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Which Way Wednesday – 50 DMAs Face Tough Tests

Saved by the 50 DMA's!

Who said investing is hard?  4 of our 5 major indexes fall in synch and stop dead at the 50 day moving average that we've been watching on our Big Chart for over two months now as bullish support.  Yawn… 

Of course, if you think this can possibly be result of individual decisions made by millions of global investors than it's you that need to wake up.  This is a completely machine-driven market and that's a GOOD thing if you follow our charts, as they give you very clear indications of all the major inflection points.

I'm not at all a TA guy – I merely accept the fact that the markets are fixed and the moves are coordinated and we set our points accordingly according to our 5% Rule, which works best in Bot-driven markets.  Since we only adjust our Big Chart once a year or less – it lets us dispense with all that TA BS in less than two minutes a day and move on to more important things like – FUNDAMENTALS! 

SPY DAILYWhat we can do, however, is combine our view of the Big Chart with some fundamentals to figure out what the market will do at serious inflection points.  Note on Dave Fry's SPY chart, we get a good view of the weak 50 dma. 

Before we despair, however, look at that upwardly jammin' 200 dma – that sucker is going to pop the index like it was hit with a tennis racket at right about 1,320 in about 2 weeks so we have a jittery sell-off in a choppy early earnings season to look forward to and then something good happening at the end of the month to spark a rally

Oh sorry, I planned to conclude with that but it's so freakin' obvious – why waste time with exposition? 

Going back to the Big Chart, you can see on the S&P (and the others) that we still have a constructively bullish "M" pattern where the lows are lining up in an up-trend that mirrors the rising 200 dma.  Obviously, if we fail to hold these 50 dmas – the next stop is that 200 DMA, which is generally intersecting the 2.5% lines on each index but forget those – it's all about the NYSE, which is our broadest index and is already testing its 200 dma AND the 50 DMA at 7,650 – so there's an easy line to keep our eye on for a market pass/fail indicator. 

Fundamentally, we have to ask ourselves WHY the NYSE should hold 7,650 as well as asking ourselves why the NYSE should fail to hold 7,650 and, when we have a preponderance of evidence on one side or the other, we shift our bets. 

When we made our double-top in early July, we flipped bearish as there simply wasn't enough good news to justify that run.  Now we have to decide if there is enough bad news to justify returning to the top of the V panic sell-off we had in June. at about 1,320 on the S&P and 7,500 on the NYSE.  Have we really made no fundamental progress in over a month?

Sadly, the answer there may be no.  Just this morning, Spain's PM Rajoy announced another $81Bn in deficit savings by raising taxes and cutting unemployment benefits for the 22% of the country that are out of work.  The taxes are VAT taxes, which disproportionately impact the poor and the soon-to-be-much-poorer unemployed.  Apparently, we are still entertaining this completely insane austerity BS as the cure-all for whatever ails the EU so no, we have not made any progress since the crash of early July – our "leaders" are still completely insane and we can expect riots in Spain any day now.

Meanwhile, Germany's Parliament has pushed back until September a decision on whether or not the ESM is contstitutional (from Germany's perspective) while Spain is pushing back the planned stress tests on their 14 largest banks until November.  Meanwhile, Spain is rumored to be buying a very large dog so they can later claim it ate their homework next time they need to delay something. 

Portugal's international creditors may soon have to ease terms of the country's bailout to prevent the plan from derailing as the government faces setbacks in attaining its deficit goals. Prime Minister Pedro Passos Coelho's struggle to meet deficit pledges were further hampered last week when about $2.5 billion of planned cuts to pensions and civil servants' holiday pay were ruled unconstitutional. With Portugal's 10-year bond yield above 10%, returning to the markets next year may be untenable, requiring more international aid despite the premier's insistence he won't seek concessions 

While all this is going on and with the fiscal cliff looming, our Conservative friends will be happy to know the Republicans in Congress will be voting to repeal the Health Care Reform Bill.  This will be the 31st time the House has voted to repeal all or part of the bill and it will be the 31st time the Senate rejects them but the GOP continues to display gross constitutional ignorance as they do it yet again today.  Or, perhaps they are not ignorant and simply don't care that they have wasted 31 days of Congress' time (and countless hours of staff time at the taxpayers' expense) in order to score cheap political points – we report, you decide

What the GOP is being successful at is blocking the extention of the Bush Tax Cuts to 132.5M American taxpayers who earn under $250,000 a year in order to force an extension of the tax cuts to 1.5M Americans who make $250,000 or more per year – including just 3.5% of all small businesses – contrary to all the BS you hear from the MSM.  Well, we got Health Care Reform over the GOP's dead body, perhaps we can also get tax cuts for 99% of Americans over their dead bodies as well…

EDZ (see Monday's post for our trade idea in that ETF) continues to fly as we wait for the International shoe to drop.  Even yesterday, we added a modified version of the trade to our Aggressive $25,000 Portfolio, which only had a so far losing F trade remaining so we're very bearish at the moment but in no mood to bottom-fish for balance unless our levels hold.  The $25KPA is up a virtual 24.6% as we move into month number 2 and we're pretty much all cash:

That's what cashy and cautious looks like folks – we don't know (or care) which way the market is going to run - we just look for opportunities to buy low and sell high and get the hell back to cash as soon as we realize a small gain.  Do that over and over again and it does tend to add up but we can also sleep well at night and that's worth more than cash these days!


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  1. stjeanluc

    Oil Lines

    R3 – 87.87
    R2 – 86.91
    R1 – 85.57
    PP – 84.61
    S1 – 83.27
    S2 – 82.31
    S3 – 80.97

  2. Phil

    CNBC round table being schooled by Paul Krugman.   Sorkin can't believe someone can shut Joe and whatshername up with their conservative clap-trap.  Too bad they only gave him one segment while their conservative guest is on all morning. 

  3. stjeanluc

    Mid-week update for Peter's portfolio…

  4. stjeanluc

    CNBC / Phil – It's amazing that once someone starts rebutting their talking points with facts, they have nothing else to offer…

  5. stjeanluc

    Speaking of talking points and facts, Obama's tax reform will impact small businesses after all … 3.5% of them:

    http://tpmdc.talkingpointsmemo.com/2012/07/obama-tax-plan-small-business.php

    In its latest estimate last month, Congress’s nonpartisan Joint Committee on Taxation found that in 2013, just 3.5 percent of small business tax filers would pay a higher rate — about 940,000 individuals, many of whom are lawyers and doctors in partnerships. But those few percent account for 53 percent of all small business income.

    There is a myth about small businesses that will not die. A large majority of small businesses are "mom and pop" shops that will never come close to making $250K a year. Look at the figures – 3.5% of small businesses bring in 53% of all the income. But it makes for great talking points…

  6. Pharmboy

  7. Savi

    Good Morning
    qcmike—did not get your e-mail

  8. qcmike

    Savi 


    what is the correct  e mail address  ?
    thanks

  9. pat_swap

    I guess the pattern will follow. A slight pop in the morning and then the markets will drift down during the auctions and then again a recovery (maybe). TLT may keep rising till tomorrow But i have seen that markets start going up during the final auctions. What is the size of the 30 year auction? If it is not too big then the push can start sooner than later (of course if there are any positive news in the market)

  10. 1020

    Good Morning!

  11. Savi

    qcmike—-savi_ted@hotmail.com

  12. qcmike

    Savi
    thanks email on the way 

  13. stjeanluc

  14. stjeanluc

  15. samz3700

    Phil – German court - WSJ says court decisions pegged at three weeks based on length of time for previous decisions like this. FWIW

  16. Pharmboy

    LEN – buying more puts on them.  Aug 29s.

