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Thursday Thrust – Enough to Break on Through?

I've listened to preachers

I've listened to fools
I've watched all the dropouts
Who make their own rules
One person conditioned to rule and control
The media sells it and you live the role
Mental wounds still screaming
Driving me insane
I'm going off the rails on a crazy train – Ozzy

Wheeeee, that was fun!  

SPY 5 MINUTEWe called for a "Whipsaw Wednesday" and it doesn't come much more whipsawed that that.  Fortunately we stuck with the plan from my morning post to take the money and run on our short plays and we even pulled the hedges off our $25,000 Portfolio, leaving it 100% bullish at 11:11 in Member Chat.

That left us a little nervous for the next hour but, of course, we had a plan for that too and, at 12:27, I put up a chart of the our indexes over the last 5 days saying: "Note our lows of last Friday – Those are the lines we need to give up at if we fail them!"

That's a very important point about aggressively trading – it's OK to pick a bottom and flip bullish, but ONLY IF YOUR BOTTOM HOLDS!  The biggest problem traders have is they guess a bottom (1,300 on the S&P was ours) but then, when their premise fails – they FAIL to give up on the position.  This is much like saying in the morning that you don't think it's going to rain – then having breakfast and seeing it pouring with rain outside – and refusing to take an umbrella because you didn't think it was going to rain (see "The Microwave Oven Theory of Behavior" for more on this subject).  

Here was the chart we looked at at 12:27 in chat:  

Things were not looking good, were they?  Remember, we had gone bullish on that first pause and failed to hold that line so the first thing we had to do was make a new plan — just in case.  If you don't know EXACTLY what you are going to do "just in case," you are going to let yourself get shoved around by these crazy markets.  We had laid out our Just in Case plays in the Morning Alert at 9:57 with three aggressive hedges to play for the Dollar over 82 (still valid today if we don't hold our weak bounces!) – we had a great ride down early in the morning and – as planned pre-market in the morning post – we took the money and ran on a 1% drop (a nice 10% profit on those SQQQs, as planned) and then we rode out the next little drop but we were PREPARED to re-cover.   

"Plan the trade and trade the plan" is a message we often use in our Virtual Portfolio section, where we discuss portfolio management techniques.  The more short-term and aggressive your trading, the more you need to have a plan.  Fortunately for us, our timing was pretty good and that same chart finished the day looking like this:  

I do so love it when a plan comes together!  Still, we are not out of the woods yet by any means as we've only succeeded in getting back to the weak bounce levels that we expected to give us trouble in Tuesday's post.  In the same way watching the channel on the bottom kept us from getting too bearish – watching the channel on top keeps us from "listening to fools" in the media and BUYBUYBUYing when we should be, once again, taking the quick profits and running.  

We had a quick primer on Stock Market Physics in yesterday's morning Alert to Members so I won't get back into it here but we simply don't have the thrust yet to break over our strong bounce levels and I'm not even sure we can hold our weak ones (Dow 12,540, S&P 1,319, Nas 2,840, NYSE 7,560 and RUT 765) without FIRM announcements of more QE, which is still the entirety of the bullish premise for the broad market.  

That, of course, does not stop us from making selective bullish picks – as there are plenty of very good stocks trading too low for the SLIGHTLY improving conditions we're seeing in the US.  In addition to the stocks I mentioned on BNN Tuesday and in addition to our Twice in a Lifetime List, we were able to identify a few additional bullish trades as we flew down yesterday including this gem at 10:29:

 

HPQ down another 4.5% today and they have earnings later.  Gonna be fun for a bullish play, I think.  At this point, all they have to do is not suck as much as DELL did.  

HPQ June $20/21 bull call spread is .55 and IF they have bad earnings, THEN we can sell July puts for .55 to cover them but, for now, there's 81% of upside and HPQ is at $20.80 despite the sell-off and the June $20 calls are $1.30 so they have to lose more than 50% of their value before you can't pull .55 back off the table anyway (leaving naked long calls on presumed bad earnings or general market collapse).  

That one should be well on-track for the full 81% gain this month (and maybe enough today to just take it and run on a quick day's gain) after HPQ did, indeed, manage not to suck as much as DELL.  It was a simple premise for a bullish earnings play and, as I often say to Members: "If you're not going to buy low – when will you buy?"

8:30 Update – When I said SLIGHTLY improving conditions in the US, I may have been a tad optimistic as April Durable Goods came in up just 0.2% (0.5% expected by leading Economorons) and, ex-Transport, it was a MISERABLE -0.6% vs +0.7% expected by the clueless people who they poll to get these pointless estimates.  

370,000 Americans lost their jobs last week and that is in-line with expectations but not at all a good thing as we still need to knock that number down 20-30% in order to get back to job GROWTH, something we haven't had in this country since the '90s:

We get Consumer Sentiment tomorrow as our last major data-point for the week and that's not going to be good with the market crashing and gasoline still $4 but what's the difference if it's 76 or 66 – it's a far, far cry from 116 we had WHEN WE USED TO HIRE PEOPLE!

When did we develop the fantasy in this country that you can have economic prosperity with high unemployment?   What whack-jobs came up with this joke of a concept and spun it to the masses by taking over Television stations and the Wall Street Journal and brainwashing the weak-willed masses with trickle-down BS that passes for policy these days?  Gosh, if only we knew, maybe we could stop them…

At least someone is trying to stop JPM from cornering another commodity market as US Manufacturers are getting together to tell the SEC that JPM's planned copper ETF (which will suck up 27% of the LME's copper supplies the way they do with GLD and USO etc, etc…) would "grossly and artificially inflate prices and wreak havoc on the US and Global economy."  Er, duh!  That's kind of the whole point to doing it, but thank goodness someone besides me is finally complaining.

In the letter to the SEC, lawyers representing copper consumers argue that the ETF would result in a “substantial artificially induced rise in near-term copper prices … simulating the effects of an artificial squeeze or corner being financed by unsuspecting investors in JPM’s ETF.”  FINALLY people are catching on to this scam – let's hope the SEC listens this time and, maybe next time we can get retroactive and take away the many, many other ETFs that cost Global Consumers Trillions of Dollars in excess commodity costs to support each year.  

Meanwhile, let's watch our levels and let's be very careful out there!  


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  1. Burrben

    New York Fed President Bill Dudley: “My view is that, if we continue to see improvement in the economy, in terms of using up the slack in available resources, then I think it's hard to argue that we absolutely must do something more in terms of the monetary policy front,” Dudley said.
    The NY Fed chief, who has a permanent vote on the rate-setting FOMC, acknowledged that his views have hardened a bit from his more dovish comments a year ago.
    Dudley is set to give a speech this afternoon on monetary policy rules in which he’ll argue that rules can be helpful in communicating with markets but that he would “be very hesitant to apply them mechanically.”
     
    http://www.cnbc.com/id/47548630

  2. stjeanluc

  3. morxlntway

    Parm – CLDX having a nice morning

  4. 1020

    Good Morning!

  5. Pharmboy

    PP today:

  6. Pharmboy

    CLDX….yes they are!  Think SGEN…but smaller.  Actually, the study that just came out is an SGEN technology…and since it appears to work in a good study (needs more power thought which = higher patient numbers), I will take it.  They are going to become the PLXs for the year.  Sell premium, reduce the cost of the core holding.

  7. stjeanluc

    Germany Gross Domestic Product n.s.a. (YoY) (1Q F) / 1.7% (1.7% expected)
    Germany Gross Domestic Product s.a. (QoQ) (1Q F) / 0.5% (0.5% expected)
    Germany Gross Domestic Product w.d.a. (YoY) (1Q F) / 1.2% (1.2% expected)
    France Business Confidence Indicator [May] / 93 (94 expected)
    Germany Purchasing Manager Index Manufacturing (MAY A) / 45.0 (47 expected)
    Germany Purchasing Manager Index Services (MAY A) / 52.2  (52 expected)
    Euro-Zone Purchasing Manager Index Composite (MAY A) / 45.9 (46.6 expected)
    Euro-Zone Purchasing Manager Index Manufacturing (MAY A) / 45 (46 expected)
    Euro-Zone Purchasing Manager Index Services (MAY A) / 46.5 (46.7 expected)
    Germany IFO – Business Climate (MAY) / 106.9 (109.4 expected)
    Germany IFO – Expectations (MAY) / 100.9 (102 expected)
    Great Britain Gross Domestic Product (QoQ) (1Q P) / -0.3% (-0.2% expected)
    Great Britain Gross Domestic Product (YoY) (1Q P) / -0.1% (0.0% expected)
    US Durable Goods Orders (APR) / 0.2% (0.2% expected)
    US Durables Ex Transportation (APR) / -0.6% (0.8% expected)

    A mixed bag again, but Great Britain slipping into a recession it looks like. And even the numbers that match or beat are indicating a contraction in the Euro-Zone. Overall not much to fuel a rally.

  8. lflantheman

    I may purchase some AAPL October 600 calls today.

  9. stjeanluc

  10. stjeanluc

  11. stjeanluc

    Our TNA calls are up 60% from yesterday!

  12. Phil

    Good morning!  

    Do I really have to say it?  All cut and past from yesterday and the day before as we're still skeptical of the bounce:  

     

    If we break lower than 2,550 in the Nas Futures (/NQ) and 12,500 on the Dow (/YM) and 1,320 on the S&P (/ES) and 760 on the RUT (/TF) – meaning ALL 4, we can move back to more aggressive bull call spreads on ultra-shorts:

    • SQQQ June $53/62 bull call spread at $2 
    • QQQ June $60 puts at .66 (just $2.40 out of the money (3.5%). 
    • TZA July $20/27 bull call spread at $2 ($1.89 in the money).  

    It's all about clearing those bounce hurdles and taking back the Must Hold lines – if we can't do that, then we're technically bearish again – no matter how cheap things may LOOK.  Our bounce lines are:  

    • Dow – 12,750 (12,540 is 20% retrace/weak bounce)
    • S&P – 1,343 (1,319)
    • Nas – 2,900 (2,840
    • NYSE – 7,720 (7,560)
    • RUT – 780, (765)

    Gotta clear the RUT, they stopped dead at the weak bounce and are just over at the open so now we look for the S&P to join at 1,319 but we really want to see 1,320 taken and held and all that is just a WEAK bounce that we expected for the week – not really a reason to get bullish.  

    I see we're already failing so I'm putting this up fast and dirty.  

    It's all about 760 holding on the RUT, the others are lost already and I'm going to want 40 of the QQQ puts in the $25KP and then 20 TZA if we fail 1,315 and 20 SQQQ if we fail 1,310.  

    Keep in mind the early selling could just be wise men taking the money and running but why should we be less wise if our levels don't hold?  

  13. Phil

    Whew, nice bounce already!  760 held like a champ but we don't want to do that again!  

  14. stjeanluc

    Big improvement in our FAS position!

  15. lolobear

    lflan/AAPL – what do you think of those oct 600 calls?

  16. stjeanluc

    Back to almost $5K of profits!

  17. lflantheman

    I'm likely to scale into the Oct 600s one or two at a time.    Let's get one for the MoMo, then no more unless the next one(s) get cheaper.    Order placed for one contract at 37  (presently 37.90)

  18. Phil

    Damn, I really would have loved it if we broke higher but, as we expected, lack of additional QE Thrust applied to the markets along with no decrease in gravity (Dollar 82.20) is making it very hard for us to break out of our weak bounce levels.  

    AAPL back below $570 is a bad sign too.  I'd say financials failing $14 would be the last straw and it's looking likely if something doesn't perk us up soon.  

    Something INCREDIBLE happened to EUR/CHF – They flew from 1.2009 to 1.2075 in minutes.  That's the biggest move they have made in a very long time and I don't know what it means and they're already back to 1.2035 but SOMETHING crazy happened at the open.  

