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Thrill-Ride Thursday – Playing the Patterns

Not much in the news today but the futures are way off at 7am.

I'm assuming that will, as usual change.  They are already boosting the pound back to $1.66 and the Euro is at $1.452 but getting stronger and the Yen ran back down to 92 for a dollar long enough to give exporters and excuse to lead the Nikkei back over 10,500 (in an amazingly fake-looking finish after a major gap up in their futures) while the Hang Seng managed to close before giving up more than half of their 400-point gap up, making them look nice and green with a net 218-point gain on the day (up 1%).

I know you don't want to hear this.  You don't want to believe that the markets are being manipulated and you don't want to think you can't rely on your charts or numbers you read in the papers (or the articles for that matter) as it might prove that you have as little ability to predict the markets as a soap-opera viewer had of predicting who will be the next character to have an affair.  Like a soap-opera, the stock market is written for television, has a regular cast of writers (the MSM) and makes little sense to people who come in late to the game. 

We, at Philstockworld, do not care if the game is rigged.  As long as we can figure out HOW it's rigged, we know where to place our bets and we can make money from it.  So don't take this as me being down on the market – we love this stuff!  Yesterday I told you, before the market opened (in fact our Newsletter title at 8:30 was "Beware the Beige Book Blues") that the FACTS of the Beige Book would override the hype of market.  We followed through with our plan to short the Dow into the BBook release and we were able to pick up the DIA $95 puts for .75 and sell them for $1.10, which is a 46% gain on the day.  Even if you play conservative and risk just 1% on a day-trade, that's still half a point added to your whole virtual portfolio's gains for the year – that's pretty good stuff!

Another conspiracy we drone on and on about is the good old "stick save."  Perhaps it's not a conspiracy aimed at propping up the markets on low volume, perhaps it's a natural phenomenon of the markets that makes it move up 3 out of 5 afternoons per week but we like to call it a stick save and we like to play it at 2:30 on any low-volume day.  You can buy a DIA call that is about $2 in the money, like the Sept $94 calls (now $2.05) and they will gain 70 cents for every $1 the DIA moves up (the delta).  Had you made this trade at 2:30 every day and sold at the close  for the past week, you'd be up net 50% on that trade.  When we see a pattern, we label it and follow it – is that complicated?

Market movement doesn't matter.  Fundamentals matter.  If you haven't learned that when the Dow was up at 14,000 or down at 6,500 or back at 9,500, all in less than 2 years – then I don't know what I can say to convince you.  Good companies bounced back, bad companies failed.  The charts betrayed the pattern-watchers over and over again but the fundamentalists, including "doomsayers" like Whitney and Roubini were right when they said the markets were overbought and we were right at the bottom when we said they were oversold.  Now that the markets have drifted into a middle zone, I've been willing to watch the charts and we set our levels every day (and RUT 577 kept us from being bearish early in the day yesterday, thank goodness). 

Just because we set levels, doesn't mean we're believing the market action – it's just a rational acceptance of the fact that "you can't fight the tape" because there are so many of you out there who consider yourselves technical traders.  As we saw in the last, failed "head and shoulders" event in early July, these patterns have become traps for the TA crowd and it was that sell-off that drew in the short speculators and the subsequent short-squeeze that followed, that gave the markets 2/3 of their current gains.  The question that faces us now is – can this level (Dow 9,500, S&P 1,000) be sustained when the volume picks up in the fall?

Reading the Fed's latest Beige Book, I would say clearly the fundamentals do not support the current market levels.  As I parsed out the text for my 2:30 Alert to Members, I decided to highlight positive indicators in green and negative ones in red.  Needless to say, the report was a sea of red, very similar to our negative reading of the Fed minutes last week.  The Fed minutes were long on optimistic outlook but very short on actual improvements in the economy.  The key is that those minutes were from a meeting that took place on August 11th and the data compiled was through July at best

We've seen a clear deterioration in our "recovery" since then and the Beige Book, which covers the period through the end of August, contains little evidence of a bouncing economy.  This is fine with us, it's what we expected and the only question we are really wrestling with at the moment is:  Should we raise the mid-point of our trading range from 8,650 to 9,100 or is this stretch to 9,500 the new "normal."  We set our 8,650 Dow target way back in November and it has guided us through the ups and downs of the market – helping us to be, as Warren Buffett advises "Fearful when others are greedy and greedy when others are fearful" and we've gotten some great bargains along the way by sticking to our fundamental guns. 

Has the global economic climate changed enough for us to raise our targets 5%?  The mood certainly has but there are still many risk factors that leave us cautious.  This does not mean we need to sit out the market and it does not even mean we have to bet bearish (in fact, we have very few bearish bets in place at the moment, something that will change into the weekend).  What it does mean is that we will play cautiously, taking small gains quickly off the table and stockpiling cash for the next buying opportunity if we do get a real sell-off.  I would love to see a big-volume move down to 9,100 and see it hold up so we can feel more comfortable raising our targets.  The Dow NEEDS to finish the year at 9,700 to post a 10% gain, which is what we're going to need to get enough investors off the sidelines to keep things interesting next year. 

We're not there yet.  All we have so far is the biggest rally on the lowest volume ever recorded and there is AMPLE evidence that up to 80% of that volume is coming from 5 trading firms that have a strongly vested interest in getting the markets up and over that 10% mark – otherwise, where are the people going to come from to pay their fees?  Only by being able to print those shiny brochures with all the charts and graphs that show you how much better off you'd be if you let them have all your money can "THEY" make their Billions in fees and Billions in bonuses for the next decade.  As the first decade of the 21st century draws to a close, just try to keep that in mind.

In another clockwork trade this morning, the dollar (9am) is now at 91.8 Yen and $1.46 to the Euro and $1.664 to the pound.  You could have made millions trading off my very cynical 7am prediction at the top of this post but we don't mess around with currencies other than a couple of ETFs as they are just too crazy – even for us option traders!  Still, a guy like me shouldn't be able to predict the movement of the Dollar that easily, especially when I had no fundamental reason for it, just theory that "THEY" push the dollar down in order to boost commodities and the markets artificially so they can reel in the suckers for another round of market manipulation.

We're going to be very happy to start buying when we see a clear break over our break-out levels (doesn't that make sense?).  As I said earlier this week, is the global economy really back to just 1/3 off the highs, even with 10% of the global population unemployed?  If so, I suppose we must have been way UNDERVALUED at the top as we didn't even need 10% of our customers in order to make 66% of our profits – that's pretty incredible – as in:  NOT credible

As the Abe Lincoln once warned (quoting PT Barnum) in the face of shenanigans that were being played by his opponents:  "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."  Like Goldman Sachs, the great George Bush the second also seized on Lincoln's words and he said (and I kid you not): "You can fool some of the people all of the time and those are the ones you want to concentrate on."

Let's just be careful out there and try not to be one of "those" people.  As my favorite band says: "We won't get fooled again!"

