX – closed and i'm out of this dysfunctional margin-sucking bankster's kosh!

  190. Inkarri1982

    STJ – You are right.  To add on to what I said, the deficits might be smaller but the debts have only gotten bigger.  At this point, what good would reducing austerity and going back to 6% deficits do as the debt will just keep escalating and growth will have to be much higher.  Maybe "exponential" is the right word here but debt cancellation would seem to be the only real solution at this point.

  191. barfinger

    Crap, I can't sell calls on TLT. Shares not available to borrow!

  192. stjeanluc

    I wonder how many people are actually getting paid more:

    http://www.nytimes.com/2012/05/05/business/economy/us-added-only-115000-jobs-in-april-rate-is-8-1.html?pagewanted=2&_r=1&hp

    Today the United States economy is producing even more goods and services than it did when the recession officially began in December 2007, but with about five million fewer workers.

  193. stjeanluc

    Debt cancellation / lnk – Otherwise known as the "Greek Job"

  194. newbie

    PHIL
     
    Hello, Concierge desk? Yeah,  I need a USB mouse NOW!
     
    No, no, I don't have a mouse in my room……..I NEED A MOUSE……….no, not a real mouse, a COMPUTER mouse….
     
    No, I didn't say You SB, I said USB…..
     
    what…..?  no, no…….money is no object, just get me one,  NOW.
     
    OK. thanks…

  195. sagemm1

    Phil/Greece, Euro etal
     
    If Greece rally pulls out and Hollande get elected what, if any result do you think, in general it would have on Bonds issued by the multinational corporations?

  196. scottmi

    Nuns/Phil – Sister Shiela hit me with a ruler in school, but i was a righty. They don't do that around here any more though.

  197. Inkarri1982

    StJ – That was more like a "slide of hand" because their total debt didn't actually decrease if I remember correctly, it is simply owed to the IMF and ECB now.

  198. Burrben

    Ahh, oil.  Well, I missed the move down in Oil AGAIN since I didn't want to pull the trigger on the SCO trade phil reccommended, and then internet has been down for about a day…grrrr.  No biggie though, two good things:
    1) I had GTC order to get out of my long SCO shares at 39 triggered at least, cutting a large loss I had holding SCO shared at a price of net 40.
    2) My Oct short 28 puts are up 66% while my Oct 28/30 BullCS is mid 5.70 from a cost of 3.93.  
    Not too bad, but I would have been happier being short 10 /CL all the way down! 

  199. 2can

    DMND /  what happened?  big spike

  200. stjeanluc

    Greece – Just you wait lnk… not done yet!

  201. jabobeast

    "Lazard Capital's Jake Fuller boosted his price target on shares of Priceline.com (NASDAQ: PCLN) from $750 to $800 in an earlier research note Friday. The analyst maintains a Buy rating on the stock".

    "With shares trading down 1.4 percent to $739.79, Fuller's new price target represents potential upside of about 8 percent".            

  202. Burrben

    Phil / SLW
    I was hoping you would comment if you like this play by Scott.  I'm not that familiar with silver
     
     
    SLW/mrm – nice! i took that Sept 28/34 BCS at 1.99, and paired with a sale of the Sept $24 put at $1.10 for net .89 (or .91 after commissions) entry on the potential $600 gain..  a 548% win if we get QE.  if we don't, and silver languishes, goes nowhere, max $91 loss all the way down to where SLW last saw 24 in Sept 2010 and silver was at $19-20/oz. 

  203. doro165

    Any Beastie Boys fans, MCA died today of cancer. That'll boost the rating for HBO of the R&R Hall of Fame show this weekend.

  204. Phil

    Debt cancellation/Ink – That's what inflation is, a stealth debt cancellation.  I buy a house for $500K and I put down $100K and take a $400K mortgage and, 15 years later, the house is $2M so I have Maybe $1.8M in equity and a $200K mortgage left.  Then I refi $800K, pay off all my debts and I have $1M equity still in my home to retire on.  So easy with inflation.  Our whole economic system is based on people being able to do that – it's' really a form of default but at least it moves money around and the banks don't care that much because they get fees and salary bumps along the way.  After all – it's not their money anyway – people forget that – it's your money they are losing.  Banksters are there to make fees – they don't give a crap what else happens in the World as long as they can churn accounts and loans and get those fees….