  17. stjeanluc

  18. diamond

    Phil – More vacation time! :-)
     
    "A fascinating FRBNY study shows nearly all of the S&P 500's return since 1994 has been earned in the 24 hours prior to scheduled FOMC announcements (which occur just 8 times per year!). Going further, excluding the 3-day window before and after scheduled FOMC announcements yields a flat S&P over the last 28 years."

  19. Savi

    fyi——-pcx options trading —just got out

  20. morxlntway

    Pharm – looks like we coulda got some PLX cheap this morning.

  21. Pharmboy

    SDS Sept $19 Calls and Puts….Someone is making a wager….and I like it!

  22. Pharmboy

    morx – just a little dip.  YMI is where the action is right now.

  23. samz3700

    Diamond / FOMC – that's really interesting – wish I had read it before I got short yesterday. 
    I wonder how much FOMC meetings since 2009 contributed to the findings because I think the moves have been larger since the financial crisis – anyone feel free to correct me.

  24. lflantheman

    MoMo trade…I sold 3  PCLN 645 this weekly puts for 4.00. 

  25. newt

    FLAN/ AAPL: last night we talked about adding to the AAPL620 calls for $20 or better- outside of the MoMo- Still a good idea?

  26. Phil

    Good morning!

    Short day for me as I'm off to LA this afternoon.  Vegas has flown by, the kids couldn't believe we've been here 6 days already.  We got upgraded to a totally kick-ass suite at the 4 Seasons and I don't want to leave either.  My room has a view of the Airport with helicopters flying below my window all the time (38th floor of Mandalay Bay tower) and the kids have a fantastic view right up the middle of the strip - Maddie moved her bed right to the window and goes to sleep looking out at the lights. 

    Although down the strip from most of the action – I highly recommend the 4 Seasons for people who aren't focused on gambling.  If you have AXP fine resorts program, you get upgrades and free breakfast and round-trip to and from airport – all good stuff!   Without the kids in November though, I'll more likely be back at Caesar's as they are more central and have better poker. 

    Anyway, the markets – well this is just silly.  Same BS as we just ran yesterday (see my note from earlier this morning) so what is there to say.  Rumor, rumor, BS, rumor, rumor – wash, rinse repeat…

    Fed minutes are key at 2pm but Bernanke already just said no to QE3 and we are way up in the markets since he said that so what would have changed?  If we do get a rally, it could be a good chance to short AMZN, MA, V, DIA and the RUT as we still have 30-years to peddle tomorrow.  10-year is at 1pm with $21Bn to sell there and oil at 10:30 should be fun (oil now $85.25).  I'll be here until noon (EST) but then I have to start packing.  Back to "normal" tomorrow and Friday and Monday's my last day of the trip and back at the command center next Tuesday.

    9:31 AM At the open: Dow -0.01% to 12652. S&P -0.04% to 1341. Nasdaq -0.19% to 2897.
    Treasurys: 30-year +0.07%. 10-yr +0.02%. 5-yr +0.04%.
    Commodities: Crude +1.3% to $85. Gold -0.49% to $1572.05.
    Currencies: Euro +0.04% vs. dollar. Yen -0.26%. Pound -0.29%.

    Market preview: Stock futures are flat-to-higher after the trade deficit hits expectations and ahead of FOMC minutes, when the focus will be on how easygoing the Fed's going to get. The S&P benchmark is +0.15%. Corn futures are surging after the the USDA lowers its corn forecast. hhgregg is getting battered 30% following its profit warning yesterday. Later: Wholesale Trade

    A fascinating FRBNY study shows nearly all of the S&P 500's return since 1994 has been earned in the 24 hours prior to scheduled FOMC announcements (which occur just 8 times per year!). Going further, excluding the 3-day window before and after scheduled FOMC announcements yields a flat S&P over the last 28 years.

    Pension funds might consider going back to the old days of holding 60% of assets in equities and 40% in bonds as the classic strategy has whipped hedge fund performance for the last 5 years. Nevertheless, Citi sees institutional investors continuing to pour money into hedge funds. It's tough for a Vanguard brochure to compete with fancy dinners and a round at Shinnecock.

    The price for Spain's bank bailout looks set to be high politically as well as financially: the government will reportedly be forced to cede a significant amount of oversight to the EU, while local investors, who include a huge number of ordinary citizens, will have to share the losses. Senior bondholders, though, may be protected.

    Data out of China suggests that automobile sales remain a bright spot with first-half sales up 7.1% and trending strong right through May and June. Though the reports only track inventory, not sales, analysts forecast demand to remain above 8% for the rest of the year. General Motors (GM), Ford (F), and BMW (BAMXY.PK) could expect even higher numbers after posting double-digit Y/Y gains for China auto sales in June.

    Chinese passenger car sales rose 16% to 1.28M units in June vs. estimates of 1.27M. Analysts caution the bump could be from manufacturers stuffing dealerships with a lot of inventory ahead of summer factory shutdowns. There's also cities like Guangzhou – which imposed a quota on new vehicle registrations – and saw a mad rush of buying ahead of June 30.

    Two federal lawsuits have been launched against Scranton, PA after the city's decision to slash municipal employee pay to the minimum wage. Mayor Chris Doherty says the city has run out of money as he and the council have been unable to figure a way to fill a $16.8M budget gap. (earlier, San Bernadino files for bankruptcy)

    Not totally unexpectedly, the USDA lowers its corn forecast 12% to 12.97B Bushels; the projected yield is cut 20 bushels/acre to 146 bushels, "reflecting the rapid decline in crop conditions since early June and the latest weather data." Corn prices surge in response.

    Jim Cramer dampens some of the excitement surrounding Arena (ARNA -4.1%), saying that the company's Belviq diet drug won't make as much money as people think. Cramer notes that Arena will receive just 40% of the revenues from treatment, which is anyway not as effective as initially thought, nor as good as Vivus' (VVUS) yet-to-be-approved Qnexa.

    Bank of America (BAC) efforts to help 60K homeowners slice a large chunk of principal of their mortgage balances are falling short of expectations as more than half haven't responded to mailings from the lender. Other large lenders are reporting far better success, suggesting some truth behind anecdotal reports of the difficulties of dealing with BofA.

    Best Buy's (BBY) new plan is Canada will see the retailer open smaller stores and jump into non-core categories online in addition to launching a new price-matching program. The company will open stores in the nation with closer tie-ins to its website and reduce the size to closer to 5K square feet, instead of the 25K-36K square foot behemoths in play right now. BBY -4.4% premarket, after hhgregg guidance cut.

    Farnborough: Alcoa (AA -0.2%) wins multiyear agreements worth $1.4B to supply almost all of Airbus' commercial programs. Senior Alcoa exec Olivier Jarrault says Boeing's use of carbon composites in the 787 pushed the aluminum company to develop "break-through technologies that are surpassing what composites can offer."

    Farnborough: Boeing (BA) picks up another deal for its next-gen 737 jets, with Dublin-based leasing firm Avolon ordering up to 30 of the planes in a booking worth $2.3B at list prices. Away from the airshow, United Airlines (UAL) is expected to announce a $9B booking for 100 737 MAX aircraft tomorrow, Reuters reports.

    Harley-Davidson (HOG -4.1%) falters a bit after Citigroup comes out with a note forecasting the company's motorcycle sales may have slowed down in June. Though Q2 sales growth is now estimated to be in a 4%-5% range, compared to the stellar 26% pace in Q1, the up-and-down nature of motorcycle sales has analysts keeping a bullish tone on the name for now.

