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Fed Day, Party Time, Excellent!!!

Today's the day!

I was browsing the archives to check out what we were thinking around the last Fed meeting (Halloween) and it turns out that was the Monday, with the Dow at 13,727 (up 840 points in 6 sessions), that I accused the markets of yadda-yaddaing the bad news as we irrationally ran up into the Wednesday meeting.  What's really funny about that day is that, in the morning, UBS had forecast a $600M loss, an amount they topped yesterday by $9,400,000,000.  Ah yes, happy days are surely here again!

Nobody believed me then either…  We had been shorting TSO at $65 and they said I was mad when I said: " I will drink the gasoline if these guys have a good quarter!"  XOM was at $93.50 and we were painfully shorting them too.  WYNN was our 10/30 focus put at $170 (that went well!) and we also made the very obvious play of shorting MER at $68, who had just lost over $7Bn in sub-prime write-downs and ditched their CEO.  TSO and WYNN are still dead but MER and XOM have made spectacular comebacks – it's like nothing ever happened…

We closed our pre-Fed Tuesday at 13,792 despite oil holding $90 a barrel and the S&P/Case-Shiller home price index showing a 4.4% decline in home prices.  We added puts on DRYS at $130 and BIDU at $360 and it's kind of interesting how again, one comes back and the other doesn't.  I was wrong about DELL at $29, figuring a tech exporter should fare well with the declining dollar (76.5 at the time).  We opened Fed day with a Dow strangle in place and boy do I wish we had done that last week!  At 8:30 am we got a 3.9% GDP report and, with our new (and totally BS) 4.9% GDP report now in hand, I will repeat what I said then:

"The Fed absolutely should NOT cut rates today, the economy grew at 3.9% EVEN THOUGH housing was collapsing.  All a rate cut will do is stoke inflation and IT IS THEIR MANDATE TO FIGHT INFLATION, NOT LINE SPECULATOR’S PROFITS!  A rate cut is still considered "in the bag" on the futures market as the governors are under enormous political pressure to deliver a good market into next week’s elections."

Just substitute 4.9% for 3.9% and next week for next year and we're all set for today's event!  The markets closed that Fed day at 13,930, up 136 points on the day but I was 100% negative after reading the GDP report in detail and said so much in my eveing post.  We had cashed out our calls on the Dow's failure to break 14,000 as I said in Wednesday's member comments: "This is not a rally, this is limping halfway back to our 14,200 high from a sharp and relentless drop to 13,600. The big drop came 10/19 at 13,900 (to 13,550) after a protracted sell-off from 14,200 on the 10th. So here we are on the 31st at 13,930 (and boy was that finish forced!) acting like everything is great. After the last Fed blast (9/18) we drifted flat along 13,800 for a week so it’s all going to be about next week’s action. Today is meaningless."  The WSJ summed it up nicely with this statement:

"Of course, the reaction out of the equity market wasn’t all that bewildering. After all, allow a six-year-old child to eat all of his Halloween candy, and one can’t be blamed when he’s bouncing off the walls a few hours later. After all, the stock market got what it wanted, which was its candy, as the Fed apparently was swayed by the market’s expectations, which basically amount to worrying that something worse was going to happen (even with stocks near record highs and oil closing in on $95 a barrel, but never mind all that). “There have been numerous recessions and market crashes caused by credit going from being too loose to too tight,” notes Charles Rotblut, chief strategist at Zacks Investment Research. Fear was enough — the Fed fearing the markets. So the Dow industrials finished 136 points higher, a gain of about 50 points from the pre-Fed rally, as investors gobbled up whatever they could by taking the “it’s all good” approach to analysis of the Fed statement. That is to say, the economy is doing well but could slow, which is still good, because more rate cuts! And if not, no worries, hey, look, candy. "

That reaction lasted all of 17.5 hours as the next morning the markets opened at 13,924 and, before you could say "I need another rate cut," the market had fallen 402 points and finished the day much nearer the low than the high at 13,567.  The proximate cause of the collapse was an earnings miss from our pals at XOM, even with oil flying to $95 a barrel thanks to Uncle Ben's dollar dump.  XOM fell 10% over the next two weeks, as did the Dow, which bottomed out a month later on 11/26 at 12,707 when I said to BUYBUYBUY as everything was on sale. 

I had written an article in mid-October, when I was predicting the post-Fed crash, called ""How to Spot a Market Correction a Mile  Away," stating everything I needed to know about how to play this market I learned by watching Rodney Dangerfield in Caddyshack!  When the market is full of sheep, it's easy living for the wolves and I am ashamed at the behavior of my fellow investors as they rush headlong into the same potential catastrophe that just burned them 40 days ago.   Even the President knows it's shameful to get fooled again and again by the same nonsense yet here we are, with the Dow 65 points below our last Fed day, having run up 1,000 points in 10 sessions just so we could get right back where we started from.

The high of the day on Halloween was 13,990.65, anything less than that today is likely to be viewed as a spectacular failure.  The dollar's in the same place, oil is in the same place, gold is in the same place, the Nasdaq is 141 points lower, the S&P is 34 points lower, the Russell is 37 points lower, the NYSE is 311 points lower, the SOX are 31 points lower.  I'm sure Larry Kudlow would say "This is great, look how much room Goldilocks has left to run!" but, as a normal, thinking, human being from this dimension, I have to say that I have some concerns.  I hope I'm wrong and, if I am, we've got a long run ahead of us to ride the Nasdaq to the moon but, for now, I'm rolling up the index puts and staying mainly in cash because there's something very familiar about all this…

 


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  1. “I was browsing the archives to check out what we were thinking around the last Fed meeting (Halloween) and it turns out that was the Monday, with the Dow at 13,727 (up 840 points in 6 sessions). . .”

    The DOW is again sitting at 13,727 right now. . . spooky


  2. re-post from yesterday’s wrap up
    rahul
    December 11th, 2007 at 7:49 am | Permalink
    Phil – How would you play WM now? I have two positions.

    First position to capture the dividend
    Long the stock with a basis of 17.2 and short Dec 17.5 Calls (1.5 basis) and 1/2x Jul 15 Puts

    Second position to capture the volatility in the Dec calls
    long Jan’09 20 calls short the Dec 17.5. I also added 1/3x Jul 17.5 calls last week as I thought the stock was showing a strong upside move.

    Any suggestions would be appreciated.


  3. rahul, you do know they severly cut the dividend yesterday


  4. Insiders selling – I see a lot of insiders selling AAPL and GOOG. Does anyone follow this in their trading?


  5. WM – yes, I’m aware of the dividend cut. I guess I was looking for more of an exit strategy – now or wait for a bounce. Thanks.


  6. …. I would even be ok with trading this dividend cut news and reversing my positions to bearish and unwinding that way.


  7. What time is the FED meeting today?


  8. Morning,

    All ready for the party today?

    Talking about surprises still out there in this credid market turmoil.

    Something to folllow maybe, as a sceptic of the exuberance in many a emerging market i always wondered about this one.

    One of South Africa’s largest retail banks ABSA has some eyes on it now..maybe its nothing

    http://www.moneyweb.co.za/mw/view/mw/en/page38?oid=176404&sn=Detail

    cheers

    Lukas


  9. G’morning people. Blake, Fed is always 2:15 EST.

    Been out for two weeks, what’s been going on? BBD – you still in FCX? RIMM earnings next thursday day before expiration. If anyone remembers / looks back, they’ll see RIMM the last two expire days has gone down until around 11 EST, then popped up huge. Not saying this will happen again (esp with earnings day before) but something to note if you feel like day trading it. If you play it right you can get in and out of the ATM options for big gains… but obviously very risky. buyer beware.


  10. thanks mark


  11. TXN up +4% pre-market on raised guidance


  12. guy on tv right now

    no fed cut … dow 16000 target
    25 bp cut … 18000 target
    50 bp cut … 20000 cut

    how irresponsible; what a load of crap.

    if the market would go that high, it would have little to do w/ a 25 bp cut.


  13. Phil,

    What do you think CELG? Sell for the first excitement or wait? I have LQHAJ bought yesterday.


  14. Phil:

    Looking at SNDK.
    Any thoughts?


  15. Jeez, nearly had a heart attack this morning when I found my account down 25% overnght. Then I noticed that half of my positions had a bid/ask of 0.

    Ameritrades idea of a joke, obviously.


  16. I wouldn’t call that irresponsible. Do you know what his time frame is? Look at how much the market rose this year. Look at China and the world markets. Assuming the credit crisis is a temporary stumble, is that not possible? If the Fed shouldn’t cut and does cut, doesn’t the cut “overheat” the economy and corporate earnings driving the stock market higher? I would suggest we all forget market targets and invest in solid companies and use the market targets as guidelines for technical corrections…


  17. Fed

    Not a big deal but I think they actually read the cut @ 2:00 PM EST and then there is more commentary.


  18. parchesia. you are funny.


  19. A. He did not give a timeframe
    B. Of course its possible, but
    C. That it would be dependant on the magnitude of this rate cut is silly.
    D. It was just a bunch of vacuous unsupported blather.


  20. If anyone’s interested, I was discussing a complex Apple spread with Reinharden at the end of yesterday’s comments.

    WM – answered in the wrap-up.

    Oil back at $89 – thank you Mr. Bernanke!

    Fed meeting is all day, statement is 2:15.

    Heya Bushman (and I sincerely hope that’s an Aussie reference and not your undying support of our fearless leader) – I think it’s all something. If the “best” and most diversified banks lost Billions, what about the ones that may have been too investment specific. Don’t forget these were double and even triple-A rated investments that are going bust.


  21. parchesia,
    I was getting tired of ‘cheap’ oil anyway and the Fed will fix that. And why punish the ‘ingenuity of the markets’ regarding CDO’s, SIV’s etc. Just keep pouring the pension money in.


  22. good morning peoples!


  23. CHL JAN calls (from yesterday) – half out


  24. Sweet AT&T raises dividend, stock up 5% haha


  25. Film-Good Morning! You’re up early today! I just like people seeing the other side and possibilities so they can not see what they want to see and get their ass handed to them if the market goes against them. Being the contrarian doesn’t make you friends but honestly, I just want people to consider the other side, even though it may not come. It makes everyone, myself included, better investors by thinking about possiblities.


  26. The news we were expecting about ttwo have arrived .. TTWO upgraded to $26 as far as I know


  27. CELG – well that didn’t last long but I’m not sure I’d blame them as there are a lot of things selling off harshly.

    OIH is starting to be a tempting short but don’t forget we could get a 300-point run a 2:16.

    SNDK – good second chance to pick them up at yesterday’s open. I still like them.

    Check out RTP – Ka Ching!

    Parchesia – you are right but we are facing a global credit crisis and housing correction that will suck Trillions out of the economy if not handled very gingerly. Not even great companies are spared when it really hits the fan but, if you like to stay in no matter what, then that’s the way to go.

    $25KP – Selling the T $40s for .85, selling more for .85 against Jan $40s at $1.44 XXX


  28. Apple is finally launching TV in Canada on iTunes.


  29. $25KP – oops, rolling T $37.50 caller up to $40s at .85. XXX


  30. Oh no, say it isn’t so FWLT!


  31. FWLT- dammit, cashed out of those at 3.50 cause my account went under the margin day trading limits. Bah!


  32. Yes, I am up. Still not “feelin’ it” but oh well. Figure I will grab some AMZN puts since it got to 95 AGAIN. Out if it gets over.


  33. mrl14, can you post a link on the itunes-tv thing. Thanks.


  34. TOKYO (Reuters) – Sony Corp’s (Tokyo:6758.T – News) consumer electronics business in the U.S. market has not been affected by the shaky economy and is on track to hit a 5 percent operating margin for the year ending March 31, Chief Executive Howard Stringer said.


  35. AMZN over 95. And the hits just keep a coming.


  36. CAT still strong, IBM looking good, MA is amazing, I’ll be thinking about that one now. Actually the sellers look done already.

    WFR coming on strong at new ATH, FCEL was a great pick, POT ATH, horsemen all rolling now, RIMM is a good catch with the Jan $105s at $9.50 being worth a risk down to $8.50 as we can always sell the Dec $103s for $6. XXX


  37. CHL – all out!


  38. BA

    Webcast starting if anyone’s interested.


  39. CSCO – what’s going on?


  40. GOOG and GS big concern, you don’t want AAPL to confirm that GOAX turn down. SU making an attractive put at $103.88 so if you don’t mind rolling 2 or 3 times the Mar $110 puts at $11 are a good way to go. XXX

    The potential payoff on the QID July $35s at $5.80 is great as they are $2 from being at 1/2 of where they were in ’06 and $15 below where they were in Aug. That makes them a great headge on positive Nasdaq plays.

    THQI still going up!

    CAKE looking shakey but we’re covered.

    TXN – I hope you guys sold into that!

    BA – last chance to buy I think…


  41. AMZN-Bought back some calls earlier on cross of positive 5MA and news from Bill me later (I wonder what the effect will be on credit card companies, might want to take a look at shorting MA if chart turns bearish…I already have COF puts). I don’t have a full position on AMZN yet, will add on a pullback.
    PRKR-Left early yesterday so did not see the jump. Added some puts this morning. This is one crazy short squeeze.
    GLUU-Amazing day yesterday.
    GRMN and LVS-Both weak, testing 5MAs.


  42. check out the ginormous volume in CSCO. News?


  43. DECK-Someone asked yesterday about The Jan/Dec $145′s spread. I have rolled the Dec 145′s tp the 155′s a long time ago, and posted here.


  44. AT&T said Monday it will buy some of the world’s largest routers from Cisco Systems for a massive network upgrade, suggesting that big telecom firms are keeping their checkbooks open.
    The upgrades will quadruple AT&T’s (NYSE:T – News) network capacity — and help the telecom giant stay ahead of growing demand for bandwidth-consuming applications such as online video, music and social-networking sites


  45. BA

    No surprise but they are on track with the revised time line and will still deliver 109 units of the 787 in 2009.

    1. 314 787′s ordered so far this year
    2. 762 787′s ordered in total
    3. 52 airlines have ordered the 787
    4. 5 year lead on Airbus’ comparable plane if you can call it comparable
    5. Record for any launch of any commercial airplane


  46. BA – May 95s @ 6.00 ~ May 100s @ 4.00. Is there a play there?


  47. jayhawk…T upgrading system across US. Going to use CSCO hardware


  48. that was yesterday’s news and CSCO stock yawned at it. Somebody knows something which “we” the normal people don’t.


  49. BIDU- there she goes
    VIP- bought some on downgrade
    Fabregas-I am still holding CHL from Friday. Nice trade by you congrats


  50. CNBC – buffet on now


  51. POT calls-1/2 out.


  52. WM holding up well.

    CSCO happy about TXN’s news.

    MA – I have left 30 $200 calls I sold against 20 $210s and 10 $190s and I own 20 $185 puts and 10 $210 puts that are trashed.

    I’m going to spend $6 to roll my callers up to the $220s, which have $6 in premium and I will leave my calls in place, flipping the $190s to a bull call spread as they are well in the money.

    On the pathetic put side, I’m going to roll my $3K worth of puts up to 10 ($6.2K) $220 puts as my exposure is to the downside and I will sell the $230 puts against them, now $11.70) against them if MA takes off. XXX


  53. TXN

    Missed selling into the excitement… bugger. Ended up chasing the bid-ask spread down. Greed is bad.


  54. BA

    Really good call with very specific detail

    1. Power on of 787 end of January
    2. Parts supplies down
    3. All software systems are now functional 92 of 92 systems (this was a big concern before)
    4. FAA certification process on plan, 25% of certification is already done.

    MTF


  55. Film – it is on appleinsider.com


  56. BA

    Sorry, parts supply shortages are down, esp for fasteners.


  57. Phil you think we should leave AMGN uncovered for the fed meeting?


  58. Quadrupled my money on FCEL. Was anybody else in on that?


  59. BA dropped fast. Fred – anything negative on the call ?.


  60. BA’s “last chance to buy” turned into a buyers remorse w/in minutes! DWRRRT, DWRRT, DWRRT – pull up, pull up!!!!!


  61. T/CSCO – maybe it just suggests that T needs some new routers… I think people read way too much into the ordinary purchase decisions that big companies make every day. Sure it’s a big order for CSCO, but that doesn’t make it a trend – this is more of an AT&T success story, which we predicted for ages.

    FSLR still going up!

    FNM still going down and rates are supposed to fix them.

