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Monday Market Mayhem

It does not take much to turn this market.

In Friday morning's post I said: "a 5% correction would be good and healthy and we’ll be looking to hold the same levels we set on the way up on this pullback – those would be: Dow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420, roughly 15% off the bottoms with 5% rule adjustments." and we got 1/2 of that move on Friday (the 2.5% rule) and I reminded members over the weekend: "Don’t forget I was looking for something like a 5% pullback and "all" we got was 2.5% so far."

So let's not be all "shocked" that there's a pullback today.  It's the same pullback as we had on Friday, following through to where it belongs.  Timing-wise, it was to be expected as we run-up to the G20 and my catch-phrase prediction for this week was: "While Obama’s away, the bears may play" and it looks like the bears are bringing their "A" game this week, pressing hard before Obama is even airborne for his European tour.

The newsflow turned sharply negative this weekend as well but not much of it matters other than Rick Wagoner being forced to resign after the Administration rejects the automaker's latest plan (Chrysler's too).  While much is being made of this – it's actually a very positive thing as the government is playing hardball with GM debt-holders and the unions to wring concessions from them that will bring the turnaround plan in line.  Although they are tossing out the "B" word, the administration said it would provide the company sufficient working capital for 60 more days, during which a revamped GM board and top management has to put forward a much more rigorous restructuring plan than it submitted last month.

A GM bankruptcy is, unfortunately, one of the three things I have long said that could each knock 20% off our 8,650 midrange.  Even more unfortunately, our other two market killers - the bankruptcy of a major financial institution or the default of a less-than minor country – are both still firmly on the table as possibilities.  Speaking of countries that may default – Russia's economy is forecast to shrink another 4.5% this year.  “As the crisis continues to spread to the real economy around the world, initial expectations that Russia and other countries will recover fast are no longer likely,” the World Bank said in a report today. In November, it saw growth of 3 percent, based on oil prices of $75 a barrel and global expansion.  The only thing really shocking about this report is it took them 5 months to figure this out


That's what negative newsflow is all about – Da Bears worked overtime this weekend to flood the MSM with everything but the kitchen sink to kill this rally, Including this very scary chart from the WSJ under the headline: "How A Modern Depression Might Look"  Also from the WSJ – they finally figured out my long-standing inflation premise so kudos to Murdoch's minions for catching up after 3 years!  We have a LOT of economic data to get through this week and I listed that out in the Weekend Reading post along with a chart that indicates we may be in the middle of a "Quadruple Evil Knievel Formation" that could take us all the way back to 6,550 but we'll be hoping our 5% pullback levels hold and a base gets formed around today's open that we can build off.

[Asian markets tumble]Asia's base had no legs this morning as the Nikkei fell right off the table with a 4.5% plunge, all the way back to 8,236, a 600-point pullback (33%) off a 1,800-point run (25%) from the March 10th low.  The Hang Seng fell 4.7% on the day and is back at 13,456, an 800-point pullback (30%) off a 2,700-point run (23%) from the 3/9 lows.  India also gave up 4.5% and Singapore gave up 4.8%. "The next two days will help show whether the rally into the end of the quarter is sustainable, or was merely a relief rally after a brutal downturn," said analysts at RBC Capital Markets. 

To some extent, I wonder if all this negative newsflow, GM, etc has been engineered by the G20 to make what is rumored to be as much as $2Tn in additional global stimulus more palatable to their citizenry.  The IMF has called for all nations to pledge 2% of their GDP to stimulus plans but, so far, only the US and China have met those goals.  This morning, Japan's Finance Minister said Japan is prepared to implement economic stimulus steps that will "far exceed" 2% of gross domestic product and I'm expecting language out of the G20 along the lines of "we will all hang together or we will all hang separately."

EU markets are hanging onto the 2.5% rule today, also neatly completing their own 5% pullback legs so we'll be watching that line very carefully today.  As with the rest of the planet, Banks and Auto companies are leading the indexes lower.  This should be an advantage to the US, as GM and F trade under $5 COMBINED and Chrysler is private so we literally have nothing to lose!  Economic Confidence in the EU is at the lowest since the Union was founded but, in the UK, the decline of housing prices has slowed considerably with mortgage approvals the highest since last May – a real sign that England's aggressive stimulus approach may actually be working. “The housing market isn’t about to start booming, but the intensity of the pain will probably recede,” said Amit Kara, an economist at UBS AG in London. “We may have reached a bottom in mortgage activity.”

We're pretty much in a watch and wait mode today, there are 4 new plays in the Weekend Reading post and we'll be looking to see if we hold our levels this morning.  There is nothing in the GM news that should surprise investors who have been paying attention over the past 20 years and the news of possible protests may be spooking EU investors, who are selling off the US futures hard this morning (down 2.5% at 8am) but it looks like an opportunity to us as we don't really care what the G20 says – we're going to follow-through with our plan to re-flate our own economy at all costs.  Those costs may come back to bite us down the road but, for now, we need to trade for today.

As it looks like we're hitting our pullback levels right out of the gate, we may want to double down on the half-covers on our long index puts, rather than roll them down to 2x a lower cover.  It depends where we open but we can use our levels as the on/off switch, covering 100% if 3 of our 5 indexes are above.  Europe opened at the the 5% mark and hten gained a point – we'd hate to miss out on fun like that and we can always go back to a more bearish stance by working our stops (also see weekend post).


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  1. Good Morning everyone.
    I saw this great quote over the weekend, it’s from the rules of Monopoly :-
    The Bank never goes "broke". If the Bank runs out of money it may issue as much more as may be needed by merely writing on any ordinary paper.

  2. Enhance your trading today by listening to this instead of CNBC ….


  3. Good Morning!

    Monoploy Rules/DB – LOL, so true….

    So we’re looking to hold:  Dow 7,636, S&P 805, Nas 1,525, NYSE 5,075 and Russell 420 this morning.

    We’re really getting jammed down hard in pre- markets and that’s exactly what happened in Europe and they bounced back but are drifting down about 2% ahead of our open so nothing to get excited about.

    I’m not even worried about our break-up levels today as we’re miles away and it’s just not going to happen.  Oil at $50.50 pre-market will be very bad for the energy sector (but great if you still have those OIH shorts). 

    One nice trick on a day like today is to try to grab DIA puts before the Dow gets properly priced.  We have the 3/31 $78 puts that should be $2 but may still be buyable for $1.50 if you can hit Friday’s sell orders before they get changed, these are fun when you get lucky.

    The sell-off is all about GM and Geithner saying the banks may need a lot of capital – both pretty obvious things so we have to take all this market panic with a grain of salt.  What really matters is:  Are the painters still out there?  The quarter isn’t over yet and there still have to be a lot of people who would like us to end on a positive note.  FAS is coming back to our $5 buy point and I will say AGAIN – How many times will you see this ETF go from $5 to $7.50 before you start buying some at $5? 

    We can open a position by selling naked Apr puts for $1+ (net $4 entry), that is, by far, my favorite play of the morning.

    Happy hunting!

  4. Phil, If I’ve done my calc right, the DOW is well past a 2.5% pullback premarket.  Does that mean we should forget about it?  You said 3 of 5 though.. how’s the NYSE doing?
    My SKF is STRONG!!!  FMD?? 

