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Telling Tuesday – Tops Truly Tested Into 2010

Yes!  Once again the futures are up!

Who could have guessed such a thing?  At 7:30, we have about a half-point gain in the US futures despite the fact that oil is languishing at $73.35 and gold is down to $1,091 with silver failing $17 for the first time since October and copper bouncing off $3.12 again.  So no one wants any commodities but the economy's great???  Perhaps it's because, according to the Rasmussen Report, that as of yesterday, 52% of Americans were not done with their holiday shopping.  In fact, according to what has to be either an idiotic survey or a survey of idiots, 24% of adults have not even started their shopping yet - with just 2 shopping days left!  

Sixteen percent (16%) of adults say they will be spending more money on gifts this holiday season compared to past years. That's up seven points from last week and the highest level measured so far this year. However, most (63%) say they expect to spend less money this year.  

I suppose we can always hope that the 16% who spend more will spend more than 4 times what the other 63% cut back and then all our Retail Christmas wishes can still come true.  So forget the disappointments of Black Friday and Cyber Monday and Super Saturday and Snow-Bound Sunday – we still have "Take What's Left Tuesday" and "Whatever is On-Sale Wednesday" and "Thoughtless Gift Thursday" for all the real last-minute enthusiasts. 

I'm sure if this week disappoints, the media will be waiting to spin how great they expect the post-holiday rush to be as everyone comes in for the sales (as retailers desperately race to clear their shelves so they have less to load on trucks when they close 20% of their stores and lay off a few million people next quarter).  Why would the media spin retail so positive?  Who do you think pays their bills?  The most important message the media needs to send every minute of every day is:  "Advertising works!

So get out there you last-minute maniacs and shop or the economy drops!  Unfortunately, no one will tell you this is happening but me and I almost feel silly to keep saying it BUT LOOK AT THE SIGNS!  We've been reading the tea leaves since the weekend with our PSW Holiday Shopping Survey, which has given us mixed reports from around the country and I urge Members to contribute their shopping anecdotes as it gives us a great picture of what's hot and what's not this year - miles better than the Rasmussen Report! 

China, where they make all the stuff we buy, had another down day on the Shanghai Composite, dropping 2.3% and now off 12.5% from the December 7th high, a drop that is pacing the 25% drop in the Baltic Dry Index over the same period (2 weeks!) as the logical connection between lack of Chinese economy and lack of shipping actually holds, despite all the other silliness in the Global Markets.  Bulls should be terrified that there is any logic to the markets anywhere in the world as logic is the bitter enemy of this rally and should sanity rear it's ugly head in 2010, the markets will be sorely tested indeed!

The mainland's misfortune was shrugged off by the Hang Seng, which gapped up 250 points thanks to their futures and finished up 143 points on the day, only falling 107 points in real trading (and most if it right after lunch), much like our own 60-point dip from the fakey, fake, fake open we had yesterday.  By the way, my FREE play of the day yesterday, right in the Morning Post, to short oil at $75 in the futures yielded a gain of $1.50, which is $150 PER CONTRACT so don't say I never got you anything for Christmas!  Back to Asia though – we are long on Japan and the driving dollar sent the Nikkei up 2% – flying over our 10,200 line all the way to 10,378.  That should give us nice gains on our EWJ calls, probably enough to cash them out this morning.

I'm a little more worried about Japan than I was yesterday as Eisuke Sakakibara, formerly Japan’s top currency official, said the yen may climb to 80 per dollar in the first half of next year, hampering the economic recovery.  “A strong yen would cause stock losses and enhance deflation, which may cause Japan’s economy to slip into a double-dip recession,” Sakakibara said at an event today in Tokyo hosted by Citigroup Global Markets Japan Inc.  Japan’s government would find it difficult to intervene effectively to weaken the yen, said Sakakibara, who became known as “Mr. Yen” during his 1997-1999 tenure at the Ministry of Finance for his efforts to influence the yen rate through verbal and actual intervention in the currency markets. 

I found that statement and it's timing (coming during a dollar rally) a bit strange and I don't know who pays Sakakibara to say what so we have to take his statement at face value and exercise a little caution regarding Japan.  Of course, Sakakibara was not alone on the gloom squad yesterday – also ignored by the rallying markets was Chinese central bank Governor Zhou Xiaochuan, who said that reserve ratios for lenders remain an important tool, fueling speculation that requirements may be increased to limit the risk of asset bubbles.  A record 9.2 trillion yuan ($1.3 trillion) of loans in the first 11 months of this year drove a recovery in the world’s third-biggest economy, pushing up stocks and sending property prices to their biggest gain in 16 months in November. As I mentioned, the Shanghai Composite Index fell 2.3 percent today to the lowest close since Oct. 30 on concern the government may tighten policy. 

Europe was off to the races this morning as Greece was downgraded less than expected by Moody's to A1, avoiding the B's for the moment.  The UK economy "only" shrank 0.2% in Q3, which is considered encouraging the same way it's encouraging when a coma patient wiggles their toe.   Goldman gave Europe a nice spin by adding Julius Baer to their Conviction Buy list, which boosted the banking sector.   “We view Swiss private banks as an attractive sub-sector of European financials,” said Goldman analysts.  Baer gained 4% and the banking sectors led the advance on the European exchanges this  morning while miners and other commodity pushers held their ground despite the commodities themselves taking a tumble – following yesterday's perplexing US action.   

What's really perplexing this morning is the way the futures are holding up despite a 20% miss in the Revised Q3 GDP, possibly supported by the declining dollar as it seems we'll need a few Trillion more stimulus dollars to keep our economy from falling apart so YAY – I guess…  So now the GDP has been revised down from 3.5% (which rallied the markets) to 2.8% (which rallied the markets) to 2.2% (will it rally the markets?) since the estimates began coming out.  2.2% is lower than the lowest (2.5%) estimate of 73 expert economists polled by Bloomberg, some of whom were looking for a 3.7% gain! 

It's funny to watch the analysts scrambling to spin this on television this morning but, like yesterday, the pre-holiday volume is so low that anything can happen (or be made to happen).  ICSC Retail Store Sales were up just 0.4% year over year, which is off a cliff from the 2.4% previously reported but that too will be ignored by the MSM today.  Redbook Chain Store Sales are up 1.9% year over year indicating the chains are able to draw customers away from Main Street with bigger discounts but Redbook also says retailers are scaling back their December forecasts but shhhhhhhh….   You also probably won't here that Q3 Corporate Profits were revised down to +13.8% from +14.5% and why not, as it could confuse you when you realize that the stocks are up 60% from when Q3 was reported last year. 

The number of borrowers that fell behind on their mortgages – including the most creditworthy – rose in Q3 as the percentage of current and performing mortgages dropped for the sixth consecutive quarter. Those that fell behind on their prime mortgage payments more-than doubled to 3.6% from a year ago.  In good news for the banks though,according to a new academic report, banks that lavished more money on lobbying were more likely to get government bailout money – so at least we know the system still works!

Looking at the tremendous nonsense in the futures this morning, I won't be surprised if we have another opening rally like we did yesterday but, as I said to members into the close, we're going to be a bit more aggressive with our shorts today as we expect the same kind of pattern where we have a low-volume rally, followed by a day of selling off as the real market players head for the exits.  We have already made our exit and are happily in cash but that doesn't mean we can't have a little fun gaming the game this week!

Just be careful out there.

 


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  1. GDP – 1st reported 3.5%; then lowered to 2.8%, now 2.2%.
    With all the gov’t stimulus / intervention ….
     
    Unreal


  2. And the futures are still green !


  3. phil -
    gll is the jan 9 with no premium still good way to go?


  4.  Manipulation masters – I’m sure the commerce dept knew the real number all along….and that the markets would ignore it if they waited long enough to release the final figure….obsolete data.   What is significant is the error range!   How can anyone put any credibility on any GDP estimates with such a poor accuracy rate?  What don’t people see it for what it is….pure manipulation of the market pyschology.


  5. Also for wish list
    Might check out ARCC – BDD – 11% yield – - avoided construction loans -
    no recent insider selling only purchases


  6. ARCC – should have read BDC


  7. Interesting Conference Call this morning:
     
    Fitch Teleconference 11 am: US Equity REIT Outlook Negative
    Dial In: 877-233-9813 ID=48439561


  8. Allrighty guys, we just left Maryland driving to Orlando, so it’s another iPhone trading day today and tomorrow. The GDP revision is blowing my mind and making me furious. But, we all know the game is rigged so let’s just figure out how they plan to rig it next!


  9. craig how is trading on the iphone?


  10. there’s got to be something good to short this morning after markets open – unbelievable that futures are still green after the GDP revision.  QID? short MA?


  11. AA potential downgrade – short today?
    Moody’s (MCO) this evening said it placed Alcoa’s (AA) senior unsecured debt on under review for a possible downgrade, Dow Jones reports,  after Alcoa today announced it will spend $900 million on a joint venture with Saudia Arabia to create a new aluminum manufacturing operation in the country. The debt is rated Baa3 currrently, and Moody’s warns that Alcoa has an extremely high level of debt service, on the order of 17.3 times the amount of debt relative to Ebitda generated in the last 12 months.
    Moody’s believes that the aluminum industry still has lots of excess capacity and that a correction in aluminum prices is likely, the report says.
    Alcoa shares finished up $1.15, or 8%, at $15.73.


  12. looks interesting Samz – and futures for AA are still holding at $15.70-$15.73.


