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Monday Morning

[Big Money Poll Illustration]I was hoping to get a coherent picture over the weekend but after reading the WSJ, Barrons, the Economist, the Financial Times and the Investor's Business daily I'd have to say I'm just confused.

The Journal surveyed economists and came out with a very dreary outlook for the first half of the year.  The Economist says "the fears over the municipal-bond market in America look overdone."  The Financial Times shows food inflation is so out of control that the World Food Program will have to ration aid to starving people while Barron's interviewed David Winters, who said that "We view this as a gigantic after-Christmas sale. There has been a lot of indiscriminate selling at any price."  Not exactly the clarity I was hoping for!

I've been siding with Winters for the past few weeks but things are still looking very scary out there and we are by no means out of the woods and are unlikely to be for some time.  Patience is going to be key to navigating this markets and we will need to adjust our trading strategies to reflect the flat but choppy nature of this directionless market.  Trader Mike pointed out that: "Skittish. Confused. Insane. One or maybe all of those words describes the current market environment" and illustrated the point with this S&P chart, which shows it simply flatlining into a range:


Fortune had a fantastic interactive timeline called "50 Years of Market Swings" that really puts our current "downturn" into perspective and it's very, very amusing to see the patterns formed by the election of certain parties and the NEGATIVE performance of the market while they are in power but, since it's only Monday and we save politics for the weekend, I won't attempt to draw any conclusions as to which party has a long history of economic destruction.

They had a swingin' time over in Asia this morning with the Nikkei jumping 414 points but getting a minor rejection ahead of the 14,000 mark.  The HSI dropped 35 points but fell 300 points from the gap open, finishing below the critical 23,300 line.  Banking shares let Tokyo higher and the market there also got a boost from speculation that China's Sovereign Wealth Fund would be investing $10Bn in the Japanese markets.  I don't really see how this is news since they have $200Bn to invest and Japan is 1/10th of the global economy but I guess anything is a reason to rally when you're in the mood.  Most importantly, India had a much-needed nice day, gaining 300 points back to 17,650 despite suicide bombs going off in neighboring Pakistan.

Europe is having a lovely morning with 1% gains across the board, also led by financials as everyone seems to be excited about the bond insurers' bail-out except the US pre-markets, which are trading flat to negative in early trading.  I blame LOW, who picked today to remind us we have a housing downturn (if you don't say something, traders seem to forget) with a poor earnings report.

The WSJ is coming around to my prediction that GS is on the wrong side of the market, which explains their blatant attempts to take the market down at every opportunity so perhaps now people will stop listening to these idiots.  ABK seems to be moving forward with a raise of $3Bn, which will make our other favorite market manipulator lose a little sleep this week!   Speaking of hyena's, ex Fed Chairman turned bond pimp, Alan Greenspan decided today would be a good day to say: "Economic growth in the US had gone to zero and was likely to move negative soon" as well as commenting that high oil prices would "go on forever."  Whether Greenspan was sucking up to the Saudis gathered at the conference in Jeddah or scoring points for his masters at PIMCO is hard to determine, but it's interesting how every single threat of a market rally is met by waves of media shock troops, who jump out to tell you how bad things are out there.

The actual CEOs, who run our corporations DO NOT see a recession with ONLY 3.6% of those surveyed by the Business Council expecting the US economy to decline in the coming year.  85% said they expect economic conditions to improve over the next 6 months but – what do they know?  They're only the guys taking the orders and budgeting the capital expenditures and talking to the customers and watching the sales and inventory numbers… 

Let's ignore them and listen to the bond pimps and other hyenas who are hoping to profit on an economic downturn!


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  1. Anybody else having problems signing in to IAB?

  2. To the 10kp players:

    Remember that anything you DD’ed on last week (BA,EK) should be 1/2 closed when it reaches your basis. That was the point of DD’ing. Don’t get greedy.

  3. No problem with Interactive Brokers here. I’m assuming that’s what IAB is.

  4. Japan is not up because of ABK it’s up because there are reports the Chinese SWF is going to steam in to Japanese stocks:

  5. Phil (and anyone else who cares to comment),

    I’m considering a non-directional BIDU trade for my Roth account:

    Long BIDU JAN 10 250 Call and Jan 10 240 Put.
    Short MAR 260 Call and 230 Put.

    The idea here is to take the nice front-month premiums. Any suggestions?

  6. Thanks for your reminder, Steveplace!!!

  7. Greenspan at it again ….

    C … big downgrade at Opco

    Rimm…. upgrade/price target at MER

    VISA IPO ?

    TTWO bid by ETRS….

    what’s is all mean ? I dunno.

  8. Well I hope Visa doesn’t pull a BX.

  9. Hey Cap,

    TTWO already turned down ERTS’s offer –

  10. Phil, got a large gain in some March 45 CMED calls. Earnings are out after the market and it looks like the stock is opening up in anticipation of an earnings beat. Anyway, you can hedge besides buying expensive puts? (The March $50 puts are selling at an ask of 1.35.) A miss in the market could be devastating.


  11. PHIL did you buy the 700 in the Rutterfly on Friday???

  12. Sold 10 BA Mar 85′s at 2.00 (the 10 from the DD).

  13. 25KP- BA and EK hit basis! sold have on each

  14. JMAC,
    Not in the 10KP or 25KP, was my understanding. If you had the extra cash to do so, sure. But for 10KP and 25KP, taking out the callers would have been pretty expensive and depleted a lot of cash.

  15. Thanks Jake!

  16. ERTS is coming back pretty nice, just more proof that AH/Pre-Market traders are a weird lot, sometimes.

  17. CROX = SUX

  18. BIDU spread – I like it if you are comfortable with day trading the front months, it’s super volatile and won’t give you much sleep.

    Woo hoo on BA! EK moving up two and both need to be 1/2 out at even (BA is better already so tight stops). XXX

    Don’t forget housing at 10, shouldn’t be too bad but it all depends on how the market feels like reacting.

  19. Carl,
    I didn’t think EK was part of the new 25KP?

    In the old 25KP, we’re still a ways from hiting basis (unless you did your own thing, that is). My basis in EK is .46, from the old 25KP. Waiting on it to hit 50 to sell a big chunk back…

  20. Nice bio guys. Keep it up, really interesting backgrounds.

  21. GM everyone.

    Existing Home sales comes out in 22 min FYI………

  22. Out half at basis on BA, working on EK.

    The RUTterfly is doing its job.

    NDAQ has 1.50 in premium left, so not buying out yet.

  23. Jake,

    Yes, are right on EK. I closed out before last exp. I got in again on the new 25KP on the DD.

  24. What is the news on ERTS?

  25. Jake I have the same basis. Is anyone else having a problem with IB options quotes?

  26. bigs – yes, don’t have quotes.

  27. JMAC

    They made a takeover bid for TTWO

  28. ERTS made a $2bill bid on TTWO, rejected by board, going hostile…

  29. Can we get a link to the bios on the home page?

  30. random:

    U.S. equity options markets soaring, says TABB Group

    The market for U.S. equity options is increasing dramatically, according to TABB Group in a new industry benchmark study released last week entitled ‘Equity Options Trading 2008: Rising Out of Obscurity’.

  31. size: you should be able to tack it into your comment form in the website field

  32. fyi on option quotes:

    CBOE is currently experiencing issues in two business clusters Order routing for contracts starting with symbols A-L are affected

  33. Brilliant comment of the day: Fed’s Krozner says “banks should improve risk management”.

    Ya think ?

  34. Speaking of BX – I like them as a straight stock since they are a 2% dividend payer with a p/e of 11. I think this is their bottom, there is lots of cheap money around to fund their deals and lots of deals that need funding. The Mar $15s are $1.20 so buying them at $15.50 is net $14.30 out of pocket and getting taken out in 4 weeks = 5%. I’m happy to buy more and keep selling long term as these guys are good. XXX

  35. My CROX 25KP position: 10 June 25s Long, 5 short Mar 25s, 5 short Mar 28s. Is this in line with Phils position? Thanx in advance.

  36. jazzkool
    CMED-lately they have beaten earnings but why risk it with stock at ATH IMO

  37. BA,

    Lots of front month call buying 3:1 ratio call/put.

  38. vishal

    I think phil took out the mar 28 caller

  39. Vishal,

    I believe Phil bought back the 28 caller. Can somebody else confirm?

  40. Phil, re: your BX play

    How do you like OZM? They seem to have an impressive track record and great risk managment. Nice yield too. They’ve been hammered a la BX since going public in the fall.

  41. Just caught this article from WSJ, haven’t had a chance to really read it indepth, just skimmed it for now –

    Maybe a chance in the future to short EWA and/or FXA (Australia ETF and Australian Dollar ETF, respectively)?

  42. BX’s 2010 options aren’t that bad.

  43. fred – how do you know it’s buying?

  44. Thanx guys… added tight stops on the 28 caller.

  45. don’t know if this was already discussed but :

    Feb. 25 (Bloomberg) — The U.S. Treasury supports allowing
    the International Monetary Fund to sell some of its $98 billion
    in gold reserves to help cover a revenue shortfall, the
    department’s top international official said.
    “We have a very credible plan for cost reduction that’s in
    the process of being implemented” at the IMF, David McCormick,
    Treasury’s undersecretary for international affairs, told
    reporters in Washington. “For that reason, Treasury supports
    limited gold sales.”
    The Treasury, which until now has opposed letting the fund
    sell gold, reversed its stance to endorse elements of cost-
    cutting plans of IMF Managing Director Dominique Strauss-Kahn,
    McCormick said. Strauss-Kahn has proposed eliminating as much as
    15 percent of its 2,600 staff and saving $100 million of its
    $922.3 billion budget to offset dwindling revenue from lending.
    “In the managing director, there is a leader there that is
    Really building momentum and pushing in all the right
    directions,” McCormick said.
    The IMF holds 103.4 million ounces of gold, trailing only
    the U.S. and Germany, according to the World Gold Council. Gold
    futures, which rose to a record $958.40 an ounce on Feb. 21,
    traded at $950.70 at 9:50 a.m. in New York.
    The U.S. Congress can block any sale of the reserves, since
    approval requires an 85 percent majority from the 185 countries
    that are members of the IMF and the U.S. has a 17 percent voting
    stake. Congress blocked IMF attempts to sell gold in 2005 and
    McCormick said Treasury has “confidence” lawmakers will
    approve of any IMF gold sales.

  46. Any news on ABX – It is falling fast?

  47. CMED – Yeah, get the hell out of the $45s! Why on earth would you want to risk that? You can take it off the table, buy yourself the Apr $60s for $2.52 and sell 1/2 the Mar $55s for $3.30, which means you could lose $1.70 on 1/2 if they blow through $60 but that should be fine with the value of your Aprils and the naked 1/2 and, if they go down, you don’t care at all.

    Rutterfly – the official one is left alone and the one I was daytrading was cashed out at the close as it was too much to risk (and now I’m glad).

    BA – out of the rest, no sense in riding it down! XXX

    Market selling off ahead of homeowner report, could get ugly if they look bad.

  48. Watch your positions! Here comes that homebuilder info…

  49. The markets back to the “drip” , “drip” selling. No resistance in most things.

    BIDU in a bad way.

  50. Are we buying visa?

  51. Are we buying visa boys?

  52. heh housing down 0.4%

  53. Thanks Phil. I meant that straddle spread to be something I could sleep with, so I’m clearly missing something.

  54. Market likes it though!!

  55. exit whole position of BA?

  56. ERTS – let’s take out those callers in the old $25KP. We can always go back in. XXX

    Homesales down 0.4% in line. Sales are down 23.4%, lowest in 10 years. Inventories up 5.5%, 10.3 month supplies – terrible.

    Home prices still falling. This is very bad but not unexpected, we’ll see where the sell-off stops on this one.

  57. nevermind… Just saw that supply number, not a reason to rally lol. So how about that bailout?

  58. vishal

    BA – yes

  59. BA – I am all uncovered and all out. I intend to get back in if we have another sell-off to $83, but probably with Aprils.

    EK NOT in new $25KP but is in $10KP and old $25KP.

    SOX holding up at least. That reaction wasn’t too bad, this could turn into something if we can shake housing off.

  60. Haynes is right!!! Every house has a price.

  61. full out at BA. Nice play Phil. Perfect example of why DD’ing is a good thing.

  62. VERY interesing:

    Feb. 25 (Bloomberg) — The New York Mercantile Exchange, the
    world’s largest energy market, will launch futures and options
    contracts on an exchange for trading carbon dioxide emissions
    credits in March.
    Contracts at The Green Exchange will be introduced March 16
    for trade on March 17, Nymex said in a statement today. The
    initial contracts offered will be European Union Allowance
    futures and options and Certified Emission Reduction futures.
    Global trade in emissions credits tripled to $30 billion
    last year, fostered by restrictions on carbon emissions from
    power plants and refineries in Europe. Twenty-two U.S. states are
    exploring mandatory carbon caps and emission-credit markets
    similar to one in the EU.

  63. sorry for bombarding the boards, last post for a while:

    Feb. 25 (Bloomberg) — The yen fell against all of the 16
    most-active currencies on speculation U.S. bond insurer Ambac
    Financial Group Inc. will avoid a ratings downgrade, spurring
    traders to buy higher-yielding assets with loans made in Japan.
    The yen dropped the most versus the Canadian dollar as oil
    traded close to $100 a barrel and zinc surged to a six-week
    high. Investors resumed so-called carry trades on speculation
    U.S. banks will provide Ambac with $3 billion in new capital as
    part of a rescue plan that may help revive credit markets.
    “The potential for a deal that helps bond insurers keep
    their AAA rating is a very important boost of confidence for the
    markets,” said Boris Schlossberg, a senior currency strategist
    in New York at currency dealer “Investors are
    getting back into risk and that’s weakening yen.”

  64. HXL hasn’t stop from climbing since Friday last half hour.. Intersting .. looking to get even or profit on my (now) naked 22.5 march calls

  65. Krozner – That’s why he’s a Governor, he’s right on top of the problem!

    No GOOG, no AAPL, no BKX, oil sector lethargic, we have to break 12,450 in order for this to amount to anything but we want to see some movement from Nasdaq to lead us. See how RUT handles $700 this time.