    TLT/Barf – That may be a good thing in the end.  If we open down on Mon, they can go back to the $120s.

    Thanks for the script Newbie but I think I can walk 3 blocks to the mall.

    Greece/Sage – Hollande is baked in, Greece is not.  Greece pulling out is an effective default.  It also immediately casts dispersions on all the PIIGS to ever pay their debts.  Corporate bonds will likely be more popular than Government bonds until they start defauting too. 

    Hitting/Scott – I think that's a shame.  A little whack once is a while is good for you.  Our HS gym teacher used to kick the crap out of guys who got out of line – never a complaint and we didn't have fights in our school or on the grounds he patrolled.  Things are really out of control these days with the teachers too scared to even yell at the kids for fear of being called down in front of the parents to apologize for hurting the kids' feelings. 

    Oil/Burr – Don't worry, this sort of thing seems to happen once a month or so. 

    DMND/2Can – Doesn't take much, they are so underpriced any new/rumor can do it. 

    SLW/Burr – I didn't comment because I assumed people know I an negative on gold and silver.  Neither one has demand justification for their current price so it's just not something I would touch. 

    Attempted stick moves meeting heavy selling but they are trying really hard to jack things up.  As I noted earlier, they really want the Dow to print -1% or less as well as the S&P.  They are close on the Dow but this is a lot of selling for 3:10. 

  205. stjeanluc

    DMND – Spokesperson says no news to account for big spike.

    Why bother – since when do we need news to move prices? 

  206. angelcur

    http://historysquared.com/2012/05/04/australia-disaster-meme-goes-viral

     
    look at aussie house price index…wwow
    i knew it was bad, but that is insane!!

  207. barfinger

    Phil, it is not such a good thing, since I am not allowed to roll existing short calls for five days. Broker'sXpress claims its an SEC rule. What a crock!

  208. newt

    EDZ/ 25k- did close this?

  209. scottmi

    doesn't seem to be much of a stick..

  210. shadowfax

    MMs must have taken up a lot of slack on the slide and now they want out before the hammer comes down, 100 shares takes prices up, thousands to drop the same but the sellers are not giving up and the volume is on their side.

  211. scottmi

    SLW – i think there is a lot of volatility ahead for silver, and SLW is down now, with silver down, and silver down re gold, and gold down.. lots of support at these levels and can pop up pretty quick. i expect to close the spread on a pop, and fully expect to have the 24 put expire – but would absolutely take assignment of SLW at 24.  more QE, and if not QE then velocity will increase. both inflationary. i'm not so worried about 'deflation.'

  212. palotay

    Phil/SCO – I have the following spread = Short October $28 Puts, Long October 28/38 bull call spread, which I entered for a small net credit.   I have a big winner here, which will be much bigger if I hold until October.  Can you suggest an adjustment to reduce the downside risk?  Other times you have suggested pulling the long caller, and then buying a higher bull call spread.   So I could sell the caller for $11.40, and then buy the October $39/45 Bull call spread for $1.75.  Locking in 9.40, and covering the short $38 call, up to $45.  Thoughts?

  213. 1020

    Phil, you have a FRYS, 3 miles south of you on Las Vegas Blvd.
     
    http://www.frys.com/ads/page10

  214. Pharmboy

    LLY June 40s….and that is why I am shorting them….no growth.  Metrics?  Who uses them in this market.  Future for LLY is grim.  I am using the double top as a reason.  For the $40 cover, I would buy a long put…..just my 2c.

    REGN – sure, start small, as they could be taken out at anytime.

  215. pat_swap

    Phil/Pharm,
    Is it a good idea to cash all the remaining position of USO May 39 Put right now and take a position in June 38 or 39 to catch the further move down?
    Thanks

  216. Canuck

    Gap down or up monday??  any guesses?

  217. lolobear

    lflan – what say you about AAPL?

  218. jthoma

    quitea turn on XRT from earlier in the day- is it at all possible the jobless may not be able to shop to their heart's content?

