Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Monday Market Movement – The Big Chart Review

Well, we sure have come a long way in two weeks!

Here’s a great selection from our Chart School files that gives you a nice visual overview of the S&P from Larry at Ichimoku Charts:

 
As I mentioned in the weekly wrap-up, having come to the very top of our predicted trading range, we had no choice but to grit our teeth and go short into the weekend, ratcheting up our DIA coverage to balance the overall virtual portfolio bearish over the weekend.  There was nothing fundamental in the shift other than the overall fundamentals that WERE NOT being reflected in the (perhaps) overly exuberant rally of the past two weeks.
 
As I said in the post: "We have another heavy week of earnings ahead of us and we also have heavy data next week, including the Q2 GDP on Thursday.  We have New Home Sales on Monday, Consumer Confidence and Case-Shiller on Tuesday.  Wednesday is Durable Goods and the Beige Book all leading up to the GDP for April, May and June – which will be interesting to say the least.  It’s going to be both exciting and informative but I’m sure sleeping better knowing we are well-covered over the weekend!"
 
We did, in fact, have a nice, relaxing weekend as we were able to review our positions and discuss the pros and cons of the market.  John Mauldin wrote an excellent piece called "The Statistical Recovery" and points out that, as Tim Knight did in "Legends of the Fall," seemingly spectacular rises off a deep bottom are not necessarily "evidence" of a recovery.  In short – beware the dead cat bounce – something we had EXPECTED back on July 11th, when we first predicted this "rally."  Has the cat exceeded our expectations?   No, 9,100 was always our Dow target for this bounce – we just didn’t think we’d get there in just 10 days of trading! 
 
In that post at the bottom of the sell-off, I asked: "Is the current panic justified?  What’s really changed in the last 30 days?  Obviously, there were great attempts being made to push us up and over the top during the early part of June - the media pandering, the constant "stick saves," Cramer’s idiocy, Goldman Sach’s $85 oil call – all attempts to pull investor dollars off the sidelines and break out of our range.   Failure to do so seems to have led to a sell-off, perhaps funds are giving up on the year or perhaps the sheeple who were herded in at the top have no appetite for a market that doesn’t go up and up and up."
 
Now I could ask the same thing as we are back at the top – What has changed in the last 2 weeks?  When did everything get so good?  Yes, we had better than expected earnings but we didn’t expect very much did we?  What are we celebrating?  That we "only" are on a pace to drop 6M additional workers this year?  That "only" 4M more US homes are facing foreclosure?  That "only" 18% of the population is late on their credit card payments?  In either direction, a few low-volume weeks is not going to be enough to fuel us out of either end of our trading range and we sure as hell need a better catalyst to the upside than the return of $70 oil (yes, I’m back to having a problem with that again). 
 
So which way will the market go now?  That all depends on sentiment at the moment and that brings us to my own contribution to Chart School – The Big Chart Review.  It’s not pretty as we used statistical-based models to pick our levels but it works and, most importantly, it works consistently and we like things that work over at PSW!  Right now, our focus is on the 33% off line, as the next "goal" area now that we’ve taken out some of our breakout levels (5% over our mid-points). 
 
Things do look good, every single global index we track except the SOX, Transports and CAC are over the 40% off line we’ve been expecting to form a new global floor ever since the great crash.  While we have spectacular performances in Asia, with China and India closing in on doubling off the lows – it pays to keep in mind that their lows were so spectacular, that 79% up from the low in Hong Kong is still 37% off the top! 
 
    2 Week % Off  40% 33% March % From
Index Current Move High Down  Down Low Low
Dow 9,093 947 35% 8,413 9,394 6,469 41%
Transports 1,776 126 43% 1,868 2,086 1,233 44%
S&P 979 99 38% 946 1,056 666 47%
NYSE 6,337 737 39% 6,232 6,959 4,181 52%
Nasdaq  1,965 215 31% 1,717 1,917 1,265 55%
SOX 300 30 45% 329 368 188 60%
Russell 548 68 36% 514 574 342 60%
Hang Seng 20,251 2,751 37% 19,200 21,440 11,344 79%
Shanghai 383 23 35% 353 394 234 64%
Nikkei 10,088 888 45% 10,980 12,261 7,021 44%
BSE (India)  15,378 1,878 27% 12,720 14,204 8,054 91%
DAX  5,266 666 35% 4,891 5,461 3,588 47%
CAC 40 3,512 512 43% 3,701 4,133 2,465 42%
FTSE 4,582 482 32% 4,052 4,525 3,460 32%
 
We’re seeing plenty of our indexes getting to that 50% gain mark off the March lows and we can ignore the FTSE’s relatively poor performance as they also didn’t fall as far as the rest.  The Dow and the DAX are close enough to the 33% off line to merit close attention but we still have a long way to go on our other indexes so that’s going to be a tough line to cross and is our next critical goal.  Of course, first we need to get those Transports, the SOX and the CAC over the 40% mark and a 10% move would do it there.  We just don’t see that happening without a pullback of the others to regroup, so holding the 40% lines on a pullback is going to be our critical indicator for whether or not our cat is showing signs of life.
 
Asia had a great morning with 1% gains across the board and Europe is up about half a point ahead of the US open but nothing much matters until we get the Beige Book on Wednesday and the GDP on Thursday and, oh yes, another 1/3 of the S&P 500 reporting this week. 
 
It’s going to be a wild ride – try to have some fun!
 

Tags: , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Hello Good Morning.
     
    Just a fast remainder: Last week was announced a replacement in the S&P RHT for CIT.  Someone suggested to short RHT and the recommendation was to wait some time till s&p related founds load RHT stock.  Maybe is time to take a look at it …


  2. Good morning! The Oxen trade is shorting KBH – the timing depends on new home sales:  http://www.philstockworld.com/2009/07/27/short-sell-kb-homes-inc/


  3. Homebuilding stocks are very difficult to short … no borrow.
    No borrow on KBH, LEN at Schwab for ex.  — not just today … always.


  4. KBH
    Fidelity is showing 10,000+ shortable KBH available ..


  5. RHT/Spider – Good idea, $23 seems like a tough nut for them to crack and they certainly haven’t done anything exciting lately other than joining the S&P.  Their earnings are late in the cycle (Sept I think) and the Sept $20 puts at .50 are a good way to play them for a dip and pick up a quick 40% (.20) if things go well. 

    Shorting/Cap – KBH can be shorted by buying the $20 puts at $3.80, net $16.20 is virtually no margin.  We’re already in SRS long so I wouldn’t want to double up but it won’t take much to knock KBH lower.

