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Which Way Wednesday – World of Worries Weighs on Wall Street

7 W’s in the title - that has to be some kind of alliterative record! 

What could we possibly be worried about with the market making new highs?  Well, I’m a little concerned that Shanghai housing prices fell 10% in a week.  That’s the kind of behavior that may make you think they may have a bit of a bubble that’s popping.  Of course they held up well compared to Shenzhen, where prices dropped 14% in the first week of March.  That was matched by a 14% decline in iron ore shipments from Australia as China’s demand fell from 11M tons in January to 8.7M tons in February.  So, if you were wondering how much China’s $600Bn stimulus spending was affecting their economy – 14% is the effect of them simply slowing it down a little

Japanese Machinery Orders fell 3.7% in January and Producer Prices fell a deflationary 1.5% in the World’s second-largest economy (for now).  “The gap between supply and demand in the domestic economy has yet to shrink,” said Morita at Barclays Capital. “It’ll be very difficult for companies to pass on those costs. That’s not good for their profits.”  The Baltic Dry Index is topping out just over our 3,200 target, signaling a possible end to the great commodity run of 2010.  Devan Kaloo, head of Aberdeen’s Global Emerging Markets is predicting that emerging markets (we are long EDZ, now $47) may fall as much as 15% this year.  “The markets will see a correction this year,” Kaloo, whose Aberdeen Emerging Markets Institutional Fund has beaten 93 percent of competitors in 2010, said in an interview in New York. “People get over-optimistic and expect too much out of earnings and global growth.”      

Sure, I know I’ve been saying this for a while but it sounds so much more official when a guy in charge of $22Bn says it!  China’s 4 trillion yuan ($586 billion) stimulus package, coupled with record bank lending in 2009, helped the benchmark Shanghai Composite Index rally 80 percent last year. The gauge has dropped 6.4 percent in 2010.  “From a stock-picking perspective, we can find better opportunities” than China, Kaloo said. “The government pumped money into the financial system, but soon they’ll run out of money,” which will hurt the earnings of Chinese companies.

Amazingly, much of the tech growth we’re seeing in Asia is resulting from a mad rush to produce 3-D TVs in time for the holidays – something I believe may be one of the biggest marketing catastrophes of our time.  At the moment, I’m hoping SNE gets to $40 so we can short them, not just over 3-D TV but on the general lack of health of the consumer as well as the fact that they are fighting losing battles with AAPL on music players, smart phones, laptops and book readers (the IPad will make the BookMan pointless).  As it stands now, a SNE Jan $50/40 bear put spread is $7.60 and the Jan $40 calls can be sold for $2.75 for a net $4.85 entry on the $10 spread, which is already completely in the money with SNE at $37.15.  The upside on this play is 106% if SNE fails to hold $40 by January expiration day (21st). 

We made a similarly hedged play exacly a month ago on ITMN when my trade idea for Members was to buy the stock for $15.40 and sell the Jan $10 puts and calls for $12 (ITMN was priced for very high volatility with an FDA decision pending) dropping the net entry to $3.40 or $6.70 if the stock fell below $10 and we had another round put to us at that price.  The good news is the stock is now almost at $40 as they got their approval and the bad news is we "only" made 194% on the trade since our gain is capped at $10 but, of course, with a $6.70 worst-case net entry when the stock was at $15.40, we were able to buy twice as much with half the worry!  All in all, it’s a very nice return for a month and our favorite way to play volatile biotechs. That’s what hedging with options is all about – reducing risks, not increasing them! 

Thanks, of course, to the great and powerful Pharmboy, our resident Biotech specialist, who pointed out this opportunity earlier that week (we had been in various ITMN plays for some time, thanks to him) and gave our team so many good entries that our higher-risk trades popped up on Andrew Wilkinson’s hot sheet that Monday!  Congrats to all who played along on that one.  We’re working on a Wiki but, if you ever want to know how we feel about a play, you can always Google it – like "Philstockworld: ITMN."  We don’t do a lot of these speculative plays but we latched onto this one in the fall and have been playing it since - very much like the way we doggedly kept after DNDN last year, until it finally popped.  Speaking of DNDN, word is there will now be an investigation into the manipulation of that stock by certain hedge funds and their media lackeys who told their sheeple to SELLSELLSELL based on false information with very suspicious timing!  This is something I was talking about back on Aug 9th of last year.

