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Wednesday – What Color Is Your Beige Book?

The Fed's Beige Book comes out at 2pm today.

Our last Beige Books came out Jan 14th (down 250), March 4th (up 100 ahead of huge drop) and April 15th (up 100) so we are anxious to hear what the Fed has to say today in their anecdotal report of economic conditions through the end of May.  On May 20th we had Fed minutes and the market didn't like that one bit. so let's hope they've cheered up since that last meeting.

Oil has cheered up, hitting $71.50 in pre-market trading.  All of our indexes are flying as Asian trading rocketed higher on a RUMOR that China's Friday Industrial Production Report rose 8.9% in May and Tomorrow's  Fixed Asset Investment Report will rise 37% for the month.   This came from the Ming Pao Daily, who cited "unnamed market sources."  This information is stunning, especially in light of the ACTUAL PPI falling 7.2% for May and the ACTUAL CPI, that showed a 1.4% decline but, since we have long ago entered the "no thinking zone" (in fact, on Mad Money yesterday, Cramer made fun of us for thinking!), so happy rumors trump ugly facts every time.

Perhaps it's true, perhaps China did increase Industrial Production 9% while driving input costs down 7% during a month when commodities rose over 20%.  If so, all the more reason the Republicans should shut up and let us go Communist ASAP because those guys REALLY know how to get things done!  We're already giving them Hummer and it's very likely, by 2011, we'll be importing 2M Electric Hummers a year from China.  Boy that joke will be on us, right? 

[The hidden costs of China stimulus charts]China is leading the global stimulus bandwagon, of course with a massive increase in debt financing this year.  "There is no such thing as a free stimulus package. There is a huge amount of unreported government debt, and we're adding to it now clearly," said Stephen Green, an economist for Standard Chartered in Shanghai.

The stimulus package in China is working so well that there is now a 2-month wait to buy a car in China as direct subsidies and a cut in retail taxes has pushed millions of Chinese into auto dealerships.  Gee, rather than give the auto companies $30Bn three months before they went bankrupt – do you think the US could have offered $5,0000 incentives on 6M cars to boost demand AND help the consumer?  Like I said – when can we go communist?

Notice on the chart that the godless communists of Russia and China, seem to run their economies with far, far less debt than the G20 (and Russia and China are part of the G20 and keep the average down).  They have armies, they have health care, they take care of the elderly….   Kind of makes you wonder about all the knee-jerk revulsion to their systems doesn't it?  Anyway, not a day to get political with so many fun things to look at this morning.  The Hang Seng led Asia higher with a 4% gain this morning – led, of course, by the commodity pushers.  Mainland China, who are more of the importers, was up 1% on the Shanghai.  The Nikkei topped out just under the 10,000 mark, a line they fell through so fast in September that you can't see a pause on the charts.  This puts them just over 50% off the March '07 high of 19,786 and 43% off the bottom of 7,000 so it will be very impressive if they plow through from here.

Japan is certainly following Cramer's advice and ignoring the bad news as their Machine Order Report for April showed a 5.4% decline vs. a 0.8% increase expected as part of that 43% rally they've been having.  The BOJ also released a report showing PPI down 5.4%, the worst sign of deflation in Japan since 1987 and they've been having 20 years of deflation so that's saying something!  I suppose rising commodity prices will soon take care of that and prices will rise and everyone will be happy – right?  I'm not sure, I'm new at all this mindless optimism… 

Makers of general machinery, metal products and chemical goods slashed their orders, as did some non-manufacturers like transportation firms, Cabinet Office data showed.  Core orders exclude often-volatile demand for ships and orders from electronic power companies. Their value totaled 688.8 billion yen ($7.07 billion) in April, the lowest since April 1987, a Cabinet Office official said.  "Machinery orders' absolute level remains low, capex remains weak," Goldman Sachs said in a report. "We do not envisage a capex recovery anytime soon."  Say, aren't those the same guys telling us global demand is picking up and we should buy oil?

Speaking of oil:  Well I sure learned my lesson.  If Goldman Sachs says oil is going to $85, it's going to $85 and it doesn't matter what data you have against it.  Today we are at $71.50 at 7am and, aside from the rumors of China's stunning Production Report, we also have a report from the American Petroleum Institute (sponsored by oil companies) that says there will be a 6Mb draw in crude today.  Official estimates were for a 1Mb build and that's what send oil flying from under $70 at the market's close yesterday all the way up to $71.65 earlier this morning.  Of course, if you read the report you'll see that there were two factors in play.  One is refinery utilization picked up by 200,000 barrels a day – drawing 1.4Mb of stock for the week.  Two is the STUNNING drop in imports, to just 8.5Mbd. 

New paragraph because this is VERY important.  8.5 Million barrels of oil a day is 1,465,000 barrels PER DAY LESS than LAST WEEK.  That would be, with no weather issues and no wars and not even any Nigerian pirates, a short-shipping of 10.25 Million barrels of oil to the US.  Even worse, last year at this time, they US was importing 11M barrels of oil per day so 8.5Mb is 17.5 MILLION less barrels being shipped to America than last year right at the beginning of our busiest demand season.

Of course it's not going to create a shortage, we are still at record capacity and we'd need 30 weeks of 6Mb draws just to get back to last year's average storage levels but HOLY COW – is no one going to do anything about this?  Driving up the price of oil by $2 a barrel by refusing to deliver oil (and canceling millions of valid delivery contracts at the last minute each month), costs US consumers $38 Million a day – I smell class action lawsuit against the people who use our TARP money to store our oil in offshore tankers rather than deliver it to US consumers, even as they place orders for those products in record quantities on the NYMEX to drive up prices with NO INTENTION of taking delivery.  The net effect is a massive theft of money from every single person in America.  So I'm tired of telling you to write to your congressmen – JUST GET ME A LAWYER!!!  At $1.2Bn a month of directly attributable damages for every $2 per barrel, it won't take much contributory claims to make this case worthwhile… 

Commodity pushers are also sending Europe about 2.5% higher (8am) but we've been here before – ON FRIDAY!  That's right, Friday's pre-markets were up at the same levels we're at now and we're still not over our "Triple Top Testy Tuesday" levels of June 2nd's pre-market.  I asked yesterday if we would get fooled again and it looks like today is going to be "Breakout today, shame on Phil, 4th failure at these levels in 30 days and Cramer's a fool.."  I already sent out a Morning Alert to Members listing our "Brain Shut-Off" targets.  Aside from the not yet held 40% lines of 946 on the S&P and 6,232 on the NYSE, we really need to take out Friday's tops of:  Dow 8.750, S&P 950, Nas 1,865 (beat in yesterday’s high of 1,870), NYSE 6,160, Russell 536, SOX 285 (June 1st, Friday was 275), Transports 1,880 (also June 1, Fri 1,850).  Give us those levels and we'll jump on board Cramer's crazy train but I don't think it's too much to wait and see if they can make it to the next station without crashing before we jump on board.

Europe is already on that runaway train despite German exports slumping 28.7% in April, the worst drop since record-keeping began in 1950.  That's worse than March, worse than February or any or the other terrible months that led to a massive market collapse.  It's OK though as trade was well-balanced because imports were down 22.9% too, even with the 10% increase in crude prices (those really help push up your import figures and that's GOOD, right Cramer?).   Germany exported about $1.4Tn last year so that's "only" $400Bn less this year – about the size of China's entire stimulus program – see how everything evens out? 

Also breaking new records for sucking today is South Africa's Manufacturing Index, which fell 21.6% in April, worse even than the 18.3% expected.  “We expected the number to be substantially lower than last year but this was a really shocking result,” said Johan Botha, an economist at Standard Bank Group Ltd. in Johannesburg. “Domestic demand is almost non-existent and there’s also no life on the export side.”  Business confidence slumped to its lowest level in almost a decade in the second quarter, Rand Merchant Bank said yesterday, indicating the economy probably contracted for a third consecutive quarter in the three months through June.  Automakers have fired workers and curbed output in response to slackening demand. Vehicle sales plunged 35 percent in May from a year ago, after falling by a record 43 percent in the previous month, an industry body said on June 2.  Yep, must be time to buy commodities… See, I'm getting the hang of this! 

The BOE does not see a recovery and is urging banks to increase lending. "For the moment it is unclear…whether the financial system can generate the expansion of credit that will most likely be necessary to support recovery," Deputy Governor Tucker said.  Tucker urged banks to increase their lending, and said those that choose not to, in the hope that others will take up the slack, risk damaging their own medium-term prospects.  "There cannot sensibly be free riders," Mr. Tucker said. "If all banks were to adopt such a strategy, recovery might end up being anemic at best, which would feed back into the banking system itself, increasing defaults and depleting banks' capital.  Inevitably the medium-term outlook remains highly uncertain, and the path back to anything like normality can only be gradual, I'm afraid."  He's afraid but FOREX traders sure arent' as the Pound is up 6% against the dollar this week.

8:30 Update:  Our own Trade Deficit moved up to $29.16Bn in April but that's not a surprise with oil up 10%, just wait until next month when another 20% jump in oil is factored in with hardly any cars or planes going out!  Trade added 2.18% to our Q1 GDP as the weak dollar boosted exports but April's number (the first month of Q2 for those of you keeping score) fell to $121.11Bn, the lowest level since July 2006, from $123.93Bn in March (revised down $1Bn).  Our cost of imports went UP $13.63Bn and our trade deficit with China rose to $16.75Bn from $15.62Bn in March so things probably ARE pretty good at WMT!

For more commentary on the economy – CHECK OUT THIS GUY!  Whoever he his, he can have a weekly spot on our site…

My prediction to members of today's action is that this would be yet another failed pre-market pump job.  We added to our oil futures puts and will be happy to get out even at this point.  The real inventory report is at 10:30 but if those import numbers are really as weak as the API measured and the Obama Administration doesn't do anything, it will be a shameful act of cowardice as we've already subjugated this nation to the US energy cartel when times were good – are we now going to let them grind us under their boots when we're down as well? 

Also supporting oil was yesterday's EIA report which, if you listened to CNBC, was MARKET MOVING!  TheEIA raised their forecast for world oil demand for 2009.  Guess by how much?   If you just heard it on CNBC, I’ll bet you thought it was more than enough to justify popping oil over $70 from $67 at the beginning of the day.  Late traders sure thought so and ran oil all the way to $71.50 this morning.  Get ready for the shocking forecast that moved oil up 2.8% yesterday:

"The EIA data showing it has raised its world and U.S. oil demand forecast for the first time since September is a sign that things are stabilizing on the demand side," said Phil Flynn, analyst, Alaron Trading in Chicago.

OK, here it comes – brace yourself:

The EIA raised its forecast for 2009 world demand by 10,000 barrels per day from its May estimate of 83.67 million bpd, marking the first time since September it has increased its 2009 demand estimate.

10,000 Barrels a day!!!! Oh my gosh – RUN!!!! Everybody start digging holes in the yard so we can store oil before it’s all gone!!!   What a friggin’ joke this is: 

World demand will likely decline 1.8 million bpd this year from the 2008 level. The EIA expected global demand in 2010 would rise to 84.41 million bpd, 20,000 more than it forecast last month.

Obviously, there is no end to this farce….

