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Monday Market Mark-Up – 50 Ways to Dump the Dollar

"The problem is all inside your head", G20 said to me
The economy's an easy fix if you don't want to wait
All we need to do is globally inflate
There must be fifty ways to dump the dollar

G20 said it's really not our habit to deflate
Furthermore, we have elections and the voters hate to wait
So we'll indebt ourselves, buy lowering the rates
There must be fifty ways to dump the dollar
Fifty ways to dump the dollar

You just buy a few Yen, Wen
Push up the Pound, Brown
You buy up the troy, boys
Give Goldman the fees
Take the IMF bling, Singh
Let it drop like a rock, Barack 
Act like you're bored Jean-Claude
Let the dollar fall free

I heard they were dancing to this one at the G20 Meeting so I thought I'd share it with you.  Never have so many gathered so often to accomplish so little as our G20 in the past 18 months.  This weekend's meeting of the World's "top" Finance Ministers resulted in a split on whether to tax financial trading as part of a broader strategy to ensure the global economy’s expansion is less crisis-prone.  The idea of the levy was to prevent excessive risk-taking and fund future bank rescues but US Treasury Secretary, Tim Geithner said trying to get the banks to behave is "not something we’re prepared to support."

That was all the Gang of 12 needed to hear and the commodity markets went wild with the guarantee of no additional regulation on the horizon and the dollar was taken down to new lows in overnight trading, plunging to $1.50 to the Euro and $1.685 to the Pound, over 2% off Friday's lows.  They Yen Rose back to under 90 to the Dollar and the Nikkei, of course, did not like that one bit and an early rally turned into a flatline for the day.  The rest of the global markets, however, were off to the races with Europe up 1.5% at 8 am and the US futures up over a point as well as gold flies to $1,110 an ounce and oil heads back to $78.50, up $2 from Friday's low

Of course, doing nothing to prevent excessive speculation by the "too big to fail" crowd isn't all the G20 didn't accomplish this weekend (which is it for the year now).  They also failed to do anything to get China's Yuan off the dollar peg so the falling dollar is still great for China, who export far more than they import.  Not wanting to stop there by accidentally accomplishing something, the G20 also failed to make any progress on climate change, which is rocketing all the major polluters in global trading. 

Kudos to Gordon Brown, who TRIED to talk some sense at the meeting saying: "it cannot be acceptable that banks enjoy the rewards of their successful trades yet leave taxpayers to pick up the cost of their failures."  That gave everyone a good laugh but Geithner's opposition potentially kills off the proposal even before the IMF reports on its feasibility in April.  “A credible medium-term plan to cut deficits is needed to tackle shortfalls in public finances,” Brown said. For now, “a self-sustaining global recovery hangs in the balance.”  Man what comedy timing that guy has!  If Brown loses his election next year, I'm sure the Daily Show will be calling…

Instead the IMF did what they could to boost the price of the 200 tons of gold they are still looking to sell.  They issued a statement saying traders are probably using the dollar to fund “carry trades” across the world and the currency may still be overvalued after its slide this year.  “There are indications that the U.S. dollar is now serving as the funding currency for carry trades,” the IMF said in a report published on Nov. 7. “These trades may be contributing to upward pressure on the euro and some emerging-economy currencies.” While the dollar “has moved closer to medium-run equilibrium,” it is still “on the strong side.”    

U.S. interest rates look to remain near zero through the first half of 2010 at the very least, which provides traders plenty of time to continue with carry trades,” said Boris Schlossberg, director of currency research at the online currency trader GFT Forex in New York. “Labor-market conditions are still very challenging in the U.S., and the rest of the world is improving faster. The dollar remains the weakest link.”  The dollar has dropped about 13 percent against a basket of currencies from its major trading partners in the past seven months. Meanwhile, the MSCI All-Countries World Index of global equities has gained about two-thirds since March and sugar has soared 90 percent this year with oil doubling and gold up 50%. The euro has risen 15 percent against the dollar in the past nine months as well. 

We'll see how far they can push things today, certainly we can expect a retest of our highs and then we'll see.  As I said in my Dec, 2006 article, "Burn Dollars to Fight Gravity," where I first predicted that hyperinflation was the most likely US solution to our debt problem: "let’s throw those dollars onto the fire and light up those market engines – we’re taking this baby to the moon!"  Yes, I did say last week that the dollar looks to be bottoming here and, hopefully, this is the blow-off before the turn.  Much like the oil predictions went from $100 to $150 to $200 as oil went from $80 to $140, the more outrageous the predictions get the more likely it is that the bagholders are feeling trapped and about to panic themselves. 

However, like any good swimmers, we know not to fight the tide and I pointed out in the Weekly Wrap-Up that we are partying like it's 1999.  By the April of 1999, the Nasdaq seemed ridiculous at 2,500, having run up from 1,500 in October.  Despite all logic to the contrary, the Nasdaq bounced between 2,500 and 3,000 until October 1999 when, rather than going down, as every rational person believed it would, the Nasdaq instead went UP – to 3,500 around Thanksgiving, 4,000 at Christmas, 4,500 by Valentines Day and 5,000 by Easter.  Sure, by Memorial Day 2000, we were back at 3,500 but WHAT A RIDE

So, IF we can break on through to the other side of our upside levels, then it's time to switch off our brains and just strap in for the ride.  We already have our seat-belt plays so now it will be time to make some aggressive upside targets where we can make amazing returns off big index moves.  That is IF and ONLY IF we can break out here.  Otherwise, let's see this for what it probably is, a desperate act of market manipulation by funds that are under the gun to unload their stocks by December 31st or before the dollar bounces back on them and sends the market plunging back faster than it went up – just like the Nasdaq in 2000.

        Dow S&P Nasdaq NYSE Russell Trans HSI Nikkei  FTSE  DAX 
Fri Close  10,023  1,069  2,112  6,958  580  1,810   21,829  9,808 5,212  5,575
2.5% Up 10,273 1,095  2,164  7,131  594  1,855  22,374 10,053 5,342 5,714
Sept High 10,119 1,101 2,190 7,241 624 2,045 22,600 10,397 5,299 5,888
2.5% Down  9,772  1,042  2,059  6,784  565  1,764  21,283 9,562 4,917  5,435
July Base 8,200   880  1,750  5,600  480  1,650  17,500  9,200  4,200  4,600 
25% Up  10,250  1,100 2,187 7,000 600 2,062 21,875 11,500 5,250 5,750
Retrace 9,840 1,056 2,100 6,720 576 1,980 21,000 11,040  5,040 5,520

So no one is actually at their September highs but the Dow is in striking distance this morning but ALL of the other indexes are more than 2.5% away from getting back to where we were last month.  The DAX was our outperformer in September and is leading Europe now but notice how closely those 25% Up numbers (off our July base) are lined up with the September highs (except the Nikkei, which peaked at 10,767 in August).  As we've often mentioned, the country most damaged by the falling dollar is Japan, and their market has been unable to gain traction as the dollar slides into the pits

Aside from the Nikkei, Transports are our biggest concern as they are still not over their retrace mark off the 25% line, which they also hit earlier than the other indexes.  What's going to be critical for the US, is whether we can take back those highs and hold those retrace lines.  Once again, we find ourselves looking at 1,056 on the S&P as the single most important technical point for the week, this time signaling a breakdown if it's crossed.  576 on the Russell remains our canary in the coal mine and we really need to see the FTSE get through their 25% mark otherwise, we may have nothing more than another failed breakout attempt. 

So still very skeptical but ready to move on the upside (we actually made a half dozen bullish plays on Thursday to cover this run) but nothing to panic us out of our bearish positions (55%) until those levels begin to roll green on us.

Trade carefully out there. 

 


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  1. RIMM catches a downgrade from Susquehana


  2. Just slip out the back, Jack …


  3. Some interesting insight into the cellphone wars after the release of the Droid with Google’s Android 2.0 Open Software operating system.  In light of that article, not suprised at the RIMM downgrade.  http://blogs.zdnet.com/perlow/?p=11516


  4.  javaben - 
    "At around 8PM Friday evening, I walked into the Route 4 Paramus, New Jersey Verizon corporate store and walked up to the counter and said two words: “DROID Me.”"
    Some war. If memory serves me correctly you didn’t "walk into a store" to get Apple’s phone. You hopped in the back of the queue…
    On both releases.


