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Testy Tuesday – A Very Dangerous Line in the Sand

Well we are up in the pre-markets (7am) – that's something

Interestingly the global markets took our dip rather well.  The Shanghai fell 2.8%, the Hang Seng gave back yesterday's 3.5% gain, India hit the 2.5% rule, and the Nikkei fell 2.2% – a bad day but not worse than ours, as is often the case in Asia.  The DAX is, of course, leading Europe lower with a 2% loss into lunch but the CAC and FTSE are down just a point.  I had a busy evening doing a Big Chart Review and indulging in my political rant of the week about the budget fiasco but maybe that will be a weekend article as my comments alone in the members section were over 2 pages.

We went mildly bullish into yesterday's close, mainly by covering our long index puts, looking for at least a bounce off what is now a 1,100 point drop since February 9th, when we did our previous Big Chart Review.  We are actually 14% below the 8,280 on the Dow that we held that morning so another 1% down to go before we hit our next bounce, just over the 7,000 mark.  The gravity of the 5% rule dictates that we are more likely to go down than up now that we blew through 12.5% and finished at yesterday's low and getting back to that 12.5% line (7,245) will be our challenge for the day.  On the S&P we'll be looking for 760 to be taken back but we are just a hair over 738, which is the 15% drop off that 2/9 open.  The Nasdaq is about 2% over 1,352 and just under the 12.5% line at 1,392 so we'll be looking for leadership there to the upside. 

The NYSE is our most worrying index.  They are aleady down more than 15% (4,675) at 4,633 and the Russell (see David Fry's chart) is the NYSE's partner in crime, failing the 15%, 400 mark by 5 points already.  So it's going to be an easy day to look for a turn as we need the NYSE to break over 4,675 and 4,790 is our next stop.  The Nasdaq needs to hold 1,352 and get back over 1,392 and the Russell must break over 400 and return to 411 in order for us to see anything more than a weak bounce in today's action.  Notice 411 was the Russells failure point yesterday and keep in mind we are talking about numbers that exactly adhere to the 5% rule from a chart that was put up 2 weeks ago – you should take these levels very seriously!

The week's datafest begins in earnest today with Case/Shiller Home Prices at 9, Consumer Confidence at 10 and, about that time, Bernanke will begin his two-day interrogation by our clueless Congress.  It's hard to get optimistic after the partisan debacles we've seen so far whenever Congress gets on TV with our policy makers and Fed speak is so far over most of these people's heads that it would be funny to watch if not so tragic

22-feb-v2.jpgKeep in mind that EVERY Republican you see voted against the stimulus – twice!  So you don't really have to wonder to yourself – "How does he really feel."  That means the success of this stimulus would make them look foolish.  It is very much in the political interest of the Republican party to paint the bailout as a total failure already, forget the consequences of their negativity…  This is certainly not going to be a confidence booster for the market as the Democrats made mixed votes and even the ones who voted for it will probably have some serious concerns to raise.  Gloom, gloom with patches of gloom is my forecast for the next two days and Bernanke is the anti-Greenspan from a confidence building perspective.  The confidence builder in Chief speaks to Congress and the nation this evening but he will probably not be sugar-coating our problems so no help there is likely.  More positive already were President Clinton's comments on energy, the economy and Obama's performance to date

We had some nice earnings reports last night from FST, HLS (who guided UP), JWN, OWW and PSB (which was surprising).  GGP missed but not the catastrophic miss people were expecting.  This morning FWLT was BTE, FDP continued the positive run by food companies (lower input costs), MVL continued to do well (Iron Man), MHS has a nice beat, PWR beat but lowered guidance, RIGL lost less than expected and JOE had a beat that shows excellent cash management and makes me want to take a stake in them down here.   We can give ourselves a nice discount off the $20.91 stock price by selling the naked Apr $17.50 puts for $1.  If put to us, it's a net entry at $16.50 (a 21% discount) and if the stock finishes above $17.50 we keep the $1 against $8.75 in margin, which is an 11% gain in 60 days so generally a nice risk/reward profile.   

According to Cap, someone on the YHOO message board was counting the number of times CNBC talking heads said "nationalization" this morning and, as of 8:15, they were up to 300 times.  Sadly, this is the fear-mongering that is driving the markets to new lows while Cramer continues to keep his sheeple out of protective ETFs like SKF.  So you have the man's network telling you financials are going to zero while dog and pony boy tells his minions to sell ALL the financials, causing them to go to zero - even though they could hold on and protect themselves with conta-funds, if Cramer didn't spend 3 days a week convincing his viewers contra-funds are poison.  I've never seen anything like this outside of a racketerring investigation.  Speaking of racketeering - Dennis Kucinich nailed it when he pinned that charge on Paulson and company back in November.

Meanwhile, Shiela Bair, the head of the FDIC, says key decisions on shoring up the shaky financial system will hinge in part on a "stress test" to determine how the largest banks would perform if the economy weakens further.  She cautioned against rushing to a judgment that Washington intends to take over the industry, saying "I think there's ambiguity in the word 'nationalization.' Bair said, "I think that is something that would be surprising." She said on CBS's "The Early Show" Tuesday that the stress test must be done first, "before we determine what type of additional capital investments the government may need to make."  But please, don't confuse CNBC with facts, it's 8:47 now and we're up to 330 mentions…

9 am Update: Home prices came in down 18.55%, 0.4% lower than last month and 0.3% worse than expected by people who have no concept of seasonality, the mortgage market or the overall economy but seem to be considered "expert opinions."  We are still waiting for our Consumer Confidence (or lack thereof) numbers but German Business Sentiment hit a record low in February. "On the whole the survey results do not signal a cyclical turning point," said Hans-Werner Sinn, president of the Ifo Institute.  Actually, sentiment in retail and construction improved - although from very low levels. The business climate among German services companies improved slightly, although firms plan to shed some more staff, Ifo said.

Our wall of worry continues to be a steep one.  After yesterday's failure we do not expect too much out of today, we'll be happy to just see a bottom at this point but it's looking a little more likely that we're heading into a capitulation event that can take us down to frightening levels.  The 60% line is a line the markets dare not cross but, as I pointed out yesterday, we already lost the SOX and the Nikkei, with the Hang Seng and the BSE hanging on by a thread.  Let's take these levels very seriously, if the administration can't turn it around this week – the downward momentum can easily pick up steam. 

 

 

 

 


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  1. CNBC:  Someone on a yahoo message board was counting the times CNBC talking heads said "nationalization".
    So far this morning, its something like 300 times.
    This is obscene.
     
    If it were a drinking game ….


  2. Sheild Baird sez:  No Nationalization.


  3. Good Morning, Phil
    Gold>>  I know you like it long term, but are seeking a short term pullback.   Several questions to pose:
    1.  What percent to eventually own ?   Do you ascribe this percentage as a "% of and individuals net worth" or as "% of his/her liquid assets" ?
    2.  Should you own the physical metal or are you comfortable in an ETF like GLD ?   If you own GLD, it is my understanding they (the ETF) will go out and buy the physical property (the actual metal).   If that is the case, who is running the audit of these folks so we are really sure the stuff is there ?
    Thanks


  4. Good one Cap, already in today’s post!

    Gold/Sw – Well at $700 I was advocating 10% in gold, using the $70 leaps for $10 which would go to $80 if gold hit $1,500.  Those were easy to offset by selling shorter calls while we waited.  While there are plenty of reasons not to trust the ETF, I certainly advocate being an early profit taker as we hit goals rather than sticking around long enough for the audit.  As to owning gold – what are you going to do, buy $20 Krugerands today and run back to the dealer on Thursday when it breaks your stops and then buy some more at $850 and try to cash them out on the retest of $1,000 playing for a small pullback….   Just too much bother…  Also, we can get a 10 bagger off the leap while buying $700 worth of gold will only give you $1,500 at $1,500.  I like gold as CATASTROPHE insurance for about 10% of the portflio but I don’t like it very much at $1,000 for an initial entry.  If I had to start a spread now I’d go for the Jan $88s at $20.45, covered with the Apr $100s at $5.20 as that pays for you to roll down to the $76s if gold heads lower or leaves you $17 in the money before you have to give your caller his $5 back on your $15.25 net entry.


  5. Cool Phil
     
    Art Cashen begging CNBC to tell these pols and admin to try suspending mark to market for 6 months.


  6. AAPL downgraded by Kaufman.   Then MSFT had some positive comments about AAPL market share or something.
    I think AAPL may be taking some hits ahead of their annual meeting, which probably has them in a quiet period, so the crooks are free to attack.


  7. Man I’d love it if they suspend mark-to-market…. mega rally to S&P 900 and I can short it to hell all over again.
     
    Maybe mark-to-market is what caused AIG to lose a titanic of cash in the last few months..?  


  8. I don’t feel better enough about AIG to keep it.  Out at .44.


  9. The rally doesn’t mean anything, just people randomly buying because they think there should be a rally after yesterday. How do I know ? …. RSX + 3% thats the proof :-)


  10. Suspend/Cap – Well that would be a great short-term fix but the bears don’t want it and they can mount a very good claim that doing so would be pretty much a fraud that could lead to greater problems down the road as we would be letting banks lend against assets they don’t have. 

    Dollar still flying up, pushing stocks and commodities down.

    X at $20.9%!  AA at $5.82 – what are they making cans out of now?  IP at $5.67.  USB $10.81, LUV $6.42… these are some pretty intense prices….

    JPM reiterated that they are doing fine.  If you want a financial, they are proably the best and you can enter at $20.50 and sell $20 puts and calls for $5 to net $15.50/17.75.