  13. Timing will be everything as I’m sure everything goes up when we open in a few.


  14. Anyone know what’s going on with STEC? Why the nearly 20% jump the last two days?


  15. Phil, MA 240 puts down %40 – roll up to the 250s for ~$2? Or hang tight…


  16. Wow, 2.2% GDP and the futures are still up 0.3%.  I bow to the people who pull the strings…

    The highs are still there to break at: Dow 10,549, S&P 1,127, Nas 2,242, NYSE 7,380 and Russell 615 and it’s still going to be the Nasdaq’s show to prove out (we already got the RUT, who are up to 620 again) but I will be dumbfounded if they pull it off today.  We should gap open right to test on the Nas so a good time to buy the QQQQ Jan $44 puts for .42 if you want to play the downside over the holidays

    7,200 is still the red zone on the NYSE and if they can’t break that then it’s hard to take any of the other breakouts seriously so be careful. 

    We’re watching oil $72.50, Gold $1,085, Silver $17 (already below) and Copper $3.10 as serious breakdown levels and I don’t think that anything less than a serious breakdown is going to derail the bulls, who can make the markets do whatever they want on these pathetic volumes. 

    I didn’t get rid of my DIA 12/31 $103 puts at yesterday’s close and they are down to .48 from .60 but no change.  If the Dow moves up a lot, I’d rather buy more 12/31 $104 puts at .60 (now .78) than DD the $103 puts so figure a roll for .20 is my goal on a move up

    Make sure you check out the new Watch List – lots of good opportunities there if we do actually break out from here but it’s hard to trust anything that’s happening here so just good to get familiar with it for now and we’ll get into adding them to the $100KP in January – hopefully at lower entry points.

    We’ve been to 10,500 often enough that it should be no surprise to test it again.  Yesterday they ran the markets up until just after 10pm so let’s see how today goes.


  17. V still going down – that’s interesting.

    GLL/Samz – You are very late to the party on those, a bit too risky down here.  If you want to short gold I think the GLL apr $11s for .90 are the way to go as you can roll those on a dip. 

    SOX up 1% yet again!  Nas touching 2,250. 

    Manipulation/LV – Yes but it sure does work doesn’t it.  If you have bad news, lie and lie and lie and then, when everyone forgets, adjust the numbers to the truth.  BRILLAINT!

    ARCC/Samz – That sounds good, please comment on Watch list – That goes for any good dividend paying ideas please.

    Fitch/Cap – Really?  I can’t believe someone is actually saying it….  Maybe a good day to buy SRS at $7.50 for a quickie or short VNO.

    QID Jan $19/20 bull call spread at .45.  Nice leeway so you can buy the $19s for .95 and only sell $20s if they fall to .40 and that’s still a pretty good spread

    AA/Samz – A nice day-trade short but I do think AA is still a good long-term play.


  18. Three doji’s in a row and volume is waaaayyy down….now that is telling!


  19. Markets are keying in to the record-wide yield curve, usually a harbinger of economic growth. Still, while the curves "are incredibly steep," they may not indicate "absurdly large" GDP growth, Miller Tabak’s chief economist Dan Greenhaus says.

    10%+ unemployment is draining states’ unemployment-compensation funds so fast that 40 state programs could go broke within two years, and will need $90B in loans to keep issuing benefit checks.

    STEC/Jrom – They guided way down in Q4, I don’t know what changed but EMC popped too so maybe it’s just a general move in the space. 

    MA/Kwan – Roll for sure.  V is still very weak and MA going opposite way as mo traders love them but when that ends it could be great for the short side.  At this point, I’m adding Jan $250 puts at $3.50 to $100KP, just a scale-in of 5 to start

    Dow volume at 10 looks like a crap 19M (18M with 3 mins to go). 

    AMZN up 2% but RIMM down 2% (very nice on our spread if you left the Jan calls naked) and I’m not feeling the Nas getting over 2,250 the way things look.


  20. Existing Home Sales up 7.4% in November as first-time credit expired.  They were up 9.9% in October but 33% were distressed sales and 71% were under $250K and 51% were first-time buyers.  This is a market booster though as we’re up 44% from last year, which was a total disaster.  Prices paid dropped 4.3% to $172,600 median. 

    This should give us the high of the day.  Offering .40 for a DD on the DIA 12/31 $103 puts and, of course, then looking to sell 1/2 even at .50. 

    Richmond Fed Survey is -4 – that’s AWFUL! 


  21. DIA lagging djia today?


  22. Samz, trading on the iPhone is pretty great. The TOS app is by far the best mobile trading platform there is. Now if apple would release the damn tablet it would be the only way to mobile trade.


  23. Now there are little bull flags forming on the DIA 5 min chart….FYI.


  24. Phil, the December quarterlys are showing $1.04 for the 103′s. Am I looking at something wrong?


  25. I just found out WSS doesn’t fill unless the ask falls to your offer, despite what the last sale was.  That’s why I’ve been so frustrated getting fills.  They say they are going to fix it but that’s why my day trades are killing me over there.

    Now we’ve filled the Dow gaps to the lows of last Tues and Wed.  I think the NYSE must pop 7,200 for the Dow to get back to 10,500 so we’ll watch that closely but the RUT is off to the races so S&P 1,120 is going to be the next significant roof to take out. 

    Dollar doing very well at $91.75 Yen and $1.595 to the Pound and $1.427 to the Euro – both big deals.  Copper just blew $3.12 and gold touching $1,085 with oil at $73.25.

    That makes FCX Jan $75 puts a fun play at $1.55

    VNO Jan $70 puts at $2 are also attractive

    MA still going up though so waiting to see what happens is not a bad idea!   We could still get a break up to 10,500 or higher as all the stops are being pulled out to push the market to year’s highs – maybe funds are desperate to attract or keep capital into the new year and a big finish may keep the redemptions from coming in.

    VIX below 20!!   Amazingly, $20 calls are $3.30 and $20 puts, which are .25 in the money are .40.


  26. DIA/Craig – You sure are!  The Jan $103 puts are $1.03 (DIAMY) but the 12/31 $103 puts (BQDXY) are now .39 and I finally got my fill (so now I’m really worried!).

    I can’t bring myself to do anything long – this is just so stupid!


  27.  Winners in the Senate healthcare reform: (not my list but a good one)
    - Drug and device makers (PFE, MRK, BSX, MDT)
    - Hospitals (UHS, THC)
    - Biologics (AMGN)
    - Cosmetics (JNJ, AGN)
    - Home healthcare providers (AMED, ADUS, GTIV)
    Losers:
    - Health insurers (WLP, UNH, AET)
    - Generic drugmakers
    - Pharmacy benefit managers (MHS, CVS, ESRX)
    - Nursing homes (SKH, KND)

    Oct. FHFA Housing Price Index: +0.6% month-on-month, vs. a 0.4% decline in Sept. Year-on-year, prices are -1.9%, and are 10.8% lower than the April 2007 peak.

    Dec. Richmond Fed Mfg. Survey: -4 vs. 1 last month, returning to contraction after seven months of expansion. All broad indicators (shipments, new orders, employment) turned negative. Capacity utilization turned negative after seven up months. Firms stayed optimistic on months ahead.

    Sector ETF strength: Homebuilders– XHB +2%. Coal– KOL +1.3%. Biotech– BBH +1.2%. Insurance– KIE +1.2%. Biotech– IBB +.2%. Solar– KWT +1.1%. Internet– HHH +1.1%. Broker/Dealers– IAI +1.1%.
    Weakness: Silver– SLV -0.9%. Gold– GLD -0.8%. Regional Banks– RKH -0.5%.

    Dow leaders early on: DD +1.7%. BA +1.6%. HD +1.3%. MSFT +1.2%. XOM +0.9%. HPQ +0.9%.
    Laggards: AA -0.8%. AXP -0.7%.


  28. Simon Properties downgraded to Hold at Benchmark (SPG) 79.68 +0.28 : Benchmark downgrades SPG to Hold from Buy on valuation


  29. What does DIA 12/31 $103 PUTS mean pls? I am missing something. I am reading it (partially) as  DIA JAN 2012 $103 puts but that doesn’t seem right!


  30. I bought JAN 10 BIDU 420 calls at $19.90. Any recovery ideas?


  31. I missed yesterday’s dd on the RTH Jan puts.  Would you dd here at $0.40?


  32. Well, i found a small bug in the TOS mobile app. When look at the option prices for DIA it said it defaulted to Jan prices, but said I was looking at the quarterlys. Actually selecting the quarterlys fixed the problem though. Thanks for clearing that up.


  33. Emcginley, they are the December quarterly options which have a different expiration than normal dec options. The quarterlys expire at the end of the month. Dec 31


  34. Wow, gold gave up $1,080!  Oil failing $73, Silver $16.85, Nat gas way down to $5.58 (that was an easy short last week), Copper at $3.115 – Danger, Will Robinson, Danger!!!   

    DIA/EMC – There are quarterly DIA options that expire on 12/31/09.  It’s possible (and lame) that your broker doesn’t have them.

    BIDU/EMC – Ouch!  My best idea for that is take the loss and blow the transaction up on a big sheet of paper and tape it to the bottom of your monitor and write on it – DON’T BUY PREMIUM! – as many times as will fit.  At least then you will get an education out of this.   The best "save" for them is to sell the $400s for $13.50 and, if BIDU begins to recover, then you will need to spend $20 to roll to the March $410 calls and play out the spread.  If it doesn’t recover – at least you get $13.50 back.