  19. lflantheman

    We have 1 at 37.   Order now placed for 1 at 35.00

  20. Phil

    Very low volume (16M at 9:54) so not too meaningful but FEELS bad to me. 

  21. kustomz

    Phil from Forexlive on the EUR
     
    The rumor that the Swiss government may impose a tax on Swiss franc-denominated deposits has gotten the EUR/CHF cross off the floor at last. Now they need to follow through or risk the SNB being bull-dozed by the hot-money crowd which bought the cross on the back of the rumor…

  22. stjeanluc

    Makes you wonder if the Swiss CB is giving up… How much money have they been burning to maintain that peg!

  23. jabobeast

    PCLN at 666 again..hmmm….

  24. Phil

    760 and 1,315 still holding but Nas 2,530 and Dow 12,455 in Futures needs to improve but there are some bargain hunters out there and Transports are green (+0.4%) and VIX just 22.50 and TLT $123.13 so no major panics.

    FAS Money – Let's sell 3 June $89 calls for $2.05 to be responsible.

    IWM Money – Fine.  I still think we pull it out.  

    $5KP – TNA at $47 needs $17 to make $64 and that's 36% so we need a 12% move up in the RUT to 850 in 3 weeks – that's a bit doubtful but 5% up to 798 is not that far-fetched and that would be 15% on TNA and that's $54 and a $7 move on the $64 calls with a delta of .03 would move them up .21 and our 20 calls are at average .55 is not going to help us much, will it?  The problem is we're in for $1,100 and down to $160 so it doesn't pay to roll them BUT, if we spend $160 to DD at .08, we drop the basis to .315 on 40 and then it's a matter of luck (and QE) if we make it or not.  So, we can't roll as there's no point and it costs us more to sell them than it's worth so we could let the $160 die and maybe get $320 to $500 on a nice RUT move OR we can DD at $8, risk losing another $160 and have a chance of recovering $640 to $1,000.  Sounds like more fun to me so let's DD!  

    $25KP – 760 holding so no hedges still and I guess  we should be responsible like FAS Money and cover but July $72 puts don't seem so crazy to bet they hold and the Oct $94 calls don't seem out of reach and we're currently showing a $7,000 loss on those two positions that can flip to $4,000+ winners if XLF pops back over $14.50 so not only do I want to stick with them but I like them both as a brand new pair trade!  

    • DMND –  seems fine.
    • BBY – $18.87 – we aint gonna make that by June!  
    • FAS – above. 
    • CHK – $14.72
    • TNA – DD for the same reason as $5KP
    • TLT – I love those at $1.08.  
  25. Phil

    Dudley/Burr – That's just 7-year auction talk!  

    German GDP/StJ – Keep in mind that, just because it's in-line, doesn't mean it's good.  

    PBR making year lows.  

    Let's buy 5 TLT Sept $110 puts for $1.08 in the $5KP – why should the $25KP have all the fun?  

    Swiss/Kustomz – Yep, we figured they'd break at some point but I think this morning someone just forgot to turn the BuyBot (for Euros) on.  Maybe the rumor caused a surge that overwhelmed it and, if so, bravo to the manipulators who floated it because they were now able to benchmark the SNB's breaking point – kind of like sending a squad in to test the enemy lines…

    Quite this morning – everyone staring at the levels?  

    Going to be very hard to see what's what until we get rid of EU trading at 11:30 and then the auction – hopefully the same script as yesterday with a pop around 12:30 when the auction is done (takes them a while to report results) and there's no more reason to panic the markets.  

      

  26. rainman

    Calm before the storm?

  27. nicha

    Anybody in the car biz around NJ, NY, CT, MA areas? I am looking for a used car ASAP.

  28. stjeanluc

    Germany / Phil – It was my point. The Euro-Zone PMI is worrisome at 45.9! And the Great Britain GDP number was not comforting either. Given these figures, it's tough figuring it out a big move up unless we get more free money soon!

  29. stjeanluc

    Jerry Holbert

  30. kustomz

    Free money, Bill Gross says Dudley comments less dovish and puts odds at 50/50 now

  31. stjeanluc

    The FT is also wondering what is up with the Swiss Franc:

    http://ftalphaville.ft.com/blog/2012/05/24/1015091/a-mysterious-swiss-franc-sale/

    There were rumours of a tax on CHF deposits being introduced in Switzerland. JP Morgan might have started the move with a big buy order near SFr1.2010. But – to be honest, we aren’t sure what to make of this move yet.

  32. Savi

    maya—-I am working on the Vegas meeting, it is at the very beginning stage—the dates under consideration — Nov 10,11,12th

  33. stjeanluc

    Tough times ahead in China it looks like:

    http://ftalphaville.ft.com/blog/2012/05/24/1014161/china-flash-pmis-point-to-contraction-again/

     

    The number for May is 48.7, compared to 49.3 in April. This is the seventh straight month of contraction and the more important components of the index look fairly bad.

    Here’s a summary of the direction and speed of movement of each component:

    China FLash PMIs May 2012 Markit Economics/HSBC

    The things to notice here are the new orders, which contracted at a faster rate, and the new export orders, which reversed after expanding in April. Also the faster-contracting stocks of purchases suggests inventories are building.

    China Flash PMI May 2012 - export orders & employment charts

  34. yodi

    Phil QQQ Holding the following play and I am loss to what to do with it Jun 12 B/C 5.32/ 2.97 now 3.04 / 1.03 ??? TIA

  35. kustomz

    Ugly markets. Panic equates to swift moves up and down…

    ONXX has been kicking ass

  36. Phil

    At the open: Dow +0.19% to 12521. S&P +0.26% to 1322. Nasdaq +0.17% to 2855.

    Treasurys: 30-year -0.26%. 10-yr -0.16%. 5-yr -0.07%.

    Commodities: Crude +1.15% to $90.94. Gold +1.64% to $1573.75.

    Currencies: Euro +0.13% vs. dollar. Yen 0.%. Pound -0.12%.

    10:00 AM On the hour: Dow -0.16%. 10-yr -0.16%. Euro -0.06% vs. dollar. Crude +0.85% to $90.67. Gold +1.3% to $1568.55.

    Market preview: EU shares and U.S. stocks are higher despite some awful eurozone and Chinese PMI data. S&P Benchmark +0.1%. It could be because the EU says it wants Greece to stay in the eurozone, although they are planning for a "Grexit." Following earnings, H-P is +7.6% and Pandora is +17%, but NetApp is -13% and Tiffany is -8.2%Later: Kansas City Fed Mfg Survey, Fed's Dudley

    FRBNY President Dudley – one of the leading doves on the FOMC – sounds a hawkish tone, telling CNBC he doesn't see the need for additional ease at this time. What's changed? He has more confidence the economy is going to keep growing and less worry about a "Japanese-style deflation outcome."

    The dive in the Swiss franc was the result of a small sell order, and not from a policy move, says a trader. The euro/franc cross has been pinned to CHF 1.2010 for much of the past month, so it didn't take a whole lot to move it. The cross remains higher, however, now at CHF 1.2037. - How obvious of a short is that?  I'm going to go out on a limb here and call for it to fall to 1.2009!

    That whoosh in the Swiss franc (nice pic here) comes on rumors about a Swiss tax on bank deposits to come into effect on June 1. 

    U.S. Flash PMI (first ever) for May 53.9 vs. April's final read of 56.0. It indicates the slowest level of expansion in three months. New Orders 54.8 Vs. 56.9. Backlogs of Work 51.7 vs. 52.2. Input prices 56.3 vs. 63.1. Output prices 52.8 vs. 53.9.

    EIA Natural Gas Inventory: +77bcf. Futures -0.73% to $2.78. - Seriously running out of room!

    Good for the long-term, though – go CHK!  Never before has the price gap between natural gas and diesel been so large, making trucks powered by natural gas analluring option for company fleets. Examples: Waste Management (WM) says 80% of its truck purchases in coming years will be fueled by nat gas, and Ryder (R) is expanding its program of renting out nat gas trucks and is introducing them in clusters it operates for big retailers.

    Still all autos:  Demand for motor vehicles and parts rose 5.6%, according to this morning's release on durable goods. The reading marks the highest level for the category since last July. On watch: ALVBWA,GNTXJCITEN.

    Zillow's new negative equity report shows nearly 16M U.S. homeowners, or 31.4% of all homeowners with a mortgage, were underwater in 2012 – a bit better than 2011's 32.4% but higher than estimates from CoreLogic and others. “It’s a $1.2T problem," Zillow's Stan Humphries says. “We think 2012 is going to be a great year for home sales, but a mixed picture for prices." - Remember the good old days when you'd see a $1.2Tn hole in bank balance sheets and worry.  How silly we were back then…

    "Who could blame" investors for continuing to pull money out of U.S. stock funds, writes Josh Brown of the 13th consecutive week of outflows. After having been beaten up by the bullies on your way to class, one learns to take a different route to homeroom.

    How about a show of hands on who thinks the euro is headed lower, asked Goldman's Jim O'Neill at a January hedge fund conference, when the currency was about $1.26. Nearly every hand in the room shot up. Six weeks later, the euro was buying $1.35. "If Europe says something good," writes Upsidetrader, look for a big reversal in the euro, the dollar, and stocks.

    Not the way to rally the markets at the open:  "Price stability is the benchmark of well-being," says Mario Draghi in a speech (that thought must be very comforting to Greeks at the moment). The ECB's extraordinary steps averted a bank collapse, he says, but it is not the central bank's job to keep insolvent banks afloat. Continued EU integration needs "a brave leap of imagination."

    Pump it UP!  "Pencil in" another LTRO announcement at the ECB's July meeting, says JPMorgan, also predicting a 25 basis point rate cut for September. The bank cites today's PMI reads as the final straw to stir the ECB to action (then why wait until September?). Something is clearly up in the currency markets, where the euro has spiked higher vs. the dollar and, more interestingly, against the Swiss franc.

    Yes, because the first one really did the trick!  Expect the ECB to respond to Greece by holding another LTRO, says Commerzbank's chief economist, adding he expects the bank to take its time about announcing such. "The growing uncertainty is poison for the economy," he says. He predicts a cheaper euro, not because of a run, but because the ECB will have the loosest monetary policy.

    Best quote from the EU summit: Discussions about eurobonds were "not unheated," says Jean-Claude Juncker. (via Sara Eisen)

    Quelle suprise!  Moody's affirms France's AAA-rating and its negative outlook, saying it would raise its outlook if the country's debt metrics improve but would cut if its contingent liabilities increase. Moody's adds that France's plan for sustainable finances is positive.

    Greece's exit from EMU would be a good example for others, says the Bank of Russia's Mikhail Shvetsov, speaking in Milan. He also says Greece has plans for a parallel currency. "Merkel to Greece: come to mama, Putin to Greece: come to daddy," writes ZH.

    Move along folks, nothing to see here: The majority of steel mills in northern China have halted production, according to an analyst in the coal-trade business, putting more meat behind an earlier story about iron ore and coking coal buyers attempting to back away from orders. Not surprisingly, electricity producers seeing their own stockpiles of coal grow due to slumping demand for juice.

    Or here… You heard me – move along:  Aluminum producers in the province of Henan (China's largest producing province) have idled about 700K tons of capacity in recent months, says a senior official, with another 500K to be shut by year's end. The country in total has capacity of 23M tons, mostly at the high end of the global cost curve, thus making it particularly susceptible to weaker demand. 

    I thought I told you to move along!  Weak Chinese property developers are in survival mode, says S&P, facing "spiraling upward" borrowing costs. Higher-rated companies are also facing higher rates and shorter terms, the agency's Chris Lee says, not expecting much of a property recovery even if the government eases policy

    Beachfront property in Iceland looking good!  The IEA reports U.S. carbon emissions fell by 450M metric tons in the past five years, but global emissions continue to rise, now at 31.6B metric tons. IEA attributes U.S. improvement to “policy driving greater efficiency and technology making shale gas production viable.” But abundant U.S. natural gas was more than offset by added coal burning in China and India.

