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Monday Market Meltdown – Down Goes Copper!

It wasn't Ali who shocked the World knocking Joe Frazier down it was George Foreman.

In 1973 the undefeated Frazier had beat the unbeatable Muhammad Ali (everyone's favorite Muslim) to take the title and had defended it twice in 1972 before being knocked out in just 2 rounds by Foreman (everyone's favorite grill salesman).  Frazier had 29 consecutive victories up to that point and seemed unstoppable but then, suddenly… unexpectedly… he was stopped.  Giving Frazier huge credit he was knocked down 6 times before they stopped the fight but it was a beating nonetheless.

This morning copper has been knocked down and is leading commodities lower after coming off an earlier knockdown at $200 and another at $150 -  having started its run way down at $125 back in December.  Of course, after a 100% run to almost $250 we can certainly forgive them a 20% pullback to $225 per our 5% rule and we're not going to call the fight just yet but Oil is also pulling back off a 100% run while gold has only moved 17.5% over the same time period, already double-topping at $1,007 and $989 in February and May respectively.  

As recently as May 26th, we had looked to copper as a bullish sign as they broke out over $200 but oil was only $60 at the time.  Since then, both copper and oil have rocketed 25% to the point at which I warned of hyperinflation in a special post last Thursday.  Let's take this move VERY seriously as it took days after I started worrying about copper for the commodity to finally drop and my observation on May 12th was that investors had finally realized that "China buying copper to stack it up in warehouses wasn’t a buying premise."  That gave us a great week last options expirations as we took bearish stances on Agriculture, Oil and Metals right into Monday's mega-pump as the Dow then gave up 600 points between that Monday's post, where I called for a meltdown, and that expiration day Friday when I said: "We are already on vacation, having followed our plan to cash out at the bottom yesterday anticipating some short covering today that would take up the markets."

That gave us a very happy holiday weekend and we did get our rally on light volume during the next, short week but that took us to 8,800 on June 1st and, since then, we've been waiting and waiting and waiting and waiting for the market to break one way or the other.  On the bullish side, we could say that the S&P, SOX and NYSE are catching up while the other indexes hover at their breakout zones.  We do, however, need to take multiple rejections of the S&P at 946 and our first rejection of the NYSE at 6,232 coupled with oil and copper simultaneously being rejected from their 100% gains off the bottom as a pretty good sign that a correction is coming – perhaps 20% of the runs we've had.

That would be copper $225, oil $66.6, gold $940, Dow 7,980, S&P 900, Nasdaq 1,740, NYSE 5,840, Russell 488, SOX 262 and Transports 1,730 – those are our new breakdown points to watch.  Hopefully, we can hold those but also HOPEFULLY we can test these levels as we would feel much better about going long after we get a proper test of some support levels WITHOUT these BS stick saves that distort the market and, in fact, end up keeping money on the sidelines.  It's very hard to get motivated to invest in stocks that get yanked up and down 5% a day – sometimes up and down 5% on the SAME day!

Allegations of vote fraud in Iran may be able to sustain oil for another few days but if it doesn't REALLY disrupt supply soon the oil bulls are in trouble as they are running our of things to scare us with.  This rally has been very much driven by the energy and materials sector and, if they do crack, we WILL get a proper test of our pullback targets.  The WSJ is poking holes in the coal premise today as cheap and plentiful natural gas has electricity producers seeking cleaner, cheaper alternate fuel.  This is, of course, the same WSJ that ran a ridiculous "peak coal" article last week but now that the MSM has herded all the sheeple into the sector – it must be time to pull the rug out.  We'll see if BTU can hold $35 as a turn signal but I like shorting FCL anyway as they are up 120% since April and the June $35 puts at $3.65 are a good way to play them short with little option premium with a stop at $32, something that would be a neat trick for FCL this week.  Jim Cramer, of course, strongly disagrees with me.

At least Asia agrees with me as energy and mining stocks led the downturn this morning.  The Nikkei fell 1% but held the line at 10,000 (although maybe saved by the bell) while the Hang Seng blew 18,500 (down 2%) despite a rare double stick day (one after lunch and one at the close).  Commodity stocks were starting to give back some ground after their recent gains, with metal prices slightly lower. Fortescue was down 7.2% in Sydney, with BHP Billiton off 2.7% and Rio Tinto down 2.2%. Sumitomo Metal Mining slipped 4.6% in Tokyo and Jiangxi Copper was down 4.5% in Hong Kong.  Oil-related shares also lost ground. In Hong Kong, PetroChina fell 3.3% while China Oilfield Services lost 4.3%. Japan's Inpex was down 1.9%.  "The trend is still sideways with no important data out in the U.S. Friday. I expect the market to just drift along for the next few days," said AmFraser's senior vice president of equity sales, Gabriel Gan

Despite the love-fest for China's economy, which is supposed to lead the world out of recession, by the MSM – foreign investment in China fell for the 8th consecutive month in May.  Why are investors not putting their money where the media's mouth is?  China attracted $6.379 Billion in actual Foreign Direct Investment in May, down 17.8% from a year earlier but narrowing from April's 22.51% drop, Ministry of Commerce data showed Monday.  Actual FDI in the January-May period fell 20.4% from a year earlier to $34.05 Billion.  Because foreign investors account for around one in 10 jobs in China and more than half of trade, the continued fall in FDI could weigh on employment and growth.  Actual FDI in China's western and central regions fell more than 30% in the January-May period from a year earlier, sharper than the drop for the overall country.

9 am Update:  Kudos to NYMEX pre-market pumpers who reversed a steady decline in oil from Friday's last NYMEX pump into the close at $72.57 (2:15 on Friday) to $70.66 at 4am this morning as Asian traders dumped it heavily but, suddenly, you'll be happy to know that between 7:35 am and 8:55 am, they managed to get back to just under $72 just ahead of the NYMEX open.  So amazing it's criminal!  Of course this is great fun if you play the futures as we get to play these silly moves on both sides (short at $72 again of course) but, for the average American trader – you are just screwed so happy Monday!

Europe is off about 1.5-2% at 9am with the DAX failing the 5,000 mark.  The Paris air show is far, far less than exciting as there is nothing more depressing than a gathering of airline exectives looking down the barrel of $70 oil once again.  Oil and mining stocks are also leading the EU lower as EU employment numbers posted the largest decline since record-keeping began in 1995.  The number of active workers in the euro zone fell 0.8% in the first quarter (1.9M people), according to data released by the European Union statistics agency Eurostat. It was the third-straight quarter in which employment fell, and marked a substantial pick-up in the rate of job losses. In the fourth quarter of 2008, employment fell by 0.4% on a quarter-to-quarter basis, while in the third quarter it fell by 0.2%.