    RTH/JCM – Yes, I would DD at .40.


  35. I have an idea for an iPhone app.

    Google maps has a traffic view which colors the roads from green to red depending on how bad the traffic is. What I want is gps tagged traffic news. So, when I see a red chunk of road ahead of me a bubble shows up that tells me why it is red. Either because of an accident or whatever. The radio stations get instant traffic news, so why can’t they enter that into a database at the same time which is connected to google.

    On an unrelated note, Phil, you have to go see avatar in 3d. IMAX if possible. The plot is nothing special, but quite satisfying. However it is an entirely unique movie experience. It was like going to see the matrix for the first time for me.


  36. Volume not even going to make 40M at 11 – we may as well be closed!

    Amazingly, SPG finds buyers on the very small dip it took from $80 to $79. 

    Maps/Craig – That is a good idea but you have to work with one of the trafffic info suppliers as I doubt there are free hooks.   I will see Avatar in IMAX, just because I trust Cameron to give me my money’s worth but I’m not too excited about the plot and I doubt my kids will sit through it all. 


  37. Sold 1/2 of my GLL Apr 10 Calls for a double.  A few more cents for the Apr 11 Calls


  38. wow look at MA plunge!


  39. Phil/MA.  Just jumped off a cliff.  Do you have a target selling back the Jan puts?


  40. Good call on MA Phil!


  41. Hi, Craig,
    I am wondering how you do the trading on the road.  I presume somebody else is driving the car?  How do you read the screen and hit the right buttons, etc, while the car is bumping up and down?  And how reliable & speed is the internet connection?
    I’ve never done such a thing in that kind of situation.  My wife probably won’t let me do that while she drives.


  42.  Phil….DON’T BUY PREMIUM is the first thing you need to emphasize again and again to new members.  I learned this the hard way, by experience (before I knew you).  The only way I’ve been able to consistently beat the market is to SELL PREMIUM.


  43. I’m a newbie on here, so please forgive me if this is a stupid question.  But how do you determine if you’re buying premium?  Is it based on the amount of time before expiration, the delta, etc?  Obviously you want to buy calls with as much intrinsic value as possible (I have been told to never buy a call with a delta lower than 0.50 and preferably 0.70 or more).  But what are other rules to follow when buying calls to make sure you don’t get into this situation?
    For selling premium, what are some good rules to give you the best chance to let the options you’re selling expire worthless?  I’m pretty scared at this point to sell naked calls, but spreads limit your profit potential if that’s all you trade.


  44. I took advantage of large INSIDER BUYING in a terrific sector for the times – NS ( New Star Energy) Based in San Antonio, TX. They have 8500 miles of pipeline, 82 terminals and one of the largest asphalt refiner in the country. Bought the stock. FWIW


  45. Hi Phil : looking for your input. I bought BSX at $8.79 a few days ago, now $8.83. Thinking of selling May $10 C for $.45 and selling May $9 P for $.95. Lowest price for BSX in last 6 months was $7.84  and 10 day MA crossed 50 day MA  a few days ago with chart looking like strong uptrend.What’s your opinion.
    dflam
    ps: Lived in NJ for 35 yrs & got tired of the snow.Went to macy’s ,houston yesterday. parking lot fairly busy,but we have  had 2 cold/wet days prior to yesterday. 


  46. cwan,
    Answering your question "How do you determine a price to bid on a SPX / RUT calls, puts, or strangles?  And when the market goes the opposite direction, do you lower your bid to catch up?"
     
    For strangles, TOS gives the Mid price for spreads, so I usually use it or 0.05 or 0.1 above the Mid point.  For stock/indices with a wide Bid/Ask, the mid point can get skewed to one side due to a sharp market movement, so I watch out for those anomalies.   For individual calls/puts, I use the Ask when selling and see if I get lucky.  I think I’ve only use the mid point on naked options a few times this year, and they do work most of the time. 
     
    If I missed the boat and still want to get into the same spread, then I lower the ask price to the Mid point (for selling).  Otherwise, I look at different strikes.


  47. Is there a good way to play AGNC to capture the dividend it’s about to pay (12/29 ex date)?


  48. Peter,
    if you open now Feb positions, I assume that you split your capital between 2 month,
    or because, how you said, majority of premium should vaporize during first 4 weeks, you keep everything in one month, and after 4 weeks make a decision to close and open one month farther, or stick with it till it will payed off?


  49. Phil
    what do you think about FNF at this level?


  50. Ceanothus, I don’t trade while driving unless I am stuck in traffic. My setup is, I hold the phone in my left hand and type using the index finger of my right hand. I keek the middle finger of my right hand up against the side of the iPhone to anchor my hand. This makes the whole unit move up and down with the bumps so no missed keys. Also the iPhone typing correction is fantastic so a missed key here or there doesn’t slow me down.

    As far as trading is concerned I just flip back and forth from PSW to the TOS mobile app. The TOS app is wonderful. They put a lot of time into the design so it has giant buttons to push which makes for no mistakes.

    As far as speed is concerned, up and down the 95 corridor it is just as fast as using the Internet connection at home. Refreshing PSW only takes 1 second or so. And you just double tap a comment and it auto zooms to fill the whole screen so reading isn’t to hard. I find it only slightly more inconvenient than trading at home. Mostly because the girlfriend says I have to put on pants to leave the house :)


  51. Speaking of BSX….2500 lot bull call spread just went through at the 7.5/10 Jan11s.  Nice double if they make it.


  52. tchayipov,
     
    Your question yesterday "if you open now Feb positions, I assume that you split your capital between 2 month,
    or because, how you said, majority of premium should vaporize during first 4 weeks, you keep everything in one month, and after 4 weeks make a decision to close and open one month farther, or stick with it till it will payed off?"
     
    I usually try to keep the major spreads in one month.  The other month (usually closer to expiration) is for speculative plays.  For Jan, I kept closing them out as VIX decreases, waiting for a jump in VIX.  The Jan’s premium got very low and I need to move some to Feb’s.  I’m in the process of building up the Feb positions, and the remaining Jan’s are just a waiting game as they are way OTM and won’t hurt my portfolio much on a sharp 5% drop.  The Feb’s would hurt if we get a 5% drop in the next 4 weeks.   A month ago, I was mostly in Jan’s, which is more closer to the goal of staying in one month.  PM really helps in this case as the OTM Jan’s doesn’t cost much in margin to keep. 


  53. Sorry, it autocorrected cwan to ceanothus. What the he’ll is a Ceanothus?


  54. Peter thanx
    plan to get my PM in january and will start to play with you


  55. MA/Judah – Hopefully about $250 on a pullback.  V did a full retrace of recent gains, $250 is 1/2 for MA.

    Oct. highway travel ?0.5% (-1.4B miles) vs. a year ago. Cumulative travel for 2009 seen ?0.2%.

    UBS lowers its jet-fuel price estimates to 2010 – which means it sees increased profits (or narrower losses) for airlines. The entire passenger carrier sector advancing so far, leaders: LCC +8.7%; UAUA +8.3%; AMR +5.6%; JBLU +5.1%; CAL +3.5%.

    Downgrades from S&P for five mortgage insurers, bringing two of them to the brink of junk. The firm had put seven insurers on downgrade watch in October. Lowered today: Old Republic International (ORI), Radian Group (RDN), Genworth Financial (GNW), PMI Group (PMI) and United Guaranty Residential Insurance.

    Emphasis/Iflan – Maybe we could desing some kind of subliminal messages that flash on screen during chat…

    Premium/Ernest – That’s easy, how much of the strike plus the price you are paying for the option is out of the money.  If you buy the AAPL $195 calls for $8.30 with AAPL at $199, you are effectively paying $203.30 so $4.30 in premium or about 50% and you have what we call $4 of intrinsic value (the amount that is in the money).  If you buy the AAPL $200 calls for $5.50, you are 100% in premium AND $1 out of the money so effectively paying $205.50 for the $199 stock.  Remind me on the weekend and we can have a longer conversation about it but it’s not NEVER buy premium – that’s impossible with options, but the idea is to try to sell more than you buy and learn to recognize a sucker’s play when you see one (like paying $2 for the AAPL $210 calls so AAPL must gain more than 5% just for you to get your money back). 

    NS/Gel – That’s a new one to me, good space to be in though.

    BSX/Dfalm – I should put them on the Watch List, I like those guys down here.  Why sell May combo for $1.40 over 5 months when you can sell Feb $9 puts and calls for $1.10 for 2 months?  That drops your net to $7.69/8.35 with a nice 20% upside in 2 months at $9, which is nice money for little movement. 

    AGNC/Roast – They already had a run-up and the premiums on the $25s suck so not much you can do with them.  The assumption would be they drop $1.40 on 12/31 so you could buy the Jan $30 puts for $3.30 and maybe they go to $4.50 or you can go with the Feb $25 puts at .65 with a .25 delt so a $1.50 drop in the stock would pay about .35 but the call side is a dead zone as you are sure to get called away ahead of the dividend, which would be a major annoyance, which means the only stock play is really the buy/write with the June $25 puts and calls but if you can’t get .50 premium on the calls, you are almost sure to get called away (but up .50 in a month isn’t bad and then you can re-buy). 

     Look how well this market holds up no matter what gets thrown at it – amazing…

    FNF/Tcha – Note the downgrade on Morgage Insurers above.  That should knock FNF down a bit too.  I like them much more around $12 than $13.70.