  5. Kwan, good point!
    Here’s something I don’t understand, and hopefully someone here can enlighten me:  How does (or will) Google make money from the Androd OS?  Do they have a RedHat model in place, where they don’t make any money off of Linux, but make it off of support services? 


  6. Interesting Java. Kwan
    I found this opinionated article interesting about cellphones/OS (ignoring the irrelevant barbs at Gartner)
    http://www.roughlydrafted.com/2009/10/21/gartners-presumptuous-coronation-of-android-as-the-windows-of-smartphones/
    This is the quote that caught me:
    nothing about Android’s Windows Mobile approach provides any evidence that Google’s hardware partners will somehow radically improve their market position as they shift from making terrible smartphones dripping with impressive specifications and running Windows Mobile to making terrible smartphones dripping with impressive specifications and running Android.


  7. Good morning!

    We’re watching around the September highs:  Dow 10,120, S&P 1,100, Nas 2,200, NYSE 7,250 and Russell 595.  Not getting those levels with this global rally is nonsense, especially for the Dow, which only needed 97 points to make it as well as the RUT, which has been lagging by a lot and could cover that ground if they really want to. 

    Taking out DIA Dec $99 puts at $1.80 for a quick .70 profit is a gift worth taking and we’ll re-cover if the Dow can make it’s level (with whatever we can sell a half cover for $2.50 for).  The long DIA put position is March $102 puts, now $6.10 BUT those can be rolled to the Jan $105 puts for a dime credit and I like those better if we fail to break-out.  Since a roll like that is a pain in the neck (in case we do break out and want the safety of March) – I’d say officially we have 1x March $102 puts naked and add 1/2 X the Jan $105 puts at $5.85 with a stop at $5.50, just speculating that there won’t be enough volume to punch us through

    Anything NOT breaking those levels is a failure and we went to be bearish for it.

    If we break over 1,120, then the selling the DIA $103 puts, now $2.55 are a great momentum play if you have the longer covers to protect you


  8. AMZN in 100KP: No, I’m hoping that upgrade just has the same effect as the last few and burns the shorts for 2 days and fizzles.  The roll I’m looking at for AMZN right now is to sell the Apr $105 puts for $6.60 and the Dec $120 calls for $10.75 so we move our caller from $16 of intrinsic value to $10 in premium and still generally bearish.  The only bad thing about that is we may wipe out the caller in Dec but we’d have a long wait to get rid of the putter (but still we would be much relieved!).  If AMZN goes up $10, then we should get the same $6.60 for the Apr $115 puts and we’ll be able to sell the Jan $120s for $20 so that’s not a terrible fallback if we get burned next week, which makes it something we can hold on for over the weekend.

    Phil, just want to check if this trade that you posted late Friday afternoon is an official trade in the 100KP yet or if you are still  waiting to see what happens today and tomorrow?


  9. Phil any thoughts on FSLR. It seems to be on long bottom support line if you look at weekly chart. Don’t they need a nice green story as they take up oil.


  10. Fidelity’s crappy website is down:  Fidelity is currently unable to provide brokerage or mutual fund account information. Please try again later.


  11.  Cap – jump ship to the dark side and use ToS.


  12. We’re watching around the September highs:  Dow 10,120, S&P 1,100, Nas 2,200, NYSE 7,250 and Russell 595.
    Phil, I think the Russell high was 625?


  13. CAP
    ATP seems to be working OK


  14. RIMM/Steve – Yeah, they’re only up 3%…  AMZN popped $127, that’s a stunning valuation.

    Phones/Java – Yes, I was in the mall and saw little interest for Android.   Apple store was packed as usual but genius guy fixed my IPhone is 20 seconds.  The problem Apple’s competion will have is that, once you experience the level of customer service at an Apple store, you have no patience for the "go to the back" set-up of VZ and T stores. 

    Mall/Kwan – Hey I was at Palisades Plaza doing the same research…

    GOOG/Java – I assume they license something, they can’t be looking to make all their money on search can they?  Well, maybe they can as they control the screen and nobody can monetize eyeballs like Google…  GOOG’s current mobile search revenue is about $50M, if they can get Andriod on a billion phones, that’s gotta get them closer to $500M – it’s no Microsoft but certainly worth spending a few programming dollars on.   Don’t forget Windows was pretty much free with a computer at one point and MSFT got like $7 from manufacturers on a $3,000 computer sale – Now it’s $129 software on a $500 computer…

    AMZN/Allen – Yes, if we don’t get a very violent move then that will be the trade but let’s see what happens today as they are trailing the Nasdaq move at the moment and the Do, who are first to hit resistance, are lagging the other indexes this morning.   

    Of course we’re crossing 10,120 now so this is our critical first look at how the Dow performs.  Volume is decent and looks like 30M in first half hour.  If I’m wrong to stay bearish, the Dow should plow through 10,120 and join the rest of the indexes at 1.5% up for the day.  If I’m right, the other indexes will be rejected at 1.5% (SOX are at 2.5%). 


  15. Buying SRS here …


  16. FSLR/That – I’d say $115 is realistic support since that held in Sept and more or less held in March but I don’t even know if they are realistically worth $85.  I think LDK is much more fun for speculating at $5.84 as you can sell Dec $5 puts and calls for $1.75 for a net $4.09/4.55, which is a nice 22% discount if put to you and about the same up if called.  What will you risk to make 22% on FSLR?  SPWRA is my favorite solar, but we like them when they are closer to $25.

    Fidelity/Cap – That is very messed up. 

    Russell/Allen – Oh yes but no way are they getting there today.  I should have said that one is just a breakout level, not the high, which is in the chart above

    52-week highs:  BUCY, GAP???, SWK, HPQ, ADP, IAG, MCK, EGO, SNIC, CTSH, GOLD, HBI, WLT, TCL, ACN, RSH (picked up the IPhone), UFS, HRS, NETC – Generally, you want to see more marquis names making new highs to get comfortable but we’re getting a few and we have to go with the flow. 

    HMY flying since we picked it as a gold cover. 

    DIA Nov $103 puts down to $2.30 already so a stop on 1/2 even is a good idea with a .25 trailing stop


  17. Shorting COF


  18. Hi Phil, since you mentioned you’ll start a new $100KP after Nov expiration, are you still going to show us how to wrap up the current $100KP?  I still need to figure out how to roll the AMZN, CROX, BAC and C positions. thanks


  19.  Phil,
    In regards to picking up some TWM for protection about a week ago you suggested the April 33/38 spread for $1.2. Would you still pick this up as it is down to around $0.95 or would you go with a lower strike spread for the same $1.2?


  20.  Analyst Ratings, Phil do you know of any studies that track and correlate analyst rating with factors like stock price movements etc. This system of analyst ratings seems very corrupt and open to abuse. Is it regulated in any way etc. I cannot see how firms that have their own proprietary trading can also be providing ratings on stocks. The concept of Chinese Walls etc is total BS.


  21. Now that DOW is over 1042 are you pulling the trigger on selling AMZN puts?



  22. AAPL $200 will be interesting as will S&P 1,085 (1.5% up).  AMZN just broke $128, V making 52W High but volume is slowing considerably so where is the excitement about retaking the Dow high?

    Something is just not right here….

    Gold is falling back of $1,111 to $1,106 but oil is rockin’ at $79.27 because they finally got a sqall in the gulf that gives them an excuse to shut down production. 

    There’s lots of things I’d like to short but I’ll just be happy to not be forced to go long here.  Of course, many fund managers probably feel that way so it’s better to be early than late.   Thursday’s long plays were:

    • WFR Jan $12.50 puts can be sold for $1.20.  Still $1.05
    • VLO Dec $18 puts can be sold for .83.  Better now as you can sell Dec $17 puts for .85
    • TIE at $9.31, selling Jan $10 puts and calls for $2 nets $7.31/8.65.  TIE $9.56, still doable.
    • SPWRA at $26.68.  Buying 2x 2011 $20s for $9.90 and  selling 1x Dec $25 puts and calls for $4.60 nets nets $7.60 on the longs that are $6.60 in the money.  This one got away.
    • FAS Dec $65/69 bull call spread for $2, up 100% of FAS stays where it is.  Now $2.50 but you can do a $2.20 entry with the $67/71 spread but I’m not into this one unless we see XLF hold $14.50 (the original FAS was cashed).