  66. SWN-running before Thursday’s #’s ATH

  67. The call spreads are still stupid from friday.

  68. CROX – The Mar $28 caller stopped out leaving 1/2 cover of Mar $25s. Those are now $1.50 and should be taken out as it’s worth the risk. XXX

  69. EK is on the rise but seems to have little effect on our MAR 20′s!

  70. Phil,

    Is comment about BA to sell all for 25K or STP?

    My apologies if I asked stupid question but I don’t follow your STP so I am not sure if your comments are for everybody or just STP.

  71. why is the VIX still up?

  72. OZM – I don’t know them well enough. BX I’ve watched for a long time and I’m comfortable with their investments.

    SNDK flying! MRVL rockin’. MU making my caller happy.

    ABX – maybe the IMF news? They never like it when someone sells gold but, like I said, $50 is about right for them anyway.

    GOOG – If they are going to insist on selling the $520s for $9.95 I just have to buy them as a mo play. XXX

  73. Good opening retest for AAPL. In for a daytrade on Mar120′s. All up from here would be nice. But, I guess that is usually true.

  74. DM – BA

    You never know and as we know there is a seller for every buyer however while I was watching most were moving at the Ask.

  75. BA – all out @ $2.25! Thanks Phil!!!

  76. ABX,

    Was downgraded by a couple firms but I still like them for their reserve replacement and exposure to copper & other minerals on top of gold. I own the stock as one of my hedged positions.

  77. Solars,

    Sharp turnaround to the plus side.

  78. Mark – any strangle for LDK and their earnings?

    BBD – MOS doing well

  79. BillBigD,

    Lakers looking great. Celts seem to have come out of their post All Star slump at half time.

  80. Phil – I have some BA May and Jan $80 with some nice gaines currently uncovered (I took my $85 callers out Friday). Probably I should cover part of it to protect gains, which is tricky with the announcement coming any time now. What would you recomend?

    6x Jan’09 $80 @9.46 (current 11.60)
    4x May’08 $80 @4.00 (current 7.20)

    I also have 300 shares of BA stock at $86.04 (this i snot true cost as I’ve got these through the put assignments but nevertheless it’s worth lot of $$$)

    Thank you!

  81. oh okay, thanks fred… If it’s on Ask, then it’s a good indication of something.

  82. UK has recovered from the US open !!!!

  83. Visa – no thanks. Too risky in this market to mess around with a financial IPO.

    GOOG logic. I will DD at $8 to reduce basis to $9 and then stop out at $7 as that would just very clearly indicate it’s going to wrong way. I’m looking for $12 for 1/2 and will let the rest ride with a $10 stop once it hits $12.

    BIDU – you’re missing the $50 one day moves it makes.

    EK – I advise panicking as we only have 20 sessions to get to $20.45 and it only gained .60 since 3:20 on Friday!!! 8-)

    BA – when I say sell all it’s all uncovered short-term calls. I don’t have BA in the STP, I have a ton in the LTP and will for the next 5 years. It wasn’t worth risking in the $10KP ($2,000) or the $25KP ($4,000) because it’s shown us tremendous signs of weakness and a willingness to go down for whatever reason so if I can exit with small profits of $400 and $800 in the two, I’m very happy.

    As I noted this morning, you guys need to adjust your thinking for trades and we have to learn to take 20% and run on pretty much every trade. The days of sitting around waiting for a double are very likely over.

    Money is Bugs Bunnying in and out of bonds as well as stocks, people just do not have a clue which way things are going but that’s good news as we can pick almost any random position and just wait for a swing to go our way but if we’re not smart enought to take a small gain and get out, then we can be just as sure that the stock will turn against us just as quickly.

    Look at GOOG – $1.50 gain in 10 mins wiped right out just 5 mins later!

  84. Meanwhile, rejection at 12,450 is expected, the question is do we break it by lunch?

  85. As I noted this morning, you guys need to adjust your thinking for trades and we have to learn to take 20% and run on pretty much every trade. The days of sitting around waiting for a double are very likely over. Agreed Agreed
    Lakers- hot hot hot
    MOS-buy at $108 not so stupid now.

  86. Rfly – rolled MAR 700 short leg for 30% gain to MAR 710

  87. DE

  88. Yes, 30% is the new double.

  89. sakiko- LOL
    UPL- screaming
    POT & MON broke thru round numbers.

  90. JPL! What’s up brudda.

    LDK – really don’t know much about the business unfortunately, but solars in general are crazy volatile. That being said and quicly looking at the chart, it’s lost 40% in value since Jan 1. boucning off $30… could it see $35 or $25?

    I don’t have quotes on my IB, but my bloomie 10 min delay quote shows March 35 c’s for 1.70 or so and 25 p’s for .95 or so. That’s $2.65 with ATM 30 c’s going for 3.85 currently… obviously IV is high, but if ATM is $4 with only 1.40 above 30, would 35 c’s or 25 p’s have the potential to be more than 2.65 is the question. I think the potential is there, but frankly I’m not playing it (partially b/c it’s day of and I would have tried to get into it last week before IV got soo high). But I’ll paper it! ;)

    In at 2.65…

  91. Mark – thanks

  92. PHIL
    ERTS has been going down since we took the covers off, do you think the price will go down since they have to up the offer

  93. BBD, Suns game vs. Celtics was awesome (managed to score second row tickets from a friend) Unfortunately, we got schooled by the pistons yesterday.

  94. Phil, what do you think about MSFT 25′s 2010 for LTP at 6.7 ?

  95. POT calls – 1/3 out

  96. POT calls- 1/3 out

  97. jomama-yes yesterday’s put me to asleep in the 3rd. HA HA Second Row very nice

  98. Orion-Funny timing LOL. Realized you posted exactly the same after hitting “submit comment”.

  99. CELG-Very strong.
    ILMN testing high.

  100. The big news here is Europe is about the crazy inflation in the price of food. Pasta up 30%, Milk 40% etc.
    That’s all I have been hearing about since I arrived. Wonder what the best way to play this is.

  101. I knew Opt had multiple accounts.

  102. LDK – I’d just play them up, they could really fly on good earnings. The Apr $35s are $2.95 and if you want to hedge you can always sell 2/3 the March $35s for $1.82, which drops your basis to $1.70, which is the price of the Apr $40s so you’d need a $5 dip to take a big loss and a bump up to $37 (20%), which would make you give your caller his money back, would leave you with all your callers in the money.

    BA – I’d sell 6 Mar $85s for $2.20 and roll the May $80s to the Apr $85s for $4 which pretty much takes your May money off the table. You still gain all there is to gain on a big news run in the Aprils while cutting your downside coniderably overall and, of course, you can roll and roll and roll your callers, which is what you should be doing with the leaps anyway.

    Nice breakout but our heros (Apple, GOOG etc.) are still dead on the battlfield.

    ERTS – I think it’s a good fit for them and I don’t think they’ll end up in a bidding war as other gamemakers aren’t so cash rich. Even at $2Bn, TTWO has a positive impact on ERTS’ p/e, even before any expense cutting, so the dip is simply wrong and, like I said, worth taking a chance on.

    MSFT – I do like them down here but the short calls don’t pay much, you need to grind out an income selling the $29s for .50 as it’s too risky to sell $27.50s.

    Opt/Orion – You guys are spooky!

  103. CROX is naked now….is that correct ?

  104. opt, try CALM. been in it for a while, but it looks to go higher

  105. Phil, have you tried just selling calls w/o the leaps? I bet if you just keep rolling , you’ll come out at even at worst case.

  106. znake – CROX should be 1/2 covered

  107. Like we need more of this:

    Rising Inflation Creates Unease in Middle East

    Article is light on analytics, but it points out some of the social effects. It seems the problem is that wages aren’t keeping up.

  108. Seeing some buyers here.

  109. UA took a big hit cant find any news did i miss something.

  110. CROX – yes, sadly naked now. If the market can hold another 100-point gain today then we have to give it room to breathe. We made $1 in 2 days on the $25 calls, we can afford to watch a little.

    Selling naked calls – DM, that logic is the same as betting red on roulette and doubling down every time it comes up black. It’s fine most of the time but you quickly reach the point of diminishing returns and you tie up a lot of capital just trying to get your first $1 back. I do sell naked calls but only on some outrageous run that I think is really unsustainable and still, those are some of the worst losses I end up taking.

    There was a lot of energy movement in that rally, it’s really not translating well to the broader markets.

  111. Where do you see the buyers DB?

  112. CF seems to have continued its recent upward move..

  113. CALM-67% of float is short? Wow.

  114. POT-Another 1/3 out. Very strong.

  115. Opt – I’m trying to learn from you.

  116. Trying to catch up (just got done with a test) before I close down again to drive home…

    Let me know if I missed anything -

    CROX in the new 25KP, take out the 5 Mar 25′s for $1.50 (working order)
    ERTS in the old 25KP, take out the 20 Mar 50′s for $1.00 (working order)
    BA in the new 25KP, sell the remaining 10 Mar 85′s for $2.25 (working order) (already took out 10 this morning at $2.00)

    Any other trades I’m missing? Just waiting for the EK Mar 20′s to hit $0.50 to take out all of the DD’s and go back to our original 10 (I think it was 10, does anyone remember by now? lol)

  117. EK is up 40% for me today from friday, i’m all out via phil’s comments earlier about taking 20% and running…

  118. Opt.

    How do you develop the list of long and short for the day/week?

  119. Speaking of naked calls – EOG $105s are $3.10, that’s one I don’t mind selling! I’ve moved my puts to the Mar $100 puts and will DD at $2 if possible. XXX

    CNBC back to recession doom and gloom. Now they are going to tell us how hot dog sales in NY spell recession…

    If you think about it, this is a pretty bold rally with Greenspan on the warpath and oil back up around $100.

    Watch that 12,450 line!

  120. GOOG just bounced off a bottom

  121. UK closed up 1.9% – would like to see some of that here.

    DM – Buyers , I watch level 2 on the top 3 most actives on each of the Dow and the NAS. More often than not when you visually see a “flurry” of activity it translates into buyers/sellers entering the market. Its not 100% reliable but it seems to work a good percentage of the time.

  122. 10KP/25KP followers:
    Jun 42.5 – what are these covered with and the ratio (1/2 cover?).

  123. CMAN in the new or old 25K

  124. scratch that, confused myself for a minute :) now is a good time to get out if you did DD however

  125. 25kp – NDAQ fully covered with the MAR 40′s

  126. WDC – sold 1/2 postion to take profit; leaving other half with Mar covers

  127. I have full cover with march 40 against june 40

  128. BA – wins contract:; not much reaction, maybe already baked in the price

  129. Phil,
    Any changes for AIG and AXP in the old 25KP?

    AIG – Long 5 Aug 45, Short 3 Mar 45 (both fairly deep ITM now)
    AXP – Long Apr 45, which is down 25% since we opened it (barely up on the AXP position as a whole, the stock went down quite a bit after we uncovered it last week)

  130. UA put out annual report on Friday, may have had something an institutional didn’t like.

    BA/Jake – I agree with waiting for your price to take out callers but don’t leave without getting off the BA’s. They are having trouble at $85 and for $3K ($25KP) I feel better having 10 Apr $85s at $3.35 and selling 5 Mar $85s for $2.20 in the $25KP and doing a 6:4 sale in the $10KP XXX

  131. Phil,
    So we would be SHORT 5 Mar $85′s as cover, now? Just want to make sure since I didn’t get completely out of the BA trade this morning, so I’m in a bit of a different situation than the other 25KP’ers.

  132. NDAQ:
    I do not believe it is in the new 25KP – so it is all old 25KP per my records.

  133. CMAN – 5 NDAQ in the new 25K

  134. xian- i have no opinion either way on HOV. the CEO was on Fast Money last week.

    Esignal GET edition- I forget who was asking about this, but I use it. The Elliot wave functionality works best in a trending market, so it’s been somewhat useless over the past few weeks. Those who are new technical analysis should keep in mind that the tool set that works will change over time as the market goes through cycles (expansion, retracement, consolidation, etc). be sure not to marry yourself to any one tool set and have the flexibility to change your strategy with the market. this is tough to do and takes experience (i still don’t quite adapt fast enough after nearly four years of day-trading).

  135. MOS- took some off from Friday’s buy.

  136. AIG – I’m comfortable there with the $45 caller protecting 3/5.

    AXP – If you want to play Visa’s IPO, these APX Apr $47.50s are a good way to go at $1.65. XXX If they come down to $1.35 then I like them for a DD on the old $25KP but, otherwise, we have enough money tied up in them.

    BA – as with any spread entry, it’s good to take your long on an upswing and sell the caller on a loss of momentum but they’ve been rejected at $85 twice in 2 days so be careful.

    NDAQ is in new $25KP with the Mar $40s covering the June $42.50s. Obviously, if I take a play like that, it means I’m short-term bearish.

  137. Bought Jan-09 120′s for my accounts, stop at $20.75, which is below the low of Friday. Risking $1 to see if this bottom holds.

  138. A lot of the big names are breaking down here. I cant see whats holding the indexs up.

  139. What Phil means by “doing a 6:4 sale in the $10KP”on BA $85?
    Does it mean: Bur 10 BA APR 85 and sell 6 BA MAR 85?

  140. Down market, down! I have a huge bearish position…

  141. Phil
    I have BA ’09 80 strike, uncovered for the moment.
    You had mentioned buying NOC as a hedge in case they got the contract instead of BA.
    Is this still your advice?

  142. Sohrab,
    Long 6 Apr 85 (buy-to-open) and short 4 Mar 85 (sell-to-open).

  143. RMM- I got your email, and am stuck on conf calls this morning. Will respond in a bit.

  144. raffy, I think this post from KC earlier kind of makes the hedge pointless now:

    BA – wins contract:; not much reaction, maybe already baked in the price

  145. BTW everyone, I’m digging the bios. Nice to get to know some of you better. Next time I’m in LA we’re going to have to put a lunch together…sakiko, optrader, film. :-)

  146. Jeeze, GOOG. Start an IV D5W TKO and let’s transport! Stat!

  147. Where are the bios? Were they in comments and I missed them? Would love to have lunch anytime, K1.

  148. One last thing and then I have to concentrate on this call. Beth, great write-up. I’ve linked it into the k1 project stuff on how to get started.

  149. Film- click my nick URL.

  150. Thanks Andy

  151. Andy:

    Your link is down, but I think your referring to the 77M contract that was awarded.