    Not a terrible open so far.  Indexes stay on a bullish path as long as they don’t fall more than 1.5% today so not too hard to form consolidation patterns up here.   Anything over 1.25% is rally fuel but we need some leadership from SOX and Transports, who need to make up ground as the lagging indexes. 

    We did have problems over the weekend system upgrade with the PSW report but, otherwise, things went well.  If chat should go down, I will be over at Stock Talk and you won’t see anything if you don’t click on my photo to follow me!  This will go out in an alert so you’ll have the link in your mail.  This is the same place that $5,000 Portfolio moves can be followed. 


  6. ZION having a good day today (they just fascinate me!).  X broke $40 with authority and seems to want to go higher. 

    Transports and SOX are leading us as they are the only indexes that are green at all. 

    VIX up 5% on no sell-off at all – that’s kind of odd but we did think the VIX was too low last week.

    AMZN down 2.5%, RIMM up 2.5% so balance at the Nas.    BIDU still heading up (can’t fight the China tide).  GE suddenly finding buyers ($12.34), VLO way up at $18.50, LVS doing well despite Pharms not-so-good field report.

    New Home Sales coming up, 352,000 expected…


  7. Good Morning,
    I did the vix play last week. They both show me a negative. The $30 put is about 2% down and the $27.50 is about 7% down. Do I leave them as is?


  8. June home sales way hot, up 11% at 384,000 so WAY better than expected.  So much for shorting KBH – I’d kill that trade.


  9. A bit of info I got from some family involved in the Ag business.  Possible move for MON in the future.
     
    Landec tried to market their Intellicoat commercially to growers but I think their niche is more in seed production and not commercial corn. I know when Monsanto bought Fielder’s Choice, it was part of the deal but the seed coating didn’t come along for the ride. I’m not sure if Monsanto actually purchased the Landec product (My guess is no). The problem with Intellicoat especially in the upper Midwest is that most growers hit the fields when the soil is ready. Most times that’s when we should be planting anyway so why spend the money on a product that you really don’t need. Monsanto will commercialize their proprietary seed coating called “Acceleron.” in 2010. It’s the brand we’ll be using on all new technology releases including Genuity Round Up Ready 2 Yield soybeans and the newest in corn, Genuity Smart Stax. Smart Stax just got approved by the EPA and will be the most advanced corn technology ever released. There are 8 modes of action to help control numerous pests and growers won’t need to purchase any insecticides at all. The refuge for this product has been reduced to 5% which will make planting much easier. If I was a betting man, I would definitely take a position in the fund by purchasing Monsanto any time the stock is under $80. Smart Stax is the “Real McCoy” and will revolutionize the corn market within 2 years. DuPont’s Pioneer doesn’t have anything close to it.


  10. VIX/Miracle – That is a high-risk play that gives you a big payoff if the market dives.  You may want to hang on through GDP on Thursday.  I’m showing $2.70 for the $27.50 and $4.70 for the $30s so looks the same $2 spread.  Your trade system may be showing you the bid for your call $2.65 and the ask for your caller $4.90, which is $2.25, a pretty big difference but keep in mind it’s not possible for you to lose more than .50 and that was the risk of the trade against the $2 upside.  Even on expiration day, .50 is the worst you can do so taking a .25 loss with 4 weeks to expiration is not recommened.  If you are scaling in and they are willing to sell you more $30s at $4.90, you can always take them and improve your net but I very much double that price is real at all. 

    MON/Where – Thanks, that does sound really good.  Too bad MON flew up 5% last week but hopefully we’ll get a cheap crack at them. 

    Home Sales not doing much for the overal market but it really hammered SRS there!  I’m not seeing much conviction backing up the bull moves though. 

    Volume just 33M at 10:10, not impressive. 


  11. morning to all – anyone else in the HSGI long put trade?


  12.  My brother from California is here in Maine visiting.  He’s a building contractor in in Lodi/Stockton, the center for real estate "boom or bust".   He told me 2 years ago that the homes he was building were finding no buyers.  He eventually stopped building, and the market for new homes dried up completely.  Shortly thereafter the entire building market sank like a rock.
    I asked him now " What’s happening in California?"  He says "Nothing.  Nobody is building."  Until my brother tells me they’ve started to build houses again in California, I will not play the housing market long.  When he calls and says, "They’re building again!’  I’ll get back in.  Until then, short them!!  Buying KBH puts today.


  13. Phil, are you still trying to get filled on Friday’s 5KP trade in VNO for a $1 debit on the calendar spread?


  14.  Buying FSLR calls.  Expect them to ramp up further ahead of earnings, later this week.


  15. RIMM pulled a harsh reversal.  All our indexes are red now but not much of a trend other than a lot of VIX buying possibly pointing to the big boys stocking up on puts ahead of something. 

    VZ missed a bit this morning by the way – down 2.5%.  Costs went up and wiped out an 11% gain in revenues (and AT acquisition made that happen).  300,000 ($60/month = $216Bn/yr additional revs) more FIOS subscribers is great growth but not enough to offset other weakness with wire-line falling 5.2% ($500M) in just a quarter.  I still like them but jobs have to come back and foreclosures need to stop before this inducstry gets safe.  

    VNO/Allen – No, I did not re-up a missed trade (I rarely do) but it’s still not a bad idea. 


  16. Phil, what are your thoughts regarding FSLR for the $5K Portfolio?


  17. RIMM  My current position is +3 Sep 65 Calls / -1 Aug 70, -1 Aug 75.   I need to roll out my calls and also put my callers into premium.  Suggestions on repositioning?  


  18. Remember that VIX index buying won’t change its value, since its just calculated from S&P call and put prices.
     
    I’m watching BIDU for a long entry. I doubt it’s done going up, but it probably has to retrace a bit first.


  19. I like David’s plays for the most part, but his execution is sloppy.


  20. DIA/mattress- still long Dec 89′s with 1/2 cover on Aug 89′s @ $1.38. What’s the plan/outlook for today/tomorrow?


  21. BRCM $27 still on your radar? Now $1.20 +/-


  22. oops that was the calls. Puts are bout $1.


  23. FSLR/Iflan – Just so you know, I don’t think much of them. 

    FSLR/Java – Not at all risk appropriate for the $5KP.  I think they are worth less than $140 but who knows what earnings will show – most of my issues with them are related to their long-term growth potential and profit outlook based on their revenue model.

    Now it’s looking like a proper sell-off!  SOX and Transports went from leaders up to leaders down but Nas is not far behind and blew the 1,950 mark already.  Dow 9,000 is the big level to watch, which would run with S&P 966, NYSE 6,260 and RUT 540. 