    Came close but no cigar to stopping out the DIA Jan $105 puts, now $5.65.  If you didn’t take money and run on sale of $103 puts (now $2.35) just make sure you don’t go negative on them.

    Volume DIED!!!  Coming up to 10:30, just 12M in last half hour (42M for the first hour).


  23. i’m getting killed on my SRS and TZA shorts.  i did covered calls on these as you know and I won’t do them again,
    but I’m stuck in 6000 SRS at 9.60 and sold the 10 calls for about 70 cents average, so 8.90 in net, and
    TZA i’m long 5000 at 13.80  and short the 14 calls at .80 so 13.00 net, but then today, i covered those short calls
    and shorted the 12.50 and picked up 35 cents more so, in at 12.65, but if closes above 12.50 i’ll get taken away unless I roll.
    Nightmare to manage covered calls on 3 x ETFs yes, I agree, any s uggestions to manage this until Nov. expiration,
    without putting much more money in the trade?
    thanksDAvid


  24. phil, could this be the fakeout last gasp rally before we trade down hard?
    and if so, what is best trade for NOv. options?  how about selling AAPL 200 calls and AMZN 130 calls, to sell them….fairly "safe"?  or could sell the 130 and buy the 135 to reduce margin for credit of 1.65 for the 5.00 spread, break even at 131.65


  25. $100KP/Jlui – I will very likely be pulling most of the small positions through to the new porfolio and yes, I will continue to update on AMZN as we may be stuck with them for a LONG time.

    TWM/Calch – Lower strike is better.  Better to protect yourself than be greedy for profits you are less likely to get. 

    Ratings/Ken – Yes, it’s a totally corrupt system but what can you do.  There have been papers written and many people have testified to the SEC that it’s a fatally flawed system with tons of evidence but you may as well complain that it’s ridiculous that when the Fed fund rate was 9.5%, mortgages were 11% and now that the Fed fund rate is 0.25%, morgages are at 6% – you may be totally right but you are outlobbied by about $1Bn to $1.

    AMZN/Jim – Not unless something besides the Dow makes their high.  The Dow is a totally BS index so we need to see at least the Nasdaq get back up there to support AMZN’s 52-week high.  Ultimately, we have to roll but it’s really a matter of rolling up one strike or not while a big downside move can save us $10 if we wait.   


  26. Little help please: I have been rolling up GLD long puts for a month or so ala DIA, covered with short puts but still need the longs to eventually pay me back…. I am in the NOV 105s now, should i roll to DEC?? 107??? Any rules of thumb? Any feedback would be appreciated.
    Part 2: The Nov shorts are up to 87% profit. Should i risk rolling up or to DEC or just take it and be safe?
    Thanks


  27.  TWM … Noticed your earlier comments … since I entered this position at 1.2 spread on Friday, I assume it is a longer term play with some adjustments or add-ins along the way.   Please keep us informed when you feel the time is right for adjustments to a beginning position at 1.2 on TWM 33/38 call spread.   Not worried at all in fact, licking my chops to add in more.   Thanks.


  28. While it’s not near it’s highs, the SPX is close to breaking the head-and-shoulders pattern that was developing (assuming we close near here). So a lot of people may see that as bullish for that index.
     
    VNO March 55 puts have taken a big IV hit (ask the man who owns them) and are now 3.95 so I’m doing a DD there and selling the Dec. 55s against them.


  29. Phil,
    Can this just be the Dow making a double top? How can you tell?


  30. ANF is soaring on an upgrade from CS (target 49). Really have no idea what they see there, but a possible short candidate for the brave (be sure to give yourself time on the trade, obviously).


  31. VIX – the $25puts – should we be planning to cash in today if there is sell off? (Cost 1.01, current 1.85)


  32. Phil,
    The Nov 5 puts on PARD are extremely high now that the weekend is over, is this a good play to sell them for .60? Seems to make sense unless PARD falls 50% in 2 weeks.
    Thanks


  33. Ultras/DMan – This is why I only like buying them at the bottom of their ranges.  As I told you, when you play them in the middle they are simply a crap shoot.  I think I may have mentioned that the best and most immediate way to stop the bleeding on SRS is to buy URE.  URE is $5.59 and will pretty much make a penny for each penny SRS loses.  You are in SRS for net $8.90 and they are now $9.71 though so what is the actual problem there?   TZA sounds really confusing but if you get called away for only a .15 loss after missing the entry by 10%, why is that a bad thing.  Sometimes you do have to gnaw off a limb to live… 

    Fakeout/David – As I said this morning, the entire Nasdaq run over 3,500 was a fakeout but it lasted 6 months and you could have made millions following the fake (buying YHOO at $150 and selling it for $300, for example).  It doesn’t pay to insist on being bearish if we are breaking out here.  We are better off being bi-directional and taking those hedged downside plays only until we break back down

    Off to the races now.  DIA $103 puts right at $2.25 and Jan $105 puts at $5.55.  RUT at 590 on the button, that’s a big 4 points they need as that would also be the 2.5% rule.

    The number of single-family homes under water fell to 21% in Q3 from 23% last quarter, according to Zillow.com’s Q3 Real Estate Market Report, while home prices were flat over the period. Foreclosure sales rose to 21.4% of all sales from 14.7% a year ago, and the firm estimates another three million homes remain hidden in the foreclosure pipeline.

    Sector ETF strength early on: Coal– KOL +4.6%. Gold Miners– GDX +4.5%. Steel– SLX +4.1%. Semis– SMH +3%. Semis– IGW +2.9%. Oil Services– OIH +2.8%. Agribusiness– MOO +2.7%. Basic Materials– IYM +2.6%. Real Estate– IYR +2.5%. Gasoline– UGA +2.5%. Regional Banks– KRE +2.4%. Basic Materials– XLB +2.1%. Oil– USO +2.1%. Heating Oil– UHN +2%. Broker/Dealers– IAI +2%. Retailers– XRT +2%.
    Weakness: NONE.

    See, coal and steel, the polluters are loving the lack of climate agreeement.  Pretty much commodities, commodities and more commodites doing well.  Good thing they extended those unemployment benefits for 20 more weeks or those commoidities might be tough to afford…

    Oct. Employment Trends Index: +0.7% to 89.3 vs. +0.3% to 88.7 (revised from 88.5) last month. "The Employment Trends Index has likely turned a corner in September, and the historical relationship between the index and employment suggests that job losses will end in early 2010," Conference Board says.

    U.K. Press Complaints Commission says it found no proof journalists at Rupert Murdoch’s (NWS) The News of the World regularly hacked the phones of public figures to secure sensational stories. The probe was prompted after reports in The Guardian said the practice at the tabloid was widespread. In response, Guardian said the PCC did not have the "ability, the budget or the procedures to conduct its own investigations." 

    GLD/Morx – You should not play that game with front-months as you end up just bleeding premium.  If you want to bet GLD lower, you can just spread the June $112 puts at $10.35 with the June $107 puts at $7.30 and that pays you 66% if gold drops $10.  GLL is also dirt cheap now and you can simply go for the Apr $10s at $1.50 and sell Jan $11s for $1.05 so that’s .45 on a spread that is .36 in the money that needs a very small pullback in gold to double.  As to 87%, birds in the hand are worth 2 in the bush, if you want to press your bet, maybe you should try a more conservative spread.  

    TWM/CMC – as a rule of thumb,  look at the current just in the money $5 spread, like the Nov $24/29s, that spread is $3.90 so keep in mind that pretty much the best you can expect to do by March is $3.50.  That means your upside for Dec, Jan and Feb is about .50 per month so if you get a good run and make .50 ahead of schedule, you need to seriously consider taking it off the table.  Also remember these are downside protectors against BULLISH positions.  The chief advantage of these is they are supposed to lose money slowly while you make money on the longs. 

    Double Top/Japar – Looking a little more like a real breakout now, huge move but it’s all commodies and that’s a terrible reason for a staggering economy to rally.  To a very large extent I think we have a short squeeze after opening up 100 on futures which is how you can account for a sharp, low-volume spike (other than blatant manipulation).   10,200 is the point at which we have no choice but to call this a Dow rally but the Dow is nothing, none of the other indexes are confirming this move. 