    IMAX continues to enter new markets in China after signing a new deal to add theaters that will take its tally in the nation up to 229. It's an interesting strategy in the nation, but not uncalled for after the government loosened regulations on Hollywood films. In fact, U.S-China relations appear cozier in the film industry than in the political arena after AMC Theaters was snapped up by conglomerate Dalian Wanda.

    Shares of Abercrombie & Fitch (ANF) move up 5.2% premarket with a report out saying the retailer plans to make a big buyback and scale back in Europe.

    More on Google: iSuppli estimates the $199 version of the Nexus 7 tablet costs just $152 to manufacture, and that the $249 costs $159. The former figure is well below the $184 estimated by UBMTechInsights, and suggests the 7 could be profitable for Google even after taking into account other expenses …. particularly if revenue from mobile ads and other services are thrown into the equation. Now all that's left is for a mass-market to emerge for the device.

    Microsoft (MSFT) and Google (GOOG) agree to stay 3 patent suits until the matter of Google's FRAND licensing obligations for standards-essential patents is resolved. A trial won't begin until mid-November, and appeals could take months. However, the stay doesn't cover Microsoft and Google's ITC disputes, which have resulted in Android and Xbox bans flying left and right. Congress has just taken up the issue of FRAND obligations.

  27. jyoti

    Phil, good morning. I need some advice. I am sitting on a VNR July 30 call. Any ideas how I could salvage this position?

  28. sagemm1

    Phil looking at USO Jul 32 puts…seems like a pump before inventories?

  29. lflantheman

    newt….again, it depends on your portfolio.  If you have no long AAPL then a new position could be profitable.  But remember, FED at 2 pm, earnings on the horizon in a couple of weeks.  These things move AAPL and the markets, so  position properly and make your play according to your own risk tolerance. 

  30. Phil

    Thanks for link on talking points StJ – came in just in time to use it in post. 

    FAS Money – Let's buy back the July $70 puts for .30.  Not that I think they will trigger, just to free up the space to sell something more aggressive into the next dip.  Let's call the target selling 2 July $75 puts for $1 (now .70).  I know it doersn't seem like much but it's another $140 in 8 days and the point is to learn to work these spread positions.  These little things really add up over time. 

    3 Weeks/Samz – Sounds optimistic to me.  I read something more detailed with the politics behind it that I can't find but got the impression there was no way they are going to rush this. 

    Vacation/Diamond – That's what I was thinking. 

    Congrats Savi.  See, not panicking and being patient is generally a good strategy.  I wonder who they hell bought those from you?  I guess they figured paying a little less than the fulll strike now is better than paying it all later. 

    FOMC/Samz – I agree.  Haven't looked at the study yet but maybe the details are there?

    AAPL/Newt – I'm a bit worried expectations are too high for earnings. 

    Oil down 4.7Mb but gasoline up 2.8Mb as we expected and distillates up 3.1Mb so bearish overall build.  Means we can short /CL if they cross below $85 with tight stops but maybe a false move up first on the headline draw in oil (now $85.34). 

    10 USO July $33 puts at $1.33 in both $25KPs! 

  31. Phil

    If I'm right about oil, it will drag the whole market down so watch that!

  32. lflantheman

    MoMo….I've reduced the AAPL position size by 1/2.     5  of the Aug 620 calls sold for 18.77.   Why?   "When in doubt (about what you see occuring) sell 1/2"……Phil.        

  33. Phil

    VNR/Jyoti – LOL, they are .05, what is there to salvage.  What you can do is make an 8×10 glossy blow-up of this trade and put it up near your computer where you can see it every day – circle the worthless expiration value and write in big, red letters – DON'T BUY PREMIUM – SELL IT!!!  Then at least you can salvage some educational value from it. 

    It's not that we never buy premium but, when we do, we know we are being idiots and we maintain very itchy trigger fingers looking to get out of the position.  When you are the sucker burning premium on out of position options, then every tick of the clock is costing you money and if you are not right in short order – waiting and seeing is not likely to be much help.

    USO/Sage – Good call. 

    AAPL/Lflan – That's good as I do have my doubts.  If they really bang down, then I'll like them long but, otherwise, I'm hoping they miss the whispers and drop back to $555 so I can get in again. 

    Oil fighting hard to stay over $85 – good for fills on USO puts at least.

  34. diamond

    AA is on SALE!!! Selling Jan14 $8 puts!!! :-)

  35. lflantheman

    MoMo….I sold the other 5 AAPL 620s for 18.50….

  36. lflantheman

    see above…….I'm not liking what I see, and I have to follow my trading rules…..this one is " cut losers quickly".   Right now, AAPL is acting poorly.   We cut it, take the loss, and move on.   I am "AAPL cash" and looking for other trades.  And notice, no emotion about this whatsoever.  

  37. jerconn

    Lflan, how are you liking AMZN at $218?  I suspect they still have a ways to go down…

  38. lflantheman

    MoMo trade:     LULU puts     August 55…..50 at 2.88
    jerconn……I'm hesitant to establish AMZN as a long right now. 

  39. gucci

    iflan — is it selling 50 puts thx

  40. Pharmboy

    If he is selling those puts, he is crazier than a June bug flying at low altitude over a major highway…..That chart is horrid.

  41. 1020

    Phil – You may want to consider some motion sickness pills as a precaution when leaving Vegas. The high temps and cool atmosphere can make for a very bumpy ride when flying out…..

  42. Inkarri19

    And don't forget to wear light clothes as it is going to be triple digits in LA.

  43. jomptien

    LEN/Pharm,
    I was looking for a put to buy now and took your Aug 29, looking good

  44. sagemm1

    Bucky is flying!

  45. Phil

    AA/Diamond – I agree, great long-term hold.

    10:00 AM On the hour: Dow -0.04%. 10-yr -0.04%. Euro +0.27% vs. dollar. Crude +2.1% to $85.67. Gold -0.04% to $1579.15.

    11:00 AM On the hour: Dow -0.43%. 10-yr +0.05%. Euro flat vs. dollar. Crude +1.11% to $84.84. Gold -0.31% to $1574.95.

    EIA Petroleum Inventories: Crude -4.7M barrels vs. consensus of -1.3M. Gasoline +2.8M vs. consensus of -0.4M. Distillates +3.1M vs. consensus of -0.5M.

    How many FOMC members expect additional easing, and in what form is one of the questions Goldman's Jan Hatzius expects to see answered in this afternoon's FOMC minutes release. He's also looking to see if there was discussion about changes in forward guidance, i.e., pushing ZIRP all the way into mid-2015.

    Goldman cuts its Q2 GDP forecast twice in one morning, the wider (after stripping out oil) trade deficit and lower wholesale inventories each good for a 0.1% reduction, bringing the growth estimate down to 1.3%.

    Doug Kass wonders whether weak sentiment works as a contrarian indicator anymore, listing a slate of perfectly sensible reasons for folks having low expectations for stock returns. Of course, at market extremes (low or high), the reasons always seem sensible. It sounds like Kass answered his own question.

    OPEC leaves its 2012 forecast for growth in world oil demand at 0.9M bpd but expects that growth to slow to 0.8M bpd next year due to the weakening global economy. In its monthly report (.pdf), OPEC says total OPEC output fell 106K bpd in June to 31.36M.

    Wouldn't you think this is a pretty bad overall sign for the economy? Office Depot (ODP -5.6%) sinks lower after Bernstein Research downgrades shares to Market Perform from Outperform on revenue concerns. Peers Staples (SPLS -2.2%) and OfficeMax (OMX -2.1%) are also taking on water from a Bernstein ratings cut.

    Lululemon (LULU -1.2%) trades lower after an appearance by the stock on Mad Money's lightning round fails to invigorate buyers. The big picture on LULU is that continues to be tagged as a "momo" stock with risk-off implications, which Cramer says gives investors a chance to profit with deep in the money calls 6 months out.

