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Fall-back Friday – Filling the Gaps or Fading from Lack of Fuel?

No QE for you!

That was the word from Uncle Ben yesterday as he testified before the Senate and, as we warned you in the morning post, without Dr. Bernanke firing those stage two boosters on the market:

We may fall gently back to our lows as we once again shift our focus to the G20 or we may blow up, along with the bullish expectations that have driven the market for the past two days – in which case, I don't know if the G20 will have enough fuel to pull us out of the tailspin that a lack of Fed action is likely to put us in.  

So not much new to report this morning.  We are, so far, in a relatively gentle descent – market-wise but we caught the danger signs as our gauges flashed warnings at us early yesterday and went from "Cashy and Cautious" back to CASH.  As my morning Alert to Members, which went out at 9:53 yesterday morning, said:

Good morning – cash, Cash, CASH is King ahead of Bernanke at 10.  Nice pop to lighten up into and that would go for the small portfolios too if I weren't playing them for an aggressively bullish hunch that Ben has no choice at this point, other than to at least strongly indicate that additional accommodative policy is likely warranted.

Oil is testing $87 (/CL) and is a great short here.  $86 is still too much based on yesterday's inventory.  If Ben fails to stimulate – it will drop like a rock but very, very dangerous to say the least.

Cash is so much more relaxing!! 

We recycled the 5 bearish trade ideas we didn't get to use the day before as all of our levels held but yesterday, our levels were S&P 1,310, Nas 2,850, Russell 760 and NYSE 7,600 and those quickly flashed failure warnings across the board and by 10:03 we got the text of Ben's speech and knew it was time to abandon ship.  As the Q&A got underway, my 10:31 comment to Members was:  

FAS Money/StJ – Up $10,000???  CASH!!!!   (we started with $2,000) 

Same goes for IWM at $5K and the $5KP at $1,435 for that matter.  I guess we'll leave them up but holy cow – any rational person would take that and run in this market

Ben is having to say NO MORE QE! many different ways – no one wants to hear it.

SPY 5 MINUTEFAS Money is one of our small (not small anymore) virtual portfolios as are the $5KP and IWM Money.  None of them have the buying power to ride out a massive dip so the proper play was to cash them out as they are all up huge for the year.  Our super-aggressive $25KP is a lot more flexible and that one we're happy to play through as it's the aggressive carve-out (no more than 10%) of a much larger portfolio like our $500,000 Income Portfolio.

By 10:53 the writing was (to us) clearly on the wall as I said to Members: "All breaking down now – Dow is lagging so best short to chase at the moment (12,470 on /YM and $124.65 on DIA at 12,478)."  

We had a nice dip to 12,430 in the futures by the day's end – good for $200 per contract and this morning we fell all the way to 12,300 for another $650 per contract and we played for the bounce at 7:27 am this morning with a long on Oil Futures (/CL) off the $82 line (a $5,000 per contract gain off our Futures short in the morning Alert!) and we had a nice run up to $83.75 already, which is very nice as oil is good for $10 per penny per contract or $750 – paying for our Egg McMuffins and letting us get back to cash ahead of the open.

The markets held up better than expected into the afternoon but our attitude didn't change.  As we got a little surge back up at 1:55, I warned our Members once again:

Ah, now we're getting a little sensible action.  DO NOT tell me you didn't have all day to cash out!  

Dollar coming off the floor at 82.14, oil testing $85 and looks like it will fail into the 2:35 NYMEX close, Gold $1,589 and not looking strong there with silver 1% weaker than that and nat gas now $2.28!  Even gasoline heading lower ($2.69) so what the hell is the energy sector happy about?  Nothing – stupidness – NO QE FOR YOU!!!

USO WEEKLYAt 2:29, we were getting impatient as we now were sitting on the morning short plays and off our longs and I noted to Members:  

Oil failing $85 again – I think below $84.50 into the close and that HAS to spook XOM off their 5% run in the last 3 days (one would think) and that should knock the Dow back a point and that's back to yesterday's close (12,400) so everything points to that happening EXCEPT the actual market action – which is stubbornly hanging on.

I'm baffled – how can people not want to take profits into the weekend off a 500-point pop in the Dow from Monday's low?  

We should open today below that 12,400 mark and how we behave at that line (if we should get an attempt to get back over) should give us the story for the day.  Overall, unless there is some big news, I expect we flatline into the weekend and that means we STILL have constructively bullish gains for the week but not enough so (as it's only a weak bounce overall) that we want to go bullish (or bearish) into the weekend.  

openingimageCash really is king and we feel like kings going into this weekend with nothing on our minds except working on our tans and the short trades we picked up in yesterday's Alert to Members.  The G20 meeting isn't until the 18th in Mexico and that's AFTER the Greek elections, when the World may already be in flames so even if the market moves higher on Monday – who wants to bet on it lasting?  

We do have our bullish trades in the Income Portfolio but that is about 10% invested and those are brand new picks that can survive a 20% drop that we'd be happy to double down on if we have a 40% drop so not exactly a high-risk proposition there.  On the GAMBLING side, we still have our bullish plays in the short-term and aggressive $25,000 Portfolio – just in case the EU or ECB or PBOC or BOJ or BOE step in over the weekend and wave their own stimulus wands but Bernanke just took the Fed off the table – at least through the next Fed meeting on the 19th – which WOULD be the perfect time to coordinate massive action with the G20.

Sadly, I think we're going to need it!


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  1. 1020

    Good Morning!

  2. aaronc

    Morning gang.

  3. stjeanluc

  4. 1020

    With all these improvements, I'm sure Guantanamo is well on it's way to a AAA 3-star rating……
     
    http://openchannel.msnbc.msn.com/_news/2012/06/07/12110360-soccer-cable-tv-at-gitmo-us-lockup-in-cuba-quietly-being-upgraded?lite

  5. stjeanluc

    Japan GDP Annualized / 4.7% (4.5% expected)
    Japan GDP (QoQ) / 1.2% (1.1% expected)
    Japan Trade Balance / -¥463.9B (-¥450B expected)
    Australia Trade Balance / -$203M (-$900M expected)
    Japan Eco Watcher Survey: Current / 47.2 (50.0 expected)
    Japan Eco Watcher Survey: Outlook / 48.1 (50.0 expected)
    Germany Trade Balance / €14.4B (€13.0B expected)
    France Trade Balance / -€5.8B (-€5.5B expected)
    Italy Industrial Production (MoM) / -1.9% (-0.5% expected)
    Italy Industrial Production (YoY) / -11.9% (-9.8% expected)
    Great Britain BoE/GfK Inflation next 12 Months / 3.7%
    Great Britain PPI Output Core / 2.1% (2.3% expected)
    Great Britain PPI Output / 2.8% (3.2% expected)
    Canada Unemployment Rate / 7.3% (7.3% expected)
    US Trade Balance / -$50.1B (-$49.5B expected)

    Note the Italian Industrial Production hit!

    At 10:00 AM we have the US Wholesale Inventories, but most importantly tonight we get the Chinese CPI and PPI for May.

  6. angelcur

    no qe at june meeting is my bet…the fed is already behind the curve..phil  was adamant that we needed the qe in early fall..and we are still talking about it…that's how botched this is..bernanke has completely hoisted his keynesian petard..it has not worked nor will more qe..HOWEVER enjoy the surge and don't for commodities because they will get ridiculous…bernanke is in his own pedantic coma right now..if you think greenspan was reviled bernie better get busy or watch out for the villagers with torches and pitchforks

  7. angelcur

    i can't imagine the chinese would have cut yesterday if these pending releases (of fairy tale data) were strong

  8. Burrben

    Morning Commentary  -  Does anyone ever read the morning writeup and after feeling really good about trading the day before, you feel really stupid now?  I missed almost all the Oil plays because I didn't want to chase, then I ignore them, and they would have made wicked money.  Beating myself with a stick now.

  9. Burrben

    Peterd / SStranglers
    Has anyone tried to do a call ratio butterfly and a put ratio butterfly to generate monthly income on the RUT or SPX?  I like the profile since you are protected on spike moves to an extent, as long as the spike isn't too dramatic, but at least you have the chance to cash out.  Take a look at these slides from the free CBOE presentation on the topic.  BTW I'm not endorsing anything, but it's interesting.
    https://docs.google.com/open?id=0BzlfETMAwklcQXVCbWVxWTEwX2c

  10. stjeanluc

    China / Angel – I really don't know how the Chinese can make rate adjustments based on the figures they release – either they believe their own lies or they have no choice. Why would you lower rates if your cooked up CPI numbers will show no inflation while food prices have gone up 20% (as an example – I don't have any real figures) – either you don't want to show the real numbers that would put a knife in your story or you need to stimulate your economy no matter the costs because the consequences of a hard landing are too dire to consider. And how can we then make investment decisions based on all that crap!

  11. Pharmboy

  12. boltdude

    Phil — speaking of Egg McMuffinns — MCD looks like it will gap down to modest support at 86, next minor supports by my read at 84 and 83, with stronger support at 80.  What, if any, put sales might you consider?

  13. ccsincsd

    Bur
    Thanks for all the info.  Good stuff.  Another tool in my tool box.

  14. angelcur

    burrben we all got equivocal about oil fairly early in the day..you can't be cashy and cautious and aggressive in a futures contract that will blow a hole in your psyche in 3 minutes..so don't despair no one catches every move 
    so long as the SP holds  1296 bulls get the benefit of the doubt….I'll be looking to buy near that level…i am covering some euro shorts..its hard to believe those shorts have been in place for almost a year..(where does the time go?)..i still believe parity is in the cards..but as phil has pointed out how the SNB has gone insane fighting the green knight..the eurozombies are still walking arms outstreched bumping into each other while somehow avoiding reality..

  15. stjeanluc

    Good stuff Burr! The one thing that I like about ratios is the fact that you are usually protected on one side and these butterflies do the same!

  16. Lincoln

    Everyone: Added Value
    Of course Phil always gets his deserved props, but I have to comment on the value I’ve received from many others who share their thoughts and trading strategies.  It is always interesting to see what others do even if it doesn’t fit with my temperament or “style”.  JRW, IFLAN are brilliant and I learn some things but can’t trade the way they do.  Peter D, Kurtww, Burrben’s short strangle discussions are more suited to me and excellent real world explanations of the pro’s and con’s to the techniques they use.  So I just thank all of you who share strategies and not just hot “tips” as most other sites do.
    One quick example of different styles.  I mentioned LULU as a good MOMO , on which I had been selling naked  calls for months, so what does IFLAN do? He sells naked puts which is the last thing I would do but he is in and out in a couple of days with a profit.  My plodding, tortured path to collect on the calls is now paying off but it just proved once again that trading has a very personal element to it and of course one mans ceiling is another mans floor.
    Namaste

  17. NF**X

    CSCO-NUAN/Phil – Repost. I will repost. No problem. No rush. Thanks.

  18. angelcur

    st jean you might remember my china rant last year..my longest post ever…they are contorting reality at every turn..a pox on industry and human rights..positive change is inevitable as the world is finally rejecting their generalized lilt toward fraud and distortion

  19. Phil

    Good morning!  

    Am I allowed to say I could care less what happens today?   Down is most likely but this is the song stuck in my head this morning:  

    I don't care, I don't care, I don't care
    I don't care, I don't care, care if it's old
    I don't mind, I don't mind, I don't mind
    I don't mind, mind, don't have a mind

  20. exec

    Phil

     
    What do you think about selling the Jan 14 $40 puts for $5.40?

  21. yodi

    Lincoln
    Good points in your argument 

  22. boltdude

    Can someone explain why a put sale for one stock can have higher margin/option requirements than for another, even when the total dollar amount of the obligation incurred (# of contracts * strike price) is less?  Just as an example (using OptionsXpress); selling 20 contracts of FTR July $3 puts  has an option requirement of $3,612, but selling 10 contracts of AA July $8 puts has an option requirement of $1,514.  If I am put the FTR shares, I will need $6000 to buy them; if I am put the AA shares, I will need $8000 to buy them.  So, why would FTR have a higher option requirement?

  23. stjeanluc

    The advice was to go to cash yesterday, but here is the latest anyway!

    Should we close this portfolio Phil and hold on the sidelines or do you want to keep it open for sh@t and giggles!

  24. stjeanluc

  25. Pharmboy

    Man, my accounts are moving like a yo yo, so, it shows you how I am positioned……

  26. stjeanluc

    Once again, we advised going to cash yesterday!

  27. jthoma

    I think today will be a good day for napping!

  28. Pharmboy

    Here you go Gov. Walker…..ponder this:

  29. stjeanluc

  30. Pharmboy

    Go SGEN go…..

  31. stjeanluc

    MoMo portfolio still in cash!

    I'll update the strangle portfolio later today as it's not as time sensitive and my conference calls are!

  32. Pharmboy

    ZLCS – 1/2 out.  That was a nice pop.

  33. jthoma

    Phil- Do you have a longer term target price for oil if nothing happens to stimulate the apple cart? It seems without stimulus or a pickup in world economic activity we should be heahding to $60.00.even though I realise fundamentals do not matter day to day.

  34. Phil

    Dollar way up at 82.85 and Euro, don't forget, is being desperately supported by the Swiss at $1.245 and watch out if that breaks down.  Pound already weaker at $1.541 and the BOJ is up to their own tricks, trying to hold that 79 line but the Nikkei was still down 2.5% to 8,440 so what's the point?  

    Copper $3.28 ($3.85 is bullish), Nat gas just bounced off $2.25 and gasoline is $2.65 with oil heading back to $83 for who knows what reason.  

    Watch the RUT – that seems to be our honest indicator and they hopefully will hold 750 and then 760 is their upside resistance to watch.  Dow blowing 12,400 is BAD and we're right on that line and now Nas 2,800 is in play and that would be tragic if failing along with 1,300 on the S&P (and 1,310 needs to come back to feel comfortable that the panic is fading) but, overall – weak, Weak, WEAK!  

    Dow gaps go down to 12,350, 12,250 and then all the way down to 12,100 so watch those for support on the way down if we crack, which I think we will – at least to 12,350. 

    The only greens I see are safety stocks (WMT making new highs) and that's not a good sign at all but this is all about rumors now and it can whipsaw back up quickly from any level on any HINT of QE/Stimulus so it's all silliness between here and 12,000 on the Dow – then it gets critical if we fail to hold that and 1,280 on the S&P!  

    At the open: Dow -0.31% to 12423. S&P -0.29% to 1311. Nasdaq -0.37% to 2821.
    Treasurys: 30-year +0.89%. 10-yr +0.37%. 5-yr +0.15%.
    Commodities: Crude -2.46% to $82.73. Gold -0.6% to $1578.45.
    Currencies: Euro -0.9% vs. dollar. Yen -0.26%. Pound +0.75%.

    Market preview: Stocks are under water premarket (S&P futures -0.4%) after sputtering into yesterday’s close on the seemingly shocking realization that there's only so much the world’s central banks can do to fix the global economy. European shares are lower after disappointing German trade data and as Spain reportedly could ask for aid for its banks as soon as tomorrow. Later: wholesale trade.

    10:00 AM On the hour: Dow -0.24%. 10-yr +0.34%. Euro -0.85% vs. dollar. Crude -2.13% to $83.02. Gold -0.55% to $1579.25.

    Apr Wholesale Trade: Inventories +0.6% to $483.5B vs. consensus of +0.5%, +0.3% in Mar. Sales +1.1% to $415.0B. Inventory-to-sales ratio at 1.17 vs. 1.15

    SNB intervention in May to support its CHF 1.20 floor vs. the euro totaled $66B, or a staggering $7M in euro purchases every single minute, writes Bruce Krasting. It's an amount that's "absolutely not" sustainable, he says, meaning the only other option is exchange controls – "if not this weekend, it will be before the end of the month." - Aren't you glad you actually understand this now?

    Japan's GDP grew an annualized +4.7% in Q1, a notable increase from the preliminary estimate of +4.1% growth. Private demand was revised upward as the domestic economy responded to certain government incentives and post-earthquake reconstruction. Domestic demand will likely remain on a recovery trajectory this year

    The Bundesbank lowers German 2012 GDP forecast to 0.6% from 1%, for 2013 raises to 1.8% from 1.6%. Raises inflation forecast to 2.1% from 1.8%. (Bundesbank statement)

    German trade fell sharply in April, with exports -1.7% vs. expectations of -1% on weaker-than-expected European demand; exports to the EU fell 1.1%, while non-European exports gained 10.3%. Imports fell 4.8% vs. expectations for imports to remain flat.

    Yes, moves by the ratings agencies are lagging indicators, but Fitch's 3-notch downgrade of Spain yesterday does have implications as it leaves Moody's as the only agency rating the country better than BBB+. Once Moody's moves, the ECB will require an additional 5% haircut on Spanish paper used as loan collateral, putting further stain on the country's banks.

    Spain is reportedly planning to make a request this weekend for a financial package to prop up its ailing banks. The request would likely come after a eurozone finmin conference call on Saturday. Spanish officials have no comment on the rumors. 

    Full-force bank aid is Spain's only hope, warns Christian Clausen, president of the European Banking Federation and CEO of Nordea Bank. Recapitalizing Spain’s banks has become the key hurdle that European policymakers need to overcome, and fixing the turmoil in Spain's financial system would calm markets.

    Italian industrial production -1.9% M/M in April vs. consensus of -0.5% and +0.6% in March. On year, April output was -9.2%. Two recent earthquake in the Emilia-Romagna region, which accounts for over 1% of GDP, will hurt production for six months, the Confindustria employers lobby said this week.