  56. C is down again, found in news that russian hackers stole same money from them


  57. NUE just dropped like a $1 and AFL just turned red for the day, wonder if this a sign of an afternoon selloff?


  58. Pants/Craig – ROFL!  Ceanothus is shrubs – it’s always interesting what spell checks decide to call people.

    The final GDP revision means that earlier estimates were as much as 50% over on the high side; why so far off? And more to the point, aren’t those missed components bad omens for the future? Eddy Elfenbein charts a trend line, dividing GDP by historic 3.08% growth to compare with past decades – and it looks poor.

    Bill Ackman says Hovde’s analysis of General Growth Properties (GGWPQ.PK) – which led it to believe its assets no longer exceed its debt – is materially flawed, and thinks the bankruptcy creates a once-in-a-lifetime opportunity for a large strategic buyer (BAM, SPG…).


  59. TOL is moving up nicely finally.  Jan $17.50s up to $1.80 (up 35%) and I don’t like them so much that I’d be willing to blow that!

    Wow, commodity stocks are moving up again on bottom fishing.  Either they really know something or this is one brain-washed market!


  60. Phil
    Please look at the options, particularly the leaps for NLY.
    The ATM call leaps have little premium and the ATM or OTM puts are very expensive.
    Do you think it is the smart money or the dumb money causing this?
    Is NLY going to fall off a cliff?  15% dividend right now, maybe disappearing?
    AGNC is similar, but not as extreme.


  61. Just a thought that it’s nice when I don’t need to play catch up for the year end return.  I now understand more on how the bankers feel – don’t do anything silly in December and wait for the bonus!  With thin volume, it’s very hard to play catch up.  I’m going to sign off for the next few hours .  Not a single trade executed today, but I’m offering to buy additional PUT verticals with the low VIX, RUT Feb 650/550 PUT vertical for $1.3 (now $1.35), SPX Feb 1040/1030 PUT for $1.45 (now $1.55).  These are part of the crazy plays.  Will sell the 1X strangles later.


  62. Peter D , RUT Feb 650/550 PUT vertical is $33…..


  63. NLY/Rich – Yeah, big difference.  Well, it’s all supply and demand (ie sentiment) and it seems the risk is seen to the downside on those guys.  I kind of like the almost free play of the 2012 $15/17.50 bull call spread at $2.50, selling the 2012 $12.50 puts for $2.10, which is net .40 (so NLY put to you at net $12.90) with a $2.10 upside.  TOS shows simple margin at net $166 to make $210 so that’s a pretty good long-term play.  You can short below $15, using that for a line and make sure you can’t lose on the trade (unless it blows by $15 overnight). 

    Things must be improving as RICK is doing well again.  That means Americans once again have money to spare to stuff into G-strings!

    Speaking of wild stocks, YRCW is having another 20% up day.  I gave up on them as they are just too annoying.

    LVS is down even though Shelly was saying some nonsense about making $5Bn in 2010 (wishful thinking or senility).

    VIX $25 puts are just $3.30 with the VIX at $19.82 – how’s that for strange?

    Woops, oil just rocketed back to $74, that may finally get OIH over $120 and should certainly let the indexes retest the highs.


  64. EricL
    I have backed off my Forex trading for the past six months. Since downsizing my portfolio, I am considering the possibility of getting active again. I think the action coming next year may make it fun. Are you still doing much with it?


  65. Phil
    Do you still have those DIA 103′s ?


  66. Gel/NS:
     
    I’ve owned them for years. Good company.


  67. V still going down but finally bounced, MA still way up there – what a strange market.

    Traffic at enclosed malls has been sluggish. Last week, mall traffic was down 2%, on top of an 18% decline for the same time last year.  Even with the recent storm, this season has been better weather-wise than last year, according to Weather Trends International. The weather consultancy reports total snowfall for the 10 days prior to Christmas has been 537 inches this year, down 55% from last year.

    EOG making 52-week highs, that’s a tempting short. 

    Along with the decline in Treasurys, mortgage-backed securities have slipped, with the yield on Fannie Mae’s (FNM) 30-year fixed-rate bonds hitting 4.5%, the highest since August. Higher mortgage rates are likely, as agency bonds are guiding rates on almost all new home lending.

    DIA/JRW – Sadly, yes.  They are still .38 but I have to consider a momentum cover with the $103 calls now if the S&P breaks over 1,120 and the NYSE breaks 7.200 or perhhaps selling the 106 puts to cover (but that could get messy as I may have to roll to Jan puts).  Actually, it looks like the roll to the $104 puts for .20 may be executed if we move higher as there is a .15 delta differential and the current roll is .23 so about 30 more Dow points to getting the roll (10,500). 


  68. Phil — this may be a topic for after hours but someday I’d like to hear how you screen for your ideas.  Obviously I don’t want you to give away secrets, but I’m always wondering how effective traders/investors are able to absorb the fire hose of information that gets sprayed at us every day, then manage to distill the information, aggregate it into what’s important/relevant and from there focus on the specific actionable ideas.  I think the first step is being able to know what’s important and what’s not, but that’s a biggie considering we are overdosed every day with stats and opinions.


  69. With Nasdaq at 2251 are there any puts worth buying?


  70. Chaps/NS
    What caught my eye was the insider buying – this is usually a very good signal that the company has good prospects. They also have a very good international exposure, which is good considering the falling dollar. I am working on a short straddle or a short strangle that I will supplement the stock with, after Jan 1.


  71. S…cough…R…cough…S…gag


  72. Ideas/Jcmn – I’m essentially a value investor.  I like to buy things that seem too cheap and sell things that seem too high.  I will do that long-term or intraday.  As you can tell from my posts, I read a lot and pretty much all that information just swims around in my head and it comes out if someone asks me a quesiton (which is why this format is good for me) or if I notice a current news item that I think will serve as a catalyst to move the trade.  What I mainly look for is for convergences of fundamental discrepencies between value and price coupled with good chart action that gives me the feeling a move will be near-term, rather than long-term.  My biggest flaw in trading is I am often too far ahead of a trend, like last year I started shorting oil at $80 because it was ridiculous and I shorted it all the way to $140 before I was proven right.  I try to remember what Keynes said, which is:  "The market can stay irrational longer than you can remain solvent" but still I tend to dig in sometimes when I think the market is going the wrong way (like this week). 

    As to distilling information.  I always try to check my sources and, after many years of doing so, I am aware of patterns in the media like what’s fluff and what’s not and what’s an agenda and what’s not.  I’m not sure that can be taught, other than going over various things year after year.  I got my start taking media and journalism courses in college, the most valuable of which was Critical Analysis of the Mainstream Media in which I had a cool radical professor who taught us that 90% of what we read was BS and that the news was a product of corporate America.  I was very lucky to take that course in my second semester as it made me realize what teachers "got it" and what teachers didn’t as I went on to select courses along the way. 

    So I’ve been looking behind the curtain of the information society for about 30 years now and learning how to spot the nonsense is as helpful in a 10Q as it is in a press release.  That plus the fact that I spent a decade as an M&A consultant, delving into the inner workings of companies for a living and the companies I built myself give me a pretty rounded view of business from the inside and outside perspectives.  I do warn you though, once you go down this path, it’s kind of like the Matrix, where Neo takes the pill and wakes up and finds out everything he thought he knew about the world was a lie – it does take the fun out of life sometimes…    8-)

    Man if V wasn’t still down I’d be pretty worried by this move…

    SRS/JCM – Thanks for reminding me.  Jan $7 calls are just .65, that’s .13 premium for the month!


  73. When you become right on SRS. How right are you expecting to be?


  74. Phil, DD on QQQQ Dec 31 45s (by buying Jan 44s)? This is ridiculous.


  75. Jan 7 calls.  Are you suggesting selling them as a covered call, or buy them?


  76. IWM Jan $61 puts for .93, selling 12/31 $62 puts for .62 is net .31 and if they head down, you can roll the 12/31 putter to the Jan $60 puts (now .68) or the Jan .59 puts (now .50) for a cheap vertical.

    SRS/Roam – I think CRE will pull back about 20-25% in a big crash, then maybe to -40% so 60-120% on SRS (depends on how the dips space out, of course).

    Qs/Ajay – Not enough of a discount to make that worth it yet.  Jan $44 puts are still .41, that’s the place to be (just a nickel roll from the Dec $45 puts).

    SRS/JCM – That’s buying the Jan $7s for .65.

    Is it that big a deal that America’s manufacturing sector continues to shrink?

    Sector ETF strength: Homebuilders– XHB +2.8%. Insurance– KIE +1.8%. Coal– KOL +1.5%. Gasoline– UGA +1.5%. Oil– USO +1.5%. Biotech– BBH +1.1%. Telecom– IYZ +1.1%.
    Sector ETF weakness: Heating Oil– UHN -1%. Utilities– XLU -0.5%. Agribusiness– MOO -0.4%. Gold– GLD -0.4%. Regional Banks– RKH -0.2%.


  77. Additionally to SRS $7 calls you can also buy $9 TZA JAN calls at $1.15 which is a a $0.20 premium for the month.  It’s very tempting.  I bought a few of both.


  78. Gel:
     
    My favorite overall pipeline company is MMP. I tend to own a group of MLP pipeline companies instead of bonds. Boring, but sometimes boring is good.


  79. Spending the day identifying the losers, limpers and laggards in order to take some tax loss. SRS was #1, and LYG was #2. They are gone and hopefiully forgotten.


