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Testy Tuesday Morning – $1.70 for a Pound? I Don’t Think So…

Has the dollar fallen too far?

The British Pound is now fetching $1.70, a huge break-out and well above the June highs, now valued higher to the dollar than any time since last October.  Britain has aggressively cut rates and expanded their money supply and Britain had banks falling like dominoes before being taken over by the government.   The UK's budget deficit as a percent of GDP is forecast to be 11.6% this year, the second worst on the planet, exceeded only by the US's projection of 13.5% but the UK is forecast to catch up in 2010 with 13.3% of their GDP taken up by debt.  Why then, you may wonder, is the British Pound up 25% against the dollar this year and almost 10% this past month?

The answer to that is the same as the answer to many irrational market moves – SPECULATION.  The dollar in general has been pushed back down to 1-year lows by currency speculators and the Pound is benefiting from their No-Euro policy that makes the UK a relatively safe-looking investment for currency traders who are worried that Eastern Europe will eventually prove to be a weight that drags the rest of the EU down.  With a population and economy about the size of California and the independence of a sovereign nation, any small sign of improvement (like the recent uptick in manufacturing data in the UK) can quickly pull money back to the Pound who, just 30 years ago, were the second strongest currency in the world and, for 500 years before that, was the undisputed global leader.  The UK, as it was 500 years ago, is still ruled by its powerful banking sector and again the fishbowl-like nature of the island nation tends to magnify small improvements we've seen in the UK banks, which causes Japanese housewives (who are very into FOREX trading) to push more money into British currency. 

Japan Housewife forexToday it may become apparent that the Japanese housewives have become a little irrational in their Pound exuberance as nationalized British Bank, Northern Rock, showed a 31% increase in first-half losses to $1.25Bn as bad loan provisions jumped to over $1Bn from under $300M last year.  Even worse for the bank – deposits fell 17% despite the bank's 100% government guarantee while mortgage delinquencies rose 10%.  This is a pretty clear indication that Britain is not quite out of the woods yet and we'll see today whether the Pound is rejected at the haughty $1.70 level or if they are really back on their way to $2, a level they sat at as the dollar dove in 2007-8, which sparked the global commodity rally that ultimately doomed the global economy.  So let's hope the Pound calms down or we may all be in big trouble!  

On the continent, UBS also reported a wider net loss for Q2 and is down 5.6% this morning but BNP bucked the bad banking trend with a 6.6% increase – although their $2.3Bn in earnings were due entirely to a $1.7Bn goodwill benefit from the May acquisition of Fortis as well the additional Fortis revenues.  The Fortis acquisition neatly covered up a $3.38Bn increase in loan loss provisions – triple last year's amount and a strong indication that all is not so well in the EU economy.  Nonetheless, BNP's Tier 1 capital ratio rose to 9.3% from 8.8% and any improvement there is a hopeful sign in the end.  Not so hopeful this morning was BMW's conspicuous lack of outlook as they reported earnings that were off 76% as demand for luxury cars fell to new lows. "Despite some tentative positive signals, a lasting and wide-ranging recovery is not yet in sight," BMW Chief Executive Norbert Reithofer said in a statement.  Putting BMW's lack of money where his mouth is, the company is taking the drastic step of pulling out of the prestigious Formula 1 motor series at the end of 2009 – how's that for a negative outlook?

Europe is trading down about a point ahead of the US open (8:45) but there's nothing wrong with a little pullback after such a massive run.  I said to members yesterday, as we held our slightly bearish stance into the close: "We have June Personal Income and Spending which will both likely be misses, that could be a downer.  We have Pending Home Sales for June but those are subject to major shenanigans as builders will consider a used piece of gum to be a firm deposit in order to make Q2 numbers so that’s going to be meaningless."  So we expected SOME pullback this morning, we just need to see how far it takes us…

Asia was relatively flat this morning as commodities led the way up but auto makers pulled back as both Yamaha and Suzuki reported poor earnings.  “There are early indications that the economy is bottoming out,” said Ivan Tham, Singapore-based head of fund management at state-backed Kuwait Finance House, which has about $24 billion in assets. “I’m a bit more cautious, as valuations have run ahead of fundamentals following the recent rally.”  Yamaha had the steepest drop today in the MSCI World, slumping 9.9 percent to 1,096 yen after forecasting a first-half net loss that’s four times wider than its previous projection.  Suzuki sank 5 percent to 2,300 yen after saying first- quarter net income dropped 92 percent. Transportation companies had the steepest decline of any industry group in the Topix.  

As we expected, US Personal Income numbers are terrible, down 1.3% (the biggest drop in 4 years) and on a pace for a 15% annualized decrease but spending is up 0.4% because the PCE is up 0.5% for June so it's pay up or make due with less for consumers (that's 6% inflation folks!).   75 economists polled by Bloomberg had expected a 1% decline in income so the pros only missed it by 40% – a good day for them!  Wages and salaries decreased 0.4 percent in June, the ninth drop in 10 months.  The drop in incomes caused the savings rate to fall to 4.6 percent from a 14-year high of 6.2 percent in May so so much for that story that Americans were starting to save more…  

Consumer spending fell last quarter at a 1.2 percent pace, and the gain in the first quarter was revised to 0.6 percent, smaller than previously estimated, Commerce figures showed last week. Spending has fallen 2 percent since its peak at the end of 2007, the deepest retrenchment by consumers since 1980.  We'll see what levels hold today with all this news.  As with yesterday's Member Alert, our watch levels are  continuing at Dow 9,297, S&P 1,000, Nas 2,017, NYSE 6,438, Rut 562 and SOX 308.  As I pointed out to members near yesterday's close, Last time we had a failure, at the 40% line, EVERYONE BUT the NYSE was over the line and the NYSE kissed off 6,232 to the penny before everything collapsed.  This time, only the NYSE is above the line.

So, until we get some solid confirmations – let's just be a little careful out there. 

 


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  1.  Red futures… it is about time !!!  
     
    Everyone who trades knows we are way overbought and now this ridiculous market is overdue for a selloff back down to the bottom of the trading channel. Let’s get it on.


  2. kinda worrying the $1.7 per pound.
     
    VNO / Founds from ops $0.54   .. not so bad,  or yes?


  3. RedBook sales were bad :   -5.4% w/e Aug 1st v 1 yr ago,  -5.6% first 4 weeks July V 1 yr ago and -1.6% first 4 weeks July V June.


  4. Beware the pump monkeys.


  5. Hey Phil whatchya think of this???…
     
    GOOG has been trading in a channel that is cycling roughly between 400 and 450. What do you think of making a put play on GOOG right now at the top of this channel at 450?
     
    With MSFT’s Bing and the recent Yahoo search deal going after GOOG’s business, and the increasing competition forming between AAPL and GOOG, I’m thinking Google has a tough road ahead of it. GOOG’s earning’s were lack luster and it seems to some articles I’ve read that Google may have played games with their Q2 report by using an unsually low tax rate in order to "beat" street estimates.
     
    So I’m thinking the stock price is much more likely to return to the $400 price level rather than have any chance of making it to $500.  How do you think?


  6. Premarket orders: can one get premarket orders filled before the market opens ? Anyone doing it ?? Thru which broker ?


  7. Pharm
    HGSI – I believe you called this a short a few weeks back? Current thoughts? Upgraded this AM.


  8. Yes you can. I use etrade. Just select the extended hours trading. An additional fee is charged. Not usually advisable though.


  9. Looking at the MRK charts, might be a good time to take a shot at shorting them.  Unless something drastic happens, healthcare reform will not get done until after the summer session from Congress.  MRK has a gap to fill back at 28, so the 29sSept09 P a re 1.15, and you can sell the 28s Aug09 P for .3.  Another way to play if one wants to own MRK, is sell the SGP 25 Sept P for .55c, and if put to you, in Oct/Nov, SGP will become MRK.  If selling the P, I would wait a bit longer for the pullback.


  10. Pstas – that didn’t help this morning.  I am still in the 12.5 Aug P, and I am considering rolling to Sept.  If you notice, all the Biotechs that popped recently, have pulled back 20% (e.g., SVNT).  HGSI has not yet, and they sold 250K in an offering (what timing).  Just a roll of the dice with them now, but I still believe a pullback is eminent.


  11. good morning!
    I am at my wits end. I finally stop buying the dia puts yesterday and bought a call thinking we are surely going up again. Some sanity please……. Now I have a call and am watching it dwindle. Do I wait for the next report at 10:00 or ditch them now?


  12. Hey, Bears.  (lol)  I suppose a pullback might be noteworthy (eminent) but I guess I’m at least hoping with you that it’s imminent so I can get the the hell out of SDS and plays.


  13. For those who like fun….WNC moving quickly.  Little resistance here.  Next OH level is 2.5.  Trying to get in on a pullback.


  14. OIH is headed back to 107 and maybe 108 after being in the mid 105′s.  How can that be consdiering the data from companies like BMW and Suzuki? 


  15. How did the earnings on SRS related companies play out so far.  Can you give a brief update on the SRS Aug 16 Calls.


  16. Just not wanting to sell off.


  17. Pharm:
    HGSI-thanks, I am still in the Aug 12.50′s also- small position. Was also considering Sept roll/or just getting out. We shall see- seems ripe though.


  18. What with the computers jumping the bid on SPY by $0.05 and the MMs widening the bid/ask to $0.15 (at times) it’s just impossible to trade SPY puts.


  19. Simply amazing, this market.  Bad news, no problem, buy buy buy.


  20. miracleniss, you should STOP trading and paper trade. Only do Phil’s suggestions until you get the hang of this.


  21. Good morning folks, are we expecting another 8% jump in the market to SPX 1,080 as predicted by GS?  Well maybe not so soon.  So keep an eye on these as possible short candidates: ERX (big run up in oil), TNA/BGU/UPRO (3x ultra with big run up).  If we sold September CALLs that are 10% OTM on the 3x ultras, we’d get another 6% in premium, giving us 16% upside cushion, which is 5.3% cushion in the indices, i.e. we don’t loose unless the market is up another 5.3%.  In addition, these 3x ultras tends to decay with time giving us an advantage.  Not a bad risk/reward for the next 2 weeks.


