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Monday Market Madness

A little pullback this morning (so far).

Nothing we didn't expect as we went into the weekend on the short side.  We'll be watching oil with great interest as it's time for USO to roll their contracts this week, as I wrote over the weekend, that can give us a nice pullback in the NYMEX front-month contacts (July) and, of course, the worry is that a drop in oil prices will spook the energy sector, who have been leading the rally for the past month, accounting for almost all of the index gains

I think I spoke enough about oil and the market manipulation that got us here last week so this week I'm going to save space by assuming my readers already know this and I won't be annoyed by GS et manipulating the markets as it did give us some really nice shorting opportunities, so I can't really stay mad at them.  We don't care IF a market is rigged, as long as we can figure out how it's rigged and place our bets accordingly…  Speaking of rigging though, CNBC has the peak oil crew on camera this morning to stop the drop in crude and the WSJ even has a Page One article (right below the fold) that says "US Foresees a Thinner Cushion of Coal."

Wow, I'd love to "follow the money" that led to this article getting front page on the day USO is scheduled to roll their contracts!  Check out the wording of this article: "Every year, federal employee George Warholic calculates America's vast coal reserves the same way his predecessors have for decades…"  Ah, so he's a FEDERAL employee so he MUST be incompetent and he calculates it the same way they have for decades, as if that's bad too (WSJ: How do you measure things that are less than 1 foot?  A:  With a ruler.  WSJ:  YOU FOOL!  That's the same way they've been doing it for decades!).  WSJ cites the "emerging ranks of peak coal theorists" who generally ague that much of our coal reserves are not profitably extractable at current prices, which are 1/3 of last year's prices.  Lies, damn lies and statistics as Mark Twain used to say.  Unlike the WSJ, I would draw the conclusion that conservation and alternate energy are the way to go and this justifies ramping up all such programs! 

Another Front-Page story in the that is blown out of proportion is the main headline: "China Squeezes PC Makers – Beijing is Set to Require Web Filter That Would Censor "Harmful" Intenet Sites".  Oh BOO!  China evil, boo… Right?   Actually, if you are one of the 15% of the people who statistically read further than the headline, you will find that this has been told to PC makers for quite some time and the software does not have to be pre-installed, they just need to include a disk so USERS, who are typically much poorer in China than in the US, will be assured that they have some way of protecting their children from pornography, which they consider a growing problem on the Web

The software's Chinese name is "Green Dam-Youth Escort." The word "green" in Chinese is used to describe Web-surfing free from pornography and other illicit content. Green Dam would link PCs with a regularly updated database of banned sites and block access to those addresses, according to an official who tested the product for a government agency. The May 19 Chinese government notice about the requirement says it is aimed at "constructing a green, healthy, and harmonious Internet environment, and preventing harmful information on the Internet from influencing and poisoning young people."  Yes, China being villified for what is pretty much a standard plank of the conservative party is very interesting while the Wall Street Journal turning into a rag paper that splashes sensationalist headlines on page one is very scary!

[Journalists]Speaking of journalists, North Korea put two of ours in jail and, speaking of China, the Hang Seng was only saved by the bell this morning to stop it from hitting the 2.5% mark with a 426-point loss on the day breaking just below (if you were paying attention to our targeting last week) Tuesdays lows!  See, this chart stuff isn't that hard if you pay attention…  The Hang Seng Bank forecast that the Hong Kong economy would contract 5% this year, 60% worse than the 3% decline originally forecast.  "The global economy is not out of the woods, even though the pace of contraction may be easing," Hang Seng Bank analysts said in a note.  Most Asian markets were down around the 2.5% rule except Japan (up 1%) and the Shanghai up 0.5%) who both got a nice boost as the rising dollar rallied the exporters

Energy companies led Asia down as oil fell to $66.75 near the close of Asian trading (now pumped back to $67.50 in the US pre-market (8am).  "I don't see the rally that we've had over the last couple of months as being sustainable," said John Vautrain, energy analyst at consultancy Purvin & Gertz in Singapore. "Inventories are still growing and OPEC production cuts haven't been big enough to offset that," he said. "The major economies are still weak and we are still losing demand."  Oil was pumped back up early in the EU session as RDS.A's CEO Jeroen van der Veer preached to the converted at the Asia Oil and Gas Conference in Kuala Lumpur, where he warned that oil prices would rise in the future without continued investment to meet demand once the global economy recoversand as the world's population grows to a projected 9 billion by 2050.  Of course, this is being taken out of context by the MSM.  "The oil and gas industry cannot supply all this additional demand … this means the next price spike is in the making," he told more than 1,000 delegates at the Conference.

The Baltic Dry Index continued it's steep decline, dropping 7% this morning as actual shipping is not keeping up with all the glowing forecasts we were getting in May.  China did their best to goose the market by reaffirming their commitment to buy $50Bn of IMF bonds, but this was part of a deal that came out of the last G8 meeting, not a new stimulus action. Still it is welcome relief for the many, many third-world nations who are teetering on the verge of default on their debt obligations (so more debt, of course, is the solution!).

I discussed the EU elections in yesterday's post and their markets are holding up better than I expected this morning, up about half a point, as more right-wing parties won seats than left-wingers and business interests are celebrating a rejection of socialism during the financial crisis.  The fact that so many in government were thrown out has been trumped by looking at who got in to replace them.  Even in England, it's Gordon Brown's LABOR party that's suffering and that's actually helping the Pound come off its lows.  Trying to explain the EU Parliament would make the heads of US readers spin in circles as each country has 4+ parties and each of those parties can have a seat on the EU.  Real political choice is something we've heard about in America but we're not ready to try it just yet

Treasury yields are still on the rise this morning as investors want more than verbal assurances from the Fed that a $10,000 10-year Treasury Bond purchased in 2009 will still be able to buy 10 onces of gold in 2019.  So, whether you think the economy is getting better and the market will rise more than 4% a year or whether you believe the economy is collapsing and the Fed will have to print money 'till the cows come home, either way locking up your cash in a 3.5% long-term bond backed ONLY by the US government seems a little silly these days.  We benefitted from a flight to RELATIVE "quality" as global investors looked for a safe place to stash their cash during the crisis but investor confidence could become the undoing of the low interest rate party.  That would be bad for America, who is looking to borrow over $2Tn this year and will owe over $15Tn by the year's end.  1% of $15Tn is $150Bn a year – that's what it will cost the US in interest on debts for every point over 3.5% that they have to pay for 10-year notes.  That then, becomes money we need to borrow the next year – kind of like a consumer when the credit card companies are putting the screws to them!

There's a very good article in the WSJ (they haven't fired ALL the good writers yet, some have only been castrated!) on what it would take to execute a "good" recovery with a great chart showing the relationships between Unemployment, Inflation, GDP, Dollar, Interest, Home Values, Commodies and Stocks.  I suggest giving that a look when you have the time, the chart they have is excellent and this article is why I keep reading the Journal, even while I complain about it. 

Woops, it's 9am and Europe turned down sharply, now testing Wednesday's lows and down about 1%.  It looks like we're heading down -1.25%, which is what I told members in this morning's 6:25 Alert – we like to stay a bit ahead of the markets!  I also told members to watch our 40% levels, of course: Dow 8,413, Nasdaq 1,717, S&P 946, NYSE 6,232, Russell 514, SOX 329 and Transports 1,868, but there are new levels there as well that we'll be keying our moves off this week.

We can expect a wild couple of days for crude and that $67 line will make or break the energy sector today.  I don't see much chance of a quick rotation so the commodity sectors pains will be shared by the broader markets this week, we also have more Treasury auctions and lots of data ahead starting with Wholesale Inventories tomorrow at 10 am.  We'll discuss more about the data tomorrow

Let's be careful out there!

 


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  1. Phil, I’m under water by about .12 on the June 81s DIA putters with an unhedged position much bigger than I am comfortable with.  Friday’s delta has me at near breakeven at current premarket levels though I am expecting at least a pump into the open.  Should I put the order in at breakeven and consider myself lucky that my sutpidity didn’t torch me on this round or do you think we have enough time to sell half now at break even and wait to see if GS and crew don’t flinch at this little blip and rather than just push the buy buy buy button they start doing jumping jacks on it?


  2. LYG- I see it is down in the premarket- news of upgrade from Deutche Bank to Buy from Sell. I am in the buy/write from a couple of weeks ago @ $2.12 net with short Jan $5 puts/calls. Time to add here or is something else going on?


