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Will It Happen Wednesday?

Wednesdays have been wild lately.

Last Wednesday was flatish but July 16th was a 477 point move top to bottom with a big 278-point gain.  July 9th took us from 11,115 to 11,505 (390) as we finished down 234 on that day.  July 2nd gave us a 330-point swing from 11,504 down to 11,215 as we closed down 167 points while June was generally calmer, with "just" 200 point swings on your average Wednesday.  So we start today at 11,397, kind of in the middle of the range for the month and in some real need of a move that takes us well over 11,600 and puts us on the road back to 13,000.

We have our housing bill, we have oil struggling to hold $120, we have the SEC restricting the short-selling of 19 major financial stocks (woo-hoo for our financial plays!), we have not too disaterous financial earnings, we have a dollar finally breaking over 73 and about to test the 50 dma at 74.35 (which can send gold tumbling below $900 along with copper and other metals), we have a Fed that may finally fight inflation rather than fuel it next week and we're finally cracking down on political corruption – if we can't get a boost off of this, then I can't imagine what's going to work.

On David Fry's chart we can see that, last time we broke up through this range on the S&P, we were on our way to a 30% run-up that took us to our all-time highs.  Back in mid-2006 we had oil falling from $79.86 in July to $51.03 in January, a 36% decrease that was a huge stimulus for the economy.  35% off our $145 high would take us to $95 and most of oil's 2006 drop came by September at $60, down 25% – which would be just under my $110 target price so let's hope we stay this course! 

Looking back at my articles of the time I see the same concerns over the value of the dollar, the deficit, housing, inflation, Iran/Korea nukes, the price of oil – even the problems brewing at the banks.  That was the famous "wall of worry" we climbed in 2006-2007.  Well, we are plenty worried now and S&P 1,300 looks like quite a wall ahead – I think climbing that is going to make the bears plenty worried indeed but, like 2006, we must get a break in commodity prices that quietly redeposit dollars back into the hands of consumers.

Last year I pointed out that investors had their head in the sand as we ran the market up to record levels and ignored the MASSIVE problems that were brewing all around us and this time I believe we have swung the other way and are now over-reacting to the very same problems we ignored in the last cycle.  So Goldilocks – to recap:  S&P 1,500 is too hot, S&P 1,200 is too cold but S&P 1,400 should be just right and we've got a long way to go before we get there. 

[17-Go+long.jpg]To that end, we're starting to play with the SSO's, the S&P ultra-longs that have been knocked down 35% from their highs last year.  We want to work into a butterfly but our first move is to buy the long leg of the Dec $59s, last trading at $6.90 and, if you have margin for it, you can sell the short put leg of the butterfly, the Aug $60 puts at $2.40 before we cover as the upside momentum slows by selling Aug $59 calls and buying Dec $60 puts.  This play needs to be managed (rolled) if the S&P really takes off but if we get a good entry on our first two legs we can have a very favorable spread.

Another butterfly play we looked at was the UYG's, the ultra-long finanicals but those are going to open up $1 from yesterday's close so I think we'll just take some of the long calls we planned (Dec $20s at $4.90) to offset any over-coverage we have from callers we sold on our financial holdings.   The extension of the short-selling restrictions should give that whole sector an added boost.

Asia got a boost of around 2% following our upbeat market yesterday.   Financials led the way in Tokyo and Nintendo jumped 34%, which is no surprise to anyone walking into my kids' playroom.  Strong US sales indicate a not-quite-dead consumer, much like AAPL, when people really want something, they still buy it.  DCM bucked the bad telco trend with huge earnings, another good sign for the global economy.  Europe is also up over a point in early trading despite a poll showing very weak economic sentiment.  That's a strong indication that the US markets are back in charge so it's all up to us to pull this one out!

It's oil, oil, oil today with the inventory report at 10:35 today and I'm already hearing notes from GS digging their heels in and telling their people to hold that $120 line.  I doubt there is much hope of that if we get another net build as the traders have already shorted as many barrels as they can for delivery and, with the markets picking up, it's hard to drive new money into the very tired looking energy sector.  They've tried Iran, hurricanes and Rent-A-Rebel already this week, now GS is telling people demand is stronger than we think and even that is not getting oil back in the green pre-market.

I said last night we need gains here, not consolidation – let's hope we get it!



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  1. CEPH beat and has a 19% short interest.
    MT with huge beat.
    JLL and CBG misses bode poorly for real estate today
    HES met
    EOG beat
    LAZ Lazard beat as a financial, only small short interest though

  2. Pisani on CNBC just said 50% of market letter writers are bearish- the highest % since 1995. That has to be bullish.

  3. I’m not going to be happy if AAPL and GOOG don’t participate.

    C looks lslow out of the gate and Nasdaq leadership would not be a bad thing (especially as we still have those QQQQ calls).  MER is zooming, that’s going to be great for those calls!

  4. Phil, I got into the V spread per yesterday Jan 75/Aug 75, could you clarify the strategy past earnings.  Once earnings are announced Aug call will loose its premium. 
    On a drop I can take out the caller and recover with another caller? 
    On a pop, what do I do, wait till expiration and roll?

  5. Not buying into this rally so let’s be patient on new plays.  That’s 300 points in 24 hours and I want to see 11,450 hold for a bit and 8,500 NYSE would be nice.  We’re probably going to drift into oil inventory but a nice build there that sends oil below $120 and this market could be off to the races. 
    They are predicting a build in product of about 3M vs a 1.5M draw so we need to do better than that….

  6. wow GOOG already went negative.

  7. GM Phil – Why is MA not showing the same love that Visa is seeing today? Looks like more juice riding on Visa than MA. What are your thoughts on the possible reasons? I am suspecting that folks are waiting on the earnings and guidance to clear some air for both and after that maybe it will play a catch-up.

  8. Picking up some UYG $23s to cap my heavy financial coverage until I decide what do do with the covers, not wanting to roll them just yet until we look stable up here. 

    Let’s take the money and run on MER, that’s a very nice gain for the small portfolios so

  9. Oops, MER – So out at $3.30  XXX

  10. BAC facing some resistance around 34.25 which is the march low.

  11. USO first things first, it needs to break yesterdays low of 97 immediately.

  12. Stopped out of USO

  13. MJ You might get your thing today… A friend who’s into this stuff told me the draw won’t be what I think it would be… You guys are lucky.

  14. it would be cool if crude falls to Phil’s target of 110 today :-)

  15. Phil, the MER trade was only listed for DTP … when did it get into the small portfolios?

  16. Is BKX similar to XLF? Are BKX options a "cash settled" contract similar to your RUT options?

  17. GRMN is getting crushed (down 14%).  They beat on profits, missed on revenue and cut forcast.
    Garmin (NASDAQ: GRMN) shares are crashing, trading 11% lower in premarket action after the company reported quarterly profit that was above market estimates, but revenue missed expectations and 2008 outlook was cut due to macroeconomic conditions and high fuel prices that have already impacted growth.

  18. actually screw it I’m going back into USO and waiting for the draw… You’ll know if I stop out or not.

  19. fonts screwed up again?

  20. Fonts Might be due to Vicky’s post above…

  21. NLY   Anyone looking at it?   I think it is close to a steal at these levels.

  22. V spread/Yev – that wasn’t mine!  You have to wait for the earnings and see which way it goes.  There are too many variables to go through them all in the middle of a trading day before we have any idea what’s up.

    Now we’re looking better over 11,500, if we can hold this and get back to NYSE 8,500 all we’ll need is the Nasdaq to come around but they are looking pathetic, especially GOOG so I’m still not excited…

    MA/Bball – MA is fairly priced, V was unfairly down but now a little much at $77 without earnings confirmation.  I’m expecting tepid forecasts to dampen earnings enthusiasm as AXP isn’t the only one with rich cardholders (you have both right?)