    BA – very cool reception to that report… I wouldn’t do the May spread vertical but the May/Jan $95 is much better but, of course, it’s worth selling the Decembers first as you could end up collecting $3 or $5.70 by Jan 19th. XXX If there’s any stock I’d be willing to chase down for a bounce, it’s BA. They are talking about 1,200 $70M planes, that’s $84Bn worth of new planes ordered from a company that already has $60Bn worth of sales a year. More importantly, it’s 1,200 planes worth of spare parts for 30 year and they make a lot more money on parts than they do on planes!

    TXN – you may get another whack at it but even if we go back to $34.75, it is unlikely that the price of the $32.50s will go much higher than this morning’s $1.55 but I stopped out at $1.30 and will not be selling the $35s unless I can get .50 or better, otherwise I’d rather sell the $32.50s again.

    AMGN – sure, $50 has been a good floor and we can always cover if things go south.

    FCEL – great call Khan!


  62. BA – oh good, another chance to buy!


  63. FCEL--bailed yesterday :-( . Made 75% though!


  64. Phil
    i got filled on RIMM. Please let me know when to sell the DEC. Thanks Henk


  65. BA

    No. Very positive call, much progress. BA partners are doing well which was one big issue in the supply chain and the second big issue was software which has been addressed.

    One major parts supplier in Italy is producing defect free fuselages first time off the line which the project manager has never seen before. Gives you confidence in the planes we are flying around in now.

    The guy is very matter of fact and is the one who built the 777. I like what I’m hearing in the Q & A. I think the analysts just don’t understand the significance of the progress they’ve made. Perhaps some skepticism given the last guy blew it.


  66. thanks mrl.


  67. KHAAAAAN !!!!

    I have dec 10′s up 269%.


  68. BSC $100 puts interesting at $2.35, stop at $1.90, look for $3+ XXX


  69. BA – o.k. if you believe in ‘em that much, so do I. “I believe I can fly. I believe…” (Ever notice that “die” rhymes in that song but it’s never used? Don’t think about it.!!)


  70. BA

    Based on what I’ve heard I’d be a buyer of the calls but I’m a put seller so that’s the angle I’m pursuing. I own BA stock as well.

    One more…”this is the first time the FAA has agreed to all the criteria required to test the 787 before testing starts. This has never happened before.” Seems contrary but the FAA usually asks for more and more as the tests go on so this will streamline the testing.


  71. RIMM collapsing again. Sorry that would be a sell for Dec, not worth risking. XXX Need 20% upside stop on short calls.

    Gold turning down, that’s a little strange.


  72. Thanks fred. I think you’re right about there being some skepticism. Probably will be until these things start rolling off the line.


  73. phil- i saw the AAPL spread last night (iron condor-ish?)- i think that same position can b put on for DEC for a 4.20credit.

    the downside is 5.80.

    why do think this play is better for JANs? is it just b/c the risk/reward is much better (ie JANs risk/reward = 2.80/7.35)?

    thanks-


  74. Maleko

    The other thing on everyone’s mind is the A380 from Airbus and the monumental delays. I really trust Jim McNerney the CEO who came from 3M. He’s no nonsense and won’t put up with underperformance which is why he replaced the guy who was running the program. That being said, launching a new airplane has risk and they will keep reminding people of that risk every chance they get. Keep in mind the new guy has been in place for only a couple months. Given that he built the 777 I think he knows what he is doing.


  75. GRMN and RIMM dropping hard. WIll take 1/2 off on RIMM puts in case it bounces around $100 again.


  76. FAA – that’s because BA wisely made the 787 a logical extension of the line, not a radical departure so everyone along the process is very comfortable with what they are doing, including the regulators. The worst thing EADS can do is start actually flying A380s because the clusterf*ck they will cause at 80% of the airports they land in will lead to massive order cancellations. The A380s are designed to be customized, how stupid is that for something you intend to mass market? Ford had it right with the Model T when he said, “You can have any color you want, as long as it’s black.”

    HOV and other builders with a nasty pullback – what happened to the magic Fed or is this a flush before the 500-point rally?

    SHLD doing well, TXN recovering, YHOO is death, BIDU is cookoo…

    EBAY – yes I will sell $35s for .85 against the Jan $35s so let’s buy them first at $1.60 and see if maybe we can sell right on the $35 rejection. XXX


  77. MA- not risking the Fed. $1750 per contract
    KHANNN- congrats on your play


  78. Looks like profit taking before fed decision, same pattern as last time


  79. CCJ – analysts doubt Cigar Lake production in 2011, and that uranium prices could be bid up even higher. Unsure what the net effect is for CCJ, though looking at chart, looks like most view this as net negative.

    http://www.reuters.com/article/companyNewsAndPR/idUSL1120255720071211


  80. AAPL condor – yes I like the risk/reward better but, of course, you can always roll to it and the spread should work here too. That was specifically to protect Rein’s bullish Apple calls in Jan, that’s why I went out further as I’m a bullish on Apple as the next guy but just a little concerned after they dropped from $192 on 11/6 to $150 on the 12th. I do try to blindly follow the herd, I really do – it must be so nice to be a sheep, just munching on grass and following the shepherd until either he or the wolf slaughters you…

    Airbus – Has anyone heard of a single airport that has made modifications for the A380?

    AAPL ATH!!!


  81. This a good article on dry bulk shipping and freight rate predictions.

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aYsNUycqlHPc


  82. GRMN:
    pitty i sold the puts yesterday. What a move south!


  83. The grass is good. The shearing stings a bit though.


  84. GRMN puts-1/2 out.


  85. Phil,

    AMGN dead or alive?

    No, when the Auzz’s get to play decent rugby i might go there! I am from south africa.

    And for Bush the leader..

    National Parks game rangers here often have to go catch some escaped wild animal running around civilization..


  86. Foolishly building some Dec 190 puts on AAPL. It is topping out its channel. Also accumulated some CSCO puts. I post these as a public service of what not to buy. :)


  87. Airbus

    I haven’t heard of one making runway mods but some already have the capacity to handle the plane. Even in those cases gate mods are necessary.

    Maybe they can use a giant slingshot to get it moving like on an aircraft carrier.


  88. Airbus:
    Singapore and Sydney as it is already in service


  89. BA

    Recovering from lows of the day. It really was a great call but it was only a call.


  90. Henk,

    I don’t think they needed to make mods for it. The A380 was in Los Angeles, Minneapolis, Orlando making the rounds but no mods were done. They could already handle the behemoth. I’d hate to deplane on this thing trying to hit a connector anywhere.


  91. No but all airports need to as they do make alterations when at full capacity and cargo; they spit out 500+ passengers. In Singapore they paid upto 50,000 $ to be in first!


  92. BBD – congrats – that is fantastic….great trade.


  93. $10KP:

    AAPL – same as MA, rolling $175 caller up to $195 calls for -$11.60 as we owe it to him anyway. Selling the $185 calls at $13.

    $25KP –

    AAPL – rolling $175 caller to $195s for – $11.60. Rolling Apr $170 calls to 2X the $195s for + $9, no selling against them (the extra 5) yet but selling the $195s if we fall below $195.

    SHLD – will sell the $120s for $3 or sell the $115s for $3, whichever hits it first.

    GOOG – can’t move, too dangerous.

    HMY – rolling Jan $10s to 2X the May $12.50s at $1.25 (+$1) and leaving callers as is for now but looking to roll them to 2x the Jan $12.50s at about .50.

    LVS – rolling Jan $110s to Mar $120s about even and paying $3.75 to roll $110 caller up to $115s

    NEM – stop on 1/2 caller at $2

    DIA – taking out $132 putter at .48. Rolling Jan $129 puts to current $137 puts for + .75


  94. Whats up with LULU, (besides the stock price). 8% on no news. I guess the market finally got around to reading the earnings release.


  95. Phil-

    Do you think the market will run up if the Fed cuts 50 bps?


  96. GRMN with a tremendous U-turn at $106. Maybe just a flush on the way up. Remember I posted a while ago that the AMZN top 25 page was 1/3 GRMN products.

    AMGN – The news wasn’t bad enough to make them unattractive to big pharma if they get too cheap. These guys have a pipeline MRK, PFE et al can only dream about, that’s my long-term outlook.

    T is rockin and rollin’ still.

    Buyers coming back in general, kind of a pre Fed push/pull thing going on and it was similar last Fed day right up until they announced exactly what we knew they were going to announce at 2:15 so we need to be ready to buy DIA calls at 2:10.

    A380 – it’s the gates that will be the problem more so than the runways although I’d hate to be landing in the snow in most US airports as they will be cutting it really close on length.


  97. Phil…I got this: Apple April 170′s (39.45) Buy 2X The Apple April 195′s at 50.40
    Cost 11.05 How did your get 9.00 or I was I simply to late (2 minutes after your post)

    Don


  98. Phil, would you leave IBM uncovered into fed. They look like they are looking for a reason to bounce up?


  99. Sorry, referring to $110 09′ Leaps


  100. Run up on 50 pts – I think this is a bit of a flush and we’ll run up into any crap but I’ll be shorting into that run and dumping open calls as I would much rather be safe than sorry at 14,000. If we break 14,000 and hold it for the week, it’s a different game but then we have opt exp next week and then 2 holiday weekends where something might blow up so I’m planning on being closer to 90% cash by 12/28 but that’s a 3-day week after Xmas so really expiration day is the last day of the year to seriously trade.

    I just can’t justify the exposure as we know how to make money in any kind of market so we’re not “missing” an opportunity if we sit out a run, especially if we are loaded with cash when we come back in Jan after a nice relaxing 16-day break where we could care less what the markets do. So that’s my overriding plan for the next month.

    AAPL roll – it wasn’t for $9 it was $9 more into the pot. The Apr $170s were $39.30 and the 2 $195s were $25 each by the time I got them which is net $10.70 more. When I looked, the last trade on the Apr $195s was considerably cheaper. I only quote the last sale I see, I try to do better but on popular trades you guys really kill me sometimes but that’s OK, we seem to manage. I need to get used to the fact that even a liquid stock like Apple isn’t all that liquid in obscure Apr contracts…


  101. IBM – yes, worth a risk and ’09 gives you plenty of time to make it better if not.


  102. RIMM:
    can we give up our protection?


  103. BIIB flying. ELN $25s at .62 just in case it’s one of their joint ventures as a craps roll. XXX


  104. VIX pretty high?


  105. RIMM – of course take him out if you got a good one day gain!


  106. AAPL- took off Dec 185′s and Dec 195′s that I bought on Friday.


  107. bbd, how you feeling about VMW. I am thinking about loading up on some stock across various accounts. You feelin’ it? Seems like unless we were sold a bill of goods at the IPO, we have done a fine retracement and look to move higher in a steady fashion.


  108. THPW getting some love in a Fortune article dated yesterday: http://www.thoriumpower.com/files/Thorium_Power_Fortune_December_10_2007.pdf

    Check out the other news articles on this THPW web site and tell me this is not the future, then I will shut up.


  109. Phil-

    What is your target % gain with the BUD position?


  110. although, if I look at EMC, I really don’t like what I see. That chart looks Head and Shoulders below the rest.


  111. Wish I could remember exactly what I said about VMW back in late October… ;-)

    I’m pretty sure it wasn’t flattering (although I still love virtualization — just not 200+ PE ratios).

    reinharden


  112. hi Phil,

    Does the “NEM – stop on 1/2 caller at $2″ apply to the 10K too?

    Thanks


  113. rein- How about these:
    Comment 1
    Comment 2
    Comment 3


  114. BUD – I don’t target gains. At about $55 I will likely sell the current calls against the Marches to lock in some profit. $54.47 was the ATH and I think they’ll take a while to break out but we bought them expecting a good move into the Superbowl. The writer’s strike is giving them cheaper than usual rates as the networks are getting desperate and NEED their big buyers.


  115. How is everyone feeling about the market? I am so skittish right now. I can’t go long because I have been listening to Phil for too long (kidding). I have almost all my accounts in cash. All I can see is Basel requirements, bank write-downs, AAPL’s impending 6-month top, and a bunch of over-extended horsemen.

    The market is doing exactly what I thought it would a few weeks ago, and I just can’t get on board with it. I am too afraid of…. I am just too afraid. All I see are charts of nasty looking pullbacks that could happen at any moment. I guess my biggest concern is that the correction will be so swift and overnight that I won’t have time to turn if I go long. But, building long put positions is an account killer if we rally. I guess I am back to just sitting in cash and working hard on my day-trading and waiting for good set-ups. The AAPL spread is working, so I don’t have to worry too much.

    Just wondering where everyone else’s head is at.

    Thanks for listening. Talking it out helps. ;)


  116. NEM $10KP too, sorry!

    The CNBC “Fed Countdown” clock really seems like a contrarian indicator to me…

    GM having a bad day. HOG looking terrible… These are rate-sensitive stocks which is making me think something is up.

    Thank goodness we didn’t panic out of our HXL callers.

    Here goes HMY I hope, there’s been a seller at $11.13 all day and it just broke over.


  117. k1, thanks. Yeah, I knew there was more than I felt like trying to type again. ;-)

    reinharden


  118. I’m with you Film, there’s just too many things that can go wrong and the finacials are down, retail is weak, builders are down… what is this rally about? It’s that same 11:40 on New Year’s kind of thing where it’s too close to the ball drop (the Fed) to go home so you put on the silly hat and drink some coffee but you already found your coat and you plan on being out the door at 12:10 before you have to drive 6 people who overdid it home.


  119. Hey Film, are you sure you’re not picking my brain, because I feel word for word the same way. I feel frozen at the moment. I want to get into Apple but I am feeling it will be pulling back (although I’ve felt that for the past week, right), at the same time it might go higher lol. I am thinking about getting into a small Jan/Apr call position (partial of where I’d like to be), if market shoots up great, if it doesn’t I’ll buy more. I expect some volatility in Apple in the last week of the year when I can pick up some more cheaper calls.


  120. Well, it was either VMW isn’t worth its stock price, or EMC has some big bad news not announced yet. I am leaning toward EMC puts. I HATE THAT CHART. Nice clean out if it crosses $20, but if it doesn’t look out $18 because it will fly right past that.

    I will try to wait for EMC to touch $20 before buying the Jan 20 puts, but maybe half now, half at $20.


  121. I’m actually kind of pissed that I’m missing this huge move on MA…


  122. SBUX-Phil do you think it’s penny wise to sell the current 22.5s for a 30 cents against the leap 25s? Downgrades can put a stock to sleep for a while after the drop sometimes…

    oh and I’m gonna have to start charging royalties for all these quotes in your articles lol


  123. k1:

    You are amazing!


  124. Albo- nah, just helping out. Rein’s a busy guy, but his stuff is so good we need to encourage him to stop by more often.


  125. Bushman, Pls. e-mail me at: basson_jasper@hotmail.com
    Regards, Jasper.


  126. Film – I am with you on being skittish on the markets, and yes Phil has something to do with it for which I am grateful to him.

    That said, I am still mostly long going into Fed today, but I am ready to dump the longs at the slightest signal.


  127. FILMflam, you left out the uncertainty inherent in the beginning of the voting cycle.

    Plus a ton more stuff.

    My glass-half-view (which is rare for me) is that if anything starts to go well, we’ll see a tremendous rally. Short interest is near historic highs. But the market is also near historic highs. In what has to be one of the most challenging environments since the 1970′s.

    If we see signs of progress in Iraq (and thus the foretelling of reduced spending there), if we see signs of progress in Iran (and thus less of a threat to oil), if we see signs of progress in North Korea (and thus less need for an expensive defense system that likely won’t work anyway), if we see signs of a bottom in the housing market, if we see signs of a light at the end of the tunnel in the mortgage market (and thus the financial credit market), etc, etc.

    Oddly, we’re starting to see a lot of those signs. Iraq is stabilizing. Iran is talking (and apparently not building nuclear weapons after all). South Korea and North Korea are making tentative moves to open their border to trade. Housing shows intermittent starts as if though maybe the worse is over. The financial crunch hasn’t hit as hard as we feared.

    Mortgages, alas, still scare the crap out of me. Particularly because I don’t think subprime is the problem. I think the prime versions of 0% equity ARMs and interest only ARMs, and negative amortization ARMs in California (and similar locales) are the potential problem. California needs 10%/annum increases in real estate. But Phil’s probably posted about that a lot while I’ve been busy the last month. And that fear is largely already built in.

    So, back to the optimism. Lots of stuff is starting to look like it’s at a bottom. And the American people are relentlessly (stupidly?) optimistic. So they’re still showing no signs of slowing down their spending in a big way. And we’re still growing the country and our economy and a surprisingly brisk rate all things considered.

