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Technical Tuesday – 50 DMAs Will Grade Us Pass or FAIL!

BIG day today!

As you can see from the Big Chart, we are testing the 50 day moving averages on the Dow (12,746), S&P (1,347), Nasdaq (2,920), NYSE (7,756) and the Russell (781) IF all goes well and we move up from here.  The Dow is already over and the S&P and Russell are close so we'll be watching them closely this morning to see if we should stay bullish or cash out our winners while we wait for some actual bullish news – because the rumors that are driving us higher so far are running out of steam.  

The G20 meeting drags on in day 2 and we await their announcement.  China dropped $43Bn into the IMF last night and India, Russia, Brazil and Mexico will also commit $10Bn EACH for another $40Bn and that brings the IMF's war chest up to $456Bn.  Even Turkey put up $5Bn – we're talking about an all-out Global effort here so we expect A LOT more from the big guns.  

Let's not dwell on what it means that Turkey has to bail out Europe and instead focus on Christine Lagarde's statement that the commitments demonstrate "the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability."  So now it's up to the G20 and that means it's up to Merkel today and Bernanke tomorrow.  

Merkel faces mounting pressure to make even greater concessions, by putting Germany's financial muscle behind an integrated banking and borrowing system to keep the euro intact. The question is whether, after two years of muddling through, Europe's pre- eminent power can act quickly and decisively. "I think she will remain an incrementalist: we have not yet reached the point where it is obvious that we are hanging over the precipice," said Paul de Grauwe, a professor at the London School of Economics. "It looks again that what is going to come out is going to temporarily pacify markets until it is clear that it is not going to be sufficient."  

For those of you who don't speak Economics – "not going to be sufficient" = DOOM!!!

All of our global indexes are on quite a tear in anticipation of more bailouts/QE from the G20 this week.  If we don't get it – prepare for a real temper tantrum that is likely to send us to even lower lows for the year.  I can't believe our leaders are willing to risk it but, then again they are almost all new at their job as the last bunch got thrown out in their most recent elections.  Hopefully, they do the right thing as the markets are on the cusp of a rally – they just need a little push to get them over these humps:

Now THAT's a technical rally!  I drew the 50% lines (from non-spike high to non-spike low) for the past 2 months in blue and you can see how perfectly they are lining up with the 50 dmas.  The trick to analyzing a chart is to think about what your extrapolated data sets will do to the arc of the longer-term averages over the anticipated time period.  To put it simply, we need those 50 dma's to begin to curve up, therefore we need data points to form ABOVE that red line or the line will be dragged DOWN to meet the lower data points and then the 50% line will fail as support as well and THEN (see Big Chart) the 200 dmas are in danger of curving down as well and we REALLY do not want that to happen!  

See – that's everything you need to know about reading a chart in one easy lesson – stop thinking of them as static pictures and imagine the lines as dynamic entities that will be formed, going forward, by each additional data point (close) that goes on the graph and then you will begin to "see" what these things are supposed to be telling you.  

So we NEED to close OVER those 50 dmas today or tomorrow or it will become much harder to reverse the trend that may turn that 50% mid-point into the top of a lower range and that can very quickly send us to a 5% lower low than the one we had 5% ago in early June.  At this point, the TradeBots have done their job and pumped us back to these resistance lines but now it will take some Fundamental change (in the form of stimulus/QE) to get us over the hump and ready for the next 5% move higher.  

5% on the S&P is 1,412 and that's 67 points higher than we are now and, per our Nobel Prize Soon to be Nominated formula – it costs $10Bn to buy one S&P point so we'll need $670Bn in fresh stimulus from the G20 and the Fed in addition to the $650Bn that is already anticipated in the run from the June lows of 1,280.  So far we have $125Bn tossed at Spain last week and let's call it $100Bn from the BRICs to the IMF this morning, leaving us $1,095,000,000,000 short that will need be committed today and tomorrow or we can expect, in the very least, to be stuck in this lower trading range.  

We remain optimistic, but cautiously so.  After all, what's another $Trillion between G20 friends?  That has been our bullish premise all month but yesterday, on the morning dip, we drew lines in the sand for cashing out our brand new Income Portfolio, which we began just two weeks ago with a virtual $500,000 and only deployed about 20% of it and already we're up about $8,000 ($7,940 at Friday's close) – which is so far ahead of our $4,000 a month income goal that we'd feel like real idiots if we blow it on a G20 failure.  

Those first 5 short put plays were the same ones we featured in the June 3rd issue of Stock World Weekly and those 5 positions are providing most of the returns so we'll be raising our stops this morning and leaning towards cashing them out and letting our long-term positions ride as we won't mind a big sell-off there since we're already hedged for a 20% drop and we'd love to add more if they get cheaper as we're less than 20% invested so far.  

Our smaller virtual portfolios are also off to the races and we added more bullish positions to the $5,000 Portfolio yesterday in anticipation of a bullish announcement from the G20 but, as Mark Cuban reminded us yesterday - "When your thesis is wrong, you don't wait – you just get out."  Let's bear (don't say bear!) that in mind today and tomorrow as our thesis is we will get $1Tn in new commitments from the G20 and the Fed so about $600Bn today and at least $400Bn tomorrow or we're going to have to lighten up and add some more bear hedges.  

In yesterday's morning Alert to Members I had noted

Nice second chance this morning to take oil (/CL) long off that $82 (now 82.44) or at least a break back over the 82.50 line but very tight stops below.  RUT (/TF) is testing 760 and that's another good bull line to play but make sure the S&P (/ES) is holding 1,330 or no play! 

The S&P gave us no trouble and the Russell Futures were kind enough to jump to 770 yesterday for a $1,000 per contract pay-off and oil hit $84 yesterday for $1,500 per contract and this morning dropped to $82.50 again, giving us another entry and already it's hitting $84.50 just ahead of the bell – Futures are fun!  

We had another nice opportunity to short TLT at $127 and we didn't pass that by.  DMND ($18.25) got cheap again and FB is not a stock we like but SOCL was down at $13.75 so we went with the broader index play on Social Networking (with an option spread for leverage, of course for our Members), FAS was $82.50 but still one of our favorites along with XLF at $14.25  and SVU touched $4.30, which was good enough for us and CHK was too cheap at $17.76 so we hit it again (all with very clever spreads) but we took $2.75 and ran on HOV as that was a huge run and we're not greedy, are we? 

So, on the whole, we were kind of gung-ho bullish yesterday and if we don't pop our levels we will become gung-ho bearish just as fast so be very careful out there.  The best sign for the bulls will be the Dollar dropping below that 82 level – everything else will key off that.  


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  1. stjeanluc

  2. knightpilot

    Phil/clip
    It is from a movie called “A Serious Man”. I thought it was great, my wife fell asleep. I still recommend it.

  3. stjeanluc

    Economic Numbers:

    Japan Leading Index / 95.6
    Great Britain CPI (YoY) / 2.8% (3.0% expected)
    Great Britain CPI Core (YoY) / 2.2% (2.3% expected)
    Great Britain CPI (MoM) / -0.1% (0.1% expected)
    Germany ZEW Survey (Economic Sentiment) / -16.9 (2.3 expected)
    Euro-Zone ZEW Survey (Economic Sentiment) / -20.1
    Germany ZEW Survey (Current Situation) / 33.2 (39.0 expected)
    US Building Permits / 780K (730K expected)
    US Housing Starts / 708K (722K expected)

    Tonight we have the Bank of Japan Minutes and Japan Trade Balance numbers.

    Still no sign of inflation… The big surprise today was the ZEW Survey in Germany. The FT has an article about it:

    http://ftalphaville.ft.com/blog/2012/06/19/1050181/zew-germans-are-suffering/

    It suffered the biggest decline in 13 years and there seems to be a correlation between its results and markets and GDP:

    Something to watch….

  4. stjeanluc

    And following Switzerland, Denmark now gets paid to keep investors' money:

    http://www.ritholtz.com/blog/2012/06/investors-pay-denmark-to-lend-money/

    While we’ve seen the German 2 yr note yield fall below zero in previous intraday trading, Denmark today was actually able to sell newly issued debt at a negative yield. A note maturing on Nov 15th, 2014 was sold with a coupon of -.08%.

    On the other hand, Spain pays over 5% for 12 and 18 months notes!

  5. malsg

    Phil – How did you find a picture of an elderly Shaggy from Scooby Doo?

  6. Pharmboy

  7. lflantheman

    I will very likely repurchase AAPL July 575 calls this morning. 

  8. yodi

    Burr Just to mention here that the ECA play buy write with leap puts Jan14 with monthly caller showing now a credit of 1354.00. Sold the Jul 12 on 5/10 for 1.30 now 1.22. Stock shows 22.36. So as you can see selling monthly calls or selling a far out leap call all pays off!

  9. yodi

    This will be my last day in the hot house of Cancun, leaving for Europe tonight for a three month tour around. So will report to you from there.
    Saludos to all

  10. 1020

    Good Morning!

  11. bobhu

    Have a great tour, I envy you. :-(

  12. bobhu

    Last message was for yodi…

  13. lflantheman

    Order placed MoMo buy to open 3 AAPL 575 July calls for 20.00.   It might go through at open

  14. zipla

    Hi Phil,

    Here's the post you asked me to resubmit about two potential/possible rolls I’d like your opinion on:

    I have an AA Jul 8/10 bull call spread @ $1.47, now  about .79, and bought without an offset. My thinking was to buy back the caller and to roll the Jul 8 call to a long Jan 12 $7.50 for about .80, selling an Oct 8 put for about .45 to cover some of the cost. Then after early July earnings to look for another $10 call to sell, maybe Oct at first, and then do another sale later to keep me in a spread with the $7.50 long as base – while also selling another Jan 12 put. Is there a better way of doing it?

    And here’s one I’m not quite sure about as it's doing OK now.

    I have an FMCN Jul 17/24 bull call spread @ $2.41, now $3.39, bought with a Jan 13 $10 offset @ $2.59, now $1.10, and I’m wondering if I should do something about it. My thinking was that since the caller can be bought back for around $0.25 (and we might finally get QE3), I should do that and spin out the long a month or more even – or even up to an $18 strike) with the intention of selling short against it again around the August earnings.

    Thanks in advance for the deeper thinking on these.
     

  15. deano

    Spain’s borrowing costs soar at debt sale

    http://link.ft.com/r/J0VG55/97BXVS/XTAB9Q/97JNWF/PFDN25/XL/t?a1=2012&a2=6&a3=19

  16. stjeanluc

    Approaching $12K… This is like an ATM!

  17. stjeanluc

    Doing well here too, but we have not been as aggressive as with FAS.

  18. stjeanluc

    lflan is turning PCLN into a cash machine now…

  19. lflantheman

    MoMo. trade:  Sell ONE of the AAPL July 575 calls for $26.00.  

  20. yodi

    bobhu
    Thank you. as I say give me an internet connection and I can do my business fom every WC

  21. rustle123

    Counting today, McClellan Oscillator is over 200 which is very high.  The one for Nasdaq is also approaching year highs.

  22. stjeanluc

    We have a stop at $0.75 on the FAS BCS.

  23. stjeanluc

    lflan – Did you get in at all at 20?

  24. smala766

    lflan i missed your post in pre-market, do you think it's better to wait for a pullback to place an order ? thanks

  25. lflantheman

    MoMo   ….Bought one more PCLN July 670 call for the MoMo at 25.70

  26. lflantheman

    The lowball AAPL trade did not go through.    smala……..You can buy AAPL here. 

  27. Pharmboy

    Penny stocks from yesterday…..GTHP was one of them. 

