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GDP Friday – Cramer Rips Me Off!

Boy am I mad!

It was brought to my attention last night that Jim Cramer has stolen my plan, which I called "The 3% Mortgage Solution" in my Feb 9th column, and simply added a point to it and claimed it as his own on national TV.  I’m not sure how to feel about that – I’ll be glad if the plan is used of course, but seeing Cramer take credit for my work is a little irritating.  In fact, "Cramer’s plan," as laid out, also lifts elements from my 2/16 article – the latest version of my year old plan for immediately ending the mortgage crisis by making the government an equity partner in the homes.  So congratulations to Cramer for sinking to yet another new low in broadcasting – I suppose only writers from TSCM, where Jim has overseen the loss of 87.5% of shareholder equity in the past 5 quarters, are worthy of being given credit by the great Cramer while the ideas of us independent bloggers are just his for the poaching

Other than being shocked last night by Cramer’s flagrant foul, yesterday was a pretty good day.  We executed our plan of buying out our short DIA puts into the morning run-up as we rolled up our long puts and we grabbed some XLF puts as our first trade of the day, which worked out well as a day trade.  We did a little bottom fishing with UNH and ISRG and caught the IBM rally for a quick momentum play all before lunch.  In fact, at 11:20, we were done being bullish as I said to members: "I do expect a big temper tantrum this week.  I know I threw one at Bush’s last budget (in fact it was BECAUSE it hid so many costs) and the GDP is going to back up the Doom and Gloom squad tomorrow so still balanced bearish off this level as we haven’t hit one of our goals yet:  Dow 7,400, S&P 780, Nasdaq 1,450, NYSE 4,850, Russell 415.  Keep that in mind."

We had added long QID puts as general virtual portfolio protection and those are working out so well we are becoming concerned with our April $64 covers – which seemed safely out of range at the time.   We had a bit of a false bottom after lunch but I said to members at 1:33: "Not good on XLF – see they tested $8.40 to upside and failed.   That puts them on path to test $8.20, which is light resistance on the way to a real test at $8 and below that we are back to $7.60 so be careful if this starts breaking down."  We ended the day picking up some FAS calls, just in case our bearish stance was wrong but it looks like there was no need as the pre-market (7:30) is already looking awful.

We are getting hit from all sides this morning with the government announcing a much larger stake in C along with the FDIC doubling fees charged to lenders and, of course, the upcoming 5% drop in GDP.  For Citigroup, the government is expected to match $25Bn in privately held preferred stock conversions, so $50Bn of preferred comes off the books and the conversion price is $3.25, a massive premium to yesterday’s close, which will immediately dilute C by 1/3, pulling down all the indexes they are a part of.  Running an onerous deal like this may be good for the government but it’s bad for confidence in the financials and we can expect our pals at SKF to fly back to $180 or better today – only this time I’m not so certain I want to be shorting them.  Contrary to Cramer’s advice, we had been using the SKF $230 calls at $7.30 as disaster protection and yesterday I suggested selling the SKF Apr $95 puts for $5 into the close – those should do very well at the open!

The XLF is miles above the low of $7 from last Friday and I warned members how easy it would be to have that 15% drop back that could send SKF up 30% ($240), this is the danger we fact when we have an ultra-ETF like SKF that is indexed to a broken ETF like XLF.  Of course that’s also our opportunity on the downside as a .35 bounce off $7 (5%) can send SKF tumbling $20 or more (10%) – that was the essence of our 1,300% gainer last Friday and here comes the set-up again so stay tuned in intra-day chat – hopefully we’ll get another swing at this one. 

Meanwhile FNM (if you are a taxpayer, you own it) lost $25Bn this quarter and says they need another $15Bn to get through the next one.  FNM lost $59Bn in 2008, making GM look efficient and we’re not even discussing bigger brother FRE (we own them too!), who may need $35Bn of their own to move forward.  The two mortgage companies hold about 200,000 foreclosed properties ($200K each = $40Bn), double last year’s rates but, once again, I will point out that delinquent loans account for just 2.4% of their total virtual portfolio’s of $5Tn – cash flow and mark to market is killing these companies, not bad loans

We’ll be watching XLF $7 to hold, also oil at $40 and copper at $150 as signs of the overall economy.  The Baltic Dry Index fell below 2,000, which was our watch level from last week and now we need to see them hold 1,900 or we may be looking at another big, global sell-off.  China is not buying our bonds, they are SELLING theirs as local governments are running out of cash.  India’s Rupee sank to record lows against the dollar as their economy slowed to 5.3% growth (from 8.9%) in Q4.  The rising dollar was good for the Nikkei, and that market gained 1.5% but they were alone in the region as the Shanghai went 1.8% the other way and the Hang Seng fell 0.7%.  "Asian economies have proved to be more vulnerable than most had been anticipating to the collapse in global export demand," said David Cohen, director for Asian forecasting at Action Economics in Singapore. "They have dropped at a pace not seen before. Exports just went over a cliff in the fourth quarter."

It’s 8:30 now and Europe is off their own cliff now that our -6.2% GDP Report came out.  That is way worse than the preliminary reading of -3.8% and way worse than the -5% analysts were expecting.  EU markets are down about 3.5% across the board, an indication of broad-based program selling that is hammering the US pre-markets as well.  We will certainly be testing our last week/November lows at the open and it’s going to be very hard to make bullish plays into the weekend but now is certainly the time to buy if we can hold our levels again (hedged of course!).

One of the best ways to open a position in a falling market is by selling out of the money naked puts.  In addition to our usual "Buy List," I had 4 nice-looking candidates in yesterday’s chat:

  • AMGN took a nice dive today.  $50 puts are $1.75 but let’s make sure they are done going down.
  • RAH fell back to the 50 dma crossing the 200 dma, nice spot for a rally.  Apr $55 puts are $1.58.
  • APOL got whacked for no reason I saw: $65 puts are $1.62, wish I’d seen this $4 ago this morning!
  • GMCR in an interesting squeeze on the charts: $35 puts are $1.43.

We should get even better pricing on the morning dip and these are all stocks that I like for the longer term.  Remember, scaling in is the key to survival in this market!

The November lows were:  Dow 7,449, S&P 741, Nas 1,295, NYSE 4,607 and Russell 371.  Those are our "lines in the sand" for today but, more importantly, we are closing the second month of the year today and let’s keep an eye on our 20% off levels from our Jan 2nd open.  Those are Dow 6,995, S&P 724, Nas 1,260, NYSE 4,600 and Russell 400 and we should get some good resistance there with expected bounces of 4% above those marks before March expiration (20th) or we are going to have a very, very long way to the bottom!


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  1. What in the world is the Treasury up to now with Citi????  I know they want to have their capital injection count as REAL capital for Citi.. but making their statement to convert preferred to common if and only if private preferred holders do so is unbelievable.  If that’s what they want why don’t they just negotiate it behind the scenes and announce it when they have some agreements with private parties?  This is just another convoluted idea of the Treasury that is complicated and dependent on others.  I don’t think the market will like this.. which is easy for me to say given the huge drop this am for the banking sector UYG.  I really dodged a bullet this time and got lucky holding SKF overnight! 
    The government policies are WAY too fluid for investors to jump in with any conviction.  Period.

  2. S&P futures are right on the intraday lows from Monday…. and November of course.

  3. FAV-Friday: looks like a pattern we have on some fridays – mkt opens 150+ lower, goes down by 200-250 & then roars back positive or near positive by eod
    Although pattern may change ….

  4. Euro Area Risks Breakup on Bank Woes, Subprime Bear Hayman Says

    Email | Print | A A A

    By Bo Nielsen
    Feb. 27 (Bloomberg) — Hayman Advisors LP, the firm that earned $500 million betting on the U.S. subprime mortgage-market collapse, says Europe’s monetary union is about to fall apart.
    Richard Howard, a managing director for global markets at Dallas-based Hayman, said Germany may opt to shore up its own economy, Europe’s biggest, rather than bail out fellow euro nations such as Austria, Italy and Spain as their banks sag under the weight of bad debts. That might lead to defaults and compel Germany to renounce the euro, he said.
    “People said subprime could never blow up but it did and now they’re saying the exact same thing about the eurozone,” said Howard. “There’s no stopping what is now a downward spiral.” He declined to discuss his investments.
    Hayman joins a growing number of investors seeing the possibility of a breakup of the $12 trillion euro bloc, conceived more than 10 years ago to cut unemployment, tame inflation and create a rival to the dollar. Societe Generale SA said this week Germany may refuse a bailout in an election year. ABN Amro Holding NV said Feb. 17 the crisis is “Europe’s subprime.”

  5. I can’t see it roaring back today. Look at that GDP ! Look at Citibank ! UK already down 3.5% and its getting worse after that data. Now we will see how low it’ll go.

  6. Futures failed: U G L Y 

  7. MGM Mirage Requests To Borrow $842M From $4.5B Credit Pact
    Last update: 2/27/2009 8:38:43 AM
    MGM Mirage (MGM) disclosed Friday that it submitted a request to borrow $842 million under its $4.5 billion senior revolving credit pact.
    The entertainment, hotel and gaming company said in a document filed with the Securities and Exchange Commission that the borrowing request, which was fully funded as of Thursday, was made in light of the continuing instability in the capital markets and uncertain state of the global economy.
    MGM said the funds will be used for general corporate purposes.

  8. maybe not roaring back … how about creeping back up?