    An increasing number of forecasters in Reuters' monthly survey expect Brent crude to average less than $100/bbl next year thanks to Europe’s debt crisis, slowing Chinese economic growth and a possible resolution of the Iranian nuclear crisis. Macroeconomic risk from Europe will need to fade before crude oil market fundamentals dominate pricing again, says one.

    Talks between the P5+1 world powers and Iran have continued for a second day, although big differences still remain. Iran wants the West to cancel its impending oil sanctions for the negotiations to carry on; the EU and U.S. want the country to halt its production of higher-enriched uranium and reverse its current capabilities. 

  37. Phil


    Airline stocks charge out of the gate with outperforming gains across the board, helped in part by a 
    forecast for lower oil prices. Advancers: LCC +4.2%DAL +3.8%UAL +3.8%LUV +3%.

    Arch Coal (ACI+2.3% premarket after Goldman Sachsupgrades shares to Neutral from Sell with an $8 price target. The firm says the risk/reward is more balanced as concerns about thermal volume cuts and its balance sheet are now mostly discounted in the stock.

    Suntech (STP) CEO Zhengrong Shi says if Europe follows the U.S. in levying punitive tariffs on Chinese solar panel imports, it could deal a "lethal" blow to the industry. Beyond words, China signals it may retaliate against the tariffs, saying U.S. government backing for six clean energy projects in China had violated WTO rules and acted as barriers to trade.

    Dow Chemical (DOWwins a final and binding $2.2B award from the International Court of Arbitration in a dispute with Petrochemical Industries of Kuwait. "The company's partnership with Kuwait, which includes several… joint ventures, remains strong and will continue to benefit both parties," Dow says. Shares +3.8% premarket. - That's a whole year's earnings!  Good for a buy/write at $31.34.  

    Over 50% of medical insurance policies sold to consumersdon't match up to the requirements of the federal health law that's due to take effect in 2014, a study from the Commonwealth Fund shows. The law, which is being reviewed by the Supreme Court, will improve the terms of the policies for individuals, although it could lead to higher premiums.

    Speaking of TSLA expectations:  General Motors (GMrecalls 4.3K Chevrolet Malibu Eco cars in the U.S. to fix an airbag problem that poses a potential safety issue under extreme driving conditions. Shares -0.2% premarket.

    New York Yankees President Randy Levine denies rumors in baseball and banking circles that the Steinbrenner family are considering selling the team. However, sources indicate that the family's eyes have been lit up by the $2.175B that the Los Angeles Dodgers fetched in April, with experts saying that the Yankees could be worth $3B. 

    Tiffany's (TIF9% plunge following its earnings report and profit warning is a buying opportunity, says Oppenheimer, as Q1 sales held up, input costs are easing, and comps will soon moderate, while the firm also believes the new guidance is attainable. 

    Though reiterating a Market Perform on H-P (HPQ +4.7%),BMO sees it as a better play than Dell (DELL -0.6%), following H-P'sFQ1 beat and restructuring announcement. Dell's efforts to improve margins "will take too long to play out," BMO argues, whereas H-P will get a boost over the next few quarters from its restructuring. The fact Dell is underperforming a bit this morning suggests the Street takes H-P's results as evidence Dell's problems are partly of its own making. (HPQ transcript

    NetApp's poor guidance is hurting both storage-related names and infrastructure vendors seen as having strong cloud/virtualization exposure, as fears of an IT spending slowdown grow. Also, while the Street is pleased overall with H-P's results, thepoor showings from its server business and Autonomy enterprise search unit might not be going over well. EMC -4.1%STEC -3.8%.BRCD -2.8%CVLT -4.9%FFIV -5.5%VMW -4.5%CTXS -3.9%.

    Conflict?  Of course not – we ALWAYS screw you like this – it's in the prospectus: The $100M trading profit that underwriters are reported to have made by "greenshoe" short positions on Facebook may seem "like a giant conflict of interest," outside of Wall Street writes Fortune's Stephen Gandel, but no rules were broken and the potential trades were even disclosed in Facebook's prospectus." 

    And we're ALLOWED to have inside information, silly:  The WSJ details how one of the institutional investors that was notified by an underwriting bank of cuts to Facebook (FB) estimates, Capital Research & Management, decided not to invest in the IPO as a result. It's added that while such selective disclosure is normally illegalit isn't for IPOs, due to laws that prevent analysts at underwriting banks from issuing research until 40 days after shares begin trading. FB +1.8%. (previous)

    Microsoft (MSFT) has won a German injunction on the sale of Motorola Mobility (GOOG) Android devices, after a court ruled Motorola is infringing a patent related to the brilliant innovation of breaking up and reassembling a text message. The ruling comes after the ITC banned the U.S. import of Motorola devices infringing another Microsoft patent, and suggested (pending a final ruling) the Xbox 360 should face an import ban for violating Motorola patents. 

    Adam Lashinksky, author of a recent book on Apple's (AAPL) business culture, provides an inside look at how the Tim Cook era is unfolding. For better and/or worse, Apple is becoming "a more normal company" under Cook, Lashinsky suggests. Among his findings: Cook engages with investors in a way Jobs didn't; engineers have to share more decision-making authority with managers; and the company now has a dedicated M&A team.

  38. Burrben

    Guy writing about Phil's SCO Trade and BNN video.  This was a little while back
    http://seekingalpha.com/article/419031-oil-options-risk-and-illusions?source=email_rt_mc&ifp=0

  39. dclark41

    Phil:
    If we do get QE will that indirectly improve things over there (Europe/China) or will it simply start the money presses everywhere? Even still, I am not sure more free money over there would be as effective as it would be here. Perhaps EDZ should still be in favor as a long term downside hedge?

  40. Phil

    The drinks flow

    People forget

    That big wheel spins, the hair thins

    People forget

    Forget they're hiding

    The news slows

    People forget

    The shares crash, hopes are dashed

    People forget

    Forget they're hiding.



    Behind an eminence front

    An eminence front – it's a put-on

  41. zeroxzero

    Thanks for the PBR tip, Phil, it's a lumbering, politically-hobbled giant, but $19 is a very cheap price for those non-Middle East Risk-exposed reserves.  Backing up the truck, in phases. Dollar looks a little overstretched, too, we'll see if it's a long or short term trade.

  42. Burrben

    Phil / DOW
    What do you think about buying DOW for 31.49 and selling the Jan13 30 Straddle for $7.30?

  43. rperi

    Phil I am trying to decide what to do with 2 June $30 HPQ short puts.  I have made nice returns on the stock selling covered calls over the years and I had the last round of stock called away in Feb, so I have been rolling these puts a few months at a time and selling calls against it as well, currently the June $23's.  I am happy to be in HPQ long term as they have always done well by me, but I want to get in closer to the 50 dma of $23.75.  My net on the $30's is $27.77.  Any creative play I am missing?
    Btw, thanks for the ACI response yesterday – very appreciated and really helping me learn a well-rounded approach.
    You looked tan on the tube yesterday – where you been lately other than Vegas?

  44. angelcur

     SP bumped  resistance@1325 a couple x this morning….pushed back each time…so long as index holds above 1318…  think we keep trying to break higher today….dropping back below 1318 probably brings in more selling pressure and a possible test of support at 1310….after yesterdays staccato action….stocks mayjust chop back and forth for most of the session…for me may not be muchto do intraday today.

  45. kustomz

    Fxlive with the close in Europe
     

    UK FTSE +1.8%
    DAX +0.6%
    CAC +1.3%
    Spain IBEX +1.4%
    Italy MIB +1.1%

  46. ethan2010

    phil, what do you think of PFF? for a small, conservative and less actively traded IRA account, does it make sense to just buy the stock earning interest and hedge the downside risk with some disaster hedge, either long PFF put or short call or buy a TLT or XLF bull call spread? thanks in advance

  47. morxlntway

    i bought a new HP laptop because my jack on my Compaq broke off inside! I may try to solder a new one myself just to see if i can.
    anyhow, the F5 key takes me to my homescreen unless i hold the funtion key down. My guess is this is an easy change, but where & how? anyone know?
    thanks!

  48. terrapin22

    Savi / Vegas - those dates look good esp since that Monday is Veterans Day holiday observed.

  49. zeroxzero

    Lotta fibrillation, notta lotta information. 

  50. Phil

    Car/Nicha – You can call my brother down in Florida and at least he won't screw you.  Cost $500 to ship a car up but Florida cars can be real bargains – literally driven only by old lady's on Sunday and no salt damage, etc.  Last car he had for himself was a top of the line $80,000 BMW that was 10 years old and looked brand new with 40,000 miles for $15,000 – you can't get stuff like that here – if that's the kind of stuff you want.  

    Free Money/StJ – I don't see that Germany has an alternative.  They just have to figure out how to save face while doing a reversal.  

    Euro $1.26 and Pound $1.57 – hopefully it holds with 10 mins to close!  

    Transports/Rain – Could actually break out on lower oil. 

    Swiss 1.2028.  

    Vegas/Savi – Election week is good!  

    China/StJ – It does seem silly to be bullish about anything with that looming catastrophe hanging over us.  

    QQQ/Yodi – I don't know what strike that is but I assume it's the $60/63 but then why did you buy it for $2.30?  Anyway, it's $2 now so just take the .30 loss and get out if you've lost confidence in it.  That play is betting on QE over the weekend or you'll be out of the money with 2 weeks left.  

    Sisters/Burr – Now there's a family to marry into.  About to do an IPO and get even richer too…

    SCO/Burr – First of all, who pays $44.85 to trade 3 contracts?  Second of all, his entries are terrible.  I set the trade up at net $75, and it was an easy fill for weeks, and this guy sets it up at net $155.  This is why most people shouldn't play with options (and good thing for us too or they'd be too crowded).  I know for a fact I said risking $75 cash AND owning SCO long-term.  The mere fact that he's supposing oil goes back to $145 shows what an inept analyst he is but that's the problem with SA, you can't tell if anyone has a clue or not except sort of from the number of followers they have.  I can't believe this guy has an investment advisory firm – it's friggin' amazing!  

    EDZ/DC – It's always my favorite hedge these days.  $18.56 is nice and low for EDZ and you can set up the following hedges: 

    • EDZ July $17/26 bull call spread for $2, selling $16 puts for $1.20 for net .80 on the $9 spread.  If you stop out at $1 on the bull call, worst case is you own EDZ for net $15.80, which is below the last top of range (around $14) before it broke up.  
    • EDZ  Oct $18/23 bull call spread at $1 is on the money so no need to sell puts (as you make 400% to the upside on just the bull call spread) unless they fall, then the goal would be to sell $10 puts (now .30) for $1 as that's well below the $11.50 low for the year and owning EDZ for net $10 is a good hedge for the rest of the year.  

    PBR/ZZ – They cut their dividend, which really cleared the decks of investors but I do think it makes for a nice scale-in entry.  2014 $15 puts can be sold for $2.20 – that's a nice net $12.80 entry (33% off current $19.20) against $1.60 of net margin – can't complain about that and I'd do that for the new Income Portfolio.  

    DOW/Burr – I like them but you have to get into the mindset of taking advantage of a high VIX and a low stock price.  In Jan 2013, DOW may be at $40 and you won't get the opportunity to do anything but be called away so, if you are a LONG-TERM investor, why not buy the stock at $31.35 and sell the 2014 $27 calls for $7 and the $25 puts for $3.70 and then you are in with a net of $20.65/23.83 and that's a 24% discount even if it's assigned to you with just $2.50 in net margin on the put side and a call away with a 30% profit plus your $1.28 dividend, which is another 6.2% a year on the $20.65.  There's a value in NOT having to hedge a long-term trade because it's so well protected.  Your trade puts you in 2x at $27.09 if DOW is under $30 while mine puts you in 2x for almost 20% less, which means you can buy 20% more with the same allocation and collect 20% more dividends and have 20% more downside protection and tie up more than 20% less margin to do it.