We stand rested and ready to switch off our brains.  We are the proverbial cash on the side, waiting for a real signal that it's safe to get back in the water, even here, up about 40% from the bottom.  It will be easy to buy above our breakout levels as we simply turn around and use them as signals to get out or cover – that's the kind of easy investing we like.  Up this high though, and still under our levels – it's like being on a wire at the top of the big top without a net – at this point, we'd feel a little safer walking on the roof so let's get that break-out.  Come on Cramer – I'm waiting

 


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  1. Russia just announced its going to reduce the amount of gold and foreign reserves it invests in US Treasuary bonds. They didnt say by how much. Lets hope China doesn’t follow. Of course the market doesn’t care.


  2.  Phil… hasn’t China turned its back on communism?
     
    They have become the best capitalists in the world and built an impressive cash surplus that makes debtor countries like us jealous. Let people work hard in jobs or their own businesses, save their money and don’t tax the hell out of them… wow… what an amazing concept.
     
    My wife and I own a condo in Guangzhou and my wife’s relatives live in Beijing. It is amazing to me to watch how much my chinese in laws have raised their standard of living…. it  has been improving phenominally during the last decade.


  3. Exports fell 2.3% and Imports fell 1.4%. Thats a big drop in consumer activity. They’re all out tending the green shoots. Stock markets unstoppable.


  4.  CNBC having some thoughtful guests on this morning…. refreshing for a change


  5. Damn USO, all eyes on 10:30 inventory..


  6. "makes you wonder about all the knee-jerk revulsion to their systems doesn’t it? "
     
    Oh, and there is that nagging "freedom" thing those knuckle dragging conservatives continue to dredge up.
    Perhaps useful to remember Lenin and "useful idiots".


  7. merk, I don’t have an exact percentage to share with you.. but the way I’ve heard the Chinese brand of ‘capitalism’ works is the gov’t takes a huge, 50%?, cut of the profits from companies who export.  The companies have to go through the gov’t to exchange their earnings in dollars to yuan.  That is how the gov’t racks up the ridiculous amount of dollars that they have.  So yes, companies are taxed.  It’s just not noticed because they have such a huge volume of exports and the standard of living WAS so low that anything more then a pittance raises the employees’ standard of living.  The key to China’s success is the production of inexpensive goods that the world wants to buy over what they produce themselves.  But if world demand drops off, which it is, China will be in a trouble.  Their middle class can’t support their production capacity.  They need to export.  Which is why China won’t let their currency leave the dollar.
     
    That being said, I WISH the US had their problems.  Our greatest ‘product’ was of a financial nature.  Nothing really tangible.  And with impending regulations, the products the financial sector makes won’t be as profitable.  So what does that leave us with?  A hole lot of debt and no great prospect for paying it back.  Other then through inflation.


  8. A challenge – Name one (REAL) thing that is better now than in March ? I’ll be interested in your answers.


  9. ….. and you cant say "Stock Market" :-)


  10. DB, corporate bonds are better; issuance is up, risk premia lower, credit-default swap spreads sold againt them are tighter.
     
    This is a ‘green shoot’, but the last Fed minutes pointed out that it was offset by a reduction in bank lending to corporations. Which is why we should be interested in what the Fed says today about corporate borrowing.


  11. Thanks Phil for that link on Zerohedge… ROFLMAO… that’s my kinda guy… absolutely love that rant !!!


  12. One of our lead sled dogs is limping out of the gate (BIDU). Shouldn’t it be joyously springing ahead on all the China news?


  13. Russia/DB – They have been talking down the dollar all week.  The lower the dollar, the more dollars they get for oil – simple motivation, they make $3-4M a day for each dollar they can jawbone oil up to.  That’s why this country is insane – a comprehensive energy policy aimed at price control is the only way we will ever have ecomomic security.  If you put the people of this country in a position when, on any given monthy, they can be "taxed" $10 per barrel extra ($5.7Bn), that’s $684 per American family per year per $10 and none of it goes back to work here – it’s all outflows…

    The thing about oil is we’re not buying anything.   When you buy gold, there is gold.  When you buy oil, there is only oil until you burn it and then you need to buy more oil.  Agriculture is the same, dollars are transferred out of the country in exchange for nothing.  Draining money here, flooding it over there – what else can we do but keep printing more money if that is our economic policy?

    Speaking of Ags, they are on a tear today and worth watching as lagging puts to grab if things start heading south.

    $38.50 is the big inflection point for USO.

    LOL – CVX has a fire from Nigerian Rebel attack – now everythign is in place!

    Communtism/Merk, Pstas – I will save that for weekend conversation.  Mainly I was being rhetorical in the post.  Call it what you will but those guys know how to manage and stimulate an economy!  Of course it could all blow up in their faces but so can ours (and more likely).

    Lame so far, looking like Friday.


  14. Phil, I bought AAPL Jan 110s covered with Jun 120s back in April for 24.7-9.65 = 15.05. How to adjust the caller?


  15. MrM – remember JAZZ (I noted them a month ago on trial data as well as said they were old Alza/JNJ folks that just reformulate drugs)….well, just look at em now….


  16.  phil, i’m in the DIA 86 puts for about 1.00 (already DDed) do you think it’s worth rolling up to 88 puts ahead of the 2 pm BB or is just adding more bad money to the play?


  17. Dividend play that looks attractive:  BMY pays a 6.3% dividend.  Buy here, sell 21 Dec09 C and 17 Dec09 P for roughly $1 each gives a nice big spread, collecting the dividend.  @ 19.5 entry, that is 18.5 if called away in Dec @ 22 (~ 20% gain not including dividends), or roughly 17.9 if put to you).  Their low in this psychotic market is 16, so should be safe.


  18. Bonds/EricL – Interesting  – I thought that corporate bonds were "oversold" in that too many firms were chasing what capital there is in order to boost their balance sheets- seeing as how most balance sheets were shrinking. If they are stable then maybe I should be looking there. Thnx


  19. I love capitulations.


  20. I love capitulations.


  21. Are there any "bond" ETFs ?


  22. Wow phil, you outdid yourself on this mornings post.   Had to finish reading it during the first case.  You must have had a full cup of joe this am :)



  23. Thoughtful guest/Merk – I wonder if that’s a sign the market will fail here and they want to make sure you remember they had people on warning you?

    March/DB – I’m thinking….  I guess the bank failures are off the table and we’re not worried about Chrysler and GM going BK anymore (because it happened).   Sentiment is sure much better and that is important but you can cheerlead Bill Gates all night long and Mike Tyson will still kick his ass in the morning or vice versa in a chess match – sometimes you need to be realistic…

    Crazy guy/Merk – Cap found that yesterday.  I really would like that guy to have a weekly video here…

    BIDU/Eric – Good catch.  With China up 4% if BIDU dragging isn’t a toppy sign I don’t know what is….

    1% rise in the dollar pressuring oil, not fear of inventory.  Also pressuring equites probably so don’t get all bearishly excited about this sell-off.  They seem determined to get to $72 on the inventory if it’s even close to confirming API because they never talk about imports mattering (as the assumption is they are steady, which they used to be).

    Gold down almost $10 from 7:30 at $957 and falling fast, oil holding up very well by comparison.


  24. Since Blackrock is controlling the US in many ways, CYE, HYV and several other of their closed-end bond funds are nice money makers for small portfolios.  Average in for best prices, as there is no options traded on them….FWIW.


  25. Pharmboy/Bond ETF – Wow so many ETFs – so little money :-) Thnx


  26. "Are there any "bond" ETFs ?"
    DB…consider
    TIP – iShares TIPS fund
    BSV – Vanguard short term bond
    SHY – iShares 1-3 YR Treas.


  27. Hi Phil,
    Please comment on the correctness of the following trades.
    Initial buy 10 DD july 25 puts @ 1.10
    Second buy 20 DD July 25 puts @ 0.90
    Third buy 40 DD July 25 puts @0.65
    Net 70 DD July 25 puts @0.76
    I know it is the right thing to get out if I get even, but do you think I should hold them for some time or get out at even?
    Thanks


  28. Phil/Better since March – Sentiment – Certainly thats what the surveys/MSM say  – but I was talking to the guy that cuts my hair and he says he hasnt had it so bad for years. He and his wife are having to cut back like mad to make ends meet. The guy that delivers my fish says the same. I know I’m not supposed to be thinking but …. I wonder if you asked the guy in the street the same question what the answer would be ?


  29. Rally failure Phil…   I tell ya, I’m more than ready to start building into a bunch of bear positions… but frankly I’m afraid to do it until we at least touch some major levels. If we get to that 9k resistance level, I’m going to start scaling in with gusto.
     
    I got short position triggers waiting for them if they wanna bring it on.


  30. I will post this again (late yesterday as well).  Very interesting lady…Revered economist and monetary policy expert Dr. Anna Schwartz talks with Kai Ryssdal about how the Federal Reserve and government have performed while in the economic hot seat. She isn’t too pleased.
    http://marketplace.publicradio.org/display/web/2009/06/09/pm_taking_stock_q/


  31. AAPL/Ajay – You can roll the June $120s at $20.55 out to 2x the July $135s at $10.05 and the Jan $110s at $36.85 can go to 2x Oct $130s at $19.43 or (if you have margin avail) just roll up to Jan $125s at $26.48 ($10 back) and buy 1x the Oct $145s.  You just have to make sure you get at least $5 in position per month on future roll-ups so don’t let the July callers get away from you.

    DIA/Kwan – The delta on the $86 puts at .58  is .26 and it costs .70 to roll to the $88s at $1.28 with a .47 delta so there’s no cost/benefit to rolling up as 2x .58 will return .52 for each dollar down while 1x $1.28 will only return .47 for the same move.  Of course you lose more if it goes against you too…  Keep in mind you what you are trying to accomplish.  If you add .70 you are in for $1.70 and need a $1.50 move down to get even, if you add .58 you are in for avg .79 and need a .50 move down to get even – that’s the way you need to calculate those decisions.

    BMY/Pharm – I like that one!

    Bond ETFs/DB – I’m pretty sure there are but I don’t know the names.  There’s PIMCO of course…

    Thanks Jo!  Are none of you guys lawyers?  I really mean it on this class-action thing…  We could all do the research, that’s a staff of hundreds gathering evidence…

    Wow, gap down on S&P to 942!!  Lacker says Fed WILL fight inflation.


  32. CNBC, website, has a suprisingly bearish tone to it today.  But I would be shocked if today is the day for a pullback.  I’m on the sideline for now.  


  33. So Blankfein made some comments about the recovery not being here yet…the market didn’t do anything until it just hit the DJ news wire and it whacked about 20 points off the Dow in a few seconds.   Is GS done with the oil trade and now are posturing to start unloading?


  34. Phil, I am interested in shorting POT again.  I waiting to see what shakes out today, what do you think about selling the 125 calls for $1.40?


  35. matt1966/cnbc
    yet another guy, Rubino, on there pushing bearish positions


  36. FXP $12.50 puts can be sold naked for .93, nice play on China pullback based on us not gaining 2.5% today.  Beige book still pending but roll possible to July $12 puts so one month of insurance on China.


  37. "But I would be shocked if today is the day for a pullback."
    We’ve had a narrow range day yesterday, we gapped open above the high of the previous day today and in the NQ we’ve led the sell off down just like in the last "correction".  Longer term on the weeklies and monthlies, we’re due for a correction.  I will also note that this market has to come down before it can rally into earnings.  Also June tends to reverse 3 consecutive monthly up closes in the DOW and SP and July is bullish, typically.  Right now we have the makings of a good reversal.