  3. Shocked!  Shocked I tell ya, I could have never expected a run up into the open.


  4. pstas, just heard on bloomberg on the way to work that lyg was only able to place 87% of a dilutive share  placement.


  5. USO back in green already!


  6. Wow, hell of a pump job in the last 20 mins.  Jammed oil back to $68.47 but they can’t get gold back over $950 so I’m not buying it yet.  Oops, there goes gold! 

    I just heard that CC delinquencies are up 11% in May so I’m not going to be rushing to cover here….

    DIA/Smasher – I’m still expecting 8,650 to be tested today, one way or the other but certainly, if you have more than you are comfortable with, lighten up until you get comfortable.  If you have 100 that are down 20%, keep in mind that if you sell 75 when they get back to down 5%, you are left with 25 that are down 20% – it’s a BIG improvement but many people hold on trying to "get even" on the whole thing and that’s a costly mistake sometimes.

    LYG/Pstas - They are down 10% in Europe as an offering they did did not go well.  I’d put a stop on the calls as this is a nice break for you but I wouldn’t rush to buy more – you’ll have enough if they are put to you!

    LOL Smasher – at least you’re getting used to it.

    USO – I don’t know why they couldn’t have just let it stay low for the open, they must be really afraid of faling $37.

    Nice opportunity to short the Dow here.  I still like the Sept $88s at $5.65  and the current $85 puts at .88, looking to DD at .72 for a .80 avg entry, stop or roll at .60, looking for $1.15+


  7. Must be some heavy buying into USO, its stuck at 37.20 while the Dow keeps dropping.


  8. Phil, buyin VLO Jan 10C…..any thoughts b4 i buy?


  9. Oops, that was Sept $88 DIA puts of course!!!


  10. wow! i actually knew what you ment and didn’t even know you left out info. I must be progressing.


  11. Monday without a gap up open must be scary for the bulls.


  12. REITs and Financials not getting smacked — yet ….


  13. VLO/Onc – I don’t think it’s a good plan, timing-wise.  This could be day one of a multi-day sell-off and it’s not like the Jan calls are moving so fast you need to time a bottom perfectly so wait until you are sure you see one.  Don’t forget USO is rolling today and maybe over a few days – that and a poor inventory report could put us back to $65 oil easily and VLO does tend to react to that. 

    XLF holding $12 so all is relatively well.  QQQQs need to hold $36.  AAPL below $140 would be a bad sign.

    USO volume light and whole market volume is light so meaningless move on the whole so far.

    VIX up 5%, very unhappy with down move already.

    Broad sell-off, very few greens to be found.

    LOL Morx – Congrats!  That’s that scary context we were talking about on Friday…


  14. Phil
    HOV- I am in a buy / write with 1000 HOV (June $250 p/c’s at net $ 1.29. If I am correct, rolling these to the July $2.50′s would make sense here. Comment?


  15. what uso would you add here


  16. Anyone have any ideas why the DIA 81 Puts didn’t budge on the bid/ask at around .28/.30 to .29/.31 on the Dows move from -80 to -120.  They are just stuck.


  17. Nice to see some sanity gripping the markets.  I was beginning to miss the recession…


  18. "DIA 81 Puts didn’t budge "
    What month was that Smasher?


  19. just bought some xom july 70 puts. for 1.55.


  20. Smasher, not sure that oil and the dow can be expected to move always the same way? If you can see CLN9 (the front month oil future) or CLQ9 that should help show what is moving USO…..


  21. Phil…on Friday you said "
    Someone is taking a real beating trying to support oil. Buys are coming in 2 and 3 cents over the last sale and they immeditatly get sold into so they are making terrible progress for a lot of money. BUT it is progress so be careful!"
    What do you watch to see bids coming in 2 and 3 centns over the last sale? And then how do you identify unusual selling to meet those buy orders? Thanks, Brian.


  22. 8,650 baby 1.25% on the nose!  8,531 then is the 2.5% rule per our chart, let’s watch out for any of those turning red, probably Transports first if we go there.

    Don’t forget oil hasn’t broken yet.  That’s keeping OIH at the 2.5% (nat gas doing worse than oil) rule and XLE is down just 1.65% but look out below if oil breaks below $67.  XOM down just .66% (666 I’m sure) and our other Dow component, CVX, is down just 0.5% – lots of ground to lose if they turn.

    QID play is kickin’ ass.

    HOV/Pstas – Well you have .42 in premium left to work off that expires in 10 days (.04 per day) and you’d just be rolling to .83 that expires in 40 days (.02 per day) so a little early to do the roll, especially as you are right on target.

    USO/Spuhr – I like the July $35 puts at $1.25 best at the moment as you can sell June $36 puts for .70 so I’d hope to cover for $1+ but would settle for covering at .50 on the way up with tight stops.  That’s based on my theory that ANY jump in USO betwen now and Wednesday’s inventory report is fake.

    DIA/Smasher – They are too far out of the money to move much with just 10 day’s left.  They won’t move more than about .10 until the Dow drops another 100.  So far, 8,650 held very nicely as did 930 on the S&P and 6,000 on the NYSE but that’s what we expect to happen on the way down.  Still no volume….

    USO with a huge .25 jump in 10 mins, back to $37.50, where they seem to run into trouble so we can clal that the top of the channel hopefully.  For oil futures, that’s $68.50 – same old spot as last week.  Gold is still $946 and an atack on the dollar from the Euro just failed but the Pound is holding $1.59 (Euro now $1.38).  The dollar is coming back towards 99 Yen and there’s a lot of people in Japan pushing for that so if the Pound can’t hang on, the dollar bears are screwed.

    Watching/Bri – I’m watching the direct futures bidding on /CL contracts.  I can see how many open bids at different prices and, of course, over time you get used to what’s "normal" and what’s not.

    Oops, there we go already – failed our second test at 8,650 et al…


  23. 135000 new teacher jobs, some job creation.  Public sector and government job creation is Obama’a plan.  Create more jobs where there are unions and high benefit cost that the private sector will eventually have to pay.


  24. Phil: re SCO – in your post over the weekend you said alot about the plays on SCO? are you getting in it yourself?
    You used the phrase, "You can play either one of those off the July $…"  Please elaborate on "play off of" for me.
    Thanks


  25. Shorted appl on Thurdays, bought Jun 130 last week, there looks to be a bearish rising wedge on the 60 min that was broken to the downside today. The WWDC opens today, and seems to me that speculators have Steve Jobs unveiling a new iPhone already priced in, so even if it is announced, which I don’t expect, it could be a case of sell the news. just a thought. Proviso, I have no idea what I’m doing, lol


  26. Perhaps what’s allowing the market to correct is that now that JPM, GS and others have made back enough to repay their loans, there is less need to push the matket higher.  LOL.


  27. XTO July $40 puts for $2.35, selling June $40 puts for $1 IF it heads the wrong way (now $1.15).


  28. "I’m watching the direct futures bidding on /CL contracts.  I can see how many open bids at different prices and, of course, over time you get used to what’s "normal" and what’s not."
    Thx, Phil.  What platform do u use to watch that?


  29. USO fund did previously announce they would start to roll over multiple days rather than just one day. Maybe their roll began friday, and fridays support that you saw was people trying to minimise the impact of this roll?


  30. I love these multi-minute selloffs. :)


  31. looking for some shorts now … WFC on my radar about here.


  32. Union Jobs/Steve – good plan!

    SCO/Morx – Yes, I do like all those plays but I’m waiting to see what they do with USO today.  I’m already very short USO so I’ll probably be looking to play with these AFTER I’m done with my current round.

    Dollar knocked down half a point since last I looked, spiking commodities back up and rallying stocks.  It’s amazing!

    AAPL/Jbo – Sell on the news (the actual event) is a good general strategy.  I wouldn’t do it with AAPL as they could unveil the I-Kidney or something but whenever there’s a big anticipation run-up (see PALM), then shorting the event is the way to go statistically.

    Financails doing well now, up 0.5%.  THAT news (of TARP repayments) is not to be sold on.

    Platfotm/Bri – TOS.

    USO/Steve – Hard to say but I’m just watching the total open contracts on NYMEX, which were about 330K on Friday and those have to go down to 40K two weeks from today so NYMEX front-month selling isn’t "done" until they get ahead of themselves in reducing contracts more than the 30K per day they NEED to.

    Amazingly, REITs are still getting bought, V, MA and AXP are flying off the lows….  That makes COF a fun speculative upside play, selling naked July $21 puts for $1.50


  33. V and MA made a quick run up.    3 of 4 horsemen changed couse but AAPL still flat.


  34. Hello Phil,
    I wonder if it’s really worth playing the USO short game and fighting against GS
    After seeing today action at open.