    The 35B contract has not been released yet.

  152. Thanks Jake!

  153. Phil,
    ERTS should we DD at this point?

  154. BA is tanking so quickly my Mar leg isn’t filling anywhere near 2.20

  155. steveplace
    thanks for checking, correct this was a contract for new ashtrays in stealth bombers for $77 mill :-)

    raffy I was wrong, so please ignore my post. Also typing in BA in or will tell you a lot of recent news, it’s not bloomberg terminal, but pretty efficient.

  156. NOC – Now that we got out of that trade and in on another one, I have no reason to gamble on NOC. To be clear, the contract they got today was for missiles, the tanker is still up in the air but it just goes to show you how fickle the whole thing can be.

    ERTS – no DD, just need to watch and wait.

    Kwan, if they break $83.40, then be very concerned.

  157. If you haven’t started the first leg of the BA cal spread, you might want to wait until the downside momentum dries up. I’m waiting for a close above the 15 min 5ema, but use your own discretion.

  158. Did anybody get the EK sell order filled at 0.4 or do you sell at 0.35 ?

  159. Sohrab,
    BA in 10 KP:
    Buy 6 Apr 85s(@3.35) and sell 4 Mar 85s (@2.20)

  160. How many people here have run 3 or more of the 25K cycles?

  161. Steveplace, yes I also waiting for BA bottom to buy the call

  162. Man I can’t wait for the ToS platform release. You’ll be able to do news releases and quick charts in your Trade Grid area so you don’t have to hop around tabs and yahoo finance.

  163. steveplace you can do that now

  164. On BA: the earliest possible announcement for the Tanker deal is today at 2PM; it’s unlikely that they’ll announce this early in the week, but just keep an eye out for any high-volume movements around that time.

  165. Herb: crap. You’re absolutely right…

  166. Just filled GOOG $520s at $8, now comes the hard part as this does not look good! $488.52 was the 1/21 low so I suppose I’ll wait for that test.

    Boy this is such exciting stuff isn’t it? The swings are amazing and pointless…

    We are still flat on the day to Friday’s big gains, despite your individual disappointments, that’s not bad. Oil snapped back down and killed the rally, like I said earlier, without clear leadership from the Nas, we can’t mount a proper rally.

    Check out this relationship between GS and GOOG (red):

    I guess what happened on Friday is they just ran out of bear guests on CNBC – today they have dozens of them apparently!

    CMP making new ATH

  167. steveplace
    I just watched tos video yesterday and have been playing with it today. They are working hard to give us all the bells.

  168. Herb I can’t wait for the iPhone compatibility personally

  169. glad to see all business today.

  170. AG’s & NAT GAS leading this rally. FMD for me

  171. Merrill reiterates cry rating?

  172. kwan – the new TOS thinkPod app is very cool for the iPhone. I don’t know if you’ve tried it –

  173. BBD – What Nat gas stock do you like the most?

  174. DM:
    CHK has done VERY well.

  175. DM,

    I used to own PGH (canadian energy trust) and it has good dividend – around 15%. It has a good run thus far. You can look at it.

  176. Steve – I love that stock, I can’t believe I forgot about it. thanks for the find.

  177. DM,

    Natgas, I’ve got DVN, CHK, XTO.

  178. Did that article by Susie? ever get put out
    How she doubled her account in a month using PSW?


  179. Phil, I am sorry to bother you but I really need to know if this is typical….I have lost money overall for 7 days…the only thing I have missed in the new and old 25K is BA – but it is discouraging that no matter what the market does I seem to loose money…Please give me some advise or hope!!!

  180. We seem to have calmed down, and a lot of you are here today. Could we get to meet the rest of you guys and gals? Make your entry here.

  181. PHIL..

    Wanted to get your thoughts on XLE with $100 oil. We are currently trading at $76 on the XLE wanted to see if you thought we’d fall back down to the $70-73 range in the next two weeks?

    Thanks for your thoughts.

    Thinking about buying the March 08 $71 Puts at $0.85, then selling the $70 puts when we catch that down day.

  182. yopauly- would you email me please? I have a non-PSW question for you. My email is on my bio.

  183. DVN – I had an argument with my friend a while ago about this company. Bad taste in my mouth.

  184. Phil:

    In a super safe play
    like BAC with a $60 2010 put to get the dividends

    Do you look strictly at a $1 a month
    $12 a year selling the $45′s etc. = 20% a year

    The difference between buying the stock and simply a $55 2010 call in that you get the dividends?


  185. POT & MOS another leg up

  186. violent moves of VIX and NYSE trin getting down & up sharply too .. any news ??

  187. JMAC: Have you been putting in market orders? Have you been DD’ing to reduce your basis AND getting half out at even?

    Go back through your trade history for the past 7 days and line up the trades with the recommendations from Phil and try and find any discrepancies.

  188. DM- Let me guess you didnt like DVN? LOL

  189. JMac – there is no hope… Just kidding, there are so many factors in new postions, especially spreads that you can’t guage anything from a week’s performance but it’s been a bad week and we all got hit (and still are). Part of it is the decline of the VIX, which deflates the value of all options and part of it is simply the flat market action eroding our premiums.

    If you followed the old portfolio and you are well ahead, now is still an excellent time to cash out and take a vacation. This was my advice at the end of January and I expected a very rough time through March – this is what I meant. I also told everyone to cash out in October and come back in January but no one listened to me then either but I still do it just so I can say I told you so.

    If you insist on playing the market every single month, the chance of having 12 good months in a row is probably millions to one against, at least 2 to the 12th, whatever that is but really worse since you are looking to build off prior gains each month rather than starting from scratch. This is a very nasty, very rough market and there is no reason to play it with money you can’t afford to lose.

    Both the new $10KP and $25KP are within 3% of even right now and you can’t go by the Rutterfly as it’s essentially a random number generator. If being down $70 on EK and down $200 on the NDAQ in the $10KP leads you to being discouraged and fretting over your positions, then trading is NOT for you. I don’t want to be harsh but I’m sure many here can back me up when I say that I see many, many people come to “play” and end up losing what little they have saved because they went into this with the wrong expectations.

    Options (and stocks for that matter) are just a sophisticated form of gambling and in gambling you win AND you lose. The main trick is in how you manage your money and knowing when to take a profit (like BA this morning) rather than mindlessly holding things until you have a big enough loss to force you out.

    There is a book on our Book Club tab called The Psychology of Trading and all new members should read it when they get the chance. This is a very tough job you have chosen for yourselves, it’s not a game and the losses are very, very real. No one has a magic formula to make you never lose money but we do know how to take advantage of a good run – it just won’t do you any good if you’re broke when it finally comes which is why last week had the least number of trades of any week since we started this site – there just aren’t that many good things to buy right now.

  190. Mark,

    You were dead on last Friday with your use of the 200MA (one minute) for your turn of the market call. Congrats on that. Is this an indicator you watch for early indications of turns, or was that just a one shot deal that was specific to Friday’s unique movements?


  191. Steveplace – I don’t put in market orders…the only DD on the 25K old and new that I have is EK and BA(which I missed the DD) I watch this like a hawk and from what I can see I am just following Phil – but I have not had a positive day in 7 days…about at the point where I am going to have to be done with trading for a while and paper trade the problem with that is I NEED this to work…financially…

  192. JMAC,
    I can assure you having watched Phil’s moves for the last several months, If you are in step with him – you will NOT lose money. Where you need to watch yourself is on things like his trailing stops taking his callers out – he does not use them on all positions at all times – he has been more careul with his small portfolio moves than he has been in the past – meaning he has been keeping his plays straight forward and his prices are not as tight as I have seen them in the past. SO, don’t be discouraged by the dips/valleys in the journey – we are headed for the peak – have faith.

  193. “JMac – there is no hope…” LOL, now that is funny, you could take that on CNBC Phil.

  194. XLE – I find this very frustrating and it’s a joke that CNBC’s agenda doesn’t allow them to blame $100 oil for what’s wrong with the consumer even though it’s pretty damned obvious that $35 a barrel x 20M barrels a day means a lot of people can’t buy that extra pair of CROX this quarter vs last Q1 when oil averaged $60.

    As many components of XLE are integrated oil companies who make money in refining and the price of gasoline was about $3 last year and is still about $3 but their input costs (oil) are up 50%, I’m pretty sure refiner earnings will be less than stellar this Q but never let it be said energy traders have a clue about how the stocks they buy actually operate so you have to be ready to roll to April and maybe May while you wait for gravity to take it’s toll.

    I will say that I do like the XLE $75 puts for $2 right here though. XXX

  195. Looking very bad after lunch. People getting their own back for the close on Friday. GOOG, APPL, BIDU and ORCL all selling off.

  196. SOXX up 2% at one point, now red

  197. Good, I didn’t want to keep all those gains from Friday anyway… LOL

    Not covering AXP and NDAQ at the close on Friday is hurting today, need to find a better way of tracking my positions…

  198. APPL- OK when do we admit that this thing is broken?

  199. BillBigD,

    Friday, when I said it was

  200. come on little GOOG. Your gurgling. Come back to Eddie

  201. Richard – thanks man, it’s something I just recently started using, and it’s scary how decent of a momo indicator it is. Learned it from a big boy futures trader who’s been trading for 21 years (was a pit trader). Haven’t used it much / for very long, but look at previous days of the spx and how it bounces off / around the 200 min SMA. can help you intraday if you’re wondering where the market’s going, but like anything else is dependant on your apptitude for trading and knowledge (“FEEL”) for the sentiment / psychology of the market.

    I like it best for ES futures, but check out the intraday 1 min chart with 200 min SMA for CVX… creepy right?

  202. BA bouncing around 83.30

  203. Phil,
    EDU in the old 25KP, the caller has given us almost 50%, take him out, roll him down, or sit and do nothing because EDU was a juicy premiums type of play?

  204. the Zouk-Well you were a day ahead of me. LOL

  205. DB – Bad lunch

    It’s those CNBC recession hot dogs everyone had for lunch.

  206. PHIL: and others:

    Rolling: rules for a 10$ roll and 5$ roll are stated in k1.

    I have a need to roll one my positions for $2.50 and one for 1$.

    I figure that I should pay $0.75 or less for the $2.50 and $0.30 or less for the 1$.

    Am I doing this ok ??


  207. Richard – last thing, when I made the call Friday my basic premise beside watching 200 min SMA for the confirmation was that we’d end the day / week flat (1350). So having that idea in mind the 200 min became my “indicator” for that move. Once again, if the big boy PM’s don’t want to take a position before PPI tomorrow morning and GDP Thurs… what’s your guess for where the market will end? If you say flat, then when it’s down 20 points a decent day trade may be to buy, and the opposite of course. It’s all FEEL from there…

  208. hey peoples!

    phil/inflation nation- sweet, i must check out the swamp book.

    wow- we r getting smashed- well, not really just AAPL, C, GOOG

    no GOAX- i think that’s the problem- people r scared of the octane (banks aside).

    economy- i don’t know- but a guy was telling how easy it was to get an autoloan last week for his kid- he’s a straight shooter, too (also in bonds since SEP)

    averages r flatish- but C, oh man: who knows/has links to oppy’s bad news? i’ll search anyway. on that note:

    brandnames: fans vs customers

    Fans, Not Customers
    If you want to build a killer brand, that’s what you should look to create
    Monday, February 25, 2008
    Vernon W. Hill

    AAPL- i notice that volume was increasing starting on the drop from 202ish and has been decreasing since the 160ish level- only stats can tell us if that’s significant

    also, i think at least this guy must panic down- it’s in it’s nature (at least of a lot of holders) probably AUG07 lows- who knows, maybe 90ish, but the fundies wouldnt allow that (again, who knows)

  209. BBD / DVN – lol yah I didn’t like it… He Balance-sheeted me to death on the company. Too focused on what the ratios are saying “now”, rather than if they’re expanding or contracting.

  210. speaking of 200 sma, spx keeps failing it since it flatlined. It’s not sure where to go, waiting for floor / pit to get back to lunch… next 30 min watching.

  211. RMM- the 35% rule for rolling a long option towards the money is more of a guideline than a rule. I’m not sure if I referenced all of the gotchas in the k1 project, but the key here is to keep an eye on the spread between strikes both within a given month as well as between months.

    As you get to know a company’s options, you’ll see opportunities for crazy rolls appear with the movements of the stock price and VIX. And you don’t want to miss a chance to roll down $10 for $1.75, especially when the corresponding move up can be worth $5 or more.

    This thing of watching all of the strikes in proportion to each other is an advanced skill you’ll pick up as you get more comfortable with the basic stuff. Early on I spent unnecessary amounts of cash on rolls that I later learned to ignore, once I figured out how “deep” I need to look.

  212. JMAC: if you NEED this money, then that can affect your emotional state when you trade and can affect your performance. You need to know your risk and position size and your stop losses. But you also have to treat the dollar signs more like points than actual money… sitting there watching your portfolio fluctuate and thinking “man, i could buy like 5 PS3′s with the money I lost” is not the way to do it.

    Detach yourself emotionally. You can’t trade a small portfolio as a full time job, either.

  213. JMAC3300 – I just spent 50 minutes talking down one of my pals who feels pretty close to the way you sound. He was looking at 10 days of incremental losses. On analysis of his positions, I told him that his portfolio was more in the dreamer category, and that the thing to do was to roll out a few months of strike and sell premium to suckers just like him on the upswing. If nothing else, it will stave the short term losses, but the real magic will occur in 24 days, where he has a very high probability of keeping the 9.53 of of premium I found for him. Of course, he has to spend a little to get him there, but he’ll be OK in a few weeks, and next month – and each month thereafter, he’ll get 11.20 or so, and we’ll plan to make adjustments as we go.

    It is really about mindset, as you will be down the first couple of weeks of these spread positions (unless you are dang lucky/skilled at entry).

    The small portfolios here are not dreamer stuff at all, and are well considered for their risk levels (so another question is: do you match those risk parameters?). With so many participants and experienced members watching the PSW positions, you are going to be well served by whatever is officially called for.

    Just hang in there. Gosh, look at these swings. I’m pretty sure that if you “stay in”, today is something you’ll have forgotten about – six weeks from now.

  214. K1-

    I just shot you an email.

  215. 35% rolling rule- one other thing. Somewhere out there in the archives is a quote of Phil saying he’ll pay as much as 50% for a roll if he has faith in the company and figures its just a temporary dip.