    The China will rescue Europe meme takes another hit as Beijing's nearly 2-year old pledge to loan money to Greek shippers so they could place orders with Chinese shipbuilders yields little. "It was a political statement that was not really matched by the will of the banking system," says a Greek shipper. You don't say. 

    Unintended consequences:  Industrial Bank (IDCBF.PK) dove 4.5% in Hong Kong trade last night after the PBOC rate cut included allowing banks to offer a 20% discount to the benchmark lending rate. Chinese banks have benefited from state-set lending and deposit rates which guaranteed them a chunky margin. Liberalization is a good thing, but true competition is sure to crimp profits.

    Chinese regulators are reportedly limiting access to corporate filings after a series of incidents in which short-sellers used the information in said filings to deduce accounting irregularities and outright fraud. Sounds like a plan.

    Singapore's economy is expected to remain restrained for the rest of the year against the backdrop of subdued global growth, the Monetary Authority of Singapore said yesterday, though "domestic consumption and investment spending will provide an important buffer." GDP will likely grow 1-3%. Inflation outlook unchanged at 3.5-4.5%.

    The sell-off in Europe has left in its wake several dividend payers selling for better multiples and offering higher yields than their U.S. counterparts. At 4.82%, Novartis (NVS) yields 90 bps more than JNJ. France Telecom (FTE)  yields 14.9% with a PE of 6.4 vs. 23.4 for its peers. The full list.

    The 19 largest U.S. banks are at least $50B short of meeting Basel III requirements. Smaller U.S. banks are around $10B short of the requirements, the Fed said yesterday. 

    U.S. regional banks' earnings and share prices are set to fallthanks to record-low interest rates, say Citigroup analysts, adding to look for the bulk of the hit in 2013 and 2014. The call comes as othersraise ratings on regionals because of their lack of international exposure. Lack of risky exposure is swell, but it doesn't speak to where profits will come from.

    The Citi downgrade of the regional banking sector included cuts of these individual banks: Wells Fargo (WFC), SunTrust (STI), KeyCorp (KEY), First Horizon (FHN), ZION, SVB Financial (SIVB), M&T (MTB), PNC, and First Niagara (FNFG).

    Miners everywhere are feeling the pinch from falling prices, but operators in Australia face the extra challenge of soaring labor costs plus carbon and mining taxes that soon take effect. "There's been such demand for gear over the last few years and mining guys get paid $140,000 to drive a dump truck. It's a joke… It's all going to come home to roost now." Y/Y: RIO -35%BHP -32%.

    Though it's not a new warning, McDonald's (MCD) spooks investors by saying that global economic volatility and austerity measures in Europe will "significantly pressure" Q2 results. The company also notes that at current exchange rates, its foreign currency translation will negatively impact Q2 EPS by $0.07-$0.09. MCD -2.9% premarket. (Previous: III

    Alpha Natural Resources (ANR -2.8%) plans to reduce its Kentucky coal mining operations, which will cut thermal coal shipments by an additional 2M tons this year and 4M tons in 2013. ANR will discontinue mining at four mines and idle two coal preparation plants, production will be scaled back at several other mines, and four contract mines will close.

    Shares of Best Buy (BBY +1.3%) open higher against a weak tape with the intention of founder Richard Schulze over his 20% stake looking as a big question mark. JPMorgan's Christopher Horvers says that although the bear case on BBY remains intact, he sees a leveraged buyout led by Schultz as a possibility after he crunched the numbers on a deal.

    Susquehanna initiates coverage on IMAX with a Neutral rating and $23 price target. The company has the highly-anticipatedPrometheus on screens this weekend, with Roger Ebert's reviewextolling the benefits of seeing the sci-fi movie on a 3-D screen.

    MEMC (WFR) said late yesterday it's "disappointed" with Moody's decision to downgrade the company's debt, as a result of which the company "will be limited from making [certain] additional borrowings." Q2 cash needs which would have been met under a specific borrowing facility will now likely result in a cash balance reduction of $15M-20M.

    Bernstein analysts believe Apple (AAPL) could sell 31M iPhones per year in China by 2015 and perhaps 80M by 2017, which would equal an $8/share EPS increase by 2015 and $12.50 by 2017. But the firm says Apple should offer a low-end model in China over the near-term to secure first-time smartphone buyers to answer the high adoption of low-end phones in the country.

  35. angelcur

    PHIL! you better not be off your meds!
    Pharm its sad but big labor is dead..self inflicted…the rank and file victims of the same policies of self interest that are undoing our financial system..my gandmother used to stuff incense in a uniion shop..happiest days of her life..by th etime she dies she couldn't believe how the union bosses were riding around in fancy cars and charging excessive dues..what happened?

  36. Phil

    A lot of hope on Obama's upcoming remarks – I think he is being set up to be the bad guy here with a fake rally and then they crash the market and blame him – we'll see…

  37. kustomz

    US wholesales inventories rise 0.6%, sales rise 1.1%

  38. Phil

    Dow volume 17M at 10:10 so totally dead.  

    Euro holding $1.245 but look what it's costing the SNB (news above).  Pound holding up with the Euro.  

    If we do pop, bullish on Nikkei (/NKD) at 8,450 line or EWJ can be played with July $8s at .84 (EWJ at $8.80 so no premium).  

  39. aussie260

    First day of school holidays…7am here in Cali and the house is soooo quiet! You would never know there are 5 kids plus 1 friend asleep upstairs! Even my 8 year old trading buddy, my youngest son, is having a sleep-in this morning…zzzzz

  40. Pharmboy

    Obama/Phil….I think you are right on that one……

  41. edro00

    SDOW
     
    Phil – SDOW is not a good trading vehicle.  No volume and bid/ask spreads are 0.40 …..
    Cannot get fills at the mark.

  42. rainman

    Phil / bad guy — My feeling as well.  What could he possibly say today that he hasn't in the past?  All bark and no bite.

  43. angelcur

    aussie i was up til 230 watching the markets imagine being able to sleep for 12 hours like the old days!

  44. angelcur

    where is the president speaking?

  45. morxlntway

    edro00 – i was hinting at that yesterday. I think it's to be used as a hedge in a bigger downturn than we had today. Let's see what the master's wisdom is.

  46. sagemm1

    Crashing and Obama, the funny thing in my opinion is wall street has never had it better (other than when the covers were not pulled back); free money, no risk and a market that while stalling has been straight up. The only problems stem from THEM chasing the retailers with HFT program trading and F-ing everyone.

  47. NF**X

    Phil – 2 AH Questions – Repost:  Thanks
     
    First, I, like you (or mostly from you) love CSCO.  When I follow a trade that fits for me, I always make a point of pasting it into an email, sending it to myself and reviewing for complete understanding later.  I know the structure of this one isn't uncommon, but I can't find my notes and I'm not certain re the end play.
     
    On or about the same say, bought XX CSCO shares (11-11-2012) at $18.70 – and sold XX Jan '14 $15 Cs at $5.60 and same date $20 Ps at $4.40.   I know I'd like to accumulate and own CSCO over time – and I rarely look at this position right now, but. for re-education purposes, I (apologize) but am wondering what I'm looking for approaching exp and what the end game is.
     
    Also, recently got a little too bullish on NUAN.  Tho I like them, my spread is too aggressive – and I didn't finance with Ps. Opened the Jan '13 25-27 bull call spread for $1.  Normally – on a proper BCS – I'd sit and from time to time see if, as you say, we're still on track.  NUAN isn't going to see $27 in six months.  The premiums, tho, would seem to support converting to a diagonal and selling calls every month against the 25s.  Can get their cost basis to zero or better.  That seems simple to me – but right way to approach?  Or is there a better way to "reset" this spread for further out?

  48. stjeanluc

    Here is the Strangle portfolio. You mileage may vary based on the prices and strikes you got yesterday.

  49. Pharmboy

    AVEO – buy the stock, sell the October 12.5 straddle for $4.10…….small amount, but VERY lucrative for smaller accounts.

  50. kevinb63v

    Phil,
      Don't know if you're aware, I wasn't, but Ian Anderson has released Thick As A Brick 2 (TAAB2), subtitled Whatever Happened to Gerald Bostock (the fictitious schoolboy who purportedly authored the original). It's not a Tull album – no Martin Barre most prominently. I haven't heard it yet, other than the official trainer on You Tube. It's gotten somewhat mixed reviews from what I've seen, but 4 stars overall on Amazon, FWIW. It's definitely not a continuous suite as was the original, one of my favorites of all time.  I don't see how it could be too bad myself, I mean it is Ian Anderson after all, voice diminished by age notwithstanding. The deluxe edition DVD contains a 5.1 surround version of the album mixed by current wunderkind Steve Wilson.

  51. painman

    Pharmboy,

    Cashed out earlier of my June SGEN vertical for nice profit. Thanks. Would you enter the Oct BCS 20/25 that you talked about now or wait? Do you consider this the breakout? Thanks again

  52. kinkistyle

    China/stjean: China is in denial. And I think they'd rather deal with inflation and civil unrest than admit defeat.

  53. stjeanluc

    Happy trails Ray…

    Clay Jones

  54. Phil

    Guantanamo/1020 – Maybe a good spot to take the kids this summer.  

    No QE/Angel – I don't see how they can not do it.  Twist expires in June and leaving nothing will be a disaster.  For one thing – the Fed is buying 80-85% of all the TBills – what happens if they don't.  What would a 1-2% pop in rates do to the economy?  I don't see a choice – madness to suddenly get off this path.  Good point on China – bad news likely tonight as well.  

    Oil/Burr – Look at it more as review and learning for next time.  Also, good to practice scaling out.  When you have a nice gain — take 1/2 off, set stops.  If you get more of a gain – take half off, set stops – etc.  Yesterday's drop in oil from $87 to $82 was crazy – no one expects that in one day and we were happy to take $2 and run at $85 as THAT is a huge move for one day.  

    And what Angel said.  

    MCD/Bolt – See above.  They are lowering guidance so I'd stay away for now and just hope they have a nice dip to sell into.  

    Great point Lincoln – Fantastic TEAM effort this past month.  So many great contributions and, of course, a fun and interesting environment makes the day interesting and don't forget the value of being able to stay engaged and alert with so many people we know and trust keeping their eyes on all aspects of the market.  I am so happy to see this team coming together over time (and those of you who've been here for years know it was our original mission statement to build this group) and I really hope we will be able to take this to the next level with a BBBW-type project!  

    CSCO/NF – Now is fine – I can get to it.  

    Mystery puts/Exec – Kind of depends on the stock but, if it's not at $45, I doubt I'll be interested.  

    Puts/Bolt – The internal VIX of the stock matters and where the stock is as they assume a 20% drop in the stock price to stress-test the margins.  Also, it varies a lot by broker and OPXS is CRAZY (I used to use them).  

    Portfolios/StJ – I think keep them open but seriously just a what-if training exercise at this point.  Already down 10-20% from yesterday's call is why I wanted out but, of course, we can play through almost anything and that's kind of the point – to teach the adjustment process.  Generally, these portfolios are all praying for QE3, it will be interesting to see what to do if the G20 fails and the market capitulates.  

    Yo-yo/Pharm – Yet amazingly the cash holds nice and steady (actually up 0.5% as the Dollar jumps).  

    Labor/Pharm – That's why they shot him.  "Sic semper tyraannis" is essentially the Tea Party motto…

    Oil/Jthom – I think low $80s is the right price but easy to go up or down 10% in the band.  I think OPEC would consider $65 to be an emergency but $80 is a line they're going to defend anyway.  

    What is with Obama – that guy never starts a speech on time!  I guess we're not used to a President who actually does stuff rather than just show up for the photo opp.  

    SDOW/Edro – OK, bad play then, we'll find something else.  

    Finally – Obama time! 

  55. Phil

    Oh no – His plan is to hope Europe's "leaders" do something?!? 

  56. edro00

    Morx
    The problem with SDOW is we cannot adjust it because we cannot get fills near the mark

  57. rainman

    I think that's the test shot to have US bail out europe for OUR OWN GOOD.

  58. Phil

    Never better/Sage – But the threat of regulation is intolerable to them.  They are crooks and they hate the law.  So it doesn't matter how nice Obama has been or may be to them – they still want to be able to run their scams with impunity rather than "go legit."  

    Still talking about the same Jobs Program that's gone nowhere for a year?  

    Wow, this market is so desperate for a reason to move higher – even this is giving us a boost.  

    We could, we could, we should….

  59. stjeanluc

    China / Kinki – I agree, but my point was what the denial was based on and I guess we need to then go to various psychological descriptions – mythomania, schizophrenia or others! I am not a psychologist!

  60. wavecounter45

    Pharmboy,
    Here's what FDR said about collective bargaining for public employees in 1937:
    “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress.”
     “Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable.”

  61. rainman

    Could / Should — All bark, no bite….

  62. 1020

    Obama is beginning to sound like the teacher in the Charlie Brown cartoons. She does not speak in words, but in blah, blah, blah.
     
    O, please refrain from speaking in blah, blah, blah……
     
    :(

  63. sagemm1

    anyone else lose obama stream?

  64. 1020

    I've always appreciated Obama's "cool"…..
     
    But, I'm beginning to recognize, that without perspiration, there cannot be inspiration……..

  65. angelcur

    u see china big 5 banks RAISED rates?

  66. aussie260

    Love Charlie Brown…

    http://www.youtube.com/watch?v=ss2hULhXf04&feature=youtube_gdata_player

  67. 1020

    I think the next PSW project should be FAFI….
     
     
    *Find A Freaking Island.  :)

  68. Peter D

    OK, the SPX crazy play didn't get filled, so let's break the 4 legs to 2 trades, a short strangle of SPX July 1125 put/1430 call, and then the long put vertical at July 1265/1260 put.

  69. sns1

    FOR PSW…(Barclays Note):
    Spanish bank recapitalisation: What to expect in the days and weeks ahead
     
    In the coming days/weeks, several important pieces of information will be released regarding the bank recapitalisation of troubled Spanish lenders. We describe the IMF assessment due in the coming days, as well as the sector assessment by two private firms, the outcome of which is expected by 21 June (top-down analysis), followed by a detailed (bottom-up) analysis by 31 July. We also discuss briefly Spain's most likely choices for type of bank recapitalisation.
     
    The IMF assessment
    The IMF report on Spanish Financial Stability Assessment Program (FSAP) is scheduled to be discussed by the IMF Board today, 8 June, and its findings released either later today or possibly on Monday, 11 June. The international and local media have reported that the IMF estimates costs for the sovereign of bank recapitalisation would be about EUR40bn (nearly 4% of GDP). This is in addition to the EUR16bn already injected via FROB and the asset protection schemes provided to several institutions for about EUR24bn – the latter, for the moment, are only contingent liabilities for the sovereign.

     
    Given the immediate release of the IMF recapitalisation estimates, media reports today suggest that Spain will request aid from the EU to recapitalise its banks. In particular, Reuters reports that two senior EU officials said finance ministers of the euro area would hold a conference call tomorrow (9 June) to discuss a Spanish request for an aid package, although no recapitalisation figure had yet been set. The Eurogroup would issue a statement after the meeting, they said, according to Reuters.
     
    It is important to recall that the IMF FSAP team already published its preliminary findings on 25 April (see http://www.imf.org/external/country/ESP/index.htm). The conclusions contain several key recommendations that the government seems to have followed quite closely: the intervention of Bankia, the most systemic among the weak institutions; and undertaking independent and comprehensive assessment of all bank loan portfolios, which was followed by the government nominating two private firms (Oliver Wyman and Roland Berger) as independent assessors. In addition, the ECB and the IMF itself are participating in the process, which would make it similar in many ways to Ireland's PCAR, completed in March 2011 under the EU-IMF programme.
     
    The assessment by two private firms
    This assessment started about three weeks ago and is expected to be completed by 21 June (a more detailed bottom-up analysis is due by 31 July). The government has stated that this assessment will be a key input into its final decision on the public funds that will be injected into the banks.
     
    The amount estimated by the two independent firms is likely to be closer to market consensus, which is higher than the c.EUR40bn that the media reports as IMF estimates. For example, our baseline of net additional costs for the sovereign was EUR50bn, but this was estimated prior to Bankia 's announcement (see Spain: Dealing with sudden reversals, 4 May 2012). Following the Bankia announcement, our estimates increased roughly EUR20-30bn, bringing total baseline recapitalisation needs to EUR70-80bn. Our stress level estimate is EUR126bn under an extreme yet plausible scenario. Recently, both Fitch and S&P mentioned amounts on the order of EUR90-100bn under severe stress.
     
    Can the government recapitalise banks without external help?
    The government insists that it does not need a programme. Assuming this is indeed the case, it seems the most likely venue would be the injection of government bonds into the banks in exchange for equity. The recapitalisation bonds could be used by the banks as repoable securities at the ECB, depending on their format. It is worth noting that this would neither be "unorthodox" nor "unusual", as argued by some commentators, because this is precisely how a majority of governments have recapitalised banks in previous banking crises (eg, Thailand 1997, Indonesia 1997, Korea 1997, Turkey 2000-01, Argentina 2001-02, and, to some extent, in Iceland 2008 and Ireland 2010).
     
    Even if the government argues that it does not need a programme, other governments have also denied programmes only to request them soon after. It is clear that official support would come with conditionality attached, even if focused largely on bank recapitalisation. This is perhaps why the government may be hesitant to request a programme, given the stigma attached, and the potential for strict conditionality even in areas beyond banking reforms (eg, fiscal and structural reforms), depending on the type of programme. The current EFSF guidelines on recapitalising financial institutions (likely to be applied for the ESM) highlight that conditionality would be institution-specific. Additional conditionality in the domains of financial supervision, corporate governance, etc, should also be put in place. However, as such, there are few broader conditions put on the sovereign itself.
     