  35. Rates shooting up yet again!  Huge supply of new bonds driving everything up, they are quesitoning whether the Fed has enough money to hold up this auction already (6 months to go!).  Pound jammed up to just under $1.60 now, Euro still can’t get out of it’s own way at $1.38.8 and the Dollar/Yen is 98.62.  Gold is going down again, fell below $949 so nice try pump boys but no cigar on that round. 


  36. USO/Desi – I’m still on board with initiating shorts at $68.50 oil.  You need to look at opportunities to get in at the top of a channel as…. opportunities.  Again, it goes back to what I keep saying – If you do not have both the conviction to stick with your position and a plan for how you are going to do that, then these oil trades will chew you up and spit you out.  They flush all stops before making a big move in either direction and you have to BELIEVE that the resources of GS et al are not infinite and that they are not specifically out to get you and you can time it right if you stay on your toes.

    We are very much like ants on a football field – it is very difficult, from our perspective, to figure out what’s going on in the game.  Every once in a while, a lot of really big guys run past us one way or the other and sometimes we get crushed and sometimes we can grab on and catch a ride in the right direction.  It takes a long time to figure out the rhythm of the thing but, once you do – you can make great advances standing on the toes of giants…

    Ooh, "9 banks may return up to $50Bn of TARP money!"  That’s what people are all excited about at the moment (and excited meaning we shaved half our losses).


  37. Phil do you like FWLT as a quick trade or a build a position under 27?


  38. Another fresh round of speculation on OGXI (OncoGenex).  They have a prostate cancer treatment (think of DNDN and Cougar Biosciences – now JNJ).  Their trmt extends life 6 or so months, and is less invasive than DNDN (IV infusion).  Not sure where to put this, but the volitility is there.  They have a market cap of 135M and need to partner to continue on.  Options are thin to nil, and they have shot up (literally)  on the DNDN and Cougar news FWIW.


  39. FWLT/B1 – I don’t like them long at all but I never liked them for one minute in ’07 as they went from $30 to $90 so don’t ask me on that one!  If you want to get in on them, perhaps aim for a pullback below $25 and then sell puts naked to initiate something.  Maybe the July $23 puts, now .75 for $1 + as you can roll them to 2x the $21 puts and THAT’s a price I wouldn’t mind owning them at!

    BUCY getting stabbed, shot, raped and beaten and no one is helping them!  Where’s the coal rally if they get murdered?

    Volume – Friday was 200M on the Dow with 400M "normal" and today we’re only at 62M so far – super low. 

    CNBC trying to make something out of the China web-software issue…


  40. 5% Rule Observation – Note that this Dow drop started at 8,800 on Friday afternoon and we just bottomed out at 8,640, so call it 150 non-spike points to our resistance line at 8,650.  That means we EXPECT a 20% bounce to 8,680, especailly as it was the 1.25% rule.  Anything less than 8,680 remains a bearish trend, increasing the probability of another 1.25% drop. 

    Oil, spiked to $70.25 and fell back to $67.50 this monrnign (throwing out spikes), that’s $2.75 so 20% is .55 and that makes $68.05 our critical line on oil to watch.  If they hold it (and they did all morning) then they can still turn back up. 

    On the whole, I still think we get a proper pullback here on the whole market. 

    Gold back below $950 and never went far above it, Oil testing my mark soon…


  41. I hold some USO June $35 puts that cost $1.30 and am considering a DD on the USO June $37 put at $1.05.  Wold it be wiser to go out to the July $37 at $2.05 or do you have another preference?


  42. Careful on your COF call.. I know you probably meant short term.  But long term, they’ve got some serious headwinds.  They, more then any other cc company, will be hurt the most by the new rules on ccs.
     
    http://www.washingtonpost.com/wp-dyn/content/article/2009/06/07/AR2009060702503.html
     
    As for the banks repaying TARP.  Big deal.  TARP was only the 3rd thing ‘given’ to the banks.  And they only one that cost them any money or came with restrictions.  They AREN"T going to give up the gov’t gaurantee of their cdo’s and they aren’t giving up the guarantees by the FDIC on the first round of equity they sold (no wonder it was so easy for them to do it).  They have raised very little money on their own without the gov’ts assistance.  They are truly ungrateful.  And I only wish the gov’t would tell them fo f. off when they come back again for more money down the road.  But of course, the gov’t will always say they are too big to fail so their is very little the gov’t can do.  Except to say NO to TARP repayments now.  But they don’t have the balls to do it.
     
    http://www.washingtonpost.com/wp-dyn/content/article/2009/06/07/AR2009060702551.html?hpid=topnews
     
    However, once the money is repaid by GS and JPM, I think we might see some more downside to the market then we have so far.


  43. Phil – I’m actually a bit puzzled for once and could use a suggestion about an IBN calendar spread I’m in for .70. I sold the Jun 25 puts and own the Jul 25 puts. The putter is obviously no problem but I’m not sure what to do about my own puts. I think I can try selling the Jul 26 puts for .90 if I think it’s unlikely to break that low (it hasn’t broke 27 since it gapped up after India’s elections), but I’m not sure.


  44. Not feeling good enough to play USO puts (Jul), but took a stab at some DTO (straight up).


  45. phil, thoughts on axp here?


  46. Pharmboy
    Anyone out there using inkjet technology to produce inhalers for medicine.  We were working on that technology in HP over  10 years ago but axed it all due to FDA concerns and timeframe for approval.  You can do picoliter drops. aresol.


  47. so you hook your inhaler to your printer?


  48. steve, probably the only way you can save lexmark.


  49. Steve – not that I know of.  GSK, Roche are the biggies in that arena.  It really comes down to drug product phyiscal properites and where the drug needs to disperse to (how far down the lungs) for the particular disease.  Most, if not all pharma prefer oral meds due to compliance, and unless it is compelling, inhalers are a last resort.


  50. USO/Sarahd – I would roll up to the June $37 puts for .60 ($1.65 net) and DD at $1.05 ($1.35 net) so a very small drop in USO can let you get 1/2 out even. If it breaks over $37.50, you can use that line as a stop for selling the $38 puts, now $1.65 to cover.  That would be all of your money back and you can then decide if you should use that money to roll to July, where the $37 puts are currently $2.

    COF/Matt – Yes short-term.  I doubt they’ll fall all the way to $20 from $25 Friday without a bit of a fight and that’s already down from $30 so I think a lot of the bad news is baked in here.  As to the TARP repayment – I’m struggling to see how taking $50Bn of liquidity OUT of the system when loans still aren’t being made is going to help anyone other than the banks who are getting away from

    IBN/KWan – I’d let the putter roll the putter up to the $28 puts at .65 and spend .90 to roll up to the July $28 puts or you can just stand pat and wait for a pullback – which seems pretty inevitable at this point.   The idea of a spread like that (which I generally don’t like as you have too little time to adjust) is to be one monty bullish, 2 month bearish – it’s quite the market timing call to make.

    AXP/Jo – I’d stay away for a couple of days while we let that 11% increase in late payments story run it’s course.

    Inhalers/Steve – Isn’t that pretty much what the MDT thing does?  If I was that guy who patented it, I would have gotten $1 off every cartridge sold – that’s gotta be Billions if this catches on…


  51. Is Mr Sticky going to come out to play this afternoon?  Are we going down on decreasing volume today or am I seeing it wrong.  


  52. Phil,
    Could you update your thoughts on ELN, por favor?


  53. Volume/Steve – Since I mentioned it an hour ago at 62M, we’re now at 78M so totally down on much lower volume this hour.  I think they are hoping Obama will save the markets by doing a victory dance on the jobs but he’s also going to talk about the need to create a lot more jobs so could go either way.  Technical-wise though, we’re going down.

    ELN/Maxt – I love them but not so much at $8.50 as I did at $6.  I’d wait for a pullback, Ireand has big money troubles, may hurt them.

    Obama not doing a happy dance over jobs – very responsible…  Being used as yet anohter opportunity to spike oil up to $68.50 ($37.50 USO) so don’t say you didn’t have 10 chances to short it today.


  54. The very second I put a trailing stop on my SPY Puts to protect profits the SPY jumps the requisite amount in one go ! thieves.


  55. NYMEX contracts – 300,939 Jul (down from 344,711) and 147,567 Aug (up from 139,388).  THEY have started rolling last Fri.