    Again, these things are based on research as well as feel for the market. It took me a long time to even realize these were skills I needed to develop, so don’t be surprised if you find yourself wondering about them.

  216. Just walked in the door for the first time today.
    Looking at a strange market: DOW up, I guess because of energy
    stocks. Only things I got going are POT, which I am just selling
    my last calls, and DNA, which I have been writing against. Just
    rolled March calls up and out. Everything else stinks!
    Phil, the correlation between GOOG and GS is uncanny. Would you
    run the same chart for GOOG and CME? Should show a similar result
    I would think.

  217. RMM,
    Phil uses 35 % rule – meaning he will pay 3.5 for a $10 roll down. However, depending on the situation he will pay up to 50%. If you give specifics of your situation some one more experienced on the site could guide/suggest some solution/alternative for you.

  218. AAPL – I don’t know about being broken. Personally, I sort of expect it to test 111. A clear break of that area would really be amazing without some change in the company specific news flow. Of course, if that is the bottom, then “they” will probably run stops in that area before it turns around. Kind of hoping for more of a rounded bottom here as V’s don’t have probability on their side.

  219. MOS-a little more out from $108

  220. I think the obvious conclusion from todays action so far is that punters are offloading all the popular “retail” stocks. My view here is that the punters who buy shares hoping for quick gains buy the most popular ones e.g APPL, GOOG, ORCL, MSFT etc. These punters are losing their appetite and selling. I think that all the doom and gloom from the media is forcing the average person out of these stocks. I dont believe that institutions are offloading at these prices. Neither do I think the drip, drip will stop until there is some consistent change in focus from the media. (or institutions think we’ve hit the lows and start buying.)

    Just my 2ps worth.

  221. That tuppence is worth more than my two cents! ;-)

  222. DM: Here’s a blog for you if you haven’t already heard of it. I think his humor is right up your alley.

  223. Oops…I’m used to the “name” part auto-filling. Didn’t even check it.

    AAPL – Even a simple test of the 20 DMA would put it around 126.

  224. BA: 5sma flattening out on 15 min chart, and just closed above it. Hopefully this TA crap will help out my spread.

  225. surfah/AAPL- all i c is downside

  226. Thanks for the encouragement – I will try and hang in there a bit longer – Is following the 25K exactly not the correct thing to do???

  227. AAPL- …then i c rich people

  228. DM-DVN is probably the best NG company out there. I saw the CFO speak (I have mentioned it before) Anyway I never bought because I thought it was to big. Also he thought Wallstreet would never really respect the company as they do things for the longterm (5 years) He talked about they so much NG and Oil in the Gulf they can not even drill it. Also that they were losing projects to PBR CEO SNP and others that were state run companies because they really didn’t care what they bid on projects.

  229. jmac- i look for one trade/position at a time – hopefully something i’ve traded or already have familiarity with.

  230. Crox,

    I never thought it would be exciting to see it break $25 to the upside…sad, sad, sad.

  231. GOOG is doing the “dog paddle”. Nowhere fast but afloat

  232. AAPL-I c dead people LOL

  233. Buyers are back

  234. BBD – I’m afraid I’m one of them.

  235. JMAC – I’m new here, but I’ve been in your position before. I spend at least 12 hours a day on the market and I always feel like I need to do just a little more…point being that it’s not easy at all. The only thing I can add to the great posts that precede this one is that you should ALWAYS paper trade a new strategy before committing real capital. That’s double true if it’s money that you cannot afford to lose. Learning in this business – even if it’s just a new strategy – usually involves losing money…

  236. ABK!!!!!!

  237. Been gone what just popped loose.

  238. Hey, who hit the Buy button?

  239. BBD – Hmmm DVN is the GE of NG world.

    Dammit the stupid Amback crap again.

  240. check out the f’n crazy volume on ABK. MBIA of course too…

  241. POT-All out for now. :)

  242. I think you guys are way too negative on AAPL, the thing has almost already been cut in half. Relative to other stocks and companies out there, you would think the world is coming to an end as this thing has had recession, bankruptcy and nuclear holocaust priced into it.

    Wow, BUYBUBUY!!! button.

  243. They took Mbia off negetive watch list

  244. POT-my trigger call at $160 working well.
    DM-I guess you could call it the GE except it goes up.

  245. Feb. 25 (Bloomberg) — MBIA Inc., the world’s largest bond
    insurer, is no longer under review for a downgrade at Standard &
    The insurer’s AAA rating remains on negative outlook, New
    York-based S&P said today in a statement.

  246. BAC – the problem is that it’s tough to get $1 per month selling calls with them but the strategy is sound. The only trick is you have to reenter when you get called away or buy out your callers but they aren’t USUALLY that erratic (but they sure have been lately).

    Frankly I’d rather buy C and sell calls with no puts at all.

    Wow, this is just crazy now!

  247. Nice. ES above 1368, lets see if we HOLD!!!

  248. Primus, I’d short right now frankly… that’s 5 day resistance, and this is just quick market movement… make quick monye!!!!!!

  249. JMAC3300 – I think your question was for me… Yes, you should follow the exit callouts exactly, but sometimes you can buy better here and there.

    When you are familiar with how a stock acts during the day, you can often take advantage of that fluctuation, but I don’t think that you’re there yet. You need to think “best case, likely case, acceptable case” for pricing, and having followed a couple of these on papertrade, I see the prices being called at somewhere between “likely”, and “acceptable”.

    Beth had a great post on Sunday, and worth a review.

  250. K1,
    I am also in the LA area – and would like join in for lunch if that is OK with you guys. Just let me know.

  251. MBI/ABK- if these things rally on more capital, then the companies still have the same liabilities, but only now they have more $$$- what’s this say about the liabilities?

    i know this would b just one little rally on the crowded landscape of rallie/declines- but still.

  252. JMAC

    I follow the 25k, but don’t necessarily make all the moves. Many times (like on BA), I will wait for the DD to make my initial entry. Other times I scale in with only 1/2 position at first, then get 2nd half on DD. You also need to remember that we have had a rough, nasty market recently. I am trying to learn to trade, not simply follow every trade Phil makes. If you don’t understand why a trade is being made, then you shouldn’t be making it yourself.

  253. BAC – I’ve been nursing them for a few days. I’m ready to call it marginally psychotic. It now has that daytrader look.

  254. So my Spread on BA is complete with the APR 85 for 3.1 and the MAR 85 for 2.15.
    So I´m happy with the better entry :-)

  255. Mark-Precisely what I was thinking but if you short now, you’re chasing it, 44 on Q’s was when to short…

  256. Mark – Make that 6 day resistance.

    The only leadership from the NDX is right back down to the cellar.

  257. JMAC

    I just read the post sakiko pointed out from Beth. It is a GREAT post. Any newbie would benefit greatly from reading it.

    k1 – you should consider adding the post to the project.

  258. parchesia – COMPLETELY agree, was saying 68 was the short (was discussing 67.50 as the short first hour of the day). Gotta watch the action now to see where it goes, but still FEEL 1350ish is best bet for EOD.

  259. I guess that spike was due S&P reaffirming ratings on MBIA and Ambac
    “U.S. Stocks Extend Gains as S&P Keeps AAA Rating on Ambac, MBIA”

    It faded pretty quickly though.

    What happened?

  260. BBD – lol well the argument was back in 06… Anyways, this is your Nat Gas pick? DVN eh?.. Okay I’ll keep that on watch, still think CHK is the shaker and mover. But I’m not really commodity person.

  261. That’s precisely why i’m extraordinarily careful daytrading after 2. I’ll wait until the odds are ridiculously in my favor like they were when Q’s hit 44. I’m out of puts now but that sure was 5 minutes of fun!

  262. LOL – AAA rating on MBIA reaffirmed, ABK too but with conditions that they close capital raising! ROFL!!!

    EDU – way up at $60 I’m not inclined to take him out.

    Red/Roll – I wouldn’t be too dogmatic about the amounts. I shoot for 35% of the bracket but I’ll pay 50% if I feel its the right direction to go. At 35% I just roboitcally take the rolls without thinking.

    Damn the RUT really shot up on us! Still week on the horsemen.

    GOOG CME always trade in tandem, they shouldn’t but they do just because they are the only two stocks at that price. The GS/GOOG thing has no logic at all other than perhaps S&P bot programs are controlling the market and none of this has anything to do with rational trading.

    BA is annoyingly weak in this rally.

    Money is FLYING out of bonds! Rates going up trying to bring money back but it’s heading into the markets…

  263. Flyonthewall – That is my sense of humor completely! I look at his blog once and a while, smart trader. Crazy trader.

  264. GOOG, APPL, ORCL and GS options back to where they were pre that burst. (No strength)

  265. Afternoon all,
    This news on the monoline “bail out” is complete BS. It does nothing to change their liabilities, and just allows the banks to keep up the fiction that the insurance that they purchased is good. I think the market would like a reason to rally so I’m not going to fight it, but I doubt it will last long without more than this for fuel.

  266. crazy market …

  267. MBI/ABK capitalization- i was thinking that if they had $18B or $14B in cash (like AAPL, GOOG, respectively) would they b looked at so slack-eyed?

    i guess, my point is the same as phil’s logic of “life insurane default leading to high death rates”

    anyway- wow $18B in cash- but this BS is getting tossed around (“who knows what $h*t will b piddled as truth”)

    UPDATE: More iPhone Concerns Likely To Weigh On Apple

    February 22, 2008: 01:52 PM EST

    SAN FRANCISCO (Dow Jones) – Apple Inc. continues to stand by its goal of selling 10 million iPhones this year, but some analysts continue to question whether demand for the iconic device is high enough to support that target.

    Another issue remains iPhones that have been “unlocked” to be used on carriers other than Apple’s exclusive partners, which include AT&T in the United States.

    but also, this: (fan vs customer thing)

  268. XTO-CEO on Cramer, he is really smart DM maybe want to listen.

  269. DM-Another good nat gas play is LINE. The time to buy them was when they dipped below $20 a couple weeks ago. They have a great div/yld. Going to hit some nice resistance at $22.5 but if they dip to $20 again on a retracement, a lot of bad news has been priced in and I hear nothing but good things from them. Again, like BBD was saying, they focus on longer term and don’t really care what the market does to them.

  270. k1:

    have protective puts on my UNG at april43$ strike.

    stockprice is 44.8$.

    have trouble figuring out whether it would be smart to get the put strike closer to stockprice ?

    roll 1 $ up for 0.40$ ???

    what’s your take ?


  271. BA,

    Strange, price way above bid/ask

  272. meanwhile GOOG AAPL total POS.
    RIMM negative.

    crazy stuff; very hard to trade.

    Good call Mark on shorting the spike.

  273. Stupid arb’s keep cutting in front of me.

  274. BA,

    Must be picking up the wrong market.

  275. fred: I think that’s there because philadelphia doesn’t trade it. The bid/ask for phlx is 1.00/130.00… which means don’t trade here.

  276. Reuters having pricing problems.. beware of anything you see for a bit.. -Peter

  277. Phil,
    Thinking of selling AXP Mar 45′s at 1.70 on a bounce. Its been so volatile recently…


  278. BIG volume coming back to MBI and ABK.. need to see if it can break HOD’s…

  279. in the BA 4/6 cal with 2.15/3.00 spread. Can’t complain.

  280. Makes a joke of “AAA” – my spendaholic 19 year old sister is more AAA than MBIA are :) seriously.
    AAA credit rating but their paper trades at, what, 12%!

  281. I think Goog, Apple and other leaders are being sold off by people desperate to stop a rally. GS is frighteningly on the wrong side of a major rally as are many others. There are only so many times they can fire off big guns like Greenspan to spook the markets before they lose their effectiveness (credibility) and they’ve been pulling out all the stops for the past few days. As I said last week, the bears’ worst nightmare is an affirmation of AAA ratings for ABK and MBI, it negates 50% of all the fincial BS that premised this whole drop.

    AXP – If they break and hold $45 you might want to hold on but they have been a massive disappointment lately.

  282. Iphone unlocked, i saw about this (cet time) morning Xian.. do really expect AAPL not to happen this ..hey man we are consumers not AAPL shareholders.. think AAPL must review its bussines model with Iphone

  283. So Anton, how’s that oscar treating you? ;)

  284. BBD – I’ll take a look, thanks.

    Par – That’s how a good company is usually ran. Market is a good current indicator of the business, but long term solutions require long term planning or some bullshit like that.

    The market is going up on retarded news. I mean bernanke cuts a billion points, and no one cares… S&P says they won’t review a company, and America is fixed. This is just asking to be short…

  285. ANTON- I agree!
    NEW YORK, Feb 22 (Reuters) – Moody’s Investors Service on Friday cut its top “Aaa” ratings on Channel Reinsurance, which provides reinsurance of policies written by bond insurer MBIA Inc due to its exposures to residential mortgage-backed debt
    The downgrade may negatively impact the value of the reinsurance policies it has written for MBIA, **its only customer**, Moody’s said in a statement.
    But if someone can explain this to me I am willing to learn

  286. Maybe I’m just too bearish, I dunno.

  287. Phil,
    Trying to learn to play smarter, AXP, NDAQ, CROX, and ERTS are all naked and have show a lot of negativity recently. So what I was thinking was going with full to 2/3-3/4 covers overnight, then reevaluating in the morning, either taking them off or letting them ride down…

    But then it may be too late and they could be at bottom, but that’s the kind of thinking that got me here in the first place, sort of.

  288. Mark – I know that you were making a different point at 2:43 with that page 20 chart, but I noticed that the paper is attempting to address the difference between papertrading and trading “For Reals”.

    In turn, that reminded me of something my statistics professor said (and obviously designed for me to remember 30+ years later), “Aaah… Simulation is just like Masturbation – it may seem like the real thing, but don’t kid yourselves.”

    I have encouraged many people to papertrade first, but they do it with much less gusto than if their real money is on the line, and that’s a mistake.

  289. CROX getting a pulse….

  290. FXI showing a bit of strength, wonder if we could see a break-out move on top of the AAA news

  291. “it negates 50% of all the fincial BS that premised this whole drop.”

    On a day that house prices continues to fall and inventory continued to grow!