 


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  1. Here’s some stocks to look at, companies that have totally missed the rally:

    Stocks Down Since March Bottom


  2.  What do you recommend for SRS?


  3. FYI, I got an alert this morning to be on the lookout for possible strong selloff at any time, possibly today.


  4. Cap, who did this alert come from?


  5. Merideth Whitney giving a good interview on CNBC.  She’s keeping it real.  Sound like Q3 is going to be great but without the big spike in equities we had w/ Q2 earnings.  Q4 sounds like the wheels will begin to rattle off the bus and fundies will start to creep back into the picture.
     
    She said another leg down.  I say Q1.


  6. There it is … whitney


  7. ssdirk;  not Whitney; a guy who runs a futures service that I check in the morning.


  8. Pharm  – I know your in KC but maybe checking in. (I’ll be in KC on Mon). Did you see this analysis?
    After June’s implosion from $19.24 to $5.78, Matrixx Initiatives Inc. (MTXX) didn’t budge from the $5-ish area for weeks. And, it still hasn’t.  However, there’s still something compelling about the Matrixx Initiatives chart.

    Now we can see there’ a very tight trading range between $5.59 and $6.87; if and when those boundaries break, the move should be explosive from MTXX.

    Just as important, it’s worth noting the odds favor an upside breakout move. Why? We’ve seen multiple strong accumulation days of Matrixx Initiatives shares while the stock has been range-bound. Between an excessive beating two months ago and the fact that investors are now going fishing, MTXX should be on your breakout watchlists.


  9. BIDU right at recent highs. I’m asking 7.30 to sell the Sept. 350/360 call vertical.


  10. The Dollar finally catching a bid.


  11. SRS/Oldgoat – I recommned taking at least $1,000, then going to the bank and getting singles.  Then place those singles in your fireplace and light them on fire.  The amount of time that it keeps you warm and entertained will probably far exceed any pleasure you’ll get from playing this ETF….  8-)

    Actually, it has been a disaster but I also do think that CRE is the next major shoe to drop in the market.  I laid out a pair trade on URE and IYF yesterday that’s safer than SRS but – IF I were to break my vow to stay away and play SRS, I would go for the Jan $7s at $4.60, selling the Jan $10s for $2.80, which is net $1.80 on the $3 spread so a gain of 66% if SRS holds $10 (now $11) through Jan and a break-even at $8.80, which is 20% down from here

    Oil inventories not until 11am.  Oil is currently at $71.  Gold is at $990.  The Euro was harshly rejected at $1.46 and back to $1.45 very fast.  Pound holding $1.66, 91.92 Yen at the moment.  Nat gas is 10:30 so a strange day in energy…

    Same boring old levels as yesterday: Dow 9,600, S&P 1,030, Nasdaq 2,038, NYSE 6,700 and Russell 577 – nothing too exciting until we break over on ALL of them. 

    TXN should have given the Nas more gas this morning, they seem stretched.

    Gang of 12′er, JPM boosted the transports today with a big airline upgrade, they are trying to get the Dow over 9,600 any way they can. 

    Monsanto (MON) says 2009 earnings will come in at the low end of its range of $4.40-4.50 per share. 2010 earnings will be at $3.10-3.30 per share vs. analysts’ calls of $4.29.

    General Mills (GIS): Says its current estimate of FQ1 EPS exceeds internal targets, noting "the business is recovering margin that was reduced a year ago by sharp input-cost inflation."

    Japan’s machinery orders fell to a record low in July, as companies wary of the global recovery idled factories. Orders fell 9.3% from June, more than twice the expected 3.5% drop.

    Foreclosure filings topped 300K for the sixth month in a row, says RealtyTrac. August’s 358,471 is just 0.5% below July’s record and is up 18% from Aug. 2008. With unemployment hovering at 9.7%, RealtyTrac expects foreclosures to rise for another year.

    China "cannot and will not" pull back from economic stimulus measures, says Premier Wen Jiabao. "China’s economic rebound is unstable, unbalanced and not yet solid."

    In its monthly bulletin (.pdf), the ECB warns that a new wave of protectionism poses a threat to the nascent global economic recovery and could lead to "a retaliatory spiral of ever harsher trade restrictions and tensions."

    Supporting oil on a down day: IEA boosts its global oil demand forecast by nearly 0.5M barrels/day for both 2009 and 2010, citing stronger-than-expected economic data in North America and Asia. Now sees global demand of 84.4M b/d this year, still down 2.2% from 2008, and 85.7M next year. Yesterday, the EIA lowered its forecast by 30K b/d.

    So what do economists from Moody’s Economy.com, who bested 44 other forecasters for the most accurate August economic predictions, see in our future? More stimulus.

    Bank of England’s decision to keep rates on hold, and all financial tools still in its shed, highlights central bankers’ approach in 2009: Wait and hope.

    All in all, pretty much what I said above – {waving hands mysteriously} This is not the economic recovery you were looking for…


  12. PROP JOB!@!!!!!!!!!!


  13. Phil, I have CAL as a buy/wright.  Stock – Net ~7.00 and sold Dec 11′s for 4.43 now 5.50.  Do you suggest a roll?


  14. Don’t forget those FXPs – much less painful to play than SRS (which is already flying). 

    BIDU/Eric – I like the Oct $390 puts for $35.20, selling the $370 puts for $23.20, which is $13 for the $20 spread with b/e at $357.

    Speaking of short plays:

    • OIH Oct $100 puts at $2.17
    • BXP Oct $65 puts for $5.60, selling Oct $60 puts for $3 nets $2.60 on the $5 spread (BXP currently $61.77)
    • CAL – selling Oct $15 calls for $1.20 and Dec $13 puts for $1.50.  Buying the stock over $15 (now $14.77) selling below $15 (stop line).  Other than cost of going in and out a few times should be either called away at net $12.30 (up 21%) or owning the stock at net $10.30 (30% off).
    • AMZN Oct $80 puts at $2.50, stop at $2 (break over 50 dma at $83.30.

    DIA $95 puts back at .89, will be liking them again at .75.  Fine to buy at .80 with DD at .70 or less as it’s an overnight play if we don’t head lower.


  15. Oops, that was break-even at $377 on BIDU!  I like that number MUCH better!


  16. Phil, I have CAL stock net around 7 bucks now 14.90.  I sold the DEC 11′s for 4.46 now 5.50.  Should I roll?


  17. Yours is a much safer trade Phil, in the sense that it has a much higher probability of success. Selling the Sept. vertical requires a $10+ directional move in order to make money BUT risks only 2.70. So it’s basically a gamble on a triple, but makes a nice downside hedge (which I probably need at the ‘mo).


  18. Phil just wanted and update on the BAC play……what to do wit the 17 callers and putters…..roll/close?


  19. Shorting KBH here …. go homebuilders !


  20.  Phil, I missed your FXP suggestion. Please give me the details. 


  21. great post, thanks!
    love the details on such a wide range of things happening with our markets -
    some of those historical quotes are priceless  ;-)


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    FXP still cheap at $9.31, no reaction to 200-point dip in Hang Seng this morning.  I still like the Dec $7/9 call spread for $1.10 or less (break even $8.10, 72% upside at $9)


  23. Off that list at the top of the comments, SUN is the most attractive to me.  They pay a 4.5% dividend and are a very attractive takeover target at $3Bn (down from $9Bn when we used to short the hell out of them).  At $26.36 we can start with them here and sell the Oct $25 calls for $2.20 and the Jan $22.50 puts for $1.15 for a net $23.01/22.76 entry. 