  9. GE at $8.50 pre-market. 

  10. Dow futures battling to hold the 7 handle! Wow! 

  11. Y’know, I don’t think I am stupid; but this Citi deal is consistent w/ what was being discussed all week and should be viewed as a positive for both the stock and the financials.  The company is not going under; the gov’t converts to 36% stake not 40%; other preferred holders will go along, some have already announced.  Even w/ the dilution.
    The stock had been anticipating worse before this, so I see no reason for a 40-50% haircut.  I think this was forced down pre-market on low volume (13 M shares b4 8 am when most can’t trade); so folks can start covering their massive shorts.
    Yes, the overall tone is negative w/ GDP (also no surprise) and we have a couple of other releases today to wait for.
    They need to trot someone out – Pandit – TIMMEH ! – to expain the Citi deal; hopefully the lows will hold.
    The way SKF is trading pre-market (high was 185) suggests that this may be a re-test of the lows; and perhaps we can move up a bit.  The alternative is too scary to think about.  AAPL only down $1 pre market.
    I also scalped $5 (sold my SKF at 185; bought it back at 180), so my stock hedge is now at a cost of about 165-19 = 146.

  12. X = 19.32 pre market; wow.

  13. Ah; from Faber, some of the preferred converting could simply be selling out.  So why not sell out right now in advance of converting and cover when you convert.  That could be pressuring the stock extra more.

  14. How do we play ultra short treasuries?

  15. Phil –
    I know I sound like a broken record – and I know you believe we are bottomish BUT
    positions that MAKE money when the market goes down

  16. Downtrend/Edro – That’s what the QIDs, SKFs and XLF shorts from yesterday were.   Otherwise you can just pretty much short anything.  Of course we always have the DIA bearish plays and even if you are only 40% bearish, those have doubled twice in the past 2 weeks. 

    Treasuries/Dilbert – Not sure on those. 

    Meanwhile – this is a time to look up, not down – this sell-off is nuts!  It’s nothing we didn’t know, C gives up a big dillution, GDP sucks pre-bailout & pre-stimulus – Duh!  We need to see where things settle down but notice AAPL not off much, Q’s off only 1% overall, C is coming off $1.60 (and I like them here), BAC back on crazy sale.  XLF not even down 10%…

  17. BAC $4 calls for .98, FAS Apr $7.50s for .85,

  18.  Phil- re one of your posts in your "favorites" section refers to capitalizing on USO rolling front month contracts…specifically, article mentions front running ahead of March 6-9 "rebalancing". could you explain how and when we could take advantage of that? Txs. 

  19. Phil,
    What do you think of celg at these prices for calls??

  20. what about X puts at this level?

  21. Downtrends
    Most of your shorts plays are daytrades or trades that have to be executed exactly as you execute them in order to make money.  You have told me not to daytrade – I agree, I am not skilled enough.
    So How about some buy and hold positions for a downtrending market.

  22. Right on 20% line on NYSE so let’s watch 4,600 there carefully. 

    XOM broke $70!

    USO/SNS – that’s complicated but remind me over the weekend and I’ll be happy to lay out a plan.

    DDM $20s at $1.85 (these are risky upside plays).

  23. Wow -
    I just got $20 in dividends from Citi – anybody want to buy some shares??

  24. WMT up, CSCO up, YHOO up, VZ up .. there are a few stocks up so that gives me some confidence.

  25. Boy, SKF really looks shot here; doesn’t it ?
    This market right now has a sleep walking effect to it ….seems pretty slow, even though it is clear there is net selling pressure.  Maybe its end of month and we get some kind of rally or something, I don’t know.

  26. X/Drum – They’ve scared me off at this point.  Too many people think they are going BK or maybe need massive, dillutive assistance.  I don’t believe it but 5% off every single day is a little much to take.

    Long Puts/Edro – Having DIA puts is a long-term bearish position, the long QID puts yesterday were a long-term bearish posiiton.  If you balance your portfolio with 40% on those and 40% on longs and keep 20% in cash then you can control the bullish/bearish ratio of your entire portfolio by simply covering or uncovering them with shorter puts. 

    Speaking of which, obviously I’m looking to hold this floor so the 1/2 DIA March $75 puts sold yesterday for $3.70 are now $5.40 and they can be rolled to 2x the $72 puts at $3.50.  Meanwhile, the June $78 puts are up $2 so it’s time to reposition those down to the June $74 puts IF THE S&P breaks 740.  That lowers the upside delta and those puts are just $8 so $3+ off the table and almost 50% covered is good.

  27. Dividends/Edro – Hey Congrats!  Oh wait, that means you have 2,000 shares – not so good…

    Good point Jordan – this is the blow-off bottom move we wanted!  Also, it’s a great time to BUYBUYBUY and just make sure you use our 20% levels as a warning sign to get the hell out or cover. 

    Damn, SKF went down too fast, I was too busy with the FAS to make that play but the premiums were silly last I looked.  

  28. CAT up 2% – THAT is my favorite bull sign of the day.

    Go Citi!

    VLO being given away again at $19.35, March $19 puts and calls can be sold for $2.75 for net $16.60/17.80

  29. "Blow off bottom"
    This isn’t it.

  30. Normal



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    mso-padding-alt:0in 5.4pt 0in 5.4pt;
    font-family:”Times New Roman”;

    OK, who here on the board is the funny one with FAS 7.5 Apr C for $5

  31. not sure where that stuff came from…

  32. Phil: yesterday you spoke about PUTs deep ITM,
    the reason is of course that when those puts were sold(as part of hedged stocks) it was thought that we had a bottom but the bottom went even lower, UNH is a good example,
    if these stocks would move higher, if that is the projection, then these puts will get out of the ITM situation,
    is this PUT review ok for today or should I wait until next week ?

  33. Phil, I don’t think you can blow off the GDP numbers this morning with a ‘Duh!’.  IMHO.
    They are horrific.  And it remains to be seen what kind of an impact the stimulus has.  Alot of people would disagree with you that the money will have a lasting effect or even a significant impact.  It’s a fire hose approach in a few specific areas.  Those areas will quickly get inundated with $ and waste will set in.  They simply aren’t set up to handle that kind of loot in a short period of time.
    As for C, that news was pretty much out.  Except for the "only if the private preferred holders do so first" part.  That’s the part I’m alarmed by.  But anyway, I picked up C at open for 1.7.  Closed my SKF at 180.  Picked up COF at 12.  And now have SKF again at 169.
    It’s really odd to see the Naz so far out of sync with the Dow and S$P!

  34. So far, the intraday low on SPY today was $73.81, just $0.06 above the $73.74 intraday low on Nov 21st! 

  35. Might want to keep an eye on the dollar, testing November’s high and looking like it wants to break to the upside.  Not good for stocks.
    Agree Anton.  I can’t see them letting the market have a weekly close below the Nov lows, but I could also see next week being really painful for the bulls.
    I pulled my money out of the market last summer and have no intentions of testing the waters until the S&P is in the lows 600′s.

  36. I’d love to buy some GE down here, esp selling the puts/calls…  Then I look at the mess that is GE Capital, remember that the collapse in Comm Real Estate will be bigger than any other in history and will take GEC down with it… and I have to step away from the Buy button again :(
    Why did GE, such a great company, have to turn into such a dumb debt pimp..? Irritates the hell out of me that they’ve destroyed such genuine value by greedily gorging on the debt mountain.

  37. Why is the medical sector down?  Something I missed in the stimilus bill or budget?

  38. RMM – Ref DITM puts. Keep in mind that by definition these puts have very low premium so you may be requested to accept low valued stock at high strike price. Monitor dividend data and be comfortable with this eventuality.

  39. Nat Gas $3.96  about a seven year low.
    If you believe in the inflation thesis, or Obama,  then it should be appetising.
    Unfortunately, I believe in neither.

  40. FAS/Pharm – You can have mine for $5!

    Watching S&P 740, SOX 200 for bearish signal.  NYSE 4,600 still critical but those two will go first.  Not happy about losing 390 on the RUT either.  C is pulling back, failing $1.60 would be bad.

    Puts/RMM – I think we need to see how the levels hold today.  Just holding the lows will be a victory today.  Lots of time to roll and the VIX only goes higher (good for the premium you roll to) as we go lower. 

    Nas/Matt – They are not out of sync, this is rotation and the Nas just has more companies that are worth buying.  RUT is "out of synch" too, just down half a point.  

    Healthcare sector still getting killed.  Retal and Consumer Staples too, that’s a strange choice to sell off.  

    $RUT May $450s at $10.15.   The current $410s are $9.10 so it takes a 10% improvement in the RUT in 3 months to stay on track which means a 5% bounce in the next two weeks should be a nice boost.

    GE/Anton – I don’t know that they are destroyed.  Just perception of them.

    Medical/Steve – Obama pushing big for healthcare reform.  Cramer freaked out about it last night.

  41. GE Capital are destroyed.
    They’re like a heroin addict, bleeding cash from their helpless big brother. 

  42. Huh! That copy pase was terrible. Will try to see if I can repaste it nicely.

  43. Harris (HRS), Stericycle (SRCL) and Marietta (MLM) are this weeks features in BW magazine.  I will post them in the weekend reading.

  44. Second attempt at pasting the table.
    Buy 20K worth UYG at 2.3                                   
    Sell 2 SKF March 170 Put at 26                                   
    Buy 2 SKF March 125 Put at 5       
    Final                                                     Final
    SKF   Net Short PUT   % Move    Net Long PUT     UYG      UYG        Net Gain/Loss
    Price Gain/Loss                 Gain/Loss     Gain/Loss   Price
    200    5200           -0.18      -1000        -3529.41    1.89        670.58
    190    5200           -0.12      -1000        -2352.94    2.02        1847.05
    180    5200           -0.06      -1000        -1176.47    2.16        3023.52
    170    5200            0.00      -1000            0.00        2.3         4200
    160    5200            0.06      -1000         1176.47    2.43        5376.47
    150    5200            0.12      -1000         2352.94    2.57        6552.94
    140    -800            0.18      -1000         3529.41    2.70        1729.41
    130    -2800           0.24      -1000         4705.88    2.84        905.88
    120    -4800           0.29          0         5882.35    2.97        1082.35
    110    -6800           0.35       2000         7058.82    3.11        2258.82
    100    -8800           0.41       4000         8235.29    3.24        3435.29
    90    -10800           0.47       6000         9411.76    3.38        4611.76
    80    -12800           0.53       8000        10588.23    3.51        5788.23
    70    -14800           0.59      10000        11764.70    3.65        6964.70

  45. PHIL and Bronek: yes deep ITM puts have low premium, I want to be prepared what to do,
    my worst in terms of low premium left are:
    GE    5 cents
    PFE    6 cents
    CAT    21 cents,
    so, the question is: what is outlook for these that accepting assignment is ok ?
    with such low premium left, assignment is possible any time soon ?
    MCD    25 cents
    X    25 cents,

  46. Quick explaination of the columns:
    First Column = Final SKF price at March expiration (assumption)
    Second Column = Gain/Loss on the SKF Short PUT
    Third column = % price move on SKF from today
    Fourth Column = Gain/Loss on the SKF Long PUT
    Fifth Column = Gain/Loss on UYG stock
    Sixth Column = Final UYG price at March expiration
    Seventh Column = Net Gain/Loss on the whole position
    Two issues I see:
    1. Margin requirements on the SKF options (170 – 125)/4. Unless you have portfolio margin where they will use UYG to offset the margin, you will need full margin for the SKF puts.
    2. Assumption that UYG/SKF move in tandem is not correct (I think).

