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Leap Day

Of all the months to have an extra day in it, why did it have to be this one?

This has been a torturous month to play the markets and making us spend one more day in it is just cruel at this point.  I mentioned in last night's post how deeply concerned I am about the dollar's continued decline and when I see things like that I want to go to cash and I very much doubt I'm the only trader who feels that way.  Unless we see a recovery in the dollar, it's going to be very hard to make a good case for US equities as we are down 20% from last year in foreign currency

Of course 20% would be an ideal bounce zone but it's also a terrible level to lose and breaking 12,500 again is a pretty good indicator that we have another bottom test in store for us.  Let's hope we can hold it today as 12,500 is up 100 for the week and we'll take it, but we're not going to like it!

Asia sold off last night as Bernanke's comments yesterday about possible US bank collapses for some reason made investors a little uneasy.  The Nikkei gave up 2% and the Hang Seng dropped just 1% (still 260 points!) and Europe is trading off about a point as the Euro hits $1.52, getting close to a double over the past 6 years!    Now there is ample grist for the rumor mill and AIG's surprising $5.3Bn loss on an $11Bn write-down of mortgage securities is not helping this morning.

We have AIG in our virtual portfolios and we pretty much expected this so we're going to take out our callers and be very happy it was "just" $11Bn and the key phrase is: "AIG said the unrealized valuation declines aren't indicative of the actual losses the unit may realize over time. Any credit losses that do occur in future won't have a big effect on AIG's overall financial condition."

This is why we bought August and sold March!  While it is possible that there may be some more write-downs if the government continues it's do-nothing policies and the housing market continues to collapse, this represents a net $5Bn loss on AIGs $505Bn invested in credit derivatives alone!  AIG is a huge company with  close to $1Tn in cash and investments, of course they lost some money in CDOs – they wouldn't have been very well diversified if they hadn't!

Over in Europe, Swiss Re, who are similar to AIG, also took a $1.2Bn hit on CDOs and the lesson the world gets from this is, unfortunately, DON'T INVEST IN AMERICA.  RBS had the best scam this year as they aggressively went after US deposits, invested most of the money abroad and now owe their depositors 14% less in Euros than they took in last year.  While the bank did lose $1.8Bn in CDOs, they made record profits as they wisely cut back on personal credit loans last year. AXA also posted strong numbers despite $900M in write-downs.  While you can't completely escape exposure to US assets in a global economy, those that limited their exposure most lost the least.

To hammer that point home to European investors - Peloton Partners, a British hedge fund founded in 2005 by two former GS parners, is shutting down one of its funds and closing the other to investor redemptions amid losses managers described as "severe" due to mortgaqge investment losses. Yesterday, Messrs. Beller and Grant said in a letter to investors that they would be selling off the assets of their $2 billion ABS fund, which turned in a blistering 87% gain last year. They blamed a drop in the market value of highly rated mortgage securities in which the fund had invested, and moves by banks to ratchet down their exposure to hedge funds.

"We have been working night and day exploring every feasible option to alleviate the situation," they wrote. "In the end the best solution has been to seek buyers" for the fund's assets. Messrs. Beller and Grant lost about $120 million of their own money that was invested in Peloton, according to a person familiar with the matter.

Aside from Bernanke's statement that small, regional Banks may end up having to be bailed out by the FDIC, financials are selling off as Senator Jack Reed, Chariman of the Senate Securities Subcommittee, has suggested applying rule 46-R, a rule meant to stop Enron-like balance sheet abuses, more strictly to banks and their "off balance sheet" assets.

After Enron, with Sarbanes-Oxley, we tried legislatively to make it clear that there has to be some transparency with regard to off-balance-sheet entities.  We thought that was already corrected and the rules were clear and we would not be discovering new things every day.

Despite all this mess you just can't seem to keep the US consumer down and Consumer Spending jumped 0.4% in January, outpacing already inflationary income growth by a full point.  Unfortunately, adjusting for inflation, spending is actually flat and the market is in no mood to look on the bright side of an economic report today.  Even the PCE index, which the Fed actually does agree is a pretty good inflation gauge, is showing 3.7% year over year growth - quite a bit more than the 2.2% "core" CPI the government likes to cling to.

To summarize the last 2 day's worth of data:  0.6% GDP = STAGnant economy and 3.7% PCE = inFLATION.  STAGnant economy + inFLATION = STAGFLATION!  Very good…  Next week we will discuss the situation we find ourselves in when the FUndamentals start to suCK.

Have as good a day as possible!

 


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  1. Didn’t read until today, but once again a great article by Jeff Saut from Monday. Can’t wait to see this Monday what he thinks about this week’s market action:

    http://www.raymondjames.com/inv_strat.htm


  2. nice last para phil ;)


  3. GOOG is going to look pretty good today compared to say a bank or a fininacial or a bloated commoditiy. Think of this dynamic – to a foreign investor, commodities are only up 1/2 as much as they are to us so the massive run-up in miners and oil companies can be called into question on a “real currency” value basis.


  4. Phil,
    EK in 25 KP:
    DD @ .1 still OK?
    Thanks!


  5. Maybe looking at the European options market isn’t such a bad idea, I will do some research over the weekend, those of you with IB accounts can of course trade anywhere TOS/OXPS/Ameritrade are all bound to the US. One advantage of the IB platform is that you can have base curreny in Euro/CHF/HKD but still trade with USD instruments and you can swap base currency with 24 hours notice… minimizes impact during cash holding times…


  6. Mark, thanks for that interesting article. A couple of things I’m not so sure of though:

    “Ladies and gentlemen, negative real rates have always sewn the seeds of economic recoveries.”
    That may have been true for the U.S., but it hasn’t always been true (Japan, e.g.). If we have a credit contraction combined with commodity price increases it may not be true for us this time.

    “Moreover, typically a recession follows a tightening cycle by the central banks, causing the entire interest rate spectrum’s yields to rise sharply. Clearly this has not been the case.”
    O.k., but recessions have also almost always followed rapid contractions in new home sales:
    http://photos1.blogger.com/hello/243/2888/640/NHS7Aug2006.jpg
    So one of these indicators is going to be broken this time.

    There are some pretty plausible counter-examples to Saut’s indicators that make them fully consistent with a recession, in other words.


  7. Let’s keep in mind that holding 12,500 would be good but it’s be a tough morning at least.


  8. Yep .. coincidence I was looking to spanish market and Eurostoxx options Andy I choose Ib because of that.


  9. Out of puts, I love profit first thing in the morning.


  10. EK – sure if you can get .10. If I’m not in a better mood next week I’m going to more cash but I still think that everything but the dollar is well priced in, what scares me is the unthinkable possiblity that the dollar can slip another 10% or more, which would force global investors to rethink everything and will shoot our inflation through the roof at an alaming rate.


  11. Alright, we’ve got goodish news, why aren’t we rallying?


  12. Phil,

    Tried to cover 1/2 crox at 1.75 yesterday but never got executed for the price. Should I cover it now?

    Thanks.


  13. DOW is skewed… all the big losses on the day are financials

    AIG, AXP, C, BAC, JPM are the biggest % losers in the 30 right now


  14. Thank goodness for index puts! Those QID’s are like standing by a slot machine that pays off 50% of the time. Big, big drop in them at the bell though so I agree with DM – better to stop out of puts and reestablish later if we have to.

    I see strength in the horesemen as well as IBM, solars, GRMN, TGT… Gold still strong.

    Energy taking a huge dip! Thank goodness I thouhgt I was losing my mind but I’m also taking stops on those puts as I’m in no mood to short oil over the weekend.


  15. Maybe they should make a canned food and shotgun ETF


  16. WOW what a market


  17. Q puts-1/2 out.


  18. Wow, huge drop


  19. Sitting, waiting, wishing…


  20. CROX – still stong in a crap market, I missed my cover too and I’m going to hold out if they hold $25 today.

    Those EK calls get more expensive as it goes lower – very strange.

    X got wolloped this morning, totally insane stock. EOG falling off that cliff.

    XOM and CVX getting killed but so is everything else in the Dow.

    Chicago PMI at 44, 50 is neutral. Very very bad!


  21. SIGM – trying to ignore the market?


  22. FRE moving again, those Apr $30s are very reliable at .70 XXX


  23. Phil,

    25KP ~ Is SNDK a good candidate for a DD right now at these levels?


  24. EOG Resources-EOG: Recommend trimming positions on yesterday’s rally@CRTC
    CRT Capital recommends swapping into CHK or XTO. Duh stock was up 20% yesterday


  25. AAPL-Bought back more covers.


  26. OPT – still have sfly puts? I’m out unfortunately.


  27. FYI – I couldn’t get .70 so I took 1/2 at .8 with an order to DD at .65 (yesterday’s low). This is going to be my first attempt to teach day trading as we may need it to survive next Q!


  28. SIGM – shoulda, coulda…


  29. AMZN puts-1/2 out.


  30. NYX- is so sad


  31. AKAM-What is going on?


  32. Phil, BA is it too risky to uncover and take the 20% gain available, but with the risk of being uncovered…. ouch ERTS down at $46… still long time to June though


  33. Akamai-AKAM calls active with low volatility on Buyout chatter
    AKAM is recently up 43c to at $33.90 on unconfirmed takeover chatter. Goldman Sachs has a Neutral rating on AKAM. AKAM March 35 calls have traded 130 times on transaction volume of 4,725 contracts. AKAM March option implied volatility of 47 is below its 26-week average of 54 according to Track Data, suggesting decreasing price fluctuations.


  34. Optrader-

    I am working on incorporating the DDE that steveplace showed us yesterday into my spreadsheet…I’ll email it to you over the weekend


  35. Eric, thank you for the response! Great POV.

    The one think I’ll say on Japan is their lack of control which led to their stagflation. I think we’ve learned from that and won’t let it happen.

    To quote another great source from Monday (ISI):

    Arguments against a recession include inventories are
    lean; global short rates are already down -50 bp; unit
    labor costs in 4Q in the US were up just 1.0% (helping
    explain why S&P earnings ex financials are up almost
    14.0%, according to First Call). In addition, there’s a
    global glut of investable funds, trade is lifting US real
    GDP, developing economies are strong now and
    unlikely to slow as much as they did in the last
    recession, and we’ve gotten this far, and it appears real
    GDP will not be negative in 4Q, 1Q, 2Q (rebates), or 3Q
    (more rebates). By 2009, lower rates should start to
    help.

    More from ISI, and what I beleive Buy side firms are looking for before they jump back on board with the bulls (i.e. go LONG):

    Four Needed Catalysts for a Perception Shift We’re Not
    Going Down the Tubes
    First, we need to see oil stabilize to take the heat off
    headline inflation, which is a headache for the Fed and is
    working like a tax hike for consumers.
    Second, we need to see ECB ease — Eurozone is the
    same size as the US. For this to happen, we probably need
    to see energy prices stabilize.
    Third, we need to start to believe that Washington is
    really on board to START TO SOLVE the financial crisis and
    the slump in house prices.
    Fourth, we need to start to see credible signs the
    economy is unlikely to collapse (not necessarily that it’s
    about to improve in the next few quarters).
    FYI: In 100 days, airlines around the world plan to stop
    issuing paper tickets, ie, starting June 1, e-tickets only.

    But thank you, always love these discussions b/c it’s ultimately what helps the investor decide for the long term WHAT to be in… and also very importantly WHEN to be in it.


  36. AAPL- trying to make something out of nothing- relatively strong


  37. DELL holding up well, still I wish I had covered the leaps ahead of earnings.

    WFR climbing with solars.

    AIG, CVX and XOM are about 30% of the Dows loss, things aren’t as bad as they look. Let’s watch SOX 350, GS $170, GOOG $468, NYSE 9,000, 1,345 S&P, 12,350 Dow and 2,300 on the Nas. This was either the end of the sell-off or a pause, we need to retake 1/2 the loss to get out of the woods though.


  38. DTV puts-1/2 out.


  39. SFLY puts-I have 1/4 left only.


  40. ATI- Took profits at open on WEAK TIE numbers


  41. SEED – anyone know what happened there; used to trade w/ ag’s.


  42. AAPL didn’t crash boys. Who’s got the champagne?


  43. Phil,
    CROX 25KP:
    “CROX – still stong in a crap market, I missed my cover too and I’m going to hold out if they hold $25 today.”
    What covers are you planning?
    Thanks!


  44. AMZN puts-Another 1/4 out.


  45. Crox!

    Money coming out of Deck and into Crox? Strong for a down day.


  46. Phil,
    Question on some plays for today…

    AIG 3:5 Aug 45/Mar 45 spread – taking out the callers at some point today? or do you think it will go lower?

    SNDK Apr 25 with a basis of 3.08 (leftover position) – DD at some point?

    CCJ 2:3 Jun 35/Mar 35 spread – Add more callers as it heads down then back to a 2:3 spread when it perks up again or bottoms? Had a stellar run these past few days…


  47. X – after weeks of keeping negative delta in my X trade, I came in this morning with positive! LOL.

    Oh well, price shows signs of stabilizing, so it might be a nice time set up the call legs of my straddle.


  48. Last comment as far as Saut: while his statements can easily be argued just as any other investing / eco pundit, his investing ideas have been spot on b/c of his macro themes. The fact that he’s been long Ags and Metals / commodities since ’01 shows his prowress IMHO to make a GREAT LT investing theme when people were afraid to invest in anything.


  49. HOV is the craziest stock I’ve ever owned!

    Oh sorry, Steve is right, include the rest of the financials and pretty much all of the Dows losses are in the sectors we want to rotate out of. If the Russell holds up comparatively that’s a good thing.

    SNDK $25KP – $1.45 off a $1.85 entry isn’t quite where I’d double down. When something goes down 20% you need to decide to either get rid of it or hold for a DD opportunity, really 30% is about the right place as your DD turns it into 15%. We purposely took a small entry expecting a better one so there is no hurry but $1.35 would be the official DD target so XXX to that in the $25KP.


  50. Lucked out on BA – had missed to buy back callers y’day – got stopped out at 1.85


  51. Peloton Partners

    You see, even the pros lose money sometimes. Loved the story this morning about the guy who has made $500 million shorting subprime debt and he was turned down by Goldman Sachs to do the transaction.


  52. Screw that, CRASH. For 10 minutes. Then rebound. Holding off my buy in. Watching the downtrend on the 5 min.


  53. CMan

    Just keep in mind that the BA deal is expected to be announced tonight. It is expected they will get the deal so I wouldn’t expect a big pop buy you may want to have a cover in the event that they split the deal with NOC. Hope that doesn’t happen for many reasons.


  54. Google may be launching digital billboard ad network for malls-ClickZ
    Google (GOOG) has filed a patent application for technology that lets local stores tie their stock control computers to a Google-powered ad network. The patent, filed in December 2006, covers systems and methods for allocating advertising space in a ?network of electronic display devices.? The concept behind the patent is to advertise products for sale in a mall’s stores on billboards located in the mall. Reference Link


  55. CMED worth a comeback gamble?


  56. Google may be launching digital billboard ad network for malls-ClickZ
    Google (GOOG) has filed a patent application for technology that lets local stores tie their stock control computers to a Google-powered ad network. The patent, filed in December 2006, covers systems and methods for allocating advertising space in a ?network of electronic display devices.? The concept behind the patent is to advertise products for sale in a mall’s stores on billboards located in the mall. Reference Link


  57. Google may be launching digital billboard ad network for malls-ClickZ
    Google (GOOG) has filed a patent application for technology that lets local stores tie their stock control computers to a Google-powered ad network. The patent, filed in December 2006, covers systems and methods for allocating advertising space in a network of electronic display devices. The concept behind the patent is to advertise products for sale in a mall’s stores on billboards located in the mall. Reference Link


  58. Sorry about the triple post. Don’t know what happened.


  59. well. Out of the INTC cover shorts


  60. AKAM-Flying :)


  61. Phil, I did not take out the BA caller yesterday. Can I take them out now…. or have the weekeend protection?


  62. AKAm buyout chatter huge call volumes
    Akamai-AKAM calls Heavy with low volatility on unconfirmed Buyout chatter
    AKAM is recently up 89c to at $34.29 on unconfirmed takeover chatter. AKAM offers services for accelerating content and business processes online. AKAM March 35 calls have traded 191 times on transaction volume of 6,671 contracts. AKAM March 40 calls have traded 84 times on transaction volume of 3,233 contracts. AKAM March option implied volatility of 48 is below its 26-week average of 54 according to Track Data, suggesting decreasing price fluctuations


  63. AAPL-Are we loving this, Film?


  64. BBD, you’re 20 min late on this one LOL.


  65. 25KP ~ SNDK DD filled at 1.35!


  66. X – spoke too soon.


  67. Consumer sentient 70, down from 78 last month. Worst economic indicators since Bush 1 – mission accomplished W!

    NYX very tempting down here.

    AKAM?

    $10KP:

    BA – We don’t buy out a 1/2 cover up just 20% that’s $2 out of the money!

    Rutterfly – it’s amazing that there is not a single strike that gives us a positive looking result but you have to trust the math.

    EK – How is it we got .10 yesterday on some but today we can’t fill with the stock down 2%?

    SNDK – DD at $1.35

    $25KP (new):

    BA – same

    CROX – Hooooolllllllllllld.

    SNDK – DD at $1.35

    Rutterfly – same

    NDAQ – These are full covers of Mar $40s (just 5) Let’s roll down the June $42.50s to the $40s for $1.25 if possible.


  68. Phil,

    Did you guys also purchased DIA-127strike at 1.99?. Is it time to DD on that at 1.17?


  69. Went net bearish at 130, just flipped and building Mar 130 and Apr 140 position. Going with tight stops, letting profits from drop pay for some whips if necessary. Long way down to close that gap. Possible support at 126. But will be out before then.


  70. Q puts-Another 1/4 out.


  71. Blowing all levels – when in doubt, cover!!!


  72. Opt, so far so good. Want to see 127.50 hold in this crap market.


  73. Not sure if this sell off feels justified. I know it’s bad, but I don’t really see us going to 1340 on the S&P.


  74. Huge gap-down in TNX. Not bullish.


  75. FIlm, I don’t care if they take $127.5, I’ll just add more ;-)


  76. Feels like 126 is next stop.


  77. Anyone,

    Didn’t understand phil’s comment on BA cover. Can anyone explain?

    Thanks.


  78. Opt, totally, just great little rest while the rest of the world falls apart.


  79. Blake:
    here a daring question:
    you take about a spreadsheet.

    I am struggling to mamage a portfolio, download Phil portfolio info etc.

    would your spreadsheet be available for me ?

    Txs

    RMM


  80. 126.50 is support. Just saw it. Watch for that.


