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Triple Top Tuesday – How Much Will it Cost to Break Higher?

$800Bn

That's the number we came up with yesterday for the minimum bailout/stimulus required to hold Dow 13,000, S&P 1,380, Nasdaq 2,950, NYSE 7,900 and Russell 790.  Buying a breakout over those levels will be even more expensive and, so far, we've gotten a grand total of ZERO actual commitments from the Central Banksters and other Government morons, most of whom are on vacation anyway.  

As you can see from our Big Chart, this is within our rule of thumb that it costs $10Bn to buy an S&P point and that effect lasts for about 6 months.  The S&P is up 105 points off the June lows and, so far, only China has committed stimulus Dollars (about $120Bn down with $400Bn still rumored), leaving a the gap to be filled by Europe, Japan and the US.  

Of course China has, by far, the biggest hole to fill.  In fact, Larry McDonald calls China's GDP "the new Libor," pointing out the pretty obvious fact that it makes no sense at all that Europe has negative growth while the US and Japan have minimal growth while China claims things are humming along at 8.5%.

Just this morning, Taiwan (China's neighbor) reported declining GDP, Korea reported their Industrial Production has gone negative and Singapore's Government Investment Corporation issued a report with a very gloomy outlook for the whole planet, stating:

"The developed economies will continue to be weighed down by an extended period of debt-deleveraging. In Europe, the debt crisis has spread beyond the periphery to the larger Spanish and Italian economies,  In the United States, the fragile economic recovery could be aborted by automatic spending cuts and tax increases if political gridlock continues beyond the 2012 elections with no compromise on a long-term plan for reducing the public deficit. Growth in the emerging economies, particularly China, is also slowing."

Judges at Germany's highest court may hold the future of Europe in their hands. Well, that sums it up quite nicely, doesn't it?  Meanwhile, everyone is looking for the ESM to save us but Germany hasn't even approved the fund yet – that matter is tied up in their Constitutional Court (pictured left) until September 12th and you can bet those judges are on vacation and not sitting in Draghi's kitchen, plotting to spring an early approval on us on Thursday – as seems to be expected by the MSM.  

Germany is not the only country that has yet to approve the ESM treaty. The fund will become operational as soon as member countries representing 90 percent of the fund's capital commitments have ratified it. Germany is the largest contributor, at 27 percent of the total, so the fund CAN'T be launched without German ratification.

So, let's try to be a little realistic and scratch Europe off our "rescue" list this week.  That's a shame because Draghi has sort of backed himself into a corner by pledging to do "whatever it takes" to save the Euro last week and "whatever" is going to be about $3Tn – to start.  As noted by the NY Times, "With expectations so high, anything short of a decisive display of financial firepower could send financial markets back to the panicky behavior of only a week ago — when the thin trading of summer was exaggerating stock market gloom and bond investors were bidding up the borrowing costs of Spain and Italy to potentially destructive levels."      

Investors concluded that Mr. Draghi was signaling a major policy action, like huge purchases of government bonds to raise demand for debt from Spain and Italy and keep their borrowing costs at sustainable levels.  Nearly identical statements by Chancellor Angela Merkel of Germany, President François Hollande of France and Prime Minister Mario Monti of Italy in recent days further raised expectations, though it was unclear if they all had the same policies in mind.

Of course Draghi and the EU Stooges and Wen Jiabao over in China are going to do whatever it takes to protect their phony-baloney jobs – that's a given.  Unfortunately, the ECB is SUPPOSED to defend price stability above all else and is BARRED from financing governments.  For the central bank to be sufficiently intimidating, it would have to violate some existing taboos.  For example, it would have to abandon its practice of offsetting its bond purchases by taking in equal amounts in commercial bank deposits. By absorbing deposits, the bank takes as much cash out of the system as it puts in via bond purchases. By keeping the supply of money in the economy approximately even, it tries to avoid the appearance that it is printing money.  

This has led us to conclude that there's a pretty good chance this week will end in failure and we cashed out longs and went more negative yesterday but used our Long Put List (see yesterday's Alert to Members for update) to avoid the mishap of being blown out of the water by somebody actually doing something helpful – doubtful but long-shots do come in once in a while…  

I think the make or break moment for the bulls will come not tomorrow, with the Fed and Bernanke's speech, nor Thursday with the ECB's tap dance, but tonight, when Geithner, who just met with Germany's Schauble and some other EU Finance Ministers, will be on Bloomberg this evening – suspiciously at 10:30, when the Asian markets open.  

If we are going to have successful stimulus, it will need to come from our Governments in the form of money given to the people – not in the form of Central Banksters giving more money to the top 1% that will ultimately create new debt for the people.  We've done over $9Tn of that in the last 3 years and it clearly isn't helping – perhaps it's time to give real stimulus a chance.  

Oil (/CL) has been failing $90 in the futures all morning and makes a great short off that line.  Gold (/YG) is a tempting short too at $1,630 but very dangerous as it can pop on stimulus and, of course, shorting the Dow futures below the 13,000 line is a no brainer!

These would be quickie trades only, far too dangerous to hold open overnight (or while you go to the bathroom for that matter!) but could be fun if we get any negative commentary from Germany or the Chicago PMI (9:45) comes in negative or the Consumer Confidence (10:00) continues its downtrend.  Also, we get the bad news on Agriculture Prices at 3pm and any Central Bankster who's supposed to be fighting inflation will have a very hard time ignoring that data.  

Be careful out there!  


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  1. Pharmboy

  2. stjeanluc

    Oil Lines

    R3 – 92.25
    R2 – 91.53
    R1 – 90.76
    PP – 90.04
    S1 – 89.27
    S2 – 88.55
    S3 – 87.78

  3. rebelscum

    This can't be helpful: 670 Million People In India Without Power As Electric Grid Fails

  4. lmeiner

    Oh Hey German Finance Ministry
    http://seekingalpha.com/currents/post/451141

  5. mjjwo9b

    rebelscum/elec:  Populationwise, that is the equivalent of the North American continent being off-line.  Ouch.

  6. Pharmboy

    VVUS/mrm – probably a dead trade.  I would wait a while and then start doing some calendars.  I think they are and Elan……(oh, who said that?).

     

    I am out again today.  GLTA.

  7. 1020

    Good Morning!

  8. sagemm1

    Phil/F
     
    Being that you think the bull/bear charge will come tonight how do you feel about waiting for F results, wouldn't a positve probably be gobbled up by any lack of real action forthcoming?

  9. nicha

    rebel, mjj – India has experienced power issues for the longest time but not as severe as this. In some states they cut off power for 6-8 hours a day because there is not enuff. Corruption combined with land issues (by ppl who do not want to give up their land) is the cause of power plants not being built. 
     
    The current govenment has also created a gridlock for new projects. 

  10. stjeanluc

  11. stjeanluc

  12. Phil

    Good morning!  

    Damn, that was fast!  Germans already screwing things up.  Can't say we didn't see this coming:

    Tuesday, July 31, 9:16 AM Here we go again: The Germans bring things back to reality, the finance ministry saying it sees no need to give the permanent rescue fund (ESM) a banking license and that there are no secret talks for such. European shares are the euro are sliding from session highs

    India power dump is insane!   So much for just worrying about the US drought, this is going to be catastrophic.  Boy are we going to have a party when our grid fails…

    Note on this picture, it's kind of severe.  

    Trains were stranded in Kolkata and Delhi and thousands of people poured out of the sweltering capital's modern metro system when it ground to a halt at lunchtime. Office buildings switched to diesel generators and traffic jammed the roads." 

    F/Sage – I can't get down to a $9 valuation on them.  Just seems too low but, if stimulus comes off the table, market might take them down.  

    Chicago PMI was good at 53.7, up from 52.9 in June and flat was expected. 

  13. stjeanluc

    F coming back somewhat! The Sept puts are looking good now!

  14. Burrben

    FAS Money – I cashed out of all MY short FAS a little while back.  Would you short a AUG 93 CALL for $1.06?  Feels toppy here.  

  15. stjeanluc

    Tough sledding for PCLN this week after the monster rally on Friday!

  16. Phil

    FAS Money – Wish I hadn't been to scared to sell more calls yesterday ($4.50).  Oh well.

    $25KPM – We'll want to cash in the DIA Aug $128 puts if we get a good run, maybe $1.60 if we get lucky.  Other than that, good balance.  

    $25KPA – Wow, profits doubled since Friday.  That's the sort of thing you should take off the table but I like all our positions too much.  I guess  same deal on the DIA puts – looking for $1.60+ on those.   

  17. Birdman

    ST Trading: It's an odd feeling operating in an environment almost completely detached from reality – like living in an alternative universe. Hi Elvis! The scariest thing about it is that it's starting to feel almost normal.  Buying and selling derivatives of derivatives of indexes – everything notional. I'm old enough to remember when we invested in companies and the fate of our investment was based on well or poorly the companies actually performed. This feels like puppeteers putting on a puppet show where the puppets are putting on a puppet show. The whole concept of investing has become insanely perverted, kind of like dogs and the Westminster Dog Show.
     