  80. I wasn’t a very good student when you kept selling those calls…. so I really need it to make the 120%… at what point should I start going for the exit if I’m averaged in around $15 and pretty much out of DD money?


  81. Phil
    Did you sell the TOL  ?


  82. I really didn’t believe they could keep this thing up this long…. I mean throughout this whole rally… I haven’t seen the improvements anywhere and I’ve spent a couple months in Texas, Lithuania, and Germany…. can someone show me where real estate is doing well anywhere?


  83. Chaps/MMP
    That is a good one that I missed – good dividend to boot. Very nice long term hold, One of my largest portfolio positions is KMP – M is a neighbor of mine – real solid people that know how to run a business.


  84. Phil,
    An hour and a half to go, direction into the close and over night ?


  85. Roamer/Real Estate
    Singapore is doing well. The bankers who just were delivered a 50% tax on their bonuses, are buying in Singapore.


  86. TZA/TM – Yes, I was looking at those and hoping to catch RUT back at 625 but it went the wrong way, that’s how I ended up with IWM spread.

    Boring/Chaps – Boring should be 75% of your portfolio.

    SRS/Roam – You have a $7.50 stock and want to make $7.50?  Better to flip to 5x 2011 $7.50/12.50 bull call spreads at net .95 and sell 2x Feb $8s for .47.  That way, you are collecting .90 per current $7.50 stock position but you still have miles of upside before you run into trouble and you can either roll the callers up if things go well or sell more callers if they don’t.  If you can manage to collect $1 every other month without losing too much value on the spread (break even in 2011 is $8.45) then you’ll be very close to even, even if SRS flatlines. 

    TOL/QC – Yes, I said so earlier.

    Real estate/Roamer – In the UK it’s doing well.  Of course they fail to mention that the UK is about the most densly populated country on Earth.  As Gel notes, other places that are doing well are places where bankers get bonuses – they had a fantastic year. 

    Direction/JRW – I just can’t do anything else but stay bearish.   It feels like a suicide mission but I’m sorry, this is just stupid…

    Even a giant Atlantic-coast snowstorm isn’t rebalancing the natural gas market to previous norms, with a somewhat muted effect on prices. (Which means whichever hedge fund bought calls in August at triple the spot price went the wrong way.) Natgas futures currently +1.1% to $5.731. (ETF: UNG)

    See, that item is making me go for the EOG $95 puts for $2


  87. New Jersey cities and towns are leading the downgrade parade for municipal bonds, amid a slashed aid budget and 11% declines in property values. It could start a trend: “In many of the large states, this is going to become the norm: California, New York, New Jersey and Illinois,” says McDonnell’s Richard Ciccarone.

    FDX is going down and down and down.  UPS looking weak too – somebody is seeing less than exciting shipping numbers.

    YRCW up 27% now!

    COF is as weak as V but MA and AXP seem to disagree with them. 

    ISRG having a nice day.  I’ve been approached by a Canadian company who has a similar model with breast cancer treatment to raise capital for a phase 3 trial.  Oncmed and Pharm and anyone else who is interested, I’d like to shoot you over some stuff this weekend to get your opinion


  88. POT broke over $110, that’s lifting Ags.  They are punching sector after sector up trying to get to new highs but wherever they stop paying attention (OIH for example), slips back down so it’s like juggling too many balls.  It’s interesting because you would think the trade-bots could ram anything they want through with just 80M Dow shares traded at 3pm.

    We started dropping about 30 points from 3:10 yesterday into the close, that would drop us back to around 10,430 today, pretty much where we opened, wiping out the morning spike completely. 

    Property and casualty insurance sales took their biggest dive since 1986, falling 5% in the third quarter as both demand and prices declined. It was the 10th straight quarterly decline for written premiums.


  89. Phil, what are your thought on the smaller Chinese online gaming co symbol-gigm? Thx


  90. Phil – be happy to look at it. 
     
    All – I will resume my biotech column in the new year.  Things have been busy at work and the fall/winter is not as exciting as the spring/summer.  I will begin to scan the biotechs for some risker plays that have scientific rationale.  I also have a book coming out over the holidays (I hope to finish) for premium members on Tech Analysis.  A must read for newbies.


  91. HI folks – are you still in V short pls?


  92. Steve – I am out.  They have a bit of support here, a smidge at 85, but as I noted the other day, they could move down to 82 area if they fail 85.


  93. Phil,   so I own 500 FAS @ 76.34 and would like to sell some calls into this strength. now selling @75.55
    I’m looking at Jan 75 @ 4.3 or  76 @ 3.8
                             Feb 75 @ 7.3  or 76 @ 6.85
                             Aprl 75 @ 11.2 or 76 @ 10.75
    how do I pick which date and strike?
    thanks much


  94.  Did anyone notice Vader rang the opening bell this morning?


  95. anyone else dumb enought to be stuck in tza hell -


  96. Gel I hear you, real estate in Hong Kong is through the roof also


  97. Pharmboy,
    Look forward to your Tech Analysis and biotechs!!


  98. Wonder who advised India to buy all that gold? Poverty in India is widespread with the nation estimated to have a third of the world’s poor….thats right yet they spend billions on shiny metal..

    China, they are cranking out the steel…and they think prices will rise in January…oh i forgot down is up blah blah
    China’s daily crude steel output reached 1.646 million tonnes in the first 10 days of December, down 1.5 percent from the end of November, according to figures from industry consultancy Mysteel.

    Total output from January to November reached 518.177 million tonnes, up 12.1 percent compared with the same period last year

    GDP numbers, there needs to be a revision to the revision….. Gov is now 30% of the economy. GDP expansion in the face of defaltion…whats that called? Japan.


  99. magret, sorry it was a typos as I was in a hurry to sign off, should be:
    "RUT Feb 650/640 PUT vertical for $1.3 (now $1.35), SPX Feb 1040/1030 PUT for $1.45 (now $1.55)."  Those RUT have filled, but SPX haven’t.   Signing off for lunch again, fighting the temptation to short RUT by selling the Feb 670 CALL.


  100. Phil
    I would like to play UUP over the next couple of weeks…looking for USD 80. What play would you recommend?


  101. Their stupid let’s gun the REITs after 3 pm program works …every day.   Today triggered at 3:20 pm
     
    Works until it doesn’t.  Hate these crooks.


  102. Peter, You really meant 560/550 for the $1.3, didn’t you?


  103. Woops: First Solar (FSLR -0.9%) cancels plans for a 150-megawatt plant in Colorado (10% of its 1.5-gigawatt project pipeline), to focus on "nearer-term" and higher-priority plans.

    GIGM/Jrom – I don’t follow those little ADRs as you just can’t get enough information to make a rational decision. Heck, you can’t even trust the BS that LVS and WYNN spin when they talk about Macau, how are you supposed to trust a Chinese-based company to give you good guidance?   If you remind me on the weekend though, I’d be happy to check them out – you never know…

    V/Steve – No, they ran their course.  5% moves in the stock are about all a bear can hope for in this market. 

    FAS/Ban – You just want to balance premium and protection.  I’d sell the Jan $75s at $4.40 as that drops your basis to $72.  You could also consider being safer and going for a buy/write with the Jan $72 calls at $6 and the $70 puts at $3 which drops you to $67.34/68.67 as long as you are willing to own 1,000 at $68.67.  It’s a better call away (+$4.66) than if you sell the $75s (+3) by themselves and at a 5% lower strike.  Of course if FAS sells off you can roll the caller to much lower Apr puts (the Apr $50 puts are $3.50) so not to scary to the downside and, if you wipe out the putter, that’s $3 you can put towards rolling the caller up the next month.

    TZA/Samz – I would have been if they had hit my mark.

    Vader/Kwan – What is up with that?

    Speaking of steel – X jumps up to new highs again.

    This market just refuses to lose.

    Nov. Mass Layoffs: 1,797 mass layoff events (at least 50 workers), resulting in 165K job losses. That’s down 330 layoff events from October. But year-to-date numbers of 27,669 mass layoff events marked a high point since measurement began in 1995.

    Equity volume may just keep trickling down into the Christmas holiday, but stocks have been floating along with broad, well-distributed gains. Airlines have continued building gains: UAUA +12%; LCC +10.4%; AMR +6.5%.   Yet the Transport Index is flat as truckers sell off (other than YRCW).

    Sector ETF strength: Homebuilders– XHB +2.5%. Insurance– KIE +1.9%. Coal– KOL +1.7%. Biotech– IBB +1.4%. Gasoline– UGA +1.2%. Oil– USO +1.1%.
    Sector ETF weakness: Utilities– XLU -0.7%. Gold– GLD -0.6%. Silver– SLV -0.2%. Oil Services– OIH -0.2%. Regional Banks– RKH -0.1%.

    Dow leaders: DD +1.5%. T +1.4%. BA +1.3%. HD +1.1%.
    Dow laggards: GE -0.6%. INTC -0.4%. PG -0.3%.


  104. Hi, Craig,
    Thanks for sharing your iPhone experience.
    Phil just said you keep you pants (aka DIA covers) fully off tonight.  Your girlfriend should be pleased!
     
    For GS’s sake, since when I become ceanothus??