    MER – Oh never mind, I thought we did that in $10KX but we didn’t (I think I decided it was too dangerous).

    Gold broke below $900!  Oil touching $121.

    I forgot to mention ELN – they got crushed on mixed results of a study and I love them at this price.  The Oct $20s are $3.70 so let’s get 20 of them in the Butterfly collection as a starting leg but we’re going to give them a while.  In stocks portfolio I’m going to sell 20 $20 puts for .75  XXX

  23. oops I am very sorry if I messed up the fonts.

  24. NP Vicky, easy to fix once we know what post it was.  It was the pasting of the prior comment that messed it up, no big deal.

  25. until something is actually done that changes the excessive speculation game in oil, it could easily be rammed back up to $145 (so good on a DM for taking the other side of the trade).

  26. Fonts – Great…will be careful next time.
    Phil, for AAPL are you still sticking with the plan to sell the 170s for 2.00 for the naked 165s in the 25KP?

  27. USO/DM- i hope u get ur pop higher on an unexpected draw b/c i want to roll further into the future….

  28. hey GOOG, show phil that you’re not pathetic!

  29. GOOG/other search engine- my friend did a search for "LA earthquake" yesterday and said it returned nothing pertinent to the events

  30. anyone else think we’re setting up to be disappointed by the oil inventory report?  or am I just paranoid

  31. Phil;
    what changes have you made on VLO FLY ? if any,

    the energy report should give VLO a pop, shouldn’t it ?

  32. xian
    i tried out the other search engine on several items, it is absolutely no competition for GOOG the way it stands currently.  it’s called cuil.

  33. Just because you’re paranoid it doesn’t mean people aren’t out to get you.

  34. xian – Thanks xian, hope things go in your best interest!….I originally played it against my model.. and I have to stick with it… Even though my buddy strongly went against it.. I have to do it.. I have to have faith in what I’m doing… and if it’s a failure, then I will find the errors.

    Wikipedia will compete against google.

  35. true that ephmen…i like to refer to those people as "they"….they like it too

  36. JLL   I’m thinking of taking a position.   There is huge premium in the front month, but I think there might be bounce back.   In general, (non-stock specific, just when a company you like LT is hammered by bad earnings) is it better to go ahead and book the premium now or wait a day or two to sell the caller?   How’s that for an unanswerable question?  At least you can’t give a wrong answer!  :-)

  37. Q’s testing important 46 area- it would be nice if AAPL and GOOG would play along.

  38. BIDU still relentless going up. Gonna have to sort it !!

  39. crude- any draw will b bought and the apologists will like "u c, blah blah blah"

    good to get rid of putters too-

    if we build again, then i think it drops hard….the mo is working

  40. xian, I liked the "true that"  I taught for a year at an inner city school and adopted it into my vocabulary…you don’t hear it much in financial discussions

  41. AAPL- any rally is totally unsecure until its firmly  above 160

  42. DM, interesting that you see Wikipedia as competition for GOOG since they rely on donations and appear to be committed to staying noncommercial.  I guess they could change their mind, but they seem to be of similar mindset to Craigslist.

  43. thrue that- i use it all the time when discussing science…also, the intensifier "mad" and of course, "totally"

    depends on the audience and how well they know me

  44. Gas down 3.4, distilates up 2.4, crude down 100K – pretty much as expected net.

  45. wow, USO positive now

  46. USO spiking – someone trying to pump it?

  47. troy – I think non-profits can compete… Why not? What they are doing is a great thing for humanity and the internet… Wikipedia is an archive of information I want… Google is everything I don’t.

  48. DM, congrats. USO spiking up big time.

  49. MJ – Keep your knickers, they’re still worth something..  Crude up a buck isn’t a big deal.. I need to to travel 10 to make the model worth it.
    Phil - Crude inventories -81K vs. consensus estimate of -1.3M. Gasoline inventories -3.52M vs. consensus estimate of +350K…. Gas is not inline, hence the uptick.

  50. AAPL at 160

  51. MA & V – Anecdotal information.  One of my banking friends has reported back.  She says that credit card transactions have "Exploded over the past five months".  It seems that people are keeping what cash they have and running their card balances up.

  52. Highlander
    July 30th, 2008 at 10:49 am | Permalink

    wow, hyenas could not keep aapl from reaching r1 point. maybe a breakout possible!!


  53. DM- isnt the model trying to predict the immediate future of news (unknowable/forseeable) events?

    seems a little difficult on the short term

  54. Phil/OIH,
    What are your thoughts on Jan 09 puts?  Or spreads perhaps? 

  55. DM – I guess I just don’t see it as having played out that way so far.   Wikipedia has a much smaller scope.  Interesting thought though – maybe i’ll change my mind if it really looks like Wikipedia is eating into their profits.  Probably wouldn’t be such a bad thing if it happened.  Someone’s obviously going to pose a major threat to Google at some point.  I’ve been thinking it might be more along the lines of Facebook, but I’m no expert on this stuff that’s for sure.

  56. VLOfly/RMM - no changes.

    AAPL $165s are too annoying, we’ll have to bail if we get even so tight stops over $3.80. 
    GOOG $530s – Let’s get out of these at $2+ if we can, only 12 days left!
    HOV going the wrong way but it’s Sept so we can wait
    QQQQS – Let’s take $2.85 and run
    FRE – Selling $9s for $1  XXX

  57. GOOG has tested 486 level 5 times in last 2 days.

  58. DM, right. I forgot your target was 110 on the USO. Another 11 more to go :-)
    POT zooming!
    thinking of buying some more Jan 2010 USO puts. Rolled my Jan 2009 and Jan 2010 100/105 puts to Jan 2010 90 puts few days back.

  59. Stopped out of UYGs, now I’m really glad I didn’t roll the financial callers!

    Same on AAPL, would love to get out,’
    Same on GOOG
    HOV out at .40.
    VLO rockin on gasoline draw but oil going up should put a cap on their rally.

  60. Phil:
    DNA hovering around 95 with expextations that offer by Roche will be taken up to 100$,
    my DNA jan70 is deep ITM, I am tempted to take out some cash and roll this one to jan90.
    jan 90 is were my short calls are as per your recommendation,
    what do you think about this ?

    Txs for help.

  61. troy – Well I use google when I want to find information on a certain topic… Say learning about Python. You get this versus this

    GOOG just seems more cluttered, and less to the point. 

    Xian – For sure, but I believe the butterfly effect though… Say there were only 2 indicators… Consumer spending and Oil inventory… Now if you were given a starting point (Consumer spending is extremely high)… Then by deduction you will  already know the future… That oil inventories will be low. Then you will know that: oil prices move higher, consumer spending will tighten… Etc.. Thus the future is a product of the past.

  62. Day Trading:
    BA is frustrating now, tempted to either kill it or sell Sept $65s and roll down to Nov $60s for net .30, which is worth it and I would do it if not for the fact that it isn’t a day trade.
    HOV – same as $25KP, no reason to hold it.
    GOOG $470 calls – let’s take out 1/3 at $20 and 1/3 at $18 and all at $16 if we get so lucky/unlucky…

    Bush coming through with his non-energy policy.

  63. DM- i think there’s enough sprad in the outcomes from the same stimulus to makes things truely unpredictable.

    look at quantum stuff, those laws r really just a series of probabilities…given enough time, events will occur that r unfavored by probability.

    maybe if we had a record of ALL the events that ever happened and ALL the time to compute what would result, then we could look into the future…until then, it’s just educated guessing (and that’s useful, too- but not perfect)

  64. sprad = spread

  65. NOV doing really well

  66. xian – That’s what I thought too. It seems possible from my end now… After a few months of work, I’m either crazy, or making progress… Hopefully the latter.