    FDO is another strange one on that list with a 2% dividend, stready 10% growth and a p/e of $13.  Apr $25 puts can be old naked for $2.10 for a net $22.90 entry but it needs to be a light entry in case they miss and we want to roll to a 2x lower put

    CEPH is a good one at $58.34.  The premiums are low so better to just do something simple like the 2011 $50 calls for $14, selling the 2011 $60 calls for $8.50, which is $5.50 for the $10 spread (82% if called away) and you can be more aggressive and sell the $40 puts for $2.50 and that drops your net (but adds margin) to $3 with a net cost of $43 (a 25% discount) if CEPH is put to you at $40.

    HRB we already had a play for on our Watch List!

    DF has a low enough p/e (10) to be very attractive at $18 and selling the March $17.50 puts and calls for $3.80 drops the net to $14.20/15.85, which is a nice initial entry

    ABT testing the 50 dma with a big move up if they pop it.  I just like the Jan $42.50s for $5, selling the Jan $46s for $2.70 for net $2.30 on the $3.50 spread (52% gain if ABT holds $46).


  24. whoa! hope my SS# idnt in there somewhere.


  25. Huge relative call option activity on SUN today.


  26. gotta watch the fake fake fake trade in KBH !
     
    DIA, programs trying to hold it up ….watch it.


  27. DPTR with a monster move Monday.  You can buy the stock here and sell the DEC 4 puts and calls for 200% upside if they make it to 4, with breakeven back down to the mid 2′s.


  28. Wow!  Phil, your timing on AMZN $80 puts @ 2.50 was on the dot.  I saw your reco; went to my broker’s platform to place an order; it was already bid/ask 2.54/2.56.  I bid 2.55.  Looked at the order status screen.  The price jumped to 2.66!  And my order wasn’t filled.  I’m not going to chase.


  29. RDY – Indian Generic DrugMaker. Buying here, expecting (or hoping?) it to breakout and reach close to 52-week highs or more. Stop at the nearby 50 dMA of $16.39
     http://stockcharts.com/h-sc/ui?s=RDY&p=D&yr=0&mn=3&dy=0&id=p69757638773


  30. SUN, yeah call buers have run the IV on the call side up high, and Oct. IV is ahead of back months.   28 strike Jan/Oct call verticals are 1.00; seems really cheap, but not much upside there either.


  31. I meant 28 calendars are 1.00, not verticals. I’m buying a few.


  32. Morx – I still love MTXX and will get in when I get back.  I saw the move yesterday in their stock, and rumors abound, I see them moving back to 9-10ish in Oct/Nov.   MrMs SYNA is on the march now as well…YEOWza…..ABT will be in a future writeup FWIW.  Go gold (down I mean….)  Later all!
    SPPI was in the first Pharmboy’s favorites for whomever asked a question yesterday.  PARD is still ok from my point, but will have to reevaluate this weekend.


  33. RUT – if you are still holding the short RUT Sep 590 CALL that we thought was heading to be expired worthless, you can continue to hold your breath and gamble to see if it expires below 590, or looking to roll to Oct 620 for even (currently needs $0.7 debit), or roll to Sep 600 CALL for $3 debit (currently $3.7) to give another 1.7% cushion.


  34. What a completely preposterous market.


  35. RDY – mSq – I believe they are in bed with MRK making generic Zocor (statin drug).  MYL is another interesting one to look into.  I was loving WPI (Watson) when they were at 25-28 area, but have moved quite a bit since.  OK now I must go…


  36. At the moment, I’d be inclined to play ARNA selling the $5 calls for .50 and buying the Apr $6 calls for $1.60 as those should hold value wekk and the Oct $7.50 calls are .65 so easy rolls.  If you scale in at net $1.10 you can always buy more Aprils if ARNA jumps up and then you can roll callers to 2x whatever and you’lll be in great shape.  If they fall, you can roll down and sell more.
    Phil, I need some help learning how to manage calendar spreads. I took your advice yesterday and bought some ARNA April 6 calls (at 1.64) and sold an equal number of Sept 5 calls (at .49). The net debit was 1.15. I understand what to do if ARNA goes down (at least I think I get that).
    I don’t understand how to manage this trade (or other similar trades) if ARNA goes up. ARNA is up .9% as of now. The Sept 5 calls are at .80 and the Oct 7.5′s are at .75. So when you say roll higher it means buying back the Sept 5′s for a loss and rolling to the next month for about the same premium as I am paying for the current month, except that it is a higher strike. Is the theory here that ultimately I will roll up to a point that ARNA will not go above it and I can collect much of that premium before rolling to the next month?
    If so, at what point do I roll? What  criteria should I use? Also, is there an advantage to rolling to the Oct 6 calls which have a much higher premium (1.15) instead of the 7.5′s? Trying to understand better the basic concept….


  37. We are now 3 days post labor day … where is the volume ?????
    non-existent.
    I don’t know how they can keep this propped up w/ HAL 9000


  38. Pharmboy – any thoughts on VTIV, what a beautiful chart?  The OCT 12.50 calls have no premium so I bought some here naked, perhaps will cover with the 17.50′s when they reach $1.


  39. Interesting how totally unconcerned the oil sector is with the impending inventory figures.


  40. The Fed will need to keep interest rates low for ‘many years’ to counteract massive consumer deleveraging, economists at Goldman Sachs say, noting the process of reversing private credit is in its early stages. "If you want to bring down leverage, you should keep monetary policy sufficiently accommodative to forestall a collapse in spending and a deflationary spiral." In other words:  "KEEP GIVING US FREE MONEY- OR ELSE!"

    2008 U.S. income and poverty stats just out from Census Bureau: Median income -3.6% to $50,300. Poverty rate 13.2% (39.8M people) from 12.5% in 2007, the first increase since 2004. Number of people without health insurance rose to 46.3M from 45.7M.

    CAL/SS – As long as you don’t mind a DD at $12.50, you can sell the Jan $12.50 puts for $1.70 and spend that money to rolll the Dec $11 calls to the Jan $14s which changes you from net $7 with a $11 call away (57%) to net $7/9.75 with a $14 call away (100%).  It’s a pretty reasonable risk/reward as long as you wouldn’t mind riding out another crash if it comes.

    Safe/Eric – Notice I’m all about safe today.  Too hard to tell what the market will do at the moment!

    BAC/Oncmed – They’re at $16.86, why would you do anything with them?

    KBH/Cap – Playing with fire!

    FXP/Oldgoat – At the moment I like the March $5/9 spread for $2.20, which is 82% if called away at $9 (where FXP is now) with a break/even at $7.70, down about 20%.  FXP is an ultra so China would have to move up 10% from here for them to drop 20% (although it’s not exact as ultras are wacky).  It’s a very nice way to protect against a global meltdown, especially if you have bullish commodity plays.

    Thanks Adanlerma!

    Oh thanks Morx, that plays good too!  We get some very strange noise when people past things…

    DPTR/Mr. M – Nice play but very speculative as they are up on approval to drill exploratory wells.  If they come up dry, these guys are screwed. 