    An important factor that affects the government decision to request a programme is the cost/benefit from a sovereign perspective. First, if the government interprets a very long-term loan at a very low interest rate from the EU-rescue mechanisms as reducing the sovereign costs of bank recapitalisation, because it aids its public debt dynamics (ie, lower financing cost from say EFSF/ESM long-term loans), it may decide to opt for the EU facility and accept the conditionality. Second, if instead the government fears that markets will dislike official loans (ie, market sells off after the programme) mainly because of bondholders' subordination, perceived higher LGD, and consequently higher credit spread, then it would be more hesitant to opt for a programme. It is also important to notice that neither the EFSF nor the ESM were designed to inject equity capital directly into banks, and that this is unlikely to be changed in the near term: any programme would have to be requested by the Spanish sovereign itself, and whether it is channelled via the FROB or to the government itself does not make any difference in terms of fiscal implications because FROB liabilities (debt) are included in gross public debt.
     
    As we mentioned earlier, the overall cost to the sovereign will likely be c.EUR70-80bn, so a programme may not make a large difference in terms of market reaction. Fundamentally, Spain is likely to remain solvent after accounting for those bank recapitalisation costs (see Spain: Dealing with sudden reversal, 4 May 2012). This is crucial because solvency is the benchmark to understand potential PSI discussions in the future, which at this juncture appear unlikely (note that only about 20% of the Spanish government bonds are now owned by non-residents). Obviously, the higher the recapitalisation costs, the less clear-cut solvency is. This is also true because this would generally happen in a scenario of stress macroeconomic conditions, which would be reflected in worse public debt dynamics as well. One aspect in which a programme may help is to add credibility to the completion of the bank clean-up process through strict conditionality.
     
    However, a programme may not be a "choice" but a "need" if Spain were to be forced by market events into an EU-IMF bail-out. If markets events accelerate the ongoing capital reversal, and spreads continue to widen, given the contagion to other weak economies (eg, Italy has been trading at a spread versus Spain of c.30-70bp for 10y bonds), it would be unlikely that the programme could be circumscribed to the banks only or even to Spain alone. And for that, there are no sufficient rescue funds readily available (ie, for multi-year full-fledged programmes for Spain and, depending on contagion dynamics, for Italy as well).
     
    Will an adequate bank recapitalisation be enough?
    In sum, the size of the bank recapitalisation estimated by the independent institutions matter (IMF, ECB, the two private firms), as well as how it would be completed. Even if the final figure is less than 10% of GDP, as seems likely in our opinion, and Spain remains solvent, as seemed to be the case, the negative market dynamics in the periphery are unlikely to be fully resolved, as we have argued in the past. Nonetheless, a programme focused on banks could alleviate Spain's market access somewhat. Excluding bank recapitalisation costs, the issuance programme for Spain is relatively limited going forward: net issuance is close to zero for the remainder of the year, and gross auctions sizes should be around EUR2.5bn, which is small by any standard. This ex-bank issuance can probably be absorbed by domestic investors.
     
    Besides the completion of bank recapitalisation processes, the solution also requires the euro area/core to make explicit decisions and strong commitments to the periphery, especially after the PSI exercise and the open discussion of a Greek exit.So long as the euro area does not remove the tail risk of potential FX redenomination for periphery countries, medium- and long-term investment commitments by foreign capital (or even domestic) are unlikely and that creates a growth disadvantage in the periphery. And without growth prospects, there is little hope to emerge out of the crisis.

  70. 1020

    aussie260   EXACTLY!!!  :)

  71. exec

    Phil/Mystery Puts

     
    Sorry about that.  I was looking at KFT Jan 14 $40 puts for $5.40?

    However, the more I looked the less I liked.

  72. Pharmboy

    SGEN/pain….I would rather sell puts at this point, but yes things have moved quickly.  September is the BCS is the one I am in, October is a bit too much for me.  Just couple it with sold puts for a credit if possible, or wait for a pullback.  Breakout it is, but we need a few more days of consolidation for it to move up again.

    FDR/wave – sure, but this country was built on the backs of labor….and by labor I mean building things or picking crops, etc.  I still think people need to protect themselves, and Walker is a pawn…no more politics from me until after hours.

  73. Peter D

    Burrben,
    Yeah, don't worry about the fancy names for these strategies as they all have the same principle that we sell shorts to collect premium and spending some money to buy the longs at lower strikes for puts and higher strikes for calls to protect ourselves.  There is a shortcoming in every short sell strategy that the loss can be high at the short strike (dead spots), or loss can accelerate exponentially if they are sold naked.  If we buy more longs, the loss "band" is narrower, and profit is lower.  The key is how to get out of the dead spots if the market get there.  It does take practice and MARGIN to escape them, so that's what we are trying to do together.

  74. Canuck

    kevinb – big Steve Wilson fan

  75. angelcur

    not sure what that presser was all about

  76. kustomz

    To squeeze the EUR shorts

  77. aussie260

    Coldplay’s version of Charlie Brown :)

    http://www.youtube.com/watch?v=-u5JM6X_XG8&feature=youtube_gdata_player

  78. sagemm1

    angel may be prepping public, if that Spain announcement tomorrow is true, that US is not sleeping on the job…rather doing everything to keep things afloat

  79. stjeanluc

    Portfolio / Peter – Do you want to me adjust the prices in the portfolio based on what you get or are you OK with the figures I have. At this point, just like the other portfolios I see that an educational instrument so price accuracy is not the most important thing.

  80. exec

    Phil/Blame Bama

     
    Kind of reminds me of 2008  when every time the Pres or his staff spoke the market would drop like a rock.
     
    Obama has been taking some serious heat lately.  He can't say a thing anymore without someone crawling up his @ss with a microscope. 
     
    I suppose he's paying for his first year when they'd march him out every 10 minutes and he'd go on and on and on about everything that was on his mind.  I remember when Clinton got elected and Barbra Bush told him….."don't trust the media".  I think Obama thought they were his friends and that he was above their deceit.  As it turns out, the media is the media….they love to build you up….but they love tearing you down even more.
     
    It also looks like the money may take him to the wood shed for all his "Fat Cat" and other comments that put them in a bad light.  Time will tell but from the looks of it, it won't be a cake walk to his second term.

  81. pstas

    Peter- interesting, I never considered entering the trades for the strangles & put verticals as one.
    I got filled almost immediately on the put verts but I used 1270/1265; Took a bit longer to fill on the Strangle.
    The RUT put half got filled right at the close yesterday. I was tempted to lower my offer but held out and it filled at the bell.

  82. Peter D

    stjeanluc,
    You are right that we don't need to adjust the price in the spreadsheet.  I'm trying to illustrate how to get fills for these trades, which is a good thing to learn.

  83. Phil

    That's it – he's done.  "Congress should do something or we darned sure want them to tell us why not!"   That's not good…

    FB likes it – up 5%!  

    Oil not over $83, gold $1,585, Dollar 82.75 may be the low and if it moves up, this little rally dies but still very impressive as we're up 100 from the open on the Dow with 27M at 10:45.  

    CSCO/NF – So you netted into CSCO at $8.70/14.35 with a call-away at $15.  CSCO is $16.56 and you made a bearish entry so you are "on track" but a bit too aggressive with your puts means you get assigned to 2x at $14.35 and that narrows your profits unless CSCO clears $20.   But, then again, it's 2014 so lots and lots of time to hit $20.  I would just leave it and watch.  Your escape move on the short puts is a 2x roll to the $15 puts, which would cost you about $1 and net you down to $9.70/13.23 but, of course, you'd be on the hook for 3x at $13.23 – just with less chance of an assignment 25% lower in strike.  Better to patiently wait (as long as CSCO holds $15) for 2015 options to materialize because, if you are a long-term holder, the Jan $20 puts are now $4 and the 2014 $18 puts are $3.70 so being able to roll down $2 over a year is not a bad path to be on.  

    NUAN/NF – Good job being proactive, you still have $1.45 in the Jan $25s and that's more than you paid so why not sell the July $24s for .30 and spend $1.50 to roll down to the $21s ($2.95) so it cost you net $1.20 to roll down $4 with the anticipation of selling another .30 3 or 4 more times to make a free play roll out of it and, of course, if those $21s drop down to about $2.50, then the next roll would be down and out to the 2014 $22s, currently $4.40.  It's always important, when you are making a roll, to KNOW what your next roll will be.  If you don't like your next roll – why do the first one and that would mean you need to consider stopping out, rather than putting more money into a position you don't really want to commit to for the long-term.  

    You know, I understand that Obama has his hands tied and can't get anything done but, at this point, he needs to take the gloves off and call Congress out – not hint that they should reconsider legislation they have already held up for a year.  Demand a meeting!  Name names!  Make sure people know you are willing to do whatever it takes to move things forward and point to the people who are blocking it and make THAT an election issue.   I think it's a little late to worry about hurting the Reps feelings…

    Brick/Kevin – I heard a couple of tracks and lost interest.  I love Tull but not enough to buy whatever crap they make.  I also stopped going to concerts now that I'm 49 and most of my rock idols are my mom's age – it's just depressing!  There's a reason we capture these recordings – you get people at their peak performance.  Athletes have to perform every day and they retire them at 40 because IT'S NOT THE SAME ANYMORE – sadly, they don't put musicians out of their misery and it's often like an old-timers game going to concerts – nice to see the old boys but sad too….

    Well, at least that little rally gave you all a chance to fill those short positions!  

    Europe still red by about 0.25% but at day's highs on that inspirational speech by Obama – this is as silly as it was yesterday after Bernanke said no QE for the 20th time and we were still hanging around 12,500.  

    FAFI/1020 – I agree.  

    Nice report SNS, thanks!  The Moody's downgrade is key, it will force Spain's hand and seems inevitable.  

    KFT/Exec – Then no because it's too aggressive.  The entire global economy may collapse this month – can KFT be that important to you?  

    Blame/Exec – Yes but Obama does reliably pop the markets, which is amazing considering how much everyone in the Financial Media hate him.  They loved Bush and he tanked them every time – so strange.  

    Is Europe buying into the US ahead of the weekend?  We'll find out soon…

  84. danny3399

    Phil,
    What are your thoughts on a spain bailout this weekend and if the china economic data is bad as well. What effect do you think will have next week or will they cancel each other out.
    Thanks
    Danny 

  85. Burrben

    PeterD / Example Strat
    I hear you, I don't care what they are called, I was just looking to get your opinion on this type of credit trade.  What I really like about the risk profile on the trade below, is the spike in profit as the underlying is getting closer to the main short strike of the trade.  The dotted line shows the profile on expiration day.  So if the RUT has a violent move down or up, it would give us a chance to adjust or cash in the side for a possible profit, rather than the steep drop off in profit of a ironC or a short strangle.  I'm just throwing ideas around:
    Take a look :  https://picasaweb.google.com/lh/photo/aP8wEbFkQ0VJXRIQmp2jN3NLJEdTq20IeksyP_kMH6Y

  86. 1020

    Phil – I totally agree.  Time to bloody those knuckles!!!
     
    Or – He can write books, give speeches, enjoy his kids, his wife and his life. And earn Millions…..
     
    Unfortunately, the right's knuckles have already healed and they're fired up for more…..

  87. rustle123

    I'll Have Another has been scratched from the Belmont, so no Triple Crown Winner this year.

  88. deano

    Phil – how about a play for a selloff in the next few days? SQQQ's perhaps?

  89. Phil

    LOL, Rick Santelli now picking up boys on the train to use for interviews!   

    10:00 AM On the hour: Dow -0.24%. 10-yr +0.34%. Euro -0.85% vs. dollar. Crude -2.13% to $83.02. Gold -0.55% to $1579.25.

    11:00 AM On the hour: Dow +0.2%. 10-yr +0.18%. Euro -0.76% vs. dollar. Crude -2.16% to $82.98. Gold -0.2% to $1584.75.

    Don't Expect Any Help From Us, Bernanke Tells Eurozone Leaders. Ben Bernanke, the chairman of the Federal Reserve, sent a message of "you're on your own" to European leaders yesterday, telling them there were no policy tools or technical steps the US central bank could take to help ease the pressures in the eurozone. Instead, in testimony to domestic lawmakers on Capitol Hill, he said the Fed would monitor American banks to make sure any sudden worsening of the euro crisis did not infect the US financial system. And he promised the Fed stood ready to prop up demand in the US if Europe pushes the wider global economy into recession. "The risks have waxed and waned. The crisis has been going on for more than two years and there have been periods of greater and lesser intensity," he said. "Certainly it is at a point where it is important for European leaders to take additional steps to contain the problem."

    Larry Summers: Europe Crisis Hit By 'realism failure'"There are also very large psychological effects," he said, "and the sense that a large part of the world economy could encounter really grave financial problems is a source of uncertainty. "When people are uncertain, they wait, and that means they don't spend, and in a demand-short economy, that can be a serious problem. "Europe is a threat not only to itself but to the global economy." Mr Summers tells me he can understand that European leaders want to maintain confidence, but adds: "Sometimes there's nothing more demoralising than being told that the emperor's well-clothed when you can see for yourself that the emperor is naked. "They are errors that tended, in the name of maintaining confidence, to seek to perpetuate illusion."

    British banks among the most unprofitable in the world. The British banking industry was the second most unprofitable in the world in 2011, according to an analysis of lenders in major economies.

    "Greece leaves and 'Helicopter Draghi' enters" - Harley Bassman's (formerly ML, now CS rates strategist) "coda" prediction. (via)

    The Euro Working Group has been placed on standby to work on bailout terms for Spain over the weekend, reports The Telegraph's Bruno Waterfield. "It's not a question of if Spain needs support, but what the terms (are)," says a source. It sounds as if Spain is being goaded into something it's not quite ready for. (also)

    Spain too big for EU rescue fund as China recoils. As Spain edges closer to a full sovereign rescue, economists have begun to doubt whether the EU bail-out machinery can raise such large sums funds at viable cost on global capital markets.

    Rajoy Holds Bank Talks With EU Leaders as Fitch Downgrades SpainSpanish Prime Minister Mariano Rajoy said he's talking to his European peers about how to shore up the country's banks as Fitch Ratings cut Spain's credit grade to within two steps of junk. Rajoy said he's spoken to colleagues in the European Union and that, once he has estimates from international consultants on banks' capital needs, the government will find "the formula for the financing of the capitalization of the banking sector." He will take the decision that "best defends the interests of Spaniards," the premier told reporters in Madrid yesterday. Rajoy spoke minutes before Fitch downgraded Spain by three levels to BBB, within two steps of non-investment grade. Fitch said the cost to the state of shoring up banks may amount to as much as 100 billion euros ($126 billion) in the worst case, compared with its previous estimate of 30 billion euros, as Spain will remain in recession next year. Spain is trying to overcome German opposition to allowing the euro region's bailout funds to sidestep governments and recapitalize lenders directly. The Treasury's access to capital markets is narrowing as it increasingly depends on domestic banks to buy its bonds, reducing the government's ability to backstop struggling lenders.

    Full-Force Bank Aid Is Spain’s Only Hope, Industry WarnsSpain’s banks need urgent aid plugged directly into their balance sheets and Europe can no longer allow itself to deploy half measures, according to the leaders of some of the world’s biggest banking and finance groups. “It must be done with full magnitude,” Christian Clausen, the president of the European Banking Federation and chief executive officer of Nordea Bank AB (NDA), said in an interview in Copenhagen yesterday. Recapitalizing Spain’s banks has become the key hurdle that European policy makers need to overcome, and fixing the turmoil in the nation’s financial system would calm markets, he said. Bankers are stepping up their pleas for action as Spain’s financial crisis risks engulfing the euro area’s fourth-largest economy and policy makers remain divided on how best to tackle the issue. The European Commission last month lent its support to proposals to provide a direct capital infusion to Spain’s banks, a model Germany opposes in favor of aid with fiscal austerity strings attached. Spain’s banks are buckling under the weight of 184 billion euros ($231 billion) in real estate loans that the Economy Ministry has characterized as “problematic.” The country’s lenders may need as much as 100 billion euros in support, Antonio Lopez Isturiz, a leader of the European People’s Party, said yesterday in an interview with broadcaster TVE.

    Your Complete Guide To The Crisis Going On In Spain.

    China rate cut sparks fears of grim May data (Reuters

    China Near Recession Amid Rate-Cut 'Panic,' Asianomics Says. China's first interest rate cut since 2008 and loosed controls on lending and deposit rates are a "sign of panic" and will not do anything to boost the economy, Jim Walker, chief economist at Asianomics Ltd. said. "The timing is a surprise but I suspect it demonstrates just how weak the Chinese economy really is," Walker said today. "We believe that it is pretty close to recession." The central bank's move may backfire if it "further dissuades people from putting money into savings and time deposits," Walker said. "If anything, banks will need to raise their lending rates because their cost of funds is going up."

    It Is Clear Now That China Is Headed For A Hard Landing.

    China’s Ship Yards Fail to Win Orders as Greek Owners Shun Loans. Chinese ship yards are failing to find new work 20 months after Premier Wen Jiabao sought to encourage ordering by pledging $5 billion of loans to Greek vessel owners, who control the world’s biggest merchant fleet. Almost 90 percent of China’s ship yards received no orders this year and about 28 percent have secured none since the end of 2009, Clarkson Plc (CKN), the world’s largest shipbroker, said May 16.

    Commodities Tumble Most in a Week as Slowdown to Reduce Demand. Commodities slumped the most in a week on concern a slowdown in China and the U.S., the world’s two biggest economies, will cut demand. The Standard & Poor’s GSCI Spot Index dropped as much as 1.7 percent to 581.73 and was at 584.19 by 11:34 a.m. Singapore time.