  38. Brianma/Bonds – thnx


  39. Also if we get a close below yesterday’s low that will be strong signal we’re heading lower.  Right now, we’ve already taken out yesterday’s low in NQ (an outside day).


  40. DD/B1 – Once you go past your first double down, you really want to try to find a hedge to pay for at least 1/2 of the next move.  I see the July $25 puts are now .70 and were surely higher yesterday or the day before (or did you only just now DD).  You absolutely want to get 1/2 out even after a 3rd DD because you WERE wrong at some point and may be again so be very happy to catch up in the very least.  On the whole though, the trade looks like it will forgive you.  I’d get the 1/2 out and be very happy to stay in with the low basis but keep stops on half once you are up 20%.

    Sentiment/DB – It is still crap but in March people thought the world was going to end.  What we have now is what Cap calls the "hopey changey" effect, where a full media blitz and lots of BS statistics have convinced people things are getting better, even though they haven’t.  But, if you convince enough people, amazingly, things can actually get better so it’s a valid strategy.  You need to push the economy and people are the economy so manipulating the people is the way to fix the economy – sad but true…

    Bearish/Merk – See I’ve been looking at it the other way.   I started flipping bearish up at the 40% lines (a bit early though) because THOSE made good stops if we broke higher.  If we break over, I can flip bullish and work out of the downside plays as protection. 

    $70.65!  Mission accomplished on those horrible oil futures


  41. We’re at the daily MA now on NQ and finding (at least temporary support).


  42. DB   If you are looking at bond ETFs, you might want to look at closed bond funds, especially if you can buy them at a discount.  Here’s a great site for searching for ETFs and closed end funds.    http://www.etfconnect.com/


  43. DB   If you are looking at bond ETFs, you might want to look at closed bond funds, especially if you can buy them at a discount.  Here’s a great site for searching for ETFs and closed end funds.    http://www.etfconnect.com/


  44.  Phil/DIA – that makes perfect sense and i’d never thought about it that way. once again, info like that is worth the price of tuition!


  45. What does the group think about the spread between nat gas and oil narrowing?  Right now the ratio of oil to nat gas is pretty high.  It seems like that would be a good longer term play…


  46. Ryssdal/Pharm – That’s a good one.

    POT/Craig – If oil doesn’t come through then yes. 

    Draw of 4Mb in crude, 1.6Mb gas and 1.1Mb distilates.  I think this would have been a bigger winner if the API report didn’t come in higher.  No evidence of demand AT ALL – this is all about short supply and the traders are well aware of the BS import numbers so watch for selling into sucker retail buyers. 

    $71.35 (5% rule – see alert) now after bottoming out right at my $70.65 target so I’m still going to be looking for $69.50 as the support line.  If they break that, then right back to $67 this week.


  47. got a roll up this morning DIA Sep 88 puts rolled up to 90s for .98, hope that was a good move….


  48. Volume 47M on the Dow, much more than yesterday.

    Notice OIH and XLE not rallying with crude.  This is sucker retailers buying on headline number.  USO happy to take their money too…

    Back to shorting futures at $71.50!

    Cool Kwan – Once in a while I think of good ways to explain something!   8-)

    Gas/Oil/JD – I’m becoming concerned (because we hold long gas positions) that gas is right and oil is just way, way wrong.  I had been thinking gas would catch up but the surplus is so extreme that only a really hot summer with hurricanes will save them.  Keep in mind that gas is local, not affected by dollar or politics as much as oil.


  49. SPG — Oh, that was nice !   All covered now


  50. Here’s a list of all the Bond ETFs from that site…
    PLW PLK GKA GKD GKB GKE GKC UBD ULQ UEM PCY EDV PHB PWZ PZA PZT BIV HYG LQD EMB CSJ SHY TLH TLT
    IEI IEF AGG CFT GBF CIU GVI MBB SHV TIP CMF MUB NYF BLV SMB MLN ITM TBT PST BSV IPE WIP BIL LAG CXA JNK
    ITE BWX TLO TFI INY SHM BND PVI
     
    The most liquid ones are TBT TLT TIP LQD SHY


  51. craig: POT  I sold 125 puts for 165 today;  Good play IMO
     
    USO … July 37 puts for 1.30 !


  52. Damnit I missed the boat, There only $1 now.


  53. Roll/Steve – It’s always a good move if it’s your long-term protection.  In theory, you should be making more than enough on the long side to offset it and it lets you ride out the dips (and we have many) without getting forced out of your longs at bad times.

    I think one of my problems trading oil is I fail to appreciate how many people buy oil but have no clue whatsoever what they are doing.   Clearly that inventory report was not in the least bit bullish but you would have thought demand doubled with a $1+ jump in 5 mins and we’re already up $5 from last week’s report, which was a 3Mb draw.  It’s like they are professional poker players luring in children with money with this massive PR campaign telling retail investors to "protect" themselves by investing in oil.

    Now CNBC wants you to invest in Africa?

    OK, now that we’ve calmed down from inventories we have the 10-year auction around 1pm and, of course, the BBook so I’d expect we drift into that and then 150+ points one way or the other.  Maybe we should look at a straddle?

    PALM with a nice drop by the way.  If you are in that play (our Channel Checkers post), my timing was perfect yesterday and now we can set a buy on the $11s at .75 for a very nice profit.  Right now the trade is up .90 but I think we can do better.  This trade is a great example of how non-greedy exits make you money!


  54. There goes the 5SMA on DIA .


  55. TBT @ 7 month highs


  56. Market has had excuses to go up, but has stopped going up.  
     
    I’m cashed out. Now buying and scaling into puts and building my short positions. Bouht first round and setting triggers at 8820 and 9000 to buy more.


  57. Here’s the Palm trade update I just posted:  http://www.philstockworld.com/2009/06/09/palm-pres-big-day/.  Anyone taking these CC trades or the Oxen Group trades?  I’d love feedback - ilene@philstockworld.com


  58. I’m looking at setting up some low-delta RIMM trades ahead of earnings (June 18th). June IV is very elevated relative to other months. It will probably go even higher but the differential with later months may not change that much. So for now I’m going to start with a small number of cheap June/July calendars, bidding 2.00 each for the 85 call calendars and the 80 put calendars, with a plan to add more if the stock starts moving around or the IV difference gets even higher.


  59. CAP, are you sure you wrote that correct.  You said you sold the 125 puts.  What made you decide to go long POT?


  60. Phil, can you put up that post so all of us TOS guys can try and get that better rate?


  61. Now here is the Crime.  CNBC’s reporting of this oil inventory is criminal.  "In part because we saw a decline in imports."  They do nothing to explaiin the report, they show no numbers, no charts – just spin and never a contrary voice allowed on these reports.  Are they supposed to be a news station or what?  It’s not just negligence – it’s fraud, it’s the willful deception of consumers….  I’d include them in the suit!

    Gold below $950 again!  Nice divergance with oil.

    RIMM/Eric – As it’s the day before expirations (maybe that afternoon) they will hold premium but not THAT much.  I very much like selling the $85 calls naked for $3.95 and, IF they break over $83.50, then buying 1.5 July $90s, now $4.10, perhaps  for $4.50.  That leaves you very well covered with 1.5x .38 delta (.57) to the callers’ .45 delta and your net spread is $2.75 so it would take more than a 10% drop for you to lose.  I don’t WANT to be in the spread though, I’m generally bearish on RIMM at this price and I think they got a poor exchange rate last Q but it depends how they recognize revenues and that I don’t know.  So, ideally, it’s just a short sell on the calls, looking to pick up $1.

    TOS/Craig – It’s on the main page about 4 posts down isn’t it?

    Boy I swear they have the oil pumps timed right to CNBC’s segment schedule.  Huge jump in last 3 minutes right ahead of Larry Kudlow saying "Next – Oil prices on the rise, do we need to drill, drill, drill?"  And now that they go to comercial it heads right back down…


  62. craig; sold the 125 calls; sorry…


  63. Phil,
    I’m legging into PALM , I sold the july 13 calls for 2.10 and I want to sell the July 12 puts for 1.60 getting me into the stock around $9.00, how does that sound to you?


  64. Bonds – Thnx again everyone


  65. Phil,  I like that too; I may do it in my taxable since I agree with your premise. I’m also doing this in IRA accounts though (no naked call selling allowed). So there I went with June/July calendars since the Julys will keep up with the Junes pretty well on a big move.
    Basically I’m hoping to get my 2.00 back on the ‘losing’ side (which will probably be the direction it moves; i.e., puts if it goes down), and make a profit on the winner, with a shot at a huge % return if it flatlines.


  66. Kudlow stopping Senator from talking about speculators by saying "But EIA study says demand is picking up."  That would be that global 10,000 barrels a day he’s using – funny how he doesn’t use the figures.

    I like this Senator Cantwell, she seems to actually have a clue about what’s going on - Everyone send he today’s post please!  http://cantwell.senate.gov/contact/

    Then CNBC has a Lind-Waldock commercial telling you commodites are better than stocks…

    Time to speculate long I think, DIA $90s at .37, looking to enter the $85 puts, now .48 at the same price on a run up, keeping the spread for the Fed BBook unless one side pays off the other before then.  From a scaling perspective, if you go in here (.37 on each side) and add at .23 (when it’s going against you) to avg .30, then a 100-point move on either side should give you a double with a free ride on the other.


  67.  Maybe I’m being too obvious, but if the oil markets are so controlled and manipulated, then why not trade a bullish position? How much gain could have been made from 67 to 71.5 with calls, rather than doing put position salvages?
     
    Is oil really going to head back down to 67 now, or is it going to 75 just as the Saudis and GS crowd want it?


  68. hey phil – TBT thing worked out well for me (not sure if you remember helping me through min-meltdown acouple weeks ago)…I have it at about $55.70 and have the 58 Jun calls for $1.30….Would you roll these and stay with the position here or take $ and move on
     
    also, I missed the UNG trade you opened and would like to be in it…At $14, where do you come out on it…for instance the $14 june puts are at about .50 now and perhaps thats a good start to enter??


  69. AW yesterday had a GLD spread where the 100 Sept 09 C were sold and 90 P were bought for a debit of 30c.  With the divergence of oil and gold, is not a move down in the short term warranted?  I have taken some money off the table with the 80 Sept09 C and am looking to sell the 95 Jul09 for 2.5 or better.


  70. PALM/Maxt – Good but do you own the stock?  If not, just watch the upside…

    Oil/Merk – You are right and I had said a few weeks ago we should take long oil positions but we didn’t and it got away.  At this level (and I only started shorting them at $63) I truly believe "THEY" can’t support it much longer.  I did not count on the Goldman call or, as I said before, the sheer volume of retail traders who would stampede into oil through USO, DBC, USL and the other 100 ways they now have to sell you oil that you never will actually use.  For sure, if we do sell back off to $35, I will be all over the long side!  The entire bull premise for oil is based on "everybody’s doing it" and a very optimistic outlook for the economy – hardly an investing premise I want to follow (at least not until we break our 40% lines, if ever).