    Just look at this hack job on the dollar (mentioned in the post but being pushed out to every media outlet on the hour):

    "There are indications that the U.S. dollar is now serving as the funding currency for carry trades," IMF says in a recent report (.pdf). "These trades may be contributing to upward pressure on the euro and some emerging-economy currencies." While the dollar "has moved closer to medium-run equilibrium," it is still "on the strong side."

    U.S. companies largely blew away Q3 earnings estimates, but not regional banks. More than half missed the mark as asset quality continued to deteriorate, and they don’t have the huge trading desks that have helped offset losses at their bigger rivals. streetTRACKS KBW Regional Banking ETF (KRE) +1.7% to $20.25.

    DIA Nov $103 puts now $2.10 so $2.25 is now the stop out (.15 trailing stop) but very tempting to offer $2.  That means there’s no pressing need to sell the Jan $105 puts, as they are still $5.45 so barely down by comparison.  March $102 puts still $5.60 and can now be rolled up to March $103 puts for .50 (no roll on Jan $105s as they are speculative). 

    Contrary to the Conference Board’s rosy outlook this morning, Gluskin Sheff’s David Rosenberg says unemployment may hit a post-war high of 13% as growth stagnates. "This is going to be the mother of all jobless recoveries. At the beginning of the year, who was calling for unemployment to go up to 10%?"


  34. thanks, Phil,  it seems l ike the Russell 2000 is lagging the SPX a lot.  SPX only 1% below high and Russell is 5% below high.  Do you think russell will catch up, or it will underperform from this point forward?  I’m doing some calendar spreads on IWM, buying Jan. 2010 and selling the Nov. calls and puts right at this level, and it makes money on Nov. expiration if IWM is 61 or 57, in that range, kinda tight range, I know…


  35. Phil,
      I’m still in Nov DXD $32 calls at $1.4 now $0.55. Do you suggest a roll or just to sit tight (Jan $32s at $2.00) ?


  36. Phil – DIA mattress- currently have long JAN 103 puts – never got the roll to March 102′s (last Fri), should I roll straight to March 103′s and what price?


  37. KRE, following on Phil’s comment above, March 17.5 puts are just .95, although liquidity is poor. KRE was in the 17 range just three months ago. You can sell a Dec. 22/22.5 put vertical for 2.35 against the puts, which risks .15 to collect 0-2.35 in the event that KRE keeps pushing higher.
     
    My current feeling is to defend short positions in banks, REITS, consumer discretionary, and credit-card names, where I think things have to give at some point, and to hedge that exposure with cheap long positions in commodity names, tech, and indexes (like SPY).


  38. If anyone likes audible cues, I love this site http://www.pivotfarm.com there is a link for ‘Tape Tweet, the audible market tape’


  39. That was the Dec 22.5/25 put vertical short, I meant. Very cheap little ‘throw-away’ upside and I did get filled (likely a waste of money though).


  40. VIX/Concreata – I’m out too early already. I think its best not to push your luck as the VIX can snap back hard.  You can always go for the Dec $22.50 puts at .65 and stop those at .30 so you risk little of your gains but, with a .32 delta, they will capture 50% of any additional upside you would have gotten on the $25 puts.

    VIX – Selling the $30s last week is already a 50% winner.

    PARD/Jomp – It’s always a good idea to sell a put unless the stock drops and you get screwed…  I sold them a long time ago and I have no inclination to buy them back. 

    Four months after cutting off lending, Advanta (ADVNA -72.8%) filed for bankruptcy and may turn its banking unit (not covered by the filing) over to an FDIC receivership. "The economic debacle over the last two years devastated Advanta’s small-business customers and Advanta itself," said CEO Dennis Alter, who’s waiving his salary and bonus.

    RUT not closing the deal at 590. NYSE just below 7,100, SOX under 310.  Biggest deal is NYSE holding 7,000, which is 25% up – that would make them the only big index to make that level.  Dow needs 10,250 to get there but RUT 600 should come first, if it’s going to happen at all.

    65M at 11:30, very slow since first half hour but slow=up, that’s one thing we see over and over again…

    DXD/Japar – With 2 weeks to expiration you lose about 10% of your premiums per day so it costs you a nickel to "wait and see" every morning.  If you still like DXD then you can move to the Dec $31/33 bull call spread for .65 with a $2 upside at the point where your current calls get their first penny.  You can also sell the $31 puts short for .55 and let the other guy lose 10% a day and just put a .30 stop on them, which is how far your current calls would probably fall if those puts went up to .85. 

    DIA/Concreata – I hope you got the 1/2 cover on at least.  At the moment, you took such a big hit on the $103 puts (now $4.25) that it’s not worth going to March.  We went to March BECAUSE they had a lower delta and would hold their value better if exactly this happened.  You can roll up to the Jan $105 puts for $1.15 and those will kick ass if we fall back.  You can pay for about 1/2 of that roll selling 1/2 the $100 puts for $1.05 so why not start there and see if any of our other indices confirm the Dow move?

    AMZN watch – Currently looking at Dec $120s at $11.50 and Apr $110 put at $7.40.  Ideally, we get a sell-off and can get $6 for the Jan $110 puts which should also give us an even roll to Dec $120s at about $6 so we need the $110s to get to $12, which is, of course $122 by next week

    David Leonhardt’s look at how wages are rising – up 1% in real terms – has Derek Thompson thinking deflation, and he’s not sure if wage increases are "good news, or bad news with lipstick."

    KRE/Eric - I agree, that’s the bet worth pressing.

    This is just like 1999 – I’m staring at the screens looking for glimmers of sanity and finding little to report. 

    TRIN is at .4 right now and it’s very rare you get a reading that low that doesn’t get snap-back (big selling).


  41. There is an article in zerohedge that SL Green + Fortress might have lost almost all of 1.4bil in mezzazine loans at stuyvesant town properties. But SLG seems to be very happy and is up 6%


  42. I can only hope that today is a Ramp, Camp, and Dump day; but I doubt it.  No news all week to screw things up for the trade-bots.


  43. Needless to say we have a FMD in progress.   TRIN = 32.  Sellers nowhere to be found.  Algos pumping energy, REITs, financials.  VIX 23.53; after blowing above 31 about a week ago.
     Low volume again of course.  Any selling will put an end ot this, but for now, HAL9000 is easily rebuffing any half hearted attempts.
     
    Once again; REITs are great shorts here.  SPG at 70.50; SLG at 40ish.   Long SRS.


  44. Hi Phil, I have DXD NOV 33 ($1.15) and sold NOV 34 ($0.50) calls on Friday to ride out a move against me. Should I take any further action?


  45. Really No Volume …. SPG usually trades 4 million.  Not even 1 million at 12:30.  Just one example.
     
    COF avg = 8 million.  at 2.7 million right now.


  46. Phil,
    For AMZN,  are you saying that we should roll the DEC $110 calls by  selling  the DEC $120 calls for $11.50 and selling the APR $110 puts for $7.40 now.         Or should we still wait for a selloff?


  47. H P{hil : do u still like the April bear spread on Russel 2000 you advocated last Friday? It’s the only bearish position in my portfolio & represent s about 2% of total positions. thnak you
    dflam


  48. Interesting on volume, maybe sector specific?
     
    Market Internals update at 12:00pmET – NYSE volume 435M shares, about 10% below its three-month average; advancers lead decliners by 7.2:1. – NASDAQ volume 865M shares, about 14% below its three-month average; advancers lead decliners by 2.4:1. – VIX index -2.8% to just over 23.50


  49. Phil Dia holding jan 10 103long for 5.5.85 now 4.22 naked you suggested above to roll to 105 for 1.15 but the nov 100 put is trading only for .71 where you said 1.05 pls explain what to do thks


  50. stuyvesant town properties
    "There is an article in zerohedge that SL Green + Fortress might have lost almost all of 1.4bil in mezzazine loans at stuyvesant town properties. But SLG seems to be very happy and is up 6%"

    Every time there’s an article on that subject i run out and trade MET, they sold at the top of the market…you have got to respect the call


  51. Low volume on up days, high volume on down days….makes sense to me


  52. Phil I am short GDX nov 46 call sold for 2.05 now trading for 4.25  any suggestions thks


  53. Phil – is it time for SRS buy/write for APR – selling APR 10 calls (2.10) and APR 9 puts (1.70) = $3.85 with SRS at 9.55 that is $5.70/$7.38 – what do you think?