    HPQ/Rperi – Well those aren't coming back and very disappointing day for them off that earnings pop.  The $30s are $8.30 and HPQ is certainly a $25 company so why not just drop them to 1.5x the 2014 $23 puts at $5.10 and stop staring at them.  If you get assigned back – then you have your ideal entry and, if you get nervous, you can always sell a few calls along the way as you won't be upset if HPQ pops 10% on you and forces you to roll some callers or buy to cover with those long puts dropping in price. As to the tan – a few days in Vegas is all it takes for me, I tan very easy.  

    3rd time testing our lows not looking charming but let's see what happens as we've had a lot of resilience so far. 

    Volume still lame at 46M on the Dow at noon.  

  51. Phil

    Do you think it's a coincidence that CNBC plays Crazy Train in their bumper the same day I use it?  That kind of stuff happens a lot…

  52. rustle123

    Crazy Train/Phil
     
    I think it's as much coincidence as when oil starts going down and they wheel T Boone Pickens out  that day to tell us how the Sheik in Saudia Arabia is sick and oil will soon go to 200 a barrel.

  53. jbaker2447

    WFR down
    S&P downgrades WFR to B-plus from double-B
    http://online.wsj.com/article/BT-CO-20120524-712378.html

  54. dclark41

    Phil
    We are breaking your marks! SPX: 1314.37 RUT: 759.65
    Seems dollar driven

  55. Phil

    S&P struggling to hold 1,315.  So there's one layer of protection now in the $25KP and we'll add the 2nd if we have to on a break below 1,315 BUT, keep in mind it's the auction right now so this could be the blow-off bottom we had yesterday at about the same time…  Tough call.  

    PFF/Ethan – Have you seen how volatile that thing is?  How do you call that conservative for a less-active IRA when it ranged 20% last year and 10% this year?  This is what I was talking about above – you have to factor in the cost of your need to hedge and subtract that from what you think you'll make on the stock.  Aside from having terrible option premiums to sell, it doesn't correlate too well to the S&P so makes for messy hedging.  If you want to be bullish on a dividend-paying stock, why not MRK at $37.40 where you can cover with 2014 $35 calls at $4.65 for a net $32.75 entry (12% off assuming you can't sell puts in the IRA) and that makes the $1.68 dividend a whopping 5.1%.  $35.50 is the 200 dma so good support there and no major need to hedge unless the market drops 10%.  

    82.27 on the Dollar is increasing gravity.  

    F5/Morx – Try the F Lock button, should lock the function for you.  

    Veterans Day/Terra, Savi – That's what makes it good.  Most people can get off of work and it's a slow market day but we're open so a perfect day for a seminar while the markets are open.  

    Coincidence/Rustle – Or synchronicity!  

    A connecting principle

    Linked to the invisible

    Almost imperceptible

    Something inexpressible

    Science insusceptible

    Logic so inflexible

    Causally connectible

    Yet nothing is invincible

  56. Phil

    If we're running the same program as yesterday it's rally time!  

  57. zeroxzero

    I'm bored enough to dip my toe into Facebook, which seems to be approaching a loss of 1/3 of high tick on its IPO.  Or to go off and do real work, even.

  58. Phil

    CHK/Jabob – Gotta agree with Oppenheimer there.  

    Poor WFR!  

    OK, NOW if we blow 1,315 again, I'd add the 2nd layer of protection – we've only been holding out hope it's another flush but 3 failures on a move up is something we want to be protected from.  

    AAPL not $570 = Bad

    XLF not $14 = Bad 

    Dollar 82.25 = Bad 

    I think QQQ $62 should be the last straw if you're on the fence and/or Transports going red (up just 0.12 now). 

  59. nicha

    Cars/Phil – I am not looking for high end cars. Just something basic. Send me his number or website and I will get in touch with him. Thank you.

  60. jabobeast

    prety cool bball commercial/video--not market hours, of course..
     
    http://www.thepostgame.com/blog/clip-board/201205/kyrie-irvings-uncle-drew-video-hit

  61. Phil

    11:00 AM On the hour: Dow +0.13%. 10-yr -0.19%. Euro +0.01%vs. dollar. Crude +1.44% to $91.19. Gold +1.51% to $1571.75.

    11:53 AM Europe closes nicely higher as oversold conditions overpower an initial fall on ugly economic data (which may cause the ECB to act). Stoxx 50 +1%, Germany +0.5%, France +1.2%, Italy+0.9%, Spain +1.4%, U.K. +1.6%. Euro is flat after some big rumor-mill-induced swings, buying $1.2583.

    12:00 PM On the hour: Dow -0.05%. 10-yr -0.18%. Euro +0.01% vs. dollar. Crude +1.5% to $91.25. Gold +1.35% to $1569.25

    May Kansas City Fed Manufacturing Survey: Rise to 9 from 3 in Apr, 9 in Mar. New Orders 10 vs. -8 previous, Production 17 vs. 0 previous. Backlogs -3 vs. -5 previous

    The "Death of Equities?" John Authers and Kate Burgess explore the end of more than a half-century "passion for equities," as institutions shed stock exposure for fixed income. The authors suggest stocks' relative cheapness is more about low bond yields, and unless said yields are going to go negative, any tailwind to equity prices from fixed income is about used up. (see also)

    Billion Dollar Bait & Switch: States Divert Foreclosure Deal Funds (Pro Publica)

    Obama spending binge never happened (Market Watch)

    WSJ Poll: Dim Views of Big Business, Government (WSJ)

    Obama Prospects Improve as Swing State Economies Improve (Bloomberg)

    Debt crisis: Germany holds a gun to Greece’s head (Telegraph)

    China's banks may fall short of their 2012 loan targets, say several officials, thanks to a drying-up in demand from their biggest customers – large state-owned firms. Bank loans dove 33% April and the May figures may be worse, with only ¥34B ($5.4B) advanced through May 20 (¥682B was loaned in April). The news seems to have hit stocks and the aussie dollar, off 40 pips in a few minutes.

    China’s rich head for the exit (FT.com)

    XLF was $35 at the time!  Bank Q1 net profit rose 23% to $35.3B – the highest since Q2 2007 – as revenue rose 3.1% to $169.6B, the FDIC says in is quarterly report. However, loan balances fell $56.3B (0.8%) after three consecutive quarterly increases. Lower provisions for bad loans were a factor in the profit improvement. (PR)

    The Modest Worth of Big Banks (NYT)

    Whom Should We Prevent From Blowing Themselves Up, And Why? (DealBreaker)

    GE expects its 2012 revenues in Brazil to jump 30% this year from $3.7B in 2011. The conglomerate plans to set up a factory in EBX Group's Acu port in Rio de Janeiro to produce equipment for the oil, gas and energy industries. As noted earlier, GE will provide $300M to an EBX investment fund.

    GE (GE -0.6%) will use the entire $4.5B "special dividend" that it's receiving from GE Capital for buybacks, Jeff Immelt has told investors. That should add ~$0.03 a share to GE's 2013 earnings, estimates Citigroup, which reiterates its "buy" recommendation on the company. 

    Onyx Pharmaceuticals (ONXX +4.7%) says that Bayer (BAYRY.PK) has submitted a New Drug Application to the FDA seeking approval for the oral multi-kinase inhibitor regorafenib for the treatment of patients with metastatic colorectal cancer. Regorafenib is a Bayer compound, and Onyx will receive a royalty on global net sales. Separately, Bernstein initiates the shares with an Outperform rating.

    Following years of prodigious spending, health insurers, doctors and hospital are making efforts to halve the growth in the U.S.'s $2.7T healthcare bill to bring it more in line with inflation. One problem, though, is that the more tests and procedures doctors and hospitals do, the more money they get.

    Attn TSLA fans – what's that – two in one day?  Nissan (NSANY.PKrecalls over 194K vehicles sold by Isuzu because of defective parts, according to a filing the company made in Japan. The recall covers Caravan and Como vans produced between May 2001 and July 2011. [

    FB victim!  Corsair Components has postponed its IPO, citing market conditions. The company, which provides computer components with a focus on gaming hardware, had intended to sell 6.9M shares for up to $14 each, but will wait until the environment improves. Corsair follows TVAX Biomedical, Tria Beauty and others in deciding not to list at the moment.

    PayPal's (EBAYtie-up with payment-processing rival Verifone (PAY) is all about fending off Square, suggests Owen Thomas. PayPal, while expanding its offline partnerships, doesn't have Verifone's retail reach, and Verifone can't match PayPal's low cost structure. While PayPal and Verifone have each released rival offerings (III) to Square's credit-card reader, their deal is an attempt to halt Square's efforts to move upmarket and sell retailers on a soup-to-nuts payment solution.

    Netflix (NFLX) is a "frenemy" of the cable industry, Cox CEO Patrick Esser maintains. While admitting Netflix is a content rival, Esser also notes 40% of Cox's broadband customers streamed Netflix content in March. Netflix content chief Ted Sarandros (previous)admits his company is cannibalizing some cable viewing, while adding Netflix's investments in original programming are due to its inability to license content from the likes of HBO and Showtime. 

  62. Phil


    Heavily-shorted Pandora (
    P +16.8%) soars thanks to itsFQ1 beat, which was fueled by share gains and better monetization, and strong FY13 guidance. Needham (Buy) sees the results asevidence Internet radio is a "winner-take-most" market, while Maxim Group (Buy) thinks they indicate Pandora's sales investments arepaying off. SA's Rocco Pendola is encouraged by Pandora's earnings call commentary, which he sees as more proof of the company's disruptive impact on the radio industry.

    Chinese sovereign wealth fund CIC is in "advanced talks" to buy up to a $2B stake in Alibaba (ALBCF.PK), Reuters reports. The e-commerce giant would use the funds to help buy back half of Yahoo's (YHOO) 40% stake in the company for $7.1B, per the terms of Sunday's deal. Alibaba, valued at $35B in the Yahoo deal and eying an IPO, posted 2011 revenue of $2.8B, nearly 2/3 of which came from its Taobao auction site.

    Fun: The Economics of All-You-Can-Eat Buffets (Forbes)

    Three lunchtime reads:

    1) Nervous investors look beyond positive U.S. economic signs

    2) China is a black box of misinformation

    3) Time to enforce Sarbanes-Oxley in the JPMorgan scandal

    Come Together

  63. Phil

    Differences in Goals, Happiness Top 1% vs. Population

     
    By Barry Ritholtz – May 23rd, 2012, 7:10PM

    Interesting charts looking at differences in Goals, and Self-Reported Happiness.>

    Click to enlarge:

    ~~~

    Source:
    American Express Publishing and Harrison Group
    The 2012 Survey of Affluence and Wealth in America
    Press Webinar, May 9, 2012

  64. Phil

    Wow, almost half of 90% of our population is very happy and just about 1/3 are successful in their career – what a great society we have built!  

  65. japarikh

    Phil,

      Are you worried that Brazil may nationalize PBR like Argentina and YPF?

  66. button

    Equities holding the lines on a USD test of 82.40

  67. kustomz

    7-years yield 1.203%, expect $ to get smacked

  68. jabobeast

    Phil—does that survey tell you that almost half the population is very happy and the general population is more concerned about their appearance and greedier than the 1%s???

  69. Phil

    82.38 is killing us!  

    PBR/Japar – I don't think it's the same situation, I doubt Brazil would start doing that.  

    1:00 PM On the hour: Dow -0.25%. 10-yr -0.13%. Euro -0.31% vs. dollar. Crude +1.35% to $91.11. Gold +1% to $1563.85

    The Treasury sells $29B in seven-year notes at a record-low 1.203%. Bid-to-cover ratio of 2.8, vs. a recent average of 2.58; indirect bidders take 42.7%, vs. a recent 38.7%. Direct bidders take 15.7%, vs. a recent 15.5%.