    And I think we’re even going to miss a lot of the uncertainty penalty associated with a Presidential campaign because in this campaign we’re *certain* that we’re getting rid of Bush and there don’t seem to be all that many people who think that’s a bad thing! ;-)

    And, um, all that money that can no longer be safely invested in real estate has got to go somewhere. And BRIC and emerging markets are even scarier than US markets.

    So, I wouldn’t be surprised by the mother of all short-covering rallies that drive the US markets to surprisingly high levels in a relatively short period of time. Of course, I said similar stuff probably over a year ago. Got the record levels, but not so much the short-covering. Which to me means that there’s still hope for an explosion upwards. Of course, it might be a blow-off high like we saw at the end of the dot-com bubble. But it’ll be interesting to watch regardless.

    reinharden

    PS: Still wish I had an easy way to buy Samsung. ;-) I’m a lot happier with that company than most others in the world.


  128. Best bang for the buck to the upside is probably the DIA $139s at .95. Low of day was .90 so I’m going to start buying here with the plan to SELL the $138s if we go the wrong way, rahter than get killed trying to sell my calls. In theory, a 150 point run should get us $1.70 so at about $1.50 I’d sell half and set stops as I very much doubt we’ll plow through 14,000 unless the Fed drops a whole point (although that would cause me to want to go all cash as something must be terribly wrong).

    Woo hoo, oil up $2 today, close to $90, maybe the Fed can get us back over the hump at $90 so we can pretend it doesn’t effect the CPI some more! Interesting lack of enthusiasm from most of the energy sector considering they were up 3% on a smaller move last week.

    SBUX – for shame on not having covered when they were higher. SBUX is a serial disappointer but I’d give Ben a chance to give them a boost, this looks oversold here (stops on putters of course XXX). Your check is in the mail! 8-)


  129. EMC- they are starting to see a slowdown in Business. Hardware grew 4% last 1/4
    VMW- still growing at 100%
    reinharden-welcome back! Sure it pulled back. But the return has been greater than AAPL since coming public MY shares are $29(IPO)and $50. I also don’t worry a 1 1/2 month timeframe.


  130. reinharden-

    I read something interesting the other day and it made alot of sense.
    Basically the thesis was that the sign of a true bottom is when new shareholders are willing to come in with the same terms as the existing ones. No 11% yields (C), no free shares+clauses to reroute option orders through you (Citadell-ETFC), no 7 year warrant thrown in (MBI), etc.

    It makes sense because these companies that are seeling shares for cash are giving significant discounts because they are in deep shit. Survival is at stake (maybe not for C) so they’re willin to give alot away to the new financing…


  131. FOMC- we very high likelihood we rally; counterpoints wanted

    1- excellent chance (they nearly said this already) of 25bps funds rate & 25/50 bps on discount
    a- anything more cuts will only increase the violence of rally

    2- excellent chance the talk is extremely dovish. a week ago they were serenading and markets responded (ie players fessing up more losses, markets/rates responded)- they took notice and will continue to sing

    given these very likely things, the markets will only see reasons to rally- at least for the next 3 hours.

    counterpoints?


  132. I have GOOG $650s tee’d up a mo play, currently $2.90, were $4 at some point each of the past 3 sessions. XXX if the Dow breaks 13,750.


  133. Rein, I completely agree. I really think we could go another 1000 points before correcting in January. Have been saying this all year. And now that I am standing at the foot of the mountain. I want to go home. It’s cold.

    Just need to find strategies that let me climb without causing altitude sickness.


  134. SBUX- lol well I just bought Friday when the stock was 50 cents higher, should have specified that. I’m still in good shape and just getting started obviously.

    It does look ovesold to me, this is still growing 20-25% a year until proven otherwise…


  135. Phil – did you mean Goog 750s as a mo play?


  136. Phil, if NEM caller in the 25KP hits 2 before the fed meeting, do we still stop out, or wait till the fed meeting to take half out?


  137. GOOG 750s?


  138. PTSC – sold 4/5ths to pay for a free ride from here. SA, similar but risking more. I sure hope you’re right on BA or I’m in BAAAAAD shape (I’m a part of Phil’s flock of sheeple)


  139. Fed counterpoint – 150% chance of a .25 cut, 90% chance of a 50% window cut. The Fed has been making doveish comments for 2 weeks including Ben endorsing the Paulson plan which reminded me of Greenspan endorsing adjustable loans 4 years ago. What more can they do to prop up this turkey? That’s the trick, they did not play the expectations game well and the slightest misstep might turn people off.

    Last time they did everything but actually kiss Cramer’s ass on TV but we dropped 1,300 points the minute investors had a moment to sober up and look at the facts – and that was when the banks were still lying to us and telling us the damage was closer to $200Bn than the $400Bn that is creeping into consensus. What happens when it’s $600Bn? One Barron’s article can knock 500 points off this market before the bell on Monday.

    Really, how often do you get a year where you are given the chance to cash out your winners near the top in December without having to risk the holidays. I’m willing to miss a little extra gain for a chance to relax for 2 weeks.

    GOOG $750s, yep – showing my age there, can’t get used to the new levels!

    NEM – I’d take them out, I think gold will march if the Fed comes out doveish. You can watch $51 for confirmation.


  140. VMW just got rejected at it 50% retracement (for the second time) from recent high to low. And EMC got rejected at $20. In puts on both. Out of VMW puts at HOD, DD if EMC gets over $20 by a little bit. Out if it gets over by alot.


  141. STX – starting early?


  142. I always have to mention that my AAPL views are fundamentally biased and my AAPL moves are oftentimes taken against the backdrop of protecting a larger position. And anything I say now may well be proven wrong at 2:15 ’cause AAPL will undoubtedly react out of proportion to a Fed disappointment.

    I see the near-term AAPL environment as most likely whiplashing upwards into a growing frenzy near and post Christmas on the back of what seems to be an unrelenting stream of good news (with the possible exception of the rate of iPhone sales in Germany).

    The week after Christmas is always volatile because it’s so thinly traded. But as long as things are okay through Christmas, that week will likely be okay as well.

    If you look at the options distribution for December and January, there are comparatively no puts above $200. And we’re breaking away from the calls. So I think we’re about to go orbital away from the options-induced resistance.

    A move above $200 on volume has essentially no resistance. If we can get there this week and hold it through options expiration, we likely get a frenzy into Christmas that has an outside chance of pushing towards $225. Which would lead to additional frenzy into Macworld which might push even higher.

    Alas, Macworld will probably be “disappointing” (I all but promise that they won’t announce a 3G iPhone). So I plan to be well-hedged by then (and there’s a chance that I’ll be wrong). I’m not sure which way AAPL moves the week of MacWorld, but I think the pain will be limited in expectation of subsequent earnings announcements. And pre-announcements could make things rocket in whichever direction the pre-announcement points.

    Earnings are likely now after the January options expiration (I hate that!). But, as I said, there’s a chance that something will be pre-announced at Macworld. That would probably outweigh any product announcement disappointment. Earnings will probably be spectacular. But AAPL’s Q2 forecast is *always* disappointing (although I’m always surprised that it’s such a surprise to the market).

    But, I expect some residual rally into earnings (if we haven’t already gotten our money from a Macworld pre-announcement).

    Consider that AAPL has moved 20% in less than 3 weeks twice in the last 6 weeks.

    So, if the Fed cooperates and AAPL breaches $200 this week… There’s a widely speculative shot at $225 by Christmas. And an even more wildly speculative $225 to $250 by MacWorld. Steve Jobs’ keynote is Tuesday, January 15. Options expiration is Friday, January 18. Should be a wild ride between now and then.

    All that speculation aside, fundamentally, I still like AAPL for the long term and have a disproportionately sized chunk of real stock left. I wish they’d split just so I could sell some and still maintain the round number that I like.

    But it’s hard for me to get hugely excited ’cause it’s hard for me to forecast AAPL making if much beyond $400 (and I prefer stocks that I think will multiply).

    Okay, maybe if they sign up China Mobile real soon now…which won’t surprise me. And could be announced any day, and might well be announced at Macworld. On the other hand, I wouldn’t at all be surprised if this Macworld was relentlessly Macintosh focused to make up for the last one barely mentioning the Mac. Unless, of course, they announce that they’re changing the name of the show to Appleworld.

    And that’s my random speculation on AAPL. And thus why I was thinking about well out of the money January options as a crap shoot kind of play. I look at it this way, if I don’t lose the money I’ve made on AAPL this year on something stupid, I just have to give 40% of it to the federal and Virginia governments. So really, I’m playing with their money (and it makes me feel better about having sold the last of my January $180s)…

    reinharden


  143. 60 minutes and counting!


  144. phil- i’m only talking about the chances in the next 3 hrs, kind of like the GOOG mo’ play.


  145. Boone on at 1:30pm. No wonder OIL up $2 LOL


  146. WM

    Phil your puts may be golden after all!


  147. Short puts, that is.


  148. And here is a silly play for you. I just bought 1 Apr 140 put on HDB. They are an Indian bank that looks extended. I wanted a put on an Indian stock. IV through the roof. Waiting to sell the Dec 140 until it decides which way it is going at this important level. Very illiquid chain. But, what are you going to do.


  149. FSLR butterfly : Sell the $250 puts and calls for $30 and buy the $270 calls for $7 and the $230 puts for $7 for a net $16 credit. This is a gamble as it’s volatile but very nice risk/reward means we can afford to spend a few bucks to reposition if we have to. XXX


  150. Rein, again I agree with you completely. I just want a better entry. It is KILLING ME that I can’t chase it. But, the last 6 week rally stayed nicely in a channel. We are pushing against that channel. I see any pop from here as a shorting opportunity. And again, THOSE NEVER WORK FOR ME. But, I keep trying.


  151. After the market closes, if you’re really bored, you should go browse around vanu.com.

    Vanu is a leader in deploying cellular base stations based upon software defined radios. Their founder is Vanu Bose whose last name is related to those radios (that’d be his Dad). I previously worked with Vanu tangentially when I was involved with DARPA’s Next Generation Networking projects. I mention them because I’m trying to figure out who’s going to make money if GOOG actually wins any spectrum. And unfortunately, Vanu is my most likely candidate. I say unfortunately because as far as I can tell, they’re privately held. ;-)

    If GOOG wins spectrum, they’re unlikely to go into the telecomm equipment business (well — I think they are, but who thought they’d go into the alternative energy business?) and they need partners who are sufficiently flexible to quickly be capable of fielding equipment capable of just about anything. That means that we can count Alcatel-Lucent out. ;-)

    Ericsson sometimes demonstrates flexibility. Motorola definitely needs the partnership. But I’m not enthusiastic about any of the traditional telecomm vendors…

    reinharden


  152. GW coming off the mats, let’s go for the Jan $37.50s at $1.25, 10 in the $10KP and $25KP, we’d like to sell current $37.50s for $1+ but let’s give the Fed a chance. XXX


  153. ARG! That was GE, not GW!!!


  154. FILMflam, I advocate increasingly ignoring technical analysis the closer we get to AAPL events. ;-)

    Look at a chart of AAPL from November 15, 2006, through January 31, 2007, and don’t be surprised to see something similar this year. Heck, we’ve already got the 18% beginning to peak nailed. So hopefully we’ll move last years behavior back a few weeks and start that 18% rally now. ;-)

    reinharden


  155. Hi all, just checking in. We had a baby girl last night…Abbie Elizabeth. Her brother Declan and sisters Kaelin & Rian are very exited. That’s all for now, see you all later.


  156. Anyone,
    Are we still holding TOL 25 09 put?
    TIA


  157. Congratulations dday, glad all is well.


  158. FED: Looking for a .50 point cut and a .75 cut in discount rate. The Fed is behind the curve with the problems in the credit market.


  159. Congrats dday97…

    Better buy her a good birthday portfolio… ;-)

    reinharden


  160. congrats dday and mrs. dday!!


  161. When did the 10KP pick up the NEM’s?


  162. Holy Cow. “Whatever it is I think I see, becomes a damn put play to me.”

    XLF big resistance at 32. Bought Jan 08 31 puts.

    Let’s take inventory.

    AAPL Dec 190 puts
    EMC Jan 20 puts
    VMW Dec 90 puts
    XLF Jan 31 puts
    HDB Apr 140 puts

    And a GOOG Dec/Jan 710 spread that really needs a pullback.

    I am really screwed here on a rally. So, I have to get DIA calls to cover, I guess.

    Added DIA Jan 140 calls.

    Ugh. Here goes nothing. OR everything. Gulp.


  163. NEM – Ok, found them. Are they still worth getting into for a 10KP at 4.90?


  164. dday – Cheers to you!


  165. Congrats DDay! That’s a lot of women in the house, good luck with that!

    Oil just broke $90 with 2 mins to T Boone

    TOL put – you should sell $22.50s against it if we start to rally but it’s coming right down to the wire now with 30 mins to go. GS is creeping back.

    $10KP NEMs have been there since 12/4


  166. Reinharden – have you read Cringley’s article, ‘Google’s plan for world domination?’ It’s interesting.
    http://www.pbs.org/cringely/pulpit/2007/pulpit_20070914_002928.html


  167. Phil,

    Would you recommend to uncover some calls in anticipation of a move to the upside?
    I’m assuming the DIA put is uncovered at this point?

    Thank you


  168. AAPL- getting weak


  169. Rein. It is too early for AAPL to start that run. What’s the hurry? Everything is all wound up and overbought. If they break this channel, then everything gets crazy. THEY don’t want crazy. They want a defensible channel that will keep more money behind them to close near 220 in January. No need to pick fights right now when there are so many people who will sell the crap out of them if this run gets to 200.


  170. dday- that’s a great start to the holidays- congrats


  171. Congratulations, dday!


  172. I am stupid, but I am not buying a VMW/EMC breakout ahead of the fed. I will reduce on a pullback, but I am stubborn, stupid, and on a losing streak. Don’t stop me now.


  173. congrats Dday.


  174. film- AAPL too overbought may be true- but compared to what? looking at the the MACD and RSI on the daily shows that current levels r high, but less than half of the previous peak of 192

    chartists, am i looking at those indicators, correctly?


  175. I’m always amused to see analysts suggesting companies with exposure to non-US markets…yet they somehow never mention INTC.

    Allegedly, “The Brazil, Russia, India and China market will account for more than 775 million new PCs by 2015.” That’s out of a bit more than a billion total units sold in that timeframe.

    And who has 80% of the CPU market? Oh yeah, INTC.

    Oh well, what do analysts know?

    reinharden


  176. Phil – I don’t think George W. is coming off the mats :)


  177. film- “those” people who will sell them at 200? can u explain this more, “they” sound different from the other “they” who r defending the channel.

    i know this is all speculation on ur part, but i want to get a better understanding of what forces u think r at work on AAPL


  178. sorry – couldn’t resist, just saw that post…


  179. 100% cash. I simply cannot make up my mind what will happen. 25bp cut, and then probably a sell-off tomorrow… but still I am 100% cash.


  180. On the other hand, I think if AAPL breaks $200, there won’t be a mutual fund left alive that doesn’t have to buy more of it so that it’s in their year-end portfolio as a top 10 position. ;-)

    reinharden


  181. dday – CONGRATS MY FRIEND!!! That’s fantastic.


  182. GE – Those took off, not even close to 1.25 now…


  183. AAPL – 200 is a big psychological level. and there’s been 15 or so up points with no pull back (about 177 to 195). I look at the Stoch myself on the daily chart and that’s 96.67, 96.95, which is pretty high. So, I’d be surprised to see it rally, but I’ve been surprised before!


  184. NEM – entry is still valid.

    Uncoverig calls – it depends how much time you have as I expect a 100-150 point up move regardless of the Fed but then I expect a bigger down move over the next 5 days but follow GS and you are unlikely to go wrong and they are heading up. So, for convenience, I’m concentrating on just buying index calls I can sell into the excitement as recovering a bunch of positions in a wild market move always ends up being messy.

    BIIB still going up, ELN stalled so don’t take a loss if it fails here ($24.60)

    15 minutes!


  185. VMW won. I am out at what will prove to be the low of the day.

    I don’t think AAPL is that overbought. I think the market is. But, seriously, my trading is complete ass right now as I can’t get on the bull train. So, I wait and churn.

    I couldn’t be forcing it more if I had vaseline and a plunger.


  186. Thanks everyone,

    You’re right Phil, luckily my garage is heated so me and my boy spend lots of time contemplating life there. He gives me investing and real estate tips and I give him tips on how to traverse the difficulties of Kindergarten.