  81. BBD-You’ll probably be interested in this link with Bob Knight if you don’t already know about it: http://collegebasketball.rivals.com/content.asp?CID=780183


  82. RMM-

    it is not something that I even use to trade with, just something I am trying to put together, I only mentioned it earlier to Opt because there was a discussion yesterday with steveplace about using DDE with TOS, and I am starting to incorporate it into my spreadsheet. I’ll let you know when I am done with it, but it will be quite confusing as it doesn’t have a lot of organization to it and may be too complex at this stage.


  83. Film, this is why it is great to be diversified: you are not too tied to a position and you can make money on other stuff while it is going against you, giving you more confidence to add up. Even better if you have calls AND puts.


  84. OPt, I know, I know. I am getting there. I PROMISE. As soon as I get my account consolidated, I will limit that account to 40% AAPL, and no more than 10% on any one other position. I have my eye on some puts to balance it out and will actually start to pay attention to the delta of my portfolio. Next week should be the last week where I am SOOO solitarily focused.


  85. parchesia – You going to the Biltmore today?


  86. Blake:
    txs
    I am pretty good with spreadsheets
    yet I have trouble hooking into Phil spreadsheets and keep them updated.

    See what you can do

    RMM


  87. is anyone else showing a low of 120.88 for appl today or is my TOS messed up


  88. The markets are dismal today. I knew we’d be in trouble because we didn’t close above 1370 but didn’t expect the severity of the selloff this morning. One of the few times I haven’t been covered enough to mitigate my longs but that’s how it rolls sometimes.


  89. BA:

    why are they diving ?

    are they NOT going to get the contract ?

    RMM


  90. I asked this yesterday. Or the day before, can anyone think of a reason to short MO?

    The Biltmore. I met Bill Clinton there. He is a total duffer. That is a golf term. He is not good. I didn’t know it was him and I was laughing at the guy who kept hitting it back and forth over the 18th green.


  91. Film – I’m with Optomus Prime on the diversification bit. AAPL’s great, but requires big nuts.


  92. parchesia- Thanks for the details i saw something about it while at the gym.
    CF- should have sold shoot. LOL


  93. Blake – I also see 120.88 in my Ameritrade streamer.


  94. Mark – how about US labor costs are dropping relative to real currencies?!

    I wouldn’t pop that Apple cork yet as Goog lost $468!

    CROX – 1/2 $25 covers if they blow $25 but, again, very impressive holding up in all this.

    The BBP is even and I’m shutting it down, we need to move to a more flexible portfolio with $100K for day trading. Unless a lot of people strongly object, I’m going to kill that and the old $25KP (of course you can still ask about positions) so I can concentrate on trying to make some money in this crazy market. That means on Monday I’ll start a $100 Day Trade Portfolio, not really day trade but whatever quick opportunity plays we can run.

    In the old $25KP:

    ABX – Fine

    AIG – Mar $45 caller is even and our Aug $45s are down 10%, we need to take out Mar caller and hold the Augs open.

    AMGN is a roll down from the Apr $47.50s to the $42.50s for $2.30 and sell the Mar $42.50s for $2.51 with stops on 1/4 at $3 and 1/4 at $3.50. XXX

    AXP – roll from Apr $45s to $42.50s for $1.30, sell Mar $45s for $1

    EDU – Fine

    EK – Same DD at .10

    ERTS – Rolling June $50s to June $45s for $1.50, selling 12 Mar $45s for $2.40

    NDAQ – full cover with $40s, now $2.85

    SNDK – take out Mar $25 callers at .60, keep in mind that this makes the trade EVEN. Set stop at $2.20 on remaining calls. SOX holding 350.

    Advance/Declines is 1/6 – soooo bad!


  95. BA’s down on news of possible delays on the contract because whoever loses is going to pitch a hissy fit. But that was expected, so it just seems to be going with the market.


  96. biltmore- right near my homebase- i workout there when in miami.


  97. Should also mention that the Streamer is also fluctuating the S&P 500 value at -1233 to 135 or so, from time to time. That scared the crap out of me earlier today…


  98. Sakiko-What’s going down at the Biltmore?


  99. parchesia – I thought Fast Money going to be taping down there?


  100. THEEEEEEEE Biltmore is here with us in AZ

    RMM


  101. Q puts-All out for now. That was a very nice drop.


  102. Biltmore Miami-Nice Sunday brunch


  103. RIMM calls-Bought back 1/2


  104. Xian-This looks like a good place for MCD to consolidate again and make that run on $60. It’s been kind of a safehaven for investors lately and I think their business (aside from that gas station coffee, which I have not tried-I knew better before hand) should be doing well since they are the best low-priced alternative for fast moving, money-crunched families.


  105. next support around 1320 if we break lower than ~1340 (current support).


  106. S puts-1/2 out. WOW!


  107. AIG/Jake – I’d risk it, maybe leave 2 for weekend coverage but just set a .25 stop and let that decide for you.

    SNDK – see above

    CCJ – I’d keep that for the weekend, if Europe steps in to bail out the dollar, we could get a major drop in commodities (and the EU actually works on the weekend!).

    X – Good plan on setting up long side Eric but we may test $105. If they hold $110 for the day then buying the calls would be OK and, of course, at $105 it’s certainly worth buying 1/2 of the target. Don’t worry about the putters – take a look at the April rolls you can get, you can roll the $115 putter to the Apr $105 puts for just $2! That’s why I liked that spread so much yesterday.

    XOM/CVX making us very happy on the put side. Those guys now make great Dow puts!

    NOC $80s just $1.40 now make a nice gamble as it would be stunning if they get the tanker deal!


  108. RedMountainMan – My Sunday Brunch there is at the Phoenician (not too often); is THAT Biltmore you mention the one at McCormick Ranch?


  109. LOL-I’m closer to “the Biltmore” in Asheville, N.C. than the Biltmore, Miami. Not for long though, headed on soon…


  110. If gold is up why are gold stocks taking a serious dip?


  111. lol aha nice film!


  112. Okay market bottom out, lets have some fun now. Shake out the boys.


  113. biltmore golf- in my middle school vandalism days, my boys and i would roam the golf course at night and break into the sprinkler system. we totally destroyed it and they had to redo 1/2 the system.

    yes, we’re proud of that.

    also, we’d roam inside the hotel itself in the middle on the night and try to break into al capones’s suite thru the exit stairs- we did.

    we came full circle when my boy had his wedding after party in that same suite about 2 yrs ago.


  114. MrN-It’s stocks in general taking a hit, not just one specific sector. Without looking, i’ll bet those stocks are outperforming the indices but because of index selling, all stocks tied to that index get hit on a selloff of this magnitude.


  115. AAPL holding at yesterday’s openning – so far


  116. Optrader/Film
    Taking our AAPL callers here??
    Thanks


  117. Meant to say taking out!


  118. Bought back AAPL 130Cs sold.


  119. Every attempt at buying gets beaten back with more selling. No let up yet. Could be a bad omen for the close. Bidu wants to go green but never makes it.


  120. rider, good place for it.


  121. SLW-All out. I did not like that move at all.


  122. Biltmore:

    in AZ, the Biltmore built by FWright is just west of the Phoenician (my favorite place),

    xian: how can you brag about your destructive actions if they are true.

    RMM


  123. BA – After mkt close, the Air Force will announce who won the contract for the tanker deal. It is 23 billion dollar deal. BA is a big favorite having won it earlier but losing it after an ethics scandal.


  124. X- thanks Phil. Watching 110. I ditched the putters at 112, so no problems there.


  125. Is there a possibility that there will be more oil wells blowing up soon?


  126. NOC calls, on NOT getting a tanker deal?


  127. CMED – LOL! I didn’t trust them yesterday and I still don’t trust them today!

    I can’t wait for Buffett’s letter today, hopefully he’ll say something nice and save the market.

    Opt – will Google be launching a digital billboard? Will it? Will it?

    DIA – you don’t DD, you roll down .35 per $1 – only DD when your total basis becomes 1.5-1.6x your current strike and then set stop to get 1/2 out at basis. In theory, if you start with a $2 call at $127 that means you roll down to $126,$125 and $124 for $3.05 at which point you DD at $2 for a basis of $2 on the $124 calls where a 50-75 point retracement of the 400-point drop gets you out even. This is similar to all roll down logic but it’s easier with the DIAs as they are very liquid with $1 incriments.

    Also, it never hurts to wait as the lower the Dow goes, the cheaper the roll gets but catching the bottom IS KEY so the trick is to go in with this plan and stick to it.

    While we’re on the topic – when things are going your way you want to mattress into the next strike at your ORIGINAL basis once you are green so if you started out buying $2 options, you simply buy the next level above yours when it gets to $2. Since the roll downs were .35s, this means that your lower call (all reversed for puts of course) is at least .50 in the money and you set a .25 trailing stop on your end to make sure you get out of your lower calls better than even and then you would repeat the roll-down process with the higher strikes. The advantage to this is the rolls are cheaper from the more out of the money positions and their downside delta is lower too.

    Qs holding up here is huge if they stick! SOX refuse to lose 350! Go Tech!!!


  128. RMN, I agree with you. The Biltmore in phoenix is very nice. Close to camelback and squaw peak for great hikes (which is what i’d do after work but i got this damn flu bug!)


  129. MOS- bought some APRs


  130. xian,

    Good thing you didn’t disclose who you really are or perhaps the statute of limitations has run out on your criminal activities.


  131. Uncovered my AAPL…seems to be holding nicely here.


  132. RMM- b/c they were fun times and the memories r joyful ones…i think its called childhood.

    besides, we served as quality control for their security standards. it’ll take more than a few kicks from a bunch of 13yr olds to get into the sprinkler system now (in fact, a month later the whole thing was on lock down).

    also, now there is a chain on the fire exit doors when no one is occupying the capone suite.

    no one was hurt.


  133. RIMM calls-1/2 out. Have to be nimble on those.


  134. xian:

    I’ve vandalized golf courses on 3 continents


  135. VIX is not where we’d like it to be (25.50) – 28 has been a pretty reliable top but 26 has held firm since mid-Feb but it’s very interesting how the VIX bounced off its 200 dma and broke through the 50 dma as it was a perfect advanced market turn signal. Let’s add VIX 26 to our list of signs of the appocalypse.

    Some kind of paper, maybe by the Fed, on the credit crisis is being released but they peg $400Bn in total losses, this is NOT even a worst case. I’ll be very happy if we shake this off and looking to buy if we have an irrational sell-off led by people who thought we would lose less than that amount but it sounds like they do say it could get worse if conditions worsen.

    There’s no way a thing like that gets written without people having a heads up, this is a buy on the news thing most likely (let’s hope).


  136. gosh, u guys r being squares and bugging me out. so i’ll confess that it wasn’t me and my boys- we only heard about it.

    seriously, lighten up its just a place for the wealthy to get away from the rabble less than 2 miles away.


  137. Would be a fine time for a snap reversal higher. But, I am totally talking my book. Went in on a Mar 130 position that I will have to bail on quickly if we turn down.


  138. or was it us?


  139. MOS – interesting, seems like a mix between POT and AG…. Lets see if I can get it at 100ish.


  140. if you haven’t DD’ed on SNDK, now might be the time. cross above 5ma on 15min chart


  141. If you didn’t do some sort of haneous vandalizing in your youth, you missed out on some of the pure pleasures in life.


  142. steveplace- we’ld have gotten along great in our angst-ridden adolescence

    screw authority and all their “PRIVATE KEEP OUT” postings.


  143. will Google be launching a digital billboard? Will it? Will it?
    -- It’s not a digital billboard. You carry your Iphone (or other device) into the store and google links it to the store’s barcoded (Universal product identifier code). Google matches that with your cookies/profile/purchases and sends targeted advertisements, maps to products in the store, etc. — this is one of the grand ideas in the beginning of the interenet--surprised that the patent came so late


  144. AAPL-yes, I am pretty much almost all uncovered at this point. But remember, I have puts on other stuff. You always need to adapt trades to your own portfolio.


  145. looks like AAPL made a very brief spike down at 10:29 to close the gap from yesterday’s open.


  146. parch- right on. like i said, we never troubled people per se, just lifelessly arrogant institutions.

    sadly, i’m a hypocrite as i now pay their membership fees that insure the property against the next generations of aimless vandals


  147. Phil,
    BA:
    Based on Yesterday’s post your BAs must be naked – please correct me if I am wrong as I bought out my callers this morning and need to adjust if necessary :
    “Phil
    February 28th, 2008 at 10:51 am | Permalink

    BA – Not take them out but it’s a good idea to put stops on them if they gain 20% from the bottom.”


  148. xian- don’t feel bad. Had a great time one night playing bumper cars with some “borrowed” golf carts. A long time ago.


  149. lol steve, still loving that SDNK eh?


  150. That’s how the wheel works Xian but I still get a wry smile everytime I see or here some good youthful fun. Oh, and if any of you ever want to know how to flip the governor on a golf cart to full-tilt, you just give me a holler!


  151. EK: Got filled @ .1


  152. DM: well i’ve balanced out the losses with some overnight Q puts so it’s ok right now…they’ll do better if the SOX can ever get back in gear


  153. Phil,
    I have 3/4 – full covers on just about everything right now. Should I be thinking about taking some callers out here, or would you recommend keeping the cover through the weekend?


  154. DIA – by the way, I developed that system when a 300-point drop was considered a catastrophic event, not something that happens when you get up to make a sandwich like it is now… 8-)

    Oh darn, BIDU went red.

    TNX – Check out that trend: http://stockcharts.com/charts/gallery.html?%24tnx Looks a lot like the day before 1/22 guys!!!

    MCD is not that cheap anymore. I don’t usually notice stuff like that but it was more than $20 for just me and the 2 kids which kind of threw me. It would be smart for them to try to keep that from happening (it was due to multiple size upgrades as my little on now wants 8 nuggets) as it kind of hits you over the head when a $20 isn’t enough and pizzas are still $9.99 and I can let my kids run wild in the dollar store and they’ll come out with better toys than those happy meal things.

    NOC calls on BA not getting the tanker deal.

    GOOG $480s at $10.50, I like them because you can cover with $470s, now $14.80, on the way down or $490s, now $7.50 on the way up over the weekend. This is a test of next week’s new portfolio so the set up would be take 10 for $10, and sell 5 $470s IF our $480s fall below $9, then we’ll reevalute.


  155. xian;

    weird to say it mildly,

    childhoodstuff, no, surprised you are not in one of our many prisons, but, of course they are overcrowded,

    your understanding of words: you need help,

    you want any ?

    RMM


  156. I guess that those people did not get the “Window Dressing” memo for today.


  157. Isn’t this where the computers kick in ?


  158. Parchesia, I hate governors. And vandalize golf course equipment all you want. But, don’t vandalize the grass. Especially a green. That is really bad karma.


  159. POT-Bought on Russia rumor


  160. phil
    that TNX chart is spooky. are you predicting a retest of 1/22?


  161. rmm- i’m sorry i ever reminisced- besides it’s not market related (sort of fast money, but whatever)

    and ur offer to help and willingness to censure me is a put off.

    i’m dropping this conversation- mea culpa, sorry if it annoyed/distracted folks.

    MCD- anyone try their coffee? macke said it tastes terrible.


  162. MCD is on my list for long puts. Along with MO. That monthly charts looks tired. At the very least we go sideways and sell premium.


  163. Sorry about this question, did everyone get this roll down to Jun $45′s, the price I see is around $2.20 for the roll, perhaps I just missed the window. thanks


  164. xian (on MCD):

    Consumer reports did a double blind taste test with MDC coffee vs. SBUX and MCD one by a landslide.

    It tastes bad because of the atmosphere. It’s like Wal-mart vs Target.


  165. ORLANDO, Florida (Reuters) – Google Inc has unveiled a plan to help U.S. patients gain control of their medical records and is working with doctors’ groups, pharmacies and labs to help them securely share sensitive health data.

    The company’s long-rumored entry into the highly sensitive field came when Chief Executive Eric Schmidt introduced Google Health at a health-care conference in Florida on Thursday.

    Google said it has signed deals with hospitals and companies including medical tester Quest Diagnostics Inc, health insurer Aetna Inc, Walgreens and Walmart Stores Inc pharmacies.

    The password-protected Web service stores health records on Google computers, with a medical services directory that lets users import doctors’ records, drug history and test results.

    Google aims to foster sharing of information between these services, but keep control in patients’ hands, allowing them to schedule appointments or refill prescriptions, for example.

    “We don’t know how to suck it out of the brains of doctors, but we know how to suck it out of the computer systems of doctors,” Schmidt said in an interview after his speech.


  166. Come to papa, baby.


  167. Coffee – As a former road warrior, MCD is the coffee stop for us. I find it better than at Carl’s. I only do SBUX when in a mall, or if someone brings it in.

    Have not tried the premium coffee, tho.


  168. DOW almost 40 points off the low…comeback?


  169. Okay, I would be buying like crazy stops at LOD. And uncover, obviously. Just to reiterate.


  170. EK – this is getting ridiculous! .70 down from yesterday and still NOT ONE fill at .10!

    BA – mine were naked and recovered yesterday as they failed to break $85 again. They look good for a turn again here and I don’t mind rolling them down or adding to them so I’m all naked again if I can get $1.50 (33%) but otherwise I’ll leave them. XXX

    This is the advantage of trading a stock you really believe in, your worst case scenario is you simply buy more…

    Golf antics – personally I used to go to the course every weekend when I was about 10 and find bags of golf balls and sell them. I had one of those ball scoopers and made a fortune. Ah, wild times…

    GOOG – damn, I missed them! I am so pissed…

    Buyers coming in…

    JB/All – yes, of course take out callers if they stop you out. Anyone you are 35% ahead on, don’t let them go to just 20% ahead (this is assuming you can re-cover later without day-trade issues).


  171. Phil,
    Old $25KP –
    EK – no fill at 0.10
    ERTS – no fill at 1.5 for roll to Jun 45
    I have CY Jun 24 covered full with Mar 24 – should I roll down?

    Thanx


  172. Phil-MCD, I haven’t been to one in seriously 6 years. Thanks for the pricing info.

    RMM-That’s your perspective and you’re entitled to it. I don’t want to live if I can’t have fun and enjoy life and my idea of fun isn’t watching movies and going to dinner and having two kids and a dog with a white picket fence in a suburb, so I don’t think you’d understand even though I respect other people’s property but I refuse to put a helmet on and “be safe” like society wishes us all to be. I’ve progressed beyond simple vandalisms and have now progressed to fast cars and jumping out of planes and cool sh*t. But frankly, I don’t give a damn what other people think about what I do and I doubt Xian does either and from my perspective, you’re the one who needs help.