    AMZN/Cwan – Good example of why it doesn’t pay to chase as they are $2.50 again but I do very much think they are nice and toppy here.

    RDY/M2 – Look very nice!  Next time they are down at $15, I’d love to sell puts on them.

    LOL Matt – Preposterous it is but there isn’t any major data to upset the stick men and oil inventories don’t seem to be worrying them either. 

    DIA $95 puts at goal of .73 – very scary though!


  41. Nice to see other analsts catching up to us:

    Pali Research thinks IntercontinentalExchange (ICE -1.5%) could be in trouble: "The more digging we are doing the more we feel that positon limits are not being fully priced-in for ICE here… particularly given view that the CFTC is going to take a hard line and will be aggressive on financial position limits."

    Oil down 5.9Mb, Gasoline up 2.1Mb, Distillates up 2Mb, Utilization unchanged at 87.2% – not at all supportive of $72 or OIH $110 so we’ll have to see what happens


  42. USO $39 puts at $2.20 – going for it, hopefully $3+.


  43. No one wants to trade with a Fed floor in the market esp sellers; hence no volume.,  Perhaps weeks leading into Oct with end of QE and other fed programs we’ll see some vol come back in. 


  44. $100KP  Moves:

    AIG squeezing up again.  Time to sell the Oct $40s for $6.50.  Put stop on $35 puts at $2.50 (now $1.87).

    PSW – adding 5 more Jan $50 calls for $2.75, NOT adding covers yet (a bearish move).


  45. This market is a rolling pumpathon.   Now moving to the REITs to prop it up.


  46. $100KP:  Sorry about that, those were 5 more PSQ Jan $50s at $2.75


  47. cap – that sounds like a bad porno


  48. Phil, thanks for the link to the "Bushisms", after the last couple of days I needed a good laugh. It’s hard to believe he was once the President of the Uninted States!


  49. Wow, Cap, I stopped out of HK at 21 last week and look at that baby bounce back!


  50. Pardon me , that should have been Decider.


  51. Phil, on the CAL roll, if I roll the Dec 11′s to the Jan 12.50 put and the Jan 14 call it is not an even money roll.  The Dec 11′s would cost 5.50 to cover and I could sell the Jan 14/12.50 set for 4.70.  Is it advisable to spend more money to roll for a more favorable position in this case?  Or, are you saying to keep the Dec 11 put, cover the Dec 11 call and sell the Jan 12.50 put and Jan 14 call?  If so, can I do this in an IRA account?  Sorry for needing more clarification.


  52. $100KP  Moves:
    AIG squeezing up again.  Time to sell the Oct $40s for $6.50.
    Phil, did you mean to close out the Oct 40′s? We were already short.


  53. LVS now preparing for re-entry?


  54.  USO/Phil,  Please clarify your USO position.  Thanks


  55. ARNA/Allen – The first thing you need to understand is how to relax!  Stocks go up and down every day.  You have a target for ARNA not to break $5.50 and, even if they do, your Apr $6 calls will gain value.  The Sept $5s, now .70 can be rolled to the Oct $7.50 – THAT IS 50% HIGHER THAN WHERE ARNA IS NOW – which are at .70 too.  If ARNA flies up on you, then you can always buy more April $6s.  Let’s say ARNA goes to $10 and you owe you caller $5.  You buy more Apr $6s for (guessing) $5, which puts you in for an average of $3.30 and you roll the callers to 2x the $10 calls for $2.50 each and you are in a $5 spread that’s in the money for $3.30.  In short, to manage this trade – take a walk, read a book, get a hobby.  You can’t play biotechs if you intend to worry over them all day, the stress isn’t worth it.  When they break your range, then we can look for an adjustment.

    Volume just hitting 70M at 11:30 a little better than most of August but still nothing.

    Bush/JRW – Sure, NOW we can look back and laugh – kind of like the fall of Rome in retrospect…

    CAL/SS – $5.50 for the Dec $11s???  I suppose you mean puts AND calls becasue I have $4.60 bid/$4.80 ask on the Dec $11 calls (which I thought was all you had) and they were just traded at $4.60 this morning at 9:50 and 11:05.  If you sold the puts and calls that’s $5.50 and then your net basis on the roll would be $7.80/10.15 and you make 81% if called away at $14, not 100% so it’s up to you if it’s worth the risk vs. just letting yourself get called away with a 57% gain. 

    $100KP/Allen – I don’t think I ever made that an official trade or, if I did, it didn’t fill for me. I DO want to be covered with the Oct $40s at $6.50 and it looks like mine filled at $6.30. 

    LVS/Kels – That is a wild one.  Too scary to short but very tempting.


  56. SUN/Phil – Hi, Phil, you said you liked SUN’s dividends.  But with the buy/write (buy stock at 26-ish and sell Oct $25 calls & Jan $22.5 puts), we are mostly likely to be called away in about 6 weeks, and won’t get the dividends.
    Is your argument like this: We are not really aiming at collecting the dividends.  Rather, SUN won’t drop much because of the support from the dividends?


  57. USO/Kels – A buy of the $39 puts at $2.20, now $2.40, hoping to get $3+ as oil drops.


  58. phil, how about a oih 110/105 oct put spread?


  59. I dunno friends; keeping market pumped ahead of TIMMEH ??


  60. BUSH / Phil / JRW … oh, things are just SOOOO much better now w/ the reckless socialists in charge !


  61. I so need to hurry up and learn patience!!! USU up nicely…..thanks for encouraging me to wait Phil!


  62. jomama, selling the Sept. OIH 105/110 strangle is currently a bearish trade too (-30 delta at 110), which is what I have going.


  63. Eric, just to be clear that means buying the Oct 110 puts and selling the 105′s?  I am gonna wait to sell the 105s.  Maybe even sell the septs 105′s with a juicy drop?
    Eric – did you get in the Bidu put spread as well?


  64. 2008 U.S. income and poverty stats just out from Census Bureau: Median income -3.6% to $50,300. Poverty rate 13.2% (39.8M people) from 12.5% in 2007, the first increase since 2004. Number of people without health insurance rose to 46.3M from 45.7M.

    We have welfare, come on!! This is good news! Less worry about inflation fed can keep rates at zero…


  65. Phil,

    What can be sending YRCW sky high all of a sudden – should I cover those naked Oct $2.50′s right now?


  66. Phil
    The regulators, with commodity ETFs in their sights are messing with the balance between net asset value and share price. I have 100 contracts 2011 UNG Jan 8 short puts naked ( a train wreck ). Is it time to dump?  Thanks!


  67. Jomama, no it means selling the Sept. 110 call and the 105 put against about $2500 margin. You should collect around 3.00 right now.
     
    I’m dithering on the BIDU thing (but glad I waited — now 7.45).


  68. Phil, since I’m still new to options, I am not sure if I understand why you want to pay more for USO when you say BUY $39 puts for $3+ instead of $2.2?


  69. USU – long stock at 6.08 and Oct 5 puts at .82 (now .45), current net basis is 3.66
    Am considering selling Oct 5′s for .5, any thoughts pls?