  47. Phil: the puts I mentioned are
    GE mar 16
    PFE mar 17.5
    CATmar 30
    MCD mar 57.5
    X mar 30.

  48. C – Matt, why didn’t you pick some up in premarket at 1.15 or 1.25 or 1.40.
    It was ridiculous what was going on premarket !
    BAC too, 3.95.

  49. Cap: how can you pick up premarket:

  50. RMM – With my record, I am not qualified to provide advice to anybody. A purpose of my previous post was, by saying the obvious, to remind you to have a plan for assignment.

  51. RMM/assignment stocks.   Those are all dividend payers so if you believe in them for the long term, there is nothing wrong with selling calls against them every month as you would with a LEAP.   The advantage of selling against a stock is that you won’t have to worry about the decay on your long (unlike a LEAP, stock doesn’t suffer time decay) and if the stock takes and your caller gets buried you can always just let them take the stock rather than make an adjustment.   If you think any of those stocks are near a bottom and have the cash, just let them be assigned.   I had GE assigned at 12.50, and while I’m not happy with the loss, I could get .70 right now for the Mar 9s ($1 in premium).  No matter what the stock does I’ll earn the premium and can roll it to something else next month.  If I earn $4 in cash over the course of the year, I make 30% on my $12.50, no matter what the stock does.   I can live with that as I wait for a recovery.   It’s all about whether you have the cash to wait out the storm.

  52. Cap, I don’t catch knives premarket.  Too risky.  I’ll buy at open after the premarket bloodfest is over.  And my C pickup was an after thought really and very small.  But then everything I trade today is small.  Bully to those of you who did.

  53. Phil – If copper prices hold or move up, PCU should be in a nice position to move up.  They have been trading in a channel b’w $12-15, roughly.

  54. BA  Hasn’t this been a stock of death.   My long call is Jan 10 35 and I have a Mar 35 strangle.  I’m getting so tired of rolling this down that I’m thinking to taking assignment of the stock and just dump the call.  At least I’d be selling against a 5% dividend yielder then.  (RMM, this ties into my previous post.)

  55. RMM … who is your broker ?
    It should be clear on your trading platform how to enter an "extended hours" order during pre market or after hours.

  56. Sorry guys, I’ve been working on the Buy List and just lost the whole thing in a big power outage.  The short story is there are a ton of good deals there so if there’s anything you like, feel free to ask.

    UYG/Mampcs – I would not sell SKF $170 puts AT THIS MOMENT because I very firmly believe SKF will be lower than $170.  Mathwise, I get the play and maybe if you take your legs now and ease into the covers.  Don’t forget SKF can drop in half very quickly (25% gain in XLF).  Europe had what amounted to a 20% gain in the financials yesterday morning – it sold off but you would have hated to have that putter then. 

    DITM/RMM – Don’t forget that the low premium means they lose a lot if we do get a run up.  Other than X (and Anton would say GE), they are all fine long-term plays and you have little to gain by rolling them now IF we hold our bottom.  That being said, you could consider rolling GE to 3x the June $11 puts as it adds $1 in premium (x3 is $3) and GE only has to get back to $10 get half your money back.  You can cover with Apr $6 puts at .46 if you are worried about BK – may not be a bad idea to cover half…  PFE – (by the way, keep in mind that you need to roll when 1/2 the putter’s premium is gone, that’s why these are so painful) those go to 2x the June $14 puts, costs you .75 to push them down $3.50.   CAT can go to 2x the Aug $20 puts for $1.  MCD I would just roll 1x to the Apr $55 puts and pay the $1.50.  X I would either bite the bullet and roll to the Apr $25s for $4 or 2x the July $20 puts at $4.85 (costs .50) and cover with Oct $10 puts at $1.50 - just in case.  Also, what Eph said!

    PCU/Pharm – I like FCX much better overall but PCU is a good pure play.

    BA/Eph – I agree, a death stock but will the US let them go under?  Will they not be around in 20 years?  They are priced for BK at this point.

  57. ephmen85:
    yes you are right, if you take the stock, wait out the storm, well the storm has been raging a long time,
    my thinking is: if these stocks do not drop further, I take them and sell premium and collect the dividend,
    the concern is: are they dropping even lower and then the endless catch-up game starts again.
    Txs for comment.

  58. Phil, NYX looks very tempting. But at 17, sell 17.5 put at 1.7. what do you think?

  59. Phhil: your DITM comment of 11:13: if we get a runup, low premium means they loose a lot: what is being lost ? where does the premium go ? UP.

  60. Phil, LUK and MCF both look very appealing at this level.  Hard to make an entry with us testing 740, but curious what you think of both these.  Great operators and great undervalued assets.

  61. Phil, sorry about the power outage.
    What do you think about CAT? Mar $25 put/calls can be sold for $3. Entry looks pretty good at below $22.

  62. UK closed down 2.5% @ 3822. never recovered from the US data and Bank problems.

  63. Phil- can you reference the link to your most recent buy list post?

  64. Phil: your comment for X mar30 puts; dividen yield is 5.9% if they continue to pay,
    what is the better choice: roll to apr 25 or2x to july 20 ?

  65. C preferreds are zooming -that’s kind of interesting…

    LAMR is flying (from yesterday’s post).

    NYX/Mampcs – Yes I do like them down here.  NDAQ just had a great upside surprise but got beaten back down after the rally so don’t expect too much.  This is another business that you can expect to stick around for a decade and you can sell the Apr $15 puts and calls for $4.20 to net $12.80/13.90, not bad for a $17 stock.

    Premium/RMM – If they are almost 100% in the money at, say $20 puts with the stock at $15 then a $2 move up costs them $2.  If you roll to a long put with a lower delta, then a $2 move up only costs them maybe $1.  With 20 days left to expiration (3 full weeks), it may be a little early to give up on March.

    LUK/Bigs – I do not follow them.  They are in a tough sector but you can knock $5.50 off the price selling the June $12.50s for net $9.24/10.87, which is about 33% lower than here so nice if you like them.   MCF is an old favorite of Zman and I during that huge run in ’07 but I wouldn’t feel safe here with oil hovering at $40.  You could play the bounce off $35 and they may test $40 but this is a trading vehicle, not a long-term hold.

    CAT/Jordan – I always like CAT but they never like me!  I can’t see how they can miss with all this infrastructure being approved.  People can’t even buy Komatsu (or they are "discouraged") so how can they miss but they are being priced down to 1/4th of not even their highs – the steady $70s and 80s they hit since ’06!  Even the pessimists think they are good for $2 per share so, as a long-term hold, that’s worth $22, which is your entry if you sell the Apr $25 puts and calls for $4.60.

    Buy List/SNS – It’s the Portfolio tab above.

    X/RMM – Since I am worried about them going lower, better not to DD if avoidable.

    Lots of resistance on the runs up!

  66. Wheeee!

  67. SKF $100 puts are $1 – that’s a fun play!

  68. PBT   Crammer herded his sheep to this one yesterday.  Will have to see where it is in 3-4 days.  But up 22% today.

  69.  Phil,
    Just a thought.  We are pretty close to a 2 year cycle low, but not quite there yet.  Heard chatter on the floor about the 2 pm balloon, then they roll it over.  Over the next few days we could see mid to low 6000′s.  That should give us a good point for at least a weekly or monthly rally.

  70. PBT/Steve – they are an excellent play, stolen from our board on the Monday (Bronek’s idea).

    Well now we have to wait to get rid of Kudlow as that guy even puts me in the mood to sell!

    Still not much buying pressure – would only take one determined seller to bring us back down. 

    IYT is a fun play if you think commerce will resume this decade, the Sept $55s at $2.60 are a speculative play.  IYT was at $66 on Jan 2 and $90+ in September.

    2pm/Mattda – That would really suck!  Well we need to keep our fingers on the DXDs in that case.  The $74s, now at $6.25 could gain 50% pretty quicly on a spike down but only if the RUT slips red along with the Nas.

    Some guy accused of running a $40M Ponzi scheme now.  He should be ashamed of himself – that’s nothing compared to the other Ponzi guys out there.   I mean if you’re not even going to make a real effort to scam people, why bother?

  71. Phil:  Is "C" a good speculation on the long side here at $1.61 ?

  72. What is this morbid fascination with the low – mid 6000′s.
    You should analyze the Dow components and figure out what gets us there …

  73. Any idea why IYH (Healthcare ETF) is down so much?  I am looking for a nice ETF for a 401k, either Healthcare or Construction.  Any ETF ideas for either sector?

  74. Phil:
    those puts I put forward earlier are all -so far – paying dividends,
    I have put these putters into groups based upon timevalue left, its still 21 days to OPEX and the darn market might turn UP still,
    here is the next group of putters which have timevalue left in the range of 30 to 35 cents,
    they are: (they pay no dividends)
    LDK mar 10
    DBC mar 20
    JRCC mar 15
    SNDK mar 11,
    please comment on these.