  11. Ag doing well this morning.  MOS leading the pack.


  12. According to DataQuick here in San Diego, housing foreclosures fell by 12% last month, 15% YOY FWIW.


  13. Thanks for the update, Phil,  RE:  Gold
    After reading some of the weekend comments you had, plus watching too much of Glenn Beck and his "survivalist guests", I was thinking very long term and in the "doomsday scenario" where we have no electricity and no one to sell or GLD leaps to  (LOL).    Makes a person pause when the see the gun maker stocks pop today (Sturm Ruger- RGR and Smith & Wesson  – SWHC)


  14. AA at $5.85, selling 2011 $5 puts and calls for $4.50 is in for net $1.35/3.17.  Basically a bet they don’t go BK.

    X Jan $10s sell for $2.05.  Also a bet they don’t BK with a 65% discount off current $20.80 if put to you and a 50% profit on $4 in margin if X finishes the year over $10.


  15. Bob Doll, BlackRock Newsletter….We have been saying for some time that the S&P’s low of 740, reached last November, is likely to hold. However, we recognize that drastic, quick and decisive action on the part of the federal government in terms of clarifying the rescue package might be necessary to stave off further declines in the stock market.


  16. IP at $5.62 is just a buy on the Jan $5s at $1.50 with a stop at $1.20.  Print may be dead but it’s not that dead!  The trick is, if you were thinking of buying 100 shares of IP at $5.62, don’t buy 4 contracts for $640, just buy 2 for $320 and you have a stop at $120 and if IP finishes at $7.50 you get $500 back, which is as well as you would do with $560 worth of stock that goes to $750 so your upside is $200 at $7.50 vs $188 if you lay out $560 while your downside is limited to $60 or just 10% of your intended investment

    Well that rally went nowhere fast.  Bernanke’s notes warn of "adverse feedback loop" that can trash economy.  These guys are amazing!  More bad news every time they talk!

    Holy Crap – Feb consumer confidence 25, 33 was expected.  Can it actually hit zero?  I think the richmod Fed sucked too so off with the covers on the puts until we see where things shake out (ie. 60% bearish).


  17. DIA – Hopefully we will have a reason to sell the $73 puts for $4 but it’s not looking too good right now, S&P 750 should be the main line we watch along with RUT 400 otherwise nothing is bullish at all.


  18. Despite all the bad news in the data and in Ben’s comments; we have a shot at a FMD today if we can move strongly above 7175…. conditions seem to be there.
     
    Or we could flatline; Dodd talking is not exactly inspiring for the markets.
     
    Or we could crash through the lows.
     
    I think FMD 30% Flatline 70%


  19. blah, blah blah blah blah, blah, blah….next congressman, you have your five minutes….
     
    These hearing are soooo annoying because supposedly they are for the Fed Chairman to give testimony, but it really a chance for congressmen to just blather on.   Just ask a question occasionally!


  20. Played my 1st  PSW trade on UNH-
    Bot UNH Yesterday, average at 7.70 and Sold Apr 26 calls today at 1.65, sold a bit more so as to buy the Jan 20s later for about $7 or lower when UNH reverses the direction (already making profits)


  21. or crash; keep talking Dodd.
     
    GE 8.50


  22. SOLD to  Bob Doll!
    At least it’ll shut Erin up as well. 


  23. FMD…funky market day?


  24. Dodd is a market killer !
     
    And he thinks he didn’t have a hand in anything that happened.
     
    If he says "in conclusion", we could rally !


  25. FMD alert is off for now.


  26. FMD?  Full Melt Down?   Full Monty Dress?  Fantasy Market Day?


  27. Has SKF topped for the day?  Who the f knows.  But I sold at 202.32.  Will buy back if it breaks above its high.


  28. SKF breaking higher, watch XLF at $7, that would be 210 on SKF.  BAC below $4 – this is pretty dire..

    UNH/Shiv – Just be careful, we could be heading to a major washout so make sure you have somthing offsetting some of the bullish positions. 

    F hangin’ in there.  But then again GM is up 7% so who knows what’s going on…

    I’m beginning to think Congress has some kind of pool to see how low they can get the markets in one session.  Maybe they have an ongoing bet between the House and Senate and they all compete to say stupider and stupider things to see who can make the public bleed the most.  THAT would be better than thinking they do this out of sheer ignorance!

    Don’t be so quick to write off the FMD though Cap.  I see green on my watch screen on ADM, AAPL, AMZN, ANF, BAC, BIDU, CVX, FXI, GM, GOOG, GS, HOV, MCD (a good entry here), OIH, POT, QLD, RIMM, SHLD, SNDK, TASR (10%), TM, VLO, WFR, XLE, XOM and YRCW – seems like some selective selling is causing a lot of the pain but the volume is low so far with little conviction.


  29. FMD = Full Metal Daytrade.  Means trade with your armor on!


  30. FMD … still a shot; but not lined up yet.  Usually have to wait to at least 10:30 before you can call one anyway.  Look for break now above 7165; Trin is low enough; lower VIX needed,  Higher indices.


  31. On an FMD you will usually grind relentlessly higher, much like we grinded relentlessly lower yesterday.


  32. Free Money Day.
     
    And in this market, nothing is free !


  33. que est, FMD?


  34. ah, gracias Senor Cap!


  35. How do you generally play an FMD?  Sell puts, buy calls, some combo?


  36. hmmm….. maybe ….. we need strength you can feel.


  37. Ben pulls it out!  We crossed our S&P target so back on with the put covers of course, hopefully we won’t see 750 again! 

    GOOG bustin a move…


  38. 3, 2, 1…lift off…maybe, please…get off the damn pad.


  39. MSFT   I don’t care if they can’t get their act together in search, that Vista is crap, and that they are as innovative as mold, they are still a quasi-monopoly and throw off buckets of cash…below $17 seems ridiculous


  40. Usually I just watch dumfounded !  LOL.
    Seriously, you can play it lots of ways; buy calls; by index etf’s; sell OTM puts; buy futures (probably the best way; but I am not trading futures these days).
     
    The key to success on an FMD is early recognition and not being afraid to miss the early part of the move before getting on board. 


  41. Thanks Phil, are you referring to a washout in general market, managed healthcare or UNH. By the way, I was filled for 7.30 (jan 10 20s).


  42. I think we will need material news or rumor to sustain a move higher.


  43. Unfortunately, the Senate will speak again and then tomorrow we have the House and our newest segment of "When Ron Paul Attacks.

    Boy he’s really knocking gold down fast.  ABX and other miners off a cliff – somewhat of an overreaction to gold falling to $950 I think…

    GOOG $440 and AAPL $90 are good things to watch for a real breakout.  Up about 1.5% on our indexes so far but we much hold the RUT and S&P or time to buy back puts again!

    MSFT/Eph – I agree, I can’t stand the food at MCD but that doesn’t make them a bad stock. 


  44. Phil: shorting SRS was productive, did it twice, gain 12.3 and 18.2 %,
    yet all these gains from shorting SKF and SRS cannot balance the losses every day on the portfolio.
    1 step forward, 2 steps backward.


  45. DIA/mattress    I have 10 long puts overall and I’m fully covered.   3 of my longs are Apr 80s but then all my others are May/June in the low/mid-70s.     I know that I should be rolling up my puts, but I’m trying to save cash.  Given that all my putters are ITM (73, 74, 77), it’s not the end of the world if I just let this position sit, right? 


  46. KFT – reloaded some Mar $22.5s @ $1.15


  47. Really tempted to Long Silver/Short Gold -- I can see a pull back on both but Silver hasn’t seen anything like the yellow’s rocket and I don’t think will fall back nearly as far…….


  48. 2 step/RMM – You need to work your overall portfolio to a little more neutral but also realize that if you can ride down a 50% market contraction with 75% of your portfolio value inact, then a 25% recovery (50% off the bottom) will put you up over 105%.  To the extent that you don’t believe the markets will come back to 11,000 in your timeframe, you need to be more bearish.  As to timeframe, it’s best to assume a normal 7% annual gain so 11,000 is about 6 years away if we have a flat market.  If you hang onto 75% and can sell 10% in premiums each year and we gain 7% then you are not in terrible shape.  That’s what staying in the markets is during a downturn – you can’t expect to win, just to lose less than everyone else and use your superior capital to buy bargains at the bottom.

    Getting some nice, spurty buying now, want to see SKF fall below $192 ($7.50 on XLF).


  49. Social security in the stock market is different than private accounts.   In theory you could just have social security invest directly in the market like a gigantic pension fund.   It’s likely that the market would be significantly higher today as even a 10% allocation would mean billions of dollars of automatic buying would be going into the market.  


  50. Anton Silver/gold    The options on SLV are not nearly as active as they are on GLD, but the underlying is so much cheaper that you can just buy it and sell covered calls against it.   I’ve thought about opening a long-term position SLV as an inflation hedge in addition to my GLD spread.   Silver also has the advantage of being an industrial metal, so when the economy finally recovers it will get a boost from that.


  51. Phil: thanks for comment and handholding.
    Shorting is a lot easier lately: I shorted 52 times since 1/1/09 and 50 had gains, only 2 small losses.
    I rather go long but not these days.


  52. SLV  I just looked, there is a decent spread opportunity.  The Jan 10 10s are $4.80 and you can sell the Mar 15s for .40 (or 1.40 in premium)


  53. Goldman smash CRE: 
    "Commercial real estate trends are eroding at a pace indicating that occupancy and rental declines should match the deep recession of the early 1990s. To that end, we ran a “stress test” for the 36 companies under coverage and now expect a 25% decline in earnings in 2009/2010, far below Street growth forecasts. Moreover, we expect most companies to reduce dividends to help address debt rolls of more than $100 bn into 2012."

    Punchline: $26 billion of debt comes due in 2009/2010. Even with all REIT dividends converting to 100% stock/0% Cash, this measure would satisfy at best 25% of needed cash to pay down upcoming maturities. In our opinion a massive wave of commercial REIT defaults is expected."
     
    I concur entirely. SRS TO THE MOON ALICE.