  67. Phil, googfly #1 now has a Dec  460 call and 510 put? tks

  68. USO  I share the general bearish view and that conspiratorial #$@!$#!@s are ruining the country, but I’ve sold a bunch of putters and one set is ITM so, if you don’t mind, let’s get USO above 103 by expiration and then we can continue to run it into the ground….thank you, you may resume your normal trading.

  69. This market is frustrating.  Especially HOV.  It can’t seem to make up its mind.  What is it waiting for?

  70. Phil:
    do you have your AAPL calls naked ?
    if not what shorts do you have ?

  71. BIDU knows !!!! I went short :-(

  72. Phil – any thoughts on a GRMN play down here?

  73. anonymous – that was me…sorry

  74. Can anyone tell me what $110 oil is in terms of price on USO?

  75. Phil:
    what are the NAKED options for today ?

  76. POT could be a nice short right here (for a day trade).

  77. MJ/POT – why do you say short? Because it got bounced of 20 dma?

  78. Phil,
    What is your thought on PGH – gives good dividend and the management seems to be good (in hedging, etc.)?  Also your thought on merged SIRI/XMSR.

  79. USO rebounding from the Pivot at 98.45

  80. Someone posted a formula a while ago that USO*1.236 = Oil Price… I don’t know if that is right or not but I’ve been using it.

  81. cnicola, just that it (POT) failed to hold 210, I thought it was a nice short  below 209.5 or 209.

  82. WFR – I’m on a not-so-great spread here, and need some advice:
    5 JAN 2009 45 calls base: $6.04, now: $8.60
    -5 AUG 45 calls base $2.10, now $3.70
    The deltas on both are relatively similar, and I fully covered cause I wasnt feeling too sure of the thing. Best way to adjust?

  83. FSLR  Any one making plays or predictions into earnings?  A 260/280/280/300 Iron Condor yields a $17 credit for $20 of risk, is that enough?

  84. Stocks:  No changes, all looking good.

    Butterfly collection: No changes.  Tempted to adjust BIDU or cover open AAPL calls but let’s see what kind of trend we have.

    Oil – best excuse for a rally they’ve had in a few weeks.  This is the big one DM!  I’m surprised, according to Kudlow, if Bush says drill, drill, drill that solves our oil crisis…

    OIH/Texas – despite the puts we took the other day, I don’t like shorting the OIH as they have lots of very solid companies that will do well long-term as we do have actual demand.  As a long-term short, I think the XLE is a better play but they are already down 20% and bouncing so not just now.

    Wiki – You can’t run a $1Bn server farm with donations to a non-profit!

    DNA/RMM – I would take the money and run.  Why mess around if you have a good profit?  You still have a huge premium and that will go away once they firm up.

  85. That’s funny MJ.. Cause I’m long it… Going to 300 baby.

  86. Phil – Dont adjust the BIDUfly – just adjust the share price DOWN pls !!

  87. MER  Anyone looking at it as an LTP?    They added some strikes in the front month so it would be easy to roll and they have lots of premium.

  88. DM, I don’t have any short position on POT. Damn good fundies, no way I am going to short this except for a day trade. If it goes above 220, I am going to buy some calls.

  89. So things looked great this morning but after the oil report I guess we get to be in limbo for the rest of the day?

  90. I want to give up on GOOG – it’s really annoying me

  91. DanW,
    There’s still quite a bit or premium in your WFR shorts…I am watching the WFR butterfly in the 25k and we have not adjusted that at all yet.

  92. Wiki / Phil – Keep the chocolates, Wikipedia is the first place I will donate too…

  93. troy – Wikipedia must be taking market share already LOL..

  94. Took out GOOG callers on that dip,  Risky XXX

  95. Phil:
    DNA: for the short jan 90, buy to close also as the timevalue destruction is very slow because of the long time to Jan.
    True ?
    So; you would not wait for an improved offer of an extra 5$ from Roche ?
    You would stick with your profitrule:if up big, cash in.

  96. Thanks MJ.

  97. Googlefly/Potter – there is no change from the weekend.  In the $25KP we have Dec $510 puts and Dec $460 calls on one end and on the other we have Sept $530 puts adn Dec $460 calls.  The Aug $480 callers should be taken out on both plays at $14.  XXX

  98. WFR/JB – yes, that is what is confusing me. Being a vertical in the money is something I’m still trying to get a handle on.

  99. I meant, thanks Ephmen for the USO formula.

  100. AAPL/RMM – My Jan $140s are covered 3/4 with Aug $160s, not an official play anymore as we killed those portfolios.  I don’t care how much you love a stock, you don’t turn down that kind of premium.

    GRMN/Anon – I haven’t had a chance to look them over.  Very complex space, that’s why I dumped them a while back.

    PGH – that’s a very good on Malai!  We used to play them but then they turned ugly.  Now they are a great deal down here. 

    SIRI/XMRS/Malai – I like it in concept but, like any merger, it may be a long, long way from payoff.  I certainly like SIRI as a long-term hold to scale into.  XXX

    Very ugly market turn!  Not at all what we wanted, watching GOOG for re-cover at $470s if it can’t hold $475 and so, so happy I left my financial callers on!

  101. TIE – Buyout rumor not having legs.

  102. USO/Oil – you can calculate it at any time but it changes as adjustments get made.  The fees really eat into the value too (think of the churning) which is why I like playing the puts and not the calls.

    WFR/Danw – That spread is just fine, $45 is very likely for finish, if not, you just roll them up to Sept $50s, which are $2.50 and more than the intrinsic value of your callers.

    Well we still can’t take even $123 oil.  They are spiking to $124 (USO $100) and if they make it we’re really screwed.  I’m not too inclined to bail on this right now as clearly oil shot up and the market fell down so we’re still down on a single issue but it is the biggest issue.

    Oops, there goes USO $100, we are screwed!

  103. Hey Phil,
    If you have billions invested in short term stock market positions (such as sold covered calls), then spending a few million to drive up crude futures which drive down the price of those short covered calls is a good move, especially since you now see that no body really important gets a jail term for it.

  104. FSLR/Eph – we already have a fly for them. 

    BIDU – no problem DB, I naked shorted them for you!

    MER/Eph – well I’m glad we got out earlier, I certainly do like them here as a longer play but scale in carefully.  Obviously the buyers in this market have no conviction.

    DNA/RMM – On a put you sold, it’s the same issue, watch the premium.  Once a price is set, that’s the value of the calls and puts, no more changes.

    GOOG perking up at least.  Loving the $480s here!  Let’s take out the rest of the $470s in the DTP, good plan from before!

  105. Phil – How much are the fees in USO

  106. Phil:
    you often say: this is a good premium, this is of course stock specific,
    also, depends on time to expiration, and on what strike you select,
    how do you make the judgement whether or not the premium is attractive ?

  107. Phil:
    once a price is set, no more change to puts and calls,
    yet if Roche increases the offer to 100$, these prices will increase?? True ??

  108. What is this spike in oil ?
    glad I have cover on USO puts.

  109. Naked BIDU shorts –  Thnx Phil – Its working. Short a few more pls – I wont tell !

  110. Oil $126.00 – Looks like congress might not give the oil mongrels their drilling cart blanche.  That makes it time to manipulate prices upward for some political gain.  Mission bankrupt America progressing according to plan.