  22. Calm down Merk – you know the pre-markets are meaningless…

    VNO/Spider   – Seems like a .30 loss but that includes .35 in gains from selling real estate (because they have such old stuff they make money, even at fire-sale prices).   You need a forensics team to figure out what really happened at a REIT but the investors certainly aren’t thrilled with it.  VNO only missed by .02 on the face and did seem to book $1.07 in profit somehow – we’ll have to take a closer look later. 

    I think the story of the morning for the bullis is upgraded guidance from ACTS, ATML, CAM, CTSH, CRAY, HCP, HEW, PPS, TAST, VRX and WMS and the beats are still overshadowing the misses. 

    The Donald is buying back TRMP to take it private for $100M out of BK.  What a genius!  He builds it up, goes public, pockets $500M, let’s it fall apart and go BK, then buys it back for $100M with no debts – BRILLIANT!!! 

    Redbook/DB – Thanks, I missed those!  Already there as signs that rising energy prices are sucking very limited consumer dollars away from the rest of the economy which is why I think oil is unsustainable over $70 because people simply can’t afford it.  If the people pay for fuel then they have no money for the banks or the retailers and more jobs are lost and soon there will be more people who can’t afford any oil at all.  Still, don’t get too bearish because the 5.6% number is compared to last year’s stimulated number so it’s not a fair comparison.  I’m more concerned with the 1.6% July vs June drop. 

    Either way, it goes back to what I was saying earlier this morning (big economic discussion in previous post) – So retail sales are off 5.4% from last year – does that justify a 40% drop in the market?

    Keep in mind we are watching our levels:  Dow 9,297, S&P 1,000, Nas 2,017, NYSE 6,438, Rut 562 and SOX 308.  If We really are getting weaker then they should be harder to get over today and, of course, the NYSE needs to fall as well.  As it stands now, the NYSE and RUT are the only ones over the line and that’s not too impressive but the oil pumpers should be out in force today as it’s the last day before data comes in, when they lose a little control.

    BAC is whittling down, watch for them to crack below $15 if we are going to have a real sell-off.  QQQQ 40 is a very big deal and must be broken on the bull side and AAPL and GS both set direction at the $165 line.  

    Volume very low, just 24M in first half hour on the Dow (usually 30M).  At this low level, "THEY" can make the market do whatever they want so don’t count on a big sell-off unless the Pending Home Sales at 10 are a real disaster. 

    Oops, June Pendings are up 3.6% (0.5% expected) and last month has been revised up from 0.1% to 2% or something (I missed it).  So huge and bullish numbers – no excuse whatsoever for not taking out our highs now – let’s see what happens… 


  23. miracleniss – Heed jamie’s advice.  Too much bear-biased advice around here otherwise.  As a newbie, I’m not endorsing taking a bull’s stance, but Phil will at least offer even-handed ideas rather than waiting-for-the-fall prayers.


  24. Jamie
    I tried some of phils suggestions. Unfortunately, some I misunderstood and the others I did were losers.


  25. FWIW – Out of DENN at 2.45.


  26. Psts – HGSI.   Move out for now.  Charts not showing a slowdown.  We can revisit later.


  27. Phil – Thoughts on WHR?


  28. Phil- Based on pending sales numbers, should we cut part of our losses in SRS?  I have about 85 $16 calls.


  29. If for some reason cash for clunkers doesn’t get extended, AZO might be a good long. I think they’ve been hit on speculation it will pass.
     
    Oil and copper futures keep trying to push green but failing. It’s going to be hard to rally without them. So no clear direction and probably a good day to sit still and let long theta positions do the work. Out of my SPY puts from yesterday’s close.


  30. I have KSS Sept. 50 calls,,, hold?


  31. UAUA – Up 11% so far today.  If we do breakout maybe this might be a good long.


  32. miracleniss
    August 4th, 2009 at 10:07 am | Permalink  
    Jamie
    I tried some of phils suggestions. Unfortunately, some I misunderstood and the others I did were losers.
    Response, I would bet you a beer that if you followed more than a couple of Phil’s trade, with no more than 5% allocated to each position, AND THEN FOLLOWED his plan when it did not work out, you would not have all losers.
    Hence, you are not following "Doctors orders" and need to prohibit yourself from $ trading until you GET IT.!!


  33. Merk / Goog Puts
    I really like that idea… when the dam finally breaks, which may just be never. 
    But when the whole NAS starts to fail there should be tons of short idea’s, even though I heard an analyst (I think on CNBC in AH) say he had AAPL set for a target of 210, I nearly threw up in my mouth.


  34. Phil – I have DBC Jan 2011 20s covered with Aug 21s. Position is now showing a loss. What’s a good roll to salvage?
    Similarly, AA stock covered with Aug 9s and significantly buried. Is it best to let them get called away?


  35. Same pattern after the first hour , volume drops off and the initial lows are easily picked off and pushed higher.


  36. what a boring day so far….hope this starts moving one way or the other


  37. Phil:
    re: "Taking out putters/callers when they are 50% ahead with more than 2 week to expiration."
    Does "50% ahead" mean buying back something you sold for $1.00 for $.50? Or does it mean buying back for $.67,  so that you make $.33 (50% of $.67)?


  38. EK … dead cat bounce?  I have truck loaded… maybe I sell half?


  39. EK sold half.. actually the "truck loaded" was less than 2% account :-D


  40. It’s about that time again folks, ready to wipe my hands clean of this bear crap waiting for the turn that won’t come.


  41. GOOG/Merk – It looks to me like $455 would be the top of the channel and it’s a rising channel so I’d rather go long on the next dip to $445 than trying to short other than just very quick mo plays.  To me, Bing puts MSFT in charge of GOOG’s only real competitor so I think you can kiss the whole thing goodbye in 5 years or less.  What since Excel or Word has MSFT successfully been able to break their competition with?  And, don’t forget, they did that by giving Excel and Word away!  Also, don’t forget that GOOG is down from $600 (25%), which it held pretty well for a year and the internet is a very rapidly expanding pie and GOOG didn’t miss a beat last earnings.  I’m not gung-ho on buying them now but if the Nas does break over then GOOG is sure to follow back to $500 and then we can see if it’s overdone.

    MRK/Pharm – I always like them, they’ll probably be in the new monthly income portfolio and $30 is a nice, squeezy number for them to float along at as a top.  How about just do the .35 vertical of the Sept $29 and $28 puts, which make .65 if MRK falls.  If MRK breaks $30 you can sell 1/2 the Sept $30 puts for $1.50 as additional cover and that puts you in for net $28.50 at worst.

    DIA/Miracle – Flipping back and forth is not the answer.  It’s good to buy calls to COVER your puts but not good to switch directions after you’ve already taken a huge hit.  As you can see, not even the great housing numbers seem to be enough to sustain this charade but the volume is still low so we’ll have to see. 

    OIH/Conf – The movement of those stocks have very little to do with reality.  Oil is over $70 even though it’s over $70 BECAUSE production has been severely cut back which, if one were to use logic, would not be good for OIH companies in general.  XOM and the other majors had AWFUL earnings and one may imagine they won’t be throwing money at the service companies either yet they keep going up as if not only is oil not down 50% from last year but that their customers won’t be negotiating for lower rates to help control costs.  They are seriously partying like it’s 1999 – only it isn’t…

    SRS/Sarah – Looking hopeless today.  We had a nice pop on VNO and CTX earnings but the housing data killed it.  VNO is 5% of the index and only took a 1% hit and BXP actually went up 1% today to counteract it anyway.  PSA is 5% and they report in 2 days and SPG (8%) just missed but have barely been touched by it and they are being canceled by a big move up in EQR (4%) who have no news at all but are up 1.7%.  So, if the market doesn’t sell off this afternoon, it may be time to give up on these damn things. 

    Good set Peter!

    WHR/Bigs – Sadly, both WHR and SRS were based on the assumption that this rally would not last.  Clearly the rally has other ideas… 

    85 calls/Conf – Ouch!  Well they are .60 now so there must be some buying sentiment somewhere.  I’m still looking at an escape of selling the $15s for .90 and rolling to the Sept $16s at $1.20, which I’m pretty comffortabal with as a big move up in SRS would let us roll the caller up to the Sept $18 calls, now .80 or the Sept $17 calls, now $1, which is why I don’t consider that play an emergency yet.  I just don’t want to tie up the $5KP in a long-term positition if I can avoid it so I’m waiting until there’s no option and I’m not sure that SRS trading at the all-time low with the earnings numbers I’m seeing is more than a fluke yet

    AZO – Good ideas Eric.  They are a good overall chain anyway and they seem to be hiring, not firing people.  There’s a big resistance line at $145 and I’d like to see them test that but the Leaps are surprisingly cheap so I like selling the Sept $150s at $5 naked with a buy-in on the March $150s, now $13.20 at no more than $14.50.  With luck, the price of the March $145s will fall to $13.50 or less and then that would become the buy-in at no more than $14.50….

    Copper/Eric – They look strong to me, minor pullback last week and then a crazy up move. 

    KSS/DrRob – Earnings are the 13th and they are expected to be .77 vs. last year’s .67 and those expectations are way up over guidance last Q, when they only beat by 4.7% with .43 so no, I would take the money and run on these or backspread the Aug $50s for $1.65, selling 3 for each 2 $2.50 Sept $50s to net 95% of your money off the table.

    Miracle – Perhaps helpful if you plan on following monthly income portfolio as it’s going to be new and will be a good exercise in starting well-hedged positions from scratch.   The turnover will be this expiration period so I can finish the $100KP neatly.

    Amazingly they are jacking the dollar back to 95 Yen even though it is making no progress against the Euro and the Pound.