The dollar is picking up some steam again and big trouble for commodities if it breaks back over 80.  Even Russia had some nice things to say about the Dollar and it won't be much of a stretch for the Dollar to complete a 5% move back to 83 this week.  Meanwhile, our NY Empire Manufacturing Index came in at a TERRIBLE -9.41% for June.  That's 100% worse than -4.55% in May and 90% worse than the -5% expected by the "expert" economists that they, for some reason, continue to bother asking the opinions of.  Even more fun data, our own US TIC inflows were no better than China with just $11.2Bn coming in for April.  This is a factor of 4 worse than March's $55.4Bn and a factor of 5 worse than the $60Bn expected by our always-on-the-ball "expert economists."

This is the stuff we talk about every single day – how can the economic expectations be so entirely divorced from reality.  Those expectations are baked into the stress tests and, sadly, into Obama's budget forecasts and they also influence things like Friday's Michigan Consumer Sentiment reading of 69 as the consumers tend to believe what they read in the papers and hear on TV. 

So the Government tells you there is a Tooth Fairy and the MSM tells you there's a Tooth Fairy and 69% of the people surveyed believe there is a Tooth Fairy and they go out and buy something nice for their kids when they lose a tooth and that's a great way to boost the economy but when the reality is that the parents are losing their jobs and they were counting on that tooth money to pay for what they bought – isn't the government and the MSM perhaps doing more harm than good?

Let's watch our levels and continue to be careful out there!

 


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  1. Phil
    What is the USO equivalent price for your oil target of $66.60. Also what is the delta relationship?


  2. WMT downgraded by GS …. is this more evidence that GS is flipping to short the market ?


  3. I should have told you guys last week that I was going to move my account to TOS so that the inevitable correction we’ve been waiting for could start immediately.  I figure it will take another 2-3 days for them to get me moved over, so have all your bearish bets closed by then so we can again enter another consolidation period until the week of July 12 when I’ll be at the beach.


  4. CAP – I agree looking bearish
     
    GS upgrades/.downgrades
     
    Dell Inc. (DELL): Upgrading to Neutral from Sell as cyclical issues start to ease
    Wal-Mart Stores, Inc. (WMT): Downgrade to Neutral as ROI plateaus
    Mead Johnson Nutrition Co. (MJN) Buy: Upgrading to Buy; best vehicle to participate in emerging markets
    KB Home (KBH) Sell: More cautious on the builders given rate move; KBH to Sell
     
    Seems bearish overall they are still bullish energy, and now MALL REITS!


  5. USO/Pstas – A little tricky with their rollover nonsense but back to early June roughly at $36.50.  It’s roughly 2:1

    WMT downgrade/Cap – Yeah that’s harsh.

    Thanks Smasher!

    Let’s keep an eye on our downside levels now:  Copper $225, oil $66.6, gold $940, Dow 7,980, S&P 900, Nasdaq 1,740, NYSE 5,840, Russell 488, SOX 262 and Transports 1,730.  We are, of course, miles away but those are what we need to hold for the week - IF WE GET THERE AT ALL.  The commodities would lead us down if we’re going and gold is the only breakdeown so far at $935 so we’ll watch them closely.

    Otherwise we’re looking to hold the same dull old 40% levels:  Dow 8,413, S&P 946, Nas 1,717 (notice support is above that line), NYSE 6,232, Russell 514, Sox 329 and Transports 1,868.

    Transports are already off 2.25% this morning and only the SOX not down 1.25% so we watch for them to break and lead the Nas lower.  Oil back at $71 already and I’d like to see $70 tested on this run at least.


  6. Holding the 2.5% lines so far.  Oil bounced off $70.50 but gold is $933 and the dollar is still strong(ish) so I’m still looking for oil to break $70 and that’s bound to take the Dow lower still. 

    XOM is down 1.4%, CVX down 1.5%, BA holding $50 at the moment but it’s early…  Good news for BA is planes are being deferred by not cancelled.  It’s a subtle difference but it’s keeping the stock going for now.

    Tranports now down 3.5%, RUT right on 2.5% at 513.70 and SOX fail at about 268 so watching those for now.  XLF holding up so far with V going up for some reason (MA isn’t, COF and AXP are down on delinquencies) but I’m liking FAZ at $4.50 of course, July $4 puts and calls are $1.30 so that’s $3.20/3.60 – not bad for a month.


  7. Phil,   We have YRCW   and sold the June 2.5 calls & puts.      Should we roll both out to July here….


  8. Phil
    I am in the July 39 puts- USO. What are the guidlines for rolling down or is this advisable at all since I loose the delta?


  9. Down goes VNO, Down goes VNO!


  10. BTU dropped like a rock, FCL too.  Rails are taking a hit as they are supposed to transport all this coal demand…

    YRCW/Atlas - Well I wouldn’t pay the caller .15 to buy them out today, that’s almost 1/2 of what you can collect for all of July.  Same goes for the shorts.  We’re right on target so let it go as the roll will still be there.

    Rent-A-Rebel is on the march but not helping the oil trades any.  They’re starting to panic

    Interesting buys going on like BIDU, FSRL, RMBS.  AAPL holding up well.

    OIH and XLE both blew 2.5%, oil was just rejected at $71.  If the markets don’t get a stick today it will be very demoralizing.

    Window dressing/Matt – I don’t know, a lot of money has been made and it’s going to be hard for fund managers, who sit mainly in cash, to show that the outperformed the S&P this Quarter.  That means the smart play for the funds would be to cash out, crash the S&P and then show clients how they did better and were wise to stay mainly in cash….

    USO/Pstas – Oh you don’t want to roll down to more premium.  Don’t forget you can always exit 80% of your position by selling the $38 puts, now $1.75.  That leaves you with a $1 spread for .50 which isn’t bad.

    There goes XLF testing (and probably failing) $12.25 and FAZ, of course, loves it!  If XLF fails $12 – TERRIBLE THINGS can happen.

    OIH down 3% already and XLF only down 2% so far so watch them to start dragging the Dow lower.

    Shaping up for possible Free Monday Day for the Bears…

    See why you have to be contrarian to be a bear?  You can’t wait for a trend because you tend to get these kinds of snaps and there’s not much chance to short more….

    Oops, there goies the Dow past -2%.

    VNO/Pstas – $46.50, then $45 are the magic numbers.  BXP still up near $50, they have to confirm.


  11. Dow and S&P just over 2.5%, Nas, NYSE and RUT already blew it so this is looking ugly.  Transports making a run at the 5% rule and SOX down 3.35%.

    I like the DIA $85 puts at .68 as another mattress layer (putting tight stops on higher puts you already have) with a .10 trailing stop or just out if the Dow gets back over 8,600 (now 8,597).


  12. Phil, regarding the FAZ trade isn’t it better to go as far as Jan 2010 for the straddle. Currently the straddle at $5 nets something like $3.55. The risk then is only about a dollar. What is the drawback on going so far out? Thanks.