    Having last week closed a deal to buy 63 local newspapers from Media General for $142M, Warren Buffett has told Berkshire Hathaway's (BRK.A) editors and publishers that the company "will probably purchase more papers in the next few years," focusing on "towns and cities with a strong sense of community." 

    S&P cuts MEMC Electronic Materials' (WFR -3.6%) credit rating two notches to B+ from BB, two levels below investment grade, citing “continued weakening of the solar power sector." MEMC says it is disappointed with S&P's move, "but we are comfortable that our cash and liquidity position is sufficient to meet our current cash need."

    A strong rally in airline stocks (NYSE Arca Airline ETF+4.2%) still has legs with US Airways (LCC +9.1%) and United Continental (UAL +5.2%) leading the charge. Comments from JPMorgan's Jamie Baker that earnings estimates don't reflect the positive impact of lower jet fuel prices are helping tip sentiment in the sector. 

    As Research In Motion's (RIMM) smartphone sharecrumbles, the popularity of BlackBerry Messenger (BBM) is going down with it, even if many continue to swear by its messaging and contact-list features. Former co-CEO Jim Balsillie reportedly wanted to license BBM (along with access to RIM's network) for use on third-party platforms, but new chief Thorsten Heins put an end to those plans. Heins "decided RIM shouldn't pursue licensing deals in general," it's claimed.

  70. stjeanluc

    RIMM is truly getting creamed now… They lost 1/2 their market share and ship 30% fewer sets. Symbian is basically dead except in "free" sets as Nokia moves to Windows Phones (losing market shares but with higher shipment). Android sales are just taking off.

    Image

  71. lionel

    End of the UST auction.
    Please turn ON the buy bots.
    We are ready!!!
    http://www.youtube.com/watch?v=WLTI2rWAlV4
    Turn me on – David Guetta

  72. zeroxzero

    Euro money managers seem to be moving money into U.S. equities at an increasing rate, from the chatter I hear.

  73. zeroxzero

    Pharm:  I'm up 21% so far on YMI, substantial position, great call, thanks.

  74. Phil

    Survey/Jabob – You're money is showing in that comment.  Most women can't AFFORD to look their best- that's where that number comes from.  Working-class women would love to have the time and money to hit the spa and get the $100 hair cuts and $50 nail jobs and pedicures, not to mention the clothes!   Generally people in the top 1% have done whatever it takes to max out their appearance.  More telling than anything is 91% of the "lazy" bottom 90% have no desire to work less – another BS bit of propaganda bites the dust.  

  75. stjeanluc

    Work less / Phil – Actually, the top 1% seem like the lazy one with 1 out 5 wanting to work less. I am sure that Kim Kardashian schedule is exhausting!

  76. newt

    RIMM- with them getting creamed does it make sense to look at them as a getting bought by another company? What would that do to RIMM sock price?

  77. jabobeast

    The survey didn't mention how many of those 1%s are on anti-depressants to remain "very" happy. I don't buy it. I don't know how my money is showing in my comment (I was half joking again). I hope 50% of the population is very happy. I would like 100% of the population to be very happy (unless they are long PCLN or CMG, of course). I guess I think the survey is flawed. Just my opinion ;-)

  78. Pharmboy

    Zero – that is good….I think they are going to be a huge winner, just keep nimble.

  79. wappler

    Savi/Vegas mtg,
    What do I need to do to sign up?

  80. angelcur

    maybe we are going to hit that 1310 area of support on the spu…uninspired follow up

  81. zeroxzero

    SCO?  Euro is just getting destroyed.

  82. stjeanluc

    Euro / Zero – I have never played it, but the EUO is the ultra short Euro ETF and it seems liquid enough and the spreads decent to use for plays. As with all the other ultras, decay might be a problem!

  83. stjeanluc

    And the options on EUO don't seem to indicate any strength in the euro any time soon!

  84. zeroxzero

    Stj:  The  EU is going to have to pull a rabbit out of its hat at some point.  I don't want to be short FXE overnight when they do.

  85. rainman

    newt / RIMM — depends on how much they pay for them.

  86. Pharmboy

    FXE…..

  87. newt

    RIMM- would a Jan BCS be a good play?

  88. Phil

    Now we're coming into the weekend so we certainly want to hang on to at least one hedge – even if we do get a stick!

    1,310 now – not good if we can't hold this!  Lining up with 12,400 on the Dow, 2,520 on Nas and 755 on the RUT.  

    $62 broke on QQQ.

    EUR/CHF back to 1.2014 – so close!   What a joke – it's like free money…

    Just 64M on the Dow at 2 – not much conviction to the sell-off either.

    RIMM/Newt – No, dead company!  We gave them every possible chance and they just keep getting worse.  I know it seems tempting but they screwed up and who knows when/if the slide will end.  

      

  89. Pharmboy

    You play Crazy Train…I play "See You on the Other Side…." Greece

  90. Phil

    82.47 – no wonder we keep slipping.  Euro ($1.2534) and Pound ($1.565) priced for DOOM!!!   79.55 Yen to the Dollar (weaker) means we have a little Yentervention helping us along too.  

    That means we probably hold 1,310 as it's more currency related than a proper sell-off.  

  91. spiro21

    Phil
    what are the fresh water stocks you like more?
    TIA

  92. Pharmboy

    CHK article and Nat Gas….yikes….

  93. Savi

    wappler--will inform when everything is in place—nothing confirmed as yet

  94. angelcur

    ZERO// i think we now can say without doubt that if the euro gotts pull something out of anywhere it will NOT be its hat

  95. enni_82

    Anyone ever paid their mortgage using a line of credit like this? Does it work?
    http://www.youtube.com/watch?v=VIsN2RbTVtM&feature=share

  96. Canuck

    TQQQ – risk a 3rd try on this this week?

  97. ronresnick

    Burr / sisters:  Don't get your hopes up.  The blonde sister is married and the brunette sister lives with her boyfriend.
    spiro / water:  Check out Hyflux (HYFXF, HYFXY, 600:SG).  It builds large reverse osmosis desalination plants all over Asia, including in China, some cities in which have serious water problems.  The price chart looks like a waterfall, but I am not giving up on it, as I like its pure play on the scarce water theme.  I buy the shares in Singapore.

  98. Phil

    Twice in a Lifetime List: 

    OK, let's see how the TWIL list is doing with the VIX at 23.  Keep in mind these are scale-ins as things could get much worst and our hedge was the SQQQ July $55/70 bull call spread at $2.50, now $3 so up $1,500 if 20 were purchased for $5,000 against a few of these that you REALLY want to own, even if the stock drops another 40%:

     

    • AA ($8.50) 2014 $8 puts can be sold for $1.50, now $1.55
    • ABX ($35.91) 2014 $30 puts can be sold for $4.50, now $3.80
    • ALU ($1.45) 2014 $2 puts can be sold for $1, now .95 
    • BAC ($6.97) 2014 $7 puts can be sold for $1.75, $1.79 
    • BTU ($25) 2014 $20 puts can be sold for $4.10 – WOW!, now $4.60 – WOW!!  
    • CCJ ($19.37) 2014 $17 puts can be sold for $3.30, now $3.40 
    • CHK ($13.83) 2014 $13 puts can be sold for $5, now $4.40 
    • CSCO ($16.70) 2014 $15 puts can be sold for $2.05, now $2.15 
    • FTR ($3.20) 2014 $3.50 puts can be sold for $1.30, now $1.15
    • GLW 2014 $15 puts at $3.90, now $4.05
    • GNW ($5.02) 2014 $5 puts at $1.75, now $1.70
    • HMY ($8.88) 2014 $8 puts can be sold for $1.40, now $1.20 
    • HOV ($1.83) 2014 $2 puts can be sold for $1, now .95
    • HPQ ($22.04) 2014 $23 puts can be sold for $5, now $6.66 – WOW!  
    • MT ($14.30) 2014 $15 puts can be sold for $5, now $4.75
    • JPM ($34.59) 2014 $30 puts can be sold for $5, now $5.50 
    • OIH ($35.90) 2014 $30 puts can be sold for $4, now $3.90 
    • SVU ($5.15) 2014 $5 puts can be sold for $1.85, now $2 
    • WFR ($2.05) 204 $3 puts can be sold for $1.40, now $1.75
    • X ($22.25) 2014 $20 puts can be sold for $5.10, now $5.50 

     

    Some are getting away, some got better – this may be our last chance to get our 2nd chance plays at great prices and, clearly, the hedges work well.  

  99. 1020

    …..and as they cross the finish line, it's personal life in first, followed closely by very happy, second, and job/career finishing third…..
     
    It's A Clean Sweep for Team One Percent!!! 
     
    :)

  100. Phil

    Speaking of RIMM – free-falling to $10.60!  

    Water/Spiro – I don't study that space, something we should all start discussing though.  

    AAPLdaq leading us down with the SOX down 1.66%.

    Now AMZN heading down again – poor Nasdaq.  

    CHK/Pharm – They are kitchen-sinking CHK with every possible bad angle trying to keep them down IMHO.  

    TQQ/Canuck – Seems like the sell-off is overdown but semis getting crushed at the moment and RIMM just goes lower and lower and is still a big part of the Nas.  AAPL is no help at $563, accounting for 1/3 of the Nas loss by itself.  So, on the whole, I like it!  June $50s at .95 have a reasonable .26 delta but the key is that the $47.50s have a .38 delta so you are talking about a RAPID increase in your upside delta, which makes for a nice trade.  Let's do 5 of these in the $5KP!  

     

  101. Burrben

    Knight Capital lost 35mil on FB IPO.  
    http://wallstcheatsheet.com/stocks/this-trader-lost-35-million-on-facebook-ipo.html/

  102. scottmi

    TLT/Phil – still liking the TLT for 5K? i haven't got a fill at 1.8. still good at 1.10 or is 1.8 really the key?

  103. scottmi

    TLT/Phil -can't get a fill at 1.08 that is..

  104. zeroxzero

    Touche, Angel!!  And some bad news for Phil:  Taser's relentless march to investment relevancy may be stopped in its tracks by a diabolically humanistic rival — the Pepper-Ball Gun.  [PBAL].  http://www.nytimes.com/2012/05/23/us/mississippi-prison-on-lockdown-after-guard-dies.html?src=recg#

  105. rperi

    Is RIMM just gone?  do I take the entire hit on the 2 Jan 13 $5/13 spreads now or do I roll down to the Jan 14 $3/10 spread for even? 

  106. Pharmboy

    This is gonna hurt JNJ….BMY should benefit….

  107. escohen5

    AAPL/lflan — is your order for the Oct 600 still in at 35?

  108. Canuck

    TQQQ – was that 5 $47.50's?  at $1.80 ish? 

  109. Phil

    TLT/Scott – I do still like it and .02 isn't going to break the trade (at least I hope not!).  

    RIMM/Rperi – I wouldn't put more money in but there's a CHANCE they may pull it out over time.

    Pepper balls/ZZ – Sounds like fun.  Reminds me of this:  

  110. Phil

    TQQQ/$5KP, Canuck – That was the $50s for .95 – I was just pointing out how fast they can move up by comparing them to the others.  

  111. Pharmboy

    Look at the option OI on SGEN. 

  112. jerconn

    And, we have lift-off…

  113. Ottomatic

    Fire up the stick bots!

  114. iTrade

    BUY PROGRAM initiated!

  115. rainman

    Wow! Haven't seen a stick like that in some time.  Humbled :)

  116. Phil

    Wow, better late than never Mr. Stick!  

  117. stjeanluc

    2 days in a row that we get the big stick…. But hey, no manipulation!

  118. sagemm1

    Phil/CHK
     
    I am long CHK JUL 15/17 BCS from a debit 1.37, any suggestions or adjustments here.
     