    Oil got a harsh rejection off $69 and is back testing $67.50 again.  Gold was rejected at $960 and is back to a $950 test.  The dollar is showing good strength after being beaten down pre-market (I forgot to mention GS dissed the dollar this morning and gave the markets a little kick-start pre-open).  The dollar is right at 95 Yen and $1.42 for the Euro and just broke under $1.65 to the pound so we should keep an eye on that today.  Strong dollar not good for OIH, XLE, miners or the market in general at this point (but the Nikkei would like it).

    RIMM/Eph – I’d sell another Aug $75 in the very least.  If they bust out, then add more longs but you have a 20% gain to cover over 2 weeks. 

    VIX/Eric – But it’s the put buying that influences the VIX and that’s the sign we’re looking for, the loss of complacency that the market will keep going up and up. 

    BIDU/Eric – I don’t know if they can get a lot of traction with GOOG down in the dumps. 

    Good spot to speculate long on MSFT as they held $23 before and word is YHOO gives up their own search engine to brand Bing, which would be a big win for MSFT.  Since Ballmer is a boob, they may end up overpaying up front for the rights so that’s the danger but YHOO looks desperate to me and surely there is someone at MSFT who can negotiate a deal without giving away the store…  I like the Jan $21s at $3.15 with $1 in premium over 6 months (.17/month) as you can sell Sept $25s for .35 but I’d rather take the chance that they do a run-up and either sell 1/2 the $25s for .50 or just get out for $4 if we get a run back to $24.


  24. I just got a message saying CBOE has halted electronic trading ?


  25. CBOE- now will reopen @ 9:58


  26. RIMM  If I want to keep the trade alive, would I be giving up to much position by rolling Sep 65 --> Jan 70 for $1 as opposed to Sep 65 --> Jan 65 for $4?


  27. from go to homebuilding analyst…..
    Homebuilding: June New Home Sales Solidly Above the Street, Consistent With Other Recent Data Points

     
    Consistent with the recent uptick in some other housing-related data points, including the NAHB Survey (up 2 points in July), and June Existing Home Sales (up 3.6% seq.), June New Home Sales rose 11.0% seq. to 384K, solidly above the Street’s 352K. However, we are somewhat surprised by this strong rise given the MBA Purchase Index has remained in a stable band between 250 and 280 over the past several months. None theless, we do believe New Home Sales’ rise is consistent with other data points, positive builder commentary, and as this activity relates to the Federal and CA tax credits. However, we continue to view the second half with a more cautious outlook given that it is the seasonally weaker half of the year, as well as the fact that the Federal and CA tax credits are expiring. In addition, while absolute new home inventory continued to decline, down 4% seq., and months supply fell to 8.8 months, we continue to believe the core problem facing the housing market is still the highly elevated level of existing homes available for sale, which fell only slightly in July, down 1% to a still highly elevated 3.823 mil., or 13.6x the size of new home inventory. As a result, given our outlook for continued weak demand, and our view that inventory should remain highly elevated over the next 12 months, which should result in further home price declines and large impairments for the builders well into 2009, we maintain our cautious sector stance.

    While absolute new home inventory continues to decline, existing home inventory remains the core problem. New home inventory fell 12K units to 281K, rep. a 4.1% decline and a 51% fall from its July ‘06 peak, while specs fell 3.6% seq. to 241K, down 49% from its Sept. ‘06 peak; months supply fell 13.7% to 8.8 months. Importantly, however, we believe these declines in absolute inventory remain relatively immaterial relative to existing home inventory, which remained highly elevated at 3.823 mil. in June, or 13.6x the size of new home supply.

    Prices fall solidly; further declines should drive continued large impairments. Median prices fell 5.8% seq. and 12.0% YOY to $206K following May’s 0.9% rise. On a 3-mo. moving avg. basis (to reduce volatility), prices rose 0.2% seq., but still fell 9.5% YOY. We continue to believe further declines in new home prices are necessary, given continued weak demand. This in turn should drive further material land charges for the builders.

    Regionally, rise led by the Midwest; Northeast and West also rise strongly. The Midwest rose 43% seq. following May’s 24% rise, while the Northeast and West rose 29% and 23% seq. following May’s 9% rises each. Lastly, the South fell 5% seq. following May’s 6% decline. On a YOY basis, the South, Northeast, and West fell 34%, 11%, and 10%, resp., while the Midwest rose 6%.

    Maintain negative sector stance. We note that the larger-cap builders are currently trading at 0.83x P/B (ex-FAS 109, incl. MDC), above the 1990 trough of 0.7x. However, we believe today’s markedly more challenging housing and macro environment supports even lower trough valuations for the current cycle. Specifically, given our outlook for higher unemployment, rising foreclosures, and elevated inventory levels, our estimate for impairment charges to represent another 30% hit to builders’ equity could easily prove conservative. As a result, we believe impairments should continue to prevent investors from gaining confidence in asset values, resulting in depressed P/B multiples, as well as drive further erosion of BVs.


  28. Phil – What do you think is behind the UBS action ? (As posted in Phils Favourites)
     
    IMPORTANT NOTICE: Inverse, Leveraged and Inverse-Leveraged Exchange Traded Funds are no longer available for new or additional purchases at UBS
    Effective July 27, 2009, UBS is suspending the offering of Inverse, Leveraged and Inverse-Leveraged Exchange Traded Funds (ETFs). You will no longer be able to make new or additional purchases and will only be able to liquidate current positions through UBS at this time. Any attempt to execute a trade of such ETFs will be rejected.


  29. Morning Phil hope you had a nice weekend, i was fixing pavement :P
     
    remember the zion 11 puts we sold last week for .90 for aug, they are .35 now, do we take it off the table or let it go through exp ?
     
    thanks
    david


  30. David’s plays/Dstill – He’s going to be joining us officially this week and I will be working with him on that.  I think we can construct a better targeting system for entries and exits that allow for no-trades (something he doesn’t do now) and improve the returns of the better calls.  Take today, KBH was a great call and it did drop 2.5% off the open and continued to look weak up until the housing report.  Now that that thrill is gone it’s a good short again at $16.60 but you can’t be greedy and you need to take .50 and run and cut your losses if they break back over $16.75.

    DIA/Pstas – Well $89 is still far away so fine with a 1/2 cover.  Not much to do here but wait.  The nice thing is a steep decline will boost the long put’s value too.  Keep in mind this sell-off is nothing so far, no one has even broken -1% yet so still a half point to go before hitting danger zone. 

    BRCM/Morx – That was a naked put sell.  Sold and forgotten unless they give us trouble. 

