by phil - August 21st, 2012 6:58 am
Here we go again (again)!
Yep, that's what I said last Tuesday and the Tuesday before that because Tuesday is a day they push the Futures higher and ditch the Dollar and tell you that this time it's different because of the same rumors they had the Tuesday before only this week – the data is getting worse and worse, as we know is better, right?
Last Tuesday we set levels to capitulate and go fully bullish at Dow 13,464, S&P 1,428, Nasdaq 3,060, NYSE 8,160 and Russell 816 and, as of yesterday's close we had the Nasdaq and the Russell over their marks needing just one confirmation to make it 3 of 5 and begin to flip our short-term portfolios (the $25KPs) bullish. We are soooo close but, so far – no cigar.
While we waited, we looked at some upside hedges that would do well if the market continued higher. Just as we get downside protection when we're bullish – we use upside protection when we're bearish and I suggested taking 5% or 10% positions in aggressive upside plays to help balance a bearish portfolio against – well against exactly what happened in the past 7 days. Our trade ideas were:
- 2 FAS Oct $105/115 bull call spread at $2, selling 1 BBY 2014 $18 puts for $3.25 for net .75, now $1.15 – up 53%
- 2014 SHLD $32.50 puts sold for $7.50, now $6.40 – up 15%
- 6 EWJ Jan $9 calls at .53, selling 1 BBY 2014 $18 put at $3.25 for a net .07 credit, still net .07 credit – even
- TNA Oct $55/61 bull call spread at $2.50, selling Oct $42 puts for $1.90 for net .60, now $1.80 – up 200%
The BBY puts jumped over 20% yesterday, from below $3 to $3.75 and that killed two of our trades (and worse today after earnings!), that were up significantly in Friday's update (which is why we take quick gains like that off the table). The good news is the EWJ play gives us a nice, new entry at the same net price so that one is still good and, of course, we are done with TNA after making 200% in a week and we'll find a fresh horse for that money.
by phil - June 8th, 2012 8:37 am
That was the word from Uncle Ben yesterday as he testified before the Senate and, as we warned you in the morning post, without Dr. Bernanke firing those stage two boosters on the market:
We may fall gently back to our lows as we once again shift our focus to the G20 or we may blow up, along with the bullish expectations that have driven the market for the past two days – in which case, I don't know if the G20 will have enough fuel to pull us out of the tailspin that a lack of Fed action is likely to put us in.
So not much new to report this morning. We are, so far, in a relatively gentle descent – market-wise but we caught the danger signs as our gauges flashed warnings at us early yesterday and went from "Cashy and Cautious" back to CASH. As my morning Alert to Members, which went out at 9:53 yesterday morning, said:
Good morning – cash, Cash, CASH is King ahead of Bernanke at 10. Nice pop to lighten up into and that would go for the small portfolios too if I weren't playing them for an aggressively bullish hunch that Ben has no choice at this point, other than to at least strongly indicate that additional accommodative policy is likely warranted.
Oil is testing $87 (/CL) and is a great short here. $86 is still too much based on yesterday's inventory. If Ben fails to stimulate – it will drop like a rock but very, very dangerous to say the least.
Cash is so much more relaxing!!
We recycled the 5 bearish trade ideas we didn't get to use the day before as all of our levels held but yesterday, our levels were S&P 1,310, Nas 2,850, Russell 760 and NYSE 7,600 and those quickly flashed failure warnings across the board and by 10:03 we got the text of Ben's speech and knew it was time to abandon ship. As the Q&A got underway, my 10:31 comment to Members was:
FAS Money/StJ – Up $10,000??? CASH!!!! (we started with $2,000)
by phil - May 31st, 2012 8:06 am
That's how much the Dollar has risen in the month of May. Should we be surprised then, that the S&P has fallen 7.2% – from 1,415 to 1,313? The Dow is down 900 points and that's 6.7% etc. Are the chart's, in fact, giving us a misleading view of how well our markets are doing? I said to Members in this morning's chat:
Big Chart still indicating a constructive floor although it doesn't feel like it. Don't forget we're supposed to adjust our lines vs the Dollar and the Dollar is up 5.4% in May. This is a BIG factor because it means ALL stocks should be 5.4% cheaper when you buy them with Dollars so look 2 2.5% lines higher and THAT's where we've recovered to – back to our April highs in a Dollar-neutral market.