  28. jerconn

    rustle – Maclellan indicator high, meaning to look for a steep pullback soon?

  29. jabobeast

    Jeffery H Boyd who is President and CEO at priceline.com Incorporated (NASDAQ:PCLN), sold 2,000 shares at $642.00 per share for a total value of $1,284,000. The shares recently traded at $673.5, up $31.5, or 4.91% since the insider sale.

  30. ban2

    morning all
     
    lflan – AAPL –
    thanks for the time you take to discuss your AAPL trades and trading philosophy  very helpful and profitable when you catch  hold of your technique.
    question re covering  the  July 575 calls yesterday and today  — what are you thinking when you decide to sell the calls instead of turning the trade into a bull CS?
    I have several July 545 c that are looking pretty good now but wonder whether to sell out or sell C's against them to lock in further profit.
    tia

  31. lflantheman

    ban2….If I'm sitting in front of the computer I usually trade the options straight up……sometimes in/out of the trade during the day.  If I can't sit and watch then I will often convert to bcs, which doesn't require so much watching. 

  32. lflantheman

    Now PCLN moving, and by placing the extra July long call we are now very well positioned to catch the wave on the longs and gain the premium on the shorts, including the short weekly call.

  33. Phil

    Good morning!  

    Starting to feel very irresponsible with a possible market-killing day ahead of us.  Also, I am out of here at 1pm for my interview at 3:10 on BNN so default to cash is a good idea.  It's hard to convey but, at the moment, we're up about half a point and the Dollar is below $82 so all is well but I don't think we should have any tolerance for failure today.  Even oil should be over $85 or we should be concerned.  Gold is very worrying, failing $1.630 (now $1,624).  

    WFR at $2.07 and BBY at $20.50 will make me look like a genius on TV later (those and XLF were my bull picks) and I think I like GT to talk about today based on this news:  

    A sizable rubber supply deficit is set to 180 into a massive glut thanks to a material slowdown in China. The resulting price drop will cut income for producers, but slash costs for tire makers like Goodyear (GT), Bridgestone (BRDCF.PK), Michelin (MGDDF.PK).

    They are already up 5% but still good at $11.40 and I like the Jan $10/12.50 bull call spread at $1.20, selling the $10 puts for $1 for net .20 on the $2.50 spread.  I also like just selling the 2014 $10 puts for $2.10 – let's do 20 of those in the Income Portfolio.  

    Speaking of the Income Portfolio.  I'm very inclined to cash out our first 5 trades (the short puts) so let's do that if the Dollar does not stay below 82, which it should unless something goes wrong in Europe.  At the moment, the Euro is $1.264 and trailing the Pound, which is testing $1.57 and needs to make that to make us comfortable.  It's 79 Yen to the Dollar with the Nikkei at 8,700 and /NKD is a good bet above that line with tight stops and that can also be played as EWJ July $8s at $1.15, which is no premium at $9.15 and a stop at .15 means 10 of those in the $5KP would not be too risky.  Well, guess I'm still pretty bullish…

    Still nothing concrete to be bullish about – keep that in mind.  Without stimulus this house of cards is very likely to collapse but the Fed tomorrow can still be the bulls last hope but that won't be us without a real commitment of capital from the big boys today.

    At the open: Dow +0.47% to 12802. S&P +0.53% to 1352. Nasdaq +0.49% to 2909.

    Treasurys: 30-year -0.46%. 10-yr -0.2%. 5-yr -0.06%.

    Commodities: Crude +1.12% to $84.53. Gold +0.13% to $1629.15.

    Currencies: Euro +0.56% vs. dollar. Yen -0.1%. Pound -0.18%.

    10:00 AM On the hour: S&P +0.56%. 10-yr -0.24%. Euro +0.56%vs. dollar. Crude +1% to $84.44. Gold -0.13% to $1624.85.

    Stock futures hold steady gains following amixed housing report and ahead of the FOMC's policy meeting, from which markets are hoping to be thrown more candy. The benchmark S&P is +0.3%. Walgreen (-5.5%) most definitely red following its$6.7B investment in Alliance Boots and J.C. Penney -6.7% on news a top exec is leaving, but Oracle is +5.2% after its early earnings beat.

    U.S. job openings in Apr totaled 3.4M, down from 3.7M in Mar, the Labor Department reports.

    Redbook Chain Store Sales: +2.4% Y/Y vs. +2.0% prior week. Warmer weather and Father's Day helped move seasonal goods. The sales is expecting to pick up at plus 0.5% in June.

    ICSC Retail Store Sales: flat W/W, vs. -0.7% last week.+3.6% Y/Y, vs. +2.9% last week. The moderating gas prices will boost discretionary spending.

    May. Housing Starts: 708K vs. 720K expected and 744K (revised) in Apr. Permits 780K vs. 736K expected and 723K (revised) in Apr.

    You don't wait for the hurricane to arrive before boarding up the windows, says BofA's Mike Hanson, already seeing evidence ofcorporate spending caution ahead of the so-called 2013 fiscal cliff. Defense contractors are most fearful as that part of the budget would be an easy target for massive cuts.

    U.K. inflation slows to +2.8% in May – the lowest for 2.5 years – from +3% in April, with consensus +3%. The fall is led by food and fuel, and core CPI rises to +2.2% from + 2.1%. While inflation is still above the BOE's 2% target, ABN Amro economist Joost Beaumont thinks the bank will continue to increase asset purchases to "stay ahead of the curve."

    Look for the ECB's furloughed SMP (sovereign bond purchase program) to be re-started if Spanish 10-year yields  reach 7.5% (currently 7.08%), says ING's Alessandro Giansanti. He sees the country needing another €250B bailout on top of the €100B already pledged, a sum too great for the current rescue fund.

    It is Germany and not Greece or any other GIIP that should say "Auf Wiedersehen" to the euro, says GaveKal analyst Anatole Kaletsky. The other members should force the issue with a vote in the ECB for unlimited QE. A German exit would be "very bullish for practically all global risk assets," Kaletsky says, although it wouldn't be so great for German exporters and banks.

    The terms of Greece's bailout will be renegotiated, according to a senior EU official, as the worsening situation there makes the original agreement "an illusion." Anyone who believes differently "is delusional."

    More on FedEx (FDX): The company sets its guidance for the fiscal year which began June 1 with an assumption for U.S. GDP growth of 2.2% and world GDP growth of 2.6%. The relatively high targets surprises NBG's Brian Sozzi, as he cites downside risk. FDX-2.4% premarket.

    Best Buy (BBY +3.5%) shows an early gain, with a little help from Microsoft's launch of a Windows 8 tablet. The premise goes that any product that keeps the steady stream of consumers from marching like ants into Apple stores for tablets could potentially help the retail chain stay relevant.

    Oracle (ORCL+4.9% after providing its FQ4 report andFQ1 guidance ahead of schedule, and throwing in a $10B stock buyback. Canaccord (Hold) sees the quarter as "a favorable read-through" for software companies. Goldman (Buy) points out both software license and hardware sales were better than expected (ed: the latter was still down 16% Y/Y). Arik Hesseldahl notes Larry Ellison's earnings call boast that Oracle is now the world's #2 cloud software firm (behind Salesforce.com).

  34. stjeanluc

    Looking like FAS Money 2 now!

  35. Pharmboy

    Hopium is not investing…. this is a joke.

  36. nicha

    Anybody get $26 for the AAPL $575′s?

  37. lflantheman

    On AAPL, I'm working with the July 575s, and I would sell a little bit at 26, or buy more at 22 or below. 

  38. stjeanluc

  39. lflantheman

    stjeanluc….seems all portfoios are doing well.   Even the 5k up 20% or so.  I think posting these daily for perusal is a great learning tool, and thanks again for the effort you expend there. 

  40. Burrben

    My portfolio really likes smoking Hopium, it keeps getting higher….

  41. stjeanluc

    Lflan – These Jul 575 topped at $25.80 this morning. Did you sell any?

  42. Phil

    Serious/Knight – Looks good, I will look for it on cable.  

    ZEW/StJ – Nasty!  

    XLF flying!  

    ROFL Malsg!  Took me a minute to get it but then very funny…

    Have a great trip Yodi – I'm off to shake and bake in Vegas in a couple of weeks – 111 there already this week.  Maybe I should just stay at your place instead since you don't need it – got a pool?  8)  

    AA/Zip – The question is, is your goal realistic by July?  We're at $8.81 now and your call is .92 so you're getting a very nice 15% premium now that will surely disappear if AA isn't on track to gain .04 per day for the next 30 days.  AA is very tough to play, which is why we killed the AA Money Portfolio – the premiums for selling were very low in relation to the risk of AA's relatively large moves so there was no good way to hedge it.  

    If you want to be bullish on AA, I'd kill that spread, sell the Jan $9 puts for $1.05 and buy the Jan $7.50/10 bull call spread for $1.30 for net .25 on the $2.50 spread that's $1.31 in the money to start you off.  It's an aggressive sell on the put side but you can always roll them (2014 $8 puts are $1.35) so, if you REALLY like AA long-term – it's a nice way to play.  

    FMCN/Zip – If we don't get the stimulus, then you might want to bail but, if all goes well, you might be on track.  Keep in mind those $17s are worth $4 at $21 so ignore the spread and worry about your bird in the hand, now priced at just $4.10 so no premium at all, which is BS.  I'd consider taking $2 off the table with a roll to the July $21s ($2.10) as you'd still have a $3 spread and net 0.40 on the entry not even including the short put, which you can put a stop on and still roll the caller if they go in the money.  

    Don't forget – I'm gone at 1pm today.  

  43. stjeanluc

    Portfolios / lflan – Nothing like a nice rally to help out everybody…

    Except for Jabob who is probably still short PCLN!

  44. lflantheman

    stjeanluc.   no, I have a sell order in computer for AAPL July 575s at 26.00 and a buy order of same at 22.   Yes, but Jabobeast plays an important role here as my contrarian indicator.   Whenever I see "FU  XYZ" on the board, I go long XYZ.    :)

  45. jabobeast

    FU IFLAN!!!

  46. jabobeast

    jk ;-)

  47. lflantheman

    jabobeast……I KNEW that was coming!   :)   

  48. nicha

    Iflan/FU indicator – Go long Iflan? :)

  49. stjeanluc

    LOL Nicha…

  50. Burrben

    Yodi / ECA
    Yeah, I'm still playing with it.  I'm long 300 ECA at 20.72 (9% gain), and short the 3xJul 22 calls at 0.69, although they are now $1.30. with 0.73 of time value left.  So even if I get called away it's still a pretty good return.  I'm thinking of rolling the Jul 22 calls though out to Aug.  I don't have any short leap puts on the play, and I probably should have sold some when Vix was 25.  What do you think?     

  51. 1020

    Phil/BBYWFR
    http://www.youtube.com/watch?v=uhmjOD__iFQ
     
    :)

  52. lflantheman

    stjeanluc….what is your take on direction of the markets rest of the day.   Any reason for this to be pushing higher?   

  53. crussell14

    Phil
    I'm thinking about going ahead and killing the FAS 89 Call I sold instead of waiting for it to get underwater. Looks like I'm a day too late selling a weekly put, so lesson learned there. Does it seem a bit premature to buy out the call? Sold 2.85 now 4.15, so not out of control, but momentum is clearly upwards at this point!

  54. lflantheman

    I see AAPL fighting to hold 585 at almost 11 a.m.    If they were going to push much higher today I think they would have done so by now. 

  55. stjeanluc

    Markets / lflan – My indicators are still green for now. The real short term ones spiked down 15 minutes ago but it looks like we are going up again!

  56. nicha

    Iflan/AAPL – it cud be consolidating here as there is resistance at $589.