We have tons of bullish postions – I don’t want people to think we are perma-bears but when you are loaded up with bullish plays (and our last major buying spree was a well-timed Feb 6th Buy List) that are well-hedged and so far in the money that there’s nothing to do but wait - then it pays to be a little more bearish with your short-term trading.  I don’t like being bearish, I’m an optimistic person by nature but, as I said yesterday – what really worries me is how NOT worried other traders and the MSM are, so I am thrust into the role of a stock market Cassandra but, like the famous Oracle – I just calls ‘em as I sees ‘em

Speaking of Greek tragedies: The Bloomberg Professional Global Confidence Index fell to 53.8 from 54.9 in February.  The confidence gauge for Western Europe fell to 41 from 49.8 as Greek Prime Minister George Papandreou struggled to convince investors his government was serious about taming Europe’s biggest budget deficit, which has stoked financial market turmoil since January.  Euro-area growth almost ground to a halt in the fourth quarter, while unemployment held at the highest level in more than 11 years in January. The European Commission last month said the economy may fail to gather strength for most of 2010.    

As usual, it was Asia carrying the ball in this global survey of 1,612 Global Bloomberg Terminal Users (clearly people in the top 1%), with that index rising to 75.9 in March from 70.8 in February.  Latin America was also spicy with a 74.5 reading.  The US rose to 48.5 from 41.3, perhaps boosted by the $1Bn in fees skimmed in just 6 months by Wall Street terminal users who overcharged municipalities for the government’s "Build America" bond program.  On average, the underwriting fees for Build America Bonds are $8.20 per $1,000, according to Thomson Reuters. By comparison, the standard fee for tax-exempt issues is $5 to $6 per $1,000, according to Wall Street banks.  Goldman Sachs Group Inc. is the top seller of Build America Bonds, with $9.79 billion in sales, according to research firm Thomson Reuters, followed closely by J.P. Morgan Chase & Co., Citigroup Inc., Barclays PLC, Bank of America’s Bank of America Merrill Lynch and Morgan Stanley – otherwise known, in part, as the infamous "Gang of 12" that seems to be at the center of every single scam. 

Jesse's Cafe Europe finally wised up and has stopped doing business with Wall Street Banks in Government bond sales and I challenge you to find this story reported in the US MSM.  "Governments do not have the confidence that the excessive risk-taking culture of the big Wall Street banks has changed and they still cannot be trusted to put the stability of the financial system before profit," said Arlene McCarthy, vice chair of the European parliament’s economic and monetary affairs committee. "It is no surprise therefore that governments are reluctant to do business with banks that have failed to learn the lesson of the crisis. The banks need to acknowledge the mistakes that were made and behave in an ethical way to regain the trust and confidence of governments."  

Next on the EU’s agenda is a move to set new limits on credit-default swaps and European leaders are pushing for a ban on speculative bets against government debt.  Greece only has until the end of April before they must formally seek EU assistance if their borrowing costs don’t come down sharply.  The high premium now charged by investors for Greek bonds is "simply unsustainable" and must be brought down in the coming six to eight weeks, one official said Wednesday.  The officials said Greece needs the spread to tighten to around two percentage points before crunch time: Athens must redeem some €22 billion ($29.92 billion) of bonds in April and May.  "In all his meetings the prime minister reiterated that Greece needs EU support," the official said. "The next move must come from Brussels and there is not much time left."        

Asia was amazingly flat for the second day in a row with the Hang Seng rising 0.74 points (21,208), the Nikkei dropping 3.73 points (to 10,563) with the BSE making a relatively big 45-point move to 17,098 and the Shanghai Composite dropping 20 points to 3,048.  Europe is up slightly ahead of our open and Jesse’s Cafe American says we may be showing signs of an "Exhaustion Top Amidst Rumors, Hype and Shenanigans" which saves me the trouble of saying it so we will just continue to watch and wait.  They almost had us yesterday but we ended up shorting into the top for some nice, quick wins – perhaps more of the same today but we do have some breakout plays ready as well – just in case! 

 


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  1. Good Morning!


  2. Good morning,
    Guys how you watch Asian and Europian market during night time in TOS? (symbols)


  3. Geez, am I glad I saw this. Everything is just fine so we can all just chill.
    http://www.bloomberg.com/apps/news?pid=20601109&sid=aeSenIUvpSK0&pos=10
     
    By the way, would like some fries with that "spin sandwich"


  4. tcha – i know you are asking about tos – but you can check stuff out on bloomberg for free if you are not at your trading station


  5. tcha- my understanding from TOS is that they plan on adding those tickers later this year.