  105. There was some mention of sbux? Is this a good put op?


  106. samz3700,
    Yes I am also long TZA and, being a glutton for punishment, bought  some $10 JAN calls yesterday and some $9 JAN calls today. The Russell just won’t give it up.   I hate to hold TZA more than a day or so but am stuck right now and don’t want to give in just yet.   If the Russell tests it’s high of 625.31 on 9/23, maybe we get some sort of pull back.   It’s analagous to my SRS position I am holding on to for now.


  107. UUP/Gel – We’re already at 78 and I’m worried that lower GDP will lead to more stimulus talk and weaken the dollar so not something I’d go for right now.  

    REITs/Cap – Just play URE every afternoon around 2pm and sell at the close.  Good for a nickel or dime per day to offset the REIT puts.  URE about to test $7 now!

    SBUX/That – I wouldn’t short them, they are great on economic rebound + China growth story.


  108. Phil
    what do you plan to do with DIA puts overnight?


  109. Big data tomorrow is Personal Income and Spending for November at 8:30 along with PCE.  Personal spending has high expectations of 0.7% (same as Oct) and Prices should be very inflationary as oil kicked up (1.7%) but that may rally the commodities.   Michigan Sentiment at 10 and New Home Sales and then oil at 10:30.  Obviously the NYMEX crew is expecting to hit a home run tomorrow but XOM and OIH oddly not reflecting it. 

    I’m assuming DAX gets rejected at 6,000 but, if they don’t, we could gap up yet again.  Note that I’m very bearish but also very in cash so it’s not as much of a commitment as it seems and I intend to roll out to Jan puts if things don’t work on the 12/31 puts.  The March $108 puts I’m just going to deal with if I have to but I don’t think we’re going to plow over 10,500 without a chance to cover so that is the basis of my bearish position – it’s a going for it stance on the off-chance we have a big sell-off, which would most likely be started by Asia selling off into their holiday (Japan closed tomorrow so it’s all China).


  110. Peter, thanks for your answer at 11:38am.  I nearly missed it.


  111. Analysts at Goldman Sachs on Tuesday issued some bearish remarks on the banking sector, cutting its earnings estimates for three big U.S.-based banks.
    The firm said it expects that the recent capital raises by several major banks will eventually all be used to pay off loans, and that it expects more bank failures in the coming quarters. It also adjusted its earnings estimates for the following:

    Bank of America (BAC) – 2010 EPS estimates raised 4% to $1.30, 2011 EPS lowered 10% to $2.25. Stock currently rated a “Buy.”
    Wells Fargo (WFC) – 2009 EPS estimates slashed 21% to $1.66, 2010 EPS raised 5% to $2.25, 2011 EPS maintained at $3.00. Stock currently rated a “Buy.”
    Citigroup (C) – 2010 EPS estimates lowered 3% to $0.20, 2011 EPS cut 13% to $0.35.


  112. Cwan; Peter;
    TOS- portfolio margining approved!.
    Vroooom; Vrooom !!!


  113. pstas
    congrad. it is great news, good luck with strangle fun


  114. SHLD getting close to $80.  LULU at $30 – now that’s discretionary spending!

    Banks/Customz – I’m fine owning C at $3.35 if they are going to make .35 a share.

    EOG up and up.  Nat gas back to $5.72, huge recovery.

    Volume 105M on Dow at 3:55, that’s not even a big fist hour’s volume!


  115. A larger straddle on EWZ – 2K at 79/66 C/P Jun10.  Wonder which direction they think it is going????


  116. Pstas, Congrats. a Ferrari for Christmas…


  117.  thank you 
    will wait to see futures pushed higher again in the am


  118.  Phil, Ive got GLD Jan 106 and 107 puts. Do you like them here? 


  119. Congrats Pstas – don’t go too crazy…

    EDZ/Pharm – I think it’s a short straddle.

    Well, another crazy, low-volume (135M at finish) day.   Oil finished at $74, gold finished at $1,084, silver still under $17 at $16.98 but copper, as always, was saved and got back to $3.13. 

    Dollar finished at 91.82 Yen but Japan closed tomorrow.  $1.597 to the Pound and $1.425 to the Euro should keep dollar index well over 78 (80 was our goal). 

    Nas finished near high of day as did RUT but NYSE still under 7.200, which is break-DOWN, not up level.  

    Very, very strange that Transports finished flat with airlines up 10% and YRCW up 30% – there’s a story there somewhere…

    GLD/Jeff – I think the dollar move may have run it’s course.  You might want to take advantage of a spike down in gold to lighten up, just in case.


  120.  Phil do I just put in a sale order for about $1 lower than the closing prices for GLD options??


  121.  I mean add a $1 to the closing prices and hope a spike kicks them off?


  122. Phil
    PNRA- well run company but a good run up lately. Thoughts on a short play?


  123. Back from lunch, in fact, I’m already in holiday mood with all that errors and typos today.
     
    Judah/magret/RUT – Yes, it’s the 560/550 PUT vertical for $1.3.  I would have made a killing if I could get the 650s for that price.
     
    pstas, congrats on getting PM!  How exciting.  Did your margin drop a significant amount?  If not, you have too many longs. hihihi.


  124. GIGM/Jrom:
     
    I owned them for several years. Cashed out awhile back. It’s a story stock. Orientals like to gamble (stereotype) and internet is getting bigger in Asia, etc. Unlimited potential that seems to stay potential…..lol.
     
    People at Motley Fool have been waiting for years for the GIGM ship to come in, but in never quite does. The stock perpetually shows up on a number of value screens (Joel Greenblatt’s Magic Formula, for instance). But, IMO, the management in unreliable and not too swift. I think internet gambling stocks are one of the modern equivalents of searching for El Dorado.


  125. Pstas
    Congrats… Can’t wait to follow some of your strategy!


  126. GLD/Jeff – Well the best price of the day was about .50 higher than they are now so you have to hope gold dumps back down to $1,075.  I think it will, I think we can get back to $1,000, which is roughly $101 on GLD but if you are already ahead, protect your profits as the dollar is in a funny place at the moment where it could retrace it’s gains.

    PNRA/Pstas – That does look a little silly doesn’t it?  I’d sell calls into earnings  but I don’t know when those are.  You can do a Feb $75/70 bear put spread at $3.50, which is a nice upside if they don’t break $70, if you want to be brave you can pick up the $75 puts at $7.50 and sell the $70s only if they cross $3.50 (now $4.20) and hopefully pick up a better spread or maybe just get a quick win.


  127. Pstas: Yes congrats but also listen please when Phil says be careful. Not to make this Oprah or anything, but my story is this… I got whacked like everybody in the crash and all my savings and retirement in common stocks (no options) lost about 40% total value of my portfolio. I hung tight and bought (again common stock only, no options) in the early spring and by June 09 clawed my way back to a point where I could make myself back to "even" within another year or so if I played it smart and safe. Well, I starting reading about and then started using options (naked options) and I simply did not understand their destructive potential, and I was short naked options from July through September, thinking like Phil that this forever upward market had to correct sometime soon….. That was six months ago. The result is I am now 50% down total from pre-crash levels! Yes, that’s right, I am 10% worse off than at my greatest loss during the crash-- all damage done within a few short months of being a bear and using naked options. I did not have sufficient loss controls and the other tools that Phil and the others use here. That’s why I am here, to learn, ask questions and rebuild the smart, safe and slow way. So LISTEN to what Phil says, don’t get sloppy on the rules—live by them with controlling losses being your NUMBER ONE PRIORITY. Please don’t be stupid like I was during the summer of 2009. It was the second worst period of my life. OK my soap box time is done. Good luck and happy trading to you!   


  128.  Phil no profits on GLD…lost all those when it dumped as I levered into a lot of Dec calls which expired worthless, so now Im trying to let puts run to downward move.


  129. Someone bought 20,000 of those VIX puts I noted earlier – was that someone here?


  130. TBT has been quietly flying.   How rates shooting up equals a market rally I don’t know…

    Micron Technology (MU): FQ1 EPS of $0.23 beats by $0.16. Revenue of $1.74B (+24%) vs. $1.6B. Shares +3.6% AH. (PR)

    Red Hat (RHT): Q3 EPS of $0.17 beats by $0.01. Revenue of $194M (+18%) vs. $188M. "Strong bookings, particularly in North America, led to strong billings and greater than 20% growth in subscription revenue and deferred revenue, as well as further improvement of non-GAAP operating margins." Shares +2.4% AH. (PR)

    Cintas (CTAS): FQ2 EPS of $0.39 misses by $0.04. Revenue of $885M (-1%) vs. $890M. "Given our businesses’ correlation to employment levels, it is unlikely that we will return to steady growth until the U.S. job market begins to recover … We believe that current analyst expectations for Cintas’ revenue and earnings are too optimistic." Shares -8.5% AH. (PR)

    U.S. retail sales rose at the slowest pace in 15 weeks after record snowfalls shut stores early and kept consumers at home during one of the biggest shopping days of the year.  Sales at stores open at least a year climbed 0.4 percent in the week ended Dec. 19 from a year ago, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement. Sales in December will rise about 2 percent, Michael Niemira, chief economist of the New York-based ICSC, reiterated today.

    The National Retail Federation, a Washington-based trade group, said the storm’s impact wasn’t enough to prompt it to change its forecast for a 1 percent drop in holiday sales.  The ICSC predicts holiday sales will climb 1 percent from a year ago.   Shopper traffic dropped 12 percent on Dec. 19 from a year earlier, according to data released today by ShopperTrak RCT Corp. Before the storm, the research firm had anticipated that Saturday would be the second-best shopping day of the season behind Black Friday, the day after Thanksgiving.  Down 1%, up 1% from last year which sucked – this is what’s rallying retail?