  57. nicha

    What I am concerned is why gold is not up?

  58. kinkistyle

    Not looking a gift horse in the mouth.  Bought back those JUL $19 DMND puts for a 30% gain.

  59. lflantheman

    Well, we need to stay long AAPL.   PCLN we've made $ on and if I detect any signs of weakness I may close out these positions.   Makes sense anyway to spend about $100 to close out the short puts on PCLN and free up $28,000 in margin.   I generally calculate earnings over margin and see if it's profitable to hold.  In this case we would make about $100 in 3 days holding these positions, or less than 1% proftit.  So the risk/profit analysis says "close the trades".  Will do. 

  60. angelcur

     eu lawmakers approve amendment to scrap use of credit ratings….really dumb

  61. stjeanluc

    AAPL seems to be weaker than that the overall market lflan. Right now I would need to see it above 587 to be more positive. I plot an ATR trading system and right now AAPL is still a bit bearish but rising.

  62. stjeanluc

    Overall comments from the Engadget reporters on the new MSFT tablet are actually quite positive (with caveat). We'll see:

    http://www.engadget.com/2012/06/19/editorial-engadget-on-microsofts-new-surface-tablet-line/

  63. stjeanluc

    And MSFT is up 3.5% today, so not a bad reaction!

  64. millcreek

    phil,
    my first income port so a few questions re your recent post
    sell the gt 10 p at 2.10.  i look at tos and find volume on that put is 6 so not a lot of executions.
    current b/a is 1.90/2.05.
    is there a rule of thumb (thought i saw 5% mentioned) would like to get ur thoughts. i.e. just go in at 2.00 if 5% rule etc. or put order in at 2.10. am comfortable with 5% but wanted to get clarification
    and re the sell the 5 puts above 82 on the /dx. should we trigger sales (since you are at bnn) or were you saying if it goes above 82 you will probably post the sell.
    tks

  65. yodi

    Burrben ECA I would not yet roll any callers to Aug. the Jul is just started I milk just about all premium out of the caller before I roll these, so much to early patience! Leap putter well I sold the 20p Jan14 for 4.48 now 3.50 I would even look at the Jan14 22p for now 4.50. However today is not a good day to sell puts. Wait till a down day you might get a better deal even the leaps do not change to much

  66. BertII

    This market move is all dollar generated and Oil not moving as much as indexes and gold pretty much flat

  67. stjeanluc

    A good post about using ATR for trading as an explanation:

    http://www.investopedia.com/articles/trading/08/ATR.asp#axzz1y5XiGyfL

  68. rainman

    Savi / Vegas — I'm in for Vegas.

  69. lflantheman

    stjeanluc…I closed the PCLN   weekly 645 for 1.10 and I closed the PCLN  weekly 615   for .20.   This frees up a lot of margin for new trades in MoMo.   Anyone out there see a MoMo trade they like?  

  70. nicha

    rainman/Vegas – cool! Looking forward to seeing u there.

  71. rainman

    Craigzooka / BBW — I tried to up date my profile but see no feedback that it is actually being saved. Loging out and back in presents the default profile rather than my updated profile. 

  72. bobhu

    My 2 cents on MSFT surface, I like it.  I was thinking to buy an ultrabook, now this is a better deal.  $499 for the pro(intel i cpu) with keyboard.  
    saw this post somewhere:
    ——-
    iPad 64GB: $700
    HDMI: $50
    USB: $50
    Cover: $50
    keyboard: $50
    pen: $30
     -- TOTAL: $930 + taxes —

  73. yodi

    Phil or any one GOOG Jul12 590/620 did we roll the call down to 575 or do we stick to the 590 TIA

  74. rainman

    Market Top? — I think I have the opposite problem as Phil.  When I take vacations, the markets seem to rally.  Just back from being gone since Thursday.  Now that I'm back and Phil will be gone this afternoon, this is probably a top :)

  75. lflantheman

    stjeanluc:   I sold PCLN LONG July  670 calls for 26.30.   I still hold the short call but will be unloading it shortly.

  76. bobhu

    lflantheman 
    lflantheman, CMG look interesting.

  77. rainman

    Alt energy really strong today (nat gas, solar) any major news?

  78. stjeanluc

    MoMo / lflan – Right now I would wait for some weakness and sell some calls when that happens (maybe not this week given the free money)… Most of these guys are in breakout mode!

  79. Burrben

    LFlan / Momo  -  How about Ebay?  It's above it's 20, 50 and 200. 
    http://stockcharts.com/h-sc/ui
     
    Another I have been kicking around in DNKN, back to IPO highs.  Not sure if these are MOMO though

  80. Phil

    GOOG coming back nicely.  On that spread, those $620s stopped out at $4 and now we can sell the $605s for $10, so keep an eye on that.  The $600s are $11.50 so let's say if they fail $11 (probably GOOG $575) then we want to cover with the $605s at around $9.50 – and that's how you work those spreads!  

    Dollar 81.73 with 30 mins to EU close – all under control so far.  Oil $84.50 but the contract is rolling tomorrow (I think) so all sorts of crazy things can happen for no reason – including a very fast drop back to $82 so Futures are out of the question for the rest of the week unless you are VERY fast and have lots of money to lose.  

    FAS/Crussell – Won't seem early if we have stimulus but still all premium.  Rather than spend $4.15 of premium out of fear, why not buy an Oct $87/96 bull call spread for the same $4 and now you are well covered on the call and you can set a stop on the spread at $3, as that would indicate the July $89s are not working either and then you are just paying $1 insurance rather than wasting $1.30 now (and maybe still make that $2.85).  In a perfect World, there's also the chance that you hold $3+ on the longs AND the caller expires worthless (XLF over $14.50 but not $15) and then you have the spread for net $1.15.  

    Gold/Nicha – I agree, strange.  Possibly lack of fear or EU people cashing it in to get back to Euros (now $1.27!).  So, to EU traders, gold is falling pretty fast today priced in Euros.  

    81.60!

    BBBY making new highs – I wonder if people get mixed up with them and BBY (now $20.64!).  

    Credit ratings/Angel – They are very pissed that 3 main rating agencies are all US companies and are "ruining" their economies with "arbitrary" decisions.  In other words, they want ratings agencies they can control.   Last straw for Europe was when S&P said they were going to downgrade US last year and they were immediately called in by Treasury and the next day they said "sorry, our mistake".  Think how bad that looks from the EU perspective.  

    Surface/StJ – I heard the demo failed right at the open and they ran the presentation on a back-up.  No one has touched one yet so it's all vaporware – if the keyboard is like those things in Brookstone for the IPad – who would want them?  There are no battery specs, no pricing even – nothing and I'm very dubious that they can load Windows 8 in a usable 64Gb configuration, which means you'll need 128Gb to do anything more than Email (and if I had to use Office instead of Thunderbird I'd throw it straight in the trash!).  

    GT/Mill – Unfortunately, they shot up already.  Our general rule is not to pay more than 5% over a price we wanted (or take 5% less) so .10 is the most we'd be willing to give up but I'd rather ask for $2.10 and, if we don't get a fill, then keep the cash and wait for something else than give up 10% at $1.90 on the first day.  Can you afford to lose 10% a day?  Can you afford to lose 10% of everything you enter?  Or, think of it the other way around, if you can get a 10% BETTER price on every trade you enter by simply holding out for that better price – would that be better or worse for your overall performance?  People tend to underestimate how fast those nickels and dimes can add up.  

    By the way, we are all over on our 50 dmas so now we KNOW we cash out all the directional bets on the income portfolio if we fail 3 of 5 of the 50 dmas.  That goes for the small portfolios too!

    Dow (12,746), S&P (1,347), Nasdaq (2,920), NYSE (7,756) and the Russell (781)

  81. rainman

    Phil / Surface — Your letting your Apple religion show.

  82. gucci

    Iflan – what do you think of cmg momo, has been building base araound 390-395 — now hitting resistant about 420ish, i am not sure how to calculate the vol weekly, Stjeanluc may give us a head up on it. thx

  83. lflantheman

    I bought the PCLN weekly call back for 13.00.   All PCLN trades are closed now in the MoMo.   Reasoning……..We've made a good gain over the past week on PCLN.  We will now look for a better trade.  The only thing left in the MoMo for now is 3 AAPL July 575 calls.  One of these has a sell order of 26, which has not yet triggered, and I've placed a buy order for  2 of the same AAPL calls at 22.     I'm leaving for most of the after noon.   Later!

  84. Burrben

    Yodi / MSFT Surface  
    There were some glaring omissions, which prob means they don't have their act together yet.  The didn't announce a mobile data option, that's a deal killer for lots of people.  They didn't announce price.  If they can't get it close to $500, good luck getting people to buy it.  They didn't debut a wide range of app's, which is what makes the Ipad so stellar.  Plus, (my opinion) it's really geeky.  People don't like to feel geeky, they want to feel cool.  The Ipad is cool.  My 2c.  Plus, I'm rooting for it to fail, so I can buy one really cheap :)

  85. lflantheman

    I will look at CMG and others mentioned.   Thanks.   Later!

  86. rkyroma

    Phil – thoughts on that AGQ spread?

  87. rkyroma

    and gold/silver in general right now.

  88. jerconn

    Lflan/Momos – AMZN is rallying lately but I would think they're due for a dip soon…

  89. Phil

    GOOG/Yodi – Last move was a roll to the $575s with a stop on the $620s at $4 and then re-cover with something at $10 (currently $605s) when the up move runs out of gas.  

    Religion/Rain – I'm not!  No one has actually touched a Surface – all I'm saying is that it's silly to compare at all when there is no actual product and, by the time there is, the IPad3 will be out (or the New 2 Squared).  I was playing with a New IPad and the voice recognition is totally kick-ass, even in noisy rooms.  What I want to know is what happened to the old Surface?  

    AGQ/Rky – That was the July $40/45 bull call spread at $2.30, selling ABX Jan $32 puts for $2 for net .30 from last week?    Well, AGQ is at $41.14 which I think is better than where we started with 30 days left.  ABX is really no worries at $40 so what is it you expected to happen?  As I noted above, gold (and silver) selling off a bit today as the panic goes out of the Euro but QE3 tomorrow can flip us right back up and, if not – then the premise is dead and Mark Cuban says dump the silver play and let the ABX ride if that's the case.  

  90. millcreek

    phil,  tks for the answer and the insight.

  91. lionel

    Oil/
    There has been a disconnect between Crude Oil and Eur/USD on this last up move.
    Someone is not buying this end of the day Euro move – selling Crude on volume from 1.265 until 1.27
    Tomorrow is the last trading day for July contract
    Momo/ Iflan what about NFLX below $70

  92. Inkarri19

    Hello All – With the Dow at 12,856, aren't we back in the "priced for 5% unemployment, housing booming, etc" territory?

  93. Burrben

    Anyone listing to the J. Diamond interview?  If so, do you think the politicians just sound…I don't know… dumb?  Especially the last lady who asked if JPM's model changes should have govt review?  And the guy before her just wanted to yell at him… this woman is just reading off a script and has 0 understanding of what she's reading….

  94. jabobeast

    All the world is a very narrow bridge, and the most important thing is not to fear at all.

  95. angelcur

    PHIL:  Fimalac a large French co owns Fitch..

  96. lionel

    Pharm/ ALKS
    There was a big trade today sold Nov Put 15 X 1000 for 1.3 and bought Nov Call 20 X1000 for 3.5
    ALKS is trading at $16.6 and max out at $20 on its last peak.
    Do you like the stock? And if yes how would you play it?
    Thanks

  97. dflam

    Phil :
    WhenI click on the Virtual Portfolio and go to the Income Portfolio, I get April 30th, 2012 as your last comment. Are your recent changes posted in another location on the site? 