  6. thanx guys


  7. GS notables:
    …upgrading coal today.  Targets raised on ANR, ACI, CNX, MEE, PCX, BTU, VALE
    Also, EVR added to Conviction List in place of LAZ, GR replacing TXT, BUCY added as well


  8. Chapter 5 is up for those interested in the TA Book.


  9. gel1 @ March 9th, 2010 at 11:29 pm:
     
    Interesting that you failed to mention the effect of Proposition 13 which was approved by California voters on June 6, 1978. 
     
    Perhaps it had absolutely no effect whatsoever with regards to California …


  10. nice to get one’s dia roll on the opening surge – hope it does not last


  11. Good morning!

    Still looking for those upside breakouts but let’s go with selling the DIA $106 puts at $1.05 until they don’t work (10,575 is the stop line).  If we hit resistance at 10,600 we can take out nickels and run.  The bull play would still be the Apr $107 calls (now $1.27) but don’t forget those are meant to be covered with March $106 calls (now .80) as a momentum play so these are pretty dangerous trades but the Apr calls make great cover if you are too bearish and worried about a move over 10,600

    We’re still looking for Dow 10,700, S&P 1,050, Nas 2,350, NYSE 7,400 and Russell 750 as our upside resistance and if they can’t hold Dow 10,600, S&P 1,140, Nas 2,325, NYSE 7,300 and Russell 666 then we will have to adjust back to more more bearish (even 2 of 5 below). 

    When in doubt, look at SOX 350 to confirm! 

    Copper $3.40 is still a good indicator and things may hit the fan at 10:30 if we have a big build in crude inventories but we did last week and they took it up anyway.  There’s a 10-year note auction at 1pm and Geithner speaks and releases the 2011 Treasury Budget at 2pm so a nice day for TBT I think!


  12. Good Morning Phil, Well just saw you tallking about ITMN I am holding the 22.5 and 25 c/p spread short both well the put is dead but the call jumped out of control sold fortunately only 2 at 2.87 now 13.15 they cooling down a bit but what just take a loss at the end position is march any ideas?


  13. phil -
    Intc – you still like writing puts at 20 – looking at April for .36 cents


  14. I love it.  They open FAS today above yesterday’s high and well above the close.  Same old same old.  Use the AH to create momentum at the open… fade it in the afternoon, stick it into the close.  That’s how they’ve ramped us up since last March.  It’s still working for them… and against those of us who try and use our heads.  They are really beating the drums on banks.  I think we might punch through and perhaps make a new high shortly.  There is nothing stopping them.


  15. Global/Tcha – I watch Bloomberg or CNBC World, they have tickers, I don’t think TOS has any for China and Europe (but Japan is /NKD

    Chillin’/Pstas – Well if market performance is going to be your benchmark…

    GO BA – it took a day to sink in but now they are rocketing to new highs (good for the Dow of course). 

    Upgrades/Ac – I still think they are pulling out all the stops to push a market top and the fact that we aren’t getting there is not a good sign to me.

    Book/Pharm – Thanks!

    ITMN/Yodi – Wow, did you sell naked puts and calls?  Ouch and a half!   Well, assuming that’s March and you are on the hook for $13.75 on the call side, how about rolling them up to 2x the July $40 calls and, if ITMN breaks $40, you can sell matching $40 puts, now $9 for about $8 and use $40 as a stop line to get back out.   That should clear your path to roll up to Jan $60s with little damage and they are bound to calm down sooner or later. 

    INTC/Samz – From the perspective of I still like buying INTC under $20 – yes.  From the perspective of do I want to take on $300 in margin to get $30 – not so much…

    Banks/Matt – They EU may be stopping them.


  16. Hey all,

    I will be available again all day to answer any stock questions you may have. I also know a great deal about ETFs and oil. You can come on over and leave comments on my new story. We have an interesting take on our Buy Pick of the Day, and our Short Sale of the Day is already doing pretty well (knock on wood).

    Good Investing!


  17. From Charles Payne: 
    Yesterday, 1,072 stocks closed at their 52-week high or within 2% of that high water mark. Most are significantly lower than their all-time highs. By the way, there were only 20 new lows. In a way this only exacerbates the dilemma for fence-sitters. Keep in mind that bull markets don’t fizzle out quickly. I haven’t done in-depth research, but will; in the meantime Hays Advisory wrote a piece saying that the average bull market is 29 months. Also, Sam Stovall has published work stating that the average bull market is 3.7 years long with a median of 3.2 years. He actually breaks down bull market moves for each year: 1st year is 38%, 2nd year is 12%, 3rd year is 3%, and the 4th year is 14%.