  56. Stops/DB – When I’m around to watch, I don’t use hard stops although one good trick is to put a hard stop on 1 contract, just to give you an alert (TOS makes a noise) when it fills so you know you need to look at the position closely and make a decision.

    Wow – Najarian just took a sideswipe at oil in context of Euro looking poised to go much lower.  That’s interesting…

    Of course Joe jumps right in to defend oil saying "don’t sell oil here" – mainly because Goldman isn’t done selling oil.  When GS is cashed out and pays back the TARP – THEN you can sell your oil…


  57. Oil/Fab – Do you have the deltas on Sept and Oct?


  58. CNBC Hammering the China blocking software issue ……


  59. Just curious, why do users of TOS like it so much.  It’s a relatively new platform that seems to have gained popularity fast.  Why?  Why do you use it over other platforms?  TIA.


  60. FTSE finihsed down 0.75% at Thursday’s open.   DAX finished just over the 5,000 market, down 1.4% – that’s not good.  CAC finished down 1.5% at last week’s low (Weds).

    Wed low on the Dow was 8,600 but we’re hugging that 8,650 line at the moment.   S&P low line Wed was 925, Nas 1,810, NYSE 5,985 (bad if they blow 6,000, where they are now) and RUT 518 so if we break down, we’ll see RUT lead below 520, which they haven’t crossed yet and NYSE below 6,000.

    SOX were miles down last week at 250 but they are also mile behind the group (the fat kid stuck in the fence from the weekend example) so they don’t have to move, it’s about other indexes moving towards them and Wednesday’s HIGH for the SOX was 270, which is pretty much where they are now.  They need to get "unstuck" to release the other indexes.

    USO topped out at $38 on Weds, also stuck in the mud here and I don’t think the other indexes CAN move on UNLESS oil pulls back and lets them move on without it. 

    Rick just read off about $100Bn of notes that need to be sold this week.  Apparently the 3-month auction went OK but that is totally meaningless.  Every day of the week, they auction longer and longer notes.

    Damn, oil is flying back to $68.85 now.  Gold isn’t moving but the Pound just broke $1.60, up 1.5% from this morning.  Euro flat at $1.39 (up about 0.75%) and the Yen backed off to 98.50.

    This is interesting – someone is facilitating the rollover on the NYMEX!  The July contracts are flat but the Aug contracts, that USO needs to roll to, are down 0.45.  Maybe someone was way out in front on Aug and is now cashing out to USO as they buy in but who is supporting July when Aug is just +.45?  Sept is $69.80, .90 more than Aug so I’m tempted to take an Aug contract at this point!  8-)

    Still looking for a proper sell-off but this may be a multi-day event so staying on the sidelines mainly (as is usual on a Monday) and waiting patiently to see what’s real…


  61. Phil – QID – Any update on the QID trade ?  Would you enter here at the original Jan 34/ Jul 33, or would you take Jan 35/Jul34 ? Thx.


  62. brianma
    What platform do you use?


  63. brian / TOS…my personal experience, i once emailed customer support a random non-emergency tech question at 6 am on a saturday..someone replied within 45 minutes and chatted with me throughout the day about it…i was asking when they would have the mobile stuff ready for the iphone or something…
     
    with ameritrade…i had an emergency expiration day, getting 500 FSLR getting put to me…was told i had to wait for the options guy to come into the office at 10:30 or 11…


  64. Did I miss news on AAPL or just the pre conference sell off?


  65. "brianma
    What platform do you use?"
    Tradestation mainly because of it’s research flexibility mainly but it does have limitations.


  66. TOS/Bri – I think because TOS is new, we’ve all come to it AFTER using something else so we all have basis for comparison, which makes us appreciate it more.  It’s very well designed with tons of features (that I never use) that are there if you want them but the code is very neat and doesn’t eat up too much CPU time, even though they run dozens of charts at a time.  Ordering is easy and execution is very good and, if you go to one of their seminars – they’ll show you a dozen really cool tricks that are just a click away.  All in all, I’m very happy with them, I could never go back to OXPS…

    QID/Pstas – Kind of chasing now but I do still like the Jans (not too much movement).  There should be a dip and then a proper rally but, since you can sell 1/2 the July $34s for $2 against Jan $34s at $5.50, that’s a pretty good way to start.  You only lose .30 per $1 down on the Jans so the 1/2 sale pays for almost 2 full rolls.

    TOS – Oh yes, great customer service too!

    AAPL/Steve – Just the rumor-driven sell-off.  This seems to be about low-cost IPhone cannibalizing revenues although that trick only spooks people who don’t understand the revenue model (which is most retail buyers).


  67. Volume:  1:30 and 89M, not even 1/2 of a slow day’s volume yet.


  68.  ToS – someone said about a year ago it’s like having a Ferrari delivered to you in six or seven separate boxes. Compare that to having one of GM’s cars delivered to you and that pretty much sums it up…


  69.  Brian / TOS – I’m new to TOS (within last two weeks) after leaving TD Ameritrade.  I opened a "test" account at TOS (& recommend anyone to do the same), to see what it was all about…within a week’s time, I transferred my other accounts there.  Couldn’t be more pleased.  Of special interest to me was the execution…several times within the week, I placed identical orders at TDA & TOS…TDA orders went unfilled even when b/a spread went my way several times throughout the course of a day & TOS orders filled on the first round…Also, as others I’m sure would concur, the customer service is beyond extraordinary…immediate response to any question/problem/etc.


  70. Anyone try to get TOS to match their previous brokers commission?  I’m contemplating a switch from TradeKing because their execution seems to be pretty sluggish and their real time software isn’t very good.  But, they have some pretty low commissions compared to TOS though it might not be a deal breaker for me compared to orders not filling when and where I want them to.


  71. Anyone try to get TOS to match their previous brokers commission?  I’m contemplating a switch from TradeKing because their execution seems to be pretty sluggish and their real time software isn’t very good.  But, they have some pretty low commissions compared to TOS though it might not be a deal breaker for me compared to orders not filling when and where I want them to.


  72. Blackrock with $2.8Tn under management - There’s someone who came out a big winner in this financial crisis!

    Nice commercial on CNBC – Silver is good to buy because it costs less per ounce than gold!  Duhhhh, okay….

    If anyone it thinking of switching to TOS, let me know as I’m trying to negotiate a better group rate and it will give us leverage.  Thanks.


  73. re tos – i just signed up but havn’t funded. It might encourage me to do so.


  74. phil,
    Before I forget, wanted to reiterate someone else’s request about 5% rule since I’m new to the service.  Thanks.


  75. Looks like Phil hit his buy button, all my charts are moving up.  Phil, your just like GS manipulating the market.


  76. Phil,
    I’ve got several accounts at E*Trade, considering moving one or more to TOS based on comments from your group.  Would be more interested if commission structure were closer to the $0.75 per contract…


  77. Looks like Phil hit his buy button, all my charts are moving up.  Phil, your just like GS manipulating the market.


  78. Gold miners making a massive comeback even though gold’s only at $952.  Could be short covering because they held $950 as it’s been a big drop since the beginning of the month for the secor.

    5% rule/Chuaeu – Someoene had a ready link a week or so ago, sadly I don’t but I will look.

    Buy button/Steve – The only button I have at the moment is the sell button on oil.  De Nile is not just a river in Egypt for these guys who are relentlessly puming up oil but generally in a tradeable .30 channel that’s now going to test the $60.50 downside (back to $37.50 on USO).

    TOS – I’m going to put up a members only post later for people to keep all TOS interest in one place, then I will present to Scott next week.


  79. Phil, I would move at least one account from OXPS to TOS to try out the platform as long as the commissions were no higher.  Thanks.


  80. Having problems refreshing Phil’s site.  Really slow.  like a minute or more at times.  Shut down other programs and still slow. Reopened it and still slow.  Also saw a couple of double post maybe indicating slowness too.  Anyone else having this problem?   I think we had similiar problem on Friday.


  81. Phil, will you send an alert when you post the TOS post, please?


  82. SSteve – working fine for me right now


  83. SSteve, I noticed slowness as well. When the response wasn’t instant I just moved to another window and looked back later, so not sure exactly how slow but definitely slower than normal.


  84. singa stv – me. but only sometimes. Phils just getting too popular.


  85. Slow – I’m sending note to Matt.

    Alert/Fast – Good idea!


  86. Here goes TLT going below $90 again and freezing the financials. If Oil tanks (no pun intended) then we really got something.