  219. flipspiceland

    @Felipe
    Shorting AMZN has just come in to profitability for me and I am happy to say thank you.
    In your honor, I am learning to, "Cat Daddy".

  220. stjeanluc

    AAPL sitting right on S3… If I didn't know I would think that they program systems around these lines!

  221. shadowfax

    Sold all TZA

  222. lflantheman

    LNKD     ….   how to manage the spread I posted yesterday…….       the weekly puts will expire worthless.    I bought back the weekly calls.   I sold the   May monthly  puts and will keep the May monthly calls, expecting they go even higher. 
    AAPL….   I think you can scale into Jan 13 calls, at the money.   I made no trades on AAPL today. 

  223. stjeanluc

    Cat Daddy / Flip – I want Kate Upton to teach me!

  224. shadowfax

    How come when I want to sell 1/3 at close they won't let me? PO'd me so they get the ________nickle!!!!!!!!!!!!!!!!

  225. Pharmboy

    USO – I would take all may off the table and move to June, yes.  I would start a small position to b'c they could bounce on Monday.

  226. shadowfax

    Maybe that bounce Monday? It's due by Tuesday!

  227. Pharmboy

    USO held the 200d MA. I am going to take a small position on the long side for a bounce.  I am going to also do a calendar short.  36s.

  228. threeputt

    Monday
     
    Quick drop to the Must Hold lines, then start that 50% fib retracement back to Thursday's close.  Do you expect less from the bots?

  229. pat_swap

    Thanks Pharm…just in time :-)

  230. jthoma

    a toats to Jabobeast today and all bearish positions!!!!!!!!  wheeeeeeeeeeeeeeee!

  231. Phil

    Not a very good close.  Possibly beaitsh follow-through on Monday.

    Have a nicd weekend everyone

  232. shadowfax

    Now that doesn't look so good for Monday under 79.10. We need JRW back!

  233. jthoma

    woops toast

  234. kustomz

    Closing near the lows on /ES on heavy volume.

    Really enjoyed the Great blow jobs dealt to the markets this Friday..enjoy the weekend and Phil, party like a rock star!!

  235. BertII

    Does anyone know what the symbol is in TOS prophet chart for oil futures ?

  236. threeputt

    /CL I believe is what you are looking for

  237. threeputt

    Oh, prophet, sorry!  I don't know that one

  238. Phil

    SCO/Palotay – That's a very long time-frame for a spread like that and you will pay a big penalty to try to cash out early.  The problem is you have little premium left in your calls (about $1.20) while the caller has about $5.50 in prremium.  All you would do is exchange one type of risk for another because you can't go back further in time so, if you want to just sell premium, why not cash the calls ($11.40) and leave the naked $38 caller ($5.70) and buy back the putter ($1.25) and hope for a move up in oil to give you a better entry on the short $33 puts (now $3), closer to $4.  Then you will have sold $9.70 of additional premium with $10.15 still in your pocket and all you have to do is wait to see which side you have to roll to Jan whatevers.  This trade assumes oil won't got too far up or too far down, of course.  You can always slap the cover on later – if you get nervous but why pay more when you can sell more first?

    Frys/1020 – Really, I have to go that far to get a mouse?   This is why those BBY kiosks in the airport are brilliant. 

    USO/Pat – I was all for taking the money and running at $98!

    Big dip in the futures after hours – tons of selling imbalances being filled.   Monday will be fun.

    AMZN/Flips – Nice job.

    TZA/Shadow – That may work out well for you, RUT dumped 5 more points after close.

    Quick drop/3putt – I believe yesterday I said we would either get a nice quick dive and a little bounce next week or we'd hold up and take a huge dive next week.  We had the nice dive today but not sure it's done yet – Likely to bounce off 1,360, of course but if Europe is down 2.5% Monday morning then we could gap down 1.25% easy at the open and that will blow the S&P below the line and then it will be all about whether they can get it back or not.

  239. threeputt

    Great commentary, Phil.  Thanks!  Have a great time in Vegas!