  13. Phil – not sure if others are having the same problems, but given the low volume of comments today, thought you should know…when trying to access your posts from Google Chrome browser, I’m getting a "Malware detected" error message…I am however, able to access the post through Firefox…


  14. Phil
    Hedged USO over weekend selling half position of Jun $39′s.  Bad weekend to finally capitulate and hedge the naked short, but the hedge was neutral and I did let go of the cover on a bounce this AM.  Any suggestions on what to watch and how to play the June 38′s as premium decay battles with a market correction???


  15. Phil, I’m thinking to buy puts on TBT, betting on a retrace of interest rates between now and year end (see: http://pragcap.com/a-seasonal-peak-in-yields )  and using the natural decay of TBT to advantage. If you have time, will you address: If you were to make such a longer term play… which puts and offsets would you buy? 


  16. haha nice trading places link phil.


  17. ssdirk – i got the same thing this morning just after 9 am or so and wondered WTF triggered it. i had already loaded the page once though when a partial post was up so i’m not sure what the trigger is.


  18. BIDU still holding up. The last leg down was on dwindling volume. I’m going to enter along diagonal the next move to 287, selling the 300 June calls.


  19.  Despite all the excitement of a new bear reign, there’s a revolution going on and it’s being broadcast live (or tweeted live)
    Here are two basic resources:
    http://twitter.com/StopAhmadi
    http://andrewsullivan.theatlantic.com/the_daily_dish/


  20.  It’s very surreal — on Sunday I saw a video of a man beaten to death by 15 police (the guy was not in a crowd--he was in a courtyard, it was like a mafia hit).
    Also, you can help crash the websites of the ruling elite.



  21. FAZ/B1 – Well, first of all, I’m long-term bullish and just bearish here looking for a correction so I don’t like the long bear bet as much.  2nd of all, this play nets .80 in 5 weeks with a 20% discount if put to you but the Jan $5s net $4 in 30 weeks and a 33% discount if put to you.  So it’s likely you can do better making the play monthly taking the 7 month leap and, I always prefer to be more flexible if it’s a toss-up.

    Malware/SSdirk – I’ll let Matt know.

    USO/Mirachael – Well hopefully they did their job better than if you had cashed out to be "safe" over the weekend.  Most likely it’s going to be take the money and run day if they break below $70, maybe consider exiting by selling the $37 puts if they get to an attractive price.  Right now they are .30 and you are .60 so let’s say they get to .60 then you can cash out and let the free $1 spread ride…  The new zone may be between $70 and $70.50 if they bounce around here but AI think XOM and CVX may break and drag the whole market much lower.

    TBT/JDS – I’m not sure low rates are sustainable long-term so I’d go for a cautious play like the Jan $55 puts at $6.10, selling the July $52 puts for $1.55.  It’s a nice monthly return with lots of room to roll.


  22. WMT – remember how GS downgraded MCD at $54 (citing limited upside) and it dropped to $52.  It’s still $57 after recent pullback.


  23. Woops, Oil broke right down below $70 (just barely).  Next stop $68.50 hopefully…  Bounce zone is still $70.50 – almost tempting to play them up from here but better to re-short at $70.50 after taking this stop.

    922.59 is exactly 2.5% on S&P so let’s watch that mark.  Only the Dow hasn’t hit their mark yet at 8,579 but Transports are doing their best to drag them down. 


  24.  are you checking this Iran stuff out?   Mousavi is actually holding his rally!


  25. I like the DIA $85 puts at .68 as another mattress layer (putting tight stops on higher puts you already have) with a .10 trailing stop or just out if the Dow gets back over 8,600 (now 8,597).
    Hi Phil, are the tight stops on the Sep puts, or were you referring to other front month options people have?
     
    Thanks


  26.  Grand Ayatollah Saanei accompanies today’s anti Ahmadinejad rally
    - this is a big deal.  The Supreme Leader may have played his cards wrong, and he may be deposed.  I have no idea how that works--I don’t think anyone does.  Perhaps he’s voted out by a group of Ayatollah’s that they have.


  27. Hey phil – just to confirm your plays on these front month puts DURING and exp week…Your goal is for a day trade correct and to get 8-10 cents out of them?
     
    I am pretty sure this is what you did last month, but wanted to make sure…I got 20 contracts at .68 and currently at .74 but sureely, we are not holding overnight, correct?


  28.  DAX down 3.51%; FTSE 2.7; CAC 3.1


  29.  For those of you not checking the live updates on Iran, the latest rumor is that Ahmadinejad (sp) will fake his own asisination (sp)  tomorrow in an attempt to crack down on the uprising.


  30. re: "I like the DIA $85 puts at .68 as another mattress layer (putting tight stops on higher puts you already have) with a .10 trailing stop or just out if the Dow gets back over 8,600 (now 8,597)."  – I still have the long puts – are you referring to taking another short here?  I had taken profits on the earlier shorts and so am only long at this point on the DIAs.


  31. ELN moving down nicely today, I have an order to sell July $7 puts at $.80 to complete my buy sell which will put me in the stock for $6.50/$6.80.


  32.  Concerning this rumor of Ahmadinejad faking his own assisination (sp), it’s not confirmed.  But if he does do that, I don’t know if anyone knows what that will mean.  I guess it means that the shit may really hit the fan.


  33. Is TIE a good buy/write here at $10.19?


  34. Phil,
    Been watching the interesting action in BIDU this morning also.  Any suggestions if we want to play a short term bounce, especially if it holds support at 286?


  35. Phil…
    Covered my USO puts by selling $1 below, guaranteeing a small profit on the position.  Would this be a prudent strategy to lock in profits with my Jun 86 DIA puts???? 


  36. Iran is a wild-card unfortunately but you can Rent-A-Rabble as well as Rent-A-Rebel so be careful with those oil shorts…

    DIA stops/Steve – Well my Sept puts aren’t up enough to stop out.  The idea of a mattress layer is to take a cheaper bet with a lower upside delta as you prepare to cash out your main play (that is already profitable).  So I was referring to the speculative DIA puts many of us held into the weekend, not the long-term cover – which isn’t really covering anything right now…

    Iran/Occam – The guy in charge is Ali Khamenei, he’s the successor to Ayatollah Khomeini.  Before them you had the Shas.  I don’t know how he got the job but I doubt it’s up for grabs.  The issue the Theocracy has is they can get tossed aside with the government if they back the wrong guy.  The army guys and judicial report to Khamenei, not to Mahmoud, he has no real power if the religiosos abandon him and, since he’s trashed the economy and led to a secular backlash – they may actually want to change horses at this pace.  Don’t forget the church only skims off the top and turns into a charity during hard times so it is possible that this election fraud issue could be a way of firing and disgracing Mahmoud AND showing the people that the church is still fighting for them – that way they can bring in a reformer under the guise of being supported by the Theorcracy…

    Day trades/BC – Yes, 10% on a day trade is great.  We’re just taking advantage of some low premiums to scalp a little cash.  Pretty much as soon as you enter these you want to be looking for the exits…  DIA just stopped out even anyway. (Dow back over 8,600).  That’s now the mark to watch for reentry.