  75. meanwhile, SKF is rolling over to intraday bearish.  Next support is about 157.

  76. Barron’s, which has called seventeen of the last four bottoms, says it’s stepping back into financials. "Options traders are showing signs that this famously battered sector has room for at least a modest recovery." – from seeking alpha ticker

  77.  Phil,
    Yeah, that would suck, but hopefully would give us more definition in terms of direction.  Also, changed my handle to avoid confusion with the other matt (my son’s name is matt).  And, actually my nickname is "Doc"….  long story..  lol

  78. Yay; my account just turned green for the day.  LOL.

  79. Cap: boring SRS and SKF so far ??

  80.  Cap,
    No morbid fascinatiion, would love to see the financial structure in a more stable condition, but it’s not.  The mkt is very fluid at present and the mkt doesn’t like uncertainty.  Our own gov’t didn’t even know that Lehman was a primary dealer in swaps and let them fail.  If I recall correctly, the swaps brought about .08 on the dollar at auction.  At any rate, we are near a cycle low and could happen at any time.  My gut right now is the mm’s suck retail in throughout the day only to sell off in the last half hour, like yesterday.  Until that stops occuring on a regular basis, more poor fundamentals.

  81. Geez Phil, I just cut my naked GLD calls loose, prolly left some money on the table, but hey, a profit is a profit.  Didn’t Warren Buffet say "I made most of my profits selling to early"

  82. C/SW – Oh absolutely.  It would be embarrassing to the government to lose money on C so they’ll do whatever it takes – maybe make them the spearhead for a $1Tn loan modification program that generates $10Bn in fees or whatever it takes to make this "investment" work.  Still, scale, scale, as they could get panicked down to .45 or whatever. 

    Speaking of .45, AIG back down as the earnings looms large next week.  I got lucky once so I’m not pressing it but fun for the craps players!

    6,000s – You guys do realize that if every financial went to zero it would only cost the Dow about 300 points?

    RMM list:  LDK – damn they are annoying!  Certainly 2x the Apr $7.50s for those, at worst you pick up $1 in premium.  DBC I would wait on.  JRCC – I like BTU way better.  They still have 15% premium so let it burn, you have a 2x roll to May 10s at 100% premium anyway.  SNDK  - Those I would drop to 2x the Apr $9s as those can be rolled to July $7 puts even.

    LOL Pharm – Be careful with that observation, I think those are just my calls….  8-)

  83. Cap: looks to me the flatness is only the prelude of a storm: its time for SRS and SKF to break down.

  84.  Phil,
    Agree on the financials, I think where the points would come from would be consumer staples eg the defensive stocks, and healthcare, which looked very weak yesterday

  85. We all know you are a few ticks ahead of WSJ, Cramer and Barron’s Phil…;-)

  86. Phil: the B group Putters: TXS for comment, no roll actions yet, still early, maybe market turns up,
    here is my group C putters, they have 44 to 145 cents of timevalue left, most of them pay dividends,
    they are the best of the lot:
    AAV aug 5
    BTU mar 22.5
    JPM mar 26
    MDT mar 32.5
    PEP mar 50
    SAP mar 30
    Comment please and TXS.

  87. I wrote Barbara Boxer and sent in the recommendation from Phil….she actually wrote me back!!! (Probably a chain mail to all who wrote in response to the housing in CA).  Anyone else in CA send it in to her, Bilbray, or others??

  88. Buffet – Excellent point Doc!  That’s why we have those rules in the strategy section.  Making 20% is A LOT.  Sometimes the fact that we have +50% and doubles obscures that.  In fact, in that section, which was written before the markets went insane, I mention that on a straight stock, we get out if we make 5% and have a 1% pullback.  It’s funny now that the financials trade like penny stocks, as if they have no more value than a start-up biotech…

    FSLR coming off the floor.   SU having a good week (we hit that when Obama went to Canada).  BTU with a good move.  VLO perking up. 

    XOM $65s for $5.95, stop at $5.50, looking for $7.50+.

  89. phil,what do you think about gold down here.

  90. SRS keep diving, smart move.

  91. RMM list 3!  AAV – I didn’t pick those did I?  This is an example of what I talked about yesterday.  You have $2.62 in an unrollable putter so buy those back and sell 2x the VLO Apr $19 puts for $1.55.  BTU you know I loive.   JPM is a total buy down here so patience, MDT is a shocker down at $30 but all medical getting killed.  Straight roll to the May $30 puts and what’s wrong with owning them down there?  PEP is on target.  SAP is over target.

    Boxer/Pharm - Cool!  Every bit helps…

    Gold/Rick – I’m hoping for a pullback to $850 but they’re not cooperating.  Still if they break over $1,000 there’s plenty of time to get on board then so I’m patient. 

  92. Wow look – CNBC found someone who doesn’t like the bank plan! 

    Damn, time to cover for a pullback!

  93. ok, on a limb here, POT pulls back to 85 and change, stretched, approx 2 sd on daily range

  94. XOM – Phil I have april 80 P covered by Mar 70P.  Any adjustments you’d recommend or go naked on the Apr for now?

  95. Phil: yes Phil, AAV was one of your recommendations in January, high yield you said,
    when you make your comment as on 12:39, you do not mean to act immediately,

  96. Watch XLF $7.80, if that breaks the market will likely follow until they find a floor.  Nas went red, that’s our on/off switch at the moment and the RUT is barely holding it together and must hold 393, which isn’t very impressive anyway.  C needs to retake $1.60 (is that so much to ask?) and BAC needs $4.40 – something is wrong in financials

  97.  Phil,
    Everyone keeps worrying about financials being nationalized.  In effect they already are quasi-nationalized by gov’t ownership of stock.  My guess is the mm’s know this and they eventually get broken up into smaller parts (eg regionals) and thus decentralized.  I think the current administration wants this based on past abuses from the large financial centers.  Just my opinion.

  98. Phil, last month you recommended a trade for me similar to this, what do you think today?  Buy SKF APR 140 put, sell MAR 150 put, breakeven with SKF at 125, max gain SKF at 150 which seems like a reasonable target if we grind slowly up in March.

  99. Nice – bunch of buyers came in and held us up that time….     Let’s keep an eye on those levels and failure to go green or hold green again will be reason to take out DIA putters (which puts us from 60% bullish to 60% bearish).

    POT/Doc – Hmm, looks like you may have missed that train…

    XOM/Bigs – I think they’re going up and you have no premium, why not take $8 off the table and flip to the $65 puts at $2 and set a $3 stop on the $70 puts that are all premium.  Stop doesn’t mean you have to buy them back, it just means you have to make a new decision like maybe rolling yourself up to the Apr $70 puts for +$2 and then rolling them below you if XOM keeps going down which puts you in a $5 spread for +$2.69.

    AAV.RMM – Ah, well that’s what happens when they cut the dividend.  How did you end up with puts only then?  That surely wasn’t the original play?

    SKF/Mr. M – Yes, cerainly still valid.

  100. DocQB.. would it be too much to ask what ‘floor’ you heard the chatter on?

  101. Phil: AAV, I also had callers which I closed for 10 cents,

  102. DOC — retail ain’t buying.  Nobody here but pros and us traders.

  103. RMM; this action on SKF is fine w/ me for now.

  104.  Matt,
    lol… floor traders they love that 2 pm balloon

  105. Cap: what are you doing? closing ???

  106. Cap,
    ain’t that the truth, but I continue to be amazed at the sheeple that still listen to Cramer

  107. Well I’m amazed at how the GDP figures have been brushed off. Given that the first couple of months of this year have probably been worse than the last 3 of 2008 how can investors expect things to be getting better ? Phil has too much influence out there.

  108. Given that SKF was 185 pre market and SRS 84, I would say they are not having a great day )even though SKF is up $8-9.
    I think they both should generally trend lower; unless the market breaks to new lows.
    Hedge funds believe they have a fairly risk free trade by shorting real estate, IYR, buying SRS.  They probably like that more than the financials at this point.
    I think the high quality REITs are vastly undervalued, even after considering the fundamental outlook for Real Estate.
    Just the high quality ones mind you.

  109. Doc,  a couple years ago it used to be that there was a coordinated effort to short at 2pm.  But you’re right, now, there is usually an uptick at 2pm.  You said you heard chatter on the floor.. are you on a trading floor?

  110. This market is behaving as if all are waiting for an EVENT.

  111.  Matt,
    Nooooooooooo……  lol  those guys are nuts !!!

  112.  Cap,
    Agree on limited headroom for SKF..  Geez how much lower can financials go ? (except to zero)

  113. Phil: how is the mar100 put SKF ? still holding on to it ? what is your stop ?

  114. RMM … no, not closing.  My risk on SKF kicks in only at about 245, which even if the Dow dropped to the low 6,000′s, I don’t think it can hit.  Somedays I adjust my positions as the market gives me an opportunity, which is what I did premarket when I picked up 5 points.  For now I am content to cross out 1 more day until expiration.
    Same holds true for SRS, where I only have a tiny position, and SRS would have to exceed 105 before I need to even think about it.
    On my intraday charts, the current trading is basically flat from 10 am until now.  The 50 MA is rising from below and the 200 MA is falling from above.  I am guessing that when these stupid lines meet, SKF will break higher or lower around then; we still have awhile to wait.  More flatline (a couple of points up; a couple down) until then.
    The daily chart:  Opt’s 5 MA is still falling and currently at 171.50.  Support around 140.  Close above 172 increases bullish odds;
    Weekly chart still looks bullish but rolling to bearish.  5 MA is closest support level and thats at 155.
    But hey, I am no TA expert, but it helps to know what chart guys are looking at.

  115. Remember, end of month today.  Hopefully that gives us a bullish close.  Internals are still negative although indexes are pretty much flatlining.  Would like to see S&P close over 750.