  70. maybe obvious the USU puts were sold


  71. USO/jlui – I believe Phil meant to buy at 2.20 and then hoping to sell at 3+ for a good profit.


  72. SUN/Cwan – Just because I like the dividend on the stock doesn’t mean I like the price.  We’re willing to scale into SUN at $23.01/22.76, 13.5% below the current price.  If we do get called away (and that would only be because we didn’t roll the caller by choice) then we collect 13.5% in 6 weeks, which is an annualized gain of 117%, slightly better than the dividend payment of .30.  You need to stop looking at the trades as static things, they are a work in progress and we only get called away when we decide it isn’t worth it for us to continue in the trade.  At 2% a week, that’s not likely to happen too soon!

    OIH/Jo - If the dollar fails oil could fly up.  Also a hurricane could jack prices up so I’d rather have the more flexible put for a quick in and out than lock into a vertical.

    Better/Cap – I agree.

    USU/Steve – Nice job but don’t be greedy!

    YRCW/Red – That was a cover at $2.50 with the stock and this is why, very possible they break out from there and then you can stop out on the stock with a nice profit after a while as they outgain your long calls by a lot.  They keep winning labor concession becuase, if they don’t, they’ll go BK so bullish with a huge grain of salt!

    Oil bouncing along $71, gold bouncing along $995, Dow bouncing along 9,560.  Dollar not getting back over 92 Yen – that’s pretty weak but I think the Nikkei boys are making their own stick save on the dollar ahead of that market’s open.

    Speaking of the dollar, if you want to see a textbook head and shoulders pattern forming – look at the S&P priced in EurosS&P priced in oil is even more depressing (see weekly).

    UNG/Gel – You are confusing me as UNG is now $10.50 so what’s the problem?  You can roll them to short Oct $10 puts for .80 and short Oct $12 calls for .45 (I wouldn’t risk the $11s) and even if UNG goes up 30% to $14 you are not much worse off than you are now and if UNG falls 25% to $8, you owe the same $2 you would if you keep the leaps and you could simply roll to another split in Nov or Dec. 

    USO/Jlui – $3 is my exit target, not what I’ll buy for!  Since it doesn’t seem to want to go lower it’s best to just take the quick $2.45 and run (up 10%) at this point.  That way, if you get back in at $2.20, net basis is already down to $1.95 for the next run.

    USU/Steve – I’d sure lock in those profits but they are in a nice squeeze now.  You can sell the Jan $5s for $1.10 and buy the 2011 $5/7.50 call spread for .65 so you won’t feel like you’ll be missing anything to the upside. 


  73. Cap – at least the entire world doesnt hate us and we will be winding down the wars that by the time the’re over will cost 3x as much as these socialist programs will. I’m an independent, but would much rather spend taxpayer money poorly on our own people than what our former president chose to spend our money on.


  74. Phil
    My problem is disappointment in not setting a stop on the position, as I have held it for some time. Thanks for the alternative adjustments, but time and weather will certainly resolve everything prior to expiration.


  75. If  "they "  are going to do it today, this may be it.


  76. oncmed oncmed BAC/100KP  Phil, regarding your response to oncmed.  Maybe I misunderstood a previous day’s question regarding the 17 calls, but I thought you had advised taking a profit when it was around 75%, so I’m guessing that was what oncmed was referring to.  I say that because after reading the ‘take the profit’ at 75%, I had set a GTC buy on those short 17 calls and it got executed.  Can only guess you weren’t trying to apply that to the 100kp, but I’m out of them now, still short on the 17 puts…..any action I should take? 


  77. BIDU making a breakout.  It formed a W patterned double bounce off 320 support.
     
    Next resistance is 378. 


  78. They are going to rally this market in honor of Tim


  79. 100KP/BAC – Phil, I had the same question as oncmed regarding buying back the BAC short 17 calls.  A few days back you had told someone, with respect to taking a profit, to take it when it got to 75% or so.  So I set up a GTC on those BAC shorts, which got executed today.  So I’m guessing those instructions didn’t apply to the 100KP, and I shouldn’t have bought them back.  So, I’ve still got the BAC long far out options, and the short 17 put……any action to take?


  80. 30-Year notes selling like hotcakes with 2.92 bid to cover (2.37 avg) at 4.238% so I guess all is well over there.  Of course it makes no sense at all that people are putting money away for 30 years at 4.2% but gold is at $1,000 on inflation fears but no one seems worried about that so why should we be? 

    BIDU – Ouch!  Must have bought too many puts, now they are squeezing. 

    DIA $95 puts down to .65, .35 to roll to the $96 puts (now $1.02) puts us in the $96 puts for net $1.10.

    BAC/Java – First of all, there are no longer 2 weeks to expiraiton and 75% with 1-2 weeks to go is a guideline, not a rule.  Since the play is on target and since we intend to roll and roll and roll and roll each month, it would be silly not to allow the .88 of premium that remains on the $17 puts and calls to run down over the next 6 trading sessions.


  81. Yeah, the continued strength in the bond market is completely antithetical to the inflation trade. It’s also tough (but not impossible) to square with continued weakness in the dollar.
     
    Look at the indirect bid at 46% too which confirms what we already knew — the stuff about ‘abandoning the dollar’ is something that foreign CBs are willing to bet is irrelevant for, oh, at least another 30 or so years. LMAO.


  82. Interesting move, money moving back into bonds after auction results.  That is, effectively, cash going BACK to the sidelines (30 years is a long time) and is NOT a positive thing for the markets (although, longer-term, low rates are good).  Anyway, the short-term news is a big move down in mortgage bonds like this means cash is heading for "safe" investments and could be an early turn indicator for the market.


  83.  DIA/PHIL  Are you selling DIA $96. Puts anticipating a closing rally?


  84. Phil, i will not have the ability to follow trades for much of next week.
    "we intend to roll and roll and roll and roll each month," 
    in the 100K i have C Sept $4 short put; risk expire or roll?
    and CROX Sept $6 short call – roll to OCT $6?
    and CROX Sept $7 short put – roll to OCT $8?


  85. Very peculiar action in the markets,

    Geithner Written Testimony before the Congressional Oversight Panel
    http://www.streetinsider.com/Economic+Data/Geithner+Written+Testimony+before+the+Congressional+Oversight+Panel/4935128.html


  86. what ever leaves the market for cash the fed will take up,  it would be interesting to see how much of the market (shares)  the fed (directly/indirectly owns) owns.


  87. Do we have a breakout yet? Time to buy buy buy?


  88. I am busy with other things and I just noticed this nice breakout in the last 10 minutes.  Any news…… Anyone ?  Buehler….Buehler  (sp?)


  89. Makes me wonder what the bloody h3!! the Gang is going to do at 2:30


  90. Chuck, its a farce. This is a show, and Wall St. will move the market in a positive direction and say thank you Tim. When Americans come home from their jobs and see their investments gained today and its all thanks to Tim and the Gov saving the day. Mission accomplished and closer to my 1100 target. Come on in the waters jussss fine


  91. barfinger, what we got is a bunch of bs! 
     
    Phil, I hope your blog will clearly document just how screwy everything is right now.  Someday, we’ll look back on this and say oh, that was because of this.  Or this was because of that.  But right now, it’s bizaro world.  That’s what happens when the gov’t gets involved in things!
     