  5. FAS …. I would wait until $4 or lower, but that’s just me.  Maybe $4 puts.

  6. Phil, as I am new to a lot of this I have a quick question on the MGM play from the weekend post. What are you selling and what are you buying for the $0 net cost and $2.50 profit…thanks much!!!

  7. CHK — apparently got hammered by NYT over old news, Aubrey bonus.  Could be a good buying opp in 17.50 range or lower.

  8. Assuming our pullback levels are busted, I’m going to call a 25% day in SKF now.  Someone please kick me if I don’t hold till close before selling my position.  Ok… maybe I’ll play with half during the day. ;-)

  9. Phil: what are the DIA covers which you say DD ? apr 76 ?

  10. My TRIN is showing 11.39 !!

  11. Pullback/Matt – Not just the spike down, it’s what we fight back to that counts for the day but, below those levels we stay 1/2 naked and consider rolling to lower strikes on the put covers - we’ll have to see what actually happens. 

    MGM/Poof – those were the January $2.50 puts and calls at $2.95 total to create a net credit.  It’s only zero cost up front – if it’s put to you below $2.50, you get 2x the number of shares at about $1.25 each.

    CHK – that was a very good short last week!  8-)

    DIA/RMM – Nothing to be done with them at the moment, if you have the Apr $77 puts 1/2 sold, then those went from $2.50 to $3.20 – not a big deal at all.  Of course you can get fancy and play a bounce by rolling 1/2 of those to 3x the 3/31 $76 puts at $1.10, which is mostly premium – playing for the bounce of course.

  12. PHIL, Levels are blown, right??

  13. Ok, got it.

  14. Gold exploded once our market opened, from $915 to $927 already.  Miners are moving up of couse.

    7,550 is very important to hold on the Dow, we have good volume coming in at this level so we’ll see what sticks.  Nas must hold 1,500 so we can watch 30 on the Qs, $340 on GOOG, AAPL $105, AMZN $70 and RIMM $45 with RIMM in the worst shape so far.

  15. SPY 3/31 $77 calls are $2.65 with .40 in premium,  a fun bottom picking momentum play as SPY is down from $82 at Friday’s close so a $1 bounce is a quck 20% profit.  Stop at $2.25.

  16. I have no clue, like everyone else, but I think it is possible that we are close to the lows until end of Q anyway ….

  17. Good time to buy back FAZ $20 puts for $3 (40% gain).  Unless you REALLY did want to possibly own them.

  18. Phil: no further fall ?
    Dia jun80 puts at 23 % gain, 1/2 cover apr 77 putters from 2.15 to 3.5, maybe should take 1/2 of gain from puts ?

  19. Give me the beat boys and free my soul, I want to get lost in your rock and roll and drift away ….

  20. DIA  I’ve got 3/4 covers.   Go to full covers by selling MarQ 75s?

  21. GM only down 27% – not bad for all the panic they are causing.

    Obama will be speaking soon about GM, most likely a little backpeddling after seeing the market reaction.

    Solars are getting slammed because Barrons says they are getting busy and that will drive up the price of silicone – Duh!  You would think that would at least be good for the SOX but they’re off 3.5%.   This is a non-issue for solars and should be considered a buying opportuntiy if you don’t have any….

    X got slammed back to $21.60, probably on the logic that if the US will let GM fail, X may be next.  The $19 puts can be sold naked for $1.10!

    VIX jammed up 11% today, could indicate a nice snap-back coming.

    C June $2.50s are .49 and you can sell June $4s for .23 which is .26 on a $1.50 spread if C can break $4 by then.  Another fun C gamble is the 2011 $5s for .89, selling the 2011 $7.50s for .65, which is .23 for a $2.50 spread but I’d sell 1/2 for .65 and set a stop at .50 to sell the other 1/2 as that’s still an average sale of .575 but a LOT more upside if they happen to get going

  22. VERY interesting chart in SKF.  It’s a real battle to keep her steady.  Maybe they’re trying to onboard as many people as possible before dropping the floor?  I’ve taken some off the table just in case.

  23. Lot of interesting trading buys as they take bids off the table …..
    I took CHK long at the open for quick trade.
    PQ down 17%, 2.33 looks like good price
    SLG below 11 down 12% looks interesting
    DRYS down 20% but not for me
    EOG sub 57

  24. TRIN down to 1.25

  25. what time Obama ?

  26. TRIN up to 2.35.     Schizophrenia rules.

  27. Now 1.12

  28. Now 1.07;  but still a big downside FMD

  29. Phil. You wrote "Solars are getting slammed because Barrons says they are getting busy and that will drive up the price of silicone"   If we are looking at ther same Barrons article the spirit of what is writeen is much different than your take.  It indicates FSLR as a possible short candidate.   
    " Shares of First Solar Inc and Energy Conversion Devices Inc, which make low-silicon solar panels, look vulnerable as falling silicon prices narrow their cost advantages versus rivals that rely more heavily on silicon, Barron’s reported on Sunday.  A key selling point for the "thin-film" panels sold by First Solar and Energy Conversion was that they used very little silicon, and were therefore lower-cost alternatives to traditional panels, Barron’s said.

  30. Falling/RMM – No way to tell yet.  If we can’t get back over our levels today (sooner rather than later) we could have a long way furthere to go down.  I wouldn’t mess around with the June position until we at least hold our levels for the day.

    FAS train leaving the station!

  31. Cap
    My NYSE TRIN is 1.42 and Nasdaq is 2.23.   What trin are you reporting?

  32. Poor choice of words ….
    Steve Liesman "they have money to PLAY WITH right now …"

  33. Is DRYS going backrupt soon??

  34. I think mine is NYSE, right now 2.15

  35. FAS was heavily defended during that selloff.  Didn’t drop below its previous low on huge volume.  Picking up some FAS to see if the low holds…

  36. Jesus is just all right with me oh yeah….i don’t care what they may say…i don’t care what they may do….

  37. Wow!  This is an onslaught!  The banks are resisting the pressure so far.. doubt it will hold for long.  Someone seems determined to send us lower…

  38. Hey Matt – Someone seems determined to send us lower…
    You’re a "Pink Bear". Its what we Bears said would happen. Not someone seems determined ….

  39. FSLR/Dalef – Ah, I didn’t read it, I was going by what CNBC said – always a mistake!   FSLR has many problems but the whole sector is selling off for no good reason at the moment (other than following the market).

    SOX just passed 5% – bad.  Transports right at -5%, RUT down 4%, the rest are around 3.5% – it’s going to be tough to just get back to 2.5% like this. 

    DRYS/Harvey – No way to tell.  Today they are finally reacting to the huge pullback in shipping rates we’ve been watching for a couple of weeks.

    Corleone gets religious!

    Too determined Matt – I can’t believe these are the same guys who wouldn’t sell on Friday…

    Don’t get too excited DB – will now be very bad looking for bears if we simply get back to our levels and hold through close – it will turn the talk from this rally having been a bear market correciton to this pullback being a bull market correction and THAT can start bringing money in off the sides.  We’ll see though – I’m trying to be agnostic until I see what levels do and don’t hold.

  40. 2/3rds of the education stocks are green today.  Almost everything else is red.

  41. Phil,
    On the recommendation to buy back the FAZ 20 putters (and buying FAS). The puts seem to be going the way we want them to. Do you see financials rebounding in the next few days? 

