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Facebook Friday – Finally Something to get Excited About?

The World is still going to Hell but LOOK – FACEBOOK!

Ah, Facebook will save us.  They have magical powers and will turn around the $60,000,000,000,000 Global equities markets with their $16,000,000,000 IPO, right?  I mean, who are we to question the power of Social Media – probably the single biggest drainer of productivity in the history of all mankind?  

How many Billions of hours of lost productivity have Facebook's 900M users put in over the past few years?  How much is it worth to turn millions of people into couch potatoes and can those ever-fattening eyeballs be converted into advertising Dollars?  That's the real question as Facebook currently does a pretty crappy job of converting – roughly 1/6th as good at it as Google is.  

That won't matter to the people buying Facebook in a Frenzy this morning as they release about 400M shares at $38 a share and I predicted we'd end the day at $45 but maybe $50 or even $55 on a spike up during the day.  We at PSW don't have much interest in playing these silly stocks until there are puts to buy (5/29) and then, if they are still in this nosebleed range – we will be very excited to short the hell out of this stock, which is really worth $25 tops.  

So we are rooting for Facebook, as it will be two weeks before we can short them with options and we would love to see them at any idiotic valuation at that point.  Even with 900M users, a $100Bn valuation says Facebook's users are worth over $100 each.  Yelps users are worth just $20, Instagram's $30 and Twitter's $70 – but Twitter isn't public either so that valuation is nonsense.  

In fact, no public company values users like Facebook is and 900M means not all these users are Americans or even Europeans, where the average per-capital GDP is about $40,000.  No, we're into Asia and the 3rd World here were it's more like $5,000 per person on average.   Are we really supposed to believe that Facebook will convert just as much revenue from a man who makes 100 rupees a day as they do from the average US consumers on steroids?  

900M Facebook users spend an average of 20 minutes a day on the site.  That works out to 16,000 YEARS of productivity per day spent on Facebook.  That is an entire 8-hour day of work by 17.5 MILLION people used up each day on Facebook.  

Think about that.  At just $20,000 a year, that's $350Bn of lost productivity to Facebook – God help us all if they are successful and it spawns dozens more sites like this – the entire $16Tn GDP productivity of the US can be sucked up by just 45 companies like Facebook!  But, back to my point (I'm as surprised as you are that I had one) – valuing Facebook at $100Bn is pretty much saying that you and your $350Bn worth of buddies will be handing 1/3 of your annual salary to Facebook somehow.   I know you like to think you are very valuable, I know I do, but doesn't that seem a tad over-priced to you?  

Well, we're going to throw overpriced right out the window at $38 and possibly move on to crazy at $42 (another $10Bn), madness at $46 (+$20Bn), insanity at $50 (+$30Bn), psychosis at $54 (+$40Bn) and OMG are you freakin' kidding me at $58, where Facebook would be adding another $60Bn to it's already $100Bn market cap – all through the magic of trading just 15% of the actual shares of the company.  Do you see why we are chomping at the bit to short them?

Our biggest worry is that people aren't as dumb as they seem and, like GS (66M shares), DST GLobal (131M shares), Peter Thiel (44M shares) and Tiger Global (53M shares) they will be dumping the stock at the open – taking the money and running at the $100Bn valuation.  If that happens, as I said to Members this morning, I think the QQQ July $45 puts at .10 have a good chance of being a 10-bagger as the Nasdaq goes into free-fall.  

We took a bullish flyer, however, into yesterday's close with the TQQ (ultra-long Nasdaq) June $55 calls at .50 as a fun way to play a possible Facebook pop but, on the whole, we're still pretty bearish and more so after yesterday as we added back not only the Long Puts we discussed in the morning post but, in our Morning Alert to Members, we suggested the DIA June $120 puts at $1.25, which finished the day right at the money at $1.50 (up 20%) as well as the TZA June $22/26 bull call spread for $1 (with offsets), which also shot up 20% to $1.23 as the Russell gave up another 2% yesterday.  

We went more bullish in our very aggressive $25,000 Portfolio but we also added a very aggressive SQQQ hedge – just in case.  Even if Facebook does rally the markets this morning (the IPO releases at 11), I can't see going into the weekend more than a tiny bit bullish as we await the result (or non-result) of the G8 meeting at Camp David this weekend.  

None of the bad stuff went away folks – we simply have bad news fatigue at the moment – even I don't feel like going over it this morning (see news and my pre-market commentary in this morning's chat if you must) but it's still out there and STILL, the only reason to be bullish is the promise of Deus ex Machina – the "Machine God," in the form of the Fed and the other Central Banksters, who will come down from the heavens and once again shower the top 1% with Trillions in cash so we can extend and pretend for another 6 months (that's all $1Tn buys now) while we foreclose on another few million homes and wag our fingers at the poor and tell them how they need to tighten their belts. 

Have a great weekend, 

- Phil


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  1. stjeanluc

  2. Pharmboy

    PP for today:

    ONTY/mrm = not ready to DD yet. These are November.

    ARIA/mrm – they are a ways away with their main drug, so they should be nice and volatile over the next few months.

    If I missed anyone else yesterday…then repost here.

  3. flipspiceland

    @Felipe
    probably the single biggest drainer of productivity in the history of all mankind?   
    How many Billions of hours of lost productivity have Facebook's 900M users put in over the past few years?  How much is it worth to turn millions of people into couch potatoes and can those ever-fattening eyeballs be converted into advertising Dollars?
    No, sir. The biggest drain on productivity, mostly useless human beans is perpetrated by government employees, mostly the elected class, and a goodly portion of the bureacracy.
    As for the texters, and social networkers, it's best that their availability for productive work remain as it is, on idle, until there is actually something for a billion people to do.  Neither government or private industry and certainly not Venture capitalists are doing anything about it.
    Perhaps in the multibillions of hours of playtime that are being spent may result in some major industries being formed by some kid who screws around on the barcalounger in his garage, or her bedroom.

  4. angelcur

    the pied piper is in the us!
     
    http://www.cnbc.com/id/47462956

  5. angelcur

    1315 should contain the rally but as Phil mentions when you have th ecentral bankers doing a conga line burning pipe dance..don't get in the way..being naked short at this level of o/s is crazy

  6. rustle123

    McClellan Oscillator is -310.16, 4th by a tad most oversold level of the last year.
    Nasdaq RSI is 24.36 and Dow RSI is 26.76.

  7. 1020

    Good Morning!
     
    Can't wait until 11:15, when I can turn up the volume on my tv……

  8. stjeanluc

    Econ Numbers today:

    Gemany PPI (YoY) / 2.4% (2.5% expected)
    Germany PPI (MoM) / 0.2% (0.3% expected)
    Italy Industrial Orders (MoM) / 3.5% (1.0% expected)
    Canada CPI Core (YoY) / 2.1% (1.9% expected)
    Canada CPI (YoY) / 2.1% (1.9% expected)
    Canada CPI Core (MoM) / 0.4% (0.2% expected)
    Canada CPI (YoY) / 0.4% (0.3% expected)

    Inflation cooler than expected in Germany and higher than expected in Canada. Tough to say which is good or bad as inflation is the exist strategy from our debt load!

    Italy industrial orders are a big surprise on the upside. To be confirmed next month!

  9. samz3700

    FST – Forrest Oil – anyone have a take on stock ?
    Thanks -
    Thinking of doubling down – really been punished in the sell off.

  10. stjeanluc

    Rough day all around yesterday but FAS got beaten up badly!

  11. stjeanluc

    The May TNA Puts have to be rolled.

  12. rustle123

    Weaker open than I thought.  Maybe we will see -400 on McClellan soon.  Just staying cashy right now.

  13. stjeanluc

    We are now really bullish here!

  14. Phil

    SPY 5 MINUTEGood morning!  

    I agree with Dave Fry here, there was a disconnect from reality yesterday and hopefully it was a flush but the global macros are dreadful and perhaps worse than we think (and we think pretty damned bad!).  1,275 is the 200 dma on the S&P and it's very hitable on even minor weakness and, of course, the ONLY thing we are "bullish" about is that things are so terrible that the Central Banksters will feel the need to intervene again.  

    WTF kind of premise is that to put money in the market?  CASH – CASH IS KING!!!!   Even 70% cash is a bit risky but 80% is fine and then you can bet 12/8 bullish and even if we drop 20% and your 12 goes down to 9.6, your 8 goes up to 9.6 and it's no big deal at 19.2 + 80 cash for being totally wrong.  Meanwhile, if things rocket up 20%, you've got 14.4/6.4 for 20.8 and all that cash on the side to join in along the way.  CASH IS KING! 

    I was looking at GDX and they are not moving yet while gold and silver are flying so that's a nice bullish play.  You know I like ABX 100x more than GDX but ABX popped already and GDX is a nice way to participate late in the game.  It's also an inflation hedge so how about the 2014 $40/55 bull call spread at $5.25, selling the $35 puts for $4.60 for net .65 on the $15 spread?   If that's still around on June 1st, I'd put it in the new Income Portfolio. 

    NYMONotice we are pretty well oversold on the NYMO but it is possible to go lower so CASH IS KING as we may end up with a 2008-type opportunity in a few weeks but what good will that do you if you are scrambling to roll a bunch of too-early entries?  

    If the Fed or the EU steps in, it's not like we'll miss much by being a day or two late to buy stocks and indexes that are already at 2009 panic lows – we had a 100% run from those levels that took 2 years to play out – even if you miss a 10% pop – you still have a good way's to go before the momentum fades from a stimulus rally.  

    As we're opening already – I see PLENTY of sellers into this opening move.  We've done 88M shares in the first 5 minutes on the Dow – a normal full day (thru 3pm) so people are taking advantage of this little move back up to get the hell back to CASH!   Notice a theme here?  

    Oil was harshly rejected at $93 and is heading back to $92 and the indexes are barely positive – Big disappointment already.   

    DIA $125 puts have .10 premium at .90 – I like 40 of those in the $25KP with a stop at Dow 12,455, which is probably a nickel stop.  

    Be careful! 

  15. stjeanluc

    Easy comes, easy goes… back to square one!

    I recorded the DIA puts as a wash yesterday – the round-trip at $1.10. The box around $1.50 in the SQQQ spread is our stop.

    Let me know if I missed anything, this morning was quite busy!

  16. 1020

    I say the arrogant "Zuck" ticked off a few Wall Street types with his choice of clothing while in town.
     
    They'll show him "how we do things"……
     
    :)

  17. Phil

    Hopefully, this is the high-volume flush we've been waiting for and we're just wasting $200 to cover but I feel better having the cover than not at the moment.  Actually, looks like we'll lose a dime at 12,455!

    We're back at our hopeful futures supports at Dow 12,400, S&P 1,300, Nas 2,500 (big one) and RUT 750 – ALL of which failed last night – so let's pretend that's a floor and we won't get more bearish again until they fail.  

  18. jabobeast

    FU BBY!!!

  19. stjeanluc

    My goal this weekend (and I already have many plans) is to run through our closed positions in the $25KP and run some stats on entry and exits. For example, once our position hit 20%, how many went on to 50% or more and how many went on to lose money. And so on. I believe it could be educational.

  20. Inkarri1982

    StJ – Thank you sir for all you do!

  21. stjeanluc

    You're welcome lnk!

  22. stjeanluc

    BBY earnings are to be release on 5/22 at 8:00 AM. They are expected to earn $0.59 and there is no whisper number right now. But they better beat!

  23. Phil

    Time wasting/Flip – Yeah, I was just making a point, not really putting forth a major platform.

    Europe/Angel – Wow that's really awful and – hey LOOK – FACEBOOK!  8)  

    1,315/Angel – We wish!  

    95M at 9:55 so the volume is abating but still pretty bearish – move back to 12,455 didn't last more than a couple of minutes which is why we don't use hard stops!   Still, now we should put a tighter stop in at .85 so kind of a trailing .10 but we can widen it by .05 more for each .10 we drop.  

    CHK $14! 

    Friggin' XRT at $57 now.  GS made a bearish call on Consumer sector.  

    Good idea with $25KP – looks like we picked the wrong time to go for it on the bull side but I'm counting on that Deus ex Machina to pull things out!  

    BBY/StJ – Just down with the sector now but pathetically weak.  

  24. angelcur

    part of aapl weakness has been funds making room for fb…so aapl market crutch could help today if that selling done.

  25. 1020

    Yes. Thanks for all your efforts StJ!

  26. Phil

    Oil holding $92, copper $3.495, VIX is 23.50 and TLT is $123.65 so we're not more panicked than yesterday but that is BAD because our indexes are testing the lows in the Futures and it seems like they are consolidating for a move down.  HOWEVER – the timing of FB, in 50 mins – means it's very possible that the BuyBots are lined up at 12,400, 1,300, 2,500 and 750 and are accumulating whatever gets dumped and THEN will BUYBUYBUY on the FB open.

    Have I mentioned how much easier it is to be in cash at the moment (or at least hedged to neutral)?

  27. angelcur

      im surprised jpm isn't down more…the wall st attitude on jpm reminds me a lot of their attitude about gs at 175 last year

     
    >>>>> bankhaus main making fb pre-orders in berlin right now at $70<<<<<<<<

  28. hemas03

    Phil, Thanks for your answer on the IRA question.

  29. dpastramas

    Morning all.  Just a question as i am relatively young and inexperienced.  Has there ever been an IPO with all this hype before in the history of Wall street? It seems really strange all this excitement for a company that now one can really evaluate and pin a price.  

  30. Phil

    Wow, seems like our markets and Europe are all waiting to see if FB opens strong or not.  This is going to be one crazy hour! 

    JPM/Angel – I don't think it's the end for JPM but it wasn't the end for GS either, just a permanent re-pricing.  

    Hype/Dpast – Sure, GOOG had this kind of Hype and doubled on their first day but it was $2Bn, not $20Bn.  We talk about Billions and Trillions so often now that we forget what a lot of money $1Bn is and how difficult it is to move that kind of money around.  For Wall Street – this is exciting as a big open here, even at this insane price means dot com fever is back and the IPO machines will crank back up and the VCs will start funding again.  Most people are in FB at about $10 so this is a 4x move in 2 years for them – even after paying a seemingly insane $25Bn valuation.  Their only regret is that they didn't buy more so now the next 20 companies in the rolladex begin to look much more attractive to the VCs and then they will fight for funding (and don't forget – part of the $20Bn today goes to those VCs and they need to put that money to work).

    BTU making new lows – not much economic recover there.  TIE also new lows, NFX new lows, Berkshire below $80, SCHN new lows – people have to think the global economy is completely dead in the water to be selling oil, coal and steel off at these levels!  

  31. Phil

    Hopefully, this will be the last (and failed) attempt to break our Futures supports ahead of FB – if they do break – look out below.

  32. 1020

    Pharm – still holding ZLCS @ .75?  Time to buy?
     
    Thanks

  33. kustomz

    Market crash on the day FB goes public would be epic!!

    /ES keeps bouncing off of 1303.50..important level

  34. Burrben

    DIA 125 Puts
    Are those the Today's 125's, trading at 0.70?  Or is it the June 125's weekly's, or the June 125 monthly's? 

  35. Pharmboy

    Ah, but SGEN is up…..come on folks….biotech biotech biotech.  Saving lives, so that we can live long and prosper….!!!

  36. Pharmboy

    1020….70c then I will DD.  Maybe 60 if it keeps it up. 

  37. rpme

    stjean, i noticed you have the FAS adjustment to 12 calls. I have had that order placed since the day Phil put it up and still no fill @.60. What did you fill at?

  38. 1020

    FB – taking an old term from the ski slopes, a "Yard sale" would be fun to watch…. :)

  39. dclark41

    Phil
    Can you recommend a mid term (further out than July, but less than Jan)  disaster hedge. I am out of all my EDZ and will wait to next week to re-initiate after learning the results of this weekends' G8 meeting. The only other short positions I have are specifically to cover TNA plays. Thanks.

  40. Phil

    DIA/Burr – They are dead now unless the Futures break 12,400 but, at this point, I'd flip to the June $118 puts at $1, which have a .20 delta that will move up pretty fast if we drop 200 so probably make .50 on a 200 point drop, which makes it comfortable enough for a weekend hold if you intend to roll it for protection if we gap up anyway.  