  111. Highlander – totally true.  I said that a few weeks ago how dangerous it was that a $30Tn stock market can be yanked around by $1Bn worth of oil trades.  It literally makes owning stocks a bad idea as the system is just as gamed as if the house has a button on the roulette wheel to make it come up 00 whenever they want.

    Meanwhile – Does oil affect GOOG’s business model? 

    In DTP our adjusted basis (after making $3 on our caller) for the Sept $460s is $35 and we are down $1.50.  It’s a very big position so we can’t DD which means we need to be careful here but I’m inclined to wait out this dip if possible.

    USO fees – Whatever it costs them to buy and sell the insane amount of contracts they have to trade every day to keep on par with oil is expensed into the fund.  I don’t know how much but if you chart USO vs. Oil for a couple of years, you can clearly see the negative divergence.

    Good premium/RMM – It’s in the K1, it’s a comparable call based on dozens of factors, like saying "He’s a good shortstop."

    DNA/RMM – Yes if they offer $100 your Jan $70 call will be worth $30 exactly and the premium will be gone.  Currently they are worth $26 (not much premium anyway).  If they are offered $95, they will be worth $25 and $20 at $90.  It’s your risk/reward decision but, like I siad, I’m more inclined to take the money and run.

  112. they really are trying to drive aapl below the pp!!!!!!!!!!!!!!!

  113. I’m going to go out on a limb here and say it’s safe to go back in the water.

    Buying out callers I’m up more than 50% on across the board.  There is nothing I see other than oil driving the market down and that itself was a baseless pump and if arrests are not made I’m going to be really pissed.  XXX

  114. Futures market rumor is that PM of Israel is going to resign and that implied political instability is driving up crude.

  115. White House veto’ing anti-speculation bill so say thank you George for today!

  116. LOL – you’re in for a pissy afternoon Phil!

  117. bush has just got to go. the veto threat of a lame duck is bull shit. why can’t we have the election now? i am a life long republican but the only way McCain will get my vote is to to come out and repudiate this bastard now. i won’t give him till September and neither will most other Republican moderates.

  118. "Republican moderates" ???  That’s the problem, for too many years that term has been essentially oxymoronic

  119. Phil / USO fees – It’s actually on their website:

    In this case the difference between the contract price and USO is +/- 0.005% (per day) for the last 30 days. It’s something I guess.

  120. PhiL;
    Bush vetoeing the anti-spec bill, the guy has not a single fiber in his body which is useful to the people and the nation.

    Also: the lame duck George is not just a lame duck, the word duck is too nice, he is dumb and no bird is dumb, so please do not insult birds.

  121. ephmen:
    true, Republicans by definition never are moderate, always extreme nonfactual claims and views,
    I did a lot of reading of US history: they always were like that,

  122. USO higher today on increased volume, really bad for the world and human beings everywhere. But I guess the aliens at GS will be fine.

  123. Good decision Highlander.  Phil, do you have a link to the Bush veto of the oil speculation bill?

  124. Hi Phil,
    I have the following positions in V
    20 Aug 65P @ 1.725
    20 Aug 85C @ 0.95
    6 Sep 80 C @ 6.74
    What is the best thing to do before earnings release?

  125. <a href="">The Hidden Tax Traps in the Housing-rescue Bill</a> - Here’s my two cents on the housing "rescue" bill.  I don’t see how anything in this bill will help the housing situation and has turned my market view from bullish to bearish: 

    1) The $7500 credit for new homeowners is not a credit, but a loan that the taxpayer has to pay back to the government over 15 years.  I don’t know about you, but I’m sure not going to take Uncle Sam up on that offer, even if it is a 0% loan.  As we all know, you can’t escape a debt owed to the government and if the housing market continues to tank and the new homeowner has to declare bankruptcy, they will still have their $7500 debt to the government they have to pay back.

    2) Almost every real estate investor I know takes advantage of the $250,000 capital gains tax exclusion on a vacation property, which will be eliminated as of Jan. 1, 2009.  This is scary, as several friends that have owned real estate for years are considering bailing on their properties before the end of the year to take advantage of the 0% capital gains.  Additionally, capital gains are likely to rise under the next administration.  I certainly don’t see this provision in the bill attracting buyers to residential real estate!
    3) Banks are not willing to work with future troubled borrowers. One of my friends (who is not that financially educated) bought a house in 2004 using a teaser-rate-loan.  He got the shock of his life in 2007 when his interest rate went from under 6 to 9.25%.  Rather than whine about the situation, he has worked his butt off to get his credit score to the mid 700s so he could refinance.  However, both Countrywide (holds the first) and Wells Fargo (holds the second) refuse to even talk to him about refinancing because he is now upside down on the house, and he has never missed a payment (therefore, no incentive for the bank to refi).  They told him that in order for them to talk to him about a lower rate loan, he would have to go into foreclosure.  His only options are foreclosure or coming up with about $100k cash that will allow him to refi.  In my view, these banks are only interested in one thing and that is tanking the market as quickly as possible so they can get the loans off their books.

    4) Finally, the requirements to qualify for any kind of loan assistance from the FHA are ridiculous.  Many, if not the majority of the people that are stuck in these horrible loans were given two loans to avoid paying PMI – one at 70-80% of the the house value and the second for the remaining amount.  The housing bill requires that the homeowner pay off the second loan in order to qualify for assistance, which for most is not an option (In my friend’s case, he would have to come up with $65k cash just to qualify for FHA assistance).  To add insult to injury, the lender has to agree to write down the value of the house to 90% of CURRENT MARKET VALUE.  If Countrywide is unwilling to refinance a loan for an otherwise qualified applicant, they’re certainly not going to write down the value of the house to 90%.  In my view, this bill will only prolong the turmoil in the housing market.  My friend will continue to make his mortgage payments.  The provision in his contract allowing the interest rate to go up to a maximum of 12% will kick in once the Fed gets interested in fighting inflation and he will, most likely, be forced into foreclosure.  This likely won’t happen until sometime in 2009.

    I would be interested in comments and others’ perspectives on the house bill and the housing situation.  I don’t see any relief in site for homeowners and don’t see anyone doing anything that helps!

  126. Phil:
    do you think the American people janked up oil price today by immediately buying again more gasoline ?
    That is probaly the reason why oil contracts go wild again, oil is up 5$ WHICH REAL BAD AGAIN.

  127. TCK/FDG – Any one watching these two?  TCK buying FDG for $82 + 0.25*TCK.  What I don’t understand is why FDG is trading down below $87 (down 2%) today while TCK moved up 12% today.  Based on today prices that puts the offer for FDG close $94.  I’m long TCK stock and looking to get out of FDG put spread.

  128. Jefree1,
    Re: your friend / rates, it’s funny how the FED has lowered rates how many times in the last year, yet those rate cuts never seem to get passed through to the consumer.

  129. Phil,
    I was expecting the crude speculation to be curtailed and the market to climb higher.  Since Bush has vetoed the speculation bill, don’t you think the oil speculators would be more comfortable taking the crude back to their highs (or atleast higher than what it is now)?  If so don’t you think the market will fall as the crude goes higher?  what is your premise for keeping the bullish stand?

  130. $126 – these guys are amazing!

    USO – LOL, .005% a day is .15% a month of 1.8% a year on that cost alone.  Nice investment!

    Veto link – just the chatter on CNBC so far and I got a text from an oil buddy to that effect as well.  They’ve been very cautious with thier trades as they were worried about the new rules and the effective date, this was Bush’s way of just giving them the green light to go hog wild again.  He’s like a supervillain!   Now the Dems are threatening to shut down government by not passing his bloated budget if he doesn’t stop protecting his oil pals – this could be fun!  The good thing about shutting down the government is it saves us $50Bn a month…

    V/Foredu – The best thing to do is take the money and run after that 10% pre-earnings gain.  You have bloated premiums that will disappear the second they announce so V has to get to about $82 (another 10%) just for you to be even on your $80s, which will wipe out your $65 puts and do you no good at all on your Aug $85s.