    We’ll see what happens this time around, but in the meantime we are focused on finding companies taking market share, expanding margins, and growing the top line organically. For the broad market, the next leg up could be powerful. The S&P 500 is holding above its 50-day moving average and clearing 1,200.0 would be significant, and without a doubt lure many of those fence-sitters into the game. Keep in mind that according to ICI in the week of February 24, $8.0 billion flowed into bond funds while Americans only invested $151.0 million in equities.


  18. JRW – what lines are you watching today? Thanks.  BTW, what timeframe do you use on your daily IWM chart?


  19. Phil:
     
    Been here about a year now. Just want to say how much I appreciate you and your site, plus all the good people here. Keep up the good work.


  20. Phil, current position in DIA March calls
    bot 70 105 calls @ 1.04
    sld 70 106 calls @ .50
    bot 30 107 calls @ .42
    sld 30 108 calls @ .12
    bot march 103 puts @ .83
    Looking  for DIA close @ 106.5  (or higher) at the end of March, or lower to make my 103 pttters better. what adjs would you  make now. Thanks, and thanks for VLO clarity


  21. MBA Mortgage Applications: +0.5% vs. +14.6% last week. Thirty-year fixed mortgage rate increased to 5.01% from 4.95%.

    U.K. factory production falls for the first time in five months, signaling the manufacturing sector is having a difficult time pulling out of the recession. Output was down 0.9%, vs. an expected 0.2% gain. (ETF: EWU)

    German exports unexpectedly declined, dropping 6.3% from the previous month when economists had expected a 0.5% gain and raising concerns that Germany’s recovery may not be as smooth as some hoped. (ETF: EWG)

    Since they are so good at making predictions:  A Reuters survey of economists forecasts U.S. GDP growth at 2.6% between January and March, less than half the 4Q09 pace, suggesting that the Fed won’t need to raise rates until the final quarter of this year. The core consumer price index is expected to grow 1.4% in Q1, 1.3% for the full year and 1.6% in 2011.

    Fed officials are doing some careful wordsmithing, trying to figure out the best way to signal, when the time comes, that a rate increase is in the works.

    China’s exports jumped 45.7% in February Y/Y, and imports were up 44.7%. The timing of the Lunar New Year holiday impacted the better-than-expected numbers, but they still point to growing momentum in China and add to the case for an appreciation of the yuan. (ETFs: FXI, CYB)

    Speaking of speaking to China:  Google (GOOG) unveils an app store for business applications as it pushes forward in its fight against Microsoft (MSFT), but the reason Google’s +1% premarket is because of reports its CEO is in "active" talks with China.

    At least they are realistic:  In its monthly report, OPEC raises its forecast for global oil demand this year by 100K bpd to a total of 900K bpd thanks to global stimulus measures. But "questions remain as to how long governments will be able to afford supporting their economies. Should this support diminish, then world oil demand would of course be impacted." (ETF: OIL)

    Regulators tell banks not to increase their dividends or buy back shares until there’s more clarity on economic growth and regulatory changes. It’s unwelcome news to investors in healthier financial firms like JPMorgan (JPM) and Goldman Sachs (GS).

    The Senate is nearing a deal to create a $50B fund from fees on large financial firms (like GS and C) that are deemed to be a systemic risk. The money would be used to wind down a failing firm, with the FDIC taking primary responsibility for that process.

    Germany’s Merkel says "quick action is needed" to rein in speculative financial trades, and the U.S. should "make a gesture" to curb the trades in question. Discussions of a curb will also be on the agenda of the G-20 meeting in June. (previously)

    Citigroup’s (C +2.9%) shares will likely keep climbing, says analyst Dick Bove, though the largest gains will come after the government sells its stake. Bove is talking about a longer-term investment, since he expects the bank to lose money in the first and second quarters.


  22. Phil;
    how would you get a position in BTU ?


  23. Phil, ( VLO / TSO ) how do you sort thru all the refiner BS,  "things may hit the fan at 10:30 if we have a big build in crude inventories but we did last week and they took it up anyway" ? I think it was Grasso 2 or 3 days ago saying it was time to get in the refiners. Fact is when they move up they move fa$t !


  24. Trying again with some BIDU put verticals (550/570). I may still be too early but I think persistence will eventually pay. Out if a close over 550 looks likely.


  25. Peter,
    If you are around, I re-ran the PM preview check now that it is activated (last night was Reg T like you said) and it showed margin on the 900p was about $900 and about $6700 on the 1250c.