    Rein, I have them all set up pretty well in 529′s. I’m taking the lead from my father and will help them with college. If they get a scholarship or have anything left over I’ll show them how to invest it. After that they are on their own, no trust fund babies in this house.

    Off to take care of my girls…later.


  187. While we wait, has anyone checked out the new LG Voyager cell phone? Are they worth the extra cost? How do they compare to the IPhone? My son wants one for Christmas.


  188. Jordan – Phil mentioned it earlier (I think, been busy haven’t kept up). Strngle the DIA’s? Buy the volatility… for a good price that is ;)


  189. TIF anecdote- realmoney columnist said and trafiic was pathetic and there was talk of slowdown evidence everywhere


  190. Fed’s at 2:15, correct…?


  191. Troy:

    Very clever! I don’t think so either.


  192. I presume that there would be a large cadre of aapl owners who would sell at 200. THEY shouldn’t care about getting to 200 today or tomorrow. THEY should care only about the price on January 18th close. The best way to keep the bulls on your side is to develop a channel and defend it. It would also require less money. If you break the nascent channel now in any significant way, then it has no choice but to stay above that trendline and make a new channel. I am all for that as that just moves up the price target for expiration. But, if they cannot hold that new channel, then you get more pressure at the lower trendline. Seems like the best thing to do is to keep it in its current channel unless they are going for a 240 close on Jan 18th. That would be crazy greedy.


  193. Parchesia – yes. I’ll post the minutes as soon as published.


  194. VMW-not going out of buiness today


  195. Late to the party plays:

    GS calls?
    Dia calls?
    Aapl calls?
    Goog Calls?

    Thx
    I just go back in


  196. Phil,
    I have aapl jan 09 190 with a profit of $14000. They are covered by dec. 190 with a loss of $8000 . Do I need to ro11 or wait. If roll, what month and strike. Thanks very much.


  197. Congrats dday97


  198. OXPS at ATH and having a great day.

    GE – had to cover at .80, was too much premium not to sell when it topped out. XXX

    Finally got some BXP $100 puts at .80, hope I don’t regret it.

    NVDA making a nice move finally.


  199. Phil,

    You said:

    Best bang for the buck to the upside is probably the DIA $139s at .95. Low of day was .90 so I’m going to start buying here with the plan to SELL the $138s if we go the wrong way, rahter than get killed trying to sell my calls. In theory, a 150 point run should get us $1.70 so at about $1.50 I’d sell half and set stops as I very much doubt we’ll plow through 14,000 unless the Fed drops a whole point (although that would cause me to want to go all cash as something must be terribly wrong).

    So you are saying that you are buying 139s now, and after the fed, the DIA 138s will be easier to sell than the 139s? Why ? Or am I misreading?


  200. JR –

    1) Cringely is factually wrong in that T-Mobile, for example, is short frequency in many key markets. And AT&T is buying up its regional partners because they’ve come to realize that it’s cheaper to get the frequency that way than it is to win it at auction. And Alltel went private for similar reasons. And you know that the private equity folks think that they’ll be able to flip it for a double in two to three years. Spectrum is one of the scarcest resources in the country (which is sad considering that it’s so underused — dig through SharedSpectrum.com and check out their resource utilization results — at any given time, less than 10% of the allocated spectrum is typically in use…hmm…I should mention I used to be associated with that company).

    2) With their recent foray into alternative energy, GOOG has demonstrated that traditional metrics for rate of return doesn’t matter to GOOG. So i wouldn’t bet against their spending a few billion on spectrum just for phone. Conversely, by getting the spectrum rules changed, they’ve already won the battle, so i wouldn’t bet on them spending the money either. ;-)

    3) As to the bandwidth available by using the 700 MHz spectrum as a giant mesh. Umm…not so much. Interestingly, the very fact that it propagates so well makes it not very good for meshes in that it drastically lowers the relative number of nodes you can have on a single frequency. The 700 MHz auction is actually auctions for 5 chunks of 6, 10, 12, 12, and 22 MHz. 802.11, for example, is a 20 MHz signal and requires at least 22 MHz with guard bands. WiMax is mostly used in 6 MHz chunks. Can you imagine providing broadband to the country on a single 22 MHz chunk of spectrum capable of realistically providing a shared 54 megabits/second locally? With your throughput at least halved if you’re also using it for backhaul? Even worse if you’re providing shared backhaul for others?

    Cringely hardly ever knows what he’s talking about. Unless someone has told him. And even then he usually gets it wrong.

    But there are a lot of clever things you can do with this bandwidth…even better is forcing access to the bandwidth to be open so you can do the clever thing without having to pay for the bandwidth. ;-)

    reinharden


  201. DIA 139 call for 0.97 riding on the announcement… here we go


  202. Dday – congrats – a birth on fed day – just give her a rate cut each year.


  203. Bought DIA 139 calls too. lets go over 140!!!


  204. WM taking off again! That could be a sign.

    RTP coming right back, interesting as everybody denies wanting to buy them.

    I’ve been going by the CNBC countdown but I finally realized it’s only 2 and these idiots have been 15 mins early with the clock!

    It worked though as the rally started already and we got past 13,750 but GOOG not moving yet. GS is heading straight u.

    Generally, things are getting bought at the moment.

    Small business optimism lowest since 1993, 4Q outlook is negative and MS predicts recession and FNM says 2 years before housing recovers – those are the CNBC notes ahead of the Fed. Buffett says Q4 looks “soft” but we’re not going to let facts get in the way of out big finale are we?


  205. WTF is on a huge rally


  206. Phil,

    would you cover DIA put since you’re expecting up move?


  207. Vikram Pandit to be CEO of C


  208. congrats dday !


  209. AAPL- weakening


  210. Phil, went you use OXPS to buy your options, do you use the extend software or just enter your trade directly on the website?


  211. But Phil, when everybody knows that everything is wrong (ie optimism is at a low), then that’s the time to buy!

    ’cause that’s when everything is cheapest, right? ;-)

    reinharden


  212. BBD:

    VMW – WOW!
    Missed it.


  213. buying creeping up?


  214. any news ??


  215. FILMflam – AAPL. If not now, when? *Everybody* knows how well iPods are selling, how well Macs are doing, how hot the iPhone is. You can’t open anything within reading something about it.

    I mean the Washington Post even ran a story akin to “Nobody goes to the Apple Store because it’s too crowded”. ;-)

    I expect the unrelenting frenzy to possibly enter a reinforcing cycle heading into Christmas. The more we read about how Apple’s products are way better, the higher the odds that people will buy those products for Christmas.

    Anyway, let’s see what the Fed had to say…

    reinharden


  216. DIA calls – that’s your best bet to catch a rally and the GOOG $750s as a mo play but if we don’t go 200 points up, this will be a disappointment.

    AAPL $190s – I’d wait as it can snap back any time.

    Selling the $138s, that’s because if it goes the wrong way on me my premium will get crushed and I’d lose a quick 30% trying to buy them back (we’re not talking about 10 contracts here!) so I sell the $138s which cost more than mine and lose money faster than me to the downside, effectively a bear call spread.

    DIA puts, covered by my new calls.

    C – good time for $35 puts. CEO is a big so what.

    OXPS – direct trading.

    Rein – right except not cheap now.

    OH NO – only a 1/4 pt cut!!!!


  217. Both cuts by 0.25 points.

    Uh oh…maybe.

    reinharden


  218. The following is the full text
    of the statement released today by the Federal Reserve:

    The Federal Open Market Committee decided today to
    lower its target for the federal funds rate 25 basis points
    to 4 1/4 percent.

    Incoming information suggests that economic growth is
    slowing, reflecting intensification of the housing
    correction and some softening in business and consumer
    spending. Moreover, strains in financial markets have
    increased in recent weeks. Today’s action, combined with the
    policy actions taken earlier, should help promote moderate
    growth over time.

    Readings on core inflation have improved modestly this
    year, but elevated energy and commodity prices, among other
    factors, may put upward pressure on inflation. In this
    context, the Committee judges that some inflation risks
    remain, and it will continue to monitor inflation
    developments carefully.

    Recent developments, including the deterioration in
    financial market conditions, have increased the uncertainty
    surrounding the outlook for economic growth and inflation.
    The Committee will continue to assess the effects of
    financial and other developments on economic prospects and
    will act as needed to foster price stability and sustainable
    economic growth.

    Voting for the FOMC monetary policy action were: Ben S.
    Bernanke, Chairman; Timothy F. Geithner, Vice Chairman;
    Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall
    S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin
    M. Warsh. Voting against was Eric S. Rosengren who preferred
    to lower the target for the federal funds rate by 50 basis
    points at this meeting.

    In a related action, the Board of Governors unanimously
    approved a 25 basis point decrease in the discount rate to 4
    3/4 percent. In taking this action, the Board approved the
    requests submitted by the Boards of Directors of the Federal
    Reserve banks of New York, Philadelphia, Cleveland,
    Richmond, Atlanta, Chicago and St. Louis.


  219. 1/4 / 1/4 ….. sell ?


  220. Google just fell $10…


  221. Oh nice we gummed up the server!


  222. Wow we killed the new server!


  223. Looks like we are selling off now, AAPL $190


  224. > Rein – right except not cheap now.

    But the entire market is cheap by historic PE measures!

    reinharden


  225. The anticipated rally is still anticipated !


  226. Alright, wow! This is a badass selloff!


  227. AAPL- thank god it’s pulling back


  228. Too funny. Had to close almost everything because I couldn’t handle the stress. Luckily, kept my AAPL puts (now closed) and my GOOG spread that is now positive. Really glad I closed my DIA calls, too. Back at where I started this day which is a HUGE reversal.

    No AAPL $200 today.


  229. 13550 and falling…


  230. Ameritrade not working, anyone getting this probelm?


  231. This should last 3 days.


  232. Holy cow it’s the apoclaypse and my portfolio just jumped 20% – does that make me a bad person?

    Obviously cover, the QIDs are doing great, I ended up dumping the DIAs as I got a decent enough price not to worry about it. This is sick how much they were counting on a half point – I’m not sure we’ll stop at 13,500 as all the BS run of the last two weeks was predicated on a 1/2 point cut.

    Gold is going down and oil will crash now too as the dollar will bounce off unexpected tightness.


  233. bought some GS Jan 2009 calls.


  234. Getting Crushed on those DIA calls,

    Couldn’t sell the 138 calls… now I’m out 50%


  235. Looks like my etrade platform also crashed. Just awesome and great timing


  236. Hey, at least XLE is holding up well. =(


  237. having problems with ameritrade as well – i called and they gave me 3 free trades. i guess that’s cool but i’d rather my site be working right.


  238. “Down goes Exxon, Down goes Exxon”


  239. FILMflam, there’s another 90 minutes. No reason AAPL can’t swing back up 4% before the close.

    We just need to give the China Mobile rumors some legs. ;-)

    Really, I’m surprised how well, AAPL has swung back. I couldn’t get any cheap AAPL fills on January options back around $190.

    reinharden


  240. back in aapl puts. Dec 195′s


  241. PHIL,

    Can you throw a new member a bone…

    I got the DIA 139 calls at 0.97, now worth 0.45

    My trading platform crashed and couldn’t exicute to the sell of DIA 138′s.

    I think I’m up the creek and out 56%. RECOMMENDATIONS ??


  242. rein, you can have all the margaritas I am owed if we get to 200 today. But, you owe me one if we get to 186 today. Deal?


  243. Schwab crashed too UGH


  244. Sold my DIA’s at a loss.


  245. DIA – if you are stuck in the $138 calls the best thing to do is sell the $136s for $1.75 and plan on rolling yourself to the Jan $136s if it comes back a +$2.40 so you’ll be in for $3.20, sold $1.75 of premium and if we flatline you’ll still be worth $1.75+ after your caller expires which is a $3.50 return.

    All trading platforms get hit on surprise moves as everyone runs to their screens. That’s why you need to have trades tee’d up ahead of time.

    Fed outlook is for weakness, this is going to freak asia out, check out the FXI. BIDU is off in some ohter happy place right now but they’ll catch on soon.

    We are suffering from a buyer shortage right now, this could get ugly(er). I love to be right but the stupidity of the markets just makes me sad sometimes – these people had no plan B at all!

    FWLT now my trade of the month!

    … and down goes XOM!


  246. amgn
    should we sell calls again. It just dropped through 50? Thanks


  247. etrade worked well today, crashed on sept. 18 cut
    still don’t like them though


  248. Yes, ,my TDameritrade wasn’t working too. .but back up now


  249. William – $139 calls the same plan of course.

    AMGN – yes you should be covering everything, we may be going all the way back to 12,500!


  250. Phil,
    what should we do with our naked AMGN?


  251. Wow, AMD is even worse off than I thought.

    As part of the ATI merger, they’ve now moved 60% of their chip production to foundries instead of building them on their own fabs.

    This means that they get *NO* scale benefit from the merger and their fab builds are proportionately even more expensive since they can’t even do the traditional build the new fab for your leading edge products and move everybody up a step. Now they’re going to have to build a fab and sell the old one at hugely reduced prices.

    Worse yet, this means that they have to slow the rate at which they build fabs. And they won’t have the scale to push new technologies and processes through their system. And foundries don’t do experimental processes, they follow a generation or two behind the leaders. Which means that AMD will be using larger traces, getting half as many chips per platter, drawing more power for the same clock cycles, and will not be able to push to as high a clock speed.

    AMD having to go fab free or fab lite is a very bad thing for AMD.

    They have got to sell themselves or find a partner with deep pockets if they’re going to maintain any relevance. And I personally wouldn’t buy them.

    reinharden


  252. I own no more AAPL stock (sold last at 196). I own no more GOOG stock (sold at 706).

    This will continue for several days. And from these ashes, my portfolio will rise on the back of GOOG earnings plays. IV has been dropping, now stock price dropping.


  253. FILMflam, do we have to close at $186 or just touch $186? ;-)

    reinharden


  254. So how far down are we going to drop?


  255. thanks, phil for the good advise on staying pat- the stress was so worth it.


  256. Phil you going to cover BUD also?


  257. Out of AAPL puts again.

    Thank you AAPL. That was a needed drink of water. Whew.


  258. S&P at 1490


  259. And they’re probably gong to end up revising that employment number back down anyway… ;-)

    reinharden


  260. just touch it, Rein.


  261. was considering the possibility of buying back AAPL dec 190 or 180 callers, up alot in 1 day, but it’s too scary to leave the longs naked right now.


  262. This is why I love BXP when they get too uppity! VNO just as good.

    AMD real walking dead company.

    Oh dear, I seriously don’t see anyone buying anything, I’m not even sure who the sellers are selling to right now..

    EBAY not negative yet! TXN still green. Very nice move in DUG. As I suspected, DIG puts better than DUG calls. Look at my QIDs go!!!

    Oil is holding up on false pretenses as the NYMEX closed before the full impact of the Fed could be felt so SU puts are still cheap and XOM isn’t facting up to reality like it should. SU Mar $110 puts are still my favorite but the Jan $100 puts at $3.15 aren’t bad. XOM $90 puts for $1 could get very interesting but tomorrow is inventory day so you need balls of steel for that one. XXX

    Cramer’s on now, very depressed.


  263. Film – whats your GOOG earning play ?


  264. Cramer saying anything good? He should be happy! The Fed is doing exactly what he told them to before to avoid a massive problem!


  265. FOMC cuts fed funds rate 25 basis points
    FED says recent events, including financial deterioration raise
    uncertainty for growth, inflation outlook
    Fed says says some inflation risks remain
    Fed says rate cuts should foster ‘moderate growth over time’
    FED says data show economy slowing, reflects housing slump, some
    softening in business,household spending
    Fed says strains in financial markets have increased recently
    Fed will act as needed to foster growth, stable prices
    Boston Fed’s Rosengren dissents, preferring 1/2 point cut


  266. Phil, for BUD, do we cover with dec 55s?


  267. FILMflam, I’ll even give you $187.50. AAPL won’t touch $187.50 today. If it does, I’ll buy you the first two margaritas.

    reinharden


  268. phil,
    AMGN – I sold 5 Dec 50 Call against my 10 Apr 52.5 call. Should I sell 5 more to make it fully hedge?

    thanks


  269. BUD – because there are no good covers, we need to cash that one out for now while they are up .10 XXX


  270. I am leaving ALL AAPL spreads covered until we settle down at 186. SETTLE down there. The third time they get over 186, I will go naked.


  271. Well, that was interesting.

    Not like the market was overbought or anything anyway !