     


  131. Phil, will SRS EVER go up again in our lifetime?  i guess CREstate is so good, it’s rebounding so strongly, every mall and shopping center is full, blah,blah,blah.  how to play it now?  any suggesitons for someone with no positions?
    Also , new 3x ETFs created:  CZM (China bull 3x),  CZI (China bear 3 x),  LBJ (Latin America 3 x Bull), LHB (Latim America 3x bear), not much volume yet, but i noticed if you had shorted FAS and FAZ when they first split (around 55 each, total110), now they are together only 94, a good gain.  So perhaps we can short both CZM and CZI  and LBJ and LHB and make money in a few months without worrying too much.  the only downside would be if the LAtin markets and China markets go one direction for a long long time, then we could lose, but in general the 3x ETFS tend to degrade in price over time, since they reset every day….
    thoughts?


  132. Someone bought 20,000 of those VIX puts I noted earlier – was that someone here?
    why they bot puts? expecting that VIX will go lower?


  133. The euro’s stability could be jeopardized if the budget concerns hurting Greek bonds spread to larger economies such as Spain, said Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill.

    If you start having serious problems credit wise with the likes of Spain, then the issue for the euro’s credibility and its pricing against other currencies becomes a much bigger issue,” O’Neill said in an interview with Bloomberg Radio in New York today. “Obviously the euro appears to be already affected by this.”

    The markets have been talking about the Greek dilemma for the best part of two weeks and of course, this time of year we’re at, people are looking for a bit of a breather,” O’Neill said. “It’s going to be a topic in the new year, that’s for sure.”

    Further cuts from Moody’s would cast doubt on the eligibility of Greek debt at the European Central Bank’s money market operations. Moody’s is the only major ratings company grading Greece above BBB+ after cuts from Standard & Poor’s and Fitch Ratings earlier this month. A downgrade of two more notches would mean Greek bonds won’t be accepted by the ECB if it reverts to its pre-crisis collateral rules in a year’s time.

    The really important thing for the broader issue is whether we’re going to see a cascading game where Greece loses another notch and we have problems for the ECB’s repo rate and the market just starts going after Spain and Portugal,” O’Neill said. “The next thing you know it opens another can of worms for the whole Mediterranean area for the European currency.”

    S&P on Dec. 9 revised Spain’s outlook to negative from stable, citing concern about its public finances. The euro has dropped 4.7 percent against the dollar this month, trading at $1.4305 at 1:58 p.m. in London today.

    The extra interest, or spread, that investors demand to hold Spanish 10-year debt rather than German equivalents has risen to 67 basis points from 52 points two months ago. The Greek spread has jumped to 250 basis points from 134 basis points in the same period.


  134. Shorts/Dman – I like that idea but China and Latin America are a crazy train (as were financials in the end) and the danger of those plays is one of them triples on you but well worth watching.  As to CRE – I shorted VNO directly today and I think, at this point, you can do better shorting IYR than going long SRS, other than a bull vertical, which I still like.

    VIX/Tcha – I pointed out that the VIX $25 puts were $3.30 with the VIX at $19.82 so, techincally, they are $5.18 in the money and you can buy them for $3.30 – which did seem like a good deal but I’m too worried the VIX will bounce back on a market drop to play that way.  


  135. got it, thanx


  136. bord, sorry to hear about your experience.  I think it’s critical that people voice their losses (not just gain) on this board, so that we can all learn what to avoid.  Some already has, by posting the trades that went haywire, in time for some remedies.  Don’t be afraid to do so. 
     
    Like you said, risk management and position sizing are critical.  We can gain 2,000-3000%, but a 100% loss would wipe out the account.  So as part of a tactic that I haven’t had a chance to talk about is to move the profit to another account and be conservative with it so that we are less likely to wipe out everything.  Note that it’s hard to get POS to approve Portfolio Margin for the second account with the same name, so make sure you have it under a joint account or some other name.


  137. SRS may never go up to make you a profit holding it, but if you sell puts and it roosts, then you sell calls until something changes, you can make a steady income.
    I hold both FAS and FAZ, and the option premiums for the year more than pay for what i"ve lost on FAZ itself.
    My philosophy is do anything you want, sell premium and play the odds, but avoid individual stocks like the plague. However, I’m not in charge here :)


  138. Bord- Thanks for the words of caution. It is always prudent to be reminded of the pitfalls of greed and arrogance. Someone once told me there are two types of gamblers – losers and liars. How true. A similar generality could be; repeat could be applied to "investors". All the old adages are true for a reason – If it sounds too good to be true, it is; The market can be irrational longer than you can remain solvent, etc. I too have made some spectacular blunders and had my share of bonehead moves. Fortunately, I tend to be conservative in my politics and when it comes to money. So the damages have been  manageable.  I earned every penny I have and taken on some considerable risk in the process. But I learned some time ago that there is risk and then there is risk so the lesson in life is to remind oneself to know what one does NOT know and plan accordingly. We all make mistakes and without doubt we will all make more, including me. Fear of failure can be paralyzing so we learn hard lessons and move on. You, I and all the others in this group are here to learn and prosper and have some fun. For now, the Ferrari will stay in the garage and only touch pavement on sunny days.


  139. if so many people start worrying about SRS, it should start moving up very soon


  140. Bord….Yes I know the feeling.  I lost 50% in 2008 because I was over leveraged and sold way to many naked puts.  I was selling puts when the VIX was sub 20.   When the VIX exploded in 2008 it cost me a fortune to buy back these puts to meet margin calls.   So be careful selling to many OTM options, particularly puts, when VIX is low.   This year I have done much better but have been treading water of late because my portfolio is too bearish.  Greed  has prevented me from getting balanced in the past.  My goal is to get more balance this coming year so that a big move in either direction will be much less painful.  It is difficult for me to hold off from putting on more bear positions when I think the market is due for a substantial correction.  But I have learned that the market can stay irrational longer than one can stay liquid to paraphrase what Phil said earlier.  So good luck and may we all have a balanced, prosperous 2010.  IMHO the risk of a substantial correction seems higher than average after such a run-up and who knows which geopolitical event could be the catalyst but there are enough to choose from.


  141.  Speaking of geopolitical events, which ways do the dollar and gold go when Israel attacks Iran??


  142. Peter, I followed you on the RUT put vertical, which is why I was so attentive to your later post.  Now I’m just waiting for a down trend to sell some puts.  If the RUT keeps climbing, I may just sell the calls first.  I’m doing this with baby amounts, just to find the rhythm. 


  143. Peter,
     
    how do you split your capital between SPX and RUT plays?


  144. according to my expirience RUT little bit more profitable but SPX easier to adjust during big moves


  145. just checking. Does anyone see what I post?


  146.  barfinger:
     
    re:
    just checking. Does anyone see what I post?
     
    No problem…


  147. ok. so it shows
     
    not that it matters.


  148. tchay/SRS
    This ETF is a loser… why try to make chicken salad out of chicken s**t ? – it is much easier to jump on an alternative play and do well with it. If SRS is a loss for you, then dump it and move on. I lost my patience on this one, and I’m not trying to get even, and not looking back. Staying with SRS is a lot like the guy who, while walking down road, is tripping over dollar bills while reaching down to pick up pennies.


  149.  Good article by Rev Shark.  He’s a level-headed, smart trader.http://www.thestreet.com/_yahoo/story/10651496/1/apple-google-amazon-should-see-santa-claus-rally.html


  150. gel – really good observation. Thanks for the laugh after my 5th glass of Rombauer chardonnay. Good stuff.


  151. Gel/SRS
    I don’t worry much about SRS, I sold lots of premium and I plan to get all of it, if it wont cooperate I just plan to roll and DD.
    It is short part of my portfolio, so it’s mean that if it is a loser, my long plays are winners. Plus according to my experience, more stubborn these guys are – harder they finally drop ( this is why I bot some calls today)


  152. Llorens,
    I want some wine also, but it is little bit too early up here( 4:45 PM)   :)


  153. by the way, Fast Money was short on Commercial Real Estate today after close in their comments, hope it will help


  154. Tchay:
     
    re:
     
    I want some wine also, but it is little bit too early up here( 4:45 PM)
     
    Just remember, it’s always cocktail hour somewhere on the planet.


  155.  tchayipov….it’s 5 oclock somewhere!  Pop the cork.
    More seriously….during my foray through the mall today I went into Daltons bookstore, a subsidiary of Barnes and Noble (BKS).   Their shelves were almost empty, and everything was 40% off….everything.  There was also a sign on the wall that said…."No Refunds"   I should have questioned the clerk about this trio of bad signs, but didn’t.  Is BKS a possible short?  Are they in trouble?    I’m putting this out for further research, or input from someone besides me who may know more about this company.  


  156. Hi, barfinger,
    The other day you talked about day trading with selling 2 SPX options.  One option wins while the other loses.  You cut the losing one, and keep the winning one.  Something like that.  I don’t understand what you meant.  Can you give us a more concrete example?  Are you selling 2 calls, one OTM, one ITM? Or selling one call & one put, both OTM?
    Much appreciated.