    TBT/BC – Oh good!  Well be ready for big move today.  Could go either way though or even both ways as we could get a weak auction (TBT goes up) and then a weak BBook, which means Fed keeps rates low long-term.  Your caller still has a lot of premium so no reason to roll him.  If TBT does start to head down, if you can ALSO sell naked July calls first (like maybe the $56s) and then place a very tight stop on the $58s, that’s a nice way to go.  On the upside, just keep your rolling target (maybe July $60s, now $2.40) in sight and don’t let it get away from you.

    Gold/Pharm – It’s oil that’s too high, not gold.  Or maybe they are both too high but that would make oil ridiculously high so I’d still rather short oil…  The thing I really don’t like about shorting gold is you can wake up one morning with gold up 10%.  That can happen in oil too but at least with oil, we have the supply glut funamentals to offset a day’s news but, if a currency fails on you, gold can go up and up and up and up…


  71. Phil/ToS – Your ToS blog was the 6th one on the PSW main page.  Thanks.


  72. phil -
    also, I missed the UNG trade you opened and would like to be in it…At $14, where do you come out on it…for instance the $14 june puts are at about .50 now and perhaps thats a good start to enter??


  73. BMY Update – I filled the covered call @ 18.53 net.  Now trying to sell the 17 Dec09 P for $1.05.


  74. If the banks are collaborating to orchestrate equities, then they surely will work today to get the 10 yr auction done without a panic.  Seems  then that a buy TBT rumor should soon turn to "get ready to sell the fact" trade…


  75. What happened to LDK? Good time to short?


  76. Wow, rates are flying all of a sudden!  Dollar about to get whacked I think – people seem to be bailing ahead of the auction with about 1hr to go.  I’ve got to think there is so much pressure on the Treasury to have a good auction that they would engineer one no matter what….

    10-year note at 3.934%, could easily cross 4% if auction isn’t great and that’s very psychological.

    UNG/BC – As a new entry, I would just sell the naked July $13 puts for .70, that either gives you a quick 10% (assuming $7.50 margin) or a $12.30 entry and then you can buy/write August.  Right now, the VIX is so annoyingly low it’s hardly worth selling anything but the Oct $10s at $4.60 have just .50 in premium and you can half cover those with July $15s at .90 and that takes care of most of the premium right there.  This play is really hoping for a nice hurricane spike more so than the fundamentals, which are weak.

    Oh look, CNBC found another oil bull who says Chinese demand makes the fundamentals work.  In fact, GS put out a note last week that projects Chinese demand to be up 115Kbd in 2009 and 343Kb in 2010.  China uses about 8.5Mbd so +350Kbd is not a stretch IF we recover BUT, that increase is off a HUGE drop last year of about 10% (1Mbd) so this is just total BS:

    China has been filling up their SPR, that accounts for ALL of the increased demand in the world this Q.  Rather than actually report facts, CNBC will just lie, lie, lie…


  77. What happened to LDK? Good time to short?


  78. LDK/Wii – I like those guys, wouldn’t short them.  Remember I was telling RMM to stick with them back when they were crashing….  This may be a little toppy but they are right in the sweet spot for winning business with all this stimulus money going to low-bid contracts (their cells are not as good as SPWRA but much cheaper and efficiency isn’t usually trumping price in the bids).

    Sorry about they system being slow today, Matt is working on it.


  79. Rates are starting to drag the market down. Like oil, the MSM wants to spin this as a bullish sign of increased growth and improved risk-appetite. But like high oil prices, it’s equally likely to wind up being a huge drag on the economy.
     
    I actually don’t think a lot of these MSM financial page idiots understand how the Fed works. It does not ‘set’ rates. It sets a target for rates that it tries to defend. The market ultimately decides where rates are going. If the market says ‘up’, that’s going to be a huge drag on consumer spending and RE. Just like oil.


  80. Pharmboy, that is certainly quite a hockey stick on JAZZ, thanks for the update!  Unfortunately I didn’t get that one, I’ve been scaling into your recommendations ARNA, ARRY, and VIAP.


  81. Phil, what is it that you would like us to tell the Senator you provided the link for?  I mean, I understand the gist of what you are saying, and TOTALLY believe all of it… but I don’t really know where to begin with the email.  Nor do I have your grasp of the facts.  Maybe you could provide a template for us to use along with a couple of lines of our own?  I want to help.. but feel a little helpless.  THANKS!


  82. ‘Invest in oil because everyone else is doing it.. is not a sound investment premise to me.’  Totally agree.  I’d rather fight it with words then with money.  And I’d rather miss out then take part in the speculation.
     
    It’s like in the movie American Gangster when Russel Crowe gets asked over and over again why he didn’t just take the million dollars he found in the trunk of a car instead of turning it over to ’Johnny Law’  who would most likely divide it amongst  themselves.  All he could say was that ‘it was the right thing to do’.  You cannot argue with that.


  83. TNX just blew higher. This is very bad…..


  84.  if bankers weren’t buying deferred crude futures, there would be a lot less reason for traders to store oil in tankers. if you give free money to the banks – that is what you get…


  85. matt, speaking of movies…i saw "the hangover" last nite.  pee in your pants, funny.


  86. thanks, phil -


  87. jomama – was the tyson stuff funny – looked hilarious in commercials


  88. Phil:
    re:
    Time to speculate long I think, DIA $90s at .37, looking to enter the $85 puts, now .48 at the same price on a run up, keeping the spread for the Fed BBook unless one side pays off the other before then.  From a scaling perspective, if you go in here (.37 on each side) and add at .23 (when it’s going against you) to avg .30, then a 100-point move on either side should give you a double with a free ride on the other.
    Sorry, I don’t get it. If you’re in at avg. .30 on both puts/calls, how do you get a free ride on the other?
     


  89. I would not touch anything long here if what just happened to the 10-year indicates an auction problem….


  90. Rates/Eric – I agree, this can run away on them very easily.  What they should be doing is defending the dollar, both in value and as a global reserve because, if we lose that status, this currency can float all the way to hell.  Of course, that’s probably the actual plan as they have to repay the debt somehow and what better way to pay off your obligations than with hyper-inflated dollars.

    If you want to stabilize the dollar, take $50Tn worth of land (we have it) and back the dollar with it.  They can work out some aggregation of land and hold occasional auctions of government property (including property they seize) to set a "fair value."   I don’t think there’s any difference between gold reserves and land reserves only nobody has 1.5Bn tons of gold you would need to back $50Tn and no other country in the world could claim $50Tn worth of land value to back currency with (Europe is too crowded so less gov. land and other countries aren’t worth enough) and PRESTO – the best reserve currency in the world!

    Letter to Senator Cantwell/Matt  - I think just say, here’s an article by Phil regarding the oil trade that brings up many of the points you covered on CNBC, I would appreciate it if you could look into Mr. Davis’s claims that there is a massive fraud being perpetrated on the American people by oil traders and oil companies to manipulate the energy markets and overcharge the American people.  Yes, doing the right thing feels good.  As I keep saying re. the oil trades – it’s a very painful process to be a bear (much like being any kind of market bear) but very, very satisfying when you finally get that big win because this thing tends to fall harder than it climbs.

    10-year auction went well so the markets crash.  OK, got it – good for America, bad for the markets. Yeah, this is healthy…  Yeild stays at 3.990% with 2.62 bid to cover (3.40 last  time).


  91.  nice drop eh?


  92. Will "thye" take this down to the 200SMA ??  Uumm. 


  93. Why oh why did I sell out of the DIA 88 puts for 1.35 this morning…is there an emoticon for bashing head on desk?


  94. And does this not also set us up for a big stick today?


  95. Dare I hope for $68.50 on the way to $66 oil?

    DIA/Chaps – I mean when one side goes to .60 or better you cash it out and whatever is left on the other side is profits.  Like right now the $85 puts are already .62 and the  $90 calls are still .24 – that’s the idea of that trade. 

    LOL – 8,650ish yet again….

    QID $30s at $2.40 (up 50%) set stop at $2.20!


  96. Phil…
    DIA $90 now down to $0.27…  still a good entry to collar Beige Book???   Have 30 DIA $86 puts already on playing for a correction.  Should I hedge against a full 30?


  97. Blooomberg: "The Treasury said bidding from foreigners was above average at its $35 billion three-year note auction yesterday. The sale drew bids for 2.82 times the amount of debt available, rising from 2.66 in May. Investors bought the notes after yields rose more than 50 basis points in less than a week."
    LOL
    Hypothesis: foreign buyers know they have the Treasury over a barrel. They force down prices with lots of threats and rhetoric, including a token purchase of IMF bonds. Then, they turn around and scoop the 10-year up.
     
    We had it coming.


  98. Now why do I have this haunting feeling of a big upside reverse coming now that I’m building a bearish position again?


  99. Big upside reverse ?   There will be growth in the spring …


  100. Phil, DIA puts are up now — I’m thinking take that profit now and plan on a stick at the close to save the calls too…


  101. I wonder what part of ‘yield curve steepening’ C buyers don’t understand today? Or is this more of the preferred/common arb nonsense?


  102. Bond people…
     
    The $19B reopened 10-yrs went off at 3.990%, with a 2.62 cover and an OK 34.2% indirect bidder take. The break down, with the demand for more yield playing against the decent $2.62 offered for each buck. The bonds have broken further with the 10-yr tagging 3.986% as the 30-yr, which will have its auction issue tomorrow, is back at the worst levels since Oct 2007
     
    please define the following for me…"reopened", "2.62 cover", "34.2% indirect bidder "


  103. Emoticon/Smasher – I just go with D’oh!   As to stick, coming into the BBook anything could happen, we could have a wild, wild finish or, with a strong dollar and weak demand (slow recovery reinforcing low rates and dollar safety and makes commodities less attractive) we could dump out back to the 2.5% rule with more to come tomorrow.

    DIA/Mirachael – If you have big profits on puts and no calls, why not just stop it out and be done with it.   If you are up say, .25 on the puts and you buy the calls for .27 you are risking the whole thing, not just part and you are betting against profits you already made (the calls can’t win unless you wipe out existing profits).  When you try to work into a position, a mistake a lot of people make is not realizing they lucked out and they should just take the gains and go.

    Yes Cap -In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.

    Exactly the way to play it JDS – the whole idea was to get a free call ahead of the Fed.


  104. new,
     
    The indirect bid comes from bids outside of the non-primary dealer network (usually foreign CBs). The cover is the measure of how many bids there were per bond: 2.62 in this case. "reopened" means they are auctioning more treasuries of a prior issue.


  105. Energy holding the market up;  if / when oil reverses, things will get interesting.


  106. I meant "bids outside of the primary dealer network" for indirect bid.


  107. I’m just happy that the pumpers overnight/this morning got caught !


  108. I like to watch.


  109. Bonds/New – I think reopened is something to do with the rollover from the last 10-year cycle.  2.62 is how many times bid for each $1 of notes offered, so they had $49.78Bn worth of bids at various prices and (they award high bid first) the $19Bn was awarded at an average of 3.990%.    Oh, well Eric knows this stuff better than me I see….

    OIH, XLE, XOM, CVX all flat – they can hold it together through the BBook probably but then the pressure of the NYMEX close if the news is bad…. WOW!


  110. Phil/DIA:
    So it’s a long speculation because you wouldn’t buy the puts unless a DIA runup had dropped them from $.48 to $.37?


  111. Thanks EricL !!


  112.  I wonder if the sudden drop in market is coincident with the shooting in DC that just happened.


  113. Phil
    Just go in from work . What the hey has happen ? what are we what this afternoon.
    thanks in afvance for any heads up.