    Adtran (ADTN -14.3%) plunges after reporting Q2 revenue of $184M (down slightly Y/Y) and EPS of $0.38; the latter beat by $0.03, but the former missed by $6.2M. Much like Acme Packet, Adtran blames a tough telecom capex environment for its woes. The company is guiding for Q3 revenue to be flat to slightly up Q/Q (consensus is for a 20% increase), and says poor visibility leaves it cautious about the near-term. Down in sympathy: CIEN -7%. CALX -6.4%. TLAB -1.7%. (PR)

  46. lflantheman

    gucci/LULU   …..no…I'm not selling puts.  I'm buying (and have bought) the August 55 puts.  I'm shorting it.  As Pharmboy says, the chart looks horrid.   

  47. Savi

    pharm—lol

  48. Phil

    Motion Sickness/1020 - Not too worried, we've been practicing on roller coasters all week.

    Heat/1020 – Can't see how LA can be worse than here and we've been marching up and down the strip all week in the heat. 

    Wow, 83.65 on the Dolar – same as yesterday's spike but that wasn't until near the close.  Euro at $1.2234 – if $1.22 fails, we're in a nasty spot.   Pound holding $1.55 so far with Europe closing soon.   Yen way up at 79.71 and EUR/CHF down to 1.2007 so they are really pumping trying to hold $122.

    On the whole, our markets are holding up well in face of a big Dollar move up but, as I said earlier, if we fail those 50 dmas – look out below. 

     

  49. 1020

    Phil/Heat  Not to worry….
    http://www.weather.com/weather/5-day/Santa+Monica+CA+USCA1024:1:US

  50. Savi

    Pharm—would you add to YMI on the pull back or wait—-thanks

  51. 1020

    Phil/roller coaster   Ohhh yeah, you've never experienced Southwest's "Big Dipper"….. :)

  52. Lincoln

    Phil or anyone: TLT
    How does the fact that TLT pays out aprox $.27 monthly affect the price of puts and calls 18 months out.  Does that make the puts relatively more expensive by that amount and the calls less?  TIA

  53. Pharmboy

    YMI/Savi – I would sell the Jan 13 $2.5 puts for 85c or better.  Otherwise, just wait.  We have a nice, tidy profit on them, and I think they are yanking it around b'c it is a 'dollar' stock.  In the 1.80s, I would start accumulating again.

  54. scottmi

    AA/Phil – other than sell 2014 $8 puts on AA, would you do a buy/write on them now for LT hold or is cashy still overrule this?

  55. Lincoln

    LULU and Cramer,  guess that means it's safe for me to start rolling my short Jan 13 calls lower :)

  56. l4real

    Phil / L.A.
    Very hot! Light clothes and a respirator!

  57. Savi

    Thanks Pharm

  58. l4real

    Phil / L.A.
    Mid eighties! Not so hot but respirator still a good idea! LOL

  59. snow

    Cars in China: I wonder how long the fad will last. Koreans did this in the 90s – everyone with the bucks decided they had to have a car, and shortly there were dandy traffic jams. But although people would say things like "we have to have a car", for the most part it simply isn't true, and people have now mostly realized that. Cars have recently become much more costly to keep going.  They also value the fact that at least one of the ways they've always stayed in shape is by walking a lot, and the public transportation in Korea is superb. Train, bus, and subway schedules are right there on your smartphone, and you can keep your transit card on your smartphone as well. The bullet trains are exceedingly cool, and the metro subways are great. So in the last 5 years or so car fever has faded a lot, and since Korea is a group culture, these ideas can be very powerful. I would guess the same thing will happen in China, maybe ten years down the road.

  60. palotay

    Phil/AAPL – Right now analyst expectations are 10% above Apple's revenue guidance.  Apple has always beat their guidance by 13-18% since they dropped subscription accounting in 2009.  In Q4 2011 they missed the analyst expectations, because the analysts were expecting a 20% beat, which was higher than Apple had ever beat since 2009.  The analysts had it wrong that time.  Apple beats their guidance in a very consistent way, and the analysts totally screwed it up.  Since the miss, Apple has gotten more conservative in their guidance, to avoid another miss on analyst expectations.  Since Q4 2011 earnings, Apple has beaten (this more conservative) guidance by more than 20% each time (20.59% and 25.22%).  
    With this in mind, it seems pretty clear that Apple is going to blow out analyst expectations again.  
    My prediction is that they are going to beat by a wide margin, gap up the next day, and that will be the short term high for the stock for awhile.
    (This analysis was on another site that I follow, and I'm not trying to take credit for it.)

  61. Pharmboy

    Many biotechs are getting hit a bit hard FWIW.  SGEN, YMI, AVEO.  EXEL looks like it wants to break out.  Buying some Feb $5/8 BCS for 75c.  May have to increase this slowly…..b'c the spread at the $5 is wide.

  62. i zega

    VIX and UVXY not confirming fears that this might break to downside?

  63. Pharmboy

    Cramer also pounding on the table that ARNA's drug won't have high revenue streams…Duh!  Read PSW!  VVUS is better, of course it is….but I still pound the table it gets rejected….now, I am either right or wrong, but I still think the risks outweigh the benefits of having an antipsychotic/antieplieptic as a drug for weight loss in subjects.  Especially when memory and concentration problems are a side effect.

     

    JNJ/PFE – their Alzheimer's projects…give me a break….LLY already shows the target does not work.  Oh, as well as the other 20 clinical trials for that target….beta-amyloid.

  64. dpastramas

    VVUS / Pharm – mmm this calendar spread is not going exaclty according to plan. The Jul puts are gaining in value.  I suspect more people are betting they fail next week.  Any suggestions?

  65. BertII

    What just  happeened to oil and bank s

  66. Pharmboy

    AAPL/pato – with the Euro falling, and much of their money overseas…and the surging dollar, they better have a good accounting practice and really blow the doors off.  Android phones are also eating at their momentum.  I am not as optimistic.

  67. scottmi

    Turbulent describes the market today i think. aka churn and burn.

  68. rkyroma

    USO – wtf??

  69. rkyroma

    or.   FU USO!

  70. 1020

    Phil – Check out OPTT
    http://finance.yahoo.com/q?s=optt&ql=1

  71. Pharmboy

    VVUS/dpast – time….volatility is increasing a bit faster on those short puts….still even, and still ok.  

  72. pat_swap

    Pharm/Iflan/LULU
    Chart Horrid – any more details on this?
    My opinion – does it look like $45 would be the next support if it keeps falling. on the weekly chart MACD had moved below zero and slow/fast stochastics touching the bottom line. OBV falling. But on daily MACD slope less than the price slope. Am I looking at it correctly?
    Also for LULU instead of a straight out put buy can we also do a Put spread 55/50. will it give enough profit in this case?
    Thanks

  73. Phil

    Santa Monica/1020 – Wow, that's going to feel like it's freezing compared to here.

    TLT/Lincoln – Like any dividend-payer, it will just drop the stock on ex-dividend along the way but it's already priced into the bids on the puts (in theory). You see that much more dramatically with the big dividend trusts. 

    AA/Scott – I'd wait until we ride out the current storm.  Collecting $1.45 for the 2014 $8 puts puts you in at net $6.55, even if you have 100% margin that's a nice return so not a lot of need to suppliment it. 

    Cars/Snow – The trend in the US is for families to have less cars, not more.  Like anything else, when it's cheap and plentiful, everyone wants them but as gas plus repairs plus insurance plus parking prices go crazy – owning a car simply isn't fun anymore.  I know so many people in NYC who think it's so great not to have a car anymore (coming from suburbs).  Even a cheap car is $500 a month to keep up and that's a whole closet in NYC!