  98. mrmocha

    WFR - FYI, filled on some JAN 14 3/5 BCS at 0.25 this morning, had that order in for a week or so.  Makes a nice potential eight-bagger play for an IRA.

  99. jabobeast

    Tuesday, June 19, 11:18 AM Chipotle (CMG +0.5%) continues to stake its claim as providing better-quality ingredients than fast food rivals with a new initiative to use dairy products from pasture-raised cows. It's a calculated gamble by the company that the benefits of improving its brand will outweigh the additional food input costs.

  100. rainman

    Phil / Surface — The old surface, I believe, was created by MSFT research (but I don't know for certain).  The internal structure of MSFT makes it difficult for the research department to turn research into actual products (it's pretty f*d up --  I know by experience).  My guess is that the technology was canibilized by the windows 8/windows CE teams to create the touch oriented OS.  Rumor is that Windows 8 is so touch based that it gets in the way on non-touch devices so it is unlikely to cause an upgrade cycle on the desktop which is also why they are posing surface as a windows 8 companion (also f*d up). I agree that it is silly to compare with a non-product but making assumptions that the thing can't work in 64gb is a little biased.  If they have Windows8 on phones, I see no reason they can't have it on a tablet. Did Balmer actually say it is targeted to compete with the iPad or is the MSM just assuming that?  As far as I can tell in my limited reading, it doesn't seem like it is meant to compete with the iPad, however strange that might seem.

  101. hoss18

    Howdy y'all!  A friend of Txchili is on here, but I don't know his handle. Back in late April, I gave Txchili a CRUS play to pass onto him and wanted to post the results as I closed it out today.  I believe I posted the play on here too, but I can't find it.
     
    Anyway, bought the CRUS 26/31 BCS for $2.15 and sold the June 25 P for $0.90 giving me $1.25 entry on $5 spread.  The trade went through expiration.  The sold calls and puts expired worthless and I got shares for a net entry of $27.25.  Traded up to a high over $31 yesterday, and I closed out today for $30.50, giving me a $3.25 gain or 12% in 55 days.  
     
    Yes, I could have sold calls over the position, but prefer to return to cash and be grateful for the nice little play.  

  102. millcreek

    lionel, re nflx
    i sold some nflx aug 60's yesterday as it looked like a double bottom at 60. thought i could pick off a couple with a who knows what week ahead.

  103. ccsincsd

    ipad story.  Sad/Happy
    Son bought new ipad last Thursday.  So nice.  Like better than my ipad 2.  Saturday, he and buds playing with voice rec out on patio.  Nice.  Drinking beer, burning one down.  Then they drop it.  Cracked the screen 6" long.  Now not so happy.  
    Amex Business Gold Card saves the day.  Full refund.  He is going to get another one tonight.  A few good lessons here !!

  104. yodi

    Hi Burr,
    Do you actually only see this now that most of these guys are just dumbos, they just like to hear their own voice. Low IQ

  105. hoss18

    Phil, I played the TZA 16/20 BCS which closed out last weekend for a nice gain.  However, this leaves me looking for another short term hedge.  Thinking about another TZA spread like July 17/22 for $1.90 and selling BTU July 23s for $0.90, giving me $1.00 on $5.00.
     
    Two questions/concerns, is EDZ a better play?  Second, should I wait through the Fed tomorrow before putting the hedge on in case they do move and rip my face off?  
     
    Need to cover a small set of short term plays is the goal of this trade.  LT trades are well hedged already.

  106. rainman

    jabo / CMG — CMG is to fast food what WFM is to grocery stores. Don't under estimate that decision.

  107. Phil

    My trade notes for BNN:

    Today I am liking GT because we're in an upswing in the car cycle (as well as many consumers have put off buying new tires for old cars) and, due to the slowdown in China, there is a glut of rubber – so their costs are down.  

    GT is at $11.55 and we like the Jan $10/12.50 bull call spread at $1.20, selling the $10 puts for $1 for net .20 on the $2.50 spread.   We also like the straight sale of the 2014 $10 calls for $2 for a net $8 entry (30% off the current price).

    GLW makes Gorilla Glass, which is being used on many tablets and smartphones including IPhones, IPads and the new MSFT surface so I like them at $13.34 and we like selling the 2014 $12 puts for $1.90 for a $10.10 net entry (25% off) by itself or paired with the Jan $12.50 calls at $1.70 for a net .20 credit on the $12.50 calls that are currently .84 in the money so it's a trade that returns 300% on cash if GLW simply flatlines with unlimited upside potential if GLW takes off. 

    LQMT at 0.32 is my fun AAPL trade idea as they just extended their development deal with AAPL and it's possible that one day, they will make IPhones or even IPads out of this stuff (amorphous alloys that are stronger than titanium and lighter than plastic). 

    On the last show (May 22) my trade ideas were

    • BBY Jan $18/21 bull call spread at $1.25, selling Jan $14 puts for $1.10 for net .15 on the spread.  The spread is now $1.65 and the short puts are .80 for net .85 – up 500% in a month!  BBY was $18.49 at the time and today it's $20.50 so up 11% on the straight stock play as well.  
    • WFR was $1.63 and now $2.17 – up 33% – IN A MONTH!
    • XLF Jan $13/14 bull call spread at .59, selling Jan $12 puts for 0.75 for a .16 credit, now net .21 for a gain of .38, up 220% – IN A MONTH!
    • CHK 2014 $5 puts sold for $1.25, now .70 is up 44% – IN A MONTH!  

    Others I mentioned that day were BTU (still $24), CHK ($14.90, now $18.48) and JPM ($34.38, now $35.36).

    Not bad for free picks on TV, right?  

  108. Burrben

    Yodi –  Actually it's the 1st time I've had on CNBC in two years, and the first time I spent more than 3min listening to politicians.  I don't get any of the channels in Nica, and now I really know I'm not missing much.  I'm just so suprised at how Slow their questions are, and how they don't seem to understand the answers.  Everything I know about politics I skim on PSW or Huffington.  I'm just chilling smoking Pharm's Hopium today…. yeah baby!

  109. japarikh

    Phil,
      Need some help with rolling of my disaster hedges. EDZ July 17/26 spread $2.95/$0.95 now $0.7/$0.5 with a short EDZ July 16 put for $1.2 now $1.9. Also have TZA July 20 for $3.44 now $1.2. I'd like to roll out to Oct but they all look pretty expensive

  110. jabobeast

    Phil-- I think you meant selling the GT 2014 puts not calls

  111. kustomz

    Closer to Japan everyday, not long before they close the markets for lunch.

  112. japarikh

    Phil,
      I think you meant selling the 2014 GT $10 PUTS not calls, right?

  113. rainman

    Phil / BNN picks — F*ck 'en aye Phil!  Congrats!

  114. Burrben

    Phil / GLW  -  Ahh, my old friend the GLW trade.  I added on more when it was a 0.84 credit.  I entered it when it was net zero.  We should track the volume on the options pre-bnn, and post bnn.

  115. lionel

    Phil/ That is just impressive.
    Do you get by now free pancakes with maple syrup on top?
    Could you please post the link so we can all watch their faces when you don't tell them what they expect you to say.or even better when you tell them something they didn't expect at all :)

  116. Jbur

    Hi Phil, look forward to seeing you on BNN again. I have the TZA trade (probably like many others here) with the July 20/25 Bull Call at  $1.44 debit, and July 19 short puts at 1.05. Would you suggest adjusting position by rolling the 20's down to the 18's for $0.85 or to the 17's for 1.45?  Thanks and have fun in TVLand.

  117. lionel

    Millcreek/ nice play on NFLX. 20% in one day!

  118. crussell14

    Phil
    GT Jan $10/12.50 bull call spread has moved up to $1.35. The Jan 13 9/11 BCS at $1.35 is another way to go with GT at $11.61 for a potential 96% annualized gain

  119. rainman

    /DX smackdown through 81.50

  120. Inkarri19

    GT – Doesn't GT have huge pension and healthcare obligations to a large retiree population?

  121. stjeanluc

    This one is for you Zero… Deflation analysis:

    http://www.comstockfunds.com/(X(1)S(qhr4si3g5s5yk2bw0tmiykyy))/default.aspx?act=Newsletter.aspx&category=SpecialReport&newsletterid=1654&menugroup=Home

     

    Under these circumstances, we believe that inflation cannot take hold in the real world.  Businesses feel minimal pressure from rising wages and have no compelling need to raise prices.  Even if they tried, consumers would not have enough income to pay the higher prices and would resist, forcing producers to rescind whatever price increases they try to put through.

    Even now, there are straws in the wind indicating that the world may be headed for deflation. The economy is once again slowing down from a growth rate that was already mediocre.  Recently we have seen lower-than-expected results or actual declines in GDP, job growth, retail sales, income growth, manufacturing production, core capital goods orders, vehicle sales and initial unemployment claims.  There is uncertainty on tax rates, a dysfunctional congress, a contentious election and the so-called "fiscal cliff".  Treasury bond rates are the lowest since at least the Eisenhower administration and in some cases on record.  Commodities are declining worldwide (see charts 7 & 8).  Globally, we are witnessing a recession and sovereign debt crisis in Europe, the increasing possibility of a hard landing in China, and weakness in Japan, India, Brazil and a number of other emerging nations.

    In sum, we think that the global forces behind deleveraging have more firepower than the all of the world's central banks and governments together, and that deflation is a much more likely outcome than a major inflation.  At the same time we recognize that a lot of smart people make a logical case for inflation.  In either case, however, the outlook for the market is exceedingly bearish.

  122. Phil

    OK, I have to get ready to go to the big, bad city.  

    By the way, our junior correspondent, Jackie got all As for the year and took top honors in her school (all advanced classes too!) and got a letter from the President congratulating her on the achievement, so she's very excited and I, of course, am very proud!

    TLT not down as much as we'd like for a rally day – possibly due to Dollar weakness (have to compensate with higher rates).  VIX down to 17.81 though.  

    Dow/Ink – That would be more like 14,000.  

    Diamond/Burr – After that last joke session in Congress, I lost all interest.  Senators are just corrupt, Congresspeople are generally idiots.  This is Dan, who used to be your plumber and became a state assemblyman and then went on to win a Congressional election because 2,000 more people liked him than the other guy they never heard of and now he's discussing derivatives with Jamie Dimon – RIDICULOUS!  Some of the older committee people have a clue but others are just seat fillers..  

    Fitch/Angel – I did not know that.  No wonder they are the least reliable.  ;)  

    Income Portfolio/Dflam – I haven't made a post for the new one yet.  It may be back to cash and there won't be any point by tomorrow but, if it's still there, I'll write something up.  Any moves we make are done in daily chat, like above on GT.  

    WFR/MrM – Very nice.  It's funny how those fill – making new highs it finally works.  $2.18, by the way!  

    Surfact/Rain – I'm not talking about the portable version, they say there's a full version that will run office on the tablet and I don't see how it's going to fit but just as silly to talk about that on a vapor-ware product.  Good idea not to "position" it to compete with the IPad – will save them from failing later…

    CRUS/Hoss – Very nice!  

    AXP/CCS – They do rock!  I never buy things any other way – saved us quite a few dollars over the years.  Even got a dent in a rental car – called them and they said "don't worry about it" and I never heard another word about it.  

    TZA/Hoss – Always a good play but EDZ back to $14.90 (from $19.50) is getting fun again too.  I like your hedge very much – good for all:   TZA July 17/22 for $1.90, selling BTU July 23s for $0.90, for net $1 on the $5 spread.  