    CNBC (not too trustable) says insane amount of retail orders on deck which means an insane pop at the open as idiots put in market orders to buy so game on for the bulls I guess…

  41. Burrben

    Damn, FAS at 77.  Feeling a better about myself for taking that yesterday on the FAS Money puts, and whining about it like a little girl yesterday.
    -Just how low, can we go-

  42. gucci

    HI Phil TBT i was assigned stock at 23 is this a good time to sell more put and call premium.  At what strike do you recommend, thx

  43. sagemm1

    Phil/ I am curious what would you do? (working on my discipline in these spreads!!)
    so I bought some of the SGEN jun 20/25 bcs for .75 would you sell half as it is at a double or wiat it out

  44. 2nifty

    Pharm do you have any knowledge/opinion about PRAN? I stumbled upon it because of family interest in Alzheimer's dz.

  45. Phil

    Disaster/DC – AMZN Jan $225/200 bear put spread at $11, selling 2014 $120 puts for $8.50 is net $2.50 on the $25 spread and your worst case is you own AMZN for net $131.  Or you can use one of our bullish offsets from the Twice in a Lifetime List.  Logic is that, in a major downturn, AMZN will go down and stay down and, even if we don't have a major downturn – they're still way overvalued.  

    FAS/Burr – Fantastic place to buy now.  

    TBT/Gucci – We don't like TBT anymore.  We shorted TLT yesterday, much more reliable.  

    SGEN/Sage – Well they are not really "on track" for $25 at $21 so if you can take half off and get a free ride, that's the smart play. 

  46. Inkarri1982

    Morning All – It is a sad state of affairs when we have to hope that a FB IPO saves the markets from dropping…just a thought.

  47. rperi

    Hearing Facebook IPO will be delayed by 5 minutes

  48. Phil

    Uh-oh – Indications at "just" $42 not making people happy and we're backing off already.  Still waiting on the open of trading.  What a silly day…

    115M on the Dow at 11.  

  49. ccsincsd

    FB Level II.  That is my bid at 36.  Logic is to sell OTM Calls (options start May 29th) starting with June and doing it monthly for 3-4 months.  Won't be anywhere near it at 6 month unlock.
    Thinking high IV will produce good premium, FB hysteria, etc etc.  Over the next few months, don't think FB is going to $20.
    I don't justify the valuation or ANYTHING about FB.  (I'm not even a user), but I think a buy write strategy for a few months will be good.  

  50. rpme

    They have FB listed on the top of the Yahoo finance page, right up there with the other major indices.

  51. lolobear

    lflan/AAPL – is this the start of the turnaround?

  52. Pharmboy

    PRAN/2nifty – I have not heard of them but they appear to have modification proteins, esp. beta amyloid.  This protein aggregate in Azh. has been the focus for many years, and to my knowledge, it has not worked.  PFE and LLY both have monoclonal Ab against this.  ELN also has a program as well.  I am not convinced that any of these can work, but time is still on a few of these company's side.  One of LLY's failed FWIW.

  53. rperi

    Now AAPLdaq is saying 11:15.  What's the delay?

  54. gucci

    Would you sell june 125 short call finance the sept 110 long put — or too risky

  55. Burrben

    Ok, I still am feeling pretty shitty about my trading this week, and now I have to read THIS.  I HATE BONO!!
     
    Bono to make 1.5B.  Dude, I feel so poor.
    http://www.huffingtonpost.com/2012/05/18/bono-facebook-u2-singer-worlds-richest-musician_n_1526972.html

  56. Phil

    Oil rejected at $93 again.  Dollar at 89.495.  FTSE down 1%, DAX and CAC down about 0.25%.   

    Europ $1.2719, Pound $1.58, 79.22 Yen to the Dollar and, of course $1.2009.  

    We may be about to see a great example of why you can't be greedy on an IPO.  They will maximize the take for FB but once people who pre-bought at $38 start getting nervous, they'll cut losses and then the insiders will sell and cut losses, etc.  So this thing can still go horribly wrong and, while GS may stand at the sidelines with $200M to pump into GOOG to keep things going (10% of their IPO), who the hell is going to toss $2Bn at Facebook – especially when these bankers only have very small interest and were screwed on their fees.  

    So that's how this can all go wrong.  We need FB to move past $45 fast and hold the low $40s or we will break those Futures lines (and any Futures short is good below those lines, of course).  

    I'm still leaning towards feeling there's enough retail suckers to carry them through the day but $20Bn is A LOT of money for suckers to come up with so I'm certainly worried.  

  57. haschade

    WSJ says FB should open at 1115 around $42..   seems like a disaster, if less than a 20% pop, I would have thought?

  58. 2a3tube

    FB – Quick survey – 2 families -4 kid 12-21 – on Facebook last year 4 – on Facebook this year – 0 . The kids are not that interested and that means there friends are dropping it as old school  as well . . Does this mean exploding growth among seniors? what a joke .

  59. Inkarri1982

    NASDAPPLE  is apparently experiencing difficulties in with FB shares.  Wouldn't that be something if they postponed?  Hmmm….

  60. angelcur

    XLU call volume 1,600% above normal…ive never seen that on a utilities etf

  61. 2nifty

    Thx pharm. Hope IS a strategy for Alzheimer's. Meanwhile, PRAN pops every few months for a nice trade.

  62. jthoma

    sheeple don't have that kind of money and they have mostly left the market anyway- seems to me it will be difficult to support this stock as the institutions do not seem to be enamored

  63. jthoma

    outside chance of disaster

  64. rainman

    Pissani — "If this thing is going to open at $45, there are bargain hunters out there putting in orders".  Ha!  :)

  65. 1020

    People may be canceling their FB orders….

  66. angelcur

    LOOK AT NDAQ..BLOCK SELLING
     someone must think they are screwing this up

  67. lunar

    the FB delay must have screwed all the bots up.

  68. Pharmboy

    LOOK at SGEN….BLOCK BUYERS!

  69. 1020

    This would be a good time for CNBS to run about 5 minutes of commercials…. ;)

  70. oburlacu

    I am not so worried about FB PHIL because I put a IOI for it with Fidelity for 1000 shares and I got 0. Well, so much for a swing trade :)

  71. nicha

    Pharm – thanks for SGEN. I had a small position in my IRA.

  72. iTrade

    Big banks PISSED as their BOTS program is screwed up with this delay!

  73. Phil

    Delay/Rperi – Biggest IPO in a very long time, huge demand, they have to try to match out orders (millions) before they can determine an opening price.  Once they open, then people like us can go nuts and put in orders for any old price on computers but these guys are matching essentially millions of paper buy and sell orders before they can release it.  

    TLT (I assume)/Gucci – As I mentioned yesterday, TLT can hit $130 in a real panic so it would be unpleasant to have the short but you can sell (since you were a proud owner) TBT puts, like maybe the Jan $14 puts for .80?  Otherwise, you know I like our Twice List (I'm already tired of writing it out).  

    Bono/Burr – Hey, smart guy.  Toss $90M at a start-up that was already pretty famous, knowing his attachment to it alone should give it a pop.  I do like Bono as you know most of that money will end up with charities so good for him.  

    FB stats/2a – I agree.  I do go on for 5 mins a day but that's because I have about 200 friends on it and Tina is into it but, if not for Flipboard (IPad app to view FBook in a cool way), I'd probably almost never look at it.  

    Apparently $50 was the whisper on FB so $42 (not even sure) is a huge disappointment and, at this point, they may be shifting to damage control mode.  

    Still, it's a whole new ballgame once the retailers can start buying (they have no shares so all buyers).  

    XLU/Angel – That's really strange. 

    Cramer's right, this is amateur hour for NDAQ – they should have gone to great efforts to make sure this went smoothly and every minute that ticks by is hurting their reputation.  

    Looks like only 100M matching orders so far and they're floating 400M shares 

    Oops, Nasdaq says……………… NOW!

  74. Phil

    Some idiot paid $45 already.  $42.50 not holding, but indexes holding up so not being seen as a disaster – yet.  

  75. lionel

    Yen is the ultimate safe haven…really?

  76. Phil

    Now the stupid DIA puts pop $1!  

    Lost $42!  

    Nas testing 2500, RUT 751 – NAS FAILS!!!  We're bearish until they get it back (2,805 on the index). 

  77. Phil

    RUT fails! 

    FB $40.70! 

    Dow volume 122M and lows of the day at 12,416 on the index and 12,401 in the Futures.  I can't believe we can't find buyers for the Dow at this level – at least as a flight to safety!  

  78. jabobeast

    well… now what???
     
    FU Fakebook!!!

  79. sparky123

    Bravo Jabo!

  80. Phil

    $38.91 prints on FB!   Right on the $40 line in general.  

    QQQ $61 puts at .18 are a fun way to play.  50 in $25KP. 

  81. nicha

    Too bad I couldn't short it for a quick trade. I put in a trade for shorting 100 shares at $42.30 but was not allowed.

  82. mrmocha

    AAPL p-bar down to 522, are those usually a telegraph or just a blip?

  83. knightpilot

    Great, Etrade taking a dump.

  84. daveo

    Trading halted on Zynga, circuit breaker tripped

  85. shadowfax

    IWM Lines
    72.45,73.38, 73.83, 74.31, 74.94, 75.50 and the rest stay the same. Glad the FB thing is done, did they stop trading?

  86. Phil

    $40 finding support on FB and Nas seems to be stabilizing so back out at .15 on the Qs and we'll try again if we fail to hold again.   

  87. stjeanluc

    AAPL really trading funny this morning. Wild $10 swings on 5 minute bars…

  88. kustomz

    All that money that came out of AAPL with the idea of buying FB may go right back into AAPL.

  89. rustle123

    FB up $1 on the IPO, not bad for the most hyped IPO in the last decade.  Underwriters did great job.

  90. ronresnick

    FB / Something is wrong with NASDAQ.  Markets order to sell my allocation are not being filled.

  91. rainman

    ronresnick / FB — You're in a long line to get out.

  92. Phil

    This is why cash is better – it's very annoying trying to protect a short-term invested portfolio against swings like this. 

    CHK $14.30! 

    Yen/Lionel – Yes, maybe when we owe $35Tn (220% of GDP like Japan), then people will lend us money for free all day long too!  

    Damn – $40 FAILED!  $39 came really fast – too fast to think it will hold now.  

    12,401, 1,301, 2,497, 749.4

    Those QQQ July $45 puts are at .15 already so a nice 50% gain there already, well on track for our 10-bagger! 

    $38!  Oh noooooooooooooo!   

    QQQ June $57 puts at .55 are a more aggressive way to short the Nas if FB fails $38 and all our indexes failed again so 20 in the $25KP and this time we'll keep them over the weekend no matter what.  

  93. kustomz

    LMFAO!!!!

  94. rainman

    I think the $38 level buyers will run out of bullets.

  95. iTrade

    FB bouncing on $38 like it did $40… probably going to fail.
     
    QQQ up nicely $0.25

  96. newbie

    FB CRASHING !!!!

  97. rustle123

    Underwriters are taking in a ton of stock at 38.

  98. shadowfax

    I have too many numbers on paper, 75.33 not 75.50, sorry making time if we crash and FB isn't looking good @ $38.

  99. palotay

    FAS Money – XLF roll to the 2014 12's just filled for 0.60

  100. rainman

    Whoops! SPX  lost 1300

  101. newbie

    dpastramas 

     Just a question as i am relatively young and inexperienced.  Has there ever been an IPO with all this hype before in the history of Wall street? 

    NETSCAPE

  102. newbie

    PHIL,
    can we get a good "Wheeeee" from you?

  103. Phil

    Failing $61 on the Qs will be very bad for the Nas (now $61.05).  

    FB/Ron – 400M shares to sell and no buyers – what do you expect?    I find it hard to believe $38 won't sell, I'm sure there is some support there, even if it is fake but once that blows – you may have a very rough time exiting but there should be at least an attempt to retake $39 as now it's in GS et al's interest to buy FB just to support the Nas at 2,775 (and Dow 12,400 and S&P 1,300 and RUT 750).  If you're in at $38, I don't think I'd panic out but if they go below $38 you should be happy to get $37.50.  

    200M shares traded they say so only 1/2 taken so far – not good!  

    Can someone figure out what gaia.adage.com is that's slowing down our page refreshes?  

  104. Phil

    Whoa – there it goes – they jammed to back to $40!  

  105. Burrben

    palotay / XLF
    Who is your broker?  I still have a GTC order out there for that roll for 0.60 and it's not filled.

  106. ronresnick

    FB / NASDAQ having some problem:  Market orders placed with Fidelity and Schwab to sell FB allocations at the market have been open and not filled for over 40 minutes — and counting.

  107. jomptien

    SDS June 14 calls can be bought for only $.01 premium

  108. rainman

    Ron / FB — That's how you support the IPO as an underwriter 8)

  109. 1020

    FB – not bad….a small yard sale… :)
     
    http://www.youtube.com/watch?v=q5thIuCSTkk
     
    Pizza… anyone?

  110. lflantheman

    Check this out.  On Yahoo Finance page instead of Dow, Nas and S & P ….they have FB, Nas, S & P.  

  111. rainman

    Phil / adage.com — Can't get to the site (adage.com) but it's title is "Advertizing Agency & Marketing Industry News — Advertizing Age".

  112. lionel

    Iflan/ I guess you have found a new single stock to trade for your portfolio…it is just incredible!

  113. morxlntway

    maybe we should all buy a few shares as our responsibility to the market

  114. lionel

    www,adage.com
    same as rainman.
    Do you use them for managing your ad banners?

  115. newbie

    Phil  /  Gala
    It has something to do with some kind of Twitter Advertising thing of some sort. Very Shady. Lots of abandoned web pages, using search engines..

  116. rpme

    Palotay, I have the same question as Burr. I cannot get my order to fill.

  117. danny3399

    Are you guys trying to get fills for buying or selling

  118. ronresnick

    FB / Thank you, Phil.  I am not panicking.  I am just surprised that after all the practicing NASDAQ claimed it has done to prepare for a smooth IPO its computer can't calculate a clearing price and execute market orders.

  119. kustomz

    Short covering in the EUR pushing markets higher…fear of G8

  120. Inkarri1982

    Is it too "conspiracy theorist-ish" to think that as the insiders were selling, Goldman and friends were buying knowing they would have to defend at a certain point only to drive the price back up and now start unloading on retailers after making millions in profits within a few minutes? 

  121. rustle123

    Underwriters made a very nice profit on all the stock they took in at 38 which is probably gone by now.

  122. Phil

    BNN just called to confirm I still think RUT 750 is the bottom (what I predicted we'd sell off to back in March on their show) and I told them I sure hope so because we're way too bullish in our small portfolios otherwise.  They want me on Tuesday to tell them what happens next – hopefully we'll figure it out by then…

    $40.44 and everyone is on the comeback trail!  That's going to be tough getting over $40.50 again as there are plenty of guys taking 5% and running now. 

    Dollar 81.46 – does everyone want's FB paper more than Treasury paper?

    No wheee, newbie as it was just a spike so far (and we're nowhere near bearish enough to really enjoy a move down).  

    SDS/Jomp – You mean puts?  

    Oh no, LOTS of FB sellers at $40.30!   Lost $40 again – what a joke!  

    ZNGA still halted at $7.17?  Maybe $5 when they resume?  

    Gala/Newbie – Can you figure out where it is?  I'll delete the comment or whatever it's from…

    Banners/Lionel – We don't have any banners on the pay site, do we?? 

    Nasdaq/Ron – Yes, real black eye for them.   

    G8/Kustomz – Actually it's a good thing that we are weak today as it will press the G8 to do something before things turn really ugly(er).

    Insiders/Ink – See chart above – they announced their intention to sell 200M shares.  That's not a conspiracy, that's a fact but it seems like they are on the same page and refusing to sell at $38 so the supply completely dried up at that level and then we pop and then they started selling again.  They can do this over and over until their 200M are gone.  

    YELP at new lows $19.15.  

    $40.50 again.  

    Oh no – some idiot just paid $42.50!  

  123. kinkistyle

    gaia.adage.com/Phil:  Its the Facebook Ad Effectiveness graphic you posted in the original post.

  124. soccer_f1

    WSJ Breaking News: Facebook’s underwriters stepped in to support shares at the $38 IPO price.

  125. shadowfax

    FWIW It may be just too much to support because not only are there no buyers for FB but no buyers at all. This thing is starting to go  below the price of success.

  126. Peter D

    The 1 minute FB chart looks like a cactus for the first 15 minutes.  The big boys didn't let it get below 38, lots of buy orders there.  I'm not intending to buy nor sell FB for now, but I got some short puts on the indices on that dip.  Thanks to the small panic.

  127. Phil

    Graphic/Kinki – Oh, thanks so much – I'll kill it.  