    Booster shot:  China slashes gasoline and diesel prices by the most since 2008 to try and match the recent drop in world crude. The trouble for the nation's refiners is product prices were never allowed to rise commensurately with oil when it was moving higher. Sinopec (SNP) had a Q1 refining loss 16X greater than a year ago. PetroChina (PTR), a near doubling.

    Development of shale gas reserves outside the U.S. is likely to proceed more slowly than generally expected due to uncertainties about the size and quality of reserves and a lack of distribution infrastructure, a top Chevron (CVX) exec says: "There have been millions of wells drilled in the U.S. and you know a lot more about the actual geology, and the U.S. has the infrastructure to deliver gas."

    A rise in natural gas fracking costs could crimp Halliburton (HAL -2.2%) shares, Susquehanna writes, as the firm chops its price target and earnings estimates for the next three years. While HAL has been able to pass through prior price inflation due to a red-hot pressure pumping market, the firm now sees a sequential decline by 500-550 bps in North American margins due to guar gum inflation.

    Analysts seem satisfied with the elevation of Jamie Sokalsky as new CEO of Barrick Gold (ABX): He's “well respected and unlikely to do anything that would surprise the market." The ousted Aaron Regent, on the other hand, was perceived to be leading a charge for diversification since the Equinox deal, but now "you don’t have to worry about a further shift away from gold."

     

    Shares of Wal-Mart (WMT +2.4%) push higher, helped in part by a report of a double-digit gain in sales for Mexican unit Walmex. Yet another 52-week high has been etched out by shares.

    Facebook (FB) launches App Center - an Apple/Google-like online directory of downloadable apps. The company is trying to attract more software developers and allowing its users a better way to find apps on the site should help. Shares +4.1% and threatening to go green for the week.

    Apple(AAPL) Just Got A Patent That Will Help It Crush The Ultrabook Competition.

  90. tommy1

    Exec, Obama may be running scared, but he deserves it for not making Summers toe the line and forcing him to force Citibank to take the fall. Our California senators should be pilloried for supporting the bank bailouts. Obama was right in there eagerily sniffing out opportunity as the Young Ambitous Senator, meeting with the GS crowd. Now he deserves a good ass-kicking. The thought that Romney might deliver though is atrocious. Time (once again) to leave this country? ;)

  91. lflantheman

    MoMo portfolio:   Added 5   AAPL July 575 calls for 20.70

  92. Pharmboy

    Dr. Ben not helping the EU….that's bull.  They can borrow from the Fed window as necessary….

  93. sagemm1

    Europe buying US…wouldn't that make uup a decent play or am I looking at it the wrong way?

  94. NF**X

    NUAN/CSCO – Thanks, Phil.

  95. sank1

    25kp FAS / Phil,
    With the calls to go to CASH in multiple portfolios, and the FAS Oct '12 68/94 BCS having made 25% in a short period, should we pull this off the table? Thanks.

  96. rainman

    tommy1 / Romney — Oh, he'll deliver. Just not to the 99%.

  97. Phil

    So Dow fell from 12,540 to 12,420 (non-spike) and now back to 12,480, which is exactly the middle.  S&P 1,328 to 1,308 and now 1,318 is the middle there – see how these things work out.  Nas also middling at 2,840 and RUT at 760 so this is an entirely mechanical (Bot) move and very possible we freeze here into the weekend.  

    Spain/Danny – I don't think the money is there to really bail them out within the established frame-work and, if they are going to go outside the frame-work, it's a Parliamentary nightmare unless they do something wacky like declare some sort of emergency action but that would be hard to justify (one would think).  China's data is now expected to be bad so I'm less worried about that (also since it will say whatever they want it to say) than I am about Europe spinning out of control (or being fixed – which is why we can't go too bearish either).  

    Sell-off/Deano – Total crap shoot but I like TZA at $21.26 and today's pop lets you sell July $19 puts for $1.10 and buy the $21/26 bull call spread for $1.35 for net .25 on the $5 spread and, of course, you can roll the short puts along so a nice way to take a bearish poke.  

    Window/Pharm – Good point.  Stealth help.  

    UUP/Sage – Not a real demand for Dollars as Dollars are spent to buy stocks (diminishing the supply).  Also, lots of Dollars came out of commodities and are floating around at Dollar 83, ready to get sucked back into oil and gold if there is any easing talk.  

    You're welcome NF, sorry it took a day. 

    FAS/Sank – With real money – YES!  You can leave some on (maybe 1/4) but it's a pure play on QE now and will make stunning amounts of money if we get it this weekend or next but the downside is horrific (as we saw last week).  

    Still no volume at all – 37M on the Dow coming into noon.  Means that nothing that's happening now means anything as it can all be undone in 15 mins of volume trading.  

  98. rainman

    Phil / He's done — I think you assume that Obama is on the other side of the isle from congress.  All appearances say he is but I'm not so sure.  He needs to be rallying the troops for the election and instead he's got his tail between his legs like a beaten dog.  I think the puppet masters (i.e. lobbyists) keep him from getting too far over the line and he just points the finger at congress, not to keep feelings from getting hurt but to keep up the appearance.

  99. japarikh

    Iflan,

    Why the AAPL July 575 for $20? Earnings play or WWDC play? I have 5 at 24. Thinking about adding some. Just wanted to see what you are thinking

  100. rainman

    Pharm / EU — Bingo!  That might come to light this weekend and that's why Obama spoke.

  101. Phil

    WMT good for 16 Dow points out of 20 positive.  

  102. kurtww

    Burr — those spikes in the expiration p&l will likely not be there in the immediate curve (as opposed to the expiration curve) until the very last day or two, since they are so narrow. I don't know the IB charting tool at all, but with the ToS tool you can advance your immediate curve day-by-day and see what the results will be. It's not perfect, but it gives you a good idea what to expect. Have you tried opening a paper account with ToS? It gives you all of the features of the live, I believe. You can always trade it in IB.
    I just opened a back ratio condor on the July RUT. It filled almost instantly, I should have asked for more, but the curve on this one looks pretty good. It's a small one, analyze it if you want: +10 630 P, -6 660 P, -5 850 C, +10 870 C, for a credit of $585. The volatility smile is quite nice on this trade. BP effect with PM is -$1720, so potential 30% profit on that, which is very good IMO. The max drawdown is $17k in the put trough, but even a week before your worst case is -$6k. I would adjust well before then.  

  103. scottmi

    Margin/Bolt – if you are using TOS, they up (double) the margin requirements when underlying price falls under $4. the idea is that sub-$4 stocks as more risky of going to zero. At least they do this for the stock held.

  104. lflantheman

    Informational:  I've closed out the short straddle I sold yesterday on the AAPL 575 weeklies.   Sold for 6.31   (call 2.70/put 3.61)  and bought back today for   3.32  (.59/2.73) for a 45% + profit.   That was not a MoMo trade but rather just a fun trade to demonstrate how to take advantage of premium decay on the weeklies at week's end, using an educated guess as to where the stock will likely pin on Friday, based on most acive call and put strikes. 

  105. lol730

    Puts/Bolt- often low priced stocks are considered more risky and require higher margin (sometimes up to 100%). Also margin calculation for OTM and ITM is different

  106. rainman

     June rails report is out: http://www.aar.org/NewsAndEvents/~/media/aar/railtimeindicators/2012-06-rti.ashx
     
    Seasonally adjusted carloads up 1.8% over April, Not seasonally adjusted down 2.8,  excluding coal up 4.2, excluding coal and grain up 6.7, intermodal up 3.5 compared with 2011.

  107. zeroxzero

    Just got an unexpectedly good fill on closing out a piece of my short Euro options hedge.  Someone's worried.

  108. lflantheman

    japarikh….my thinking on the July AAPL calls is that the markets have 'settled' a bit this week and the pressure is still upward on AAPL as we move toward July earniings.   So being long some July calls seems reasonable.  If they move down a bit, I'll add some.  If they move up I'll cover them.  I'm looking for a short for the MoMo for balance.  Any suggestions? 

  109. jophil

    Phil,
    I have bought BRK/B June 72.50 call @7.34 and sold Jan 14 70.00 puts@5.56 for net $1.78. Now BRK/B is at $81. Should I just cash out the June call or should I roll? thanks

  110. Peter D

    Burrben & kurt,
    Thanks, kurt, for the comments.  Burrben, this is a variation of the SPX crazy play that we just initiated.  If we buy long puts, then the P/L curve looks similar, and the left "ear", the put side is wider and less tall, allowing more chance for a profit.

  111. rustle123

    I might be early but looks like I'll be taking some profits on TPX from the other day.  The stock no one wanted to touch, with a 14RSI.  That's when I like them.

  112. Burrben

    Kurtww –  Totally agree on the ExDay graph being "pie in the sky".  The IB Risk Navigator is inferior to the TOS tools, it's amazing they market it to hedgefunds doing their risk.  I am opening a TOS account again, only to use their tools, and when I'm back in the states mid-june it should be complete.  I trade in IB because it's so much cheaper.  Only 0.70/contract with no ticket charges.  Makes a big difference over time especially in multi-leg strat's.  
    I just "opened" you're trade in IB's paper system to track it vs. my ratio butterfly vs. PeterD's strangle vs. a IronC.  It was a lot of work, but it should pay off in a learning exp.  +3hrs on my time!

  113. kurtww

    Peter – I forgot to answer your question the other night, you were asking about front ratio/back ratio combo. I was trying to construct a profitable trade like that but couldn't do it offhand. The idea was that you do a back ratio on the put side (like you did), but on the call side buy the nearer strike (say the 15 delta) and sell more of the farther strike (10 or even 5 delta). The idea being that if the market keeps going up, volatility will likely decrease, moving the p&l line up. On the back ratio call trade, dropping vols and rising market will lose money. Of course if you overrun the short strike the p&l will still drop, but in this market I think a slow march up is more likely than a melt-up (unless we get massive QE, of course). 

  114. jthoma

    rustle- good trade- took kahunas!

  115. zipla

    Hi Phil,
    Remember the GOOG play from Wednesday — 3 GOOG July $590/620 bull cal spread at $11 with short 1 $590 put $31 — the bid/ask now is $10.30/10.90 and for the put about $30.10.
    If you were to do the play now, would you lower the strikes or take advantage of the better entry? Or then again, wait until next week?

    Thanks
     

  116. threeputt

    Let's see where we are today: Low volume, Friday (weeklies expiring today), market consolidating around important retracement lines… What to do if you are sitting on piles of cash with trading bots to do your bidding? Answer: shenanigans!

  117. zeroxzero

    All out of short FXE at a profit.  It's going up, I flipped bullish on oil.

  118. ariveraA

    Phil – anyone:  Novice question of the day.  The other day there was a post that most traders feel comfortable with down stocks because they don't have to do anything since they won't sell anyway and that takes away anxiety. Someone also mentioned that only 20% of those stocks ever recover… 
    What is your rule of thumb for loser stocks? Personally I own some losers (my personal example C, GNW) that are over 20% down.  I occasionally sell calls against them (on pops) but should I just give up and invest in other things (like CHK)? 

  119. Phil

    AMZN took a nice turn down after BS rally. 

    VIX still very low at 21.34 – no fear.  

    Puppets/Rain – Hence my serious backup plans to relocate.  This is just a disaster waiting to happen – we're Greece in slow motion but just as unavoidable.  

    Rails/Rain – And we continue to muddle along.  

    Euro/ZZ – Probably the SNB snapping them up. Euro $1.248 now, Pound $1.543, EUR/CHF slipping at 1.208 – getting hard to hold!  

    Doesn't matter – the buy switch has been thrown for the markets and we're going up on no volume and even less reasons at the moment.  

    BRK.B/Jop – I'd take the money on the calls ($8.25) and leave the puts – as that's a good entry anyway and, if they go lower, then you can decide if you want to re-establish the calls.  

    GOOG/Zip – Well you always want to look for a better strike so,. with the lower VIX, we can now do 2 July $580/605 bull call spread at $11.30 and sell one July $570 put at $21 for net .80 per $25 spread. 

    Dollar down 0.4% and market up about the same – not so great really but will look good to Europe and Asia if they can hold it together. Does not seem likely we'll run straight through to the close without some fund taking profits along the way but volume so bad at 46M on the Dow coming into 1pm, that it's hard to pull the sell trigger without worrying you're going to break the market.  

  120. mrmocha

    Pharmboy - he shoots he scores!  Up a cool grand on my SGEN today, thanks buddy for that one…

  121. nicha

    Pharm – SGEN has been kind to my IRA, as well. Thank you.

  122. zeroxzero

    I'm getting the vibe that a Spanish bank rescue is on the way.  A free-falling Euro seems to have concentrated German minds.

  123. Phil

    Oil up to $83.60 popping XOM and CVX $3 combined and that's 24 Dow points.  JPM up huge off the bottom, adding another 8 – just have to sit back and watch the show now…

    Rule of thumb/Ariv – At a 20% loss, if you do not intend to roll a position or put more money into it, you should stop out.  See strategy section on scaling and adjusting (linked article and comments below it) for more on the subject.  You should always have an action plan for what you do when you take a 20% loss and, before you put more money in and adjust – you'd damned well better know what you will do at the next 20% loss and, as soon as you are not comfortable with the next move – then don't make the current one!  

    Copper still laying around but nat gas back to $2.31.  Gasoline at $2.65 (/RB) is a nice speculation for the next hour.  

  124. Winston

    Phil/Handling Hedges: I should probably know better than to ask this question, but I will anyway. I have the following hedges:
    TZA Jun 12 18/23 BCS now at net $2.67
    TZA Jul 12 22/29 BCS now at net $1.17
    EDZ Jul 12 16/21 BCS now at net $1.53

    One week ago they were doing just what they were set up to do, providing potential funds for rolling other positions out of trouble. This week the other positions dug themselves out of trouble. I guess I want my cake and eat it. But anything smart to reposition to? Probable tongue lashing anticipated.
     

  125. pstas

    Pharm- can you spare some of the SGEN pixie dust to sprinkle on DEPO?

  126. zeroxzero

    Long BBVA at $6.47, one of Spain's stronger banks.

  127. japarikh

    Iflan,

      With this crazy market, I've been focused on playing AAPL spreads taking on/off the covers depending on which direction I think things are going and selling short puts to lower my basis. I've sold the July 480s and had the July 575/610 spread on which I covered the 610s the other day. I added the AMZN Oct 160 put for $4 (Phil's pick) as the short to balance my long. I'm also waiting for a good entry to short CMG again.

  128. Jbur

    Burrben/ratio butterflies: Thanks for posting this. I went to the CBOE website, registered and the whole Sheridan webinar
    (and many others) is available to watch.

  129. Phil

    1:30 was the top of yesterday's run – we'll see if we have the same program running today.  

    11:39 AM European shares close lower with the exception of Spain, which continues a nice run after a brutal first 5 months of the year. The Spain ETF (EWP+8.8% in June - more than 1000 basis points betterthan Germany (EWG). Stoxx 50 flat, Germany -0.2%, France -0.7%, Italy -0.8%, Spain +1.8%, U.K. -0.2%. The euro -0.6% to $1.2489.

    12:00 PM On the hour: Dow +0.07%. 10-yr +0.18%. Euro -0.63%vs. dollar. Crude -2.2% to $82.95. Gold -0.19% to $1584.95.

    1:00 PM On the hour: Dow +0.41%. 10-yr +0.05%. Euro -0.57% vs. dollar. Crude -1.73% to $83.36. Gold +0.03% to $1588.55.

    Dividends may not be a free lunch, but WisdomTree research shows the highest quintile of payers outperformed the S&P 500 by 2.5%/year over the last half century, and with less beta. Even the 2nd highest quintile performed 2% better/year than the S&P. (a sampling)

    JPMorgan on what may be a Spanish bank bailout request this weekend: "A banking support package (will be) a stepping stone to a broader package of support for  Spain" by summer's end, i.e. Spain will be in the same ship as Greece, Ireland, and Portugal. Meanwhile, would a Spanish rescue overwhelm the EU rescue funds?

    More Chinese stimulus? Property developers will be assessed a 20% land vacancy fee if they leave land vacant for more than a year. The move will likely cause land prices to fall further as strapped developers – already sitting on homes they can't unload – will be forced to sell to avoid the fee. 

    An executive at Hess' (HES) Russian subsidiary is firedafter being identified by police and rivals as a leader of the local oil mafia, Forbes reports. Simon Kukes, president of Hess’ Russian arm, confirms that Alexey Veiman, who rose from Kukes’ chauffeur to apparently overseeing all construction for the company, is out.

    Speaking of the energy mafia:  Coming from the Chesapeake (CHK +1.2%) annual meeting: 63% of shareholders vote against incumbent directors V. Burns Hargis and Richard Davidson. 53% vote in favor of a resolution to reincorporate the company in Delaware, which would allow annual director elections. 

    IMAX (IMAX +2.2%wants to add 400-450 screens in Europe, the Middle East, and Africa over time, according to Andrew Cripps – a top exec. The company also plans to start utilizing two screens at theaters, a move that could help it reach more foreign-speaking moviegoers. (Earlier: analyst initiation, Prometheus buzz)

    Could be good for SVU too:  S&P Capital IQ lifts its rating on Kroger (K -0.7%) to Buy from Sell and boosted its price target by $3 to take it to $25. Analysts see a benefit from increased sales of higher-margin generic drugs and moderating food inflation helping to lift the company's bottom line.