  42. Phil/Excited – Totally agree that this could just set some support levels from which to bounce… but allow me one day in the sun out of 3 weeks :-)

  43. GM $3 calls for .29 are a fun play, out at .20, hoping Obama says something reassuring (they were .80 on Friday and we should be thrilled with .50).

    Financial/Wes – I don’t see what happened that should make people sell financials today so no reason the long-term rebound shouldn’t keep going.  Just a good time to take advantage (hopefully) of a dip.

    LOL DB – OK, enjoy yourself but don’t get burned!

  44. It feels like the market is turning back up now.  TRINS have come down,

  45. Phil: look at the curves: they show a waiting position, something will happen, is there an anouncement or speech expected ?

  46. ARNA –
    Meets endpoints, although same % loss as competition…3.7% better than placebo (FDA guidance is 5%).  Getting hammered.

  47. Phil – Solars, specifically the Chinese ones are selling off because they went up over 60% last week on non-specific news on subsidies.  How a company with a market cap north of $1.5B can go up that fast on this sort of news is simply ridiculous.  I have followed STP for some time now – it is a heavily manipulated stock.  Criminal at best. 

  48. Obama — how uninspiring …. ugh
    just get to the point w/out th e bs….

  49. Sounds like obama wants solar powered cars, maybe that will make him happy.

  50. Cap: endless negativism about OBAMA: what is your misssion ? Surely is the first time in 8 years that I do NOT hear the nonsense we had to endure for too long.

  51. Curves/RMM – Yes, Obama speaking now!  It’s working at the moment…

    ARNA/Pharm – Well, it couldn’t last…

    STP/Dalef – Oh yes, those Chinese ones are scary but I do like LDK when it’s low.

    Obama/Cap – Oh sorry he can’t boil everything down to  a soundbite for you like the old boss.  Would it be better if he came out and said "a solar car in every garage" and pretended everything was OK for you?  Some of us like our leaders to treat us like adults…  Back to your blog now!

  52. obama is back to negative inferences….

  53. Phil I am short SKF at 45 – do I roll to the 30′s now?


  54. Phil – Cant have a solar powered car in every garage unless the garage has a "sun roof". They’d never get out !!    :-)

  55. APOL getting pumped b4 earnings March 31.
    Nice premiums on April 90  (1.70) or 95 (0.90) or 100 (0.45)
    This baby is a sell; certainly isn;t going over 90

  56. UK just closed down 3.12% @3776 – small sell off at the end !

  57. My mission RMM ?   Just calling it like I see it.  Sorry.
    How’s this ? …. Oh isn’t Obama wonderful.  Look how good he looked on TV.  What did he just say ?

  58. Phil,
    all our levels are blown do you see anything below the surface to stay bullish?

  59. Phil … LOL.
    Corleone … watch what you say …. nary a negative word is tolerated here when it comes to Obummer; no matter how accurate.  I said 3 simple words regarding his TV appearnace "how uninspiring, ugh" and look at the reaction.
    Get up stand up, Stand up for your rights !  Don’t give up the fight !  (Bob Marley).

  60. Phil, the the UK close below their level?  If we didn’t just set the low for the day… we probably won’t till close.

  61. I got my Life on Mars Radio cooking on the headphones; so I’m happy.
    Stevie Wonder playing now … Golden Lady.
    And no Dylan Ratigan; or even Kudlow to harsh my mellow.

  62. they can fool some people some time but they can’t fool all the people all the time…. 

  63. by the way caps LOVE the station link

  64. Thanks Corleone …. I am enjoying it as well; some great tunes playing.

  65. Well that didn’t quite turn the markets around did it?

    SKF/Red – I hope you’re not short at $45 – is that what you have?

    Huge push down again now that Obama’s done we need the S&P to get way back to 792 before we’re anywhere near turning up and I can’t see drifiting like this into lunch being a good thing so I’d say if we don’t retake 788 by noon and 792 by 1pm then not much hope for a good finish.  FTSE off 3.1%, DAX off 5%, CAC off 4.5% so no help from Europe.

    Volume here is still low but I don’t think that’s a good thing because where are the buyers if they are real?  People seemed pretty damned excited to buy stock at higher levels than this last week so this should be a great time to scale in for another round if they are legitimate investors.

    Bullish/Maxt – No nothing I see here looks bullish at the moment but nothing fundamentally happened to make me more bearish either and certainly not below 7,500 bearish.  I don’t think GM is news and none of totays bank fears are news either so I will not have an optinion until I see if the sell-off holds through the afternoon.

  66. when does FAZ start hittin in multiples of .50 today

  67. This could easily be a 300-500 point down day that closes on the lows.
    The exact opposite of a FMD (well its FMD to the down).
    I hope not; not positioned well enough to the short side.

  68. IBN – My favourite trading stock is down 13%!  Bought back some of the covers (Calls) sold earlier at 100% profits.
    This is a good point to to buy more stock by selling naked Apr 12.5 Puts for about $1. You are quite likely to get it assigned, but I doubt it goes much lower than $11 by April op-Ex. A conservative bet may be to first buy a longer dated Put too.

  69. Phil

    I was short Oct 45′s but I bot back for a profit (sold at 8.39 bot back at 7.25) because I got scared and I sold Jun 25′s
    for .30 cents – I know this doesn’t sound like a plan – especially because now I’m really low on cash but …

    You think the Jun 25′s are better than the Oct 45′s I was short?

  70. SNDK – Want to add a good verticle. My assumptions for the stock is that it trades in this $12-#13 range till April/May. Quite likely that it jumps up $2-$4 if (rather when) buy-out rumors between now and May/June.
    Someone please suggest a verticle or another option strategy. I also do own the stock with a cost basis above $20, but it does not have to be linked to my stock.

  71. GLD falling back to open….TIE and AA falling back to b’f last weeks ralley 10 and 13%, respectively.

  72. AMZN is holding up today. Could be a good buy on the overall pullback on the market.

  73. Oil fell below $50, that’s got OIH and XLE each down 4.5% costing us a full point in the markets.  The Auto sector is off 10% and that’s good for half an index point and Banks are off 6% for another point out of the markets so that accounts for why we’re down 5% instead of down 2.5%. 

    Still, we are not making it through to to upside and that’s firming up overhead resistance.  I can’t imagine what upcoming catalyst will save us so we’re kind of back to praying for a BS stick save – not much of a bullish investing premiise but also not one to discount given wheat happened last Monday, Tuesday and Wednesday. 

    Red – You cannot be talking about SKF, which is at $106.23 can you?

    SNDK/M2 – You can 1/2 sell Oct $13s for $3 against Jan $10s at $4.80, which drops your basis to $3.30 with a $3 spread on the covered set and naked gains if they get bought on the rest.  As to the stock, can move to 2x the July $6s at $6.50 and sell 2x the May $12s at $2 for a $18 total collection if they get bought and no worse off if they don’t – hopefully on the way to getting even on the stock. 

  74. does anybody have an opinion on NG gold  miner?

  75. We still like the portfolio vertical on CBS? Now at .45
    CBS can be our first verical play!  A little low but the 2011 $5s are $1.50 and the 2011 $7.50s are $1 so .50 net entry for the $2.50 spread.

  76. Dollar up a point, that’s yet another thing damaging the markets today. 

    7,486 was the close of 3/18, Session 7 of the rally.  It’s been 7 sessions since then so interesting place to re-touch.  S&P was 794 that day, way over where we are now so it’s lost 1% to the Dow.  NYSE was also higher at 4,975, Nas was same at 1,491, Rut was higher at 417 so interesting Dow leadership shaping up. 