  292. POT-Back in. 1/2

  293. re:- I think Goog, Apple and other leaders are being sold off by people desperate to stop a rally. GS is frighteningly on the wrong side of a major rally as are many others.

    They’re doing a bloody good job. GOOG now at the low of the day and theres not much time left for any turn round today.

  294. It’s great to see that after everything the ratings agencies have done to this market, it still gets excited when they affirm a “AAA” rating. You’d think one sucker-punch would teach it, but….

    Money IS flying out of bonds, including long bonds. I bet 30-year fixed mortgage rates top 6% this week (currently 5.95%), after their STELLAR climb following last month’s rate cut.

    What will higher mortgage costs mean for the banks and insurers? The banks are still not fully discounting their RE loan losses because they think RE market will turn around. Bond insurers and companies like AIG are still not discounting their paper CDS losses because they also think that the Bank’s CDO losses will improve when RE improves.

    There’s a lot riding on RE getting better. Maybe money flying out of long bonds isn’t such a great thing…..

  295. Steveplace -
    good man, really good!
    He deserved it – what a performance, and a great speech too! Daniel Day Lewis also – what a man.

  296. SU breaking $100, XLE puts getting cheaper but I’m not buying more until $1.40.

    GOOG making new lows for the day, I’ve decided to hold on and buy another round rather than get out at $7, if they don’t hold $490 for the day, I may rethink it…

  297. Unfortunately I think CROX is just short covering

  298. I am starting to think AAPL deferred that revenue from T because they don’t think they will actually get all of it. If they can’t find a service level that requires using locked phones, then you will be seeing the $199 iPhone flooding the market. If they are not going to get recurring revenues, no need to slow down people’s purchasing of the phones. Demand will go off if they go universal.

  299. GOOG bought back all my callers today
    will recover some before the close


  301. Anton:

    Unfortunately, I haven’t seen either. Been having to convince the wife that it’s worth it. I have seen Juno, and the dialog in that movie is amazing.

  302. sakiko – understand completely my friend. I’m an institutional equity tader (to be specific I’m a Transition Manager, a small subset of the industry, but that’s another story). Our benchmark when trading portfolios (selling Legacy, buying Target) is implementation shortfall. Just happened to have that paper on me, and figured it’s about the best representation graphically of “Market Impact”… something we statistically try to calculate when we bid on a piece of business, but is really like trying to tell the future.

    It’s not so much that everyone needs to know it, but when you see volume spike and die off on the way up… like Newton found out when he threw the apple into the air, it must come down… if you are good at catching those waves / nimble then quick day trades can make you quick beaucoup bucks.

    Sorry, that’s not for the average trader at all. That’s a “quick 10 min” trade to make. You see it, you’re gut says to sell (and you noticed the first hour of the day like Primus said that the 6 day resistance was around 1368, so you already have your limit short out there anyways), it hits… done for the day go home! :)

  303. Of course, CROX decides to make a move the second I sell the 28′s I had as I’m trying to roll to the 25′s (been busy with work to fully keep up).

  304. Mark,

    Thanks for your thoughts. (Sorry for the late reply – had a DM kinda lunch! But without the wine spill.)

    Agreed that the 200MMA is only one tool, but I’m amazed at how good it is to help with entries and exits – and to help with understanding how the day’s going. The CVX comparison is very interesting. One has to wonder, though,if in that case it’s the cat chasing the dog, or vice versa. I guess with an indicator as short term as 200MMA, it’s really both.

    Thanks for your help.


    Pot is already up about $6, do you recommend an entry at this point?

  306. GOOG: violent bounce off the low (490.05). The HOD was 506.50 a few hours ago and the March contracts have 25 days…I’m with Phil.

  307. Carl, a bit louder please, didn’t quite seem to hear you there..


  309. Well, we have the triangle reversal on DJIA and SPX, just that damn Nasdaq lagging way behind. This should be very frightening if you are really short this market.

  310. POT-I am just playing the trend, and will probably keep some (at least 1/3) until it crosses 5MA down. Yes, it is already up $6, and this is why I only bought back 1/2. Made some real big profit on it so I can afford a pullback.

  311. Anyone thinking about PPI tomorrow?

  312. sakiko – btw, the paper doesn’t talk about papertrading per se, it discusses what the “benchmark value” of your portfolio was when you got it vs. how you executed. so teh “Implementation Shortfall” is the benchmark prices of the buys and sells you had at the “first chance” to begin trading vs. your actual exectutions. So paper value vs. executed value = imp shortfall (what we try to keep under -17 bps on average).

  313. DM,
    Can you please wake up EK – it is missing the party.

  314. I’ve been watching OBV indicator a lot more lately after it was featured in “futures” magazine a few months ago. Seems notheworthy that AAPL’s OBV is still trending down hard while GOOG’s OBV seems to be stabilizing. Also NDAQ and NYX OBV’s have both remained unusually strong during the last downtrend – the divergence from price is unmistakable in these two.
    Any thoughts?

  315. I think EK is pretty strong all day and all the beginning week.

  316. furnace- way ahead of you. Check my post at 12:10 today.

    RMM- 40c for $1 in position is a fine roll for a put, as long as you need the insurance. For high liquidity options like indexes, it can be better to follow Phil’s mattress strategy as a part of your overall positioning, but this is one of those cases where “You Make the Call”. Probably no bad decision as long as you’re trading your plan. You do have a plan, right? :-)

  317. OBV analysis done on daily charts

  318. Damn, k1! You are on the ball!

  319. Oops, I think I ordered too many at $7, the minute I placed my order the damn thing turned up, now I wish I’d paid the $7.20!

    Jake – this is not the kind of market you want to be naked overnight in if the money matters to you! I’m going with 1/2 covers into the close on most things.

    FXI – there is a strange dynamic in China this month with a lot of IPOs coming out soon so money has been flowing out of established companies and into new issues, which all the brokers are pimping. There’s a lot of concern as to whether there is enough money to sustain the new IPOs and until we get past that, China is going to act a little strange.

    ERTS finally finding a floor (I hope).

    Oh Anton, so negative – I said this morning, it’s nothing that wasn’t expected. We’re in a housing slump, ok, so what, move on, next! You can’t make the market go down on the same news over and over and over, at a certain point it all gets priced in and this sell-off was forced by schmucks like Bill Ackman telling people that MBI and ABK had $25Bn in debt and would be shut down when in fact they have very little debt, enough money to cover their liabilities and are both on their way to recovery – somewhere between MBI’s October high of $68 and $0 is the truth but you are pushing it just a bit when you expect the truth to be based below $12 and not closer to $30.

    As goes these guys so goes the financials, which are 20% of the S&P, which has dropped 15% off it’s Oct highs, led down by a 33% drop in the financials, so that accounts for 6% of the entire S&P drop. Of course everything else followed the S&P down so this whole bear thing can totally unwind on you with great rapidity wheras trying to get the market to go 5% lower is literally like getting blood from a stone – what else are you going to say, what other horrors will you be able to uncover to shock the next wave of investors, who have held on through all this?

    Speaking of S&P leaders, energy is flying again (Boo!).

    PPI can’t be worse than CPI, probably better because producers know how to budget and negotiate discounts so, if anything, I expect some relief at those numbers.

    OBV – it’s a good indicator for calling a possible bottom or top but not really the actual turns as things can find a level and sit there for quite a while.

  320. Guess what ?

    Stealth FMD !

  321. Iphone Unlocked, I just look through ebay and co. there are so many Unlocked IPhones!!

  322. AG’s ATH MOS POT CF, come on MON

  323. EOG how you handling puts?

  324. Opt – you still holding an EEM put?

  325. EK is going slow because some jokers bought thousands of $20 calls and they really, really wish we would go away!

    FRE is very slow out of the box but has no reason not to improve here. Apr $30s are $2.10 XXX

  326. yeah AAPL green!

  327. I love these shorts squeezes.

  328. EOG – that sucks! Have to wait for a bad oil day.

    BIDU went positive! AAPL green.

    LOL, now they are playing up ABK’s negative credit watch, which they’ve been on for ages.

    Insane amounts of buying crossing my screens now, this may last right into the bell.

  329. CAP-There are other FMD besides GS AAPL GOOG. LOL

  330. I don’t know about the iPhone, but I like to see green AAPL!!! ES @ high of day past 1368 = Big Victory. Someone better call GS and tell them to “cover up, butter cup”.

  331. Now all we need is NQ past 1800… Come on you pig, 7 more measly points!!!

  332. BIDU and GS made a good comeback. ORCL as well, GOOG not playing.

  333. You know it’s a rally when GS is green.

    GOOG = let’s keep working on it :)

  334. phil,

    I heard that FRE might be reporting couple of billion dollar loss this quarter. I am not sure of this rumour and wasn’t sure if that is already priced in. Any thoughts?


  335. Mark – Yes, I came to understand the point of the paper. I thought that it was quite interesting and appreciate the share. It’s good to see how additional opportunities are created by market forces, and perhaps some of us can capitalize on the plays as they appear.

  336. DUG calls, DIG puts. Must…. resist…..

  337. MCD- rallies so well, it was the first on my screen to firm up.

  338. Any thoughts on a possible MER play?

  339. GOOG = flaming death!

  340. GOOG is just determined to play dead, if they keep this up I’m going to go more long on them as they are driving down the premiums! They are totally trying to blow people out, I am buying more at $7.20! XXX

  341. phil
    here’s your chance with GOOG again

  342. GRMN-Bought some puts.

  343. Phil – are you covering CROX again – in your 1/2 covering most???

  344. Eric,
    You’re a braver man than I if you’re going to play both DIG and DUG.
    Been enjoying my XOM calls today..

  345. Today was fun!

  346. EEM-Stopped-out on Friday.

  347. Phil,
    Are you 1/2 covering CROX as well?

  348. Or they could be just flying down to their doom… Ow, very painful – thank you sir may I have another. My basis is now $8.13 and I’m down $1.10 so my decision is not much different than before – $6.50 is down 20% but now I have to consider rolling down to the $510s for $3, whihc will put me in there for $11.13 with the $510s at $9.50, so that’s down just 15% and in much better position so that’s what I’m going for.

  349. Went with a 2/3 cover on the AXP in the old 25KP with Mar 45′s at 1.90 and a 1/2 cover on the NDAQ in the old 25KP with Mar 40′s at 2.05.

    Now if someone just wants to take a boat load of EK Mar 20′s at .50 off my hands, I’ll sleep a lot better tonight ;)

  350. Holy GOOG! Blowing through stops now…

  351. EEM and other plays-I already said this, but it is very important: when I don’t specify where the stop is when I enter the trade, then it is always on the 5MA.

  352. GOOG-$480 is where MAJOR support is.

  353. CROX – they didn’t gain enough for me to cover.

    FRE losses – I take that with a grain of salt but they do have huge housing exposure and it all depends on how good their controls were to filter out the junk loans.

    DIG puts – mmmmmmmmmmmm.

  354. Half my EK calls triggered and were sold at .45 today, still have the other half GTC at .5

  355. GOOG-Pretty soon it is going to be a very attractive long-term play.

  356. “We’re in a housing slump”

    – And the nominations for understatement of the year are…

    For what one expert thought was the first time, the number of monthly foreclosures exceeded the number of monthly home sales in California in January, according to data compiled by two research companies.
    The data is a grim reflection of the worsening housing market, as the number of homeowners who can’t or won’t make their payments rises and the number of home buyers dwindles. ForeclosureRadar, a Discovery Bay real estate research firm, said 19,821 California homes went into foreclosure in January, representing about $8 billion in home loans. Meanwhile, DataQuick reported 19,145 home and condo sales in January.

  357. CROX-Bought some calls. Stop at today’s low.

  358. FXI above 5(MA)

  359. BBD – Not if you’re short lol… Oh the pain.


  360. My best day in ages. It’s been a long winter

  361. Hmmm…

    Wonder if this is going to be a new pattern. Open up, drop during the day, up the last 30min to 1hr. If it becomes predictable, its a nice pattern to trade, if you’re gutsy enough (which I’m not ;) ).

  362. Great freaking day everyone.

  363. Hey I finally caught up with reading since last Friday’s close.

    Oops too late, now it 4 pm. ;-)

  364. EK – did well today didn’t it?

  365. what a day…you guys are great! On top of it all we’ve got a nice, big, out of season south swell hitting Oahu today – surf’s up! :) Aloha…

  366. I wonder if this is why GOOG took the hit today ?

    NEW YORK (AP) — Most of the world’s Internet users lost access to YouTube for several hours Sunday after an attempt by Pakistan’s government to block access domestically affected other countries.

  367. Anyone,

    Any news on GOOG? Why down sooooooo much?


  368. sakiko – good things man! I figured you knew what was going on just wanted to make sure I articulated my point correctly (I almost NEVER do that right ;) ).

    Jake – new pattern? Sorry man, but look at the volume curve of almost any stock. “Normal” is an inverted bell curve with most of the volume at the beginning and last 20-40 min of the day… GS et al show the obvious spike at 2:30 with ABK and MBI which is abnormal. I wouldn’t bet that way… follow price / volume / some general indicators. Keep it simple b/c betting for tomorrow to look like this is fools gold (not to sound harsh, just being realistic).

  369. GOOG – I don’t think I can take $480! Actually I’ve decided I’ll do one more $3 roll to the $500s before I give up as we do still have a full month to go.

    I think a lot of this GOOG sell-off is a rumor floated that they will step in and buy YHOO, which would knock them down to $450 but I just can’t see them wanting it that badly. Still someone REALLY wanted to get out of GOOG at the close, that was over 1M shares dumped in the last 20mins but they still didn’t make the Jan 22 lows.

    Anton – do foreclosure sales count as home sales? That’s a very important number because a record number of foreclosures floods the market with cheap homes, further depressing values which is why you get an end spike down in home prices just as the cycle peaks out.

    Wow, another amazing finish! At least today we had fun…

    I will be having one hell of a morning if GOOG opens back a $495!

  370. Anton-That all may be true but the market is down over 20% from the highs. You need to realize, as Phil said, that after it’s been priced in, the market won’t go lower on it. I think everything has been priced in and we’ll be in a trading range, going back and forth on technicals for another month or so. Don’t be so pessimistic. The public is very pessimistic and that leads me to believe that we’re getting closer to the end of this because the public’s overexuberance is ALWAYS a barometer of a key reversal. The market CAN’T go down forever based on bad housing. Who gives a crap about 3% of our GDP. Yeah, it’s not fun but really, the world will not end. If you don’t believe me, go all in short the market and see what happens to you in 3-6 months.