  87. Woo-hoo!  Look at oil go!


  88. what about us guys that already have TOS can we get the new better group rate ?


  89. Thx to all who repllied about TOS.  I can see there is a lot of enthusiasm about this product and it’s encouraged me to take a close look at it.  However the enthusiasm was  a little diminished when I just went out to their site and saw that TOS had been acquired by TDAmeritrade in Jan.  I traded with TDA for awhile but left them because their servers went down way to often when the market got busy.  To me, if a company can’t provide seemless access during  busy periods they aren’t worth doing business with because that’s when trading opportunities abound.  While Tradestation has its limitations I will say they have done a reasonably good job at keeping their trade servers open during periods of high volatility.  The fact that TOS will now be run by TDA makes me question it as a truly alternative platform and it’s stability and quality moving forward beyond 6 mos (once the aqusition is complete).


  90. Phil, TNK flatlining at 11.9X on low volume, do you 11.50 might be an entry point this week?


  91. Possible wedge breakdown on USO


  92. Pretty dull day … want to see better sell off in oil, financials and real estate.
    They keep trying to bring out the stick.
     
    I think we are heading lower.


  93. TOS/Micro – Yes, I think we can show them how many we are and get a concession hopefully.

    NYMEX pump crew Jammed it back up .50 in 5 mins as soon as USO (assumably) stopped dumping.  The question is – how much is left for them to get rid of?

    TD/Bri – I was really worried too but so far no bad changes that I’ve seen other than they’ve been less generous with rates.

    TNK/B1 – If the market doesn’t sell off too far.  Gotta watch the Baltic Index too.

    Cramer jumping on my BBY/TV theory.


  94. USO needs to break decisively below 37.28 to get more downside IMO.


  95. phil – count me in on TOS – I use tradestation which is a good platform and very inexpensive $1 per contract)…
    but TOS is more robust desktop, PLUS you can use it in HTML version in most browsers – MAC or Windows  (whereas TS you must use desktop version on Windows only)…Also, TS cust service is spotty


  96. Phil
    Do you subscribe to Oilintel.  15/mo    I think it has all the contracts and changes etc.
    http://www.oilintel.com/OilHome.cfm?id=1


  97. Lower/Cap – I agree, that didn’t relieve any pressure so far. 

    Keep in mind that 20% retrace of 1.25% drop is 1%, anything below 1% indicates likely follow-through to the downside tomorrow and all our indexes are skating around there now with the RUT performing the worst, down 1.66%.  XLF is saving the indexes, up 0.16%.

    Volume still dead at 102M, 1/4 of normal.  Could get ugly if sellers show up in the last hour.  Sellers probably waiting to see if Mr Stick will come take their shares away at 3pm but if we are at the top of the cycle, then they’ll be disappointed if he doesn’t have enough cash to cover everyone.  That makes people get nervous they will be stuck in a trade while the market sells off so keep an eye out for sudden dumping of high flyers as an early bad sign.

    Woopie, a new IPhone 3Gs – AAPL has to do better than that.

    Oilinte/Steve – No, I used to use OPIS but I gave them up as you don’t learn much from staring at it all day…  I might try Oilintel, all I want is a simple page that’s updated live.


  98. They’ve had a 2.5 hour "rally"; now lets sell into close….


  99.  Phil the old ones are $99 now (3G)


  100. "but TOS is more robust desktop""
     
    bcfla — how is TOS more robust then TS?  Interested in your observations.  Thx.


  101. Like clockwork on the stick! 

    Volume 108 now – we’ll have to see how anxious the sellers are but 25 points in less than 10 mins so far, not bad….

    Still haven’t really popped over a 5% rule bounce on most indexes though and failure to stick that is NOT good.

    Sharon is spinning that oil story today…


  102. phil
    count me in on the tOS too.



  103. lol I guess we will find out soon if that was the stick, or the people anticipating the stick….


  104. WTF ?  FU STick !!


  105. Brianma – will asssume you have not used TS, so will just go into a few of the major benefits…Also, I am only in the "playing around stage with TOS now and by no means an expert…  I have downloaded the platform and have paper traded for a while before making a final switch: 
    1. In order to customize some of the screens you may want to use, they this code called easy language, which is a great tool, but not as easy as most of the drag/drop features in TOS
    2.  TOS has made their platforms available and quite functional on any browser, in addition to their desktop version…This is not the case with TS…imagine if you want to analyze a trade and then  execute a trade (s)…your only option with TS is to wait until you can get to a desktop (with the software loaded on it)…you cannot just jump onto any computer…Of course you can call TS directly, but think about a fast moving market and then you have to stop and then call the 800#, but you do not get to look at what you are doing.
    3. The charting tools on TOS allow much more drag/drop functionality with various staregies and technicals..Certainly, TS is just a right click away, but dragging is alittle easier…
    .Also, you can detach a chart and move it to another monitor with TOS and therefore use muliple charts more easily..Cannot do this in TS.
    **There are many of these little things and I think that a major difference with Tradestation was that it was built for the active trader who wants complete customization of any criteria…the feeling I get with TOS is more user friendly and seems to be a better software design.
    ***also, froma cust service perspective, TOS is nicer and also has a chat feature right in the platform if you have questions
    Hope this is useful, and  I know there are others on the board who may use TS too.


  106. 2-Year up .50 since last week?!?  That is crazy!  10-year 3.9%.   If that gap closes it’s like the "crack spread" for banks and cuts deeply into their earnings.  That’s not at all reflected in today’s action.

    Tomorrow morning is Wholesale Inventories, were down 1.6% in March, expected down 1% for April – not a huge market mover.  

    ZQK (retail) has earnings tonight and FCEL.  Tomorrow is PBY (should be good with more people sticking with older cars) and MOV (probably bad) and TLB (another interesting retailer) in the morning and NDN, RENT, SHFL, SINA, NCTY and NCS at night.  Really nothing likely to shake the markets.

    On the whole, no reason to get out of DIA puts, same play as this morning.  DIA $85 puts topped out at $1.05 and just came in at our DD point at .72 and should be cheaper than that soon,  but keep in mind that that makes .96 a 20% gain and we should be thrilled to get it.

    For the close, they have accomplished their goal if the Dow stays over 8,700, this stick save is one for the books if they keep it up with a 100 point move off the bottom so far and they just blew past 8,750 so I guess we’re going green!


  107. Score that a quick 100 pts on the Dow, $1 + on SPG; $1.50 on AAPL, etc etc.


  108. THis is becoming so routine it’s comical, really.  It doesn’t matter how weak internals are, how weak leading stocks are, how long the market has rallied into the close, nothing matters when you’ve got billions to get the market where you want it.  LOL.  This didn’t even happen when the markets were going down. 


  109. GS, JPM, MS own this market – Who has deep enough pockets (with an unlimited line from the FED) to overrule them?


  110. This is being attributed to someone saying "recession may end this summer".
     
    Damn, I thought they said it already ended ….
    What BS


  111.  DIA/Phil
    I know you gave a recommendation this morning on exiting the DIA $81 puts, but are you still holding them?  For those of us that still do, what is your suggestion?  Hold them and try to sell tomorrow?


  112. I think its theft actually and the SEC (or someone) should be investigating.


  113. well, the DIA puts looked nice for a little while at least!!!


  114.  Phil – still in the SPY $81s from last week @ $0.45.  DD? Get out? Adjustment suggestions?  Thanks.


  115. All you have to do in this market is wait an hour, buy anything, then sell into the close and wait for the drop the next day.


  116. Paul Krugman ???


  117. Cap
    That’s like someone in the corner yelling about orange juice futures.


  118. Wow, what a healthy market.  Anemic volume all day long until end of day when they just squeeze whoever is betting the other way.  It takes very little to put on the hurt by these big whales.  Absolutely pathetic.


  119. oh no, the stick broke . . .


  120. Treasury prices are doing what we’d normally expect today: going down as the market goes up. But now we’re in an interesting situation where when they do this it may be putting the brakes on the rallies (although don’t tell that to bank or RE stocks at the moment).
     
    My poor LEAPs are so confused by all of this. I have calls that are way behind with their stock up, puts that are ahead with their stock up.


  121. Oh, still no volume at 122M out of 400M! 

    BIDU on fire, up to $303 and the July $250 puts are $5 and were $6.50 this morning and $10 last week.  The current $260 puts can be solf for $1.50 so a nice spread but an $8.50 margin requirement.

    Holy Cow!  What was I thinking making bearish bets!  6M more shares traded on the Dow and they got another 40 points out if it!  This is crazy….