    I like CHK but maybe longer than jul…TIA

  119. japarikh

    Pharm,

      What play do you recommend on SGEN? Thinking about the June 22.5 playing for ASCO

  120. kustomz

    Behold the power of the short squeeze, this markets an empty shell boys and very predictable. Guess that fact helps to ensure it happens.

  121. Phil

    WMT making new highs.  This market is sooooooooooooo confusing!  

    Gotta love that 12,400 support on the Dow futures…

  122. Phil

    That's what she said, Rain.  

    That's what the guy in prison said, StJ.  

    CHK/Sage – I'd sell those 2014 puts but, other than that, I think they'll be back by July (or much worse, ether way no point spending money now).  

    2:57 PM A new Greek poll shows the anti-bailout Syriza party gaining support, now garnering 30% of the vote against 26% for 2nd place New Democracy. The poll also shows 85% of Greeks prefer to stay in the euro. Another poll has Syriza and ND neck and neck with 23.5% of the vote.

    3:11 PM A Greek exit from EMU is imminent says Bank of Tokyo-Mitsubishi, with market chatter setting the timing for the weekend of June 2. The bank takes note of the relentless fall in the euro and comments from the Bundesbank that the exit will be controllable. The euro -0.5% and looking like it wants a $1.24 handle.

    3:28 PM Italian PM Monti hits the tape, telling Dow Jones a majority of the EU states favor common eurobonds. Unfortunately, tweets ZH, the ones that oppose them are the ones that pay the bills.

    Dollar still 82.47 – that's a lot of gravity to fight off.  

    Wow, CHK just got some interest.  

  123. sagemm1

    go CHK!

  124. Maya1

    Savi
    thank you.
    A glutton for punishment, you seem to be!
    But seriously, thank you for arranging the last meeting, even though I did not make it. I am sure it took some serious effort.

  125. kustomz

    Phil, all they are doing is making it more likely the markets suffer a very big downturn. Reminds of the trust exercises companies do. You know when you trust your fellow workers to catch you when you fall back. Just picture this 1000lb guy being the subject and 5 scrawny vegetarians as the catch team.

  126. Pharmboy

    SGEN play is the Sept 20/25 bull call spread, selling the 20 Ps for ~90c CREDIT…..

  127. jerconn

    StJ, I think it's more like three days in a row…but no manipulation…

  128. nicha

    SGEN/Pharm – I have the June 20/25 also.

  129. Pharmboy

    nicha – fine, but you have been in them awhile, so they are up.  Getting too tight for a new entry, so this is the next ones to target..

  130. Pharmboy

    Remember, we coupled that June 20/25 BCS with the sale of the June 20 Ps…..

  131. Phil

  132. sagemm1

    CHK…rumors Icahn is all in

  133. Burrben

    This market is amazing.  SPX green, RUT green.  

  134. stjeanluc

    Stick / Phil – ROFL!

  135. lflantheman

    The October 600 AAPL call for 35 went through.   So we got 1 @ 37 and 1 @ 35. 

  136. yodi

    CHK Bloomberg confirmed this

  137. Phil

    Dow up 33 – ROFL!  

    Poor Nas couldn't get green but nice recovery.  

    Only 125M at the end, that's a shame.  

    RUT went nuts at 766 – Too F'ing Funny!  

    Oh well, another fun day in the books – who knows what tomorrow will bring – probably a little of both.  

  138. dclark41

    yodi:
    Confirmed what Burr wrote?

  139. Phil

    RUT Futures wailing away, now 768, Dow 12,430, S&P 1,322, Nas still dragging a bit at 2,536 (I don't think they like our TQQQs).  

    Chesapeake (CHK +2.6%) shares rally into the close on a Bloomberg report that Carl Icahn has purchased at least a 4% stake in the company. But note that there was no information of Icahn taking a stake in the latest 13-F filing. 

  140. dclark41

    Phil
    What hedges did you officially do today if any? I have been very conservative with implementing downside hedges although I do have a few. Really hard to see this market going anywhere until they get the dollar down near $80 or less.

  141. zeroxzero

    Upcoming Bloomberg Businessweek magazine cover: For Euro Crisis Relief "Bang Head Here"

  142. jabobeast

    Blackrock buying CHK too!

  143. Phil

    Oh no, did I seriously forget to mention taking 50% and running on a day trade in for the QQQ puts in the $25KP?  I hope some of you guys are smarter than I am…

    Hedges/DC – We added two layers of Qs from the morning Alert but the puts should have stopped out, of course.  Long-term, I like the EDZs because, if we are going to collapse, I think the BRICs go down hard.  The Dollar doesn't HAVE to go down for the market to go up – it just has to stop going up.  Going down, of course, is a nice lifter but, in the long run, the best kind of rally is held back by dollar strength that keeps commodities in check while the markets move up.  Dollar went up 10% between Sept of last year and Jan and the markets moved right up with it AND it was sustainable – that's key.  

    CHK/Jabob – If I had a Billion dollars, I'd be buying them in bulk too!  

  144. Phil

    Remember what I said last Friday: 

    $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.  

    How often do I say something like that? 

  145. Jordan

    Phil/TOS: you made comment yesterday about how they sometimes classify you as not eligible or free quotes due to not agreeing whether your status is professional.  Thinking of opening an account.  How happy are you with TOS lately?
     
    Also, your levels from this morning are amazing.  I think you got Dow, Nasdaq and S&P almost to the point!

  146. jerconn

    PHil – I had the June $60 QQQ puts in at .66 and out at .86, more like 30%, but yeah had the brains to get out…I didn't see it go higher than .86…

  147. nicha

    Phil – really, you don’t have a billion?

  148. rpme

    Phil, I must have missed the lesson on how to know to day trade the 25kp. What potentially characterizes it as a day trade versus all the other 25kp trades you post?

  149. dclark41

    Phil
    Thank you for the explanation on dollar rising/falling. In my opinion the dollar, today,is more about what’s happenning elsewhere rather than indicating US strength. Hence, I believe this is not the type of dollar increase that will support and sustain rising equities. I have been wrong before! On the other hand, I can’t argue with the possibility that the dollar’s rise is due to the US being recognized as the best of the worst.

    Thanks for the confirmation on EDZ. I didn’t do that trade because I wanted to mull over the risk of buying the October spread you suggested. I am always anxious holding those triples for anything greater than three months because of the decay that inevitably occurs. I did pretty well layering those last month taking 20% or more profits when they occurred and initiating a new spread at a higher strike but matching the dynamics of the original trade until it stops working. Fantastic reading over the past three days! Thank you for all you do.

  150. jfawcett

    Phil / Hedging – Can you explain the proper hedging techniques?  Please go into when to lean short and by how much (how to determine amount), lean long by so much. When to peel off to change portfolio hedge direction.  I see hedging on the board a lot.  I understand the concept but am unsure how to determine the proper amount based on portfolio size, beta, etc.  I would appreciate hedging 101 and your explanation can be put on WIKI. TIA.

  151. stjeanluc

  152. morxlntway

    rainman – thanks for the link. all those function keys… i use F2 in excel, F5 for phil and mute the speaker occasionally and that's  about all.

  153. newbie

    MORX / Laptop jack
     
    By "jack" do you mean where you plug the power cable in? Is that what "came loose" inside the computer? Or do you mean the Ethernet port?
     
    If it is the power jack,  then YES, you can probably fix it yourself, if you are very careful,  you know your way around a soldering iron, and if you can take the bottom cover off the computer without breaking anything. Use a small glass or a shot glass to keep the little screws in. If you have a skinny mechanics' magnet (hardware store, $5), that helps immensely. There may very well be one or more paper thin "flexible printed circuit " ribbons that slide into microscopic connectors. Be VERY careful with those.
    The Power Jack connector is known for coming loose. I've repaired two of them myself (it's the business I'm in).
     
    Once you get good access (be sure to remove the battery before doing ANYTHING else), you'll find the connector is soldered to a board, probably the logic board, or a small power filter board.
     
    The connector will probably have 4 to 6 metal "legs". Only two of those are for the electrical, one for ground, one for the positive voltage. The other "legs" are solely for physical and mechanical support. Try to identify which are which.
     
    Solder one of the mechanical legs first, just to hold the whole thing in place. Then go around and solder all the other connections. You might have to adjust the legs with a small needle nose pliers, if it has been "wobbling around" in there for long. On the mechanical legs you can be fairly liberal with solder, but on the two signal legs use just enough to get a good connection. Be VERY careful not to overheat any components on the board. You have to solder "quickly". Get it very hot very fast, get the solder on, and back off. If the solder cools "cloudy",  it is not a good joint, and you have to re-heat it.
     
    When you are done, you can consider possibly using some two part adhesive from the hardware store, like some Devcon or Loctite, to use in extremely small amounts to "strengthen" or backup the solder connections, basically bonding the "plastic" part of the jack to the "plastic" part of the case, or even part of the circuit board. I've done that. If there is enough spare room, it's worth doing. It's maybe 4 bucks at the store. Make sure you mix it very thoroughly. There are generally two types, a "5 minute", and a "30 minute" (sometimes called "two ton"). Do not use superglue or any other one part glue. You need two part adhesive. The 30 minute is going to be thinner, for longer, it will give you way more working time then you need, and you'd have to make sure not to drip any excess in places you don't want it to go. The 5 minute is much better from that point of view, but 5 minutes means 5 minutes, so you spend about three minutes mixing and then you have two minutes to apply. Both are equally strong. When it starts to cure, it will go in about 10 seconds. It can get quite hot (thermal reaction). Once it starts to go, you're done with that batch.. Don't try to use it once it gets thick, it won't work. If necessary, mix a second batch. Toothpicks or similar very small disposable picks or straws or whatever work well for applying. Tongue depressors and a paper plate work ok for mixing. Be careful not to get it on your clothes or anyplace else. It's a bi**h to clean up.
     
    If you do all that successfully, and you get good electrical connections (joints) on the + and ground, the computer should work fine. It'd be tragic to throw away a computer because of a simple soldering issue. Make sure there is no "solder bridge" between the + and ground or you WILL have a computer that is worthless, and possibly a smoking (if not flaming) power supply brick as well.
     
    The hardest part of the whole thing will be the disassembly of the case. There are more little tiny screws hiding in places you can't imagine (including possibly in the battery compartment). DON'T force anything. If you think you've got all the screws out but the "center" or one "end" of the case won't budge, you've almost positively missed a screw. You might need to look under the keyboard also. You should allocate at least three or four hours for the whole project. Try to do it all in one evening, because if you only do half, by the next night you'll have a tough time remembering the exact process of putting it back together. When you have all the screws out and start taking the case apart, go VERY slow, and look inside as you do it, to make sure you're not pulling any thin wires or flex ribbons apart. Small flashlight helps.
     
    Good luck. Let us know how it works out. And if you get frustrated and decide to throw it in the dumpster, you can give it to me and I'll pay the postage -plus a gift certificate for McDonalds! (I'm a BIG spender!)
    -newbie

  154. newbie

    Jordan,
     
    I'm not positive (Phil or somebody else probably knows) but I believe there are some HUGE tax implications whether you are identified as a "professional" investor/trader or not. You might want to look into that. I remember reading some fairly important stuff about that when I was helping my mother with her taxes this spring.

  155. Burrben

    Phil, Anyone / Re: TWIL List and Hedge
     
    I was talking to one of the Quants at my old HF about hedging today, and he brought up a good point.  The way they do hedging is by % correlation to a index or contract.  Therefore the SQQQ overall hedge will be more applicable for some stocks than for others.  Anyone know how to take a basket of stocks, like the TWIL list and run a correlation matrix on them against various ETF's, or Index's?
    Disclaimer:  I know this isn't exactly what the list was for, I'm just running with an idea…

  156. yodi

    Phil I see you have mentioned twice WFR in your comments today once poor WFR and once in the twice in a life time buy list to sell the Jan14 3p. Well I am the lucky owner of 500 stk at some 12$ 2x Jul 5p 10x Jan 13 7.5p and 5x Jan13 5p all are just within the ATM situation the Jul is actually ITM and no one even clams it yet. I am looking at an assignment of aprox 11200.00 $ in payment for stocks due. less if I would sell the bunch 2200stk for 1.56 showing a net loss of some 7768.00 Some time you have to pay the piper. My question is only do you sincerely think this stock has still any chance at all. In this case one could hold the stock and sell calls till doomsday. By the way rolling this complete bunch of puts to Jan14 3p would cost as well just about 11k.
    TIA

  157. yodi

    Phil P.S. the above obviously does not include the loss of stock value from 12.00 to 1.56.