  54. Have’nt seen this pattern for a while; looks like the old HAL 8000


  55. Phil: On your previous MHP bull spread,(buy jan,11 $22.50 & sell Jan.10 $25, the premium on the Jan 10 is only $.30 to  $.35 . Should I roll up to Jan. $30 calls for $2.20 premium?
    dflam


  56. Phil:
    Time to roll out of the OIH $115 puts?


  57. TRV making 52-week high at $53.75, they replaced C on the Dow, who have lost money since the switch.  They’ve added 25 Dow points since Thursday. 

    SLG/Harip – That is funny.  We are so disconnected from reality here. 

    News/JRW – No news until Wednesday.

    TRIN/Cap – Don’t you feel that the TRIN dropping from .40 to .32 without pushing up the market is a sign we may be out of gas?

    DXD/Emc – Well, I would buy out the callers at .20 if you can or maybe roll down tot he $32s for .20 as it’s a 5:1 bet on that extra .20. 

    AMZN/Jlui – I’m saying that’s the roll I’m looking at but I’m still rolling from Nov, not Dec.  Either way we are waiting/hoping for a sell-off and less urgency if you are already in Dec $110s.

    I just got called to be on TV this afternoon on Canada’s Business New Network – not sure if it’s available here but I think simulcast on the Web.  I have to leave about 3pm for a 5:10 show

    Russell/Dflam – Yes, we discussed the TWM play above.  I certainly like it with the slightly lower strikes but fine as is as protection that pays 4:1.

    DIA/Yodi – I wouldn’t sell the $100 for .71, maybe I looked at the $101 puts but I’d rather go naked than sell them.  Yes to the roll-up to Jan $105s but this is a speculative play to the downside.  The safer play the March $103 puts, now $6.05, selling 1/2 the Dec $101 puts at $2.50+ (now $2.35).  So it depends how covered you are and how much downside exposure you want.

    GDX/Yodi  - I had a nice gold spread last week that played both sides.  Off the Nov $46 cals short you can simply roll them out to the Dec $51 calls at $2.53 and sell the Dec 46 puts for $1.50, which is about even.  LOGICALLY:  Since you are going to sell the Dec $46 puts for $1.50 then why not sell the Nov $48 puts right now for .95?   Those can be rolled and maybe you pick up a quick buck ahead of your next sale and you are protected by what you owe the caller anyway.

    SRS/Concreata – $9..50 is the highest I like them and we end up regretting the entry every time so I’m kind of hoping for $9.  If you want a buy/write, you can start by selling the $10 puts for .80 right now and get yourself a .30 discount if put to you and THEN you can do the buy/write by selling the short straddle. 


  58. Good Morning PSW members!  Ahh, nothing has changed after my travels to Napa.  Low volume pump job.  Nice!  ARIA got an upgrade to buy w/ a price target of $6.  I noted last week that they and CRIS were being beaten down, bought into by the big boys, and now look at where we are.


  59. "penetration with velocity" …….there isn’t any and this market going ever higher is like a skyscraper built on a foundation of mud…..im just saying….in situations like the one we see here, its easy to blame a 1000 point move to the downside on a computer glitch ;-)

    Its fine to trade but having the sense to realize the higher we go the faster and deeper the fall…funds chasing here never ends well


  60. After almost three months of gains, non-agency mortgage bonds slumped by as much as 7% in the past week as a glut of sales "swamped the market," says Barclays Capital. Analysts said it wasn’t just year-end selling, but money managers and hedge funds booking profits before a winter downturn.

    Gordon Brown: How we can restore trust in financial institutions
     

    MHP/Dflam – I would rather sell the Jan $30 puts for $2.20 in Premium as you owe $5.75 and this is $2.20 back (rather than spending $3.50 to roll) and you still have good downside protection (MHP has to fall to $24.25 before you owe the same $5.75) and, if they keep going higher, you can always roll your 2011s to 2x the $30s and double up the caller (May $30s are $3.70) while still wiping out the putter. 

    OIH/Chaps – Sadly, yes, better to go to the Dec $120 puts, now $1.63 and sell the Nov $115 puts for .70 to some other sucker.

    Hey Pharm!  Hope the trip was good. 

    Higher/Faster/Farther/Kustomz – I agree but it’s just like 1999, you don’t want to be the sane guy standing in a room full of people who just bought Porsches with YHOOXXX as a license plate. 


  61. Phil, do you know when you will be on TV?


  62. I bought the Nov DIA 99 puts at $3.20 and let them get away from me (now .48)  Any salvage play for this one or should I wait it out and hope for a correction in the next 12 days?


  63. Phil,re Meeting for Canada, Say "A," a lot, tell them you are just a blogger doing God’s work…It seemed to really work for Blankfein! I almost feel sorry to GS, They even got lampooned  on SNL this weekend…Oh and we better have our puts coverd, evrytime you go out to a lunch or meeting we get a sell off! LOL


  64. phil,
    if your leaving will get this mkt down then get the heck going and we will see you tomorrow!


  65. "sane guy " i can tell you with 100% certainty I’m not that guy 8-)


  66. Hi Phil GS hold Nov 170 put long for 2.41 now 1.72   175 put short @3.47 now 3.40 I do not know if GS will still move up up to day by 4.00  against this all I hold 210 calls short all sold for 2.40 worth nothing now so I am not losing but I do not like the puts what do you suggest thks


  67. Pharmboy – Ariad Pharm (ARIA) was upgraded by JP Morgan from Neutral to Overweight …
     
    What is your current opinion of this stock?


  68. TV/Tcha – They say 5:10, I don’t know if they are live on the site:  http://www.bnn.ca/

    DIA/Sara – Gosh, not much to salvage there.  Best you can do is say you are going to roll to the Dec $98 puts at $1.36 if you want to say in that bet and you may as well offset that play buy selling someone else the Nov $99s for .50.  Do the roll first so you stop bleeding premium or roll to 2x and 1/2 cover and stop out 1/2 if one of our other indexes breaks their level. 

    Sell-off/Colberg – I hope so!  

    I’m looking but I can’t find things to buy up here.  On the show I’ll probably tell them I like XLF buy/writes, VLO and WFR as good bottom picks and, of course, that CRE is the devil.  Only the SOX are holding 2.5% with the rest hovering around 1.5%. 

    Consolidations, 5% levels (and retraces) that should be resistance from beginning of the month:

    • Dow 9,720 – 10,206 (10,125)
    • S&P 1,035 – 1,086 (1,075)
    • Nas 2,050 – 2,152 (2,130)
    • NYSE 6,750 – 7,087 (7,020)
    • Russell 560 – 588 (583)

    As we hit these we can expect 20% pullback off the move (75 points on the Dow back to 10,125ish).  Holding that level becomes bullish, not bearish so be careful this afternoon.  Anyone joining the Dow above the 4% line is impressive and all we are missing at 5% is the Nasdaq. 

    Dow volume now looking like 110M at 2, which is easy stickable so they can jam this higher and the 3 of 5 rule prevails here so no point in being bearis with 3 of 5 indexes over the 5% rule. 

    Nas is still 2% off the high at $43.40 so the QQQQ $43s at .85 are not a bad momentum play if the Nas is over 2,150.


  69. Phil,
    On your SRS post – saying do a "buy/write by selling the short straddle" – does that mean sell lesser calls and buying higher calls?
    Thanks


  70. kustomz, I’m still thinking that the low volume is necessary for us to keep having these relentless run-ups, as the trading computers are able to inch the bid higher by pennies all day (on small, shallow bid sizes) only if there is no real selling pressure. So low volume is ‘bullish’ in the perverse sense that it allows the market to be manipulated higher by a relatively small but persistent set of fund and prop desks.


  71. Phil:
    in the DXD nov 33 calls ($1.05) that are leaking oil. Any suggestinons?


  72. Boy, this is the fakest action I’ve seen in a long time.  Is anyone buying this?  But I guess if they are going to hand out money we’d be a fool not to stand in line for it.
     
    Did I miss it?  Or how is it no one has commented on GS’s Blankfein statement claiming to do social good through their banking biz?  I dunno if ‘God’s work’ is CNBC language or did he actually say that?  I really hope the former.  His bonus dollars have clearly made him insane. 


  73. GS/Yodi – Sounds like you made your money off the caller so why not get out and move on if you are not sure?  GS is one of many anomolies in the market, doing poorly on a day others are flying but maybe it’s just because of what Blankfein said this morning.  