  240. stjeanluc

    I think that this qualifies as an interesting day!  In an interesting week…

  241. stjeanluc

    Here are my predictions for the French elections this weekend:

    Hollande 52%
    Sarkozy 48%

    The polls have a wider margin but I think that last minute some might have second thoughts on a new guy. But personal animosity toward Sarko will mean that France has a new leader Sunday. First results at 14:00 EST!

  242. palotay

    Phil/SCO – Thanks a lot.  This makes much more sense.   

  243. newt

    USO/Pharm: Sounds interesting. Can you elaborate? Thanks.

  244. newbie

    Phil wrote:
     
    " A little whack once is a while is good for you.  Our HS gym teacher used to kick the crap out of guys who got out of line – never a complaint and we didn't have fights in our school or on the grounds he patrolled.  Things are really out of control these days with the teachers too scared to even yell at the kids for fear of being called down in front of the parents to apologize for hurting the kids' feelings."
     
    You are SO right.  The headline here in Minnesota is that a 13 year old girl killed herself   (in a rural town about 100 miles from here) this week because she was being tormented by a bunch of people at school (other girls). Lot's of 4 letter words, and other stuff. They were writing a word on her locker that is very similar to "slot". She killed herself. 13 years old.  WTF is going  on out there?  I didn't even know what the word meant until I was about 20, if then.
     
    They ought to be charged with manslaughter.
     
    Teachers ought to be able to just walk up and smack these little punks on the side of the head. Literally.  Sheer tragedy. At least now the word "bullying" is in the common lexicon, and it is a big subject (here in Minnestoa, it has been for a year or two). Maybe not out on the east coast, but here for sure.
     
    13 years old. She even told her parents she wanted to go to a different school. Imagine the pain a 13 year old has to be in to feel that death is the only way out.
     
    Everybody;  Listen to your kids. Pour the love on'em. And make sure that when they are in pain, they can talk to you (or SOMEBODY).
     
    I wish there was more acknowledgement of this sort of thing when I was in school.
     
    Not going to start a rant here, but in the Minneapolis schools the punks run the place, and the teachers are pretty much powerless. We got' gangs all OVER the freakin' place.
     
    Have a good weekend.

  245. newbie

    Phil / trackpad
     
    As I think I mentioned in a different place a day or two ago, my relatively new (just inherited) Toshiba laptop (2 years old, with garden fresh Win 7 installed) was doing this to me all the time. I didn't loose much content while writing, except that the cursor kept jumping around through paragraphs for no apparent reason. Typing a 4 paragraph email could take half an hour.
    I thought it was because I don't know Windows, but now I'm not sure.
     
    Anyway, yesterday I bought a good mouse and brand X keyboard ($15). Problem solved (I don't travel with a laptop). Hell, I don't travel.

  246. newbie

    TGT / Target stores
     
    I went to a Target store this afternoon. It was beautiful. They are hitting on all 8 cylinders and then some. Store was immaculate, prices very good, and incredible food section, especially meat and other groceries. Extremely postive experience all the way around (Peter Lynch investing concept) (like Jackie the Stock Analyst). This was in a middle class / upper middle class white neighborhood -western suburbs of Minneapolis.
     
    They have like 40 checkout aisles.
     
    They got behind on checkout and the Manager put a call out on the PA asking staff to go to registers. Staff were practically running to man the registers. Every staff person on the floor (not check out cashiers) had a two way radio on their belt.  I was super impressed. I bought more beef, pork, and chicken than I think I have ever bought at one time in my life.
     
    When I go to Walmart (yeah, I know) the place is a total dump, the clerks don't know how to read, do math, count change, or use the register. They are the most brain-dead automatons I've ever seen. It is LITERALLY DEPRESSING for me to go to Schwalmart. Now that I know how nice Target is, I'm going there from now on. The prices at WMT just aren't worth the depressing frustrating experience. They don't seem to give a crap HOW long you wait in line at checkout.
     
    As the economy improves over the next couple years (assuming it does) I think Target could do VERY well, in terms of earnings.
     
    I actually worked in their world headquarters (Minneapolis) in the I.T. department on a short 2 week fill-in about 5 years ago. They run an extremely tight ship.
     
    Pretty good morale, too.
     