    NG/Corleone – They don’t make any money with gold at $900+, not my type of thing…

    CBS/Steve – Yes, they are high-risk, of course but the idea is to play a stock that is unlikely to go BK and may actually turn around given 20 more months.  CBS does fit that bill (although you wouldn’t know it from the chart).

  77. Phil

    Actually I am!

    And its because I have been very focused on your Insurance policy.

    I didn’t know how to trade SKF so thought I should learn so I began with selling a Put at 115

    some time back but couldn’t sleep so I kept rolling it down hoping to find a good night’s rest

    and last night I slept very well – but this morning I was blown away by the bearish news and began to worry

    I wasn’t down low enough.

    My goal is to own some SKF and to think of it as a mattress for my overall portfolio


  78. Oh perhaps I havn’t been clear – my ONLY position in SKF is 2 short Jun 25 puts which I sold for .30

    as a result of my panic over the 2 short Oct 45 Puts that I owned earlier this morning.

    The trouble is that buying them back even though it was at a profit  depleted my cash

    - and Incidentally proved to me that I need an injection of capital i – the first since I started trading this way last November



  79. OK put the CBS spread on it’s a bit of fun and 10% cheaper than a couple weeks ago.
    One more entry point check please?
    CAT has slipped today, but there is $2.95 premium at these strikes in April would you enter here?
    Thanks so much
    CAT 3/18  $28.41: Last expiration we switched from DE to CAT as I liked them better but we never booked the trade here but it was called away on a 20% run.  I still like them at $28 for all the same reasons I liked them at $24 so entering here and selling the Apr $26 puts for $1.23 and the Apr $28 calls for $2.16 is net $25.02/25.51.

  80. FAS
    How about a buy/write – we can get ~1.80 for the April $6 calls and $5 puts with the stock about 5.30 so that net us $2.50 if callede away or in for $4.25 if put to us.

  81. edro: FAS buywrite is ok, I did it again this am.

  82. IBN has some low management salaries — if YHOO profiles have any accuracy at all (and their option quotes are annoying, fix  the friggin problem already!)


  84. What goes up, must go down,   Spinning wheel, round and round
    How apropos …..

  85. Corleone — LOL  … we both nailed that one !

  86. Phil,
    Can we see oil in 30s again? what’s the path you see for oil and ng?

  87. IBN – Yahoo shown salaries seem incorrect. Even in India where salaries are typically not like they are in New York, us$ 85k for CEO of 2nd biggest bank is indeed wrong.
    In terms of Yahoo – they are going from bad to worse! Cancelling services such as Fax/Briefcase etc, Finance Alerts sent incorrectly or next day etc. Wish they would either just die, sell themselves to someone or …

  88. This one is just a great song… Simon and Garfunkel "America"

  89. never heard it b-4--but i like the tone

  90. Wondering if i should exit FAZ--covered my losses..

  91. never heard it b4 ?  really ?

  92. Edro –ref FAS. My interpretation of FAS’ TA is that we have 1st day of retrace with the target of $2.7- 4.5. I am waiting for turn-around to get buy/writes. IMO it may take 5-7 days.

  93. This War song, Gypsy Man, is pretty good … and I never heard that one b4 !

  94. SKF/Red – OK then, I thought you were naming the wrong stock… So you shorted at $45 or you sold the $45 puts?  I see you said at 11:54 that you sold June $25 (puts I assume) for .30, now .60.  What you have to realize is that these are so far out of the money that it’s not likely to become much of an issue.  I’m a little unclear at how you went from a $7.30 Oct $45 put to the .30 June $25 puts – hopefully you didn’t do a 20x split!  It’s never good to do a naked put on anything you don’t fully intend to buy.  If you were willing to own SKF at $115, your worst-case at the moment would be down $10 and you could sell May $100 calls for $26.30 to drop that basis right down.  From the perspective of your current position, they need to lose 70% of their value, which would be a 35% gain in IYF/XLF, not out of the question at all.

    That was way too much work to get to 788 and too quick a rejection from there so I’m NOT happy.  Need to go 55% – 60% bearish if we can’t hold our lows for the day and use that as our on/off switch for covers.

    CBS down on fear of losing GM as advertiser.  As if none will replace them over time…

    CAT/Steve – Sure that still works.

    FAS/Edro – As long as you are happy to own FAS at $4.25 (and, since you can sell $6 calls for .85 (20%) why wouldn’t you be?)…

    Oil $30s/Emo – If the recession starts to look like the depression chart in the above post then $30 oil would be high.  That’s the problem though, you only get $30 oil in a massive collapse so don’t go betting against yourself by accident.  To me, the market can fall without oil falling.  The market can rise without oil rising.  It is far less likely that the market rises without gold rising and also not likely gold will fall with a collapsing market so gold is a better hedge than oil.  Nat gas is different as it’s a real glut and getting gluttier AND coal is a substitute that’s also getting cheaper and SU et al are not making as much shale oil and they are North America’s biggest users of Nat gas…

    FAS TA/Bro – LOL, you can’t do TA on a 3x ultra.  You need to chart the underlying or you’ll get all kinds of false reads…

  95. Very weird day! 
    FHA mortgage defaults are on the rise.  Add that to the outright fraud that is rampant throughout that program and it’s just more money the taxpayers are on the hook for.  Sickening.
    Read over the weekend that tucked away in the Transportion bill that became law last year I believe is an incentive for alternative fuels.  It was a handout to the ethanol group.  But what it inadvertantly did was throw a huge tax credit windfall to the paper industry.  They use a byproduct of the paper production process to fuel their boilers.  It’s been that way since 1920 or something.  But because of the way the incentive was written, they are now being paid out millions for it.  International Paper could stand to reap 1.06 Billion themselves.  They’re only worth 5 Bill I think!  So a huge impact on their profitability as long as the credit stands.  They’ve doubled since 3/9 and have pulled back some.. but I think if we turn around, I’ll be buying some.

  96. no caps we were not jamming to that song at the keg party in the 80′s--but give me a little WHO yeah we did spin this

  97. does anyone know if GOOG earnings are before this month’s expiry?

  98. one of my favorite Who songs….and albums

  99. I didn’t exactly jam to simon and garfunkel either … its just a pretty well known tune

  100. Matt – that’s outrageous … but what do you expect from our lawmakers anyway ? 

  101.  I forgot to remind you of FXP on Friday.  (Nice gain today.)

  102. matt: what about the real wrongdoers: those who sold mortgagaes at a… hole conditions and those who bought houses they could not afford, the culprits are not now those who try to fix things, and by the way, I think that those who are in forclosure are a lot of real estate investors: thoise should not be rescued, they have more than 1 house and were just speculators, have you ever heard about vthe distinction bwetween those who needed a house to live in and those who were investors.

  103. I love this REO speedwagon song …. written when the dude was stuck in his condo in Colorado during a big storm.
    It rocks.

  104. RIDIN the Storm OUT!!!! waiting for the fallout…

  105. lol——caps we have similar taste--NEXT SONG PEOPLE

  106. Phil,
    if we can’t hold the lows, march 78 putters should be rolled today or tomorrow and to what strike and exp.?