  42. These bull/bear stalemate days like today are just like early June trading…..what I call "place your bet days"… place your chips on the roulette table for a bet on red or black… chuckle
     
    Red – we are at the top of a trading channel that ranges from 8100 to 9300 and we have topped out (forming the head of a new head n shoulders patter that will form over the next two months) and we get at least a 10% correction selloff
     
    Black – we are consolidating gains with the bullish sideways action in order to build a base for a launch back to pre-crash 2008 levels… ie… DJIA 10,000+ and S&P 1100+ (Elliott Wave viewpoint is that impulse Wave 1 completed June 11th then we had a classic A-B-C correction Wave 2 completed on July 8th and now we are in the big wave 3, which is the called the "recognition wave" when everybody finally agrees it IS a Bull Market and the buying gets serious)
     
    My "roulette opinion" is that chips on red wins…. and that is my reading of the "squiggly lines" for what it’s worth


  43.  PHIL.
     
    HTE…  What’s your thought? You think they will pullback anytime soon?
    How about SELLING Aug $5 call and BUYING Sept $5 call for a NET $0.00 or easily $0.10?


  44. Phil, yes, copper has been crazy strong. It has correlated well with the broader market recently which was the basis for my saying that its weakness probably signals a weak day in the market.
     
    Just to add to Merk’s points, if we can break over the SPX 1005-area, it looks like pretty clear sailing all the way up to the bottom of the September collapse around 1100. However, making that push will take a lot of additional energy, so I do think we at least need to consolidate first, and that could involve a little ‘bull shock’ like China had last week.


  45. Phil:
    assume you have calls,
    either one lets the call run naked (1)
    or cover and go into a spread (2)
    what are your criteria for 1 or 2 ?
     
    same would apply to puts.


  46. I don’t get it, SPG cuts their forecast and the stock goes vertical?  Is it because of the dividend?


  47. DBC/Pyern – Don’t think of a play like this as a loss.  You have 15 months of premiums to sell and some will go up and some will go down.  All you need to do is roll your caller up $1 per month and you will be $16 in the money to your caller (up 200%) on your 2011 calls.  That’s unlikely to happen perfectly but if you can keep rolling your caller $1 up for .50 or less, each move like that increases the net value of your longs by .50.  Hopefully, you can do that 10 times in 15 months for a double on the longs.  Right now, you can roll the caller to the Oct $22 calls at $2.15.  That would cost you about .45 to gain $1 in position and would still leave you fairly well guarded against a pullback.  Since the $21s still have a bit of premium, you can offer .35 for the roll and see if you get lucky this week. 

    AA/Pyern – That’s a little different as you have the stock and you are crazy buried.  I don’t know what you bought it for but I’ll assume net $8 and you make $1 if called away at $9 so you can consider a DD at $12.50 for net avg $10.25 and rolling the $3.50 caller to 2x the Sept $11s at $1.85, which lowers your basis to $10.05 and makes you 2x .95 if called away and possibly in better position to roll to Oct $12s.  Rather than a DD now, you could also split your $3.50 caller to the Oct $12.50 puts and calls at $2.50 which brings your net basis back to about $9/10.75 with a 40% profit if called away there.

    Money flying out of bonds again – get ready for a possible breakout if they are heading into stocks.  The VIX is down so money is not being spent on put covers.  Let’s watch our levles and watch out!

    VNO green, up 1.5% – this is just silly!

    50%/Chaps – Buying something you sold for $1 back for .50.   The other way requires time travel, which I object to on the basis of my overall belief in chaos theory…  8-)

    EK/Spider – Looks like the gift horse you should not look in the mouth!  Possible take-out target but you can get 100% out and buy the Jan 2011 $5/7.50 spread for .50, which gives you another $2 in profits if they keep going up but lets you stop out with .25 over the next 6 months most likely so a nice way to take it off the table with no regrets.  Very good attitude taking 1/2 off, you can also always buy $4s for .25…

    Good analysis Merk but I think in roulette the house has a 10% advantage so the winning move is not to play.

    HTE/XLF – I don’t trust the dividend with losses mounting this year.  If they cut that, nothing will save them.  Of course if you can get that spread for 0 it’s a no-brainer although the dividend gets paid before Aug expiration so you may be obligated to fork over a nickel to the caller.  It’s a good play if your commission structure allows you to scalp dimes. 

    Shock/Eric – That would be the rational thing to do so not likely….  8-)

    Call/RMM – You let it run naked if you feel very strongly that the money you would collect in premium and the relative protection you are provided are outwieghed by your absolute certainty that the stock will go up faster than your onw premium will depreciate.  Essentially your question is:  "I’m buying a condo as an investment and I hope it will go up in the future so at what point should I not rent it out on the off chance a buyer shows up who only wants it if I have no tennants."   All naked option positions are gambling, pure and simple.  There is no such thing as a naked stock or option that is an "investment" in this market.  Hedged positions are a business and you can manage a business.  Sometimes business will be bad and sometimes it will be good but at least it’s a business that generates an income – buying stocks or options naked on the premise the market will do what you want is only a small step above betting Red or Black on a roulette wheel – it’s almost 50/50 but there are also 2 greens that make you lose either way…

    SPG/Smasher – Yeah, a $2 gain in the stock on news they are giving away .60 – that makes total sense doesn’t it?


  48. SRS
    Roll to Sept 16C selling Aug15C now breakeven – it is time ??


  49. Off-topic, but some might be interested as we drift along. My wife and I visited a friend who works for Earthship homes, and he gave us a tour of some of them last month. The older ones are a little too funky-hippy for my taste, but the new models are very nice: bright, open, nearly all modern amenities (full kitchens, home theaters, high-speed internet, etc.), excellent climate control; just about everything really.
     
    These are off-grid for power and water; they need only a small propane tank for the stove. No significant compromises in living off-grid any more. I feel like a chump for paying a utility bill now, lol.
     
    http://www.earthship.net/


  50. Phil should we close the WHR play?


  51. SRS:  On sunday I spot this on Yahoo finance  Headline  " Welcome to the bottom: Housing begins slow rebound "
    So, we se sheep (as you Phil calls) jumping into IYR and URE?
    http://finance.yahoo.com/news/Welcome-to-the-bottom-Housing-apf-3190332284.html?x=0
     
     
    EeeeeeeeeeeeeeK – just touch $4..unloading other half   this will hedge my srs puts


  52. Man SRS is treating me like a %@#$^% today!


  53. Phil- Can you please break down the steps of doing a "roll" to Sept calls on my 85 SRS calls?  Will TOS let me sell $15 calls against my $16 calls?  I don’t have any money left in the account so margin wouldn’t work.  If I am able to sell Aug $15 calls, then I buy Sept 16 calls right?
    So SRS is like this girl I almost married.  She’s absolutely perfect in theory and if she were to call me today and tell me she’s in love with me again and wants to try things out, I’d have a hard time saying no………but every time we got together, all hell broke loose and I wanted to hang myself.  The theory behinds SRS rocketing up a couple of dollars is verrrrrry alluring but it never seems to materliaze (except when my calls expire of course).  As I’ve already posted, I lost a massive amount of money on SRS during last earnings season expecting the SPG’s, BXP’s and DDR’s of the world to slide.  If any of you have not read Tyler Durden’s Zero Hedge blog, I would suggest doing it just for his knowledge (and attempt at exposing) of the slimeball banks that killed SRS last time.


  54. Phil: so, you would always go for the spread ?
    forgot to add: fully covered or partial cover, what is decision point ?
    Of course, covered calls fall into same category and there you always use " full" cover.


  55. Spider- You’re a genius for buying IYR based on a Yahoo Finance article and ignoring the 100+ articles on Bloomberg, WSJ, etc about commercial real estate being the "next shoe to drop".  Why don’t you also go out and buy a huge stake in automakers since I’m sure there’s an article or two on Yahoo finance saying they’ve seen the bottom as well.


  56. One more thing Spider.  I doubt you would have posted your little IYR experiment if SRS was at $17 today. Hindsight is always 20/20 eh.  But go ahead and rub salt in our wounds….hope it makes you feel better.


  57. Phil didn’t we do this last month on OIL? Before #’s run it up, Step back let it fall, on my assumption of 60 dollar oil last time your call "  sell the 40 calls," Worked great. I think it is time to get ahead of the production #’s again. Your thoughts?


  58. Phil: Last wk, I bought 500 shares of VRX at  $25.26 & sold Sept $25 calls for $1.55 .VRX now at $27.06 w/calls at $2.90. should I roll up to Sept. $27.50 calls for $1.40 ? thank you.
    Dflam


  59. Sell calls on ultras/Peter D – Hi, Peter, just saw your recos on selling calls on ultras such as TNA.  I am wondering if selling puts on ultra shorts would accomplish the same thing?


  60. Woaaaa nelly!  How did a pullback day turn into a FMD to the upside??  There is just too much money coming into this market for the few sellers out there.  We are certainly NOT looking like we’re going anywhere but up for the near future.  I would look for a pullback sometime during opt ex week.. prolly not before then.
     
    Got the hell out of SRS and ERY near the open.  Thank bejezus.


  61. Wish I would have gotten the hell out days ago when I was near breakeven on SRS and DIA.  No idea why I thought fundamentals would start to make sense as the market was looking toppy.  I think I’m staying away from all things real estate going forward, the banks have too much of an incentive to game them up as they’ve been doing for months.


  62. You guys are making me want to buy IYR puts.


  63. Great group of articles from last time the S&P was at 1,000.

    $5KP – SRS:  We in for $560 on 4 Aug $16 calls, now $280.  A roll to 8 Aug $13s is .70 ($560) and that’s a lot of risk for a $5KP but I think it’s an oppportunity and my intent is to cover with the $14s on a bounce, maybe the $15s if we get a big bounce


  64. Phil, can a market maker in an etf, say SRS, sell it short?  I just don’t know where all the volume on the sell side is coming from.  It’s so low, clearly there can’t be that many people who are capitulating… or could there be?


  65. Well that’s about it for me.  SRS will have it’s day, it’s just not for a while.  I’ll cut my losses here and look for another trade.


  66. dunno whats going on w REITs;  just went short SPG


  67. looks like a GS algo gone wild


  68. look whats up big — JUNK stocks … homebuilders and reits


  69. YAY!  Ban on flash trades is immenent!!!  Take that you FFFFFUUUUUUUUUUUGS!


  70. $5KP – WHR:  We have 2 $60 puts at net $5.25, now $3.20.  Rolling to 2 Sept $60 puts at $4.80 (+ $1.60) and selling 1 Aug $60 put for $3.20 should be no cost move. 