    Good points Jefree.  Like I said yesterday, I don’t like the final version, it’s the same bastardized junk we always get out of Washington and every time we spend a few hundred Billion on the wrong solution, it takes money away from the right solution.  Doing something this big that doesn’t work can leave us worse off than if nothing was done at all.

    Gas – I am pretty sure the American people didn’t run out and start wasting gas last week.  3.5Mb drawn out of 140Mb consumed each week can have a lot of reasons (like refiners simply not making it as prices dropped) and this is a major load of BS but what are you gonna do.  GS comes out in the morning and says demand is high, the inventory report says demand is high and Bush says he will veto legistlation to make sure oil is traded based on demand all in the same day boom, boom, boom and they ram the price up $4 in one session (but we’re still just $1 over yestrerday’s high so I don’t see what all the fuss is about.

  131. why doesn’t the congress ask GS to testify on crude prices. The bastards put out a note today saying the demand slump is just temporary. We all need to show it to them that if we can all conserve, we will cut it down by not 2% but 20%.

  132. JB – They have gone down over the past year from 9.25 to 8.75%, where he is currently at – still way to high for someone with a mid 700 credit score!

  133. Phil,
    GDP – any thoughts on tomorrow’s numbers?

  134. Jefree,
    You would think the banks would want to work with him on that interest rate…seems like they could care less if he forecloses or not. I guess that is one way to look at it though, if they don’t work with him and he forecloses, they get to take his house, write ii off as a total loss (it isn’t), then resell it to him at a lower price, but this time charge him 12% because he is a credit risk with a foreclosure to his name.

  135. Phil, my V spread Jan 75/ Aug75, this morning the short call was up on the long call, now its reversed, the long call is ahead, I guess premium suckage has started.   Aug calls still have 60+ impl. vol, where Jan has 50.  Should be interesting.

  136. Phil:
    tempted to buy more USO puts oct 100 ?

  137. Phil:
    agree, OIL going up because the traders cry hip-hurrah, thanks George.

  138. Jefree 1 – Thoughtful commentary.  I agree with what you have said and was sharing some of those concerns with a banker this am.  One part of the bill that could have a tangible benefit is the increase to $625,000 for "Jumbo" loans.  This should allow for a greater number of buyers in the $400,000 – $750,000 range who were "Locked out" via the jumbo/non-conforming label that mortgages in this segment carried previous to this legislation.  

    At best, this legislation could only help 400,000 out of the 3,000,000 families facing foreclosure this year.  Yes, the number is now 8,250 foreclosures/day.

  139. Phil,
    Re: the speculation bill, I can’t say I disagree with the veto. Pelosi and Reed are holding things up by not working on a comprehensive energy policy that includes provisions for drilling AND conservation AND alternative energy. It’s politics as usual in Washington. If the Dems arguments against drilling are because the oil companies already have all these leases (seems to be their primary reason for not allowing more drilling), write a bill that takes those leases back if they aren’t produced in X number of years. Take the money from all new leases and use it subsidize alternative energy research, then throw in some of your ideas regarding conservation. Really, it’s not as hard as they are making it out to be.

  140. The commodity bull is back and we will all soon be screwed!

  141. Phil:
    what is a good bearish hedge play for the financials:
    buy ULTRA proshares such as SEF or SKF
    buy puts on UYG,

  142. David – Thank you for the comment on the Jumbos.  I didn’t realize that was in the bill and will certainly help some markets (California for example).

  143. Damn – What woke BIDU up ?

  144. forgot to post this yesterday. All this time when crude was falling the fast money guys never brought the biggest contrarian Dennis Gartman. But, he was on the show yesterday and as usual he made the comment on being bearish crude and boom today it is all over! Hats off to the contrarian.

  145. Jefree1, the last thing California needs is help with bigger loans.  In California prices need to come down to reasonable levels supported by people’s incomes.  That is just not the case here.  Not sure if you live in CA or not, but if you are not, then come here and I’ll take you around.  Prices here need to drop another 30-40% to around 2000-2001 levels before it becomes reasonable.  Incomes have not kept up with price appreciation here.  Yeah it is probably good for people who don’t understand the details, but it is certainly not good to keep this bubble going.  
    Anyhow I doubt this bill will help anything, unless banks start loosening up their qualification criteria, real-estate market in California at least will continue coming down.

  146. Phil / USO – It’s +/- 0.005%. Why are you trying to make me feel stupid? What’s gotten into you?

  147. SUN is on a serious return path

  148. Anyone,
    what is turning the market around now?

  149. housing  – high credit spreads are part of the problem, indicative of bank lending contraction versus expansion in spite of fed cuts. All trying to raise capital to offset the crap on their books, which get’s crappier as lending contracts….

  150. MTL, Jan 2009 20 straddle should be a nice play. This is definitely either going to zero or zoom higher.

  151. George, The President has kicked the people again: now oil is up to 127$,
    is the president swearing that he will protect the people, not his oil friends ?????????

  152. Hi gang,  just read above that GWB vetoed oil speculation bill or something.  I’m trying to find that news and can’t find it.  Anyone has a link?  Thanks!

  153. Motorola’s (MOT) Handset Business Is Worth Nothing

    Why is it just the handset business, I thought the entire company is worthless :-)

  154. Phil – I’m considering doubling down on my GOOG in my 10kx.  Cost on first 10 was $2.25.  Considering placing an order for another 10 at $1 with the hope of getting out even, given GOOG seems to be in a range between 473-ish and high 480s.  What are your thoughts?

  155. WLT setting for a nice short with a stop just above the 52 week high.
    Glad I got out of all my coal puts. Have some MEE Jan 09 calls now.

  156. CSCO reports next tuesay, stock taking a beating today on low volume.

  157. Tons of earnings tonight – Who we rooting for ?

  158. Tom2OC,
    I think the veto is a rumor right now…

  159. Thanks Phil,
    I got out of both the Aug 65P and 85C on V. Kept the Sep 80s though and sold Sep 90s for 2.05. I did the last one to capture the earnings premium. Was that a good thing to do?

  160. FDG/Rahul – I never liked those guys…  They are serial underperformers.

    GDP – because of the stimulus, it should be around 2.5% but that will be meaningless by iteself.  Overall economic picture more important and earnings much more important but they are getting the brush off so far.

    V/Yev - the  up down up movement killed the IV of the caller because it all ended up settling at the same $77 it started with.  It will be a very interesting report.

    USO puts.   I don’t know, there’s no saying they can’t do that twice and then it’s the weekend.

    JB – it is not drilling, it is an unrestricted land grant to the same people who already have drilling rights on 80% of the energy resources of our country and, in 30 years, have explored less than 15% of it.  The Dems wanted a bill that required the leasholder to perform or it regessed back to the government and that was fillabsutered.  The Dems wanted a bill that would grant new leases only after land that is already released begins production and that was fought down…  It’s not about the Dems not wanting drilling, they just want it done right before we deal away the last bit of leverage we hold over the energy companies.  That’s right, give up this last 20% of our natural resources and the US has turned 100% of their energy over to Big Oil, who have treated us so well in the past…

    It’s kind of like an abused wife buying her husband knives and guns for Chritmas!

    Financial shorts – That would be SKF calls, best way to play them if you think they are going down from here.