  107. Best REO song for stock traders is Roll With the Changes, a good mantra for this up and down market…

  108. Just like the market …. we are Ridin’ the Storm Out !

  109. We should make this radio the official station of PSW !
    For that matter, I will make it so at ObamaNation…

  110. i’m not missin a thing (with FAZ) ridin the storm out!!!!

  111. Good one Mocha !

  112. ohohohohohohohohoho

  113. best 200 i paid in awhile to have some buds to chat with while watchin the colors…and good advice to boot!

  114. Classic …. Janis Joplin

  115. i was playin soft while bobby sang the blues…

  116. I gotta step out for a bit; now if I can get this to stream to my Blackberry, that will be awesome !

  117. Phil FAS. Thanks. My targets for XLF are 7.15-7.75, providing that we close below the 8.5 support level. These targets translate to further 9%-13% decline of underlying. B/C of nonlinear correlation it is hard to estimate value of FAS decline, but I am waiting for further decline anyway. Thanks for pointing out that I should monitor the XLF.

  118. One of my favorite Joplin lines, from a different song …
    "Oh Lord won’t you buy me a Mercedes Benz, my friends all have Porsches, I must make amends"

  119. we take all kind of pills that give us all kinds of thrills--one hit after another…ON THE COVER OF THE ROLLIN STONE

  120. IP/Matt – That’s very interesting.  I like IP overall but maybe on a pullback.  We picked them down at $5 where they were a no-brainer.

    GOOG/BDC – Usually on Thurs pm before expiration day.

    FXP/Silent – Damn!  I don’t know why I have a mental block with them…

    Oil hit $48.40!  OIH down 5.5%, XLE down 4.7%, XOM $68.

  121. This is awesome, I can’t break away just yet.
    "We got a lotta teenage blue eyed groupies who will do anything we say .."  Ha Ha.
    I wanna see Phil’s pitcher on the cover of the Rolling Stone !

  122.  cap & corleone having a bromance?

  123. Alright; Joan Baez … I may be outta hear now…. but a good song…
    Hey, the Dow has a pulse !

  124. the night they drove all dixie down…..fug they are playing it alllllll

  125. Jomama, as the man said, we be Riding The Storm Out !
    With some cool tunes and tasty waves.

  126. I’m telling you guys, watching the market with the headphones on, the CNBC dolts off, is just awesome.
    I am Feeling Stronger Every Day !

  127. Phil,
    DBA – any thoughts?  how low can it get?  Thanks.

  128. i agree cap followed your advice—-could this be a rundown until the mark to market explosion? 

  129. Dow; no more pulse !

  130. Corleone; I dunno; at this point I think that won’t matter much; between the bank comments on Friday and Geithner over the weekend, the financials are toast IMO.

  131. I think it’s very cute to watch Cap and Corleone exchange tunes.  Maybe they’ll make mixed tapes for each other… 8-)

    DBA/Fab – My attitude on DBA is you can do a buy/write on the May $23s at net $21.11/22.06 and, if you scale in 3 times, dropping 15% each you’re in for about $17 and you can certainly sell $1 per month in premiums so it’s a nice little payer while you wait for a comeback.

    Don’t forget, not good if we start making new lows!

  132. cool capper--i’ll hold my FAZ to $40 or 50

  133. It looks to me that they are just trying to keep a stampede for the exits from happening.  Every new low gets protected.. until it fails.  And then the charade starts over again.  Could be they are just trying to limp to 3 or 330 so they can spurt into the end.

  134. Hi Phil, have DIA Jun 78s half covered with DIA Mar 77s. How best to adjust as the putters are ITM and expire tomorrow.

  135. Well Phil, this is a great way to bide the time in a market that’s been basically flat since 10 am.
    And dude, I just KNOW you are listening in as well !    LOL.
    Matt …. could be … that’s usually how these 1-way days end up working out …. remember last Monday was it, when up 500 ?  This could just be the reverse of that.
    The Road is Long ….

  136. caps my brother…it’s a long long road

  137. Corleone, I hold a little bit of FAZ and SKF as portfolio insurance and sell calls against …..
    Uh oh, Matt just sent the Dow flying down !

  138. This guy sounds like Bob Dylan …. can’t be, can it ?

  139. Phil,
    I sold the 1 SKF 115 put out of naievete

    Then I panicked and rolled down to 2×45 – fully intending to own all of 200 shares for $9k

    Then I saw that I’d be happier if I owned 400 for the same 9K so so I rolled to Jun 25′s but my cash was depleted buying back the (albeit at a reduction) the 45′s so I ended up with 2 Jun 25′s for a cost of .30 pending a response from you and selling some premium in other stocks that are fully covered i.e. I was long SLV, AA,CBS etc

    By the way what is the difference between shorting SKF and selling SKF puts?

    Also I can’t afford to sell calls on SKF because I can only sell covered calls and its not a stock I can buy when its $106 – but I could buy it at 45 or under.

    And no I did not do a 20x split – I bot back the 2 contracts at 45 and I sold 2 Jun 25′s for a rediculously
    low .30 and they have doubled already.

     In any event I have built up some cash and some understanding from your response – so all is good.

    We all don’t seem to follow the same weekend media – I thought Geitner and the The Plan was being well received.

    I get the statistical reports on the public from The Pew Research org and the slant from NYT.

    I watch the MSM talking heads – meet the press, McGlaughlan,

    Chris Mathews, This Week, CNBC, Bloomburg

    As for Dylan – I always thought he made the show. And I like Mark Faber too.

    So I was surprised by the response on this blog to the weekend news.

    Is it that I don’t get all my news from the Internet I wonder? And I also wonder at people who do.

  140. OK in for some CAT. Although rereading this comment stream and others it seems people are increasingly concerned we could now have a big dip from here, so only a 1/4 position.

  141. San Francisco Bay Area shaken by 4.3 magnitude quake

  142. DB: earthquake was  centered near San Jose, south of SF, 4.7 , my son lives in San Mateo, said the house was shaking a little.

  143. FAS puts only managed to sell 6 for $1, anyone else get a fill?

  144. AXP  I’m thinking of a put sell here with the goal of taking the shares.   What do you think of the value in general and what strike/month would you suggest?

  145. RMM/Earthquake. Scary. Glad we dont have em.

  146. Phil: what is your hunch now for dia puts ? 300 points is enough for a drop !!!!!!!!!

  147. Why is SRS dropping?  Sign of a turn coming?

  148. Never mind on SRS, just a big seller, we’re still going down.

  149. FAS puts – got filled at .95 – close enough

  150. Song on right now … My Old School … has the line ….. "California, falls into the sea,-- that’ll be the day I go back to Annandale".

  151. "tumbles into the sea" – sorry

  152. Phil: tempted to buy more FAS at 5.14 $ and sell calls apr 6 and apr puts 4, what do you think ??

  153. This is a very controlled sell off in the market.  Looks to me that it’s a setup.  Either for a stick save.. or more likely, a big up day tomorrow.  I will close my short positions at end of day if not sooner.
    Will 5 hold in FAS?  I doubt it.

  154. Well, we’re back to end of the world trading today – everything is just selling off at every pivot point…

    DIA/Ajay – Best off just rolling them over to Apr $75 puts even for now and stay 1/2 covered until we see what happens.  Looking ugly at the moment but, as long as the roll is even for you, no hurry.