    S&P holding that 2.5% mark!

    Gold $929, can stay short on oil as long as they stay below $930.

    DIA/Javaben – Check out "Stock Market Parachute," it lays out the general strategy for adding layers as an index goes your way.  The idea is, as I said above, to add something with a lower downside delta IF you think you may be missing something when you go to take your successful play off the table but that’s IF and IF to make a play like this.

    ELN/Maxt – I like them, good company.

    Fake assasination/Occam – Well now if he does get assasinated no one will believe it…

    TIE/Red – Keep an eye on BA to get stable, that’s where you want to look at TIE. 

    Today is, in general, a little early for bottom fishing…  We have a 2.5% rule which says a test of 2.5% SHOULD be rejected at first and it’s the bounce that tells the tale.  A 20% (of the drop) bounce is expected, which is 928 on the S&P and 8,640 on the Dow – those are bounces that are SUPPOSED to happen.  Anything less than that is actually very bearish as is not getting the bounce at all but sometimes no bounce is pointless panic while a bounce of less than 20% and then heading lower is a great sign of an orderly correciton that probably has legs.


  37. somebody hit UNG with the crazy stick.


  38. PALM sticking right @ $14, you’d think DELL had already tendered at that price.


  39. Khameni is the real power in Iran … Ahmedinijad is a dangerous nutjob.  The Mousavi guy isn’t that much better, just a nicer face to present to the West.  Hey, but he holds hands with his wife to try to get elected … wowee.  These guys in Iran are all bad (the ayatollahs and political leadership) its just a matter of degree.
     
    Now an overthrow of the theocracy in Iran, that would be something to get excited about; Ahmedinijad vs. some other nutjob; not so much.


  40. Cap,
    Serenity now, serenity now . . .  :)


  41. BIDU/Chuaeu – Again, it’s way too early to bottom fish a stock that is aup 200% since Jan just because it had a $30 (10%) pullback off the top.  For one thing, if the bounce you get off $280 isn’t past $286 – it’s the same, weak, less-than-20% dead-cat bounce we don’t get fooled by anyway so I would want to see it hold strong, not just be breeched briefly.

    DIA/Mirachael – If you believe there is more downside but you want to lower the risk, it’s an excellent strategy but, be aware, those are profits you are risking too.

    UNG did take a fast train to crazy town but what’s really crazy is the WSJ has to explain to "investors" that 70% coal use is electrical generation and gas under $6.50 makes it cheaper for those plants that can to use nat gas than coal and they will drive coal demand right down over the summer.

    LOL Maxt!


  42. Phil had a problem w/ new cc on paypal….can you please have someone look into my email and reactivate my subscription?  Thanks.


  43.  Phi,
    I have to disagree with you on a few points.  In terms of how this affects oil, you used to be able to "Rent the Threat of Middle East Hostilities."  I don’t think that is as possible.  This weakens the hands of the right in both Iran and Israel.  That is bad for oil, unless you get an extremely hash and bloody crackdown in Iran.  
    If you get that, then it’s a very tense situation.  They would spend 40 days mourning the dead martyrs.  After that time limit, it’s a powder keg.  So that would help oil.  
    In any case, the Supreme Leader is subject to the Council, which is not entierely composed of loyal elements.  There has been some dissatisfaction within the Council with the Supreme leader in the past.  His authority is only as strong as the Coucil’s approval.  


  44. Selling VLO July $17 puts @ $.98.


  45. Phil, I know it’s still early in the week, but any strong view on pin values for Friday on any of your favorite stocks? Obviously some will depend on whether we get a real correction or not, but open interest levels should dictate for some I guess. Cheers



  46. WMT: What do you folks think of going long on WMT?  Or should we wait a bit longer?  It’s 48.36; 52 week low is 46.25.


  47. Suggested first question for Obama post this speech: "Have you managed to quit smoking yet as an example for America’s youth?"


  48. Council/Occam – Well that’s the part I don’t know about.  I just know there’s only been 2 supreme leaders so if there’s a council it’s anybody’s ball-game perhaps…

    VLO/Maxt – That’s the price we liked!

    NAS may blow 1,800 – bad sign. 

    Obama going right after the fearmongers right from the start – I like it.

    Pins/Never – I think we should see about a 5% drop in the very least so we’ll see if we get a  good bounce first.  If we do fall to 5% and hold the floor down there, those will probably be our pins for the week.


  49. Iran Editorials  
    New York Times: Neither Real Nor Free

    Washington Post: Neither Free nor Fair

    Wall Street Journal: Will Obama stand with Tehran’s democratic reformer

    USA Today: Iran’s fishy election results

    National Review: Dirty Landslide


  50. You have to give Obama credit for hitting the TV day after day  (part vanity; part ego) to try to sell his agenda.
     
    That said, his agenda is a bad one; uneconomic and unworkable… healthcare being a prime example.   The porkulus that don’t stimulate being another.


  51. Iran – let us suppose, Mr.Moussavi does have a valid claim, what does it mean for the West ? nothing. Iran as a nation, is determined to proceed with the nuclear weapons program. There are  no peaceniks on this issue in Iran. West is trying to hold onto anything they can grab. The biggest mistake, the West would make is to fish in troubled waters. Restraint and more importantly let Iranians solve their problems on their own. Eventually I see it benefits everyone, not just the West.
    As for nuclear weapons, forget it, Iran ain’t giving it up with or without Ahmedinejad. This means it is bullish for Oil any which way (hey i got the trade thing in :-) )


  52. There is a real simple way to pay the health are cost that Obama proposes.   Have that as the healthcare system for all government, state, fed, and teachers and we can probably balance the budget with the leftoves.


  53. We don’t let hard working families go without coverage;  we just let them go without jobs !


  54. Are we having a stick save ? Time to buy , bouncing along the bottom here ?


  55.  Ramana – actually, it’s not the possession of nuclear weapons that move oil, it’s the likelyhood of hostilities.
    So, no, oil bulls will never again be able to say — "Ahmedinejad is batshit crazy!  Middle East War!  Let’s push oil higher!" — with the same authority that they could in the past, whether Ahmedinejad retains power or not.  
    So, there are very few scenarios in which this is good for oil.  But no doubt, Iran will continue to declare that it can develop nuclear weapons.  But that’s not the important part of the equation, it’s that Ahmedinejad is such a nutcase.


  56.  Just go back from running morning errands…. Yeeeeeeeehhhhhaaaaaaaawww
     
    Finally ….we got a 200pt downside move !!
     
