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Tuesday Tear-Down

That went about as expected.

Fortunately, in our morning sermon we were reminded to be led not into temptation and we were, in fact, sorely tempted as the Dow went up70, flat, up 50, down 10, and up 110 – all before lunch! 

That last one almost got us but the President's sound advice stayed with us and we were on top of this nonsense all morning taking up positions looking for a top.  At 12:12, right at the top, we got our new favorite market indicator on CNBC as I said: "Uh oh – Pisani looks concerned again" and he was right on the button at the market fell 100 points from there.

Some people are saying that today's crash was caused by the leak of my Fed statement, which I always publish for members the day before the official release (Ben and I were up all night!) but I tip my hat to Bill Gross, who joined my camp earlier in the morning with some chilling views on the subprime market that OptionDragon brought to our attention, causing me to say at 11:29: "Well that statement makes me want to cash out my virtual portfolio, sell the house, auction the art and have a garage sale!"

At 12:36 I was, as is often the case, annoyed by the television and I said: "Wow – CNBC guy says “pretty good rally for the dow” how does a herky-jerky ride to a 50 point lower high than yesterday constitute a pretty good rally? This is what I don’t get about them – don’t they want ratings? To get ratings you need to give good information, not spin."

We were, of course, thrilled by the breakdown in the oil sector but we took the opportunity to lighten up on our puts ahead of inventories but ZMan and I will address the Nation live tomorrow at 10:25 on MN1 with brand new picksMy live selections last week were 4 for 4 as I gave viewers OII $50 puts at .70, now $1; PTR $145 puts at $2.50, now $4.15; VLO $75 puts at $1.30, now $2; XOM $85 puts at $2.90, now $3.55 with a general comment that the gasoline inventories "were horrendously bearish" for the refiners.

As we were generally bearish we spent a pleasant afternoon on the site chatting about the IPhone (most of us were bullish and the reviews seem to bear us out) and tinkering with our many oil shorts.  All in all it was a great day and we had little reason to change our stance but we finished essentially flat for the day:

 

Happy Trading points out that my long predicted breakdown in gold is starting to take shape so beware my dollar squeeze, which may be triggered by a hawkish Fed statement tomorrow.

 

We closed just 7 positions, mostly oil coming off the table and some of our Apple covers (we still have the Oct puts) as they've done their short-term job.  Our very high-level debate among members yesterday left me much more bullish on the IPhone as we uncovered some very obvious Apple bashing in the press that indicated to me that there's a lot of nervous shorts out there.

 

Description

 Cost Basis

Open

 Sale Price

Sold

 Gain/Loss $

%

30 JUL 125.00 AAPL CALL (APVGE)  $   9,310 6/20  $   15,290 6/26  $  5,980 64%
50 JUL 136.00 DIA PUT (DAZSF)  $ 12,260 6/25  $   16,490 6/26  $  4,230 35%
20 JUL 90.00 SU PUT (SUSR)  $   5,210 5/17  $     9,190 6/26  $  3,980 76%
4 JUL 62.50 TSO PUT (TSOSU)  $   1,770 6/20  $     1,270 6/26  $    (500) -28%
5 JUL 95.00 WYNN CALL (UWYGS)  $      360 6/18  $     1,940 6/26  $  1,580 439%
20 JUL 69.00 XLE PUT (XBTSQ)  $   2,470 6/25  $     4,090 6/26  $  1,620 66%
80 JUL 80.00 XOM PUT (XOMSP)  $   5,210 6/25  $     8,390 6/26  $  3,180 61%

As a new Apple play we picked up some T $40s we'd been eyeing all week but it's all about the Fed tomorrow and it's sure to be another wild one so stay tuned!

 


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  1. New Zman post up.


  2. Wednesday before market analyst calls:

    BRKR raised to Peer Perform at Bear Stearns.
    CYT raised to Buy at Goldman Sachs.
    FFIV cut to Neutral at Baird.
    FIRE raised to Buy at Jefferies.
    KSS raised to Outperform at Baird.
    MLNM raised to Mkt Perform at FBR.
    MOS cut to Neutral at Goldman Sachs.
    MTH started as Hold at Deutsche Bank.
    PHM started as Hold at Deutsche Bank.
    PRXL raised to Peer Perform at Bear Stearns.
    RYL started as Buy at Deutsche Bank.
    TRS started as Buy at Goldman Sachs.
    TSO cut to Sell at Citigroup.
    VLO cut to Sell at Citigroup.
    VMSI cut to Peer Perform at Bear Stearns

    (RYL) and (PHM) :?:

    VLO and TSO downgrades should help those P’s though


  3. Phil

    Can you share your thoughts on AUY Jan 09 15′s. I have played this one very poorly and it is a big loser for me. ( Learning from my mistakes but painful education )

    thx

    T


  4. GOOG any reason down pre-market?


  5. Karm:

    I appreciate your upgrade/downgrade list.


  6. Phil, Had time last night to study the newsletter, it is great, having thoughts in print form gave me an edge to really study and learn. Energy sector was a little long. I would like to see a MACRO article by you. You have often alluded to the relationship between the $, Gold breaking down, oil prices etc. I don’t fully understand the inter workings and an update on your take would help me to learn nad internalize so I have a possible roadmap for the next 6 months or so. Hope that is not asking too much. Oh yeah, a page 3 insert would keep me focused!..Tks Jamie


  7. albo, np and yw

    coolkid, Curious about the GOOG decline also but actually less than .01% down and couldnt find any new news regarding the Google


  8. VLO TSO downgrades. Clearly the info was out to Citi customers yesterday. Will this have more legs than premarket tank ?

    SPY DIA … very strange action. SPY “closed” at 149.08. Now 148.08 pre market, but listed as down only 0.20. Same sort of action for DIA. Something funky happened with those right after 4 pm yesterday, but not reflected in the futures. S&P should open down +/- 10 points. Will it ?


  9. CAP — DIA and Dow futures both lost more than 20 points in the first 15 minutes after the “close”. Fell like a rock as soon as the 4 pm bell rang.


  10. GOOG now down 5


  11. AUY – this was a protective position in case inflation flew out of control or war broke out. If commodities keep collapsing we can look at possible saves by doing diagonals but you have to have the margins for it.

    Newslett – will be worked on but we need some time to get into the groove of it

    New post is up.