  272. Hey, EMC and VMW are both still up. I still like EMC a lot better than VMW. Especially considering that they own 87% of VMW and aren’t up proportionately today.

    reinharden


  273. I’m starting to sound like I’m an IB advertiser, but Interactive Brokers never gets hit during periods of volatility and high volume. In fact they pride themselves on this. I know mrl doesn’t like the fact that they’re Java, but as far as I was concerned, it’s asif nothing happened today…

    What impressed me the most with them is their last conf call. I’m seriously looking at their stock (or calls) after the next downtrend. They said they thrived as market makers in August because most of their competitors disappeared, and they attribute this to their software, which accounts for 40% of their expenses…These are the guys I want to be aligned with.

    My 2 cents.


  274. BA on sale below 90 again.


  275. By the way, I’m very, very happy with the Fed’s decision and I will now happily start buying long-term plays because they’re not willing to destroy the economy to make Jim Cramer happy.

    MCD made a new high.

    AMGN – yes fully hedge.

    Now someone is putting in a bottom call, let’s see if it sticks but I see a floor forming on lots of good stocks (well assuming the ones on my watch list are good anyway). I think it may have been just a pause by sellers though as there is very little volume in the buying. We’ll see soon but if we break 13,500 at all, we are probably not coming back any time soon.


  276. spin, totally agree. IB rocks! Just now my buy order got filled at below my bid price. I have seen this happen most of the time. Almost never with Ameritrade, fidelity or wellsfargo.


  277. film- ur call on the channel- although the channel i saw had resistance at 200- was excellent.

    i’m guessing loading up on more AAPLfilm is in order- i reduced exposure last week (that’s when i switched up to a calendar type play) and have been hoping for this.

    i’m thinking AAPL settling at 190-195 is in the cards this DEC, right? 190 is the bottom of the channel i see.

    anyway- just giving a shout out for the great call and hoping u’ll weigh in on my plan to refill the AAPLfilm & AAPL settling at 190-195ish


  278. Phil,

    So – If I’m still holding the bag on GE – any thoughts?
    I missed your sell recommendation. Double down?


  279. outlier scenario- what if the credit markets really take this badly and start seizing everywhere and the fed emergency cuts this month.

    any odds makers?


  280. Well, I had all the right bets and gut feelings. Just went in too big, got scared, and ran away from a huge day. But, I also didn’t risk wiping myself out if we had rallied. Made good money today and hopefully reversed my personal downtrend.

    Still say 2 more days of selling and dwindling IV, at least we can hope. Hold that cash. EVERYTHING is getting an IV bump today, so don’t go buying anything other than mo’ plays today.


  281. 13,500 is fighting for life!!!


  282. GE – this is why I stress learning to trade over following trades. You need to know what to dow when something happens, not wait for me. Anyway, you just totally lucked out as GE just announced a $15Bn stock buyback so I’ve taken out my caller for .40 for a quick 50% gain! XXX


  283. GE not looking quite so aweful now


  284. I am going through my accounts and putting in orders for AAPL, 50% at 185, 50% at 178. I don’t expect to get the 178, but I will gladly cancel the order if it never hits.

    GOOG almost touched the lower line of the channel I have up. So, touching 700 tomorrow might be a support level. Although, I will probably give it one more day before going naked as I don’t want to be early.


  285. Still relentless selling – I think we’re going down another 100.


  286. I knew that looked funny. Aweful means the opposite of awful, as in, GE looks bad, but not awful.


  287. Phil, could be your new Mr. Miagee quote, “Danielson, Learning to fish more important than watching waves” (please insert picture of Mr. Miagee)


  288. damn, now below 13500 and 1390


  289. AAPL-below $190


  290. Well I was prepared to dump my longs and go short after the Fed announcement, but I was not prepared for such a swift and violent reaction. I got creamed while trying to switch directions, big lossez today.


  291. Interesting item about the various volatility measures. The VXD (Dow option volatility measure) spiked up significantly (4 points) at 1:45pm, but the VIX and VXN didn’t move until after 2pm. So going into the Fed minutes, I noticed that the Dow volatility was way up (a sign of a drop) where the other two were quiet.

    I noticed this at the time, but didn’t know if it was real or not. But now I’m curious.

    Also, again not sure this means anything, but both VIX and VXN are high and climbing, while VXD has settled back down to about half of its rise.


  292. Flimflam / how do you setup your channels? on what system?
    Thx


  293. GS about to fall off my screen


  294. phil
    thanks for so often reminding me that even great stocks like AAPL and GOOG can go down, and being such a voice of reason. very much appreciated, and so clear on a day like today! my portfolio, so well hedged, is making out just fine right now, and this pleases me greatly!
    windy


  295. phil, film, other folks- on AAPL, with IV coming down in the next couple of days is buying a condor good? don’t they go up in value with IV droping?

    i’m looking for any reason to buy a condor…


  296. If you are looking for a stable platform, it’s hard to beat IB. It’s nothing fancy, but just never has issues. Also, I get price improvement fairly frequently. :)


  297. k1 – I’m prob completely wrong on this, but since the different volatility indexes are based on the underlying securities IV on 1 and 2 month expirations you’ve gotta imagine the VXD slowing down faster than teh VIX or VXN b/c less securities (30 IV’s vs. 500 and 100 respectively). Or, maybe, I’m talking out of my ass. Just speculating…


  298. That’s great Windy!

    Oh this is so ugly…

    Apple condor – the way apple is capable of moving, it’s not worth the risk. Ou out of the $195 cals in the $25KP of course! XXX


  299. phil – should i sell 1/2 GS puts before bell or will asia continue this decline.
    always appreciate your opinion. thanks.


  300. FSLR going down hard, RTP is fantastic. BIDU may never find a bottom at this rate…


  301. Mark- yeah, that’s really my point. Today, for whatever reason (or coincidence) VXD was a leading indicator of the Fed decision. Or not, I dunno. It caught my attention.


  302. Dan, I usually just print them out and connect the lows. But, now that I am demo’ing Think or Swim’s platform, I can draw them on the chart.

    I don’t do condor’s.


  303. Phil, it may be ugly intraday but we have only retraced 3 days of BS gains. Now I hope we go all the way down to 12000.


  304. Phil,

    Yes – definitely trying to learn. Only started on your site a few months ago. I suspect this will take a little time.


  305. windy – Agree with you that being well hedged on a day like this makes it much easier to stomach. This time it worked out for me although the situation was quite a bit different just before the FOMC decision. Using the opportunity to make some adjustments on my callers.

    Platforms – still on OXPS; haven’t started trading on ToS yet. OXPS seemed to fare well this time, though it’s had some hiccups after the last couple FOMC meetings.


  306. Best trade of the day: Closed DIA Jan 140 calls after 2:15pm, but before the announcement was made. I think I was the last tick before LOCKDOWN!!!


  307. I think the real tell will be what happens in the last 15-20 mins. If we get a sell-off, we’re going down for the next few days.


  308. FCEL pushing higher anyway!

    BTU heading for the 5% rule, forgot about that one!

    Asia will very likely not take this well at all tonight. They are massively overbought and the Fed said “softening in business and consumer
    spending.” That is not something the people working in our overseas factories want to hear.


  309. Yea! Everything is on “sale” again. We’ll let this settle down for the next day or so and get back in.


  310. Sorry. What is the 5% rule? If it is down 5% on the day, then what?


  311. Almost all puts right now up between 10-100% should i be getting out. I dont want to be a piggy but I believe this is start of a bigger downward move. Should i at least get out of Dec. expiring options?


  312. the following are holding up well:
    QID T PEIX VMW WFR MA HOKU


  313. DIA PUTS-

    Phil, I have DIA 137 Puts @ 1.77 basis, now at 3.25 bid.

    Before I sell, I’m wondering if there are alternatives… I’d like to lock some gain but keep some downside exposure (I think…) …what do you think? What are you doing with your puts?

    (This comes on the heels of me taking on the chin with DIA puts. I got nearly annihilated on that BS 1000 point gain…)


  314. All my callers (some were getting a bit deep ITM…) getting crushed! Thanks Phil!


  315. Shorted and covered some BIDU. Crazy stuff!


  316. Phil. I thank you for showing me the importance of being covered. WOW.


  317. Phil, I also totally agree that this is all good for the longterm. REALLY pissed I let $1000 of XLF puts go before the drop. Oh well, the good news is that I can pay myself my salary this week. That will get my wife off my case. =)

    And we are getting into go mode for GOOG earnings plays. Trying to figure out the right way to play. Gotta move some money and get ToS funded. Lots to do this week. Sucks how much our emotions ride on the market’s whimsy.

    And thank god for small XLE pullbacks.

    Hey Phil, I came across the ironic way to get out of the subprime mess. Do you endorse this?

    All you have to do is go in and buy traunches from 2003 to 2007, then you bundle and slice them AGAIN to limit the risk. All they need to do is get all the 2006 and 2007 only traunches off the market. Brilliant, no?


  318. fabregas- ditto, thanks phil


  319. Beth- Couple quotes on 5% rule:

    5% rule – almost right – it’s a logical pause point but, if it breaks it like INTC just did – watch out! The most important thing about the 5% rule is that a 1% pullback off it is meaningless – that’s key. When you get to 5% at EOD, you have a pretty good idea the next day won’t go well (or will go well on the upside).

    One thing I’ve noticed with oil is that the more 5% moves something makes, the more the 2.5% marks start to firm up. I think that is because you now have people who called tops or bottoms at varios 5% levels and as they overlay each other, the 2.5% points start to become equilibrium… Isn’t math fun!

    And go here for a more detailed explanation.


  320. BA

    I bought the May 95s this morning, but didn’t get filled selling the Dec 95s. :(

    Will this continue tomorrow or should I roll down to the 90s now?


  321. Doubleclick – you could roll down to take some profit now. But, you’re better off rolling to Jan puts since we’re less than 2 weeks away from expiration.


  322. FSLR finally really breaking down…


  323. Back from a 3 PM conference call.

    Still not out margaritas (but hey, I’ve got 20 more minutes to lose).

    Bought Jan 08 INTC $40s and $45s. But I’m just that way.

    Still haven’t managed to fill my entire Dec AAPL options. What’s the point of a $5 point drop if I can’t fill my options orders?

    AAPL has fallen all the way back to last Thursday. So I’m not overly concerned (yet). DIA and QQQQ look like they’ve fallen back a full week to last Tuesday. So that doesn’t bother me too much either.

    reinharden


  324. Broke through 5dma on DIA.


  325. goog is headed below 700


  326. bmb,
    I think the market is not going to make a come back today


  327. Ameritrade is down again


  328. Mikel, you should sell all Dec’s unless they are covers. You are getting good premiums and that is important. I wouldn’t close everything, but take some profits. Sell half of ANYTHING up 100%. And I would sell 75% of Dec puts.


  329. Phil,

    Just fyi (so you know I’m not totally thick-headed) I’m a little better off than break-even today. Definitely learning from you that it’s better to hedge than swing for the fences. The baseball analogy was well put.


  330. gotta love ameritrade : System is temporarily unavailable. Please try again later or contact a Client Services representative.


  331. This is turning very nice. Puts are rocking. I am not selling my puts today but might hedge a little bit before close with WFR, NVDA and AAPL calls. RIMM, GRMN, LVS, COF, being very good to me.


  332. FILM-

    Are you counting those two margaritas from Reinharden? AAPL just touched 187.50


  333. Also, I am in BIDU and FXI puts, new positions from earlier.


  334. FILMflam, drats, assuming that that new AAPL low holds into the close, it looks like I was 11 cents (or 8 minutes) too optimistic.

    But I’ll still claim a moral victory if we don’t hit $186. ;-)

    reinharden


  335. Check out FRE! SLM at 52-week low, they did not want to hear this. FMD is following.

    SU coming down nicely.

    POT getting smoked.

    Ah, now the energy patch is picking up steam! I knew we should have shorted OIH this morning but those XOMs made me gun-shy.

    5% rule – the more something is traded the more likely a 5% move is to act like a significant barrier. 2.5% for very heavy traders like indexes. It’s based on the way that trade programs work but it’s a darn good rule that serves us well. On a 5% move we expect a 1% retracement and do not get fooled into buying on those. Also, a stock that finishes the day at the 5% line, is very likely to follow through the next day, up or down.

    Getting out of Decembers – tomorrow is the day I like to be getting out of almost all my Decembers anyway, this couldn’t have gone better with my taking things off the table today and leaving all the puts but the intensity of this move is a little scary now.

    DIA puts – move to jan and sell $135 puts to someone else to give you premium and position. You’ll cap your upside but it keeps you on the board with some cover.

    Subprime repackage – BRILLIANT! Now all we have to do is start cold calling to see who will buy repackaged sub-primes…

    Oh thanks K1!

    BA/Anything you are considering rolling. Wait, we are only going to stop going down today because we are out of time!


  336. ameritrade down, this sucks


  337. Thank you, K1. That was very helpful.


  338. Wonderful day for me – my Jan 135 DIA puts I’ve been painfully rolling (since 132?) paid off and also my GOOG 670/690 and 730/710 call spread (net short) is right on target. Fast forward ten days and I’m a very happy man :)


  339. Keeping all my cash and will be hoping to buy back the AAPL Jan 210′s at $4.00 tomorrow leaving me naked again for Reinharden’s charge to $200 by Friday. ;)


  340. I may be out two margaritas (the woes of being off by 11 cents), but as a result I got to build a huge ridiculously out of the money position on AAPL for January and a sizeable one for INTC for next January.

    So I’m not displeased. Although obviously I’d prefer to see AAPL at $200 instead of $188.36. But that’s okay, tomorrow I’ll just hope for the “Hey, AAPL is cheap” reaction. ;-)

    And maybe hope for that China Mobile announcement. ;-)

    reinharden


  341. Phil-

    Get out of Decembers: you mean your short term trades, not the callers, correct?
    Callers are hitting the sweet spot for us in the next 10 days

    If not I’m really looking forward to that royalty check, cause that’s all I’ll be collecting in this business lol

    Thanks


  342. Let’s remember this for next time; Fed days now seem to be accompanied by 300 point Dow and 50 point Naz moves.

    You can miss the first 100 points and still clean up. Just wait for the direction.


  343. Rein

    How far out you looking? I remember you talked about 240..


  344. Optrader

    Do you have a list of your current trades/positions in one place ? Thanks.


  345. Dan, I posted all positions yesterday (or 2 days ago, I don’t remember now). Will do it again when I have a minute.


  346. Nasdaq right on the 2.5% rule, Dow bounced off the 2.5% rule but not .5%…

    GOOG – I will remind you guys I didn’t move GOOG $690 spread in $25KP earlier as it was “too scary”

    Put hedging – I had no reason to hedge the puts. Even if we gap up 100 pts now, look how much better off I am than I was pre fed…

    Cool Rymadsk! That’s my next mission is to convert you to the joys of self torture through rolling. It hurts, it hurts, it hurts and it hurts but then it’s FANTASTIC and then you start all over again! 8-)

    AAPL – no matter how good a stock it, it’s not immune to a big Nasdaq sell-off. SNE just said everything was fantastic and they retraced the whole gap up by the close. It is very dangerous to confuse yourself by thinking during a stampede, this is why very few wilderbeasts read Plato…


  347. AAPL- i’ll begin re-filling on JAN 190/200s when we see 185. this is very healthy action back-filling for AAPL to run up for macworld.

    i’ll begin selling the JAN 210s when the tide turns


  348. Hi Phil, if you have the chance, can you take a look at the P/L of the 10 and 25 portfolios? I know you made several trades in those today. Basically, I just want to know if those wonderful gains are because of your nimbleness or because of good, old-fashioned, let-it-play-out sticktoittiveness. It is a concern for me because I am not very nimble so I’m still evaluating if this is a proper site for me. If I follow the buys in the 10 or 25, and then just use your rules about rolling, taking profits, etc., to manage them on my own time, do you think that would work out okay? I know the rules are not meant to be followed blindly, but I like rules. They give me a calming effect, and I won’t need to stay glued to the computer and follow what you say like a trained monkey.


  349. InteractiveBrokers crashed also by the way. Was too busy to mention this. They are not that great and above the rest after all.


  350. Jan 210′s low today was what I covered them at all those points ago. Hoping to get a gap down in the morning. But, more important, I actually have some confidence back. If I didn’t have those AAPL puts today. I might have gone back to television….

    Hope everyone made some money, but more importantly, didn’t get crushed.

    Ciao.

    PS – DIE XLE DIE!!!!!!!!!!


  351. lol-no problems here.