    AAPL/Palotay – I'm not talking about AAPL's guidance, I'm talking about the expectations of guys like that at the tail end of an IPhone cycle and after a "new IPad" that wasn't much of a reason to buy and no major laptops or desktops in a period of economic uncertaintly at a time when a strong Dollar may have negatively impacted Global sales numbers.  Other than that – no worries…

    VIX/Izeg – No major panic at all and there shouldn't be if the 50 dmas hold. 

    Wow, what did happen to oil?  That was crazy.  Good chance to DD on USO July $33 puts at .95 or less if possible in both $25KPs.

    OPTT/1020 – Yeah, I like those guys, we were talking about them recently.  They just announced a deal with LMT. 

    Microcap Ocean Power Technologies (OPTT +62.5%) skyrockets after reaching a deal with Lockheed Martin (LMT) to develop a 19MW wave-energy project off the coast of Australia. The project will make use of OPTT's PowerBuoy device and Lockheed's wave-energy converters. A $65M grant from the Australian government will help finance the effort. (PR)

    OK, gotta run.  Watch out for that Fed!

  74. jabobeast

    Pharm--any opinion on BCLI? I hate pinkies but someone mentioned to me to take a look at.

  75. Pharmboy

    BCLI/jabo – yuck.

  76. jabobeast

    Pharm—that's what I thought ;-)
     
     
    thx

  77. Pharmboy

    Something I tucked away in regards to FOMC meeting….from A Dash of Insight….are they, or arn't they….that is the question!

    Normally the FOMC minutes do not provide much enlightenment, but I suspect that we might have a surprise this week.  In the post-meeting press conference Bernanke dodged questions about the difference between projections and policy.  He made a reference to the minutes.  Most observers do not understand organizational behavior, so they might have missed this.  The policy is the official organizational response.  The projections are a collection of individual answers.  We should be watching this with interest for a hint a future Fed policy.

  78. Pharmboy

    So, in that vein….are oil and gold rallying ahead of the FOMC, or are they just in a false rally that will cause their collapse?

  79. ronresnick

    BBBW UPDATE
    Please see Phil's BBBW article from June 16, 2012, for today's BBBW update.

  80. diamond

    Airbus inks multiyear supply pact with Alcoa – MarketWatch
     
    Alcoa Beats Estimates as Carmakers Buy More Aluminum – Businessweek
     

  81. Pharmboy

    FBI warning Labor department…..ya think!

  82. pat_swap

    a big spike in TLT just during the final mins of the auction ??

  83. scottmi

    FOMC minutes/Pharm – pretty much the same thing as Amber McCarroll's gig

  84. kinkistyle

    Corn futures getting creamed (har har).  Buying capitulation?

  85. Gingbaum

    lflantheman,

    Given that PCLN went up $10 and right back down to flat, do you still think the trade is a good idea?

    Thanks

  86. scottmi

    ABX – selling Oct $30 puts get's you better than a year's worth of dividends and rather than, say, $3500 out of pocket, TOS says just $300 margin requirement. 

  87. augrusot

    Phil, Coca Cola is doing a 2:1 split. Any thoughts on buying shares? Or is there something better that can be done?

  88. kinkistyle

    10 Year Treasuries auction at record low yield: 1.459%
    http://www.bloomberg.com/news/2012-07-11/treasuries-rise-after-record-low-yield-at-10-year-note-sale.html

  89. Burrben

    StJeanLuc / Income Port
     
    I wondering what the colors meant in the GDoc for the income port?  For example, the CSCO trade is highlighted and the 13calls don't have PnL, why is that?  Maybe a spread?
    Also in the areas of the %gain/loss, why are things highlighted?  Thanks I'm probably just overlooking something simple.  (Oh, but I am red/green color blind, so I could be seeing things too )

  90. Peter D

    Thanks, stjeanluc, for the portfolio update.   Even though it's tempting to open new trades in the short strangles portfolio with the market dropping, I'm going to hold off on it, as it seems like every time you post, we'll have a new trade to update again!

  91. pat_swap

    it looks like PSW is deserted today? very less responses/updates……

  92. kustomz

    When Doves cry.. Fed governors fav song…
    http://www.youtube.com/watch?v=0hZ6NhEegeU

  93. Inkarri19

    Few Fed Govs support more easing

  94. emunster

    Peter I like your portfolio, I have none of your trades. Are there any at this time you would recommend to get into, or should I wait for a new trade from you. Thanks in advance.

  95. Inkarri19

    Several Fed officials want to develop "new tools" to ease financial conditions?!  I am guessing they means NIRP?  What possible new tools can they come up with above and beyond what they've already done the last 3-4 years…..hmmm

  96. sparky123

    Inkarri they could try raising the interest rates to price in a bit more of reality so that we can all get along with business decisions that are now impossible because no one knows the real market price of anything.

  97. Inkarri19

    Sparky – That would be the right thing to do but since we are dealing with the Fed, I assume they'll do NIRP(as Timmy mentioned a few months ago) or some other policy in line with Japanese polcies of the last two decades.

  98. Burrben

    Well I guess when Phil and Scott are calling for cash, maybe I should step away from my computer….and stay in cash.  Maybe I'll listen for once!  
     
     
    Scott Redler ‏@RedDogT3Live
    No hints of Qe3. As said before "patterns feel more broken vs. Constructive". Cash is king. I'm in 95%+ cash $spy.

  99. diamond

    Interesting … financials are still green …

  100. kustomz

    From ZH…lol…

    SEVERAL ON FOMC SAID FED SHOULD STUDY `NEW TOOLS' FOR EASING - C5 Galaxy??

  101. scottmi

    Dollar – whooppeee! we all get a roller coaster ride today!

  102. jerconn

    Felt like a flash crash…minus 40 to minus 80 in less than 60 seconds…

  103. scottmi

    …and the VIX doesn't even blink..

  104. Peter D

    emunster,
    Thanks.  Just wait for a new trade as the current positions are almost out of premium, or start on your own trades and post questions.

  105. Inkarri19

    Scott – The Vix is the new Libor?

  106. rkyroma

    lflan – PCLN ?

  107. scottmi

    VIX/ink – no… what i think it says is there is no volume or traction in the option space.. it's all just show.. of course, you can watch your acct evaporate a point or two per day with this "show"…

  108. diamond

    Wow … the big boys are sure flushing the retailers out of their AAPL positions … Phil may get his $555.00 buy in price this month! ;-)

  109. stjeanluc

    Portfolio / Burrben – The CSCO trade is a spread which is why it's highlighted. And I track the value of the spread, not the individual options as it gives us a better idea of where we are.

    And I change the color on the P&L lines to highlight where we are and where  we have been so that we can learn from our trading. Red for losses and Green for gains. And darker for the current position. I apologize for the colors I chose as apparently you cannot see them!

  110. stjeanluc

    Trades / Peter – Don't hold back on the trades on my account! Your portfolio is not much work as I update it less often! And that's good learning for me!

  111. Burrben

    PeterD / Portfolio
    I was having a little trouble getting the spreads together in my head, so I made a small google doc, and listed the spreads around the price of the index.  Could you take a look and make sure my thoughts are correct?  I'm not worried about credits/debits/profits, just getting a handle on how all the spreads are working together.
    https://docs.google.com/spreadsheet/ccc?key=0AjlfETMAwklcdHNubWMwQi1tT2FSV3dPRmZmSmJJZ3c

  112. Inkarri19

    Scott – I know…was just kidding. 

  113. Birdman

    Tea leaves showing bullish divergences on indexes.