     


  54. Cheers for your input ephmen – I was looking at the futures but I’ll take a gander at SLV now…  


  55. GS $85 joins the list of bullish lines to hold.  MCD $55 would be nice too.  TM $65 is the 5% rule for the day – that would be a good one. 

    This is still low volume knock around crap though, not a big rally by any means.  Don’t forget we we need 7,245 to get back to 12.5%, that’s where we could uncover our DIA puts again if we can’t bust over.  760 is our S&P line and the Nas is leading us above 1,392 (as I said they would have to in the above post – pat, pat).  Let’s watch that line as a very bad breakdown signal if we lose it.

    Silver/Anton – I don’t think it makes the kind of inflation/currency hedge that gold does.  Also, it has too much commercial usage so it’s part of the overall metals slowdown. 

    Goldman/Anton – Oh yes, they have been so right about going long on builders, then finance, then copper and oil that when they tell me to short commercial real estate AFTER a 66% drop I’m going to make that play!  8-)


  56. Speakiing of commercial real estate, VNO is being killed by GS proclimation.  $30 puts (naked sell) are $1.90 for a $28.10 entry, 20% down from here!


  57. OK,now AIG is interesting at .40 with a stop at .38.


  58. HMY not a bad miner at $12.15 and the Apr $12.50 puts and calls are $3.30 for net $8.85/10.68.  They were $13.20 yesterday.


  59.  Phil
     
    Rolled up my mattress DIA puts Apr 71′s to 72, naked right now. What would be the best covers here?
    thx


  60. Phil
    That MOS question was on a uptrend .  I was noticing that many ag stocks were forming higher lows on a pullback.  Now if it falls back I will have to eat my words.


  61. Anton … I beg to disagree with your assessment.  Whil I am not offering a rosy assessment on real estate; there is financing, particularly for REITS w/ modest leverage and good assets.  And IMO, Goldman’s assessment is priced in.
     
    Goldman should worry about there own CRE Loan book, which is in far worse shape than the REITs.


  62. If you look at the prices of most of the REITs; they have already been decimated, well beyond any reasonable assessment of NAV even factoring in negative fundys.
     
    And Anton, if SRS ever gets back to 100, you should do a happy dance.


  63. now if you are a GGP, yes you have problems.


  64. DIA/Deano – No covers at the moment.  I’m watching the $73 puts, now $3.67, will sell them again at $4+ but I don’t know if 750 will hold on the S&P so I’m waiting to see and AAPL below $90 and GOOG below $340 gives me no reason to cover the upside at the moment.

    MOS/Steve – Overall, the ags look like they are ready to lose the 50 dma so be careful.  DE and CAT in the toilet, if no one needs machines, then what are they going to put seeds and fertilizer in?

    GGP/Cap – don’t you think they are out of the woods a bit?  I was liking them at .45.


  65. hmm thinking of an brokerage account, know this has been asked many times before, which is a good one?


  66. Cap, any short-term target for SLG?  I’m long stock and short a 12.5 put and want to sell a 15 call on a run-up.


  67. dilbert, I think thinkorswim is great.  About the only bad thing is they don’t have a linked checking account (for security reasons), but for options they be da bomb!


  68. TRLG up another 8% today.


  69. Suffice it to say, this is no FMD.


  70. GGP / not following closely.
     
    SLG / no …. a prisoner to SRS and C


  71. APOL just took a scalping.  I don’t see any news though. 


  72. Phil: McCaine questioned Obama about the helicopters and the high cost:
    now look at thsi, its always the same, thes ehelicopters were ordered under Bush, Obama cannot be held responsible for this.,


  73. Phil, we’re below your levels, right?  I covered friggin UYG again just in case..


  74. I think the helicopter problem is more about how military procurement is run.   After 9/11 they wanted to upgrade the security of the presidential helicopters and that added to all sorts of costs.  Then the normal BS of congressmen wanting to keep jobs in their districts and Sikorsky vs. whoever they picked and costs took off to the moon, Alice.


  75. Cap, FMD, Although I”ve never heard the expression till you said it.. to me, free money days are the ones that are all in one direction.  Meaning, whatever direction we are pre market is the direction we go for the day.  And except for some noise in the chart prior to 10am or so, it’s a complete stair step up or down and no tricks are played so that there are continuous lower lows or higher highs.  The kind that even a monkey, if he stops staring into the headlights long enough, can even make money.  We haven’t had one of those in a while. :(


  76. Phil – you were right about FXY (vs. FXE, a comment you made back on 1/30). Just for the record ;)


  77. eph
    What military procurement process??  Arn’t they still working on trying to get tankers?


  78. Anyone see any news on APOL? 


  79. Brokerage/Dilbert – TOS is very good if you are experienced.  OXPS is good if you are learning as the set-ups are easy to follow. 

    I’m looking at BBH – that’s a damn strange index.  Totally flat since it leaped up 30% in Dec (after coming down 30% in Nov). 

    Helicopter/RMM – I thought that was shameful.  Obama said a whole bunch of very nice stuff about McCain, gave him the first question and then he goes for one of those pointless "zingers" by picking on a completely pointless item to try to stir public opinion.  I have never been happier that that man is not President than I was at that moment – he should be ashamed of himself…

    Levels/Matt – Yep, we are doomed…  Still a lot of green things so we have some hope and we are halfway through Bernankes first day without a total meltdown. 

    M taking off.  $8.15 and the $7.50 puts and calls at $1.60 brings it down to $6.55/7.03.

    FXY/BDC – Thanks, it’s nice to know someone is paying attn.  Watch the 200 dma at 100 for a bounce.

    APOL/Steve – I see nothing but a big volume seller just dumped it – nice buy time if you are brave.


  80. GGP "out of the woods"?
    If the "woods" are "the stock market" then yes, they’re almost there.
    Look at last night’s info, the equity is a zero, the banks are just waiting to pull the plug.


  81.  Cap,
    last time you told me SRS would never see $70 again…
    So many REITS are screwed it’s almost hilarious, paying their req. divis in dilutive stock ..? Um, ok, that’ll work.
    Keep on catching that knife.


  82. Dilbert
    I use OXPS for trades because of it’s ease of use and checking linkages. Always been good customer support too.  But I also use TOS for some of my chart setups and looking at option chains.  They seem to be better than most.  I have a unfunded account and asked TOS to give me real time access and they did.


  83. ephmen85:
    pompous US senators in general should use their brain more to control what is coming out of their mouths.


  84. SKF bear put spread of $260 puts at $81 against $200 puts at $37 is very tempting.   Net $44 on the $60 spread and SKF has to finish at $216 before you start losing money.  That being said, I thinnk getting an entry on the $260 puts at $70 or less makes this super attractive so let’s keep that in mind if they run up again.

    GGP/Anton – But they didn’t yet did they?   I don’t think lenders want a bunch of half-empty shopping malls.  As long as GGP can keep making partial payments I think they may hang on but I’m not going to be playing them, not when VNO is being given away!

    Speaking of real estate, IYR is getting interesting if we can believe that less than 50% of all business will go under.  I like the Jan $22.50s for $8.20 ($3 premium), selling the March $27s for no less than $1 (now $1.50) but hopefully getting $1.50 or better from the $28s, which opened yesterday at $2 and are now $1.  This will be a great one to day trade the front-month calls on.

    BAC breaking up along with their preferred stock – that’s a good sign.  SKF back at $192 test area, XLF at $7.45 so just a little push and maybe we can get somewhere!


  85. AAPL just does not seem to have a ATR like they use too.  Swings are not that big.  Maybe I will switch to GS, seems like their swings are bigger.


  86. RMM; kind of like C being questioned about a plane that was ordered 3 years ago, isn’t it ?


  87. Phil:
    please give more details on this SKF bear put spread;
    sell and buy what ?


  88. Cap;
    how are your SKF shorts ?
     
     
    C and airplane: yes they need to cancel as they are bailed out by public $$, these greddt and incompetent bankmanagers need to share with us flights on commercial airlines and get a taste of normal life, they could select first class of course.


  89. Here’s what Obama should say tonight:  My fellow Americans, we have uncovered an error in the Social Security Fund.  It was made a long time ago and we are still investigating the details, which we will disclose to you but there was an accounting error made in the computers over 30 years ago and that has caused an apparent shortfall of $46Tn.  In fact, we have discovered a surplus of $76Tn.  I don’t want you to get too excited, we still need to verify it but, should this balance check out – we will be refunding all Americans their entire tax bills for the past 3 years and setting up a brand new $10Tn financial stability act as soon as we finish paying off all foreign debt.  Thank you.    It doesn’t matter that it’s not true, all they have to do is have Madoff create some fake ledgers in exchange for clemency and then just have the Fed crank up the presses.  No one can figure out those records now so it would take many years before people were able to disprove this scam and by then inflation will have wiped out the remaining debts and reinflated the markets…  The key to this plan is to be able to dump $30Tn of new money on the markets without causing the dollar to devalue by pretending it was already there!  8-)

    Man that $7.50 line seems unreachable for XLF!  Still, a nice, general uptrend from yesterday’s close.

    SKF/RMM – Very simple, you buy the high put for as little as possible and sell the low put for as much as possible.  You target a net cost of $44 on the $60 spread and the key is playing the swings.   So if SKF goes up and you enter at $77, you then want to get at least $33 for the $200 puts but you need to put a stop at $29 so you at least have a $48 spread so your initial entry determines the stop on the second leg.  You are learning pretty good timing on SKF, this is another way to exercise it.  Maybe start with just 1 until you get used to it.

    Hey right when I complained about it $7.50 went down and so did SKF $192 (and fast!).


  90. I cannot believe it.  The markets are going up with all of this senate BS going on.  That’s a first, things have changed. 
    RMM, first class ain’t what it used to be.