  114. Phil,
    Sorry rushing to fast.  What has happen for the fall off and what do we need to watch for this afternoon.
    Thanks again


  115. Wow – DIA right to the 200SMA. 


  116. DIA/Chaps – ???  Oh no!  If you didn’t get the puts you should have gotten out of the calls – no way on the naked calls.  Looking back I was not clear on that.  I have to name that and make a post for it so I can refer to the strategy…. 

    WTH/Joe – They just needed an excuse to sell off, it was long overdue.  The timing was based on a 10-year note auction that was no surprise at all.  I guess you could blame the strong dollar for spooking the commodity pushers, who were our leaders.  Well to be fair, not really our leaders, more like 100% of the rally outside of the Nas and half of those gains were OIH-types and solars and chips running off the high-oil story… 

    Oh, what to watch for… Well the 2.5% rule for one thing (see above chart for levels).  The RUT should get there first at about 514, then the Nas at 1,815 (QQQQ 36) so those are the things to watch.  XLF blows 2.5% at 12.15 and that would be bad and USO 38.50 is the big test point.


  117.  triple digits down…. so nice


  118. I’m starting a TLT position by selling July $90 put. because if the Chinese know what’s good for then  they’ll buy this crap up over night.


  119. Any reason why X is still happy??


  120. Phil, with the DIAs.  Had rolled to the Jun 87 short puts, had planned on exiting this morning – bad news – didn’t.   long deltas and short deltas pretty much offsetting now.  Should I just ride it out as the deltas will cancel each other, or roll?


  121. CENX rockin’ due to aluminum prices….


  122. CENX rockin’ due to aluminum prices….


  123. Dollar now going up, especially against the Euro. Commodity pushers this morning were assuring us that the opposite would happen:
    Bloomberg: "….. said Athur Bass, a managing director of derivatives in New York at the brokerage Newedge USA LLC. “The dollar has restarted its dive to lower levels.”’


  124. CENX rockin’ due to aluminum prices….


  125. Keep in mind we could fly 150 points so fast your head will spin in 5 mins so be careful!  Take some off the table if you have profits..  Could go down 150 too so if you are hoping for a bounce – hope is not a strategy….

    X/HP – Some steel maker got big price concessions on ore pricing so X should too.  Again, not a bullish overall sign…

    DIA/Jav – May as well ride but try to lighten up on the losing side on a big move.


  126. So funny, CNBC dissing the auction when CLEARLY hundreds of Billions in FOREX money thought that indicated strong dollar demand.  These guys are the most dispicable commodity pimps on the planet!


  127. FED: 
    Fed:  No signs of Big Boost in Economic Activity This Year; Retail Spending still soft; credit conditions tight; labor market weak; wages falling or flat; prices flat or falling.
     
    Only Mr. Stick can keep the market up ….


  128. BBook quick take:

    NO CHANGE!!!

    • Manufacturing declines.  
    • Job losses moderating.
    • Luxury goods down.
    • Auto sales crap.
    • Lending stable to weak.  Credit tight.
    • Higher commercial real estate.
    • Demand for natural resources DEPRESSED!!!
    • Prices flat or falling except for oil.

  129. This day, the behavior, reminds me of the day after labor day last year when it all started.  Gap up, sell off for the entire day when no one thought it would. 


  130. Y’know, we have a downside FMD in progress …. we should consider if we should play for further weakness … if not for the stick BS, it would be an ez call.


  131. POT $105 puts for $1.15


  132. Phil
    Thanks for the call on DAVRG at .91 initial entry.  DDs from 2 to 16 got basis to .45.  Sold half at .77
    chuck


  133. Nothing .. the market is not moving … its not dead, its just stunned !


  134. CNBC: "Quick get every single anchor on TV to talk up inflation!"

    Watching if we can hold 8,650 on Dow (1.25%), 6,000 on NYSE (1.25%), 514 RUT, 1,825 Nas (they tend to hold 25s), and 12.15 XLF but I don’t think so….


  135. Phil/DIA:
    So when this started, calls were $.37 and puts were $.48. You would’ve bought both at these respective prices and used runup on one "Side 1" to pay for DD on "Side 2," and then DD on Side 1 if subsequent runup on SIde 2 can pay for it?


  136. Not sure why my post was 3X.  Sorry, I promise I only hit submit comment once….


  137. I’m in on DIA 87 calls at 1.11 on the stick play.  Stop at 1


  138.  Phil/DIA – FWIW, your earlier explanation of how to think about DDing vs rolling this morning worked beautifully and the position subsequently fixed itself up nicely after that adjustment + trailing stops. Love it when a plan comes together :)


  139. Not enough in the Beige Book to kill Green Shoots, so I can’t see a big drop here.  The fix is still on.


  140. Taking a shot on OIH short at 110.1


  141. 2:30 oil pump; then market dumps is my theory.


  142. same for POT on 115.83


  143. going wrong way after BBook… frustrating that it didn’t breakdown 8650 with prejudice


  144. Phil

    I have 600 FAZ with CB =$7 what calls should I sell to take advantage of this move?


  145. More psychological now that the 200SMA holds. 


  146. Beige Book highlights:

    Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the Districts noted that the downward trend is showing signs of moderating. Further, contacts from several Districts said that their expectations have improved, though they do not see a substantial increase in economic activity through the end of the year.

    Manufacturing activity declined or remained at a low level across most Districts. However, several Districts also reported that the outlook by manufacturers has improved somewhat.

    Same as everything else, all the "good news" is outlook.  That 60% of consumers who are too dumb to realize their homes have declined in value also answer Fed surveys.  This is probably the biggest problem with economic forecasting, they base soo much on the outlook of clueless people that all data is skewed going forward…

    Retail spending remained soft as consumers focused on purchasing less expensive necessities and shied away from buying luxury goods. New car purchases remained depressed, with several Districts indicating that tight credit conditions were hampering auto sales. Travel and tourism activity also declined.   New home construction appeared to have stabilized at very low levels.  Vacancy rates for commercial properties were rising in many parts of the country, while developers are finding financing for new commercial projects increasingly difficult to obtain.

    That last statement is a recipe for total disaster!

    Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling. Two Districts also mentioned employers’ plans to scale back employee benefit programs.  Manufacturing declined or remained weak in most Districts.  In contrast, Richmond reported a rise in both new orders and shipments.

    Philadelphia reported that the primary metals, machinery, and electrical equipment industries remain especially weak, and Cleveland noted that steel shipments continue at depressed levels. Chicago commented that, apart from Asia, export demand was weak. Dallas reported that construction-related manufacturing and the petrochemicals markets remained weak, while San Francisco stated that activity in the wood products industry was depressed and that demand in the metal fabrication industry was extremely weak. Cleveland, Chicago, St. Louis and Dallas all noted weakness in automotive-related industries. In contrast, Boston, Dallas, and San Francisco indicated that high technology industries experienced some increase in activity, and Richmond noted strengthening across a number of industries. Several Districts also reported that the outlook of manufacturers has improved somewhat, though Boston, Cleveland and Kansas City mentioned that capital spending was weak.

    Districts reporting on nonfinancial services indicated that for the most part activity continued to decline.  Looking at some specific sectors, providers of health-care services spoke of job cuts and lower patient volumes. Activity continued to weaken or remain soft for providers of professional services such as accounting, architecture, business consulting, and legal services.  Transportation contacts in most Districts say that shipping volume either remained at low levels or continued to decline.  Cargo and container trade in Richmond and Dallas remains at low levels, but contacts noted signs of improvement in import and export activity.

    Consumer spending remained soft as households focused on purchasing less expensive necessities. Reports from New York, Minneapolis, and Dallas indicated a modest rise in sales, while retail purchases in Boston, Philadelphia, Cleveland, Atlanta, Kansas City, and San Francisco were flat or mixed. The other Districts experienced declining sales.  Travel and tourism activity declined, and vacationers are tending to spend less.

    Although the residential real estate market remains weak, agents in the New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco Districts reported an uptick in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market. New home construction appeared to have stabilized at very low levels in Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco, although Kansas City reported an uptick in construction. Home inventories were trending down in Philadelphia, Richmond, Atlanta, Kansas City, and Dallas. However, Chicago reported that inventories remain elevated.  Commercial real estate markets continued to weaken across all Districts.

    Most Districts said that credit conditions remained stringent or tightened further. Reports  New York and Cleveland said that delinquencies had increased across numerous loan categories, particularly those tied to real estate.

    Energy activity continued to weaken across most Districts, and demand for natural resources remained depressed. Coal production and prices fell substantially in the Cleveland District. The number of drilling rigs operating in the Kansas City District is sixty percent below its peak last fall, and working rigs in Texas have fallen fifteen percent over the past six weeks as global demand for oil remains low.

    In manufacturing, while employment levels remained low, several Districts saw signs that job losses may be moderating. The New York, Richmond, Atlanta, and Kansas City Districts all reported less severe employment reductions in recent weeks, with some optimism that manufacturing employment levels may soon stabilize. This, however, was balanced by reports of ongoing manufacturing employment losses in the Boston, Cleveland, Chicago, and St. Louis Districts.

    Reports from a number of Districts indicated that pricing at retail remains very soft.

    I have certainly seen better reports.  It’s not that this is so terrible, it’s just that this run-up into a report like this is in no way justified.  If we were at 8,000 and got this report, I would say "Yay, now we can go to 8,650 over time."  At 8,650, there’s a lot of stocks that have gotten way ahead of themselves based on assumptions that simply are not playing out.  This is very like to follow through to the downside once people get a chance to examine it.

    Oops, Cramer now saying take profits in the oil stocks he told you to buy yeserday – What profits Jim?

    Speaking of which – XTO finally breaking back down…


  147.  Ha… Cramer acknowledging oil being hoarded on tankers… chuckle


  148. is this twitiching or signs of mr..you know who?


  149.  I suppose since we managed to go down triple digits today, Mr. Stick may decide to come out and play ball during the final hour… this is the third time in 5 trading days we bounced off 8650 area


  150. Roll/Steve – It’s always a good move if it’s your long-term protection.  In theory, you should be making more than enough on the long side to offset it and it lets you ride out the dips (and we have many) without getting forced out of your longs at bad times.
    Understood and I have attempted to size this correctly, it seems to be ok. What I don’t really know is under what circumstances I would cash this protection in ……


  151. OK, they closed the NYMEX at $71.23, USO $38.95, now we’ll see what kind of sell-off.

    BIDU came down nicely.

    V and MA flying (don’t know why), COF chugging along.

    DIA/Chaps – The idea is you buy one side, hopefully the cheap one, on momentum (in this case the calls) and look to fill the other side when the momentum stops.  If you buy at .37 and have to fill at .45, maybe the entry was wrong and you get out even (you shouldn’t have lost on the calls, just not made much or any).  If you are close, maybe .42 but not .37, it’s a judgement call as to whether you think it’s worth the extra nickel but you can always add a few to either side (the idea is to scale) as it gets cheaper.  If you are NOT balanced – the trade is in trouble and  you should have an itchy finger to kill it.

    3x Pharm – seems to be the server issue, don’t worry about it. 

    Good stick play Smasher!  If no stick today – get worried.

    Cool Kwan!

    FAZ/Red – I’d DD (5.78 basis) and sell full cover of  the Oct $5s for $1.20 and 1/2 the Oct $4 puts for $1 for net $4.08/4.04  If you want to have more upside, leave off a few calls.