  114. sparky123

    scott/ink the longer this "show" has gone on the more i have felt that the last bid that came from a person was getting farther and farther below

  115. Burrben

    StJean  -  Okay, thank you.  I do have a bit of trouble with colors when they are next to each other, but that's my problem, I'll deal.  
    I was confused on the CSCO since it's tracked as a Bull Call spread, but the trades on F, RIG, and SVU are also spreads (straddles), but are tracked as seperate trades.  No biggie, again, I get they are paired with stock, and it's covered straddle.  TomAto / TOmato I guess. 

  116. Birdman

    Looks like interpretation of the FOMC minutes set off the bots for a while.

  117. diamond

    Wheeeeeee … let's do it again … let's do it again … :-)

  118. rkyroma

    Pharm – good day for you, I imagine…

  119. sparky123

    phrankly pharm is phab

  120. Inkarri19

    Is anyone else a bit puzzled by EDZ being down a few cents? 

  121. Pharmboy

    ryk – getting there…..out of USOs FWIW.  Oil ain't budging.  Picked up some RIG longs.

  122. sagemm1

    EDZ…Not as much as oil being up 2.20

  123. Pharmboy

    EDZ Aug $16 C, with the sale of Jul $17 C for a buck O five….I am playing that one to eat the premium and getting ready for the end of July $h1t show.

  124. BertII

    Did they announce QE3 Oil went down to 85 now its back over 86 and they Dollar went up .25

  125. Pharmboy

    RIG July/Aug $45 calendar is a nice one to play for any BS they play with oil.  $1.08 is the price I see in TOS.

  126. lflantheman

    PCLN……645 this weekly puts.    I will just roll these if PCLN appears to be closing below 645 Friday afternoon.  No need to bother the trade right now, or tomorrow.

  127. lflantheman

    LULU and NFLX both moving as we want.   AAPL shook us and others out. 

  128. Peter D

    Burrben,
    Yes, you got it correct.  The only question that you have is the 12 RUT Jul 710 short puts.  They were rolled up from the 20 original Jul 610 short puts.  When we rolled up, we also reduced the number of shorts to reduce our risks.

  129. Pharmboy

    Oh my….XRT  57 Aug/Jul calendar is now coming into play.  Come to papa….

  130. deano

    will TASR bounce at $5, or fall thru? I think the former - 

  131. Burrben

    Peter D /  Thank you.   While we are playing the cashy waiting game, may I ask what indicators are you looking at when deciding on new positions for Aug?  Are you tracking the VIX, the SPX/RUT Imp Vol, support levels, etc?  
     
    I'm trying to not just "follow" along, since I don't learn as much.  I'm' trying to plan what I'm would do, and then I want to see what you would do.  For example, I opened the Aug RUT 700/690 Bull put credit spread today for 0.55 credit.  I'm waiting on the Bear Call spread until we get a up day.  

  132. lolobear

    Just came back to my computer.. Did the Feds release anything in the minutes?? AAPL was down $10 and now its climbing. 

  133. jasu1

    Lflan,
    AAPL: in your opinion, is this just the big boys jerking us around, or is there a possibility that AAPL sales might indeed be slowing down because of the global melt down….Thanks…
    Yes did get shaken out today…..but still intend to follow LFlantheman….  

  134. sagemm1

    Look at that vix down while market is down 2/3 of a point what a sham

  135. Burrben

    Phil / Income-Port play on F
    The trade that we have going right now is using options for synthetic stock.  Why not just buy the stock, or do buy/writes, etc?  
     
     

    Jan 14 Put
    F
    10
    -30

    Jan 14 Call
    F
    10
    30

    My guess is that this spread is actually giving us a credit of 0.88c (today's prices).  Just wondering……

  136. lflantheman

    jasu1AAPL…I think it's a bit of both.  Yes, we and others have been shaken out.  But probably some institutional traders are gone as well.  They are afraid that even though AAPL will beat, that if they do not simply blow it away with huge numbers and profits, that they may be sold off.  Remember, our AAPL plays of recently have been with the caveat that we would not have a large play in place at earnings time.  We may just be out a little earlier than we expected.

  137. Inkarri19

    Apple – With the upgrade Ipad announced last time and word of a smaller Ipad now, am I alone in thinking that nothing innovative is coming out from them now and they are just copying everyone else in product offerings?

  138. Pharmboy

    SGEN…If you have any uncovered stock, I would sell some premium.  Otherwise, lighten up a bit and we will sell some puts here real soon.

  139. kustomz

    "Look at that vix down while market is down 2/3 of a point what a sham"

    If they can manipulate libor then…..

  140. jasu1

    Lflan,
    The trade was mine to make….just thankful for your guiding hand and expertise with aapl….so when is the next one!

  141. Pharmboy

    So we bounced right off of that red line -support intraday…  bounce tomorrow..?? 

  142. Pharmboy

    CELG Oct 65 Calls for 3.15.  Buying back 5.

  143. rkyroma

    PCLN – I doubled down w/ 655 weeklies @ 1.5.  Just sold, and apparently left some on the table.  You full time MoMo traders have a bigger set than me.  Yikes!

  144. lolobear

    AAPL – what the hell just happened?  Down $10, now only down $2.50… Did i miss something folks?  This is insane.

  145. Pharmboy

    Darn, should have said it was 3…that bar at that time sent us up….oh what crap these boyz pull every time.

  146. diamond

    Douglas Kass: "Bulls have sold out and the bears just grow more bitter. My view. Market is tradeable not investable for now. Be opportunistic not dogmatic."

  147. Birdman

    Bounce tomorrow, IMHO. Have a great evening.

  148. Phil

    Wow, where would we be without Mr. Stick?

    Dollar back at 83.60 from 83.75 max but still very high.  

    Euro $1.224, Pound held $1.55,7968 Yen to the Buck and 1.2007 EUR/CHF as they killed themselves holding that $1.22 line. 

    Won't take much to push us over the edge. 

    AAPL and XLF didn't participate and seems to me it was all about QE rumors on very liberal interpretation of Fed minutes but I'll have to go over them tonight – time to fly.

  149. Burrben

    Anyone playing this whole mid-west heat wave-killing corn and soybeans-needing water-buy LNN.
    http://www.wallstreetdaily.com/2012/07/10/u-s-heat-wave-makes-lindsay-corp-a-hot-stock/

  150. Peter D

    Burrben,
    You're welcome.  I watch the big charts, but the most important factors for me are the available margin and how the portfolios would behave with a +10% and -15% swings on the indices.  I'm not too worry about the daily swings, just watch for black swan events.  Since the black swans don't come often, we easily get complacent, so having margin and experience in crisis time are the keys to survival when selling premium.

  151. Burrben

    This really blows.  Having  a crappy 2 days…
     
    Supervalue has a HUGE MISS of earnings. EPS $0.19 versus expected $0.38. Dividend to be suspended, too. Stock plummeting 19%. $SVU

  152. bobhu

    SVU, ouch!

  153. boltdude

    SVU – ouch is right.  So, what could "strategic alternatives" entail?  Finding a buyer would be nice.

  154. Pharmboy

    SVU -  How do you have 10B in revenue and only make 40M?  Gotta teach the Chiefs to act more like Warriors…..

  155. jabobeast

    And this is what I receive from my hardcore conservative friend…so funny… what say you Phil ;-)
     
    http://online.wsj.com/article_email/SB10001424052702303649504577492300632472284-lMyQjAxMTAyMDEwMTExNDEyWj.html?mod=wsj_valetleft_email

  156. BertII

    SUV will get punished tomm if they suspended the dividend. The divivend was one of the reasons that I own but I have puts and calls sold against it.  which puts me in thestock for about 4.25 a share

  157. Burrben

    I really wish Phil was around right now.  I have 2K shares of SVU and it's trading at 3.98.  I purchased the stock at 5.65.  I'm thinking of selling the 2K of stock.  But will it crash lower tomorrow?  When does afterhours close?