    I trade to generate needed income and that part is real. But, despite the fact that I make money for my family, I feel like what I do contributes absolutely nothing of value to society. A zero sum notional game – how can that help anything?
     
    Just needed to get that off my chest. OK, back to work, looking for trades.

  18. stjeanluc

    The next 20 years are going to be very interesting in that China Sea:

    http://www.foreignpolicy.com/articles/2012/07/26/5_flashpoints_in_the_south_china_sea

    But what exactly is at stake in the South China Sea? For starters, as many as 213 billion barrels of oil --more than the reserves of any country except Saudi Arabia and Venezuela — according to a 2008report from the U.S. Energy Information Administration. As a result, China, Vietnam, the Philippines, Taiwan, Malaysia, and Brunei are engaged in fierce jockeying over the rights to what at first glance are not more than a handful of rocks.

    China seems to have a very strange (and aggressive) interpretation of territorial waters there:

    South China Sea

  19. Phil

    FAS/Burr – It's very dangerous to naked short FAS, that's why we use that set-up in FAS money, sell premium on both sides and cover what we're really worried about, which is a massive rally (not a massive drop as that's more likely to recover over time).  

    Consumer confidence 65.9 – way up and way confusing.  Not sure why the bulls would be happy with this as it's a great reason for the Fed to hang back.  

  20. 1020

    Birdman/zero sum   I feel out of my natural element as well……

  21. Burrben

    Phil – Right on FAS money, and that's what I do too.  I generally wait though until we get near a upper or lower resistance level to sell the call or the put.  For example, the FAS Money Call is now priced at $3.30 and you sold it at $1.81.  Therefore wouldn't I be getting a better "sale" now than you did on the call?  Or even more rolling room….
     
    If we make a minor correction then I would sell the put.  What do you think about that option price though?  The FAS 92 is $1.32 right now.  Worth the risk?

  22. sagemm1

    feels like they are going to try and take this higher today

  23. Amalfi

    Spikee McSpikes!

  24. Phil

    I have the answer for you Bird – I am doing society a favor by not taking up a traditional job to make my living.  That leaves an opening for someone else to run a company or screw the little tops on toothpaste or whatever it is I would be doing otherwise.  Also, I put the money to work and start other companies and employ people – which I feel good about and, of course, I help people when I can.  It's not about the sums – it's about what you do with them…

    By the way, you should all be very concerned that AAPL is up 2% and the Nas is red

    9:02 AM The euro adds to gains as French President Hollande notes Draghi's "strong words" from last week and agrees all will be done to protect and defend the euro. Appearing with Hollande, Italian PM Monti says there's not room for a minute of inattention to the euro.

    At the open: Dow -0.18% to 13050. S&P -0.13% to 1384. Nasdaq +0.02% to 2947.

    Treasurys: 30-year +0.24%. 10-yr +0.13%. 5-yr +0.09%.

    Commodities: Crude -0.35% to $89.47. Gold +0.23% to $1625.35.

    Currencies: Euro +0.2% vs. dollar. Yen +0.03%. Pound +0.37%.

    10:00 AM On the hour: Dow -0.25%. 10-yr +0.12%. Euro +0.15%vs. dollar. Crude -0.74% to $89.12. Gold flat at $1621.65.

    Market preview: U.S. futures are higher ahead of today's 2-day FOMC bash, and while markets might be hoping for more candy, Fed watchers don't think they'll get it this time round. The S&P benchmark is +0.3%. AmerisourceBergen (+8%) surges after winning a deal to replace Cardinal Health (-3%) as Express Scripts' drugs supplier. Following earnings, BP is -4.35% and UBS is -4.5%, although Aetna is +3.3%Later: Chicago PMI, Consumer Confidence, Investor Confidence Index

    An interesting battle shapes up between "central bankers … very conditioned to be confident in the power of monetary policy," and markets losing faith in their  ability to do anything other then juice asset prices for a quarter. "The half-life of their impact on markets has been shortening each time they've done something," says BlackRock's (and former Fed man) Peter Fisher.

    The FOMC is due to start a two-day policy meeting today, with markets hoping for a fresh injection of monetary opiate, but with leading Fed watchers predicting that the bank will show its concernabout the economy but not do much more for the moment. Still, some Fed officials have talked about the return of "insurance" action to pre-empt looming risks such as a eurozone meltdown.

    ICSC Retail Store Sales: -1.7% W/W, vs. +1.0% last week.+1.8% Y/Y, vs. +3.3% last week

    Redbook Chain Store Sales: +1.1% Y/Y vs. +1.3% prior week.

    High-end retail stocks may have a hard time getting out of the way of the blowback from Coach's weak Q2 sales report. Premarket decliners: RL -2.2%TIF -3.8%SIG -0.2%FOSL -2.5%,LULU -1.6%

    Shares of Coach (COH) tumble 15.1% in premarket trading after the retailer saw U.S. sales come in sluggish in Q2. On its earnings CC, (webcast), execs say the weak economy prompted the company to use couponing in factory stores again to clear inventory.

    July Consumer Confidence: 65.9 vs. 61.5 expected, 62.7 (revised from 62.0) prior. Expectations 79.1 vs. 73.4 prior. Present Situation 46.2 vs. 46.6 prior

    June Personal Income and Outlays: Income +0.5% vs. +0.4% expected, +0.2% prior. Personal spending flat vs. +0.1% expected, +0.0% prior. PCE core price index +0.2% m/m vs. in-line with expectations, +0.1% prior.

    Q2 Employment Cost Index: +0.5% Q/Q. Year-on-year, civilian worker costs +1.7% vs. a +1.6% increase among government employees.

    A minor read ahead of the Chicago PMI, the Milwaukee PMI dives to 46.7 in July from 60.2 previously. (full report here, but not yet available as of 8:30 ET)

    Chicago PMI: 53.7 vs. 52.5 expected, 52.9 prior. Employment 53.3 vs. 60.4 prior. New orders 52.9 vs. 51.9 prior. Prices paid 54.7 vs. 54.0 prior. 

    More on Chicago PMI: Order backlogs jumped to 52.8 from 42.2, but supplier deliveries continued to fall (to 53.3 from 54.2) – a lower number means faster deliveries, meaning, presumably, slower business. Comments: "Business is getting extremely quiet! Summer vacations? Election year? Euro crisis? I wish we knew." (full report)

    May S&P Case-Shiller Home Price Index: +0.2% M/M vs. +0.5% expected, +0.7% prior-0.7% Y/Y vs. -1.4% expected, -1.9%prior. 

    More on Case-Shiller: All 20 tracked cities showed gains during May, with 17 of 20 showing bigger increases than July. Hard hit cities like Phoenix, Miami, and Tampa led the way – Phoenix posting an 11.5% Y/Y gain (though prices remain more than 50% below the June 2006 peak). Atlanta continues to founder, prices there -14.5% Y/Y. (full report)

    Canada's GDP rose 0.1% in May vs. 0.2% expected and a 0.3% gain in April. The loonie sheds a few pips, now trading just under parity with the greenback.

    Deutsche Bank (DB) announces plans to cut 1,900 jobs (mostly outside of Germany) as part of its plan to get to €3B in cost savings. The job cuts will contribute about €350M of that. Shares+2.9% premarket. Earnings earlier. (PR)

    Hudson City Bancorp (HCBK) is upgraded to Buy at Guggenheim. Analysts there expect earnings to bottom in Q3 and growth to resume in 2013. Like others the bank has struggled with making money in this interest rate environment (and with the GSEs crowding out its mortgage business), but has thus far managed to maintain its $0.08 dividend. 

    Having recently settled with U.S. merchants over tariffs, Visa (V) is in hot water in the EU, where competition regulators charge the firm over its cross-border credit-card fees and domestic charges in eight countries. The EU accuses Visa of hurting bank competition, inflating costs for merchants, and ultimately increasing consumer prices. (PR

    BP -4.4% premarket after its weaker-than-expected Q2 earnings are “a disappointing miss on a number of fronts.” Despite talk last year that BP was turning a corner, its U.S. underlying upstream profit and oil production have declined Y/Y in every quarter since Deepwater Horizon, with no clear end in sight. Extensive turnaround and maintenance programs are expected to continue into Q3.

    Valero (VLO): Q2 EPS of $1.50 beats by $0.06. Revenue of $34.6B (+10.8% Y/Y) beats by $2B. Shares +6.9% premarket. (PR)

    As part of its Q2 report, Valero (VLO) says it will seek to spin off its retail business. “As independent companies, both retail and the remaining business will be better positioned to focus on their industry-specific strategies,” CEO Bill Klesse says. VLO's retail arm reported record-high quarterly operating income of $172M in Q2, up from $135M a year earlier. VLO +5.8% premarket.