  158. Burrben

    WFR reminds me of RIMM.  I love Phil and how much he's helped me take control of my financial life…
    But sometimes he just won't admit to a loser being a loser.  Luckily I stayed away from WFR and RIMM.

  159. yodi

    Burrben Actually I see much more hope for RIMM as it could be bought up by FB but WFR I have serious thoughts there off.

  160. Phil

    At the close: Dow +0.32% to 12537. S&P +0.25% to 1322. Nasdaq -0.38% to 2839.
    Treasurys: 30-year -0.36%. 10-yr -0.18%. 5-yr -0.12%.
    Commodities: Crude +1.07% to $90.86. Gold +0.7% to $1559.25.
    Currencies: Euro -0.4% vs. dollar. Yen +0.16%. Pound +0.13%.

    Market recap: Stocks bounced off losses after Italian PM Monti said most leaders at the EU summit backed joint eurobond sand he'd push Germany to support them (good luck with that). Earlier, talk that China’s biggest banks may fall short of loan targets was driving stocks lower. The euro tumbled to a 22-month low near $1.25; crude oil eased back above $90. NYSE losers slightly outnumbered gainers.

    While the case can be made for additional accommodation, says FRBNY chief Dudley in a speech, the costs at this point are likely to exceed the benefits. He stands ready to change his mind towards more ease should things slow down, but would also consider tightening policy earlier than expected if growth gets stronger. (earlieron CNBC)

    The percentage of bulls in the AAII Investment Sentiment Survey rises 6.9 points to 30.5% in the week ended May 23. The bear camp loses a similar amount, now at 38.7%. The bulls remain well below their long-term average of 39%, the bears above their average of 30%.

    A new study from MasterCard confirms a trend of slowing luxury spending – seen in earnings reports from jewelry sellers Tiffany (TIF -4.4%) and Signet Jewelers (SIG -4.5%) – with sales only increasing 1.8% in April after gaining 6.7% in Q1. Analysts say the supposedly non-cyclical wealth effect isn't holding up against economic headwinds. On watch: COHKORSELHESAF.PK.

    In the face of a nasty Greek exit from the euro zone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty sheet," Gross says, "At the moment the cleanest dirty shirt is the United States."

    Nothing was accomplished at today's EU summit as officials play for time – hoping Greek (and French legislative) elections in June bring more political support for the bailout regime and a move towards "economic union." The trouble is the pace at which not just Greece, but the EU economy is unraveling. Can they wait another month, and what happens if the elections don't go the right way?

    Euro Zone Crisis Boils as Leaders Fail to Signal New Steps (NYT)

    A new Greek poll shows the anti-bailout Syriza party gaining support, now garnering 30% of the vote against 26% for 2nd place New Democracy. The poll also shows 85% of Greeks prefer to stay in the euro. Another poll has Syriza and ND neck and neck with 23.5% of the vote. 

    Seeing Bailouts Through Rose-Colored Glasses (NYT)

    A Greek exit from EMU is imminent says Bank of Tokyo-Mitsubishi, with market chatter setting the timing for the weekend of June 2. The bank takes note of the relentless fall in the euro and comments from the Bundesbank that the exit will be controllable. The euro -0.5% and looking like it wants a $1.24 handle.

    In shades of Fannie and Freddie, Spain's bailout of Bankia – originally slated at about €5B, then €7-10B, and now €15B - may grow further as the lender is expected to request even more tomorrow to meet a viability plan set up by new management.

    Japan's core consumer price index rose 0.2% from the prior year, identical to its gain for March. Expectations were for a 0.1% rise. On a monthly basis, core CPI was also 0.2% higher, led by a 2.1% rise in clothing and footwear. Overall CPI rose 0.1%, for a 0.4% year-on-year gain.

    Shares of companies with significant exposure to China, such as Joy Global (JOY -7%) and Cliffs Natural Resources (CLF-4.5%), are sliding today on signs (IIIIII) the country's factory activity is poised for a seventh straight month of contraction. JOY also may be hurt by two analyst price reduction calls a week ahead of its May 31 earnings report.

    Nervous investors are looking beyond positive U.S. economic signs (LA Times)

    SEC staff will not recommend any enforcement action against Lehman or any of its former executives after completing a probe of possible financial fraud there, reports Bloomberg. "Repo 105 is magical," tweets Josh Brown, "It makes losses disappear long enough to file a 10Q, then they come back until the next Q is due."

    The loss of Japan's nuclear power plants is luring buyerseager for cheap U.S. shale gas, potentially enriching U.S. companies such as Sempra Energy (SRE) and Dominion Resources (D). But companies hoping to export LNG don't yet have permission from the Department of Energy to ship to countries such as Japan that lack free-trade agreements with the U.S.

    Strong new commitment, or politically correct charm offensive? Goldman says it plans to channel investments totaling $40B over the coming decade into renewable energy projects. The firm's new target would average out to $4B/year, which may look impressive but it already invests in clean technology – $4.8B worth in 2011. - Soon they will own the Sun!!!

    Chesapeake Energy (CHK) extends its late-session rally,+2.3% AH, as CNBC reports BlackRock has boosted its stake in the company to 4M-5M shares; as of March 31, BLK owned ~883K shares. Earlier, Bloomberg reported Carl Icahn had taken at least a 4% stake in CHK.

    Education-related stocks show weakness after indications from Congress are that the Senate won't approve two bills that would limit student loan interest rates from soaring in July. In harm's way: EDMCCECOSTRAESIDVNAUHAPOLBPIAPEICOCO,LINCLOPECPLA.

    McDonald's (MCD -0.5%) won't have to be a profit-making company and the surrogate parents for millions of kids after all, as a shareholder resolution to assess the effects of products and marketing on children's health 

  161. Phil


    McDonald's (
    MCD -0.5%) won't have to be a profit-making company and the surrogate parents for millions of kids after all, as a shareholder resolution to assess the effects of products and marketing on children's health fails to land more than 6.4% of the votes at the company's annual meeting. Execs did say that new healthier choices for Happy Meals could be part of Mickey D's menu in the future. 

    H-P's (HPQlayoffs are being conducted on the basis of salary and aren't weighing factors such as skills and performance, upset employees tell BI. It's also claimed cronyism is playing a big role in the layoff decisions. Deutsche's Chris Whitmore notes past restructurings have done little to improve's H-Ps competitive positioning, or cut its dependence on weak markets. 9K of H-P's 27K job cuts will occur this fiscal year, and result in $400M in cash charges. (more on HPQ)

    Comcast's (CMCSA) NBCUniversal subsidiary is in "serious negotiations" to buy Microsoft's (MSFT) stake in MSNBC.com, and could gain full control of the site by this summer, multiple sources tell Adweek. Such a deal could be another example of Microsoft's efforts to reduce the giant losses posted by its Online Services division.

    Google's (GOOG) rumored Nexus tablet will ship next month,Digitimes reports. It's added the 7" device, which a past reportsuggested will sell for $199, is expected to have 2012 shipments of just 2M-2.5M – IDC has estimated the 2012 tablet market will total 106M units. Between competition from the 9.7" iPad, the Kindle Fire, the Nook Tablet, and perhaps also an "iPad Mini," as well as Apple's (AAPL) huge lead in available tablet apps, Google has its work cut out for it. (also)

    Facebook (FBpaid over $80M to buy social gifting app developer Karma, sources tell Bloomberg Businessweek. Karma, whose purchase was announced on IPO day, could help Facebook finally turn e-commerce into a meaningful revenue stream, courtesy of affiliate fees on recommended purchases. Given the challengesFacebook's ad business is dealing with, many are hoping e-commerce turns into major a growth opportunity.

    Farrell: How Facebook could destroy the U.S. economy (Market Watch)

    Greenshoes, Facebook phantoms and ETF magic (FT.com)

    Mark Cuban discloses he bought 150K Facebook (FB) shares at $33, but says the purchase is a trade, not an investment. Cuban also provides downbeat commentary about Facebook and its disappointing IPO: he predicts the offering will further discourage retail investors from participating in the market, and joins Jim Cramer in predicting mobile usage is bad news for the company. He also sees mobile's monetization challenges as a problem for Google (GOOG) and other online ad sellers.

    Contributing to today's drop in LinkedIn (LNKD -5.3%) is a cautious note from ITG, which thinks the company's pricing and volume have dipped in Q2. This leads ITG to think LinkedIn, which has beat the guidance set for each of its first 4 post-IPO earnings reports, will only report in-line sales. And that, it thinks, could disappoint investors who have given the company a sky-high valuation

  162. Phil

    EUR/CHF touched goal at 1.2009 again but now back to 1.2028 – lots of shenanigans over there.  

    Dollar 82.37, Futures flattish.  

    TOS/Jordan – I love TOS's platform and execution.  If you register with them as a corporation, you don't get free quotes – other brokers don't care but TOS is very strict.  Yes, levels working well despite wild-assed day(s) – that's a good sign for us because it means we have a handle on the big picture (now if only we could time these intra-day turns better!).  

    QQQ/Jerconn – Looks like they tapped $1 at noon but still, you did the right thing for sure.   I do hope people got the message, when we went long on TQQQ, that it was a good time to kill the QQQs, which were still .85 at 3pm.  

    Billion/Nicha – That's why we're doing the BBBW Workshop – we need a few Billion to throw around.   I'd own FTR ($3.2Bn), SVU ($1Bn), CHK ($10Bn)…  Boy, $1Bn doesn't buy what it used to!  

    Day trading/Rpme – It's not different than anything else.  If you are in an unhedged position that makes 20%+ in a day – TAKE THE MONEY!  That means set stops, etc.  20% in a day is 4,000% a year so, unless your portfolio usually makes more than 4,000% a year – taking a one-day, 20% profit should improve your overall performance.  See, not complicated.  Some of this stuff is written up in the strategy section, a lot if things in the comment section on the Salvage Plays article but, in general – it's common sense.  You don't enter a position expecting a 20% one-day pop and a 40% pop is very rare and 50% is crazy and 100% is ridiculous.  Think what an idiot you (not YOU, example you) sound like saying – "Yeah, I bought the Qs for .66 and they popped over $1 in 2 hours but I didn't sell – I rode those babies right back down to .65 without stopping out – now that's trading!"  If you would be embarrassed to say it – THEN DON'T DO IT – how's that for a rule of thumb?  

    Thanks DC! 

    Hedging/Jfaw – Hopefully, over the weekend I'll be in the mood but please read the strategy section and comments under the article and THEN remind me over the weekend and I'll try to find some time.  Also, note my comments on hedging the TWIL List originally – that's a nice, basic hedging strategy.  

    Big Chart – Objectively, we step back and see a nice ascending pattern off a well-tested floor.  Might flat-line into the weekend and that will make it very tricky to call into the holiday but I think we'll want to be well-covered either way.  

    Tax implications/Newbie – Karmcon wrote a great article about electing Trader Status in Part One and Part Two – very good reading for those interested – should be in the Wiki.  

    Correlations/Burr – That's like 1980 trading advice.  These days all the indexes are pretty much synched, as are most of the sectors so it hardly matters.  I very simply use the most vulnerable or overbought sector/ETF as my primary hedge because I don't want correlation – I want to short something that might go down, even when my longs are going up.  No one expects you to pick up the whole TWIL list – if you stick to stocks in the same sector or index, then it's very easy for you to hedge with a high correlation.  I prefer to diversify the holdings but to pick the weak sector/ETF to short.  Today it was the Qs in the morning, tomorrow who knows – long-term, I think EDZ will fly if the global markets crash and, even if we don't crash in the US, the BRICs could still give us a great return to the downside.  That's the kind of hedge I like.  