  71. LOL…  don’t play Phil???


  72. Dr. Strangemarket : or how I learned to love GS.


  73. market leaders down slightly…….market up, go figure…..would be different if good stocks were gaining on this move.


  74. http://capmarketspot.blogspot.com
     
    for SPG intraday chart … see why I though shorting now was a good risk / reward play ..


  75. No Money Flowing into SPG according to my chart ….  (an indicator, usually it would be pointed straight up …)


  76. Good afternoon all, just woke up. :)
    Persistence of Income Loss – An interesting article on income loss and interestingly, some economists says the loss persist when laid off in a recession. This must have serious implications for consumer confidence and spending.


  77. Phil:
    I have at present positions(options and stocks) which fall into 2 categories: 1) NO cover and 2) partial cover
    First the No cover stuff which I have only 2:
    calls MCD jan 60, full cover with aug 50/78 cents or sep50/1.3$ ????
    calls WMT jan40, full cover with sep55/1.45$  ???


  78. SRS roll
    never got a fill all the way to .75,


  79. Quote confizzled:
     
    " Spider- You’re a genius for buying IYR based on a Yahoo Finance article and ignoring the 100+ articles on Bloomberg, WSJ, etc about commercial real estate being the "next shoe to drop".  Why don’t you also go out and buy a huge stake in automakers since I’m sure there’s an article or two on Yahoo finance saying they’ve seen the bottom as well. "
     
    " One more thing Spider.  I doubt you would have posted your little IYR experiment if SRS was at $17 today. Hindsight is always 20/20 eh.  But go ahead and rub salt in our wounds….hope it makes you feel better."
     
    WTF???  I’m NOT long on IYR, and I’m holding SRS puts neglecting my profits on other trades.  I just posted that because I remember I readit on weekend, was funny to read it. And i’m thinking that "maybe the sheep" is jumping on real state, ignoring many other issues and following yahoo article.
     
    And I can add, sometimes is better to be sheep, or at least follow the sheep trend like that article suggest. And i dont have 20/20.  I do even posted good and bad trades, like EK up 33% in 5 days ( including weekend) and ADM earning trade posted yesterday where i’m down in with sep calls but some hedge with aug calls i sold just in case.
     
    Pls, dont take it personal, and special my english is not so good, so try to think positive when you read my post, since im after all a good person. – TY
     


  80. Sheep/Spider – It’s funny, I was looking at the URE for a cover and that’s what made me decide to press the SRS play.  There is just nothing in the earnings to support this move, this is simply insane and I just can’t bring myself to do it but at least if URE does break $5, we have a cheap way to cap the trade ($400 to buy 8 calls and stop losses)>.

    Roll/Conf – With 85 calls at .35 you are getting hosed on the sale end.  That’s not so bad if the call you are rolling to is getting screwed too but you need to be careful.  You can’t sell $15s with no margin because you have a .50 gap between what they pay and what you may lose.  With no cash left to add or move, it’s a very tough position and you are probably better off sticking it out.  If your basis is .85 and getting $1 back will make you happy, you can sell the $14s for .75 and roll to the $13s at $1.10 for even of maybe .05.  It wouldn’t hurt to ask for that trade as it’s a damn site better off than you are now.  If you call TOS guys, they can help you set it up.  From an objective standpoint, I’d have to say that if you know SRS was manipulated and wrecked the RE shorts last time, why would this time be different?   Bankers keep doing whatever makes them money until it doesn’t – then they cry black swan, get a bailout and move on to the next scam…

    Spread/RMM – Yes, unless I either just got in at what I really think is a bottom (and I’m willing to scale in if it goes lower) or I just bought out a caller (and maybe I just rolled down).  Partials are how bullish you are – if you are 100% concerned that your callers will get blown out, then make a 50% cover that can be rolled up to 2x a higher strike.  If you are still very concerned that your higher strike will also blow you out, then why are you covering at all?   I think the simplest thing is how many of your trades were lost because of covering vs. how many were lost because you didn’t?

    Oil/Colberg – Last time they ran it up to $76 and the market is much crazier now.  Of course I think you are right but, like last time, I would say don’t even consider a position you are not willing to roll and roll and roll – all the way to $100.


  81. ok; spg is officially "lunacy"  !!!


  82. Yeah, volume only 1/3 of the total more than half way through the day and the stock is up 5%?  Yup, HFT programs full speed ahead.


  83. Phil,
    I agree with you on the SRS play. Just got off the phone with my nephew who works for a multi-billion dollar private commercial investment shop and He still makes the point the nothing is getting better and some reits have close to no shot at rolling their debt. His firm has made no big deals in months and are waiting for lower prices to jump in. Some of the things they have been doing is partnering with or buying land from homebuilders for "pennies on the dollar".


  84. First time since 10.45 that a SPY 15min candle has not set a higher-high/higher-low – some sellers peeping in


  85. Phil sounds like OIL is a combination play, Chuck Berry and Kiss, Roll over Beathoven, and Rock & Roll all night long!
     
    I may just sit on cash.
     
    Thanks GC


  86.  Phil, please explain in more detail your possible ure trade. I have srs 16 calls that I just can’t bring myself to dump at today’s price.


  87. What’s the next catalyst for going higher? should I ask: is there such a catalyst?


  88. Phil: now the partial cover positions:
    Have UNG stock and 1/2 cover with sep13 caller,
    have PGH stock and NO caller but some putters jan 7.5,
    have TIP stock and no callers,
    what is your view ?


  89. HA!  GE slammed for $50M by the SEC!  Of course, they admitted nothing, cooperated fully with the investigation and look forward to the remedial measures being put in place so that it neeever happens again.


  90. $5KP – SRS:  We in for $560 on 4 Aug $16 calls, now $280.  A roll to the Aug $13s is .70 ($560) 
    Phil, I didn’t see this trade right away. Right now the debit is 1.30 debit for this trade, not .70. Any suggestions?


  91. I went to the dentist earlier today; right now I feel like I went to the proctologist !!


  92. Everything turning around.  How coincidental.  But for how long?  Until they say so.


  93. This market is so rigged!!  How is it that QID, SRS, and ERY all close at their peak for the 5 min interval starting at 1:45pm!  They aren’t even closely related sectors.


  94. Phil, ignore my previous message about the SRS roll. I thought you were rolling from Aug to Sept. The Aug roll is .90 debit right now. I suppose that is close enough to your .70.
    Sorry.


  95. DAMN!  JUST LIKE THAT, THERE ARE NO MORE BUYERS.  JUST SELLERS!  HOW DO THEY DO IT?????????????


  96. matt1966: Mr.Excitement: the market rigged ?? you have found out, the secret is out that in the USA BIG MONEY rules and BIG MONEY is in the hands of who ? make a guess ?
    The worst part is that BIG MONEY is very effective in influencing the elected politicians, just see who gets how much from whom. Last night MSNBC showed who gets how much from health care companies/insures etc. AND those who get $$$ are all against health care reform, they give a damn about the people.
    The peopole do NOT decide anything thru their elected politicians, the money makes the decisions.


  97. yesterday we were shorting AMZN at 88.
    Today its 85.30.
     
    Today we are shorting SPG; nobody really wants it …..   they already had big dilution; their dividends are more dilution; and they just cut guidance !!
    party on…


  98. RMM – "The peopole do NOT decide anything thru their elected politicians, the money makes the decisions."  Truer words have never been spoken!!


  99. bidu faling hard.


  100. VRX/Dflam – I am not a fan in rolling into a rally.  You bought for net $23.71 and you get called away with a 5.4% profit – that was the deal you signed up for.  Right now the spread is $24.27 and you have a .56 profit or 2.3%, close to 1/2 your possible profit already.  If you roll the caller up to the $27.50s for $1.40, you raise your net to $25.11 (where VRX was trading last week) and your max gain is $2.39, not quite double the $1.29 you have almost locked in already.  On the other hand, you do have a net gain of $3.50 on the stock and for just $3.70 you can buy the Dec $25 calls so you can take $23.51, leaving just .20 at risk and, if the stock dips, you don’t care and if the stock goes up, you can always DD your longs (for less than 20% of your original outlay) and roll the caller to 2x the $27.50s, now $1.50.  Since you are in the Dec $25s for .20, if you DD at $4 you would be in for $2.10 on the $2.50 spread with 2 more months to sell.   All this and you still have $20 back in cash to make money somewhere else….

    Ah, all this capitulation makes me want to flip 100% bearish.  Just a little more pain boys and girls!!!

    SRS/Matt – Volume is pretty liquid on those, about 6K of options traded today in the front-month and a very busy 22M shares (avg 32M).  We broke the lows yesterday so yes, there could be heavy capitulation here, especially with the track record of ultra ETFs breaking down lately.  We got a big volume fall on Thurs morning and I thought that was it but today is trumping it and giving us a huge drop.  To what extent is the SRS fall forcing covers in VNO, BXP, etc?  Maybe much worse earnings were expected from VNO – hard to say but we STILL haven’t made our market levels and if that doesn’t happen and the market starts to pull back, then I really doubt the IYR will save the market. 

    Meanwhile – SIRI hit .54, up 15% today – can I get an AMEN?!?  Of course half out with a stop back at .47 on the rest to lock in 7% over 2 days

    Income Loss/Ramana – It’s a good point but it’s a fundamental so expect it to be ignored by this market until it’s way too late…

    MCD/RMM – I love this stuff as you didn’t listen to me when I said don’t be greedy at $60 so now, at $55, you suddenly get religion and decide to cover?  As long as they hold this line at $55, you are better off waiting for a move up but, if they fail $55, you need to full cover with the Sept $55s and pray it’s enough.  Meanwhile, why be in the trade at all if you’re not going to roll the $1.35 Jan $60 to the $3.80 March $55s?  WMT is nice because you are deep in the money and your cover should reflect that and protect you so a full cover at Aug $50s at .70 and, if WMT breaks higher, you can always roll yourself to 2x the Jan $45s for maybe +2 and then roll your caller to 2x whatever but meanwhile, get your .70 of free money.  I have no idea where you are getting the other numbers from. 