    SKF/Red – Well if you short SKF you are betting financials will go up and SKF (ultra-short financials) will go up but if you sell the puts then you are betting SKF will not go down too much (financials will not go up too much) so they are very different bets.  As to selling the calls – I was just saying that that needs to be your plan BEFORE you start – if you can’t follow through with an ownership plan, then selling naked puts is a bad idea. 

    New/Red – I spend a lot of my weekend reading people I don’t agree with – it keeps me on my toes….  It’s always good to have different points of view – too much NBC/CNBC/MSNBC can rot your brain.  Also, it’s good to keep tabs on what those Fox people are up to.  As to reading, I like to go get a latte and sit down at Barnes and Nobel for a couple of hours reading magazines and foreign papers – the net still doesn’t capture the expirence of just sitting there and paging through actual articles…

    FAS/Steve – .90 is not too bad but no hurry.

    AXP/Eph – I like them long-term but they are adversely affected if we turn down in general so don’t go too crazy without downside financial coverage.  Buffett liket them too of course. 

    300/RMM – Now that we’ve broken down, there’s not too much support – I wouldn’t assume anything as this is just an ugly mess.

    SRS – strange place for profit taking…

    FAS/RMM – They’ve been pretty reliable payers at that price.  Just a bet against the end of America…

  155. BTW, even though I had my doubts earlier.. my even earlier call about it being an FMD for SKF has held true.  And I believe it will remain so.  Will we make 25%?  We’re only 10% away now.. so that’s easily doable.  But if we do, I will close my position at 3:58pm and buy some FAS for tomorrow.   I think we could have a big up day tomorrow.  Unless there is another sell off in which case Wednesday could be a huge up day.

  156. matt where doe the upside come in—the word was -before the rally--get out before april--earnings roll in and it will be an ugly bear—-unemployment is running wild--look around--nobody is working--obama saying they’ll help the autoworkers—your warranty is still good--(i have a suburban so i am happy about that)  where does the bounce come from--rememeber-this rally started with financials—citi and BOA saying they had a couple good months-mark to market and uptcik rule just happened to come along right then--i would love to catch a bounce--tell me why—not being an ahole just getting your line here--looked to me like a controlled rally--

  157. and somebody tell me how AIG isn’t 2 cents right now

  158.  Phil:  I sold a lot of calls Thursday and Friday (BHP April 50 & May 55; JPM April 32.5 & May 35; MOS April 55 & 60; UNP April 45 & 50, & May 50)  Do you think it is too early to buy back a percentage of the calls?  Would you buy the April or May calls?  Thanks.

  159. No oil pump into the close – that’s just sad finishing at $48.50…

    We’re pretty much all the way back to last Monday’s open now, a full retrace of last week but still well above the previous Friday’s close so it’s possible we have some very harsh selling ahead of us if we close below 7,550.  It would take a heck of a stick save to give us anything but a joke of a finish now.  The only thing saving us is the low volume so all the selling so far could be reversed with some authority.  Last Monday though, we already had strong buying at 2pm.

    GM new CEO says they are studying their cash needs but they are already ahead of schedule on cost cutting.  Will go into BK if they need to…. 

  160. Corleone, you say it look like a controlled rally?  And what does this look like?!  It’s as controlled or even more so then alot of the rally days.  MTM discussion is for the Wednesday on the Hill.  Also, if there is another sell off tomorrow it will be because of profit taking by the funds for the end of quarter.  That means they’ll need to buy again in order to participate in any upside potential.  That alone can create a huge demand.  Need more?

  161. Phil – This was published on Seeking Alpha over the weekend. Its a different interpretation of recent data. Perhaps Ilene could link too it.

  162. Here comes the Sun,
    And I say, its alright !
    SKF SRS, on these types of days they tend to blast them into the close in the same direction, so 25% may be doable matt …. then again, we had that one day, where SKF went to 107 and they pounded it back to 90 in the last hour.
    That won’t happen today however.

  163. profit taking? 3 days of it? i thought profit taking was little off the top

  164. On a daily chart, unless DOW recaptures 7600 +, the V bottom move has been broken.

  165. GS could be a good buy down here at 100.

  166. Profit taking is such a BS term.  It really means selling.
    You can’t be taking profits when you sell at materially lower prices than you could have before.

  167. Steve, GS did hit 73 two weeks ago.
    I would not touch it at 100.

  168. VLO  I was fully covered with the Apr 19.  What do you think is a better way to cash the profit in my caller: put in a closing order with a .05 trailing stop and go naked, or just roll 3 Apr 19 -->2 Apr 18 for a small credit?

  169. Good call on ‘blast’, Cap, look at SRS go.

  170. Remember it only takes someone standing in the corner yelling BUY BUY BUY for this market to move 200 pts in less than 10 minutes.

  171. who is this cap?

  172. Phil,       what about  F…the last man standing? or  unable to compete against a newly  reorganized GM arising from bankruptcy….

  173. hell this might hit 6500 today

  174. George Harrison

  175. love it

  176. Yeah; that was a new one for me …. probably about the time he got sued over My Sweet Lord for plagiarism.

  177. Market attempting to rally – 3pm move … weak so far.

  178. Calls/John – If you are up 50% with this much time to go, buying back 1/2 at least is a good move, then see what happens tomorrow and either sell again or buy some more back but we just need to be flexible more than anything.

    Cramer says he will be doing positive case on banks tonight – that assets are not THAT troubled and the yeild spreads are fantastic and they are getting tons of free money – will be interesting to see if that has an effect…

    Interpretation/DB – See my weekend reading post.

    Profit taking/Corleone – In this market, they take it all!

    V/Cap – Yep, we NEEDED to hold those levels, this sucks…

    GS/Steve – too scary.  I like them at $85, I like to short them at $115.  Anything in between is a crap shoot.

    VLO/Eph – After a sell-off like that, I’d take out the $19s for .47 and replace them with 1/2 cover of $17s at $1.30, which can be rolled even to May $19s most likely and to 2x the May $20s or maybe $21s – lots of choices…

    F/Potter – We like F, just that we liked them at $1.06 so they don’t seem so thrilling at $2.68 and their option premiums suck so no fun to spread. 

    Oh Yay, here’s that one guy on the corner!    I hope he bought some friends….

  179. Love the CCR

  180. Excellent buying opportunity for SKF right now with a stop at 107.7.

  181. Whatsa matter, Cramer’s buddies didn’t get out or get short the financials in time; so he’s going to try to pump em up a bit ?

  182. agreed caps—--maybe they can get aig at .50!

  183. Woo-hoo, bounce all the way back to -4%!

    Don’t forget that finishing between -4% and -5% is a bearish signal on the 5% rule as it indicates a less than 20% retrace off the level. 

  184. mini pump in place; mostly energy ?

  185. VLO My callers were stopped out so I’m currently naked with Jan 15s as my long calls.  I’m also short Jun 19 puts.   I’m thinking of covering ATM if the stock breaks back above 19

  186. Let the onslaught continue!

  187. what minipump cap 

  188. The Troggs; now that’s something you don’t hear very often …

  189. 60 points on the Dow from the lows

  190. thanks for turning me on to this station--it is now a favorite-easier to make decisions with this background--YOU THE MAN CAPS


  192. Pump/Cap – Not much of one so far…

    VLO/Eph – I’d just say away from a full cover – you never know with them…

  193. Phil/Weekend reading. Great Minds. Sorry must have missed that link. Usually try em all.

  194. Wow, they’re running into some serious resistance for this sell off.  SKF can’t stay over 111.  9.2 million shares of FAS just traded.  A 3 day high.