Will the Dollar go up forever and keep shoving the indexes lower? Probably not and, if the Euro ever comes back and the Dollar falls – we will see a spectacular rally and all the bears will whine about how unfair it is ect. but I'll tell you right now it's a very simple and natural thing for us to have a sudden 2.5-5% pop on any can-kicking resolution from Europe and/or stimulus from the Fed.
It's very impressive that we've made any progress at all since the 21st as the Dollar has moved 2.4% since then (81-83) and that also means gold is holding up pretty well and gasoline is a huge rip-off as well as, of course TLT is up to 126.16 because the Dollars the notes are priced in are rising and that's part of your net gains in TBills too.
Back in the last Euro panic in 2010, when the Euro dropped to $1.19,
by phil - May 24th, 2012 8:28 am
I've listened to preachers
I've listened to fools
I've watched all the dropouts
Who make their own rules
One person conditioned to rule and control
The media sells it and you live the role
Mental wounds still screaming
Driving me insane
I'm going off the rails on a crazy train – Ozzy
Wheeeee, that was fun!
We called for a "Whipsaw Wednesday" and it doesn't come much more whipsawed that that. Fortunately we stuck with the plan from my morning post to take the money and run on our short plays and we even pulled the hedges off our $25,000 Portfolio, leaving it 100% bullish at 11:11 in Member Chat.
That left us a little nervous for the next hour but, of course, we had a plan for that too and, at 12:27, I put up a chart of the our indexes over the last 5 days saying: "Note our lows of last Friday – Those are the lines we need to give up at if we fail them!"
That's a very important point about aggressively trading – it's OK to pick a bottom and flip bullish, but ONLY IF YOUR BOTTOM HOLDS! The biggest problem traders have is they guess a bottom (1,300 on the S&P was ours) but then, when their premise fails – they FAIL to give up on the position. This is much like saying in the morning that you don't think it's going to rain – then having breakfast and seeing it pouring with rain outside – and refusing to take an umbrella because you didn't think it was going to rain (see "The Microwave Oven Theory of Behavior" for more on this subject).
Here was the chart we looked at at 12:27 in chat:
Things were not looking good, were they? Remember, we had gone bullish on that first pause and failed to hold that line so the first thing we had to do was make a new plan — just in case. If you don't know EXACTLY what you are going to do "just in case," you are going to let yourself get shoved around by these crazy markets. We had laid out our Just in Case plays in the Morning Alert at 9:57 with three aggressive hedges to…
by phil - May 15th, 2012 7:05 am
Here we go again!
It was only last Tuesday we were watching that 1,360 line on the S&P but, at the time, we were looking for it to hold as we finished last Monday at 1,370 – in a totally fake pump into the close. Even early Tuesday morning, the Futures were being pumped up to reel in the suckers but I warned in the morning post:
There is no particular reason for the move, other than this being Tuesday in a manipulated market. Neither oil ($97.38) or gold ($1,628) or copper ($3.71) or silver ($29.73) or even gasoline ($2.97) give any indication of consumer demand for commodities. "Fixing" the charts does not mean you have fixed the economy!
We all know what happened next – we failed to hold that 1,360 line on the S&P as the Euro failed to hold $1.30 and Greece was unable to form a coalition government (we also had disappointing Retail Sales numbers) and this morning (6:45) oil is $94.74, gold is $1,558, copper is $3.53, silver $28.23 and gasoline is STILL $2.97.
The last thing we should do is complain about gasoline prices – we still pay 1/2 of what Europe does and even China is paying $5.31 a gallon – 25% more than the US average $4.19. At this point, gas prices are the only commodity not falling down and that's because they are the easiest to manipulate – the last bastion of the speculator – if you will.
With that mythical summer driving season on the way, even we stopped shorting oil at $94 and gasoline is now a joke at $2.97 as that's $124.74 per barrel – a 33% per barrel mark-up at retail. At the pump, $4.19 a gallon means you are paying $175.98 at the pump – that's an 87% mark-up! Actually, we shouldn't look at it as 87%, that's misleading – when oil was $60 per barrel, gasoline was $1.85 at the pump and that was $77.70 and the refiners were making very good money. Why would it cost $81.98 to refine and retail a $94 barrel of oil when it only costs $17.70 to refine and retail a $60 barrel of oil? See – it's a rip-off! Somebody, somewhere is massively screwing you over – that much should be obvious to even a Republican Senator.
by phil - April 19th, 2012 8:28 am
We are just loving these crazy-assed market moves. Every morning we have a pump job to short into and every afternoon there is a BS stick-save to re-establish our shorts. It's merely a matter of time before those floors begin to crack. I mean, really – how much of this abuse can they take?