    SRS Roll/Edro – That doesn’t make sense, there were plenty of sales of $16 at .30 and plenty of sales of $13s at $1 and even a batch for .90 around 1:30 and the $16s never went below .25.  Did anyone else have trouble filling?

    Spider – I didn’t take it that way at all.  Don’t worry, there are always bound to be miscommunications, don’t let it stop you from expressing your views…

    SPG/Cap – No more than VNO at the 5% rule off those earnings….  BXP is up 6.5% and I’ve heard Zuckerman say the market is terrible and it’s a nightmare for them.

    Commercial/Maxt – Yeah, I think anyone in the business knows it’s awful but, fortunately, most of these investors are clueless so the stocks keep selling.

    ICE still heading South.  Oil got a nice reject off $72 and is back under $71.  Doesn’t look dollar-realted, just a seller showing up in the market.  108M coming in to 2pm is still very low.

    URE/Old – You just buy the UREs, which move opposite SRS, using the $5 line as an on/off switch with VERY tight stops.  You should have a goal of making .10 5 times, not trying to make .50 once.   I doubt URE will get to $5 though as today’s move in that sector is idiotic and now VNO is up 10% in a week off crappy earnings so that should be the magic number for reality to slap them in the face and the others are in a similar spot.

    Catalyst/Maxt – I think we could go higher if Obama buys a new pet or maybe if Bernanke puts on a red tie or maybe if we get a jobs report that says only 5M people will lose their job this year, not 6M.  That seems to be all it takes to "move" the market higher…. (can you tell I’m getting fed up with it?)

    Partials/RMM – UNG – I’d sell the other 1/2 in the Sept $14s for $1.15 as that’s plenty so why be greedy.  PGH – They are tough to cover but if you have Jan $7.50 putters then why not sell the calls for $1.30 which is net $8.80 and protects you on the way down as they are really a premium play anyhow.  TIP is nice with 5% dividend and virtually no movement.  It’s a shame not to collect on it so why not just sell Sept $100 puts and calls for $2.  If stays between $98 and $102 you are ahead and if it goes to $97 you just roll to the next set of puts and calls anyway.  Meanwhile, if you collect just $1 in premium 12 times a year, that’s 3x better than the dividends.

    GE/Matt – They really have to come up with realistic fines.  A $300Bn (at the time) company commits accounting fraud which causes tens of billions of stock transactions to be placed under false assumptions and they fine them $50M – that is just beyond pointless…

    SRS/Allen – It was the net spread of the roll from the $16s we had (now .40) to the $13s (now $1.30) so now net .90, which illustrates why the roll was a good idea in the first place as we moved from a .22 delta to a .60 delta for .70.  I don’t think you should chase it becase now the risk/reward is skewed.  Oops, OK, ignoring it now…

    Rigged/Matt – Notice that, other than those $5KP adjustments that were neutral, I have made no plays for 2 days?  As I like to say: "We don’t care if the game is rigged as long as we can figure out how it’s rigged and play accordingly."  Up here, this week so far, I don’t have a clear picture on what the game is so I’d rather wait for clarity than guess. 


  101. "Today we are shorting SPG"
     
    I’m with ‘ya Cap, but I’m going with OTM Sept. puts for safety.


  102. Phil – VNO BXP SPG etc …   I hear ya … its an orchestrated move. They needed it to hit 1007.
     
    Total BS
     
    And Zuckerman has been all over TV about how terrible business is.
     
    I am looking at office buildings where banks lent oodles of money and are foreclosing and/or trying to sell.
    In one case bank lent 157 million,foreclosed, wrote loan down to 105 million.  Trying to sell it for 90.  Its worth less than 50 million.
    Seeing lots of stuff like this; many haven’t yet taken the write downs …. so I KNOW these moves in the REITs are both BS and futile.


  103. On SRS roll  I think I got a fill for around 100 contracts.


  104. A trade I’ve been experimenting with that’s working so far is an unbalanced bear call diagonal in which I buy, say, four longer-dated options (like SPY Dec 101 calls) and sell three front-month near-money options one strike below it (like say SPY Aug 100s, in this case). Of course you can adjust the ratios to suit you’re bullishness/bearishness, going 3/2, 5/4, or whatever.
     
    Advantages: high theta, no upside risk (although upside profits are limited). Disadvantage: uses some margin. Right now index options are still pretty pricey, and I think we’re pushing against resistance so I’m happy to be a net seller. But given the force of recent moves, I’m liking this kind of trade better at the moment than, say, a naked short strangle on the indexes.


  105. It’d be nice not to have the stupid stick tonight – just a sell off :-)


  106. LOL – I suppose that comment on capitulation making me bearish would have made more sense when I wrote it (I was reading the comments between noon and 1:15 and the market was much higher, when a lot of you were freaking out…    I really mean it, if you want to be bearish you need to read those posts and comments from early June.   This is so very similar and May 29th we closed at 8,500 and June 12th we closed at 8,800 (3.5% in 10 sessions).  This time around we closed July 22 at 8,880 and 8 days later we’re up 4.5% at 9,280.  Our big drop last time was Monday, June 15th and everyone was really shocked (not us) and we fell all the way back to 8,100 from there so double the gain was the drop.  If we coast along here, a similar move would take us back to 8,450, which has pretty much been a consolditation point since early May so it would still be bullish if we hold it. 

    Another factor to keep in mind is that last option expiration day was July 17th and we were at 8,740.  It would be EXREMELY outside the norm for us to finish this expiration period more than 5% above the last (9,177) as that’s an annualized rate of 60% up.

    Diagonals/Eric – Very nice strategy, easy to adjust as things go along..


  107. I got filled on the SRS roll at 2:00 for .90 – missed the ,70 by one hour of so.


  108. Phil : on UNg you might have misread: I have the stock, no callers, but some sep 14 puts, what I should do is sell sep 14 calls ??? correct


  109. Cap, REITs / writedowns:  It’s the same story with all the banks.  But its my understanding that once they foreclose on a property they have to write it down on their books.   Or maybe it’s once there is a foreclosure sale..  definately then.  Shoot, guess I don’t really know.  But the point of the article that had this info in it was that the banks don’t have a big incentive to foreclose because of MTM.  And lots of other reasons.  But most the $hit out there hasn’t even hit the fan yet for these banks.  That’s what kills me.  They are just piecemealing them out on the market trying to keep it alive for as long as they can knowing full well the volume they have to liquidate will crush the hell out of it.  They will run out of investors and newbie purchasers well before their inventory is exhausted.


  110. SEC Moving Toward Banning Flash Trades
     
    Will this hurt GS?  And… the ban comes now their software was stoled??? nice coincidence  :-D


  111. very weak effort by Cramer to pump REITs …. someone knew he was going to do it; the stocks should sell off for good now …


  112. Here’s one for da bears:

    Consumer bankruptcy filings in the U.S. rose to the highest level since October 2005, the American Bankruptcy Institute said in a statement. More than 126,000 new cases were filed by consumers last month, the nonpartisan research group said today, citing figures furnished to it by the National Bankruptcy Research Center. That was an 8.7 percent rise from June and a 34 percent increase from July 2008.

    UNG/RMM – Yes, take the money.  No hurricanes this year and demand still sucks.

    I love this – Cramer comes on TV and says the insane run in REIT PROVES the economy is getting better.  This is like deciding a cancer patient is "cured" because they have a good day or a week, which happens all the time…

    ZION $15!

    Very good report on Rail Traffic (good as in well-done report, not that the traffic is good!).

    Time to get stuck!


  113.  should have held on to the ice puts…i chickened out :(


  114. Interesting that gold miners are selling off even though gold hasn’t shown any weakness.


  115. I believe NSC CEO was on Bloomberg a couple weeks back, said they had 2000 out of 8000 locomotives sitting idle.


  116. If it helps the capitulation stream I have just added my final covers taking me to full cover on everything. This is either a sign that after 6 months studying here I have made my first ever correct call, or evidence of another impending and inexplicable leg up.


  117. Phil,
    Just heard your ad on Sirius CNBC. Nice.


  118. Who of you guys is a FLASH TRADER ?  Maybe Matt ?


  119. Flasher Trader?


  120. Well, that was our big pullback day.  First they squeaze the hell out of us then they drop it in an hour only to bounce back only to sell off again for a whopping essentially flat day. 
     
    Bankruptcies?  We don’t care bout no stinkin bankruptcies!  This market is on fire and that proves it!


  121. Hey everyone.

    Oxen Group Gamble of Day coming via Oxen Group Alerts now. Check inbox for a good one.

    David Ristau


  122. RMM, I am most definately a flash trader.  When I start trading.. my money is gone in a flash!  8-)


  123. Phil

    I have 1 of these FAS 20/100 AUG 09 9 PUT  – long. 

    Why do I have it?

    What should I do with it?

    I t cost $1.25 and now its worth 8 cents.

    Please help.


  124. okay the YRCW bearish signal is flashing red. whenever that stock has been up big in the past 4 months, the market has sold off.


  125. Got TD Ameritrade accounts to work with TOS platform.  I had to call customer service for enabling it.  Now I don’t need to re-enter spreads everyday in TDA Web screen, as TOS has GTC on all spreads.


  126. Oh yeah, this will last:

    Sectortr

    Miners/Eric – They are often very good early indicators of gold moves.

    NSC/CDS – Yep, we get the same data over and over and over again – about 1/3 less business than last year.  That means the market SHOULD stop at 1/3 off, especially as the 1/3 higher mark had the assumption that the next year would be even higher – we’re just hoping to hold things together at 33% off! 

    Capitulation/Steve – LOL, I feel like Alec Baldwin in that Hulu commercial, walking around waiting for everyone else to give up being bearish even while I’m telling you that’s my plan…  

    Sirius/John – Oh good, I was wondering when that would happen.  That ad cost $100 – will be interesting to see if it works…

    David, you have to learn to link back to your post! 