    More on Valero's (VLOQ2: Operating income to $1.4B from $1.3B on higher throughput margins and an increase of 342K bbl/day, due mainly to the addition of two European refineries. Raises capital spending guidance to $3.6B from $3.5B, which it says was due to bringing forward some projects originally scheduled for completion next year; thus 2013 capex should fall to $2B-$2.5B.

    U.S. Steel (X): Q2 EPS of $0.69 beats by $0.21. Revenue of $5.02B (-2% Y/Y) beats by $30M. Shares +2% premarket. (PR)

    More on U.S. Steel (X +4.2%Q2: net profit more than halves to $101M, hurt by a $399M after-tax loss on the sale of U. S. Steel Serbia. Expects Q3 operating income to fall from $330M in Q2, reflecting the economic weakness in N. America, Europe and emerging markets, with prices also set to drop. (PR

    Aggregate profits at Chinese steel companies are off 96%Y/Y through H1, according to the country's Iron & Steel Association. Profit margins have slumped to just 0.13% from 3.06% as massive production overcapacity has the nation continuing to pump more metal out than the domestic and global economy needs. AreclorMittal (MT)earnings.

    China has again increased its planned spending on railways for this year, saying in a bond prospectus issued yesterday that it will now invest 470B yuan ($74B). That's a total gain of 14% over the initial program. It's all part of an effort to boost the slowing economy, and ties in with comments from President Hu Jintao and President Wen Jiabao today.

    China will take action in H2 to revive flagging growth, Xinhua quotes its top two leaders as saying. The government will increase fiscal and monetary policy support and diversify China's export market President Hu Jintao says. President Wen Jiabao notes that the economy is showing signs of stabilization.

  25. Birdman

    Consumer confidence 65.9. You sure that's not consumer IQ? They don't have any idea, do they?

  26. Phil


    More on 
    Cummins (CMI): This is the first news from the company since its slashing of guidance on July 10 caused a brief quake in the market. Engine segment sales -2% Y/Y, with improved North American construction demand offsetting lower sales to China, Brazil, and N.A. energy markets. Shares +2.8% premarket. Theconference call at 10 ET should be a good one. (PR)

    Goodyear Tire & Rubber (GT): Q2 EPS of $0.33 misses by $0.13. Revenue of $5.2B (-8.4% Y/Y) misses by $540M. Shares-0.5% premarket. (PR)

    More on Goodyear Tire & Rubber's (GT) Q2: Tire units down 1.9% Y/Y to 15.4M. Segment operating margin improved to 7.7%, from 5.7% last year. Expects full-year tire volume to be 5%-7% below the level in 2011. Says business on track to hit $450M in segment income by end of year, ahead of previously stated plan. Shares -0.5%premarket. (PR)

    Anheuser-Busch InBev (BUD): Q2 net income +35% Y/Y to $1.96B. Revenue +4.7% to $9.87B. Overall beer volume -0.5% Y/Y. Shares -4.3% premarket. 

    More on Anheuser-Busch InBev's (BUD) Q2: Total organic revenue growth was one percentage point below consensus expectations. U.S. results were a drag, with volume down 1.8% and marketing costs increased due to the launches of Bud Light Platinum and Bud Light Lime Lime-A-Rita. Shares -4.4% premarket.

    Ford (F) retirees start to receive letters from the automaker outlining specific lump-sum pension buyout offers. The company wants former employees to take their deals in order to help close the $15.4B underfunding gap in its pension liability. 

    Pfizer (PFE): Q2 EPS of $0.62 beats by $0.08. Revenue of $15.1B beats by $200M. (PR)

    I still never got around to checking them out:  Xerox (XRXbangs the drum that Americans currently don't want their medical records stored digitally in a silo, as the company points to a survey conducted by Harris Interactive showing only 26% of respondents supported digital medical records. PARC – a Xerox company – is pioneering alternative healthcare innovations that it says will lead wider acceptance of the integration of tablets and laptops into medical settings.

    Apple (AAPL) suppliers jump after Cirrus Logic's (CRUS+22%) very strong September quarter guidance fuels hopes of both an iPad Mini and huge early orders for the next iPhone. SWKS +5.8%.TQNT +2.2%AVGO +3.1%BRCM +1.4%. OmniVision (OVTI+3.6%) is rallying even though Needham is cutting estimates on a belief Sony (SNE) has the rear camera image sensor slot for the next iPhone, though OmniVision has the front-camera slot. (CRUS transcript)

  27. stjeanluc

    What, no wheeee on oil….

  28. Phil

    FAS/Burr – If there is stimulus, XLF can pop 5% pre-market and 10% by the end of the day, that will send FAS $15-30 higher before you wake up.  It's a very dangerous ETF to short naked calls on.  You probably won't believe me until your $3 sale is costing you $18 to buy back but believe me, we got burned that way just last year.  It's not the end of the world as we sell $3-4 a month in premium ON BOTH SIDES and we have our long covers so it only cost us about 4 month's profits and we ended up fine but make sure you have the money to ride out a catastrophe because it's amazing how catastrophic an ultra-ETF can become when you are on the wrong side of it.  

    LOL Bird! 

    And WFT was that spike?   Nice reentry on our short Futures positions (Dow 13,000 and Gold $1,630 – Oil too far gone now at $88.67 but congrats to the players!).  

  29. Dennis

    Wheeee!  

  30. jerconn

    Phil – worried that AAPL up 2% and the Nas down – meaning "they" are using AAPL to prop up the Nas, and if AAPL goes down so does everything else?  Well, that's why we bought long puts, no?  Btw, the PCLN puts doing well…

  31. rpme

    Phil, strange but I only have 2 comments from Members so far today, both from Sage, have all of yours and StJean. I have always seen Bird comments in the past. Toothpaste, reference to Willy Wonka perhaps?

  32. shadowfax

    Burrben
    I for one of the group took the worst loss ever on those FAS calls, never ever do that again, and still not back to where I was before that dumbest move.

  33. sagemm1

    rpme…me too, except for you now:)

  34. shadowfax

    I have another word on tripple ETFs. I have done well on TNA and TZA stock, whenever I want to gamble the regular X1 options do plenty with a lot less premium and spread. The tripple spreads are mostly for hedging when you need it. I prefer to cash out at EOD as a hedge, super safe cash!

  35. Burrben

    Phil / shadowfax : FAS
    I understand and agree that maybe it's not a smart bet, but I'm following the FAS money philosophy.  I have the long XLF cover, and I sold the puts/calls this month and bought them back for a profit on both sides.  I was looking to sell MORE premium this month, which was the reason for my question.  
    The short FAS 88 calls will actually experience a even worse loss due to the higher delta than the short 92's, so why aren't you closing for a small loss, instead of risking a massive loss if we get talk of QE3?
     
    Shadow, I took a huge loss on the FAS Strangle portfolio too and I just got back to where I started this week.  I was paper trading FAS money for 6mo, and I got a good feel for it, but yeah being short options on a 3x ultra never sits that well with me.  

  36. lflantheman

    Good Morning!    MOMO portfolio…..Well, AAPL gets a boost from a couple of upgrades, and  other news.  OPEN  puts acting well.   LNKD a bit hesitant, but I expect it to move upward.  PCLN faltering a bit, but I expect it to move upward by friday.  PCLN is a small bet in the overall portfolio, as are the other plays.  So our position sizing is good.  I have no plays for today YET, but I'm looking.  I'm actually thinking of some short-term call selling on AAPL.  

  37. Birdman

    My TNA/TZA buy has moved from 70.34 to 70.96. Both sides up.

  38. Birdman

    Check that – TZA down a bit, TNA up.

  39. wappler

    rpme,
    Maybe the weather's too nice to stay indoors and trade?

  40. jabobeast

    bird--why is that a surprise?

  41. gandhjo

    Hi Phil
    Depending on whether we get stimulus or not, do you expect the market to move significantly? If yes, does it make any sense to buy a strangle/straddle on FAS? TIA
    gandhjo

  42. wappler

    Speaking of which, I'm outta here as well – I'll hang out by the lake and read a book!  Ciao, see you in a few hours!

  43. shadowfax

    Birdman
    I don't know what your doing in both unless a ratio but if your playing at all my target today is 79.70ish a 62% fib on a 20 day, with 79.90, yesterdays high the max.

  44. zeroxzero

    Thanks for U.S. Steel [X] Phil, my Jan $30s [!!!] popped big time [83% at present].  I believe one or other of the presidential candidates will start jawing about "rebuilding America" at some point, which is why I'm so far out of the money.  A flyer – flying — took 1/2 off, natch.

  45. angelcur

      GARY K ON CNBC JUST SAID "EUROPEAN POLITICIANS ARE JUST TRYING TO GET PAST THEIR UPCOMING VACATIONS BEFORE MELTDOWN…HAHAHAHAHA…SIMON IS GOING NUTS!