    CBOE having some sort of issues.  TOS says don’t trust the numbers…

    CNBC beathing the drums on home sales as they are up 30,000 for the month and that’s like 600 homes per state!  Isn’t that just the most incredible thing you ever heard????  In the summer, no less, when people build things!   (end sarcasm font). 

    Good quote by Jill Schlesinger, questioning the recovery

    I’m less optimistic, because it feels like the wonder boys and girls of Wall Street have the attention span of a flea and that may be selling fleas short!

    RIMM/Eph – The roll to the Jan $70s drops .17 of delta so you gain .17 less per $1 move up (and lose less going down).  The Jan $65s have a .75 (0.07 more than the $70s) and I can’t see how that’s worth $3 more dollars as all you make on a $5 move is .35 more.  If you can find somewhere else to make 10% on $3 between now and Sept, then the diversification factor alone makes that a better play.  You sold a $70 call now $7.80 and a $75 call now $4.30 against the 3 Sept $65s at $13.20 but it’s all about what you can earn.  If you are generally bullish on RIMM, you can roll back to 4 Jan $80s at $9.10 and 2 Jan $65 puts at $5.25 and sell 2 Sept $70 calls for $9.35 and 2  Sept $75 puts for $4.25, which nets you $27.20 back on $46.90 in positions and you only have a 1/2 cover to the upside which you will be able to roll to 2x (4) the Sept $80s even and, of course, that would wipe out the putters and your puts shouldn’t get too beat up so let’s say they go to $90 and you have 4 callers at $10 (for which you collected $27) and your 4 longs are worth about the same $17.30 as the long $65s are now ($69.20) and you still have 3 more months to roll. 

    Home analyst/Cap – Thanks!

    UBS/DB – That is wild stuff.  I’ve never seen this happend before but I can see why as you can imagine how many accounts go blown out leveraging those things in this crazy zig-zag market. 

    Much more important in Phil’s favorites is Huge Hendry’s observations on China.  Hugh’s a brilliant guy and he’s in China because he actaully wants to check the data with his own eyes, which is fantastic! 

    ZION/Micro – They are at our sell target of $12.20+ now so if they cross back under (which they almost surely will) then you may as well stop out and wait to sell again on the next dip (could be later the same day!). 

    Market held up well on that bounce but VIX still heading higher, up 6.8% for the day and looks like they want to test 25.


  31. True about put buying Phil, but it’s really tough to tell with the VIX. Call selling can drive it down but is bearish, call buying can drive it up, etc. The VIX fell hard right before the pullback three weeks ago, e.g. I just find it tough to read.
     
    This pullback is a gift, IMO. I’m adding to longs, and even if I’m a day or two early, the momentum here is huge and things like the housing number will keep it going.


  32. hi folks – had a gratifying weekend working with my hands for a change installing a beautiful repro clawfoot tub with gorgeous exposed plumbing.  I know!  Exciting.
     
    Here is a very important read if you haven’t come across it yet.  It comments on high frequency trading and what we are all up against day to day.  Scary stuff.  It also mentions Tyler Durden extensively.
     
    http://opinionator.blogs.nytimes.com/2009/07/24/weekend-opinionator-is-wall-street-picking-our-pockets/


  33. ZION!!!! wonderfull…  I got the leaps .. :-)
     
    Phil,  tomorrow BMopen we have TXT reposting.  Its huge up from march low… but you never know.. What do you think about this one? – Spider


  34. Agreed re Oxen – sounds good.   KBH was a good option play – its just that the stock wasnt a shortie.  Can’t reco a short play on a stock that can’t be shorted – impacts his cred.  


  35. MA just goes up and up. That could be a tremendous short if it makes it to the 210 area.


  36. Phil,
    knowing your general thoughts on BA , do you have any thoughts on it shorter term?


  37. matt u r the man if you can have a gratifying time doing  plumbing.


  38. Phil – I have short puts in NAFC; earnings are tomorrow. The stock has been hovering around 28 for a week or so. Is this an indication that folks aren’t expecting much? Do you have any advice on how to go through this event? Is it better to wait to hear then scramble or what? I am abt 24% in the green at the moment.


  39. Alerts seem back up and running – this is a test of them!

    Any time you don’t get any alerts and want to verify, you can use Stock Talk to check (as long as you are following me).

    VIX/Eric – I agree.  I often say it’s like pari-mutuel betting on a horse-race – you are simply betting against other players, there is no "fact" of where the VIX should be.  Hard to say what the pullback is.  I was prepared (even looking forward to) getting more bullish but my Big Chart reaearch led me to conclude that caution is still the watchword of the day.

    Congrats Matt!  Always good to do something "real" once in a while.

    TXT/Spider – Well were were loving them below $5 but they are a much harder call at $11.  I think they pop up though but I wouldn’t bet on it. 

    KBH/Dstill – Yes but anything can be shorted with puts.  I don’t know why people have such a hard time with that nor do I even understand why people short things at all when you can just buy the put for less money and no margin.

    MA/Eric – Definitely one to watch!  Not sure they’ll make $200 though, yet alone $210. 

    Overall, market is weak but holding up nicely, such a minor pullback we’re going to look like we’re consolidating for a breakout if we end the day up here (within 0.5% of Friday’s close).  VIX is telling a different story, up 7.3% now but it is the first non-up day in 2 weeks so you can excuse people for wanting to cover without assuming they have flipped bearish. 

    Volume on Dow at noon was anemic 70M so the wait and see crowd is in control and real men don’t come back from the Hamptons until this afternoon so tomorrow will be "Telling Tuesday" and we get some data (Consumer Confidence and Case-Shiller) to sink our teeth into.  If Case-Shiller fleshes out today’s New Home Sales and looks positive, we could get enough to break higher but Shiller himself was bearish in outlook not even 10 days ago so hard to imagine major change so quickly.

    A sell-off tomorrow to test our Thursday breakout levels (for the Russell 535 and NYSE 6,232) ahead of the Beige Book would be perfect if we hold it and an improved outlook could rally us from there.  Thurs morning for the Dow was 8,950, Nas 1,940 (already almost tested today) and S&P 960 so those are now our "must hold" levels for the week to keep our horns on


  40. Morx, I got some HGSI 12.50 puts a few days ago when it was at 14.35, hasn’t moved yet…


  41. BA/Maxt – Perfect stock to go with leaps like the 2011 $30s at $13.40 in lieu of ownership and sell the Sept $42 calls for $2 and the Sept $38 puts for $1, collecting $1.50 per month with 16 months to sell ($24) against calls that are $12 in the money.  You have to be willing to own BA at net $48.40 (assuming it blows below $38 in month one and wipes out your leaps and forces you to buy at $38) for the long haul but since I think they are ridiculously low here and would happily DD at $30 for net $39.20 – I love this play.