    Point is, I think Target would be  an excellent long term long, when you can get it at good prices. It may take 2 or 3 years, but I think they have an incredible future. Stock might be a little too expensive now, I don't know (I'm not a fundamentals guy).
     
    Remember, a couple years back or so, some famous hedge fund short seller activist investor type (can't remember his name) tried to get Target to sell some of their real estate and then do leasebacks. He failed. Then there was word that he wanted to start a "fund" that only invested in Target. People said "why would I pay you expenses to invest only in Target. If I want to do that, I can buy the stock myself". My recollection is that the fund idea didn't work (probably for that reason). Wish I could remember his name, but somebody here will.

  247. qcmike

    newbie 

    I am in ST. Paul, i agree with you on Target

  248. stjeanluc

    Not much US data next week, but plenty of important stuff in other countries:

    I have conflicting times for the Fed speeches from different sources so that may vary.

  249. newbie

    qcmike
     
    cool
     

  250. stjeanluc

    This week did some damage but there might still be more to come…

    http://www.bespokeinvest.com/thinkbig/2012/5/4/four-sectors-oversold-telecom-and-utilities-overbought.html

  251. stjeanluc

    Daniel Gross is optimistic… Good article to prepare for next week!

    http://www.thedailybeast.com/newsweek/2012/04/29/myth-of-decline-u-s-is-stronger-and-faster-than-anywhere-else.html?

    In the months since the Lehman debacle, the U.S. has no more lost its ability to grow and innovate than reality-TV producers have lost their ability to coax skanky behavior out of New Jersey’s youth. And despite all the headwinds, there’s no reason the expansion that started in July 2009 can’t go on as long as the previous three, which lasted 73 months, 120 months, and 92 months, respectively. When the definitive history of this period is written, it is possible—no, likely—that this post-bust era will go down not as a time of economic decline, but as one of regeneration.

  252. zeroxzero

    Newbie:  Teachers can't touch their students.  I spoke to a lawyer about what parents are allowed to do in the U.S. — not that I was asking, but it came up.  He said that, in general, parents can strike or spank their children as long as it doesn't leave a mark.  

  253. zeroxzero

    Stj:  I think that's probably true, but we could see quite a strong dollar going forward, and I am unsure of what the net effect on the U.S. recovery [if that's what we have] will be.  Phil used a rock climbing metaphor last week — climbers linked together, and if Europe loses its grip, everyone gets pulled off the face.  I would be quite surprised not to see the Euro drop below 1.20 this summer.

  254. Canuck

    Demark 9 counts suggest home-builders may be a good short (LEN and TOL) and 2x silver may be a good long AGQ – any thoughts?

  255. stjeanluc

    Europe / Zero – Next week should be interesting following the French and Greek elections. There will be a lot of pressure to "adjust" the current stance on debt and austerity. 

    What is scary at the moment is that the slowdown seems to be generalized except China for some reason. Look at Australia, Brazil now, Europe we know about, but Germany is starting to feel it, Japan and the US. Talk about "climbers"… we are going to need some solid ropes!

  256. scotbraze

    On the subject of laptop touchpads – a lot of laptops have a Synaptics touchpad, and as long as you install their driver, it has an option to enable 'tap protection' or 'touch check' which will disable the mouse pad 'taps' while you type on the keyboard.  Otherwise if you happen to type and accidentally tap it, and hit space or worse – backspace, it can go back a page in the browser and then wipe out your comment edit box (I have found Google Chrome is the best as saving all state if you only went back and can click forward again in time).  But generally, the tap protection has made my laptop touchpad life more bearable.

  257. zeroxzero

    Stj:  Agreed.  I'm looking at everything from Vale to AUD for downside hedges.  I was completely offline yesterday, and my account actually produced a modest gain in the face of a substantial selloff, which means I'm [finally] getting the hang of Phil's "balanced" approach.  But I suspect this will be even trickier going forward, so my cash level is the highest in over a year.  Of course it would be nice to pick up some cheap longs, but equities may become one giant value trap if they start selling off en masse.  "Sell in May and go away" is the most inane homily I've ever heard that seems to be invariably true.