    WFR/Yodi – So bottom line is you have about a $7,800 loss on WFR, right?  I really do believe WFR should be at $3 but stocks this low are dangerous as they can delist and whatever.  You might get assigned $11,200 at that loss so roughly 10,000 shares or 100 contracts overall and you can just kill the rest and sell 50 2014 $3 puts for $1.75 and that's $8,750 back in your pocket (your loss) and worst case is you own 5,000 shares at net $1.25, which is $6,250 but then you still lost the $7,800 and so you're really in for $14K, which is $2.80 a share and I doubt you'd be happy about it if WFR is actually below $3 in 19 months.  All I can say is the S&P just cut WFR but not for anything they did – it was "sector" concerns.  I think solar will matter long-term but that's LONG-TERM, I can't say if they'll come back in 2014.  They have $700M in cash and receivables and they burned $200M the past two quarters (each) so probably OK through the rest of the year but, if they economy tanks – then maybe not so much.  It's a speculative play – certainly not a sure thing   I like them because their price to sales ratio is 0.1455 and price to book is 0.518 – both around 1/10th of the sector average.  

    Whatever you leave in this stock,you should be prepared to lose.  You can take your loss and move on or you can buy 100 2014 $3/5 bull call spreads for .16 ($1,600) so you don't feel like an idiot if they shoot up to $5.  That can be offset with just 10 short $3 puts ($1,750) and then you stand to make $20K if, by some miracle, XLF is over $5 again that quickly.   If they take $3 – it was a free shot and, if they fail to get back to $3, you own 1,000 shares for net $3ish.  

    RIMM/Burr – We gave up on them, albeit a bit late.  WFR I still like (see above). Again, if your timeframe were more reasonable, even if you bought 1x of WFR at $15 without a hedge as, say $1,500 of a $6,000 allocation and then the stock fell to $8 and you added 1x at $800 – you'd have 200 shares at an average of $11.50.  Then when it fell to $5, you could have doubled down again and had 400 for an average of $8 and you still would have $2,700 left on the side.  When the stock fell to $3, no one would blame you for jumping the gun and adding 400 more at $3 and then you would have 800 shares for $4,500 ($5.63/share) and now they are at $1.50 and you have $1,500 left in your allocation and you could buy 1,000 more shares for $1.50 and then you have 1,800 shares for your original $6,000 when you only planned to buy 400 for that price.  Your average would be $3.33 per share but that's only because you were an idiot and never sold calls and never used put sales to make lower entry points for yourself on the way down and, EVEN THEN, it's still "only" a 50% loss at $3.33 on a fully invested position – even if your allocation was 10% of your portfolio and you kept at it all the way down – you're down 5% overall.  

    By the way, if you have 5 positions that are down 20% at the same time, it's very, very stupid to DD on all 5, isn't it?  CASH is always KING and if you are down and not well hedged, then you need to cut back on the positions, not keep throwing money at them.  If you are well hedged, then you CASH (which is King) the hedge and use those PROFITS to buy more long positions and then you allocate more cash to your next hedge so you stay in BALANCE!  

    This is not complicated stuff – you just have to learn how to be patient.  If you are not in a stock for the long-term, then you take a 20% loss and move on – end of story.  Every time you take another round of cash off the sideline – it's up to you to KNOW what you plan to do on the next 20% decline.  If you do that and your scales are 1/4 each.  Then ANY stock you buy would be 1/100% 1/80%, 2/60% even if you trigger new buys at EVERY 20% drop – without waiting to find a proper flaw.  That means that the MOST you can possibly have invested – even if you are a dumb-ass and never hedge and never sell calls – is (100 + 80 + 60 + 60)/4 = 75% invested AFTER a stock drops 60% on you.  This is not hard to manage if you bother to learn instead of ignoring the entry systems, burying yourself in a stock and then looking for someone else to blame.   The system is DESIGNED to prevent you from getting into trouble – but only if you follow it!

    Do we occasionally end up 75% invested in a stock that's down 60% and it goes down even further and we take a big loss?  Sure that happens, but pretty rarely and many times we end up with a very large amount of shares in a stock right when it bottoms and then we have a bonanza on the way back but these trades play out over years, not months.  If you go into a trade pretending you are long-term but play it like short-term – you're going to screw yourself.  And you'll do it over and over again because your expectations don't line up with the strategy.  

  163. jfawcett

    Phil / Hedging – Thanks.  I did read that post (Original TWIL) on hedging and simply did not put t together.  I'll continue the reading (Strategy) and place a reminder on the board over the weekend.

  164. Winston

    GE/continuous monitoring and managing: I am long GE, although a relatively small position, and after a slight period of excitement when it dropped down to $15/16 last year it is a bit of a sleeper in my portfolio. But that is no reason not to try and squeeze some more out of my inventory. How about this idea, which I think makes eminent sense if you are long, but could be another play for those looking for a cheap entry on the longer term horizon:
     
    GE: current stock price $19.25. Sell the 2014 15/25 strangle (short the 15 put and short the 25 call) for a net credit of $2.20 against a buying power impact of $0.925 – so selling 10 contracts of this strangle drops $2,000 cash into your account and reduces your buying power by $925. It would appear to be a good use of spare margin.
     
    If you are long, and the trade goes to the downside, you get to pick up more GE for net $12.80 (15-2.20) and if GE turns into a momo stock then you get called away in Jan 2014 with your longs making +25% increase from today's price. If you try this trade uncovered then it is a good hedge for your other longs – if your current longs don't make more than GE on an up day then you must be in T-bills. You could also roll the 2014 $25 calls to the new series of 2015 strikes when they are available.

  165. angelcur

    ok well we held those levels 1310… i don't see losing that level into the week end..goldminers look great..abx gdx 

  166. jromeha

    Phil- glad I listened to you with not buying /RB futures a couple of days ago. What about today?

  167. Phil

    Today as in now?

    I’m still in bed, dont see the level but yes with tight stops. EU open may be rough but, if that goes well, gas was low enough yesterday at $2.80, to play again. I’m pretty sure $2.85 should at least hold through the close.

  168. jromeha

    Lol, yes, as in now. Sorry, in Kabul it’s almost 12 in the afternoon….

  169. Phil

    That’s ok, I check in for a reason. Hope you caught. That, we caught a nice open, futures flying – looks like I will have to get up!

  170. flipspiceland

    @Felipe
     
    "……….EUR/CHF back to 1.2014 – so close! What a joke – it's like free money…"
    I don't understand this statement. How are you playing it, if it essentially has flatlined for the last 6 months.

  171. yodi

    Phil thanks for WFR possible just hold the stock as there is not very much more to loose.

  172. newbie

    just read the wiki. the articles are partly helpful but they are 5 years out of date, incase anybody wants take on the task of updating the reference materials with 2012 data instead of 2007 data.
     
    freshening up tax law policies, we outt'a have at least a dozen people around here who think that would be great fun! and a real hoot! h
    Specifically researching current law concerning tax requirements for professional trades versus the little people.

  173. Phil

    Good morning! 

    Looks like I didn't miss much going back to sleep.  Now we're only up slightly as Europe backs off a strong open but still generally positive over there.  I was worried we'd flat-line into the weekend – that's going to suck because we have to hedge to neutral or go more cash into the holiday – just too dangerous.  

    EUR/CHK at 1.2015 now Flips and I mean you can make money playing it to 1.2009 (but was better from higher) as Forex is 0.10 per 0.00001 per contract and trade in 10,000 lot sizes anyway so $100 per 0.00001 is not bad to catch a move 1.2035 to 1.2009 ($2,400 per lot).  Usually, I would never touch futures but, as you say – EUR/CHF has flatlined for the last 6 months, they made a very unusual move up and the SNB specifically said their policy hadn't changed — sounds like free money to me as we wait for them to peg it back.  

    That's what fundamental investing is all about.  I don't play currency but I track the big 4 that same way I track silver and copper, which I don't play (usually) or the way we look at rail traffic or the Baltic Dry Index, etc – you never know what's going to be important until you see it.  We've been having a joke re. the constant Swiss peg to 1.2009 but suddenly it becomes useful information when it suddenly isn't 1.2009 anymore and that, coupled with the SNB statement that, essentially, it should still be 1.2009 and, PRESTO!, we have a trade.  

    Most traders allow the media to tell them what to pay attention to and go from one thing to another – and always get there late with no plan other than the one that is fed to them.  We try to have a general interest in things so that when a "surprising" event happens – with a little luck, the pieces fall into place for us and we see a clear path to making a profit out of it.   That's why I love talking about all sorts of topics during the day – you never know what's going to be important until it is.  We also have our benchmarks that we track, so we know when something is out of kilter and, again, hopefully we can figure out why and turn it into a trade.  

    So, Dollar was down to 82.10 but back at 82.22 now as Euro is rejected at $1.26 (bad) and Pound topped out at $1.568.  Yen hit 79.8 to paint the Nikkei close at 8,625 (/NKD) and now back to 79.53 and 8,600 as they can't keep investors out of the Yen no matter how screwed up they make their economy over there.  That's because you have outflows from the Euro, which is about 28% of all currency and every other currency (8%) to the Dollar (60%), Franc (1%) and Yen (3%).  Since it's in the nature of old, rich folks not to put all their eggs in one basket – they split their money up and even if they go 90% Dollars and 10% Yen and Franc – it's a disproportionate amount of money being shoved into those very small holes – that's the "problem" the BOJ and SNB are having – too much demand for their currency keeping them much stronger than they want to be and there really is no way they can fight it because more money comes in every day.

    Now that the US is looking less screwed up than Europe or China (or Japan for that matter), we're starting to have the same "problem" of the Dollar getting stronger and stronger but, unlike the other two, we can do a pretty good job of absorbing the inflows, due to the relative size of our currency and, of course, our constant need for debt.  Just this week, we printed $100Bn in new money through our several TBill auctions.  That's what it is – the Treasury takes a blank piece of paper, prints a note on it that says $29Bn for 7 Years at ___ % and the auction fills in the blank as people exchange their hard currency for that piece of paper.  The note is debt, of course but then the joke is that some of the people buying the debt are using Fed Funds, which are created out of think air and do expand the money supply.  

    The Fed creates money by A) Having no money B) Buying a TBill (usually through their primary dealers) C) Putting a debit on their balance sheet for the cost of the TBill (or cost of money borrowed from primaries) D) Collecting the newly printed TBill (as payment for their overnight loan) E) Putting a credit on their balance sheet for the TBill and now they are back to a "zero balance" AND they get paid interest and a profit (at future taxpayers expense) from their magical money creation scheme.  So that's how the Fed creates money and charges us for it at the same time – BRILLIANT!  

     As you can see from the age of these images – it's always been like this – it's not a new thing:

  174. Phil

    See that last chart – the only reason the Dollar went up in value in the past century was because the entire Global Economy was collapsing and people were fleeing to the relative safety of the Dollar – just like today!  

  175. flipspiceland

    @felipe
    Thx, so you would short the trade, at a move above 1.2015?

  176. Phil

    Trade/Flips – They spiked once, I'm worried they'd do it again.  I liked the 1.2035 entry on the SNB statement but we're long past that (and there was a 2nd entry at about 10pm at they re-tested 1.2035) and I'm back to my usual "I wouldn't touch forex with a 10-foot pole" attitude.  If they spike back to 1.2035 and fail, then I think it's a good short but trying to play 1.2015 to 1.2009 just isn't worth the risk (see yesterday's insane spike for an idea of what your risk is).  

  177. 1020

    Phil – Thanks for the refresher on the "basics"  :)

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