  26. Inflows/Pharm – If we do break the upper range we’ll have to get on that train and just hope we can get off before they run out of tracks. 

    Thanks Chaps! 

    DIA/Phlit – I’d sell the $107s as we’re NOT hitting $108 and, even if we do, you would be way up on the $105s and you can roll them higher.  You can also add Arpr $109s over 10,600 in anticipation of establishing a new vertical but if that seems silly high, then that’s why leaving the $108 calls naked short makes sense.   On the $103 puts – those are toast but why not sell the $105 puts at .57 and if we fall below 10,550 you can roll your $103 puts to the Apr $102 puts (now .84) in anticipation of rolling the $105 puts down to Apr $107 puts (now .60) or possibly higher where you can leap-frog to a new bear put spread to protect bullish Apr plays. 

    BTU/’RMM  – They are a little high but we like them long-term for sure.  I’d go artificial with the 2012 $40s at $14.50 and sell the June $50s for $3.10 and the June $46 puts for $3.10 for net $8.30 on the $10 spread and if we go lower, you have cash to roll down (hopefully $5 to roll down $10) and if we go higher, you just add a few more longs, which will be well protected by the increasing value of the callers

    VLO/B1 – TSO sucks, I only play VLO (SUN is fun sometimes but very wild).  I’m not worried about the refiners, they are coming off a year of record-low margins and it’s summer driving season so they will adjust to whatever oil does.  Obviously, it’s bullish for refiners if we have a draw on product (gasoline, distillates) and a build in crude as that’s their input cost.  

    BIDU/Eric – Yep, eventually.  Given my general market bearishness and BIDU’s huge run, I’m kind of warming up to the puts.  You can go with the Apr $540 puts at $20.50 and sell the March $540 puts for $8.70 for net $11.80 and the March $540s can roll to the Apr $500s (now $8) if BIDU breaks down early and, if not, you can hopefully pick up more than $11.80 from the Apr $530 puts (now $16.50) and you have a FREE $10 bear put spread


  27. judah – did you hold TZA overnight?


  28. Oil up 1.4Mb, Gasoline down 2.9Mb and distillates down 2.2M so GREAT for refiners but that’s also popping oil back over $82 like ligtning.  

    If this isn’t enough to spark a commodity rally that get us over the top – I don’t know what the bulls have left….

    EIA Petroleum Inventories: Crude +1.4M barrels vs. consensus of +1.7M. Gasoline -2.9M vs. consensus of +100K. Distillates -2.2M vs. consensus of -700K.


  29. Phil -

    Plus, you have OPEC saying:

    Crude had moved up in the aftermath of a revision from the Organization of the Petroleum Exporting Countries in which it raised its forecast for global oil demand. Strong trade data reported by China also helped fuel the higher prices.


  30. Wow. Market is acting like it’s ready to blow right through. If it does, we could see a lot of popped stops. I want to see it actually do it though.


  31. Goldman Sachs Execution & Clearing Disciplined For Trading Violations  just hit the newswires.  Shocker.
    BAC +2% on news of halting overdraft fees on it’s cards.  Evidently, investors see this as a positive because the money the lose by not charging overdraft fees will be more then made up for by not having as high charge off rates because they didn’t give money to deadbeats who weren’t going to pay them back anyway!  Friggin nuts.
     
    I’m getting out.  Capitulation ALERT.


  32. ISIS – even though I am not a fan, the charts look like they want to now go fill the gap up to 11 or so.  Worth a few April calls for a run up.


  33. Still shorting oil futures at $82.  Also still like the USO Apr $38 puts, now .77 and David’s ERY is now sexy, selling the March $9 puts for .30, which is $90 in margin to make $30!


  34. GOOG going straight up. Does anyone see why it should join AAPL and BIDU at new highs if we keep going up?


  35. I meant a reason why GOOG shouldn’t join the others.


  36. Phil, I’m still in the original EDZ play you made last week long the April 4 Calls, Short the April $5 call, and short the April 5 Put, with a basis of about .15.  This has been dragging me down (as you can imagine).  What would you do in this situation?


  37. I like your BIDU trade too Phil, except that it could flip over quickly. That’s what I see happening if/when it turns over.


  38. Thanks for the tip Matt!   If you are giving up it is time to go gung-ho short…

    Jan. Wholesale Inventories: -0.2% vs. +0.2% expected, and -1.0% prior (revised). Wholesale sales +1.3% to $346.7B, vs. last month’s +1.2% (revised).