  258. angelcur

    being a Mainer i love walmart..i can get me a kayak and a case of smokey maple bacon flavored pepto there too…oh and roofing nails! the people who work there are great as a matter of fact they are neighbors..sawdust is the cd isle a bit much tho..

  259. jfawcett

    Phil – SQQQ 11/12 Bull Call Spread is near Max profit.  I am considering buying back the 12 caller and moving the stop on the long call to .90 to 1.00.  Then shut the trade down before the 9th if not stopped out.  Comments?  TIA.

  260. pstas

    A few notes of interest from the Berkshire Hathaway annual meeting which I attended today.
    Fair amount of discussion regarding political actions of Buffet affecting the stock price. Not an issue from his perspective – besides, he would not stop regardless (re: taxes).
    The various wind & solar projects they are involved in would not be viable without the subsidies. 
    The 3 main responsibilities of Buffet:
    1. Risk management- avoiding the big mistake
    2. Allocating capital
    3. Maintaining the Berkshire culture.
    All the above subject of much discussion concerning succession planning. He re-emphasizes that these will continue to be the job of whomever succeeds him and very confident it will.
    There will be no dividend anytime soon- just a dead issue,
     Stock price a significant issue. Buffet/Munger once again emphasized the actual value is much greater than current quotes. One example- Geico is carried at approx,. $1B over book- per Buffet- actual value is more like $15B over book. Says many other owned businesses are similar. 
    I have believed the stock is currently undervalued and has lagged the market. Barring a major market sell off this year, I would not be surprised to see it bid up near $100 which would be 1.5 times book value which is the average valuation going back a number of years.
    Lastly, one has to be impressed with Buffets stamina. He and Charlie Munger were on the stage from 8:30 to almost 4 PM with a short break for lunch. Answered questions and gave extensive commentary on most issues. No sign of fatigue or frustration (especially toward the end where some of the questioning got a bit off track). These guys are 81 and 88 yrs old respectively- I can only hope for such vigor and enthusiasm if and when I reach that age. Quite remarkable. 
    Sorry, Phil, you are going to have to take a number and get in line- he is not going anywhere soon.

  261. zeroxzero

    Nice report, thanks. 

  262. kinkistyle

    Thanks for the update pstas!
    Even at his ripe old age, Munger is still as sharp as a tack.  He's completely on fire in his most recent interview with Becky Quick.  He totally eviscerates algo trading at the end of the video and says if it were him he would ban it by instituting something like a 99% Tobin tax on short-term trading.  Would also tax hedge fund compensation at normal rates — BTW this guy is a self-avowed Republican.
    Heres the interview at CNBC: http://video.cnbc.com/gallery/?video=3000088395&play=1

  263. stjeanluc

    This puts things in perspective:

    InternetIPOs 0512 Sunday links:  long term problems

  264. ceegee

    Phil, I have HOV Jan13 $2/$3 BullCS and short Jan13 $2 Puts, cost $0.03. Now ($0.65). I'm thinking to roll this to a Jan14 $1.50/$2.50 BullCS and short Jan14 $2 Puts for a net credit of 80c. Is that a decent play or would you suggest differently – perhaps still leaving the current spread as is for a while longer? TIA.

  265. Pharmboy

    Well, the Republican Party is having a tough time in Nevada……Ron Paul is a pest…to them!

  266. dpastramas

    Greek Elections – The polls have just closed and released a first estimate: Major upset! The two parties that are against the austerity programs have gained massively. (almost 30% collectively vs less than 10% in previous elections)/  still a first estimate but this holds brace yourselves, this going to be one hell of a week!!

  267. stjeanluc

    Thanks for the update Dpas… Polls close in France in less than 2 hours now!

  268. dpastramas

    Below more details in case you are interested. The lead scenario so far was for a coalition government between ND and PASOK, but now PASOK is projected to be a third party, so this is ruled out.  ND will get first a chance to form a government and if they fail, then Syriza will get their chance.  And there is where the fun starts..
     