  371. just a heads up

    AIG short call about 87% intrinsic now.

  372. This is why you should fade Greenspan’s calls:

  373. RE: GOOG
    I’ve joined the party- let’s see what the hangover is like tomorrow morning!

  374. According to briefing, at the end of the day, they were “hearing” a tier one company was “out cautious” on goog based on web search numbers. Same sort of thing with aapl on friday.

  375. Parchesia,
    Discounting it as “pessimism” is a cop out. I’ve looked at far more than housing numbers, and I firmly believe that we are in the biggest financial crisis in over 50 years, no less. Oh and: If you don’t believe me, go all in long the market and see what happens you in 3-6 months.

  376. Phil, Jan 22 – was that Yahoo’s lows? GOOG was around 600 I think.

    Anybody seeing some odd GOOG trading after hours on TOS charts? Three spikes around 495 – but there is no 495 put strike. B/A hanging around 487. 4:08pm, 4:13pm, 4:19pm – anybody else see this?

  377. Anton: your commentary screams conflict of interest. I agree with your numbers, but your superlatives lack the data to prove any causation.

    Saying “ABK is going to zero” and “huge recession” is the same rhetoric that lets me not turn on CNBC.

    And no, I won’t go all in long in this market. That would be dumb risk management. The same can be said about going all short.

    I don’t care if you’re right; I care about making money.

  378. oh Anton, no need to be so macho. We get it, your bearish.

    Maybe you are right, maybe not. But you need to read stuff other than those papers that support your thinking. (like the MER report you posted …. interesting reading, but it already seens dated and wrong as of last Friday 2-24 given the ABK news – i found it a little bit scary, but it did not convince me on the merits).

    Just like politics, you need to challenge your thinking by listening to the other side of the argument.

    Congrats on your Oscar by the way (not that I watch that hollywood self congratulatory stupidity).


    GS, btw I heard some schlock firm this am downgraded them to like 126. good luck with that.

  379. Steveplace- “conflict of interest” might be a little strong. Anton has a determined perspective, and quite a bit of research to back up that perspective. You (and each of us) can follow his links and make our own decisions.

    Presuming that PSW members have enough sway on the market to influence how the market moves seems overly optimistic. Plus, Anton’s my new indicator. As long as he can find valid negative indicators, we’re still going to bump along in this bearish market. Only when those indicators go away will the market trend change.

    (Hi Anton!)

  380. As Cap said Anton’s bearish so what? Everyone can think what they like!!!

  381. Steveo
    I was mimicking Parchesia with the “all in” comment.
    ABK runs a high probability of going to zero, downgrade or not, split up or not. Why? Because they aren’t going to write another [b]shred[/b] of CDO/CDS insurance ever again and they have to compete with Berkshire Hathaway in writing Muni insurance. Added to which, the likely capital infusion will dilute current shareholders by 20 to 25 percent! Take off your bull cap and you’ll see that their business model is finito.

  382. k1:

    You’re right. The “conflict” I was referring to was not financially motivated. This group probably doesn’t have the capital to direct price change.

    There’s always going to be indicators that go both one way or the other… that’s why I like following that squiggly line (sorry Phil).

    Apologies to Anton (please don’t kill me!) if I came off too strong, but strong words cause strong emotions in newer traders and is dangerous.

  383. what K1 said….

  384. BBD- hey, but what about the PSW mind-control chips?

  385. Hey, I’m not disagreeing with you about ABK. I just don’t like sensational-sounding rhetoric. Saying “America’s screwed!!!” is just as bad to me as saying “Buy,” or in our present case “Buy NOW! Everything is undervalued!”

    Heck, I’ll agree with Cramer on his analysis of ABK:

    “The Ambac (ABK) rescue plan makes me laugh, even as it totally drives the market with its backing by the agencies. A group of banks that are most directly related to the problems with ABK are bailing out ABK. You can’t make this stuff up. That’s like the insured insuring the insurers. Who can believe that, other than the agencies who are totally vested in keeping the AAA ratings because so much of their work on the actual stuff that is insured would not have worked without insurance.

    The ones who have most to lose, who need to keep the ratings up off Ambac because of what they hold, are going to bail out Ambac, and people think this deal has credibility? I guess everyone is so desperate to preserve ABK’s ratings that they will do anything.”

  386. Phil – I sure don’t think the Justice Department would approve
    a merger between Yahoo & Google. Not even close!

  387. Albo- merger of Google and Yahoo? I understand why Yahoo would want that (my prince! save me!) but why would Google want that? I don’t see Yahoo having any assets worth buying.

    In contrast, a bit of hardball would likely reduce Yahoo to a non-player and accrue any market share Google wanted anyway.

  388. Holy CRAP – Cramer is agreeing with me – I MUST BE WRONG

    ;D :D

  389. For those of us who lived through the 2000 tech down turn and got burned badly, it is easy to be bearish. I am one of them.

  390. Anton lol….

  391. Phil’s chip Somehow don’t make it to Dallas. I am OFTEN on the other side of his trades.
    DM- No my picks on NAT GAS is SWN UPL XTO as stated earlier.
    Posted February 25, 2008 at 9:17 am | Cramer stealing my thoughts
    Pretty interesting that Citibank and Wachovia (both with capital problems of their own)are involved in the bailout

  392. Anton- not to worry. Cramer reads PSW every day. He’s just following your logic.

  393. Other side? Now this is interesting.

  394. steveplace – Interesting points you bring up. The rating agencies
    are in a tough spot. If they downgrade, they precipitate more
    problems. If they don’t, and things continue to deteriorate, they lose
    what little credibility they have left.
    Do you remember back in ’03 when they downgraded most all the independent
    power producers?. They said they didn’t think these companies would be
    able to get the financing they would need in the future. It was a self fulfilling prophecy: Guess what? All of a sudden with lower ratings these companies were unable to secure the financing they needed, and quite a few
    almost went out of business.
    At that time it created some unbelievable buying opportunities:
    Williams (WMB) got down to 78 cents and AES Pfd C stock, got down to $7
    where it was yielding 50%. Incidentally, it is now $47.
    Next few months should be interesting!

    many nearly went out of business.

  395. Albo- great point. Periods of great fear (Hi Anton!) are when the best opportunities come about. But one must be careful, knowledgeable, insightful, and have bowels of steel.

    Not sure I have those things. :-)

  396. k1 – I agree. I was just responding to Phil saying that he thought
    a lot of selling in GOOG was due to a rumor that they might buy
    YHOO. I’ve said for months that I thought that MSFT should buy them.
    Wouldn’t be surprised, despite all the rhetoric, if MSFT raised their
    bid just a little and closed the deal.

  397. k1 – You are absolutely dead on about having to be very careful,
    knowledgeable, insightful, etc. That being said, for the past three months
    I have been selectively buying some stocks with very high yields that
    I have what I consider to be very good research on, and that have options which I have written against the positions to create some downside protection.

  398. what if cramer is shilling for GS?

    i dig anton’s views- he’s right- it’s just a question of duration/depth

  399. I am long the market and I will continue to be long the market. I was long CYBS and ARII and MCD and 11 other stocks nearly this entire crisis, although I parred back positions, hedged and then bought back at a discount at various times. I put my money where my mouth is. If you want to have an educated intellectual discussion with no emotion involved, let’s do it but otherwise, practice what you preach. If you’re so bearish, go short. If the world is coming to end, short it. I’m a bit bearish but I balance myself and also know that some companies will outperform while others won’t. I’m willing to put myself out there, in the form of my trades. Every trade I recommend, I am in on. If you want to be bearish, that’s great but don’t preach to me to believe in your bearish position if you refuse to put your money in what you so decisevely believe in. I hate drama and you sound so dreadfully pessimistic. It makes me think unclearly.

  400. ABK … I don’t think I am swayed by the Cramer argument about the insured’s bailings out their insurers.

    So what ? If the bailout accomplishes their goals and helps de-clog the credit markets, it will be a good thing. If its not, that will ultimately become clear as well. I think the jury is still out as to whether ABK or MBI ability to write new business is screwed.

    Is it a good thing to have short sellers and fear and panic bankrupt a large numbere of business and ruin the global economy ?

    Is MSFT’s bid for YHOO bailing out YHOO and its shareholders ? It probably is. So what ?

    If the banks felt that bailing out ABK was putting up good money after bad, then they probably wouldn’t do it (I say “probably”, as the banks have screwed up plenty already).

  401. With regard to Phil’s earlier comments about the psychology of trading. Another great book is “Trading in the Zone” by Mark Douglas. The TOS shadowtrader guy has been reading it aloud during the afternoons lately.

  402. GOOG – Google Inc. topped the list in late trading on Monday for Buying on Weakness, which tracks stocks that fell in price but had the largest inflow of money.

    Note GS also on the list.

    Interesting set up for tomorrow. Maybe Phils late buying will pay off.

  403. Parchesia,
    You have got to be kidding.
    My money is [i]definitely[/i] where my mouth is.
    If I make you think [i]“unclearly”[/i] then, hey, don’t read my posts. I’m perfectly capable of reading posts that disagree with my point of view and I try to see if they alter the “facts” as I see them – if they do, then I [b]gladly[/b] take them on board and (shock) change my point of view!
    I love this place but man if [i]everybody[/i] has to think the same way all the time then, someday, [i]everybody[/i] will be wrong.


  404. screwed up my tags. AGAIN!

  405. Anton- don’t worry, your PSW brain chip is on the way, men in white coats will be knocking on your door any minute now. Resistance is futile! ;-)

  406. Hi All,

    You guys beat up on Anton pretty good. God forbid you cite facts that include bad news for perma bulls!

  407. cap/cramer logic- i agree w/ u, so what? basically, it looks like the insurers r getting paid higher premiums to provide the same service.

    there’s nothing wrong w/ that when they raise premiums on policy holders b/c they want to increase profits- now, they just want to stay in business to continue collecting premiums.

  408. BBD, I don’t know what you look like or really anything about you, but when I read your comments, somehow I have Mad Jack in my head. Can’t shake it.

    And I think Windywheel is a woman. Maybe she/he is, I can’t remember. Maybe I have that one right.

    And this is what Optrader looks like in my head:

    And this is what DM looks like (and sounds like) in my head:

  409. XTO- pretty worthless interview on Cramer’s show. But they are growing reserves and Simpson has proven he is good at hedging. AT $9 they are very very happy.

  410. Out of fairness, I googled Apple Fanboy to come up with a picture of me, and this actually looks like me:

    But I bet some of you picture this:

  411. Cap,

    Do you really think “short sellers and fear and panic bankrupt a large number of business and ruin the global economy”?

    If short sellers are wrong they eventually get killed, because solvent, profitable companies do not rely on their stock price to make money. Yes, companies generate capital from stock sales, but if the fundamental business is not profitable, no amount of stock movement will help them in the long run. And if it IS profitable, the stock price WILL eventually reflect it, because everyone in the market wants to make money, and buyers will find profitable companies.

    Remember Enron? Many people claimed at the time that short sellers were the reason they got in trouble. We now know otherwise.

  412. That was me in the last message — sorry.

  413. XTO is still an interesting play. I’ll see if I can get it dutch.

    lol I’m debating whether or not to burst your bubble.. Film.. I’m actually you. Yup, all this time, I’m just part of your alter ego. I’m just you typing these words… Figment of your imagination… A random guy in Canada? All you baby. Selling Apple everytime you buy it, yup you again. Infact, haven’t you noticed that we never responded at the same time?

    That’s because we’re the same person Film, Flam, Bam Cham.

  414. That would explain a lot. Mostly, why I can’t stop ending every sentence with “Eh?”

    And congrats on your AAPL trades over the last month, you must have made a killing.

  415. Hey Film, That was great, I notice you didn’t put up your mind’s image of Windy!! The post of Balmer was terrible, I’m about the same age, balding and OHHHH NOOO I look like a Microsoft CEO! I’m going to lose weight and buy NTRI!

  416. Eric -

    It seems to me that short sellers have spread a disproportionate amount of fear and panic throughout the financial sector, starting w/ the bond insurers. This is not to say that there are not some serious problems and issues to be dealt with, however, the amplification by virtue of disinformation and aggressive use of the media has exacerbated the situation, and yes, some companies have seen their businesses put at risk because of this (undeservedly) … see TMA for instance.

    And I am not intending to disparage short sellers generally, and even I am a short seller of something fairly regularly, although not with the intention or desire of bankrupting companies or industries.

    My general point is that what is going on in the financial sector w/ the shorts is designed to give advantage to the financial positions of the shorts and is unfortunately having a harmful impact in other ways on those companies, those sectors, confidence in the financial system and the markets, and the economy.

    Do you think the freeze up things like the CMBS market and auction rate securities are either normal or deserved ? I do not.

  417. Cap,

    I think the CMBS market freeze-up is showing general worries about credit and commercial RE prospects, in addition to concerns about the monolines. The auction rate securities mess was not “normal” but why? Banks are squeezed for cash and stopped buying the bonds if there weren’t other buyers, and there weren’t other buyers. The banks basically finished this market off (I think it’s effectively dead), since they apparently don’t have the cash to keep it running, I believe.

    I think we are facing potentially very serious continued problems in the financial sector, even if the whole monoline thing turns out to be a non-issue. Despite all the terrible subprime AND PRIME lending practices, we’ve got banks over-extended on LBO pier loans, banks overextended in commercial RE loans, securitized credit-card and auto-loan debt that looks increasingly shaky, and a declining residential RE market that’s going to continue to hurt them.

    I could be wrong about the severity of the problems the financial sector faces, of course, but I really don’t think these problems were caused by short-selling.

  418. By the way, the MBI thing is already looking a lot less rosy than it did this afternoon:

    MBIA is still planning a split, “hopes” to preserve AAA on both sides, is getting out of the CDS underwriting market for at least six months, is eliminating its quarterly dividend, and has “questions” about its 2007 preliminary results.

    Incidentally, this all comes from the mouth of MBIA’s current CEO, not short-sellers.

    This from S&P: “S&P estimated that MBIA may have losses of $5.5 billion before tax, eliminating its entire capital cushion.”

    But in every other way, it’s an obviously healthy, profitable company.