  128. grant

    ZNGA, resumed, went up to 7.80, and stopped again.  Anyone know why it tanked in the first place?

  129. Peter D

    SPX May Settlement at 1310.33, which is much better than 1304.86 and a low of 1293.5 on the /ES futures overnight.  A sigh of relief for some short put holders, who benefited from the excitement into FB release.  RUT settlement will be much later in the day.

  130. Phil

    Poor NDAQ getting hammered  - $21!  That's their prize for landing FB IPO. 

    Hey, it just occured to me something else might be going on in the World besides Facebook – back after I do some reading!  

  131. shadowfax

    This is a new stock and all that but someone is selling, could it be the smae BOT that bought at 12:27? Who bought at $43?

  132. willsons

    PHIL   Would you sell some VLO puts at these levels?  

  133. rustle123

    Some of the prints you are seeing on FB like the 42.50 can be delayed prints from an hour ago.  They are running behind on this IPO.

  134. Peter D

    Oopsie, 1304.86 was the 4PM close of SPX yesterday.  So the SPX 1305 and 1310 puts were in the money at $5.85 and $9, and both went to zero.

  135. jomptien

    SDS/Phil,
    Calls not puts

  136. kustomz

    Phil G8, they've fixed Europe how many times now? What the EUR does this afternoon will be quite telling and playing pretend may be coming to an end. Poetic.

  137. scottmi

    Oil – analyst Mike Rothman has a very bullish view of oil.  And who is he? From businessweek bios: "Rothman is currently employed at Cornerstone Analytics, Inc. in the position of Founder & President. Mr. Michael Rothman was previously employed at BofA Merrill Lynch, Research Division. Prior to forming the Firm, he was a Senior Managing Director and head of ISI’s integrated oil research.."

  138. yodi

    Pharm NUVA what do you think of any B/R on this stock TIA

  139. shadowfax

    FB has what looks like S/R at $40.50 and maybe make or break at $40. Very short chart. The people I know of got in between $26 and $34 a long time ago. For them this IPO is nothing to brag about.

  140. zeroxzero

    Scottmi:  Thanks, very interesting.  I rode oil down from $107 very cheerfully, but it seems to have stalled out at current levels, nat gas, of course, is rock bottom, but distillates and electrical generation are different markets so I've been puzzling over oil for awhile, rather hoping that a Euro crash would take oil into the 80s where I wouldn't hesitate to buy.  But after reading this piece, I dunno how ambitious I should be about entry price.  Phil has this curious idea about scaling…….

  141. jomptien

    Pharm/AZN,
    Are they as bad as their chart? Yield over 9% Sell 2014 35 puts for 3.15?

  142. angelcur

    Steel output in China reached a daily record of 2.045 million metric tons in the first 10 days of May, citing data from the China Iron & Steel Association
     they just can't stop…wow

  143. Phil

    At the open: Dow +0.27% to 12476. S&P +0.35% to 1309. Nasdaq +0.31% to 2822.
    Treasurys: 30-year -0.4%. 10-yr -0.17%. 5-yr -0.1%.
    Commodities: Crude -0.58% to $92.03. Gold +0.97% to $1590.25.
    Currencies: Euro +0.13% vs. dollar. Yen +0.07%. Pound -0.18%.

    Market preview: Talk about a halo effect: Facebook's IPO is sending a jolt through the stock market, with S&P futures +0.4%after stocks have dropped in 11 of the past 12 sessions. Stocks in Europe are looking more stable, and the euro is near session highs. Worries over Greece, Spain and the London Whale are shoved aside – for the moment. Enjoy it while it lasts. 

    10:00 AM On the hour: Dow +0.03%. 10-yr -0.13%. Euro +0.15%vs. dollar. Crude -0.79% to $91.83. Gold +1.04% to $1591.25.

    11:00 AM On the hour: Dow +0.25%. 10-yr -0.13%. Euro +0.18%vs. dollar. Crude -0.09% to $92.47. Gold +1.25% to $1594.65.

    11:45 AM European shares bounce from a panicky decline at the open, but close mostly lower after a brutal 5 sessions. Stoxx 50 -0.3%, Germany -0.6%, France -0.2%, Italy -0.7%, Spain +0.2%, U.K. -1.3%. For the week, the Stoxx 50 -5%, Germany -4.7%, Spain -6.3% to 2003 levels

    12:00 PM On the hour: Dow -0.27%. 10-yr -0.04%. Euro +0.18% vs. dollar. Crude -0.58% to $92.03. Gold +0.97% to $1590.25.

    1:00 PM On the hour: Dow -0.02%. 10-yr -0.02%. Euro +0.28% vs. dollar. Crude -0.65% to $91.95. Gold +0.8% to $1587.45.

    There's that lone bullish premise again:  The ECB is playing a game of chicken – sitting on its hands to play tough with the Club Med states – but (along with the other major central banks) will "step in massively," says HSBC's David Bloom, and set off a powerful rally. Bob Janjuah agrees – "The Fed and the ECB will respond (soon) and trigger a short, sharp rally.

    G8 leaders are due to meet this weekend at Camp David, where the main topic is most likely to be how to solve the eurozone debt crisis, although no economic policy decisions are expected. Angela Merkel could find herself under pressure from those, like Presidents Obama and Hollande, who want more focus on growth.

    Some perspective on the move out of risk and into fear: The VIX is up 47.5% since May 1 and the put/call option ratio and put option volume are at their highest since the August 2011 panic. Of 13 trading days in May, the S&P has been down on 10. A tradeable bottom? Maybe, but the VIX is nowhere near its 2011 high. (see also)

    The yield on JGBs falls to 0.815%, the lowest level since 2003. Folks of a certain age will remember that summer and remember the seeming impossibility of that level. We're not only back, but the rest of the world is headed there too. German 10-year Bunds, 1.43%, U.S. 10-years, 1.71%. At the short end, Germany has gone even further, its 2-years yielding 0.05% vs. Japan at 0.10%.

    The ECRI's Weekly Leading Index for the U.S.economy slips to 124.5 in the week ended May 11 from 125.4 previously. The annualized growth rate rises to 0.4% from flat.

    Forty-eight states recorded declining unemployment rates Y/Y, while only Rhode Island suffered an increase and one had no change, BLS reports. Nevada continues to record the highest unemployment rate, 11.7% in April (vs. 12% in March); Rhode Island and California came in at 11.2% and 10.9%. North Dakota, Nebraska and South Dakota had the lowest rates. 

    Canadian inflation rises to 2% in April from 1.9% previously, and expectations of 1.9%. The core rate rises to 2.1% from 1.9%. On a monthly basis, headline and core inflation rose 0.4% vs. expectations of 0.3% and 0.2%, respectively. Loonie +0.3%, more focused on (for now) the breather in the European panic than domestic data.

    The high yield default rate through April is running well ahead of the same period in 2011, reports Fitch, with the amount of bonds affected totaling $9.2B vs. $1.7B last year. It's likely to get worse in May as Fitch estimates a default rate of 2% this month, the highest level since October 2010. (full report, .pdf)

    Trade surpluses should not be confused with moral vigor, writes Michael Pettis, and Germany now makes the same mistake the U.S. made in the 20s by doing so (illustrated with the retelling of a brilliant story from then-candidate FDR). Spain will leave the euro, he says, not to ease its pain, but because remaining in EMU will be worse. A great read.

    Ireland may need another bailout, reckons Deutsche Bank, as even a small increase in capital requirements for its banks would require the government to pump more money in. Mortgage delinquencies actually hung in there in 2009 and 2010, but rose sharply over the past year; toss in possible easier bankruptcy laws and bank losses could be set to grow.

    Look at Asia 15 years ago, writes Mike Riddell, reminding that countries typically see economic rallies after abandoning unsustainable fixed exchange rate regimes. In the short term, though, things are likely to get worse, with the disintegration of the eurozone "the most likely outcome."

    The level of loans more than 90 days past-due at Spanish banks rose to 8.37% in March, says the central bank, the highest level in 17 years (that's all?). As for bank runs, the data show a slight increase in system deposits for March, but a 4% decline for Q1 to €1.16T.

    Fitch downgrades 5 Greek banks, including National Bank of Greece, to CCC from B- following an earlier downgrade of the sovereign to CCC. "An exit of Greece from EMU … could be followed by a withdrawal of international support," and widespread private sector (in addition to public sector) defaults

    Support for anti-bailout Syriza has grown since the May 6 election, with a poll showing the party would win another ballot with 22% of the vote (vs. 17% on May 6). Support for establishment parties – New Democracy and Pasok – has also grown as voters abandon the fringe. Another poll here with different result. Hey, it's more fun than divining the U.S. 

    Here's something CNBC will never mention:  "It's like a contagious disease that will spread," says an executive with the Chinese Auto Dealers Association of car inventories that risen to more than 45 days of sales – typically a level at which dealers being "debilitating" price cuts. Total sales declined 1.3% in the January-April period, the worst showing since 1998.

    Fanstasy:  McEwen Mining (MUX) CEO Robert McEwen sees an ultimate target price for gold at $5,000/oz. by the end of this cycle, despite current weakness in precious metals prices. On the company, uncertainty related to the repatriation of funds from the San Jose mine could impair its ability to internally finance its projects. MUX +4.9%premarket.

    Reality:  The typical pattern of China building up metals inventories in Q1 and using up through the rest of the year isn't holding as the piles keep growing larger, with granaries and car parks taking the excess from brimming warehouses. The stationary cargo trains at Qingdao port are tell a different story than still-decent PMI reports.

  144. Phil


    Easy come, easy go!
      A day after American and Chinese solar stocks went in opposite directions thanks to the U.S. government's imposition of anti-dumping duties on Chinese solar imports, the entire group is trading lower (TAN -2.1%), perhaps due to investors focusing on the huge oversupply and pricing issues facing industry players regardless of location. Among the big losers: FSLR -3.5%STP -3.8%SPWR-5.2%YGE -6.4%- Yet today WFR is up – go figure…

    Peabody Energy (BTU -2.5%leases 402M tons of ultra low sulfur coal reserves in the Southern Powder River Basin in Wyoming after submitting a winning bid of $1.11 per mineable ton. BTU now controls 3.3B tons of coal reserves in the Basin; the leased reserves lie adjacent to its North Antelope Rochelle Mine, from where it shipped 109M tons of coal in 2011.

    Natural gas companies are in survival mode, and gone are the days when major players would ride to the rescue with asset purchases. Price volatility "has pushed nearly all North American shale gas operators closer to the brink of failure,” Ruud Weijermars says. “The solution may be to sell assets, but who will buy them? The number of assets up for sale are striking.”

    Schnitzer Steel (SCHN -6.5%) opens sharply lower afterwarning of weakness ahead, as demand for recycled metals remains soft while supplies are tight. D.A. Davidson downgrades shares to Underperform with a $26 price target, down from $40, as "softening market/pricing conditions since early April appear to have more than offset positive trends experienced earlier in the quarter."

    Clorox (CLX +0.3%) stands as a dividend champion with an impressive streak of 34 consecutive years of upping its payout to shareholders, according to the dividend-watching blog Dividend Growth Investor. Steady earnings growth driven by non-cyclical consumables spending and an attractive 3.77% yield make shares of CLX rather enticing for income investors.

    powerful earnings report from Foot Locker is enough to help prop up shares of Nike (NKE +2.5%). Strong sales at the company are a good indicator that Nike's new products are resonating with consumers and flying off the shelves.

    Sirius XM (SIRI +2.1%) CEO Mel Karmazin keeps selling shares like clockwork, according to SEC filings showing separate sales of 8.5M shares apiece. Rocco Pendola says Mel isn't done yet, as he predicts another offloading of SIRI shares next month by the exec as he makes his dispassionate case for SIRI running back down to $1.65.

    Caris' David Miller, a long-time Netflix (NFLX -2%) bear (previous), slashes his PT on the company to $56 from $72, andsuggests it's tapping out its U.S. addressable market. Netflix'sguidance for Q2 domestic streaming net adds of just 200K-800K had much to do with its massive post-earnings selloff. (also

    How embarrassing to be this guy: 9:46 AM Facebook (FB) hasn't begun trading in the U.S. yet, but in Germany, bids of €58.20 ($74) are being placed, according to Bloomberg. That nearly amounts to a doubling from the company's $38 IPO price, and would translate into a market cap north of $200B.

    11:31 AM Facebook (FB) opens for trading at $42, and is currently changing hands at $42.57, up 12% from its $38 IPO price. Update (11:35): Facebook is now trading at $40.20. Over 105M shares have been traded.

    11:47 AM Facebook's (FB +3%) weaker-than-expected debut is leading to a massive selloff in Facebook-related plays, and (to a lesser extent) Internet stocks in general. ZNGA -13.3%RENN -9.4%.GSVC -12.4%SVVC -18.6%P -6%GRPN -4.9%YELP -4.4%.QPSA -5.1%. Facebook is now changing hands at $39.12. 

    12:35 PM  After falling all the way to its IPO price of $38, Facebook (FB +8.9%) has bounced, and is now trading at $41.37. That's helped the NASDAQ, down ~1% at one point, head back towards breakeven. Zero Hedge notes over 30M shares traded at $38. "That's some serious underwriter buying," it quips.

    Baidu (BIDU) is reportedly working with 3 partners to produce smartphones that will feature its Baidu Cloud applications suite. It's added the phones will sell for a mere $111-$143, be marketed by local vendor Changhong Electric, and will run on China Unicom's (CHU) network. The report comes shortly after one of Baidu showed off one of its devices, a low-end Android model with a 3.5" display and Baidu search box. Netease (NTESalso has plans to sell low-end Android phones. (also

  145. Phil


    As revenue 
    plunges and share losses mount, worries about Nokia's (NOK) cash burn are growing: the company has gone through $2.7B over the last 5 quarters, a rate that, if continued, would wipe out its $4.9B in remaining reserves in less than 2 years. Moreover, Nokia has €1.25B ($1.59B) in 5.5% bonds due in 2014. Liquidity fears have resulted in Nokia's credit rating being downgraded to junk, and its 5-year CDS spread widening to 749 bp.

    "Sure we lose money on every one we sell – but we make up for it in VOLUME!"  Amazon (AMZN) will likely launch a 10.1" version of the Kindle Fire in Q3, claims Digitimes. Of course, the site previously claimed an 8.9" model would arrive in Q2, whereas it now asserts Amazon has suspended development of the product. The Kindle Fire appears to have lost share to the iPad in Q1, though the magnitude of the loss is up for debate

    It looks as if Samsung's (SSNLF.PKGalaxy S III could further cement the company's high-end Android dominance: the Korea Economic Times reports Samsung has already received 9M pre-orders for the devices. The Galaxy S III, announced to much fanfare two weeks ago, sports a 4.8" display and plenty of proprietary software. Qualcomm's (QCOMMSM8960 processor is believed to power the U.S. version. Update: Jim Dalrymple points out the pre-orders are from carriers, not consumers.

    As Kantar Comtech reports Windows Phone is creating a foothold in the U.S. and Europe, Microsoft's (MSFT) China chiefboasts the OS now claims 7% of the Chinese smartphone market, more than the 6% share he assigns to the iPhone. However, Canalysestimated the iPhone had 19% of the Chinese market in Q1, after Apple (AAPL) reported FQ2 Chinese sales tripled Y/Y. Sepeately, Lumia 900 (NOK) backer AT&T (T) predicts Windows 8 will give a liftto Windows Phone sales.

    While Facebook underwhelms on its big day, Apple (AAPL+1.4%) is outperforming after a string of selloffs. Possibly helping is a bullish note from Morgan Stanley's Katy Huberty (previous), who predicts average U.S. household spending on Apple gear will go from $444 in 2011 to $635 in 2013, and reach $888 (!) in 2015, provided rumors (IIIIII) of an iTV pan out. Meanwhile, BMO says its talks with carriers suggest they want to cut iPhone subsidies, but that actually doing so could prove tough. 

    Bloomberg backs up a recent WSJ report suggesting the next iPhone will have a larger display: its sources also claim Apple (AAPL) has placed orders for displays larger than 3.5", while adding Steve Jobs worked closely on the next-gen iPhone in his final months. Past rumors have claimed the device will also sport a 4G modem and a smaller dock connector

    Three lunchtime reads:

    1) Facebook: Following Amazon to success

    2) After Greece goes, can Spain stay in?

    3) What Dow Theory says about correction

  146. rpme

    Used to be stick time approaching, now plummet time.