    Also, I like EDZ Aug $15/21 bull call spread at $1, selling USO $30 puts for $1 for a free bear spread (assuming oil holds $75).  

    EDZ/Japar – See above.  I'd spend $1 to roll the July $17s to the Aug $15s, let the caller expire and then sell something for $1 in Aug.  As to the put – Just keep an eye on the roll, the Aug $15 puts are about $1.90 so ask for an even roll and hopefully you'll get it eventually.  If not, Oct $14 puts are $2.20.  TZA – same deal, you cna just roll down and cover or move to Aug.  Try using bullish offsets if there are stocks you REALLY want to buy if they drop 20% – then you mitigate the damage if we keep going higher.  

    GT/Jabob – Yes, I did mean selling puts, not calls, thanks!  

    Volume/Burr – Yes, would be nice to know how many people actually watch that stuff.

    Link/Lionel – I think it comes up after the fact if you don't watch it live (like CNBC).  Usually someone here gets it up when it's published.  

    TZA/Jbur – I thought we went bullish a while ago?  Same as above, just spend money (more insurance) for more time and position (assuming you have longs that are worth covering).  Also, same deal with bullish offsets – that's why I like them when we're leaning bullish.  You need to know that a trade where the offset is the same ultra-ETF is a VERY bearish bet and will get killed if we move the other way.  It's fine if you have longs that make money and plow some of the long profits into repositioning but when your time-frame is short and you're one-directional on a 3x – you'd BETTER be right!

    Vegas/Aussie – What I notice watching that video is that girl is sitting in a totally empty real estate office so – no thanks!  My goal is to put together a block right on the strip at Veer or similar for about $500K for 2Br units (1,500 ft) and break them up into weeks at $15K and form a management unit that rents them for 50% of the revenues.  So that's a 50% profit on the block as we sell it and then a revenue stream from 50 units at maybe $200 a night for 200 nights a year x 50 x 50% = another $1M (maybe 50% profit) a year off the original $7.5M investment (30% of the purchase price).   Also note that, even for the owners paying $37M for the time-shares, a conservative estimate (200 nights at $200) of $1M per year revenue stream is very attractive – especially if you assume inflation.   The very nice thing about this is we only need to sell 10 full units (20%) to recoup the 30% down payment and, after that, we just need to sell enough to cover a $17.5M mortgage, which is $140K a month at 5% (15 years) so one unit sale each quarter covers our nut going forward (and we can rent unsold units).  That is SO much more attractive than blowing $7M on one house!  

    GT/Crussell – Also good.  

    81.50!  The markets better be moving higher.  Oil has me worried, not moving up and gold very lame too.  At least TLT back below $1.26

    GT Pensions/Ink – Yes they do but so do many old-line companies.  They've been making a bit of money in a terrible economy and dropped $300M to the bottom line last year and $800Bn to cash flow with a forward p/e of 5 – I think they are worth a gamble.  

    OK guys, gotta get read to go (late actually) – have fun!  

  123. Pharmboy

    ALKS – spreads are wider than a semi, and they earn revenues from their technology.  Small royalty payments from JNJ, AMLN and others.  Range bound.  Not exciting to me.

     

    Nice big, fat Greek short squeeze to get some nice, small put entries in September.  SPY $125s for example.  Riding the tide, cause the wave will roll over.

  124. morxlntway

    speaking of EDZ and an exceedingly bearish market, today might be a good day to sell some 12s or 14s.

  125. morxlntway

    oh. and what phil said.

  126. Pharmboy

    FXE Calendar – Sept 120 / July120 bull put spread for 86c.  10 of them.  Thx very much for my second entry into shorting this poop.

  127. Pharmboy

    MS – Sept 14 / June 4 weekly bull put spread for $1.11.  5 of them.

  128. zeroxzero

    Stj:  Thanks, the article puts the case for deflation very cogently.  They are clearly correct in their analysis of deflationary trends, particularly in respect of wages.  But I don't find their case convincing.  In truth, I don't find any case convincing which argues the case for either inflation or deflation, and here's why — I don't really understand the limits of currency manipulation in an extreme case, which we surely are facing — falling consumption, falling wages, rising unemployment, rocketing public deficits and falling private indebtedness.  Sure, I understand what this all points toward.  But what exactly are the limitations of central banks in this environment given a rock solid determination to re-inflate the economy?  To take the most obvious example, why can a government not print and re-build or refurbish every bridge, tunnel, highway, rail line, airport, and government building in the country while giving 20% raises to every government employee?  Because the market would sell off the currency?  So what??  We're more competitive.  Because rates would rise?  The government just rolls over the debt into a bigger number.  Because investors would flee in droves?  To go where?  China?  Germany?  Brazil?  Gold under the bed?
     
    I realize that extreme cases are unpredictable, and hence to be avoided by cautious central banks.  But avoiding a 10-20 year deflationary period is by definition being cautious — it's not that we don't know where that leads — what part of the word "spiral" don't we understand? This massive and global recession is kind of like viewing particle behavior on a sub-atomic level — it just doesn't behave like objects do in the macro world.  In sum, these analyses —  "deflation is coming," "hyperinflation is inevitable" just don't have a ring of truth to them.  The hypotheses are all very erudite and interesting, but I don't come away feeling that I know any more than I already did — which is virtually nothing — about where this really might lead.  Am I the only one who feels this way?

  129. zeroxzero

    Phil:  Jackie — and her parents — deserve a hearty congratulations.  Well done.

  130. hoss18

    Thanks Phil….and the spread's down to $1.75 so able to get in there and sell the BTUs for $0.83.  Good luck with your interview….. 

  131. lol730

    stjeanluc/inflation
    "Even if they tried, consumers would not have enough income to pay the higher prices and would resist, forcing producers to rescind whatever price increases they try to put through."
    What a BS!
    Last 5 years food prices in my local grocery store go up and up, and up.
    So far I still consume the same amount of bread, milk, etc.
    I have less disposable income and will spend less on other stuff,
    but this won't bring prices of necessities down.

  132. Burrben

    Phil – Why aren't you on the TV Schedule?  With the % return of you're picks on that show, I'd lobby for a headline or tell them "peace out".
    http://www.bnn.ca/Schedule.aspx

  133. dflam

    Hoss/TZA: Nice hedge call. got in for $.95 on the $5 spread

  134. hoss18

    ZxZ – I'm with you.  I see both deflationary and inflationary cases, but don't see how we entirely arrive at one or the other.  It's like the balance each other out.  We tip one way and then back the other(because of intervention), but picking which side the boat will eventually rollover onto and sink is merely a guess.  So, we really are kinda like Japan the last 25 years, only on a global scale.
     
    It seems to me that as we rock back and forth, the motion will develop a rhythm of its own, and at some point may become beyond the control of central banks.  At that time, it may break one way or another, but until then it pays to be nimble.

  135. rexx

    Closed CHK July 14/16 Call Spread vs short July 13 puts that bought the spread.   I missed initial entry but managed to get paid .12 for fill when I finally got it. 
    Seems reasonable to just cash out for 90% of potential profit with a whole month to go. Not much upside left.

  136. 1020

    Way to go Jackie!  :)

  137. Burrben

    LQMT – So I'm trying to buy 1000 shares of LQMT at 0.32.  The ask is 0.315, and the order won't fill.  ???

  138. bobhu

    stjeanluc, thank you very much for your hard works to update and post all profolios everyday.  I know you have them in google docs.  Can you post all the links again?  TIA.

  139. Pharmboy

    Zero…um, stagflation and deflation at the same damn time…the worst of the worst.  What can central banks do?  Pump more money in…diminished returns, and they know that!  That is why Dr. Ben told Congress to get off their arse, as without employment, things will be bleak.  Wait for the baby boomers to pass, well, they are the controlling block now in voting, no?

     

    We are in a conundrum.  Which way do we go George, which way do we go?

  140. Pharmboy

    And to the HTFs….I say….

  141. dpastramas

    CLDX / Pharm – Still looking strong :-) . If you have a min can you please give me a quick summary on this company, why do you like it and whats the main milestones for the future? just to understand the risk/potential! Thanks so much!

  142. Pharmboy

    Well, I see someone has topped me…

    Rich Yamarone. Rich is Chief Economist for Bloomberg says a recession that is coming right here to the US. He thinks ten-year bond rates could scare 0.5% (not a typo!) if/when both Europe and China have a simultaneous crisis and the US is seen as a real –and perhaps the last – safe haven (to which I would add: besides gold). Certainly 1% on the ten-year and 2% on the 30-year will be on offer in such a scenario.

  143. stjeanluc

    De(In)flation / Zero – I have been making the case for a while that the current situation doesn't match any of the CBs models so they are in an experimentation mode right now. As with any experimentation, the results can be unpredictable. So I won't venture a guess either way – a good case can be made for either outcome!

    But the article was another view point worth considering!

  144. Pharmboy

    CLDX – SGEN technology for glioblastoma multiforme (a very deadly form of brain cancer).  Data are encouraging, with an overall survival (OS) of 24.6 months compared to 15.2 months (historical cohort).  This brain cancer is wickedly aggressive….

  145. Pharmboy

    CLDX is in phase 2, but will begin phase 3.  I would play them like we have with SGEN, CRIS and others.  JBTFD….and sell calls & puts against the position.  SGEN could buy them out, or someone else.  The rest of their pipeline is up and coming, but way too early to tell.

  146. zeroxzero

    I like Hoss's approach:  a rock & roll economy.  Kind of a Swing Trade writ large, as we lurch between hope and fear on the way to a .5% 10-year T note, and play the swing as the rest of the world panics and realizes that, with 13% of the global population and a goodly percentage more resources on this side of the planet [I'm in the west], the U.S., Canada and other Western Hemispheric nations represent the best safe harbor in a treacherous global ocean.  One would rather be one of 950M over here [I'm in the West] than one of 6.1 Billion over there when the whip comes down.  Not a new idea of mine, but perhaps more relevant at the moment.

  147. zeroxzero

    Uh, a little repetitive.  Did I mention I'm in the West?

  148. ccsincsd

    Phil/Center City
    We toured about 2 years ago to learn and wait.  A killer was the approximate $1/sqft per month HOA fee.  ie, $1,500/mo for the 1,500 sf unit.  Do you know if it is the same or worse?  I read that they had gone up 50% as the unsold units were shorting the budget and the "developer" was pushing back to not have to cover the shortfall.  Just wondering as I have interest also but have not been back in to talk for a while.  TIA

  149. rustle123

    I can't see the Fed doing anything.  For what?  Mortgage rates are at record lows so no need for Operation Twist.  No need for QE3 since oil is lower but not low.  And if he causes inflation the numbers will become even worse since high oil as usual was a big part of the reason for the slowdown.  And gas prices haven't come down that much which should be looked but most Congressman are in big oil's pockets.  The Fed has overstepped their bounds as it is, it's not their job to help stimulate jobs, it's the legislative and executive branch. I think the market will pull back, not too mention the McClellan was at one of it's most overbought readings of the year.

  150. Pharmboy

    G-20….not buying bonds….that's the reason for 'that' dip.  Joy.

  151. craigzooka

    IRA Portfolio update!