    Film-Never ever have I ever messed with a green. That’s like a sacred place…


  173. Okay lets look for shorts maybe?


  174. adami needs to shave


  175. he must’ve drank too much last night lol


  176. MCD coffee/atmosphere- that’s what i’ld think: a lot of the coffee experience is the aroma and i don’t think fried lard smell complements a fine hazelnut- whatever-roasted blend.

    anyway- the big story there is international sales of the real menu and that looks unstoppable. the coffee story is just a bear case for US folks.


  177. NYX is really looking tasty. Phil, what do you think about a June 70s half covered with Mar 70s position?


  178. 11:38 EDT GOOG
    theflyonthewall.com: Google’s declining paid click data not surprising-comScore.com
    According to comScore, Google’s (GOOG) 7% January 2008 sequential decline in paid clicks from December 2007 is not surprising, and is not necessarily a reflection of a weak economy. After careful analysis, comScore believes the softness of the numbers are a result of Google’s quality initiatives, which “result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur.” Reference Link


  179. I remember Phil talking about MCD’s atmosphere and they think high schoolers are going to hang out in plastic chairs in rooms with plastic balls. I like MCD but they still need to be realistic.


  180. xian – I must admit that I avoided vandalism as a youth,
    but we did enjoy pranks. Our favorite prank was to sneak into
    neighbors’ garages in the middle of the night and start their
    lawnmowers!


  181. Albo- That’s a great one!


  182. QID $51 puts at $1.85 were $2.80 yesterday so I’m playing these for 20 at $1.85 (.10 off LOD) followed by a roll to the $52 puts for .40, the $53 puts for .40 and a DD so my “goal” is 40 $53 puts for $2.25 = $10K and the $53 puts are currently $3.03. XXX in DayTradePortfolio


  183. how about investing and save your “confessions” of youth for after hours. you are giving me a headache. No offense but I do not want to know your story unless it is related to investing.
    Sorry. Thanks.


  184. Can’t seem to get filled at 1.25 on those NDAQ they have dipped to 1.20 three times but no fills…


  185. parch
    MCD is starting to change. here’s the very first one:
    http://www.laobserved.com/archive/2008/02/nations_first_feng_shuiin.php
    could be better, but a vast improvement by any measure.


  186. Would it surprise anyone if DOW went positive today?


  187. xian

    Okay here’s my youthful confession, when in middle school we went in on the weekend and took apart every desk and chair in our hated Algebra teacher’s class. If you can believe it her real name was Ms. Annis.


  188. I don’t know if this is easy or practical, but couldn’t we have a parallel chat where Phil, et al posts trades only. And then that will automatically get copied into the daily chatter room that we all take part in. Would also create a smaller, easier to catch-up on load on our iPhones. Next to the submit button could be a “Submit to Trade Log” button that would paste here and there.


  189. i’m getting some seriously bad ticks on the RUT on ToS… anyone having this problem?


  190. irished

    Sorry, got caught up in the frenzy.


  191. steveplace yes on rut djx and spx


  192. young entrepenuership- we’ld go around the neighborhood and collect coconuts (w/ permission) and sell them to “el palacio de los jugos” (literally: “the palace of the juices”)- probably one of the oldest hispanic establishments in miami.

    it took forever b/c we’d collect them on bike/foot, then get a parent to drive us and freak load of cocos for the sale (30 bucks was a lot b/t 4 punks)


  193. Steve, I’m having it with the RUT and DJX on ToS.


  194. I switched to looking at the etf’s


  195. I noticed alot of people here lately are in bad moods.


  196. steveplace-
    I am getting bad ticks on many symbols on TOS


  197. iPhone- When I check PSW on my iPhone, I can’t figure out a way to not scroll down the whole way (as opposed to safari where it refreshes in the spot you left off)… At the EOD, there are hundreds of comments. So, it takes like a minute to see the newest comments.


  198. Goog

    Iv’s trading nicely below hv’s I think…

    Has anyone read the new book
    The Volatility Edge in Options Trading: New Technical Strategies for Investing in Unstable Markets (Hardcover) Jan 08

    He talks about how critical the study of volatility is to options trading
    I think this book is a must!


  199. Bailed on Mar 130 position for now. Just got nervous. BIG position.


  200. looks like Energy is recovering and Technology continuing to slip. Is that right?


  201. OK- that’s it- really, i’m sorry people…only relavent market talk from me, i promise.


  202. As things seem a bit slow …

    A couple of you mentioned the options books by McMillan as being pretty goood.

    He seems to have 2 that are recommended – Options as a Stragtegic Investment and McMillan on Options.

    Anyone have an opinion as to whether one is better than the other ?.


  203. get back to trading,

    xian started this,

    pick up golf balls like Phil,
    find out the difference between a pranck and vandalism or what p says simple vandalism,
    you DO NOT respect other people’s property,

    on one point you are honest: you don’t give a d about others.

    wonder whether you ever need other’s and society’s help ?
    you should not get it

    RMM


  204. Windy-Wow, where is that? Not quite the answer but it’s a heck of a start.


  205. NYX- i think it’s destined for 60ish, but i’ld start to buy now if i had no position.

    besides, 66 vs 60 is just 11% and that’s not too hard to stomach for a LT position (1-2yrs)


  206. QID puts getting cheaper and…


  207. ROOSE – Oddly enough I have that book on order. Should be interesting and hopefully relevent.


  208. One thing I don’t mind visiting MCD for is the $1 Redbox movie rentals.


  209. parch
    somewhere in LA


  210. Play nice man, you don’t even know me!


  211. Financials crapping out again


  212. have some good books on options but after market closes, if you want. there are different level of books available.


  213. QID I took a few at the top of day range… it’s just money.


  214. I can’t solve today’s riddle on the markets guys so i’m out. Enjoy the day and the weekend!


  215. By the way, it is critical that daytraders follow general rules (once we pass 20% profit we set a trailing stop at 20% OF the profit) as there is just no way I can communicate every turn of every move.

    In the case of GOOG – once I miss a bottom call I don’t chase and, if it comes back to my price, I very likely don’t like it any more as it showed me weakness I didn’t want to see. This is why chasing is not usually a good idea.

    TNX retest – it’s a possibility, I am sure going into the weekend adequately covered with index puts. If we pop up Monday I’ll miss it but I think I can live with that vs. the alternative. It’s very important to remember that if I half cover my calls I’m still 1/3 covering the open calls with index puts (more or less on a dollar value basis) even when I’m pretty bullish. 20% would be the least and 50% is pretty damn bearish.

    MCD – I haven’t even been tempted to try thier coffee. They will get a fan base but I took my kids to MCDs and walked right over to SBUX and stood in line for a coffee that cost more than the food I was complaining about the price of…

    Taste test – you could test Chateau Lafite, Opus One and a Gallo box wine in most of this country and the box wine would win but what does it prove?

    Speaking of tests, that was one lame attempt at a rally, changed my mind and killed QID for a dime loss. XXX


  216. The MCD in question is in a “new” section of LA. Probably tons of McMansions and Costco’s in the area.


  217. Good idea Pachesia, this is uncallable!


  218. I would consider covering up here, especially if you can daytrade those covers. Feels like a weakening.


  219. Re McMIllan, the shorter title is less technical. Read both!


  220. Phil, it would prove that they are underestimating the potential market for boxed wine. Great boxed wine in Chile called Gato Negro and Gato Blanco. Would sell like crazy at Trader Joe’s.


  221. RIMM-Bought back 1/2 calls.


  222. Someone said Buffet is releasing a paper today? Let’s hope he doesn’t tuck tail with Jim Rogers and head for China.


  223. parchesia you are going to miss a nice rally


  224. xian:
    now you are talking trading:

    what is basis for your “thinking” that NYX is destined for the 60s?

    I have LEAP jan09, at 65strike, do you approve ?

    RMM


  225. Phil – Any thoughts about NTRI down here? I’m thinking that
    it may have been punished enough. I know about Alli and its
    possible impact, and the lowered guidance for ’08,but the stock
    looks awfully cheap to me.


  226. RE MCMillan once more. Recommend you purchase “Study Guide” for the 4th Edition of Options as a Strategic Investment” It structures your perusal of his main text. Not what I would call light bedside reading, but if you make it thru, using the Study Guide you will at least know a bunch more about options. Doesn’t gaurantee you can Trade, but……


  227. Filmflam

    I don’t know if this is easy or practical, but couldn’t we have a parallel chat where Phil, et al posts trades only.

    I agree and wish the none-trade/ non-investment stuff would NOT appear here.

    RMM


  228. FWLT – If I had more balls I’d take a shot at this level. Seems to have found support after earnings miss. Dow down 330 in two days and still two green candles…


  229. Oh, and sitting on 200ma


  230. MCD Feng Shui -”HACIENDA HEIGHTS, Calif., Feb. 13 /PRNewswire/ — A local McDonald’s restaurant recently unveiled a one-of-a-kind Feng Shui-inspired design, the nation’s first. The restaurant, located at 15628 Gale Avenue, blends classic architecture with modern Feng Shui…”

    Predominately middle-,upper-middle class Mainland Chinese neighborhood. Use to have clients for the bank in that part of town.


  231. In AAPL Mar 130 puts at 4.05. Looking for a closing of the gap, but will dump half the position if we get halfway there at 125.


  232. Al G – FWLT does look interesting.


  233. RMM, sometimes, the only fun I have all day in the market is in this room, so I would be very unhappy if this went away.


  234. Filmflam
    What happened to 126.50


  235. Phil,

    What is your general take on today’s correction. Do you perceive this as a start of downturn or just noise.

    I know it is impossible to know but i just wanted to get what is your feeling about today’s action?

    Thanks


  236. Apparently Vegas Police found a bag of Ricin. 1 pinhead of that stuff can kill ya. Glad I am back from Vegas, who knows what that stuff was intended for with all the AC units out there and tons of people in the Casino’s….

    http://www.cnn.com/2008/US/02/29/ricin.hotel/index.html


  237. Phil
    what’s up with the FRE Apr 30′s been watching all day, then 5000+ Apr 30 calls at .90?


  238. RMM you mite consider a name change to ‘Santimonious Blather”


  239. MCD-Tried the coffee last month on the way to Mammoth, had to throw it away. I am sorry, but this is not coffee. I like MCD as a company, but it is not that easy to make good coffee. Looks like everyone wants t do it now.
    Red Box rentals-$1 is cheap, but where is the convenience? I hate returning movies, I hate waiting in line for the machine to be available, I hate having to hurry-up because someone is waiting behind me. You can now get a movie on Apple TV for $3.99 instantly and you don’t have to return it.
    Let’s say you are being paid $15/ hour, that’s what your time is worth. So you spend $1 for the movie, but then how much time to you spend driving to the place, parking, waiting in line for the machine to be available if someone is using it, getting your movie, then driving back there to return it etc..
    Won’t you spend at least 30 minutes more than renting the movie from your living room? That’s $7.5 to add to the cost of your movie. Add gas to this and you are easily paying twice the price you would on Apple TV, without the convenience. And that’s if you return the movie the day after!
    And this is from the guy who first introduced movie rental machines in the US. I brought the concept from France in 1998 and owned 8 machines before I sold the company. It is working real well in Europe because you can rent porn without having to talk to a clerk.


  240. MikeE, 126.50 or so may hold, but I didn’t like the sideways move then drop. Will be happy to get whipsawed a few more times, but was just a culmination of gut feelings and looking at up and down volume on ATM puts and calls.


  241. Oooops, I have to buy more AAPL.


  242. Lo & behold


  243. RedMountainMan
    February 29th, 2008 at 11:55 am | Permalink
    get back to trading,

    xian started this,
    pick up golf balls like Phil,
    find out the difference between a pranck and vandalism or what p says simple vandalism,
    you DO NOT respect other people’s property,
    on one point you are honest: you don’t give a d about others.
    wonder whether you ever need other’s and society’s help ?
    you should not get it

    RMM
    RedMountainMan
    February 29th, 2008 at 12:13 pm | Permalink
    Filmflam

    I don’t know if this is easy or practical, but couldn’t we have a parallel chat where Phil, et al posts trades only.

    I agree and wish the none-trade/ non-investment stuff would NOT appear here.

    RMM


  244. S puts-Sold another 1/4. Just beautiful, this stock is dropping 10% per day.


  245. Optrader – Netflix is the way to go!


  246. I disagree that a separate “PSW Trade feed” would be practical. With all of the reasoning/rationale/clarification that surrounds almost every published entry/move/adjustment, how would you (we) know when to post into the parallel universe? Some of us barely can get the time for politics right.

    That, and a lot of flipping back and forth between windows/sessions. Technically quite possible, but impractical. And how would you propose looking back a week or “a month’s worth of posts”?


  247. Opt, hold on. I need it to a bit lower. First you start buying, then people follow you, then Phil says, ok lets buy some more, then what am I to do with these puts? 8O


  248. Albo, I still have my Netflix account, but I am ready to drop it for Apple TV. The selection is real good on Netflix but “Watch now” does not work on now and I really like the convenience of just buying something and watching it right away.


  249. Sakiko, there would be no flipping back and forth. The trades would be posted in this window as well. The other window is just for checking out what moves Phil and others were making.


  250. Rider,

    Maybe someone knows something about a capital requirement easing for the GSE’s?


  251. Film, sorry but I could not resist. Just following my strategy of buying all dips. It might go lower though.


  252. EK/ERTS no fill – so it didn’t fill, maybe you get a better price Monday…

    CY – I’d take that cover off down here. You can roll down to the $21s for $1.30 and I’d do that since you made $1.20 on the caller. No reason to cover if you don’t mind rolling and then covering if it keeps going down but $19 was the lowest it went and that’s a BUYBUYBUY price on those guys.

    “my idea of fun isn’t watching movies and going to dinner and having two kids and a dog with a white picket fence in a suburb,” – Well that about sums it up for me! 8-(

    NYX – I wouldn’t go in until next week, if we have a nice crash, they’ll go way oversold (past where your caller would protect you), if we recover and they move up – you get to sell more expensive calls.

    IPhone – one of the things I want to get done is to have a reverse chat format so the chat box is on top followed by the latest comments first in a clean screen (no post) for mobile people.

    Book sounds good Roose.

    Energy, bounce off resistance, no recovery. Same can probabaly be said about the markets. Financials testing 2-day 5% rule.

    Student loans being suspended!! Holy cow, what a mess that’s going to be.

    Hmm, QID puts still tempting and still $1.80, Qs held that 43.20 line since the big volume spike just after 10 but I got a bad taste from that last exchange so I’m staying out. This is one of those days where I should just buy and sell 1,000 blocks of the Qs to scalp nickely – check out the channel between 43.20 and 43.35, you can buy $43s around $1.27 and sell for $1.33 over and over but now it looks like we may break up so I’ll pay up $1.30 for 50 and offer $1.24 for another 50 and hope to catch some before they break $43.40, where they should get a little pop.


  253. FWLT – up a buck already!


  254. Phil,

    Have you entered TM today?


  255. BBD

    Bad moods, I’ve noticed that. Must be they aren’t Lakers or Celtics fans.


  256. Phil-( iPhone)- That would work perfectly


  257. Thanks Phil


  258. Filmflam – Hmmm. So do you see that as a “post here, post in there” thing, or as a “post here, somehow it gets there” (into other window) thing?


  259. wife works for a major bank, says cash advances against credit cards and credit card applications unusually high


  260. man, this is a booorrrrrrinnngggg day. if it wern’t for the erudite discussions on golf course etiquette it would be no fun at all


  261. Rider – FRE

    Note that there is also a 10,000 contract position of April 15 Puts. Strangle setup?


  262. Russm

    I remember in the late 80′s when I lived in Danville, CA and a friend worked for Citibank. She indicated that people were taking cash advances to pay their mortgages until they got paid and that many of the new homes in the area had only a few rooms furnished. I wonder how that area turned out.


  263. Sakiko, yes, a “post in here only” and “post in here and trade record.” You couldn’t just post in the “trade record.”


  264. Mark- SPX at 200MA- Time for one of your prescient calls. Including where we close please.


  265. CBTC – Yeah watching that also


  266. By the way, if you want to be a better day trader than me, skip the first round of every play I make and only take the ones I keep after. I wish I could do that myself but it never seems to work if I don’t put my first placeholder down (too many things to keep track of whithout worrying about phantom entries).

    I consider this report on Subprime to be a positive. $400Bn losses, ONLY 50% hitting US lenders. So what? It’s a $14Tn economy, we can’t take a $200Bn hit once every few years? That’s like dumping your portfolio because you lost 2%.

    Buffett – My assumption is that he and I are on the same page where he will say this subprime issue, though grave, is much ado about nothing. I’m only worried that he will choose to spin it down as he’s still looking to swoop into the muni bonds and it’s not really in his interest to talk up the economy. On the other hand, I don’t think he’s capable of lying and certainly not to his investors so it could be a big upside surprise from him. Of course if he turns into Alan Greenspan he could personally knock 500 points off the Dow at the open on Monday…

    There’s round one filled on the Qs, let’s see what’s next.

    Moody’s affirms AAA IFIFIF ABK gets the financing – that’s good but not great.


  267. N0w 12,000 on the FRE Apr 30′s. Phil, what’s up??


  268. Albo, NTRI

    It is ridiculously cheap down here and the news after earnings has been all negative so I think they are a good play. Short interest is huge so it could be a great squeeze. I played them prior to earnings and sold out when it got up to $29 the first week in Feb so the guidance doesn’t justify a 50% haircut.


  269. Filmflam – I see. That concept would work pretty well realtime, methinks. I’m trying to get my head around the history readback.

    Maybe one of those open-source guys could write something for us and donate it in this era.


  270. Aussi997- not what I wanted it to do when it got there.


  271. About this credit stuff: My friend makes $200k/year, his wife makes $90k, they have been trying to get a loan for $150k to add-on to their house and they just can’t get it. Most lenders don’t even return their calls. If this kind of people can’t get a loan, who can?


  272. AAPL – legging in to new postion JUL 125 long. Only 3 contracts so far


  273. What was that word we used last time – sellers are persistent ?

    Bad Moods – Not one attempt at a rally today. My callers are valiantly helping but its not enough. Sadly I still like my positions and believe I’ll make money two months down the line. But when every day is down and every day I recheck and still lose then yes a bad mood results.

    Even Bidu not helping now.

    Last day of Oracle’s quarter – needs a boost.


  274. CBTC – Lets see what happens, still hanging in there.


  275. Gotta step away. Flattened out. Be back in a while. Take a look at the trendline on a 15 minute chart from the highs of 2/25 through the highs before the gap. We are just about to drift back to that trendline which could very well act as support. I think 126.50 +/- will end up holding. At least there seams to be some good confluence of support there over the next few hours.