  46. bdybdy2

    Does anyone have a source for the Geithner presser tonight?  I have only seen it mentioned here on PSW.

  47. zeroxzero

    While I'm on the subject, my Ford March '13s just went green, too – thanks again.

  48. 1020

    angel – I totally agree with Gary K. The end of the 2012 Olympics could mirror the end of the 2008 summer games.
     
    Let's hope not…….

  49. Burrben

    Good read if you're bored (like I am).  A story about a father, a son, and money.
    What I learned from my Father, the Grifter

  50. Phil

    They/Jercon – Yep, it's the usual AAPL pump with what is now a 2.5% gain on the day.   That's all of the Nasdaqs gains today plus the SOX is up 1.77% so the rest of the Nas is very pathetic.  

    VIX up 1.77% to to 18.35.  

    2 Comments/Rpme – Now that we're off vacation mode (which is like weekend mode or after 3pm mode) you won't see Premium Members comments and there are, unfortunately, very few Basic Members.  Right on the Wonka reference – I guess you had to read the book though for that to click.  

    Thanks for testifying Shadow!  

    Man this market movement is extra silly today.  Dollar bouncing off 82.50 again so that should be it for the rally.  Euro popped over $1.23 so we'll see if they hold it, Pound stopped at the $1.57 line and not holding that.  

    MORE premium/Burr – Well why didn't you say so?  I was very tempted to sell 2 more of the FAS calls yesterday at $4.50 but the bottom line was, given the mix in FAS Money, that it was too dangerous in relation to the profits we've banked so far.  If we were $3,000 ahead, then I would have been happy to gamble $1,000 but not with $1,700.  I would close the FAS $88 short calls if I felt $15 would be broken on XLF but I don't, but not so much that I'd DD on the bet.  We went over this logic yesterday as to why not to roll yet.  Look, you ask my opinion and I tell you – it's simply not a risk I'm willing to take with that portfolio.  It doesn't mean you can't but my decision was to be more cautious but not so cautious that I'm going to pay $4.50 for an $88 call with FAS at $90 – our JOB is to sell premium, not buy it. 

    Up move/Gandhjo – As you can see from our $25KP mixes, I'd rather be long on stocks I'm willing to roll or DD on than on ultra spreads that become worthless if we get a stimulus failure this week (just in time for next week's long bond auctions).  If I were to bet up, FAS would be the way to go as we don't think XLF will fail $13.50 anyway, which is not too bad on a drop (<10%).  I think the long FAS spread I like would be the Sept $92/100 bull call spread for $3.10, selling Oct $65 puts for $2.65 for net .55 on the $8 spread.  If XLF pops 10%, FAS goes up $27 to $117 and you should be able to pull $6+ off the table and it's almost a sure thing the Oct puts would expire worthless if that happens.  

    Good way to play the market Wappler!  

    X/ZZ – Good positioning, you are very welcome. 

    Vacations/Angel – Could be their last paid vacation.  

    Geithner/Bdybdy – I got it Emailed to me as a Bloomberg press release yesterday and copied the details into chat.  The Email was from a girl at Bloomberg so I'm sure it's legit. 

    Speaking of Bloomberg: 

     

    Meredith Whitney appeared on “Bloomberg Surveillance” with Tom Keene and Scarlet Fu and said that the banking industry will lose 50,000 more jobs as companies shrink headcount to match revenue.  She said, “I would argue the banks have not overfired and are really middle of the way through firing.”

    F/ZZ – Nice!  

    I might of lost track but we doubled down on F to get the basis to .54, right?  That means we take 1/2 the Sept $9s back off the table at .50 – no need to be greedy for .55 as it makes our basis .58 on the rest so hardly a difference but much more comfortable to hold.  That goes for both $25KPs

  51. emunster

    PHIL, I am already out of my PCLN PUT play. I only had one contract but I took the money and ran. Made  about 30% THANKS!

  52. wtrask4

    Anyone believe this will Happen soon?
    AAPL to become part of the DOW
    http://blogs.barrons.com/techtraderdaily/2012/07/31/apple-headed-for-the-dow-time-is-ripe-says-bernstein/?mod=yahoobarrons

  53. Phil

    That was a great article Burr, thanks!  

    PCLN/EM – Very nice, congrats!  

    AAPL/Wtrask – That would be very scary.  Then one stock could just yank the entire market up and down any time.  I don't think they can become part of the Dow though because the Dow is price-weighed so adding AAPL at $600 would give it 3x more weight than IBM ($200) – kind of ridiculous.  Even if they adjust it with a split or reweight the Dow, how insane would it be with AAPL going up and down 2% a day?  So, let's hope that's not true – it would turn the markets into a total joke. 

  54. jerconn

    PHil – but adding AAPL to the Dow would make DIA much more fun!  Like trading a double or triple ETF, without the decay!

  55. jerconn

    PHil/Lflan, anyone else – here's a momo if I ever saw one – is this shortable?  Check out Mellanox (MLNX)…maybe now is a good time for some long puts on this one…

  56. Phil

    $88 oil!  Wheeee indeed!  

    11:00 AM On the hour: Dow -0.1%. 10-yr +0.14%. Euro +0.44% vs. dollar. Crude -1.12% to $88.77. Gold +0.07% to $1622.85.

    11:38 AM European shares fall for the first day in 4 as the battle between Mario Draghi and the Germans over bond purchases heats up (ECB policy meeting on Thursday). Stoxx 50 -0.6%, Germany flat, France -0.9%, Italy -0.7%, Spain -0.9%, U.K. -1.1%. The euro +0.4%to $1.2311

    12:00 PM On the hour: Dow -0.08%. 10-yr +0.12%. Euro +0.44%vs. dollar. Crude -1.21% to $88.69. Gold -0.11% to $1619.85.

    VERY GOOD COMMENTARY:  Michael Harkins offers a quick lesson in duration, saying a buyer of the 10-year Treasury at 1.5% will get crushed with just a move back in yields to 2.5%. The bond market is a fabulous bubble, he says, growing in size as those who went short at the then impossibly low rate of 2.5% a year ago lack the conviction to do the same at 1.5%.

    Always good commentary:  The cult of equity is dying, but the "cult of inflation" has only just begun, writes Bill Gross, expecting not just a few years, but decades of an "inflationary solution" to the issues developed economies face. Obviously not great for the holder of long-term bonds, inflation won't be great for stocks either. Jeremy Siegel's 6.6% long-term real return from equities in the 20th century may have been an "historical freak."

    "Buba likely to blink," says the WSJ's Alen Mattich on the battle over bond purchases between Mario Draghi and the Bundesbank (IIIIII). "Not agreeing to Draghi measures would push (the) euro and thus Germany into an ugly outcome. They're (the Bundesbank) boxed in."

    Capital outflows from Spain in May popped to €41.3B, quadrupling from a year ago. For 2012's first 5 months, outflows summed to €163B against a small net inflow a year ago. The large jump in May likely had something to do with the Bankia bailout as foreign investors dumped Spanish assets. More up-to-date figures would be helpful. 

    A survey from Deloitte tips off that the back-to-school shopping season could be a pleasant surprise for retailers such as OfficeMax (OMX -0.7%), Office Depot (ODP +1.4%), and Staples (SPLS +0.1%). A majority of respondents indicate they plan to spend more this year on school supplies, mirroring the results from a NRF poll of a couple weeks ago. If consumers follow through with the extra buying, especially electronics, the back-to-school bounce could also be felt by RSHWMTCOSTBBY, and TGT

    Yay!!!  Shares of Supervalu (SVU +7.1%) spring higher again following its CEO swap. Wall Street analysts widely back the new change based on the impressive performance of Wayne Sales when he was an exec at Canadian Tire.

    On our long put list:  Coca-Cola (KO -0.5%) CEO Muhtar Kent downplays the effect that spiking corn prices will have on its costs, pointing out that both sugar and aluminum are important commodity expenses. Despite the bravado, the impact of the historic rise in corn prices can't be ignored with hedging strategies pushed to the max. 

    While it's tempting to discard BP's (BP -4.2%) $4.8B in Q2 writedowns as one-time costs, analysts say it’s a troubling figure. "Writedowns were more than anticipated, and [with the] combination of weak operations, shares are reflecting that today," an Edward Jones analyst says, also noting that BP reported a 7% drop in production, worse than its major competitors. 

    Valero’s (VLO +6.4%) move to separate its retail operations follows a general trend of energy companies splitting up, but its 1,000-site operation may prove attractive for someone like Marathon Petroleum (MPC +0.6%). Though MPC is splitting off its pipeline business in keeping with the trend, it recently bought 10 retail stations and hinted it was “always looking for opportunity to grow.”

    Suntech (STP -15.7%) crashes again following the company's admission that collateral promised to it for guaranteeing a $662M investment may not exist. Worsening matters if the fact the investment firm promising the collateral was managed by a former Suntech sales rep. Class-action suits are already underway, and the fiasco is prompting new questions about the governance standards of Chinese ADRs. YGE -10.4%.