    AIG (AIG +12.5%) shares are rising rapidly in what seems to be a short squeeze. [CNBC]

    Speaking of capitulation:  "We’re in active talks with the Chinese government [on censoring Internet search results]," says Google CEO (GOOG +0.9%) Eric Schmidt, “and we have no specific timetable, but something will happen soon," declining to elaborate further.

    Momentum builds for stricter oversight of derivatives trading, as CFTC’s Gary Gensler recommends limits on credit default swaps and European leaders push for a ban on speculative bets against government debt. But curbing derivatives might actually hurt, not help, Greece


  39. Phil
    I must tag on to the comment made by Chaps. This experience is an educational tsuami, and has done wonders for my profitability. Now if we can only get the politics right ! Ha !


  40. Phil: low premium stuff what to do ?
    KBR putter march20, 0.89 to 0.10, have stock at 20.17$
    XOM putter march65, 1.74 to 0.14, have stock at 66.5$,
    AMGN putter march55, 1.06 to 0.09, NAKED.


  41. Phil for ERY its March 9 or March 10 puts ? the prices tell me its the 10 puts. please confirm.
     
    thanks
    david


  42. I’m now long DTO, SRS, and TZA…


  43. SVNT – still expecting them to get approval for their drug after manufacturing clearance comes in.  I am currently in the 16 Apr Calls for 25c (now 37), but worth a gamble if one notices the pops the biotechs get.  To offset some of the premium, one can sell the 14 Mar P for even the 13 Apr P for a 10c debit. 


  44. Hey Phil, did you mean APRIL ERY 9 puts for .30?  If you can get .30 for MARCH 9 then I want to buy them first and the arb them to you. ;)


  45. GOOG — hi Phil do yo think GOOG has taking off today, if so how should I adjust my Sept 510/570(bot at 68.65)/ 550sold at $27.65, I bought back yesterday 510putter thought that GOOG is pulling back, now today I still have 10contract of sept 570long put and 550short call, how do I adjust and cover this — thx


  46. Buying a few AIG april put verticals for comic relief.


  47. Phil, any rolling advice appreciated: XOM have 2012 leaps with 1/2 Mar $65c sold at $1.95, now $2.43 (also sold Apr puts at $1.98, now $0.70). Is it best to roll to 1/2 the Apr 65s for max premium or full cover of the Apr $70s? Also, NDAQ have the stock and protective put with full cover of Mar 19c at $0.40, now $1.20 but chart looks like some resistance at $20… when/how would you roll? Thanks!


  48. Phil, with such a concerted effort being perputrated in the MSM on the banks recently.. we may indeed be near the top.  But I’m tired of waiting for it with skin in the game.  Waiting for clarity.
     
    According to the Action Tracker below.. C has the highest volume today in both the Put and Call options for March 4 strike.  Perfectly clear!


  49. SVNT Pharm
    Looking at the history it seems they have to re-submit the BLA – which they said they would complete 1Q2010.
    Then we wait 6 months for FDA approval?  Have I got that right??


  50. Hi, Eric,
    I was going to ask about AIG.  What put verts you got?


  51. This has to be what the Nas bubble was like (I didn’t trade then). Completely crazy day after day.


  52. cwan,

    They haven’t filled yet but I’m asking 2.75 for the April 40/36. So nothing ambitious but good theta/vega positioning. A more aggressive trade would be to buy your long way up in the money and try to get away from the high premiums. But riskier.


  53. GOOG/Eric – I think the possibility of losing China is weighing them down somewhat. 

    Holy cow – oil jammed up to $82.85!  Tranports up 1.25% because nothing can be better for transport companies than really expensive fuel!  8-)

    SOX up 2% as CNBC gushes over 3D TVs because everyone’s got $2,500 for a new TV this year.

    FCX flying up too – hopeless – I may have to join Matt in giving up on bearish positions.

    EDZ/Palotay – Well the bottom line is EDZ is effectively at $4.68 and your put-to price net $5.15 LESS whatever value remains in the $4s, which is currently .68 so $4.47, which means, despite the premiums, you are fine at the moment.  The problem is you are treating the .35 pure premium of the caller and the .30 premium of the putter as if they are real – which they only are IF you buy them out.  Otherwise, that premium will expire over time. 

    BIDU/Eric – Yeah but if it goes up I imagine the Apr puts will hold value all right so out without too much damage next week. 

    Thanks Gel, I think?

    Damn, oil $83 – this is sucking.  Gold at $1,126, copper at $3.44 and silver at $17.65.  Nat gas still laying around at $4.50.