  116. I wish I could post by intraday chart on SKF for you guys to look at (actually its a 2-day chart).

  117. Influenc/DB – The market is a forward pricing mechanism.  Q4 GDP is not that important – we know it sucked, if it didn’t suck then why the hell were we spending Trillions to turn it around?  I said the other day, the big inventory draw on Durable Goods was going to knock a lot off the GDP so it is old news to the people who understand how GDP is calculated, which is why you have these retail panics with institutional buys coming in that everyone thinks is voodoo but it’s just cooler heads prevailing. 

    SKF/RMM – Just a fun play for next week.  You don’t go in and out of a play like that, the spread and commissions will kill you.

    XLF down 6%, SKF up 5.5% – that is really messed up!  SKF should be $10 higher than it is now so it seems like somebody knows something.  Either that or they are going to pop up to $180 really fast if XLF breaks below $7.80.

  118. I am really tempted to buy BAC here; but the intraday chart keeps saying don’t do it yet !

  119. Cap: man you are a chart guy, but it works for you, right,
    today is a day for me without SKF shorts, if so it would be 240 or higher, and it would be april,
    I have SRS apr90 shorts though and expect something good.

  120.  ut oh…….  there goes XLF, fer shizzle

  121. IBM rockin’ and rollin’ – they don’t think the world is ending…

    BKC nice after yesterday’s pick-up.

    CCJ having a good week.

    Oh no – GE dividend cut!  Those bastards!  Funny, the stock is going up though….

  122. Well there’s a catalyst for something … GE cuts divvy (not unexpected) but not to 0.

  123. Cap: I menat a smart chart guy.

  124.  I luv it…..  mkt goin freakin nuts right now..

  125. There goest the market !  and SKF

  126. Well, 30-40 Dow points is no biggie at this point Doc……

  127. Phil, why does the end of month have to be an up day?  Aren’t there periods of time where a fund manager wouldn’t want to show that they are holding certain stocks?  I recall that the last day in September 08 there was a huge selloff because presumably no one wanted banks on their sheets.  Couldn’t that be the case, even more so, now?

  128. I think the GE news is completely irrelevant; expected.

  129. It is amazing / stupid for them to do this mid-day on a Friday

  130. Well,  Immelt must be sued for saying that GE dividend is safe two weeks ago. I guess, the market is always right in driving down  stocks such as GE

  131.  Dang Phil, that POT train came back around and picked me up.  But ya scared me off….  lol  out for .70… (Warren would love it)

  132. So, we get a couple of point bounce in SRS so far; will probably test and be rejected at the daily 50 MA; and 1 point on SRS. 

  133.  Cap,
    Ya man…. you got the risk/reward right….  I don’t see 245 on SKF….

  134. Alright, BAC at 4.17 for day trade.

  135. SKF, meant 200 MA

  136. Interesting timing by GE.  Right in the middle of the afternoon, just as the market was trying to get posiitve, they come out with news that knocks the market down.  Now announcers keep saying dividend cut to .10 but it’s actually .10 per quarter – again it looks like they are trying to cause a panic….

    End of month/Matt – I agree.  It’s a down 20% month.  What are you going to do, turn it into a down 15% month?  Hardly seems worth the effort you would have to go through…  This week it seems more like they were determined to put in the ugliest possible low this week.

    POT/Doc – I thought you were wanting to buy it at $85 and I was just saying it got away – sorry.

    OK, that was a fun takedown, almost 2pm – magic time!

    SKF March $150 puts at $12.50, stop at $11, looiking for $15+.

  137. out of BAC at 4.28; need to run to meeting soon.

  138.  Phil,
    No prob, ya helped me net .70…. regardless  POT acting kinda freakish…  as a matter of fact the whole mkt is…

  139. Phil, GE dividend cut they say was a leak, not confirmed yet.

  140.  Phil,
    Time frame on SKF puts ?

  141. SKF/Doc – On the new puts, hopefully EOD but I don’t really have a problem holding those as I don’t see SKF sustaining $170 for a week and we have 3.

  142. Bwahahaa…. saying for ages GE would cut the divi, if Immelt had any honour he would quit now. I doubt he has an ounce. 

  143. That darn GE managment: how often have they lied to us.

  144. GE/Jordan – Are you saying CNBC reported an unconfirmed leak on their parent co?   That just screams for an SEC investigation…

    Wheee, green again!

  145. GE dividend cut is a great thing for the stock.  It’s still over a 4% yield and saves $9 billion a year in capital that’ll help shore up GEC and the market can go back to evaluating the good parts of the business.

  146. SRS and SKF DIVE, DIVE.

  147. Well, I just heard (about 20 minutes ago) on CNBC, as soon as they said breaking news on GE, bla bla, then they said, almost in passing, that it has not ben commented on or confirmed yet.

  148. Ah, and exactly NOW they are quoting from the press release!  So there was about 30 minutes of rumor mongering by CNBC.

  149. CLRT is a nice, little cheap biotech that makes test kits for disease.  I have mentioned them here before.  Low was 1.2 a few weeks back, now back up to 1.8.  Officers were buying back in 3/4Q08.   Since you all like Citi for 1.6, why not a company that has products at a similar price!!!!

  150. David faber earlier today broke the news CNBC about GE’s dividend cut, about half an hour BEFORE the official press release by GE.

  151. Reloaded on SKF at 168.8.  Gotta love that balloon!

  152. matt: be clear please otherwise its confusing: reload means  what ?

  153. Phil
    SKF is based off IYF (Dow Jones Financials), not XLF. IYF is down less than XLF percentagewise. That’s why you are seeing the discrepency.

  154. RMM, I’ll make you a deal.  I’ll tell you what reload means if you tell me if you are of Asian descent or not.  OK?

  155. matt1966: no I am not, but Asians and most other people prefer clarity. I think you would agree.

  156. OMG ROFLMAO …

  157. phil    What seems to be wrong with wfc?

  158. I have some wfc how about buying back my mar 15 puts for 3.70 and selling the apr 2x 10 puts for 3.80 thanks

  159. Pharm – Is it Pres O effect on CELG? I haven’t found any other negative news. Thx

  160. RMM, thanks for your answer.  I had a hunch about you but was wrong.  When I said reload, I meant that I bought some more SKF.  I had some earlier and had sold it.  So I said reload to imply that I’d already ‘shot’ what I had.  It’s a gun analogy.

  161. So, maybe we should open the betting pool on whether we end up green today?
    I don’t like how we’ve turned down in the last half an hour.

  162. Oh cool, Cramer will be on CNBC soon, so I know what to short on Monday :)

  163. Insurance sector is trashing SKF.   Thanks New, they are based on IYF and there are a lot of differences.  IYF is only down 1.4% so even stranger SKF is up 9% then – very silly index.   IYFs majors are BAC, JPM, WFC and USB at about 25% of the fund.

    Would be nice if GE could hold $9 too….   I would think it’s not good for dividend paying stocks if GE cuts and isn’t punished for it because it’s going to make people worry more that anyone could cut dividends.  XOM pays out $8Bn a year too….

    CLRT/Pharm – they do sound like a nice play.   Good logic!

    WFC – I don’t know but that’s what the XLF was trying to tell us before when it looked ill.  Oh wait, someone said there was a guy on CNBC who said WFC, C, BAC and FITB all will be below $1 soon….

    WFC/Bill – I don’t know, they were just at $15 yesterday so not a lost cause yet.  The timing of this rumor along with GE’s dividend cut makes it seem like "THEY" are pulling out all the stops to shake you out of bank stocks.  Seem like BS to me but as long as you don’t mind having 2x put to you, then it does improve your position.

  164. Bro – overall sell of in the entire sector due to Pres O saying he will cut payments to Pharma as well as introduce generics (bioequivelants) to the market.  AMGN, JNJ, CELG and others are taking that haircut.  That is years away though on the bioequivelant products.  MRK just bought a manufacturer in Colorado for just such an entry into the market. 
    JNJ will make a nice entry as they have not been at 50 since late 2003/2004.  Apr 50 P are $2.1.  Remember they just bought PFEs OTC stuff for 16B.  That is their one failsafe area…

  165. WFC?
    They lied about their balance sheet – slowly people are realising.

  166. Back now …. saw SKF test and fail R2 resistance.  Considered going short; decided not to.
    Back in BAC at 4.01.
    C = 1.5 BILLION shares
    BAC = 350 Million shares.
    Crazy stuff.

  167. Pharm -Thx.

  168. Matt1966: aha, reload comes from your Western culture, you are tough shooter, but you are not a straight shooter,
    wish I knew how to insert smilies , then I would use a kidding symbol,
    yet it is still not clear: you bought more ?? calls or puts ? I suspect puts as SKF went higher.
    When I wear my pink shirt which is very nice, guys are suggesting unpleasant things, yet you use a pink blog background: FUNNY.

  169. Sellling WFC $12 puts for $1.90.

  170. out BAC 4.12; small gain; but gotta take what they give ya.

  171. Piled on some more SKF at 172.08.  Could be wrong.. but I think it will close near the high for today.  And if C breaks 1.5, it could be higher.  Hope I’m not getting greedy..

  172. LMAO
    When I wear my pink shirt which is very nice, guys are suggesting unpleasant things, yet you use a pink blog background: FUNNY.

    RMM is a funny guy :)

  173. hope ya sold that skf at 176 matt….

  174. RMM, I buy the etf straight up.  Not options.
    My wife likes pink on men.  But then, she was dating a gay before me!  Perhaps you should switch from pink shorts to a pink tie or shirt.  Pink shorts could very well be suggesting something your a$$ can’t cash.  ;)
    Dohh!  SKF  :(   c’mon….

  175. Few days ago WYE/PFE deal was 33 + (13.71*.985)= $46.50.  ARB play???  Note the 13.71 was PFE stock a few days ago, so at current levels, move it a dollar down.  Can’t tell if it cleared anti-trust deals yet, though.