    NAFC/Morx – More an indication of indecision I think.  If you are up 24% and don’t REALLY want to own them, then take the money and re-short AFTER you have the facts.  You have nothing to lose but a portion of your potential profits — that don’t really exist….


  42. Gotcha.  Nary another peep from me except to say that Oxen is obligated to get his postings right the same way I’m obligated to learn the lingo/process here and not look for repeated or redundant guidance based on my mistakes or failure to learn.  Perhaps he’s more obligated. He’s sloppy – ur not.  Onward.  And with that I say Viva LYG, PD!  A goodie.  I just took my 8% and ran – tho probably coulda played it longer.   I’ve learned (A) greed kills and (B) in this market I rather be in and out and have cash to play with.  I’m a quick study on the basics.  : )


  43. Phil, for quite some time now, incuding the latest alert with a link to "StockTalk", the links you email in your alerts are not ckiclable (i.e. not links).  They show as blue text in the alert email, but not as a link.


  44. THPW may finally be picking up some steam. This one was discussed on the board last fall and I got in at .17 and waited patiently since.


  45. HEB - for those of you that played this earlier in the month, it appears to be getting some decent buying interest just now, maybe ripe for another pop?


  46. If you want to know how "healthy" a company is financially (i.e. check the financial fundamentals) what are a few important things to look at?  TIA!


  47.  FSLR    Thanks Phil.  I don’t think much of them either.  It’s a short term momentum play which I’ll be out of the day before earnings announcement.  


  48.  FSLR    Thanks Phil.  I don’t think much of them either.  It’s a short term momentum play which I’ll be out of the day before earnings announcement.  


  49. remember "buy 10K shares of NNVC and you will be a millionaire…" It’s up 10% today. I only bought 2500.
    Mr Mocha, I bought some HGSI, I guess before you. I understood that the expectation was that it was going to drop? Did i misunderstand  cause it has had a nice gain. Are you thinking since it has had this gain that now it will back track?  Just wondering if the plan to short it still makes sense.
    Thanks for responding.


  50. LYG/Dstill – Yep, that’s a good one!  I wish more people would cash in after stocks move up 20% in short periods….

    Links/Jordan – Thanks for pointing that out – I’ll have Matt take a look.

    THPW/Mr. M - You’re still in that one?  This is what I don’t like about penny stocks.  They took off in the spring and then died again and never gave us quite the same opportunity to buy back as we had in the fall.  I would take 1/2 off with a double so you have a free ride and then load back up if they re-test .20.  I do still like the company but they only have 2 quarters before they have to raise cash again.

    HEB/Mr. M – If they stya near the top of the channel (hanging between $2.40 and $2.50) for half a day into the close, that would be the best sign that people expect something coming up.  They have been pretty much up since Friday and the dips look like disappointment that whatever news didn’t come each day. 

    Health/Bri – Better for you to pick a company and we can look at it. 

    FSLR/Iflan – Just didn’t want to see anyone get in that thing thinking there was a company there!


  51. Phil,
    can you explain how one handles a longer term call that is covered by a caller that ends up in the money ( assuming a roll of the caller does not make sense)?


  52. MSFT – Phil I bought the jan 21 calls.  I think your premise was that it would hold 23.  If it breaks below what would you cover with?


  53. Let’s take FSLR.  What don’t you like about the company fundamentally?  Why do you perfer others in that sector over FSLR?


  54. Mr Mocha – what’s with Phil raggin on you for having patience?


  55. And now for another edition of Bear Droppings…
     
    The pullback (from a bear’s point of view) from the pre-earnings level in the markets has been impressive.  Not to discount the whole run from March either.  It’s clear we are in a bear market rally.  And (to me) not a dead cat bounce.  Although the road will be choppy, I feel like this rally can extend into the new year.  And in perfect coincidence, I feel it will finally begin to peter out about the same time it started which is to say towards the end of Q1.  By then, the performance of the market will be a distant memory (remember, I’m a bear).  People will be thankful that, although their job maybe gone or in jeapordy or definately someone’s that they know, the market has risen convincingly.  Real estate will be looking stronger.  And the MSM will be trumpeting the next big expansion cycle.  But alas, it will soon be over.  Why?  Simple, our economy is in the crapper and swirling faster and faster towards the big flush.  The Chinese will be over us.  Interest rates will be up and beginning to accelerate.  ‘Growth’ will be stymied.  The future will look grim and rightly so.  Despair will start to set in and risk markets will again contract.  The demographics of our country, combined with the recent massive expenditures further combined with even more massive entitlement outlays in the years ahead demand it. 
     
    In the meantime, I’ll be tagging along for the ride!


  56. Morx, I don’t think Phil was "raggin", I think he was just surprised because most of my trades are short-term and he didn’t expect me to hold anything for a year.  But this one has been above my buy price for 75% of that year so I figure that’s a good reason to hold…


  57. i’m just playin, of course. He is always encouraging me have patience. :)


  58. Cover/Maxt – A specific example would help.  Unless you set up the trade very bearishly, a roll almost always helps.

    MSFT/Bigs – We’re in for the announcement of a deal with YHOO per Ad Age.  They do look annoyingly weak though…

    FSLR/Brian – Well, with FSLR you picked one that has fundies that don’t show up on a sheet.  FSLR has the lowest cost, highest efficiency solar panelys ONLY because they us Cadmium Telluride as a base.  This is like a spreaker company demonstrating they get better sound because they use pure gold wires to lower resistance – sure it works but it’s stupid.  CT is a by/product of copper production but it’s found in such small quantities (about one ounce per hundred tons) that there is no way on earth that anyone would mine copper just to get the CT. 

    That means FSLR, who are already using about 40% of the world’s supply of Telluride, really can’t possibly double their business from here and, if the economy slows and less copper is mined (China’s copper stockpilinig just saved FSLR this year) then FSRL finds themselves competing for a very scarce resource with the rest of the people on the planet who need CT.   So, long-term – FSRL is a very limited company and simply CAN’T grow into their valuation. 

    They also, by nature of the contracts they offer, can’t switch to conventional solar.  They offer the best $/watt contracts in the industry and they even promise 20% annual improvements over 5 year contracts so they are effectively claiming they can double efficiency every 5 years.  If their costs go up or if their R&D can’t keep up, all those contracts, that are the basis of their business, become void…

    On the balance sheet, they are fine.  What they do now is very profitable, it’s just that they can’t sustain what they are doing.  You look at the income statement and see that their ’08 revenue went from $503M to $1.2Bn and cost of revenue only climbed from $250M to $550M so the 2dn $300M spent on sales added $700M in revs – that’s healthy.  SG&A needs to be included too and that went up another $100M so it costs them about $400M to sell $700M. 