  91. Matt….FMD is my term; you are right; although even one way days have some backfilling.
    Today is not FMD; I was on lookout for one due to conditions.
    In a more normal market, we might have had one today.


  92. Up volume up 3:1, advancers up 2:1, TRIN’s are low, market is going strong , well kinda.


  93. Phil:SKF:
    buy mar 260 put for 70$ or less
    sell mar 200 for 40 $ or more
    net is: 30$ cost


  94. Airplanes – If you are paying a guy $20M a year, that’s $100,000 a day or $10,000 an hour.  If a $2M per year private jet saves him 2 hours on 100 flights (which would have cost $200K in first class anyway) and lets him sit at a desk or have meetings for another 200 hours on those flights, that’s $4M a year saved of just that guy’s time (not to mention the guys he travels with).   Of course a senator who makes $1M in his best year and runs a country at a $1Tn loss has no concept of this but GS made $10Bn a year before last year and even if you assume the CEO only NEEDED to close 10% of that business, then he was personally responsible for $1Bn of profits and the 400 hours of additional prodcutivity out of a typical 2,500 hour year would have made GS and their shareholders an extra $250M.  As a shareholder, for $166 a minute, I would really like to avoid having Lloyd Blanfien standing in line at security or twiddling his thumbs without his cell phone while the plan sits on the runway for an hour and a half waiting for clearance. 

    There is an expression "Penny wise and pound foolish" a penny being the english penny which was 1/240th of a pound back in the day.  That’s what this is and that’s what politicians do all the time.  Obama was right when he said it’s ridiculous to focus on 3% of the stimulus bill and call it waste.  CEOs don’t run companies that way – you take action and then you adjust the program to optimize it but you don’t (as Paulson rightly said) let the perfect become the enemy of the good. 

    Of couse the issue of whether Blankfien is worth $166 a minute is a different matter entirely but if the company makes $1Bn more when he’s there than when he’s not – then there’s the answer!

    SKF/RMM – yes, that’s the goal but the reality is whatever it works out to.  Be aware of that.  Meanwhile there’s no trade at all at those strikes as we’re heading up.


  95. BAC possible breakout if they can get over $4.40, up 10% from our worry line earlier already!


  96. Phil
    You pressed the buy button, now look what you did.


  97. Phil: the SKF bear spread has to wait.
    just made my 3rd SRS short gain of the day at 12.3 %.


  98. SKF: dive, dive, all the way to 160 at leats, better to 147.


  99. a little more and short covering could really give this beast a kick


  100. RMM  I’ve never had the margin to spare to play SKF, but you have so much fun with it that maybe I should sell everything and join in!  :-)


  101. Dow right at goal at 7,245-50.  DIA $73 putter down to $3.27 so that’s a .60 win and that becomes the stop to the downside now if the DIA falls back below.  Longer puts need to be rolled up of course, either May $76 puts ($7.25) or June $76 puts ($8.18) are optimal with June actually being a better deal at the moment (clearly a month is worth $1). 


  102. TM  I have a GTC order in to sell a 65 caller for $5 which I figure is somewhere around when the stock is $67ish….seem like a reasonable plan?


  103. Phil: would you sell now march calls on WMT, what strike ??


  104. Anton, I don’t recall saying SRS would never hit 70.  I may have said it would have difficulty getting there; which it did, it took new lows on the Dow.
     
    If you want to track down my statement go ahead. 
     
    Anton you are directionally correct on real estate; however, all of the REITs will not go to zero which seems to be your view.  That’s insane.


  105. Santelli is a microman, does not see the macro picture.


  106. Santelli says: he is the only one looking forward>  where is he looking ???


  107. RMM
    But it is nice to see how a microman was heard in the whitehouse.  he really caused a stir or was just a point for obama’s team to rally against.  It is just good to see that if you are small, you can still have a voice.


  108. TM/Eph – Yes, things are better but probably not $7 better just yet!

    WMT/RMM – I would 1/2 sell the $50s and see what happens.  You can always 1/2 sell the $47.50s and mo trade those on the way down or, of course, roll up the $50s to 2x the $52.50s or Apr $55s.

    Santelli has now officially become a cartoon character.  Let’s go to Rick so he can jump up and down and scream about those homeowners who are stealing our money just so they can keep their familes warm….  What a joke!   Kudlow called the unemployed "losers" last night in an attempt to make himself seem relevant.


  109. SingaSteve: correct, but Santelli has no view to recognize and analyse the big picture and needs.


  110. TM   I didn’t think it would get there today, but I thought $5 for the 65 was caller was a decent cover, should I take less?


  111. EPH believe me I have thought about selling everything and only trading SKF for a while.
     
    RMM; have a bunch of short calls 240-300.  Haven’t made any option trades today.
     
    Just bought 100 SKF at 175 (don’t really want to pay that much), as a hedge for a reversal up later this afternoon.
     
    Missed out several oppty’s to short / cover yesterday and today b/c I have enuf of this stuff and don’t want to overdo it.


  112. btw, TM is a great company to spread.  I opened my position in Jul, 2008 (when the stock was $89.90) with a – Aug 90 /+ Jan 10 80 Call spread.  Despite having to roll my long down several times to it’s current Jan 10 60, I only need $510 more to get my premium out.   There are big front month premiums and the stock is volatile enough that you can often sell a caller, take it off, and sell it again in the same month.


  113. Phil you wrote
    As a shareholder, for $166 a minute, I would really like to avoid having Lloyd Blanfien standing in line at security or twiddling his thumbs without his cell phone while the plan sits on the runway for an hour and a half waiting for clearance.
     
    this makes me think of what Will Rogers wrote
    Never blame a legislative body for not doing something. When they do nothing, that don’t hurt anybody. When they do something is when they become dangerous.”


  114. Look at those moves GS, GOOG, MA what are you guys so angry about…..i love it when little Ricky goes on a rant only legit entertainment on CNBC. Just keep Nouriel Roubini off the set. :( he makes want to hoard my cash.


  115. TM/Eph – No rush, I was agreeing with you that selling for target of $5 was good plan.

    SKF – too funny that ETF, not even down far enough to keep up with XLF yet.

    Rogers/Bill – The man was clearly a Republican… 

    Dow 7,245 (check), S&P 760 (check), Nas 1,392 (check), NYSE4,790 (testing), RUT 411 (pending).  We need the whole group in order to finish bullish otherwise we take the DIA putters back off to be safe.  If we lose 3 of 5 then 1/2 naked putter.  Don’t forget to keep rolling up the long end when you can – it’s the cost of insuring the gains on the long side


  116. Phil: well, Ben did somthing good,
    closed most of my SKF now,
    maybe sell some march 130 puts ????


  117.  phil I’m 80% covered.  Should I be full covered on the putters for the mattress?  Or is it a little late at this point?


  118. XLF  I’ve got Jan 11 7s naked.   Any targets for callers?


  119. SKF/RMM – I would not sell puts.  It is not the same as selling calls as XLF can go up to $10 (up 50%) and UYG will blow you out the door.  Don’t forget we sell the calls because we have a reasonable premise that the government would do SOMETHING to stop XLF from falling below $7 but the government would be thrilled to see it rocket back to $14.

    BAC behaving very well at $4.60 with a slight pullback – looking good fro another leg through here!

    NYSE right on the line – Big deal!!!  RUT is our last holdout if they can punch it through….

    FMD rules!


  120. This is FMD ….


  121. Phil: so buy SKF calls instead ?


  122. RMM, I’ve been burned repeatedly by SKF today so be careful, it keeps twisting and turning.


  123. Phil: what can I do with AAPL march call 90???
    cost was 8.4$, now 55 cemts timevalue,
    what is a remedy ?


  124. Phil:  wow, all closed my SKF shorts,
     
    now lets start with something ?/
    But what ??


  125. Mattress/Bigs – Yeah a little late unless you sell the 20% and use all of that cash to roll your longs up $1, then it’s a good trade-off.

    XLF/Eph – As above we have miles to go to even begin to call it a recovery.  I think $10 is the right price but it’s a long way away.

    CAT making a nice move.  I needed to see that, they were freaking me out under $25!

    SKF/RMM – No, I say leave them alone.  With any ETF, when they are at an extreme you can have lots of fun playing them but when the drift closer to the middle they become very, very dangerous.  The range of SKF is $100 to $200 generally so when they are near $200, we can sell calls with impunity and when they are down around $100, we can get brave selling puts but fun time is over as they get close to $150 as they can move $50 on you any time and I’m sure not going to pretend I’m smart enough to call it.   The key to that kind of trading is to identify something reliable and stick with it until it is no longer so.  We zoned in on SKF as it hit the highs and had a nice run with it but don’t force it if the trade isn’t there anymore.

    I don’t think we have the energy to get the Russell over the edge or the NYSE.  There’s a reason for this.  It only takes a dozen stocks to move the Dow, S&P and Nasdaq through levels but the NYSE and the RUT require serious, broad-based buying to beat levels.  That’s why it’s good to watch all 5.  So far, all this is is the mathematical 5% rule bounce back to -12.5% I predicted in the morning post.  It does not change our premise and it’s no reason to go crazy.  This was the MINIMUM level we needed NOT to be 60% bearish but that just means we’ll close the day even if we are hovering around here.

    Of course, we still have plenty of time for the PPT to make their traditional 3pm entrance (if we assume that this move isn’t them in the first place).


  126. Mocha; SKF has been dropping since 11:45 ….  sorry.  As I am underwater on my 175 long buy (hedging bunch of puts) I sold another call for 19+ just in case SKF wants to drop more; although I think it might test 175-180 b4 the close; depends on the Dow.


  127. hedging sold calls; not puts.