    Could be bad for SVU:  An outbreak of the same strain of E. coli in six states has affected 14 people and caused the death of at least one person. Investigators haven't determined an official cause for the outbreak, but are reportedly focusing on beef sources. On watch: SFDPPCSAFMTSN 

    Three lunchtime reads:
    1) U.S. debt load falling at fastest pace since 1950s
    2) China faces stimulus dilemma
    3) Bernanke gives few hints

  130. Burrben

    Question about Diff btw -P +BS and just -P
     
    So maybe I'm crazy graph guy today, but I finally took the time to graph a short put, vs a short put and long bull CS that we use all the time.  Just from the graphs it seems like the short put gives you more downside room, where the other is more delta positive and requires you to be right on direction.  I understand this is due to the distance being 0 on the interval between the short put and the long bcs.  
    AXP Short Put Graph
    https://picasaweb.google.com/lh/photo/I76ZIvYgJKhl7O0I-9Bn_nNLJEdTq20IeksyP_kMH6Y
    AXP Short Put, Long Bull CallSp
    https://picasaweb.google.com/lh/photo/PTaOb-PKwUMSaGf43-_d5XNLJEdTq20IeksyP_kMH6Y
     
    I guess my basic question in, why not just sell more short puts, rather than use the short puts to "fund" a bullish play.  Aren't they basically the same thing?  What am I missing here?  

  131. Burrben

    Forgot to include this
    AXP -45 +55/65.  Basically just a 10pt distance between the short put and long call.  
    https://picasaweb.google.com/lh/photo/jG7t61MJZZjuvmKtHnHQVHNLJEdTq20IeksyP_kMH6Y

  132. Peter D

    kurt,
    I see.  It does work.  What we need to watch out for is the margin on the call side.  We can construct that spread with SPX as the call side stress test with PM is only +6%, while RUT has a +10% stress test and we quickly run out of margin.

  133. jromeha

    Phil – just made $260 off your gas reco in about 5 minutes. Literally bought it, did one ppt slide and when I checked it I was already up $260. A BIG tashakor (thx) from Kabul!

  134. Peter D

    Phil,
    I have a question on market internal.  Since everyone is net short of options with both puts and calls, how do these get financed?  Does the market makers buy or sell the basket of stocks to compensate?  Do they have the incentive to crash the market to squeeze the short put holders, or ramp it up to squeeze the callers?

  135. zeroxzero

    Stocktwits report UBS lost $350M on FB, suing NASDAQ.  Can't find a confirmation.

  136. Phil

    Hedges/Winston – The hedges are there to take the sting out of  a drop, not mitigate it entirely.  If you didn't make money on your longs on the move up then you are simply over-hedged.  Also, if you don't lighten up on your hedges when you get a nice drop (take profits) then what good are they doing you?   Especially that June spread – shame on you for not cashing out with TZA up at $24 last Thurs, Fri and Monday.  And what are they now – under $21!   Who can afford to blow money like that?  The less time you have, the tighter your stops can be.  Those $18 calls were $6.55 on Monday, now $2.90 and you could have rolled them to July $22s, which were $4.35 on Monday so $2.20 off the table and they are $1.85 now so, in the very least, you'd be $1 better off.  As it stands now, you can make that same roll and pull $1.05 off the table and then you have a $1 spread but a month advantage and the June $23 caller is just .29, which is way less than the July $29 caller (.69) should you have to roll into the vertical.  EDZ is 100% in the money but a big wild-card with China data this evening.  If it's a real hedge against disaster – then great but, if not – you need to decide what kind of insurance you really need to have. 

    BBVA/ZZ – Interesting play.  

    Short puts/Burr – It's a matter of preference but you are limiting your losses a bit better with the spread is one reason – less margin requirement, etc.  Those charts are great in theory but, in practice, you'll find the combo is a bit more flexible than just selling short puts.  

    RB/Jrom – Very nice!  As you know, I love my gasoline plays on Friday afternoons – WHEN the set-up is right, which it was today because other stuff took off and they were lagging.  

    Net short/Peter – You finance short calls when you sell one against a stock, right?  Same for pro short-sellers, they sell puts against short positions, not something us regular players generally do.  Generally the MMs won't put a penny at risk – they will find buyers and there are always arb desks willing to make a bid on almost anything if the spread is right.  What the MMs do is hold up your order while they wait to see if there's some way they can scalp a nickel off the trade – that's how they get paid.  
     

    Oil failing $83 again – seen this movie before.  XOM and CVX oblivious so far.  WMT up 3.2% for the day.  

  137. Burrben

    LF's AAPL trade is up $750 for me already.  If he comes to the Nov meeting, I'm going to order a Goldfinger for him to wear all weekend.

  138. drmtv10

    Hi Phil,
    I own C shares (long-term) in several portfolios (gains of about $1500 were realized from options sold) are currently down by almost $2500 (net down $1000), and an option position with loss of $2260.  I am looking to recover / roll options position loss.  Do you see any long term trade setups for C where deploying about $2-4k can be leveraged for a break-even exit?  A simple x10 Jan 25/30 DS for about $2.5, coupled with some put sells?  Wait for a better entry / walk away from C to invest in XLF Jan 14 12/15 ds or another?  As always, thanks in advance.

  139. zeroxzero

    More unverified comments on FB/UBS – The bank is saying they accidentally bought USD $3 Billion than they thought they did!!

  140. Canuck

    Stick today?

  141. jromeha

    Damn, guess I shouldve been a little more greedy on that gas play!

  142. rainman

    FB — What a F*ing circus.  No wonder they're driving out the retail investor — the investment banks can't even get it right. 

  143. jthoma

    but a big upday rainman- maybe we have a new persona with FB- :)

  144. angelcur

    well FB was a 'sheep in sheep's clothing'

  145. angelcur

    A FACEBOOK made for smacking: i saw zucked up for 5 minutes and i thought wow the only other time i have had an impulse to auto slap someone was oil can boyd in 1978

  146. angelcur

    over under on his marriage lasting two years?

  147. Phil

    C/DrM – Not one of the safer banks.  I'd rather play BAC or JPM down here.  BAC 2014 $5/7 bull call spread is $1.20 and you can sell the $5 puts for .78 which is net .42 on the $2 spread with .50 net margin so let's say you want to make $1,500 – you can do 10 of those spreads which pay $2K if BAC holds $7 and worst case is you own 1,000 at net $5.42 – doesn't that sound more sensible than trying to force a C trade.  If you are impatient for gains – I am not adverse to selling the Jan $7.50 puts instead for $1,15 instead as they can always be rolled but more margin that way.  

    Wow, gasoline flies to $2.69!  Good case for scaling out, Jrom!  

    2 years/Angel – Depends when her pre-nup allows her to vest interest in the stock.  

  148. lflantheman

    Sell to close 5 AAPL July 575 calls for 22.50 for  about 10% gain.  

  149. boltdude

    Hello, all.  Not sure why I am stuck on this one;  I am short CCJ June12 $19 puts, sold for .85, currently at .35.  I am considering banking my .50 profit and rolling to July12 $19s, which it appears I could sell for .95, netting an additional credit of .60.  Is there another choice you would consider?

  150. lflantheman

    stj….that AAPL buy and sell was a MoMo trade.   I'm back to cash for the weekend. 

  151. boltdude

    …of course, another option would be to close CCJ altogether and either trade something else or keep it in cash.

  152. Burrben

    Question on Trailing Stop Limit order for options.
    I set a Trailing Stop order for the 5 AAPL  July 575.  The trail was a 0.20 trail.  But if it gets hit the order is submitted as a market order.  How can I use a Trailing Stop Limit to try and hit the MID price once the trail is hit?

  153. stjeanluc

    Good thing we didn't short LNKD lflan….

    I'll record the trade in the portfolio this weekend!

  154. angelcur

    PHIl: you think he actually gave her shares he waited til after the ipo to marry her in other words that asset predated their union..considering the way he has treated his other partners i would worry if i were her..can you imagine ubs not knowing their own book?

  155. stjeanluc

    Banks / Phil – It seems that US Bank never gets much news, but it seems to me that they are one of the better ones with a lot less exposure to Europe and crap loans. I wonder why! I guess not sexy enough….

  156. stjeanluc

    This seems like the best market indicator…

    http://www.bespokeinvest.com/thinkbig/2012/6/8/market-cheers-no-triple-crown.html

    Good thing there won't be one this year!

  157. stjeanluc

    Felix take in the FB / UBS clusterf@ck:

    http://blogs.reuters.com/felix-salmon/2012/06/08/facebook-muppet-of-the-day-ubs/

    The most likely thing, here, is that UBS simply bollixed up its Facebook trading strategy in the worst possible way, going massively long at exactly the same point in time as everybody else was going massively short. It was a bold and enormous bet, and like many bold and enormous bets, it wound up going spectacularly wrong. But if that’s what happened, you can’t really blame the Nasdaq. After all, if the bet had worked out, and Facebook stock had soared, you can be sure that UBS — and its traders — would be taking full credit for their genius and prescience.

  158. Phil

    CCJ/Bolt – It's a very nice 5% monthly return (off the stock price) but why pay .35 to avoid a week?   Let them expire and, if CCJ goes lower, you just roll as the longer $19 puts will also get more expensive.  To blow off .35 of .85 in potential profits just to move to the same position (and give your putter more time/chance to beat you) isn't really within the spirit of selling as much premium as possible. 

    CCJ/Bolt – Or you could sell the 2014 $15 puts for $2.30 and put a stop on your June putter at .50 as you drop your net entry from $18.15 to $12.70 (30%) so you could really sell 30% more if you wanted and save all those in and out commissions.  

    Trail/Burr – Hard stops generally suck and the AAPL $575s are $23.20 so don't you think a 1% trailing stop is going to get triggered almost immediately, no matter what you do?  You can base your stop on the last sale, not the bid but the way options fluctuate – a spread like that you may as well just ask for a good price and get out rather than pre-giving up the extra .20.  

    UBS/Angel – I don't believe it.  What kind of idiot hits the order button on $100M 30 times because there's no confirmation?  Meanwhile, if UBS bought $3Bn – Imagine how awful the IPO would have been without their fat-finger order!   It's just a joke…  

    Banks/StJ – Yes banks are very boring unless they are in trouble so silence is golden here. 

    Well, if anyone is looking to take profits, they sure are leaving it to the last minute.   Stunning amount of confidence going into the weekend – wish I shared it…

  159. Phil

    Best week of the year! 

  160. Winston

    Phil/Hedges/Txs: You underestimate the power of your teaching skills. If my trading profits in FY 2010 were X and in FY 2011 2X then this week was 0.5X. It would be inappropriate to divulge the value of X, but it was more than pocket change. This stuff works. By the way, the cash amount in my account is 90% of the net liquidating value of the account. Nevertheless, this Monday my option buying power dipped below zero at one point (after the incessant period of down days) – although recovered into positive by market close. I guess I am playing on the limit. My notebook on handling hedges just got a new page added.

  161. lflantheman

    stj…LNKD…yes, and I noted that mentally myself.    I did not make the trade based on your comment that it was ill-advised.   And that's the way these MoMos are.   A bit unpredictable.    And here's AAPL getting ready to pin 580.  But I'm out of AAPL for the weekend in the MoMo.   If it starts on a tear on Monday we will jump back in. 

  162. edro00

    BURRBEN -
    Quite simple in TOS
    In the order entry tool change the "ORDER" to "TRAILSTOPLIMIT"
    that pops up 2 boxes, the bottom one, under "PRICE", labeled "TR" is the trail amount
    the top box, labeled "LMT" is the limit price.
    Simply change the "LINK" field of the LMT box to "MARK" and you're done

  163. jthoma

    burrben- I do not think there is such a thing as a trailing stop- limit order- I think the only possibility is a trailing stop which when hit automatically becomes a market order when the stop is hit.

  164. 1020

    Have a great weekend everyone!

  165. zeroxzero

    Taking some profits, buying some ABX against a dollar drop on a Euro "fix."

  166. Burrben

    Thanks all for the answers, I wish IB had "Mark" price as a option.  The trail though did it's "mental" job, it let the winner run all the way up to 24.60, where it sold at 24.50.  Thanks LF!  That will buy A LOT of good dinners in Nicaragua!

  167. lflantheman

    Have a great weekend.  I'll see you all on Monday! 

  168. jabobeast

    havea great weekend everyone!!!
     
    THANK YOU PHIL—great work this week as usual!

  169. Inkarri19

    Thanks all….great weekend to all!

  170. Phil

    What a crazy couple of days – glad to be on the sidelines!  

    Hedges/Winston – That's good to know!  Yes those black swans do come along once a month these days…

    And we stick the close – what a great ending.  

    Have a great weekend everyone! 

    - Phil

  171. exec

    Tommy

     
    What I find interesting about Obama is that I think he was somewhat naive when he was first elected and publicly attacked big business and the fat cats.  I personally believe it was a miscalculation on his part due to his lack of business experience and his life long involvement in politics. 
     
    In my view, politicians are almost all creeps and they play by a different set of rules than what normal people and entrepreneur's are accustomed to.  For example, it is common practice for politicians to personally attack, lie, mislead, fabricate stories, or implement a number of other strategies to degrade an opponent or achieve political gain.  I'm sure you've witnessed it a thousand times, they'll reach down into the bowels of there dirt box and wing whatever garbage they can produce at an opponent without even thinking twice.  Then you'll see the two together at a cocktail party yucking it up like there ol friends.  That's because they all do it and it's understood that it's an acceptable part of the political game.
     
    What I believe Obama miscalculated is that the private sector and most entrepreneurs don't play by those rules.  So when he comes out and makes personal attacks against the bankers, or big business, or Vegas, or whoever for political gain, these people don't just chalk it up to politics as usual, instead, they remember and they seek revenge.  One of my best friend is a principle in a corporate jet company.  Much to my disbelief, he and his wife, his kid, and his partner, voted for Obama.  I could remember during the last campaign, he was his biggest cheerleader.  I can tell you this, I asked him if he was planning on voting for Obama this year, and he went on a 15 minute tirade on how he wouldn't vote for that #$#$#%&#*#er if he was the last person on the planet.  Apparently, Obama's continuous attacks on the corporate jet industry changed his opinion of Obama.  Words have consequence's.

  172. pstas

    Exec- I believe you are on to something. I concur with your opinion regarding O's actions/consequences. My unscientific and informal surveys of small business folks confirms a deep seated distrust of this administration and policies. While the GE's and GS's of the world may be able to manipulate markets; it is the entrepreneurs and small/mid businesses which make things work or not. They/we are affected by the manipulation but we adapt and survive.
    While no big fan of Romney, his election could potentially release a wave of optimism which is the key missing ingredient in this most meager recovery.

  173. zeroxzero

    Exec:  I agree with you.  But politicians can get away with a lot of mudslinging if they produce results.  The biggest rap on Obama is that he didn't, and hasn't.  Oh, Congress, Tea Party, recession, blah blah — nobody cares: excuses are a dime a dozen.  What, being POTUS is a hard job?  Now there's a revelation.  Congress is hostile?  Nothing new there.  All legislation was frozen?  Lyndon Johnson managed to ram through Great Society programs against ferocious opposition.  In sum, Obama's heart may be in the right place, but he doesn't have the right stuff for the job.  And everybody knows it, so he's not going to win a second term.  And — presumably the only part of this diatribe with which Phil will agree — hope is not a strategy.  Ladies & gentlemen, place your bets!

  174. nicha

    IT industry slows down in India. Does not bode well for GDP.

  175. barfinger

    boltdude? CCJ 19s will be fine so long as we dont get a crisis in the next week. Are you scared of owning it for net 18.15? Although it has been below that, it is a bet that the world won't reject nuclear completely, which I think is fairly safe. You are in a good position, with a $0.35 option that can be easily rolled. Do you want to own it, or are you willing to play the next week hoping it will expire. At this point, I would hold.

  176. barfinger

    Obama is a really smart, smooth guy who has decided to stick with the liberal personna, meaning, tax the rich, grow the government. There is a shitload of debate on this issue, and I consider it a standoff, which is why nothing is being done about anything fiscal.
     
    If Obama would offer proposals (many of which I could support) that didn't rest on massive tax increases on the upper middle class, (forget the superrich) progress would be possible. GOP can not agree to taxes without some movement on the other side. This is a simple all-out war for the control of the government. Progress takes a back seat to position.
     
    We made the mistake of allowing democrats to control all of government, which produced the gargantuan health care bill, which (I am certain) will produce HIGHER costs, and more profits for insurance companies, and will do absolutely nothing for the working people who do not have guaranteed health insurance from their employers. This POS does nothing to control costs. It may mean that health systems will be better funded, but it does not do a thing to reduce costs.
     
    We have here the example of government unshackled to DO something. I need to find that island that has been mentioned here many times. Of course that Island might have politics, and disagreement even among our elite as to who should pay for the desalination plant, or the solar power grid….

  177. 1020

    zeroxzero/Obama  I agree that Obama may not have what it takes to be re-elected and at times, he disappoints and I'm not certain of what to expect next from this guy…..
     
    …..so what's my choice….. Romney ?
     
    barfinger/Obama  He has yet to tax the rich (Bush tax cut) Government slashed and took a shot (which I was not wild about) at solving a major societal issue and he has been a bad ass in getting the bad guys…..
     