    Trina Solar (TSL -9.3%) makes new lows after warning it expects Q2 module shipments of 390MW-420MW, below prior guidance of 500MW-520MW. Trina also expects to report a gross margin of just 7%-9% (still better than LDK Solar's negative margin), a $26M-$28M inventory write-down, a $45M-$48M receivables provision (many solar vendors have had collection issues), and a forex loss of $22M-$23M. Shares could also be affected by Suntech's problems.

    Cummins (CMI +7%conference call: The exact opposite of Caterpillar's "hope," the company expects no improvement in Chinese demand in H2 as government stimulus efforts to this point have been light (h/t firstadopter). Cummins earns just 6% of its revenues from China, but sales there more than doubled (presentation) from 2009-2011, and are now expected to fall about 10% this year. (earnings)

    This is a big deal – De Beers controls most of the world's diamonds:  Anglo American (AAUKY.PK -1.2%) says it will acquire an incremental 40% interest in De Beers for $5.1B, taking its total stake to 85%, following the announcement by the government of Botswana that it will not to take up its pre-emptive rights to acquire an additional shareholding in the diamond company.

    Shares of Starbucks (SBUX -2.5%) take another turn lower as investors grapple with rumors the company could pay a premium for coffee rival Peet's. The bull case on SBUX states the post-earnings dip provides a great entry point with wholesale coffee prices declining, while naysayers pound out the message that the stock's pricey earnings multiple is still too high for a $36B company struggling to maintain lofty growth rates.

    Dendreon (DNDN -22%) still appears to be looking for a bottom this morning, following its dismal Q2 earnings report and restructuring announcement late yesterday. Lazard, JPMorgan and Deutsche Bank have all downgraded the shares on the back of the news, while Jefferies and Baird both cut numbers.

    Micron (MU +4.4%) jumps following a report Elpida, which Micron is set to buy, along with JV Rexchip, has begun cutting DRAM output. A major Elpida plant is expected to see a 30% production cut, mostly focused on the commodity (i.e. PC) DRAM chips that were subject to intense price declines last year. The plant is, however, seeing huge orders from Apple for higher-margin mobile DRAM chips. The DRAM industry overall is expected to see a 10% drop in supply. (previous)

    Alibaba (ALBCF.PK) is reportedly close to finishing an$8B financing round. The round will feature a combo of loans, common shares ($35B valuation), and convertible preferred shares ($43B valuation), and will allow Alibaba to buy back half of Yahoo's (YHOO) 40% stake for $7.1B. That represents more than a 14x return for Yahoo, which bought the entire stake for $1B seven years ago. Alibaba generated 1H revenue of more than $1.8B, up over 60% Y/Y. (yesterday)  - See my 2007 commentary.  I was wrong about YHOO making $50 but nailed the Alibaba valuation.  

    Down another 6.5% today:  More on Facebook: Limited Run, provider of a distribution platform for musicians, is making waves by claiming 80% of the Facebook ad clicks it was paying for came from bots rather than actual users (it thinks a competitor could be to blame). Limited Run also says its complaints to Facebook were met with indifference. Other advertisers have had better experiences, but this isn't the first accusation of click fraud on Facebook, or of Facebook failing to address advertiser concerns

    Facebook (FB ) tumbles to new lows; shares are now down 44% from their $38 IPO price. The decline comes after Bernstein's Carlos Kirjner provides a lukewarm upgrade to Market Perform. Kirjner values Facebook's ad business at $19/share, and everything else at a mere $4/share. Moreover, he's worried about a decline in European ad rates (ed: ad rates rose elsewhere), and a share lock-up expiration that begins in August, and will increase Facebook's float by 276% by November. ZNGA -2.3%.

  57. Phil


    YouTube (
    GOOG) plans to invest another $200M in professional video channels, after being pleased with the results of its original $150M investment. The world's top video site says it has already secured $150M+ in 2012 advertiser commitments related to the channels, as it benefits from the higher ad rates given to professional content. YouTube also has to be pleased with the channels' impact on monthly viewing. Is a subscription service now on tap? (also

    Apple (AAPL +2.6%) rallies following Cirrus Logic's guidance; shares are now above where they traded prior to the FQ3 miss. Apple could also be getting a lift from a Bernstein report claiming the company may be considering a stock split in order to get included in the price-weighted Dow. Meanwhile, sometimes-accurate Digitimes is reporting that suppliers of the in-cell touch panels to be used in the next iPhone are struggling with yield issues, and that Apple is providing subsidies in response.

    Three lunchtime reads:

    1) Income investors should still be buying equities

    2) Suggestions for an Apple shopping list

    3) More Chinese regions propose mega-stimulus

  58. emunster

    US POSTAL  to miss $ 5.5 billion payment to US treasury.  Errr.  Sorry about that   Cheese and crackers nobody pays their bills

  59. Phil

    DIA/Jerconn – Well there is that.  Maybe they are trying to drive the last few people (I think its us) out of the markets. 

    Gratitude/1020 – Very good point.  

    MLNX/Jerconn – I hate fabless semis.  You never know what's going on from moment to moment.  

    Not good for the indexes if we fail to hold here – Dow 13,000 especially (already 12,968 in the Futures), S&P at 1,380, RUT 787 was a watch line and lining up with precision to NYSE 7,870 and how ridiculous is it for someone to tell you that Bots don't rule this market when we can predict the NYSE and the RUT to move in lockstep with a 10x differential between them?  We already failed my morning watch levels – now let's see if they can take them back on a bounce.  

    Also, I know the market is going lower when I start getting Emails from analysts trying to convince me that my take on the market is wrong.  I love it when they try to change my mind.  Here's one guy (I guess he wants people to read this) who's targeting 1,600 on the S&P based on some seriously faulty analysis of the Dow:

    Dow Jones Industrials Model (c) The Other Street

    Postal/EM – That's going to be another catastrophe.  Congress doesn't let them raise rates and then freaks out when they are over budget – it's ridiculous. 

  60. stjeanluc

    F / Phil – Our cost basis is higher than the $0.54. We had 2 sets of 20 Aug calls – one at  $0.27 and the other at $0.15 and we rolled both when they were at $0.06 to the 40 Sept 9 at $0.54. That would make our cost basis around $0.69 then I believe.

  61. angelcur

    CONSUMER CONFIDENCE CONFUSION// still well below feb. of last year and that measure of confidence is very sensitive to stock market…big rally from june lows to july highs

  62. Inkarri19

    Hi Phil – Any thoughts on this 6-month "sto-gap" measure being proposed by COngress?  I read a bit about the bill not allowing the automatic spending cuts that were agreed upon last year during the debt ceiling party to take place.  TIA

  63. rkyroma

    Phil-
    TLT bucking the trend here.  I was hoping for it to get back to 131-132 to short again, but now might be the time to start adding some longer-term puts.
    BBY – how does a Jan13 15/22 bull call spread look to you?

  64. snow

    Basics/Rpme – here ya go, rpme, another basic member adding my two cents. Which is to snicker at Phil's comment of horror "it would turn the markets into a total joke"
    What?! Oh no, we can't have that!!!

  65. Amalfi

    Who thinks MA is gonna' beat da' street?

  66. Jbur

    F/Stj: I agree. My calculated cost basis is now 0.71

  67. dclark41

    stjeanluc:
    I concur with what you said on F.

  68. morxlntway

    SVU another doing well today but, by my calculation, a .65c basis on the Oct $2 calls.

  69. zeroxzero

    zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz………………

  70. zeroxzero

    And who'd have thought there were sharks in Lake Kinneret?  Seems Romney found one, and jumped it.  Could the election already be over?  Is there an option for that?

  71. danny3399

    Anybody know the best place to get a list of the major companies that are still left to report earnings with the days and times. I have looked at the yahoo earnings calender but it shows every compnay that reports everyday and so many to look at.

  72. rustle123

    Phil/analysts
     
    I'll bet that guy his house that we don't get to 1600 on the S&P by year end.  Let's see his conviction.

  73. lflantheman

    Someone asked me a few days ago if the AAPL Jan 600/650s were still a good buy.   I said then I thought they might pull back a bit in the short term.   Uhhhhh……..yeah.     Well, here's a test I sometimes give myself to try and keep on the right track with these trades.  If I didn't own the position, would I buy it (or sell it) today?    And for this position, I would purchase it today, but I can't, as I'm already there. 

  74. Laddoo

    earnings/danny3399
    This may help…
    http://www.earnings.com/earning.asp?date=20120731&client=cb
    I haven't personally used it much, but Scottrade recommended it, so I guess it's accurate…:)

  75. rpme

    Snow, you could have stayed in the closet, no one knew you were a basic member.

  76. rpme

    Phil, is Bill Gross saying the same thing you have said, inflation is our only way out?