  152. This "rally" still looks limitied to Energy and Commodities; anyone see it different ?


  153. POT now up $2+ since Beige Book …. i missed the part where the FED said "buy POT".


  154. And couple that with a bounce today off the 200SMA for DIA.  Unless we go down in the last hour, sure looking like this will close above the 200SMA.


  155. I moved the call stop from 1 -> 1.10 -> 1.20
    Expecting it to trigger shortly.


  156. Well CNBC had a very different read on the Beige Book than I did.  They say it’s green shoots everywhere!

    8,650/Merk – Hey, what do you think – that I pull these numbers out of my ass?  8-)

    DIA/Steve – The set-up of that play is you should expect a 30% gain on a 300-point drop at least.  A 300-point drop would be 3.5% on the Dow so that should offset a lot of regular losses you may take.  You cash it in when it stops out at the bottom and then you can use the cash to scale in or roll the bullish posiitions, then establish a new hedge but, if expecting a bounce – with more covers….

    Rally/Cap – I do not see a rally, I see an oil bounce.

    POT – That’s why I wanted to stay in cheap puts.  Now .95, not great loss, not even worth changing… 


  157.  LOL… Phil… what its not favorite pick 4 lotto number?   chuckle


  158. I don’t know, it’s simple enough for me.  I read the actual report and make a decision.  I don’t understand these people who don’t read the report but invest millions of dollars based on what CNBC says the report says…

    Wow – CNBC found a guy who says "Energy is the place you want to be in this market."  What a coincidence…. 

    I think we can save the US economy by simply taking CNBC away from GE (and firing Dennis, even before Kudlow).


  159. Trying to get some POT 105 puts for 0.90, no takers :(


  160.  Mr. Stick … swing and a miss… could be a strike out today?  
    batter batter batter batter missssssss  :)


  161. Phil,
    Quick question, based on the 10 year auction today. Best guess for the 30yr. tomorrow. How to play it, I’ve got to make a play today as I will be in the field tomorrow and dont want ot miss all the fun.
    Thanks


  162. Back in OIH short; call me crazy.


  163. What ! my first day of not being a bear (cant bring myself to say bull !) the market is down and no stick save. Wont stay converted at this rate :-)


  164. MS getting killed, just in time for my $25 june callers to expire worthless. yey (fingers crossed)


  165. Folks: a couple weeks ago someone recommended SMH $20 puts so i took a chance on a small number, then dbld dwn and now could dd again. Are we still thinkin this is a good play?


  166. Phil how about writing USO calls naked? 39 are at $1


  167. Phil,
    BIDU seems to be in a channel. I’ve been buying puts and calls as it goes up and down. Do you think it’s time to buy some calls?
    Thanks


  168.  Man I hope this day ain’t one of those "hey let’s sucker the bears today for an ambush tomorrow"
     
    I gotta buy some "safety calls" here so I can scale into a bear trade with some sanity


  169. MS getting hammered today.  JPM too.  XLF right on 2.5%,, everyone else holding over 1.25% except the Nas.

    OXPS getting hit too – that’s interesting.

    BIDU closing in on 5% – great call this morning by Eric – those are the kind of observations that make money!

    Nice break for C escaping the Dow today!  AA, MSFT and XOM are the only greens in the index.

    Volume 150M, another slow day overall – very unusual for Fed day of any type.  Most cash must be sidelined.

    30-year/Joe – I think anyone giving money to this government for 30 years for 4.5% is insane so hard to say.  I think, just like today, it’s a "must win" or there will be chaos so we can expect the same as today – even though today’s result is subject to debate.

    Tomorrow at 8:30 we have retail sales and they sucked unless WMT made up for everyone else.  April was -0.4% and somehow they have May pegged at +0.3% so I’m thinking that will be a disappointment.  Coming off a poor BB, a bad result there will really depress people. 

    Somebody’s hitting the buy button but it seems targeted, not like the broad stick action.  Still working though….


  170. I will NOT buy this BS STick !
     
    FU STick !


  171. Seems to be running up on the OIH/XLE pump.  Not getting nervous yet with holding puts.


  172. OXPS has a blurb on their monthly activity (U can read in TOS).  They were up slightly on receipts and membership.  Their new trading platform just came out as well.  I am selling July 20 C, buying Jul 15 P JIC they blow through support at 17.5.


  173.  Cap magic…  git ‘em


  174. Phil / pull CNBC plug / cut Neal head off / Recovery:  LOL!


  175. XLF down 2.25%, that’s not a stick save.  More like a desinated hitter coming off the bench. 


  176. SMH/Morx – The June $20 puts?  Not if this stick works (and 8,700 at close is working). 

    USO/Cisco – I don’t see them going back to $72 but then again I’ve been wrong since $66…  8-)

    BIDU/John – I agree with puts into the channel but I don’t play both sides of a channel, just the side I believe in and am willing to roll or stick with.


  177. How can they do this (stick) day after day and no MSM reports anything about it?  It is just shocking. IF you don’t take short profits by 2pm they hand your head back to you.  How long can they afford to keep it up like this?  It’s just insane?!?!?


  178.  10 minutes left and down 50 points… I wonder if they stick it for a 4th "unch" day in a row?


  179. This is really such unbelievable BS !   Take a look at sticks on SPG, SRS, SKF let alone the indexes.
     
    Frigging joke man !!
     
    I will keep taking their money !!


  180. Is there anything left to be said?


  181. I cannot believe the cajones on the funds who are willing to risk the retail report after that BBook when WMT is a wildcard. 

    LOL Merk - I guess it is one of those days.  How can you be a bear in this market?  If your stock goes down, just BUYBUYBUY more….  It’s ridiculous.

    Nice gain on the DIA calls though, out of them.


  182. How can CNBC even put up a strategists call for DOW at 12000 by September?  They are worse then the Enquirer!


  183. damn… huge intraday down move and all we get at the end is down 24???….
    tough for me to watch this 


  184. RIMM  Talk about big premiums, with the Stock at 83.45, you can sell a Jun 85/80 strangle for $7.25.  


  185. Dow 12,000?!?  Hey the Sept $100 calls are .30 and that’s $20 in the money!!!   8-)

    Down 24/Merk – Well we opened up 100 so keep it in perspecitve.  Last Friday they only lost 75 from the open and we closed above 8,750 and the next day we dropped right back to 8,650 (where, SURPRISE, we were stick saved again).

    Again this guy saying "A great market doesn’t give you a chance to get in."  And the next guy agrees – Now THAT’s investigative journalism!


  186. Oh, coming up next: "Big Bargains in REITs!"  The logic is BECAUSE they are having so many problems, they are cheap!  Cap, you have to love this…


  187. CNBC has become the QVC for stocks and commodities.  All they need now is a call in line for us to oohh and ahhh about our purchases!  They are an outrage.


  188. LOL.  Straight up the last 15 minutes.  What a joke.   Have you ever wondered what it’s like inside the trading rooms of these companies, like Glodman, like Blackrock, large Banks, etc that do this predictably everyday?  What do they wait for to buy?  Do they wait untiil they see the market having trouble getting through a price then come in with large futures orders above the ask?  I would love to see that.  How they engineer this.  We have an ascending channel that put its third attempt at a new high today and was promptly rebuffed.  A fourth time will be a gift for bulls.  In an unnatural market like this one --  one where obvious engineering (manipulation perhaps--I mean come on have you ever seen a market do this?  Stick-stuff at the end?)  has the blessing of the government — anything is possible.  Without that influence this market should fall. 


  189. Yeah Phil.. I hear ya… I anticipated a breakdown of 8650 and bought more puts than I probably should have… instead of saving most of my ammunition for a scale in at higher levels. I can still do some scaled buys, but I’ll be sweating alot more if we go to 9000
     
    now I smell the stink of a bear ambush in the works… I gotta feelin I’ll be up early AM tomorrow…
    man I hope they don’t friggin gap up tomorrow… that would totally suck


  190. "has the blessing of the government"
     
    I made this comment to a friend last week that I could picture Obama saying to Blankfein and Geithner "just fix it, I don’t care how you do it, just fix it"
    And then the financial alchemists going into their dark rooms to come up with a plan.  I wouldn’t be surprised if some highly illegal activity is let slide in the name of national security. 


  191. Any gusses on where we open tomorrow?  Slightly up, slightly down.  Way up, way down?  I say something like gap down, rally in the AM weakly, sell off around 7:30-8:30.  We need the right open for that to happen. 


  192. Check out Mr. Stick in action & other stock market nuttiness …..
     
    http://capmarketspot.blogspot.com/2009/06/june-10-beige-book-market-shenanigins.html 


  193. "I wouldn’t be surprised if some highly illegal activity is let slide in the name of national security. "
    Exactly.  That’s what I meant by what do you get when you cross a corrupt/broken financial system with an overly idealistic president?  The US markets.  A president who believes that it’s OK to nreak the law if in his view it serves the publics best interest.  I’m sure if you got a candid statement from Obama if asked would you if you could drive the markets back to early 2008 highs regardless of how  much money it took or how many laws you had to break would you do it?  I’m sure his answer would be yes.


  194. Seems we have the support of the 200SMA on $DJI / DIA.  Going to need some catalyst to break below it or smash above 8800 and move higher. 


  195. This is an outrage, for sure.  REITs ?  Hah, that’s funny; I don’t care, I will be happy to reload SPG shorts on the next pump.
     
    Phil is right, we did have that major gap up pre-market … I turned on TV at 7 am and was like WTF ?   I was like that pot head in the video who breaks stuff while saying MF this and that !
     
    Anyone reading anything positive into the Beige Book headlines is smoking some serious crack.
     
    Guess we gotta be patient; oil WILL crack !


  196. Plus, Blankfein basically told us this morning that GS is now short … that was an all clear !


  197. Gentlemen.. I feel your pain!  This is something I’ve been carping about since April.  To a certain extent, it’s now become a self fulfilling prophecy.  People position themselves for the stick.  Bears cover.  Bulls go long.  All you can do is get out of the way of it… or milk it (if you can live with yourself).
     
    I think it has more to do with timing.  We aren’t going anywhere until July.  I think the market will sell off into earnings.  June will be an up month.  The fourth in a row.  Very unusual.  And enough of a statement to get more money off the sidelines.  In July, they’ll take it from them.  Again.


  198. Cap, who is Blankfein?  Where did he say it?  CNBC.  Sorry I missed that..


  199. Matt1966, interesting ideas. Your view is that the street will be skeptical of earnings even though earnings were percieved as good last qtr?  Given market action so far it’s possible.  That would run counter to what’s usually happened in the past but who knows with the way things look now that certainly looks likely.
    Cap, I missed that interview.  What did he say about GS?


  200. brianma, I’m usually looking for the counter intuitive play.  I don’t always follow through with them.. but I’m looking for them.  May is usually a sell month.  It wasn’t.  July is usually a decent month.  It may not be..


  201. Blankfein is the CEO of Goldman Sachs.
     
    Cap – he said they are short? Where? When? What? Any links available?




  202. Got this in my email late today:
    This guy has been back in forth with his calls on the market. 
    As you can tell by reading he is all about his Japanese Candlestick Charts.
     