  276. X – holding around 109. Tentatively dipping my toes in the cold, cold water.


  277. Took out Apple callers, will recover at close. Generally looking for a bounce here.


  278. Optrader – I’ve heard the same lament of many people in my hobby who want(ed) to buy new homes very recently, thinking it was cheap and there are a lot of builder incentives. They can’t get a loan and the household income spectrum runs from +/- 100K from your friend.


  279. Fred- Danville, are you kidding? A desirable and expensive district in the East Bay, serious commuter home base? The areas “near” the Bay Area having overbuilt problems are Stockton, Modesto, and Elk Grove. That’s 2+ hours of driving from the Bay Area work markets proper.

    Danville is part of a group of towns maybe 15-30 minutes from major work centers, and far as I can tell no slowdown in the economy in that area.


  280. Straddle spreads.
    Suppose I do not want to commit to directional trades right now (in my Roth account, e.g.), and would be happy — very happy — to get 5%/month consistently in this market.

    Assuming I competently manage the trade (stopping out of short legs that get ahead of me, rolling as needed, etc.), is there anything better?


  281. Optrader

    Credit crunch

    Where are they geographically? Is it because it’s a construction loan? I just don’t see this in the Boston area. Not that they haven’t thought of this in all likelihood but they should join a credit union like http://www.dcu.org , plenty of cash available and anybody can join for $5.


  282. Goog flying up – what’s up?


  283. Trade only chat – too dull for me, I’m not a stock picking robot and I’m not going to one place to chat and another place to trade.

    My take on the market is the same, it’s all just the same $400Bn of sub-prime losses and the same 20% drop in housing I predicted 18 months ago when everyone said the Real estate bubble would never pop. What’s shocking to me is how long it takes people to come around to the same conclusion and it messes me up because I assume other people must see this too and I’m surprised when I see a reaction to “old news” this late in the game.

    FRE breaking up nicely, AAPl moving, QIDs breaking down, GOOG flying!


  284. cnbc talking about GOOG
    weak info was misleading


  285. AAPL callers- undecided myself, on onehand weekend time decay, on the other Buffett. Leaning towards buying back


  286. That was an awesome GOOG spike!


  287. GOOG green … what’s that ??


  288. k1

    That was a reference to what was happening in the late 80′s into the early 90′s, not today. I do wonder if this area is struggling. I lived in both Danville and Walnut Creek between 1989-1995.


  289. comscore website has the info


  290. +1 on the double posts for Phil’s (and eventually other’s) trades; we still get the nice, long and sometimes too politics-passionate :) main page, and on the same time make it easier to keep track of posted trades.

    From what I can see and what I have read, all the ingredients for such a change are already on the system, so it shouldn’t be that difficult to implement it…

    (Reloading several hundred KB on a small device is not fun, and sometimes depending on the device, surrounding light and slightly changed view angle, the blue color becomes unnoticeable making it that easier to miss certain post)


  291. Bidu following GOOG ??


  292. 40% return on goog Mar 480, I’ll take it.. -Peter


  293. GOOG up on the CNBC annnouncement of the comsscore thing we’ve been talking about for 3 days as an overreaction.

    Tempting as it is you can’t buy into a GOOG rally like this, you end up way overpaying.


  294. Eric – you don’t like the PSW LTP strategy? 16-20 trades a year, 10-20% a month, occasionally more… ?


  295. ok, here’s the goog article
    http://www.comscore.com/blog/


  296. what’s your guys’ opinion of AMZN: unfairly oversold or justly and just very overbought last year?


  297. Fred- you were in the Bay Area at that time? Me too. Lived in tiny apartments in SF during the early 90s slowdown. Sure wish I’d bought the little house around the corner from my apartment then, at 430k.


  298. i think with any reasonable amount of market strength at close that Aapl closes green


  299. Seems like nobody has a problem getting money to buy Iowa farmland at record prices. The 9 counties around me averaged 20-27% increase in price last year. Mostly doctors and farmers with land bought at much lower prices are buying. They are still having a hard time raising money to build all the ethanol plants they want to though. Livestock farmers having hard time with high grain prices.


  300. sakiko,

    I love the LTP strategy in principle, and read the updates every week, but all those long calls and call calendars are too bullish for me at the ‘mo.

    For instance, when I bought X calls a few minutes ago, I felt soiled. Unclean. I keep washing and washing my hands but it doesn’t help!

    Seriously, rightly or wrongly I can’t share Phil’s current enthusiasm for the market, because I suspect we are entering a nasty long bear, and I will trade a shot at the big bux for the ability to sleep at night. At least in my Roth.

    I have 20 years to go in my Roth. 5%/month would make me very rich, but only if it were consistent.


  301. Phil,
    BA Mar 85s:
    I am Assuming it is 1/2 cover again?


  302. Google-GOOG: comScore issues clarification on Paid Clicks-CNBC
    comScore says it has no evidence of slowdown in consumer clicking.


  303. QID puts – took some small profits. Like they say: picking up pennies in front of a steam roller.


  304. Eric, when was the last time you were bullish?


  305. k1 and Fred,
    SF Bay Area: Housing supply is limited, demand for penninsula communities with good schools is strong. A friend is trying has been trying to buy a 3 bedroom home in Palo Alto for the past six months, but refuses to bid 100K over asking to compete with other offers. They are seeing multiple offers, and homes have been selling in one week. Outlying areas, particularly Fremont, are not doing well. I don’t know much about Danville.

    I tried a 3-day free trial for foreclosureradar.com that overlays homes in foreclosure on a google map.


  306. FRE – done at $1

    Ricin – must be way overblown as casino stocks are recovering.

    ERTS came off the floor nicely.

    Picked up 10 GOOG $510s for $5.60, will sell 8 $500s to cover if we can’t take out $480.


  307. hi
    I have June PCP 110 calls. does it look like a good time to sell the mar 110 puts against it.


  308. Just rolled C Jan10 30′s to 25′s for 1.83.. Not quite the 1.75 Phil target, but I’ll take it. -Peter


  309. Film, July of last year.


  310. GS not confirming rally so be careful.


  311. I’m thinking maybe SPY 134.07, for fun.


  312. RMM/NYX 60ish- i get that idea by lookinf at long term charts. it’s been resistance and support before- also some consolidation in the lower 60s.

    after fooling around, i’ve settled into JAN10 70s.

    i just think it needs to trade at 60ish to complete this downtrend channel that began when cramer started pumping it on mad money (JAN07).


  313. I led a PW project for Alameda County in the late ’80s (Windows interfaces for legacy data). Lived in Piedmont for the two year duration. Danville was pretty cute at the time; just one strip mall… Not long ago, was on the 580 in the Pleasanton area. My Goodness. I thought that it was bad before. Kind of glad that I’m out of traffic.


  314. CNBC-Boy I have been watching to long. Do you remember when Bill O’Neil the guest worked at CNBC. WOW he looks old


  315. TM – I paid up $11.80 for the ’09 $110s

    GOOG – decided to strangle with $450 puts


  316. Singapore Steve.. I wouldn’t sell puts against your calls.. Well, actually you can’t sell puts AGAINST calls.. You’d be selling them naked, effectively going more positive in the underlier.. If you want to protect yourself for drops, you’d be selling Mar calls against your June’s. -Peter


  317. Jone- I believe what you describe is the case everywhere. Continued demand for housing in nice areas where people want to live, and low demand for houses in newly-built areas without easy access to schools, grocery, work, etc.

    Same thing holds true around Sacramento, and from my recent trip to S. Cal, down there as well. This is why I don’t think we’re going to see a housing “crash”, people still want to live in nice places.

    In fact, I’m wondering if some of those poor suffering folks in the Southeast might tire of tornados and decide to move to nice, sunny N. Cal.


  318. Sellers back from lunch on the stroke of 1.30.


  319. Fred, they live here in L.A. Lenders are saying that they don’t have enough equity in their house (100k). This is crazy considering how much money the make.


  320. NYX-DOG IMO


  321. Anyone got any theories on why RUT is being so funny today (looking at the chart on ToS). Lots of candles with a low in the high 69 range.

    Some rich guys idea of a funny prank? LOL


  322. Then I would say your intuition might be a good contrarian indicator. Although a retest lower would be easy if we get a breakdown early next week. We are just a whisker from breaking back below the original downtrend of the triangle on the DJIA and SPX, and NAS looking like it wants to plummet. I hope it doesn’t though.


  323. opt/friends’ loans- that’s crazy. i’ve read a lot of regional banks r the ones in trouble, so they’re the banks getting super tight on lending.


  324. Jake.. bad data on RUT and VIX today.. drops to 75 and 4 respectively, both obviously faulty.. but that screws with systems that don’t filter them out. the charts on BigCharts for them are both silly..

    http://realtime.bigcharts.com/custom/etrade-com/power/chart.asp?style=1948&size=1&time=2&freq=6&uf=0&lf=1&type=2&ma=0&maval=&symb=RUT

    -Peter


  325. I bet they could get a loan to tear down their house and plant corn.


  326. hmm SPY hit 134.11… Interesting. Though not close enough, I would like 134.07.


  327. GOOG-I posted the article about Comscore at 11:40. Nobody reads my posts :(
    Unfortunately I did not act on it, was well before the spike.


  328. Optrader, they just scan your posts for “bought” and “sold.”


  329. NYX- is indeed a dog. it’s painful really, but i got in w/ shares in the fall of ’05, so i have a tolerance for it’s dogginess.


  330. Film, it was no special market intuition (assuming you were referring to me). Last July was when I started paying attention to what had been going on in home lending, after my stock accounts took a tumble. It was what I learned that made me bearish.


  331. EOG. I think the egg has cracked, covering yesterday’s speculators with oily slime. :)


  332. AMZN puts-All out for now.
    RIMM calls-Full position now


  333. Eric – Wash those hands and sell premium to dreamers (like me from time to time)!


  334. Opt – RIMM on the daily chart is a bit below the 5 day MA. I believe this is usually a sell signal for you. How do you see this one? Thanks


  335. DM – u get you price yet on SPY ha!!


  336. good, just got filled with EK.

    Now i just need my good friends at HPQ to buy them out…


  337. hmmm it touched 134.09… 2 cents away from my target… Interesting.


  338. RIMM-I am playing a bounce on the support of the bullish flag. If it does not bounce then I might close the position by EOD.


  339. ah there’s my 134.07 mark.


  340. Aussi997- looks like the 200MA worked again for now. We need another Gasparino Friday afternoon rumor.


  341. Isn’t THIS where the computers kick in ? DB is still wondering


  342. CB – Yes we do!


  343. yah Aussie!.. heh maybe one day I can drive a car like yours!!!… If we ever meet, you give me a ride, yes?


  344. GOOG – rolled down to $500s for $2.20 so I’m in for $8, now $6.30. Goal is to spend $2.20 5 more times (whichever side gets a cheap roll) until I’m in a strangle for a total entry of $25.

    FRE strangle is a good idea, as is a Dow strangle, we could go either way.

    BA – we still assume they will get the deal and head up, despite this depressing move so yes, 1/2 cover.

    Boy that 250-point move in the Dow is a magical number.


  345. Rutterfly,

    Looks like a good opportunity to buy out a caller or two down here around $14.50 and sell it back on a bounce.


  346. Dm – For sure, you got it!!!


  347. sakiko

    A good friend was an attorney for Alameda County and lived in Piedmont. What a great area and the weather…


  348. Phil,
    Old $25KP-

    ERTS – Since I am not getting the roll to Jun 45, should I leave it naked since it seems to be holding nice OR should I cover with Mar 50?

    SNDK – I have Jul 25 covered with Mar 25 (8/5). Should I roll down to Jul 22.50?

    Thanx


  349. Been out for a while so just checking for sure – is this really the end of the world as we know it?


  350. CNBC- 5 PM Eastern- announcement of tanker contract.


  351. Jone,

    My brother-in-law works at Stanford and rents since he can’t afford Palo Alto. Many of the houses are tiny little shacks for $1 million +, one he looked at had a dirt floor in one of the rooms. It was $840,000.

    My brother went to grad school at Stanford and lived in East Palo Alto, (drug capital of the west coast at the time). I feared for my life when I visited him.


  352. looks like setting up to be a 300+ day? I always thought the magic numbers were 230, 270, and 320. That’s where it seems to go a lot of the time.


  353. Phil – “Took out Apple callers, will recover at close.” Recover with what?


  354. Breaking out on the downside of the triangles ? (Dow,Nas)


  355. Phil,

    On the RUT butterfly, do you think it’s a good idea to buy out 700 callers out on this dip and then re-enter next week?


  356. AAPL – added 2/3 cover to JUL 125 long


  357. ceo of ckp bought 50k shares, $1.2 million, at 24.06, probably a good one, bought some, though the usual problem of the market dropping is not helpful…


  358. MER research highlights-

    US Economics

    Secular shift toward savings

    Much more conservative lending policies lie ahead
    A secular shift appears to be under way in terms of how borrowers and lenders
    will treat the demand and supply factors for credit in the future. The parabolic
    surge in household debt during the past five-to-10 years in particular has left
    consumer balance sheets extremely stretched and financial institutions facing a
    relentless wave of delinquent loans and capital impairment. For borrowers, the
    need to rebuild savings will be reinforced as baby boomers intensify their
    retirement-planning efforts; for lenders, the trend toward re-intermediation (onbalance-sheet lending) and away from dis-intermediation (structured product
    financing) means that banks will be forced to limit their credit extension to the growth rate in reserves. Shifts in how the rating agencies grade new debt, with better scrutiny of credit risks, will also heighten the trend among financial institutions toward much more conservative lending policies in the coming years.

    One of our major macro themes is “the need to get small”

    Part and parcel of “the need to get small” is a contraction in both the demand for and the supply of credit. That has profound implications for interest rates, inflation, economic growth and corporate earnings. As we see it, the implications from the debt-repayment savings process are uniformly positive for high-quality investments (notably Treasury bonds), defensive-growth sectors such as staples and health care, and reliable dividend growth and yield.

    A sea-change is taking place

    Few economists, strategists or analysts seem to be factoring new attitudes
    toward debt into their models. Even so, there are signs that a major sea-change
    is taking place. Surveys indicate that household demand for credit is pulling
    back significantly despite lower borrowing costs. The multi-year surge in
    homeownership rates is now reversing course as households shift back to the
    rental sector. People are driving less in the face of punishingly high energy
    prices, and they are cutting costs by extending the life of their cars. And
    consumers have cut back their spending on discretionary items to make room
    for gas, food, and pharmaceuticals.

    A contrarian’s positive
    In contrarian fashion, all of this is a positive development because, in order to rectify a problem, there has to be a realization that a problem exists. If, as we expect, the solution lies in a more prudent approach toward credit and a
    renewed focus on savings and balance sheet quality, the economy and financial
    system will be in much better shape heading into the next economic expansion
    and bull market. For a detailed discussion of this topic, please see our recent
    report, “Secular shifts – away from debt and towards savings” (Economic
    Commentary, 25 February 2008).

    The most intense housing deflation ever

    The economy is working through the most intense housing-sector deflation on
    record. December’s Case-Shiller home price data tell the tale. For the eighth
    consecutive month, none of the ten major metro areas posted year-to-year
    home price appreciation. Looking at the 20-city composite, only three cities had
    year-to-year price increases, and even they are on the verge of going negative.

    Real estate deflation will weigh heavily on PCE

    Real estate deflation and its corrosive impact on consumer spending will trump
    any upward pressure from higher commodity prices brought to light in the recent
    producer price report, in our view. Home price deflation accelerated in the fourth quarter and, if it continues at this pace, $4 trillion in housing wealth will be wiped out in 2008, as will $200 billion in consumer outlays. This is a serious headwind for consumer spending. The negative housing wealth shock represents a potential 2.5 percentage point haircut from PCE over the next several quarters. The $105 billion in fiscal stimulus will not be nearly enough to offset this, even if it is completely spent (a highly unlikely outcome, in our view, in light of the mountain of debt that households still face.)

    The Fed will minimize downside risks

    There was not a lot of “new news” in Fed Chairman Bernanke’s semiannual
    testimony before Congress, but he did stress downside risks to the economic
    outlook and seemed to still think that inflationary pressures would subside in the coming year. In our view, the Fed is going to do whatever it takes to minimize the downside risks to growth despite the clouded near-term inflation backdrop.


  359. fred – Yes, those were pretty good days… My contract included the housing ;-) You could barely ask for a better area, as I worked off Lake Merritt.

    Strangely, a lot of County managers I had to routinely touch base with lived within walking distance, so it was great for impromptu after work – or weekend meetings when I wasn’t flying home to LA.


  360. I read it Opt, thanks very much for posting it. Don’t worry, no one pays attention to me either, it’s what I said was going on when the Comscore data first came out. Remember the morning I had the raw data and interpreted it as positive? That was pretty much the right thing…

    Doesn’t matter though, Apparently this was meant to be a down market day and down goes the market no matter what. Will be interesting to see what GOOG does over the weekends discussions.

    So now the question is how much am I willing to be naked on my $8 $500s for? I suppose if I get + $4 for the puts I’ll take them off and risk the $500s….

    ERTS – Over the weekend from the $50s I’d sell 1/2 the $45s.

    SNDK – Roll down if you get a good price, sure!

    LOL, should have shorted when I gave up on the QIDs – too many conflicting feelings…

    AAPL – covered with $125s at $5.90 avg


  361. “dirt floor in one of the rooms.” – Ha, all the better to grow that corn in. Or maybe they grew something else?


  362. Arindam,

    Rutterfy – I’d also like to hear Phil’s perspective on this.

    My vote – no way do you carry the 680/720 calls through the weekend naked, especially since a big part of this strategy is sucking the premium out of the caller and there’s no telling where Monday will go. Buy back one and then sell it again when RUT gets back to 695+. If you can pick up $7.50 on that round trip, it makes the position effectively zero risk.

    Just my 2 cents.


  363. “dirt floor in one of the rooms” – hey, I rented that place for a while.


  364. OK, a bounce would be nice now.


  365. $VIX HOD @ 25.88 up nearly 10%- is that close enough to the apocalypse for you Phil? LOL


  366. Who is in charge of the rally word this week? Someone pull it out soon


  367. AAPL-$125.80 is very important support.


  368. Opt,
    Opt,
    Is it possible that the Bank probably is expecting their (your friend’s) equity to be wiped out in the coming months? And of course they are in the habit of swinging the pendulum to the other end as easily…


  369. Rally word this weekend is “Greenspan in accident, unable to speak for 6 months, say doctors”…

    Come on die AIG, my condor is even, but one more pull down and I can close it out for a profit


  370. GOOG-Bought some calls. Small position


  371. Well, we’re really moving now…just not in the right direction. WTF?


  372. I have posted in the past under Alex but now we have a Alex from Germany, so I will go under MCA.

    Opt, at what strike price did you buy RIMM – 110?