    KBR/RMM – You have plenty of margin right so why not just sell the Apr puts and leave the March until they expire.  There’s no need to pay .10 to a guy that far out of the money.  On the other hand, I think we’re a bit too high with a VIX too low to sell puts at the moment so patience may be a virtue.  XOM is same deal as is AMGN – they are all winners.  If you are going to stick with them and sell again – go ahead or, if you are ready to move on and find new trades, then take them out and look for other opportunities. 

    ERY/Micro, Salvum - I think I was looking at  the Apr $9 puts – the March $10s are cutting it kind of close but you can always roll so don’t worry about it.

    GOOG/Gucci – I would say do nothing until you see the Nas hold 2,350.  Today GOOG made nice noises about China and had a press conference so you are seeing them on a good push – make sure it’s real before taking a knife. 

    AIG/Eric – Only 16% of the float is short and they’ve traded 60% of the float since yesterday moring so I’d say they don’t have much more room to squeeze the shorts.  I like selling the $37s for $1.60 and I like the March $40/36 bear put spread at $2.90 with a stop if they break over $37.25.


  54. Phil,
    It looks like there is a huge disparity between RUT and DIA in the past couple of weeks. Do you think it is time to buy puts on RUT or calls on DIA??
    thanks


  55. Hi, Eric,
    But AIG April 40/36 put vert is about $2.10.
    Anyhow, I like your idea of an ITM put vert.


  56. Hi Phil,  BAC looking good today what play would you take  sell Aug 18 straddle at 3.20 ?


  57. cwan, I think it’s 2.80 right now. You might be looking at the 37.


  58. The Chinese government has reported their EXPORTS have increased the most in three years last month. This is a 46% increase for February. This surely will drive the commodity markets – Be careful of the shorts !


  59. XOM/Fein – I wouldn’t get overly bullish on XOM with oil at $82.  It can be back at $77.50 pretty quickly (I hope!).   So yes, I’d go to the 1/2 Apr $65s as that’s still 1/2 premium and pretty good downside protection.  If you want to be bullish, sell some Apr $70 puts using $67.50 as the on/off switch.  NDAQ is popping with the Nasdaq so it’s all about whether they hold 2,350 or not.  If they do, then you can lok ahead to rolling them out to June $20s even as they should be getting comfortable above the 200 dma at $20.

    Top/Matt – It is crazy to watch and the funny thing is the volume is still anemic AND this is a lower high for the Dow than yesterday – what’s up with that

    Nas Eric – Yep, we would buy stocks because they had cool names or because some celebrity mentioned them – those were the fundamentals and you wait to make about 25% and then get out (we were conservatives).  

    BAC/Yodi – I don’t like short straddles on stocks I’m bullish on.  Better off constructing something where you don’t get burned to the upsdide.  How about the Aug $15/17 bull call spread at $1.30, selling the Aug $15 puts for .75 for net .55 on the $2 spread?


  60. Umm…I cannot believe I had never found this site until last night.
     
    http://finviz.com/
     
    Wonderful


  61. AIG put vert / Eric,
    My bad.  You are right.  I was looking at 37.  Almost made a stupid mistake.
    I’ve made enough mistakes lately.  My butts still hurt.


  62. Phil
    do you expect BAC pull back a little? my short calls underwater (May16, May17 and March17 as a cover for Jan12 15/20 call spread)
    what is your suggesion? roll calls? do nothing now and wait for pull back? add to longs?


  63. Hi All   New subcriber for last three months.  Great trades Phil .   Question on one position
    in the 100k portfolio.  KEY   Should a person buy the stock at these levels and sell 7.50 puts and calls
    for January ? or stay away.  Thank You


  64. Hi, JRW, Judah, SS,
    How are you folks doing with TNA/TZA?  Haven’t seen any posts from you.
    I don’t play TNA/TZA, but, as I learned from Peter, I am using your levels to guide my SPX/RUT strangles.


  65. cwan – looks like i am flying solo today.  Just entered TZA at 7.28. 


  66. Big pullback in gold, all the way to $1,114.  Copper testing $3.40 and oil back to $82.50.  Maybe the train ran out of tracks already...

    Finviz/CXT – I like that chart but there’s too much damn data on their site.  8-)

    BAC/Tcha – I expect the market to pull back and BAC with them so I’d wait until the end of March unless BAC is over $17.50. 

    Welcome Wilsons!   On KEY (and any buy/write), it’s not about the stock price but the net entry at any given time.  $7.50 is a nice sweet spot for selling and the stock is $7.64 and you can get $2.50 for the Jan $7.50 puts and calls for a very nice $5.14/6.32 entry so yes to that one.   Oh and Wilson – Get back in there at once and sell, sell!!