  128. Phil,  looking for a potential double bottom move up in EXM any option play recomendations (I don’t want to own the stock)


  129. Damn!  I covered my UYG when the Russel couldn’t get over 400!  Then I stepped out.  Bummer.  Missed out on that whole run up!!!  Oh well.  Up is the direction for the next several days at least.  Gotta sell them calls, right?
     
    My SPX purchase yesterday is lookin pretty good now, huh?!


  130. Cap and Mocha:
    I closed all my SKF and SRS shorts for gains, great day, TXS Ben Ben for being a little more clear with your answers.
    I agree with Phil, as thes ultra ETFs are closer to a midpoint, be very carefull as there is less opportunity,
    if it runs up again, you get another chance for shorts,
    of course, once you go out to strikes 240 plus, I have little concern,
    good luck guys.


  131. AAPL/RMM – Is it one you sold or one you own?  Hopefully I’ve taught you enough that it’s not your call!  Anway, it’s all premium and out of the money so if it’s protection, it’s just right and rollable to Apr $95s. 

    GOOD time to go naked on long DIA puts.  Back on if we break all 5 levels but it looks like we won’t.


  132. Cap, I ended up in a rather convulated SKF pairing, probably like you. I bet on SKF up first thing today because whenever the govt speaks lately that’s the direction.  Then instead of bailing out on the dip I covered, and then adjusted all day, too much work for no gain!


  133. Mocha; well by adjusting you help yourself even if the work is not as satisfying as hitting it just right.


  134. Phil: the AAPL  are calls long, I tried a la SingSteve to daytrade, but no luck, I might get out of AAPL alltogether, too hard to trade,


  135. Man, when does the profit-taking start, this is quite the push!


  136. Bonds.  Anyone know of a good public source for bond pricing?    The credit crunch has caused many corporate bonds to trade at a big discount and it might be a good way to get exposure to a company.  One of TMF publications mentioned a SHLD 7% note due in 2042 that was trading at .23.  That works out to about a 30% yield and a free roll after 3 1/2 years (I don’t know if those prices were accurate, but it is an example of what might be out there).   Anyway, I’m looking for a site that would have descriptions and CUSIPs at least, current pricing would be a bonus.


  137. Mr. M.  On Free Money Days any profit taking is absorbed by ‘them’ buying.  That’s how you know it’s an FMD.  There is no pullback really.  And if you wait for it to get in.. lots of times you’ll miss out on the big spikes.


  138. Phil: you are neutral/bearish ?
    even with today’s rise, you would go naked Dia puts ? am surprised,
    at this time, have no long DIA puts: which ones to buy ? I only have leftover shorts march 75 and 73.


  139. EXM/Andy – You can buy the June $5 puts for $2.28 and sell the $7.50 puts for $4.30 for a net credit of $2.02 on a $2.50 spread.  Max loss is .48, max gain is keeping the $2.02 but it is bullish.  You can also go the other way and buy the June $2.50 for $2.08 and sell the June $5 for $1, which is net $1 with a $1.50 upside.  This is a little more conservative of course but at least you are in the money and a flatline would be profitable.

    Shorts panicking ahead of 3pm, worried about PPT but if they don’t show up, we’ll get a sell-off.

    AAPL/RMM – For you, I’d say yes.  Some stocks you have a feel for, some you don’t.  Best to avoid the ones you don’t.

    Speaking of profit taking.  BAC up to $4.65 from $2.85 with no major profit taking yet – pretty amazing.  Good thing Cramer told all the sheeple to get out of financials so the real men could buy in!

    Now it’s looking like we’e going to get the breakout!


  140. Matt, thanks.


  141. FAS is up 22% today.


  142.  what level would you recover mattresses?


  143. Bonds/Eph – Not my thing.

    RUT still not cooperating.  We need that to break free.  This is obviously not PPT buying as they would have spiked RUT right over.

    Bias/RMM – I am a 55/45 bearish at the moment as the DIA puts are uncovered but that will change to 55/45 bullish if the RUT breaks 411 (and the others hold theirs).  I’m not naked TODAY, I’m naked for the test of our levels and, if we break higher, I cover with DIA $75s at $3.75, which is pretty bullish actually. 

    Mattress/Bigs – If RUT breaks 411 I sell the $75s and hope we get follow through tomorrow.

    Check out VNO since my call!   X is nice and perky too.


  144. Phil, Do you plan on holding AIG overnight ?


  145. RMM
    Like I said before on AAPL, it just is not moving much these days. The ATR seems low now.  i have to think about switching to another stock or two with a higher ATR.


  146. Boy, what a racket!  COF is up +20%.  STI up 20%.  Where’d all the worry go?  Would I love to be a fly on the wall during teh planning sessions that must occur when the chart out the upcoming month for selling puts and calls.


  147. Phil:  I’m long  BP, CAT, COP, GE, and XOM from yesterday’s lows.  I’m reluctant to take profits today, but would like to protect a large percentage of my profits while participating in any potential future upside. 
    VIX is high, so it seems like I would be paying too much of a premium for any puts I buy.  Right?
    Buy a small percentage of my overall dollar exposure in DUG or DXD?
    What would you suggest? 


  148. Phil,
    Bought back my ABX March 37.5 caller today, now holding July 30 with no cover.  Buy, sell, hold?
    Also XLF Jan 6 call--would you cover on this runup?
    Portfolio is neutral to bearish at this point…


  149. Half of the bulk shippers have caught on fire, when will it be DRYS turn?  rather flat today considering EGLE, EXM, OCNF, and GNK.  But more volume traded in DRYS than the other 13 that I watch.


  150. I wouldn’t get too excited. Today just about cancels out yesterday and the markets have been down so much that there had to be some sort of oversold bounce. It’ll continue down when people realise we still haven’t seen a solution to the problems etc etc


  151. HOV still cannot break out of being a penny stock. 


  152. RUT broke 411.  I believe we will get follow through tomorrow.  Alot of it.  COF up now 25%.  It’s got a long way to get back to a decent level.  It was unbelievably cheap.  And there is a huge short interest in it.  That thing could rocket.  Now is the time to put your eggs in fellas and get on the money train! 
     
    Er… you might want to wait till after this pullback.  ;)


  153. SKF getting hit w/ the ughly stick today !


  154. TIE = POS for me  :-(


  155. Phil: with 24 days to OPEX, is 70 cents of timevalue worth waiting to decline more (3 cents/day), some of my callers/putters have good gains,


  156. Earlier today I said SKF to dive to 160, its getting close.


  157. Cap; SKF stick, wow, I left a lot of $$ on the table, but I am satisfied.


  158. Same with SRS.


  159. Matt: when will they run up SKF again ??


  160. XOM with a huge clawback.  Thank goodness.  Heck, what am I saying?  Everthing is up!  Even pathetic HOV.


  161. RMM, there will be intermittent run ups in SKF.  But I wouldn’t look for it the next day or two.  Especially not tomorrow.  Tomorrow could be one of those days we open up and just kepp going.  SKF has a good way to fall yet before it gets to its lower limit.  And if my hunch is right, that’s where we’re going until about the mid point of this option month.  Of course there will be some ups and downs along the way… but I can’t predict when those will be.  Just that the overall trend for SKF is down for now.


  162. The market turns up and everyone wants to go buy CROX shoes.  Up 18% today.


  163. Phil – For last few days I am trying to understand the adjustment process to the Mattress Play. I will be charitable to myself saying that I am still working on this. Please clarify what advantage MP has over unsymmetrical OTM put B-fly which provides 400-500 pts protection at a credit. For example +2Mar64P/-3Mar68P/+1Mar69P. If market doesn’t drop more than ~ 500 points w/o any adjustment this trade lets you keep $101 opening credit. If DJI closes at 6800 you got a jackpot of $200 and break/even is 6700. I am pretty sure that with your help ones can weaseled himself to even lower level. This type of trade doesn’t require any adjustment for few hundred points. It can be used on IRA accts but require $600 cash reserve until expiration to cover the max risk. Thx.


  164. Phil;
    what DIA puts for protection are best now ?


  165. Phil, prediction?  Do we fall back to the 2.5% levels until close?  It’s possible I know… but I think they want to close on a high note.  But then that might be a little too obvious with all the terrible news out today.


  166. IP went totally nuts since our entry.  IYR madea huge move. $28 cover calls hit goal at $1.70 so no reason to be greedy.

    Gee do you think rumors of my $46Tn Social Security surplus leaked out?

    AIG/Niten – No it’s a loser, a run like this and they flatline.  Not worth tying up cash.

    Protection/JW – You are the perfect candidate for a mattress play.  You need to read this post but the quick play is the DIA June $76 puts at $7.35, selling the March $75 puts for $3.60 to cover.  If the Dow drops back down, the $75 puts can be rolled down to the Apr $70 puts and you are up more than 50% ($6 in the money off your $4 net entry) to your Apr putter.  If the Dow goes up, the $3.60 you are collecting from the putter will pay for you to roll up to the June $82 puts so you have about 600 Dow points of upside coverage to ride out.  So if a 500 point drop in the Dow will cost you about $5,000, then it makes sense to allocate $5,000 to this hedge with the expectation of collecting at least $2,500 when the market heads down.   You can adjust your coverage from that point by moving your long call higher or using partial coverage with the March puts etc depending on how bullish you feel at any given time.   Notice the difference is you alter the coverage from $2,500 to $3,750 to $5,000 depending on how many puts you expect to have to pay off.  There’s lots more to it but those are the basics.

    ABX/Bill – Nice timing.  I say roll down to the $25s while it’s cheap and wait.

    OOPS – RUT GIVING IT UP, back to naked on DIA long puts!


  167. Sell UYGs and buy FAS for the way up to make up for loses ?


  168. Phil: please look at my 3:21 comment,


  169. Prediction:  They try like hell to end us on a high note.  Run up premarket.  A tad more then Phil’s 10%(?) pullback in the morning and then off to the races for the rest of the day.