  176. RMM, sorry, misread your post.  Pink shirts are sorta ok.  Pink blog boxes are the bomb!

  177. skf; who knows …. follow dow, ge, bac, etc.
    Looks like should test 168-170.5

  178. matt if you see 175, sell that pig !

  179. Last hour should be crazy enough …

  180. Maybe the flatness will change during last hour.

  181. Matt … did ya get out ??  You got the gift from the market.

  182. matt: do you have Irish genes /

  183. Cap, nope still holding.  Maybe I’ll sell half at 175.  But if they really are trying to scare people out of banks as Phil suggests.. it will close at it’s high.  I don’t want to miss out on that.  I always do.  But not today.
    RMM, nope,  They’re Levis!  Since you told me.. it’s only fair, I’m of mostly a German flava.

  184. The 11-2 Mocha line on SKF predicts a 166 close, but’s that’s a long way from here given the lack of momentum today…

  185. SKF very slight uptrend; but can’t break higher unless market breaks down …

  186. Thanks Mr M.  I’ll ‘trade’ lightly.  ;)

  187. and there goes the market; trying to break down again.

  188. IBM looking like it is breaking down?

  189. I could see 168; and then if we get some major news, we could see one of those 20-40 point drops.

  190.  Phil,
    Hate to be negative, but I’m gettin that woodshed feelin again……

  191. AMZN getting a paint job …

  192. Wow, COF just nose diving.  Well, SKF is comfortably past 175.  Perhaps I’ll choose 3:30 instead of 175 as an indicator to sell half..

  193. Is the PPT around today?

  194. matt don’t be greedy; it is not going higher

  195. friends: this was a terrible week and it seems to end that way.

  196. Cap, why?  It’s only making it’s way back to where it opened for the day.  C just broke 1.5 and we’re heading into the weekend at the end of the month.  I think all the ingredients are there for closing up.  But just to be safe I sold half at 176.

  197. Phil: what do you think of this market today and what do you see for next week ?

  198. Who is going for a hockey stick play today?  I don’t think it will happen.  But if the PPT is out there.. it could.

  199. C/Cap – Still 3.5Bn shares to go before everyone is rotated out.

    Bloomberg has come up with $11.6Tn in bailouts to date.

    Woodshed/Doc – Oh yeah, I feel it!  

    Watch XLF at $7.60, if they can’t hold it we have trouble. 

    I see preferreds selling off again, that’s not a good sign. 

    No rally and too scary to be bullish into weekend.  Need to move to more bearish stance in case we get a big drop.   1/2 DIA putters for now, tight stops (.25) on the rest.

  200. Went a bit higher than I thought.   I sold my hedge at 177.20;  just put it back on …

  201. Matt; b/c w/out a big selloff, SKF is topped out.  We got a decent post 3 pm selloff; now over (hopefully) which gave SKF a bit more juice.   That was my thinking.

  202. matt; what was basis which made you buy SKF at 14:21, outrageous yet you were right.

  203. I’m not sure we’re done just yet with ol SKFer…

  204. Phil, can you suggest good DIA hedge?

  205. Got more SKF on a gamble at 173.86…

  206. follow the dow for skf

  207. Anyone watching BIDU lately, what a rocket!

  208. Cap: DIA and SKF: inverse ??

  209. RMM.. I’ve been reading the SKF/UYG chart pretty much all day every day for the last 4 to 6 months.  You can notice movements that are meant to scare people out of some positions and entice people into other positions.  That happens around 2pm alot.  So I waited for it to appear and I pounced.  This was one of the most profitable afternoons I’ve had in a long time.  Kinda says how bad I’ve been doing!

  210.  RMM, I’m with you, what a crummy week. I bet that SRS and SKF were toppish several times this week (including today) and they ran straight upwards and ate my lunch.  Very dangerous stuff.  And my 11-2 trendline which was so useful in January got really thrashed this month, time for a new indicator…

  211. Matt — you da man on SKF today !  My hat is off to you….

  212. matt: sounds great, amazing, congrats,
    you have SKF and UYG on top of each other, what time charts ?

  213. C is getting a 40% haircut today.  More like a scalp!  Guess the gov’t's plan wasn’t to reassuring after all.  I really hope they make it.  That’s where I bank and I’d hate to have to set up all my online bill payments again…  but that’s the least of their worries. ;)

  214. DIAs, I was using the 75s puts all week…. but I think 5 is way to much…  I like the 73s to hold over the weekend.

  215. Matt, can you expound a little on what you’re doing at 2 and why?  I used to long or short at 2 based on the 11-2 trendline but that’s not working, seems like lately at 2 I can’t come close to guessing how we’ll end…

  216. RMM … pretty much.    But, as we have been talking about, SKF has lost steam.  With dow down 500 points this week, SKF is still down for the week i think.
    BUT, at any given moment, if you watch DOW shoot up, SKF will shoot down; and vice versa.

  217. Looks likw we can forget about 750;  lets see if we can get 741  (S&P)

  218. DIA/Mampcs – June $74 puts at $7.50, covered with 1/2 Mar $73 puts at $3.65 – a little bearish into the weekend but you can always cover the other 1/2 with $75s if we jump up next week

    SKF -   I can’t believe the way the MM works the spreads on these.  Selling calls on the runs is the only way to go.

    Interesting amount of buyers here at the end, can’t imagine what they expect to happen over the weekend and way too late for window dressing.

  219. DIA/Mampcs – June $74 puts at $7.50, covered with 1/2 Mar $73 puts at $3.65 – a little bearish into the weekend but you can always cover the other 1/2 with $75s if we jump up next week

    SKF -   I can’t believe the way the MM works the spreads on these.  Selling calls on the runs is the only way to go.

    Interesting amount of buyers here at the end, can’t imagine what they expect to happen over the weekend and way too late for window dressing.

  220. Thx for help everybody, have a good weekend and good luck in trading and investing. I am signing out.

  221. Here’s the deal on C…..
    Apparently, the announcement of the Preferred to common converesion was a huge instant arbitrage.
    The preferreds traded yesterday at 5.  This deal announced today, converting into stock, made them worth $10 in C shares (convert into like 6+ shares for each preferred).
    The reason you have 1.7 Billion shares trading is that hedge funds jumped all over this, buying preferred at $8 (price jumped up, but not all the way), while relentlessly selling (shorting) C shares.
    C & the Gov’t are freaking idiots; and obviously shareholders got completely hosed on this deal because they should have known exactly what would happen.
    And the public doesn’t know.  I just had some hedge fund friend explain this to me.

  222. Ok, I’m out.  Just a smidge on that one.  Don’t want to be a hero by holding out till the last minute.
    Cap/RMM, some days the chart just behaves for me.  Today was one of those days.  But there are alot of times that it doesn’t.  Trust me, I’ve been burned 6 ways to Sunday by SKF and UYG.  It also helps when you have a strong trend to play against.  Option expiration week is such a situation.  And now that we are clearly in a bear market with the trend down, it also helps.  A rising market would be the same way.  It’s chop that will kill you.  I call that the Ultra Sausage Factory.  8-)

  223. MDT – Phil what are thoughts on MDT now that they broke down pretty dramatically?

  224. A couple of big blocks of X moved at 15 Mar P…

  225. Ohhh  Cap, why did I let you talk me out of holding till close! 

  226. Arbitrage/Cap – Well that explains the preferreds ramping up like that early on.  I thought that was odd but didn’t put it together.

    Blew it on the S&P, naked on long DIA covers, 60% bearish into weekend.

  227. matt ….. sorry, man … they jammed it last 5 minutes; but you had plenty of chance to get out at 177;  you could have used a stop. 
    What price did you get out ?
    Phil, pull up a yahoo chart and look at a 5-day chart and the volume in the preferreds.
    Bad close ….

  228. So if the fundies bought the preferreds and shorted the common before conversion.. that means they are holding alot more shares of C because of the lower cost basis.  C has been diluted.  But now what are they going to do with all those shares?  I’m sure they tried to sell as many as possible today.. but are still holding alot.  Prolly only the gov’t has got their full hand they were dealt.  I think C may get goosed up soon so the opportunists can unload the rest that they have..
    The government has got to wise up.  They can’t leave a crack open anywhere because it will be exploited.  They must understand that?

  229. MDT/Bigs – I think healthcare is trashed for the moment.  Everyone is freaking out that Obama will wave his magic want and everything will be sold for cost from now on.  I see MDT operating with a 15% margin that is not excessive and I think adding 40M patients who will now qualify for replacement parts and testing that requires MDT equipment is a great thing long-term. 

    YHOO/Cap – What a crazy day overall. 

    This is the chart that says it all!

  230. Oh well, that was a rotten finish! 

    Have a great weekend everyone.  Barring a miracle, we’ll see how low we can go next week.

  231. Cap, 174.1.  Peanuts.  But no sweat.  I dumped in the flush before it got to 177.  I should have seen it coming.  I told you it would be near the high at close.  It’s almost always that way.  If we don’t sell off or up at 3:30 then they are going for the high or low for the day at close.  Sometimes… it’s very predictable.

  232. Matt, I recall something said during the election that Biden and Obama don’t hold stocks and don’t know much about the market, might have been drivel but even if they know something about the market they clearly don’t care about it.

  233. C – they are not holding any long C … no conversion has taken place yet.   When it does, those shares will cover the short.
    The dilution should not have been an issue.  Ultimately, this is a positive for C; should go much higher than 1.40, but never real high due to the dilution.

  234. Good observations Matt, this is how we beat the crooks at their own game.
    Somehow my accounts not too dinged up today; I am happy about that plus a bunch of nice day trades.

  235. Hey, Mocha, Nobody messes with Joe !  (Biden)

  236. Ive been keeping my noise clean and sitting on cash using only 10% for day trading. Expect the bears to get a lot of exposure over the weekend. Bloomberg had 2 guys in the last 10 minutes talking about the next leg down will be fast and severe but that will be the last leg down. Time will tell….great safe weekend to all.