    June 1 had a gap up that signaled a technical double top breakout on the chart. We have filled the gap today. Now we need to close below 8600 today and have a follow through down day tomorrow. 


  57.  Iran contintued –  That being said (no Ahmedinejad is bad for oil), Ahmedinejad and Iran is backed by Russia.  Many things that Iran has done, has been either at the behest of Russia or with the apporoval of Russia.
    The price of oil is central to the strength of the Russian economy, Putin’s power, and the Iranian economy.  However, the Iranian economy hasn’t flourished the way the Russian economy has (if you can call the corruption of the Russian economy flourishing).
    So, it remains to be seen what will replace Ahmedinejad.  Nevertheless, the equation is changed.


  58.  But of course the rumor," Ahmedinejad will have an assissination attempt tomorrow" would move the markets.  I’m just talking about how this changes the long term view of Iran as being equivalent to Ahmedinejad.  


  59. Mumbo jumbo/Cap – ROFL, I love this guy: 

    "The Islamic Republic is not the United States. We do not disqualify 99 percent of candidates."

    •  No? Out of 435 Congressmen, 100 Senators and 50 Governors who have already been filtered by their parties, and ignoring the 300M private citizens who don’t stand a chance in hell – We get a choice of 2 guys – that’s 1/292 or 99.7% disqualified.

    "We do not have a Supreme Leader."

    • What is Dick Cheney’s title then?

     

    "We do not have a Revolutionary Guard that intervenes in elections.

    • No, we have an army of lawyers and a Supreme Court, 1/2 of whom were appointed by the candidate and the candidate’s father.

    Health care is inevitable Cap – deal with it.

    WMT/Cwan – I like them long but GS effect is usually more than one day.


  60.  Been in and out of that DIA 85 Put play 3 times…Lets do it again


  61. Health Care – Does anyone know how is health care in Iran under Ahmedinejad?


  62. Nothing but weak bounces and the S&P under the 2.5% line.  If the Dow crosses this time we could be in for another leg down so watch that 8,679 line closely.  Also, XLF $12 (now $12.14, down 2.6%) is helping them to hang on – watch for that to fail and that will drag down enough Dow components to break it.

    Right now OIH is off 4% and XLE is off 3.7% and XME is off 7.5% so that’s about 1.5% of the 2.5% fall in the markets – THAT’S NOT TOO BAD?

    Also Dow volume 101M halfway through the day is hardly capitulation so this is pretty meaningless so far.  Tomorrow we are more likely to get a proper test of 8,412 on the Dow BUT the RUT blew 514 (40% line) way too easily for comfort and the S&P NEVER held above 946 and the NYSE NEVER held 6,232 and that leaves just the Nas, well over 1,717 holding up the entire market.

    QQQQ $35 puts are good ways to play the Nas down at .32, looking for a quick out at .40 on at least 1/2 and then nickel trailing stops.


  63. DIA/Atlas – That’s the way to do it!  You can use that 8,600 line to stop yourself from getting burned but then one good ride down and all is well.

    Iran health care/Ramana:

    Iran has been able to extend public health preventive services through the establishment of an extensive Primary Health Care Network. As a result child and maternal mortality rates have fallen significantly, and life expectancy at birth has risen remarkably.  The constitution entitles Iranians to basic health care, and most receive subsidized prescription drugs and vaccination programs. An extensive network of public clinics offers basic care at low cost, and general and specialty hospitals operated by the Ministry of Health and Medical Education (MOHME) provide higher levels of care. In most large cities, well-to-do persons use private clinics and hospitals that charge high fees. About 73% of all Iranian workers have social security coverage.


  64. Got called on my PGF shares today ($100K portfolio).  Is this a trade I should look to reload at some point???


  65. "The Islamic Republic is not the United States. We do not disqualify 99 percent of candidates."

     No? Out of 435 Congressmen, 100 Senators and 50 Governors who have already been filtered by their parties, and ignoring the 300M private citizens who don’t stand a chance in hell – We get a choice of 2 guys – that’s 1/292 or 99.7% disqualified.

    I AGREE PHIL !!
    "We do not have a Supreme Leader."

    What is Dick Cheney’s title then?

    THAT WOULD BE OBAMA, PHIL !!
     
    "We do not have a Revolutionary Guard that intervenes in elections.

    No, we have an army of lawyers and a Supreme Court, 1/2 of whom were appointed by the candidate and the candidate’s father.

    Health care is inevitable Cap – deal with it.
     
    DON’T BET THE FARM ON THAT PHIL & READ MY BLOG FOR UPDATES !!
    OBAMA STILL HAS NO CLUE HOW IT WOULD WORK OR BE PAID FOR !!


  66. Iran:  Health Care.
    There is no disease in Iran, just like there are no gays or jews.  there is only a glow around Ahmedinijad that enraptures listeners.


  67. Phil,
    FXP today?


  68. Phil,
    in your thinking, once a support level , eg XLF $12.15 is penetrated and then regained, is that considered as weakening the support, rejection or (as is more likely) to be plugged into other context?


  69. Here’s the current state of healthcare in Iran:
     


  70. what’s the tick for posting a JPG?


  71. GOOG, MRVL AAPL indicating all might not be well in bear country


  72. Between energy and health care, Obama very well may have bit off more than he can chew, but  he deserves credit for trying to deal with the issues rather than kicking the can down the road.   We’ve been increasing the percentage of imported oil and the number of uninsured for decades and it’s about time we do something about it.   Whatever packeages finally emerge will not please everyone, but at least they’re trying to find solutions to difficult problems.  Now if they could ever tackle the perrenial problem of Congresses that want to spend money….


  73. PGF/Mirachael – Well we were in them for the dividends, which you don’t get if they are not in your portfioio.  You got a nice break actually as you can reload for .35 less than Friday’s close.  No reason not to as you can sell always sell the Jan $14s if you get worried. 

    Damn, oil shot up to $70.32 in the early pump job – we have go to start going long on  these!  If there is an oil pump then there is probably a stick save so be careful bears!

    Blog/Cap – I will try to get over there tonight.

    FXP/Emo – That bet was already made last week.  Kind of chasing now although probably a worthy chase.

    Support/Maxt – It depends how it broke.  If it’s a quick spike, it’s meaningless.  If they start forming several 10 min candles below the line after forming several above the line and THEN it trends lower OR higher - that is significant.

    JPG posting/Maxt – I don’t know if you can.  Try going to an image link and right-clicking to copy and then try to paste it in here but I’m not sure you would be authorized.  Just post a link to the JPG is one solution.

    Horesemen/Jaimie  – I don’t know if you can look at the usual suspects and see there is an ATTEMPT to use them to push the market as evidence the market will get pushed.  I would imagine many sellers are standing around waiting for a stick save to sell into and, if that doesn’t come, then there could be a lot of selling pressure. 