    Who am I going to vote for?  Mr. Magic Munsingwear?…….
    http://www.freshpair.com/mens/Munsingwear.html?CID=SEM-G&9gtype=search&9gkw=munsingwear&9gad=11797935400.1&matchtype=b&network=g&mobile=&search=1&content=&creative=11797935400&keyword=munsingwear&placement=&adposition={adpos}&utm_source=google&utm_medium=cpc&utm_campaign=Trademarks&utm_term=munsingwear
     
    Just listen to the political arguments in the media – constructive?  What's trending? (Terry Jones, Quran-Burning Pastor, Hangs Barack Obama Effigy Outside Florida Church)
    http://www.huffingtonpost.com/2012/06/08/obama-effigy-hanged-outside-church_n_1581272.html
     
    How nice…….. :(

  178. 1020

    I'm curious. Exactly what, is the right so upset about?…..I would say this sums up how many Dems feel….
     
    http://www.youtube.com/watch?v=-bgcrugIb90
     
    Anyone?

  179. angelcur

    zero you are right..obama will not win  second term..many of us who supported him feel betrayed at many levels..it was clear he was charismatic it was not clear who he was..he is still charismatic but now its clear who he is..a very special person who is ill suited for his elected office..i do feel romney will be far more sensitive to the needs of the less fortunate than i had previously believed..his religion requires it..i don't care for him much and i have had personal dealings with him..but i find his brand of chicanery less harmful than having a talented man who is fast becoming a punch line mime being a leader for another four years..the president is a pure elitist with a dreadful team of managers..i thought bush's clown car drivers were inept..lord help us..we need a boring awkward guy who has been successful at every level. Of romney is not better than verybush and fauxbama i will be shocked and completely dismayed

  180. zeroxzero

    Angel, I agree with every word you said.  I know little about Romney, and feel little empathy with the primitives so abundant in Republican ranks.  But I have owned a house in Utah for 20 years, was once married to a Mormon, and consider them a practical people, a  minority that has historically suffered it's own discrimination and has developed the ability to adapt, survive and prosper.  Those are good traits from a leadership perspective.  
     
    My choice among presidential candidates has always been pragmatic rather than ideological.  I ask who would be the more effective leader.  Problems tend to dictate their own solutions; ideology is overrated as a force in determining the trajectory of a U.S. president's decision making.  The key factor comes down to efficacy — can he or she lead? 
     
    Leadership boils down to putting a picture in their mind and a boot in their ass.  If you can't do that with consistent success, you shouldn't be a U.S. president.  Obama patently cannot.  Romney is the only other choice we are offered.   That reduces the complexity of the decision considerably.  If the election were an options trade, I would be comfortable with a fistful of Romney November calls, and I would submit that so would most of the people on this board, political sympathies aside.

  181. 1020

    It's great to consider which candidate would be the best leader, but I feel it is equally important to consider who he will lead and in what direction…..

  182. exec

    1020/Lead

     
    Someone better start leading.  The next term will be interesting because a lot of issues are on the verge of boiling over and will most likely come to a head during the next term.  I've been saying for years that the politicians don't lead anymore.  It's all about reelection.  Everything they do and say is motivated by reelection.  Consequently, the really big problems will never be touched until they finally break because once they break, the politicians will have the cover and justification for making the tough call.  Take SS for example.  Everyone knows it's broke, but nobody will touch it because it's toxic.  The second someone try's to trim back benefits or alter the system to preserve it, they will be attacked by their opponent, accused of being anti elderly and run out of office.  So instead, they'll let it completely break, then come marching in like the knights in shining armour to repair the broken system that they created.
     
    The point that I was making about Obama earlier is that he is the epitome of a politician.  He will do anything and say anything for political gain, regardless of how it impacts an industry or national security.  I had to laugh at the headline on my homepage this morning.  "Holder appoints two U.S. attorneys to lead leak investigations"

    Seriously, does anyone doubt for a second that these leaks don't have roots to the white house.  This is a classic example of what I was attempting to point out earlier.  It doesn't matter if Obama pisses off the corporate jet industry, or the bankers, or the business's in Vegas, or national security, if his actions could potentially get him reelected, it's fair game.

  183. Phil

    Good morning!

    No Chinese data yet and not much news of note.  

    I guess the best thing about Mitt getting elected is it strongly increases the chance of the Dems taking back the House as those seats tend to go the other way and if Mitt's actions in Mass are any indication of how he will really Govern – the Reps are going to work just as hard to make him a one-term President as they have Obama – just like he was a one-term Governor as his own party felt betrayed.  

    Mitt established abortion as a health-care benefit (AFTER he came out pro-life) for a flat $50.  He forced the Catholic Charities adoption agency to give children to gay couples, pushed for funding on stem-cell research, passed tough gun control laws and he enforced the country's most liberal gay marriage laws – going up against the church directly.  These are things he actually did and we know the guy is a total liar and will say anything to get elected – hopefully he's saying it to the Republican faithful and he'll turn out to be a more liberal President than Obama!

    Do you think he wants his legacy to be nothing or to be "Romney Care" for America?  In Mass, he didn't run on health care at all – it was an idea that came to him to finish the work Ted Kennedy had started after he was elected and he discovered all the work that had been done already. 

    He cut spending in Mass but increase all sorts of "fees" (gas taxes, gun licenses, drivers licenses) and removed loopholes that really socked it to businesses to balance the budget, including a massive increase in Capital Gains taxes that accounted for $1Bn of the $1.5Bn gap and $500M in Federal grants took care of the rest.  Most of his spending cuts were nothing more than shifting the tax burden from the state to local level and Mass has a broken country system now so it was all just a big shell game that improved the books but fixed nothing.   Overall, the total tax burden under Romney in Mass increased 10% – it just shifted from State to Local taxes but Republicans are idiots and don't look past the headlines so Romney continues to get away with claims that he "balanced" the budget.   Of course, all the "savings" under Romney were completely wiped out and reversed by the insane "Big Dig" project and Romney's reversals on social issues (as he began to run for President and suck up to the Reps) led to super-liberal Patrick coming out of nowhere to kick the crap out of Romey's Lt Governor Healey 55% to 35%.  So I guess we could put up with 4 years of Romney to seal the deal for the Dems into the next decade…

    Business-wise, Romney started Bain as a BBBW-type project, raising $37M and his first big investment was in start-up Staples, which was a 7-bagger for the company.  Once they had money, they went from funding start-ups to LBOs and ran the company into the Billions by merging and destroying other companies and Romney walked away with about $200M (with great timing as the company collapsed and people were indicted a year later – but they recovered).  

  184. stjeanluc

  185. millcreek

    good morning,
    good reading if you have children or grandchildren.
    http://www.theswellesleyreport.com/2012/06/wellesley-high-grads-told-youre-not-special/
    mc

  186. kinkistyle

    You knew this was going to happen: The folks at Business Insider do a review of Taco Bell's new healthy concept restaurant, Cantina Bell, to compete with CMG and it looks like they are giving it a thumbs up.

  187. barfinger

    I suppose my point about Obama is that increased taxes on the top 5% or maybe 10% is his PRECONDITION for any agreement on anything fiscal. So, since the GOP can hardly expect to get some progress on the reasonable portion of their agenda in exchange for total surrender on their primary principle, nothing happens and nothing will happen. It should not shock anybody.
     
    I think a number of fundamental changes are required, as was the case with the health care system. As was the case with Wall Street bankster games. We got democrat bills for both projects, during the 2 years they had won the argument and could get what they wanted without negotiation. I submit to you that both "successes" of that two year period are deeply flawed, and although I agree that something significant needed to be done in both areas, I would have been opposed to both bills on the grounds that they did more harm than good, and damn little good, period.
     
    Once the democrats again control everything, within ten minutes, we will have our massive tax increase. And once again, that's a can-kick if I ever saw one. Throwing more money into our current systems will not change the eventual outcome. We actually need to do something about our problems. So, I'm opposed to that as well.

  188. 1020

    Phil – I have always seen Romney as a moderate, but his rhetoric has been hard to ignore, so are you saying that we will not know what we'll get until after the elections?
     
    Is this 2008?

  189. 1020

    Have a great day everyone!

  190. exec

    1020/Get

    What you’ll get is another politician. The only difference is his loyalties will be to a different group of special interests and funders.

  191. pstas

    It does seem our friends here at PSW who support Pres. Obama are a bit down the past few days. Understandable as his re-election prospects are fading. However, I heard a blurb on the radio this morning which reminded me that the Obamacare/Supreme Court decision may be due any day now?
    Seems this may either provide a positive catalyst for the Dems or put another nail in the coffin. We shall see.
    In any event, any speculation as to market reaction?

  192. angelcur

    phil those things you point out are correct but i do think the big dig was going on for years before mitt took office..and the feds had as much to do with that as the locals..keep in mind that mass is one of the most politically corrupt states in the country..and in mass poilitics you are either in or our..i can't imagine why romney chose to run in mass to begin wiht..hopeles for anyone who isn't a dem…he will raise taxes i have no doubt..he will NOT repeal o care he will drop the mandate..i am hoping perhaps foolishly that the pols  both dems and republicans get their asses whupped in november and some breed of representation that bears even a diaphanous likeness to  the founders intent emerges…look at the ghouls who lead their parties in the congress..worse yet look at that sea hag wasserman and that dweeb reince preibus (who the fuck would even consider a guy with moniker that screams 'elite') and he's an idiot to boot!..the third string in running our country the political systems our financial system..its sad but maybe romney will surprise..i would like to know why so many democrat leaders are clearly working against obama..even here in ct there has been a recession of support… insights? 

  193. angelcur

    i would bet a lot of money that the dems on the court have gotten the word overturn or outlaw the mandate…for some reason support for the president is being tactically removed..i cant understand it..unless the clintons and terry mcaulliffe and paul begala are working behind the scenes..for hil( love her!)..how was it statistically possible to have such fools presiding over us the last 12 years…the next one better get it right or the pitchforks and torches will take to the streets i fear.

  194. angelcur

    http://www.bigdighighwayrobbery.com/
     
    silly but you get the point..it was started in 1982 21 years before mittless became governor.

  195. stjeanluc

    I am a little troubled by the talk about Romney actually being a moderate. This reminds me a lot of the GW Bush talks in 2000 about the compassionate conservatism. How did that work for the bottom 99%?

    No matter what Romney's positions are (if one can actually figure that out in the midst of flip-flop and lies), he will either have to push back on his own party's "crazy" branch and try to compromise in order to come up with a workable solution including raising revenues (and that worked so well for Obama) or just fold and let austerity plans be implemented (and that has worked well for Europe so far). Of course, austerity only for the bottom 99%. The problem with a guy like Romney is that he might have the best of intentions, but he seems so detached from reality, even more so than the average politician due to his "environment". That's not very comforting.

  196. angelcur

    well get used to his brand of detachment(did we think the president was going to be this aloof?) because if he doesn't win in a landslide it will be a miracle..i think the gop is about to have a hangover tho because he will be a huge centrist..(its the only way to govern)..i would say he is a moderate..but we will know soon enough..taxes up entitlements shaved..mandate out.. let's see what he does..this bottom 99% stuff isn't ringin right any more..maybe the bottom 50% has something to complain about..99% sounds whinging..and its not playing on main street..this country is blessed..i just pray we don't elect another asshat

  197. zeroxzero

    Good morning!  Well, not exactly.  Great discussion, thanks, everyone.  Stj, I doubt Romney is detached from reality, given that he made it to the candidacy as a Mormon and certainly not as a fire-breathing Tea Party zombie.  I suspect that what he says in public must of necessity be void-for-vagueness — it enables each voter to believe what they want about the guy, which is necessary for being elected, since those who oppose you are always more rabid and vocal than your supporters.
     
     If he actually is elected, we'll find out, of course.  Not very comforting, but since our choice is digital, and we know Obama isn't capable of moving the ball very far up the field in either direction — he used his presidential election Mulligan on the health care bill, and could never politic his way to anything useful after than one bullet was spent —  Romney is all there is. That's why playing the market is so comforting — three options, up, down or nowhere.  In this case, only two, and one of them hasn't worked well.  That leaves "hope" as the only viable voter strategy this year.  Beats dictatorship, I guess, but not by much at times.

  198. angelcur

    well let's get back to the planet earth for a moment and the fine effluent that continues to dribble in from europe…spain hasn't asked for the assistance we were told it would reuest this week end…monday will be 'wildfire monday' if they don't break away from their macho script and start mewling for help..good lord!

  199. angelcur

    zero you are correct the \president should ditch that combover dunce axelrod before its too late..his mediocre abilities as a mesmerist worked well with the electorate in the last election but this class warfare card.the .war on women and continuing to blame bush is just plain dumb..i wish he would just wake up tomorrow call mconnell or whoever and start working toward moderating his positions.. be positive and take a new approach..he won't..btw he will be the happiest ex president since carter 

  200. kinkistyle

    Stjean:  Phil was only pointing out Romney's actual record as governor of Mass. and from his record he seems much more liberal than his words make him out to be.  Dubya was a hard-charging, Jesus-loving conservative as governor and only used the "compassion conservative" B.S. to get some moderate voters.

  201. angelcur

    yah if romney is elected he is gong to BF the ultra right push them to the side just watch..he is all about the doing..getting it down with his kneetop check list.. number one on his list: snowing the right to get elected..familiar technique! we can call that axlerodding….however if he proves to be as inept as the pres we are all screwwed 100% of us

  202. lionel

    Argentinian Grand Theft/
    http://www.reuters.com/article/2012/06/08/argentina-dollar-idUSL1E8H8EJA20120608
    A nice warning to all the imbeciles who portrayed Argentina as a role model for Greece.
    Angel, Spain has no "macho script". They are just waiting for two consulting firms to finalize their audits (due by the 21st of June).
    And why should they follow IMF/S&P/Moody advice anyway? If they had to listen to anyone it would be to the ECB and the Bundesbank (Germany has faced/is facing a similar regional banking crisis).
    Spain can really afford to take a couple of weeks to find a 2-5yr solution to its long lasting problems.
    But the real test for Spain is still to come. Spain will need to issue large amounts of LT debt before the end of the year (not like the puny amount at the last auction) with two big redemptions coming in July ($13bn 10Yr) and in October ($20bn 3/5Yr). Who will buy its debt if not the Spanish banks? (Bank of Spain and ECB are not allowed to buy on the primary market). So we all know how the story will end….
    Just a bit of patience…
    A Spanish rebuttal would help the markets consolidate next week just in time before "Greece is fixed" Monday the 18th so we could be off to the races until…Q2 earnings announcements!

  203. lionel

    Markets won…De Guindos (Spain's MinFin) just announced that Spain will accept Bank assistance loan from "Europe"
    Monday 12th "Spain is fixed" could be the big green day we were all waiting for!
    So many good news happening at the same time, I cant even remember why we all were so gloomy 2 weeks ago….Doctor, is it serious? :)

  204. Savi

    Good Afternoon—great discussion above—would anyone object to me sending the above to the Obama headquarters in Chicago—I am sure they will read with interest--I will take off all the monikers etc—my daughter works at the Headquarters at the present time--Phil would you permit this if everyone agrees—if not , no big deal

  205. zeroxzero

    Savi:  I can't imagine who would care, but it sounds like you are more savvy in respect to U.S politics than I.  OK with me.
     
    Lionel:  Awesome.  I have quite a large bet on the "Spain fixed / global QE" possibility.  Of course, "When the trumpets of victory sound in the air, sharpen your sword." [ I thought that was from Richard III, but perhaps not.]  Not that I have an actual  plan, but Phil doesn't seem have trouble coming up with them as a rule.

  206. Burrben

    OT Coffee:
     
    Anyone here a "home brewer" of quality coffee here?  I'm looking to bring back some goods to Nica to fully extract all the wonderful flavors of the beans.  I'm considering buying a Haro Grinder and a Aero Press.  I've used Boden's french press before and I'm not a huge fan.  Just looking for opinions….
    Grinder: http://www.amazon.com/gp/product/B001802PIQ/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=javaddicts-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=B001802PIQ
    Press: http://www.amazon.com/AeroPress-Coffee-Espresso-Maker-Filters/dp/B001HBCVX0/ref=pd_sim_k_6

  207. drmtv10

    If Romney wins, it would be directly connected to Supreme court decision allowing unlimited money to flow to the campaign assistance, so it will be another Supreme court "appointed" president.  If Obama wins, we will have four more years of grand standing where status quo prevails.  We really need to find a new form of government since democracy is not working and monarchs and dictators are either dead or very old!  

  208. zeroxzero

    Drm:  I'm not sure about the former statement.  Voters in recessions tend to turf out whatever leaders they can if things don't feel better.  New forms of government?  I think democracy is just fine.  We just don't have one at the moment, if "will of the people" is what democratic government is supposed to reflect.  Every generation or two some form of oligarchy emerges — because it is always trying to emerge- for its greater advantage.
     
     Democracy is a dynamic system — it wouldn't need checks and balances if it weren't.  Nascent oligarchies need to get stuffed back in their jar from time to time, but not to the point where you reach "perfect democracy", which is rule of the mob — the will of the Germany people in 1938 was undoubtedly oriented towards exterminating Non-Nordic residents of that country in the name of a pseudo-mystical "will of the volk" which would restore a war & recession-devastated Germany to it's rightful position in the cosmos.  No effective checks and balances there, one could say.
     
    There is value in having better-educated classes with a larger stake in the country to have a somewhat stronger voice — the Founders only gave the popular vote to landowners for that reason.  But inevitably those given a stronger voice tend to unbalance the distribution of wealth in their favor, given half a chance.  Ergo, the inevitable dynamism of human societies and the forms of government they invent.  Dynamism is generally considered a "good" thing, but is quite neutral in its application.  China is certainly struggling with it, as is Europe.  There is no perfect form of government, because government reflects the creatures that create it and cannot reflect the unknown future.