    DM – I’m pretty sure that .005% x 30 days is .15% and then times 12 would be 1.8% a year, not trying to make you feel stupid, just commenting that that is a pretty hefty up-front fee to pay, plus or minus…

    GOOG/Jefree – I’d wait for a real turn.  It won’t cost much more for you to be sure it’s coming back.  Below $480 is really bad for GOOG.  I pretty much think this is a flush, now that they hit $473 again I see block trades coming in and 2.7M shares today is nothing to call a trend over.  

    V/Foredu – Yes, keeping exposure low is good!

  161. Phil Your UYG Fly filled at $6.1.

  162. JB, ok thanks.  I’m not suprised, can’t find anything other than articles from yesterday.

  163. Interesting editorial in Investors Daily:
    In an Obama White House, American sovereignty will become an endangered species. The Global Poverty Act is the first toe in the water of global socialism.

  164. "The Dems wanted a bill that required the leasholder to perform or it regessed back to the government and that was fillabsutered.  The Dems wanted a bill that would grant new leases only after land that is already released begins production and that was fought down… "

    Well then damn those republicans :)

  165. The Dems could get 60 in the Senate this year and then they could be fililbuster proof.  I’m a Dem but even I’m thinking "careful what you wish for."

  166. Although this is not such good news, here is another round for Apple hyena attack material

  167. UYGfly/Bro – After all that, right about on target?

    60 Dems in the Senate and we can rename the White House lawn Red Square!  (just thought I’d say that before Cap does…)

    ELN getting killed on top of the killing that already killed them.  I’ll be buying more but not today. 

    Nice bottom call Phil! (just thought I’d say that since no one else cares..)

  168. Holy smokes, up 168 now! Nice Bottom call Phil!

  169. C – just saw a news blurp on comparrison of MER and C ABS/CDO valuations. Had MER marking theirs to 0.33 per dollar, while C is carrying at 0.46/dollar. They upped C Q3 writdown estimates from 2.2B to 3.8B, and Q3 EPS from +0.08 down to -0.13. They kept Q4 est EPS at +0.26. Looks like source is Fox-Pitt Kelton Cochran Caronia Waller (FPK).

  170. Oh no – they are releasing the Whitney!

  171. In looking at the EIA oil numbers I see some glaring problems with the reporting by CNBC, FOX and Bloomberg.

    First: Refineries ran at the lowest July Utilization rate in history!  Headline should have read something like "Gasoline demand drops so precipitously that refineries drop utilization to 87.2% of capacity".  For your reference, refinery utilization average for the past ten years was 94.7% during the month of July.  Thus our refineries have cut production by over 7.5% against the 10 year average!

    Second: We have 1.8 million more barrels of gasoline in storage then we had four weeks ago!  Total stocks of Crude oil and Petroleum Products rose by 2,537,000 barrels. 

    Most of us recall that in the past, refineries would post a reduction in utilization because of outages or fires or whatever, and it was headline news!  Now the refiners choose to stop producing gas because demand has fallen off radically and it gets twisted around to again, support oil prices!

    I don’t know about you, but I am tired of being lied to by Main Stream Media!

  172. GOOG/Phil – nice bottom, no shit! I had to go look. BOING!

  173. Is it only me but didn’t we see DJI at +30 only a few hours ago?  And oil is up big!   Is this a bullish market or not!  :)

  174. Phil:
    why do you wait until the last 30 minutes to get the market moving up ?
    is this a bottom ?

    If so, great prediction.

  175. GOOG – Phil, the low of 472.81 was at 3:13 – why did you wait until 3:16 to tell us? Greedy bast… : )

  176. Bottom or no bottom that spike was boodly expensive :-(

  177. Merrill’s Surprise CDO Sale: No, Further Hits Not Inevitable at Other Banks 
    There are CDOs, and there are CDOs

    Now that Merrill Lynch has sold a raft of CDOs at 22 cents on the dollar, every CDO everywhere needs to be marked down to 22 cents, too, right? David Reilly at the Wall Street Journal seems to think so , as does Deutsche Bank’s Mike Mayo . Lex at the FT says so, too ……………………

    ………………But, again, not all CDOs are packed with that stuff. Citigroup, with $18 billion of subprime CDO exposure still on its books, is said to be next in line to take a big hit as a result of the Merrill sale. But Mitchell points out that the bulk of Citi’s paper has protections that Merrill’s didn’t (it’s in an asset-backed structure, for instance). And something like 80% of it is 2005 vintage and earlier. That makes a huge difference. Mitchell is absolutely right to note those distinctions. More analysts should.

  178. Is anyone buying some USO puts here or give it a day or two to top out ?

  179. Phil,

    Don´t you think that if oil is going higher, we are going lower? I don´t see any reason to be bullish on the markets but bullish on oil again if they break up more.
    Would you buy DIA puts and cover everything?


  180. Seems to me that the funds want to get back in some stocks before the end of month.  Could be more of the same tomorrow.  These guys have huge sums of money sitting on the sideline for months and need to put it to work.  I know a few friends that are just in that position.  They’ve been underweight the market since February and must be itching to get back in before the EOM reports are printed.

  181. USO – lol well the +/- point is to disprove the argument that puts are better than calls…. The fund tries to between +/- 10% a year to the price of oil, which is acceptable when you’re not trading the futures directly.

  182. I think some of this is short covering in anticipation of the SEC broadening the the naked short selling restrictions beyond the 19 financial stocks.

  183. Nice exchange on CNBC.  One guy was advocating the long oil, short financial trade and the other guest said "I gotta respond to something he said…" and then basically, and very politely, called the first guy and idiot.

  184. Phil, if you liked ELN earlier you must love it down here??

  185. long oil/short financial- can i still get in tulip bulbs, too? please?

  186. "House has rejected legislation to curtail speculative oil trading"  It’s official on Bloomberg!

  187. Taking Profits on USO, in SPY shorts.

  188. though the market shorts are incredible speculative… These last couple days of rallying is unreal.. completely against my expectations.

  189. nice bottom call phil!
    thanks for the support.

  190. DM- that’s b/c it’s smart money….JK, really nice work on the USO longs

  191. DM
    I´m with you, I also can´t understand the rally today in the markets while oil gone from 120.80 to 127$. Totally insane.

  192. Phil – I take you covered the naked shorts on BIDU :-(   Bad finish for me.

  193. Utilization – Ah, very good David, so they failed to make 2M barrels (1.5%) that they made last week, that might be part of the problem…  I figured that was it as gas was coming down in price and refiners are sitting on expensive barrels of oil that IF THEY CRACK THEM would have low spreads so, naturally, they hold off on producing until they get a better price.  Again, simple economics yet totally uncovered in the MSM…

    It’s just you Tom.  8-)

    Sorry MCK – I was waiting for my 100K share GOOG order to fill…

    Oil/Alex – Yes but I don’t believe it’s going higher.  It’s a bounce off a 20% drop, that’s all.  The premise for taking it higher was that we are back to consuming gasoline, violating every single data point we’ve seen other than today’s questionable inventory.

    ELN/Harvey – I love it so much I’m going to end up owning it if those $20 puts I sold kick in…

    Wow, another cool day in the books!  Disney beat so my kids are happy.  I’ve gotta go – see y’all later.

  194. V-halted. Wire news

  195. FSLR +25 to 300+ in AH

  196. DM, these last 2 days rally is purely technical and not very surprising. Last Thursday I posted that we would test 1,240 and then bounce strongly. That’s what happened when they run the stops on Monday.
    People can try to analyze all this as much as they want, oil or not oil, but all we have to do is follow the charts. I think we have more upside until the beginning of next week. Some resistance at 1,290, but we could go as high as 1,320 (was my original target). This is a crazy market, very choppy at times, with huge moves, so better follow support and resistance.