    Great article on China market:

    The middle-aged crowd in the packed Guosen Securities office jostle around buzzing printers that spit out receipts for their share buys, hoping to cash in on China’s stimulus-fueled stock market boom.  "The central government has to fulfill their promise of 8 percent economic growth," said Wu Jun, 62, a retired civil servant who invested part of his life savings of 50,000 yuan ($7,300) and lives on a 2,000 yuan-a-month ($290 a month) pension. "They’ll come up with measures to keep the market in good shape."

    See, the Chinese are counting on "THEY" to keep the market in good shape.  THEY are the friends in China, not the enemy….

    But while investors expect the market — up more than 80 percent this year — to keep rising, Chinese leaders are alarmed. They worry that too much of the $1 trillion lending binge by state banks that paid for China’s nascent revival was diverted into stocks and real estate, raising the danger of a boom and bust cycle and higher inflation less than two years after an earlier stock market bubble burst

    Ooops! 

    "It’s a very serious threat. The Chinese government is walking a tightrope," said Mark Williams, Asia economist for Capital Economics in London. "There is the question of what happens if they rein in lending, because there is really no strong evidence that private sector demand is picking up."  The growth — up from 6.1 percent in the previous quarter — highlighted China’s continued reliance on stimulus spending. The big gains were in construction and other stimulus-fueled areas, while retail spending and other private sector activity lagged.

    The Finance Ministry says it found some companies played the market with money borrowed for stimulus projects. It gave no details but Chinese companies frequently are accused of violating China’s already lax financial controls by diverting money from borrowing or their core business into stocks in hopes of making a quick profit when the market is rising. "Above 3,000 points, the benchmark index is just in the process of blowing a bigger and bigger bubble," said Wen Lijun, an analyst for Nanjing Securities. "It is just excessive liquidity and no other reason."

    CSCO down 1.2% today, what could possibly be wrong there in a recovering economy?
     

    Flash Trading/Matt – That doesn’t count and neither does trading in your bathrobe…  8-)


  127. David Ristau, Did not receive the alert, although it is turned on on my membership page.


  128. Peter,
    I don’t think the TOS platform for Ameritrade lets you enter spreads GTC. It also does not let you cancel/replace spreads. I was told this capability will be available in October. Let me know if your version lets you do any of that. Perhaps I have a previous version.


  129. Whoops…my bad.

    Here is the link to The Oxen Gamble of the Day, or check your inbox for an email alert with it.

    http://www.philstockworld.com/2009/08/04/the-oxen-picks-report-rising-dollar-means-oil-down-homebuilders-finally-show-true-colors/


  130. and anyway wtf is a proctologist?
     
    :)


  131. ADP numbers before the open. Wouldn’t want to hold overnight.


  132. Phil:
    Would you go naked on DIA mattress puts?


  133. David" link is not active, also, no e-mail alert.


  134. Phil: how about rolling DE aug45 caller to sep47  for about even ?


  135. Link worked for me…hmm. Alert probably hasn’t reached you yet. Just sent it out.


  136. $5KP: DHI has earnings tomorrow (and it was David’s short pick this morning).  Let’s sell 5 Aug $12.50 calls for .45 ($200) and buy 4 Sept $13 calls for .60 ($240) as a quick trade in the $5KP.  DO NOT PAY MORE THAN .15 for the spreads. 


  137. Phil,
    I heard the Sirius/CNBC ad for the second time and it sounds good but the announcer says "philstockworld" so fast it’s difficul to understand. Hope that helps.


  138. Phil / stimulus funds into the bubble machine:  what will prick it?  When foreign money gets exhausted and it starts to plateau?  It’s just sick that ordinary investors get sucked up into the ruse of greedy f-ing banks.  And how much of that is going on here?  Today’s action, while relentless until 1pm, proves to me that we are still being gamed by those with keys to the system.  This isn’t normal action.  I’m sure there is more and more money being sucked into the market.. but it pales to the kind of money at play seemingly everyday to take us whereever they want to take us.


  139. com’on stick!!!!


  140. Phil, Keep in mind we are watching our levels:  Dow 9,297 on the nose or below it!!!


  141. What a suprise – A stick and Green.


  142. UNG, man this is a sweet ETF to sell options on. IV seems to sit over 60% on just about every issue. I haven’t traded it very long — is it always this good, or is it a seasonal thing?
     
    If it’s always this good, I’m likely to increase my position size by a factor of 5 or 10, basically buying 2011 leaps and selling 13, 14 strike calls. I’ll probably also buy a little stock, or maybe leave a few leaps uncovered to have a little upside delta. I could care less where it goes, really, but $150/month selling calls on a $14 stock ain’t bad at all.


  143. Dave:
    did not receive the alert
    David Ristau
    August 4th, 2009 at 3:31 pm | Permalink  
    Link worked for me…hmm. Alert probably hasn’t reached you yet. Just sent it out.


  144. FAS/Red – Ouch!  That is why I advocated getting the hell out of those before the split.  They are a nightmare.  I don’t think there is much to be done with it, FAS went the other way, effectively now at $12.50 to your $9 put.  Since it’s just 1 it’s best to just say goodbye to $100 and move on with your life…

    YRCW/Maxt – Wow, super move today!

    David – I didn’t get an alert either.  Did anyone?  We’ll have to test it later if there’s a problem.  Anyway, David’s Oxen Gamble is here.

    DIA/Chaps – I don’t think I’d go all naked.  We 1/2 covered with the $93 puts at $1.80 yesterday and if we have to roll those down to 2x the $90 puts, it will bee a huge relief with Sept $94 puts now $6.20, that’s still a $4 advantage with plenty of time to roll.

    DE/RMM – You are making a dangerous assumption that you don’t need protection for the next 3 weeks.  I woudn’t.

    Thanks John – We’ll see if I get any hits off it.  They claim about 500K listeners a day so we’ll know radio doesn’t work if there’s no spike. 

    Bubbles/Matt – The difference between China and America is China pretty much promises people if they put money into the market, they will get rich while we only had Obama mention that stocks seemed cheap back in March.  If the Fed would make sure people dump their beaten-down 401Ks into stocks and THEN pumps up the market then bless them for doing a service but there’s little to be gained by this nonsense other than transferring another $11Bn to GS this Q, which doesn’t even go to "investors" but is 55% ($6Bn) paid out in salaries and bonuses with $2.5Bn paying off interest on the money they borrowed in order to lever up these returns and another $1Bn in taxes leaving just $1.65Bn for the common shareholders who are, of course, mainly the partners (5%) and cooperating institutions like Wellington Management, BCS, AXA, STT…. 

    Wow, what a stick!  Let’s hear it for Mr. S!!! 

    UNG/Eric – Usually good because it’s so volatile.


  145. DHI in 5KP
    Never filled on the 0.15 spread


  146. yea, stick


  147. I did get the alert of OSG on 3:07pm.
    from gmail


  148. I got the alert in my email, but hmm…

    Does anyone get any of my alerts?

    I sent out 3 today.

    David


  149. WOW
    Just look at the 5 M Chart on all the indexes?
    That really looks natural …. end of sarcasm font


  150. Phil – Instead of MRK, I would do a buy/write for the 100K income on BMY.  Yield is a bit better FWIW, and the price is $10 cheaper.  Growth is also a bit better with them….


  151. David – nutin’ here.


  152. I did the DHI trade at the target prices and it looks good but can’t close it tonight – so hopefully my it will still work tomorrow as a quick trade in the morning.


  153. phil,
    the stick is like kubrick’s dr. strange love. you got to stop worrying and start loving it!!


  154. The stick is still going after hours – what a rip off


  155. Wow look at HK bounce around after their earnings anouncement, is the glass half empty or half full?!


  156. Also, ORCL JAVA deal is still on track.  9.50 i think was the deal price.  One could sell a put spread of Sept 8 and 9, or October 9 against Sept 8.  Phil may have a more lucerative play, but IF it is not blocked by the Justice dept, the deal should close soon.


  157. If you are a Premium member, you should be getting David’s alerts too unless you unchecked them in the member management section.  If you are an Oxen Report member, you should get them too but you can’t be here to read this so there’s no point in discussing it here!   8-)

    Natural/Chuck – Well, at this point it’s "normal" but I wouldn’t say normal is natural in this market anymore…

    50 Dow points in the last 20 mins.  We knew it was coming because the volume was low enough to allow it.  Only 4 of the last 20 days have been red and we haven’t had a red week since the first week of July.  The last time we had 4 green weeks in a row was into the mid-June crash although the time before that was the March Madness, when we had 7 of them. 

    Wow, we’re still going up into the AH.  WFMI going crazy! 


  158. HK has 25M more shares to offer – about 8% of total.  NOW if that ain’t dilutive.


  159. Wow, that’s a very short lived stick.  More like a hard on!
     
    Where are the investigative journalists looking into what the hell is behind all these saves?  It’s so short maybe its by at the close action by fund managers?  Nah!


  160. David … I got 3 emails : Morning levels, forecast and gamble.
     
    Phil:  DHI already reported !!


  161. Allen, you are correct about TOS from TDA doesn’t allow GTC order for spreads.  That’s a bummer.  I was doing single GTC orders and assuming it would work for spreads.  It doesn’t calculate the buying power and margin in real time either.  So it’s just TOS platform with limited capability.


  162. The following quote is from CNBCs piece on how great the pending home sales have been the last 3 months.  It’s the only mention of ACTUAL sales in the piece!
     
    "Hopefully, in the months ahead, we’ll see an even closer relationship between contract activity and closed transactions," said NAR president Charles McMillan.
     
    I would like to know closer then what?  Did they even talk about what actual sales were?  No!  More crap sensationalism. 


  163. Man. Is it really a great idea for an “intelligent investor” site to be pimping the “Gamble of The Day”? Geez. At least when I play poker I can figure the odds and accept the intervention of good or bad luck. I’d hope David’s long-shots are more than mere gambles. If not, I’ll take my chances at the Borgata. If so, better context and risk analysis is in order. I can read the news and the charts. You can take it a step further for some value-added.


  164. Yep, DHI missed bigtime.  BUT, get this, there loss wasn’t as bad as last quarter!!  That’s good for a 4.5% gain on the day.  You betcha!
     