  77. yodi

    Phil and Iflan Are you still holdin g the the Sept play of TKR the boring stock b/c/p Sept 40/45 at 11.10/7.40 now .97/.20 sold Sept put at 3.10 now up to 8.95 trading down now at 36.39  it looks like the same is not so sleepy any more loss on two plays 1600.00 so fare. Any comments TIA

  78. yodi

    I can not see what is the down draft on the NYA even with AAPL up 2.7% any one TIA

  79. zeroxzero

    Mars Rover landing this weekend. http://www.nasa.gov/multimedia/videogallery/index.html?media_id=146903741

  80. Inkarri19

    Reid, Boehner and Obama agree to 6-month stopgap meausre to the tune of $1.047T.  It never does truly end.  I imagine the Chinese and Japanese are ecstatic.

  81. escohen5

    Phil — Is there an SCO trade in here somewhere?  It's been awhile since we did that one.  Earlier, before the spike down, I tried to get a fill on Sept 40/45 BCS, and selling the Sept. 40 put, for net $0.40 on the $5 spread that was almost all ITM. Didn't fill…now it's .80.

  82. 1020

    The Post Office offers one of the best and always available, bargains out there. A First Class Stamp!
    (the costs of most of what the Post Office offers, is a helluva lot cheaper than UPS or FEDEX)
     
    Let them raise the cost of that stamp to help get back in the black….. :)

  83. ariveraA

    Hi Phil: Think X is a buy at $20?  I already sold 2014 $18 puts a while back so doing well but always figured the stock can go up 20% + from here.  Thanks!

  84. lflantheman

    yodi….TKR…that's not a play of mine  ——--> to Phil.
    jerconn….MLNX…..no interest from here in that particular stock. 

  85. Birdman

    Inky – Reid, Boehner and Obama agree to 6-month stopgap measure to the tune of $1.047T.
     
    Where does that come from??

  86. Inkarri19

    Bird – Just read the article and closed it down.  Let me find it again.

  87. 8800

    Phil,
    Given that the answer to the immediate stimulus question – which should be resolved tonight or at least this week – is very much a binary event, if one were inclined to the downside which spread vehicle (with reasonable liquidity) would you chose – TZA 17/24 (Aug/Sep), etc. with a view to an immediate exit, if wrong.
    TIA

  88. Phil

    F/StJ – Well then let's wait a bit in the $25KPs but let's call .65 a happy exit on half.  

    Confidence/Angel – That's right and we were heading up into the end of June. 

    Hey, is anyone here a travel agent?  I have some questions about the business.  

    Stop-Gap/Ink – It's just kicking the can down the road again, which is what they ultimately have to do every time anyway.  That's why you should never take anything Congress says seriously, even when they pass a bill about it. 

    TLT/Rkyro – I would rather wait to see what the CBs do tomorrow and Thursday. Maybe they buy notes and send it to $140 this time.  On BBY, I like them and that's a good time-frame. 

    Nice, 13,000 again on /YM!  If they fail that line again we can short them again.  You can just play this one all day long and ignore the rest.   Oil back to $88 and gold trying to get back to $1,620 after bottoming at $1,614 so win, win, win on the Futures today.  

    Joke/Snow – Something can be a joke and continue to function but if it crosses the line and simply becomes ridiculous – that's when it begins to collapse.  Look at pro wrestling – it was a successful joke for decades, no betting, of course and, eventually, they even went too far and turned off their fan base.  Or how about Cramer – his show was once the hottest thing on CNBC, now he can't attract enough viewers to fill a football stadium – that's a total joke. 

    MA/Amalfi – V had great numbers so no reason to think MA won't but, since Jan 2011, they have outperformed V by about 50% and I thought V's reaction was overdone and MA already followed them higher.  Plus the EU issues and poor summer driving season spells trouble.  Too dangerous to play around stimulus though.  

    Romney/ZZ – Yeah, this was not a good trip for him.  Remember when Obama went to Europe – they LOVED him.  What on Earth made Mitt or his people think they'd love, or even like, Mitt? 

    Companies/Danny – Try going weekly on Briefing.com – they tend to highlight the biggies (and details if you click for full listing) but they also miss many that are important.  

    Betting the house/Rustle – 20% in 6 months?  Maybe with a couple of Trillion in stimulus…

    Gross/Rpme – Yep, he's a smart guy.  He's evil but smart.  There is no other way out other than default and even a bond guy like Gross would rather see inflation than default.  Default is fun when you can get other countries to back it up but we're too big to pass the buck now and the next defaults could be systemic.  

    TKR/Yodi – I don't know nothin' about it.  As to NYA – what are you talking about?  The NYSE?  AAPL doesn't carry that much weight in that index.  Anyway, the Nas is barely positive despite AAPL up 2.7%. 

    Mars/ZZ – Cool, a whole new planet to sell IPhones to!  

    I wonder if we should count the Debt Ceiling extension as stimulus?  It's not really, it's just avoiding a total catastrophe if they didn't do it.  

    SCO/Esco – No because the possibility of cutting Ethanol can bump US demand about 1.5Mb/day and it's not priced in.  If we get a pop off that, then I'd like to go for a short but this is iffy – better for quick futures plays.  

    Post office/1020 – It's over.  UPS and FDX have their pet Congresspeople working to eliminate the competition.  

    X/Arivera – I liked them enough to go on the Income Portfolio but that was selling the 2014 $20 puts for $5.90.  I love that trade (even at $14.10) but I'm not sure I want to be betting they hit $24.  Check out the China Steel news from early this morning – that's going to blow back globally without stimulus.  

  89. Inkarri19

    Phil/Stimulus – I think that may make sense.  I beleive Reid said that the $1T in stopgap would hold us over BUT also saod we won't hit the debt ceiling limit until February or March.  I'm sure there is some overlap there somewhere as we aren't that faraway from $16T.

  90. Inkarri19

    And can't see how we don't spend the remiaing $400B before year-end.

  91. cdel360

    I have a Jan 13 77.5/100 strangle on CMI…today I bought back the Put side for a nice profit.  I am wondering if anyone out there has an opinion on whether I should roll up and out today (March 13/Jan 14), or hold tight for the market to pull it back in.  I did not expect such a dramatic move considering their lowered guidance that tanked the entire market for a day 2 weeks ago…
    excuses, excuses…

  92. angelcur

    WHEN MITT JUMPS A SHARK AN OFFSPRING MAY BE THE RESULT

  93. ariveraA

    X – Thanks.  Read the first part and missed the important one. 

  94. Laddoo

    DIA Aug $128 Puts/Phil
     
    Assuming we don't hit $1.60 on the DIA Aug $128 puts, would you hold them through Geithner's speech tonight? 
    BTW, my cost basis is $1.13.

  95. hoss18

    Phil – On July 16th I bought a CRUS Jan13 25/30 BCS for $2.04 and sold the Jan13 20 Put for $2.00, giving me a $5 spread for $0.04.  Obviously, with their earnings and guidance, they have blown through my spread and the value of the puts has plummeted.  The speed of the change has left me wondering the best way to adjust the position.  I'm thinking about the following:
     
    Selling the 25 C for $13.35(originally bought for $4.94)
     
    Buying Jan 13 35/45 BCS for $3.88, and then Selling the Jan 13 Put for $2.65 giving me $10.00 spread for $1.23, and putting $9.47 in my pocket. However, it still leaves me with the sold 30 calls from the original BCS, just using the value of the second BCS to cover the sold calls.
     
    Or would I be better off buying the Jan 13 29 calls for $10.40 and selling the 25 Calls for $13.40 putting $3.00 in my pocket and making the spread a $1.00 BCS?
     
    Just wondering the best approach when a BCS suddenly goes hugely in your favor.  Or is it best to just ride it out(which seems like too big a risk given the overall market conditions, which could easily drag this high flyer down).

  96. cdel360

    Also, There looks to be a perfect head and shoulders pattern forming on the CF chart.  While I like the company and have ridden them up from the 130s, I am now looking at taking a short position.  Thoughts?  Sept 165 Puts are $2

  97. Phil

    Spread/8800 – The Rut is actually way behind the S&P and the Nasdaq over the past 6 months, by about 5%.  I like shorting the Nas as AAPL could drop back on its own issues and is not likely to hold up in a broad sell-off.  That would be the same logic that lead us to the SQQQ $49s in the $25KPs and the Income Portfolio but, as a new entry, I like the $47/55 bull call spread at $1.50, selling anything off the TWIL list that's still good for an offset or something fun like CMG Aug $260 puts for $1.10 for a net .40 entry on the spread with a 2,000% payoff potential.  I like the short CMG puts because they are easy to roll down 10% and they are already 10% out of the money to start.  

    $16Tn/Ink – Funny because now I remember when the debt was only $3.5Tn and we were going to pay it off.  That was 12 years ago so another decade we'll probably be thinking how cute it was that $16Tn bothered us…

    CMI/Cdel – Why move the $100s when they are all premium?  $100 should be a tough nut to crack but your real mistake was expecting a stock that had dropped $40 since March to not move $15 between now and Jan – think how silly that is.  