  74.  Phil/QQQQ $35 Puts,
    Considering the high of the day on these is .35 so far, is this trade in anticipation of a sell off before/at the close?


  75.  Iran situation getting worse — picture out of a man shot in the head.
    More protests to follow.
    Check out the tweets.


  76. QQQQ/Jofori – Oh yes, I’m lookiing for a spike down into the close if we don’t get a stick.

    Interesting action, like just before a Fed report or something, people ar indeed trained to wait to be saved at the end of each day.  Oil closed at about $70.50 but already fell back to $70.34 – someone took huge advantage to sell into that pump. 


  77. sold DIA $85 puts at $.75, will buy back if we get a pump to $86.40.


  78. POT $111! 

    Selling puts/Maxt – It’s a good idea but be careful overnight.  I’m still looking for another 200 pts by Weds, maybe tomorrow….


  79. Phil,
    thanks for keeping an eye me , I sold puts I was long on.


  80.  C’mon Mr. Anti-Stick !!  down down down… LOL
     
    I wanna see a big hit deeeeep into center field… I got bases loaded and waiting for a grand slam !!


  81. Phil – Selling DIA Puts… another 200 pts by Weds, maybe tomorrow…
    I got nervous by Mr. Stick and sold the DIA puts I carried over from last week.  Seems market moving around 8,600 and not able to pierce the 8579 mark.  What should I look for to re-enter this position?  Should know very soon if Mr. Stick intends to make a save…  IF so, would I go short into close? 
    IF No Stick, by 3:30, would you expect market to push down hard and quickly move thru 8579 with little chance to catch up or is there a chance to enter the DIA puts for a lower open tomorrow???


  82. EWZ – Own stock and have a loosing Jun $45 calls written against it that will expire Friday. Should I roll to July $48/$50 now or wait for EWZ to go a bit lower between now and Wed?


  83. Stick is immenent.  I know it, you know it, we all know it.


  84. My BIDU long took off, but before the close I think I’m going to buy an offsetting put diagonal, selling the June 280s, and basically play for a pin somewhere between there and 300.


  85. I love it, MS leading the way down.


  86. DIA/Maxt – Ah, well selling at .75 is mission accomplished then!  I thought you were going long for the stick with a buyback target at $86.40!

    VIX up 10%, finally we may get some nice premiums to sell of we get another day like this.

    XLF failed $12.15 (12,12 now).  Keep in mind that a finish between -2% and -2.5% is a bearish 2.5% rule signal, indicating likely follow-through the next day.  Since RUT and NYSE are -3.5ish, that follow-through is likely to test that -4% line on a 2-day move.  SOX came back though, just -2% and they are helping the Nas stay up

    This week we have Housing Starts, Building Permits, PPI and Industrial Production all pre-market.  Weds is CPI, Current Account Balance and Crude.  Thurs is Jobless Claims, Leading Economic Indicators and the Philly Fed (NY was a disaster this morning). 

    Earnings – Tues:  BBY, SFD//ADBE, NCTY;  Wed: FDX, Thurs: CCL, CMED, SJM, WGO// GMCN, HWAY, RIMM;  Fri:  KMX

    Not insubstantial and we’re only a few weeks away from next earnings!

    Oil back to $70.50 and back to shortable in futures.  USO premiums are too silly to play.

    Vol 134M, still very light.


  87. Adding a little to my RIMM calendar collection too for Thursday night earnings. Finally getting a nice chance to set up the call side.
     
    Incidentally, last week was the best price for these on both the call and put side, so I have to remember not to wait too long to enter.


  88. Strange seeing SRS move up 10% in a day….


  89. Wow!  FMD for the SKFer so far… will it last???


  90.  going into the final 30 minutes and no stick yet… wooo hooooo
    I’m getting that exciting party time feeling… I love it when delta starts getting awesome.


  91. Stick/Mirachael – I think if you just cashed out with a win, why not just relax and hope for a ridiculous pump into tomorrow’s open.  Anything can happen and you can momentum trade off cash rather than play roulette with an overnight bet.  I don’t think we’re going to fly down tonight but we may gap down 100+ tomorrow but, then again, we certainly have had enough ridiculous after-hours run-ups that you can’t discount that either.  Not helpful I knw but the idea is to go cash and let the market tell you what to do when it’s ready.

    EWZ/M2 – I’d wait.  If the dollar rallies and commodities die, Brazil goes down.

    BIDU/Eric – Nice comeback by them.

    CNBC spin:  "Moving sideways would be a victory for the bulls."

    Money moving into retail!


  92. If anyone’s interested, June/July call and put calendars are filling for 2.10 each at the moment. Even factoring-in some IV crush after earnings, this has a fair shot at profit with the stock between about 72 and 90 on Fri.


  93. Forgot to mention that those are 80 strike calendars on RIMM.


  94. Thanks Phil, just not sure what action to expect if this is a correction thru the support lines and wondering how to play.  Guess I’m further anxious due to expiry week and knowing the Jun puts are all premium that lose 20% overnight, so guess that answers the question and is exactly why you say to play momentum in the morning rather than hold a decaying position overnight…


  95. EWZ – Thanks for your opinion Phil. Will wait and roll later. Hoping for EWZ to go down around $51-$52 before rolling.
    Chart: http://stockcharts.com/h-sc/ui?s=EWZ&p=D&yr=0&mn=3&dy=0&id=p55162249032


  96. I wish we were closing below 8600… technically that would be much better for making a bearish chart
    Dr. Evil’s mini me stick save…. ruining the EOD when I was so waiting for some mojo to get totally shaggadelic


  97. GS making the statement that Q3 and Q4 earnings could be up significantly makes me think that Q2 are going to be a disappointment.  Expectations will be higher then they were for Q1.  I’m curious how the investment houses will fare… I’m sure the biggies have been making a killing.  Not so sure bout the others.  I think if the runup for Q2 earnings will be smaller and we’ll sell into the news.  Further impetus for a down July.


  98. Phil can you help me out!


  99. Mini-stick not getting us over the -2% lines, very iffy…

    RIMM/Eric – It sounds good but they could rocket 20% in either direction so have a plan for that.

    Homebuilder sentiment dropped, mainly sales expectations as tax stimulus fades. 

    So that’s the 2.5% rule in action kids.  Indexes all fall down to about 2.5%, some try to rally back but are rejected at -2% (20% retrace) so we stay bearish.  SOX are the wildcard as they are about 50% bouncing at -1.4% now but Nas down 2.3% makes me think they are a bit ahead of themselves.  XLF at $12.16 so right on their line too.

    It’s a weak bearish premise because the market has been so artificially pumped up how can we trust anything to behave normally but HOPING for the PPT to save your index is not a real strategy – even though it’s been working for 3 straight months

    Vol 172M and CNBC calling it "terrible" but it’s been terrible the entire rally and they haven’t said a word.  First day we go down and they point out the volume.  Interesting….