  352. Im finally learning, sell into the initial excitement…
    Got into the apple starter spread last week and
    bought back my aapl dec 190 caller for 40% profit after being in the red on it for a few days. I plan to resell tomorrow to capture the ridiculous december prems.

    Thanks to phil, K1, sage, filmflam and others.


  353. Dont forget, earnings of financials are on tap the next few days. Should make for interesting times..


  354. this is the first wild action day that my account didn’t go wild (one way or another), but it did go up after dripping away a little in the last week

    thanks PSW!!!


  355. Beth -

    10KP

    My 10KP is now worth $5782.

    I put $10,000 in an unused Ameritrade account determined to follow Phil’s trades to the letter.

    I have had trouble following and filling Phil’s trades. I even got a margin call yesterday for $120 !!

    The down side of the margin call was I deposited $2000 more into the account and then found out Ameritrade won’t let you use the money for three working days.

    So while Phil was yelling COVERCOVERCOVER today I couldn’t because of trade restrictions.

    I wasn’t able to trade for three days last week because I was moving so of course I couldn’t follow his trades those days.

    Bottom line is only trade the 10KP if you can stay glued to your ‘puter and you are nimble.

    Perhaps you should start with the LTP……..


  356. Out of Decembers – yes, I mean my positions. I WANT my callers in as long as possible for the exact same reason I want myself out as soon as possible!

    Beth – the $10 and $25KPs are exactly meant to learn those rules and trade with them. When in doubt, always stick to the rules, like selling those Apple calls at $13 this afternoon. No option positions are “buy and hold” other than LTP plays, you could make those in a small portfolio but the rate of return makes it a poor strategy for what I’m trying to accomplish (double up $10KP players so they can move on to the $25KP and then on to the bigger portfolios).

    If you can’t monitor positions closely then stay away from naked ones and stay away from close spreads (less than 2 months) but condors, butterflies and Mar/Dec or better spreads are very unlikely to penalize you if you have something better to do with your day than watch a lot of squiggly lines move randomly on a screen. Embrace the mathematical advantage you have over your callers and the fact that you control time and space (the positions you choose) and not your caller. Once you get the hang of things, you’ll be very comfortable moving things on their own. I believe Windy can attest to that!

    That makes me very happy Jeffro and Xian! It’s very hard to get used to the idea that a consistent small wins is better than occasional big wins but, once you get used to it, life changes!


  357. Edro – Ouch! The same goes double for you! Stick to spreads and DO NOT try to “win it back” in some dramatic fashion. I’ll put up a $10KP analysis later so both you and Beth can see where the plays match and don’t.


  358. Hmm. Better put me into the same shrink-tank as Yev and Film. My real-money account is doing fine, well-hedged and all, but not showing a lot of improvement. In contrast, my paper trading account where I place all the trades that are too scary to contemplate putting real money into, is on a f-ing tear.

    There’s clearly a disconnect between the trades I see and the trades I follow, and it’s making me doubt my instincts.

    Oh well, it’s probably for the best that I’m so hedged right now. I’m going to be out the next two weeks for vacation (Japan!) so better that the portfolio is in neutral for that period.


  359. Plato not real big with lemmings either.


  360. Fed did the right thing in not fully capitulating to Wall Street IMO.


  361. Cap

    Agree. Its about time the Fed smacked ‘em down


  362. Cap- I agree. But would also point out that the notion the Fed is using Mishkin’s models (showing home prices as the leverage/control “dial”) suggests that we’ll continue to see quarter-point cuts until home prices stabilize.

    Since we’re all quite confident we’ll continue to see mortgage problems and foreclosures and falling home prices, we can continue to be confident we’ll see quarter-point rate cuts.

    That’s my (broken record) thinking, anyway.


  363. bmb, right now I’m only playing with AAPL’s Jan options; however, remember that I’ve already got large in the money positions, so I’m looking for ways to deploy excess profits in ways that *might* yield insane profits. Also, I feel better getting out of the in-the-money positions since the new out-of-the-money positions keep my AAPL exposure. So my speculative trade might not make sense for anyone playing with “real money”.

    All that having been said realistically, I think we’ve a pretty good shot at seeing AAPL up substantially before Steve Jobs’ keynote at Macworld on January 15. And if I’m wrong, the keynote might save me. And if I’m wrong, anticipation of the earnings announcement might save me. And if I’m wrong, a timely announcement about China Mobile might save me.

    Since the Fed screwed up my earlier schedule, I’m going to throttle back some though. We need to see a move above $200 on volume to get going. And that’s now probably unlikely for this week. And next week gets tricky with options expiration. And the week after is Christmas which likely slows things down. So instead of looking for a shot at $225 to $250 into earnings, I’m falling back to $225. The higher number is still possible, just less likely.

    That having been said, I bought a slew of December $220′s at $0.10. Just in case the market is more optimistic than I am. I don’t need $220, I just need the threat of $220 by next Wednesday. ;-)

    For January, I piled up $250, $260, and $270. I can’t recommend that *now*. Phil will wisely tell you (and me) that I’m pretty insane on these kinds of plays.

    So, I’d say that my view of the standard deviation intervals for January expiration are about $15 per interval centered somewhere between $212.50. Which means $240 and change has about a 2% probability.

    Of course, I could be completely wrong and my view of the likely number will change every day between now and then based upon what we learn each day…and those lovely macro-economic events (like Fed cuts and terrorist acts).

    reinharden


  364. Beth/Edro

    I’m new as well. I daytrade “normal” stocks and shares and want
    to learn “options”. I have been following the trades and comments
    continuously for 2/3 weeks and there’s no way I could keep up or
    make the same trades, Sometimes it takes re-reading and reference
    to even identify the specific option/strategy being executed.

    I plan to watch for a good month or so and then “paper” trade.
    Meanwhile , on days like today, I too make a loss.

    Best of luck.


  365. Beth/Edro

    Try virtual trading first, with 10k or 25k. THat will give you a good idea of what is involved to make things work, before you commit actual money.


  366. Okay, I just read the headline “Google sponsoring private mission to the moon” and thought “This time they’ve really lost it”.

    Thank god, Google is only sponsoring the $30 million X Prize and a mission itself!

    Considering that I was a X Prize Senior Associate donor I can’t knock Google for that. But that first headline really scared me. It’s a sign of the insanity of the times that I might (even if only momentarily) believe that Google was going to work on their own moon launch. I mean really, wouldn’t they do a space station first? ;-)

    reinharden


  367. Also, you guys may want to look into the stock club as the trades will be made for you with a level of diversity you couldn’t match on your own.


  368. Hi Phil, last I heard the stock club was oversubscribed. Does this still hold true? TIA


  369. I thought the stock club was closed?


  370. I don’t know for sure that it’s closed and with all the people showing interest I’m pretty sure there will be 2 in short order.


  371. Phil – your quote, “Getting out of Decembers – tomorrow is the day I like to be getting out of almost all my Decembers anyway”

    Why not roll our callers to other December strikes? The last two weeks before expiration is when their premium decay is the highest! Why give that up?


  372. Stock club ? – Sounds interesting. I can’t find a reference on the website !


  373. Holy cow, Rein. I can’t believe I listen to you about anything. LOL.

    My spike high target for AAPL is 240. That is my SPIKE high. Remember, AAPL only had to get to 160 in 2007 to maintain it’s double every year. 240 is a triple. You can probably play the IV on those and do well, but I will bet you two margaritas we don’t touch 250 before Jan expiry. And don’t forget earnings doesn’t help you in January. Gotta move to Feb’s for those.

    So nice seeing GOOG back down $20. I will post my GOOG earnings play when I figure out what it is.


  374. New to this also.Stock Club sounds very interesting. Anybody have any details?
    Thanks


  375. Saw doubleclick on here earlier, maybe he can take over about the stock club. But the topic came up last week, a couple links referenced here.


  376. k1 – I am right there with you. Today was a very disappointing day for me as I was so neutral that I neither made/loss $ today. I am green with envy. A vacation in Japan is a dream vacation for me. Someday…


  377. Let’s now listen to a Hillary commercial on CNBC.
    Watch how Hillary blathers on and says little.
    And of course blames Bush for everything, but not the Dem Congress for doing nothing.
    Puffball interview.

    Estate Tax: “Really its a just a tax to prevent inherited wealth from passing on from generation to generation”. What a loser.

    Buffet ought to be embarassed propping her up. Too bad he’s not.


  378. k1 you are better than GOOG to find references – where do I invest.
    Seriously, I am so grateful for the k1 project – but now you provide live search results !
    soon the moon (RE Rein post)!

    Thanks a lot


  379. Stephane- only better than Google because they can’t see the whole site. Rein is just one of the folks whose posts are worth searching for.

    Seriously though, the k1 project is just my top-level pass at pulling together the incredible amount of information, knowledge, and analysis that exists on this site. There’s no way I’ll ever get enough time to pull together the deep focused analysis available from some of the members.


  380. Did anyone have any execution issues with OXPS or ToS once the sell-off began? I read several reports of issues with Etrade and Ameritrade being overloaded.


  381. I didn’t trade during the sell off I just watched everything hit my
    stops !! (Shares not options) However I regularly have trouble with
    ETrade when the going gets heavy which I why I always try to have
    stops in place 15mins beforehand.


  382. I went all cash at 2:10. I didnt even play the index puts as the fed burned me on sept 18. But I’m glad that they didn’t try their shock and awe tactics this time around.


  383. Phil/others,

    I’m in some doo doo here and could appreciate a bit of advice. Here is the list of things I did – a list of DON”T DOs. (I’m not always this incompetent, but…)

    I sold an uncovered FSLR Dec 220 last Friday, just before it popped on the stupid rumor. Checked again a couple hours later and my call was $1500 down, or something like that. So, hurting, thinking this is just a rumor, I sell into the excitement, I sold another couple of 230s. Went down another couple grand. On Monday morning, to cover my A, I bought the same number of Jan 230s – thinking I would sell them when the stock turned – and let the callers ride into the dust. Today, when I checked at 4pm (after work), my callers are slowly dying (great), but my expensive calls are too! I guess I should have put a stop loss on the calls! If only…

    Any way, I now figure FSLR will bounce around tomorrow – up and down. FSLR was down 5.25% today, so it broke through your 5% threshold. Does that mean it will likely have a down day tomorrow – even though it had momo? I think so. Perhaps 225? So (I’m trying to cut back on risk now) I get rid of a caller or two around 225. Just thinking out loud. Then a bounce up on Thursday – it certainly had momo the last 3 days. Exit a Jan call or two at 235?

    Just my loud thinking – still feeling my way around spreads. Would appreciate any thoughts – especially about exit points.

    FYI, I did sell some deep in the money puts, which should be fine – so I’m not completely going out of business.


  384. Thank you all for the patient responses. Edro, I’m sorry about your losses. I am new to options trading, but I have a premium account with Schwab. I don’t know if I had to qualify for that or if this is their normal platform. I do have a quite a bit in my stock account, though, and my broker set this up for me. Get out of Ameritrade if they have all these restrictions. You can’t do the job if you don’t have the tools.
    I will pass on the stock club. I was told to get a hobby. And 30000 is a lot less than what my husband has spent on golf, fishing, football games, and poker. I have done very well investing over the past 25 years, but I don’t really get much excitement out of it. No, I am here to learn something new, something exciting, and hopefully something very valuable. So I figure I’ll start small and work my way up like I’ve always done. Plus, it’ll be a good excuse to get out of the hot sun. I just don’t get the appeal of golf at my age, or any age for that matter.


  385. Phil, Question about the 10KP portfolio. My portfolio lost $700 today cause my GE 37.5′s limit call of 1.25 filled immediatelly after the rate cut and I let my caller go on NEM DEC 50′s at 2 about 10 minutes before the rate cut. AMGN, DEll and XMSR which I had covered held up fine. With my small portfolio should I had used $500 to buy DIA puts to cover my 2 naked positions? Selling the GE Dec 37.5′s for .6 didn’t seem like enough premium and buying back NEM DEC 37.5′s right after I sold them didn’t seem like the right play.


  386. Sorry – I meant I sold deep out of the money puts.


  387. If you have an acct. at AMTD, it never hurts to call in and ask for 100 free trades whenever you know their system has gone down. I just called and asked for 100, they gave me 75.


  388. Phil, any plan on having your web developers utilize AJAX to dynamically update the page when new comments are available? Doing so would make this site a lot easier to use and would also significantly reduce your bandwidth requirements. I am a software developer by trade and would not mind volunteering some time to add this to the site if needed (though it may take some time as I am oversubscribed at the moment).

    Also, I am in the process of building up an SQL DB with end-of-day option quotes going back to 2001. I plan on publishing an open API that other developers (on a limited basis) can use for back testing, program trading, etc. Let me know if anyone here would be interested in using this and I will add you to the beta list when I roll it out sometime late Jan/early Feb.


  389. My girlfriend csme over the other day while I was watching Cramer’s show and she was so impressed by him during the lightning round, and I had to explain to her how much of a Jackass he really is. Listen to him complain about the fed. They cut a full percentage point over the last 3 months. GET A GRIP!!!!!

    I know there is at least one Cramer staffer lurking on this board. Note to the staffer: Tell Cramer that KHAANN!!!! thinks he’s a JAAACKKAASSS!!!!


  390. Beth, since you are very new to this, let me offer this unsolicited advice. If you have $30k set aside for trading options and have a 10KP worth 5.7K (as I infer from your posts), fight every urge in your body to put more cash to work. Just stay with the 5.7 and work it back up. The important thing is learning the strategies. It is way too easy to think, I know how to get it back before you really do know how to get it back. You can do magic with $10K, but if you fail the first time, you can try twice more.


  391. KHAAN!!!! You make me laugh my AAAAASSSSS OOOOFFFF!!!!


  392. Phil,

    What your take on LULU today? No news and pops 8% on double avg volume, even on this tape. Also 3 times the number of calls than puts sold today.


  393. K1,

    Its the least I can do for you, after all you have done for us.


  394. FILMflam. The 5.7k you are referring to is from Edro. I took 30000 out of my regular account and put it in an options account. I still have 30000 in it because I haven’t done anything. I’m still working things out on this site trying to see where’s the best place to start. This is less than 1% of my regular account so I figure I’m being very conservative here with my play money as my husband calls it. If this all goes to waste, I’ll just have to find another hobby.


  395. Beth- like Film, I’ll offer some free advice, use or discard as you see fit. My approach is the most boring, low-risk learning curve you can imagine.

    First, don’t try to follow a portfolio at first. Until you get the hang of the jargon and a whole bunch of tools, it’s likely to be more activity than you can follow at first (was for me, to my detriment).

    Second, to get a trade started, pick one or two trades that have a long-term aspect. You can tell long-term trades because it’ll have a Jan09 or Jan10 LEAP. The length will give you plenty of time to recover from mistakes. In my case, I’ve done well with CYs even though I’ve made more mistakes rolling the calls than I’ve done right.

    Third, trade single contracts. You won’t make any money (in fact Schwab’s commissions will eat your profits) but you won’t lose anything either. Single contracts are the easiest way to keep the cost of tuition down.


  396. K1, I always welcome advice from people who know more than me. I figured I would start with the smaller porfolios thinking they are the easiest to learn from. So when I reading this blog, I just need to keep track of those holdings. I’m not going to bother with those butterflies or condors on Apple or Baidu. From what I’ve learned, butterflies and condors are done when you think the stock isn’t going to move out of certain range. But then I saw you all leg into them and out of them, which means you need to be an excellent market timer. So these butterflies are nothing more than just layered directional bets. I’m not confident enough in my timing skills to do those yet. I like the idea of following those LEAP spreads, but that just seems the same as when I write all those covered calls in my other account. As for commissions, I pay 9.95 flat, same as my equity account. I wasn’t putting up with any contract fee nonsense.


  397. Beth- one more thing. I assume you’re set up with Schwab Active Trader. There are a bunch of good tools in the AT platform, as well as on-the-fly greeks (you’ll want to see implied volatility and probably delta).


  398. Beth- I think the value of the LEAP spreads over writing covered calls is that you increase your leverage quite a bit, so can return 40-50% pretty reliably and with a lot of control over your exposure at any given point.

    When you’re ready to have your head spun around, read the Core2 (Core Strategy II – Deeper Issues) stuff on the k1 project, where Optrader gets a flash of realization about why Phil initiates LTP positions in slightly OTM long calls.

    But my main point about the long-term spreads is that they evolve more slowly than the short-term stuff, and thus allow more time for thought, evaluation, and adjustment. More forgiving for those of us who are not (yet) good market timers.