  419. Eric the CMBS freeze up has resulted in spreads that are wider than ever before on record, including all past crises. This isn’t “general worries”; it is complete nonsense. This is occuring despite historically low and insignificant default rates and there is no outlook for increases in default rates that approaches the default rates implied by these spreads.

    I did not say “caused” by short selling; rather that the level of aggressive short selling has exacerbated the problems and is a significant factor.

  420. Cap,

    O.k., you didn’t say “caused”.

    I guess I have a little more confidence in the ability of markets to price risk in these cases than you do, but what the “real” risk is is something only time will tell.

  421. Eric -

    I did not way in on MBI or ABK in any way; nor make a claim as to what their overall health or profitability may be.

    That said, I just read the article that you provided link to, and it seems to me that you are spinning what is says a bit.

    I guess my overall view is that while these companies have serious problems, it is in the overall best interest of our economy to provide reasonable space for whatever capital infusions / restructurings need to take place, and that is what seems to be happening.

    Others seem to be more interested in destroying these companies and creating severe economic dislocation and chaos to advance their financial bets, the consequences be damned. As these problems get dealt with, the hysteria and yelping from those who pressed their bets perhaps too aggressively get louder.

    I have no positions or bets on MBI or ABK, but I understand and object to the hysteria to kill off these companies for profit, based on what I know today. My views are subject to change as I learn more, but I don’t see anything insidious in trying to address the problems and avoid collateral damage to everything else.

  422. Come on Eric, we know that the market is not and generally does not act “efficiently”, otherwise we would never have bubbles or crashes.

  423. Nothing like a volatile market to bring out the name-calling. Let me put this out there. Say Doc Brown came back in his DeLorean and gave me a newspaper from December 31, 2008. I know for a fact that ABK ends the year at 25. I enter a long trade on ABK. It’s free money, and I’m guaranteed 100% in 10 months. I bet several people in here with the same funds as me, who right now think it goes to 0 by the end of year, can end up making more on ABK than me when it’s all said and done.

    It’s important to have a gameplan. If I think APPL will see 100 before it sees 150, that’ll dictate the positions I take on it. But it’s essential to adapt your gameplan to changing conditions. It’s like that old lady/young woman illusion.

    Two totally different perceptions can both be right. For us, we’re right if we make money. I’ve got some adapting to do myself on GOOG. Rumors of declining searches, Pakistan blocking YouTube? Think I’ll start my own rumor that the reason for the blockage is Google maps is so great it located Bin Laden driving a cab in Karachi, and we’ll get him soon. That oughta spike it to 600. :)

  424. When things are moving wildly up or down intraday or from one day to the next, or based on a Charlie Gasparino comment, I would have a hard time agreeing that the market knows how to efficiently price risk. Same holds true for 10-15% up or down moves in the bond insurer stocks based on every little tidbit of info.

  425. Cap,
    I don’t know the exact situation with MBIA or ABK either. I tried to study it but quickly found it gets VERY complicated (anyone — not you — who thinks they know what’s going on is either an expert working at it full time or simply doesn’t know).

    We agree on not taking any bets on these two. No way I’d touch them.

  426. I didn’t mean to say the stock market prices risk well, by the way. I think it’s astonishingly speculative. I think the bond market generally knows what it’s doing reasonably well given the information available to it.

    That’s what I meant in saying I have more confidence in its pricing. Definitely NOT the stock market!

  427. Eric … even the experts don’t / didn’t know …. now Charlie Gasparino thinks he’s an expert.

    I agree; we should all stay away (and if we can’t understand that it is pure speculation at this point).


  428. Beth, I agree about your money-making example. I’ve been making a nice return on Phil’s suggested X put-spread, even though I got the direction totally wrong! It has been a good lesson for me.

  429. Eric –

    Normally the bond market does seem to know better than the stock market.

    But not at this time, IMO, at least in some areas of the bond market.

    This is a credit lockdown; part legit; part panic; definitely abnormal.

  430. Anton – Bio not boring at all! Did I remember you saying that your forex positions are mostly JPY?

  431. Xian -

    From our conversation the other day, here is another piece for you to consider:

  432. Hi Opt,

    A question for the master…

    Please advise your thinking on the below trade. I’m guessing it’s not the 5MA, but a speculative based on looking at the weekly chart and seeing week 3 of Jan2008 as resistance? However, volume on this strong down week is much heavier already than that week, so ???

    February 25th, 2008 at 3:59 pm | Permalink
    CROX-Bought some calls. Stop at today’s low.

  433. This sucks. I agree with Cap.

    And here is what I picture Cap like:

  434. short sellers- who knows: maybe downtick rule? what about finding the borrow?

    interesting that downtick changed just b4 a downtrend. i’m just saying, that’s lucky- or maybe i have too an simple understanding of the rule change and borrowing situations.

    anyway, i think the bears r right- but the market is hanging in there- its in a range. although the 200wk MAs (SPY QQQQ DIA) r just begging to b retested- considering all the triangles.

    AAPL- i looking for a test down to the 100wk MA at 107ish- at worst.

    C- oppy cut their earnings like 70% this yr, lets c where this goes.

  435. Film — That’s hysterical, man. :twisted:

    But not quite accurate; and I am really not an angry guy ….

  436. XIAN; downtick rule…. agree the timing of the change looks might curious doesn’t it ? (mid-july ’07 as I recall).

  437. MBIA-Cuts dividend

  438. Anton-It may sound like it but i’m not against you. I respect every opinion, even yours to some degree even though I don’t know you but I sense the emotion behind what you were saying earlier. That’s great! You’re fanatical about what you believe in. All I ask is we keep these “emotional” conversations until after hours. I am guilty of doing that as well during trading hours and i’ve found that is not the best environment for trading. That’s the only point i’m trying to get across as discussing this during trading hours. I’ve stopped because I found myself getting wound up on those conversations instead of concentrating on trading.

    I think the worst of the credit crunch is behind and we’ll be able to legitimately move forward from it after financials report earnings next quarter. I seriously don’t see things from a lending standpoint getting much worse. The problem, on a large scale, is that banks don’t know what anything, especially housing, is worth. So they have a hard time loaning money because no one knows what anything is worth, which is what the foreclosures coming on the market lowering prices, will finally solve over time. Another problem is that most people who swap these credit derivatives are either stuck in something they can’t sell or they’re bankrupt and can’t lend any longer. Thankfully, right now the world has plenty of money to lend to help us, i.e. Russia (among others) is buying into us and I seriously doubt they will lose their money. The real problem I foresee down the road is food inflation. If these prices in wheat and other commodities don’t stop rising at such dramatic levels, I can see a realistic food shortage of some scale hit the U.S.

  439. Anton:

    Just read your bio… I played Rugby League in New South Wales for a couple months, that was fun.

    Here’s the “rugby shot”

    1) Take the salt and snort it
    2) Take the shot of tequila
    3) Squirt the lime in your eye

    I’ve wanted to develop a trading system for forex; can you recommend a platform to build it on? I was looking into MetaTrader and IBKR… trying to port to C++ and Matlab. Any ideas?

  440. Question, from Dry Fry Blog, why does a company with a AAA rating need a bailout?
    Hope s&p is right, their credibility is now really on the line even though it hasnt been worth much before.
    For bull, bears and everyone who just wants to make money. got this quote from a book. I keep it posted above my monitor
    In the stock market- the perception of value is of far greater interest in stock valuation than is the actual fundamental value, perception in the market carries far more weight than even fact itself.

    While fundamantals are essential for long term stock selection, the short term price movement is affected more by perception of value

  441. And although I don’t completely agree, I’m glad you can put your money where your mouth is! Just remember to hedge yourself, just as I do with my long positions at the right technical times.

  442. For every negative story on housing or the economy, we can even find some with reasons to be optimistic:{9D58CC62-40F0-4809-96E1-400A27CAA99F}

  443. I think that removing the downtick rule greatly increased volatility (experiential assessment), but that did not affect the overall trend of the market. I simplistically attribute that phenomena to the credit crunch.

    Once we get that handled, the confidence that is required to change from a trader mentality to that of an investor will reappear, and market growth should follow.

  444. Goldman Sachs released a research study today suggesting that “major write-downs” in leveraged loans should be expected this quarter. The analyst indicated Citibank had at least $2.2 billion and Merrill another $1.3 billion. Total write-downs at Citibank could exceed $12 billion. Guess they will have to find another sovereign wealth fund to bail them out again! Dubai indicated today that U.S. assets were still too high.

    The Goldman Sachs studies noted that this was just for leveraged debt write-downs and did not cover significant write-downs for RMBS and CMBS securities with particular concern about CMBS. (Residential and Commercial Mortgage Backed Securities).

  445. food inflation-On the futures market, wheat contracts up the 60 cent limit and soybeans up 32 cents to a whopping $14.52 per bushel. Minneapolis wheat went up $4.75 per bushel to $24.75 per bushel. October 2008 corn is $5.07, on Dec 26 it was $4.17. No inflation there. LOL

  446. BBD, the most recent data on CMBS default rates is as follows:

    Default rates increased 1 bp to 0.38% in January, from 0.37%.

    These are miniscule and are historically low levels.

  447. Now, not to be a skeptic or anything, but do you think that Goldman’s commercial real estate principal investment group is interested in buying any of these CMBS type or similar securities at historically wide levels ?

  448. Doug Kass today:

    I have recently argued to buy the dips and sell the rips, a seemingly robotic attempt to extract excess returns from what little Mr. Market has been giving us over the last several months.

    Unfortunately, the idea of this sort of strategy conjures up a boiler room of trading automatons that strictly rely on a machine-like response on stock market price weakness to buy and share price strength to sell/short.

    It is not what I am entirely trying to communicate.

    The buy the dips, sell the rips strategy certainly does not mean that analysis and perspective should be jettisoned. Indeed, it is more important than ever, as the benefit of experience has helped us greybeards navigate an increasingly difficult market landscape.

    Logic of argument, thorough financial analysis and a complete dissection of numbers remain my investment mantra.

    Case in point: Recent evidence suggests that some of the huge financial writeoffs and writedowns of a variety of credits at our leading financial institutions might have been exaggerated. This could lead to financial writeups over the next one or two years.

    If this supposition is correct, there is a fortune just waiting to be made in the financial sector.

    On page M14 in this weekend’s Barron’s, levered loans are trading at about 88 cents on the dollar. By contrast, the market is expecting a 10% to 15% default rate, a level that has never been seen according to KDP Advisors. In fact, says KDP, “The loan market is trading with a higher default rate than the junk bond market, very bizarre given that leveraged loans are secure debt and are senior to bonds in corporate capital structures.” So, levered loans are trading well below fundamentals.

    The same holds true for high-yield bonds, in which the current default rates stand at 1.5%, implied by spreads are 8% defaults, and expected by ratings agencies (like Moody’s) is only 5%.

    The same holds true for commercial real estate loans, in which the current default rate is 0.3%, implied by CMBX is 8%, and the expected default rate, according to credit professionals I rely on, is expected at only 2%.
    One could conclude from the above that there is a mistaken pricing of debt that is causing larger-than-necessary financial sector writeoffs, similar to when portfolio insurance kicked in and forced investors to sell stocks during the October 1987 market crash.

    If my observations are correct, a mistaken pricing of debt is serving to constrain bank lending, slow the economy and has produced artificially low stock prices (especially of a financial sector-kind) as investors could be overreacting to the huge financial writedowns at some of the world’s largest financial institutions.

    Doug Kass is the author of The Edge, a blog on RealMoney Silver that features real-time shorting opportunities on the market.

  449. sakiko- agreed, rule change not caused downtrend, but as all the news came out the rule changed- sort of like polishing the bowling lane.

    C looks really bad- gonna pick up more when they report or some crazy sell off- today was not too bad at all.

    AAPL- discounting everything and then some- one thing that gets me worried is that numbers havent come down, ratings cut or anything too bad like that (right?)- is what it needs?

  450. Cap-you could be correct!!! I am more of a parrot. LOL.
    The auction muni-market continues to look like a disaster. The auction rate municipals had 480 “failed” auctions in one day. In 24 years there have been a total of only 44 until now.

  451. news story w/ negative comments on C (as I posted early this am).

  452. BBD, who am I to argue w/ you … you have a great track record.

    We are all trying to figure things out.

    Commercial RE is an area I know a little better than most.

    The auction rate stuff is so bizarre …. all the borrowers should refuse to pay the default rates and they will be taking their business elsewhere.

    Never heard of this market until the problem surfaced last week. Upon learning about the rate reset provisions I thought it was among the stupidest ideas I had ever heard of. As a borrower, I would NEVER agree to such a provision, while the banks would be saying “but these are our standard documents / provisions” and “no borrower has ever objected to these terms” and “there has never been (or only 44 times in 24 years) has there been a failed auction, all for legitimate reasons”. What a bunch of mullarkey !

  453. you guys beat out all the talking heads anyday…

  454. Beth – It didn’t seem like they were fighting. Just a structured debate. Those were easing words regardless, thanks for that.

    At the end of the day, I think short selling is a step forward. It allows a lot of flexibility for retail traders.

    I believe a lot of “inefficiencies” in the market is due to differences in opinion and time horizon. Also, “market movement” is due to the similarity in opinion. Like everything else that is based on “opinions”, it is usually problematic, but necessary for freedom.

  455. Well off to watch Texas Hoop. All have a good night

  456. enjoy the game BBD

  457. K1,
    I was trying to access Beth’s post that you said you have linked – I could not find it – Can you please guide me to it? (Let me know where it is rather than giving me the link – I want to go through the steps myself.)

  458. CMan,
    “Hints on Getting Started” in the k1 project.

    and THAT link is not the link. ;-) Beth’s post was mentioned and linked twice in today’ comments.

  459. Beth,
    I did read your post from over the weekend ( which I had noticed only this morning and deferred to read it later. I have done it now and must say it an excellent post – you have said everything that I was looking for and have put it very nicely. Again, great post and Thanks!

  460. film
    i’m so glad i’m not in your head!!
    what makes you think i’m a woman?