  100.  ahhhhh… what a lovely day….. LOL


  101.  whoa… that Raymond James dude just said something way scarey…
     
    Phil, you think the Euro fundees really will buy in to reweight their portfolios to a 60-40 stocks to bonds mix before Q2 is done?


  102. Help/Oncmed – Greg is working on your thing.

    Woops, jammed up to 230M into the close and we went nowhere – perhaps a stick attempt that ran into heavy selling.

    Well that was fun.  I feel better for sitting out a bit but all we’ve done so far is the same jiggly dance we’ve been doing all month – it’s what happens next that matters.


  103. Here is an argument that "it looks like we are in for a period of rising rates, inflation, and slower growth than would have been the case without the heroic rescue.  The only question is when it will start."
    http://www.cumber.com/commentary.aspx?file=061509.asp&n=l_mc
    So, what do you think of buying a call on TBT?


  104. RIMM, Thanks Phil I agree — I know what has happened the last two earnings. I’m probably going to add calendars at the 70 and 95 strikes, which if done 1:2 with the 80s, gives downside protection to about 68 and up to 98, even after some July IV crush is factored in.


  105. TBT/Cwan – TBT premium is high, so I have been selling rather than buying them.  If you look at TLT chart (without the dividend/interests), the $85 to $93 range is probably fair for TLT, although it may go to $80 with all the inflation talks.  So I think TBT can hang around $50 mark for a while, or moves by plus or minus 10-20% (i.e. 5 to 10% move in TLT).   Selling TBT Jul 50 PUT for $0.925 is good money, as well as selling Jul 60 CALL for $1.425.  Getting $2.35 for 5 weeks with a margin requirement of about $12 is a good bet that I like, especially for bonds play.  There are plenty of rolling options also.


  106. TBT – Just put in an order for tomorrow to increase my positions.  There was a typos in my previous comments "hanging around $55" rather than $50.


  107. merkhava
     
    was the raymond james guy jefferey saut?…what did he say, i follow him but missed it…i bet it was something involving statistics…


  108. Phil / CNBC / Volume … I noticed that too … how silly of them.


  109. Phil
    Your opinion please on best way to hedge 2 million in 3 year floating rate debt.
    Current rate is 6%.
    Thanks
    chuck


  110. PeterD / TBT: I like your short strangles and agree TBT is a good candidate. I have one expiring for TBT in June and will start another one for July.


  111.  new paradigmz/ CNBC Raymond James
    the Raymond James guy on CNBC was making an anecdotal observation… I didn’t pay attention to his name… but I heard him stressing the point that he thought stock buying by funds was going to kick up as Q2 gets close to expiration.
     
    He said he just got back from Europe and was saying how junior portfolio managers he talks to were being put under stress and told to get their funds reweighted into stocks at a 60/40 ratio… he also indicated they were underperforming badly and needed to get some window dressing done before Q2 ends.
     
    Phil knows fund guys, so I was asking if he knew any guys in Europe who might back up what the Raymond James guy said. Of course, it’s CNBC, so that guy could have been blowing smoke at us.


  112. Raymond James commentary at
     http://www.raymondjames.com/inv_strat.htm


  113. mSquare…. that’s a nice read….  Very interesting take on the next quarter’s possible upswing.  Opinion’s anyone? 
    I heard the guy today on CNBC, but kinda blew him off as a perma bull working on commission.


  114.  I also got the malware message from Google Chrome.  Here’s a link to the diagnostic info they’re claiming is the culprit.
     http://safebrowsing.clients.google.com/safebrowsing/diagnostic?site=http://www.lverose.com/littleones/images/everafter/fairygold.gif&client=googlechrome&hl=en-US
     
    I think it’s related to the tooth fairy pic you linked to in your article.


  115. thanks, i found the clip on cnbc…
     
    http://www.cnbc.com/id/15840232?video=1153488321&play=1
     
    he’s one of the few guys i listen to…to his credit, he did call this bull run before it happened (something i guess any perma-bull, by definition, could claim to have done), based on something statistical the S&P did a while back that it only did like 2 or 3 times in it’s entire history…


  116. Good Morning Phil and all


  117. Good morning!

    Debt/Hinners – You have a 3-year floating note and you want to guard against a rate spike?  The real problem is that the protection will cost you money so it can be self-defeating (ie. $100,000 spent on protection costs you 5%).  So let’s start with the premise that you are not looking to guard against an ordinary rate move, but against a spike in rates.  I would go with the TBT 2011 $60s, now $10.45.  Let’s say 100 contracts ($104,500).  Those go in the money about half a point higher than we are now in the short-term.  Over the long run, they have the same issues as any ultra.  You can offset the cost of insurance by selling 50 July $60s at $1.43 ($7,150) so it would take a 1/2 point run in a month for them to go in the money but you can roll them to Sept $67s evenand that’s another point.  Bottom line is, if you can collect net .70 a month for 18 months, it pays for your long insurance and you have 5,000 uncovered contracts at $50,000 that are likely to double if there’s a 2% rate pop and that’s $50K profit that offsets $40K in additional interest on $2M for the year.

    Europe/Merk – I don’t know anyone over there with a fund but I’m hearing this rumor over and over again and if this doesn’t happen, you may see a stampede for the exits because there’s a lot of people here who didn’t go away in May because they think even bigger suckers are coming to take their shares off their hands.  Again, the entire premise of this rally is thing WILL get better, even though they suck now. 

    Speaking of sucking – Oil is up $2 in overnight trading, mostly since 4am and back at $71.50.   The dollar got hammered back to 97 Yen and $1.64 to the Pound and $1.385 to the Euro.  BOJ claims the recession is over, which didn’t stop the Nikkei from falling 3% as they really said over as in not getting worse as opposed to getting better but that doesn’t matter to oil traders, who are acting like Japan just ordered an extra 5Mbd.

    Raymond/M2 – I do agree that this (8,650) is the right price for the market.  What I don’t agree with is that we are busting through 9,100 (5% over 8,650) as we’re a long way from growth and lack of falling is not growth (even though flat is the new economic up).  Also, I take into account that the markets never should have been at 14,000 in the first place.  They probably never should have been 12,000 but let’s give them a solid 11,000, knock of 20% for housing and manufacturing declines and we have a fair value of 8,800 so, outside of REAL growth, anything over this starts to look a little irrational.  The biggest fudge factor there is the dollar but, when the Dow was 11,000 in ’07, the dollar was 85, now 80.  Using 8,800 at the mid-point, we still don’t have much reason to go past 5% higher than that.

    Malware/Chen – Let me know if that’s better, I took the image down.