    Geitner is going to start withdrawing support to the financial system?  How bout they start with GS!  Just why the hell are they getting their money for 0% interest anyway?  They have a pos bank in Utah.  What do you want to bet they’ve borrowed far more money then that bank has ever lent..


  92. Phil – Nice run up on TNA today, but I’m thinking of going long TZA overnite. Thoughts ?


  93. kus, you have an 1100 target for the S&P?  What are you goin to do then?


  94. USU own it 6.08. Sold Oct 5 c/p for 3.48. Closed out the calls for a nice profit already, todays move has the puts up 71%.
    Thinking they should be closed and sell the Jan 5 c/p for 1.80 would be the right move here.


  95. Phil, a newbie quest:  would it be possible to elaborate on this trade.
    DIA $95 puts down to .65, .35 to roll to the $96 puts (now $1.02) puts us in the $96 puts for net $1.10.
    THe goal here is to salvage a position by rolling up but not clear how that nets 1.10?  Thanks.


  96. brianm, .75 + .35 = 1.1 (.75 being the price we bought it)


  97. DIA/Kels – Current play is owning (not selling) DIA $96 puts at net $1.10, which is currently a disaster at .84 on that last spike up.  .80 seems as low as it goes and a DD there with a stop out of 1/2 at .95 is the current plan

    C/Morx – I would just let the short $4 puts expire.  If you’re not going to be around, better to go to cash.  CROX is right on target and it’s a shame to roll them early if you don’t have to. At the moment, I’d lean towards the Oct $7 puts and calls, not the $6/$8 as we already made $1 in Sept so we have some leeway.

    News/Chuck – Just our man Tim telling us everything is great.  Dow up 100 from the open!

    TZA/JRW – I’d wait until tomorrow.  This move puts us up 300 points for the week, not something you want to short ahead of Asia and Europe BUYBUYBUYing overnight. 

    USU/Doro – Sure, keepo working down that basis until everything you sell is profit. 


  98. Phil if you watch the VIX and DJI or S&P tick side by side, do you think one leads the other?


  99. Holding DIA 96 Puts at .89  avg entry …will DD at .78 if I hafta


  100. foss, thanks.  whree does the .35 come from.  rolling to me means selling sept and buying oct.  that would be a net loss where ever the spet were sold say at .65 for -.10.  if the oct 96 were then bot for 1.10 the breakeven would be 1.20 plus some extra for commish and slippage.  What am I missing with the .35?


  101. In my retirement account I picked up the Canadian Natural Gas ETF GAS (TSX) for 3.85 two days ago and it’s up to 4.94. I’m thinking I should dump it and wait for a pullback. Any thoughts?


  102. brianma – think phil is just rolling up strike price – not rolling out the contract to oct.


  103. The breakdown was precipitous once 1100 broke, we will fill the gap. You have to remember to think in months not days when trading this market. I think it takes a few months to get back down to 950. There is complete and total control of this market, make no mistake this market will not trade on fundamentals for a long time to come. By then you’ll be on all types of medication from anti depressants to blood pressure meds. ;-) …..better pad your rooms matt….

    1100, keep trading the way Ive been trading, filtering out all the noise and making trades that make sense in this controlled market….have the markets been easier to trade then they are now?


  104. Phil/Eric/Cwan/Matt/Cap/etc.. – I’ll be away for next month due to a medical emergency-forced liquidation of most of my trading account (fitting time, no?) I’ll be back, but I won’t trade with money I can’t afford to lose. I’ve learned so much from all of you and want to thank you. I’m up 23% thanks to all of your advice, that’ll help alot with the Dr. bill my wife’s facing. Thanks, guys. Look forward to being back in the next few months.

    Best,
    Josiah


  105. rolling in this context is moving up in strike not out in time


  106. So here is the question I have?  DO we correct at all today?
    The Dow Volume is relatively strong today, on pace for 210m shares  Just under the avg of 220m. 
    We are up 72 as I type this.  What big boy/fund sells into this up move.  Just talking out loud?
    Big green bar forming as on the DJI as I type !!


  107. C’mon Stick Busters


  108. kustomz, ok, now you’ve got me interested.  I agree it is a totally controlled market.  But it’s really depressing to hear you think it’s going to stay that way even after the Fed pulls out of the business.  You’re right.  Better check my meds!
     
    So what exactly are you talking about when you say making trades that make sense in a controlled market?  Playing the stick?  Buying on ANY dip?  Details please!


  109. DIA/Bri – Our entry was .75 on the $95 puts so spending .35 to roll them up to the $96 puts gives us a net on the $96 puts of $1.10.  That seemed like a good idea at $1.02!  The reason it was a good idea is what’s playing out now, the DD at .80 dropped the average of 2x the .95 and the puts just hit .95, which allows us to sell half, leaving us with our original entry amount of contracts but in the $96 puts at .95.  Had we DD’d the $95 puts at .65 instead of rolling, we would still be down as they are currently .59 and our average would be .70. 

    Also on DIA – If you are now in the $96 puts for .95 you should have 1x and the next DD point is .75 (there’s no way we’re getting this roll as the $97 puts are $1.40).   Also, don’t forget to roll up your Dec puts if you haven’t already!

    If you take small, scalable positions on your day-trades, you keep yourself flexible and can turn in a much higher percentage of profitable trades.  The $96 puts were $1.55 this morning, the $95 puts topped out at $1 so MUCH more upside to the $96 puts – we just weren’t willing to risk it on our initial entry because they had much more downside.  While the $95 puts fell from .75 to .55, the $96 puts fell from $1.15 to .75 so scaling in to the less expensive puts was less risky and required less capital. 

    Ticks/B1 – I think the DIA is driving the S&P but I think the VIX is pretty much off on its own. 

    TSX/Blair – If you can’t cover it with options then I’d say at least 1/2 off the table back at $4.85 (.20 trailing if they head up) with a stop on the rest at $4.60. 

    Take care Josiah – Hope all goes well! 

    LDK testing $10 again.

    Correct/Chuck – According to the bulls, this is "correct."


  110. Do you ever use VIX futures as a hedging tool (or mini VIX)? Do you think now would be a good time to go long the oct or nov contract? 


  111. our prayers go with you, Josiah.


  112. TSX/Phil – The Canadian options market is horribly illiquid and IVs are low, there are only a few that are worth trading. I will definitely set a trailing stop, thanks.


  113. any body hear bad news on LVS


  114. matt , kus / TARGET  1100  -   The real target is 1950.  Let’s see… Treasury and the Fed arainge for banks to buy brokerages, and investment banks to change their charter so they can access the Fed window ( 0% ).  Then " they " buy stocks and commodities, then upgrade each other and the stocks they own and have their subsidiary ( CNBC ) hipe their ( Chase ) comodities ( OIL ).  The markets go up. Noone sells their stocks in a climbing market. The BEARS try and FAIL again and again; now they’re BROKE ! Noone to sell; the Market continues UP. At a 30% gain above the old TOP, Joe Lunchbuket’s 401(k) has enough equity to offset the loss in equity in his house.
    It’s like " nothing ever happened ".