  373. Selling still relentless

    Abracadabra


  374. No stopping the GS/LEH/BSC/C box..all at their lows.


  375. AKAM calls-1/3 out. Crazy!


  376. Rutterfly – I would not want to turn it into a weekend risk. Monday morning I would say yes if you can afford the risk on a good dip but we could open up 150 or down 300 on Monday and I couldn’t possibly tell you which. From a purely academic standpoint, we are up almost 50% on the $700 caller, it shouldn’t matter about our own positions as they were trading vehicles anyway and, if necessary, we can roll them down or up and adjust them to fit a new caller but that is just not practical for small portfolio players. Meanwhile, none of this alters my $700 target for the end of the month.

    Keyser’s idea of buying back 20% is fine if you are the daring type. If you end up having to resell at $10, your loss is simply $400 per contract but if the play goes well, your gains outweigh it.

    GOOG holding $472 would be nice but there is no real volume conviction to it so far (but there was huge volume on the spike). On the whole, this is not a heavy volume day which makes sense as there are simply few buyers willing to risk the weekend.

    AKAM still going up.

    VIX – It’s god if it spikes up as the market goes down but bad if it’s lower than it was last time the Dow was at this level.


  377. XOM Puts are saving my ‘long and wrong’ AAPL today. Not counting a snapback out yet.


  378. Phil,
    Old $25KP – “ERTS – Over the weekend from the $50s I’d sell 1/2 the $45s.”

    In my account, I cant place credit spreads. My option level does not permit that.


  379. primus- ditto, i love QIDs


  380. RIMM-106.62


  381. Bidu having is “umpteenth” attempt at green.


  382. AKAM
    theflyonthewall.com: Limelight Networks-LLNW loses Akamai-AKAM patent trial – Bloomberg
    Limelight was told to pay $40M to Akamai in the patent case.


  383. CBTC – been out, just quickly checking in saw your question. Hell if I know!!! LOL

    Kidding, pull up a 7 day 15 min chart of spx with 13 ma (close to the same as 200 min sma on 1min tick, obviously not perfect). NIce rounded top since Monday, looks like floor at 1330 from Friday mid to late afternoon). Plus we’ve already broken thru all pivot support levels (1,2, and 3).

    You can look for a spike to close close to 1340, but currnelty trend is DOWN.


  384. ATW-eyeing after sale at $99 yesterday. Oil only down .70


  385. Phil,
    SNDK:
    1/2 out at new avg price after DD applies – correct?


  386. Pimco’s Gross Plans to Buy Subprime-Casualty Assets (Update2)

    By John Glover and Gavin Finch

    Feb. 29 (Bloomberg) — Bill Gross, the manager of the world’s biggest bond fund, is taking advantage of slumping prices for “high quality” assets as financial companies sell holdings to stave off default.

    Gross, 63, chief investment officer of Pacific Investment Management Co., a unit of Munich-based insurer Allianz SE, is planning to invest in municipal bonds and mortgage loans, he told reporters at the Allianz Global Investors annual press conference in London today.

    There’s value in “assets that are regurgitated into the market place at prices that are more attractive than we have seen in decades,” Gross said via video link from Newport Beach, California. “We’re moving into assets that have been unwound and sold without discretion. There are tremendous hedge-fund unwinds of municipal securities.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ajpLYo2xv9v4&refer=home


  387. LOL, that’s funny – We have 3M prisoners and China, with 1.2Bn people, has just 1M – that’s 1:100 Americans in jail vs. 1:1,000 Chinese. That’s amazing!

    ERTS/Davin – That being the case you are better off rolling and selling all. Too risky otherwise in a small portfolio.

    SNDK – absolutely 1/2 out if we get even, this has not gone well. The closer you are to expiration the less money you should be happy with. ie – March contracts 20%, Apr 30%, May 40%… Making 10% a month is huge money so if you have an ’09 position and you are up 100%, not taking it off the table is just stupid. Of course you can take a “new” position with less risk but once you have 10% per month profits – lock them in!


  388. ok – probably overthinking this but… took off BA covers for small gain. Added 5 BA MAR 80 puts and 5 MAR NOC 80 calls. I think NOC win would be huge surprise and calls will outrun puts. On the other hand, if BA loses then you would expect some down reaction but NOC probably will not move much. Also, if BA wins and doesn’t move up, then it’s safe to put back the covers


  389. prison population- its a farce. just weeding out the folks w/ no money- and its called “criminal justice”

    orwell was a genius….


  390. Qs-Support at $43?


  391. K1

    Thanks for your response post yesterday re my 5% rule question. That helped a bit.


  392. Phil,

    We DD on SNDK on the new 25k. Should we 1/2 out on this, if we can get out even? Thanks.


  393. When it goes down, it’ll go down. Short on!


  394. malai – 2:31


  395. CNBC

    Love that, the grocery store clerk could teach our politicians a few things.


  396. Sadly rolling down to DIA Apr $120 puts, now $3.10. On Mond morning, if we go up, I will sell March puts against them and roll up but miles ahead from yesterday’s puts so it doesn’t matter much… XXX


  397. covered my few naked AAPLs with 125s


  398. so does that mean we should move to china b/c there’s less crime, or stay right here b/c there’s 10 million criminals over there they still need to catch? ;)


  399. Phil.. per your SNDK comment about getting out when you’re up.. I have Jan10 5 HOVs.. up 92% in the past 50 days (was more 2 days ago..) Suggestions? -Peter


  400. Last Friday was open at 12,116, close 12,381 so let’s see what we finish closer to…

    GOOG and AAPL holding on pretty well, there may be hope but the cavalry better ride in soon!


  401. I still get no fill on the EK DD at .10 .


  402. remember last friday’s mad crazy spike up that began at 320p


  403. FRE still on a tear. The level 2 on the options show lot of interest at $1 on the Apr 30′s


  404. AAPL-bought back covers $2.5, maybe early and foolish.


  405. Window dressing time … how much of this selloff do we get back ?


  406. NEW YORK (AP) — Shares of biotechnology company Amgen Inc. fell Friday after a federal judge left open the possibility of generic Mircera sales, despite temporarily barring competitor Roche Holding AG from launching a generic version of the anemia drug.

    Amgen shares fell $1.53, or 3.4 percent, to $44 in midday trading. The stock fell to a 52-week low of $43.72 earlier in the trading session.

    On Thursday, U.S. District Judge William Young tentatively barred sales but said he was open to allowing U.S. sales of the drug Mircera if Roche agrees to certain conditions, including paying a higher royalty to Amgen. Also, Roche would have to guarantee it wouldn’t charge higher prices than those for Amgen’s anemia treatments, Aranesp and Epogen.

    Still, Wall Street mostly reaffirmed a positive outlook for Amgen, expecting the company to win the patent dispute.

    “While the Federal Court Judge has left open the possibility of allowing Mircera sales under certain conditions and while this will likely cause near term uncertainty we believe that Amgen will ultimately prevail in gaining a permanent injunction against Mircera launch given the recent positive jury verdict affirming Amgen patents,” Lehman Brothers analyst Dr. Jim Birchenough said in a note to investors.

    He reaffirmed a “Overweight” rating with a $69 price target

    Meanwhile, Goldman Sachs analyst May-Kin Ho reaffirmed a “Buy” rating and said a bigger concern for Amgen is an upcoming Food and Drug Administration panel review on the anemia drug Aranesp. Aranesp sales have been falling since the FDA issued stricter warnings in light of safety concerns.

    Citi analyst Dr. Yaron Werber, meanwhile, reaffirmed a “Hold” rating with a $55 price target and expressed concern over Young’s decision to leave the door open for a generic version.

    “Young’s offering of a specific criteria is concerning since it suggests that he is willing to allow Mircera to launch,” Werber said. “If he lifts the injunction, Roche will be able to launch Mircera without risk and won’t need to pay damages until Court of Appeals rules when it proceeds to trial.”


  407. They haven’t caught all the golf course vandals.


  408. Prison Population – 30% of the population in prisons are illegal aliens, so this statistic isn’t quite as bad as it would appear (though still bad).

    Same crap goes for the statistic the Dems always throw around re: “Americans” with no health insurance. It sounds terrible when someone says we have 30 million uninsured people in America, but lets not forget that 15-20 million of those people are here illegally anyway and are already getting free health care.


  409. Darn, been trying to buy back my short CY 24s all day at 30c, nobody will sell them to me. Seriously, somebody thinks their call is worth 40c? Ok, heck. I’ll up it another nickel. Sheesh.


  410. Newmont
    Income Statement Get Income Statement for:
    View: Annual Data | Quarterly Data All numbers in thousands
    PERIOD ENDING 31-Dec-07 30-Sep-07 30-Jun-07 31-Mar-07
    Total Revenue 1,322,000 1,646,000 1,302,000 1,256,000
    Cost of Revenue 719,000 785,000 807,000 844,000
    Gross Profit 603,000 861,000 495,000 412,000
    Operating Expenses
    Research Development 17,000 16,000 11,000 18,000
    Selling General and Administrative 38,000 (472,000) 619,000 59,000
    Non Recurring 1,212,000 541,000 - -
    Others 146,000 176,000 189,000 192,000

    Total Operating Expenses 1,413,000 261,000 - -
    Operating Income or Loss (810,000) 600,000 (324,000) 143,000
    Income from Continuing Operations
    Total Other Income/Expenses Net 74,000 35,000 (32,000) 67,000
    Earnings Before Interest And Taxes (736,000) 635,000 (356,000) 210,000
    Interest Expense 28,000 28,000 25,000 24,000
    Income Before Tax (764,000) 607,000 (381,000) 186,000
    Income Tax Expense 95,000 84,000 (41,000) 62,000
    Minority Interest (58,000) (198,000) (98,000) (56,000)

    Net Income From Continuing Ops (918,000) 325,000 (438,000) 68,000
    Non-recurring Events
    Discontinued Operations 629,000 72,000 (1,624,000) -
    Extraordinary Items - - - -
    Effect Of Accounting Changes - - - -
    Other Items - - - -
    Net Income (289,000) 397,000 (2,062,000) 68,000
    Preferred Stock And Other Adjustments - - - -
    Net Income Applicable To Common Shares ($289,000) $397,000 ($2,062,000) $68,000


  411. GO GOOG GO!!!


  412. ERTS – rolled down to Jun 45/Mar 45 (20/20) for net 0.15 credit


  413. Prison Population – 30% of the population in prisons are illegal aliens, so this statistic isn’t quite as bad as it would appear
    --that makes it even more stupid--Why pay 70K a year to keep illegals in a pen?


  414. xian – Well, I’ve been sitting in position since -255, waiting for the train to come…


  415. Xian – Sakiko – I guess we will need another AAA rating from somwhere!!!


  416. Well… only a few minutes left before ‘the most important hour of the trading day’. Here is my TA. If we go up, we go up. If we go down, we go down.


  417. Primus – you’re hired. Find Gasparino.


  418. Phil,
    SNDK – I rolled down to Jun 22.5, Should I cover half with 22.5?

    Thanx


  419. primus, nice try but a bit incomplete, imho
    if we go up, we go up, unless we head back down and stay down.
    if we go down, we go down, unless we turn up and stay up.


  420. GS-what a difference a day makes. LOL


  421. CNBC repeating the GOOG story, perhaps looking for another spike up so they can end their day on a happy note…


  422. Gotta leave guys, thanks to all – Dont break anything, oops sorry its already broken


  423. Phil -

    EK – does it make sense to buy the April 20 call for .25, here


  424. If it moves up then it can not move higher than infinity.
    If it moves down then it can not move lower than zero.
    It can move very much higher than it can move lower.


  425. ADVANCE/DECLINE worst its been in some time. Now 7-1 decliners.
    Ugly.


  426. 6fingerman – You must mean the double top, crossover, breakdown, headfake triangle, bull-hammer, candlestick, right?

    Awww… AAPL, why do you make me act like this?!?!


  427. One last flush before big rally?


  428. This is could be a humongous close or a great reason to cover, right DM?


  429. RedMountainMan – I finally found the article I looking I wanted to point out to you regarding “Early Assignment”. It’s older, but I think that all of the concepts still apply. Pretty pictures and everything.

    http://www.optionseducation.org/resources/literature/options_central/2003_winter.pdf


  430. I seriously doubt we get a big rally today. The bonds have foretold direction so well and unless you see the long term treasuries shoot down, we’re stuck here for today. They had a huge move up in price today.


  431. TLT and LQD are green, which I have to admit is rare that I see (LT treasuries and Corp. bonds)


  432. Just cant see a rally. Been grim all day.


  433. Futures: ES printing lows, VIX off highs. How is that cool? Much like the Titanic, we’re still taking on water.


  434. 1/2 out of the FRE 30′s at 1.10. Got taken out instantly.


  435. Who’s going to tell us when the new up is down?


  436. Bill Gross statement is very bullish I would think. Any bottom is a good bottom in housing.

    BA/Joseph – I like that play! XXX

    QQQQ support – that’s what we said about 44 yesterday… 8-)

    I just can’t put on my $100Bn hedge fund manager hat and come up with a good reason to pick up my phone and tell my guys to put $20Bn down on the market ahead of the weekend. I would want my cash so I can hang tight and scoop up bargains if we retest 11,500 next week and, if we go up, well that’s what we expected when we went long anyway so we won’t miss much.

    Windy – I agree, it’s a good premium for 3 weeks ($2 per week), no reason not to take it. Against July positions at about 20 weeks away that’s $40 NOT to sell premiums like that consistantly so Apple needs to hit over $166 before selling the calls is “dumb.”

    10M criminals – LOL 6! I haven’t been to China but in Japan crime is incredibly rare – people simply don’t expect things to get stolen so they leave doors open and stores leave things out…

    HOV – LOL, where were you when they were $12 a few days ago?

    3:20 spike – that would be truly amazing at this point. Would be enough tom make me think the market is fixed.

    FRE – I got out with $1, a little early but everything else was failing so my 25% winner looked pretty damn good!

    AMGN – yeah, isn’t that what I said? I’d hold that 3/4 cover over the weekend though, the $42.50s are just barely at our second target, not enough to impress and they (the 1/4 in contention) can always be rolled up to 2x the $45s.

    LOL CBTC!

    EK – STILL no takers to fill out my DD at .10, now $3 away (20%). Hell, I’d take a damn dime against a $3 move if I owned the stock!

    SNDK – If you have cash and it’s less than 5% of your portflio, it’s worth the risk, otherwise 1/2 cover. SOX only just now failing 350, a very brave performance for them but I will now point out that the ENTIRE market (major indexes) is at the 2.5% rule and that is a MEGAplusUNGOOD sign if that’s where we finish.

    EK Apr $20s for .25 – hell yes if you can get .15 for the March $20s!

    Mike – that sure sounds pretty but I think many porfolios here would disagree with you.

    3:20!


  437. I guess that I picked the wrong day to go long RIMM.


  438. popped in for a quick sec again… Primus, do you not “believe” in TA? Also you put in quotes “most important hour”… do you think it’s not? 80% of the volume in most stocks is only 3-4 hours of our 6.5 hour day… 9:30-11(30) and 2:30 to 4. Also called an inverted bell or normal curve…

    To quote Ron Burgandy, “It’s science”. ;)


  439. Phil,

    CROX isn’t holding the 25.00. So should we cover (1/2 or full) going into the weekend? Or do you feel it is OK?

    Thanks.


  440. sakiko:

    txs
    will study this weekend,

    still having trouble with the jargon.

    RMM


  441. sakiko/RIMM – Your not alone :-(


  442. CROX – consumer spending was good, we have a long time and they are down less than the market… It breaks my heart to sell 1/2 $25s for $1.35 but, against a $3.60 position, it’s foolish not to. XXX


  443. primus, you need to brush up on your ta terminology. the earlier rise this week gave a clear indication to sell on thursday as we formed a rising reverse roundhouse donkey punch. if volume picks up on a close to the bottom, it’s pretty much a cleveland steamer for next week, or, at the very least, a tony danza.


  444. Jargon is no problem – protecting profits, now that’s the trouble for me!


  445. So, I am parking on some APR 140s for the weekend. I think the iPhone chatter is going to explode. If they put a camera on the front of that thing, you have the highest quality video transmitter in the world, available next week, anywhere in the world. Runs only on AT&T’s 3G network and there is a software dongle on the 3G, so hacked phones cannot access the 3G. Or some other tactic to defend their revenues.

    Get the freshest rumors here daily, only at PSW!


  446. Phil,

    does that mean you are willing to spend 0.15 on the DD on the EK in the 10K?

    I can´t get the 0.10 filled !!! I can´t believe manybody get it filled.


  447. What is you plan for a 300-poit down move on Monday? If you don’t have on, you may want to consider hedging a bit more! XXX


  448. SPY 133.25 would be interesting


  449. RIMM
    theflyonthewall.com: New Research in Motion patent uncovered-BoyGeniusReport.com
    According to a patent filing that BoyGeniusReport.com uncovered, Research in Motion (RIMM) is planning to make a Blackberry handset with a touch screen and a slide out keyboard. Reference Link


  450. 6fingerman – touche my friend… and once again the best handle name on here IMHO.


  451. Mark – quit flirting


  452. RedMountainMan / jargon – I think that once you can mechanically construct and adjust the papertrades, the jargon can be decoded. There aren’t that many different things we do around here.

    It’s not that much different than when you came to this country and learned the local slang.

    I speak several languages and have had exactly that same problem. Not to mention that seven countries south of the US border have a different Spanish word for “station wagon” or “pickup truck”.

    They don’t quite get “Marklar”. ;-)


  453. FRE – Sold out the other 1/2 at 1.10 when I saw the BID/ASK size gravitate down on the level 2. 33% in a couple days I’ll take.

    COST now is the demise of my portfolio, though I’ve been selling calls against it nicely over the last 3 months, but these last 2 days have put me in the red. :(


  454. John Carter’s TRIN rule seems to work pretty well so far this year.
    If the TRIN is above 2.00 at the close the next open will be higher. I guess we’ll see Monday…


  455. Plan for Monday: Slaughter the cow, but don’t expect to milk her anymore!


  456. KHAN!!!!! where are you? I miss your jokes especially on a day like this.


  457. good old hedge fund rally for Feb month-end?