  399. AHR: Got tagged today in the post-Fed sell-off, but:

    Anthracite Capital Declares Quarterly Cash Dividend of $0.30 Per Common Share
    Tuesday December 11, 5:08 pm ET

    NEW YORK--(BUSINESS WIRE)--Anthracite Capital, Inc. (“Anthracite” or the “Company”) (NYSE:AHR – News) today announced that its Board of Directors (the “Board”) has declared a fourth quarter 2007 cash dividend of $0.30 per share of common stock. The common stock cash dividend will be payable on January 31, 2008 to stockholders of record on December 31, 2007. The annualized dividend yield is 15.4% based upon the $7.78 closing price of Anthracite’s common stock on December 11, 2007.

    ———————————--

    This stock will trade higher into year-end – perhaps not tomorrow – but it is a given that there will be yield buyers and short covering into the x-dividend date.

    For those of you looking for an IRA stock, some AHR sub-$8 will make you very happy as time goes on.


  400. There is nothing I enjoy more than watching shorts get barbequed. Um. . . that’s short sellers, not underpants. Most of my trades are sentiment based. Besides technicals and fundamentals, I put a lot of weight on some of lesser watched indicators such as put/call ratios, short interest ratios, open interest configuration, and buy/sell/hold configuration. Most of my spec option plays are based on these indicators, and they are what led me to FCEL a few days ago. I don’t mention many on the board b/c I would hate to be the reason anyone lost any money. But seeing Phil and others stick their neck out for the benefit of the members is quite inspiring. So here it goes, my sentiment analysis for JOSB and why I think it is an upside surprise in the making.

    Looking at the earnings calendar for this week, I am watching for names that are already on my watch list or ones that trigger my memory (of buzz I may heard over the course of the quarter). I noticed that JOSB reports Thurs before the bell. Remembering that they posted great SSS numbers last month, I dug a little deeper. Looking at the Put/call open interest ratio, I see that it sits at 3.1, for the front three months there are more than 3 put positions for every call, Higher than 70% of readings taken over the past 12 months (this data is available at http://www.schaffersresearch.com). This pessimism tells me that there is a lot of sideline money that hasn’t made it’s way into the stock. Unwinding of this pessimism is fuel that can push the stock higher. Next, I look at the short interest. The latest data is showing me that 9.2 million shares are sold short. Thats 50% of the total float!!!!! It would take more than three full weeks at avg trading volume to cover!!!! An upside earnings surprise will all these shorts to run for the exit. With such a small float, they’d be stumbling upon each other to get out the door. Furthermore, the buy/sell/hold configuration is also encouraging, just 3 buys and 2 hold. An upside surprise can turn the holds into buys. With just five analysts following the stock, there is a lot of room for coverage initiation.

    But sentiment alone isn’t enough to send a stock screaming, it just magnifies the move following a catalyst.. The converse is also true. If optimism is running high on a stock, even an earnings beat will send the stock tumbling. Lets take a look at why I think JOSB will beat on Thurs:

    The stock is trading near a 52 week low despite consistently beating estimates. Missing just once in the past 12 quarters, with a winning track record dating back farther than that (I just stopped counting). They have reported a rise in SSS (same store sales) every month over the past quarter. Most recently, they reported SSS increase of 15% in November, handily beating the street estimate of 2.2%. To cap it all off the PEG ratio of .67 is enough to make my mouth water.

    The low expectations on the street lead me to believe that there is a lot of upside potential, with relatively little risk of downside. It would be hard to disappoint with the bar set so low. I am looking at Dec calls for a spec play, but am also studying the chains to build a long term position. Please remember guys, this is just my opinion and I am wrong quite often. It’s just food for thought

    Phew, my fingers are tired. My longest post ever.


  401. Beth, I would second K1′s advice. If you want return, you can get 500 – 1000% returns by buying leaps and holding for 6 months. If you want to get your heart racing, then day-trade front month options naked. And that I would definitely recommend doing one at a time. And if you are just looking to blow 30K, then I am sure DM would gladly volunteer to be your hobby.


  402. Hey Film, you can’t tease DM until Thursday. He’s busy all week and can’t defend himself. Wait, what am I saying? Bring it on!


  403. Beth,
    You could also come to me for advice on blowing 30K. I’m doing quite well trading next month options naked – while missing out on 300 point moves while at work.


  404. film- what LEAPS go 500-1000% in 6 months? that’s selling premium on top of that right?


  405. All,

    I wanted to see if anyone had LEH on their radar screens for earnings Thursday morning. December options are way pumped up to almost 80% and these things must to be sold on both sides. As a hedge to my Goldman long…

    Anybody looking to do a short vertical, 65/70 or 60/65? Maybe legging into a condor, short the 55 and long the 50 puts?

    I keep wanting to play them from the short side, $17B of equity up against $34B of “unmarketable” Level 3 assets. Thoughts anyone?


  406. 40,564 DEC 12.5 XMSR puts traded today. What’s going on? Is someone making a bet that the merger doesn’t go through? No other XMSR December traded more than 443 contracts today.


  407. Karen Finerman trashed LEH on Fast Money tonight after looking at their balance sheet.

    Basically said they had twice as much Level 3 paper on their books than they had market cap, which is a big problem. Oh, I see by your last sentence that you saw that too !


  408. Phil- catching up on the days postings and saw your comments about the Fed and not making Cramer happy. Hate to say it but Cramer is on the mark on this one. If they want to do a 1/4 point on the Fed rate, fine, but they should have done at least a 1/2 at the discount window. Lending has frozen except for the highest quality buyers. This will effect everyone,not just a small sampling as stated.



  409. Phil, follow up to the AJAX suggestion posted earlier…

    Ideally this feature should operate similar to the gmail email editor where an inline dialog box is presented when an incoming message is received and the user is currently replying or viewing a message. The dialog presented allows a user to update the current conversation with the new message or leave the page as is. A check box should also be incorporated in the dialog box that would allow a user to enable automatic updates to the blog when new posts are available. This type of flexibility allows active day traders to easily stay up-to-date on latest posts while allowing you to personally leave the page unchanged while you work to catch up on replying to previous posts. Hope this all makes sense…


  410. Khaann!!!
    Great post – Can you please post your analysis on FCEL? It will be interesting to see if those criterias consistently produce similar results.
    THANKS!


  411. Agreed – Thanks KHAANN!!!! It is definitely useful to see other people’s trades and analysis. That is what makes me glad that I joined this group . . .


  412. innovative FOMC?

    someone on realmoney posted something that got me thinking- and i don’t know, but this FOMC is young and may b into “experimenting”

    earlier, i asked what r the odds the FOMC will now do some emergency cutting (indeed, they did this in AUG w/ the discount rate and we rallied sweet) if the credit markets start seizing again (high probability w/ brokers reporting next week and plenty of new bad info)?

    anyway- FOMC meet again on JAN 29/30, so we can bet that they’ll cut then (they r keeping “powder dry”)

    this is what RM (jeff miller) guy said:
    CNBC ran a Steve Liesman “breaking news” piece during their Fast Money program. Liesman reported that the market “could be misreading” that today’s quarter-point rate cut represents the whole Fed response to the credit crunch. A Fed source who asked not to be named said that they are considering a range of tools to address the liquidity issue, ideas that would see the light of day “sooner rather than later.”
    Some will think that the Fed is trying to make up for a policy mistake. As readers can tell from my earlier post, I do not agree with that viewpoint. The Fed sees the FF rate as a tool that does not directly address the liquidity issues started by the housing and mortgage problems. We will see some other initiatives from them (long term repos? purchasing mortgage debt?) and there will be other stories like Liesman’s.

    Also, the first take on GE earnings growth was wrong, according to CNBC. They stated that some who saw the WebX presentation omitted the words “at least” from the 2008 outlook of 10% profit growth. The stock traded higher when some got the additional language.

    I covered some short futures contracts after hours on the Liesman story. We shall see.


  413. NIKKEI down 300ish- nice.


  414. I went to the Apple store on Sunday and as you could imagine it was crazy crowded so I didn’t buy much. I went back today at 2pm thinking that i’d beat the crowd…. nope… crazy crowded. I walked out with about $600 worth of cool gizmos. I saw at least a few people buy multiple nano’s (kid’s gifts i assume). I’ll be taking advantage of this dip to add Apr 175s and maybe some Feb OTM but don’t which strike yet.


  415. Cman,

    Thank you very much.

    Yes, the method has been pretty consistent for me. But it is important that you must have faith in the underlying issue. First I asses if I think the stock is going to beat, and then I look at the sentiment factors to guage how much sideline money is available to push the stock higher. If there is excessive optimism, I will not play the earnings release, and in some cases I will buy puts, as it will be easy to dissapoint the street.

    The trifecta for me sentiment wise is a high put/call open interest ratio, high SIR and, little or neutral analyst coverage. That is why I made the post about JOSB. It is a near perfect sentiment play.

    I arrived at FCEL in exactly the same manner. Analysts are showing 2 strong buys and 2 holds, which leaves ample room for upgrades and initiation. Short interest is high at 13. I was counting on this to propel the stock higher, and was ultimately proven correct. However, in the options pit pessimism had been unwinding for about a month now with the current reading in the lower end. So it wasnt a perfect sentiment play. This leads me to believe that todays move was mostly short covering. So when the shorts are done, it may run out of gas (pun intended). I will be watching it very closely as I still have a little position which I have let ride, given today’s strength. But FCEL is definitly a stock that I do not mind owning in the long term.


  416. mac,

    thanks for reminding me. I was going to mention that my local Apple store in the mall had a line to get in. Nylon ropes and everything. It was so crowded. I was dumbfounded. I have never seen anything like it. A normal day. No product launch


  417. Leaps over 500%:

    I bought both AAPL and GOOG Jan-09′s during this year that were up 500%+ in under 6 months. But, timing is everything, you know. I actually got my friend into some Jan-08 580′s on GOOG over a year ago when it was breaking out from 400 and those went from 0% to 500% to 0% to 500% to 0% to 600% when he finally closed them. It was quite a trip. I will have to see if I can get a chart of that one to confirm, but it was a crazy ride with the IV knocking it all over the place.

    I also had some IBM 120 Calls that peaked at 400%, but that might have taken longer than 6 months. It really isn’t that hard IF you buy OTM.

    And Beth, that joke wasn’t meant to sound (that) crude. If 30k was 1% of my “investment” portfolio, my hobbies would have “options” too.


  418. khan- u’ve posted that u r in miami, if so which AAPL store was it? thanks


  419. KHANN!!!! Your endorsement of JOSB inspired someone here to grab 408 shares AH pushing the price up $.63. That changes EVERYTHING. ;)

    I really like this play. Solid retailer with great vitals. And I think dress clothes are a good niche for this point in the cycle, too. Great find. How the hell do you get 53% of the float short. That seems impossible. I see it on YHOO finance, but do you have another source for that info? Great methodology.


  420. Film- How about ShortSqueeze.com? Seriously… Link

    Darn web, you can find anything out there.


  421. And by anything, I mean to say I was looking for pr0n, not something about stupid ol’ stocks.


  422. JOSB – Balance sheet looks solid. The thing that scares me away from this stock is that I am in San Francisco a couple of times a week and every time I pass this store I comment to my wife on how dead it is. Which is surprising because it is located in a prime spot just one block from Union Square. Sell some puts if you want to potentially own it at significant discount.


  423. film- after reading khan’s unsolicited post & seeing this nice AAPL backing up, i’m so psyched again for JAN earnings.

    also, i think the market is doing a baby/bathwater thing here on AAPL JANs (considering the impending catalysts) and am itching to buy back some JAN 190/200s and rebuild the spread.

    i’ve been looking at charts and AAPL is dipping out of the channel, so i that looks really bad (actually, good to buy)

    also, i c a gap up on 12/5′s openning to 183 from 12/4′s close of 180. it would b cool to c AAPL fill that gap quickly (many sellers on the way down) and then bounce to charge in JAN.

    i can search charts , but thought i’d ask if u’ve seen AAPL fill gaps (b/c i know it’s a gappy stock)?

    thanks a ton.


  424. Xian,

    Aventura Mall, which is in the ritziest area in Miami. Aventura is all multi-million dollar high-rises. I wouldn’t be surprised if it has the highest concentration of millionaires per square mile outside of Manhattan (is that the ritziest part of new york city?)

    Film,

    Arrggh, I knew I should have saved that post till tomorrow after I bought my own calls. LOL

    On the short subject http://finance.yahoo.com/q/ks?s=JOSB shares short divided by float


  425. Xian,

    I am also getting encouraged by growing pessimism in AAPL. Back in July I had made a similar post about APPL. A person had asked why apple had stopped moving even though good news kept flowing in. I stated that sentiment shows that optimism was so high, short was low and all anayst had a strong buy rating. There was simply nobody left to buy the stock. Pessimism now returning to apple shows that there are sideline buyers are waiting. Once I see that pessimism start to unwind, I’ll be a buy again.


  426. K1,

    That link is awesome. My favorite places list in my browser is pretty much just populated by links I got from this board


  427. Khan- yeah, I’ve seen that link from somewhere before. I like how it does the math for you, so you don’t have to think or anything.

    But seriously, I appreciate you detailing out how you determine sentiment. I remember dragon talking about his estimates of sentiment, but not having any details or methodology to go with it. Another tool in the belt!


  428. Hi Guys,

    I haven’t posted in a while, but just wanted to let all of the regular contributors know that there are people who appreciate all of their time and effort that goes into this site even if we don’t say so on a frequent basis.

    FYI, just read where Hong Kong cut their base lending rate by .25 to 5.75% in order to keep their peg to the US dollar.


  429. khan- what do u think about sentimentrader?


  430. Xian,

    Its new to me, but I’m going to sign up for the free trial tomorrow and check it out. At first glance it seems to be geared for people who want to gauge sentiment first and then zero in on a specific stock that fits their sentiment criteria. I like to play it the opposite way. I zero in on a stock I like and then use the changes in sentiment to guide my entry and exit. My perfect scenario includes a nice technical picture as well.


  431. FYI : Sage touch on sentiment trading in his book as well – can t recall the approach – I probably should read it again ;-)


  432. FILMflam,

    Without the hoped for boost from the Fed today, I don’t expect AAPL to touch $250 before January expiration. But if the $250s are $10 out of the money prior to Macworld, the trade will likely return a multiple on all three positions. And I’d take a huge volatility crush if I have to hold through the Macworld keynote.

    Whatever happens, on weakness, I’ll position for both Macworld and AAPL earnings. Still annoyed that they’ve moved earnings after options expiration. I loved the week where we had INTC, AAPL, and GOOG with days to live on the options.

    #####

    xian,

    Let me tell you about APVAT, AAPL Jan 08 @ $200. My basis is $0.35, they’re currently $7.85, down 25% today, but still up 2000%+ since I bought them on May 18. They used to have a friend, APVAP AAPL Jan 08 @ $180; however, I sold the last of those on Dec 7th for $22 — up from $0.75 back on May 18. I’d hoped for 3000%, but settled for 2800+%. ;-)

    That having been said, I scour the market looking for a dozen such chances a year. And I’ve only got to be right once or twice a year to make it work for me. The hard part is figuring out what’s likely to move enough to make it worth while in the specified time interval. And not getting screwed by macro-economic events.

    So I study Phil ’cause he can *always* make money.

    reinharden


  433. FSLR for Win(some lose some?) – If $1,500 has any impact whatsoever on your life then there is no way you should be messing around with naked selling or any naked position for that matter or any position that does not buy you time in exchange for your hard-earned cash.

    If you want to short FSLR at $220 you buy a March $220, which was $37 on Friday and you sell a Dec $220 against that, which was $20 on Friday and then when the Dec goes to $35 like it did today you don’t care because your March calls jump up to $57 so you’re still ahead and he still has $5 in premium that will go away in 8 days and put another $5 in your pocket or you could roll him up to the $230s for $5, pushing him $10 off the money and putting him into $11 in premium that will disappear in 8 days. No muss, no fuss, no having to be here to stare at it all day long as the chance of something really bad happening in either direction is fairly slim.

    When you get good at that, effectively making mo plays with a giant safety net, then you can build confidence and skill to mess around with naked mo plays. Meanwhile if you list out your positions and what you paid for them, I’ll see what can be done about getting you even on this one.

    Kris $10KP – GE, we had already called for a cover on that pre-fed. Executing 1/2 a play is never good. If you don’t get what you want and the stock peaks, the worst thing you can do is buy it while it’s going the wrong way. Think about it, we have a rule to stop out at a loss of 20% of the profits and you missed GE at $1.25, it went to $1.40 so by the time you picked it up it would have triggered a stop out for anyone who got in before. This is no big deal with GE though as they are Jans and, frankly, you could have gotten $1.12 back at 3:45 and if you can’t learn to take a small loss on a broken trade (as you said you didn’t think the spread was worth it) then you’ll end up trapped in a lot of bad trades.