    Straddle/Jomp – That’s what the sold puts and calls part of the buy/write are, a short straddle (sometimes strangle).  That was just the generic for "once we have an entry (the stock is put to us as opposed to the put expiring worthless), THEN we go about selling the appropriate puts and calls against it." 

    There’s UTX hitting a 52-week high, that’s a biggie!  MA, V and AXP all up around their highs. 

    Gold strangely down back at 1,102 but oil holding $79.78. 

    Treasury sells $40B in three-year notes at 1.404% (.pdf). Bid-to-cover ratio of 3.33 vs. a recent 2.82; indirect bidders take 68.5% vs. a recent 55%. Big jump in direct bids to 7.5% vs. recent 5.9%. Ten-year Treasurys moved slightly higher; the 30-year yield is -0.01 to 4.39%; 10-year -0.02 to 3.48%; 5-year -0.01 to 2.29%; 2-year +0.01 to 0.85%.

    Semiconductor shipments hit a record level in the third quarter, according to IDC, lifting chip stocks. The group warns of a "gotcha" that could come in the first quarter; one reason: "We have to be on the lookout for when China decides it can’t consume more processors."

    Sector ETF strength: Coal– KOL +5.2%. Gold Miners– GDX +4%. Steel– SLX +3.9%. Real Estate– IYR +3.5%. Gasoline– UGA +3.4%. Basic Materials– IYM +3.1%. Oil Services– OIH +3%. Agribusiness– MOO +3%.
    Sector ETF weakness: Livestock– COW -0.3%. Biotech– BBH -0.1%.


  74. Hi, Peter D, RE the SPX mad play (log Nov 1070/1080 put spread & short 980 put):
    I closed out the short 980 puts for profits.
    But I didn’t sell the 1070/1080 put spreads last week.  I put a limit order too high and let it slip away.  Damn!
    I made enough profits on the short puts that I can afford to wait a while.  What do you suggest?
    Thanks!


  75. Phil / TRIN / I don’t think so … 0.32, 0.42 makes little difference.
    There is no gas; only HAL 9000 and sellers sitting it out.
     
    The gas be fake; but enough for fun and games today.


  76. Blankfein really said it … I read the interview … crazy.


  77. NYSE volume picking up slightly
     
    Breaking News Market Internals update at 2:00pmET – NYSE volume 630M shares, about 8% below its three-month average; advancers lead decliners by 7.4:1. – NASDAQ volume 1.26B shares, about 14% below its three-month average; advancers lead decliners by 2.2:1. – VIX index -2.5% to just over 23.50


  78. Hi Phil  Any thoughts on FXP?  Thanks


  79. Hey Phil,
    Congrats on appearing on BNN. I will be watching you live on my cable. BNN is the top business channel here, and an excellent channel, unlike CBNC. If you are talking options selling strategies you should just prepare a 1 or 2 sentence explanation of what it is. As you know, the vast majority of viewers do not sell options, it’s foreign to them.
    I was on the show live in Oct 2008 talking about straddles. You are live for cable viewers, live to paying subscribers across the world. Pretend there is smile sign on the camera as you typically cannot see the other side. Have fun!


  80. EricL, i agree and they can trade the markets sideways for years…if need be…just a word of caution on my part


  81. DXD/Bvar – We flipped to Jan on Friday.  Jan $35s (now $1.15) or the Apr $30/33 bull call spread, which is still $1 (was $1.20).  We decided to be cautious on our shorts aw we expected a move to 10,200 early this week.  The Nov $33s are just .30 now and not very useful.  If you are in for $1.05 then a roll to the $32s for .20 and a DD at .55 gives you a .85 basis on the .55 call and a retrace of today’s gain will get you even. 

    Volume/Steve – Ah but more volume and less movement is not a positive.

    COST made a high. 

    FXP/1020 – Just something you want to roll along if you are looking for an emerging market hedge.   China can drop 5% 3 times in one week and that’s 30% worth of FXP gains ($2) so that is kind of the goal of this trade. 

    Thanks Raul! 


  82. Phil
    I have BAC Nov. 17.5 puts, Feb 10 calls, Feb 20 Puts, any suggestions on moves or  wait until next week?
     
    Mike
    Phil


  83. ARIA/Dia – I would scale in slowly. They have run up a bit, but still below the last run.  Phil might have some other picks, but a bull spread May 2.5/5 for 45c pays 2.05 if JPM is right on the $6.  Otherwise buy/writes are fine too, buying here, selling the 2.5 Dec P/C for 75c is 30% in a month….not too shabby.


  84. AMZN just went RED on the day ….


  85.  Pharmboy – Thanks!


  86. phil,
    So you think we fall, now that we hit 10,200, and up @2% on all indexes ?


  87. Buying more NWBO and HOLDHOLD HOLD, waiting for them to catch up with DNDN


  88. Since Russell is lagging, it’s worth playing them to catch up a bit.  UWM Dec $25s for $2 have a .57 delta and you can sell Nov $26 calls for .60 that are .50 out of the money so I like the naked buy of the Decembers and then throw a cover down on the Nov $26s if you get worried.


  89. Hi, Phil,
    Maybe we take SRS too seriously.  If we think of it as a protective play, just like EDZ, TZA, TWM, etc, it’s not really that bad.  When those ultras went down 5%, we didn’t complain.  Then, why are we crying over SRS?


  90. Gel – NWBO not seeing it.  Buy ARIA, CRIS, CLDX or SPPI if you want to play cancer.  I don’t like it when I see consultants as a key executive….


  91. DRV down 2.67, what a $*$%ING JOKE! Sry, just had to vent…..


  92. push up coming? GS buying  a stream of SPY futures in the pit…


  93. Phil the DXD bull call spread buy the 30 apr c and sell the 33 apr c is that correct


  94. BAC/QC – Let’s see how this rally holds up.  Did you sell the $17.50 puts or you own them?  Most likely the financials move up if we hold these levels.

    CNI made 52-week high. RL, TS, MFW, CVG, AWI, NTAP, ADSK, CL….

    Fall/JRW – I think we should at least get a healthy pullback to retest Friday’s levels but we are already pretty much destined to retest our highs unless something actually happens to stop this nonsense.  If today’s volume misses Friday’s volume, then this whole run remains very suspect. 

    Cramer pushing FRT, says they will have 100% occupancy when the market comes back.

    Another pumper: In a Q-and-A, Jim Rogers elaborates on which homework Nouriel Roubini didn’t do ("all of it … I have a problem talking about a bubble when assets are this depressed from their all-time highs") and says it’s one of the few times he hasn’t been short anywhere in the world – there’s "a gigantic amount of money being printed and it has to go somewhere."

    SRS/Cwan – I’m not complaining.  NOW they are getting back to our buy poiint but no more bearish plays for me until one of them actually pays off! 

    And more spin:  Don’t forget the seasonal adjustment, says Floyd Norris: The number of jobs actually rose, by 80,000, before being adjusted downward and creating an ugly double-digit unemployment number. He suspects seasonality is less of a factor this year, when the economy is changing direction entirely.

    It looks like the bulls are going to be pusing this to the limits.  They will say anything, do anything to make those highs so we’ll just have to let them for now.  The Qs and the RUT put me a bit bulllish as I’m about to leave, which will be really annoying if we sell off but this move up is too strong to ignore and I have to go by what I see right now. 


  95. DXD/Yodi – Yes but I’m not too enthusiastic at the moment about shorting the Dow…. 

    OK guys, I’ve gotta go – let’s see if that causes a 200-point move


  96. CROX – Phil any thoughts on adjust the crox DD?


  97. Can someone help unwind a Short AAPL November 190 Call? Im in at 6.80 (Ouch) 11 Days to Expiration.  Also got that short AMZN 115, in at 6.75. I’ve seen your solution of the AMZN Phil, just let me know when to pull the trigger.  I would like to sleep tonite if possible.  Impatience is getting the best of me.  Thanks in advance. 


  98. As I said on Fri, we can’t allow a double top now can we. Did well going long Fri, too bad I cashed in my TNA and UWM to buy 10,000 shiny new shares of TZA for the weekend!!!!!!