  195. Notice the market has been down, down, down ever since Cramer called the bottom ?

  196. Please explain why the dow stays flat while all the ultrashorts are zooming up?

  197.  After a GM day like today, bear in mind the following:
    Back in 1990, the Government seized the Mustang Ranch brothel in Nevada
    for tax evasion and, as required by law, tried to run it.

    They failed and it closed. Now, we are trusting the economy of our country,
    and 850+ Billion Dollars, to a pack of nit-wits who couldn’t make money
    running a whore house and selling booze.

    Now if that doesn’t make you nervous, what does???

  198. Hard to get a good pump when they are pounding SKF and SRS higher.  You sort of have both dynamics at work, they seem to want to get the indexes a bit higher, but can’t due to financials.

  199. Phil, you think they’re fighting for a 7500 finish on the DOW?  Is that important from a TA standpoint?

  200. Weekend/DB – Yeah, I liked that one enough to bookmark his blog.

    The problem is we are below the 50 dma at 7,582 now so it’s safer to be bearish – at least 55% into the close, 1/2 cover with DIA Apr $75 puts at $2.70 is the best way to go.  That’s why we didn’t roll the June $80 puts down lower – it’s tempting to take the profit but their delta is just .65 and the Apr puts are at .50 so you can paint yourself into a corner if you mess around too much.  This is a play for disaster prevention of course, hopefully we hold this line and get back over in the morning but, with the 50 dma just overhead – we’re not too worried about gapping up (and $2.70 still pays for 200 points of long rolls….)

    Oops, might have spoken too soon – mega pump in the last 10 mins…  All the better to short into…

  201. Matt’s happy today, anyone else?  I had lots of DIA puts expecting today but the drop in ultra financials was too big and wiped out the gains on my short bets…

  202. Damn, someone douched my buzz!  Only ‘eeked’ out 16% on my ol reliable SKFer.  Someone was throwing up some serious roadblocks on our way to 25%.  Oh well.   Still a TREMENDOUSLY profitable day.  In fact, it’s a new personal record.  I’m back out of the weeds.   Bought some FAS to see what happens tomorrow.  I’ll think we’ll be up.

  203. Looked like a stick save to me.

  204. faz  was the man today—did well

  205. Overall, my port down a little bit; but I am pleased overall w/ the day. 

  206. 3rd highest 5 min volume in FAS over the last 10 days happened at close today.  I REALLY think we go up tomorrow.

  207. Well that was an awful way to start the week!

    Congrats Matt!

    Stick/Steve – I don’t know if it counts as a save if all the stick does is push the puck around the back of the goal a little…

    Up tomorow/Matt – Well I really hope so because the alternative really sucks.  Most optimistic spin on this is we’re testing the breakout of last Monday so holding this could confirm that but that’s pretty poor…  What we’ve really had is accellerating declines off the top of 2.5% and then 3.75% so it’s a 50% increase in the rate of decline and if we go down 5% tomorrow, we’re on a runaway train back to the bottom.

    Now Asia, who were down 5% this morning, have to wake up and look at our awful day so they could go down more and then Europe and then back to us.  The question is, what will happen in the morning to cheer us all up?  Of course it is the last day of the month so anything can happen….

  208. Wow, 1% jump in Euro and Pound from 2-4pm were a big factor in our "rally."  Very interesting that it didn’t help oil at all.

  209. FAS up 2.6% AH.  Pretty heavy buying.

  210. Phil, I still have those DRYS Sep 7.5s from a while ago. Today’s drop was due to a going concern warning from one of their auditors, but may have been overdone. It is likely (I hope) that DRYS will re-negotiate the rest of their loan covenenants in April and May. I’d like to better position myself to take advantage of this pop. Does it make sense to roll down to 1/3 the qty of the Sep 2.5s? Don’t want to sink any more money into this thing. Also, rolling down will enable me to sell more callers in the future, since right now I find it hard to sell any callers without putting myself in a bad position. Thanks.

    March 30 (Bloomberg) — Morgan Stanley Chief Executive Officer John Mack told employees at Morgan Stanley and Citigroup Inc.’s Smith Barney unit that 2009 will be a “difficult year” and that profitability isn’t near the bank’s long-term targets.
    This year, “even though flows of business are good, is nowhere near what we need on a long-term basis,” Mack, 64, said on an internal conference call today with the brokers. The year “will be a difficult year for all of our firms, mainly because of some of the legacy positions that we continue to have, and they drag on all of us.”
    Mack, among bank chief executive officers who met with President Barack Obama last week, said he told people at the White House meeting that now isn’t the time to return money the banks got in October from the Treasury. New York-based Morgan Stanley received $10 billion from the U.S. Troubled Asset Relief Program.
    “As much as we’d like to give the money back and just focus on not having government involvement, being totally a public entity, we think and I think that it’s the wrong time to do it now,” he said on the call. “The reason that money was put in the hands of these banks is to help get us through this very difficult time in financial markets and a very difficult time in the economy.”

  212. Is GM changing its name to Government Motors ?

  213. Ajay/Drys   You definitely want to roll down.  If you don’t want to put in more money I agree with you that you are better off with few contracts but better position.   Either roll down to 1/3 Sep 2.5s and wait for a bit of a bounce, or roll down to 1/2 Sep 2.5s and sell some Apr 5 callers to pay for it.

  214. Good morning!

    AIG/Cap – It’s certainly very possible.  Of course the administration will do whatever it takes to pump money into banks and better to scapegoat AIG for massive "losses" while using them to funnel cash into the banks than to go to Congress and try to get another $170Bn to goose their quarter.  There is no way they could afford a bad Q1 for the banks so I don’t think this is too much of a stretch.

    DRYS/Ajay – How about roll down to the $5s for .70 and plan on having the Apr $5s, now .68 pay for 1/2 with a half-sell (hopefully at a higher price) and the fallback (if they head lower) is to cover with the May $5s, now $1.05, no lower than .80.

    FTSE is up 2.5%, CAC and DAX are up 1% and our futures are up a point.  Bank stocks are leading, which is strange as that’s what tanked Japan….

  215. Good Morning Phil & all

  216. Asia Markets :    Tuesday, March 31, 2009
    (The following is from WSJ; please cross check with other sources to confirm.)   

    Nikkei Average*                                      8109.53    -126.55    -1.54%
    Hang Seng*                                          13576.02     119.69      0.89%
    China: DJ Shanghai*                               276.25         2.80      1.02%
    Seoul Composite*                                 1206.26         8.80       0.73%
    Bombay Sensex                                     9708.50    140.36       1.47%
    Baltic Dry Index                                       1646.00     -32.00      -1.98%

    *at Close

  217. Asian Markets Wobble on Uncertainty, Tokyo Loses 1.5%

    Asian stocks wobbled Tuesday with markets weaving in and out of negative territory as some investors bet the most painful stretch of corporate earnings damage may be over and bought technology shares. As the first quarter and Japan’s financial year draws to a close, stocks, oil prices and higher-yielding currencies gained after a one-day battering on news that the U.S. government was considering pushing General Motors into bankruptcy. The economic fallout from the financial crisis is still taking a big toll on many economies, with data from Japan showing unemployment rising to a three-year high as the country’s grapples with its worst recession since World War Two.