  209. stjeanluc

    McConnell / Angel – Why would Obama need to moderate his positions to speak to Boehner or McConnell when this guys are not even willing to budge on theirs? It's been the problem from day one – look at the number of filibuster over the last 4 years. And look at the joke in the other chamber – rushing to pass laws in social issues when the economy is tanking. Is gay marriage or gays in the military a threat to the economy? Are they taking jobs away? From my point of view, Obama has made more steps toward the center while these guys have moved further to the right. But he is still a Democrat so of course they will disagree on some issue. And I do think that he has made mistakes. But they had only one objective – make him a one term president no matter the cost to the country… Compare the democratic congress when Reagan was president (he could not win the GOP primary today) – they got things done because everybody was willing to compromise – Ronnie and Tip. No comparison. Even when Clinton was president, the GOP had guys you could negotiate with. But now there is one side willing to compromise. On the other side you have a nihilist branch of the GOP ready to clear the deck if needed. And you don't believe that, why are Democrats as upset as Republicans. I guess they are happy now, but whoever gets elected next inherits a frakin' minefield… Good job all around!

  210. drmtv10

    Government / ZZ – I am not against democracy at all.  I am just frustrated that in so many countries around the world (Europe, US, India, South Aftica, Egypt, Iraq, etc) democracy is NOT really working for the people, to various degrees.  "Unfair" distribution of resources continues unabated.  There needs to be a method for "choosing" good leaders who will lead their people towards a better future and democracy is not turning out to be "the best" at it..

  211. Savi

    zz—not that savvy but thought it might be interesting for the campaign to hear some of the thoughts shared by voters of both parties and not the hysterics of extremist views

  212. stjeanluc

    That's the best description of Romney I think:

     

    http://andrewsullivan.thedailybeast.com/2012/06/romneys-unethical-stench.html

     

    Romney will run against a fictional Obama, and Fox will provide the cover, and unless Obama is able to change the frame of this debate, the relentless propaganda will be potent. Yes, the level of deception is so great it's breath-taking. But Romney, I'm increasingly inclined to believe, is a businessman all the way down. His ethics are about getting, as he put it, 50.1 percent of the vote in any state. He does not believe there are any ethical or principled reasons not to try and get to that 50.1 percent however he can. A businessman can compartmentalize core moral and political questions into marketing. The goal is 50.1 percent saturation.

    So he marketed a bunch of policies when running in Massachusetts – blithely becoming pro-choice out of deep conviction and personal experience, implementing Obamacare on a state level as a centrist conservative, being "more pro-gay than Ted Kennedy" on discrimination.  But now he is not running in Massachusetts, he will simply change the policies. He favors a constitutional amendment criminalizing all abortion, total repeal of Obamacare, and will not stand by even a gay national security spoeksman if it means offending the religious right. This is who he "is". If a line will work against Obama, he will use it, regardless of its truth. Because there is no truth in Romney's world. There is only advertizing.

    There is something increasingly chilling about this shape-shifter, isn't there? He views himself as a product to be marketed to different audiences at different times. And the actual content of that product is completely malleable. It can change as swiftly as Mormon doctrine, when market share is at stake. To predict Romney, in other words, you simply have to merely examine the market he's selling to.

    As I noted once before, he doesn't just believe that corporations are people; he is a walking corporation masquerading as a person.

     

  213. knightpilot

    Anyone else hearing Apple product launch rumors? Heard something about large cargo volumes being bought by Apple and associates. I have absolutely no evidence whatsoever to back up the rumor, wondering if anyone has heard anything solid, or if this could be plausible. Not something I will trade on, I don’t know jack about Apple, but a rising tide floats all boats.

    China numbers not looking so bad! Although I live in Hong Kong, and know enough to know that the numbers will be whatever the Chinese want them to be until they aren’t…..

  214. iTrade

    Water Fracking Movie
    http://counterspill.com/#video-472

  215. Winston

    PCLN/Invasive Surgery
     
     
    I am writing this probably for my benefit rather than the rest of the board, so please ignore or indulge me. I believe there is something to be gained by analyzing trades in detail, just to understand where things went right, and more importantly where things did not turn out quite as expected, and hopefully learn lessons that will not be repeated.
     
     
    This is a follow up to past posts which detail a series of trades on PCLN. The initial trades were put on in March when PCLN was flying and the business could seemingly do no wrong. The stock price of PCLN went up blissfully unaware of surrounding events or external circumstances.

     
     
    Towards the end of April, greed was taking over and I could only see possibilities of exploiting PCLN on the upside for all it was worth. The thought of a slide, while I knew the possibility existed, was not top of mind at this moment. I was long and strong and PCLN was at 733 – and I was happy to have the problem of rolling short calls while my BCS would move further ITM. The financing of the BCS by a May 670 put sale seemed smart.

     
    Well, then May happened! The rocket ship that is (?) PCLN ran out of fuel. Moving into May OPEX on May 18th looked worrying for my short put – on May 17 PCLN was at 645 (the 670 put sale 25 points ITM). The next day was OPEX so I rolled the May 670 put to the June 640 put for a credit of 4.70. On May 18 (OPEX Friday) PCLN was at 632.

     
     
    As we all know, the sell off continued into early June. Phil was exhorting us to buy now or what the hell are we waiting for. On June 4 PCLN was now at 616 – with my June 640 put now 24 pts ITM. My BCS were far OTM so everything was going pear shaped. Scant consolidation that my sold calls were likely to expire worthless in July if this meltdown continued. But Phil says buy – is this guy crazy – the markets are dropping like a rock, my buying power is walking out of the door and soon TOS will be knocking at the door for more money. So what to do; follow Phil of course. I rolled the short June 640 puts to the July 640 puts for a credit of 15.6 pts. Surely the market must turn? This week they did. PCLN closed Friday at 644. Current P&L of all trades so far – a credit of 77pts per contract. Still the period from now until July OPEX to navigate successfully, but with Phil's advice and the lessons learnt so far I expect to make it to shore safely.

  216. Winston

    PCLN link – the correct link for the BCS and Put sale in the above note is here

  217. pstas

    Winston- PCLN- very aggressive trade and you are not out of the woods yet but getting close. Good luck. I have a related story re: PCLN. I had been blissfully selling short strangles collecting very nice premiums for months. Then the rocket lifted off. Fortunately, I heeded past advice to be very careful when doing strangles on individual stocks and held only one short call. Rollng up went to 4X and threatened to go 8X to stay in the game. Ate up a lot of margin but still had dry powder. I caught the retrace with long puts and a few judicious short put sales as the stock fluctuated. In the end , I made a very nice profit overall. Two lessons learned for me: 1. I could not bring myself to buy long calls as PCLN continued upward. I let my emotions dictate action. I should have simply taken what the market was offering and gone long with tight stops. That would have helped enormously. 2. There is a significant opportunity cost when caught in one of these trades. I had to curtail my normal SPX short strangle sales to maintain a margin cushion.

  218. Winston

    Pstas/PCLN: Noted – these kind of trades chew up margin, and do not make for a peaceful's night sleep. It started off as a artifical buy-write financed by a put sale, but has now morphed into a many headed monster – which kind of makes it difficult to manage. The 2014 BCS is way OTM, so difficult to know how to use that to sell calls against it without taking on too much risk. Once this trade does end – and I would be happy just to hold the artifical buy write and short put – I would think twice before going head to head with these MOMO stocks again.

  219. pstas

    Winston- sleepless nights & "monster"- Oh, absolutely. My instinct was to exit many times even at a loss to relieve the pain. Plus, the trade required an inordinate degree of attention as I bought/sold puts to gain some ground- another aspect of the opportunity cost. I held my ground because I was convinced that the stock was/is fundamentally overvalued.
    That said, you are in a tough spot. I don't see it running up again anywhere near where it was. However, it is a MOMO and it may very well be due for a run. If I were in your shoes, I would play it as a swing trade up and/or down going long calls/puts as the move dictates. It requires buying premium but avoids the downside margin risk of selling more puts and calls. I played the weeklies for shorts picking up a few hundred $ here and there. It adds up.
    I kept my eye  on the exit door all the time. I maintained a P/L spreadsheet daily so I knew my position exactly if I decided to pull the plug.

  220. nicha

    Winston, Pstas – I have my story to tell. On May 24th I bought AAPL calls when the stock was $572, then on May 31st, I doubled down when stock was at $570. Then the slide happened. I capitulated on May 5th and here we are today and the stock is up to $580 and will prolly open up 10 bucks. I lost quite a bit of money. Very, very pissed at myself as this has happened before too. I always capitulate at the wrong time!!!

  221. pstas

    NIcha- been there/done that- also on AAPL. You made a judgement call to cut your loss- nothing wrong with that. Doubling down on a losing position was the problem. Generally, doubling down is a bad practice for short term trade. It could make sense as you are scaling in on a longer term trade, however.
    All part of the learning process. Don't regret your decision. Just review what happened and learn from it. If you are following position sizing guidelines, then the loss is no big deal and you will make it up on the next one. If AAPL is going to run next week, nothing wrong with getting back on the horse. Easy to say but tough to learn and do – take what the market is giving you.

  222. stjeanluc

    It's going to be tough sledding ahead in Europe:

    http://www.economist.com/blogs/graphicdetail/2012/06/focus-0?fsrc=gn_ep

    ONCE a month, The Economist takes a rain check on the state of the world's major developed economies. We ask 20 leading banks and economic forecasters for their latest expectations of GDP, consumer prices and the current-account balance over the forthcoming two years. (You can see the latest poll here.) We began requesting forecasts for 2012 in March 2011. Back then, our forecasters were much more positive about the state of the rich world; they were expecting American GDP growth of 3.2% in 2012 and growth of 1.2% in the euro area. But as the chart below demonstrates, the weather turned for the worst in August 2011 as the euro crisis returned with a vengeance. Since then the prospects for the euro area have become particularly bleak. On average our forecasters now expect euro-area output to contract by 0.4% in 2012. This is slightly up from May's poll, but strip out Germany from that forecast and the weather deteriorates even further. 

  223. stjeanluc

    History doesn't always repeat itself:

    http://www.thedailybeast.com/articles/2012/06/07/rip-van-winkle-economics.html

     

    A lot of our economic debate takes the form of getting down off a duck, such as, for example, today's oped in the Wall Street Journal by Phil Gramm and Glenn Hubbard. Here are two of the smartest men on the economic right, one a former chairman of the Senate banking committee, the other a former chair of the Council of Economic Advisers. Yet they insist on treating today's economic crisis as a repeat of 1979-81—and Europe's agony as a debt crisis (which it isn't), not a currency crisis (which it is). Why? Well you will consider only one policy solution—cut taxes and regulations—then you must insist that there can be only one policy problem.

     

    Yet in almost every way, today's economic problems are exactly the opposite of those of 30 years ago. Then we had inflation, today we are struggling against deflation. Then we had weak corporate profits, today corporations are more profitable than ever. Then we had slow productivity growth, today it is high. Then the to-individual income-tax rate was 70%. Today it is 36%. Then energy regulations produced energy shortages. Today the removal of banking regulations has produced an abundance of debt.

  224. stjeanluc

    As Macchiavelli wrote 500 years ago: "For this is the tragedy of man: circumstances change and he does not."

  225. stjeanluc

    And the private industry is not doing so bad under socialism:

    Corporate profits just hit another all-time high.

  226. zeroxzero

    The rap on the Spanish bank bailout is that it's a Euro 100 Billion loan that puts the Spanish government on the hook, leading to more austerity and a heavier can to kick down the road.  The bright spot is that the money can actually end up lent to the private sector, and it better damned well have the desired multiplier effect, because the loan amounts to 10% of Spanish GDP, with Spain already running a deficit of 9% of GDP.

  227. randers1

    I am from MN, like Newbie. I was going to write on how many corporations are headquartered here (BBY,MMM,TGT,GIS,SVU,etc), that will be another time after the events of this week. My wife was fired from a firm she worked for over a year.  This is a small company with a tyrannical founder. Examples of the work environment: Emails were sent to employees late Sunday night to complete before Monday morning, Sales managers were fired at the rate of about one a year, no performance reviews or advice on how to improve was ever given. It was like a football coach continuing to run the same play and replacing the running backs because they were not gaining yards. My wife coordinated the office moving locations last weekend (which went well by all accounts), and worked most of the weekend to accomplish it. No reason was given, other than a “bad attitude” and benefits and severance were not available because the only HR contact is on vacation. All that was offered was a letter detailing an agreement signed at hiring to not disparage the firm or reveal secrets. Basically, Don’t let the door hit your butt on the way out. From experience, I am not expecting any. Health care benefits were reduced this year after a short time and the accountant almost resigned in protest from that maneuver. I did not sign the agreement, so I feel like sounding off. This person was actually a determent to the business by alienating both customers and employees.
     I would love to stage a protest at a store promotion highlighting the treatment of employees. It might be nice at the holidays to highlight the scrooge aspect. People from Minnesota have a reputation for being “nice”. I have learned that MN is an “at will” employment state. I read this from a MN government Dept. and found it chilling:
    http://www.humanrights.state.mn.us/education/articles/rs06_4rights_dont.html
     
     
    I feel most workers deserve a warning or a performance improvement plan.
    My hope is that this is short-term setback and things will work out better in the long run, but now is not a great time to be unemployed. I will now be more cashy and cautious, but in search of additional income.

  228. pstas

    Randers -always tough to lose a job. I have been fired several times ( I consider my self almost unemployable- that is one of the reasons I started my own company). Always worked out for the best even in the short run.
    Sounds like an interesting situation, though. I would love to have a competitor like that, i.e., stupid. I would cream him. If no non-compete is in place then lots of opportunity.

  229. rustle123

    Had a great week in the market last week and won the Exacta yesterday.  If only I hit the Powerball.  Didn't even get one number.

  230. randers1

    Psts:
    There is not a no-compete on file. One was sent out earlier this year, They wanted a 3 year-term and not one employee signed it. I would like to see a court uphold that. If a person has a right to work, then how can their powerful employer tell them they can't for 3 years?

  231. stjeanluc

    Felix' take on the Spanish bank bailout:

    http://blogs.reuters.com/felix-salmon/2012/06/10/why-didnt-europe-bail-out-spains-banks-directly/

    On the other hand, all the money for bailing out Spain’s banks is immediately going to become Spanish sovereign debt. And that’s not good, for anyone worried about the Spanish fiscal situation. What’s more, it’s unclear how much of the money is going to come from the ESM rather than the EFSF. That might seem like a niggardly distinction, but it’s an important one: the ESM has preferred-creditor status, which means that it’s senior to anybody buying Spanish sovereign bonds. And as a result, at the margin, the more ESM debt that Spain has, the higher the spread on Spanish government bonds, since every euro of ESM debt effectively subordinates every euro owed by the Spanish government to bondholders.

  232. aaronc

    Thanks pstas/winston/nichas for sharing your experience and wisdom, I'm soaking it up over here. Can someone tell me how to put on an artificial buy/write. Is it going long a bull call spread? I get the financing by shorting puts part. At any time do you actually get to own the underlying stock? Thanks so much in advance!

  233. Winston

    aaronc/artificial: Correct: – buy bull call spread, sell short put. You only get to own the underlying if the stock is put to you – but you should be looking to roll out of that situation. Less likely (because you would be asleep) the long call goes in the money and you keep it until expiration.

  234. aaronc

    Winston/artificial: Thanks again, I think I got it. So the optimal result is to sell the long spread and buy back the short put at a profit, not really looking to let the puts expire worthless.

  235. Winston

    aaronc/optimal result: puts expire worthless, BCS expires with the sold short calls in the money. TOS will net out the long and short calls with the difference in strikes credited as cash to your account. This should happen automatically and has been my experience so far. But remember the rule: don't sell a put unless you are happy owning the underlying at the strike of the sold put. Before that happens there are lots of possibilities to adjust. Look at the introduction for new members and the article 'How to buy a stock for a 20% discount''.

  236. zipla

    Randers1
    Important your wife sees a lawyer. It will cost a few hundred but it's worth it to explore your options. And not just any lawyer, find an employment lawyer. I say this from experience. I've used one on two occasions and came out very well in one case and OK in another. And you should do it now: If the lawyer finds something to complain about you have 180 days to file complaints.
    The thing is the Human Rights labor act is wide. Is your wife over 40, then she's protected against termination due to age discrimination. Did she complain this a**hole boss? You could find a narrative that shows retaliation as a result of this. Did she experience any ongoing harassment from this boss? Sexual? Threats? Those emails you mention might show lack of consideration if she was an hourly employee.
    Perhaps this is information that's of no use now — closing the barn door after the horse has bolted — but it's always a good idea, no matter how happy the workplace, to keep all work emails (archiving them and taking them home) and to make notes of all incidents that could be used to document a history of any violations of workplace acts, so you have ammunition when if and when it hits the fan. I know this may sound predatory to employer owners on the board, but I have found that employees are so badly protected in this country, that we need to do what we have to to even the playing field.
    BTW make sure your wife files for unemployment benefit immediately. I've seen people refuse to do this because they feel stigmatized — not realizing that they've been paying into SS to cover them for this situation.
    Hope you find a good lawyer. And don't sign anything until you talk to one. They may not be able to make a huge case for you but the threat of action sometimes will focus a former employer and make it possible to negotiate a better termination settlement — a few more weeks pay, extension of health benefits, some contribution towards COBRA etc — that will be worth the fee.
     
    For instance

  237. silentstorm44

    Randers- Sorry to hear about your wife's dismissal. I have been fired from 3  jobs in my lifetime , so I started a small sales/ consulting business and never looked back. Since you and her have not signed a non -compete, consider working for  his main competitor or start a competing company.I LOVED working against my former company and helped drive them out of part of PA. ( I eventually got 45 % of the business; my fellow competitors got the other 45%. They were left 10%.