  99. Phil
    Thanks 
    BAC  I own the puts,


  100. JRW, ouch! 


  101. Zuko -
    You could write both the Jan 220 call and the 180 put for about 8 bucks – so it would get you out with a small potential profit and give you a 10% cussion in either directions -
    I also like writing the Jan 11 – 160 puts – it was a better play when you were getting $20 bucks for it only 15 now- Phil and others probably would not like this one because it ties you up in margin -


  102. I’m selling the AAPL and SPY bull put verticals from last week and adding to my SPG and SLG put calendars (buying April and May on the long end). I’m probably way too early, but I may get a better price, especially on SPY, tomorrow.
     
    Those AAPL and SPY positions made a huge return, but REIT short position losses are even huger, lol.


  103. Zuko775…AAPL Short Nov 190 call.  I’m not sure what Phil will say , and you aren’t here for advice from me, but my rule for exiting a short call or put gone bad is …..if it doubles and the stock is moving totally in the wrong direction….get out.    If you’re in at 6.80 I’d say buy it back NOW. 


  104. Completely abnormal market …. SPG avg volume = 4 million.  Today, 1.9 million at 3:28 pm.
    These rallies are complete BS.  Rolling short squeeze.


  105. Jim Rogers is a bozo.
    His benchmark for determining whether oil is cheap or expensive is basing it off of last years ridiculous 147 speculative high.  So in his view, 80 is "cheap" a big discount to last year.
     
    B O Z O


  106. Eric,
    Ya, I guess I misread Phil at 55% Bearish; I should have read the part about expecting DOW 10,200 on Monday!!!!!!!!


  107. MYGN -  Selling 22.5 puts here for 1.1.  Nice entry for a good stock to own semi-long term.
     
    WHOA!  Inverse stick in action…come to papa!


  108. Eric,  Can I get your thoughts on my Appl issue here? Samz’ solution sounds good. 
     
    (You could write both the Jan 220 call and the 180 put for about 8 bucks – so it would get you out with a small potential profit and give you a 10% cussion in either directions -) 
     
    What do you think?


  109. Zuko I like Samz solution aswell even go to Jan 230 c and 180 p gives you more or less a break even and a 30 $ break on the up side


  110. Eric, Matt Cap Anybody
    Follow through or retrace tomorrow ?


  111. PARD / Pharm – What do you think about the recent runup to 8.5?


  112. Zuko,
     
    samz solution seems good to me too.
     
    Honestly though, I’d be hesitant to adjust the trade on a day when the stock is up 6.85. A short term thing you could  do if you’re really worried would be to roll it to the Dec. 195s for about even and then wait for a little pull-back and buy a cheap Jan call at some higher strike (maybe the Jan 220) and turn it into a bear call vertical. This would likely significantly reduce your margin, so without adding more to the net cost of the trade, you could sell another such vertical for a credit, looking to collect enough with the second vertical sale to cover your cost of buying the Jan call. In other words, if buying the Jan call cost you 4.00, you’d look to sell another vertical for at least a 4.00 credit.

    Then keep rolling both legs up if necessary, but eventually it will stop going up. Turning it into a bear call vertical will control your losses if the stock keeps running. I personally feel more comfortable in this market with ‘defined risk’ trades like that one.


  113. No idea JRW, I’m afraid. Charts are super-bullish looking but market is fragile. For myself, I’m holding almost all my short positions but keeping some longs.


  114. Boy they paint pretty pictures!  What a bunch of friggin artists!


  115. Thanks Guys. Very Helpful.  I think I will exit the Amazon Trade all together and lick my wounds.  Eric | Samz I will probably move in that direction with APPL.  Since I missed the Bell, maybe Phil can weigh in before I pull he trigger.  Thanks again.


  116. SNDK – Covered Nov 21 Put at 250% Profits. SNDK likely to keep going up – say till 22-23 (with the rest of market without any SNDK specific news), but did not wat to risk it…


  117. My prediction……Expect follow-through tomorrow.  Too much news re govermental agencies stepping in to rescue big companies in distress for a down day to occur. 


  118. JRW, if this is like last ‘recoveries’ after sell offs then the rise will be rapid.  And by looking at the last couple of days it’s been just that.  So, assuming the other indices are going to follow the Dow into unchartered territory, there will be few if any pullbacks.  It’s cheaper for them to jam it up then take a long time to do it.  And when there is no selling pressure, it’s cheaper yet so they should make fast work out of it.  Unless this time is different.


  119. Is there a precedent for a nation successfully reflating its economy and stock market through the trashing of it’s currency?  All I’ve ever read seems to suggest that allowing the dollar to be the carry trade currency was not a good thing.  Not a good thing for who?  Every time the dollar goes down, the market goes up.  It’s an almost perfect correlation, and there seems to be no penalty for the decline in the dollar, unless you’re traveling abroad.  Can someone smarter than I enlighten me?


  120. Here is a chart on the SPX.  Broke out above the head and shoulders pattern today, but if there is a pull back tomorrow, then it could still be intact.  Too hard to tell.  GLD looks very toppy to me, and will start to short in a very small position (107 Jan10s).


  121. DIAs are showing the same divergence FWIW.


  122. Phil,
    Bought my subscription for your service last week. Need some advice, I bought SSD 38 dec calls at 3.75$ last week, DXD Dec 33 calls @ 2.15 same time. They got away from me quick with the two big days over the last week. Any suggestions at these levels on how to handle these and also maybe an alternative strategy. Thanks


  123. kustomz
    November 5th, 2009 at 3:43 pm | Permalink  
    "Phil yesterdays action could have been a move to shake out the weak hands for the next leg up"….

    Today’s move was a hell of a leg up!  I would expect a normal pullback 10140 area. Nothing but air down there always in the back of my mind.


  124. Phil did very well guys, he was on around 5:13PM with his picks. BNN Interviewer recommended people come to this site, as it is "always entertaining". Clip will be up online in a hour or so.


  125. Hey Phil, you are pretty good on TV, what do you think about SRS? long stock (9.25) and short Jan$10 puts and calls?


  126.  They recommended your blog, shortly after you were finished, and said that "you will definitely be entertained".


  127. Jcmcn5,
    The problem is that gas, food, and most other stuff gets more expensive – if you are in the markets and commodities it’s good though


  128.  Phil – You came across great on TV:  http://watch.bnn.ca/#clip233319


  129. Phil - Great clip. The reporter got really confused with SRS. :D 


  130. Phil,
      Nice interview. Don’t think the anchors were too finance savvy as it was a bit odd when she was trying to make some comment about Amazon’s chart.
      The clip did remind me of a question I’ve been wanting to ask: how do you go long on the dollar? UUP?


  131. Yes good job, I saw the clip too, you were great!
    I have a question on long the dollar too please. Is my EDZ long position effectively  long dollar would you say?


  132.  Can someone remind me where I go to look at the 100K portfolio?


  133. Wow, nice jam job into the close for that finishing kick. 

    NYSE right at the 2.5% rule but they are the only one over the 25% up line so very strong. 

    CROX/Bgb – I’ll have a $100KP list by tomorrow night.  Would I buy CROX here?  Absolutely at $5.46, selling the Jan $5 puts and calls for $1,60 for a net $3.86/4.43 entry. 

    AAPL/Zuko – That won’t get better tomorrow as Cramer is pumping them.  One thing you need to learn from this is you don’t really have the stomach for a short call to go against you.  That’s not a knock on you but you need to realistically assess yourself and know the kind of trades you are good at making money on and the kind of trades that make you miserable and lead to poor decisions.  Realistically, there is almost nothing safer than a short call because all you are betting on the $190 caller is that when you roll them to the Jan $200s (even) and then the Apr $220s (even) and then the 2011 $270s (even) and then the 2012 $310s ($17, so $4.50 more credit to you), that at some point AAPL may go down and miss one of those targets.  That’s without even selling any puts.  If you believe AAPL will hit $270 by Jan 2011 – then you have a problem.  Otherwise, not so much.  At $12.50 you can roll them up to the Dec $200s (now $8.90)  and also sell the Jan $185 puts (now $5) and put $2 more in your pocket while you wait. 

    Samz Jan spread is good too and sensible to just work on getting even.  I’m being a little more agressive becuase I’d rather sell the $9 of Dec premium before retreating to Jan.  He’s right about the 2011 puts – it’s a bit long to tie up $65 in margin just to get out  of a $6 loss.

    Eric’s take is, as usual, excellent. 

    BAC/QC – Sorry, I would get out of Nov puts.  We’ve been bullish on BAC for quite some time and I’m back to liking those long verticals on them again. 