    Back to the balance sheet – They have $700M in cash $100M in short-term investments (which you can count as cash), $134M in inventory which, in a solar company, if it’s old it’s pretty worthless.  And $32M in "current assets".  Generally I ignore "current assets" as they aren’t cash, recievables or investments so I really don’t want them from a buyer’s point of view.  Recievables only have value to net out payables, which for FSLR is $285M so that’s a net negative $200M.  Long-Term investments are always iffy and Property, Plant and Equipment are only worth something in a heavy M&A environment, which we certainly don’t have. 

    So we look at FSLR and say they are generally in comfortable shape with $800M of cash and investments against net $200M of payables and $160M in debt or $440M cash on hand.  This is where the income statement gets important again.  The first $500M they made cost them $370M and the next $700M cost them $400M too so they spend $770M to get $1.2M.  If you figure a crash in business would take them 50% by surprise (time it takes them to trim spending etc) then you figure a 20% fall in revenues to $1Bn would hit them for $125M in profits but they make $250M on $1Bn so we don’t foresee any realistic need to burn cash.

    Cash Flow helps confirm the premise and we see they spent (in ’08) $459M on Capital expenditures so that’s also good as it accounts for a nice chunk of used cash.  Going to a quarterly view, we see that the big spending seems to be behind them (the rest you need to read the news to see if anything is announced) and it is so, by far, their biggest variable that there’s not much else to worry about. 

    So Financially, FSLR is a very solid-looking company, plowing ahead in a growth cycle.  The warts on this company only appear when you dig a lot deeper…

    Patience/Morx – Just a little too much patience when you let a double go by…  When you bet your team will win the superbowl and they win the superbowl – do you say "I’m going to let this ride that they do it again next year?"  Letting a double ride is very much like that…

    Oh Matt, you are making me sad!   Do you realize how MASSIVE the bear market has to be for this to be a bear market rally?  I am generally leaning towards an upgrade of our levels if we can hold these gains.  Yes there are fundament flaws still in the economy but it’s nothing we can’t inflate our way out of and inflation is very, very good for stocks. 


  59. Morx, where is your quote about NNVC from, I doubt it was PharmBoy, he doesn’t talk like that?  However, I do think that I bought the HGSI puts because PharmBoy said they had run too far too fast, and I look at it as a binary trade – either double or nothing.


  60. VLO earns (or doesn’t) tomorrow as does BP.  X also reports tomorrow and UA so all 4 could disappoint.  Not a good idea to go too bullish into the close.


  61. me thinks Its bull market… but a lot of air gaps down there ;-)


  62. Another really low volume push to lift the indexes. Volume getting so low I’m begining to think I could manipulate SPY :-)


  63. Bonds seem to be holding up well with this rally in the indexes.  When is that treasury acution this week?


  64. It was something from trading goddess i think. http://allallan.blogspot.com/2009/07/basic-trading-101.html
    Not sure what the context was but it was mentioned by someone in this chat.
    NNVC has since dropped abt 5 pts. There goes my millions. should of not been so patient


  65. Do you still maintain the position in Aug 16 SRS Call.  It is down to $1.40 would you buy here?


  66. Hi Phil what about the SRS $16 calls? Do we DD on that or is that trade a kill after the upbeat housing data?


  67. "I’m begining to think I could manipulate SPY ""
     
    LOL.  Think what we could do if we pooled our resouces!


  68. "I’m begining to think I could manipulate SPY ""
    "LOL.  Think what we could do if we pooled our resouces!"
     
    And think what our pool can do with a leverage of 30:1 , like "they" are using :-)


  69. Phil…thanks for the great description.  How fast do u man??  :)   Your keyboard must smoke…


  70. VIX/Eric – But it’s the put buying that influences the VIX and that’s the sign we’re looking for, the loss of complacency that the market will keep going up and up.

    I asked about this very late friday after some research, as I think the VIX play we have on is driven by the price of VIX futures, which at the moment are quite a distance from the computed "spot" index mentioned here (29 versus 24.5) – they will converge by futures expiration…
     
     


  71. Phil…thanks for the great description.  How fast do u type man??  :)   Your keyboard must smoke…


  72. Treasury aution/Bri – They have something every day but the short maturities are a non-issue and should sell well. 

    SRS/Sarah – Yes I still like them at $1.40, that was on the earnings we expect (or misses) as that sector starts reporting.

    SRS/Desi – Not a DD although that was the original thought.  We are only covering YUM in the $5KP and they are loiking a little better at the moment.

    Smoking keyboard/Bri – Well sometimes I roll it one after a hard day but not during market hours…  8-)

    VIX/Steve – That was one reason we took the bullish VIX trade, it is much more likely that front-month VIX snaps up to meet the general futures pricing than vs. vs. 

    Speaking of smoking – this market must be on something the way it keeps going!  SOX and TRANQ back to leading from leading to the downside after having led to the upside at the open.  All the bears should feel free to stomp and complain because this is utter nonsense but that and $17.50 will get you a share of SBUX in this market…


  73. Any thoughts on MOS puts? The pull back got me salivating. Guess all that goes up must come down. (someday)


  74. Phil, I think almost all of us agree that the realestate situation has yet to be reflected in the price of SRS.  I went long SRS today by selling some of AUG 16 puts as well as the AUG 15 puts.  When do you think we will see the collapsing realestate situation reflected in the market?


  75. Phil,
    re the ultra bearish cover from above: I covered my DBC calls with Aug $20 and $21 callers. Fully covered now and callers way in the money. So that’s the jist of it.


  76. Nonurgent tech-ish questions: None of my ETrade interfaces factor, for example, short calls into my “price paid” for a stock. Naturally, I like to sell against long downers to reduce my per share price average. Is there a simple excel template or similar I can download into or track same with? I hate the extra steps, bu what’s the alt? Also, same re choosing best options by inserting variable values, etc? Thx


  77. MOS/Morx – Well, you can see they will fly down with the broader market but the broader market refuses to quit.  There was a good volume spike to the run at the end of Friday into this morrning, maybe the end of the squeeze but the rumor mill keeps churning with new "buyers’ luking around every corner according to the MOS bulls (but no firm offers at all). 

    SRS/Craig – I just can’t see how the major real estate companies can possibly have good reports.  If they do, we have to throw in the towel on all bearish positions and BUYBUYBUY.