    The calls we sold on CHK, RIG, and CLF all expired worthless.  I was planning on doing an update and covering everything yesterday but I got to busy.  I am glad I was busy because the market popped and we are going to get better prices.  I suppose I get to be lucky once!  So

    SELL 4 CHK JUL 19 CALL @ $0.82

    SELL 1 RIG JUL 46 CALL @ $1.35

    SELL 1 CLF JUL 52.5 CALL @ $1.44

  152. zeroxzero

    From Simon Penn, UBS
     
    : "The market's sympathy for Eurozone political decisions has decreased with every successive event. A year ago and the July 21st summit produced enough optimism that the markets carried Europe through the summer and the political recess and all the way into September. By last week and the enthusiasm for the Spanish bank bailout was about a morning. Today's positive reaction to the Greek election result was no more than an hour. Why? Because the markets and politicians continue to work at such different time scales. The markets need quick decisions and long lasting processes. The politicians, meanwhile, are taking weeks (and months) to deliver solutions to narrow, detailed problems…..It is unfortunate for Germany that the markets have eyes for only one solution – the wholesale mutualisation of Eurozone debt. A big solution delivered immediately. That's not going to happen."

  153. rvnelson

    stjeanluc
    Could you please post the links to the current position recaps including the Income portfolio. I want to do a personal modify in Excel to show up and down dollar amounts as well as % .  Thank you so much!

  154. Burrben

    From T3 : Markets would be a bit Disrespectful to close on dead highs – 5 week highs- as it begs for Stimulus $SPY

  155. Inkarri19

    Rustle/Ben – I read an article yesterday written by Jon Hilsenrath saying that the Fed was frustrated that lower income people have not been able to take advantage of cheap credit as textbooks indicate.

  156. livingfull

    Pharmboy/CLDX  …..Thank you for your invaluable input on all pharmas BTW.  Appreciated.  CLDX research the kind of break through lots of folks hope for… in addition to investmenting in.   GBM took my father.  Diagnosed in March, gone by Father's Day.  The only positive is so fast that potential suffering reduced compared to to many forms. 

  157. rvnelson

    stjeanluc,
    I figured it out!  All the portfolios showed up as worksheets when i saved the Google doc spreadsheet in Excel.  Thanks!

  158. rustle123

    Inkarri/Fed
     
    Then the Fed is incredibly more moronic than I thought they were already.  Low income people can't get credit, middle income people have a hard time getting credit right now.   They obviously have not been walking around the every day people because their head are so far up their arse.

  159. zeroxzero

    The Fed should undertake a direct/sponsored-through-banks lending program for the 99%.  Their money is not ending up in the pockets of those who are needed to consume, and weak U.S. banks are hardly going to take a chance on lowering their lending standards.  The Fed can "twist the night away" and it's not going to put money where the mouths are..  

  160. Lincoln

    Wow, I have really been missing out on insightful market analysis.  Just heard on CNBC the two week rally was sparked by the Wisconsin recall election, who knew.  Here I thought it was their "MARKETS IN TURMOIL" primetime special.

  161. Burrben

    Is there a live feed to BNN?  I can only find archived shows on BNN.CA.  

  162. kinkistyle

    Zero: I think Phil's pitch to Geithner was to have the government directly refinance underwater mortgages at a very low rate or forgive a portion and have them pay the rest straight to the government.  I seem to remember Timmy laughed at him like he was a child.

  163. jabobeast

    FU PCLN!!!

  164. jerconn

    Kinki – PHil said that Geitner's staffers like the idea but Geitner himself said, "they'll never buy it," meaning the politicians…

  165. grenowoods

    No live feed for BNN. Phil is on right now.

  166. Inkarri19

    Rus/Fed – I agree.  Here are some lines that stood out in the article:
    "The U.S. recovery is hobbled by an economic divide that separates Americans not by income or wealth but by their access to credit."
    "The credit divide factors into their thinking. Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should."
    Here is a link to the article:
    Fed Wrestles With How Best to Bridge U.S. Credit Divide
    http://online.wsj.com/article/SB10001424052702303505504577403970826823032.html?mod=googlenews_wsj

  167. mrmocha

    If I could just learn to love the momos and stop shorting them I could retire quickly.  Lookie NFLX and PCLN today, you'd think the Fed was buying them outright!

  168. Pharmboy

    livingfull – ur welcome, and I am sorry to hear of your loss.  I hope that my investing and stock picking can continue, as this is much luck as it is science.  I can only 'hope' my scientific skills outweigh my 'luck' on the final outcome!

     

    I am going to drink my depressant now, as this 'stick' up is acting like Cialis (the weekender) and not Viagra (one timer)…I grow weary of a market that could not be more manipulated than a 2 pence…never mind.

  169. Pharmboy

    3 min candle on VIX….unreal.

  170. Burrben

    Found the Live Feed for BNN, they want $6.95/mo!  Phil's not worth that :)  hehehe
    http://insinc.neulion.com/bnn/

  171. kinkistyle

    Jerconn:  Ahhh, I stand corrected.

  172. rustle123

    Inkarri/Bernanke
     
    Found a link where Bernanke is explaining the Fed's job to someone else.
     
    http://www.youtube.com/watch?v=loVhvZWpTwM

  173. grenowoods

    I stand corrected. No live feed that's free.

  174. stockgirl77

    Good interview Phil!  BNN is unreal though… gave Phil 30 seconds for his second investment pick while this guy David Taylor is on right now getting couple of minutes to talk about his investment recommendations.

  175. jromeha

    Pharm – hitting on like 80%+ of your picks is HARDLY luck! Keep up the good work.

  176. lionel

    Thanks Pharm for ALKS

  177. dclark41

    livingfull
    I am sorry for your loss. My mother is dealing with GBM today (diagnosed in February). She has done fairly well with the surgery and treatments, but ups and downs of the steroids and anti-depressant medication have been difficult to deal with. We are hopeful for a few more good months.

  178. crussell14

    Savi
    are the dates for Las Vegas solid? I would like to book my flight. I will be coming out Sunday morning Nov 11th due to a prior commitment on Saturday the 10th.  Thanks for coordinating this,

  179. Phil

    That was extra short but, on the bright side, I’m at Masa now having sake and sushi!

    Looks like I didn’t miss much action. Still have a nagging feeling that this will all end badly tomorrow… I’ll catch up later.

  180. Pharmboy

    Tomorrow, tomorrow, your only a day, away!

  181. Pharmboy

    MS – they will not sell me the June 13 weekly puts for 4c….tells me sumpin' pumpkin'

  182. deano

    Pharm – thanks again for ARNA!

  183. samz3700

    What a joke – Spain is in worse shape than before the Greek election – up, up, and away!

  184. Pharmboy

    Deano – ur welcom.  Wish I joined the fun….but I am strapped in for SGEN.

  185. qcmike

    Phil
    Amy trade on JPM  going into earning on 7-13
     
    Thanks

  186. jerconn

    PHarm – did you notice that J&J's Zytiga got a bad rap at ASCO 'cause they didn't meet their endpoints, and their experiement ended early and anyway patent protection only thru 2015?  All of a sudden you don't hear about Zytiga taking over top spot from DNDN, but now there's more talk about MDVN doing that…I have the impression that Zytiga is out of the running for this space, at least for the time being…correct me if I'm wrong…

  187. lolobear

    Phil, CNBC is saying that QE3 and stimulus from G20 is a DONE DEAL.  But then again, its CNBC.  How reliable is this info?  They've even got it on their websites.  

  188. dpastramas

    SGEN / Pharm – you still like the Sep 20/25 selling the 20$ put?  Seeing the recent run would you suggest moving the spread a bit further out of the money? Thanks!

  189. lflantheman

    3  AAPL   July 575 calls sold for 24.40   The MoMo is in cash.    

  190. kurtww

    jerconn — can you send me a quick email, I wanted to ask you something offline. My email is my username at gmail.com. Thanks.

  191. Pharmboy

    dpast….I would move out to Dec.  Or sell a few puts in Sept 22.5s.  I am wating for a pullback.

     

    JNJ – yes, I need to dig deeper into that one, as the Cougar purchase for that compound was huge, and it was supposed to be better than MDVN.  DNDN, IMHO, is toast either way.

  192. Pharmboy

    VVUS – still trying to get a short in on them.  I am looking at the July 20/15 bull put spread for $1, but cant get the fill.  Otherwise, might just buy the $15 puts and call it a day for my roll of the dice. 

  193. Peter D

    Thanks to stjeanluc for the Short Strangle virtual portfolio update!  It's right on track for a total gain and has weathered all the recent events very well.  The question now is should we sell more or breaking up the long put vertical for additional credit.  Well, let's wait until later in the week.

  194. grenowoods

    Phil on BNN

  195. hoss18

    If its a done deal, then we should BUY, BUY, BUY!!!  
     
    Wait, isn't CNBC a shill for the big boys?  They want to dump, what a better way than to sell to the retail suckers!  If the Fed were to then stand pat, who would be the bag holder?  (hint:  the 9,000 people who listen to CNBC)
     
    It's all Rock 'n Roll till someone turns the amp off……

  196. jerconn

    Pharm, you think if ARNA gets approval VVUS for sure plummets?  Seems reasonable to assume…

  197. jthoma

    Phil- Just watched your interview- if you had a collar on you would have looked VERY priestly- I am not sure that revtodd has rubbed off on you quite that much- LOL!

  198. Pharmboy

    ARNA is a big??, but it is less of an issue than VVUS's combo pill.  I don't like the fact that VVUS mixes a schizophrenic drug (Topiramate) with speed.

  199. jerconn

    Pharm – you think after an 18-4 reco the FDA may turn ARNA down?  Most people think ARNA is almost a shoe-in for approval…

  200. Pharmboy

    FDA does not have to follow the advice of the committee.

  201. microflux

    Congrads on your Jackies grades phil :)

  202. jacalynm

    Phil,
    Congrats to Ms. Jackie.  It must be something in the "name"!
    Be well,
    Jackie

  203. Inkarri19

    That is frackin' awesome Phil.  Good job Jackie!

  204. stjeanluc

    You're welcome Peter! I don't post the update every day as your portfolio moves slower and doesn't require daily attention. I think that twice a week (at least Friday after hours) or after a big day is good enough.

  205. Peter D

    stjeanluc,
    Yup, twice a week is great as it's designed to be a slow mover.  We're all appreciative of your help!

  206. stjeanluc

    And we, your experience and guidance Peter!

  207. stjeanluc

    Everybody is over their 50 DMA and the 5% Down line (actually SPX is really close to the Must Hold line). Technically it's good, but would be better if they were rising DMA! We'll take what we can as they could provide support. Of course, there is that little Fed release tomorrow that could change the game either way.

  208. lflantheman

    Phil…..Very good on BNN

  209. Maya1

    Phil/Lflan/STJ
    Good afternoon.
    Just a note to say hello.
    I am reading the daily posts.
    Sorry have not had much to say lately.
    Sitting, watching the markets, enjoying other things in life, and following yours and Lflan’s trades on the posts without taking part in any yet.
    I sold ALL my AAPL holdings in April…have been selling some premium, mostly puts to earn a little money for booze and cigarettes( just kidding about the last part)…may buy some Jan spreads if I get the opportunity.
    Keep up the great work you all do, with the morning commentary…trade ideas etc, STJ’s daily chart updates, Lflan’s uncanny timing
    Thank you!

  210. ronresnick

    Newbie / Boltdude / Maya1

    Thank you for your questions on BBBW. I just responded on BBBW.

    Ron Resnick

  211. Burrben

    I'd give Jackie $500 to trade with for those grades…. give her a taste of the action!!

  212. stjeanluc

    I guess this confirms the 50 DMA:

    http://www.bespokeinvest.com/thinkbig/2012/6/19/sp-500-sector-breadth-levels.html

  213. stjeanluc

    Something will have to give….

    http://www.bespokeinvest.com/thinkbig/2012/6/19/equities-rally-without-oil.html

    Since its lows in early June, the S&P 500 has now rallied more than 7%.  What makes this rally unique compared to prior rallies is that equities have been rising even as crude oil has done nothing.  Over the last several years, most advances in equities have been accompanied by rallies in the price of oil as well as other assets.  In the current rally, however, the gains in equities have far outpaced the gains in other commodities.  