  458. Bear market spreads… buy out month puts, sell front month puts…
    To the dark side we go ?


  459. Interesting, movement.


  460. EK – I got some filled, just not the large amount I needed.

    What I was saying (out of frustration) is that IF people are paying .15 for the Mar $20s, then taking the .10 spread with the Apr $20s is a great play.

    DNDN sneaking up on us.

    RIMM Touch – all that kind of thing says to me is that Apple is kicking their asses.

    Check out ECA, nice reverse from yesterday.


  461. okay I’m done for the day.


  462. JPL – lol. OK back to real work, enjoy the 1327 love…


  463. QID’s, callers, and Q puts..
    Into March we go.


  464. so monday is president’s day, right?

    phil
    thanks for all your guidance during such a challenging week!


  465. all we need is a new ABK deal announcement b4 the close, LOL !

    what BS.


  466. I seem to undershoot my short term projections. Back to the drawing board.


  467. Wow, harsh selling into the close, all of a sudden everyone wants out.


  468. much appreciated, mark. what can i say? paralyzing losses bring out the best in me.


  469. windy-

    Did you watch some of the TED conference?


  470. Did I mention I think we need to be well covered for the weekend?


  471. I bet the calls are stupid cheap now.


  472. Yeah, yeah, I heard you the second time! ;-)


  473. yopauly
    (i say your name the ‘brooklyn’ way, yo pau LY)
    yes, saw the main event last night. it was very inspiring. don’t know if it’s still available on their site.


  474. okay Thanks phil


  475. Maybe I am nuts, but I just bought & rolled a few things.
    Bought FWLT calls, rolled GS & CROX down


  476. Interesting VIX/Dow 1:100 correllation, that’s a pretty strong VixDex Rating! That means we’ll hit 29 VIX before 12,000 and 11,500 would put us back to 34, a level the VIX has not been able to sustain for more than a day (30 max) so we can play for a bottom on a 200 point drop on Monday.

    Did I mention covers would be a good idea???


  477. Well, that was ugly.


  478. Hey – the selling stopped!

    Oh wait, that was the bell… Well, anything to make it stop I guess!


  479. Closed at SPY 133.26… Now that’s funny.


  480. someone got hosed on ETFC.

    4 Million share trade crossed at the close at 4.27.

    mebbe that accounts for the selling in that name today.


  481. “rising reverse roundhouse donkey punch”- you guys *kill* me.


  482. Mark – My thoughts on TA are this, if you torture the data enough, it will tell you whatever you want to hear. It always ‘works’ in hindsight but that doesn’t mean it has to work in the future. From my experience, money management has much more to do with solid trading than all the signals and indicators in the world. The first and last hours are certainly the most volitle, ‘most important hour’ makes for a cute tag line for the MSM.

    Wow, this has to be one of the worst months for the market so far this year! Good riddence!


  483. what is a cover ?


  484. Tha was my worst month ever. FSWD


  485. my best week in the past 4 or 5. Man, this has been rough going though.


  486. That was our worst month ever DB, don’t feel bad – there was no way to win. The S&P fell 3.5% but the way it whipped up and down, only the best day traders could scratch out a living on it.

    I’m very happy the VIX is rocking up towards 30, it puts in a floor or, in the very least, gives us good premiums to sell. If we’re lucky, Buffett and OPEC will save the market next week.

    Have a good weekend all, I’ll be a around so we can talk some strategy over the weekend.


  487. 6fingerman / Jargon: Next week calls for a quick test of the ‘Hot Karl’ lows, only to spike right back up into a mid-week ‘Reverse Blumpkin’ or ‘Dirty Sanchez’ blow-off top. Any sort of ‘Rising Reverse Double Donkey Punch Roundhouse’ move will be telegraphed by a triple break of the ‘Pearl Necklace’ line by one of the major indices or the classic ‘Two Cats In The Bathtub’ candlestick.


  488. I take it Boeing did not get the contract


  489. Definitely gave some back from the record day. Didn’t have the discipline to stay in that put play from the morning. Have to start using trailing stops to keep me from slowing overtrading. GOTTA HAVE THAT CASH IN PLAY! (sarcasm font misplaced)

    Just keeps staying interesting. Have a great weekend.

    I am so glad I can say, “But, Baby, it was Phil’s worst month, too.”


  490. Hi, I’ve added some more articles to the back-up site, which will eventually be a new section, here: http://philsbackupsite.wordpress.com/. Plan to add a few more a little later. Anyone buy any ckp? I sold part and have a little left.


  491. Joseph, that was my best week of the year as well if I don’t realize the losses in AAPL today as it is long-term. Even if today was tough I like seeing the panic, it provides great opportunities for the future. GOOG has become a value play now. $740 to $470, come on…


  492. That was ugly … FMD in reverse.

    BA … bad news.


  493. Good thing these leap days come only once every 4 years.


  494. By the way, nothing has changed and we are still in our trading range.


  495. Speaking of bad week, the other day (was it Wed?) we discussed an AIG spread (me, rdfinder, and some others). I specifically mentioned that I haven’t seen a lot of reason to roll a short caller that’s gone ITM on me.

    How’s that AIG spread looking today? Maybe not quite so scary? Remember this experience next week, as your caller rockets up ITM on Wed. and crashes back on Friday. And also remember that opX is always a Friday.

    ;-)


  496. DB – Don’t worry man, just gotta re-focus and cut out the crap. Phils on target saying that day traders are the ones that make the real bucks in this market. Them and Ackman lol.


  497. I Started Trading and this is the worst month ever?!?!?!, Wohuu. But all in all the 10K don´t lost so much I lost with trading as a noob.

    So I am happy to be here with you all.

    Have a nice day and a great weekend.


  498. SAN FRANCISCO (MarketWatch) – Northrop Grumman and EADS jointly won a $40-billion contract to turn Airbus jets into flying tankers for U.S. military aircraft, the Wall Street Journal reported late Friday, citing a person familiar with the situation. Northrop and EADS were in competition with Boeing


  499. Don’t panic.


  500. Primus – I can understand your negativity towards TA. When I first started teaching myself I’d use tons of indicators and would get lost constantly. And AGREE completely with analysis paralysis.

    I don’t depend completely on them, but they are FANTASTIC reference points not b/c of hindsight but b/c I know major quant shops program their “black boxes” to look for these configuations, 200 sma pops, pivot points, etc. If billions of dollars are ready to trade the same point b/c it’s a point everyones looking at… it has the potential to be a good trade then eh?

    To trade TA only is to try to walk without legs. There’s the fundamental part of the market also of course… but then there’s what I consider the MOST important aspect to learn / understand IMHO: psychology / sentiment. You can value a company perfectly using their BS and FS, or find perfect support / resistance lines… but if the market doesn’t FEEL like being there it won’t be there. EXTREMELY hard to explain, but I think it’s a mark of the best traders out there (from the ones I know who can blow any of us out of the water).


  501. Stop, drop, and roll on BA.


  502. Worst month by far.
    Did okay daytrading the swings but can’t be by my screens all day (job).
    Hard to make $$ using traditional spreads when the market direction is down.
    I don’t think a recession is ‘priced in’ the current valuations and we might be on another stair step down. Need to crunch some numbers this weekend and come up with more bearish plays.


  503. Well Phil: You beat me to the punch with the video of “Diebold Leaks the 2008 Election Results”. I was excited about posting that link only to find you already had it in your morning essay. I just can’t get up early enough to beat you to the punch.

    Anyway for all you conspiracy obsesed kooks here, watch this video: http://www.theonion.com/content/video/in_the_know_is_the_government


  504. Primus – Maybe you’re right, Technical Analysis is bullshit!! (Where’s Penn and Teller when you need them?)… Hell Technical analysis is telling me that BA’s going to 61.5ish… That gotta be bullshit right?.. I mean BA’s a great company.

    Alwell, C’est la vie… Or however you spell it.


  505. Thanks RD2.0, I like that article, this has been esp. true for me (and I’ve not been quick to adapt to new rules because of apparently other psych. issues as noted in the article): “There’s a different reason why trading might be one of the world’s most difficult occupations: the rules of the game are always changing. In most performance activities, from sports to chess, the rules don’t change from year to year. Market patterns, however, are continually shifting: trends change, volatility changes, and historical patterns that worked at one time suddenly fail during the next time period (a phenomenon that has recently tripped up several quant funds).”


  506. RD2.0 – perfect article thanks.


  507. Forgot to add, it’s easy to make money when the market is running in one direction. I was lucky vice good for most of last year. I certainly improved my education since joining here – just don’t have the results to show for it (yet).


  508. Man, I had to leave for a few hours, missed my cover on BA and CROX, ouch…. well I guess I will see what Phil has to say on strategy for Monday.

    On a related point, I did the Van Tharp personality test for traders, it was very good and revealing to be honest. I think the site is http://www.iitm.com, it’s $100 and considering we can often spend more than that on commission in a day, it seems a worthwhile investment.


  509. Mark / TA – I don’t think TA is worthless and I think we’re on the same page. I have no doubt that you can increase your odds of winning using TA as a reference and following strict money mananagement as demonstrated by your 200 MA and Op’s 5 MA trend following. I also think that you bring up a good point about ‘feeling’ the market. You really have to learn to shut your brain off and try not to worry about the news that was good for the market last week and is bad for it today. I was just having a laugh at some of the ‘jargon’ tossed around to explain the markets by the wild-eyed TA buffs out there.


  510. Mark or any one,
    What is IMHO and IMO? I have seen quite a few members use these abbreviations and have never understood what they represent/stand for.
    Thanks!




  511. sakiko,
    Thanks – that is a great site – I have bookmarked it.


  512. Our small portfolios are invested more than I would like (Old & New 25KP) and hope we can get to unload some on Monday as I will not have much time (out of town, away from my laptop) to trade for 2 weeks after Monday.
    Good weekend you all!!


  513. Jeff Macke today said that he would not touch AAPL yet here, maybe in the teens. Is this guy for real? He changed his mind 3 times this week.


  514. Primus – A lot of Technical Analysis buffs have no idea on what they’re doing… We’re all learning, but you can tell that some are full of shit. But c’mon BA @ 62.5?!?? I’m surprised no one railed on me yet. I’m surprised you didn’t call me out on it haha… I’m just kidding around.


  515. Jeff Macke … but he changes his mind with such conviction !

    Maybe one of his buds who is caught short put a buzz in his ear.


  516. Optrader, I think you misheard Mackey yesterday.. he was not recommending AAPL even yesterday.
    He was saying “it was a good move today.. but we need a followthrough. Let’s see if it goes above 130 tomorrow”

    He was not saying it will go above 130..


  517. That was some funny lingo btw. I just wanted to harp on you a little.

    (Re: BA – I still do think that’ll go there)

    Anyway, at the end of the day, I really do believe that success is dependent on your learning curve. A lot of people get a free ride off of Phil’s Learning curve, but when you’re out there, by yourself, you gotta know how to learn.

    Everything changes, everything is new, it’s very hard to blanket things without being able to change. In today’s market you have to learn (or change) even more quickly than say 2 years ago when I started… A lot of people have difficulty with it.. Of course they do, it’s new.

    I dunno if that made any sense.


  518. lol every month I’ve been saying I’ve started 2 years ago.. I gotta really keep count, maybe it’s 3 years now.


  519. Interesting vix/DJI correlation as Phil mentioned


  520. DM, here is the BA P&F Chart:
    http://stockcharts.com/def/servlet/SC.pnf?c=BA,P

    Missed the paste on the vix/dji correlation before

    http://stockcharts.com/charts/performance/perf.html?VIX,$DJI


  521. Andy you use P&F?! That’s so wicked, where do you think it’s going to go based on your analysis?


  522. Joseph, great job on BA puts, NOC calls. Was thinking the same thing. Took the NOC calls, but also kept my BA 80s. Oh well, those NOC 80s should gain more than the BA 80s lose.



  523. This isn’t good..
    from the WSJ:

    Berkshire Hathaway Inc. posted an 18% drop in fourth-quarter net income on lower investment gains and a drop in insurance underwriting fees, and Chairman Warren Buffett warned that the insurance business is likely to get tougher in 2008.

    “That party is over,” the billionaire investor wrote in his annual letter to shareholders


  524. Air Force

    Okay, I have to say that I have reached a new level of disgust with our government. How we can award the tanker deal to EADS & Northrup is beyond anything I can explain. Our country is falling into the abyss, jobless rate going up, handing out my kids money in idiotic rebates and we give a $40 billion contract away. I’m speechless…bunch of fools we have running this country. Now I’m pessimistic.


  525. DM, no I don’t use P&F, but I felt good if it was going to be true as BA should go to $106 as the chart says, but I am sad to announce it’s just a set of computations that spit out a number, like many things, nothing necessarily to do with reality and 20/20 hindsight is kind of interesting, but totally useless in trading. (so in other words I would tend to agree with you). However I do use a daily chart and 15 min chart and the best advice I got was from Opt, which was on the 15 min, get rid of everything and just follow the candles.

    What I tend to do is use the daily to get an ATR value (usually 14 days) and then look at the daily range for the trade I am considering and I try to use this and the 15 min chart to attempt not to screw up my entry too badly.


  526. Macke, FM and the whole CNBC lot are all a bunch of shills if you ask me. None of them can be trusted. They had some hedge fund manager on just before or right after Halloween who said he was certain that the market would ‘melt up into the end of the year’. I wonder how many contraian indicators there have been over the years with CNBC.

    DM – BA 62.50 – I suppose anything is possible, it’s going to be printing fresh 52 week lows if we get more rate cuts from Helicopter.


  527. oh, come on, whether BA gets a 40 B government contract has very little to do with the rest of the country …

    it doesn’t affect my life one bit.


  528. “it doesn’t affect my life one bit.”

    That says it all about the self-centered American ethos. Sad, sad, sad.


  529. Cap--

    Not to mention that juicy contract they got for the virtual fence, which they now have an additional three years to make work. Unfortunately, they seem content to design things in chicago rather than actually come out here to AZ to get the lay of the land. One of the towers in Arivaca, a border town, was situated so that it looked into the side of a mountain they didn’t know was there.


  530. Beth – thanks… I think selling the NOC calls and BA puts into the initial excitement will be critical to maximizing the profit.


  531. I’ve got mine and screw everybody else – the attitude that has gotten us where we are now.


  532. Just listened to the demo of TOS new software. Some really cool stuff, especially Thinkback.


  533. Fred / $40 billion contract – Interesting perspective. You’re right, I wouldn’t be drinking bud light either.



  534. size123 – I agree, miss-spelling of TEAM is somewhat problematic.


  535. Cap is right. Unless you worked for BA and were going to have to move to another city to work for NOC, what’s the difference? You think different people will be building it. They are all the same, it just matters who is cutting the paychecks. It is not like the job is getting outsourced to India. The economic effects on the macro level are zero. The 3 people I see the most often work at NOC or similar.


  536. NOC – You might be interested in the KC-30 propaganda they provide; I don’t have a trading position in NOC or BA:

    http://www.northropgrumman.com/kc30/index.html


  537. Fred; oh please ….

    that said I may be looking at BA calls for a couple of months out.


  538. Warren Buffet’s Annual Letter (excerpts)
    http://online.wsj.com/article/SB120432105199503761.html?mod=hps_us_whats_news

    At 84 and 77, Charlie and I remain lucky beyond our dreams. We were born in America; had terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a “business” gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society’s well-being. Moreover, we have long had jobs that we love, in which we are helped in countless ways by talented and cheerful associates. Every day is exciting to us; no wonder we tap-dance to work.

    :-)


  539. Alright! Home alone this weekend. My wife Jess is in Austin for a Bachelorette party and I’m home alone with the corgie and Ausie drinking 15 year Balvenie… is that sad? ;) Actually waiting for a buddy to show up and we’ll play some guitar hero and halo 3. Greatness, just like undergrad…

    Primus – Thanks for the confirmation. Sorry, in advance, if I ever seem “too” straight forward, usually traidng / analyzing something and don’t have time to be PC (does tha make sense?). I can tell without ever meeting you that you “understand”… there’s the TA side, there’s the FA side… and then there’s the emotional side of the market.

    Don’t know who’s doing this for a living or for a full time job, but I challenge anyone to take a few days off… COLD CALL a trading shop they might know of close by, and see if they can sit next to an institutional trader for a day or so. Might sound SILLY or something, but I swear to all things HOLY you will learn more than you ever wanted to about the business. Also GOOD traders like one thing more than anything: their egos. They’re more than willing to talk about what they do (just like a manager’s more than willing to talk about their business to an analyst at an IB).

    IMHO, Trading is so difficult b/c you’re playing with your own cash, and we’re all emotional with our money. So you have to change your thought process to be
    more like those who OWN the stocks (buy siders) and understand their thought process for selling / buying something. If you can understand / get this you’re half way there for LT investing.

    Day trading is all technicals / market sentiment when it comes down to it. Perfect examaple is AAPL (EVERYONE’S favorite stock LOL). Great company, worth $220… so if you’re buying stock long, why are you sweating? Buy it, sell it two years from now for a 60% gain (better than most MF’s and individual PM’s out there). Or just buy ATM ’10 leaps…

    Anyways, probably drank too much scotch to make much sense, but I guess I’m saying this market is perfect for day traders, BUT NOT FOR LONG POSITION INVESTORS (hence why the BIG BOYS are not investing long yet)! Wait until July 1st… the long investors out there will start making great money.


  540. mark- i dig it, man. i just stopped into my lab to prepare a small set up for tomorrow- bacteria stuff, so it needs to grow overnight.

    stepping in from some drinks myself and i got to say: nice friday drink- too early for though, in comfort of home is best. my friends here in VA, we do a scotch/poker night monthly, so i dig that too.

    anyway. i appreciate the things u share w/ the board- AAPL 220…i like the sound of that and JUL 1 isn’t too bad either.

    stay cool


  541. OH, also since it’s AH and we can talk about things outside trading, here’s some of my favorite bands.

    My buddy sends an email annually to a ton of people describing his top 5 albums / songs of 2007. I LOVE music / think it helps defines certain situations… and so here (for anyone who cares a flip on Friday night at all) is a few of my favorite clips from some great bands:

    http://flyingclubcup.com/spip.php?article2

    a GREAT band from Austin originally: Spoon (my exgirlfriend is dating the lead singer): http://youtube.com/watch?v=NKmgUdRAzxQ&feature=related

    DM and youngins, these lyrics seem to most fit you peoples: http://www.youtube.com/watch?v=XVnRzEjpUmE

    and of course the easy one: absolute brilliance of Wilco: http://www.youtube.com/watch?v=KGlsfM3Tf70&feature=related

    TY and good night. :D


  542. xian – where you out of agian brudda? ahh the scotch… makes everything seem that much more focused ;)


  543. Mark, enjoyed a scotch tonite at dinner out w/ the wife and kids. I deserved it … made it thru a tough week ! Hoped for an Oban, had to settle for The MacCallan.