    When oh when will this vast conspiracy to suger coat everything end?


  165. SPY over $1 up from premarket lows to after hours high. The stick was over $0.7 on about 17m shares. Thats some effort.


  166. My niche industry for trading is the AIRLINES…and I have absolutely no clue why UAUA shot up over 18% today . I have a suspicion about the Frontier BK/buyout but can’t pin down a single source.
    Any one else?????


  167. Talking with a friend who works as an engineer in the real estate gamish of CA.  His specialty is community development (things a few years down the road).  The last 2 yrs have been slow, slow, slow.  The past two months, things are beginning to pick up considerably.  Green shoots?


  168. Phil,
    Isn’t this last minute pump they way they avoid a rejection like they had earlier in the day. Then overseas markets look at the numbers and they think vow they broke resistance.


  169. boy, aapl could not even be pushed down a/h!!


  170. Phil – Dont the articles Ilene posted in Phils favs make you even a little bit bearish ? Tax revenue disaster, office space/rent disaster, Peter Schiff (talking a lot of sense) talking disaster. Not to mention Tyler on how this rallly is built on never ending decreases in volume now augmented by big block trades as the big boys get out. Scares me and I have almost zilch in the market.


  171. Tripwire,
    I’ve suffered with UAUA and YRCW for the past several months and I have a theory that after they were both driven to their lows in the past 10 days, people closed out their shorts and they were bought because all the BK bets are being closed.


  172. AKAM- big i/s buys announced after close.


  173. Actually I think Tyler’s stories get inversely more scary to the stock market. The latest post on zero hedge recounts that due to cuts in the sheriffs budget Jefferson county is calling in the National Guard to maintain order. Either he , Mish and Karl are getting loonier or the US is getting deeper into trouble each day. I hope its their bias.


  174. Matt: "Wow, that’s a very short lived stick.  More like a hard on!"
    Hi, Matt, need some Viagra? 8)


  175. Does the "Stick" count toward our "Hold" levels?  No, really, maybe it shouldn’t.


  176. UNG trade idea: double-diagonal going long JAN 2011 15 calls and 13 puts, selling the Aug 14 straddles against them. Cost: 4.63 + 2.00 margin. Profitable between about 12.75 and 16.25 at opex, with max profit of 1.45 (21%) in the unlikely event of a 14 pin at August opex. 
     
    For added upside cover, buying one Jan 11 16 strike call (2.90) for every two of the above double diagonals insures profitability at any strike above 13. Obviously the idea is to sell agaisnt these 2011s for many months, rolling as needed.
     
    I want to do these in Roth accounts, so no naked straddle sales. Anyone see a better way? I want to sell to those greedy, heartless bastards who hope to profit from a hurricane in the Gulf, but also sell to the complacent, cowlike idiots who think there won’t be one.


  177. Phil- Thanks for your help.   Took your advice and sold the $16 calls for $.35, sold (naked?) $14 calls for ~$.75 and bought $13 calls for ~$1.15.  The difference in delta between the $13 (.58) and $14  (.43) calls is about .15 so I’m guessing if SRS goes back to $15, I can make almost a quarter ($.2475) on the spread.  So in theory, I can get $.69 ($.35 + $.24) back from the $.80 average price I had originally paid for my $16 calls.

    Let me know if I’m missing anything.


  178. Dumped my short SPX 985 puts. Nice profit  but it may mean the market is headed much higher ;)


  179. EricL/double diagonal on UNG – Let’s try a different spread with less risk and more profitable: Buy the Jan’11 10 CALL and 20 PUT, which is a $10 spread for $13.35.  The extrinsic value is $3.35 and you’d get $10 regardless of the price of UNG.  Your Jan’11 15 CALL and 13 PUT is $6.15, all extrinsic, i.e. you’d loose $6.14 regardless of the UNG price.
     
    Now for the Shorts, we’d better off selling strangle, Sep 15 CALL and 13 PUT for $1.62, to improve the chance of winning.  If UNG ends up between 13 & 15 in 6.5 weeks, you’d get half of the $3.35 at risk investment back.  The profit range for September improves to 12 to 17.6  (was 12.75 to 16.25 for the Aug 14 straddle).  If you are bullish, you can sell Sep 16 instead of 15 CALLs and get $1.35 for the strangle.
     
    The idea is to keep the Shorts within the range of the Long to avoid margin requirement.  The deeper ITM the longs are, the less premium you’d need to sell.  These are good for IRA accounts.  However, we can be blown out if the stock moves to the extreme (the shorts gain value and have as much intrinsic value as the long).  Always have stops on the shorts to avoid getting crush in double diagonals.


  180. Pharmboy-  I respect your calls a ton.  Please keep us posted on the next HGSI or CTIC.  I know bio/pharm is a crapshoot a lot of times but there are occasions when the odds are good.  There was a company back in June that had gone back to the FDA after HIRING some of the former FDA folks who had rejected their first application AS CONSULTANTS (they took a cue from GS and their four Treasury Secretaries I guess) and sure enough, they got the approval.  I forgot the name of the company and I’m actually glad because not buying it haunted me for a while.  HGSI was another one where there were good odds rather than just a crapshoot and I actually made some money on them (which offset the $10K I lost on DIA puts that same week).  The reason I felt confident about them was that the patients who had been put on the Lupus drug they were trying to get approved KEPT TAKING THE DRUG EVEN AFTER the trials….voluntarily.  I thought that was a good sign their phase II trial results were going to be positive.  Anyhow, if you know of any similar FDA decisions where the chips seem stacked in favor of (or clearly against) a company, let us know. I’ll do the same.
     
    As for your friend who’s in California and in RE….I respectfully disagree.  There’s no need to even search for data or talk to anyone.  Just run the numbers in your head.  The hundreds of thousands of people who are getting laid off each month….their former employers won’t need as much space and thus the office building owner will have more vacancies = less rent .  The other thing to keep in mind is that whenever you go to a mall and see closed stores (i.e. Circuit City’s 300+ locations which broke leases and DID NOT HAVE TO PAY a penny to the mall owners) , that’s lower rent/income for the company that owns the mall.  Add to those to things the fact that just like residential real estate, commercial RE values have also fallen and you get a recipe for SRS shooting up…except it never does LOL.  If any other company’s assets were depreciating at the crazy rates as CRE along with their income dropping, the stock prices would be falling like crazy. 
    Here’s an example of the depreciation CRE is going through.  http://www.bloomberg.com/apps/news?pid=20601087&sid=am8XNt86M_ck


  181. Con – thx and I am always in search of bio/pharm info.  As I have stated, I only bet on the science when it comes to FDA info or belief in a company (ITMN is one such that I am monitoring to get back in), not on the 50/50 roll of the dice ones.  SVNT is another one that took off recently, and the MM were moving options all over the place.  You could see the set up there in the front month spreads.  I noted it here.  Others, I call ‘em as I see ‘em.  HGSI, didn’t like ‘em b’c the gamble was huge.  Lupus is a very hard disease to treat, and like stroke, rhum arth. etc., it is a graveyard for drugs – so I tend to shy away.  More investigation into it may have changed my mind, but I only have so many hours to do the total package of research.  Many biotechs (cough cough HEB – of which I recommended) are in search of a treatment for their drug once he main shot on goal fails.  Again, I try to focus on the science. 
    My other picks are more momentum plays (GOL from a few weeks back, or WNC today) for those who like to put in a few hundred dollars to make a few hundred – all tech analysis.  Stop losses should used wisely in these plays.  I by no means want people to put tons of $$ in. Will post my cost if I am playing, but like Phil, post interesting moves for those plays as I have a day job and cannot play them all.
    As for my friend, he is in residential real estate master neighborhood planning for a private engineering co hired by cities and home builders, not commerical.  I know the CA RE market is crap, but my house is holding its value better than most (down about 25-30% from top).  Just was passing on info on the residential end.  Should have clarified that one.  People can do what they want with the info.


  182. NEW YORK (Dow Jones)--Crude futures ended slightly lower Tuesday as trading entered a lull ahead of data expected to show a growing oil surplus.
    Light, sweet crude for September delivery settled down 16 cents, or 0.2%, at $71.42 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled up 73 cents, or 1%, at $74.28 a barrel.
    Crude futures were prevented from adding a fourth consecutive session of steep gains by traders’ expectations that the latest inventory data would show rising stockpiles of crude and distillate fuels such as diesel and heating oil. Oil prices are still up 13% since last Wednesday, as an increasingly optimistic economic outlook has allowed traders to play down the growing glut of oil and fuel created by weak demand.
    Analysts expect oil inventories to rise by 500,000 barrels in the week ended July 31, while distillate stocks are seen increasing by 900,000 barrels, according to a Dow Jones Newswires survey. Gasoline inventories are seen falling 1.4 million barrels as refiners are expected to cut back their operating rate by 0.4 percentage point to 84.2% of capacity. The data is due out from the U.S. Department of Energy at 10:30 a.m. EDT on Wednesday.


  183. Peter, thanks. I agree that selling the strangle has the higher chance of success: I picked the Aug straddle just because it has the most extrinsic on it (same for Sept.). So a trade-off there, but here’s something interesting from the long end:
     
    Certainly buying the 10/20 2011 strangle buys much less extrinisic, but at a significant outlay of 13.35. Subtract the 1.62 for the Sept strangle and it’s an 11.73 spread. By contrast, selling that same Sept strangle and buying the Jan 11 16/12 strangle (keeping one strike distant as in my original but widening the diagonal to accomodate the strangle) costs 3.68 plus 1.00 margin (I was wrong to say 2.00 margin for the spread above: ToS only charges margin for one ‘side’). So 4.68 total. Now if you have, say, $10K to put in this trade, you can buy 20 of these double diagonals. These 20 have a theta of about 38, and are profitable from about 12 to about 18, as is yours. On a close between 13 and 15 at Sept opex, they have about a 23-33% profit. Very nice!
     