  147. Peter D

    Fascinating topic continues on the May SPX puts:
    - 22,800 Open Interest for the SPX May 1310 puts = a bunch of people lost $20,000,000, and a bunch gained $20M overnight.  What's amazing with AM settled indices is that you can watch it all night long, but couldn't do any trading and get the loss handed to you.  I didn't have the long puts, thankfully.
    - 116,000 OI for May 1310 puts at $3.6 = $40,000,000
    - 10k OI for May 1305, and other strikes added to another 500k open interest for ITM puts.  They all lost $5 or more, that's $250M. 
     
    So a total of $350M was lost overnight in SPX index puts alone.  Who was buying them?  Probably the scared retirement investment plans, who need to hedge their exposure.  I'm sure GS, JPM, etc. got a bunch of those profit and us, the short sellers.  There weren't much Open Interest on the call side, so who would stand to gain big, and who would have the ability to push up the futures in the face of bad news?  Probably GS, JPM again.  Moving on to the next month folks!

  148. shadowfax

    rpme
    It is also anti-stick time. Support is turning into resistance FB can't hold $42 to save the world so I am short for this close.

  149. Phil

    OK, that was a lot of reading.  On the whole, Europe still falling apart, China right behind – G8 must act, probably don't have a  week to put this off. 

    VLO/Willsons – I hate to say it but $17.50 is our entry target.  

    SCHN still falling! 

    Son of a bitch – failing 1,300 in Futures again!  12,398, 1,300.25, 2,497, 751.  

    SDS/Jomp – Oh, you said .01 premium!  I thought you said .01 and were crazy.  Sure, that's good for a momentum play if you are so inclined.  

    Euro/Kustomz – $1.2726 at the moment with EUR/CHF at $1.2009.  Almost comical if not for the impending charity when this thing breaks down.  

    Rothman/Scott – You mean this idiot: July 20111: Get Ready for $150 Oil – Barrons.com and Sept 2007: Contrarian Mike Rothman: Oil Headed for $45 (off by only $100 there).  

    Can't stop/Angel – State run factories, everyone has to make their production numbers, whether people need/can afford stuff or not.  When the pile gets to big – the send 100,000 people to the middle of nowhere to build a new city no one will live in or a new airport no plane will fly to or railroad tracks that will be covered in weeds years before the first train goes across them.  That place is completely nutty AND they are now running out of money – a $3Tn surplus just doesn't go as far as it used to and that figure was from 2009! 

    Might be your last chance to sell FB in the $40s Ron!  

  150. zipla

    Hi Phil,
    For the TNA May 51 Put roll, what are you suggesting? The June 50 can be sold for a credit — or does it make more sense to go for a lower.strike?
    Thanks.

  151. scottmi

    RUT – me no likey the price action with RUT today. is there any support here?

  152. 1020

    Phil/Can't stop   And I wonder why a guy as smart as Jim Rogers can be so bullish….

  153. ronresnick

    FB / Thank you, Phil!

  154. Burrben

    Phil / Are these cheap?
    I hear you with cash, and the twice in a lifetime list.  I'm not thinking of getting any longer here, just wondering if you thought these stocks were at good prices for long term holds.  I have a 25% allocation in each right now, most are down, some are a little up.  I'm looking at these as "Income Port" type holds with buywrites using Jan14 Straddles.
    MT – Arcelormittal – 14.43
    CHL – China Mobile – 52.51
    ECA – Encana – 19.60
    SVU – SuperValu – 4.74
    TASR – Taser – 5.12
    HCBK – Hudson City Bank – 6.09
    HOV – Hovnanian 1.74
    CHK – 14.18 (don't need to answer this one)
    FCX – 31.72

  155. chasw

    Phil,
    I understand the Swiss trying to hold the Euro up to a point, but if the Euro unravels, where does that leave the Swiss?

  156. Phil

    Barry says "This is why you use a limit order":

  157. rperi

    Funny how Facebook has completely overshadowed today being an OpEx day.

  158. scottmi

    Rothman/Phil – yep that's the guy.

  159. Inkarri1982

    Phil – Did something stupid.  I was long 1,900 shares of EDZ at $16.51.  I caved in and sold some Oct $15 calls for $2.75.  Very stupid, I know as they are now going for about $5.60.  Would you recommend I just leave the position alone and just let it get called away or might it be a good idea to buy back those calls and maybe sell the Jan 2013 $20s for about the same price?    

  160. lionel

    oil touching S2

  161. lionel

    long cl

  162. lionel

    scalped 27c out of this weak bounce.
    What a weak finish for oil this week.
    Doesnt bode well for our equity indicies…

  163. rpme

    Phil, if the Germans agree to start up the Euro printing presses, does this not lower the Euro, raise the dollar and lower our stocks?

  164. jrod0725

    Phil, what's your opinion on AAPL lately after the almost $100 drop in a month? Good time to sell puts?

  165. scottmi

    RUT – down at a trendline support if you throw out the Oct 3 and Oct 4 spike down/up…

  166. joemayo

    Wow  FAS weeklies only go down to 74 strike

  167. stjeanluc

    TLT is making new YTD highs today. That is not a bullish sign…

    On the other hand I would suggest we borrow another $15 Tn since they are willing to pay us to take the money. And I would also suggest to use the US Army to invade the USA so that we can have a nation building effort where it's needed and with a better chance of success than Iraq and Afghanistan…

  168. shadowfax

    scottmi
    RUT is falling below that support and it is not at LOD as other indexes, I have a target of 74.30 line by 2 week trend line support, the face is under $40 also so that was reason for excuses now.

  169. Canuck

    TLT Sept $110's can be had at $1.10 again.

  170. stjeanluc

    FAS / Joemayo – Happened last week also. On the other hand, standard volatility suggested a low of 85 this week so we can't blame the MM on this one….

  171. chaps

    Hi Peter D:

    AM SPX settlement. I avoid those like the plague. Life is stressful enough.

  172. Phil

    TNA/Zip – Sorry, I forgot.  Have to take a look next. 

    RUT/Scott – 750 was where I said we'd sell off to on March 5th.  We had a strange trip getting here but it's the 10% correction I was looking for for the reasons I expected (risk finally being priced in).  We may go a bit lower because we first went a bit higher but only to 847 before failing and that was a silly spike.  The top I was looking at then was 833 and 10% off was pretty much exactly 750 and that was the top of our fall run, which I felt was a proper floor to retest so, everything is proceeding as I have foreseen it and I don't have any real reason to change my mind yet.

    Rogers/1020 – It's hard to be bearish when you have a couple of hundred million dollars and live like a king and the only people you see (other than the ones you ignore as they serve you) are in your $250,000 a year private clubs and you jet around the World in first class meeting with other to 1% people who tell you how great everything is.  I flew first class to Vegas last week and everyone I talked to thought the economy was much better and I stayed at the 4 Seasons and people there thought things were great too but I walked up and down the strip and I went to the cheap casinos and everyone said things sucked and they don't know how much longer they can hang on.  

    They talk about the President being in "the bubble" and not in touch with what's going on in the country but most rich people are in a bubble too and you don't realize it because we (top 1%) are served mostly by the top 10% and sometimes by the next 20% and those people SEEM like poor people to us but there's another 200M people below those people whose lives are TERRIBLE now but, just like counting a rice picker in Bangkok as a $100 eyeball for Facebook, people like Jim Rogers says – oh, now there's 7Bn people and 6Bn people used 80M barrels of oil so 7Bn people will use 93M barrels of oil but that's completely false logic because NONE of those additional 16% people are Middle Class Americans and Europeans (just 800M of us)- not only don't we make those anymore but we're destroying the ones we do have and the rest are aging themselves out of their buying power anyway so you're trading in 6Bn people where 10% of them were power consumers for 7Bn people where maybe 8% are power consumers and the rest are on subsistence.  

    The structural problem with Capitalism is there's no incentive to build a base – the incentives are to get what you can from a declining base by destroying your competition and gaining market share – it's short-sighted locust logic but it has worked for hundreds of years as we filled the World but now it's full and what we destroy is only where we already live – slash and burn is no longer a good philosophy and we've closed the loop on Global trade so there's only a limited benefit to moving goods around – hence the labor pool is shrinking and becoming devalued but that too spells the death of demand.  

    When we had the crisis brewing in '07 and '08 I had a running Highlander joke for the IBanks that, in the end, there can be only one – they were all destroying each other right and left because they had saturated the markets and there was no way left for them to grow so they began turning on each other – literally trying to kill each other to gain market share.  We all know how that ended up, several major firms died, many minor ones and tons of banks closed – all so the survivors could keep "growing" but, without the CBs pumping money into the system, their whole model is collapsing on them.  

    Anyway, point is there's a big picture out there that guys like Rogers can't/won't see.  

    You're welcome Ron – don't you feel better now?  Told my brother the same thing – sent him a text saying "Get out while you can you greedy bastard."  8)  

    Cheap/Burr – Nothing is "cheap" if the G8 fails this weekend.  They are all attractive but look where the indexes are – we could drop 20% and still be a mile over the lows of the last crash and why would these stocks be immune?  It's a great list but I'd rather buy SVU over $5 and know we're recovering than try to get in at $4.74 when it can go lower.  Same goes for the others – we'll know when it's time to buy – it's not time to buy.

    Have I mentioned how much I like cash lately?  

    Swiss/Chas – They lost $4Bn supporting the Euro in Q1, gotta be more like $10Bn now, maybe much worse.  Their entire GDP is just $500Bn and could you imagine if this country was on a path to spending 10% of its GDP propping up another currency so we could maintain our exports?  Even the Swiss have a breaking point and, as both me and my 10 year-old daughter pointed out – by announcing what they are doing they leave themselves open to attack from which they now have to defend constantly or else they'll seem ineffective and lose their influence, which cost them 100 years to build up so $10Bn, $20Bn, $30Bn – what's the price at which they are willing to have egg on their faces?  Meanwhile, any time EUR/CHF hits $1.2009, I know I can hit the dump button on Euros and these suckers will buy every single one from me and then I buy at the bottom I create, wait for them to jack it up and dump it on them again.  It's a good little business and perfectly legal because I'm not the one manipulating the currency – they are! 

    EDZ/Ink – Not stupid, you just cashed out is all.  I'd take $18.66 off the table for the stock (up $2.15 plus the $2.75 you collected) and buy the Jan $16/23 bull call spread for $3 as that's $2.66 in the money and covers your callers while you wait for the premium to expire and, if you are lucky, EDZ will pull back and the Oct calls will lose all their value but you'll get maybe $1.50 back on your calls and then you net $3.40ish, which is much better than the net $1.24 you get if called away at $15.  Only worry is you have to scramble and cover more if EDZ goes over $20 but not that complicated if it happens. 

    Oil with a nice dip to $91.50 there!   Good call by Lionel to take it long but tight stop on that line.  

    FB back to $39 – was fun while it lasted…

    Oh, great discipline too Lionel – congrats!  

    Printing presses/Rpme – Yes but no because the EU is priced to fail as a currency and printing more of them to stop the PIIGS from destroying the Union may devalue the Euro but it also makes it more likely it remains viable and, thus, more valuable.  So, if anything, $800Bn to $1.5Tn would be bullish for the Euro and for the EU markets (and ours). 

    AAPL/Jrod – Did a bull spread with short puts yesterday or Weds.  I think I explained the logic of taking the position early this morning at the end of yesterday's chat (a good read for all!). 

  173. jromeha

    Somebody just dropped the dollar!

  174. 1020

    stjean/invade  Too late – the bankers have already been here…..

  175. yodi

    Who stabbed GOOG 13$ down my short calls look really good today

  176. kustomz

    Death throes=EUR

    G8 will be about pressing the ECB to cut rates to 0…then its on to cigars, some great liquor and lots of hookers..

  177. Phil

    FAS Money – Keep in mind we are playing this as a gamble that we get G8 action or QE3 or both next week so no action here.  

    IWM Money – Same thing, we're very bullish for maybe bad reasons but March is a long way off and now we can roll down to the $75 calls (all 15) for $2.40 so let's do that and improve our position.  The TNA May $51 put is hurting with TNA at $45.33 but c'est la vie there and we roll it ($5.70) to the June $47 puts at $5.20 for .50 out of pocket and that way we just have the one strike to worry about.  

    $5KP – Also very bullish but TNA, now $45.33, can come back hard and fast on QE and, if not, then we're down a bit and we try again.  CHK is up 5% today so can't complain there.  

    $25KP – Wow, that went fast!  I'd almost put the whole thing on a CHK spread so we could have $100K in Jan but that would be cheating (Selling 100 CHK Jan $10 puts for $2.15 ($21,500, $10,000 margin) and buying 200 Jan $10/15 bull call spreads for $2.60 ($52,000) – you can just do that with a stop loss at $10,000 ($15,000 left) and you're risking $10K out of $32K to net $100K at $15 in 7 months.  

    • DMND – Down day today but $22.66
    • BBY – What, who?  
    • FAS – Tempting to add but we'll be thrilled if they just do something.
    • CHK – As I said, love them. 
    • TNA – Rough stuff today
    • SQQQ – Small comfort.
    • TLT – That was a very easy 18%! 
  178. 1020

    Phil/Rogers  Thanks for that. I'm clipping your comments to keep in my holster along with my B.S. spray, for my protection from the "ditto heads" in my neighborhood…. :)

  179. cwan120

    Hey, Peter D,
    Haven't talked to you for a while.  Howdy?
    So, what SPX strangles do you suggest to play now?

  180. rustle123

    Guessing they won't let FB break 38 no matter what and will try to hold it there till settlement date.

  181. rainman

    Intersting that the dollar clubbing didn't do much to jack up the markets.

  182. scottmi

    IMAX – tsk tsk.. is no one watching movies this week?

  183. Canuck

    QE3 bet – TQQQ Jun 50c for $1 ish

  184. zeroxzero

    Rain:  I noticed that, too.  And with oil selling off notwithstanding, I'm even more confused that usual.

  185. Phil

    HPQ making new lows at $21.41.  Could be the next CHK.  $127Bn in revenues, $7Bn in profits, rock steady for 3 years and their market cap is down to $43Bn (CURRENT p/e = 7).  They pay a 2.2% dividend and have $8Bn in cash and bought back $8Bn of their own stock last year at $35is which is, of course, stupid but gives you an idea of what management and the board think the stock is worth.  

    LOL StJ – Good idea invading ourselves.  Let's start with Texas – take their oil and install a Democratic Dictatorship where we force their children to be educated in the sciences!   Last time I was in Texas I realized that's what killed Nasa – they take all the smartest people in the country but then they shuffle them off to Houston where they end up breeding with the locals and in just one generation we've destroyed the top end of our IQ gene pool!  (just kidding Texas folks…) 

    Dollar/Jrom – Very disturbing that the Dollar dropped almost half a point and the markets didn't bump up!  

    You're welcome 1020 – caught me in a pontificating mood…

    FB/Rustle – Below $38 would embarrass way too many people I think.

    And what Rain said. 

    IMAX/Scott – Best news of the year is out – time to take the money and run.  Also, death of China not good for IMAX as that's a major projected source of growth (but I guess we could say that about the whole S&P).  

  186. jthoma

    not much bounce with the dollar having been hit! Nothing seems to matter at present just as it did not as we went up. Hopefully by Monday Facebook will not be 95% of what everyone talks about now that " the boys "have dumped all their stock at $38 plus to the sheeple!

  187. rainman

    Watching for a spike in volume in FB when it bumps $38…

  188. lionel

    Yen too close to 79
    Intervention next week by the BoJ
    EWJ is another good play since a weaker yen will prop up the Nikkei (closed -3%)
    BUY JAN 13 CALL 9/10 for 37c or more aggressively SEP call 9 for 37c
    SELL JAN 13 PUT 8 for 32c

  189. lionel

    Thanks Phil

  190. Phil

    TQQQ/Canuck – The $47.50s are $1.60 and that's 5%,which is a 1.5% move up in the Nas and you make 60% – MADNESS!  

    Wow, people are just selling the crap out of FB and somebody is playing the role of the Swiss and just taking a pounding supporting $38.  

    EWJ/Lionel – Ballsy but I like it!  

  191. rainman

    Down to about 12M buys at $38

  192. bobhu

    stjeanluc/TLT,
    "TLT is making new YTD highs today. That is not a bullish sign…".
    I don't think it's that easy, TLT was below $110(LOY) on 3/19, so, that should be a bullish sign?
    Just my 2 cents.