Notice, in Dave Fry's SPY chart, the high-volume selling followed by low-volume pumping – that's the very unhealthy pattern the "rally" was built on, which means there really aren't any buyers waiting to scoop up shares when they dip – just Trade Bots that tease the indexes higher so the IBanks can keep pulling in the bag-holders as the "smart money" stampedes for the exits.
Yesterday was great fun. As I noted in the morning post, we went short on the Oil Futures (/CL) at $104.50 in our morning Member Chat and even in the morning post there was still time to catch it at $104. Oil sold off all the way to $102.60 at 2:10 and my 2:14 comment to Members nailed the turn as I said:
Oil coming right to our goal at $102.50 ($38.50 USO) so let's not be greedy and look to take $1.20 off the table on those 1/2 USO positions in the $25KP and $5KP as it's better to get out while the gettin's good.
That's what we mean when we talk about taking non-greedy exits (I had set $38.50 as my USO target for our exit at 11:08 but it didn't look like we'd get it so we got out). We caught the bottom and got out clean and this morning we got a chance to re-load our shorts at $103.50 on that predictable morning pump. Sure, you can say the markets aren't fixed and maybe we just have amazingly good timing – either way we make the same money!
We did manage to find a few things we liked, one of which was CHK, as the stock plunged to $17.20 on much ado about not too much as people took issue with the CEO borrowing money to invest in their wells. We didn't think it was such a big deal and our trade idea at at 10:23 in Member Chat gave us a good opportunity to buy right into the day's low at…
by phil - March 13th, 2012 7:52 am
For once I have to agree with Fox (and thanks to D Virginia for the link):
With gas at $3.87 and over $4 in California, New York and Illinois, Fox news says other journalists don't check "the substance of the accusations against the President," the media needs to "look at certain claims and promises to see what the facts are behind them." And what are the facts that Fox News presents us with?
- Cal Thomas: "No President has the power to increase or to lower gas prices – Those are market forces."
- Neil Cavuto: "China and India are slopping up oil faster than we can these days and THAT is the not so sinister response to what's going on."
- Cheryl Casone: "At this point, it really is tough for this President, I have to be honest with you, because he really does not have any control over what's going to happen with the markets and with the economy and with oil prices and with supply and demand and gasoline – it really is out of this President's hands."
- Bill O'Reilly: "Yesterday oil hit a record high and politicians can't do anything about it."
- Joe D'Agostino (VP of NYMEX on O'Reilly): "The only thing we can do is start to use less energy."
- Bill O'Reilly: "If every American who owns an automobile or an air conditioner says "I'm going to use 10% less" – the prices then would fall… Politicians can't do this."
- News team: "Get rid of gas guzzlers, buy decent insulation for your house and tell your local, elected officials to get on the stick and do some more mass transit/infrastructure spending because those kinds of fixes that can really help Americans."
- News team: "Drilling an ANWR would reduce the price of oil by about 40 cents a barrel (1 penny per gallon) or maybe as much at $1.40 per barrel (3.3 cents per gallon)." "If we drilled in ANWR we would get 4% of our daily consumption in oil." "It would take 20 years for saving from ANWR drilling to be realized."
- O'Reilly: "So the next time you hear a politician say he or she will bring down oil prices, UNDERSTANT IT'S COMPLETE BS! If Americans want lower gas prices, cut back – that's what the candidates SHOULD be saying. Sell those SUV's, ride a bike when
by phil - March 12th, 2012 8:24 am
$35Bn worth of 3-year notes to sell today.
That will be followed by $21Bn worth of 10-year notes tomorrow and $13Bn worth of 30-year notes on Wednesday. The 3-years are expected to fetch about 1.5%, 2% for the 10-year and 3.12% for the 30-years despite the fact that that represent negative returns to inflation. So, either it's just a scam where the Fed, through its member banks, purchase whatever Treasury wants to sell to keep up the illusion that the US is able to borrow cheap OR the rest of the World is so horrifically scary that Global investors are willing to take a loss on $69Bn long-term, rather than risk leaving it in a bank or putting it into a stock or commodities or in the notes that are handed out by other countries.
Like Greece, for example, who were just "fixed" yet today the NEW BONDS are trading as 18.1% for 11-year notes. Hmm, 18.1% for Greece, which has just been declared "safe" by the EU or 2% for US notes? Something is clearly wrong with this picture… You KNOW something is wrong but, if you are buying equities, then you are choosing to pretend that, although there is a very obvious scam going on in the bond markets, that it somehow doesn't affect the equity markets. Come on – admit that you are lying to yourself – you'll feel better!