    I guess everything is great, oil heading back to $69 now, back to the high of the day while the Transports rally because nobody really wants cheap fuel (oh by the way, due to high gas prices, airline loss estimates were doubled today from $2.5Bn to $5Bn for the year).

    DIA/Jofori – In above comment I’m saying DD at the top and see what happens in the morning but it’s a gut call as the charts are now way against us. 

    SPY/SSdirk – Well you are way late for stopping out.  It’s kind of a dead trade at this point, you would have to be beyond lucky to get much back on those.  At this point you are best off getting .05 back and waiting for a better opportunity to short.  When you take an out-of-the-money put like that, it’s  a real short-term speculation, they’re never meant to be held over a weekend and you must adjust on a 20% loss.

    Well they really do know how to make the markets look like a joke don’t they?  Check out a 5-day 15-minute chart – just 2 up sticks to go 150 points after being down 100 almost all day. 

    Volume 140M now.  People aren’t getting out so bears beware, we’re back to possibly breaking our 40% levels to the upside tomorrow.

    VIX dropped 5% since this morning – that’s amazing!

    Oh no, don’t let the rally make the dollar too strong or commodities will go back down – how confusing…


  122. Bought some BAC, IYR, USO, and DIA puts on this pop, that should cement a nice rally for tomorrow!


  123. It’s pretty sad that I find solace in having sold out at not substantial but not fun losses oh the 81 putters before lunch at .28 and .30 and feel great seeing what they trade at after this manipulation.
    Are we going to have to start adjusting the strategies specifically to daily volume?  It seems to be pretty predictable now if the volume is super thin all day that we get a late day pump.  Should we just sit all day long until around 1pm before start trying to make moves?


  124. We’ve got to be the butt of jokes aroundn the world…I can see it now…hey what do you get when you cross a corrupt/broke financial system with an overly idealistic US administration?  The US markets!!  A-ha!


  125. check out the one day chart for the swiss index, almost identical!


  126.  Smasher/DIA
    …even sadder if you’re still holding them…be glad you sold when you did.  I think the high for the day was $.31 so your timing was pretty good


  127. Odds are we either gap up or down tomorrow. 


  128. This is whacked.
     
    Seriously though, treasuries got significantly cheaper on that afternoon rally — notice how banks and RE fell back as they did so. We *might* have a little bull chain going right now…..


  129. Supreme Court – delays Chrysler sale !  
     
    Poor Obama, not above the rule of law ?


  130. "one day chart for the swiss index"
    Where do you get live swiss index data, maxt1234?


  131. brianma
    I don’t have it live, but they’re closed already. check out bloomberg.


  132. Singapore Steve, I agree. I was buying front-month calls and puts into the close to sell on the open tomorrow. I also think it’s a good time to be long straddles (short-term).


  133. I feel like I’ve been mugged. The US market is just corrupt – no other word for it.


  134. Despite all of that, the QIDs did stay green and we do have a pivot up on the dailies — a pivot that took out the lows of the previous two days.  Could be the start of somethin’ 


  135. Should’ve recognized that violent spike upwards for what it was.  Just a squeeze.   You know they’ve got your number when you sell $.04 from the low of the day.  I hope they’re happy with my $105.  Problem is, everyday it’s another $105!


  136. Somebody sticking it to Mr. Stick into the close but what an impressive recovery nonetheless. 

    Thanks Mr. M!   8-)

    Late moves/Smasher – I must say that we probably should make a 2:30 trade every day that we’re down on a DIA call as we get saved 3 out of 4 times for big moves.  I think anytime we’re down 50 points or more someone should remind me!  It’s my fault because it worked on Thursday but I didn’t want to do it Friday and then we forgot about it today, when it would have been a home run.

    Jokes/Bri – No more so than China and that market went up 500% on manipulated BS closes like that, draggin in more and more foreign and domestic money until it crashed from 588 to 172, wiping out the life savings of 20% of the population as well as killing many foreign investors. 

    Chrysler/Cap – they will end up liquidated and that’s probably not good.

    Check out that close on the Dow, up 1.36 for the day and up to 189M at the close so 30% of the Day’s volume was dumped into Mr Stick in the last 10 minutes, allowing all the pumpers to dump back into the Fed funded buyers where, ultimately, we end up taking all losses.  So don’t worry about flipping bullish in this market – You already are!

    All I know is oil topped out over $70 on Friday and couldn’t make $69 today.  USO topped out at $38.50 on Friday and finished around $37.50 today.  If they both lose $1 a day for the next 9 sessions, I can live with that…


  137. Phil or anyone who speaks "Phil"  fluently:
    Could you explain in some detail your comments to Sarahd at  12:10.  This is a fairly complicated although common here and so if I can understand this one, maybe I won’t have to ask in the future.
    Situation is this: She has bought a USO June 35 put for $1.30.  Unfortunately, USO has gone up.  What should she do?
         "I would roll up to the June $37 puts for .60 ($1.65 net)"
    This I think I understand.  Sell the 35 put and buy the 37 put.  Difference being $0.60.  o.k., but what does $1.65 net mean?  Isn’t it a net of $1.90 ($1.30 + 60)?
         "and DD at $1.05 ($1.35 net)"
    No idea what this means.  DD I guess is double down, which I take to mean double the amount of her position.  But what?  37 Put?  What is the $1.05? And the $1.35 net?
         "so a very small drop in USO can let you get 1/2 out even."
    As this pertains to the previous, don’t know what this mean either.  Especially "get 1/2 out even"
          "If it breaks over $37.50, you can use that line as a stop for selling the $38 puts, now $1.65 to cover.  That would be  
          all of your money back and you can then decide if you should use that money to roll to July, where the $37 puts are
         currently $2"
    Well I sort of get this, if it goes higher (which it did) sell the (June?) $38 puts (how many? Now 2x?). Sure would be nice to see all the math broken down on this  just one time.
    I really consider myself a pretty sharp guy (actually really sharp <g>), but not understanding what’s language is being spoken is driving me crazy.
    Thanks for any help.


  138. "Jokes/Bri – No more so than China "
    Do we really want to end up comparing ourselves to China?  These are supposed to be free markets.  LOL.


  139. Phil,
    HOV- earlier I asked about rolling to the July P&C ($2.50′s) and you replied:
    HOV/Pstas – Well you have .42 in premium left to work off that expires in 10 days (.04 per day) and you’d just be rolling to .83 that expires in 40 days (.02 per day) so a little early to do the roll, especially as you are right on target.
    This "pea brain" of mine may be sprouting too many green shoots and screwing up my synapses- so help me out here.
    I need to know if there is fault in my logic- remember I am still learning the ins/outs of the buy/writes:
    I have HOV @ $ 2.34; sold June $2.50 P&C for $1.05 ; so in for 100 @ $1.29; 200 @ $1.89.
    With HOV pulling back today on the downgrade;  I noted that I could buy back the June P&C’s for $.50 and sell the July $2.50′s for $.75.
    That would reduce my net on the first 100 to $1.04; 200 @ $1.77.
    So, my logic is that at June expiration; I will either own 200 @ $ 1.89 or get called away for a profit of 93%.
    If  I roll to July, at July expiration, I will either own 200 @ $1.77 (lower cost) or get called away for a profit of 140%.
    So, short of HOV tanking below $1.77 by July expiration, it seems to be a "wise" move. If not, help me understand why not?
    Thanks,


  140. Gotta ask because I’m curious (curious in the way one cannot turn away from an auto wreck): after all the drama on Friday, what happened to RMM?  Did he/she vaporize?


  141. RMM was MIA today.   Must have been playing golf.


  142. Ohh Sam…. you just couldn’t let a sleeping dog lie could ya?  Of course it goes without saying that he/she was vaporized!


  143. Paul Krugman predicts recession’s end is the excuse de jour….

    Krugman’s remarks followed his remarks on May 25 that the government hasn’t done enough to end the worst recession in at least half a century. At the end of last week, Krugman said he’s having a “hard time” seeing what might drive a “full” economic recovery.

    I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”

    Do they think that means Krugman reversed himself?  The end of a recession is not a recovery, it just means Q3 will not be worse than Q2 but flat is "not worse" – they guy is an economist speaking to economists in London and that’s the basis of the rally?  Oh well, whatever works… 

    USO adjustment play analyzed:

    USO/Arganx  – You are right, I saw the $1.05 and was using that as the basis (sorry Sarahd!), not $1.30.  So the net after the DD on the roll would be $1.48, not $1.35.   Oh, yes – DD means Double Down.