    Japan’s Nikkei fell 1.5 percent, the final day of the financial year, with banks and insurers down on renewed worry about the health of the global financial system in the wake of European bank rescues.

    Seoul shares ended 0.7 percent higher, recouping some of the previous session’s losses, with Hyundai Motor gaining on heavy program-related buying for end-quarter window dressing.

    Australian shares closed down 0.6 percent on the final day of the quarter. But stocks posted their biggest monthly gain in almost nine years in March amid tentative signs of stabilization in the global financial sector.

    Hong Kong shares edged up 0.3 percent supported by firmer regional sentiment, suggesting an easing of pressure after the bourse posted its biggest single-day drop in three weeks in the previous session.

    Singapore’s Straits Times Index rose 1 percent. Neptune Orient Lines, the world’s seventh-largest container shipper, dropped 3.5 percent after it said it carried 21 percent fewer containers in the four weeks to March 6 versus a year ago.

    China’s Shanghai Composite Index fell on worries that the market’s recent strength might prompt regulators to permit the resumption of big initial public offers of equity, which could hurt the supply/demand balance for shares.

    Bombay Stock Exchange’s Sensex closed at 9689.49, up 121.35 points or 1.27 per cent. Indian benchmark indices witnessed some profit booking in the last hour of trade Tuesday but still ended with smart gains. Meanwhile, broader markets rose steadily during the day and outperformed the benchmarks.

  218. Euro Stocks Rise in Broad Rally; M&S Jumps

    European stocks gained ground in early trade on Tuesday, clawing back a portion of the last two sessions’ sharp losses as investor focus turned to a meeting of G20 world leaders.

    The FTSEurofirst 300 index of top European shares was up 1.2 percent at 717.59 points. The index, which sank 3.9 percent on Monday, is down 14 percent in 2009, hit by the deepening global economic downturn as well as fears over the health of the banking system.

    British retailer Marks & Spencer surged 9.3 percent after posting a smaller-than-expected fall in fourth-quarter underlying sales, saying it was turning around its troubled food business and holding market share in clothing.

    Embattled financial group Fortis fell 2.5 percent after posting a mammoth 28 billion euro loss in 2008 due to massive negatives from banking activities stripped out by the Belgian and Dutch states.

    But the news didn’t prevent other banking stocks from rising, with Barclays up 5.3 percent and UBS up 4.1 percent.

  219. Oil Rises Above $49 on Firmer Stocks, Weak Dollar

    Oil rose above $49 a barrel on Tuesday, heading for its largest monthly and quarterly gain since June 2008, gaining a lift from rising stock markets and a weaker dollar. European stocks gained, following a rise in Asian stocks as some investors bet the worst stretch of corporate earnings damage may be over.

    A weak dollar can increase the appeal of oil and commodities to some investors.

    U.S. light, sweet crude [  49.27    0.86  (+1.78%)] rose, having earlier climbed more than $1 to as high as $49.46.
    London Brent crude [ 49.17    1.18  (+2.46%)] rose.

    Worldwide, demand is expected to contract in 2009 for a second consecutive year. Further evidence of weakening demand came from Japan, the world’s third-largest energy consumer, where crude oil imports in February fell 3.3 percent from a year ago. The next major indication on demand will come from U.S. weekly data which will probably show crude stocks rose for a fourth straight week, according to a preliminary Reuters poll.

    Yen Falls as Fiscal Year Ends; Euro Follows Stocks Up

    The yen fell broadly on Tuesday as the Japanese fiscal year came to an end, while the dollar lost ground against the euro as some of the pessimism of the previous day ebbed to drive equities higher.

    Rise in european stocks caused demand to drop back for the dollar and the yen, which are typically used by investors as safe havens during times of financial uncertainty. The yen also retraced a significant part of Monday’s gains as traders said the end of Japan’s financial year generated book-keeping demand for foreign currencies while yen demand from repatriation flows has peaked.

    Focus is now switching to the summit of Group of 20 leaders in London this week, with investors hoping that they may reach agreement on measures to help revive the global economy.

    The dollar [ 98.4    1.16  (+1.19%)    ] rose against the yen, as did the euro [ 131.14    2.79  (+2.17%)    ] .
    Against the dollar, the euro [ 1.333    0.0134  (+1.02%)   ] firmed. Currencies perceived to be higher risk also recovered some of Monday’s losses, with sterling [1.431    0.0046  (+0.32%)   ] and the Australian dollar [ 0.6924    0.0113  (+1.66%)   ] both gaining against their U.S. counterpart.

    The greenback is on course for a gain of more than 8 percent against the yen for the first quarter of 2009, its biggest quarterly rise since the end of 2001, according to Reuters data.

    Analysts believe the euro’s gains may be limited, however, with S&P downgrades on Ireland and Hungary weighing on sentiment towards the single currency, while investors look ahead to Thursday’s European Central Bank rate decision. S&P sovereign ratings downgrades on Ireland and Hungary renewed concerns both about the financial health of countries on the euro zone’s periphery and about western European banks’ hefty exposure to eastern Europe.

    Data on Tuesday showed euro zone inflation plunged to an all-time low of 0.6 percent year-on-year in March, strengthening the case for a deep interest rate cut.

    Gold firm, but dollar could undermine sentiment

    Gold was $917.85/918.75 an ounce at 0915 GMT from $916.30 late in New York on Monday. The precious metal is up more than 4 percent since the end of last year, but down about 9 percent since an 11-month high above $1,000 last month.

    The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stayed unchanged at a record 1,127.44 tons as of March 30, a level first reached on March 29.

    Another negative for gold is the amount of scrap coming into the physical market. "There are some reports out that India has actually become a net exporter of gold. People are saying it is coming out in the form of coins,"  an analyst said.

    Silver was $13.06/13.12 an ounce from $13.03 on Monday, palladium at $212/217 from $213.50 and platinum $1,118/1,128.

    Precious industrial metals were following gold’s lead, but the dire demand outlook is expected to cap prices.

  220. Phil,
    Is there a "second best play" for FAS this AM? My new a/c is not open yet  – I can’t sell naked puts on my current a/c.
    Also, just got back from AZ last night – anecdotal observations- What recession? Took in several White Sox Spring training games in Phoenix/Tucson- full planes; full hotels; busy restaurants; souvinier shops at the ball parks busy and people spending; For what it’s worth.
    Did not execute the trades on BAC last week – update – I have 1000 BAC @ 3.60 with April 7 put @ .90 and sold April 8 call @ .59. ; Should I still roll down on the call?
    I read your post on GLD on the plane. I want to establish a gold position and I am looking for good "low mainenance" play. I have some cash in an IRA. Any advice?

  221. hello gentleman/ladies—life on mars playing (check) market charts on (check) money loaded and ready to go (check)

  222. Looks like the FAS buying continues!  Up nicely premarket. 8%.

  223. good call matt

  224. taste just like cherry cola (C.O.L.A)

  225. Corleone … I’ve created a monster !   LOL.   just kidding.
    I’m gonna wait til the open …

  226. Link to the recent 12 months or so of the DOW simualted as a roller coaster ride on an iPhone w/ airphone app.

  227. cap—it is just a great mix of tunes—-puts me in a good mood

  228. That’s great Kwan!

  229. Pre-Market seems indifferent to a really bad ADP number !