  170. 7.5 million shares of UYG traded this 5 mins just to keep her up.  This is an FM1/2D!!!


  171. Looks like I’m the only bear left here. Everyone seems so excited by this little rally – just like the peops out there buying stuff like it wont be cheaper tomorrow – it will !!


  172. Phil:  I neglected to mention I am trading a qualified account and therefore unable to write calls or puts. 
    So, although I can buy the DIA June $76 put, I cannot sell the March $75 put. 
    Perhaps I’m limited to buying puts or short ETFs?
    JW


  173. Hmm, this is a toughie and qualifies for the rule: "when in doubt, sell half" so it looks like it will be a 1/2 cover on the DIA long puts into the close as we are just teasing along our levels and who knows what Obama will say tonight.  By the way – when I do these on and off calls, they are because they only cost $70 to offset $35K in protection (per 100 contracts) so I’d rather pull them off and put them back on 5 times than let them drop 5% on me.   Once I get comfortable I’ll ride something out for a while or end up 1/2 covered and confused like today.  It’s very important to keep your trade costs in perspective when doing these things and, more often than not, you are better off just sticking with your initial play.

    Oh nice, UAE spends $2.8Bn on planes.  BA is going back on our buy list if they ever settle down.

    UYG/Micro – Too late for that play but you guys should be buing me dinner if you took my advice the other day and flipped to FAS at $4!  Since then, UYG went from $1.95 to $2.42, FAS went from $4.10 to $5.68.

    3:21/RMM – I have looked at it…..   

    .03/RMM – Not worth it if you think you can do better right?  I wouldn’t focus on the .03 though, what percentage is .70?  If it’s 5% and you are asking me if 5% a month is a good return, I’d have to say yes but if that .70 is 5% protection on your total position, then I would say you are poorly protected….

    DB the Bear – You need to swtich to coffee!


  174. SKF down $40 ! 


  175. Phil: for protection just opened DIA puts june 76, naked .


  176. DB, Don’t get me wrong… we’re all still doomed.  But as long as they are going to hand out money you might as well get some.  But don’t wait much longer.  I expect a big pop premarket after Obama’s miraculous speech.  Not that it will be.. but the market will miraculously think so.


  177. I should have taken your advice on FAS but at the time i was scared frozen with a 2X finacial soeding to the ground, didn’t have the nuts to switch to 3X the speed toward the floor :)


  178. Holy smoke!  13.44 million shares of UYG traded in the last 5 minutes just to close at the high!!  Somebody sure got a sweet spot to sell into.  Hope they’re out of ammo!!!


  179. Phil/Coffee – Noooo – I drink about 10 cups a day. Start at 8.00am when the UK opens and stop about now after I’ve done my closing accounts. 13 hours of coffee, any more and I’d never sleep :-)


  180. DB – I am pretty far from being a bull, but after 9 straight days of downdraft finally we got a burp. My Fib lvls are ~7400 and 7570. Also this is a good time for me to buy few contracts of the Phil’s mattress. I placed order for 5 ctr Mar75P/Jun76P play, but it didn’t fill at suggested $3.6. Let see what Phil will suggest tomorrow.


  181. Qualified/DB – Well I’m very much against that!  I find it ridiculous that the only kind of hedging they allow you to do is the kind that forces you to lose money on one end of the trade or the other – it’s ridiculous!   I’d say DXD, the ultra-short Dow since you have 4 Dow components to cover.  The July $64s at $15.60 should hold 60% of their value on a 10% Dow up move and should pay you almost a double on a similar move down ($14 DXD points either way).  So using that logic you want to cover with perhaps 1/3 of what you think you would gain on the move up, which should pay you close to 2:1 if it all falls apart.  Once you establish that position, you can always buy a put to cover if you think we are in for a good run.  The DXD March $70 puts, for example, are $4.15 and the DXD moved $5 today and that would have been a better than $2.50 gain to offset the loss on your longer calls. 

    Yay!  We made it through a positive day without a massive sell-off.  Just made my levels though – hard to be too happy but so much better than the crap we’ve been given for the past 2 weeks!


  182. RMM – could call on SKF.  I should not have bought for 175 (net cost is 156 w/ option sale).


  183. Cap: you mean GOOD call ?
    this was a great day,
    shorts good, portfolio up.
     
    Agree ?


  184. Phil:  I read "The Stock Market Parachute" article.  Excellent advice and it makes complete sense to me.  
    Since I’m basically a long only fund, (qualified account) I’m thinking the best hedging strategy for my situation is to use a mix of the DIA puts and short ETFs i.e. DUG since (in this case) it matches my oil and gas long positions. (COP, XOM, BP, etc)
    However, here’s the rub:  I USUALLY experience a loss when holding calls or puts OVERNIGHT.  The time decay, a movement in the VIX, or some other unexplained "adjustment" deterioriates the value of my option.  What am I missing?
    Conversely, I (more often than not) am profitable DAY trading options.  I pay close attention to the VIX intraday and avoid buying calls or puts when the VIX is unusually high.   I also take all or scale out of my profits rather quickly. 
    So here’s my question:  When buying DIA puts to hedge my long OVERNIGHT positions, how much time should I buy?  Prompt month or further out?  Also, how do I factor in the VIX and the slippage resulting from the bid/ask spread?
    Thanks,
    JW


  185. VIX crush – was huge today, more than 13%.  OTM CALLs didn’t gain much while OTM PUTs lost big time.  It was great for my Short Strangles, which recovered five days of losses in hours.


  186. JW – DUG is NOT a good fund.  It is a broken ETF like USO and SKF that degrades too quickly over time to protect you from anything.  That is why we generally day trade SKF or sell some other sucker the calls.  Play with the dates on this chart and you will see that, over the short run, COP, XOM and BP will move right in line with the Dow (COP performing the worst because they have the most gas exposure) but that, over longer periods, the Dow will underperform them.  Since your other longs are Dow components BP and CAT – the DXDs are the ideal cover for you.  DUG is just gambling on the sector and the premium on them make them pretty useless protection.  If you are profitable day trading options then try the long DXD protection and freely day trade either DXD puts or DIA calls against it as you already have a buffer and if you knock off .50 20 times between now and May, you have almost free protection – isn’t that fun?  8-)

    As to time, longer is better.  You shouldn’t be constantly moving your long covers other than to roll them higher (or lower with DXD) or further out in time when you get too close (45 days).  That keeps premium erosion from being a major factor as they only lose 1/50th of the premium per day.  It takes time and experimentation to come to balance in your portfolio but once you get a good feel for it, you can make just one simple adjustment that can flip you from 60/40 bearish to 60/40 bullish and that is a huge advantage.  That’s what we were doing with our DIA covers today.  We didn’t change the longs much (other than rolling them up) but we day traded the front-months until we found a position we liked and went from none to 1/2 to full cover, ending up prettty neutral with the half cover. 


  187. FSLR getting hammered after results.


  188. Phil – recieved the alert.


  189. Oh thanks Pharm but that won’t work if everyone does it…

    Premium Members – I sent out an alert at 5:08 PM.  If you didn’t get it by 5:10 pm, let me know and we’ll try to figure out what’s wrong.  We are just about ready to roll on the new alert system, which will also be the backbone for the daily newsletter (just the post going out by Email) as well as future specialty newsletters we’re planning.


  190. RMM – Yes, definitely.


  191. C 2.84 after hours.   Big short cover ?


  192. Then the question is:  What constitutes an alert?  Surely people don’t want 5-10 trades a day sent to their mailbox – or maybe you do.  I don’t know as I never get around to looking at my email for days at a time…. 

    Would you want to see levels we’re watching, would you want every bold trade idea? 


  193. C – ROFL – that little call we took the other day is going to be golden!


  194. Phil -
    I’d be interested in your comments on Bronek’s 3:32 question
     
    Thanks


  195. Alert content: yes to levels, yes to bold trades.  I don’t mind 5-10 trades a day or more, I can set up a filter for them so no biggie.


  196. Phil, I’d like to see levels.  Definately the ones we need to look for during the day.  And then maybe if all, or at least a majority, of the indices going above or below the levels during the day.  Thanks.


  197. Got the alert, thanks.  Second to Jordan on both items!


  198.  I didn’t get the alert…


  199.  OK, under email on my profie I only had my user ID. I updated it. I am getting the daily emails though, must me the non-premium list…


  200. This is great stuff (actually revolting) regarding Sen. Christopher Dodd:
    The Hartford Courant continues to do yeoman’s work exposing Chris Dodd’s questionable ethics. Over the weekend, they published this story from a former Connecticut state legislator about the highly suspect circumstances in which Dodd came to own a cottage on the Irish coast. Read the whole thing.
    And today in the Telegraph, Toby Harnden has more on the story including a photograph of the "cottage," which looks more like a large-ish house.


  201.  No alert here either….


  202. Say it ain’t so, Joe !
    The WSJ reports this morning that accused billionaire swindler Allen Stanford has ties to Joe Biden’s son, Hunter, and Joe Biden’s brother, James.
    A fund of hedge funds run by two members of Vice President Joe Biden’s family was marketed exclusively by companies controlled by Texas financier R. Allen Stanford, who is facing Securities and Exchange Commission accusations of engaging in an $8 billion fraud.
    http://media.nationalreview.com/post/?q=OGI0OGI4ZGI1Mzc3NGZkMGIyMDlmOTBmNWQyZjJkODI=


  203. 4:07PM First Solar beats by $0.31, beats on revs (FSLR) 137.68 +12.84 : Reports Q4 (Dec) earnings of $1.61 per share, $0.31 better than the First Call consensus of $1.30; revenues rose 116.0% year/year to $433.7 mln vs the $410.4 mln consensus.
     
    Punish those that cannot double.  They got trashed!!