    The idea is, that the $35 puts have a downside delta (change in value as USO moves down $1) of .20.  So leaving them alone, it would take a very significant move in USO to get even.  By Rolling up to the $37 puts, the delta becomes .40 and, with a net entry (after doubling down) of $1.48 with the puts at $1.05, then just a $1 move down in USO would put them even.

    The MOST important reason for doing a roll like that is not so much to improve your delta but to give yourself the ability to cover against further losses.  Using the $37.50 line, which was crossed at 12:35, you have the ability to sell the $38 puts, which were $1.50 at the time and dropped to $1.35 on that run up.  That wasn’t quite enought to bother taking them out but they finished the day at $1.40 and the $37 puts finished at .95 so they did their job of absorbing the losses and could be taken off on the close (since we thought the run was BS).

    In a best-case scenario, USO flies up to $70 and we buy back the callers for .60, leaving us in the $37 puts, mabye at .40 for net .48.  Depending on how you feel at the end of the day (or how you felt on starting the spread), you can adjust between 1/2 and full cover. 

    It’s not so much a "language" thing as keeping in mind the moves are always fluid.  Think more like checkers or chess than a linear thing.  You take a position, it gets devalued.  Because your position is devalued then a "better" position has also been devalued – that’s why we try to make a new decision at every 20% inflection point, that’s when it’s time for your "move."  

    Take the $35 puts.  Last Tuesday they were .40-.50.  Wednesday they went up to $1, then fell to $80.  Thursday they opened at .60 and fell to .50 and Friday they went back to .60 and fell back to .40 and today went from .50 to .55.

    If you follow the rules and scale in on a simple 1x, 2x, 4x plan here’s what would happen.

    • Enter Tues at .50, drops to .40 (down 20%) so DD for .45.  Weds it hits $1 so 20% of the profit trailing stopp is .85 and you are done.
    • Enter Weds at 50, goes to $1 and you set stop for .10 trail, out at .90 and done. 
    • Enter Weds at .80, goes to $1 (up 20%) and you set stop at .95 and done.
    • IT IS NOT POSSIBLE, FOLLOWING THE RULES TO DO WORSE THAN THAT UP TO AN ENTRY AT .80.  Keep in mind that entering at .80, when the contract was .40 the day before is very, very stupid anyway.
    • Enter Weds at $1, drops to .80.  Now into the close it is not smart to DD but let’s say you did.  Now in at .90 on 2x.  Thurs stock opens at .60 and falls to .40.  If you DD at .60, your net would be .75 on 4x, with the stock at .60 so you are already 20% out on a full position.  Logically, that would not be a place to DD.  If you wait for a proper bottom (.37 that day) to buy on the way UP, then you could have bought 2x at .40 which would average 4x at .65.

    The question is, if you were down 50% and you DD’d at .40 and the option went back to .60, would you have done the right thing and sold 3 at .60, which would leave you 1x at net .80, which you could have then DD’d today at .40, leaving you with 2x at .60 into tomorrow? 

    Generally, it’s a self regulating system if you do it right but doing it right takes patience, discipline and practice.  Day trading of any type is not for everyone and especially not options that are this volatile as anything that can go up and down 100% in a day going to kill you once in a while, no matter how good you are.


  144. This sort of massive govmn’t intervention in the markets when fundamentals collapse and prices fall is probably a great example of why the US should not be looking to the stock market as a vehicle for saving social securit/y.  As soon as you tie people’s well being to the rise and fall of the markets govmnt’s have no choice but to intervene to support prices.  It’s bad enough with 401K’s but to throW in Social Sec would make it a nightmare.


  145. Brianma – You know I’ve always thought the opposite ..That SS would do us all much better invested in the Stock Market ..  Not !!!   .We’ve learned a lot this past several weeks, since we’ve met the stick man.


  146.  Glad I missed today… looks like there was a lot of drama for another "unch" day


  147. merk
    You missed some big run ups.  Could have bought into an hour or so in and sold at the close and made some big money.


  148. Hi Phil,
    I already use TOS. Please include me in the group rate at TOS. I currently use their EXRATE1. Thanks.


  149. Hey – I got the TOS email a few minutes ago regarding going to a link to enter information. 
     
    The link doesn’t do anything for me.  I’ve tried it both from Firefox and Windows IE, and they don’t ever make the jump when I select it.
     
    Anyone with a clue?


  150. javaben-
    just go to phil’s home page and scroll down a post and you’ll find it.
    the link didn’t work for me either..


  151. Thanks Bud!


  152. I cant find the TOS link can somebody post it here


  153. Oil contracts – 90,801 in Sep (up from 87,070) and 44,339 in Oct (up from 43,053)


  154.  PHIL,
     
    TOS – I’m looking to improve on my current rate of $1.50/contract options and $5/stock trade.  
     
    Let me know what the PSW community is offered from TOS. would be great!


  155. TOS – Please use the TOS post for comments of interest there.

    They jammed oil up from $68.50 to $69.25 ahead of the EU open based on Krugman’s call so I’m shorting oil futures here.  DD at $69.50 and DD at $70, maybe a repeat of last week where they spike it up or maybe Europeans aren’t so dumb and we sell off from here.

    Here’s from the Dow Wire:

    At 0632 GMT, front-month July light, sweet crude oil futures on the New York Mercantile Exchange rose 95 cents to $69.04 a barrel on Globex. July Brent crude oil futures on London’s ICE futures exchange were 90 cents higher at $68.78 a barrel.

    Crude oil market participants focused on dollar and share price movements much of Tuesday’s trading in the absence of oil-related cues, said Shuji Sugata, an analyst with Mitsubishi Corporation Futures & Securities in Tokyo. "Technically, the market is still on an uptrend and traders are following that. But Many traders are keeping a wary eye out for any signs of sudden collapse," he added, citing still weak crude fundamentals.  Koichi Murakami, a broker and senior analyst with Tokyo-based Daiichi Shohin, agreed there was the possibility of a drop given there are no signs of demand recovery. "Recent gains in crude were mostly baseless."

    Still, "there’s steam in the market to test $70 again later this week, if indicators like U.S. oil inventories and IEA global oil data show some signs of recovery in demand," Murakami added.  U.S. crude oil inventories will likely display a fall of 500,000 barrels in data due Wednesday from the Department of Energy, according to a Dow Jones Newswires survey of analysts.  Stockpiles of gasoline and distillates, which include diesel and heating oil, will likely increase.

    These guys are just too funny: "There’s no reason at all for the rally but we’re buying and we plan on getting out at the top."  Yeah, good plan!


  156. As for Krugman – he said the same thing on May 25th at a speach in Hong Kong and the Dow gained 200 points (as we have on Monday May 18th, May 26th and June 1st accounting for ALL of the markets gains from 8,200 to 8,800 in the past month).

    So yesterday was a trend-breaker, unless you count the 100-point stick save as being a 100-point gain…. 

    Europ is opening up a point and US futures went up about .75% into their open but, seriously, it’s because Krugman said: "I would not be surprised if the official end of the US recession is dated, in retrospect, some time this summer."  He said in retrospect because the context was he expects the kind of recovery you won’t know you are having until 6 months or so later when you can look back and say - "Oh, that’s where we bottomed" as opposed to a V recovery where the bottom is ovbious. 

    He also said: "Almost surely unemployment will keep rising for a long time and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period."  I think the LA Times summed it up well saying:

    Evidently, though, all the bulls have to hear is "recession over" to shovel more money into stocks.

    That’s a good thing for every investor who’s still riding the spring rally. But it’s vexing the folks who are waiting for some kind of significant setback to get aboard.  Since the surge began on March 10, the Standard & Poor’s 500 index hasn’t had a pullback deeper than 5.4% before buyers have jumped back in. "It’s tough to keep this market down," said Todd Leone, head of block trading at Cowen & Co. in New York.

    This is, by the way, the same Paul Krugman who is the "evil liberal writer" for the NYTimes who conservatives disagree with on every word that comes out of his mouth except, perhaps, when he says the recession may end – in which case he becomes a "Nobel Prize-Winning Economist" and that gives them the green light to BUYBUYBUY!  It would be funny if not so ridiculously tragic….

    Here’s what Krugman won the 2008 Nobel Prize In Economics for:

    What kills me about Krugman is he won a Nobel Prize for saying the exact same thing I was ranting about in my own posts at the time….

    Woops, got to go, oil just fell below $69!