    For anyone interested, go to Alphatrends blog; he had an interesting TA up on BA this morning (b4 the bad news tonite). DM’s 62 might be a little extreme, but this TA sadly points to 70-ish.


  544. Cap! Love the commentary man. I’m prob more “liberal” then you, but your intelligence / conversation I respect.

    Scotch = good. Lagavulin is the best, thier rivals/ Islay mates are good too Laphroaig. anyways, that’a for another time… 15 yr Balvenie is making the Matrix on AMC seem like a good movie.. hehe.

    Cap – Oban is sweetness… but love the “hard core” smoke ridden scotch myself.

    My 2 cents? Sounds simple but look for test of Dec low in March – May sometime… and invest “accordingly” LOL. I.E., if market says “this is the low”, the buy. Otherwise, short until the market thinks it’s done.

    Once again (and I HATE doing this seriously b/c I wasn’t “perfect” but trend tells EVERYTHING) but not to toot my own horn but:

    Mark
    February 29th, 2008 at 2:23 pm | Permalink
    CBTC – been out, just quickly checking in saw your question. Hell if I know!!! LOL

    Kidding, pull up a 7 day 15 min chart of spx with 13 ma (close to the same as 200 min sma on 1min tick, obviously not perfect). NIce rounded top since Monday, looks like floor at 1330 from Friday mid to late afternoon). Plus we’ve already broken thru all pivot support levels (1,2, and 3).

    You can look for a spike to close close to 1340, but currnelty trend is DOWN.


  545. well i’ve got a bottle of maker’s mark by my side.

    Also have a new girly drink that’s being developed.

    Pear Harbor:
    3 parts pear vodka
    1 part blue Curacao
    2 parts sweet and sour
    splash of sprite

    happy friday everyone, don’t think about the markets, that’s what mondays are for!


  546. Do Prophet Charts lag on demo? Or is it still real time? (lol good vid Mark)…


  547. Scotch – I still like my walker. Nothing fancy, just straight up on rocks.


  548. Trader Monthly had an article last month on where traders should spend their bonus checks. Top of the list was a $20K bottle of Johnny Walker. I don’t care how big your bonus check is; that bottle better come with a car and a hooker.


  549. Paying the full 20k for a bottle of Walker? Wow they’re not from New York lol.

    Cap – You’re right, I’ve re-looked at things, and I think BA’s going to 64 instead, then bounce around a bit, then to 56.75. Not saying it will go there, but technically, thats what I’m seeing.

    Btw, does anyone have the answer to that Phophet chart question?


  550. DM – If you’re not an upgraded member, it’s delayed.


  551. Man you could have stuck a fork in my I was so done. I was Drunk Blogging LOL.

    More great music b/c music makes me happy:

    Ahh the briliance once again of Beirut: http://flyingclubcup.com/spip.php?article8

    Iron and Wine – still one of my top 5 bands ever possibly… great lyricist : http://www.youtube.com/watch?v=0XXD20DhV4c&feature=related

    and off his new album:
    http://www.youtube.com/watch?v=TLNyVLbqdEg&feature=related


  552. sakiko – I mean on the TOS platform, I remember it being live ticks.. I’m not too sure if they switched it over on demo accounts. I still haven’t completed my registration with them, but just wondering.


  553. DM – Oh, I see. I don’t have any experience there, but of course now that others can read the full question, you’ll get the answer.

    If I was a product manager there, I’d want you to have the realtime, as there’d be an annoyingly expensive customer service issue as users were to try to get their heads around a delayed Prophet display, and their TOS Charts (bundled).


  554. Blake / Costa Rica – After reading Mr. Buffet’s Letter and specifically the section on currency holdings, I thought about your CR plans. Why not establish an account tied to the CR currency? You’d be target-neutral. There are a number of CR banks with an agency presence in Miami, if that’s your level of commitment.


  555. Mark – I understand your technical outlook (retesting 1270), but why don’t these guys just do this *right now* and get it over with? There’s certainly enough fear, and maybe not a lot of buyers, and a potload of hedging facility available.

    What are they waiting for?


  556. Thanks, Mark !

    Lagavulin … of course BBD enjoys only the best, which is what I think I owe to him.


  557. sakiko- regarding that technical outlook, I think the key delay factor is the broader market fear that we’re in for a protracted bear market. As I understand it, the “big boys” won’t start committing capital to the long side until they’re comfortable that they can see the end approaching.

    I’m pretty sure all of the big long-only players are aware of the fact that a forced test of the lows isn’t the same as a change in sentiment. So as long as it feels like a forced technical, we’re not going to be done yet.

    We need our ultra-bears to keep scaring people a little longer so we can have some consolidation. Hey Anton, what have you got for us? Unfortunately, it looks like Vallejo is going to work out their difficulties (at least temporarily) so that one will come off your list for a while.


  558. DM, as Optrader would say, I have no idea where BA is going.

    But that TA I referred to clearly supports the idea that it goes lower.

    But TA is not the be all and end all.


  559. re: market direction;

    while it was ugly, it seems clear that the buyers stood aside. a lot of stocks I looked at were down on low volume.


  560. Sentiment-wise, I’ll be on the lookout for another rising reverse roundhouse donkey punch to take profits on some callers.


  561. I don’t there there were buyers to begin with. I would love to see if the short floats increased during the recent “bullish” period we’ve had. I think we’ve been played.

    Sakkio – Thanks, though I don’t know what you mean exactly… I have a demo account with TOS, just wondering if their prophet charting platform had a 20 minute delay.


  562. Speaking of Mr. Buffet’s Letter (available as pointed out in ramanas’s post, and for convenience, here), there are some major gems of “down home” narrative and humour that would serve anyone who also wants an succinct introduction to value investing. I have read his Letter in the past. This year not a disappointment. Here’s a sample from page 22:

    The Annual Meeting

    Our meeting this year will be held on Saturday, May 3rd. As always, the doors will open at the Qwest Center at 7 a.m., and a new Berkshire movie will be shown at 8:30. At 9:30 we will go directly to the question-and-answer period, which (with a break for lunch at the Qwest’s stands) will last until 3:00. Then, after a short recess, Charlie and I will convene the annual meeting at 3:15. If you decide to leave during the day’s question periods, please do so while Charlie is talking.

    The best reason to exit, of course is to shop. We will help you do that by filling the 194,300-square-foot hall that adjoins the meeting area with the products of Berkshire subsidiaries. Last year, the 27,000 people who came to the meeting did their part, and almost every location racked up record sales. But you can do better. (If necessary, I’ll lock the doors.)

    They don’t have too many CEOs of this mold anymore !


  563. Mark, I think you would like Radioparadise.com I hear Iron and Wine on there often.


  564. sakiko
    Re: Buffet – How many CEO’s would have the courage to take questions from the floor during an annual stockholder’s meeting (and be able to respond, intelligently, off the top of their head). He and Charlie are quite a team – they really answer questions, not just CEO babble speak.


  565. Does anyone have a LA-based accountant who is savvy with trader tax rules for individuals and corporations? My regular accountant is not knowledgeable enough to answer some of my questions. Please email me at filmflamtv@gmail.com if you have any suggestions. Thank you.


  566. I love Phil’s analogy for all the whipsaws … like a Bugs Bunny cartoon with money rushing in and rushing out in a stampede.

    We should call this the Bugs Bunny Market ™.


  567. Currently use Tradestation platform and have been considering TSO. Just glanced at some of their (TOS) screens and went through a couple of their tutorials – looks way ahead of Tradestation for options traders like us. Now I know the portfolio delta thing that you guys talk about – at tradestation you are totally on your own – it is a trial & error method very slow but awfully expensive ( at least for me it proved to be that way). One thing I have not seen yet (like I said I have just started looking at it and hence I have not even scratched the surface yet but would appreciate any input/help ) on TOS is ways to find suggested Option rolls & their Profitability/probability and studies based on historic data. The platform looks fairly intuitive.
    Currently have too many open positions that are not worth closing at this time but sure would like to move slowly but surely to TSO soon. Would like to hear other opinions.


  568. Read in Trader Monthly: “There is no bonus check at the end of the year for being smart”


  569. FILM – thanks man! listen to streaming radio on itunes but was thinking about finding something for work…

    sakiko – almost to the letter agree with what K1 stated earlier. It can’t be a forced push down, needs to have some news (government not in control of our economy, next quarter earnings, subprime fall outs, fear and greed…) and to top it all off the big boys are afraid b/c like anyone they can’t predict the future either. So I think we’ll see some sideways trading for some time with a tendancy to test lower than higher. 1400 is a big number and to be above it is to be “back on track” IMHO. I.e., until something tells us otherwise, if you see 1390-95 again… short.

    To repost what I posted earlier on Friday too (so you can see what the most highly regarded third party eco research firm in the industry is telling / implying the big boys are doing):

    Four Needed Catalysts for a Perception Shift We’re Not
    Going Down the Tubes

    First, we need to see oil stabilize to take the heat off
    headline inflation, which is a headache for the Fed and is
    working like a tax hike for consumers.

    Second, we need to see ECB ease — Eurozone is the
    same size as the US. For this to happen, we probably need
    to see energy prices stabilize.

    Third, we need to start to believe that Washington is
    really on board to START TO SOLVE the financial crisis and
    the slump in house prices.

    Fourth, we need to start to see credible signs the
    economy is unlikely to collapse (not necessarily that it’s
    about to improve in the next few quarters).

    Alright off to the dog park. :)


  570. k1, Mark – Thanks for your macro-level view on the current trading environment. Mark’s concurring view is useful to me, since he’s got those Wharton guys down the hall from him.

    As you can probably tell, I’m not doing much “investing”, either, and was looking to see if what I’m doing vs. “the way my father saved up for retirement” made any sense. I’m doing things for other people and there’s always a rolling of the eyes when I explain why I made a move that seemed counterintuitive on its face.

    But if RIMM comes in, they’ll have forgotten the question. ;-)


  571. LOL Primus! I like your jargon a lot better than most TA guys.

    BA shocker! Great opprtunity to add but not if the whole market follows this major Dow component down 5% on Monday. Those NOC $80s are going to be sweet! Kudos to Joseph on designing a great play on both ends!

    FRE – did anyone catch fast money, they said it was down 5% and hopeless. Looked up 3% and hopeful to me but I guess we’ll excuse them because they were in Florida and didn’t have any fact checkers. It was a good show for hearing off the cuff opinions as they were out of their usual studio.

    Opt: “Nothing has changed and we are still in our trading range.” – Yeah, I’ve been thiking about whether that’s true or not but it’s all going to depend on arresting this drop by 12,000. All my fundy premises are based on some kind of dollar stabilization and we can handle a dip to 73.2 (2.5% below 75) but lower than that really calls the value of the equities into question. At a certain point, you have to look at earnings of many multinationals and say “Is that in DOLLARS? What kind of crap earnigns are those then, you’re down 14% from last year!”

    To the Euro specifically the doallar is at .48, vs .66 last Q1 and .76 the year before, that’s declines of 27% and 13% respectively so the loss is twice as fast this year. So if Google reports earnings of $1.2Bn from Q4 vs. $1Bn the prior year, that’s down 7% in Euros. Couple that with any kind of declining revenues runor and they are toast!

    On the bright side, when we catch the upswing of this (maybe after Barack is elected and declares a Socialist Republic) it will be very powerful as rising revenues and a rising dollar will make the US markets look like China last year.

    Wohuu to you too Alex! It’s a great time to start trading if we keep our heads. If I whispered to you in October that I would make it like you didn’t even miss the last two year’s worth of rally and you had a chance to make a fresh start, do you think you would have been interested?

    We made stunning amounts of money for the past two years – as long as we don’t lose it all now our time will come again on the bull side. Meanwhile, we hit a lot of nice in and out plays the past few days and we’ll adjust our style to go with what’s working.

    TA – Mark is right, like it or not, TA is a self-fulfilling prophesy as enough big money shops believe in it that it’s now programmed into their buys and sells. The more these computers take over the market (and a few more months like this one and you’d be willing to turn things over tho a computer too!) the more accurately the TA rules are followed. That’s why the 5% rule works so well, it’s based on my own observations, not of the market, but of the trading system designs I consulted on.

    It’s a flaw of large system behavior and human nature that leads to “quirks” like that which we can exploit to our benefit. Here’s an example, find a photo of the sun in the daytime and tell me what color it is. Now find any painting of the sun in the sky where it’s not yellow. Yellow is the color of the sun because that’s what color everyone says it is and it’s so ingrained in our thinking that, even though it’s right in our face every day and we’ve looked at it 10,000 times, we still accept the conventional wisdom that it’s yellow, even though it’s actually very, very white through our atmosphere (orange in space) and you would be hard pressed to find a single photo of it where it even looks yellow. TA is like that – no matter how flawed you may think it is and no matter how much you think you may know better, it you had to place a bet on what color over 75% of the people would say the sun is, you’d better go with yellow!

    Good video Greg, those guys are getting very good with that fake news stuff!

    Trading strategies. Yes, like anything in life, we’re trained to recognize patterns and adjust our behavior to fit accordingly (see multiple “Wednesday Rule” comments since I pointed it out last month). The problem is that our brains reward us for finding patterns (a lot of the “addiction” factor of gambling is based on this) and once we find something that works, it becomes very hard for us to abandon it – even if conditions change drastically. That’s what capitulation is all about, people finally give up on “what was working” and take their money out of no longer performing sectors and finally put it to work in sectors that are improving. This is why money is always chasing performance, it’s always trapped in the last cycle and takes quite a while to rotate out.


  572. Film / Trader status – I don’t know if you remember this article on PSW from last year. Some additional insight can be gained there.


  573. Phil, I would pleasured take this chance as I know what gains you are made in market corrections self, you are found bottoms and highs, that is what fascinates me!!!!
    I´m a fast learning guy and I know That a trader needs much funds in the back-hand to live with market corrections, so we can loose a bit(But not all).
    I still keep my Dayjob alive, till I have ca 100.000 Dollars in my account.
    with that I can make 10% in each month so i have have 10.000$ to pay my bills in Euro. I calculated that 10.000$ are round about 4.000€ with all taxes.

    10% each month is not much compared to PSW gains so I´m very happy to be here.

    Phil and I really hope that the US economy recovers all the dollar weakness.
    I agree with you that the dollar is strengthen in the next time so we need only to be in the right place and the right time will come.

    Many money flow back to the banking(I hope) So they must do that job … making gains … giving and increasing interest rates to consumers … decreasing credit rates.
    And at next building homes that not every tornado destroys.. ;-)

    If I´m complete with my plan I will announce it here and Trade all the day working in a Team!!!
    Have a nice Sunday.


  574. http://traderfeed.blogspot.com/2008/03/ultrashort-etfs-as-sentiment-gauge.html

    Bottom or not that´s the question … I believe in phil´s knowledge.

    BA I think it´s not so bad, we can take the big gain from the short caller if the bottom is found and DD in the oversold BA reaction. and then cover with the next significant high.


  575. Alex,

    I am glad to hear that you feel you have found a good spot here in PSW and I am glad you have some goals for your returns, now I don’t want to be person that seems negative, but I would like you to perhaps spend a little time looking at the return for the Magellan fund, this was and still is a very famous fund, with some of the best managers in the world

    http://en.wikipedia.org/wiki/Magellan_Fund

    Notice their annual return, compared to your monthly return expectations…


  576. Andy, I have to disagree with this. It is pretty easy to make 10% a month trading options with the amounts we trade. It is more difficult to trade the Magellan fund, which has much stricter risk management rules and especially liquidity issues (they can’t exit a position all at once for example). Also, there are a lot of hedge fund managers who are having amazing results (1000% and more), even trading size.
    Honestly, with some discipline and a good trading plan 10% is possible. I am sure that if most traders here look at their past trades and just see how much they would have made just by cutting their losses short, a lot of them would have made more than 10% a month. Also, remember that “the best managers in the world” are people like you and me.


  577. Phil, I agree with your view on the dollar, but let’s put a little perspective on it. Even if GOOG’s profits are down 7% in Euros (but still up 20% in dollars), isn’t the stock already down 37%?
    Also, isn’t the stock even more attractive today for a fund manager who has Euros? I think there is something very interesting here that might be happening, very comparable to real estate.


  578. Opt – I have a ‘weekend’ question about your strategy if you don’t mind. I noticed that you regularly take profits on your winners. Let’s imagine the situation (hypothetically) that you sold all your puts, but the market keeps going down. What do you do then?. Is this realistic case at all? Or you manage to avoid such situation by regularly adding to your puts? I would appreciate if you could elaborate on this if possible. I am trying to model the portfolio dynamics and see that in order to keep positive balance you either have to open new put positions or stop out your loosing calls. Is it close to how it actually works?
    I like your trading style and just trying to learn more.
    Thank you,
    Dmitry


  579. Phil:

    From a previous comment on K1
    “If you want a list of totally safe plays, I can put something together for you.”

    Would you mind revisiting this comment…

    Thanks!


  580. Dmitry,

    Yes, this is the problem with taking profits regularly. What I do is that I usually balance my portfolio at the end of each day. But very often during the day it is unbalanced. For example on Friday I found myself way too bullish before the last hour of trading. I could have rebalanced at that time but I wrongly decided to take the chance. This was a little bit risky and not a good idea, but on one side 300 points drops don’t happen every day and at that point I had major profits on the puts and they balance somewhat the losses on the calls. Especially as I have a longer-term view on most of the calls I hold. But I did rebalance at the end of day (keeping a bullish bias though) and bought some Q puts, like I did on Thursday right before close.


  581. Phil/Anyone,

    I was reviewing my portfolio ($25KP) today and got concerned to see -11k of paper losses mainly coming from CROX (-3k), EK (-3k) and SNDK (-1200). I still have till Jul to recover from SNDK but EK looks hopeless.
    I was also concerned about the ERTS position size – I have 20 Jun 45 (10.8k) in a small portfolio and it is way above the 5% rule. Should I keep into account the sold calls – then it would be 4600. I was wondering if 5% rule is practical for a small portfolio – as 5% of 25K is 1250 and all the positions are more than that.

    In an effort to balance the portfolio, I have been also noticing the effects of market swings as suggested by Phil. 100 point swing does not affect much but more than 200 down really hurts. Since more than 200 swings are becoming more common, what is right strategy to adjust (harden) the portfolio?

    Thanx


  582. Dmitry where are you from?


  583. (and where are you now?)… if you don’t mind me asking… Just curious, not trying to be rude or obtrusive.