    By contrast, with the same $10K, selling the same straddle against the more expensive 10/20 2011 strangle, at 11.73 each, allows for only 8 spreads. Total theta of those 8 is about 15, maximum profit of those spreads is about 10% to 13% with a close inside the Sept strangle at opex. Also profitable from about 12 to 18, as you said above.
     
    So now I’m really liking buying the 16/12 2011 strangle and selling the Sept 13/15 strangle for net 4.68! I know the longs are pure extrinsic, but the time-adjusted ratio of extrinsic sold to extrinsic bought is so great it makes up for it, IMO. Also, the total risk on each of these is 3.68 +1.00. So 4.68 is the maximum loss. On the 10/20 strangle the maximum loss is  11.73. Of course if you’re buying 20 of mine instead of 8 of yours this is irrelevant, but the profit potential on the 20 seems higher, as I said.
     
    So I like a hybrid of our ideas — thanks again!


  184. Eric,
    ""  I want to sell to those greedy, heartless bastards who hope to profit from a hurricane in the Gulf, but also sell to the complacent, cowlike idiots who think there won’t be one.  ""
     
    You’re a sick pup!


  185. confizzled: 

    I think now understand why you thought I was long in URE…
    When I said  "Eeeeeeeeek just touched $4, unloading…" I was joking about EK (kodak) and placing a bunch of "e" letters in between  as joke with EK name and a wonder expression.
     
    The Sunday yahoo article about house bottom is funny compared, as you said, with hundreds of articles saying the opposite. And because today rally, I thought the sheep (some moved by yahoo news?) are buying IYF and URE….
     
    I’m not putting salt in other wonds, that is what mfkrs people do, not me. I don’t have 20/20 and if you like I can share all my trades. regards.


  186. Eric, yes the revised spread works too.  Don’t forget that you can sell 1 or 2 less short CALL contracts to lift the profitability on the upper end.


  187. Spider-  That is exactly what happened….I thought you were talking about IYR rather than EK….and using "sheep" sarcastically. 

    It’s actually my bad for jumping to conclusions and I apologize for the harsh words.  It’s actually very generous of you to offer an explanation for my misunderstanding….despite knowing that you yourself didn’t mean any harm. 

    Again, mia culpa and thanks for clearing things up. 
     
    In case you’re wondering why someone would have such a strong reaction to a post, it’s because I’ve lost over $100K in SRS in 2009 alone…most only front month calls.  I’ve studied this thing more than the stuff I need for my job and am intimately familiar with the index it tracks, the specific components of that index, the specifics of many of the larger components (i.e. ACC, American Campus Communities, which bought most of their properties during the "top" [2004-2006] so their assets have dropped at least 30-40 in value plus they have $550 mil in debts due in 2009 and the next three years while only having $180 mil in cash INCLUDING their credit line and CBL whose stock has tripled since March DESPITE the fact that they need to come up with a BILLION dollars in the next two years and only have $200 mil cash), the fact that getting new credit is extremely difficult for them, the fact that their revenues are dropping, the fact that many of their stocks were diluted in the last 4 months and yet, they keep going up.  It’s a very sore subject for me.  Again, that does not change the fact that I owe you an apology….just wanted to give you some background for my overreaction.


  188. Good Morning Everyone
     
    UK is flat (ish) again this morning. Overnight the US futures were down almost to the point where the stick started last night. Since UK/Europe opened the usual pump of futures is taking place although not spectacular they are well of the lows.


  189. Interesting article here:
     
    http://seekingalpha.com/article/153859-equity-prices-have-not-kept-up-with-profits
     
    I guess it depends on what you want to see.  Apologies to the bears.


  190. I can’t believe this will be ‘allowed’ to happen but the so called independent accounting board is considering a change to the way banks would be required to value long term holdings.  Short term holdings have been allowed to be valued at what is considered a ‘fair’ value.. but they are proposing that long term holdings be marked down to reflect market conditions even if payments to them for their holdings are current.  If you don’t do this for short term holdings I"m not sure what the point of doing it for long term holdings is.. but that’s what they are proposing and it will go out for comments later this morning.  The industry plans a vigorous fight.  
     
    This might be a private link but give it a try,
     
    http://www.washingtonpost.com/wp-dyn/content/article/2009/08/04/AR2009080402740.html?hpid=moreheadlines


  191. Morning stick job complete – nearly $1 off the overnight S&P lows – now $101


  192. This is fun – Rally


  193. Good morning!

    Huge move up in the futures since Europe opened.  Hang Seng fell about 500 points from an opening run up, down 300 for the day but giving up the last 3 days of gains (one could say just filling a gap if they bounce back).  The Nikkei dropped from the opening bell to the close but just 1.2% in the end and the gap was not filled but 3 days of gains were also erased.  FTSE looks like it has no intention of doing the same, more like a retest of 4,750 before they will consider a reverse.  The DAX is flatlining but the CAC has already gotten to the retest top of 3,640 so we should get a good indication from them before we get a chance to open.

    DHI/Spider – Oops, I did not know they already reported, I was playing that as a silly run-up ahead of earnings.  It’s not a bad thing, the concept is the same, the front-month volatility causes a jump in the Aug calls that is not likely to be sustained but since it won’t evaporate quickly enough we may want to get out sooner than later.

    Actual sales/Matt – Historically, 80% of Pending Home Sales close.  That figure dropped to 20% last year but I don’t think you can ignore a 3.6% increase – it’s a huge number, way beyond what a little quarterly padding would likely bring but, on the other hand, you should never underestimate the crookedness of home builders.  The survey is taken by the NAR, who WANT good news and they just ask builders essentially "so are people buying homes?"  Now the builders, who sell homes, have the option of saying "No, no one wants our homes" or "Yes, they are selling like hotcakes – tell people they’d better hurry to our store before they are all gone."   Which is the more likely response? 

    The NAR survey is simply about "contracts," it doesn’t question the validity of the contracts and many, many builders have been known to pad by offering fully cancelable contracts to homeowners so they can "think about it" in order to make their quarter look better.  The actual sales number doesn’t come out for about 2 months but don’t forget that our last home sales number was up 11% so these are aligning, which makes them more positive and more believable.

    Gamble/Dstill – I think there’s a place for clearly labeled gambles but I also do feel there is too much gambling among members and that’s why I’m leaning toward the more-conservative $100K Portfolios as a teaching tool.  It seems too many people choose the Dark Side of options investing which is fun but you notice there’s plenty of old Jedis and only one old Stith…

    Airlines/Trip – I am amazed at the way that Transports and oil now seem to move in tandem, as if $70 oil is great for that industry.   To some extent it’s relief that high oil prices MUST mean there is more demand but airline investors especially need to realize that there’s not an airline on the planet that can make money carrying around 50,000 gallons at $3 a gallon!

    Developing/Pharm – That is certainly a green shoot.  Hopefully it’s not just a result of short-term stimulus. 

    Pump/Maxt – Yes, it’s all about painting the tape but I’ve decided it’s much more effective than we’ve been giving it credit for.  Only when they are unable to hit their marks will things collapse. 

    Favs/DB – Of course they make me bearish (or more bearish than otherwise) but we had awful fundamentals as the Dow rose from 11,500 to 14,000 too.  You can be very, very right about the economy but you can’t enforce your will on the market – it will do what it wants in the short-run.  At this point, it’s important to keep an eye on the MSM as there is virtually no negative news at all and sentiment is very, very bullish. 

    Hold levels/Rich – Yes, all that matters is the finish.  While we may look at the move a little closer than most, we have to recognize that "most" control the market. 


  194. Hello.  Good morning.
     
    SRS / Conf = No problems at all. I understand, my posting in spanglish can generate misunderstands. And about SRS seems you have a great study on the IYR and I agree the current market reaction is not in sync with reality. Now we see sentiment going into this index, the sentiment that recovery is around the corner. And it hurts when we are with the fundamentals and the market goes in the opposite direction we expect. There the phrase: market can stay irrational more than one can stay solvent.  I have been there, for example when I shorted X (us steel) last year at $135 to only see them go irrational over $190 and fight all way up… what a bad timing!
     
     I understand this plays with SRS puts as a momentum change play, looking for a correction in the IYF and take some profit. And if I recall correct this play is part of the 5k portfolio, witch is very speculative. I’m very sorry to read about the amount lost in SRS. Hope its just a small (or not so big) percentage of your portfolio.
     
    So,  on SRS, my idea is to bet hard when the bomb explodes, IF it ever explodes. Regards.


  195. Doubles/Eric – I love those plays, especially Peter’s set-up, which lowers risk considerably.  I love your logic on your target buyers!

    SRS/Conf – Not missing anything other than the fact that you should be absolutely thrilled to get out even, not worried about making money at this point.

    Commercial RE/Conf – I think residential may be actually bottoming.  There are about 5M new customers born every year for residential real estate and they WILL have homes (1 home per 3.2 of them) eventually.  Commercial is a different animal entirely as we had a huge commercial building craze based on business expansion projections of 20% that have now run headlong into actual business contraction of 30%.  Landlords are thrilled to renegotiate leases at 1/3 off so that’s a quick indicator of the size of the glut and this is very short-sighted if they don’t have tax escalation clauses in there because raising commercial tax rates is much easier for politicians than sticking it to the voters so I expect some massive increases coming this fall as municipalities seek to balance their budgets.

    Good thought Where, bears do need to read those articles and realize that is the way MOST people are looking at stocks right now.


  196. Matt, the links works ok. Very interesting.  And I’m glad to dump ZION yesterday… but maybe i’m to early because this guys are shorted to dead and they can squeeze it keep going up.. The true about banks is incredible complex, because their stock values are way low compared to the good old days earnings. The question is not if the will survive, I bet most big ones they will make it,  but how big their earnings will be after deleveraging?  For that reason i sometimes jump in, sometimes jump out…
     
    Where : That well written and while reading I almost jump and buy back ZION all long SPY :-)
    Just joking. thanks for sharing it. We will see in some time the truth


  197.  Conf… I feel for you on that SRS play… my portfolio got hurt bad on it too… Twice I did a DD on the Aug 16, then capitulated with an "at the market" sell of everything at  0.75.  I’m licking my wounds, but still watching SRS to jump back on it if it goes down lower