  197. out of MEE calls today. Bought the MTL Jan 20 calls and puts, we’ll see how it goes.

  198. FSLR up to 315. Looking like a nice short opportunity now…

  199. Opt – Agreed, it’s a great market. People get pissy when I long stuff that they’re short (or vice versa), acting like I killed their goldfish or something. T/A – Good call.

    Xian – Thanks. The model said it was good buy, though I’ll post it on this forum because a lot of you guys are overly bearish on it.. So I just gave my two cents. But after knowing it somehow works in your favors, then that’s awesome too!

    Alex – Lets make some $$$.

  200. DM, sorry, I did not mean it was a great market. I think it is a very difficult one to trade, and because of it you have very aware of the levels of support and resistance. Technical analysis is your best friend right now, because anyone who tells you that they know what is going on is just lying. 
    But I agree, there is a lot of money to be made right now by taking advantage of this volatility.

  201. No arrests on oil pump today !  LOL.
    GS bull report (wasn’t that mentioned here yesterday) is being used at the excuse by some.

  202. keep blaming the republicans for the anti-speculation bill … that’s a joke.  Its the Dems that don’t want a pro-drilling bill attached so they are using Stalinist tactics to kill the bill.  You know, all the procedural nonsense to not allow a proper bipartisan debate; this way they can tee up "legislation" that is guaranteed to fail and then point their fingers at the other side.
    No wonder this do-nothing democratic Congress has a 14% approval rating, far below even Bush’s.

  203. As I recall, they too were going to be the agents of "change".  NOT.

  204. Phil – Any comments on VISA earnings? Stock trading $80-81 in After Hours now.

  205. Phil – Utilization -The important statistic is that running refineries at 87.2% of capacity results in a weekly reduction in supply of 8.4% or 1,324,825 million fewer barrels of gasoline refined/week over the ten year average of 94.7%!

    Over the past six weeks we have a Total Motor Gasoline supply build of 4,803,000 million barrels despite the radical reduction in refinery utilization.

    Last week we had a 2,847,000 million barrel gasoline inventory build!  (Not a headline).  This week it was a drawdown of 2,733,000 mb. (Headline).  

    Market note:  What is shipped to retailers varies, week over week due to seasonality.  RE: The July 4 weekend sales disaster caused retailers who had stocked up to forego shipments for a few weeks.  Last week retailers filled up again.  


  206. DM, I thought you mentioned that USO long trade was against your model here
    May be you adjusted the model based on this trade.
    Anyways, as I mentioned yesterday there are tons of puts OI on USO at 100, 108 and 110. So this rally in crude for me is not unexpected. And most of us here still have short USO puts that are still close to or at the money.

  207. You rabid anti-Bush guys are at the same time hilarious and sad.  Its sad how the media and Dems and their 527′s have created such a poisonous political atmosphere.  People should chill and have some respect.
    As for oil, did you expect it to go straight down, every day ?  C’mon, that sentiment is what short covering rally’s are all about.

  208. V back under 80, Aug vol should collapse nicely tomorrow.  Phil what would your strategy be for tomorrow on a Jan 75/Aug 75 spread.

  209. re: 2:24 pm .. JB — well said & spot on.

  210. Yev – are you in the real estate business ?

  211. MJ – No no I mean I place trades against my model… Not "Against" it…. I use as a term of referrence, rather than actually going the opposite — Which is purpose defeating. And I know you make some good calls here and there — it’s okay even if the USO rally was unexpected. Most people are bearish on oil, hence the high O/I.  I just happened to be bullish at the right time I guess.

  212. Phil, the Dems "want drilling done right" ?  c’mon, where they been the last 30 years ?

  213. 60 Dems in the Senate ???….. arghhhhhhh
    Frankly, we could pretty much fire 95 out of 100 of the current senate and it would be a vast improvement.
    And don’t ask me to name the 5 we would keep; we might be able to fire all of them.
    Suffice it to say Kerry, Kennedy, Obama, Reid, Byrd, Craig, Stevens, Hagel, Dodd are not on the keep list.  And the 50 or so no one ever heard of, get rid of them also.

  214. Anyone have any idea why RIMM is flying A/H?

  215. Cap, no I am not, but the amount of research I have done over the last 3-4 years could make people think I am :)   At this point my wife hates it when real-estate topic comes up. :)   We’d like to buy a house, but it just makes no sense.  In Los Angeles if you put any kind of a downpayment at this point, you will likely not see it for a very long time.

  216. Today I opened a TOS account, so I plan to do some spreads and report on experience.  Will need a month or so to make some conclusions, but thought it would be helpful for people to know.
    Would welcome ideas on what kind of practical comparisons people want to see though.

  217. pitmlp,  Cramer is pumping RIMM, says "…says Bold is bigger and more of a babe magnet than iPhone…"

  218. I’ll double down on Optrader’s comments. I’ve been totally OCD on TA of general index movement for the past 6 months. Support/resistance, and long term moving averages, and more recently, lots of regression channels. This seems to help make some sense of the chop for me. I’ll be happy when we can dump all this and just go long and go big. But who knows when that is, honestly. :-(    
    Per the suggestion our good friend Mark on this site, I started using Fibonacci MA intervals as well as the standard 5/20/50/200. So 8, 21, 34, 55, 89, 212, 335. The 34 and 89 do seem to land some reversals. And they have proven useful on all my favorite time frames. 5 min, 15 min, 60 min, and daily. Helps to define at least some of the big and  invisible moves which use to vex me. Longish MA’s on the 15min and 60min in particular. They can come out of no where as potential support/resistance. I think the value in the long MA’s on intraday charts is that a lot of people forget about dynamics a week or 2 old. This can lead to very contrarian and potentially profitable insight. 
    Of course I forget all this non-sense on big news. TA is just for tracking the herd.

  219. Thanks Yev.  I guess that is the reason to watch the lunatic. I’m sitting here wondering why my largest short is beating the hell out of me. I can’t believe one man can move such a large cap stock like that. Incredible!

  220. Yev – At times like this you can get; not just deals, you can get steals!!!  You can find homes priced 40 – 50% off right now! 
    You have to live somewhere, and the benefits of homeownership are many.  Make a list of the things you want most in a home.  Choose a location that you would have been priced out of in the past and find the seller who is not just motivated, but HAS TO SELL!  They are out there.  Within six months you will find the deal of a lifetime and all that education on housing will pay off…

    All the Best

  221. Yev – MA showing $280 AH while Visa is a tad below $80. Once MA is out tomorrow morning, we will get a clear direction. Don’t forget these two stocks have been hit alongside the financials and moves will be interesting.

  222. David, thanks, we are keeping an eye out and watching what’s out there.  I believe once this years selling season is over, prices will come down more and quite a bit more sellers will be desperate.  Our timeline is between now and the end of next year.  We’d love to get a place, but in place where we are looking in LA prices are still more then double 2001 prices.
    Here is an example:
    Foreclosure, need to put in another 150K, its completely destroyed inside.  Have a look at the historical price, this place was mid-400′s in 2001, and 1.4 mil in 2006.  Its a hole in the wall next to main road !!!
    Here is another in Santa Monica, look at the 2000 price

    LA was the stock market between 2002 and 2007, sick !!!

  223. DM, ok cool!! Congrats once again on that USO long trade.

  224. Tom … EOM Window Dressing … good point !

  225. FWIW, I sold DUG Aug $29 puts today for 0.40.  Will be quite pleased to get long DUG again at 28.60, but I view that as unlikely.  May add some calls tomorrow.