  238. Winston

    aaronc/Stocks for a 20% discount: the link to the article is here.

  239. aaronc

    Winston/Stocks for a 20% discount: Thanks for the link, I am still learning how to navigate the site and got sidetracked on "the salvage play." Cheers.

  240. angelcur

    lionel you are right its not as i had thought macho posturing,,it's delusional puffery as rajoy has just declared the 100bn euro bailout as a "victory for eu credibility" and that there were 'no strings attached'..i am sure bondholders who are now subordinated will share every stride of his victory lap..once the bank eurozombies sell their exposure to european debt a restructure or default is inevitable..que cosa y cuanto cuesta..there is always a more rational approach
    http://www.reuters.com/article/2012/06/08/us-iceland-gdp-idUSBRE8570UA20120608

  241. escohen5

    Stjeanluc/Romney -- 
    Another quote from Andrew Sullivan's blog:
    "There no longer exists any doubt that Mitt Romney intends to win the White House by conducting the most dishonest, unscrupulous and reprehensible campaign ever devised, in mere whimsy. The unethical stench of this man is not only breathtaking, it's meteoric. I have never seen anything like it, never heard anything like it, never imagined anything like it." — PM Carpenter

  242. jerconn

    @lol reg Bullish Cross – this was posted a few days ago!
    Bullish Cross will begin Accepting New Members on June 17, 2012
    Wednesday, June 6, 2012
    By Andy M. Zaky As many of you know, Bullish Cross is currently closed to new members. However, we plan to re-open the publication to new subscribers on June 17, 2011 which coincides with the first anniversary of Bullish Cross 2.0. If you are interested in becoming a member to Bullish Cross, please e-mail us at admin@bullishcross.com. Given the extraordinary amount of interest and daily e-mails received from people interested in becoming a member, we may not be able to immediately respond to your questions regarding being placed on the wait list. However, we automatically place everyone who is interested on the wait list and we will begin e-mailing those people once we re-open the publication to new members.

  243. angelcur

    well andrew sullivan is one cacophonic voice is a world of strident voices.(.they echo right and left) and he is a part of the president's family so not exactly unbiased..also as a democrat i truly hope that our side intends to be just as unscrupulous as theirs..and with a mechanic like that scalplock axelrod leading the muck slinging i have faith that the president will match mittless pound for pound when the detritus starts flying…it could get interesting if mitt asks christie to run with him..then its laurel and hardy vs urkel and walter the muppet
     
    http://www.mediaite.com/tv/tearful-andrew-sullivan-praises-obama-father-figure-saying-im-fully-a-part-of-this-family/

  244. angelcur

    futures already fading off highs

  245. zeroxzero

     Randers:  Agree Zipla. Get a good employment lawyer. W/ or W/O the emails, other employees can give depositions regarding this employer's behavior.  The words "class action" also tends to get an employer's attention if the arbitrariness and abuse is widespread, and it sounds like this company is an equal opportunity abuser. It will cost the company a lot more to defend itself and risk a class action than to settle up with your wife in a civilized way.  Also agree Pstas and SStorm — I too was fired a few times — nobody worth a crap isn't at some point [bosses don't like "initiative" nearly as much as they claim, because it makes them look bad].  I also started founding my own companies, since doing things according to my own lights was just too attractive to resist.  It worked out very well, although nothing worthwhile doing is every easy.  I never looked back, and I've been happy at work ever since.

  246. roberthjrfl

    What smacked the dollary?  Did i miss some new of QE?  TIA.

  247. Savi

    Phil—what do you think of STD worth a small gamble?

  248. stjeanluc

    Amazing what "free money" does to the markets!

  249. stjeanluc

    It will be interesting Angel… 

    And maybe, once this is all done they will go back and review the Citizen United decision that will make this campaign as bad as I fear it will be!

  250. Phil

    Wow, look at those Futures!  

    Seems about right with the additional Spanish aid:

    8:11 PM S&P 500 futures +1% following the Spanish bailout. German Dax futures +1.7%. The Nikkei opens higher by 1.8%. The euro gapped all the way to $1.2669 as trade opened in Auckland a few hours ago, now +0.9% to $1.2630. The euro/Swiss franc rate hasn't budged, still at CHF 1.2012. When the debt crisis is truly solved, one would expect the pressure on this cross to come off

    A bit of perspective on what could be called a Spanish TARP: Given that Spain's economy is 1/10th that of the U.S., the €100B ($125B) Spanish rescue towers over the $700B U.S. TARP on a relative basis. Bazooka indeed. Of course, the U.S. TARP was followed up with the Fed's QE. Will the ECB do the same?

    The big news isn't the €100B, tweets Pawel Morski, it's that the eurozone (Germany) for the first time passed on imposing more austerity as a condition of the bailout.

    The conventional wisdom says risk markets rally Monday in Pavlovian response to the latest bailout, but the news may be baked in: Spain (EWP) was 10% higher last week, the S&P 500 +4%. Is the rescue even good news? "Spain is the Rubicon that should havenever been crossed," says Nicholas Spiro. "A limited bailout for Spain (will) fail to restore confidence in the markets, (and) could fuel fears that more aid will be needed at a later stage (with Italy waiting in the wings)."

    China May exports +15.3 Y/Y vs. +4.9% in April and consensus of +6.9%. Imports +12.7% vs. +0.3% and +3%. Trade surplus $18.7B vs. $18.4B and $17.8B. Sales to the EU rise for the first time in three months. However, economists remain cautious. "It is doubtful that growth in exports and imports can keep up such a fast pace," says one. 

    Moody's could issue its expected downgrades of large banks this week, with the short-term debt of BofA (BAC) and Citigroup (C) set to possibly receive cuts from Prime-1 to Prime-2. In anticipation of Moody's action, money-market funds have been limiting some lending to banks, and municipal bond issuers have been switching bankers.

    So great – this is why we couldn't be bearish and now maybe we'll get a good setup to be bearish later but, for now, let's enjoy the ride while it lasts…  Big tests will now be the falling 50 dmas but we'll deal with that tomorrow.  

    I had a non-stop weekend but got my reading done and nothing much actually happened – just the bailout we expected.  Gold only at $1,600, oil $86, silver $28.79, copper $3.37, nat gas $2.25 (ouch!) and gasoline $2.73.  

    Dollar dove to 81.88, down almost 1% – so there's your rally.  Euro $1.2636, Pound $1.556, 79.66 Yen to the Dollar and Nikkei popped from our bullish pick on /NKD at 8,450 on Friday to 8,740 and has faded back to 8,650.  The EWJs should open well too and I would just take it an run as it was a fun bet (same for /NKD, of course!).  

    That's an important reflex to develop if you like day-trading or futures.  When you have a pop (or drop) you don't want to chase – you just look around for what sector or ETF or Futures contract isn't moving the way it should in a rally.   There's nothing I like better than playing the laggards when our other watch items break our levels.  Of course, the key is to be in the habit of watching a dozen or so things CONSISTENTLY so you have the experience of seeing how they behave under various conditions – that's how you know something is leading or lagging unusually.  

    As you guys know, I watch a lot of stuff and rarely call the Nikkei EXCEPT when it's lagging in an up move.  

    Anyway, back to the Futures:  The RUT should have a rough time at 780 (/TF) and a short there (now 777.20) ir realistic as is shorting the S&P (/ES) below 1,340 (now 1,336.75) and the Dow (/YM) does not seem to like 12,650, now 12,644 so – if you want to be bearish off this pop (which does seem a bit overdone), that's the way to go as well as, of course, oil (/CL) if it breaks back below $86 (now $86.03) but I'm not too interested as it's still all rumor-driven BS so I'd rather get a good night's sleep and see how things look AFTER the EU opens.  

  251. 1020

    Phil – Last week, you mentioned that you're not interested in old favorites rocking into their sixties and seventies and I share those thoughts.
    I would recommend one old rocker's show. Roger Waters, The Wall.
     
    They have dates coming up around the Fourth of July in NYC.
    http://tour.rogerwaters.com/
     
    Of course, the music is great, but the production and the message was fantastic and I'm sure your entire family would be totally entertained….. :)

  252. Phil

    Big Chart – We'll be looking for those next lines to cross as our goal and that takes us all the way to Must Hold on the S&P at 1,360, which would mean everyone else is now lagging them – a very interesting turn of events if so.  1,340 is halfway there from our consolidation top at 1,320 for the last few weeks but the 50 dma is declining at 1,356 so 1,360 is both impressive and doubtful but it is expiration week and ANYTHING can happen.   Also, let's keep in mind that 1,360 is dead between the non-spike high of 1,420 and the non-spike low of 1,300.  

    Romney/1020 – Not to get heavy into it but actions do speak louder than words.  He became Governor at 56 and then ACTED a certain way once he was elected.  Now he's 66 and I doubt he had a major life conversion to harsh Conservatism after so many years on a different path.  He's a liar and a manipulator and while those are qualities that are sought-after by the GOP – it never occurs to them that they are the ones being lied to and manipulated by these pricks they nominate for office.  Romney will probably be a President that no one likes but what does he care – he's 66 and being President really spruces up the old resume, doesn't it?  That's all Mitt really cares about…

    Big Dig/Angel – True, Romney just got stuck with the Bill more or less but it was finished(ish) and ran a few Billion more over budget on his watch.  Christie, on the other hand, yanked that tunnel project to save NJ from the same fate (although dooming us to 20 more years of traffic jams so pick your poison).  

    Argentina/Lionel – Good point. 

    Sending to Obama/Savi – I have no problem with that.  You can add my name too as long as Michelle promises to stop writing me notes – I think Barry's getting suspicious!  ;)  

    Grinder/Burr – Tina uses a Cuisninart "Grind and Brew," which you feed whole beans and it grinds them up and makes the coffee in one process but that's regular coffee, it doesn't even do the stronger stuff.  Still, it works very well with no hassle but I'm more of a tea guy and only drink coffee when she uses a really good-smelling one.  

    AAPL/Knight – Well I'm sure they always have a need to buy cargo space so hard to make something of that.  You're right about China – numbers were good, so what?   Back to AAPL – I'm was in BBY this weekend and the IPhone is looking small compared to other things so the obvious way to go is a bigger IPhone or a smaller IPad to give people an AAPL choice in that space.  I think the TV thing is a huge mistake unless they are going to come out with a kick-ass 60" model – no one cares about regular sized TVs for the living room anymore and 42" in the BR is getting normal but do you really want to sit there in bed surfing the Web with your spouse?  This is what IPads are for.  AAPL created the new dynamic in computers – where you look something up and hand the screen to someone else to show them.   It would be very unobservant of them if they are now going to try to get everyone to go back to looking over their shoulders and share a screen.  On the content level – I think we would have heard if they had locked up content providers and, without that – they are just offering another flavor of NFLX so I'm not too excited there and what's left to do with an IMac or MacBook at this point?  Thinner, faster, more stuff but I don't see them doing anything earth-shattering this year – they need more time to get the TV to work.  

    PCLN/Winston – I may have been bullish but certainly not on PCLN!  Be careful with those guys.  The premise was to buy stocks that were back at their 2009 lows – for PCLN, that's about $100 and I'm still not sure I like them for that price…

    Capitulation/Nicha – Very important to scale into momentum stocks and AAPL is one too.  These short-term positions are gambling and gambling on a stock that can go up or down 2% in a day for no reason at all is GAMBLING and you need to allocate your capital with that in mind.  Before you enter a trade, you should know what you will do when it loses 20% and then what you will do when it drops another 20% and the 20% after that.  If you can't see 3 moves ahead – then you can expect to do no better than a chess player who can't think 3 moves ahead – it's not your "opponent" that boxes you into a corner – it's just the nature of the game and, if you don't have a plan – then you will become trapped in unwinnable positions more often than not.  

    Circumstances/StJ – Good quote. 

    Fired/Randers – That sucks, my condolences.  This is what is still happening all over America as companies struggle to keep growing profits – despite a stagnant to declining economy.  The stock market so dominates corporate decision-making that they'd rather terminate people to save money than work through a rough patch with their team – just another way Capitalism hits an end game that is not sustainable.  Also, that non-compete WAS the warning I guess…  Good advice from Zipla too if yo are in the mood to fight it.  

    Romney/Esco – Yep, that sums him up quite nicely.  

    STD/Savi – It's a good idea but would have been better at $5.20 least week than $6.20+ tomorrow.  $6.25 is the 50 dma at $7.50 is the 200 so that's the best you could expect and they'll make a better short at $7.50 than they do a long as we all know that nothing is really "fixed" – just buried.  

    Waters/1020 – Tempting but my kids think Pink Floyd is what you use to force confessions out of spies and I saw the original and would hate to tarnish the memory with an inferior copy.  Choice is out of my hands anyway as we're off to Vegas that day.  There's a live Floyd album called Pulse, from the Division Bell Tour, which was excellent – that's great to listen to but even those shows are about 20 years old! 

       

  253. lionel

    Markets are up on a dollar up move. Strange.
    They must be keeping some dry powder for a later push up during the week or someone is not buying the rally.
    In any case I would expect a sell off before the "risky" elections weekend.
    Contagion risk = Fixed
    Spain banks = Fixed
    France Hollande full majority = Almost fixed
    Greece Pro Euro government = Getting there
    China economy = Good numbers
    Let start to worry about Iran for a week and then we can do it all over again starting with Japan/US/Europe/China….

  254. Phil

    Good morning!  

    That was easy on the Futures, nice, small pullback of about 20% of the pop and we're still up nicely at 773 on the RUT, 1,331on S&P, and Dow 12,590 with oil giving us the best dip, down to $84.85.  The move came right at 3am as the Dollar popped back from 81.80 to 82.10 so that's all it is – a Dollar move.  Nikkei fell back to 8,600 and is holding that.   

    Monday's economic calendar:

    12:00 PM Fed's Williams: 'Challenges in Global Finance: The Role of Asia'

    12:00 PM Fed's Lockhart: U.S. Economic and Monetary Policy

    8:15 PM Fed's Evans speaks at the Loop Capital Markets

    3:20 AM European markets jump up, U.S. futures follow suit. London+1.5%. Paris +2.1%. Frankfurt +2.2%. Madrid +4.5%. U.S. futures: Dow +1.1%. S&P +1.1%. Nasdaq +1.1%.

    Spanish banks get the expected bounce this morning, following the sector's bailout. In Madrid, Santander +7%, BBVA+8.5%, Bankinter +15%, CaixaBank +10%. Spain's IBEX 35 index opens +4.5%

    NEXT!  Italy faces more scrutiny, not less, following Spain's bank bailout. Italy has over €2T of debt, more as a share of GDP than any advanced economy after Greece and Japan, and is now a guarantorfor 22% of Spain's bailout funds. But is also has a relatively healthy banking system, a jobless rate less than half of Spain's 24%, and is on track to rein in its budget deficit.

    Italy's Q1 economic contraction confirmed at -0.8% Q/Q. Year-on-year revised to -1.4% from -1.3%.

    Did Republicans deliberately crash the US economy? (Guardian)

    Who Killed American Unions? (The Atlantic)

    Bartlett: The Decline and Fall of Organized Labor (The Fiscal Times)

    JPMorgan: If This Is a Financial Fortress, Run For the Bunkers (Alter Net)

    Big U.S. Banks Brace for Downgrades (WSJ)

    GE (GE) is considering selling businesses in GE Capital's consumer-finance portfolio, sources say, potentially cutting GE Capital's loan portfolio by 16%, in an acknowledgement of investor concerns that GE owns what is essentially one of the country's largest banks.

    Goldman Sachs (GS) is reportedly in advanced discussions to sell its hedge fund administration business to State Street (STT), a move that would create an administration services provider behemoth with funds under administration of close to $700B.

    Prosecute The Big Banks? ‘Nothing’s Off The Table,’ NY Attorney General Says (TPM)

    IntercontinentalExchange (ICE) has reportedly offered £1.3B($2B) for the London Metal Exchange, while sources say bidding rival Hong Kong Exchanges & Clearing has made an offer just shy of £1.3B.  - This is like the Mafia offering $1.7Bn to take charge of PowerBall…

    The global airline industry will likely post a second consecutive year of net profit declines, says the IATA, as the impact of the eurozone debt crisis offsets the boost from lower oil prices, stronger-than-expected growth in passenger traffic and an improved freight market. The expected industry net profit of $3B is less than half the $7.9B of 2011, and a far cry from 2010's $15.8B.

    American Airlines (AAMRQ.PK) reaffirms its target to exit bankruptcy by year-end and as a stand-alone entity, but warns of possible delays if labor contracts aren't negotiated in a timely manner. CEO Tom Horton adds that the airline is "not focused on a merger right now," despite pressure from unions for a tie-up with US Airways (LCC).

    Recall of the week:  Regulators have launched a preliminary investigation into certain Toyota (TM) and Honda (HMC) SUVs for alleged safety problems ranging from rusty undercarriages to headlights that suddenly stop working.

    Very good read: Of Flying Cars and the Declining Rate of Profit (The Baffler)

    Apple's (AAPL) Worldwide Developer Conference is due to kick off today, when CEO Tim Cook & co. are expected to unveil the next generation of the iOS operating system for the iPhone and iPad, MacBooks updates, and the company's own mobile mapping software to compete with Google Maps. 

  255. jomptien

    AAPL/lfan,
    I have July 575 call, up 18% and looks to surge this am. Would you: 1)sell int initial excitement, or 2) Sell calls against it?
    Thanks – any other opinins welcomed

  256. jomptien

    AAPL – One reason I'm hesitant of selling is what lfan said when he sold, he would reenter if up on Mon.

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