    NEM – this is why I hate hard targets. The calls touched $2 very briefly twice but the stock never broke my $51 mark (and .01 does not count!) so there was no reason to buy out the caller. This is another case of a room full of Nervous Nellys causing problems because I end up spending a good deal of my time telling people not to panic and once in a while I end up capitulating and saying it’s OK to get out but you need to think twice, three times, perhaps four times before ever buying out a caller into a spike. Take a look at the LTP – there were tons of callers deep in the money this weekend and I did NOTHING. $800K worth of callers who were “ahead” on my by perhaps $300K and I DID NOTHING because nothing is the right thing to do 90% of the time.

    As you say, AMGN, DELL and XMSR were covered and did fine. Covering is what it’s all about in a choppy market! Should you have bought DIAs to cover, yes because they should not have been uncovered so you should have done something. Notice in the $25KP I couldn’t find a cover I liked for BUD – SO I SOLD IT! If I can’t cover it and I’m not 75% sure it’s going up then what the hell do I want it for? That goes for any position.

    When I sell a call, even a crappy .60 premium that you turned down for GE (which would have coverd 45% of your purchase price so I’m not sure I agree with your “not enough” assessment) then I KNOW FOR AN ABSOLUTE FACT I will be collecting that money. In the case of your GE, it would have cut your risk by half and the only reason you didn’t sell it was greed for phantom profits overriding the sensible protection of the perfectly good cash you put at risk.

    Designcurve – I like both ideas but you need to talk to Jared about it as he works with the progammers. I do have some ideas for utilizing that data so do let me know when you get to work on it as I’ve been tossing several ideas around for better option systems.

    LULU – it’s just a trading vehicle that’s been taken over by some funds. There’s always a few hot stocks like this that can be moved around at will by the big boys who run the classic pump and dump on a massive scale. Again, we don’t care if it’s a scam as long as we know what the scam is…

    Beth still with $30K – Well you already learned one of our most valuable lessons – patience! This has been a terrible quarter as the up and down moves waste all but the best of traders. I’ve gone very neutral as I can’t take the swings either and, why should I? I make money selling puts and calls and make a few small plays to pass the time but I’ve been over 80% cash since we cashed out before Halloween as I’d rather wait for a good opportunity than just throw money to the winds. Yes a long/short play is very similar to what you do sellig covered calls off stocks but with 5x more leverage. You need to decide if your “hobby” is aimed at makeing money or if you are looking for a thrill as they are very different investment philosophies.

    LEH – I’d go with the Jan $62.50s/Dec $60s for .20 and the Jan $57.50 puts/Dec $60 puts for .35 so it costs you .55 to sell $5 in pre-earnings premiums with no more than a $2.50 spread between you and the winning (if any) caller. Figure your wrong side play keeps $1 in value and you can walk away with $2 under most conditions. XXX I agree the downside risk is far more pronounced but who the hell knows the way things are trading these days so I kind of like the neutral trade and this one is tilted bearish anyway.

    JOSB is a great stock, I’ve got a marker on them at $22.50 assuming they hold it. They don’t have calls past July otherwise I would have started buying leaps at $25.

    LOL Kahn, Manhattan IS NYC. There are 4 other boroughs but no one cares about them. I saw a wealth chart once which listed the concentration of capital around the country and it was fascinating but NYC was miles above any other place, not even close… Just think of all the Goldman employees that live there alone!

    Hong Kong almost always moves lock-step with the Fed. They are down 785 at the moment, Nikkei down 300. China inflation out of control, we’ll see how this pans out in the morning.


  434. Reinharden – Congrats on your spectacular returns. I kick myself often for being way too conservative with my trades which results in me missing out time after time on some substantial returns. Today reminded me of that as my positions were so neutral that my account balance barely budged when the market closed. I had my finger on the trigger for what would have turned out to be several high yield trades over the past several weeks. The hardest part for me in trading is not the stock picking or selecting the appropriate strategy but controlling my fear. I take some comfort in knowing that there are more great trades in the making…just hope I can muster the courage to click commit next time.


  435. Phil – I don’t see Jared’s contact info listed on the Contact page, so feel free to fwd my email to him: designcurve@gmail.com and I will take it from there. Thanks.


  436. New to this site, and need a little help from the experienced folks to see if I’m doing this right…

    I bought GOOG Mar08 720 Call at 48.0 at $88 premium as long position, then:
    1) Sold Dec07 720 for $11.50 ($39.50 premium), covered for $8.50 at $43.50 premium (did this as abiding the 20%+ gain rule)
    2) Sold Dec07 700 for $17.00 ($23.25 premium)…stock ran up to $715, so I rolled up to Dec07 720. Covered 700 Caller at $26.50 ($12.3 premium), sold Dec07 720 Call for $15.00 ($19.50 premium)
    3) After today’s action, 700 Caller down to $4.80…What’s the next step?

    Should I roll down to 710 to take advantage of the higher premium there, or just sit tight with the 720, assuming it expire OTM, and leave with $5.50 gain for the month?

    Also, according to the calculations by premium credit/debit, I should have been gaining a credit with each trade, yet I fail to see how I can win the trades by rolling up/down without actually having a caller expire OTM. Obviously, the premiums drop quickly as Dec expiry approaches, so wouldn’t the shrinking premiums over the next 8 days basically flatten out my trade? I’m kinda understand the rolling up/down concept, but something still doesn’t quite jive…and I’ve studied k1 and optionsage’s pages on this topic a couple times already.

    Any advise on the next best step re:GOOG, as well as explanations on the above would be greatly appreciated!


  437. Phil, at my age, the thrill is in learning a new and valuable skill. And since the whole point of all this is to make money, then yes, making money would be essential. This is something I can do on a daily basis. With my stock portfolio, I make maybe 4 or 5 moves a week, and most of that is just massaging my QQQQ shorts like today. I let the rest sit mostly. There’s not enough action there to hold my interest on a daily basis. It’s like gardening. You’re really active for 2 months of the year. The rest of the time you’re just pruning. Options look more promising. I can’t say I’ll be around every day or that I’ll be glued to the screen on the days that I am, but I see you disappear for hours at a time. You go on vacations. So even as active as you are, there’s still no need for you to watch all those numbers light up on your screen the whole day. So that’s what I’m looking for, to learn this options thing in a way that would be consistently profitable but that I’m not a slave to. It sure beats bunco. See you all tomorrow.


  438. designcurve,

    It’s all about what makes you as an individual comfortable. I accept potential drawdowns that I’m sure appalls Phil. But up until lately, I’ve been more interested in capital appreciation than capital protection.

    Of course, that’s yet another reason that I study Phil’s moves. He seems to have mastered both appreciation and protection.

    My “luck” in the market has derived from being very well-studied on a particular company (AAPL) that went on an historic tear. My remaining AAPL stock has a basis of $6.5. But I’ll tell you right now, if I’d known that it was going to go this long and this far, I’d have a *lot* more of the 10k shares I used to have. So I feel your pain on conservative actions limiting returns.

    Oh well…

    reinharden


  439. Thanks Reinharden. I really should not complain as I am overall I am still positive for the year, though nothing that has substantially altered my life. I had a fairly large setback with the Feb 27th correction using high probability low yield credit spreads on the RUT and SPX. That day is still fresh on my mind so I have since kept the position sizes very small and hesitated on countless great trades over the past several months.

    I agree with you that Phil has mastered both capital appreciation and protection. It’s amazing to me to see that you can make directional bets and still remain well hedged. There are *many* advisory services out there that trade naked or use exclusively high probability / low yield trading strategies that can really blow out an account in turbulent times.

    My hat is off to Phil and the numerous high caliber contributers here (opt, k1, parchesia, film, dm, …) who make this community a fun and educational place to be! :)


  440. Checking in quickly, I rolled my rimm fronts to next month, deeper strike, looks like it’s a lost cause, I hate making errors. Selling fronts, looking to make even now. RIMM and NILE… Stupid stupid stupid trades.

    Should’ve sold fronts before rates, I figured a 25 cut, but dammit.

    designcurve – Thanks dc, where are you on the list? I agree, there are many good traders here, which makes this an excellent community.

    LOL Flim -”…if you are just looking to blow 30K, then I am sure DM would gladly volunteer to be your hobby.”

    30k??? Cheapest Tuition yet!… How much does university cost again?


  441. oh and
    http://www10.americanexpress.com/sif/cda/page/0,1641,10732,00.asp

    Why doesn’t America admit to it? Everyone knows about the black card, give it up!


  442. What don’t they admit?

    See http://americanexpress.com/centurion/

    reinharden


  443. OK, I know that this is way off the topic of trading but I ran across a DVD player at Target tonight that fellow parents may be interested in. It’s called “ClearPlay” and it filters out offensive content from DVDs. Now why any responsible parent would want to sit down with their child and watch an R rated movie is beyond me but the concept and technology is pretty nifty.

    http://www.clearplay.com/


  444. Too bad this company is not public. Would be a great short candidate. It’s another one of those truly great solutions to a problem that doesn’t need solving. Sounds great to the VC’ers, generates investments and then vanishes.


  445. Asia Markets : Wednesday, December 12, 2007

    (The following is from WSJ; please cross check with other sources to confirm.)

    Japan*

    15932.26
    -112.46
    -0.7%

    Hong Kong*

    28521.06
    -705.78
    -2.41%

    DJ Shanghai*

    517.13
    -4.87
    -0.93%

    S.Korea*

    1927.45
    2.38
    0.12%

    India*

    20375.87
    84.98
    0.42%

    Baltic Dry Index (BDI) -63 9929

    BDI Charts & Spot Rates – http://www.dryships.com/index.cfm?get=report

    * at close
    Sources: Dow Jones, Reuters


  446. Asian Markets Close Lower, Fed Disappoints
    Asian markets closed mostly lower Tuesday, after the U.S. Federal Reserve’s decision to cut interest rates failed to shore-up investor confidence. South Korean and Australian markets managed to finish slightly higher, however. Market players, expecting a bolder half-point move, were disappointed by the modest cut — there were hopes for a more aggressive 50 basis point reduction. Financial stocks bore the brunt of the selloff as worries about further credit-related losses flared up. The sector had been lifted recently by hopes that cash infusions for some big firms such as UBS would help them tide over ructions in credit markets.

    The Nikkei closed 0.7 percent lower. The Nikkei was down as much as 2 percent at one point of the session. South Korea’s KOSPI wiped out early losses to end slightly higher, led by telecom stocks and retailers, and as market rumors mounted that the Labor Ministry had bought a large amount in shares during the day. A Labor Ministry official confirmed the ministry injected some funds to buy stocks, but declined to disclose the amount.

    Australian shares finished 1 percent lower, led down by U.S.-exposed companies; Hong Kong stocks fell 2.4 percent, led by a slide in property plays, on disappointment with the Fed’s 0.5 percent cut; China’s Shanghai Composite Index was down 1.5 percent in response to a tumble in Hong Kong and global markets, and as banks and real estate shares continued falling because of concern about monetary tightening.

    European Stocks Feel Fed Aftershock
    uropean markets opened lower Wednesday, tracking declines in US and Asian markets after the Federal Reserve disappointed investors on Tuesday with only a quarter-point interest-rate cut. The Fed’s less-than-aggressive statement also disappointed the market, failing to say that the central bank would take all needed action to prevent further deterioration in the credit market or that the balance of risk had shifted to a slowing economy.

    That was enough to push major European indexes down about 1% in early trading.


  447. Gold claws back losses as dollar gives up gains
    Gold bounced from the lows it hit late last night after the Federal Reserve’s quarter-point rate cut initially boosted the dollar, as the greenback gave up its gains and investors took advantage of lower prices to buy into the metal. Gold dipped significantly immediately after the Fed’s decision to cut its benchmark interest rate by 25 basis points to 4.25 pct, as the dollar rallied. However, gold bounced back above 800 usd an ounce as the US currency gave up most of its post-Fed gains.

    Weakness in the greenback boosts gold’s appeal as an alternative investment, and makes the precious metal, which is priced in dollars, cheaper for holders of other currencies. At 9.32 am, spot gold was trading at 804.50 usd an ounce, against 811.50 usd in late New York trade yesterday. Demand for the metal from exchange-traded funds (ETFs) remains at record levels, he added, further underpinning prices. ETFs trade commodity futures, backing up stock bought on paper with actual physical supply.

    Among other precious metals, platinum dipped to 1,461 usd from yesterday’s 1,466 usd, while its sister metal palladium fell to 343 usd from 347 usd.
    Platinum is continuing to take support from tight fundamentals after a string of production outages in South Africa, the source of around three-quarters of the world’s platinum supply. Supply of the white metal is expected to fall 2 pct to 6.66 mln ounces in 2007 on a combination of industrial action, safety-related stoppages and other problems at South African mines, according to a report by specialist materials group Johnson Matthey.

    Copper falls as demand worries linger after Fed rate
    Copper prices were lower as demand worries lingered after the US Federal Reserve yesterday moved to cut rates by only 25 basis points and failed to reassure the market about further rate cuts ahead. Although Chinese copper demand has fallen for most of this quarter as industry players opted to stay out of the market and draw down on stocks, data out yesterday showed a reversal of this trend.

    Chinese imports of unwrought copper and semi-finished copper products rose by a monthly 9.5 pct in November, after falling 5.6 pct in October. In addition, scrap imports were at their second highest on record. Elsewhere, lead rose to 2,555 usd a tonne against 2,520 usd, recovering from yesterday’s fall to near 6 month lows.

    Dollar gives up gains made in wake of Fed rate cut
    The dollar lost the gains it had temporarily made after the Federal Reserve last night cut interest rates by only 25 basis points, disappointing minority expectations for a more aggressive cut. The Fed acknowledged in its statement that both growth and inflation risks had increased, suggesting it does not yet know which side the balance is going to tip. “The Fed is expressing uncertainty at a time when financial markets require leadership,” said Hans Redeker at BNP Paribas. He said the price pressures in the economy mean the Fed is unable to operate ahead of the curve, so “the Fed will have to sacrifice more economic growth to bring inflation down.” Although the moderate rate decision has cleared the risk of a sharp dollar sell-off into the new year, the Fed’s policy will continue to be highly data and market-dependent, analysts said.

    “We believe slower growth, tight credit conditions and a comforting core inflation reading will encourage the Fed to implement further insurance easing to protect against the downside risks to growth, and we look for two 25-point reductions in Q1 of 2008,” said Daragh Maher at Calyon.

    Meanwhile, the euro was mildly stronger against the yen and pound, with investors looking to data for more direction. In the UK, the pound will be similarly data-driven today, with the focus firmly on the labour market data. Euro 1.4682 usd up from 1.4658. Sterling 2.0435 usd up from 2.0369 usd .

    The dollar was trading at 111.18 yen at 4:50 p.m. (0750 GMT) Wednesday, up from 110.82 yen late Tuesday in New York.

    Oil trades near 90 usd ahead of weekly snapshot of US fuel inventories
    Prices jumped back above 90 usd yesterday after ice storms in the US Midwest paralyzed distribution hubs, heightening supply fears going into the peak winter demand period. While pipelines are now coming back online, expectations for another drop in US crude stockpiles are keeping prices pinned near the key psychological level.

    At 9.29 am, New York’s WTI (West Texas Intermediate) crude for January delivery was down 2 cents at 90.00 usd per barrel, having earlier hit an intraday high of 90.20 usd before running into selling pressure. Meanwhile, London’s Brent crude for January delivery was up 6 cents at 88.79 usd per barrel.

    Analysts polled by Thomson Financial News predicted US crude stockpiles will drop by 1 mln barrels in this week’s EIA report, while inventories of gasoline and distillates are seen as rising by 1 mln barrels and 1.5 mln barrels respectively. The weekly report normally has a significant impact on crude oil price direction.


  448. ramana – I don’t know if I told you this before, but thanks. Your information is always very helpful.

    reinharden – Did they link that from the public website? Are you a centurion holder?

    designcurve – That’s a good idea. DVD’s are old now, they’ll be replaced within 5 years…. Not a life cycle I want to be in. But the short would be a long and continuous one — might not be worth the time / risk if it did IPO’d.


  449. FOMC- will do something “innnovative”- thiey know they screwed up yesterday, maybe they were just testing the market’s metal?


  450. DM, glad it helps :-)