  115. CAP – after my attempts to find my new phone that AAT said they shipped with USPS I think i m going to join your team against government involvement in anything! there are no human beings there. GRRRRRR. (ok, patience)


  116. Josiah, woa, sorry to hear about the emergency.  Best of luck to you and your family.


  117.  LVS news came out before the open…
     
    Las Vegas Sands initiated with a Sell at Citigroup with a $13 tgt; saying while a spin-off of LVS’ Macau assets will remove any covenant issues, the stock looks fully priced


  118. Brilliant call on the AIG call sell.


  119. VIX/Roaster – At $20 I like to play them up but we’re back at the range where we may actually break higher.  I may not think we will but I don’t want to layer too many bearish bets here or I may end up in a red box like Matt waiting for my thorazine to kick in.  8-)

    LVS/B1 – Yeah, up 25% in too weeks is ridiculous, that’s the bad news…  The gaming numbers in Vegas and Macau were terrible last month, unless they have some rockin’ casino on the moon, I don’t know what people are expecting.

    Target/JRW – Wow, that IS a good plan! 

    That’s why I always pay extra for FedEx, at least you know where they lost your stuff…

    AIG/Smasher – Don’t confuse not greedy with brilliant.  Everyone can learn not to be greedy…


  120. thanks  newparadigmz


  121. Morx not sure who you are suggesting is worse USPS or AT&T. Pretty close run race if you ask me. At least USPS never paid anyone to steal your identity and transfer your business to them….


  122. Phil
    You have blessed my UNG position with your comments. I now know how to turn things around when needed.


  123. Phil – Check out David Merkel’s peice on SA


  124. Grrrrr I still didn’t get a DIA roll up from 97 to 98 – what were you all offering?


  125. Phil – the 96 puts – are these a day trade or hold overnight? Also, do we half cover or go naked on Dec puts?


  126. Josiah; good luck and hope the wife will be ok …


  127. Atlanta Fed President Dennis Lockhart: The economy is "improving but still fragile. Stabilization is proceeding, and the first stages of recovery are under way." Doesn’t see any sharp recovery. Core inflation drifting lower; firms have very little pricing power, and inflation will be "contained for some time." (Lockhart is a voting FOMC member this year.)

    Wal-Mart (WMT) CEO Mike Duke says Christmas will be late this year, at least in terms of consumer shopping patterns. Shoppers are less likely to stock up or buy "throw-away" items, he says: "This is the new normal. This is not something that is going to change."

    List from David Merkel of stories no one is talking about that is so good I will just print it right here:


    • China is overstimulating businesses through loans and they are buying up commodities that they don’t need now, leading to a possible correction in commodity prices.

    • Western European banks are in trouble because of loans to Eastern European nations denominated in Euros.  With the rise in the Euro, defaults are likely.

    • Water shortages in China and India.

    • Most entities that the US Government has bailed out will have stocks that are zero eventually — GM, Chrysler, AIG, and maybe Fannie Mae and Freddie Mac.  For an opposing opinion on the GSEs, read the intelligent John Hempton at Bronte Capital.

    • With dud residential mortgage loans, modifications don’t work well unless there is a forgiveness of some of the principal.

    • The foreign funding base of the US is getting shorter in maturity — could this be a sign of trouble?  Is there a lack of confidence?

    • If we marked the value of commercial real estate loans to market for banks, using data from the CMBS market, some banks would be insolvent.

    DIA/Steve – .50 if you can get it.  Otherwise, there’s always tomorrow.

    DIA/Concreata – Oh I wouldn’t have chased it as a day trade (but I would have been willing to take the money and run if it did work but fat chance into a close in this market!).  I’m still advocating nakedness on the Dec puts although it’s getting a little chilly up here.  Of course, now that we have plenty of longs they really are protecting things so it’s not like a couple of years ago when they were pretty much a straight bear bet we didn’t want to lose. 


  128. I know I don’t need to say it; but this is f-n nuts !


  129. Phil,
     
    GILD back down to 50 DMA, thoughts? I missed it last time it was here.


  130. I was late reading your comment on AIG, the Oct 40 Calls for 6.50. I sold a naked bunch at 6.20, and now, I’ve got an order in to buy back at 5.20. I realize this may have been part of a buy/write, but since Im one-sided, I figured it for a day trade. Any thoughts?


  131. OK, filled at 5.20.
     
    1. Took Money
    2. Ran


  132. I’m not sure what more I can say then what is being said below.  Meanwhile, SRS is now in the $10 range.  I’ve had a long open order for $10.50 in my IRA.  I’m a little nervous keeping it open with today’s move but I can wait it out if ‘they’ break $9.
     
     
    Zelman estimates that the foreclosure timeline has doubled "due to moratoriums, modification efforts, lenders’ self-serving motivations, postponements at trustee sales and logistical delays, which are all leading to a mounting pipeline. In total, foreclosures in-process are 88% higher than the year ago, led by prime non-jumbo (up 159%) and prime jumbo (up 152%) mortgages."
     
    http://www.cnbc.com/id/32782085


  133. GILD/Maxt – They were up on flu news.  Not sure they’ll get that boost again but not a bad company overall.  If they settle down to $45 and you can sell the Oct $45 puts naked for $2, that’s not a bad entry but I like CEPH better as a bargain (above play). 

    AIG/Barf – Those calls were covered by the 2011 $30s in the $100KP and we were locking in profits but it did make a nice day trade too!   AIG is certainly a "take the money and run" kind of stock.  Oh there you go!  Nice job…


  134. Josiah, good luck and try to stay positive

    Matt i read read read then read some more, look for bullish, bearish trends (charts news sentiment). I live by the kiss philosophy. Trade only the best names and you’ll do just fine. Like i said i feel safe trading the market to 1100 but along the way we will hit resistance and pull backs…trade them….i wouldn’t touch CAT here but i would buy some MCD…..kiss

    So yes playing the dips and trading the stick

    You cant lose with GOOG AAPL MSFT MCD PG CAT WMT AMGN T VZ LMT BA IBM MET stick with names that are core to any successful portfolio…… timing is key and dont be TOO greedy

    Theres the quick and theres the dead, i pride myself on being quick.
    And being a part of PSW doesnt hurt :-)


  135. GS sez:  Thank you TIMMEH for saving our asses and our bonuses.  
     
    This HAL 9000 pumpathon is for you buddy !


  136. IBN – I think it is time to sell it and take profits (cost low $30s from last month). It approached the 52-week high and retreated. Selling Oct $34s for $2.40 instead


  137. Updated price targets for S&P – We’re past many already:

    Strat910

    2010 is starting to trickle in:

    Strat2010

    So double-digit gains in ’09 and double digit gains in ’10.  That is just perfect for the brocures, don’t you think?

    Real estate/Matt – Come on – are you trying to use logic on the markets again?   That’s just not going to work…


  138. I do this two or three times a month just like clockwork – buy VNDA at 13, sell at 15.


  139. kus, thanks, I’ll try and give it a shot.  As for kiss’ing’, I usually trade only one etf.   It goes up and down.   Doesn’t get much simpler then that.  As for reading, I do it, too.  But all that does is make me want to use my head.  And if we were using our heads in this market we’d all be out of it or out of money.. or both!  S&P at 1100 would be huge.  We’ll see..
     