    DBC/Maxt – Your callers are not so in the money that they aren’t serving as good protection if we ever get a pullback.  You can roll the $20s at $2.75 up to the Oct $21s, now $2.25 but wait for the VIX to come back as that would give you a better roll.  You can also, if you are willing to buy more, just roll them straight across to Sept $20s and $21s for .20 and slel the Sept $21 puts for .35.  That leaves you 10% covered and still collecting .50 per month, which is a great return in a low-volatility market. 


  78. What strikes me having traded through both the down last year and the up this year is the way down markets behave vs up markets in US stock indexes.  In down  markets, volatility increases and you can if you’re nimble still make good money on the long side playing the inevitable shortcovering rallies, relief rallies and gap filling rallies.  Even in a market like the  one last year, there was a ton of money to be made long.  I remember the time when the market had fallen for 7-8 days straight and every one was howling how could the market do that for so long.  Fast forward to now.  We just witnessed an incredible bout of buying that lasted almost twice as long as that sell off last year (distance may be another thing).  There is very little money to be made on the short side of this market as selloffs unless they’re snap sell offs.  Retracements don’t last longer than 40 min to an hour or maybe a couple hours for one day of the week.  This has pretty much been the general pattern all the way up.  Short selling in a rising market is generally futile while buying in a falling one, even sharply, can be done with some success.   There definitely seems to be a long side bias.


  79. Templates/Dstill – I don’t know any, sorry.  Maybe Gainskeeper if it works with ETFC.  You should ask them what they work with. 

    Long bias/Bri – Well timing is everything in any market.  If you are going to be short, you HAVE to be prepared for a world of pain before you are "right."  On the other hand, as we saw last fall, you can be spectacularly right when you are short – IF you survive the blow-off top that often comes before the fall.   That’s why I prefer to go short when the bears are howling already. 


  80. DIA- what say  you going into the close?


  81. Qs look like they are fading here. If this continues I’m covering all my index calls into the close in anticipation of further weakness at tomorrow’s open. Ideally a push lower tomorrow, as Phil said above, then I’ll be a buyer.


  82. steven, that’s my understanding of the VIX too, that its priced off the futures, which look several weeks ahead. This thing is thus a derivative (of futures on option prices) of a derivative (of option prices on stock) of a derivative (of stock itself on coporate earnings). I traded it once and made money — it was sheer luck.


  83. Phil:
     
    re: DBC/Maxt – Your callers are not so in the money that they aren’t serving as good protection if we ever get a pullback.
    Would you clarify what you meant by that? 


  84. FFFLLLLLAAAAAAAAT. 
     
    There’s always tomorrow for that down day we’ve ALL been looking for.  8-)


  85. Pharmboy- Are you back?


  86. DIA/Pstas – No change from Friday’s close really, easier for the market to go down than up but I’m  a little more worried they go up tomorrow as this was a pretty strong showing.  Still, the logic would be for a lower test tomorrow and a rally, if we’re going to break higher, on the GDP and Fed.

    DBC/Chaps – In other words he has the ETF, which he’s well up on and it’s only trading at $22.60 so a 10% cushion, not exactly so deeply buried that it’s over-protected, especially with oil trading at (hopefully) the top of its range. 


  87. Phil
    USG- I have 5 Jan 11 5′s which I paid $5.40/ now $9.25; Covered by Aug 12.50′s @ $1.26; now 1.70 (my actual basis is higher since these were rolled up from the Aug 10′s). I thought UAG would sputter at 13 but it seems, for now at least, to be holding. My question is when is it wise/appropriate to roll up the Leaps?


  88. Huge premiums on UNG, it seems (maybe this is normal?). Aug 13s are .975 and only .18 in the money. Going long Jan 11 calls, selling those 13s is only 4.025 with good protection and o.k. upside (+20 delta).


  89. Sorry, those are Jan 11 10 strike calls (currently 5.00).


  90. Phil,
    What’s your opinion on GS.
    Thanks


  91. Phil, what are the big names in realestate that we are waiting on earnings for?  Also, when do they report?


  92. john / GS:  Only the Fed and GS can print money.  What else would you like to know? ;-)


  93. A true masterpiece by the chart painter….


  94. It’s the magic stick !
     
    Funny how the talking heads take no notice….


  95. Phil
    EXM- I did a buy/write on this a couple of weeks ago for net $3.94 selling Sept 5′ P/C’s. I am perfectly content to get called away come September. Given the run up in EXM , is there any way to take advantage at this point?


  96. Phil: I’m up 50 % on LYG Jan.$ 5 puts & 8 % on stock. Closed calls out 2  weeks ago @ $.35 @ a profit. Should I now resell Jan. $5 calls @ $1.70.thanks
    DF


  97. VIX/Eric – But it’s the put buying that influences the VIX and that’s the sign we’re looking for, the loss of complacency that the market will keep going up and up.

    I asked about this very late friday after some research, as I think the VIX play we have on is driven by the price of VIX futures, which at the moment are quite a distance from the computed "spot" index mentioned here (29 versus 24.5) – they will converge by futures expiration…
     
     


  98. VIX/Eric – But it’s the put buying that influences the VIX and that’s the sign we’re looking for, the loss of complacency that the market will keep going up and up.

    I asked about this very late friday after some research, as I think the VIX play we have on is driven by the price of VIX futures, which at the moment are quite a distance from the computed "spot" index mentioned here (29 versus 24.5) – they will converge by futures expiration…
     
     


  99. I have no idea why that reposted it wasnt in the comment box. sorry.


  100. steven, I agree. As I say above, I think playing this is kind of a gamble — too many variables. But I think you’re right about convergence.


  101. What a joke.


  102. Sold 10 SPX 975puts for 21.00, but left the position open into the close, trading at 19.30×20.50.
    This market just wants to go higher.


  103. My IPad is finally coming (I called this over a year ago).

    USG/Pstas – Well the 2011 $5s at $9.25 ($14.25) have .40 in premium.  The $10s at $5.70 have $2.90 in premium.  The whole thing hinges on, if you were to roll up to 2x the $10s, could you sell enough extra premium to cover the $2.50 in additional premium over 15 months (.17 per month).  If you can clear that hurdle, then the roll makes sense.  So you can roll yourself to 2x the $10s, which drops your downside delta from .95 to .79 and then you can roll the Aug $12.50s to the Sept $12.50s at $2.10 (+.40), which covers all you need to collect on all your longs and you have now doubled your upside delta against your callers and you have the flexibility to sell 1/2 more Sept $15s (now .85) or more $12.50s if we head south.  Just collecting that extra .40 a month 15 times is $7 or about $3.50 per current long contract more than you are now so that’s a 33% improvement in collections even being very conservative in your sells. 

    UNG/Eric – Good spread.  Just keep in mind we head into hurricane season and prices could go crazy.