    Exit poll K-Research: 
    ND 16%-19%,  (Pro-EU / Pro Austerity)
    Syriza 15%-18%,  (Pro-EU / Against austerity)
    Pasok 15%-18%, (Pro-EU / Pro Austerity)
    IndepGr 10%-12%, (Pro-EU / Against austerity)
    Communists 8.5%-10%,  (Against everything)
    GoldDawn 5.5%-7.5%,  (fascists, only want to beat up immigrants)
    DemLeft 4.5%-6.5%  (Pro-EU / Pro Austerity)

  269. zeroxzero

    http://finance.fortune.cnn.com/2012/05/04/french-election-sarkozy-hollande/?iid=HP_Highlight&hpt=hp_t1 
     
    Quote: "Hollande has said that he would shake things up once he gets in power and would not toe the line with Germany or anyone else. That means anything is on the table, including agreements Sarkozy had carefully worked out with his European counterparts in taming the sovereign debt crisis. In addition, Hollande seems bent on really sticking it to the banks. He is no fan of the City of London and Wall Street and has openly criticized them for the role they played in the financial crisis. "My enemy is not another candidate, it is not a person, it has no face, it is the world of finance."   

  270. angelcur

    the us is about to tip right is my guess…meanwhile euro yawwing 35 down form friday close what a joke

  271. stjeanluc

    There is a good show in TV5 now where they have reporters from various countries reacting to Hollande's elections. 

    As usual, I believe that promises made during the campaign will get mitigated by market forces… Once Hollande realizes that the president doesn't have the powers he use to, some adjustments will be made! 

  272. rustle123

    Futures with fair value down 162, Hollande, Hollande, Hollande!!!

  273. 1020

    Excellent commentary on what this nation has become…..
     
    http://globalpublicsquare.blogs.cnn.com/2012/05/06/national-security-state/
     
    Fareed Zakaria GPS is must see/dvr TV on Sunday mornings.

  274. Phil

    Dow 12,800. RUT 775!

    Can’t a guy take a weekend off without the world falling apart?

    I’m going out tonight but I’ll check in later on this craziness.

    Looks like we finally picked the right week to be short the market….

  275. zeroxzero

    Might Euro stocks actually rise if the Euro falls off the table?

  276. zeroxzero

    "It is possible, as Aldous Huxley argued, that the function of [Phil's] brain could be eliminative: it's purpose could be to prevent some vast, transpersonal dimension of mind from flooding consciousness, thereby allowing [traders] like ourselves to make our way in the world without being dazzled by phenomena irrelevant to [our] survival."  [A rather approximate paraphrase taken from a review of Doors of Perception.

  277. kongen

    Has anyone here used, or formed an opinion of, HDGE, the "Active Bear ETF"?

  278. edro00

    options on /ES
    I noticed that the options on /ESM2 (/es june) seem to be tradable now on TOS, however, TOS is quoting me $3 per contract commission  where a contract is 1 option.  Has any ever traded options on futures?  Does the commission seem reasonable?
     
    Thanks

  279. stjeanluc

    Interesting – anti-austerity party get elected in France and gain votes in Greece and the price of oil goes down $2.00. Who knew that's all we needed!

  280. kurtww

    edro – I have a rate of $2.50 per option on /ES. I asked for a lower rate when I signed up last year, but I'm no big fish or anything. 

  281. rustle123

    Oil down another $2 a barrel right now.  Might be an early Christmas tomorrow.

  282. stjeanluc

    Maybe PCLN and CMG might even go down in sympathy tomorrow!

  283. kinkistyle

    HDGE/kongen: There is a 3.3% expense ratio on that ETF.  367% more expensive than the expense ratio for SDS, the S&P 500 UltraShort ETF, at 0.9%.

  284. kongen

    Kinki – thanks

  285. scottmi

    Oil – now THIS is more like it! very happy i did not flip long!

  286. Phil

    Good morning!

    Only 9:30 here but I'm trying to get an early night's sleep so I can be bright and shiny for the fund angames tomorrow.

    So the Dow Futures stopped at that 12,800 line (5% down on Big Chart) but the S&P is at 1,349 so below the 1,360 Must Hold (and they were the only hold-out).  775 was our RUT target and the Nas Futures dropped 26.75 to 2,598 and that's about 2,925 so right on the 2.5% line between our Must Hold at 3,000 and the -5% line at 2,850.  No surprises so far – not panic selling, just an orderly bot-driven sell-off so far.