  584. Opt,

    Ok I guess we will agree to disagree, I hear you saying that someone whom is a beginner with $100,000, that they can consistently produce $10,000 per month (we are then saying doubling their cash every 10 months) to pay for their cash living expenses, meaning taking out of their cash holding $10,000 every month, from a portfolio of $100,000. Also considering that Alex will need to take ever more $ out of his portfolio to pay for his EURO expenses.

    Personally I would promote a more conservative goal and my emphasis would be to focus on putting together your own personal trading plan, as you allude too. I went through great returns in excess of 200% and then let most of it go to land flat (thankfully), so my experience has now shown me that investing (trading) is something that requires a careful thought out trading plan that fits you, without that you are just another leaf on the tree of wall street money, you can easily fall to the ground at any time.

    What I would love to hear from you and other of the more experiences traders is about your trading plans, are they specific?, do you stick to them always?, what is your loss limit (do you use ATR)?, when is enough enough? do you have an automated way to generate trade ideas based on technical indicators or do you browse the papers and look at news for ideas? what is your view on the currency situation that is evolving?


  585. Andy, Optrader

    Thanks for the good comments for me. 10% I think is really nothingness compared to Phils gain. :-)

    When the time is come, I can think about a fund as a LTP.
    But If I get a real trader I can manage all my money self like Phil with the LTP.
    We´ll see what next week brings. But what do you think about a little more Hedging in the small portfolios? Is it to expensive?
    I like to take profits from Hedging, but when you don´t Hedge you can´t take a profit when the Market going the wrong way.


  586. Andy,

    I guess I did not understand that Alex was a beginner. I just thought he had just joined PSW.
    Yes, I agree with you, I am not saying that a beginner can expect 10% a month right away, but it is definitely something that is not difficult with a little bit of experience and a lot of discipline.
    About your questions about loss limit etc…these are things that I have explained many times, so it should be easy to find the answers, especially in K1.
    But to give a quick answer, yes my trading plan is VERY specific, especially about position size and stops. I always have a stop before I enter a trade and I always stick to it. For everything else (trade ideas, technical indicators etc.), I have explained my method and it is in K1, but it is very personal and there are thousands of ways to make money. But to make money consistently you need to have a trading plan and you have to respect your stops.



  587. Andy, yes If the Dollars falls further I must take more Dollars of in the coming months.
    But With all calculations I need max. 1000€ for a living. So I´m constrained to let my Portfolio grow like Phil it did: STP from 400K in 2007 to 1M in 2008.


  588. Opt – thank you again! I have some experience with this style for stocks and for much longer term trades. It was easier to keep the portfolio balanced because timing was not so critical. Also I didn’t sell in parts, just used hard stops for the entire position.

    Learning a lot on this forum. Thanks!
    D


  589. DM – as the name (and probably language in my posts) suggests, I am Russian, living in USA now.


  590. Opt,

    thanks so much for your points on the trading plan, I am actually working on my own at this time, it takes a bit of time, but it is the most important thing I have come to realise, if you are to survive. An additional thing I also realised is that you have to get with a style that fits you and with that I don’t mean satisfies you, I realised that I got satisfied by always trading, but feeding that satisfaction was working against any possibility of making a profit, so what I am trying to say in a convoluted way is that you can use others plans as inspiration, but you need to work out your own and make sure you play to your own strong points.

    Again I am very thankful for having discovered PSW and I have the utmost respect for all on this board and I am especially thankful that Phil keeps this whole site running, I am sure he would be financially fine without out constant nagging and stupid questions, so Phil thanks for your patience and making this whole thing happen and to Opt for your sharing of your entries and exits, I learn a lot from them.


  591. Andy, you’ve made a huge step by understanding that you need a trading plan. Most traders never get there. I have a strong opinion about this and I don’t think people can make money consistently until they take a piece of paper and a pencil and write their trading plan. I know that for me it was what started everything (I don’t mean making big money because in fact I probably made bigger money before but it was luck and some incredible runs in Apple etc., but since I have had a trading plan I have made money consistently, almost every month) . But unfortunately it is way too difficult for most people because we are lazy and we think we know better. But believe me, entering positions because we “feel like it”, without stops, without a strategy, is a sure way to blow-up our accounts. If it was that easy everyone would be doing it.
    It is amazing how people believe that they can make money in this job by doing exactly what most people are doing, believing they can just do it better by being good at entries.


  592. Regarding stops, what would you guys suggest to follow phil’s LTP strategy ?


  593. More articles posted in the future Phil’s Favorite’s section, http://philsbackupsite.wordpress.com/, not much real optimism out there, unless I’m just missing it.


  594. Well a swift little war in south-america could contribute to a new oil record this week..
    http://news.bbc.co.uk/2/hi/americas/7274038.stm

    If this goes down, which I think is likely considering Mr. Chavez’ political options (when all else fails go to war), this could be a very long-drawn affair and I will bet quite a bit that the US will get involved, anything to bring down Chavez, un-nationalize everything (including the time) and sell oil exploration back to Exxon and others.


  595. Oh and to the shock of the entire world, Medved is going to win the Russian election, quel surprise…

    http://news.bbc.co.uk/2/hi/europe/7274001.stm


  596. Dmitry – Good, thank you. Russians and the middle easterns are some of best forex traders I’ve known to date. Very technical heavy and brilliant in programming. I’m surprised of your interest in the US Stock Market, but since you’re living in the USA, it makes more sense.

    Opt – Trading plans are awesome, but before I develop one, I always seem to be sucked into another theory of the market. It always seem that I’m at square one, gah.


  597. AAPL: Jim Goldman (CNBC) piece … wants Jobs to announce buyback.

    http://www.cnbc.com/id/23437225/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

    GOOG: Morgan Stanley conference presentation on Monday 9:30 am.

    Japan: Getting crushed tonite.


  598. Google sites: Seems interesting, we’ll need to get K1s opinion since the wiki project is his baby.

    Buffett – Yeah thanks a lot Warren! I’m not looking forward Monday at the moment but we’ll see.

    I’m had planned on catching up but family issue came up this weekend and I’m miles behind. Will get to the wrap-up later.


  599. Looks like a ‘Dirty Sanchez’ opening Monday.
    Too funny Primus.

    or perhaps a ‘TTBOWTBW’ candlestick pattern..
    (throw the baby out with the bath water)


  600. ETFC:

    E*Trade Chairman to Take CEO’s Post to Tackle Woes
    By Susanne Craig

    In a move to rebuild investor confidence and possibly position itself for sale, E*Trade Financial Corp. is hiring Donald Layton, a former vice chairman of J.P. Morgan Chase & Co., as the brokerage firm’s new chief executive.

    Mr. Layton, 57 years old, has been chairman of E*Trade since November, when hedge fund Citadel Investment Group injected $1.75 billion into the New York company. Citadel has nearly a 20% stake, and tapping Mr. Layton is a sign Citadel is getting antsy for results.


  601. NIKKEI getting killed – 523.72 3.85% – And I think they are only about 30 minutes into it.

    I think any strenth is going to get sold hard on Monday.

    This guy is pretty long winded but one heck of a good trader. I used to hang out his blog, he called all the major turns in 06 and he is still very bearish
    http://www.bigwavetrading.com/2008/02/29/its-about-time-stocks-breakdown-from-the-triangle-consolidation-on-much-heavier-volume/


  602. If you really want to know (to anything), you should ask our Rev. in Hamilton.
    http://www.hessvillage.com/advice.php


  603. Google Sites and PSW wiki: Last I heard, Jared and company were making great progress on a wiki integrated into the main PSW site. I’m sure the Google stuff is cool, but virtually all of what we all want to share and work on is Phil’s copyright and property, so I’m uncomfortable recommending that we use a public-domain system to share it.

    The Google Sites page referenced seems to suggest it is possible to restrict who gets access to your wiki pages, but if I read it correctly, that means that each of us would need to maintain an access control list to allow each and every PSW member access. Which sounds like an insurmountable amount of extra work to me, especially as the access lists would need to be kept up with changes in membership.

    As always, I’m happy to be shown to be wrong.


  604. All – TOS new build today – Just opened TOS tonight and saw all the new tabs etc – new feature on the new “StockHacker” tab (used to be called “SCAN”)

    SizzleIndex – lists stocks that volume has been increasing on Options over the last 5 days. If you add Call Sizzle and Put Sizzle to the grid, you can see what stocks have increasing volume on call and put side.

    Anybody played with this yet??


  605. Good morning everyone.

    March continues where Feb left off. UK opens down 1.4%.

    US futures look bad


  606. Asia Markets : Monday, March 03, 2008

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

    Japan*

    12992.18
    -610.84
    -4.49%

    Hong Kong*

    23584.97
    -746.70
    -3.07%

    DJ Shanghai*

    503.91
    12.15
    2.47%

    S.Korea*

    1671.73
    -39.89
    -2.33%

    India*

    16677.88
    -900.84
    -5.12%


    Baltic Dry Index (BDI)
    +281 7613

    * at close
    Sources: Dow Jones, Reuters


  607. Asian Stocks Get Hammered, Tokyo Loses 4.5%
    Asian stocks sank sharply Monday, with Tokyo the hardest hit market, closing 4.5 percent lower, burdened by growing fears about a U.S. recession and more writedowns in the financial sector.

    Japan’s Nikkei sank 4.49 percent, with the Nikkei hitting a nearly six-week closing low as Honda Motor, Sony and other exporters were battered by the strong yen and on growing U.S. recession worries. South Korea’s KOSPI finished down 2.3 percent as renewed recession fears in the United States hit exporters. Australia’s S&P/ASX 200 Index finished 3 percent lower. Financial stocks were hardest hit. Hong Kong stocks fell more than 3 percent, tracking losses in global equities on concern over weakness in the U.S. economy, with investors looking ahead to a series of major company earnings due this week. But the index will be likely be helped in Tuesday’s session.

    China’s Shanghai Composite Index bucked the trend to finish up more than 2 percent. Chinese stocks climbed, led by large caps such as PetroChina, as the market performed better than many investors had expected with large amounts of new shares becoming freely tradable. China Business News estimated that 371.9 billion yuan ($52.4 billion) of shares would become tradable this month as lock-up period related to IPOs and state share reforms expired, with two-thirds of that amount becoming tradable on Monday.

    India’s benchmark stock index slid 5.3 percent Monday, tracking other weak Asian markets, as investors reacted negatively to last week’s federal budget.
    The Bombay Stock Exchange’s 30-share Sensex index dropped more than 939 points to a provisional close of 16,639.54 points.

    European Financial Stocks Tumble
    Banking and financial markets stocks slid sharply in Europe Monday, dragging major indexes down across the continent as worries about the credit situation and a big selloff in Japan hit investor confidence.

    Wall Street’s sell-off prompted an unwinding of the carry trade, where investors borrow currencies with a low yield like the Japanese yen to buy high interest rate currencies. The dollar hit a three-year low against the yen.

    European financial stocks tumbled in early trading, with shares of UBS suspended after the Swiss bank fell more than 5 percent as fears mounted about continued losses from weakening credit markets.

    “Further writedowns appear likely and could be large,” said analysts at bank Credit Suisse, estimating another 15.5 billion Swiss francs ($14.85 billion) in potential writedowns at UBS and lowering their target price for UBS to 57 francs from a previous 67 francs.

    The Dow Jones STOXX banking index slipped 2 percent, while the financial services index dipped 1.7 percent and the insurance sector fell more than 2.1 percent.

    British-listed miner Xstrata fell 1 percent after reporting a 13 percent rise full-year net profit, shy of the 15 percent rise analysts expected. But shares in EADS soared more than 10 percent after the European defense group successfully defeated U.S. rival Boeing to a $35 billion refueling tanker contract. And Volkswagen agreed to increase its stake in Swedish truck maker Scania to more than 68 percent, a move seen to pave the way for a merger with MAN.

    And in politics, Russian outgoing President Vladimir Putin’s successor Dmitry Medvedev sailed through the country’s national vote and pledged a policy of continuity in his first official address.

    FTSE : -1.43%
    CAC : -1.47%
    DAX : -1.59%


  608. Morning DB, Doesn’t look too hot on the bullish side right now, I was looking forward if Phil had some change in heart of his overweight on the bullish side or we where to move into more calendar spreads on the put side. I think like most my brain is mostly wired for bullish thoughts, but I guess re-education is on the cards.

    I was looking over the weekend on a combination of YEN/USD bullish view as I think they will let the rate drop below 100 (last time the Japanese propped the USD up, it really didn’t pay change much after a few months) – this can be accessed through ETF’s. DBA or DBC as a commodity gainer, as from what I understand the outlook for some immediate change in agri commodities for pricing to drop looks rather dim. Slightly irritates me that I didn’t get into DBA back in Jan where it popped up in one of my daily screens, but that’s what happens when you don’t have a good trading plan and stick to it…. Still working on that and just wanting to maintain positions currently open with minor adjustments where needed.


  609. Oil Falls Below $102, Weak Dollar and OPEC Support
    Oil fell below $102 per barrel on Monday, finding support from a sharp decline in the U.S. dollar and expectations oil cartel OPEC would leave its output unchanged.

    U.S. light crude for April delivery [ 101.51 -0.33 (-0.32%)] was down. London Brent crude [ 99.42 -0.68 (-0.68%)] fell. Crude oil is priced in U.S. dollars so when the U.S. currency declines oil prices rise to reflect that. “Recession in the U.S. is still a worry but that is not an immediate concern at the moment,” said Rowan Menzies, head of research at Commodity Warrants Australia.

    A combination of a weak U.S. dollar, supply disruptions from Ecuador and a fire at a European natural gas terminal had helped oil rally to a record $103.05 on Friday, beating the inflation-adjusted high of $102.53 reached in 1980 after the Iranian revolution. Rumbles from the Organization of the Petroleum Exporting Countries (OPEC) over the weekend also strengthened expectations the cartel will keep supply levels unchanged, rebuffing calls from the U.S. to hike output and tame prices.

    U.N. investigators want Iran to explain an organizational chart linking projects to process uranium, test explosives and modify a missile cone for a nuclear payload, diplomats briefed on the matter say.

    In Nigeria, attackers armed with AK47 rifles and dynamite blew up a police houseboat on Bonny Island, an oil and gas export hub in southern Niger Delta, a police spokeswoman said on Saturday. Venezuelan President Hugo Chavez asked for tanks to be moved to the Colombian border and mobilized fighter jets on Sunday, warning Bogota could spark a war after its troops struck inside another of its neighbors, Ecuador.

    Crude speculators on the New York Mercantile Exchange increased net long positions last week to the highest in seven weeks, according to data from the Commodity Futures Trading Commission released on Friday.

    Net crude long positions rose to 91,625 in the week to Feb. 26 from 60,873 in the previous week

    Broad Dollar Losses Deepen, Hits 3-Year Low vs. Yen
    The dollar’s broad losses intensified on Monday, taking it to a record low against a basket of rival currencies and a three-year trough versus the yen, as concern about U.S. economic health gripped investors The dollar also hit a record low against the Swiss franc approaching 1.03 francs, while dollar/yen moved below 103 as worries about a U.S. recession stoked expectations of aggressive rate cuts. The yen and Swiss franc benefited as investors unwound some leveraged carry trades, in which funds are borrowed in those low-yielding currencies to buy higher-yielding assets.

    The dollar [102.98 -0.73 (-0.7%) ] was down from late U.S. trade on Friday against the yen, having earlier hit 102.62 yen, its lowest since January 2005. The euro [ 1.5174 -0.0003 (-0.02%) ] was slightly lower versus the U.S. currency, near a record high of $1.5238 hit last Friday, according to Reuters data. The dollar’s trade-weighted index against six major currencies dropped to 73.445, the lowest since it was created in 1973, while the Swiss franc hit a record 1.0308 per dollar.

    The dollar’s tumble comes before central bank decisions this week that will highlight the differences in how major economies are handling the U.S. slowdown combined with the surge in commodities and inflation. The Reserve Bank of Australia is expected to lift rates to a 12-year high of 7.25 percent from 7 percent, even as the Bank of Canada is seen cutting rates. Unchanged decisions were expected from the Bank of England, the Bank of Japan and the Reserve Bank of New Zealand. The European Central Bank was also seen keeping rates steady, though analysts were looking to see if ECB President Jean-Claude Trichet takes a less hawkish tone.

    Federal Reserve Chairman Ben Bernanke speaks on Tuesday and analysts assume he will reiterate his willingness to cut rates.

    Gold hits fresh record on dollar weakness; 1,000 usd in sight
    Gold hit a new record and headed towards the much-hyped 1,000 usd per ounce price as a weak dollar prompted buying. Gold rose to a record high of 984.95 usd an ounce this morning, extending gains on the back of a weak dollar, which made bullion cheaper for those trading in other currencies, and on its safe haven status amid concerns about rising inflation. Against a backdrop of inflation and fears the US economy could be at risk of recession, investors are looking to gold and other precious metals for safety.

    By 10.06 am, the precious metal was trading at 979.40 usd per ounce against 972.20 usd in late New York trade Friday.

    Dollar weakness aside, gold is finding support from high oil prices, which while dipping slightly today seem to have consolidated above 100 usd – thus fuelling global inflation expectations. In addition, there is little indication as yet of excessive selling of gold from either the International Monetary Fund or from European central banks, whose sales remain capped at 500 tonnes a year because of previous agreements. The IMF, the world’s third largest gold holder, was last month given the green light to sell a portion of its reserves in a bid to plug its ballooning annual deficit.

    Meanwhile, silver was up at 19.92 usd from 19.78 usd per ounce Friday, having earlier touched a new 27 and half year peak as gold’s stellar rally to historic levels sparked investor interest in silver, a cheaper alternative. Platinum was down at 2,159 usd against 2,168 usd an ounce, although analysts said it remains underpinned by dollar weakness, inflation worries, and ongoing supply constraints in South Africa. About 80 pct of the world’s platinum is produced in South Africa, where energy supply to mines looks to remain at 10 pct below normal levels for the next 4-5 years.

    Sister-metal palladium rose to 573 usd against 567 usd.


  610. Good Morning Ramana

    Good Morning Andy

    Have to agree I am a generally Bullish person looking for momentum trades in good companies. Interesting though that I havent made a single trade in the UK since 4th December yet my portfollio is the same to almost the penny. It’s lost momentum but the fact they are good companies seem to be holding them up despite the ups and downs being similar to the US. In the US however the hit on what I thought were good companies has been immense with huge drops in almost all stocks. Certainly US stocks have been excessively hit when missing expectation regarding earnings or projected earnings. This leads me to suspect that I may have to tone down the bullishness on my UK stocks as I suspect what hit the US is yet to fully reach the UK. So much to think about still.


  611. Morning all. Monday post is up.