     
    Bungee Jumping with the Candlestick Doji: the Crash of 1987 and Today
    Something very unusual just popped up on the charts, and I need to share it with you.
    In Candlestick-speak, a "Doji" pattern occurs when the opening price and the closing price for a given time period are the same, or nearly so.  The Doji is understood to be a demonstration of "indecision," and is a warning of a possible price reversal.
    On October 2, 1987, the DJIA open was 2639.20; the close was 2641, clearly a Doji.
    On October 5, the next trading day, the open was 2641.00 and the close was 2640.20, also clearly a Doji.
    Note also that, as between the two days, the closing prices were nearly the same: 2641 and 2640.20.
    The Crash followed.
    Now to the current day:
    On June 5, 2009, the open was 8751.65; the close was 8763.10.  A Doji.
    On June 6, the open was 8759.30; the close was 8764.50. 
    On June 7, the open was 8764.85; the close was 8763.10. 
    All of them qualify as Doji. 
    Now note also that, as between the three days, the closing prices were nearly the same: 8763.10; 8764.50; 8763.10.  That’s a truckload of Indecision!
    Very interesting.  Will history repeat?  We shall see.  However, coming at the top of a strong advance, I read this pattern as Bearish.
    Multi-bar Candlestick patterns which display inter-day closings at or about the same price ought to have a name.  I propose "Kobe Moonbeam" for the bearish version and "Kobe Sunrise" for the bullish version.


  203. Look at the EOD pump in FSLR !


  204. Don’t expect comments from a Blankfein to be that blunt; but when he says this, you need to pay attention:
     
    Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein called the current global recovery "shallow." Blankfein said the recession is likely to be long and protracted. Blankfein was making the comments at the International Organization of Securities Commissions conference in Tel Aviv today.
     
    Its no different than what anyone else would say, we say it here every day.  But when Goldman CEO says it, it is almost telegraphing that they are going short and you should do.
     
    Just my opinion of course !


  205. To illustrate the REIT equity raising scam, consider this research note from Merrill, the UNERWRITER of CBL’s 67 million share, $6 per share offering:
    They underwrite and sell the deal, but rate is as an UNDERPERFORM with a $5 price target !!
     

    Reducing leverage via equity offering
     

    Like many of its peers, CBL tapped the equity markets and is selling 67.1mn shares at $6.00 (assuming green shoe) thereby raising gross proceeds of $402.6mn. While retail real estate fundamentals should remain weak and we still have expectations for a number of store closings across the nation, CBL’s improved balance sheet should allow the company to better weather the storm even though it dilutes the company’s long-term earnings power.

     

    Reducing FFO, but raising NAV and PO
     

    Given the dilutive impact from the equity offering, we are reducing our Normalized ’09 from $2.92 to $2.53 and our ’10 FFO estimate from $2.81 to $2.04 as the company uses the proceeds to repay indebtedness. However, despite the dilution the equity offering places CBL in a far more secure position and we are no longer placing a severe discount on our forward NAV to arrive at a price objective. Currently our forward NAV (assuming equity offering with green shoe) is $5.05. Our price objective now assumes the stock trades "in-line" with this forward NAV. Maintain Underperform rating. 

     

    Balance sheet update
     

    The $402.6mn of gross proceeds brings greater clarity to CBL’s refinancing efforts over the next 3 years. The equity raise combined with extension of secured and unsecured credit facilities resolves significant amounts of pending debt maturities and provides CBL with sufficient liquidity through 2011. CBL has received commitments to modify, extend and close more than $1.0 billion of bank facilities.


  206. Cap-
    I think you brought up an excellent point.  Now that GS is going to pay back TARP money, they need to replenish their coffers.  What better way than to sell the stocks and commodities that they drove up over the past few weeks.  I’ll bet (with the USO put position I opened today) that we will see some movement down this week.  I am not falling into a total bear trap though.  I plan to buy on the dips. 
    Celeste


  207. I just watched the video of Blankfein.  It seems to me that the comments attributed to him; are comments he made about people who would be skeptical of a recovery … and not necessarily his comments.  Most of the talk was about complimenting govt/central bank action that reduced but did not eliminate the risk of the "wheels falling off the bus" and perhaps helping recovery come sooner; but not necessarily just yet.


  208. The Housing Short Report: May: Short Interest Rises for Builders for the First Time in 10 Months, Driving Solid Underperformance

     

    In this monthly report we analyze short interest for both the Homebuilding and Building Products sectors, which we believe can help provide some insight into the stocks’ past and future volatility. We monitor short interest on both a percentage of fully diluted shares outstanding (SI) and a days-to-cover (DTC) basis.

    Homebuilding short interest for the 30-day period ended 5/29 rose 80 bps to 13.9%; we note this is the first rise in the overall group since June 2008 (the larger-cap names did, however, rise last month and in February). This month’s rise was led by the larger-cap names, up 102 bps, while the smaller-cap names rose 54 bps; DTC rose 0.9 days to 3.7. SI rose the most in KBH (up 320 bps), CTX (+242), and HOV (+226), while TOL, LEN, and MDC fell the most (down 131, 106, and 64 bps, resp.). Over this period, the stocks fell 9% (S&P: +5%), with the larger-caps down 17% and the smaller-caps flat, we believe driven by waning enthusiasm regarding earlier possible signs of stabilization in the housing market.

    Building Products’ SI fell 23 bps to 7.3%, while DTC rose 1.2 days to 4.0. SI fell the most in FO (-179 bps), MHK (-144), and SWK (-142), while MAS, USG, and WHR rose (+215, +126, and +23 bps, resp.). Over this period, the stocks fell 11%.

    Recommendations – We maintain our negative sector stance given our outlook for high inventory levels, relatively weak demand, and foreclosures in 2009 to drive further price declines and large impairment charges for the builders. However, we maintain our relative Overweight ratings on MDC and LEN. We are also negative on the building products side, but highlight our relative Overweight rating on MAS.


  209. Does CNBC not report the news ??
     
    http://littlegreenfootballs.com/article/33900_Shooting_at_Holocaust_Museum_in_Washington_DC
     
    Security Guard was killed.  Gunman a white supremacist nutcase.


  210. Phil,
    Thanks for the suggestions at 10:21. I got out of the trade completely at 1.80 with a cost basis of 1.76. Just broke even with a small profit ($ 300).


  211. LOL Cap they reported that the world is still full of nutters in a different way though, by pointing out that people are still keen on buying oil and commodities…..
     
    I don’t know how to read Blankfein’s comment at all. He was talking about the economy rather than the stock market. Is it possible the stock market can rise with a poor economy?
     
    I expect anything he utters in public is carefully tuned to sound good while conveying as little information as possible. There is a deeply ingrained "don’t look at us, we’re not here" GS culture.


  212. Biden needs his own reality show ….
     
    The vice presidential gaffe machine was in high gear Tuesday. During a press conference call with reporters, Joe Biden was asked to explain how exactly the administration plans to create 600,000 new jobs this summer.
    But according to The American Spectator, when reporters asked the VP to explain how the White House even came up with the 600,000 number, he asked for a pass, saying a question like that is "above his pay grade" and, "I’m sorry, I’m not an economist. My background is in foreign policy."
    That is so comforting coming from the guy who President Obama tasked with implementing the stimulus plan.


  213. test


  214. PHIL / POT:
     
    You took POT 105 puts for 1.15.   Given the run up, are you holding, DD, or punting ??
      Closed at 80/85.
     
    I am short shares at avg. of 116+ … did not like the idea of buying the puts so close to expiry.


  215. That’s strange – I lost a post totally… 

    Well suffice to say I had many wittiy and insightful comments and we’ll leave it at that…

    8-)


  216. Wow, oil back at $71.80 and gold still at $957 and no index movement and no dollar movement so I’m back in with a short on the futures.  – hopefully it’ll be Xmas again!


  217. Ha!  Found my comments, they were under the broker post – I just got mixed up as I have one window I write in and one I read in….

    CNBC/Matt – LOL!  I wish I had a TV show on the markets with a staff to do parodies like the Daily Show, endless amounts of material from these jokers. 

    Up/Bri – Notice UP is the title of America’s #1 movie too.  Coincidence?  I don’t think so…  Now where did I put my tin-foil hat?  8-)

    Gap up/Merk – I don’t know, they gapped up 100 today and it was a great opportunity to short.  Retail at 8:30 is key.  If they rally off bad retail, I am literally going to scrape my brain out with a spoon and put it all on XOM….

    Blessing/Smasher – I think this is the clip of how it happened.

    By the way, as a frequent clip user I think it’s ridiculous that people like Fox stop YouTube, et al from putting up clips of their shows and movies.  While I understand why you would not want a whole show to go out – what on earth is wrong with letting people post 2 min clips of your stuff – It’s advertising you idiots!  It really pisses me off when I want to use something that you know should be available but, obviously, some psycho corporate attornies have had everything removed…  There, I feel better…

    Tomorrow/Bri – Yes, that sounds right…  8-)

    Charts/Cap – I have to learn to do that stuff….

    Market rewind/Bri – Er, so would I and so would many compassionate people who realize the retirement savings of tens of millions of people was wiped out in a crisis so large that it will affect 2 generations of investors.

    Video/Cap – LOL, I would pay money for that video starring you!  Maybe do one about Obama…. 

    China/Occam – Good find!

    Candles/Chuck – I don’t think that you can use any pattern for what is going on here.  Never before have markets been tinkered with to this extent.  Every country in the World is pursuing an agenda but derivative give them all too much power – China can move commodities across the globe, Russia can attack the dollar, Japan can deflate the Yen, China hods the Yuan down, OPEC jacks up crude, Goldman jacks up all commodities,  the US borrows $3Tn at 3.5% and lends $11Tn to GS and Co at 0.25% – it’s just nuts.  I don’t know what these guys say to each other at these G20 meetings…  It used to be that the actions of one country did not immediately affect another but we are all so closely tied together financially now and finance is an instant thing these days – this just simply hasn’t happened before and I don’t think the people in power understand what they are doing from a big picture persective.

    FSLR/Cap – I’m waiting for them to form a good top, not yet, maybe back at $195.

    CBL – That’s wild!

    GS/Celeste – If they are saying go bearish, then they already sold theirs but if they sold theirs, oil wouldn’t be here so Cap is probably right, he’s taken a bit out of context.

    DD/B1 – Nice!

    Poor economy/Steve – Yes the market can rise on a poor economy because if XOM makes $25Bn this year with a p/e of 15 ($75 a share), after 5 years of 15% inflation and flat earnings they will still be making $50Bn with a p/e of $15 and $150 a share…  So if your crappy econonomy is inflationary, then the market can go "up" but keep in mind that this is the S&P priced in barrels of oil.  On Apr 20th we got 18 barrels for one unit of S&P and now it’s 13 even though the S&P is up 15% so the S&P is up but you can drive 27% less with the money you cash out for, all in just 45 days.  Hyperinflation?  You’re soaking in it!!!


  218. $71.88 oil.  DD is at $72 (assuming it doesn’t break over). 

    Gold actually going lower while this nonsense is happening.

    Euro $1.40, Pound $1.64, 98.25 Yen and .80 Aussie Dollar (can you believe Australia’s currency is kicking our asses?).  

    From the futures it looks like the Nikkei is going to gap up almost 200 points on dollar strength.


  219. Cap / Steve :  thanks for the info..
     
    Phil:  please don’t scoop out your brain..