  157. Good Morning Phil and all


  158. Asia Markets :    Tuesday, June 09, 2009
    (The following is from Yahoo; please cross check with other sources to confirm.)   

    Australia All Ordinaries*            3933.60        -35.40        -0.89%
    Nikkei Average*                           9786.82        -78.81        -0.80%
    Shanghai Composite*               2787.89         19.55          0.71%
    Hang Seng*                               18058.49      -194.90        -1.07%
    Seoul Composite*                      1371.84        -21.46        -1.54%
    Singapore Straits Times*          2349.87         16.17          0.69%
    Bombay Sensex                        15148.28      482.36           3.29%
    Baltic Dry Index                            3809.00     -284.00          -8.06%

    *at Close


  159. Asian Stocks Falter, Investors Fear Rally Is Overdone

    Asian shares fell Tuesday for a second consecutive session as investors worried that a recent rally may be overdone, though oil prices extended gains ahead of data this week expected to show a fall in U.S. crude inventories.

    The euro edged higher against the dollar, recovering from falls on Monday when Standard & Poor’s became the second credit agency this year to cut Ireland’s "AAA" sovereign rating.

    Japan’s Nikkei fell 0.8 percent, as exporter shares such as Honda Motor ran out of steam after leading the benchmark to an eight-month closing high the previous day.

    South Korea’s KOSPI closed 1.5 percent lower with drops in regional markets weighing on sentiment, with losses led by key technology and steel issues

    Australian shares fell 0.9 percent as recent strong gains sparked profit taking in stocks.

    Hong Kong sank 1.1 percent, down for a second straight session, shedding early gains, as blue chips were sold down on worries the market had run ahead of itself in recent weeks, distorting valuations.

    Singapore’s Straits Times Index was up 0.6 percent. Singapore Airlines rose 4.4 percent after its CEO was quoted as saying the airline was not looking at acquisitions in China at this point in time.

    China’s Shanghai Composite Index was down 0.7 percent following Monday’s sharp gains while worries about a near-term resumption of initial public offerings weighed on sentiment. Financial shares were mostly weaker, relinquishing some of their gains on Monday when news of a possible tie-up between Ping An Insurance and Shenzhen Development Bank helped to spur a rise that lifted the index to a fresh 10-month high. Shares in the two companies remained suspended as the market awaits confirmation of a tie-up.

    Bombay Stock Exchange’s Sensex ended at 15156.33, up 490.41 points or 3.34 per cent. Indian markets ended with huge gains on Tuesday erasing previous day’s losses after investors bought stocks from across the board. Realty, IT and metals were the top performing sectors while power and auto ended with modest gains.


  160. Rising Oils, Techs Help Euro Stocks Climb

    European stocks rose in early trade on Tuesday, erasing all of the previous session’s losses, as buoyant commodity prices boosted heavyweight energy shares. The FTSEurofirst 300 index of top European shares was up 0.6 percent at 870.60 points. The benchmark index has surged 35 percent since falling to a record low in early March, a sharp rebound spurred by signs of economic recovery, but the rally has lost steam over the past three weeks.

    "The Spring rally has produced a big gap in valuations between cyclicals and defensives. But the market is now heading into a consolidation phase, and we should see a rotation in favor of utilities, healthcare and the likes," said Jacques Henry, analyst at Louis Capital Markets, in Paris.

    Tech stocks got a boost from U.S. firm Texas Instruments, which raised its targets for second-quarter earnings and revenue, signaling improving demand in the chip market. STMicroelectronics gained 5.2 percent, Infineon rose 2.7 percent, Nokia climbed 4 percent, and Alcatel-Lucent added 2.3 percent.

    So far this year, the DJ Stoxx basic resources index, home of Europe’s mining and steel stocks, has gained 51 percent, the banking index has risen 22 percent, and the energy index added 17 percent. On the downside, the utilities index has lost 9.4 percent, and the healthcare index is down 6.6 percent.

    Total added 1.1 percent, BP gained 1.7 percent and Repsol climbed 1.6 percent.

    Mining and steel shares were also on the upside, rising along with metal prices. Rio Tinto added 0.9 percent and ArcelorMittal up 2.8 percent.

    Banking shares were on the rise, led by Lloyds Banking Group, up 4.1 percent. British media reported the lender would close all branches of its Cheltenham & Gloucester mortgage unit and cut some 1,500 jobs.

    Spain’s Banco Santander was up 1.3 percent, France’s Societe Generale was up 1.9 percent, and Credit Suisse rose 0.6 percent.

    Around Europe:

    FTSE     4,413.04      7.82       0.18%
    DAX        4,997.52    – 7.20    – 0.14%
    CAC         3,293.36      3.70      0.11%
    SMI        5,389.08    – 2.64    – 0.05%


  161. Oil Hits $69 as Dollar Eases

    Oil rose on Tuesday, snapping a two-day slide, to climb above $69 as the U.S. dollar retreated.

    U.S. light crude [ 68.63    0.54  (+0.79%)] for July delivery rose, just off a session high of $69.37.
    London Brent crude [ 68.48    0.60  (+0.88%)] also gained.

    Oil prices have more than doubled since February, in line with equities and currency markets. The S&P 500 index has risen by 39 percent from a one-year low on March 9 and increased appetite for risk has diminished demand for the dollar as a relatively safe haven.

    Societe Generale on Tuesday raised its year-end crude oil price forecasts for 2009 by $8.50 to $65 a barrel in the third quarter and lifted its fourth-quarter forecast by $11.50 to $72.50, it said in a research note received on Tuesday.

    Nobuo Tanaka, executive director of the International Energy Agency, told Reuters on Monday the agency expected oil stocks in developed OECD economies to fall to 57 days by year-end from 63 days now if OPEC keeps output at current levels and demand recovers.

    Analysts polled by Reuters said they expected crude stocks to have fallen by 400,000 barrels last week, while distillate and gasoline stocks could have risen by 1.2 and 1.3 million barrels respectively. Last week, U.S. crude oil stocks rose by a more-than-expected 2.9 million barrels.

    Dollar Slides, Investors Reassess US Rate View

    The dollar slipped on Tuesday, pausing from gains versus the euro as investors reassessed whether speculation of a possible rise in U.S. interest rates later this year may push the U.S. currency higher. A climb in European shares in early trade helped to raise demand for risky trades, helping to boost the Australian and New Zealand dollars, while stinging the yen across the board.

    Also adding downward pressure on the dollar was a jump in sterling, whose rally on stronger-than-expected UK housing figures and signs of some political stability in the country helped to lift the euro from earlier losses against the dollar.

    Traders said they were focusing on economic indicators and upcoming auctions for U.S. debt this week to gauge whether a shift towards a dollar-positive trend will take hold.

    Dollar was 0.3% lower against a basket of currencies to 80.596, retreating from 81.466 hit on Monday for the first time since May 20.
    The euro [1.3872    -0.0027  (-0.19%)   ] traded higher versus the dollar, near the day’s high of $1.3963 hit according to Reuters data.
    Sterling [ 1.6086    0.0035  (+0.22%)    ] climbed to the day’s high of $1.6177, recovering from a slide to $1.5803 the previous day,
    The dollar [ 98.35    -0.12  (-0.12%)   ] rose against the yen as higher share prices stung the yen.

    The Australian and New Zealand dollars each rose roughly half a percent against the U.S. currency, after European shares climbed 0.7 percent in early trade and stoked some appetite for higher-yielding currencies.

    Some analysts were unconvinced that speculation of higher rates will heat up even more, arguing that a rise in inflation risks is unlikely this year as the global economy continues to struggle.

    Given this scenario, some said it may be premature to reward currencies on rate rise expectations.


  162. Good morning!

    New post part up already so make new comments there please.


  163. Gold edges up as dollar gives up some ground

    Gold was bid at $952.50 an ounce at 0916 GMT, against $950.05 an ounce late in New York on Monday.

    The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings were steady at 1,132.15 tonnes as of June 8, unchanged from the previous business day. It is still in sight of the record high of 1,134.03 tonnes marked on June 1.

    Physical demand remained relatively quiet, with the market dominated by investment buying. In India, the world’s largest bullion market, high prices kept traders on the sidelines as the wedding season approached its end.

    Among other precious metals, platinum eased a touch from late Monday but lifted from early lows as the dollar wilted.

    Platinum was quoted at $1,241 an ounce against $1,242 late in New York on day, while palladium was at $251 against $247.50. Silver was at $15.00 an ounce against $14.91, tracking moves in gold.