    Big volume in SRS at the close as they got back to our buy range.

    10,200/JRW – We can be bearish AND think the Dow will go up.  It’s just like knowing your college team sucks but then they have a game against someone that sucks even more.  You may bet on that game but it doesn’t change your outlook for the season… 

    I was listening to Cramer on the way home and his premise for why the market will go up for the reso of the year (somehow he’s forgotten that he told everyone to get out 2 weeks ago because the rally was over) is that there is not enough data to make it go down.  If there was data, it would be bad and the markets would go down but lack of data means you should BUYBUYBUY.  I’m surprised insurance companies don’t adopt his brilliant appraisal strategy – it would save them a ton of paperwork and processing if they just accept the fact that no data means you can just ignore the fundamentals…

    The Fed says nine out of 10 stress-tested banks are on track – having raised $77B in seven months – and singles out GMAC, though the Fed says the lender will meet its need via the TARP Automotive financing program.   Er – doesn’t this mean 2 major banks are failing?

    Revenues will drop sharply for U.S. airlines in the Thanksgiving holiday, says the Air Transport Association, as the recession keeps many at home. Planes won’t be any emptier, though, after the deepest capacity cuts since World War II.

    It’s beginning to feel a lot like Christmas:  Electronic Arts (ERTS): Announces cost-reduction plan that will eliminate 1,500 jobs by the end of the first quarter (900 of them in development) saving $100M annually. Expects October is another down month. Shares now -1.9% AH.

    It’s not a good sign when the money banks spend on government debt matches the amount they’re loaning to businesses (chart).

    Reflating/Jcm – That’s a good question.  I’d have to say yes.  Germany in the 30s (of course seizing 100% of the assets of 10% of their citizens helped), Brazil in the 80s and even Zimbabwe all wiped out their debts and were able to move forward.  Of couse Zimbabwe is still a train wreck but they only just revalued their currency but the people didn’t starve and they probably would have otherwise.  We have a $15Tn econonomy and the government collects $3Tn in taxes and owes $12Tn.  Since the debt interest is fixed, if we hyper-inflate our economy to $45Tn and collect $9Tn in taxes – Even if government spending doubles to keep up with inflation, we have still reduced our debt load to 1/4 of GDP. That then makes us a good investment.  No one cares where you came from, just where you are going (ask AIG). 

    Welcome Rmelin!  I assume that’s SDS and NOT SSD?  You have to be careful with those ultras, especially if you are not hedging with plays in the opposite direction.  Those are down about 1/2 but they are also Dec so not a catastrophe.  You can sell the current $37s for $1 and roll yourself down to the $35s for $1.30 and, if it goes higher, you can roll the caller to the $41s where you would be thilled to have them cap your gains.  If SDS goes lower, you can always sell some puts and calls and roll out farther.  DXD is not much different you can sell the $32s for $1.15 and roll to the $30s at $2.05 just to try to get even if you still want to stay with the play.  Don’t forget if it’s going well, you can always buy one or two more calls or buy back one or two callers to give yourself more upside. 

    Nov 5th/Kustomz – Actually we’re up exactly 2.5% from 11/5′s close so that is exactly one leg up!  8-)

    TV – Thanks guys and thanks for posting clip Diamond.  I still find it very annoying to have to take 3 hours out of my day for a 10-minute interview.  That studio was directly above the Fast Money studio, we look down on their show on the lower level.  I didn’t realize how small their desk area is, those guys are right on top of each other…


  134. Good stuff, Phil. They are definitely not used to people calling oil a scam. They probably thought you would give the normal double-speak about contango or some other such party-line BS that it is cheap on a relative long-term basis. Too bad you didn’t have time to get into dropping demand, the amount of money it takes out of the economy,  and the cancelled contracts every month. Nobody else seems to be talking about it.


  135.  Phil and Zuko and AAPL…..Great explanation of how to play AAPL if you have sold the calls naked.  But your statement "If you believe AAPL will hit $270 by Jan 2011, then you have a problem." is exactly why I would not sell naked calls on this company.  I just believe it’s too much of a risk.  AAPL could hit $270 by Jan 2011, so I’d rather play it in some other way.  I also agree with the observation that some people don’t have the stomach for naked calls.  You can make a lot of money on them by trading them as you describe.  But you have to have the nerves for it, and you have to know what stocks make a poor choice for this type of trading.  I sell a lot of calls naked, on a lot of companies, but AAPL ain’t one of them.  And ditto.  You did great on the interview.  The interviewers?  Well….


  136. Long Dollar/Japar – I don’t think you want to play UUP until see something break.  I feel better about EDZ (see, cleverly answering two questions at once) because, at $5.50 – you don’t have much farther to fall.  You can buy EDZ at $5.50 and sell the Dec $5 puts and calls for $1.40 to net $4.10/4.55, which is 20% off and that’s a 7% rise (roughly of course) in emerging markets over 6 weeks befroe you are hurting.  If you are scaling in and figure you can have it put to you at $4.25 and then sell Feb $4 puts and calls for $1.20 to take you down to net $3.35/3.65ish, then this entry has a 40% downside.  If you think emerging markets will run up 15% in a few months – why the ell are you buying EDZ longs? 

    EDZ/Steve – Yes, I do think it’s a sideways bet on the dollar as it’s generally a bet against commodity exporters and China going up past 100% gains.  If the dollar goes down OR China pops OR commodities go down on their own OR an emerging market economy fails – we have a good chance of winning this one. 

    Scam/Ac – I don’t think Canadians want to hear that oil pricing is a scam as they REALLY need $70 oil to make those sands projects profitable. 

    Thanks Iflan – The whole format of TV news is pointless for learning anything.  They want 10 min segments (mine was cut from 20 as some important guy got slotted in) and the pre-interview was almost an hour for it – total waste of time and then the spontenaety is gone by the time they ask the questions.  I thought I was going on the air with the guy and girl I talked to last time, they are very sharp and I enjoy their show. 

     

    $100KP/Iflan – http://www.wallstreetsurvivor.com/Public/Content/PhilStockWorld/Dashboard/Philstockworld.aspx - I’ll be updating the positions by tomorrow night.

    Wednesday I’ll be out all day unfortunately but there isn’t even any real data on Wednesday as it’s Veterans Day.  Thursday seems to be jobs as usual and crude inventories are pushed back for the holiday – which makes no sense at all.  Trade Data on Friday along with Michigan Sentiment

    Despite what Cramer says, next week seems like a lot of Data to me with Retail Sales, Business Inventories, PPI, CPI, Industrial Production, Housing Starts, Leading Indicators and the Philly Fed…


  137. That was one stupid stupid day.
     
    Typical of a FMD, and you must, must, must remember this, is that they tend to close at the highs (or lows if down). !!


  138. Nice job Phil!


  139.  Thanks Phil and Crew.  This was a bit of learning experience, but it was mostly the reluctance of "giving it back".   New Day tomorrow.  I’ve definitely have to be more disciplined with my stops.  Thanks again.  


  140. Phil
    I caught the interview…. terrific!.  Your host recommended that the viewers should " go to your site, as you will be entertained ". That is for sure if you consider entertainment is laughing while you read, learn and make unbelievable leveraged profits that you never thought were possible. That is my kind of entertainment !


  141. Paterson: NYS Will Be Broke Before Christmas
    http://wcbstv.com/cbs2crew/david.paterson.special.2.1300362.html


  142. cwan, the SPX Nov 1080/1070 PUT vertical is $2.45.  So if the market doesn’t drop in the next day or two, you are better off selling it, as the total profit from the short 980 PUT minus the loss from the vertical is more than the profit we originally intended to get.  If you are not sure, then sell 1/2, and let the other half ride for a few more days to see if you’d get the full $10 payout.


  143. Phil,
    I have POT – the boring variety – 4x March 95s at $9.30 (now $12.75) covered with 3x Nov 95s at $3.30 (now $6.00).
    Intend to roll the 3x callers to the 3x Dec 100s (now $5.40) and 3x Dec 90 puts (now $1.90), for a net $1.30 credit. I am assuming that $90 will hold. Is this a good roll? Any other considerations that I should take into account?


  144. Phil,
    You looked good on your interview, too bad it coulden’t have been longer.
    Also thanks for your patience in your explanations during the day.


  145. I am interested in SRS call option….