Buying equities in a Federally funded, Bot-propped rally is no different than participating in an obvious Ponzi scheme. You KNOW it's fishy but EVERYONE is doing it so you just want a little taste and you tell yourself you're just going to help yourself to some of that free money and then you will get out (dumping your shares on some other sucker who will be closer to the eventual burning than you were). That's called the greater fool theory and it works great as the World is bursting at the seams with fools but, eventually, the fools and their money are parted and SOMEONE is left holding the bag.
Will it be you? Of course not, you are no fool! Someone else will buy your GMCR shares for $63, right? Well, that was right on Thursday, but on Friday they dropped to $52.50 and that was after drifting gently down from $69 earlier in the month. It was "just" a…
by phil - March 8th, 2012 8:12 am
The Dollar is down 1%.
That makes the markets go up 1%. Mostly, the Dollar is down based on a FABRICATION in Uncle Rupert's Wall Street Journal – the most widely read financial publication in the World (next to Philstockworld, of course!). Although Jon Hilsenrath, the WSJ chief economist who started this nonsense made it VERY CLEAR that the story was predicated on IF they decide to do more "capital I, capital F," Jon says – THEN this is the kind of bond buying that might happen.
That's all it took yesterday to send the S&P up 1% but, if there were a volume measure, you'd see that, on the Dow, 25M shares were traded before 11, and just 35M shares between 11 and 3:30 and then 50M shares were traded between 3:30 and 4pm, almost 100% down volume. The only people that are fooled by these word games are the beautiful sheeple who are so well-trained to buy the F'ing dips that even a misstatement like this sends them into a buying frenzy.
Ah, fresh meat – we love it! Oil (/CL) was back at $107 this morning and we already caught a nice dip off our favorite sell spot in Member Chat and gold is giving us a good short entry at $1,700 (/YG) as well. All we have to do is watch the Dollar and see if it can hold 79.40 once real trading begins. The Euro is up at $1.324, off the $1.31 line yesterday so up 1% and the Pound is up from $1.57 yesterday to $1.58 this morning and the Yen is loving it at 81.71 (weaker) as they've been solidly backing the Euro over at the BOJ this month and the Nikkei futures (/NKD) shot up from 9,500 yesterday to 9,835 this morning (3.5%) on a 1% drop in their currency so this would be a great spot (below 9.850) to short the Nikkei.
For the Futures impaired, the EWJ April $10 puts at .20 should be a fun way to play the Nikkei reversing, assuming reality sets in at some point. It's 8:25 now and oil just hit $106.50 and that's our take the money and run spot in the futures as we pick up $500 per contract off my 4:56 comment in Member Chat this morning:
by phil - February 27th, 2012 8:02 am
This is frustrating isn't it?
The S&P fell to 1,355 in the Futures, breaking our rule to get bullish as they must hold 1,360 for 2 consecutive days so we're back to watching and waiting now as it's been two full weeks of teasing this line as the index creeps back into the bottom of David Fry's SPY channel.
We thought we were going to fail back at 1,300 but we caught a nice bounce off the bottom at the beginning of the month and flew up another 5.5% since then but now we're almost 10% over the 200 dma on less and less volume and that's one hell of an air pocket below us on the S&P so of course the lack of more free money from the G20 is going to hurt today – the question is – how much?
We discussed the G20 over the weekend, so no need to re-hash it here. Let's take a little time today to delve into the logic of S&P 1,360 and see if we can find some good reasons for it to stick. In his letter to shareholders this weekend, Warren Buffett very plainly says that his entire bullish premise is based on his believe that housing will make a comeback. Jim Bianco had an article on that this weekend noting Homebuilder Optimism has risen for 5 straight months, back to the highest level since May of 2007, at the early stages of the slowdown BUT – let's keep in mind that the sentiment level is 29 and anything below 50 is still NEGATIVE – so we have a long way to go!
We have been playing XRT short, expecting it to have been rejected at $56, like it was last summer prior to a 20% drop. Now XRT is at $58, up 31% from it's October lows and we have to wonder if the situation for Retail has REALLY gotten 31% better than high-volume investors were pricing it AFTER seeing last July's earnings reports or is this another major air bubble that's about to burst?
The January Retail Sales Report showed $361Bn in sales and that was up 5.6% from last year's $342Bn. This month we'll see an automatic 3.5% bump as February has an extra day (people fall for that one every 4 years) and we have strong…