    Oil $71.85 now, which is extra funny as that’s up $1.50 but Brent crude is still down $1.50 ($69.39) so I guess it’s only US oil that is in such amazingly high demand this morning.  This is the biggest discrepancy I’ve seen since oil was racing to $147 and $3 didn’t mean much, now it’s a 5% gap between the two!

    Make that $71.95!


  118. Asia Markets : Tuesday, June 16, 2009
    (The following is from Yahoo, please check other sources to confirm)

        Australia All Ordinaries*                3957.90        -72.50    -1.80%
        Nikkei Average*                               9752.88     -286.79    -2.86%
        Shanghai Composite*                   2776.02      – 13.53    -0.48%
        Hang Seng*                                   18165.50     -333.46    -1.80%
        Seoul Composite*                          1399.15       -13.27    -0.94%
        Singapore Straits Times*              2288.16      -28.40    -1.23%
        Bombay Sensex*                           14957.91       82.39     0.55%
        Baltic Dry Index                                 3763.00      180.00     5.02%

    *at Close


  119. Asian Markets Slide, Optimism May Be Misplaced

    Asian markets extended losses Tuesday, in the wake of Wall Street’s biggest tumble in a month, while government bonds and the yen rose, as investors cut down on riskier assets, demanding evidence of a sustained recovery. Weak U.S. manufacturing and housing gauges weighed on sentiment, while the European Central Bank renewed fears about banking stability after it said euro zone financial firms may need to write down another $283 billion in bad loans over the next 18 months.

    Japan’s Nikkei ell 2.9 percent, its worst one-day percentage loss in over two months, with shares sold across the board on growing investor caution about the global economy as the yen advanced.

    South Korea’s KOSPI closed nearly 1 percent lower, with commodities issues falling after their latest streak of gains, while news index compiler MSCI’s decision not to upgrade South Korea to developed market status in its annual review added pressure. But online gaming issues rallied on the back of earnings hopes.

    Hong Kong shares pulled back 1.8 percent as investors reassessed risk assets following weak economic data from the U.S., while resource-linked counters were hard hit by falling commodity prices.

    Singapore’s Straits Times Index fell 1.2 percent. Singapore Airlines, dropped 1.1 percent after saying it filled 62.8 percent of the space available on its planes for passengers and cargo in May.

    China’s Shanghai Composite Index slipped 0.5 percent, but outperformed regional markets on support from positive signs for industrial output in June. Brokerage shares bucked the negative trend, buoyed by expectations of an imminent restart of IPOs that would boost their business.

    Bombay Stock Exchange’s Sensex settled at provisional 14,907.64, up 32.12 points or 0.22 per cent. After a weak opening, stocks staged a smart comeback Tuesday with equity indices ending flat-to-positive after surging to the day’s high in afternoon trade. The broader market gained momentum with banking and power stocks in demand on the back of Budget expectations.


  120. Euro Shares See-Saw, Weighed on by Financials

    European shares see-sawed on Tuesday morning with the leading index weighed on by financials, and after the previous session’s steep losses. The FTSEurofirst 300 index of top European shares was flat at 863.50 points, after having been up as much as 0.3 percent earlier in the session.

    Banks and insurers were the heaviest losers, with BNP Paribas, UniCredit and Allianz down 2.1-3.6 percent.

    The European Central Bank had said on Monday that euro area insurance companies may face "significant" balance sheet stress ahead due to financial market turbulence and a weak economy. It also said euro zone banks faced potential further writedowns of $283 billion through 2010.

    Pharma stocks added most points to the pan-European index, and the DJ STOXX European health care index was up 0.8 percent. German Bayer rose 0.6 percent after its chief executive told a newspaper that debt reduction and securing liquidity was taking precedence over acquisitions during the economic crisis. Sanofi-Aventis and GlaxoSmithKline rose 2.3 percent and 1.8 percent respectively.

    British consumer price inflation slowed less than anticipated in May, staying above the Bank of England’s 2 percent target.

    Investors will also look out for more macro data from the United States later in the day, with U.S. building permits due 8:30 am New York time, and industrial production due 9:15 am.

    Around Europe:
    FTSE     4,349.36     23.35     0.54%
    DAX    4,904.05     14.11     0.29%
    CAC     3,232.28     12.70     0.39%
    SMI    5,406.38     6.23     0.12%


  121. Oil Rises Above $71 as Dollar Weakens

    Oil rose above $71 a barrel on Tuesday as the dollar slid after Russia said the world needed new reserve currencies, while stock market declines weighed on expectations of economic recovery.

    U.S. light sweet crude [71.55    0.93  (+1.32%)] rose after falling below $70 earlier in the day when the dollar was stronger.
    London Brent crude [71.61    1.37  (+1.95%)] also rose.

    OPEC Secretary General Abdullah al-Badri said too quick a rise in oil prices could harm a global economic recovery, though a price of $80 a barrel would not stem growth.

    The head of the International Monetary Fund, Dominique Strauss-Kahn, also sounded a cautious note, saying on Monday the worst of the global crisis was not yet over.

    Dollar stung by Russia comments, euro up on ZEW

    The dollar fell broadly on Tuesday after what were seen as dollar-negative comments from Russia, while the euro extended gains after a strong reading of German economic sentiment. Before a BRICs summit later in the day, Russian President Dmitry Medvedev said the world needs new reserve currencies, which traders took as signals that it may be looking to cut the share of U.S. assets in its currency portfolio .

    The German think tank ZEW on Tuesday said its index of economic sentiment rose to 44.8 in June, surging from 31.1 in May and exceeding expectations for a 35.0. This suggested that market participants are hopeful that the euro zone’s largest economy will recover later in the year.

    Euro traded 0.6 percent higher at $1.3975, after climbing as high as $1.3923 after the ZEW poll.
    Sterling rose against the dollar, after a smaller-than-expected fall in UK inflation fuelled expectations that the Bank of England may not need to continue quantitative easing much longer. It rose to its highest level of the year against the euro to 84.39 pence

    The dollar traded 1.0 percent lower at 96.80 yen, after falling to 96.08 yen on EBS in early European trade.

    The Euro was 0.5 percent lower at 134.25 yen, not far from a three-week low hit earlier in the day.

    Traders shunned the dollar ahead of the summit of BRICs emerging nations — Brazil, Russia, India and China — in Russia, which comes amid rising market speculation that countries may be looking to diversify reserves portfolios away from U.S. Treasuries in the future.

    Gold recovers to $930 but weak stocks limit gains

    Gold had risen to $932.10 an ounce by 0542 GMT, up 0.5 percent from New York’s notional close of $927.85. It was down 3.4 percent from last week’s peak of $965.25.

    Investor demand for gold as an alternative asset class remained weak. Holdings of the SPDR Gold Trust GLD, the world’s largest bullion exchange-traded fund, were steady at 1,132.15 tonnes as of June 15, unchanged since June 5.
     


  122.  Malware – yep, no more Google Chrome warning, thanks!