  158. deano

    From FT:
    A day for the history books in US Treasuries: the lowest-ever auction
    yield for 10-year bonds at 1.459 per cent, and the highest-ever demand
    from direct bidders for the $21bn debt sale (Financial Times). Stocks
    faded the Fed minutes: the Dow Jones Industrial Average closed down 0.38
    per cent (Reuters).

    The FOMC minutes for June confirmed the Federal Reserve's internal
    divisions over further monetary easing. "A few officials" said that it
    "likely would be necessary" to provide stimulus, and "several others"
    also believed that it "could be warranted" if the recovery slowed down.
    April's minutes showed that "several" officials considered action if the
    economic outlook seriously deteriorated (Wall Street Journal). The
    revised language suggests a stronger bias to easing (Financial Times).
    Officials also warned that further easing might harm the liquidity of
    the market for US Treasuries (Bloomberg).

  159. Birdman

    Reading "Dark Pools" tonight. Looks fascinating.

  160. jjennings

    I'm halfway through Dark Pools……makes me want to liquidate my investments and load up the mattress.

  161. randers1

    SVU- rapidly becoming a gang that can not shoot straight, tough business to compete in..
     
    Sorry that I can not make Vegas this year- respecting the budget for our new one income family.
     
    I stayed here last year, It was decent & relatively close to Cafe Moda.
     
    http://www.travelzoo.com/hotels/las-vegas/-70-Las-Vegas-Suite-at-Trendy-Hotel-w-25-Daily-Credit-1272870/?ptl=done&rating=&tppct=&utm_source=top20_us&utm_medium=email

  162. Birdman

    Dark Pools/jjennings – Thanks a lot, now I'll be up all night reading it. 

  163. zeroxzero

    Ditto Randers, would like to commit to Vegas and meet everyone,  but I've been on the road 40% of the year due to extraordinary circumstances, live over 3000 miles away, and expect no letup until 2013.   But I may be nearby at the time, and would try dropping in at the last minute if there remains a space.  Have fun, y'all.

  164. Birdman

    Anyone else feel like trading this market is particularly challenging? I'm not complaining because this is the game I've chosen to play, and I'm making a few bucks, but man! I've been around the markets since 1975, including 17 as a broker, and the wear and tear meter is higher than ever – this feels like cage fighting.
     
    Maybe I'm just getting old and need testosterone treatments.

  165. 1020

    Birdman – I'm 50, dyslexic and on a testosterone schedule….yes, the market is a challenge…. :)

  166. oburlacu

    A long read yet interesting:
    http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

  167. kinkistyle

    SVU:  The good news is they still posted a profit, right? I think suspending their dividend was always kind of inevitable if they were serious about paying off the debt.   As far as I am concerned they just need to survive to 2014…

  168. zeroxzero

    Birdman/ 1020 – Misery loves company.  I haven't done too badly net net, but it's hero to zero and back again on the whipsaw express no matter what approach I take — hedged, unhedged, loved and unloved, cash and trash. Learning experience?  I once heard someone say that owning a few hundred corn contracts was worth a Harvard MBA.  Amen, brothers. 

  169. kinkistyle

    SVU: FWIW, I just looked up the SVU bond quotes on Fidelity and the 2014 and 2016 maturities seem to be trading above par at around $101 as of 5pm today, so the credit traders are not expecting them to default — at least not today.

  170. Birdman

    zeroxzero – Yep. I used to call it paying tuition, but that's getting a little lame after 30+ years. At some point I guess I'll have to admit I'm a little slow. :)

  171. Burrben

    SVU – Well maybe I made the wrong move, but I decided to sell the shares afterhours for $3.90.  Maybe they will pop up, maybe not, but I don't want to turn a 30% loss on the stock to turn into a 100% loss.  From what I'm reading, they have enlisted GS to figure out options which probably means sell the company.  
    Regardless, I'm taking a page for LFlan's book, if a trade isn't working, get out, don't be emotional, don't just stand there.
    I'm still short the 2014 5puts/calls, so those puts are going to put nice little dent in the account balance when they open tomorrow.  

  172. zeroxzero

    Birdman:  Even the cool guys get hosed.  Ask Bruno Iksil. Or Nick Leeson.  Or any of a very long list of traders who thought they were smart enough to compound at 30% per year.  I'm not mathematical enough, or patient enough even if I were, to do it, even if it were possible, which I rather doubt.
     
     Phil was right about counting cards in Blackjack:  it's dead boring to go through a few hundred hands waiting for the numbers to stack up.  Even if you then hit it big, which I sometimes do on the rare occasions I sit at the table long enough — only to suffer the angry scowls of the pit boss and perforce head for the bar.  The only really intelligent investment I make is giving most of my money to people patient enough to play the long game.    Does that mean I'm just wasting my time?  Not at all; trading, even at break even, keeps me very sharp in terms of global macroeconomics, as I read incessantly, and I guide the portfolio I keep in the hands of said patient professionals in the right directions because of it.  When it comes to trading, I'm as dumb as a mud fence — but I'm a pretty good investor.

  173. kinkistyle

    The way I see it, if there was all that discussion of a SVU as a take-over target at around $5, then a price-tag at below $4 should be an even bigger bargain for a firm looking to buy them.  They are turning a profit in a tough economic environment, and CEO is getting serious about paying off the debt — ain't that good news?

  174. Pharmboy

    Now that is perfect algo trading…..

  175. stjeanluc

    The 50 DMA held except for the Dow. On the other hand, the 50 DMA crossed under the 200 DMA for the NYSE (death cross). On the bright side, it's a rising 200 DMA!

  176. Birdman

    zeroxzero – You misunderstood my frustration. My rate of return in trading is just fine – strict money management gives me a consistent bankable edge even winning only slightly more than 50% of my trades. My average winner is larger than my average loser. But that *is* pretty boring. The challenge is to increase the percentage of winning trades, and that has only improved slightly over the years. I consider the money lost in the losing trades as "tuition" and try to learn from them. But in the end, it's just money management. Which is about is thrilling as counting cards in Blackjack.

  177. ed3524

    Birdman,
    would you please suggest  good books about money management for traders

  178. Birdman

    ed3524 / Trading Money Management Books
     
    The best I have read are those written by Alexander Elder. His "Come Into My Trading Room" is the most influential book I have read about shorter term trading and many of the components of my methodology are built using principles he writes about there. I approach trades from the risk side and he has a number of ways to do that (similar to Optrader right here). Dr. Elder has a website at elder.com.

  179. jfawcett

    Dr. Elder's book.  A simple search pulled up the pdf.  For those interested….
     
    http://equity-research.com/wp-content/uploads/2010/04/Elder-Alexander-Come-Into-My-Trading-Room-A-Complete-Guide-To-Trading.pdf

  180. 1020

    Jeeez…In The Name Of Natural Disasters,  can't we get some of this done after the elections?
     
    http://news.cnet.com/8301-1023_3-57469950-93/obama-signs-order-outlining-emergency-internet-control/
     
    Just Take Fox, will ya?!  :)

  181. diamond

    LIBOR Scandal Explained

  182. diamond

    Reminder: The key is to trade the market you have, not the market you want.

  183. scottmi

    SVU – well sonuvabi… not to move in on jabo's mojo, but i do feel entirely justified in this instance saying:
    FU SVU!
    at least was fully covered with this through buy writes (thank you phil!), and was well ahead already so even with the current loss (if does not crash more in the morning) i am stll pretty close to EVEN or even ahead considering dividends and short puts already paid to my favor through the last year..   suspending the dividend is kind of a stab in the back of all shareholders though, and i bet there are some large position holders out there. WTF? This MUST have been on a Goldman Sachs recommendation.