  204. Got my alert on time.


  205. I’m thinking about opening an account with Think or Swim.  I know they were giving out a promotional rate to PSW members.  Does anyone know what that is?
    Thanks.


  206. Matt re: Phil’s levels.
     
    I made a simple spreadsheet with columns at +/- 1.25% increments. I set the benchmark at 8650 and review the previous two days closing values. It is uncanny how the market reacts when values start to line up intraday. This has helped me tremendously to follow Phil and his intraday trades.


  207. Phil, I have been reading site extensively for past few days. I need help in one area, can either Phil or fellow memebers guide me.
    How do I start investing/trading with the picks here, sometimes there are just too many in a day? How do I allocate certain % and build portfolio? and once that’s done then continue to be in and out by myself depending upon updates here at the site?  Are there any suggestive approach what % of capital shall be allocated for LTPs?
    Assuming I have 50k and say I built LTP portoflio for the long haul, then how do I rebalance it?
    I shall surely appreciate some sharing in this area,
    Thanks and By the way I have great time with UNH and X picks. Phil I played X in a different way (decided to buy Jan 10, 15 C, and sold Mar 22.5 calls, will appreciate your thoughts on this)
    Thanks, Shiv


  208. I got my alert on time. I want to see the levels and all trades.


  209.  Well looks like he didnt find 35 trillion in SS but he did happen to find 2Trillion in the budget :) He might be a member you know ;)


  210. Edro – Thx.


  211. What a speech! What a comment by D. Brooks on PBS! Both are spot on, Dave had many more specifics. I loved them both. The Pres rose to the moment, no specifics but it was a terrific morale building presidential speech. The man has talent.


  212. Good Morning everyone.
     
     
    UK is following the US , up 1.52% @ 3874. Lots of good reading on the site today, thanks Ilene, that man Mish talks so much sense. I still think things are going to get a lot worse before they get better so its going to be hard to pick just when the markets will turn ahead of that. Some good reads from over here … Some UK commentators think revolution and disent could follow soon and UK savers just dont trust the banks at all.


  213. Comments/Bro/Edro – I am NOT going down the path again of having porftolios or running trades.  That leads to too many problems and I have a hedge fund where people can deposit their money and have trades made for them if that’s what you are looking for.  Opt also has a linked account in TOS where people can have him trade for them and will be trading in the hedge fund as well.  This column is trade ideas and education.  I suggest trades, I will suggest ways to adjust trades, I will be happy to discuss specific adjustment ideas for your own trades but I will NOT be directing trades for others.  See the disclaimer at the bottom – I am not your investment advisor, I am not your broker, I am not your hedge fund manager (unless I am), I am not a linking service.  Najarian charges $500 a month, has thousands of members and he doesn’t do half of what I do.  In fact, I don’t know anyone in the world who does what I do.   Was there a single wrong trade idea today?  Was there one this week?  How many last week?  Still not enough???  You can see why I find this frustrating….

    Alerts/Cris – We’ll be testing during the day.  Let me know if you still have a problem.

    Alerts/Binoy – Make sure your Email address is in your profile and let me know if today’s test fails.

    Biden/Cap – Oh my God!  You’re saying that Biden’s family members had a hedge fund and a guy who brought clients into their hedge fund ran a fraud that had nothing to do with them?!?  That is truly stunning Cap – I’m switching parties immediately!  What I find really scummy about this particular attack from you is that you know damn well how a fund of funds works and you know damn well that the connection between Biden, his family and the Stanfords is about as close as your connection with my barber yet you gleefully spew this BS as if it somehow proves a point – it’s very distasteful.

    TOS/Bigs – Scott@thinkorswim.com is our rep.  I understand they’ve been doing flat .70 per contract for me and Optrader’s guys, I’m not sure if it’s $$$ based but it never hurts to ask.

    Spreadshee/Cafords – I’m working on one that will go at the top of each day’s comments.  As you said, it’s very nice to have a visual during the day.

    Portfolio/Shiv – I do not in any way, shape or form advocate taking every trade.  There is a hope that you yourself may have companies you like and that when one of my trade ideas line up with something that you have already been thinking about doing through your own research, then you may consider it a good time to get started on the position.  I watch about 200 companies at any given time (my desk is littered with papers with stock symbols written all over them along with little comments that end up being less help than I intended by the time I get back to them) and I’ll usually pull the trigger when there is an event that makes it too attractive to pass up.  As a rule of thumb, in a small portfolio - you never want to have more than 20% in a position and really 10% is what you should target so $5,000 out of $50,000.  Since we advocate entering in a scale that allows for 2 double downs, that means you initial entry should be between $1,000 and $1,500.  If you follow this rule and generally keep 20% stops – you shouldn’t lose more than $300 on a bad entry, which is just 0.6% of your portfolio. 

    Read the strategy section for a general overview but let’s say you are entering UNH at $24 and want to do a buy/write, selling  the $22.50 puts and calls for $3.50.  That puts you in for $20.50/21.50 but you have to buy 100 shares, which is $2,100 a little high so maybe this trade is not for you in the first place.  You MUST be willing to OWN 200 UNH at $21.50 for a LONG time to even consider a trade like this.  So your "entry" is $21.50.  UNH is currently $24 so that’s about 14% below here and, as I said, we are going to get concerned when you lose 20% so that’s 34% down from here.  Let’s say UNH does fall 33% to $16.  You are obligated to buy another 100 shares at $21.50 and you have 100 shares that are down $8 already.  If you get assigned, you have 200 shares at $16, down $5.50 from your net entry (25%).  In reality, we would have adjusted earlier but this is the point at which you MUST adjust….

    What would be the adjustment?  Well you committed $4,200 already so do we take the $1,100 loss and quit (2%) or DD with another $3,200.  Assuming we think the sell-off was not justified, then we have 2 choices.  We either sell the April $17.50 puts and calls for $2.50 (guessing), which lowers our net basis to $19, a loss of $300 if called away or $18.25 x 400 shares ($7,300) if put to us.  Here is one of the most critical aspects of these kinds of trades:  If you don’t really, really, REALLY Today WANT to own 400 shares of UNH at $18.25 LONG-TERM – you should not be entering this trade at $24.21.  By planning your trade’s next 2 moves like this, you will know before you allocate your first dollar if you are going to have the wherewithal to ride the trade out.

    If you want to get more agressive, you could DD at $16 right off the bat, dropping your net basis to $18.75 and then sell the $15 calls for $2.50 which drops your basis to $16.25/15.63 and a $250 loss if called away (1/2 of 1%) but, of course, we would look to roll to higher May strikes if we get a bounce.  We could be more aggressive and sell the $17.50 puts and calls for $2.50, which is the same $16.25 but $16.88 if put to you with 800 shares ($13,500) so it would be a major commitment to be that aggressive. 

    Meanwhile, notice that you could have gotten out, even with a 33% drop in UNH, with a $1,100 loss and, if you had hedged 30% of your portfolio ($15,000) to the downside and they picked up just 20%, it would pay for 3 losing trades like this.  Now, let’s look at the upside.  If UNH does, in fact hold $24 through March 20th, you make $350.  This may not seem very exciting but if you do that every month that’s $4,200 a year, a very nice return on the $10,000 you allocate to the trade.  Since you know your downside stop (and when I say stop it’s "stop or adjust") is a $1,100 loss, you can allocate 10 active round one trades and assume that you won’t be doubling down on more than 5.  That would put about $10-$15K directly in play with perhaps another $10K in margin (usually you are charged 50% of the naked put strike you sell) and leave you with $10-15K to hedge to the downside and $10K in cash to make adjustments.

    I do not recommend you start out juggling that much.  Try 2 or 3 trades and see how they go.  Like I said, if you make $350 on 3 trades 10 times a year, that’s still a $10,500 return on your $50,000 and you are outperfoming 95% of all investment vehicles on the planet.  Your X trade was good, by the way, just watch the caller in case they start to run on you but you have good position.

    LOL Micro!

    Pres was great, I am very pleased – still need follow-through on specifics though but he bought them until next week for sure!

    DB/Ilene – That’s an important point to new members.  The Phil’s Favorites section is a must read.  Ilene does a great job putting up a great cross-section of opinions and these guys are all analysts I have great respect for.  Some totally disagree with me and that is a very healthy thing for all of us to read!


  214. Good Morning Phil, DB & all


  215. Asia Markets :    Wednesday, February 25, 2009

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

    Nikkei Average*                       7461.22    192.66     2.65%

    Hang Seng*                           13005.08    206.56     1.61%

    China: DJ Shanghai*                254.99        1.00     0.39%

    Seoul Composite*                   1067.08       3.20     0.30%

    Bombay Sensex*                     8902.56     80.50     0.91%

    Baltic Dry Index                         2010.00   -74.00    -3.82%

    *at Close


  216. Good morning!


  217. Asian Markets Pull Back from Rally, Yen Slips

    Asia stocks were mixed Wednesday despite reassuring comments from Federal Reserve Chairman Ben Bernanke, which sparked a rebound in battered U.S. financial shares. The yen slid further on Japan’s mounting economic and political troubles. Safe-haven government bonds retreated as investors shifted funds into riskier assets, while gold steadied after having soared in the past few weeks on mounting fears about the financial health of countries trying to contain the crisis.

    The Nikkei closed up 2.7 percent as exporters climbed after the yen hit a three-month low versus the dollar and on hopes for a possible government stock-buying scheme.Japan’s finance minister said on Tuesday the government was looking into expanding share buying to support the stock market and the Nikkei business daily said this might include buying directly from the market. While market players said the news was positive, they remained wary.

    Data showed Japanese exports plunged a record 45.7 percent in January from the previous year, pointing to another sharp contract in economic activity in the first quarter of the year. But Japanese shares were helped in part by reports that the government may start directly buying stocks to support the market and ease the strain on the country’s big banks, whose large equity portfolios have suffered heavy losses.