    $87.50 holding on oil, worth an upside toss into inventories tomorrow.  USO Aug $33s are .74 and they were $1.20 yesterday so not a bad risk/reward as oil's not likely to drop back to $85 that easily.  10 in both $25KPs.

  98. yodi

    Phil NYA sorry my mistake. TKR can you advice me how to get to the Phil's Newsletter of 10th April 12 TIA

  99. Birdman

    CF/360 – That truly is a textbook H&S.

  100. rainman

    Post office / end game — Not so fast!  FedEx is using the post office for the "final mile" of delivery. They deliver to the post office and the post office delivers the package to the home. Makes sense with the post office going to your house daily anyway.

  101. cdel360

    Birdman/CF – too good to be real?? I am giving it a shot anyway. 
    Bought Sept 160 puts for $1.50.  I normally sell premium but this is a "long puts list" style trade…

  102. dflam

    phil/anybody: where are the current income portfolios positions listed?

  103. 8800

    Phil,
    Thanks for the perspective on the lagging aspect o f RUT and the thgt re SQQQ(47/55 bcs) . I'm assuming you're referencing the Sep @1.55 vs the Aug @ 1.03 The 47/55 bcs, right?

  104. dpastramas

    CF/ Cdel – Thanks for the heads up. I bought some puts, wishing for the best!  Cheers

  105. Phil

    DIA/$25KP, Laddoo – That's why I added the USO calls – buffer.  My feeling is it's not Geithner's place to announce major policy so all he might do is float a rumor or a plan and that may goose us and that would be a DD or rolling opportunity as it's just another sugar rush (if we even get that).  

    CRUS/Hoss – I'm confused, what's the problem?  You are way ahead of schedule and you can just sit back and collect your $4.96 profit.  That's your bird in the hand.  Now you want to let that go and start piling on risk?  Let's say that $20 is off the table – you can buy back the $20 puts for .65 and sell the $28 puts for $2.20 and that's +$1.35 and then you can use that to push the $30 caller ($9.50) to the $33 caller $7.50 for another .65 and then you've added a possible $3 of upside to your spread for net .65 and THEN you can put a stop on the $25s ($13.10) at $12 and THEN you can cover the remaining short calls with a 2014 spread, like the $35/45 for $3.80.  Unless you think the move up in CRUS was wrong and will be quickly erased, why would you want to turn yourself into a bear on it?  

    CF/Cdel – Great growth in a sector that's likely to do well next year (replenishing drought-ravaged soil).  I would not bet against them.  They may go down with the market but there are far worse stocks to go short on.  

    Newsletter/Yodi – Just go to http://www.stockworldweekly.com and go for the archives.  

    Post office/Rain – Is that a new thing?  Good idea but BS if we're subsidizing $5Bn loss so FDX can not do their job.  

    Income Portfolio/Dflam – StJean puts it up Friday afternoons, that's the update.  

    SQQQ/8800 – Yes, that was September, sorry!  

  106. Phil

    12,960 again!  This is great, just sit back and play the /YM all day..

  107. cdel360

    CF/Phil – short term play…as I said, great company and on my long term buy list

  108. Laddoo

    DIA Aug $128 Puts/Phil
    Thank You!  Just got the fill on the USO Aug $33 calls!

  109. jacalynm

    OK Phil you can spank my stupidity now :)   remind me what "YM" is and be gentle….

  110. hoss18

    Thanks Phil….I had seen you do something similar to an AAPL spread with me earlier this year, and was looking to do the same thing.  what you propose is closer to my objective than what I had come up with, which is why I asked you.  There was no problem, just trying to determine the best course forward for this position….although sitting back and collecting the cash does seem very tempting……was hoping for, and received, another pearl of wisdom.  Thanks!

  111. rainman

    Post office / Phil — Relatively new, maybe 6 months or so.  It can be argued that both make out but also argued that we are subsidizing FedEx.  Capitalism at it's best!

  112. newt

    /YM dow mini futures

  113. jacalynm

    thnx newt

  114. rainman

    Wheee!

  115. Birdman

    Got on SVU at the opening, mainly because it's a real company and I was bored being flat. Fun day today anyway.

  116. Phil

    Ugly finish. 

    No volume though, just 114M for the day on the Dow.  

    /YM/Jacalyn – That's the Dow Futures.  Not something you'd know unless you play them.  Anything with a "/" in front is a Futures play.  

    No problem Hoss – you just have to step back and break down the if/thens of each stage and think about what you would do if playing the position from scratch.  Sometimes, the existing trade can prevent you from getting out of the box for a fresh look.  

    Post office/Rain – If we're losing $5Bn and running a service that FDX utilizes heavily, then we're subsidizing FDX…

    OK, that was an easy one – now things get intense for the next 48 hours…. 

  117. zeroxzero

    The DIA hedge kept a green day green, that balance thing really is a good idea, although you tend to decry it when the market heads into the stratosphere.  I'm amazed it's possible to make money on both sides if you're quick and non-greedy. Arigato gozaimasu, sensei!!

  118. stjeanluc

    Looking at the trend over that last 2 months, we should be expect a down day tomorrow and maybe Bernanke's will provide the ammo to the bears. The Dow and S&P really look driven by algos!

  119. stjeanluc

    The war on the poor continues:

    http://www.nybooks.com/blogs/nyrblog/2012/jul/30/medicaid-cruelty/

    A nation that can’t summon a natural compassion for the poor—that can’t understand that many Americans face hardship in circumstances that no amount of personal responsibility can surmount—is losing its moral bearings. As more people experience the benefits of Obamacare, including the Medicaid expansion, resistant states may well be pressured to adopt the program over time. We cannot be certain yet which way the nation will turn. One thing we do know is that if Obama loses the November election, much of the health care reform may be overturned before it has had a chance to have much impact, and those waging war against the poor will enjoy another victory.

  120. jerconn

    PHil – give me a little education here, please – I suggested MLNX as a momo to play short and you rejected it as a fabless semi and we just don't know what's going on with those…my question is, isn't that the definition of a momo – we just don't know what's going on with them – they go up to nonsensical valuations and then it's time to short them?  Well, here you have a mid-cap with a forward PE of 39, admittedly not as high as some other ridiculous stocks, but a graph that is not only parabolic but nearly vertical for the last year…in this market, why would you NOT want to short it?  What am I missing here?

  121. yodi

    Phil Thank you for the info re archive but I tried everything but I can not pull up the daily report of the 10th April 2012 I am looking for the comments of that day. Thank you

  122. Birdman

    Nassim Taleb on Bernanke (in 2009): : “He doesn’t even know he doesn’t understand how things work. His methods make homeopath and alternative healers look empirical and scientific.” 
     
    Not too reassuring.

  123. Burrben

    Yodi / April 10
    Link to April 10th

  124. Birdman

    What if….
     
    What if you made a big bet on a market melt-down, got a huge melt-down, made huge profits – but your brokerage firm went bankrupt, the government was essentially bankrupt, and your great riches simply vanished? Far fetched?

  125. shadowfax

    Phil FDX
    For a while you could drop off Fed EX at the Post Office but here you can't anymore, and USPS never delivered to my house, they don't even come to the door for registered mail, only leave a slip to go to the post office. A few years ago they came to the door with USPS packages but that stopped also. UPS and FDX come to the door for pick up or delivery, maybe they should do the mail!

  126. rkyroma

    Some interesting Marcellus shale costs and political moves in this article
    http://www.examiner.com/article/corbett-administration-presses-on-despite-poor-shale-gas-financials

  127. zeroxzero

    Birdman:  There are worse things.  Like whacking your head on your tile floor because your children had a shampoo fight in the bathroom. You live your life, you take your chances.   " According to astronomers at the Mount Lemmon observatory in Arizona, there is an asteroid – they're calling it "2011 AG5" – whose current orbit gives it a one in 625 chance of hitting Earth in 2040. The asteroid is only 460ft wide, not big enough to kill us all, but it could obliterate a city if it lands on one. Further observations will be carried out next year, but at the moment that's where things stand: 625-1.  Worried? Should you be? Odds like these are rather hard to quantify emotionally, especially when something so important is at stake."  http://www.guardian.co.uk/science/shortcuts/2012/feb/29/asteroid-625-1-chance-hitting-earth

  128. Birdman

    0X0 – Judging by the profound doom and gloom on this board, the probability of your digital assets being wiped out in a worldwide financial apocalypse are far greater than an asteroid hitting the earth.  Or maybe I'm losing my perspective. 

  129. Burrben

    This could be interesting, Fracking without the water
     
    Chimera Energy Corporation of Houston, Texas, has announced that they are licensing a new method for extracting oil and gas from shale fields that doesn't contaminate ground water resources because it uses exothermic reactions instead of water to fracture shale.
    http://www.gizmag.com/dry-extraction-fracking/23513/

  130. rkyroma

    mrmocha – are you a Premium Member?  I'll be bummed if I can't see the Crazy Plays real-time.