  193. rustle123

    FB/Phil
     
    If it fell to low 30's it could very well cancel the deal as many people who didn't flip have the right not accept their syndicate offering.

  194. jthoma

    Phil- Thoughts as to anything meaningful from the conference this weekend or just more can kicking rhetoric?

  195. yodi

    GOOG 23$ down !!!!

  196. rainman

    They're fighting themselves, buy at $38 and sell at $38.02!

  197. bobhu

    Let's see if FB can hold $38.

  198. Canuck

    FB – "… and the crowd went mild."

  199. jthoma

    Jabo- are you going to give us an FU and a wheeeeeee for the end of the week?

  200. Phil

    Funny how you can put the EUR/CHF 1.2009 line against the FB $38 line and the action looks identical – good lesson for those who want to learn how to spot artificial support.  

    Syndicate/Rustle – That's interesting.  So there's more motive than I thought to hold the line.  

    G8/Jthom – If they do not understand that rhetoric isn't going to be enough then we are DOOMED!  They need to announce a $1.5Tn commitment to reduce debt AND provide stimulus to the PIIGS – even if they just commit to a loan facility that lets them roll over debt at a fixed price it would make a big difference and that would only cost them the rate spread.  They have a chance to come out of that conference as 8 bold and united leaders who will step up to the plate and stabilize the Global economy but, more likely – they'll be the idiots that blew it in the great crash of 2012.

    GOOG/Yodi – Yep, as we thought, they were pumped up on the basis that if FB is worth $100Bn, then GOOG is worth much more but SURPRISE – FB isn't worth $100Bn…

    LOL Canuck!  

  201. 8800

    Phil,
    Care to hazard a guess as to the odds of something bullish from the G8 this W/E?
    Thanks

  202. lol730

    we aren't pining anything on SPY, neither 129 nor 130.
    Shocker!!!
    They cannot control market anymore?!?!?

  203. shadowfax

    If anyone followed my lead in shorting. now is the time to get out and cash for the weekend. I agree with Plil that we needed a volume down day, it hit the marks, and it is time for Europe to get fixed again. They have to because if not Ben will screw the world again.

  204. exec

    Monday should be interesting.

  205. rainman

    Down to 7M @ $38  orders, Juicy stuff!

  206. rainman

    shadow — DOW @ 190M, that's a little higher but I'd like to see 250M

  207. shadowfax

    Now the BOTS are buying, a 3:55 stick?

  208. Canuck

    Phil/QQQ Jun 57p – in at 0.47 and out at 0.62 – nice 30% scalp for the day – thanks for the trade idea.

  209. shadowfax

    raiman
    If the patter stays the same you may get your 250M!

  210. scottmi

    this has been a perfectly ugly day.

  211. Phil

    Odds/8800 – I think 60% they do something, which would be stunning coming right out of a conference.  

    193M on the Dow at 3:58 – at least that's something considering we're "only" down 0.7%. 

    Oil $91.38! Gold still $1,590 – so sure there will be QE.  

    Dollar 81.25 is a major worry, down 0.7 is almost 1% down on a down market day – could be masking BIG TROUBLE!  

    250M/Rain – You should have it on the close. 

    You're welcome Canuck!  

    Ouch that was just painful to watch.  Oh well, congrats to the bears and maybe it is time to look at the old Big Chart now…

    Have a great weekend everyone!  

    - Phil

  212. shadowfax

    rainman
    I show 240M now, close enough!

  213. 1020

    Have a good weekend Phil

  214. dclark41

    Phil:
    Great commentary today. Not the easiest market to navigate!

  215. stjeanluc

    TLT / bobhu – Not that simple at $110, but $124 indicates that people would rather lend money to us at basically a loss (if you factor in inflation) than invest in equities. As long as you have that mentality in the street, there is no strong support for equities. 

  216. Peter D

    Hi cwan,
    Selling SPX June 1150 put for $4.7 is a good deal!  We have been down 9%+ on SPX from the top and 11%+ on RUT, so 11% cushion for the 1150 sounds reasonable.  We can also sell 1100 put for $2.75.  The 1050/1000 vertical is $0.65 while the 1100/1050 is $1.4.  We can pick any of these, but keep some dry powder in case we drop another 5%.  If the market heads back up or stand still, those puts will go down quickly.

  217. stjeanluc

    I'll post new monthly (for the new OpEx period) and weekly volatility tables this weekend. I am guessing there will be some interesting numbers there.

    Have a good weekend everybody!

  218. rainman

    We'll see what the ecomorons do at G8 but if they don't factor in then I think we may bounce off my 12,300 target on Monday and head higher. If we don't get that, Kustom's 12,200 is the next stop (it's also the 200 SMA).
     
    Have a good weekend!  Cheers!

  219. jabobeast

    WOW…. All that hype on fakebook and they had to use SOOOO much of the greenshoe just to keep it above 38!!!
     
    FU Ibanks!!! 
     
    Phil, Jthoma, and crew have a great weekend!

  220. Lincoln

    Wow! just heard on CNBC that Facebook went public today.  FWIW

  221. Peter D

    Holy FB, it costs 2.9M shares at 3.37PM to keep it above $38, 3.3M shares the next minute, and another 30M shares from then until closing at 4PM.  That's the entire float!  Hey, I just have a FB notification that I have a message from someone. hihihi.

  222. soccer_f1

    How much longer do the underwriters have to protect FB’s $38 floor? Is it just a Day1 commitment?

  223. danny3399

    Phil or Anybody,
    I am looking for some good articles on how retail investors have been burned by the wall street banks. Such as JPM, MS, GS, UBS. How the big brokerage houses have broken their fiduciary duty by selling them one thing and betting against it. Or have they have taken marketing dollars to recommend certain funds. Just how they have really screwed the retail investor.
    Thanks
    Danny

  224. lflantheman

    FB fakeout.  AAPL fakeout too.  Went to 543 + today and I sold some next weekly 545 calls, with ability to roll of course, suggesting which way I think it is going to move.   Obviously I don't think AAPL has bottomed yet.  And Facebook?   I'll just watch that one for awhile.  Have a great weekend! 

  225. Canuck

    StJeanLuc/TLT --
     
    have you read

    "The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation [Hardcover]
    A. Gary Shilling (Author)"
     
    Just finished a section on why he likes 30 year bonds, especially coupon bonds.  He has been a long bond bull for 30+ years and still is as of printing in Nov 2010.  He points out that if you take say a 3% yield AND accept his belief in deflation, then the real yield is say 5% – however, if interest rates drop further, then the capital gain on the bond is where the real return is, say  20% plus in his examples.
     
    Worthy of reading and I found it an interesting argument, but I'm still a stock guy. 
     

  226. rustle123

    Yield/Canuck
     
    Problem with that theory is that we are having inflation right now and for the last year and a half so that 3% yield is basically 0% and even less if you drive a lot and in 2014, if rates do go up those bonds are down quite a bit.

  227. newbie

    "The FACE"
     
    THANKS to everyone for all the fascinating postings today. What a blast it was to watch this thing on the ticker, especially with all the enlightened observations here. I fear the "retail" buyer is going to take it in the shorts (so what else is new).
     
    Could this  be legitimately described as a "failed" IPO? or at least "miserable"?  -Considering that the Syndicate had to buy, buy, buy just to support the offer price? I don't see much that would move the price or value up very much in the near future.

  228. newbie

    DANNY 3399,
     
    Pretty much any one of Phil's morning articles is a good place to start. Just go back about a week or so from here, and then skim each article, going backwards one day at a time. You'll find an amazing amount of factual and empirical information, charts, data, number, drawings, even a good cartoon once in a while for good measure. You'll probably learn more there, FASTER, than you would any place else.
     
    Many of the articles have a lot of links in them that take you to more root level sources. You could spend 10 hours every day just following all the relevant links and reading THOSE pieces and then following links FROM THERE.
     
    Aside from that, there is absolutely no limit of articles on those topics all over the web. You might need to learn some of the finer details about doing boolean and advanced searches in Google or Bing.
     
    If you have any money to spend, (cheap used copies available on Amazon) there are dozens of books that have been written in the last four years, about the Financial Crisis in general, and also quite a few on the structures of the banks, et. al.   I was just at the bookstore Wednesday, and I saw at least a dozen on that latter subject.
     
    The U.S. Government published a report on the Financial Crisis, which you should be able to download free as a PDF, I imagine. Probably not the most "incisive" data source, but should be a useful reference nonetheless.
     
    But mostly just learn the Inner Game of using Google (they have excellent Help articles) and you'll be on your way to finding more data than you could read in a lifetime.

  229. kinkistyle

    According to this NYPD police blotter twitter feed, just today there were 5 reported bank robberies in NYC — three of which were in Manhattan, including the Chase Manhattan bank at 53rd and Park Ave.   There were only 26 bank robberies all of 2010 and 44 in 2011.  
    I suppose the take wasn't as big as what some of the hedge fund vigilantes got taking the other side of the London Whale trade, but still disconcerting for someone who lives in the city.  I much prefer hipsters banging drums in the park and holding signboards than desperate people robbing you at gunpoint.   

  230. Phil

    NYSE says haha Nasdaq, you suck!  

  231. Phil

    At the close: Dow -0.69% to 12357. S&P -0.91% to 1293. Nasdaq -1.24% to 2779.

    Treasurys: 30-year -0.24%. 10-yr -0.04%. 5-yr -0.06%.

    Commodities: Crude -1.72% to $90.97. Gold +1.03% to $1591.05.

    Currencies: Euro +0.61% vs. dollar. Yen -0.28%. Pound -0.21%.

    Market recap: Facebook's glow faded almost as soon as the IPO began trading, and more headlines out of Europe implyingdiscord between Greece and Germany helped push stocks lower for the 12th time in 13 sessions. Crude oil slid another 1.2% to $91.48, lowest since October, while the dollar index fell for the first time in 15 sessions. NYSE losers led winners nearly three to one.

    Stocks are as oversold today as they were since the doom-and-gloom days of the financial crisis, says Bespoke's Paul Hickey. In total, 5 out of 10 S&P 500 sectors are now three standard deviations from their 50-day moving average. "This is as oversold as they have been at the lowest points," Hickey says. "We simply haven't gotten more oversold than this versus the 50-day."

    Expect denials soon, but sources says Angela Merkel suggested to the Greek president the country hold a referendum on continued use of the euro at next month's elections. Syriza: Merkel is treating Greece as a "Protectorate." New Democracy: Merkel proposal "unfortunate." The German Chancellor has managed to unite the feuding Greek parties. 

    Merkel did in fact suggest to the Greek government that it hold a referendum on staying in the eurozone, according to a statement released by the new PM's office. Original story here. Immediate German denial here.

    A German government spokesperson denies Merkel suggested Greece hold a referendum on staying in the eurozone. That didn't take long. (previous)

    Spain says it may have to once again revise its 2011 budget deficit upward. Spending by the four regional Spanish governments exceeded forecasts, driving up the national deficit for a second time. The government now projects a possible deficit that is equal to 8.9% of GDP, nearly three times the recommended maximum for nations using the euro

    Banco Santander's (STD) U.K. division lost about £200M of deposits - about 0.2% of the unit's total – on Friday, according to the lender's U.K. chief. About 70% of customers who visited branches to discuss their concerns left without withdrawing funds. "The other 30% couldn't be convinced," he says.

    So bad it was good:  Brazil's economic activity index fell 0.35% in March and rose just 0.91% Y/Y, well below expectations for a 2.4% gain. The news prompted yields on interest rate futures contracts to fall to record lows as traders place bets on more policy ease from the central bank. The Bovespa outperforms today, +1.5%.

    Optical networking equipment revenue fell 23% Q/Q in Q1,estimates Infonetics - a sharp decline even after accounting for seasonality. A 30%+ drop in EMEA sales overshadowed a small drop in North American sales. The firm is particular worried about the fact EMEA sales of WDM gear fell more than sales of legacy gear. "This is not the behavior of a region experiencing only a minor quarterly pullback," it observes. Some key industry players: CIENINFNALU,SCMRTLABADTN.

    This is cool:  Costco's (COST -0.6%) partnership with Aetna to provide health insurance to its customers could provide a boost to revenue. Already in place in 9 states, the company expects to sell health plans across the U.S. with major medical benefits and dental coverage.

    Kansas City Southern (KSU -0.1%), Norfolk Southern (NSC-0.8%) and CSX (CSX -0.7%) report strong growth in auto shipments but weakness in coal hauling. "The big driver is lower natural gas," CSX says. "Utility coal will have a long term place in our energy supply. We think we're going to stabilize that decline [but] we're not counting on a big uptick."

    Fitch has downgraded Chesapeake Energy's (CHK) debt rating to BB- from B. Its outlook is negative. S&P downgradedChesapeake, which has been plagued by liquidity fears in recent weeks, on Tuesday. (also)

    Chesapeake Energy (CHK) says it is reducing compensation for outside directors by ~20% and eliminating the use of fractionally owned aircraft for personal travel by outside directors. CHK says the move reduces director compensation to a level at or below the average director compensation of the company's peers.

    The time may be right for long-term investors to find winning bargains in natural gas, Intrepid Capital's Mark Travis says, listing Bill Barrett (BBG) and Patterson-UTI Energy (PTEN) as examples of stocks with solid balance sheets to go along with attractive valuations. But there's too much debt at Chesapeake (CHK): "Shareholders need to be aware that the bankers eat first."

    Often overlooked in predictions of world crude oil prices is the industry's acute and worsening shortage of experienced skilled professionals. The industry could need as many as 130K new hires by the end of the decade, but there aren't enough workers who can drill big, complicated wells – potentially raising oil prices much faster than generally expected.

    "Like hitting a walk-off home run in the bottom of the ninth before a full house in Yankee Stadium": ExxonMobil (XOMhoodwinked the Venezuelan government out of $300M, one of the largest asset seizures ever attempted by an American oil company, according to Steve Colls' new book, Private Empire

    No matter what you do, some people are never happy:  U.S.-based solar companies suffered today, reversing gains made yesterday after trade duties were announced. Some think the duties could end up hurting the U.S. solar industry because they could slow the rapid price declines that have made the technology less reliant on government subsidies. FSLR -8.4%SPWR -9.1%.

    This is what I keep warning you about!!!  Forget peak oil, and think peak water. Fracking uses an average 4.5M gallons of water per well, and Cody Willard thinks it's inevitable that water will become a traded and bundled commodity like crude oil. Remember ethanol and corn prices? "The same thing is about to happen to water. And water inflation is way more insidious than food inflation because it will drive up the costs of everything we eat."

  232. Phil


    It's a bit early to say for sure, but perhaps CBS (CBS +1.8%) is aiming too high with its plans for Super Bowl advertising revenue after GM opts to pass on advertising during the most-watched event of the year. The network hopes to land $4M for its top SB spots – a bit of a hefty premium after this year's broadcast only averaged $3.5M per ad. 

    Shares of Dendreon (DNDN -5.1%) continue their descent today after Maxim initiates coverage with a sell rating, saying that Provenge faces logistic, manufacturing and competitive challenges that could impede sales growth.

    App analytics firm New Relic estimates PayPal (EBAY) accounts for a whopping 60% of web payment transactions, more than 3x that of #2 processor Authorize.net. Google Checkout (GOOG) came in fifth place with a ~3% share. eBay's PayPal revenue rose 32% Y/Y in Q1 on the back of 24% volume growth. The company is hoping PayPal's offline and mobile payments initiatives will drive further growth.

    Facebook (FB +0.6%) closes at $38.23 following an epic final hour of trading. Shares spent an enormous amount of time between $38 and $38.05, without ever breaking below the IPO price. Underwriters are widely seen as responsible for the support (IIIIII), though their apparent efforts couldn't prevent the NASDAQ from falling 1.2%, or a general bloodbath from occurring among social networking and other Facebook-related stocks.

    As Facebook's (FB +2.8%) IPO-day trading volume rushes towards 500M, reports pile in (IIIIII) of trade confirmation problems. Expect Morgan Stanley (MS) and the NASDAQ to engage in somefinger-pointing over the matter. An NYSE spokesman laughed and said he had no comment. Meanwhile, Facebook shares have fallen back to $39.06.