  237. Mr. M, I don’t think they do care.  And I’m not saying they should.  But they shouldn’t be stupid about it either.  I just think that they are marching ahead with what they said they were going to do.  No suprise.  Except for the amount of money being thrown around.  What we are experiencing now is the backlash of the impending change.  Rich people are angry.  And they are taking their toys and going elsewhere for the time being.  I don’t blame them.  Obama’s agenda is too ambitious right now.  He should lower health care costs before expanding benefits.  But Phil is right.  Any savings the Administration can get out of the industry on costs will more then be made up for by extending benefits to many others.  Add in the graying boomer popultion and the health care sector is getting to be a GREAT long term buy.  But there will be blood on the streets first if he tries anything like Hillary did.   Not that I don’t think we should cap those greedy bitches.  They are as bad or worse as the bankers!

  238. Don’t believe everything you hear on TV !!

  239. Matt, well said. I’m not saying they should care either, but when they set up retail investors for a spanking it would be nice to know if they are just ignorant, busy, or really enjoying seeing us ‘Wall Street fat cats’ get a spanking.  I fear that anyone with stock, including me trading a puny 5-figure IRA, is a ‘fat cat’ to them and, if true, I’m gonna get thrashed.

  240. Phil …. that is one ugly chart.
    O B A M A !

  241. MGM announced today that it had submitted a request to borrow $842mn under its $4.5bn revolving credit facility. The request was fully funded on February 26, and combined with $93mn outstanding letters of credit, the company had fully utilized its borrowing capacity. Management stated that the funding was made "in light of the continuing instability in the capital markets and uncertain state of the global economy."
    Based on our previous projections, we believed MGM could be close to violating its credit facility leverage maintenance ratio in 2Q09 and breach the ratio in 3Q09. Pro forma for the drawdown, we now expect the ratio to be above the maintenance level by the end of 1Q09. The company intends to use proceeds for general corporate purposes.
    Given the drawdown and our belief that the company made no repayments on the facility in the fourth quarter, we estimate pro forma cash of $1.8bn at the end of the first quarter. In one sense, MGM could use the cash to buy back the longer dated debt in the $50s, which would reduce overall debt levels. In addition, we believe the gain on a debt repurchase is included in the credit facility EBITDA definition.
    For example, if MGM utilized $500mn cash to repurchase the 7.5% notes due 2016  and the 7.625% notes of 2017 at $50 (bonds currently trade at $40), debt would decline by $1bn ($500mm/.50). This would bring debt/EBITDA below 7.5x, which is the maintenance level. When the gain on the debt buyback is added to EBITDA, that ratio falls further, to 5.9x, and would remain well under the maintenance test for the remainder of the year.
    However, once the gain rolls off, the company would likely be out of compliance the following year, when the maintenance level declines to 7.0x. More important, that scenario uses up valuable liquidity for addressing the 2009 and 2010 maturities.
    A second alternative would be to buy back the near-term debt, although the dollar price is significantly higher (see table below). This would also keep the debt/EBITDA ratio below the maintenance level for 2009, but the company would be in violation the following year. Furthermore, MGM would not have cash on hand to retire maturities in that year.
    Thus, even if MGM repurchases debt at a substantial discount, it still needs to access external cash through either an asset sale, equity infusion, delay in CityCenter funding, or some combination of all three. We estimate that this amount needs to be well over $1bn in order to make it past 2010. And even if the company makes it that far, it still must address another $500mn in debt maturities and refinancing its $7bn credit facility in 2011.
    Despite the steps the company has taken to enhance liquidity over the past six months (amending credit facility, secured note issue, Treasure Island sale), much more is needed. While we are waiting for the company to pull the proverbial "rabbit out of the hat," this is looking increasingly unlikely. Thus, we believe the question is no longer whether MGM will restructure, but when.

  242. I don’t trade MGM, but in case any of you do …
    Have a good weekend all !

  243. Testing yet another version of the alrert system – If you are a premium member, you should get this just after 4:26 pm – let me know if you don’t.


  244. Got it twice, at 4:27 and at 4:29 pm.

  245.  Twice here also at 4:28 and 4:29

  246. NEW YORK (Dow Jones)--The price/earnings ratio of the Standard & Poor’s 500 Index at the close of trading Friday was 8.64.
    On Thursday, the ratio ended at 8.84.
    The price/earnings ratio for the S&P 500 measures the index’s closing level divided by the index’s total earnings, as reported under generally accepted accounting principles, or GAAP, for the most recent year.
    In 2007, the most recently reported year, S&P 500 companies reported earnings of $85.12 a share.

  247. Twice here as well…

  248. Got it twice also

  249. Hi Phil – I did not get the alert

  250. On the Pharma front/defensive (since that is where I reside) – drugs are cheap compared to care. That $3 Lipitor is much less expensive for LIFE than a bipass surgery.  Advancements in drug research is expesive b’c we want more safety…..  Litigation is rampant now, and FDA is scared crapless about public backlash.  Take VIOXX for instance – it made 2.5B b’f it was withdrawn for a higher risk of heart attack.  Come on’, most of those people were already predisposed.  If you were younger (I use that loosely), Vioxx posed no threat. Celebrex is still on the market, and it is the same damn thing, just a bigger pill due to its potency.  Vioxx SHOULD HAVE NEVER BEEN WITHDRAWN.  Ibuprofen/naproxen also have the same warning.  DRUGS are the cheaper alternative, just get rid of the litigation.  Biologics are another story.  They do rape you to some extent, but they are once a week/month drugs, and usually for more drastic disease states.  Pharma needs to rid itself of the bloated sales staff.  Even those with large research engines only use 10% of revenue on the research spend.  Our company works with pennies, and turns them into golden nuggets with 50 people.
    Generics (TEVA) are going to be the way to go in the near future.  Cerner may be an interesting play for the database/software management.  Medco, ExpressScripts might also be a good bet, as they are the middlemen distributing the drugs for the elderly – right to their door..

  251. Phil: what is the point of the alert system: I did get a mail, where is there inormation ?

  252. Good stuff Pharm!

  253. Twice alert – hopefully that was a one-time glitch.  Programmer Matt said "oops" while we were doing the test…   There’s some kind of tricky loopy thing that tries to verify they all went out and if it loops too fast it thinks they didn’t go or something. (sadly, I was once a programmer!).

    P/E/Kustomz – Of course you have to believe in the E to set the P.  That’s the problem, you have Whitney/Roubini et al saying that everything will be cut in half.  16 is about the "norm" for all-time but in the past 25 years we’ve averaged 21 x earnings and in the last 50 years it was 17.7.  In 1980 at the tail of the Nixon/Carter/Ford recession, p/e’s were averaging 8!  Still, that would be 680 and we’re not far off…

    Not getting alert – Please go to your account settings (top right) and make sure your Email is correct.  Then send Email to admin@philstockworld.  I’ll be running a couple of more tests over the weekend.

    Drugs/Pharma – I agree it’s a broken system but it’s the companies that need to sit down with the government and work something out.  If I’m PFE, MRK etc why can’t I negotiate to set up a bid contracting process to work on drugs.  That way we could allocate resources more efficiently and perhaps have 2 companies working on a cure for whatever at a time.  I’m not saying little biotechs can’t do whatever they want – they will just effectively be subcontractors.  A big company like PFE would win the cholesterol contract and be spec’d to bring a pill to maket that does X and Y and the government chips in for the research as long as they are on target.   That way the government knows before the pill is invented what the cost/benefit should be and then the drug cos can cut back on their marketing and concentrate on actually curing things.  Just a thought as it’s not my field but it does seem to me that there is just too much money spent that is ultimately wasted, too many great scientists who end up having a decade of work discarded because they made the 2nd best cure…. 

    Alerts/RMM – LOL, it’s a test.  It should have said exactly what it said in the 4:26 box in pretty much the same format.  That’s all an alert is.  Other sites have alerts but don’t chat with members so the alert is the only contact you have with the site.  Our system is unique and there is NO more direct or faster way to get information than to be in chat live.  So the alert is not really a big plus for someone who is here all day anyway but for people who have to work or are on the road and want to know if something is happening, then it’s great for them.

  254.  Phil, I’m getting it *twice* – I was also amongst the small group of people that was being flooded with 80+ a day at one point when they were testing the system a few weeks ago. I suspect the two are probably linked so if you want to pass this along to the programmers…

  255. OK, let’s try this again

    This is a test of our new alert system that should be going out to all subscribers.  Under your profile (top right of main page) you can go in and opt out of alerts if you do not want them.  I’m sending this out at 5:37 and testing this image:

    Just to see if it works, as well as the red lettering in this line.

    I haven’t quite decided what will and will not be an alert but generally it will be the comments that I usually decide to make bold in the daily posts – General trade ideas, important market news and levels we are watching. 


    - Phil

  256.  Phil, I got two of the earlier ones and got the latest one as well.  FYI, I get my investing e-mail on my phone during the day so graphics are a nuisance for me, perhaps you should survey the members and ask if they want rich alerts or plain text.  Have a great weekend.

  257. Phil: it worked, the alert, all came thru. Salud/

  258. The alert sent at 5:37pm came in at 5:38pm to my gmail account and I got it just once, it showed the cartoon image and the red letter text, so I consider this second test a success.

  259. Matt – U crack me up….I was on the same page as you…  8-)

  260. Graphics/Mr. M – Graphics will be the same rarity in alerts as they are in comments usually.  I was just testing the capability.  Doesn’t your phone let you turn off graphics in Mail.  I have an IPhone so I love graphics – doesn’t seem to slow it down too much…

    Second alert seems to have gone off without the dupes.  I’m very happy to finally have a system that works!