    Dollar at 80.07, Euro fell to $1.2974, Pound $1.6119 doing much better than Euro, 79.77 Yen to the dollar has sent the Nikkei down to 9,140 – devastating and EUR/CHF is $1.2009 – sad.

    Gold is down to $1,638 and oil is $96.90 and is a good long over $97 with very tight stops (/CL) but silver is surprisingly still $30.12, holding up a little too well to be normal.  Copper is $3.68, nat gas is holding $2.29 and gasoline is $3.959.

    We'll see how things hold up through the morning but the Nikkei is down 245 and the Hang Seng is down over 500 – as we expected, the Asain markets are going to give the Europeans a pretty poor open.

  287. dclark41

    I don't know, maybe the European election will free Ben's hand to engage another round of QE. I used to think he was too worried about high oil prices, and the affect of a falling dollar on pushing commodity prices even higher to push the trigger prematurely. Hence, he was looking for very clear signals before he even considering another round of QE something. Now those problems may be off the table and the door swung wide open for more free money. I am worried about being too short. Another fix is all a junkie needs to forget what's going on around them.
    This week we have two "hawk" non-voting Fed members speaking, and two "dove" voting Fed members and the Bernanke (Thurs.) speaking. It should be interesting.

  288. jmm1951

    scotbraze/laptop touchpads

    In Windows 7 you can set it in Control Panel so that if the mouse is plugged in, the touchpad is disabled. I find this very useful.

  289. craigzooka

    @edroo,  $3.00 is what I pay as well.  It is still cheaper than buying 5 spy contracts which is the equivalent position.

  290. Phil

    Good morning!

    As we left off on Friday, we expected a quick drop and a bounce off S&P 1,360 and our other lines.  Europe is not down 2.5% – just around half a point and Spain, in fact, is up half a point so I'd say the Hollande victory and Greek chaos was mostly baked in. 

    The Dow Futures hit the 12,800 line (-5% on Big Chart), S&P Futures at 1,355, which is probably right on 1,360 on the index, Nas Futures are down 7 points, which is roughly 2,947 on the index and RUT once again hit 775 on the nose in the Futures and bounced back 8 points to 783 and last time we were here, the inded was +5 to the Futures. 

    Oil had a nice $1 pop off our earlier play so a very nice start to the morning.  Obviously I'm not going to advocate shorting them at $98 when we just went long at $97 – oil is kind of in a no play zone for the most part – the bounce this morning just seemed obvious but now, not so much….

    TGT/Newbie – Good store.  We used to like them but they have made some mistakes in recent years.  I'd have to take another look.  Sometimes a company can provide a better service but not be a better stock (see any airline vs. Spirit).

    SQQQ/Jfaw – Sure, with 2 weeks left if you have the opportunity to take the money and run, we go for it anyway and here we don't even have 2 weeks due to the rollover. 

    Thanks for Berksire update Pstas.  Did you have a good time and, what was the mood of the investors there?  Are people confident about the economy.  Buffett's on CNBC and seems pretty upbeat – probably doing a lot to help market recover in Futures.

    HOV/Ceegee – I'm all for layering a successful spread but the Jan $2/3 is not even on track at the moment as far as finishing at $3 so I agree with the rolling idea but I think i'd just roll the Jan $2s that you own (.30) to the 2014 $1.50s (.75) as it's worth spending .45 for .50 in position ad a year.  Meanhile, there's still a lot of premium in the Jan caller and putter so maybe wait and see what happens first.  The rolls will be there..

    Eliminative/ZZ – Well I do consider my wading through the BS in the news to be my most important daily function.

    HDGE/Kongen – You have to be really careful with those custom ETFs – a lot of them are just money pits that churn fees and decay.

    ES/Edro – If you trade a lot, they should be able to do better.  Still, it's $12.50 per .25 move in the S&P so $3 not an unreasonbel amount to pay unless you are just scalping nickels on quick trades – then going to chew up half of the first $12.50 you make. 

    Time to work on the morning post!

  291. lionel

    VRTX – yeah!

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