    GS/John – They are a great and powerful company.  Thank goodness for GS.  All hail, hail, hail….  8-)

    GS/John – They have a current p/e of 36 and that’s AFTER being totally bailed out by the government.  Everyone else AIG owed money to got .16 on the dollar, GS got $1.  That was a $12Bn gift that would have wiped out the firm had it gone the other way.  Yes, they control the universe and maybe they will get away with it every time they bet and lose but never forget they ARE betting and they did lose big-time – they just happened to get bailed out and, like any bad gambler, they are right back at the table, rolling for long-shots again.  I wouldn’t bet on them, other companies were not so lucky and they may not be next time but you can’t bet against them because they are like those "professional" gamblers who only stay professional because they have a rich uncle who ultimately bails them out of their losses so they can get back to the table and claim more victories. 

    Real Estate/Craig – Well they are all reporting some time.  They come late in the cycle.  Maybe early Aug.

    Heads/Cap – Even funnier that if the same move happens mid-day they act like something amazing happened and it must be some kind of rally but when it’s painting the tape into the close they just dutifully report the close as if we were up there all day. 

    EXM/Pstas – Not much to be done with the Septs now that they are so DITM, you can really just kill the trade if you can take out the putters for .10 and the callers for $4.40 as that’s net $8.34 at $9.40, and you can only make $1.06 being called away at the end.  Of course, looking at it that way, if you take out the caller and putter you are in for net $8.34 and you can sell the Sept $7.50 puts and calls for $2.75 to drop the net to $5.59 so you are risking $2 more to make $1 more next month.

    LYG/Dflam – I wouldn’t be so quick to cover the way they are going.  The Jan $5s at $1.70 are funny contracts and you don’t want to sell those and the regular Jan $5s are a rip-off to sell at $1.20 (1/2 in the money).  If anything, you can ditch the stock, buy the Jan $10s and sell the Oct $7.50s for .20 so you take $4.50 off the table and have a free run on the rest.  Don’t forget no matter how high LYG goes, you have the right to buy them back for $5 more so it’s not like you are giving much up to cash out. 

    Repost/Steve - It’s a system glitch that happens when the server is doing something or other, no biggie. 


  104. phil, can you explain what’s going on there and also, how would you feel about my parents buying some Citigroup stock ?  assume options are not available
    http://www.marketrap.com/article/view_article/91114/citigroup-when-issued-share-discount-narrows


  105. I think I’ll be shorting the pre-market pump tomorrow.


  106. SPX PUTs/barfinger – you’re brave selling PUTs close to the money.  My SPX PUT sold are still at 850, but I know what you meant by the market wants to go up.  Maybe I’ll sell SPX 900 PUT on a 2-3% dip. 


  107. Phil
    Sorry but you are about 27 years late on calling the iPad.  Back in the early eighties when I was working at HP on some of it’s first computers and portable products I said that what I wanted was a tablet to carry around that i could either write on or touch to configure.   It just took awhile to come to reality. 


  108. How about this one,  picture windows that turn into displays.  You can see outside but when you want to use it as a display for a meeting it is like a projector screen without the projector.


  109. HGSI- per DJ newswire
     
    Human Genome Sciences Plans 18M-Share Offering


  110. A different take on the June Home Sales "spike":
    http://online.wsj.com/article/SB124872653284684759.html


  111. JAZZ took off.  These biotech winners are crazy.


  112. rule on naked short selling has been made permanent.
    http://news.yahoo.com/s/ap/20090727/ap_on_bi_ge/us_sec_short_selling


  113.  i thought melissa lee was bad…michelle caruso-cabrera is the WORST…EVER


  114. Federal Reserve is a Ponzi Scheme an Inside job

    http://www.youtube.com/watch?v=jmxpf4CRiwM


  115. Good Madness Everyone
     
    UK has opened UP. BP profit down 53%, Cannon profit down 86% , Hitatchi lost 87billion yen compared with 31.6 billion a year ago. Bank of America to close 10% of branches (WSJ). Futures heading up.


  116. Good morning!

    C/City – There is some strange swap that’s been going on since June where preferred shareholders have been able to swap into C common stock at a discount.  That has led to a huge amount of C shorting as arb traders go long on preferreds and short on C.  As the discount drops, it hopefully indicates this trade is finally unwinding and C can start going back up.  You ask about your parents owning C and it’s fine as a 5% portion of a portfolio but too dangerous to be a mainstay, tempting though it may be.  At this price ($2.69) we are naked in the $100KP and I’m pretty sure we’re going to DD on those too but, again, this is just a portion of a sensible portfolio.  UYG is a safer way to play the financials, still at $4.36 but if C goes to $10, so will they. 

    27 years/Steve – Well I think Star Trek beat us all but I’ve been saying it was the next logical product after the IPhone for AAPL and if they can make a book-sized one for $499 or less, I think it will be the next big thing (and bad for AMZN).  Picture window idea is great, OLED tech should make that pretty simple in a few years. 

    HGSI/Pstas – What strikes me strange about this offering is the use of proceeds.  They intend to retire 2.25% convertible notes.  Meanwhile, those of you interested in the company should take the opportunity to get a prospectus at 1-866-471-2526, or by email at prospectus-ny@ny.email.gs.com  I think the dip in HGSI is a nice buying opportunity if you missed the boat.  They are buying out a conversion that’s already priced into the stock after the stock has jumped 300% so the money is being used to avoid a major dillution and it’s not like the company is hurting for cash. 

    Short selling/Trad – Well it’s about time they at least enforced what’s on the books.  Going to make it very hard to borrow shares now so you short sellers better learn to work with puts!   I wonder if the ultra-ETFs are exempt?

    Michelle/New – They need Dylan back…

    Open/DB – Sounds like just another typical day in Wonderland… Should have put money where my mouth was on BP, that was kind of obvious because they got hit on both ends (price of oil sold and refining margins). 


  117. Good Morning Phil, DB & all


  118. Asia/Pacific Markets    Tuesday, July 28, 2009
    (The following is from Yahoo, please confirm with other sources)   

    Australia All Ordinaries*             4,174.00    26.20    0.63%
    Nikkei Average*                       10,087.26     -1.40    -0.01%
    Shanghai Composite*                3,438.37      3.16    0.09%
    Hang Seng*                            20,624.54   372.92   1.84%
    Seoul Composite*                     1,526.03      1.98    0.13%
    Singapore Straits Times*           2,624.04    47.38    1.84%
    Bombay Sensex                     15,331.94   -43.10    -0.28%
    Baltic Dry Index                        3,407.00    62.00    1.85%

    *at Close