  131. oburlacu

    $9,000,000,000,000 MISSING From The Federal Reserve:
    http://www.youtube.com/watch?v=1QK4bblyfsc
     
    Makes you wonder….

  132. danny3399

    Savi,
    I was wondering if there were still spots open for Vegas. I know you have posted a few times on here how to pay the deposit but I was wondering if you could go into more detail about how to do it on paypal.
    Thanks

  133. zeroxzero

    Bird / Perspective:   You must be younger than I.  I was in college and law school in the '70s, my parents lived in London, I remember gas lines with people shot for jumping the queue, Gremlins [now that was grim] , and traveling to London for Xmas  '75. It was a crumbling city, an IRA bomb went off in Harrods while I was there, blood and death, the end of Western Civilization with Japan all-conquering.  Or so it seemed, and I was bloody glad not to be looking for a job.  By the time I made it to Wall Street in late '77, the U.S. was revving up, and by 1980 I was pulling down a big salary at an investment bank, partying at Studio 54 with Warhol, Halston and other glitterati and thought the future held infinite riches. I moved to the Left Coast by the mid-eighties,  and by '91 you couldn't give away a La Jolla beach house, and it was clear the party had been an illusion — and then the tech bubble rolled in, and we were off and running again.
     
     Until the bubble rolled out again.  And then the Collateralized Mortgage Obligation was born.  Etc. Etc.   Historical memory, along with our lifetimes, is pathetically short, there are at least two or three near-Apocalypses per generation, and I'm sure the Egyptians, Assyrians and Mayans thought so too.  

  134. emunster

    OBURLACU
     
    Why do we not hear about this, they mentioned a BLOOMBERG report but i watch bloomberg alot but never heard anything about this.
    It would be funny if NOT SO SAD. So there are just as good at OFF BALANCE SHEET BS as everyone else.

  135. Birdman

    There are some who believe that the Baltic Dry Index is one of the leading global economic indicators. If it is, this is a very troubling charthttp://www.bloomberg.com/quote/BDIY:IND

  136. Birdman

    Younger / X0X – If only. I was a child of the 60's: protested against the war in Vietnam, civil rights activist, spent much too much time in jail. Stockbroker beginning in 1975 (talk about the end of the world). Had to FORCE my clients to by AA rated 18% non-callable 10 year bonds in the early 80's. Present during October '87 melt-down. Sold an Internet marketing company for 12X revenues in April 2000, bought 6% munies, no stocks. Lots of t-shirts. Many focused on my five grandkids right now. It took me a while, but all I really care about now is family, friends and health. Everything else is BS.

  137. zeroxzero

     Right on, brother.

  138. Savi

    danny—yes, you can still register—-go to paypal and click on send money and follow directions—-all you need is my e-mail   savi_ted@hotmail.com
    $206.10  if you pick issue refund feature otherwise $200

  139. Savi

    danny—my reply to you is in moderation and should be released soon

  140. Burrben

    This is REALLY interesting…..the exact same thing happened July 31st 2011…..Aliens?
    4.1Billion Notional Value
     
    Visualizing Today's Deja Vu Last Second 60,000 E-Mini Contract Wipe Out
    http://www.zerohedge.com/news/visualizing-todays-last-second-60000-e-mini-contract-wipe-out

  141. lolobear

    I'm in Canada so I don't have Bloomberg tv.  Whats Timothy G saying on tv?

  142. Phil

    Timmy not moving the markets much. Just backing Draghi's play not much of a statement. 

    Nice job with balancing act ZZ!  

    Big Chart – those 50 dmas are bending up very impressively and the 200 dmas all held except NYSE (but their -5% line held like a champ).  That's some pretty bullish technicals.  

    MLNX/Jerconn – I didn't reject it, just said it's not something I like to play.  I can understand CMG's business and sense when they may be exceeding their potential value – same with AMZN (though I'm wrong so far) but I don't have a clue in the World what MLNX is selling, what they own and what they are licensing, what contracts they have with manufacturers and customers and what the terms are or what's in their pipeline – so I have no idea whether they are worth $40, like the were in April, or $140, which is just 20% away.   Maybe they were just far too cheap last year, maybe their business model changed…  Something sure changed because they earned $1.07 per $35 share all of last year but this year they are making $1 per quarter so 4x $35 = $140 and they are worth a hell of a lot more than that if they can keep up that pace of growth.  At $4 per share and $105, their p/e is actually 26, not 39, you're looking backwards to get your valuation.  Perhaps they are not a Momo stock – there's certainly no great hype around them, is there?  Maybe they are just a company that's growing fast and being recognized for their true value?  I don't have the answers, it would take ages to research so we get back to – I don't like fabless semis because they are too difficult to value so, unless there is some spectacularly good reason to go long or short – I have no interest in playing.  

    Sorry Yodi, I thought you were looking for SWW from that date, the dailies are archived under the Phil tab and thanks Burr for tracking that down.  

    Brokerage/Bird – Not at all far-fetched.  I was pointing that out to people in 2008 who were taking these silly, speculative short positions and I essentially was saying that if those shorts ever triggered – there wouldn't be anyone around to pay them.  Same thing with gold $5,000 – long before you get paid, someone will shoot you on the way to the bank and loot your car for supplies.

    Private mail/Shadow – You may get your wish but a stamp will be $3. 

    Shale/Rkyroma – Well at $3, nobody's making money.  Simple case of supply way outpacing demand.  

    Asteroid/ZZ – 625 to one of something with an atomic-bomb kind of damage potential sounds bad BUT, then there's 196,940,000 square miles it could hit and even if 100 square miles were affected, we're talking about 1/1,969,400 AFTER the 1/625 that this would be something that affects you.  There is a 75% chance it would land in the ocean and another 15% chance it hits uninhabited land.  Worried – What, me?  

    Oddly enough though, just as I was walking up my stairs tonight, I saw the biggest shooting star I ever saw and it was heading straight down very fast.  I'm sure it hit something but it was very hard to tell as I live on a mountain and the view I had was over a ridge and it landed "out there" but whether it was a very small one 10 miles away or a huge one 100 miles away, I have no idea.  It was amazingly cool though and, interestingly enough – I was just contemplating how worried we should be about such things before I sat down and read your comment – that is amazingly coincidental.  

    Fracking/Burr – That's nice but notice they are promoting this as a process that doesn't contaminate the groundwater while their fellow drillers are still in court arguing that they don't contaminate groundwater.  If this thing works, though, then we can go after the massive shale reserves in Wyoming and other Western states where there wasn't enough water to make it practical.

    Fed/Obur – But they don't question the Fed, they question the Inspector, who has no budget and no staff.  She's trying to explain to this guy she's not an auditor but he doesn't care.  This is what Ron Paul's trying to accomplish with his audit the Fed stuff.  

    Great perspective ZZ.  

    BDI/Bird – That used to be true but it's not anymore.  Shipping capacity blew past demand 3 years ago and, if you look at the morning news notes, the glut of capacity is so bad that the Chinese ship-builders haven't gotten any orders ALL YEAR for new ships.  It will take many, many years for usage to come anywhere near where it was and all these new tankers (some of which are still rolling off the lines from old orders) have nowhere to go anymore.  That keeps BDI super-low. 

    Drift/Bird – That's interesting but too tired to worry about it now.  

    Futures holding flat but Nikkei up 0.7% and Hang Seng up 1% with India up 0.5%.  Shanghai still out of it – down 0.3%

  143. zeroxzero

    Head of Fixed Income from Carmignac Gestion, on credit and equity markets in the U.S. and Europe, on QE, on yield vs. [strong] credit, on U.S. bank debt.   She thinks that because U.S. banks are cheap, the spreads between bank and sovereign credit are attractive.  They are picking up bonds from AIG, CIT and Allied which have gone through restructuring and deleveraging.  Comments on the Eurozone are very bearish.  http://www.citywire.co.uk/global/fed-not-ready-to-deliver-qe3-says-carmignac-bond-star/a607520?ref=citywire-global-videos-list

  144. yodi

    Phil Burrben Thanks for you help 7 AM here in Europe and I went to bed last night the 4PM US closing is late for me.

  145. jerconn

    Phil – thanks for the explanation on MLNX!

  146. jromeha

    Awful #s all around last night…Not sure how we aren't down more, guess lil Ben is expected to do big things. We'll see. lol

  147. Burrben

    Phil –  Would it be possible to highlight the futures trade setup's a bit more than you do?  Sometimes I feel like I have to read between the lines.  I would have loved to work the /YM and /CL trades, but I just kinda missed them.  Now I know this is my issue, I'm just asking for a little more help on them.  Maybe a bold, or stronger language or something.  If you could help at all I'd appreciate it!  You're really good at calling them.

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