    One of the reasons for Facebook's (FB) less-than-stellar performance today may be due to the fact that the system became so clogged that traders backed away, says CNBC's David Faber. The big mid-day drop – from $40 to $38 – apparently happened because the Nasdaq temporarily stopped taking orders at one point, which created enough uncertainty that traders on many desks stopped trading the shares altogether. The SEC has launched an investigationinto the issue. (video)

    Facebook (FB) isn't letting this week's craziness slow down its buying spree (III): the company has just bought Karma (cue the one-liners), developer of a mobile product-gifting app. Facebook intends to keep Karma's service running, and integrate it with its own mobile services. Also: the WSJ reports Facebook is experimenting in New Zealand with a feature that charges users a small fee to guarantee their "friends" will see what they write- Wow, it only took them 6 hours after IPO'ing to jump the shark!  If they do that, they will die a quick death!  

    The Business Software Alliance estimates the share of Chinese PCs containing pirated software fell to a record low in 2011, and is down 1500 bps since 2003. Unfortunately, the figure still stands at 77%, well above a global average of 42%, and the Asia-Pac average of 53%. The PC industry's growing reliance on China and other emerging markets has dinged Microsoft's (MSFT) consumer Windows and Office sales, both due to higher piracy and lower license fees.

    As Microsoft (MSFT) and PC OEMs hope the fall release of Windows 8 systems featuring ARM-based (ARMH) processors will give their PC/tablet sales a lift, the OEMs are reportedly struggling to reach tablet price points they consider necessary to compete with the iPad (AAPL) and Kindle Fire (AMZN), due to Microsoft's insistence on a $90-$100 Windows license fee. Concerns also exist about the software compatibility issues facing ARM-based hardware. 

    The ITC bans the import of Motorola Mobility (MMIGOOG) Android phones that feature meeting and scheduling software deemed to be violating Microsoft's (MSFT) IP. The ruling comes just weeks after the ITC and a German court declared the Xbox to be violating Motorola's patents. Much like Apple's disputes with Android OEMs, the Microsoft-Motorola war doesn't appear to have any end in sight.

    Eastman Kodak (EKDKQ.PKaccuses Apple (AAPL) of trying to undermine the sale of its patent portfolio in order to avoid paying $1B in royalties Kodak deems Apple to owe for its infringement (subject to a pending ITC ruling) of a patent covering a digital camera's ability to preview images. Apple is accusing Kodak of misappropriating technology the companies collaborated on; Kodak believes Apple's move is a stalling tactic. (previous)

    Nomura raises its PTs for AT&T (T) and Verizon (VZ) to $36 and $42, respectively. The firm sees a "positive industry backdrop" emerging, and thinks sentiment should remain healthy through the launch of the next iPhone. On the flip side, it's worried Sprint (S), on the hook for huge iPhone purchases, could suffer if its iPhone sales "conform with broader industry upgrade trends."

  233. barfinger

    guys, the weekly SPX strangle continues to work, although I was chased out of the May 1305 puts, rolled to the Wk4 1240s. I still take $2 or so a side every week, and now, that's 40 weeks that have netted nearly the entire $2 a side. As a few of us old strangle hands used to say, "we know NOTHING" (Sgt. Shultz) we just play the system.
     
    I must say, everything else I do seems to cancel itself out to zero.

  234. palotay

    Does anyone have the link to the post Phil wrote about buying a house, and the various mortgage tricks?  I'm about to buy a house, and want to brush up on my knowledge.

    Thx.

  235. Pharmboy

    All: I will be limited to the board next week (Mon-Wed) as I am traveling.  GLTA.

  236. Pharmboy

    LOL –

    Shares of Dendreon (DNDN -5.1%) continue their descent today after Maxim initiates coverage with a sell rating, saying that Provenge faces logistic, manufacturing and competitive challenges that could impede sales growth.

    I said that several years ago here, on this board.

     

    MDVN, JNJ and others will win this market, not DNDN.

  237. kinkistyle

    And so it begins…
    State TV Host Offers Advice on How to Throw Out ‘Foreign Trash’

     
    "The Public Security Bureau wants to clean out the foreign trash: To arrest foreign thugs and protect innocent girls, they need to concentrate on the disaster zones in [student district] Wudaokou and [drinking district] Sanlitun. Cut off the foreign snake heads. People who can’t find jobs in the U.S. and Europe come to China to grab our money, engage in human trafficking and spread deceitful lies to encourage emigration. Foreign spies seek out Chinese girls to mask their espionage and pretend to be tourists while compiling maps and GPS data for Japan, Korea and the West. We kicked out that foreign bitch and closed Al-Jazeera’s Beijing bureau. We should shut up those who demonize China and send them packing."

  238. ceegee

    Barfinger/weekly SPX, I think I remember you posted your strategy once – if you did, can you provide a link or re-post? If not, give us a quick run-down of your strategy/ strike selection? Thanks!

  239. yodi

    Going back in time How wrong can you be!
     
    1.      Phil
    July 7th, 2011 at 2:57 pm | PermalinkIgnore this user
    Puts that can be sold to fund bearish plays:
    o    MO boring but cheap, makes a nice bullish offset or a straight play selling the 2013 $25 puts for $2.65. Net margin on that is just $3.40 to get $2.65 in cash to play with – very reasonable.
    o    RIMM still cheap but less so at $29. Sept $29 puts sold for $2.50 drops you back to a $26.50 entry that I’ll bet you regret missing.
    o    WFR still being given away at $8.25. Shorting the 2013 $7.50 puts for $1.50 is a net $6 entry and you can sell 50 of them, collect $7,500 in cash and it’s just $4,400 in net margin (according to TOS) so a very good deal.
    o    JPM is a good way to bet on a manipulated commodity rally – You can sell the Jan $37.50 puts for $1.81 for net $4.20 in margin and an entry price of just $35.70 (JPM now $41.50)
    Phil

  240. Phil

    Good morning! 

    I'm off to the Tribeca Food Festival today so won't be around.  

    Buying a house/Palotay – That was the beloved classic:  Interest Scams and How to Avoid Them – Mortgage Madness

    Trash/Kinki – How lovely…

    Wrong/Yodi – Er MO is still way up, RIMM popped to $33.50 a month later, WFR is a total disaster (but at least was a slow-moving one) and JPM was at $46 a month ago – I'm sorry if you missed the part about STOPS or BEING GREEDY or my 110 calls to get to cash and short the market in general and hung onto these positions almost a year after I made the call but holy crap Yodi – really???  Not only that but notice the entire statement was predicated on funding BEARISH PLAYS (and it says so right on top of the quote) well ahead of the massive crash last summer but I notice you never bothered to thank me for those – just dredge up these 10 months later – once we're in a market collapse (that I called).  

    You know Yodi, this is my job and I take it very seriously – if you have a problem with a trade, even if you ignored every rule of common sense that we do have – then ask me and I'll be happy to help you fix it but this is BS and pretty much ruins my whole day – because I do care about every single call I make so I look it up and check it out and then I see you're taking offsets out of context.  What did I do to deserve this from you?  

  241. dclark41

    palotay
    RE: House
    Provide me an email and I can send you what I have. I think it might be helpful to you.

  242. dclark41

    oops Phil beat me to it. nevermind.

  243. kinkistyle

    Prof. Patrick Chovanec with another great write-up.  This time about the Chinese practice of "Credit Guarantee Companies", China's equivalent of AIG and CDS insurers.
     
    'A branch manager at one bank involved in the Zhongdan case said most bankers are fully aware that most companies provide falsified contracts to qualify for loans. Others said they routinely skip certain procedures designed to catch tricksters.

    “Banks argue that companies should be held accountable for fraudulent borrowing,” said a company manager who said he obtained several bank loans by working with Zhongdan. “They are determined that they will not admit to knowing these are fake contracts.

    “I worked with other guarantee companies before,” he said. “I realized that, in fact, a lot of banks know about this.”'
     
    I think I know how this movie ends.

  244. jthoma

    Phil- not to worry- there is an old saying ” you can please some of the people some of the time but you can not please ALL of the people all of the time”. That is why he is one of only 3 people I have checked to not read their crap. Some people are unhelpable and always looking to blame their own mistakes on others because they are unwilling to face their own mistakes and failures. Unfortunately that has been the way of mankind forever and will not soon change. Perhaps that is why I have 2 dogs- if you feed them and simply give them a kind word on occasion they return loyalty and unconditional love- such a shame that humans do not share that trait!

  245. angelcur

    jthoma i hope i have not been subjected to the cruel censure button!

  246. palotay

    Dclark – my email is palotay@gmail.com. Not sure if you have anything else beyond the article, but any info will be appreciated. Thx.

    Phil, don’t let Yodi ruin your day. I’m buying my dream house with a down payment that I made by trading your strategy. Keep it up.

  247. kurtww

    Not to be devil's advocate, but I could interpret Yodi's comments as an attempt at humor, pointing out how some seemingly safe plays can go exactly the opposite of what you expect. I know enough Germans (myself included) to know that dry humor can sometimes be misinterpreted. I have not noticed Yodi saying anything particularly negative or derogatory in the past, but I haven't exactly been paying attention. 
    Palotay – I always like to hear success stories… can you be more specific about what has worked for you? It seems like this market has been tough for a lot of people (myself included). 

  248. jthoma

    Angelcur- you are safe my friend- LOL!

  249. jthoma

    And I do not mean to be unkind to anyone- Phil has a very difficult and unenviable job and I would just hope most would remember anyone can only be right more than they were wrong. He gives us his best thoughts as do many others- it is up to each of us to decide what to do with them. The thing we all strive for is to be helpful to each other and this site is the best at fulfilling that which I have found

  250. diamond

    Phil – RE: "I'm off to the Tribeca Food Festival today …"
     
    Question: What'd you eat? :-)

  251. yodi

    Phil Sorry this was not a stab at you only was showing how times can change. You missunderstood. I was just reading up on some things and came acoss it. I have been playing MO for ages as well I hold positions in JPM. Rimm well bad news.
    No one could blame you JPM blows 2 big once just two weeks ago.
    Again this was not at all a stab at you and I am sorry it ruined your day, in deed it was not mend that way. I do not have any complains about my positions. The only one who presses the mouse is me and there is not mend to hang any blame what so ever on you.
    I just wanted to show how the tables have turned at some stocks only over a period of 10 month or so.
    Sorry please excuse me if I hit the wrong note.

  252. yodi

    kurtww
    Thanks for the interpritation. It shows you how different people of different nation think. It was not mend to be actually as dry humor but just showing how the market can turn.
    In deed no flies on Phil, as I can only say I only received good advice. Yes as a stuborn German I still do not listen sometimes. If I would not like the site just ask Phil how long I am aboard.
    Only a fool would stay if he or she would not see any results.
    I regret beeing the black sheep today and not only  unintentional offended Phil but somehow other members as well.

  253. sparky123

    Yodi, I hope kurt was right, because if that wasn't missfired humor it was really off base. Phil does his best to keep us out of the market when the odds are against us. As far as specfic calls he makes to get into stocks, if you are blindly following anyone, you need to seriously rethink what your're doing. No one has a monopoly on truth, and that certainly includes stock picks. 

  254. sparky123

    yodi
    sorry, I am on a quirky internet connection and it didn't update, or I would have seen your last post.

  255. grenowoods

    30 min. ago, Zuckerberg posted on his Facebook page that he got married to Priscilla Chan. 2 big events in 2 days.

  256. zeroxzero

    He's pushing his luck.

  257. sparky123

    ZZ,
    It's 28 years today for us. Maybe it will be a lucky day for him too.

  258. Phil

    The end/Kinki – Amazing how China could essentially be just a massive Ponzi scheme that is nearing the end of its run.  

    Thanks for nice words guys.  In retrospect, I was just in a bad mood and having a hectic morning trying to herd 4 kids into the car for a trip to the city so the last think I needed was to be told I had blown trade calls from last July.  Yodi, I think the fact that I thought you, as one of my long-time students, did not "get" what we're supposed to be doing bothered me more than you saying I missed a couple of calls (I miss hundreds of calls, the trick is to manage the cash so the misses matter less than the hits).  It just came across less funny than you thought but so do some of the things I say so I need to remember to take as good as I give on occasion (and again, sorry to people in Houston – I'm sure you hold up the gene pool just fine!).  

    Eating/Diamond – Don't know if you are from NYC but Accappella (Mushroom Agnelotti in Port Wine Sauce you wanted to drink until your heart stopped), Nobu (Black Cod Miso), Greenwich Grill (Waygu Burgers with Terriyaki Sauce), Tribeca Grand (Squash Blossoms Stuffed with Basil Goat Cheese), Blaue Gans (Strawberry and Elderflower Coup) and somebody's Meatball Sandwich were the standouts along with a Beet Salad and the most amazing deserts from Mrs Cupcake (including Red Velvet Cupcake Balls Jackie almost fainted from), who we were sad to find out has no actual store of her own but simply sets up a tray at the end of a bar in an Irish Pub and was sold out by the time we got to the bar, who's name I forget but I think it was 41 Murray.  I am telling you, desserts to die for and apparently she's a one-woman show until I can speak to her and hook her up in a shop!  

    Anyway, best thing about the Festival, aside from the fact it's all for charity (money for local public schools) is a chance to have the kids try all sorts of new things to see what they like and, of course, teach the something along the way.  Mostly the chefs and owners are right there to talk about the dishes and there were cooking demos and even a mini-farmers market where we got to taste and talk about sustainable produce and what was and was not in season.  So a nice way to spend the day overall but it's yogurt and salad for me tomorrow!  

    Congrats Sparky!  Although, if you would have held out for 28 years, you could have had a shot at the Zuck!  Priscilla's a smart girl – wait until he's got a big net worth to marry him in CA!  

    Dialo/Jabob – Looks good but good night – I'll read that in the morning…

  259. bdonnelly713

    Hello all,
    Phil – looking at NEM or ABX purchase for a long term dividend re-investment. Would like to sell a near month ITM put to get a better entry. Do you have any thoughts on timing/selection/strategy?
    Pharm – do you have any thoughts on GALT, NEPT, and BTX? I've read some pretty interesting commentary on all three over the last few months and they have all pulled back nicely with the market.  

  260. deano

    Anyone ride motorbikes? A couple college buddies and I will be going to Jackson Hole next month, and looking for a couple good half day trips for short tours and a good place to stay. TIA

  261. Winston

    Leveraging this resource/questions
    I think one of the things that members do not do enough of is ask Phil questions. I learn so much more when people post their positions and Phil gives his perspectives on how to adjust an existing position. I do not know if people are somewhat defensive in talking about trades that may not be working out, but as someone said, it so much more useful to hear about someone who screwed up, so we can avoid making the same mistakes.
     
    Make use of the pre-market or post-market time periods to ask questions that may require more extensive answers from Phil. I speak from personal experience that Phil is generous with his time to answer a well thought out question. I frankly cannot imagine trading the way I do unless I had Phil as a mentor. Sycophantic rant over.

  262. 1020

    Good Morning!
     
    My Dad brought Mom, to the states from Italy, to the farm in Wisconsin.
     
    That's where life began for me in 1961.  Mom spent the next 16 years caring for a family, learning to speak english and drive a car, becoming an American citizen, receiving her H.S. diploma and all this time, working on her new… American… way… of… life……..
     
    I still think it's funny when a child does a "face palm"……that little kid was me!  :)
     
    http://www.youtube.com/watch?v=BNsrK6P9QvI

  263. barfinger

    Phil, it is obvious that some of your picks are early or unfortunate, and I doubt anybody thinks less of you for them. I will say I have seen ten or twenty proposed new entries on WFR over a period of more than a year. Perhaps I am misreading things, but when you continue to recommend new entry trades on a troubled stock, I take that as a reaffirmation of your belief. Most of us know how to manage a position to keep potential profits reachable at some point, however, when you scale in to a loser, you merely build a large losing position.
     
    I have a hard time knowing when to give up on a stock that you keep trading. When you think it is time to give up on a trade, I would appreciate your statement to that effect. I escaped other bad trades (HOV, most recently) when you pretty much suggested they was now a long term "hope" play.

  264. Burrben

    Phil / Div Stocks
    Woke up early and starting looking for some picks for the next Income Port.  Found this on SA.  What you think?  I like that the screen includes little long term debt.  Looks like only CXS has options though…
    —--
     
    We first looked for stocks that have a very high dividend yield (Div. Yield > 10%). We then screened for businesses that have strong profitability (1-year fiscal EPS Growth Rate>10%)(Net Margin [TTM]>10%). From here, we then looked for companies that have maintained a sound capital structure (D/E Ratio<.3). We then screened for businesses that operate with little to no long-term debt (Long Term D/E Ratio<.3). We did not screen out any market caps or sectors.
     