  461. Beth-LOL, we weren’t calling each other names. I have absolutely no hard feelings towards anyone, especially Anton. I just wanted to be sure Anton was just as adamant in his convictions as I am in mine. That’s the best way to have a genuine conversation and why I proceded to gently provoke him into letting me know that knowledge by the response he gave me. Anton and I could, in fact, both be right. They may be in serious financial trouble and the market may, in fact, keep moving forward without them. I really have no idea as I don’t delve much into financial companies. All I do know is that the world has never been on a stronger financial footing, aside from the U.S. and that it will be very hard, although possible, to dislodge because of a lack of lending occuring in the U.S. I know there is money to be leant, it’s just not being leant out for many of the reasons that have been outlined this evening. With that said, a Black Monday is possible and a full recovery is possible. All I can say is that it doesn’t matter because it’s only an opinion, which we could all sit here and argue over for days at end. Although we should discuss these issues because it makes us look at different angles and above all, increases our knowledge. We should all trade on the fundamentals and technicals we know to make educated decisions so we can keep this tight knit group growing and intact. We’re all here to help each other and I never want to lose anyone here because of a bad trade.

  462. sakiko,
    Thanks – I was looking for the link on the K1 tab. I had copied and pasted & saved Beth’s post for later read and had easy access to it. But I wanted to make sure I knew navigation inside K1′s project for future ref and hence was my query / cry for help to K1.
    Thanks the same!

  463. anton- i know u like this j rogers thing- almost 30min of him scarying the hell out of me w/ his “gump-like” logic.

    anton and anyone else have an opinion on this?

    upside on ag/commodites looks endless on a 10-20yr timeframe? i need to get into the DBA- i’m going to make a plan and just start scaling in and look for some other comm indexes.

    from 1960s gives a brief history of bull market cycle- he thinks we r going back to the 70s or japan-like situation.

    buying agriculture in the last month- buying “the largest index” b/c of lawyers’ advice.

    …greatest excesses in 15yrs have been in finance…u don’t c 29yr old farmers driving maseratis…

    …rimimbi will double, triple, quadruple in next 20yrs…USD will lose status as reserve currency- just like sterling did- first enemies, then friends will move away from USD…

    has no faith in US politicians- any.

    my favorite: “we’re now burning our ag in our fuel tanks- instead of feeding each other”

    he sounds like such a polite person- southern accents.

  464. Beth – you are unusually smart and profitable. I’m on to you, don’t think I don’t know… Bethy.

  465. b gross- getting nice- real nice. compares australia to US- check it out

  466. Xian – Despite what Potash thinks, commodities will top out. I love POT, but there’s only so high you can go before crashing.

  467. pimco- has been buying AA, A+ bank debt in US also australia.

  468. Pimco’s Gross Favors Australian Debt as Fed Failing (Update2)

    By Chris Young and Wes Goodman

    Feb. 26 (Bloomberg) — Bill Gross, manager of the world’s biggest bond fund, said Australian government debt is more attractive than Treasuries because U.S. Federal Reserve policy makers are failing to tackle inflation.

    “U.S. citizens, the Federal Reserve and policy makers, certainly in an election year, are unwilling to accept their medicine,” Gross told a meeting in Sydney via a live broadcast from Newport Beach, California-based Pacific Investment Management Co.’s head office. “They’re unwilling to endure the pain” of raising interest rates.

    Bank Debt

    The fund had 46 percent of its assets in mortgage bonds and 19 percent in investment-grade corporate debt as of January, according to data on the firm’s Web site. It held no government securities.

    “The corporate debt we’ve been attracted to in the U.S. is primarily banks,” Gross told the conference. “Despite the fact that we have a shattered banking system, the original banking system is a requisite for economic growth and stability going forward.” He said Pimco has been buying debt of banks rated AA or A in the U.S. and Australia.

  469. In case anyone missed this –

    a huge salvo in the MSFT/GOOG wars was fired today.

    So…who’s going to buy ADBE?

  470. C- 11/4/08 downgraded to AA by fitch @ 35ish

    - 11/27/08 abu dhabi buys in @ 30ish

    – 12/14/07 takes on $49B SIVs onto balance sheets @ 30ish

    – 12/27/07 GS forecasts $18,7B writedown in C Q4 @ 29ish

    – 1/15/08 C writedown of $18B, cut divi @ 27ish
    The company called the fourth-quarter results “clearly unacceptable.” Indeed, revenue dropped 70% to $7.22 billion from $23.83 billion.

    - 1/22/08 C low 22.36

  471. Just catching up tonight. Thanks Film for your visuals once again. It’s easy to see what business you’re in – you’re a “chert” man too, if I recall. Maybe one of these days we’ll get our LV thing done, and we’ll be able to meet everyone. Odds are our minds’ eyes are pretty right.

    (Except I always imagined DM to look like a younger version of the Ballmer pic.) :-)

  472. Beth – thanks for your posts this weekend and today. I think you underestimate your wisdom and the contribution you can make to this group. I hope you keep posting regularly.

  473. 2/25/08- GS forecasts another $12B in C writedowns

    SP affirm 6 of 7 SIVs – junk ratings, that is. @ 24ish

    from C website:

    01/29/08 – Citi Announces Three Key Hires

    01/29/08 – Citi and Nikko Cordial Corporation Successfully Complete Share Exchange

    01/22/08 – Citi to Exceed Targeted Capital Ratios Pro Forma for Fourth Quarter 2007; Nearly $30 Billion of Capital Raised or Priced Over Last 2 Months

    01/17/08 – Citi Announces Conversion Price of $12.5 Billion Private Offering of 7% Convertible Preferred Stock

    01/17/08 – Citi Prices $2.9 Billion Public Offering of 6.5% Convertible Preferred Stock

    01/15/08 – Citi Announces Key Actions to Enhance Capital Base

  474. Xian – aside from these articles, what is your conclusion? Is the GS forecast an attempt to drive down the price of C even further? Even back to its lows of last month?

    I’ve been slowly adding some to my retirement accounts, as I don’t think they’ll go out of business, and their China position seems pretty secure.

    What do you think?

  475. Windy. I don’t know. Windywheel. Wendywheel??? I don’t know. Always thought OptionSage was a woman too. And I know he isn’t, I just think woman when I see the name. Probably because I know women named Sage.

  476. Beth, absolutely great post. You are an asset.

  477. Asia Markets : Tuesday, February 26, 2008

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



    Hong Kong*


    DJ Shanghai*






    Baltic Dry Index (BDI)
    109 7296

    * at close
    Sources: Dow Jones, Reuters

  478. Rally in Asia Fizzles, Japan Closes Weaker
    An early rally in Asia fizzled out with markets turning lower in the afternoon session Tuesday. Japan gave up gains to end weaker and South Korea closed flat. But Australia managed to hang on to its advance to finish in positive territory. apanese stocks gave up early gains and closed lower, dragged into the red by mobile carrier KDDI Corp on a ratings downgrade.

    The Nikkei fell 0.65 percent, after jumping more than 3 percent and posting a six-week closing high on Monday. South Korea’s KOSPI finished flat after hitting a five-week high. Australian shares ended 0.8 percent higher, with financial firms extending gains as worries over credit markets eased. In markets still trading, Hong Kong blue chips rose as HSBC Holdings jumped after Standard & Poor’s removed a threat to downgrade the ratings of U.S. bond insurers, easing concerns about subprime-related losses at the biggest banks. Steel plays gained further momentum after China’s largest steelmaker, Baosteel, said it would raise major steel product prices by up to 20 percent.

    Chinese shares fell 1 percent after a strong opening, suggesting the latest intervention by the securities regulator to support the market was not enough to produce a sustained rally. The Shanghai Composite Index had opened higher after the China Securities Regulatory Commission addressed a key worry of investors, the balance between supply and demand for fresh equity, by warning companies against making big issues of new shares. That appears likely to ensure a drastic scaling back or postponement of huge share offers planned by companies including Ping An Insurance.

    European Stocks Gain on Ifo, Earnings
    European stocks extended early gains Tuesday after German business sentiment grew at a faster rate than expected in February, according to data from the Ifo economic research institute. The major indexes had started the session in the green due to a wealth of positive earnings from Ferrovial, Suez and Persimmon.

    The closely watched survey beat estimates from analysts polled by Reuters, which gave investors hope that Europe’s largest economy was coping with the slowdown in the U.S.

    Also in the UK, Standard Chartered posted forecast beating results for 2007 due to exposure to Hong Kong and Indian markets, sending its shares higher by 6.2 percent. n Spain, Ferrovial’s core earnings rose 31 percent, thanks to the acquisition of UK airport operator BAA. But the debt taken on to finance the deal weighed on the company’s net profit. France’s Suez beat expectations with a 12.4 percent rise in full-year operating profit.

    French President Nicolas Sarkozy criticized Societe Generale chairman Daniel Bouton, telling Le Parisien that Bouton must assume his responsibilities for the bank’s trading scandal.

    And in Germany, Siemens’ shares were up 2.7 percent after the company released its restructuring plans, which include a number of job cuts at various units.

    In economic news, growth in Germany’s economy slowed by more than half in the final three months of 2007, as rising food and energy prices cut into consumer spending.

    FTSE : +1.35%
    CAC : +1.25%
    DAX : +1.75%

  479. Oil Below $99 on US Crude Supply Increase Hopes
    Oil eased to below $99 a barrel on Tuesday, as higher demand for winter fuel driven by cold weather sweeping parts of Europe and the United States was balanced by expectations of another build in crude supplies.

    U.S. light, sweet crude [ 98.81 -0.42 (-0.42%)] for April delivery fell. London Brent crude [ 97.44 -0.25 (-0.26%)] traded lower.

    The cold weather had sparked a rally in major world heating fuel markets, boosting crude oil benchmarks the previous day, as caution also prevailed ahead of OPEC’s March 5 meeting. London gas oil futures hit a record high on Monday, while U.S. natural gas briefly touched a two-year high and heating oil gained close to 1 percent. U.S. distillates stockpiles, including heating oil and diesel, were expected to maintain their seasonal decline due to cold temperatures and a dip in production and imports, analysts said, and are forecast to have fallen 2.4 million barrels last week.

    The market was eyeing policy direction from OPEC members ahead of the group’s next meeting on March 5. On Monday a senior Iranian oil official said there was enough crude in the market and saw no reason for OPEC to raise output, an Oil Ministry Web site said. The remark came a day after Iran’s oil minister, Gholamhossein Nozari, said he would support an OPEC output cut.

    An industry consultant said on Monday the group’s oil supply was set to fall by 200,000 barrels per day in February due to lower output from its top two producers, Saudi Arabia and Iran.

    Unexpectedly Strong German Ifo Cheers Euro
    The euro edged up versus the dollar on Tuesday after a forecast-beating German Ifo business sentiment survey dampened the case for near-term interest rate cuts from the European Central Bank. Ifo’s president Hans-Werner Sinn said it would be premature for the ECB to cut rates yet, and markets trimmed expectations for a move by end-June to 1-in-4 from 1-in-3 before the data.

    The euro [ 1.4872 0.0044 (+0.3%) ] was up against the dollar, around half a cent higher than before the Ifo release.
    The dollar [ 107.91 -0.12 (-0.11%) ] traded slightly lower versus the Japanese currency.

    The high-yielding Australian and New Zealand dollars failed to benefit much from the improved risk appetite.

    The kiwi [ 0.8102 -0.0014 (-0.17%) ] was down against the U.S. dollar, as investors took profits on its rally to 23-year post-float peaks of around US$0.8150 earlier in the session. The Aussie [ 0.9279 0.0014 (+0.15%) ] was a touch firmer versus the greenback.

    Gold falls on IMF sales but weak dollar and high oil underpin
    Gold fell on expectations for higher supply, with the the US looking happy to support International Monetary Fund gold sales. However, bullion was just 2.5 pct lower than a record seen last week as inflation fears and safe-haven demand lent support.

    Gold hit a record above 950 usd late last week but yesterday fell to as low as 926.40 usd as the US treasury looked likely to approve the sale of gold from the International Monetary Fund (IMF). The US Treasury’s Under Secretary for International Affairs, David McCormick, said the Bush administration will support the sale of roughly 8 pct of the IMF’s reserves.

    The sale, which will equate to about 12.9 mln ounces of gold, marks a significant policy shift for the Bush administration, which had until now opposed selling IMF reserves. However, inflation worries remained, with oil close to 100 usd a barrel and the dollar weak. Gold moves in line with oil as investors hedge against inflation and in the opposite direction to the greenback as bullion is seen as an alternative asset to the US currency.

    At 9.39 am, gold traded at 932.50 usd per ounce against 938 usd in late New York trade yesterday. On Thursday, the precious metal hit a record 953.75 usd per ounce. Elsewhere, platinum fell to 2,109 usd from 2,145 usd in late New York trade yesterday. Sister metal palladium was flat at 508 usd from 519 usd per ounce. On Thursday, it touched 525 usd, its highest level since mid-2001. Meanwhile, silver fell to 18.04 usd per ounce from 18.07 usd, having yesterday hit a 27-year peak of 18.18 usd per ounce.

  480. I listen to Peter Day’s podcast regularly, this weeks on Russia is quite interesting, seems that the new middle class is exploding and spending up to 80% of their income as their basic costs (housing, utils, etc.)are so low..

  481. BTW, the apple online store is down, rumors point to a refresh of either MacBook Pro or MacBook…

  482. I saw this being pasted on Wang’s site, this is really quite useful overview, the UI on the site is a bit weird, but if you select the archives view on under the upgrade/downgrade calendar you can get any date:

  483. film
    you were correct with the gender (not with the name though). what a riot it was to see this cast of characters inside your head.

  484. CMG is above 5(MA) it has been quite volatile in the past 3 months, but last 2 earnings have been quite good, they missed by 0.02 earlier in Feb. Next earnings are thought to be 1st of May.

    SEP 105 are about $11 and MAR 105 are about $3.20, which pays for a roll down to SEP 100.

  485. Now THIS is what I aspire to:

    C Citi’s hits: 15 times $100 mln – WSJ (24.74 )
    The Wall Street Journal reports Citigroup (C) disclosed that traders in its investment bank piled up daily losses of more than $100 mln on 15 separate occasions last year.

  486. FWLT & KBR … big misses.

    AAPL … Morgan Stanley & Piper both out defending / pumping

    GOOG … way down early pre-mkt

  487. Bill Gross was calling for falling rates while the Fed was raising; now that they are falling he wants rising rates ?

    Gimme a break !

  488. why is GOOG and a few others being singled out for such a disproportionate hit?