    Wow.  Very impressive.  Those tax dollars.. er I mean newly printed dollars, can really make an impact on the market.  Folks around my office are just giddy with today’s move.


  140. Best wishes Josiah!


  141. Well that’s it – we finally finished a day with ALL of our levels broken.  If we hold those tomorrow, we may actually have to start buying more bullish positions. 


  142. Hi Phil,
    Thanks for your advise on C I finally graph it. I have a bit of a hard time as new comer to this group to understand when you buy or sell put or call. Further what is DD.
    Where do you show now entries at the 100K portfolio. At the website the show positions but no starting dates. I obviuosly have to start with new positions as the exsisting once are showing profits or losses.
    Sorry for all the questions but I will learn


  143. Even trying to be bullish is hard — I’m now over-covered on most longs, while my delta neutral and short trades get killed. Now behind on the week even though I thought this run would happen, lol.


  144. Incidentally, Bloomberg ran an article last week on UNG right at the bottom, saying it was probably going lower and everyone was buying 8 strike puts. Great reversal indicator this time.


  145. Just submitted a question to the CNBC town hall meeting with Geitner.  I asked how much money is GS allowed to borrow from the Fed window.  Lemme know if anyone here’s an answer..


  146. Hi Phil, can you make the search function on this site ignore partial matches?  For example, if I want to see all your comments about DIA, and I search for "DIA" I get a bunch of matches, including words like "media" etc.  The search function is of very little use right now.


  147. Prediction:  Market gaps up at the open, Falls all day.  Opens lower Monday.


  148. P.S. If there’s no gap up, it’s probably going higher.


  149. Matt, that question will get wadded up and filed in a trashcan …… way to tough! 
    Hopefully I am wrong, it would be agood one to hear him answer.


  150. Phil, in the 8/28 log, took an EDZ buy write but at slightly different numbers: Stock at 9.14 (vs. 8.98), and the put/call at net 2.70 (vs. 2.60).  I made the same mistake here as above – bought back 1/2 of the calls to take a profit, leaving me with 1/2 the short calls and all the short puts.  So obviously I’m missing when to apply the ‘take the profit’ as I now understand I should have just kept this together as a hedge.  Any suggestions now?


  151. By the By ……84+ Million Shares in the last half hour


  152. I forgot about this great video from the Daily Show of CNBC’s idiocy from the last great rally and early crash.   The best is Cramer explaining to viewers (with the Dow at 14,000) how you "have to buy" even if you think we’re overbought becaue the pros are buying and you don’t want to be left out like a loser…  Oh yeah, we really learn our lessons don’t we?


  153. Bubble Diagnosis and Prediction of the 2005-2007 and 2008-2009 Chinese stock market bubbles – this econophysicist predicted a bubble in the chinese markets back in july and just posted a paper about how he did it. He also did the housing bubble in 2006 and the oil bubble last year.
    "Their method is a synthesis of ideas from the economic theory of rational expectation bubbles, from the imitation and herding behaviour of investors and traders and from the mathematical and statistical physics of bifurcations and phase transitions.
     
    From this, they say they have discovered an unambiguous signature of a bubble market about to collapse in the form of super-exponential growth decorated with logarithmic oscillations…"


  154. This kind of puts the lie to the "money on the sidelines chasing the market up" mantra, doesn’t it ?
     
    http://www.zerohedge.com/article/51-billion-outflows-domestic-equity-lt-mutual-funds-over-past-month


  155. Very interesting Cap. I wonder where that money is going?
    Assuming I can eyeball it correctly, Denningers graphs show outstanding consumer credit declining about  $100billion over the last 12 months.
    And here we see in at least one month $5 billion coming out of equities. I wish they showed a longer term graph for the equity in/outflows, or I was smart enough to know where to look for more data.
    Is it possible people are using money they weren’t going to spend tomorrow anyway to pay down debt which for many may have risen in cost. I imagine a guaranteed 10-15%+ return will look attractive to many people in this market.


  156. Well I guess that would be a no to my little theory :)
    "Fixed-income funds absorbed net inflows of $5.06 billion in the week ending September 2, while equity funds suffered net outflows of $4.95 billion, according to EPFR Global data."
    http://www.asianinvestor.net/article.aspx?CIaNID=111917


  157. LVS – Macau gambling figures were huge in Aug.  LVS and WYNN preparing to list their Macau assets in Hong Kong.  These catalysts have been triggering the recent analyst upgrades.  I’m short LVS though.


  158. VTIV/MrM – never heard of them.  They provide risk analysis for pharma/biotech it looks like.  I will have to look into them later.  T’is a nice chart though.  Been holding HK naked the past week.  Nice.  TRNA is moving and grooving FWIW.  I mentioned them a few weeks back, out at 8, back in at 6.5, and viola…..


  159. Sorry, TRMA….


  160. LDK – perhaps positive for LDK officianado’s I believe their writedown last Q was largely due to long term polysilicon supply contracts at around $100/Kg. They now state their polysilicon cost at $25/Kg..
     
    http://www.jlmpacificepoch.com/newsstories?id=156286_0_5_0_M


  161. Pharmboy
    Any update on SPPI & PARD?
    Thanks


  162. From wiki, this is why GS (our Government) is milking the US (citizens)  while they still can there is no way this is sustainable, the bailout was a mere drop in a very large bucket that’s going to drown US!!

    [edit] Unfunded obligations
    The U.S. government is committed under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues and Social Security payroll taxes fully cover payouts only until 2017. These deficits require funding from other tax sources or borrowing.[44] The present value of these deficits or unfunded obligations is an estimated $41 trillion. This is the amount that would have to be set aside during 2008 such that the principal and interest would pay for the unfunded commitments through 2082. Approximately $7 trillion relates to Social Security, while $34 trillion relates to Medicare and Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social Security. Adding this to the national debt during September 2008 of nearly $10 trillion and other federal commitments brings the total obligations to nearly $53 trillion.[55]
    The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare and Medicaid—the federal government’s major health care programs—will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term challenge in setting federal fiscal policy."[56]


  163. Clunker-nomics-I guess I must be on the wrong page…

            A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.

            A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.  
         
            So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.  
         
            They claim 700,000 vehicles – so that’s 224 million gallons / year.

            That equates to a bit over 5 million barrels of oil.

             5 million barrels of oil is about ¼ of one day’s US consumption.

             And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.

             So, we all contributed to spending $3 billion to save $350 million. 

             How good a deal was that ???
     
    They’ll probably do a great job with health care though!!


  164. Because in 10 years you’ve saved 3.5 billion which is more than the 3 billion you initially spent?


  165. In fact, let’s make it even more ridiculous and say they can keep spending 3 billion every year to take another 700,000 off the road. Following your math/numbers by year 16 you’re at break even with about 48 trillion spent and 47.6 trillion saved. What they’re saving grows exponentially and what they’re spending is growing linearly. Then things really get interesting…
    Oh algebra you are so much fun.


  166. Oops, that’s billion, not trillion. Haven’t had my coffee yet.