    1) Crexus Investment Corp. (CXS)
    Sector: Financial
    Industry: REIT – Diversified
    Market Cap: $780.76M
    Crexus Investment Corp. has a Dividend Yield of 10.60% and Payout Ratio of 75.70% and Earnings Per Share Growth Rate of 163.94% and Net Margin of 97.05% and Debt/Equity Ratio of 0.04 and Long-Term Debt/Equity Ratio of 0.00. The short interest was 2.40% as of 05/18/2012. CreXus Investment Corp., through its subsidiaries, operates as a commercial real estate company. It acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial real properties, commercial mortgage-backed securities, other commercial real estate-related assets, and agency residential mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes.
     
    2) Rhino Resource Partners LP (RNO)
    Sector: Basic Materials
    Industry: Nonmetallic Mineral Mining
    Market Cap: $2.44B
    Rhino Resource Partners LP has a Dividend Yield of 13.22% and Payout Ratio of 0.00% and Earnings Per Share Growth Rate of 97.16% and Net Margin of 12.66% and Debt/Equity Ratio of 0.20 and Long-Term Debt/Equity Ratio of 0.19. The short interest was 0.39% as of 05/18/2012. Rhino Resource Partners LP produces, processes, and sells coal of various steam and metallurgical grades in the United States. The company holds interests in various surface and underground coal mines located in Central Appalachia, Northern Appalachia, the Illinois Basin, and the Western Bituminous region. As of December 31, 2010, it operated 10 mines, including 5 underground and 5 surface mines located in Kentucky, Ohio, and West Virginia.
     
    3) PennyMac Mortgage Investment Trust (PMT)
    Sector: Financial
    Industry: REIT – Residential
    Market Cap: $303.61M
    PennyMac Mortgage Investment Trust has a Dividend Yield of 12.20% and Payout Ratio of 73.68% and Earnings Per Share Growth Rate of 67.86% and Net Margin of 48.01% and Debt/Equity Ratio of 0.21 and Long-Term Debt/Equity Ratio of 0.00. The short interest was 3.49% as of 05/18/2012. PennyMac Mortgage Investment Trust is based in the United States.

  265. pstas

    Manufacturing, Housing Probably Improved: U.S. Economy Preview
    http://www.bloomberg.com/news/2012-05-20/manufacturing-housing-probably-improved-u-s-economy-preview.html

  266. yodi

    Phil I know you like the china stocks SINA I keep it as one of my crap shooting once. They have falling quite a bit The call plays I am even steven. However the put side is the one I am not to sure about. My last roll was in April where I am holding now the Jan 13 putter sold for 13.56 now 33.75 X2 Thinking of rolling the Jan13 85 p to Jan 14 60p for a debit of 13.03.
    Thinking of reducing the cost by selling callers against it.  2x Dec 12 for 7.60. Taking out 60% of the loss. In case the stock goes up I know the naked caller will increase in value but I would be gaining on the putters. Obvisously by selling more putters or callers it would make the situation even not showing a loss. However I do not want to double neither of them as I would be happy to play on the caller side for a year to possible make up the difference.  What you think. TIA

  267. jmm12

    Phil- How do you know when to give up on a position?  For instance, RIMM or WFR or even CHK?  I know that you haved liked WFR for a while but at what point do you give up?  Or do you roll and double down and hope they don't go BK.  Just so you are aware, this has nothing to do with Yodi's comments from earlier, it is a sincere question that I was going to ask over the weekend anyway.  

  268. stjeanluc

    Better late than never!

    No need to be a great technician to see a trend forming…

  269. roberthjrfl

    Does anyone do multiple month work with Futures?  More specifically, set up a calendar type trades with futures?  TIA.

  270. morxlntway

    Anyone else in the May EDZ 16 calls? Etrade says they have been assigned and i now have 500 shares short. No message yet about the 13s. This letting bull call spreads expire is not something i have had the pleasure to experience very often. What can i expect to happen with these tomorrow morning?
    thanks to all.

  271. yodi

    jmm12
    RIMM WFR , Again I have to point out reading you question to Phil, That the fact remains we have bet possible on the wrong horse. In no way I can or would blaim Phil that the stock went down. The only one to blaim is the holder of the stock by not taking the writing serious  enough to get out of it.
    If RIMM gets bought out it will shoot up like a rocket. Where I live I see a lot of Blackberry users and it is still selling very well.
    I think the once running the company are asleep on the job, thinking the money would be rolling in for ever. With WFR I do not have much to say as their business is very well spread all over the world. So if there is hope I do not know.
    Again my comment if it even was a comment it was not in any way intended to blaim Phil for something which looked good 11 month ago. By reading the original comment I only realized how quick things can turn against your holdings. Even over the 11 month it was a slow train reck thinking possible tomorrow it will recover.
    I learned with the time that you can not always be a winner. You sometimes have to loose, or you would have no counterpart where to sell to. I sincerely hope this will clear up the matter.
     

  272. jmm12

    Robert
    I do in interest rates.

  273. Phil

    Futures looking so-so with the Dollar down at 81.20 and the Euro up to $1.2786, Pound $1.5815, 79.14 Yen to the buck and – SHOCKER – EUR/CHF at 1.2010!!!  Something sent then flying to 1.202 at the open (6pm) and they couldn't get back below 1.2010 on their first attempt.  On the whole, what a silly thing to worry about when it's .001.  
    Oil $91.79, gold $1,593, silver $28.73, copper $3.477, nat gas $2.71 and gasoline $2.89 – so all stronger than Friday and our Futures are up about 0.3% so far and looking good for the bounce we expected despite no major news of stimulus yet.
    Japan up 1.25%, retaking all of Friday's losses.  Asia mostly flat otherwise but China not open for 30 mins.   

    G8 leaders wrapped up a weekend retreat in Camp David yesterday, saying they want Greece to stay in the euro, although they offered no new proposals for helping the country out of its mess. The leaders also said it's "our imperative" to promote growth as Angela Merkel found herself increasingly pressured. Next up is an EU summit on Wednesday. 
    Spanish PM Mariano Rajoy rejects the idea that the nation's banks should go cap in hand to the EU bailout fund, an idea that Francois Hollande apparently floated, although Rajoy is skeptical that he did. Another report says Spain turned down EU pressure to accept an IMF credit line to help strengthen the banks.
    The Seaway pipeline yesterday started to transport crude oil from Cushing in Oklahoma to refineries in Huston following thecompletion of a reversal project. The new direction of the pipeline, which is owned by Enterprise (EPD) and Enbridge (ENB), should help ease the glut of crude at Cushing and reduce the spread between WTI and Brent prices.
    The percentage of people over age 65 who are working is at a record high, with over 1/3 of men and over 1/4 of women aged 65-69 holding jobs. Of those 75 years old and over, 1 in 9 men and 1 in 20 women are employed. Meanwhile, the percentage of people younger than 64 with jobs has fallen, with those aged 25-54 down most. "This aging-but-not-yet-aged segment of the baby boomer class can’t afford to retire," says economist David Rosenberg.

  274. deano

    morx – assuming you were long the 13's and short the 16's, your broker should have netted the two positions – might be a timing issue in the way they handle the trade.

  275. Phil

    ABX/Bdonn – I love ABX LONG-TERM but not so much NEM.  I just feel ABX is a better operator and better prepared to ride out a major downturn – if we get one.  I think ABX's timing was this week as we were happy to start selling long puts when they tested $35 – they might go lower but, value-wise, I have a comfort with them around net $30 on an entry.  

    Thanks Winston!

    When to give up/Barf – Well, for one thing, there are always new people who haven't had a chance to lose money on WFR yet so, when I pick them again – it gives everyone a chance to be miserable!  Also, maybe I'm wrong but I don't think I've ever made WFR a short-term pick.  I liked them long ago when they were $10, thought they were ridiculous at $90 in 2008 and started liking them again below $15 in 2009.  They did get back to $20 but, since then, pretty useless.  Still, let's assume we take a $15 entry in 2009 and our allocation is 1/20th of $1M or $50,000 and in our 1x entry we did a 2011 buy/write on 1,000 shares at net $12/13.  That's about where we were in Jan 2011 so the first buy/write is a success and you have 1x at net $12.

    Now we still like them at $12 and we do a Jan 2013 that brings the basis down to $9/10.  Here we are in May 2012 and that's not looking good at all at $1.75 – our 2,000 shares (assuming the assignment) at net $10 have a potential loss of $16,500 – almost our entire initial allocation.  

    Of course, if I hadn't already decided I was going to DD when we lost 20% or 40% or 50% – then I'm a freakin' idiot for starting at this position down 80% and wondering what I'm going to do, right?   At the moment, the loss is 1.6% of the portfolio (and even if you did a 10% allocation on a smaller portfolio, we're looking at 3.2%) so it's hardly a matter of life and death and, frankly, with a $50,000 allocation, all I have to do is commit $8,500 (bringing me to a 50% allocation) to buying (at the moment) 5,000 more shares and my average cost on 7,500 shares becomes $3.33 per share.  

    So the real question is, do I still believe WFR can come back from $1.73 to $3.33 and get me even?  SURE I DO!  That being the case – why would I get out?  I hope it goes to $1 because I have the same $8,500 to commit and then I'd have 8,500 more shares at $1 and it drops my net to $2.38 on 10,500 shares.  If WFR goes bust, then I blow 2.5% of my portfolio on the gamble – obviously I wouldn't want to have 5 of those kind of risks in the portfolio but, if I have other positions that are making me money – then this one can hang on the risk side.  

    We are losing faith in WFR due to it's relentless decline but I kept buying SIRI at .10 when it was "certainly" going BK and I would pound the table on CROX at $1.50 when they were "doomed" and BAC at $3 and BA at $30 and BRK.A at $80,000 and AAPL at $85 etc, etc – stocks go out of favor from time to time for many reasons – sometimes they are good reasons and sometimes "EVERYONE" is wrong.  I'm pretty good at knowing when everyone is wrong but it puts me in a bad positions since no one agrees with me.  

    RIMM I did give up on because MOT killed me and I decided I don't understand phone company math as well as I thought I did.  That lesson helped me keep people out of NOK though -which turned out to be a good thing.  CHK, as I said the other day, I would consider it a cheat to take $32,000 from the $25KP and turn it into $100,000 by January with that spread because it's just one trade and not the purpose of the portfolio but I would be SHOCKED if people with $100K portfolios can't turn $3,200 into $10,000 on that spread.  Maybe I'm wrong – maybe everyone else is right – I just don't think so for reasons I've outlined this past month.  

    WFR had $1.6Bn in revenues in 2009 and lost $68M and traded for about $15 most of the year.  Last year they did $2.7Bn in sales but lost $1.5Bn due to a $1.5Bn restructuring loss and asset write-downs that didn't hit their cash-flow at all, of course, and they still have $500M in cash against $2Bn in serviced debt.  This kind of business goes through cycles and you have to bet on management to manage them effectively.  Not only are the SOX down significantly but the solar sector has been hammered and may continue to be hammered for a LONG time so this is a LONG-TERM investment so – even if we have $16,500 invested and $33,500 on the side to buy more – we don't rush in to buy more BECAUSE WE COULD BE WRONG!  

    We let the cycle play out unless there are EXTREMELY attraction option prices but, as it stands now, there are not so we wait for Jan 2013 and we'll see where we roll to but already I see that the Jan $10 puts at $8.30 can be rolled to 2x the 2014 $5 puts at $3.50 for a $1.30 debit so if we're still in a 1,000 share buy/write at $9/10 then we end up with a 1,000/2,000 share buy/write at $10.30/6.77 in 2014 if that's the roll and we STILL haven't committed more money than our initial $10,300.

    That's out of a $50,000 allocation out of a $1M portfolio where we wrongly entered WFR at $15 in 2009.  So the problem isn't the stock losing 80% of it's PRICE (not VALUE) over a few years but the allocations and time-frames of the investors.  It is getting to the point where it's kind of silly not to DD on the stock to make it a 2,000/2,000 buy/write with the first 2,000 at 10.30 + $1.70 = $6 per share and then, with another 2,000 potentially assigned at $5 in 2014, it's a $6/5.50 buy/write with $12,000 committed and another $10,000 allocated for the next round.  

    Between now and 2014, we hope to have a clearer idea of what's really going on with this company but, originally, I wanted to own 3,000 shares at $15 for about $45,000 and now I'm looking at owning 4,000 shares in the same company for $5.50.  As  a long-term investor, I'm probably going to be pissed if WFR jumps back to $10 and I ONLY have my 2,000 shares at $6 but, also as a long-term investor – I'm not going to throw more money at a trade that isn't working unless I have a DAMNED good reason to do so.  

    As I keep saying over and over again, year after year after year – if you aren't going to buy low – when will you buy?  If you aren't going to sell high – when are you planning to sell?  Investing is much, Much, MUCH easier when you have an actual value proposition on the things you are buying and when you allocate your capital appropriately to build your position.  

  276. nicha

    Anybody remember what trade Phil is talking about on CHK from above? Thanks.

  277. wjcarney

    Finally getting some rational actions out of YHOO.  Should have a nice pop tomorrow.

  278. jabobeast

    Nicha--i think this is it;
     
    (Selling 100 CHK Jan $10 puts for $2.15 ($21,500, $10,000 margin) and buying 200 Jan $10/15 bull call spreads for $2.60 ($52,000) – you can just do that with a stop loss at $10,000 ($15,000 left) and you're risking $10K out of $32K to net $100K at $15 in 7 months.

  279. sagemm1

    Phil/ on track question…TIA
     
    I wrote the following question will youresponse below that; My question here is hwere would you feel that trade was on track? for instance I own a DMND jun 20/25 BCS @ 22.64 last do you think that is on track? I am trying to get a feel where it is I should be thinking about on trak or getting out in the spreads.
     
    Phil/ I am curious what would you do? (working on my discipline in these spreads!!)
    so I bought some of the SGEN jun 20/25 bcs for .75 would you sell half as it is at a double or wiat it out
     
    SGEN/Sage – Well they are not really "on track" for $25 at $21 so if you can take half off and get a free ride, that's the smart play.

  280. jfawcett

    Phil / WFR – Nice commentary!  It is difficult to stay focused on the long term portfolio  Appreciate your mentoring.

  281. morxlntway

    thanks Deano, that was what i was expecting. Just surprised to see something else might be in the works. Guess i will know in a few hours.

  282. Phil

    Do me a favor and let us know what you think of SWW this week if you get a chance, thanks! 

    Dividend stocks/Burr – They are all nice-sounding picks but CRE does concern me and will continue to concern me for a couple of more years.  Obviously it concerned a lot of CXS investors last year, when they plunged from $12 to $7.50 into September and now they are asking you for 50% more than that so I'd maintain some healthy skepticism as maybe last year's sellers saw something (I don't follow them).  RNO is totally collapsing, falling 5% just on Friday so there goes your dividend – oopsie!  Do you care whether global demand is in the toilet or does the 13% dividend trump all other concerns – including rapidly falling earnings to the point where all of their cash flow is now subjugated to dividend pay-outs?  PMT also wiped out it's entire dividend's worth of value in the past month but how can anyone have an opinion on a $500M REIT?  I used to work with some guys who had a $500M line of credit with GE Capital to buy CRE – it doesn't go very far!  

    Rather than knock yourself out trying to find a way to make a 10% dividend on these companies – why not just sell the HOV 2014 $1.50 puts for .60 as HOV is at $1.73 and your net entry is $1.20 so, without any other coverage you have a 30% cushion and, even if you have an IRA with a 100% margin requirement, you are still picking up net .60 against 0.90 of net margin over 19 months, which is a 33% dividend without even annualizing and you don't have to worry about HOV changing their mind about the payouts or even draining their cash-flow to make the dividends – because they DON'T!  You are just selling premium to a guy who is willing to bet HOV drops 30% before he even makes his first penny.  And don't worry, there's an even bigger idiot paying .55 for the 2014 $2 calls!  There's a reason I don't waste my time with many dividend-paying stocks – I prefer GOOD stocks at GOOD prices – we can make our own dividends…

    Improvements/Pstas – My reading this weekend has reinforced my feeling that the US equity markets are still the best place to park money.  They may be the best place the way the aft deck of the Titanic was the best place to be relative to the rest of the ship but that didn't ultimately stop it from falling to the bottom of the ocean with the rest of the ship…   

    SINA/Yodi – I don't remember liking SINA.  I don't like anything in China, not even CHL anymore (and even when I did like CHL, it was just a bullish offset to shorting China as the least bad of the bunch).  I know Optrader plays around with it but he flipped bearish a while ago.  Anyway, I would not do anything to increase a commitment at the moment.  If you sold Jan something puts for $13.56 and they are now $33.75 my first question is what the hell price did you enter at?  My second question is – do you EVER stop out of a position?   Last time we crashed the markets, SINA was at $20 so, at $53 you'd better be planning to have China be a big part of your portfolio for a few decades if you'd rather DD than take the $20 loss or, in the very least, just roll the Jan $85 puts $33 to the 2013 $60 puts ($20.50) and then you have a chance to break even if they hold/get back to $60.  I'd say you could also sell the Jan $60 calls for $8.20 to cut the risk but that only works if you actually stop out the callers when and if the stock turns around.  