  220. Oh, here we go – $71.98!  I say $72.05….


  221. Brain/Matt – Must remove brain…. hurts too much… to trade….  Kind of like those Hulu commercials.

    $71.99 – what a tease!


  222. Damn, $71.88 again.  It’s frustrating when your 2x doesn’t trigger that close…


  223. LOL – now we have Dave doing Being There references on his blog!


  224. Hey, he’s stealing my material !!


  225. MOSCOW (Dow Jones)--Russia’s central bank said Wednesday it plans to reduce the proportion of foreign exchange reserves it invests in U.S. Treasury bonds as Moscow continues to bemoan the dollar’s status as a global reserve currency.
    "We plan to cut the share of U.S. Treasuries since the window of opportunity to work with other instruments is opening," Deputy central bank Chairman Alexei Ulyukayev told Russia’s State Duma, or lower house of parliament, according to a report by the Interfax news agency.


  226. Good morning Phil and everyone
     
    futures relentlessly green… looks like it could be another tough day being bearish
    chart has really gone flat line with four consecutive dojis… should be a big crash coming after that kind of pattern 


  227. Economic warfare ??  
     
    Alexei Miller, chairman of the Russian energy group Gazprom, raised the stakes further when he reiterated last year’s estimates of $250 a barrel. "This forecast has not become reality yet, given that the [credit] crisis gained momentum and exerted a powerful impact on the global energy market. But does this mean that our forecast was unrealistic? Not at all."
     
    http://www.guardian.co.uk/business/2009/jun/10/oil-market-reserves


  228.  Another reason to take the baseball bat to the computer monitor…
     

    "Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement. California’s revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
     
    http://news.yahoo.com/s/nm/20090610/pl_nm/us_economy_california_revenues


  229. Good morning!

    LOL, friggin’ Russians….  Oil topped out just under $72.20 but then fell to $71.80, then back to $72.20, then $71.40, then  $72.20 again and is just coming off $71.80 so I haven’t missed anything since I last looked…

    Gold is still $954.7, Euro $1.40, Pound $1.6475, 97.81 Yen and .8149 Aussi Dollars.

    So no big change in currencies and no change in gold means oil is BS’ing again.

    Now we have a new channel we can reload futures shorts at $72.20 (if they can hit it again).


  230. Good Morning Phil and all


  231. Good Morning everyone.
     
    They’re pushing the futures up again – how do they make money when all it does is fall at the open ?  MSM pushing the fact that the recession is over. UK is predicted to be growing again. (Have they been shopping lately ?) Oil predicted to go back over the $120 mark. I only saw one negative report on the FED book. When re-reading Phils summary above there were very few green shoots, it was quite depressing. Who cares ?


  232. Asia Markets :    Thursday, June 11, 2009
    (The following is from Yahoo; please cross check with other sources to confirm.)   

    Australia All Ordinaries*                          4046.70     30.40     0.76%
    Nikkei Average*                                        9981.33    -10.16    -0.10%
    Shanghai Composite*                            2797.32    -18.93    -0.67%
    Hang Seng*                                            18791.03        5.37     0.03%
    Seoul Composite*                                   1419.39        4.51     0.32%
    Singapore Straits Times*                       2381.81      -9.41    -0.39%
    Bombay Sensex*                                   15411.47    -55.34    -0.36%
    Baltic Dry Index                                         3452.00    -66.00    -1.95%

    * at Close


  233. Asian Market Mixed, Resource Stocks Rise

    Commodity-related stocks in Asia and the Australian dollar rose for a third straight day Thursday as oil prices extended gains, keeping a rising trend in raw materials prices intact. U.S. Treasurys edged higher, after the benchmark 10-year yield advanced to 4 percent Wednesday, the highest since Oct 16, on concern about how expensive it will be for the U.S. government to finance its growing budget deficit.

    Japan’s economy shrank a revised 3.8 percent in January-March, confirming a record contraction in the world’s No.2 economy, but economists are forecasting a gradual return to growth. Still, weak capital spending and personal consumption will likely be a drag on growth in the coming months as domestic demand crumbles and economic outlook remains highly uncertain.

    Japan’s Nikkei briefly edged above 10,000 to an eight-month high before slipping 0.1 percent on the day, with worries about rising U.S. interest rates offsetting a jump in steel shares on a brokerage upgrade.

    South Korea’s KOSPI ended 0.3 percent higher after a volatile session, with futures buying on the day of their expiry boosting markets, while reaction to the central bank’s decision to keep the policy rate unchanged was muted.

    Australian shares closed 0.6 percent higher, with miners leading gains for a second day amid speculation that many could be in the running to attract Chinese investment.

    Hong Kong shares pared back earlier gains to close flat. Local property stocks were beaten down on worries about rising interest rates, which hit Wall Street shares on Wednesday.

    Singapore’s Straits Times Index dropped 0.4 percent.

    China’s Shanghai Composite Index fell 0.7 percent. Steel shares were weak. The official China Securities Journal cited a senior executive at China’s steel industry group as saying that China was ready for a breakdown in iron ore term talks with major global miners and was prepared to cut steel output if ore supplies are curbed as a result.

    Bombay Stock Exchange’s Sensex settled lower by 0.59%.  Bulls took a breather on Thursday after a massive rally in the previous session. Investors took to profit booking across all sectors barring the metal pack. The subdued mood across overseas markets weighed on sentiment as well.


  234. European shares flat, trade thin ahead U.S. data

    European shares traded slightly higher early on Thursday, led by healthcare stocks, with trading thin ahead of U.S. economic data due later in the session. U.S. weekly jobless claims and retail sales for May are due at 1230 GMT, both sets of data expected by analysts to shed more light on whether the world’s largest economy is on the mend.

    Economists polled by Reuters expect a 0.5 percent rise in retail sales compared with a 0.4 percent decline in April. Excluding automobiles, sales are expected to rise 0.2 percent compared with a 0.5 percent drop the month before.

    At 0830 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.3 percent at 882.91 points, having closed 1.2 percent higher on Wednesday.

    Pharmaceuticals added the most points to the index, with GlaxoSmithKline rising 1.7 percent after positive analyst comments. Morgan Stanley upgraded the stock. The DJ STOXX healthcare index .SXDP rose 1.1 percent.

    Industrial engineering was another sector showing strength, up 0.6 percent, after Goldman Sachs upgraded capital goods to "attractive" from "neutral".

    Also among the gainers, Allied Irish Bank climbed 9.3 percent on news that it would exchange up to 2.7 billion euros ($3.79 billion) worth of bonds in a swap programme to boost its core Tier 1 capital ratio.

    Rio Tinto, which rose as much as 20 percent between June 4 and 10, distinctly outperforming the DJ STOXX European basic resources index, was down 1.3 percent. Shanghai copper fell half a percent on Thursday, with investors hesitant to buy into the recent rally, fearing a downward correction in prices on weak fundamentals. The rally in base metals has been partly boosted by economic data showing positive signs for a recovery in the global economy.

    Around Europe:

    FTSE     4,455.16     18.41     0.41%
    DAX        5,078.03     26.85     0.53%
    CAC         3,322.75       7.48      0.23%
    SMI        5,490.09     53.70     0.99%


  235. Oil Rises Above $72, IEA Demand Outlook Supports

    Oil firmed above $72 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand, adding to signs the fall in consumption may have bottomed out. World oil demand will contract by less than previously expected this year, the International Energy Agency, which advises 28 industrialized countries, said as it raised its 2009 forecast for the first time in almost a year.

    "These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession," it said in its monthly Oil Market Report.

    U.S. light crude [ 72.01    0.68  (+0.95%)] rose, near an eight-month high.
    London Brent crude [ 71.18    0.38  (+0.54%)] also gained.

    Falling inventories in top oil consumer the United States also supported prices.

    Gasoline inventories fell 1.6 million barrels last week against forecasts for a 800,000-barrel build as gasoline demand rose by 0.4 percent over the four-week period, the start of the U.S. summer driving season, the EIA said. Distillate stocks, including diesel and heating oil, fell by 300,000 barrels, versus analysts’ expectations for a 1.4 million barrel increase.


    Dollar Eases, Focus on US Auction

    The dollar edged lower against a basket of currencies on Thursday, erasing some gains made after benchmark U.S. Treasury yields rose to eight-month highs, as caution set in ahead of another U.S. government debt auction. The dollar was also pressured in the wake of Russia saying it would divert some of its reserves from U.S. Treasuries to IMF bonds, a move that may be highlighted when the world’s largest emerging countries meet next week. Higher-yielding and commodity-linked currencies also gained on the back of views the global recession may be bottoming, as stock and oil prices gained.

    The dollar index, a gauge of the greenback’s performance against six other major currencies, fell 0.3 percent to 79.981 from late U.S. trade on Wednesday.

    The euro [ 1.4015    0.0037  (+0.26%)   ] rose against the dollar, resuming its rise towards a more than five-month high of $1.4339 touched last week before falling sharply near $1.38 earlier this week.

    The euro [ 137.26    0.11  (+0.08%)   ] was flat against the yen.
    The dollar [ 97.9    -0.20  (-0.2%)   ] slipped versus the yen.

    Meanwhile, the New Zealand dollar rose after the Reserve Bank of New Zealand (RBNZ) kept its key interest rate steady at a record low 2.5 percent, the first pause in nearly a year, but left the door open to resume its aggressive easing cycle to combat recession. The kiwi [ 0.6426    0.0175  (+2.8%)   ] climbed against the US dollar.The currency rose nearly one percent against the yen [  62.93    1.60  (+2.61%)   ].

    Markets were stirred after Russia’s central bank said on Wednesday it would diversify its currency reserves by cutting U.S. Treasury purchases and buying IMF-backed bonds. China has also said it would purchase IMF-backed bonds. Brazil, Russia, India and China are set to meet in Moscow on June 16, and markets expect further talk about diversification of reserves away from the U.S. dollar.

    Gold edges higher as dollar slips

    Gold was bid at $954.60 an ounce at 0929 GMT, against $953.65 an ounce late in New York on Wednesday.

    Stronger crude prices also indicate interest in commodities as an asset class. A global commodities benchmark, the Reuters/ CRB index .CRB, closed at a seven-month high on Wednesday.

    Buying by exchange-traded funds was relatively soft, with neither the largest gold ETF, the SPDR Gold Trust, or London’s ETF Securities reporting inflows on Wednesday.

    Gold buying in the world’s largest bullion consumer, India, remained slow on Thursday, with dealers unwilling to make fresh purchases as the wedding season nears its end. On the supply side, mine output from South Africa fell 13 percent in volume terms in April from a year before, official data showed.

    Meanwhile silver was flat at $15.15 an ounce, platinum was at $1,262.50 an ounce against $1,261, and palladium was at $257 against $253.

    ETF buying of platinum continued, with ETF Securities reporting another small inflow of just over 3,000 ounces on Wednesday. Holdings of the company’s ETFS Physical Platinum fund have risen 42,700 ounces or 14 percent in the last week. While ETF demand is likely to support the market, price gains could be limited by the chilling effect of this on jewelry buying, one of the only buoyant areas of consumption at a time when industrial demand for the metal is languishing. "Further platinum price gains could dampen Chinese jewelry demand, which could increase the downside risks, as China is the biggest platinum consumer," Standard Bank said in a note.


  236. Continuing claims … 19th straight record high.