  214. knightpilot

    Phil

    I have a July 55/70 Bull Call Spread on SQQQ as insurance for a few income portfolio style naked puts. Should I set up a whole new insurance trade or roll this one? I can’t leave the sold call naked.

  215. Burrben

    BNN / GT  -  I wonder if someone out there will actually buy the 10/12.5 Bull CS and sell those 2014 $10 Calls like Phil said on BNN.  "Take that for cutting my time BNN!!!!"

  216. rpme

    A good read on Minyanville. 5 reasons why the Americans are more worried about Europe than the Europeans, by Shawn Wolff. Sorry, could not get the link to work.

  217. Cap

    Stjeanluc -

    I really like the Pivot Point schedules that you and Pharmboy post .

    Is there a way to get a copy of those , or link to those ?

    Thx.

  218. nicha

    Cap – where you been?

  219. silentstorm44

    Cap- good to see your moniker  again.

  220. kurtww

    Good article, rpme!

  221. barfinger

    I believe the Germans are slow to boil, as the article suggests. On the other hand, they are slow to recognize that they are being bled, and at some point the loss of blood will be painful. That the Germans are not worried does not mean they have nothing to be afraid of.

  222. Cap

    Nicha, Silentstorm – thanks.

    Just been too busy, and not enough time in the day I guess to keep up w/ all my resources.

    Playing a lot – too much – defense.

    My market / position focus during the day has limited my ability to post very much, just a bit on the Twitter. I will try to hang out here more

  223. Phil

    Wow, on to Brussells, I guess:  

     

    World leaders meeting for the G20 summit in Los Cabos, Mexico, expressed growing alarm at the failure of European leaders to get a grip on the single currency crisis. The White House made it clear that it would not join in talks for a eurozone rescue package. It urged European leaders to agree on a deal in Brussels next week.

    On Monday night, Barack Obama was due to meet European leaders, including Mr Cameron, to put pressure on Angela Merkel, the German chancellor, to provide more support to struggling European economies.

    Mario Monti, the Italian prime minister, said: “We can see that the markets are not convinced. We must draw up a definitive and clear road map with concrete actions that make the euro more credible.”

    Mrs Merkel indicated that she was not prepared to “loosen” the terms of a bail-out for Greece. Despite her unyielding stance, an official of the New Democracy party said a coalition government would be announced today. Fears were also mounting about the health of the Spanish economy. A full-scale bail-out now appears increasingly likely.

    Also:  

     

    G20 leaders now await a European Union summit next week where European officials say they will launch the long process of deeper integration, starting with a push for banking union, with an aim of finalizing a broad plan by December.

    Canadian Prime Minister Stephen Harper, a critic of Europe's progress to date, said it was now getting to the root of its debt crisis.

    "What will be important, what we'll be watching for next week and going forward will be the concerted, coordinated action that will actually make these things happen," Harper said.

    Financial markets have yet to be convinced about the chances of agreement. Germany has resisted taking on euro-wide financial risks if its citizens have to foot too much of the bill, while others, such as France and Italy, want to move more quickly.

    Although the danger of Greece crashing out of the euro zone eased after weekend elections, risks are mounting that Spain, the euro zone's fourth-largest economy, will need a full-blown international rescue as its longer-term debt yields hover above 7 percent, a level that has forced other euro countries to seek bailouts.

    The tensions over the world economy and the round-the-clock discussions contrasted with the laid-back atmosphere of Los Cabos, a beach resort at the tip of Mexico's Baja California. The summit declaration was drafted at a hotel next to the adults-only, clothes-optional Desire Resort And Spa.

    Very disappointing – I'm not sure we'll hold our 50s tomorrow morning…

  224. zeroxzero

    I agree Barfinger and Phil:  I don't think that the Minyanville "analysis of the German character," suggesting that Germany will eventually get around to throwing itself on its sword for its southern Neighbors is anything but soft-headed optimism, lacking any understanding of the arithmetic involved in Spain and Italy having to pay 6-7% for 10 year money in a recessionary, deflationary world economy.  I hit my all time record short position on the Euro at 3:59 pm today, and tonight I'm damned glad of it, although I was dumb enough to leave some JPM, IBM and AAPL positions on with the faint hope that QE-whatzit might get pulled out of someone's hat.  So good luck to us all if, indeed, "hope" has taken pole position as the strategy of choice for Europe's bewildered governments.

  225. zeroxzero

    http://online.wsj.com/article/SB10001424052702303379204577476562825100498.html?mod=WSJ_hps_LEFTTopStories
    Updated June 19, 2012, 11:23 p.m. ET    "LOS CABOS, Mexico—World leaders papered over their differences after clashing over the euro-zone debt turmoil, deferring concrete decisions to other meetings amid worries about another global crisis."

  226. joel

    Phil,
    The Island of Lana'i Hawaii is for sale.  500 million.  98% of the island as a block sale from  David Murdock ( Cooke & Castle).  There are 2 Four Seasons resorts on the island that are part of his holdings.  Negotiations are going on  now.  If you can finance this fast and jump in the negotiations, it might be the steal of the century.
    (this is a double post, I posted it on the BBBW thread and I know its a long shot but I'm just throwing it out there.)

  227. Phil

    Defaltion/ZZ – I certainly agree with you in terms of infrastructure.  $2.2Tn worth of repairs are urgently needed and we have 12M construction workers out of work.  $400Bn a year pays 8M people $50,0000 a year so 5 years of adding 8M jobs and that money flows back through the economy (and 1/3 comes back as taxes anyway) so you would think, in the scope of a country with a $3.1Tn budget that this would be beyond a no-brainer.  It's not like we can just NEVER fix roads, bridges, tunnels, dams, the electric grid, aqueducts, etc – one day they will completely break and then they will be 10X more to fix anyway.  1/2 the energy we put into the electric grid is lost in transmission – that's 120M homes and businesses with $500 average monthly bills for $720Bn a year spent on electricity, which is also over 20M barrels a month (2 days of imports) of oil.  So upgrading the grid, estimated at $500Bn, would save Americans $360Bn a year in energy costs and cut our imports of oil by 10%.  Who could possibly against such a thing?  Kochs:

     

    The Los Angeles Times has reported that in 2010, Koch Industries and its employees marshaled hundreds of thousands of dollars behind the election of their Republican allies on the House Energy and Commerce Committee, who have pursued their interests in Congress. In fact, nine of the 12 new Republicans on the committee signed AFP’s pledge to oppose President Obama’s proposal to regulate greenhouse gases.

    What is known about the Kochs’ agenda and business practices would give most Americans pause. According to the Kansas City Star, Koch Industries has enriched itself by keeping oil off the market, storing it in offshore tankers and waiting to cash in when the cost of oil rises. The Koch brothers have also been vocal critics of the administration’s investments in clean energy alternatives. Our energy strategy cannot be set by what’s best for the pocketbooks of politically-connected oil and gas executives. It must be driven by what’s best for the American people, our economy, and our energy security.

    TV Schedule/Burr – I hate doing TV.  I do BNN because they are very nice and it's good to have some TV clips around.  I may go up to Toronto to be in studio one of these days – I hate that 1 segment BS – you can't have a proper conversation with people.  

    CHK/Rexx – Very wise!  

    LQMT/Burr – I hope you filled, they popped 25% today to .36 and I didn't even get around to them on BNN.  Fly on the wall figured out why we're bullish so now the cat's out of the bag and it will be time to take the money and run again if they pop.  

    Bonds/Pharm – Things will have to get very ugly for that to happen.  

    Center City/CCS – That's why I'm going with time-share.  People don't think it's strange to pony up $500 for maintenance fees for each week per year.  Whole thing is negotiated anyway when we take a block off their hands – they are sitting on hundreds of empty units.  

    Fed/Rustle – They actually do have a mandate to promote employment and maintain price stability.  Unemployment too high and prices falling means they are almost forced to act.  

    Geithner/Kinki – Actually the pitch was to offer $100,000 that would go direct to the lender to reduce the mortgage in exchange for $125,000 of equity in the home (based on current value).  That would keep people from using it just because it's free money but anyone who wanted to take advantage could reduce their mortgage payments substantially (average US mortgage is $220,000) without taking on more debt of refinancing.  A single-page form could be done at the bank and the bank would get the $100,000, which has the side benefit of injecting liquidity into the system but FROM THE BOTTOM so it helps consumers and the banks at the same time and costs no more than bailing out the banks (where they don't help the people) or these silly modification programs.  Geithner liked it but said it was politically unworkable – what made him laugh was when he asked if we had any more questions and I said "So, does the US still have a strong Dollar policy"  - He fell off his chair laughing…

    I think I can tell you now that I've been back twice since but not allowed to discuss content.  

    Thanks Stockgirl.  

    JPM/QC – I'd play them long unless the whole market fails.  Seemed like Jamie was confident loss would wash in the quarterly report.  

    Done deal/Lolo – That's the kind of thing that makes me really nervous.  

    Thanks Greno!  

    Priestly/Jthome – RevTodd said I can come up and give a sermon in the Fall – maybe I'll make it my new career…  ;)  

    Thanks Micro, Jacalyn, Ink.  

    Big Chart – Right on those lines is a good sign for the 5% Rule – means we're in a nice, predictable range and we can rely on our Big Chart levels.  Takes more than one day over the line to move a 50 dma though – would be nice sign if they act as support now.  

    Thanks Lflan.  

    Hi Maya!  

    Jackie/Burr – She accepts cash as well as checks if you are offering.  Meanwhile, her DIS stock is at record highs so she has plenty of action there.  

    X snuck back to $20.  

    SQQQ/Knight – You still have $1.05 in the July $55s, no sense wasting them.  You can roll those to the Aug $58s at about $2.05 for $1 and that buys you a month with little loss of position and, when the July caller expires, you can sell an Aug whatever for $1 and use that money to roll your calls down or out more in time.  That's how you keep working the insurance to keep yourself in position while spending as little as possible. 

    Calls/Burr – Did I say calls?  Damn!  I don't know what graphics they put on screen at CNN – there's no monitor there like at the Nasdaq.   Last time they did a much better job of outlining the trade ideas.  

    Hiya Cap! 

    Lana'i/Joel – I did always want a private island but was hoping for more of a tax haven.  Might take more than a few days to put together a $500M buy and, even if we could – I'm not sure what I would do with it that would generate $100M a year in profits and, if not – then what's the point?  If we could get an exclusive for a casino there – that would be great but it's the only thing I can think of as Murdock bought it from C&C for $700M in 2000 and is now taking a big loss to get out.   

    Greek islands are much cheaper and very nice. 

  228. kinkistyle

    Geithner/Phil:  It was a terrific idea.  I know you thought he was a nice guy, but the fact that Timmy waved you off right off the bat basically confirmed to me that this Administration wouldn't amount to a hill of beans.

  229. deano

    LCH has raised margins on Spanish government debt

    From the FT:
    LCH.Clearnet has raised the margin, or extra deposit, it requires from clients to hold Spanish government debt, in a move that could have implications for the cost of funding for the country’s banks

  230. Phil

    Good morning!

    Geithner/Kinki – I don't know.  The fact that he realized that he had an obstructionist Congress that would rather flush America down the toilet, in order to make their goal of making Obama a one-term President, than approve a program that might actually help the American people was pretty savvy now that we've had more time to see their track record.  

    Meanwhile, Dude, where's our stimulus?  