    South Korea’s KOSPI closed a volatile session 0.3 percent higher, but losses by shipbuilders and construction issues on deepening economic worries cut the main index’s earlier gains.

    Australian stocks finished 0.1 percent lower, reversing early gains, as investors looked past an initial bounce on optimism over the health of the financial sector and refocused on a weaker economic outlook.

    Hong Kong shares trimmed early gains to settle 0.7 percent higher by midday ahead of the index futures expiration on Thursday.

    Singapore’s Straits Times Index was higher.

    China’s Shanghai Composite Index swung back into positive territory, up nearly 1 percent, though investors continued to worry that an uptrend in Chinese stocks may have ended because of high valuations.

    Bombay Stock Exchange’s Sensex ended at 8892.60, up 70.54 points or 0.80 per cent. It slipped from intra-day high of 8995.04 and touched a low of 8889.18. Indian equities gave away most of its intra-day gains on Wednesday ahead of February expiry as traders booked profits at higher levels. Auto, IT and metals ended higher after announcement of cut in indirect taxes. Capital goods and realty space ended lower.


  218. Euro Shares Lifted by Banks, Bernanke

    European shares rose early on Wednesday to snap a three-day losing streak as financials surged, tracking advances on Wall Street after the Federal Reserve signaled that bank nationalizations were not imminent.

    The FTSEurofirst 300 index of top European shares was up 1.1 percent at 727.35 points, after it had fallen 1.4 percent on Tuesday to a six-year low. The index has fallen 12.6 percent so far this year.

    The broader STOXX 600 index rose 1.3 percent, led by banks and oil stocks.

    U.S. stocks had risen late Tuesday, recovering from a 12-year low, afterFederal Reserve Chairman Ben Bernanke signaled that nationalization of big banks was not at hand, causing relief in the markets.

    Financials were among the biggest gainers in Europe, with Deutsche Bank, BNP Paribas and UBS up between 6.6 and 8.3 percent. The DJ Stoxx European banks sector index was the strongest sectoral gainer, up 4.2 percent, and has fallen 25.2 percent since the beginning of the year. Deutsche Boerse rose 5.8 percent, after the German stock exchange operator released solid results late Tuesday.

    Shares in British confectionery giant Cadbury also rose, and were up 3.1 percent, after the company reported a 30 percent rise in 2008 profits.

    Pharma stocks dropped, with the DJ Stoxx health care index the biggest sectoral decliner, dragged down by heavyweight Novartis, after the Swiss company said first-quarter results would be hit by foreign exchange movements. Shares in the company were down 3.4 percent.

    Utilities were also down, with GDF Suez, EDF and EDP Renovaveis and Gas Natural down between 0.3 and 0.9 percent.

    Around Europe, UK’s FTSE 100 index rose 0.9 percent, Germany’s DAX index was up 1.2 percent and France’s CAC 40 was up 1.1 percent.


  219. Oil Pushes Above $40 as Stocks Rally

    Oil held above $40 a barrel on Wednesday after a 4 percent rally in the previous session, as equities gained and investors looked ahead to U.S. inventory data expected to show rising supplies. The price of oil has become closely intertwined with equities, a barometer of economic sentiment, in recent months.

    US light, sweet crude [  40.69    0.73  (+1.83%)] was up.

    London Brent crude [ 42.69    0.19  (+0.45%)] , trading at an atypical premium to U.S. crude because high U.S. inventories are weighing on the U.S. benchmark, was up.

    Attention will focus later in the session on the latest snapshot of oil supplies in the United States. The U.S. Energy Information Administration releases its weekly inventory report at 10:30 a.m. New York time, which is expected to show that crude stockpiles probably rose 1.4 million barrels last week.

    American Petroleum Institute data on Tuesday showed crude stockpiles rose 341,000 barrels last week.

    OPEC oil ministers meet to set policy on March 15, and the group is expected to consider deepening its output cuts.

    Dollar Erases Losses vs Euro; Yen Falls

    The dollar erased earlier losses against the euro on Wednesday as concern about the global economy crept back in to boost the perceived safe haven currency, while the yen continued to fall broadly. The U.S. currency had started the day on the back foot against the euro as equity markets took heart from Federal Reserve chairman Ben Bernanke’s signal that bank nationalizations were not imminent.

    But analysts said the rally in riskier assets, which also bolstered currencies such as sterling and the Australian dollar, was looking shaky, although European shares remained up 1.3 percent.

    The euro [ 1.277    -0.0073  (-0.57%)    ] was flat against the dollar, below an earlier session high of $1.2901,
    while the pound [  1.4368    -0.0112  (-0.77%)    ] also erased gains to trade steady versus the greenback.
    Against the yen, the dollar [ 96.55   -0.07  (-0.07%)] rose, not far off a three-month high of 97.35 yen hit earlier on platform EBS.
    The euro [ 123.35    -0.80  (-0.64%)   ] was up versus the Japanese currency, off an earlier high of 125.18 yen.


    Gold extends losses as risk aversion cools

    Gold declined on Wednesday, extending the previous session’s 3 percent losses, after Federal Reserve Chairman Ben Bernanke’s reassurances on the outlook for inflation and the economy cooled risk aversion. A recovery in equities indicates a pick-up in appetite for risk and may divert investment from gold, analysts said.

    Gold slipped to $955.90/957.90 an ounce at 0941 GMT (5:41 a.m. EST) from $862.45 late in New York on Tuesday.

    Holdings of the world’s largest gold exchange-traded fund, the SPDR Gold Trust, were also unchanged for a fourth consecutive session on Tuesday, fuelling fears burgeoning demand for gold to back ETFs may have stalled.

    Gold buying in India has picked up as prices have retreated from the record highs they hit last week. A further dip below 15,000 rupees per 10 grams may rekindle buying interest, dealers said. "We are getting calls for the first time after gold dipped below $1,000," said a dealer with a state-run bank in Mumbai. India’s buying of the precious metal tailed off as gold soared, leading some to speculate that a depression in jewelry demand could prove a major drag on prices, despite the strength of investment buying.

    Among other precious metals, silver eased to $13.71/13.78 an ounce from $13.74. Holdings of the largest silver-backed ETF, the iShares Silver Trust, were also static on Tuesday, albeit at record levels.

    Platinum was steady at $1,036/1,041 an ounce from $1,040.50.
    Palladium slid to $195.50/198.50 an ounce from $198.


  220. Hi Ramana


  221. Phil… "scummy"; "distasteful" ?? c’mon.
    a) I didn’t "attack" Biden and family.  I posted a news item about them (and their possibly shady dealings).  Its news; sorry if you don’t like it.  As I recall, during the election there was other news about the brother and son and their questionable dealings; its more of the same.  And you clearly didn’t read it carefully; they had a fee sharing arrangement with someone they didn’t know ?  Really ….
     
    b) don’t switch parties; the other guys won’t have you !  :grin:
     
    c)  speechgiver in chief last night:   good tone (less doom and gloom, more positive); no specifics; some of his ideas are troubling.  A for presentation.  C overall.  No earmarks in "next years" budget ??  What about the 8000 or so in this years ?


  222. Cap – when you wallow in the filth of the attack blogs you insist on linking too on a regular basis, I can see where you may not be very sensitive to what constitutes objectionable material to others.  The actual story says a fund of funds run by Biden’s brother and son was marketed by companies controlled by Stanford.  Stanford was a huge operation with a major reputation and marketed hundreds of funds.  This was a $50M fund that got $2.7M from Sanford and the Bidens’ fund has already offered to give that money back in full, not because they did anything wrong, but because they are a legitimate hedge fund and the $2.7M are assets that should be part of the Sanford settlement. 

    Paradigm Global, the Sandford ($8Bn) entity ($270M) seeded the fund (called Paradigm Stanford Capital Management) and was comissioned for finding investors.  What I find particulary distatesful about this coming from you is that you are a former fund manager and you understand that this relationship in no way ties the Bidens back to Stanford other than the parental business relationship yet you would rather misdirect people in order to score political points.  Forgive me if I choose not to put up with this on my site!

    "There is no connection between the Bidens and Allen Stanford or Stanford period, full stop," he said. "There never was any meeting between any member of the Biden family, no phone calls, zero correspondence."

    Now a normal person would read that and say "Gee, I guess I have nothing to attack Joe Biden with" but your keen powers of observation cut right through facts and post this nonsense on my site…


  223. Attack Blogs ?  Hah; ridiculous.
    Phil, I don’t know if there is any there, there or not with that story, which came from the WSJ, not from any so-called "attack blog"  (oh yeah, WSJ is now an attack blog b/c its owned Murdoch, I see).  And its not like these 2 Bidens haven’t been in the news before w/ questionable dealings.
    Boy, do you have a thin skin this morning !  When you post a list of Phil approved legitimate news sources and blogs besides the WSJ let me know.  I didn’t invent the stink that pervades Wash DC where politicians and their families have questionable dealings.  I’m sure that there will be many many more such stories on pols of both parties that are newsworthy; and when it involves the VP’s brother and son, its newsworthy.
    But, later on in the WSJ piece:

    Mr. LoPresti said Stanford entities put up the $2.7 million in seed money and marketed the fund. SEC records show the fund, which was launched in June 2007, had 104 investors as of Nov. 10, 2008, with assets of $49.8 million. Paradigm Global, of New York, manages portfolios of hedge funds with a total of about $270 million in assets.
    Under an agreement, Stanford was entitled to share in a portion of the fund’s management and performance fees, Mr. LoPresti said. "That’s all I’m going to say on the fee side of things," he said.

     
    Also, there may be nothing untoward in this, and the article suggests that as well.  We don’t know yet.
     
    And your Chris "I get a tingle up my leg" Matthews quote may have been funny to you; but others might call it racist.


  224. Thanks Phil. I appreciate your taking time and replying.