    Giving up/JMM – See above.  When you make a 1x entry, you have a decision point at a 20% loss and you either take the loss or you commit to seeing a 40% loss or you roll or whatever.  That's not a heavy decision usually as, even if you have a small portfolio and you're doing 10% allocations, we're just talking about losing 40% of 2.5% = 1% of your whole portfolio if the stock or option falls 40% on you.  When you do make the 2x allocation – things begin to get serious so let's say you DD with a 40% loss  - now you have a 20% loss on 2x or 5% of your Portfolio.  It's the same 1% but now another 20% takes you down another whole % in the Portfolio so you'd better be VERY sure you are willing to roll those dice BEFORE you move to 2x.  

    That means, the next decision you make – with 2x down ANOTHER 20% – needs to be taken very seriously and now you should need to convince yourself not to cash out as you will have done 2% damage to your entire portfolio with one position and the stock/option you entered has now moved 60% against you so CLEARLY you were wrong with your entry.  Still, you do have 50% of your cash on the sidelines but usually, at that point, we don't want to use it but we roll for time and position while we wait for things to turn around (assuming we still believe).  

    As I noted in the above post – the key element is to be PATIENT and not try to rush the timeframes.  We knew when it was a good time to buy in the Fall and we've been nervous since March about owning stuff near the top and by the end of April we were getting very bearish so you just have to pay attention to those cycles for entries and exits rather than entering positions regardless of where we are in the cycle.  As I noted above, RIMM we did end up giving up on with nasty losses but WFR and CHK I still like and neither one of them has been crushed by a competitor – they are simply out of favor due to the economic cycle.  Realistically, you should ALWAYS cut losses at 20% of a full allocation – there is really never a good reason not to follow that rule unless you are a VERY AGGRESSIVE trader and, if so, then you will get aggressively burned on a regular basis – it's all part of the cycle.  

    Big Chart – You would think we are overshooting but only the S&P is even holding the -5% line.  

    EDZ/Morx – Looks like you should be able to buy them back with little or no damage in the morning, if that's what your broker does.  If it were TOS and you had the $13/16 spread, they would just drop the net $3 in your account (although this is not an official, written policy).  If you are assigned the stock short then the caller paid you $16 cash and you kept the money he paid you for the calls and now you just have to buy EDZ to cancel in the morning – not too complicated.  

    YHOO/WJ – They could have done this much better and cheaper years ago.  That's why I never touch that company – idiots.  

    On track/Sage – On track depends when you started.  In other words, if I buy NOW the DMND Sept $22/25 bull call spread for $1 with DMND at $22.64, what's my goal?  My goal is to get to $25 between now and Sept, which is 4 months so I need DMND to gain $2.50 over 4 months or .60 per month or .15 per week so now I know EXACTLY whether my trade is on or off track and by EXACTLY how much it's on or off track every minute of every day between now and September expiration.  In general, if I'm off track by 2 units – I have to consider shutting down the trade if it's under or taking the money and running if it's over.  Of course there are other factors like earnings or some other event you may expect but, outside of other things – it's very simple to set up a quick spreadsheet to see if your positions are moving in the right direction or not.  So, on your specifics:

    • DMND has a break-even at perhaps $22 for you and they are at $22.64 but they were at $23.50 but they also were at $20.50 at the beginning of the month so here's a stock that can move up or down $1 in a week and you are dead center on the spread with 4 weeks to go so they could easily go down to $19.50 or up to $27.50.  Longer-term, however, they are range-bound since the great drop between $20 and $25 so again, dead center in the range and you just need to hope they are on the way to the top over the next 4 weeks and not the bottom.
    • SGEN with a break-even at $20.75 and the stock at $20.06 is not too bad as they jumped up from $17.50 a couple of weeks ago and if they only sort of kind of maintain 1/2 that pace, you'll be in the money in a month but again your range is less favorable as $21 is the top of their range and $17.50 is the bottom so this may be as good as it gets and if they can't pop $21 this week (or if they blow $20), I'd get out or at least roll for more time.  And what I said last time, I guess!  

    You're welcome Jfaw!  

    Things look calm enough at the moment.  Time to see who wins the Apprentice (Arsenio, I assume) and get some sleep – should be a busy week.  

  283. kinkistyle

    Looks like AMC Entertainment is going to get acquired by China's Wanda Group for $2.6B.  Can't help but think of Japan right before the bubble burst, but anyhow, hopefully Jackie's recommended CNK will be getting some of that China-love tomorrow!

  284. Pharmboy

    SGEN/sage – I would ride it out or take 1/2 off for a free ride.  This is one that I recommended many months ago, as well as a week or two ago.  Look a that chart on Friday.  Something is up, and they are trying to squeeze premium in every direction. 

     

    As for SWW Phil:

    I have to be honest here, and I hope that my comments come across as constructive.

     

    For the first few pages, and the last page, I think these are the most valuable for a weekly reader. I would like to see more charts (like StJs), weekly things to worry about (economic calendar) and a list of possible trades section….why you or whomever likes the company and the LONGER term trade. 

    As for pages 4-9, the daily recap of PSW, these are not really something that excites me as a subscriber of SWW (IF I was not here on a daily basis).  While there are some tidbits that are interesting (a few of your comments, Mish's call, Lee Adler, etc), it comes across as more of an advertisement for the daily chat, with all the 'trades' that did well (e.g., /CL shorting or going long, long put list that was for members initially and are now all up, etc).  I think this whole section could be condensed into the front few pages.

    For a weekly, I would be looking for 2 things, what just happened, what are some interesting things that shape the next weeks events.  Lastly, depending upon the trades, I would be looking for things like the income portfolio or longer term trades that do not have to be managed on a daily or even weekly basis.

    So, my question to you is: is this an advertisement for others to join daily chat, or a stand alone reader for those with busy schedules that want a market snapshot.  Right now it appears as an advertisement in the middle of the SWW….and IF I were to pay for just SWW, I would want a few trades that could help pay for the cost of membership.  I think we get that in daily chat, but others with busy schedules are after something different.  JMHO.

    And lastly, what happened to my section?  That was my favorite! :)

    Hope this helps. 

  285. Pharmboy

    I see that JPM is looking at losses that may run as high as $7B, not $2, not $5, but possibly $7…wanna go higher?  I think they have something to hide, and I stand by my pledge that they are going…..down.  MS, well, I still say $6. 

     

    OK, good night, should be around for a while tomorrow…I hate being on east coast time.

  286. jerconn

    Phil – SWW feedback – this is the kind of SWW I like, basically going back over, summarizing the past week and giving a sort of head's up regarding the upcoming week…I follow the daily chat avidly and esp yours and Pharm's comments but still if things are moving quickly as they did last week, I don't have time to digest every trade that you suggest so to get a weekend summary works well for me.  I take many of the directionals, especially DIA and USO puts and calls as they have been the most profitable for me.  I also did very well with the long puts – GMCR, LNKD and PCLN were all profitable – but as we have noted in the past, it's very often good to get into them some time AFTER you first mention them and ALSO to get out of them some time after you indicate that it's time to sell…many times I've hung onto DIA and USO options well after you said to sell and they turned out to be far more profitable – same for all of GMCR, LNKD and PCLN – I wish I was still holding them (I cashed out on Wed cause I thought like you let's go bullish) but obviously they are well down from then.  I take this bias toward holding on is because as the guy calling the shots, you want to do the "right thing" and get out when there is reasonable amount of profit, but for a guy on the board like me, there is often much more to made by holding on…last but not least Pharm's suggestions need to be in the SWW (as he mentioned) as do Lflan's – these guys contribute a lot of profit to PSW, so why not include them in the summary?  But overall, thumbs up for the SWW! 

  287. Burrben

    Phil / Jercon / Timing
     
    As Jercon pointed out, I find that the challenge with the trades posted here are that the calls are TOO early for both buying and selling.  The DIRECTION is spot on, which is excellent, but the forsight is such that it's way ahead of the market.  Phil has been calling for $90 Oil for a year, and if I was just short oil at 103, 105, 107, 109 and HELD onto my conviction, I would be building a home twice the size I'm planning.  But when Oil went from 101 to 109, I lost my trade conviction and took a loss, where I should have been doubling down and looking at a long term time bias.  
     
    Notice that many of Phil's main article reviews go back to early March calls to show the profitability of the trade.  Even the 25K was down 25 due to being bearish way too early, but Phil was proven to be correct.
     
    Phil, I guess what I'm saying is that while most times you are right in your analysis and foresight, it takes a while for the market to catch up, and this needs to be planned for.  Hell, if I just would have shorted oil with a long term bias, and entered the put list, with a long term bias, I'd be a very happy surfer with a new Al Merrick board!

  288. kinkistyle

    Last in the China series showing that the "Deus Ex Ma-China" is not coming anytime soon.  Chinese importers are starting to defer raw commodity shipments like coal and iron — or sometimes just outright defaulting on contracts.
    These deferments and delays have only started happening in recent days.  The dead fish is starting to stink!
    FT: China buyers defer raw material cargos

    Bloomberg: Chinese Iron Ore Buyers Defer Imports Cargoes, Mirae Says

  289. kinkistyle

    SWW:  I am of same mind as Pharm concerning SWW.  I am the "easily-bored" type and tend to skim over the SWW looking only at the pretty charts,  colorful boxes with big words, trades, schedule of events and new stuff like Pharm's commentary.    But here's the thing:  Whenever Phil mentions that he announced a couple of new trades in the last SWW, I always find myself scrambling over to the SWW site and frantically searching through the PDF like a kid on Christmas.  I think thats how you get more eyes on the newsletter ;)

  290. kinkistyle

    Timing/Burrben:  Phil's always early.  I usually use Phil's warnings as an early-warning system to start making preparations for the big turn and to "gird my loins".
    Actually, great thing to do is to go back into the archives and look for Phil's daily member chats on major bottoming days — like Mar 2009, Summer 2010, Fall 2011 and review the chat flow to see what a major buyable bottom looks like.  Many times the members will be completely pessimistic and screaming out for disaster hedges, some members will finally snap and start going off their rockers. There will usually be a sea of white trade recommendation boxes as Phil throws up so many bullish trades it becomes hard to keep up with them.  The Short Put list becomes as long as the Long Put list is right now.   And Phil will be pounding tables and heads trying to keep people from selling out.    You also notice the "value" members come out of the woodwork after not having seen or heard from them for ages.  

    Days like those make it totally worth the price of admission.

  291. yodi

    Phil thanks for SINA you liking China stocks is just my German sense of humor. I know your view on them!!!

  292. Phil

    Good morning!

    Futures up a bit more, that's good.  Chatter about stimulus but no actual stimulus – not into playing that game again…

    EUR/CHF back to 1.2009 so all is right with the World again.  

    SWW/Pharm – I didn't know you submitted a section.  Make sure I get a copy by Friday evenings and I'll make sure it goes in next time.   This issue of SWW was just thrown together over the weekend to see if we could get the formatting right in new system so we didn't have the usual charts and calendar.   As to the middle section – I thought the idea of a daily recap of what went on is good for people who work and don't have time to watch the markets every day.  What do you propose the middle be – I thought it was a totally unstructured mess the past few weeks so I wanted to get back to more of a review of the week.  As to trade ideas, there are plenty in there but I do think we need to put big, flashy boxes around them if you can't see them.  Unfortunately, that would add even more space requirements and we definitely need a better editing program (or maybe just better editors) as no one seems to be able to make that happen.  

    As a stand alone, I want SWW to be for people who have money in the markets but don't play every day or every week – just people who want to be informed about what's happening but have real lives and real jobs and can't play every day.  Sort of like baseball weekly for the investing set.  There must be millions of white collar guys in that position and they may not be able to justify a full-time subscription but I would think they are interested to hear what goes on in a chat room like ours.  

    I'm not sure if we're doing another one this week but if you have a different idea for formatting and content for the middle and you want to take the reigns – please feel free!  We're going to keep trying stuff until we get something I'm happy with.  

    Thanks Jerconn.  The thing about exits is people should be scaling OUT of a trade the same way they scale in.  I can't sit there every time and say "out of 1/2 PCLN at $22 and set a stop on 1/2 at $20" or whatever.  As it is I don't baby-sit every trade as I'm really trying to concentrate on the bigger market calls.  

    My attitude about a trade is that if it makes 20%, that's that.  You can stick with it, of course but ideally, if we enter 20 trades for $1,000 and 12 make $200 and 8 lose $200 then we're up $800 on $20K of trading for the week, which is 4% and gosh people should be happy to be up 4% a week.  Add to any positive winning percentage just one or two trades that make 40% or 60% and now we're making 10% a week.  That's all it takes because there's always another opportunity and something else to trade but only if you have the DISCIPLINE to get back to cash and that means you have to take winners and ESPECIALLY losers off the table – before they become a drain on your time and capital!  

    I've written a few times about this in the context of Babe Ruth vs. Ty Cobb.  It's more fun to be Babe Ruth but it's more profitable to be Ty Cobb – very few traders realize this and Babe Ruth hit .367 – he was no slouch, most Home Run hitters barely crack .300 and, from an investing standpoint, would be BK long before they made it to the hall of fame.  

    Timing/Burr – Position Sizing and scaling in are the key.  The minute you set out to make a big win, you are damning yourself.  Big wins are accidents, little wins are a skill as are little losses.  I am too far ahead a lot of the time, it's tricky when you see fundamentals forming very clearly but it takes MSM and retail investors a long time to come around to the same viewpoint.  I've actually gotten better as now I'm only about 3 months ahead on most things!  The Long Put List is a great example of sticking with positions and rolling (as opposed to scaling in) until we become right.  By NOT attempting to make a big win over a short time, we ended up with almost all 20%+ wins on 19 positions in 2 months.  Now we've got a Twice in a Lifetime list and people are complaining that 2014 is such a long way away but the point is that if the market goes down another 40%, we'll be able to roll and DD and we'll have plenty of time to recover and, if the market recovers early, then we make our 20% and 40% profits and we're happy.  It all goes back to my favorite investing quote:

    The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich.”~ Charles Dow, 1901

    I think people mix up the more exciting $25KP, which is GAMBLING, with the $500,000 Income Portfolio, which is INVESTING and those are the proper proportions between investing and gambling.  As I mentioned last week, we cashed the Income Portfolio because we don't have the confidence that we can protect our main investment but we're leaving the $25KP etc. to gamble with but even then, only because the point is to teach adjusting positions – otherwise I would have cashed them too.  My other favorite investing quote comes from WOPR becasue, sometimes, "the only winning move is not to not to play."  

     It's fine to take some aggressive plays with a little bit of your cash because you CAN afford to stick with it when it goes against you without freaking out because you have significant money riding on short-term trades.  Once you start gambling with money you need – it's a very short walk to unaffordable losses and desperation…

    Deferments/Kinki – That's not good!  How long have we been worried about all the stockpiling in China?  This is the end game for that and could get very ugly. 

    SWW/Kinki – Do you mean we need more pretty pictures?  That's why I'm trying to pick a better editing program because they don't seem to be able to manage it in Pages, even though it's supposed to be easy to work with.  

    Good way to play PSW Kinki!  

    SINA/Yodi – Since when did you get a sense of humor?  8)

  293. deano

    SWW Phil – I too find the week in review useful, but would keep it focused on trade calls, as the ones which go against are usually very good plays over the next several weeks/months, and the ones going well should be assessed on when to close. I also think the big chart and the economic calendar for the coming week are essential elements. As you are a primarily a value investor, I think a review of a companies fundamentals would be worthwhile – we spend so much time on the site on trades but relatively little looking at companies which is an important thing and art in itself  (I'd be happy to contribute in this area BTW). I think the last few issues guest author/ad sections have cheapened the newsletter, and if they're going to continue should be included as guest authors for a month – make them less overt pleas for subscriptions. Pharm is a must. Thanks as always for your fine service.

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