  184. Phil

    Good morning!

    3:17 AM Asian markets are broadly down, with lots of divergent data to digest (Korea rate cut, Japan APP shuffle, India industrial output, Aussie joblessness). China's the outlier, +0.4%. Japan -1.5%. Hong Kong -1.9%. India -1.6%. Korea -2.2%. Australia -0.7%.

    That pretty much covers it – what a mess this morning. 

    Europe down about a point and our futures are moving to match.  Not really unexpected off yesterday's action.

    Dollar back to 83.30, Euro right on the $1.22 line, Pound $1.5459 and only 79.32 Yen to the Dollar, which sent the Nikkie all the way down to 8,700 on /NKD in a crazy session where they bounced over 100 on the way to a 200-point loss.

    Oil stopped being silly, now back under our shorting line at $85 (after hitting our original shorting target of $86.50, albeit much later than we expected) and is now $84.77.  Gold is $1,563 and silver failed $27 at $26.65 with copper very weak at $3.39 while gasoline holds stubbornly to $2.75.  I think $27 on silver is now a good line to watch for a recovery as well as, of course, $85 oil (although we usually get a pump into nat gas report before it finally gives up).

    Overall, we're tipping into panic here, which is fine with us except for the Income Portfolio, so we'll have to either protect it or cash it today – hopefully StJ and or Burr can give us a current status report.

    6:33 AM U.S. stock futures slump further on disappointment over lack of Federal Reserve stimulus support. S&P -0.6%, Dow -0.5%.

    Thursday's economic calendar:
    8:30 Initial Jobless Claims
    8:30 Import/Export Prices
    9:45 Bloomberg Consumer Comfort Index
    10:30 EIA Natural Gas Inventory
    1:00 PM Results of $13B, 30-Year Note Auction
    2:00 PM Treasury Budget
    3:40 PM Fed's Williams: Economic Outlook
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

    Gee, ya think?   ownside risks to the eurozone economy have materialized, according to the ECB's monthly bulletin (.pdf). "Economic growth in the euro area continues to remain weak, with heightened uncertainty weighing on confidence and sentiment."

    Eurozone industrial output +0.6 M/M in May vs. consensus of -0.2%; -2.8% Y/Y vs. -3.7%. Notably, Portugal grew 4.1% on month. The unexpected monthly growth provides a bit of light relief in an otherwise gloomy prognosis. (PR)

    Italy's national statistics body ISTAT threatens to stop issuing data on the economy, saying it has been crippled by government spending cuts aimed at reducing national debt. That's one way to solve the ugly-data problem.

    The Bank of Japan leaves it key rate unchanged, expands its asset purchase program to ¥45T ($564B) from ¥40T, and cuts its loan facility to ¥25T from ¥30T. "This is simply a technical move that shouldn’t be considered to be monetary easing," says JPMorgan economist Masaaki Kanno. (BOJ statement)

    India's industrial output rose 2.4% in May, beating expectations of a 1.8% increase and a notable turnaround from revised figures that showed an annual contraction of 0.9% last month. The notoriously volatile data point could play a key role at the RBI's July 31 policy meeting.

    Australia's jobless rate rose for a second month, to 5.2% in June from 5.1% in May. The number of people employed fell by 27K, led by essentially erasing a revised 27,800 job gain in May. Aussie dollar -0.8% to $1.0168. ASX 200 index -0.7%.

    Brazil cut its benchmark interest rate yesterday for the 8th time since August, chopping off 50 bps to a record-low 8%. Policymakers are scrambling to revive an economy that has failed to respond for the last year to a barrage of stimulus measures. Further rate cuts could follow.

    German tax inspectors have been raiding the homes of Credit Suisse (CS) clients suspected of tax evasion, according to bank and government officials, focusing on ~5,000 clients who allegedly bought certain insurance policies during 2005-2009. It's part of a broader crackdown on Swiss banks in connection to possible tax evasion.

    The ECB’s zero deposit rate took effect yesterday. "[We] would need to see deposits parked at the ECB to fall meaningfully below €680B or so to prove that the cut in the deposit rate is having an immediate impact," say TD Securities analysts.

    Finland is negotiating to receive shares in Spanish banks as collateral for the country's participation in the bailout of those banks, Finance Minister Jutta Urpilainen said yesterday. Other eurozone nations "have no alternative but to accept" the demand from the Finns, who received security for loans to the EFSF bailout fund for Greece's second rescue.

    The timing of this statement alone should prove that the IEA's primary mission is to keep oil prices high:  Oil demand will rise 1M barrels per day next year to 90.9M barrels, says the IEA in its monthly report, with growth in oil demand tempered by a muted economic recovery. That would be an increase from this year's rise of 0.8M bpd but is still well below the pre-crisis growth trend.

    Regulators are running out of time to file civil charges for alleged wrongdoing during the financial crisis, as the federal laws under which the SEC usually goes after fraud and other misdeeds have a five-year statute of limitations. Expect to see a flurry of charges as the deadlines near.

  185. Burrben

    Phil / No comments on SVU?  I'm interested to hear if you think I made the right/wrong decision to sell AH…

  186. Burrben

    You have got to be kidding me.  I'm really taking my career in the wrong direction.  
    500K/yr for wearing T-Shirts.
    http://www.businessinsider.com/jason-sadler-makes-500k-per-year-wearing-t-shirts-2012-6

  187. revtodd64

    SVU – Marketwatch reports that the dividend cut is a signal that the  grocer is for sale.  http://www.marketwatch.com/story/supervalu-halts-dividend-weighs-its-options-2012-07-11?dist=beforebell
    Without the dividend, I don't really want hold SVU, but I don't want to sell at panic prices either.  The question is-what is SVU worth and what will be the sale price?  Who would the buyer be?  Kroger or Walmart?  Is it worth staying the course to see what the buyout options are?  I'm voting "yes" for the moment, but would like to hear what others think at this point.

  188. deano

    from Bespoke:
     
     
    Sure, it's early, but companies that have reported since earnings season began on Monday have disappointed big time.  As shown below, just ONE company has beaten estimates of the sixteen that have reported, while TWELVE have missed.  
     
    And the price action in response to these earnings has been equally as bad.  As shown, the average one-day change for these stocks on their report days has been -5.45%.

  189. deano

    from the Oracle:
     
    Forget the FOMC staff, Warren Buffett downgrades his view of the U.S. economy, telling CNBC there's been a clear slowdown in the last 6 weeks, though giving no detail as to what he's personally seeing. It's the most pessimistic The Oracle has sounded in some time. As for Europe, it's slipping "pretty fast."

  190. Phil

    SVU – Sorry, fell back to sleep after waking up too early!  I like it when companies sensibly cancel a dividend to improve cash-flow but, of course, the market does not.   I think this is probably a huge over-reaction to the news and a great entry opportunity but my time-frame on them being worth $5 is still Jan 2014, not July 2012. 

    SVU already fell from $8 to $5 and then back to $6.50 and then to $4 and back to $5.37 – maybe this is the end for them and maybe the .14 per share they made last Q (4x .14 = .56 for a p/e of 6 at $3.36) was the last .14 they'll ever make and it's all downhill from here because people have just lost interest in buying groceries from anywhere but WFM.  It could happen – but I don't think so. 

  191. 1020

    Phil/sleep  The sound of the ocean will do it every time….. :)

  192. scottmi

    SVU/Burrben – i think you made the right move selling last night. looks like openning around 3.35 this morning.. @#$!

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