  157. I found, that if I pop the cork so early, I have to open second one, and have trouble to wake up next day for trading, but well probably I will do it now :)


  158. Phil re Canadian company. Send the info over I would be happy to review: 
     I’ve been approached by a Canadian company who has a similar model with breast cancer treatment to raise capital for a phase 3 trial.  Oncmed and Pharm and anyone else who is interested, I’d like to shoot you over some stuff this weekend to get your opinion


  159. Phil – you may remember me commenting on a few occasions about Alan Grayson — saying he’s nuts.
     
    Well, I guess I am not alone in that sentiment …   http://www.mycongressmanisnuts.com/about.html


  160. More:  
    Alan Grayson’s recent self indulgent behavior has paralyzed his ability to serve as an advocate for the citizens of Central Florida. By asking Attorney General Eric Holder to fine and imprison Angie Langley for exercising her first amendment right to free political speech, Alan Grayson has sunk to an extremely alarming and potentially dangerous new low. It is clear that this man has no business representing the good people of Central Florida. Please join our effort and encourage others to do the same. This disgusting attempt to use the law enforcement arm of the federal government to silence his critics is proof positive that Alan Grayson is not only unfit for office, he is completely and utterly NUTS!
     


  161. tcha/splitting capital,
     
    It’s usually 30-35% SPX, 25-30% RUT, the rest is for tech, gold/silver, oil, bond and speculative plays - NDX, XAU, OSX, TBT (don’t have any for 2 months now).


  162. llorens
    Rombaurer…. You are a man that really knows good wine! I have been to their winery. It might have been plays like SRS that got me started on it in the first place!


  163. After dividends in the S&P 500 fell more than 21% this year, don’t hold your breath for a speedy recovery, says Ben Steverman. Those who think dividends are due to recover are generally using the logic that they’ve already been cut a lot.

    Many of the companies that have managed profits this year did so after some aggressive cost-cutting. Boston Consulting Group says companies aren’t cutting nearly enough to survive the post-recession world – with only 28% saying reducing labor costs is a priority, and European firms even further behind the curve than those in the U.S.

    AOL (AOL) will lay off a third of its 7,000 workers and take restructuring charges of $200M. (MW)

    With climate talks in Copenhagen fading into a vague promise to revisit the issue, carbon-permit prices have slid nearly 15% – not just bad news for countries trying to sell them, but also for clean energy, including wind, solar and more.

    Following its downgrade of AIG’s (AIG) plane-leasing unit, Moody’s cuts its consumer lending unit to junk status for the same reason: expecting that it’s going to lose support from its parent next November. AIG -0.3% AH.

    WSJ says Citigroup (C) lost tens of millions to Russian hackers; Citi says its systems weren’t breached and there were "no losses"; Alphaville tries to dig through the story and figure out which one’s lying to their customers. Update: WSJ runs Citi’s internal memo of talking points.

    U.S. crude oil inventories expected to have fallen 900,000 barrels last week, according to an expanded Reuters analyst survey on Tuesday. [EIA/S] Distillate stocks were seen down 1.9 million barrels and gasoline supplies were estimated to be up 1.2 million barrels.  Gas is set up to be a bigger draw than expected, mild weather until Sunday, which didn’t count in the numbers means more driving than last year (and no planes grounded).  Next week’s inventory will have a build with a half day’s use cut out in much of America.

    Dec. 23 (Bloomberg) — China’s benchmark stock index fluctuated. Developers fell on concern the government will step up measures to curb speculation, while commodity shares rallied.  Beijing Capital Development Co. fell 3.6 percent. Zhuzhou Smelter Group Co., China’s biggest producer of refined zinc, added 3.3 percent and Jiangxi Copper Co. rose for the first time in seven days on speculation raw-material demand will be sustained as the nation’s economy recovers. Citic Securities Co. predicted today the economy may grow 10.1 percent next year.  “The market is now worrying about where the lending is going to go, whether they are going to tighten lending,” said Hugh Simon, co-manager of the $1.1 billion Dreyfus Greater China Fund.  The Shanghai Composite Index lost 0.3 percent to 3,042.19 as of 1:50 p.m. local time after changing direction at least eight times. The CSI 300 Index retreated 0.3 percent to 3,296.75.

    They just spiked the futures up insanely at 1:30, flushing stops it looks like or maybe testing to see where the selling pressure was before pushing things higher.  A total joke for them to claim it’s not manipulated when S&P (1,119), Nas (1,847), Dow (10,443) and RUT (626.8) ALL spike 0.25% at the same exact moment. 


  164. Man someones playing with the futures driving them higher, WTH i cant find any news as to why.  


  165. The Chinese worry me
    Flaherty Says Russia, China May Buy Canada Dollars to Diversify

    PetroChina Co., China’s largest oil company, this year bought its first stake in the Canadian oil sands, paying C$1.9 billion ($1.8 billion) for 60 percent of a project run by Athabasca Oil Sands Corp. Vancouver-based Teck Resources Ltd., Canada’s biggest base-metals producer, sold a 17 percent stake to China’s sovereign wealth fund for C$1.74 billion in July.

    http://www.businessweek.com/news/2009-12-23/flaherty-says-russia-china-may-buy-canada-dollars-to-diversify.html


  166. China is going to flood the market, how can oversupply be good for pricing

    Total output for 2009 is expected to hit 565 million tonnes, almost half the global total and far higher than the 400 million tonnes predicted at the beginning of the year, Qi said.
    Led by the government‘s 4 trillion yuan stimulus package, soaring fixed asset investment has shielded the Chinese steel industry from the worst of the global downturn, he said.
    "Consumption in the first eleven months of this year rose 109 million tonnes compared to the same period of last year. Some people ask where this 109 million tonnes has gone? I tell everybody to look at China’s fixed asset investment this year."
    Fixed asset investment rose 32.1 percent from January to November, easily accounting for the increase in domestic demand, he added.
    http://news.alibaba.com/article/detail/metalworking/100222431-1-china-steel-assn-says-gloom.html


  167. This guy loves gold and he coined the phrase "let gold speak to you" down to earth and smart guy

    By Jim Sinclair
    The US dollar represents a common economic union of states as much as the euro does.

    40 US states are on the very edge of bankruptcy.

    Be serious and think about it. Don’t fluff it off because you prefer flag waving and pleasing your readers.

    The difference is the euro would be stronger without Greece, Spain and Ireland. Also, don’t forget Turkey.

    Gold will trade through $1224 to $1278 and then onward to $1650. After $1650 has been achieved, we will move on to Alf and Martin’s numbers.

    China is trying to operate the gold market because they want the rest of the IMF’s gold.


  168. http://www.latimes.com/news/local/la-me-budget23-2009dec23,0,7164018.story

    The governor and lawmakers have already had to close shortfalls this year totaling $60 billion, as tax revenues plummeted at rates not seen in California since the Great Depression. Amid the continuing budget crisis, the state ran short of cash needed to cover its bills and was forced to issue IOUs over the summer.

    States that have the highest GSP California Texas NY Florida Ill. PA NJ OHIO NC GA……everyone of these states have budget short falls….I ask again how in the world are we out of the woods?

    Karl Denninger…scary stuff
    http://market-ticker.denninger.net/

     
    This is an especially cold night for hundreds of workers, with Tulsa-based Arrow Trucking as they abruptly lost their jobs. Some also lost their home, on 18-wheels. Arrow has suspended all operations.

    Fired and evicted the same day. Tough news to bear, when everything you own is inside this truck.


  169. FHA is almost bankrupt yet their loans are driving the housing market

    Nearly 40% of existing homes purchased in November used a Federal Housing Administration (FHA)-insured mortgage, according to a National Association of Realtor (NAR) survey of 3,161 real estate agents’ perceptions of conditions on the ground in residential real estate.

    outright lie..
    And while this trend may not change immediately into 2010 lending, the FHA is recently defending the program, saying that it is well enough capitalized to avoid any major losses in case of surging defaults

    http://www.housingwire.com/2009/12/22/40-of-mortgages-are-now-fha-says-nar/


  170. Let me put this into perspective FHA was at 3% reserves in May 2009, thats right a mere 7 months have passed and reserves are now under .5%….thats point 5 percent! Congress requires the ratio be maintained above 2%.

    "Almost nothing down loans (or if you have the tax credit, which many states now allow to be used as the down payment and closing cost, then a nothing down mortgage) with historically low interest rates, where the originator of the mortgage could care less how the loan performs because the risk has been pushed to someone else."
    http://www.benzinga.com/68270/bloomberg-luxury-homeowners-defaulting-at-twice-the-rate-of-the-market


  171. Dec. 23 (Bloomberg) — The municipal market is completing a record year for fixed-rate bond sales after U.S. state and local governments shunned variable-rate issues and employed new federal subsidies to broaden demand for their debt.
    Municipal borrowers sold $374 billion through last week, 11 percent more than the $338 billion during the entire previous record year of 2007, based on weekly data excluding variable- rate offers compiled by Bloomberg. Issuance with adjustable interest fell 72 percent this year through November from the comparable 2008 period, monthly figures show.

    WHAT?!! Are there really that many potholes to fill?

    Top Ten Most Active Equity Options & Strikes – BAC, C, ETFC, WFC, RIMM, GFI

    http://www.theoptionsinsider.com/unusualactivity/?id=3632


  172. Hong Kong’s former central bank chief Joseph Yam said on Dec. 18 that the yuan can become the “third pillar” of the global monetary system as deteriorating public finances erode confidence in the dollar and the euro.
    China’s central bank statement didn’t say when the transactions will be expanded.
    http://www.bloomberg.com/apps/news?pid=20601080&sid=a7uIbknvEDAo