    The G-20 leaders, whose nations represent about 85% of global economic output, appeared to recognize the need for urgent action amid risks that euro-zone fears could spark turmoil across financial markets in the coming months. But they found themselves with few options as they awaited action from Europeans. "We will act together to strengthen recovery and address financial market tensions," the leaders said in their joint statement.

    With just four of the euro zone's 17 nations attending the Mexico summit, European leaders sought to defer any major commitments until their meeting in Brussels late next week. They pushed back against the notion that the 27-nation European Union could not solve the crisis on its own.

    In the G20 Communique they essentially promise to do something but no specifics – we're in a very dangerous spot.  

    Dollar still down at 81.50 but our premise is blown and Euro under $1.27 – especially if the Fed fails to deliver so I'm leaning back towards cash or at least some serious downside hedges as we head into a potential disaster.  

    6:00 AM Overseas: Japan +1.1%. Hong Kong +0.5%. China -0.3%. India +0.2%. London +0.1%. Paris -0.2%. Frankfurt +0.1%.

    6:29 AM U.S. stock futures stand level ahead of a highly-anticipated statement from the FOMC due out later today. S&P -0.1%, Dow+0.0%.

    7:00 AM On the hour: S&P +0.04%. 10-yr -0.12%. Euro flat vs. dollar. Crude -0.03% to $84.33. Gold -0.64% to $1612.85.

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    10:00 Mass Layoffs

    10:30 EIA Petroleum Inventories

    12:30 PM FOMC Announcement

    2:00 PM FOMC Forecast

    2:15 PM Bernanke Press Conference

    The S&P has averaged a gain of 0.74% on Fed days since ZIRP began in December 2008, according to Bespoke, with the bulk of those gains coming before the 2:15 ET announcement. How about the tally for 2-day meetings?

    MBA Mortgage Applications: -0.8% vs. +18% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 3.87% from 3.88%.

    As usual, a lot of handshaking but not all that much action from the G-20, where leaders urged European nations to integrate their banking systems and calm financial markets but deferred concrete decisions to future meetings amid worries of another crisis.

    German PPI -0.3% M/M in May and +2.1% Y/Y. Economists has expected -0.2% M/M and +2.3% Y/Y.

    Forget EURIBOR And Basis-Swaps; EUREPO Curve Inversion Signals Major European Funding Stress. (graphs)

    A consensus begins to form in hedge fund land where managers – apparently all using similar models – are busily agreeing with each other that German bond yields are set to soar. They're already on the move, the 10-year Bund hitting 1.53% today, sharply higher than the panicky bottom of 1.13% touched on June 1. 

    This can be a problem very quickly:  Japan's trade deficit widens to ¥907.3B ($11.47B) in May from ¥520.3B in April and vs. consensus of ¥520B. Exports +10% Y/Y and imports +9.3%. Most notable is Japan's ¥11.1B deficit with the EU, the first since records began in 1979. Shipments to EU -0.9%, to U.S. +38%.

    The BoJ says Japan's investments and acquisitions in foreign countries hit an all-time record during the March 2011-March 2012 fiscal year. Much of it has to do with a strong yen, which, while hurting exporters, has also led to an 18% jump in direct overseas investment by private-sector firms. The year also marked a rise in the private sector's bank borrowing, the first such gain in three years.

    Japan's economy will return to modest recovery in the coming months, according to BOJ minutes (.pdf) released today. Members of Japan's Monetary Policy Committee also pointed out there is inherent risk in abruptly hiking long-term interest rates after years of eased conditions. [

    Singapore, Hong Kong and Taiwan are likely to take Asia's biggest economic hit in the event of a Grexit or a eurozone collapse, writes Credit Suisse economist Robert Prior-Wandesforde, as those are the region’s most open or export-dependent economies. A Grexit could knock 2.2-2.3 percentage points off of GDP, while a eurozone implosion would shave off 4.6-6.7%.

    G20 summit: perils of a half-baked rescue for Spain and Italy. Germany and France are doubling up on a high-risk gamble. The tentative deal at the G20 summit to mobilise the EU's rescue machinery to douse the raging fire in Spain and Italy comes in the nick of time, but is fraught with fresh dangers.

    Leaders from France, Germany, Italy and Spain will discuss on Friday using the €750B in the EU's two rescue funds to bail out the latter two countries by buying up their debt on the financial markets in an attempt to push down borrowing costs. If Germany agrees, it would mark a substantial shift in policy.

    Purchasing the sovereign debt of EU states is already allowed by the charters of both the EFSF and the ESM, notes Joseph Cotterill, wondering about the fuss over the rumor that Germany will agree to such. By the way, the ESM has not yet been ratified. 

    LCH Raises Margin Costs for Trading Spanish Bonds Amid CrisisLCH Clearnet Ltd., Europe’s biggest clearing house, raised the extra deposit it takes from clients to trade most Spanish government bonds as concern mounts that euro-area leaders are failing to tame the debt crisis. The margin needed for Spanish securities due in 10 years to 15 years will be increased to 14.7 percent from 13.6 percent, according to a statement on LCH Clearnet’s website yesterday, which was confirmed by Rachael Harper, a spokeswoman for the company. The rate was also boosted on all Spanish debt due from zero months through seven years.

    Moody's lifts Turkey's rating to Ba1 from Ba2 and maintains its positive outlook thanks to improvements in the country’s finances.

    Subbarao: India's Inflation Rate Is Disturbing. (video) Indian inflation exceeds acceptable levels and restraining it may require sacrificing economic growth, central bank Governor Duvvuri Subbarao said.

    The fiscal cliff may be six months away, but it is already affecting the United States economy, says MarketWatch's Irwin Kellner. In the last few weeks we've seen weaker May retail sales, factory output declining and goods piling up in warehouses, and jobless claims jumping sharply. It's no surprise that consumer sentiment is down, and unless the current law is changed quickly, its going to get worse – big time – come year-end.

    Henry Paulson says the U.S. will muddle through the European debt crisis relatively unscathed "with growth that really isn't enough to make a dent in employment." About the next financial crisis, regulation isn't the answer, he says: It will never be enough "because unless you think the banks are trying to blow themselves up, you’re never going to uncover all the problems in advance."

    Forget about QE3, says Dick Bove. Unleashing the power of the American banking system will do more to stimulate the economy than throwing cash to the wind. Removing capital and liquidity requirements for banks would get lending rolling again and stimulate activity, Bove asserts. "Lowering interest rates to zero and printing more money are not effective options."

    A CFTC subcommittee is expected to propose today a broad, 60-word definition of high-frequency trading, a blow for traders who had hoped the CFTC would take a narrower view in imposing regulations on the oft-maligned industry.

    Better late than never Gartman!  There's been a big shift in the mechanics of gold trading lately, observes Dennis Gartman. For the past four to five years, the spot price of gold has risen while gold miners have languished, but no more. Recently, gold mining stocks have outperformed the advance in the yellow metal, which Gartman sees as a positive sign that the rally in spot gold may have legs. How to play it now? He recommends buying the Market Vectors Gold Miners ETF (GDX). 

    Ow, my wrist!  Six refiners agree to pay $21.6M to settle a class-action complaint that they were charging normal prices for fuel that had expanded in volume because of high temperatures and thus contained less energy per gallon. BPVLOCOPXOMRDS.A, Citgo and Sinclair Oil had been defending themselves for five years against the "hot fuel" case. 

    Valero Energy (VLO +5.2%) shares post strong gains after UBS upgrades its stock rating to Buy from Neutral, viewing the current level as an attractive entry point after falling 13% since February. The firm sees the upcoming completion of a hydrocracker project at VLO's Port Arthur refinery setting the stage for reduced capex and a $1.9B increase in free cash flow.

    Chesapeake (CHK +5.6%) says it will cut 8% of its workforce at its prolific Barnett shale field in Texas as drilling slows, and will entertain offers on its Fort Worth office tower that it bought for $100M in 2008. CHK has pledged to sell up to $11.5B in assets this year to fill a projected $4B-$5B shortfall. 

    Even The Airports In Europe Are Bizarrely Empty.

    P&G (PGcuts FQ4 guidance, citing slower-than-expected growth in developed markets and forex fluctuations. P&G forecasts adjusted EPS of $0.75-$0.79, vs. prior guidance of $0.79-$0.85 and consensus of $0.82. Net sales to fall 1%-2% vs. +1%-2% prior. For FY 2013, P&G predicts a percentage increase in profits of flat to mid-single-digits. (PR)

    IDC expects global PC sales to rise 5% this year to 382.6M. Most of the growth is expected to come from a 12% increase in emerging markets notebook sales – just 1.7% growth is expected for developed markets. This works to the benefit of Lenovo (LNVGY.PK), which has been picking up share, and to the detriment of Dell (DELL), whose PC ops just had a dismal quarter. In spite of tablet cannibalization, IDC is staying positive about 2013, estimating PC sales will rise 8.1%.

    More on Adobe's FQ2: Deferred revenue rose $43.9M Q/Q to $592.8M, and digital marketing sales (boosted by acquisitions) rose 35% Y/Y. Citing weak Euro demand, Adobe expects FQ3 revenue of $1.075B-$1.125B and EPS of $0.56-$0.61, mostly below a consensus of $1.13B and $0.61. It expects FY12 revenue growth of 6%-7% and EPS of $2.40-$2.46 vs. a consensus of 6.6% and $2.44. FQ3 guidance could heighten concerns about the transition to a subscription model. ADBE -4.7% AH. (PR)

    Facebook (FB +1.6%) closes higher yet again: shares have rallied 25%  from their June 6 low, though remain down 16% from their $38 IPO price. Helping their cause was a positive note from Susquehanna's Herman Leung, who praises Facebook's plans to allow premium ads to be purchased via its site. Leung notes the rates for premium ads can up to 30% above the rates for regular ads, and that Facebook is only selling 70%-80% of its premium inventory. (earlier)

    Another victim of AAPL:  Barnes & Noble (BKS -4%) finished lower following its FQ4 report, as the Street registered its dismay with declining Nook hardware sales. The results suggest B&N is a victim of Apple (AAPL) on multiple fronts: not only is the iPad making life difficult for all would-be tablet rivals, it's quickly eating into the e-reader market. IDCrecently predicted e-reader shipments would fall slightly in 2012, while tablet shipments grow nearly 60%.

    Though analysts are impressed with Microsoft Surface (MSFT +3.7%), few see it as a huge threat to the iPad (AAPL +0.6%). Jefferies' Peter Misek thinks Microsoft will need to "significantly undercut" the iPad on pricing (something that's unlikely given its specs) to be competitive, and argues the iPad's 225K+ apps set it apart. However, Forrester's David Johnson believes Windows RT's management features, user interface, and Office support will appeal to enterprise users.  (more

    IPad Boom Strains Lithium Supplies After Prices Triple. Investors from JPMorgan Chase & Co. to BlackRock Inc. are trying to make money from the exploding popularity of iPads and increasing sales of hybrid cars by investing in producers of lithium for batteries. Prices for the conductive metal, the lightest in the periodic table, have tripled since 2000 in a market now worth $1 billion a year as uses expand in vehicles, ceramics, electronics and lubricants. Apple Inc. (AAPL) and Toyota Motor Corp. (7203), maker of the Prius electric-gasoline car, have few alternatives as they pursue higher performance and mobility, leading Dahlman Rose & Co. analysts to forecast lithium demand will double by 2020.

    Guest Post: Who Destroyed The Middle Class? (Part 1).

  231. Burrben

    Can we please open right now???  Futures up, AAPL up, I want to sell those FAS spreads and AAPL Calls into the excitement before it dies!

  232. Phil

  233. Phil

  234. knightpilot

    Phil/ SQQQ
    Thanks!

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