  226. Opt, you of course are amazing.  This market is difficult.  I have been doing well lately thankfully by playing small and picking my spots.  You just don’t know which way its gonna go on any given day, although Tom’s TA is helpful in painting a picture.
    I am still generally bearish due to oil and the financials.  I just don’t see the financials healing in ’08.  Big rallies from time to time ?  Yes.  But those are going to be sold b/c the news will continue to be bad.  And this impacts everything else.
    Even Phil’s favorites, like BA.  BA is getting killed simply b/c of oil killing the airline industry.  I sold Aug 55 puts today for a small 0.20;  Would be quite happy to own BA at 54.80.  Even though BA looks cheap, given the trend the market and oil, I just can’t get enthused at getting long except for possibly short term trading plays, which is where Opts points about support and resistance make so much sense.

  227. Yev … any views on Orange County … same as LA or different ?

  228. Cap, Orange County is in the same boat as LA, actually entire state of CA is f__ed.  They just went all crazy with Pay Option ARMs, ARMs, Options ARM, taking out equity and living it up.
    Here are a couple of articles about OC

  229. Yev – thanks.  Interesting / scary.

    Even the Washington Post is not grooving on the Messiah.
    Presidential Idol   [Peter Wehner]

    Dana Milbank’s column in the Washington Post, “President Obama Continues Hectic Victory Tour,” is worth reading, if only for these paragraphs:

    The 5:20 TBA turned out to be his adoration session with lawmakers in the Cannon Caucus Room, where even committee chairmen arrived early, as if for the State of the Union. Capitol Police cleared the halls — just as they do for the actual president. The Secret Service hustled him in through a side door — just as they do for the actual president.
    Inside, according to a witness, he told the House members, "This is the moment . . . that the world is waiting for," adding: "I have become a symbol of the possibility of America returning to our best traditions."

    Not to everyone.
    Any man who believes he is “the moment that the world is waiting for” and views himself as the symbol of the possibility and best traditions of America is an individual of staggering arrogance. That is doubly so when, like Obama, you have achieved nothing so far in your life — in terms of scholarship or literature, legislation, acts of valor, self-sacrifice, or anything else – that qualifies you to view yourself in quasi-Messianic terms.
    One increasingly senses with Obama that he views himself not as a presidential candidate but as a world celebrity, with all the vanity and arrogance that accompanies such people.
    Obama, a literate man, might want to reacquaint himself with the Book of Proverbs, which warns that “Pride goes before destruction, a haughty spirit before a fall,” and the story of Icarus.
    Barack Obama is a very talented political figure, but he is not indestructible. And right now he is flying closer and closer to the sun. At some point – it’s hard to tell when – the wings of wax will begin to melt.

  231. from the very staid and conservative rand corp:

    the military is the worst tool for combating terrorism

    reagan took a similar approach

  232. Phil – I was looking to open a QQQQ spread in my son’s account with the 2010 Leaps 40 Calls.  It’s a small account and I was looking for something relatively low maintenance.  But looking at the premiums and factoring in spread and commission costs this does not look like a profitable spread.  What are your thoughts?  Is there a QQQQ spead you like?

  233. Anyone have any news on EMC?

  234. Xian, if the military is the "worst" tool for combating terrorism, what, mind you, is the best (or even better) tool ?  Hopium ?
    Keeping in mind how our military, particularly special forces, are kicking terrorist ass night and day, particularly when the politicians get out of the way.

  235. cap- dont ask me, read the report…these analysts think intelligence and local police forces r the most effective.

    they back up that claim by examining the fates of 268 terrorists groups over the last 40 years.

    its very interesting…im sorry to b the one to tell u this- but the war on terrorism is completely wrong-headed

  236. also, political engagement is very effective as well.

    just the facts- no ideology or preconception

  237. xian, you are entitled to your opinion, and if a Rand report helps you feel better about that, it’s fine w/ me.
    But your conclusion is not correct (in my opinion, of course).

  238. Cap – No one terrorizes America "just cause".

  239. Yev, I wouldn’t call all of CA real estate to be f__ed yet. Here in the bay area, there are certain places (such as Palo Alto, Cupertino, etc) were houses are still being bought over the list prices with multiple bids.

  240. cap- im just relaying the conclusions of the rand corporation’s study…ur disagreement is w/ them- im soryy, but their a tough party to dispute.

    especially if ur speaking from tv/magazine knowledge.

  241. TV / Magazine knowledge ?  Puhleeze.
    Now you’ve hurt my feelings.

  242. Yev – That is a tight market.  In one way it is good to see a market holding up, in another I see how difficult your choice is.  I think that things will soften there nonetheless.  You can buy an uber house in many other markets if your occupation is mobile.

  243. MJ, I should of excluded "special areas" :) but then again there are special areas in LA also where prices are being reduced.  There are properties however that are only within the reach of that top 5 percent and until that time I won’t be competing for those today :)

  244. Rahu, EMC had over 250K call options bought in the 14-17 dollar range today on no news.  They beat a few weeks ago is the  latest news I can find.
    Here is a very short funny video on "nozzle rage:

  245. cap- that was harsh and offensive- my bad. BUT my point is that rand is very formidable in their research and the fact that they’re so conservative makes this particular conclusion surprising and worth a heavy weighting.

  246. Re: Obama…
    Its pretty interesting to see how the Conservatives are attacking Obama these days, especially talk radio.  Its pretty desperate. I mean…no one is really taking issue with policy stances. Its just an endless stream of incredulity about of his "rock star politician" or "messianic" image. Oh, and lets not forget how much of an elitist he is too. Obama doesn’t know anything about or care about the little people, mainly because he’s got a law degree from Harvard. Yeah right…the day I look to the republican party to take care of the little guy is the day GS calls me up and tells me they are transferring all their assets to my name in unmrked swiss bank accounts.  
    Maybe, just maybe, his confidence isn’t mismatched to his competence. Maybe, just maybe, he won’t suck. Maybe Obama is indeed a figure who can accomplish things simply because so much hope has been banked in his corner. (He certainly can’t do worse than you know "W"ho)
    So are his detractors prepared for success? Can they handle being wrong about him, as well as hopelessly wrong about W and the past 8 years all at once. Would they admit it if they were? Probably not, but there’s always hope.
    I can honestly say I gave W a chance in 2000. Not my first choice, and not convinced Florida was really in his favor. But oh well…what did it matter? But as soon as he said "axis of evil", I knew we were in for a wildly bad ride. Too his credit, W never let me down. He and his crew came through with flying colors. All bad. 
    So now its time to embrace the anti-W…Barack…pretty much everything W is not across the board. Despite the oft revisited track record or lack thereof, which I don’t necessarily disagree with, the contrarian in me likes the odds. Obama is the right man at the right time. What do we have to lose at this point?
    Did I mention McCain? No? Good.

  247. And why oh why is Obama’s track record under such scrutiny anyway? W seemed to skate in as a relative do nothing. Yes, when you get right down to it, almost every single argument against Obama’s presidential qualifications highlights the shortcomings of the President favored by those putting forth those arguments. Do they really think a huge swath of people in this country don’t see the obvious hypocrisy there? You’d think this would be cause for a little humility, but I guess not. I suppose those most vocal simply prefer going down in a huge ideological chute of flames.
    Yeah, no, I’m happy to try a little hopium, thank you very much. I’m pretty sure it will work much better than a branded, blessed, copyrighted, and trademarked war on terror. Everyone else in the world seems to be getting along just fine without one.

  248. TM – Thanks for the info on EMC.  I also came across some news about a potential spinn-off of VMW.  The company commented on this during their earnings conf call saying that they wer open to this.  There may be an announcement as early as next week.
    Nozzle – Reading the latest stats on US oil imports, I think at least one of those flags should be Canadian!