  261. Phil – I can agree on some accounts, but drugs are like cars (glup), the first one is not always the best one.  Mevacor to Zocor to Lipitor to Crestor – it is the same thing, just different potency at the target (or other targets in the case of Crestor).  Not that we need that many choices, but there are distinct differences between the drugs – even for this class.  Also, people respond differently to the same drug (e.g., anti-depressants (Prosac, Zoloft, Zyprexa), aspirin vs NSAID vs tylenol for pain relief, etc.).  Biotech is acutally much more efficient at bringing the things to phase I/II, we just don’t have the capital to bring things to market (aka the safety thing).  Once things make it through Phase IIb and work, most likely (80% or so the stats say), a drug should make it to market (unless you are Neurocrine of course, and screw up the clinical trials….morons and same goes for Pfizer for letting them run the trials).  The statistics were 1:7000 researchers for biotech vs. 1:35000 for big pharma to bring things to market.
    Again, biologics are a different beast.  Humera and Remicade are different mAbs (monoclonal antibodies) to the same target (TNF).  JnJ/Amgen/Roche are also the same for anemia.  That is were COGs and competition can drive the price on the market.
    While I am on the topic of drugs, much of the healthcare could be solved if they just legalized street drugs and taxed them like alcohol.   LSD, ganja/mara/hash, heroine, uppers/downers etc…they are all over rated anyway…(I did not ingest any of these ;-) )

  262. NIH and academic research grants also drive much of what we do in biotech, b’c those academics drive the cutting edge science, targets, etc.  Biotech/Pharma then pick it up and run with it.  Courts need to overturn the patents on DNA things.  U should not be able to have a patent on a receptor to block others from working on it. Thats like me patenting the protein for hair and trying to charge you for growing it.  We all have the same ‘targets’ more or less.

  263. Phil, did you do anything with these two trades today:
    SKF $100 puts are $1 – that’s a fun play!
    Sellling WFC $12 puts for $1.90.
    What is the plan as to closing these trades, mental stops, etc.

  264. Steve S,
    You used to send out a list of stocks that have high premium for Cover Call plays, but I have a reverse request.  Could you please create a list of stocks with low options premium, preferrably in leaps or further out months, for Long Strangle plays.  Even better if you know which ones could have wild moves, but have low premium.  I need to balance my Short Strangles with long strangles.  I looked in my watchlist and most of them are "good" stocks (at least to my perception).
    Others, please post possible candidates for long strangles if you know some too!

  265. OT:  Politics.
    Phil & others, I invite you to read all about what’s wrong w/ Obama’s economic and foreign policy moves.
    Go here and read the last two days of comments and analysis of the budget (including the sheer dishonesty and hypocrisy of it) , Iraq, his non-handling of the financial crisis, and some of Obama’s simply atrocious appointments.
    Phil, I hope you will avail yourself of this opportunity to challenge your own beliefs and that you appreciate that I did not simply cut and paste a bunch of stuff that makes my blood boil.
    In one short month, Change you can believe in has turned into, OMG, WTF did I do ?
    Enjoy and have a good weekend all. 

  266. Doug Kass has it right — read here:

    A snippet:
    Don’t Laugh at the Next Paragraph !
    SEC mission statement, "The Investor’s Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation" (taken from the SEC Web site)
    Most investors (who are long-biased), and indeed the very U.S. stock market as a whole, are disadvantaged in a market dominated by momentum-based quant funds and by ultra bear ETFs, both of which prey on a weakening hedge fund industry riddled by redemptions and by a community of individual investors whose confidence is badly broken.
    These quant funds and ultra bear ETFs, which bypass Federal Reserve Regulation T margin rules governing the extension of credit by securities dealers and brokers in the U.S., wreak havoc in a market that needs all the regulatory support it can get.
    Today’s investors no longer walk tall as they have seen their portfolios shrivel up. For several years, institutional and individual investors have been competing on an uneven playing field dominated by the powerful quant funds and ultra bear ETFs that not only have a disproportionate role in total NYSE trading but, more importantly, have had an undue influence on pushing stocks lower during the course of the bear market.

  267. XLF:   Flat for week:   Open 7.60    Close 7.60
    SKF:  Slightly down for week !    Open 180; Close 177
    Dow:    Down for week.    Open 7400+    Close 7063
    S&P:   Down for week:  Open 777;   Close 735
    Nasdaq:     Down for week:   Open 1450;   Close 1377
    Conclusion:    DIE   SKF    DIE   !!!!

  268. Thanks Pharma – It’s a very complex issue of course but it seems to me that you have these companies trying to recoup massive costs before the competiion wipes out their product so if we (and I know how this sounds) limit competition and allow two companies to keep the franchise on a certain drug then we could focus the research in a coke and pepsi fashion.  Coke has lots of flavors and they keep doing whatever they can to improve their product and it stays cheap and efficient until everyone in the world has easy access to it – isn’t that what we want for drugs?

    SKF/WFC/Jordan – No change, the SKFs of course, are just hoping to profit from a quick dip next week while the WFC is a value thing but I’d get out at $2.50 rather than wait to see if yet another bank goes to $1.

    Cap – Your link goes to an article on Science vs. Religion and no thanks to that debate!  I think you need to get perspective on what is going on.  Yes, there is a war against the upper class.  Yes "they" are sticking it to investors and entrepreneurs and big business because those same people have stuck it to the lower and middle class for the past decade.  I have written many articles about minding the wealth gap, warning that the masses will only take so much abuse before fighting back – it happens over and over again in history and we had clearly reached a tipping point where the standard of living for the bottom 95% was deteriorating while the top 5%, especially the top 1%, were living a life of blatant excess and throwing it everyone else’s face – this is not a good combination (but you argued tooth and nail for that status quo when I said we needed to make changes).  Then, to top it all off, the housing bubble pops and all the corruption in the system is exposed and 401Ks get taken down with the market (making the average American feel twice robbed) and people start losing jobs because of things "wall street" did and you are LUCKY all they want to do is tax you…

    Back in 1932 Farmers went on strike and refused to sell produce for a month until the government got the banks off their backs and stopped them from foreclosing.  They gave free food to the poor but sent nothing to the cities.  That led to the Agricultural Adjustment Act (subsidies) and the Farm Credit Act that gave farmers low interest loans.  You won’t read many history books that mention that much of that governemnt reform came at the end of a very pointy pitchfork. 

    Perhaps if all the distressed homeowners simply didn’t pay ANY mortgage this month, rather than just pay late, then we could get some similar relief.   I think we talked about this week how it’s actaully very difficult to legally foreclose on homes because the mortgages have been chopped up so many ways that the servicing bank doesn’t have clear title to the loan anymore.   Right now, banks are suffering from 2.5% delinquency but if 20% of the people didn’t send in a check – commerce would grind to an immediate halt.  It probably wouldn’t be hard to start a movement that tells people NOT to pay their mortgage…. 

    We (investors) are the ultimate mortgage holders.  We lent out that money through our agents and they made some very poor decisions on our behalf.  You can point fingers at whoever you want but the fact of the matter is that the people have the ultimate power.  They agreed to pay a mortgage on a home that was presented to them as having a certain value – now they find the merchandise is flawed and you expect them to be good little suckers and keep forking over the money but they don’t actually have to.  If 20M families walk away from their homes tomorrow, they will be able to walk back into those homes in 6 months for maybe .20 on the dollar – that’s the free market in action!

    We’re already getting a permanent demand destruction in housing as kids are not going to college, old people are moving back with thier kids and kids coming out of college are moving back home.  The mansions of the early 1900s became the boarding houses of the 1930s with 10-20 people living under one roof.  If we let things keep drifting down from here, that could easily happen again and the 5Br McMansion that sold for $1M in 2007 becomes the $300,000 boarding house of 2009 with 5 families coming up with $500 a month each to pay the bills.  That leaves 4 other homes empty with no one to fill them.  

    Just keep in mind there are consequences to NOT doing something to stop this.  We’ve certainly tried doing nothing to help the actual homeowners for long enough and that really hasn’t improved things much and I know how much fun it is to say "screw the poor" but ultimately those poor pay our bills.  No matter how high up the economic ladder you are, they buy from a guy who buys from a guy who buys from a guy who buys from you and that’s a really tall house of cards to stack on the back of people who have no jobs and are losing their homes.

  269. Phil, thanks for that powerful speech! I hope everyone listens!
    Wow, there is an iPhone view? Awesome!

  270. Peter D
    I see what i can come up with.  Will start at about 9 monyths out and screen for low volitility, those should have less premium.  Any particular strikes? can screen by any number of strikes from ATM.

  271. Pharm
    I agree, the litigation is what is killing us.   How we can have some states with no helmut laws and just ignore the people that get killed but focus in on a few deaths in the pharm industry….   Like how many people die in coal accidents vs nuclear accidents.  But the good news with no helmut laws is that we have plenty of donars.

  272. Peter D
    A few stocks that poped up with low premium are
    I even have a search for long strangles, just a whole bunch of variables that you can scan for.

  273. Listening to my iPod this weekend….and these lyrics just rang a bell..(Alan Jackson).  If anyone wants the song, I can send it out as an MP3.  Cheers!
    In this modern age we live in it’s hard to figure out.
    If anybody out there talking has a clue what they’re talking about.

    There is twisted trends and psychic friends and tabloid UFOs.
    The wisest man with the best laid plans might still say, "I don’t know."
    Whatta you think? I say well..

    "They must not be that different. The ass and the hole in the ground.
    They often are mistaken for each other I have found.

    Life rewards the ones who try until they got it down….

    The difference between the ass and the hole in the ground."

    Politics and OJ, Everybody’s heard enough.
    But no amount of talking can change a mind that’s been made up.
    We got Presidential pillow talk, they know just what to say.
    Whatever side you are on, one thing’s for certain either way.

    "They must not be that different. The ass and the hole in the ground.
    They often are mistaken for each other I have found.

    Life rewards the ones who try until they got it down….

    The difference between the ass and the hole in the ground.