  67. I’m just recently back to Premium and can see all posts now so I’d like to know about the TNA/TZA trades too. That is one of the reasons I upgraded so help a brother out!


  68. Where’s Beeks? What happened to Beeks?!


  69.  Phil
    I have the Jan YHOO 12.5′s, covered by the Mar 15′s – looking to roll out, but I think YHOO is overbought – where to go  - July 16"s, July 15′s? Suggestions?


  70. hey phil! been out of the country the last few weeks and getting back into things today. quick question, and sorry if this has come up this week already…any POT short plays? Touched 119.75 today and at 118.93 now. Thanks!


  71. Phil
    Do you have a long term price target for BA ?


  72. SS,  Finally on line.  I lost my childcare this morning so I was with my 3-year old at a park, trading via smartphone (not recommended).  I won’t win any father of the year awards for my that.  I took your advice yesterday and did not hold TZA overnight.  Instead, I did what I used to do playing DDM/DXD, which is to trade in the direction of the general trend from the open and sell at the first real resistance/support.  Then, I look for an end of day play.  This morning, on TNA at the open, off a little too soon at 67.75.  Not on anything at the moment.


  73.  SSdirk,
    Nice entry on TZA. What levels are you watching?


  74.  With another recall announced last night on the Prius, TM seem to be holding up extremely well. Wonder why?


  75. Phil – are there any future bad news that could drive this market up more, should the train out of steam by now, VIX is 17.77 last I ck, do you think that we have been rolling the caller and that keep creating a short sqeeze to the upside in the market.  Mutual fund has already 93% in equity already, where are the money that can fuel the market now— I am still an infant, only have experience for the last two mos joining you, still learning th emarket —- :)


  76. Phil, some brainstorming would be appreciated. I have PM at 48.61. Sold Mar 47c at 1.12 , now 3.25, sold Mar 45 p at 1.18, bought back at .04 ( I know I wasted .04 + commission !!)  I’ve watched for good rolls for past 3 weeks and there has been none that I could see. Simple roll to April or June not so hot b/c premiums suck. I could just let the stock be taken out and collect my .65. Not complaining , on the other hand…  not a very good return for 12 weeks. I have got to learn to enter the position better.


  77.  WOW, I hope you held on to those /CL shorts PHIL.  You should be up about $1500 per contract if you shorted at $83.


  78. Yeah, whatever happened to Beeks?

    YHOO/Deano – Why not wait until next week.  Right now the $15s are all intrinsic so you gain penny for penny on a move down and any move up raises the calls you will roll to.  Also, the VIX is awful now and will be much better if we sell off between now and next Friday.   As a target, I’d go with the July $16s, right now it’s a .25 roll so maybe offer .10 and see if it fills and don’t let it go past .40. 

    POT/Ajay - $119, really?  Thanks for noticing.  I just got the crop report from Beeks and it looks like there won’t be a huge need for fertilzer this season (notice MON not doing so well).   I’d go withthe Apr $110 puts at $2.65 and stop out if they break $120

    BA/Gel – I think they are good for $80 this year.  Still they won’t fight the market on a pullback. 

    Oh and – Wheeeeeeeeeeeeeeeeeee! 


  79. Phil
    I bot DIA apr 107 calls as a protection against squize up, when do you think to close them?


  80. Nice call on the USO puts Phil! 


  81. SVNT/edro – correct, but if they resubmitted in January, or Feb, or even this month….6 mo is max. They can announce at any time.  I am only playing with positions where I can pay for the C with selling odd lot Ps, knowing that large funds have taken big stakes in the company, I am ‘protected’ to the down side.  They have approval (for the most part).  They now need manufacturing. They should pop to over 20 when that happens.


  82. Copper dropped 2.5% in 30 mins – this is nuts! 

    Woo hoo on oil, gold, AIG, USO…..

    TM/Jced – People can’t do math.  They are going to take a $5Bn hit on these recalls and they only make $15Bn in a good year (lost $4Bn last year) and it’s not likely 2010 will be a good year for them so you are buying a company on the mend at premium prices. 

    Bad news/Gucci – There’s lots of bad news, the question is at what point to people start to worry.   This is NOT a normal market so the assumption that non-participation with Trillions of dollars on the sidelines means we’re going to rally is about a logical as investing in a restaurant that nobody goes to because it’s empty and people are eating elsewhere.  The market is very scary and the current prices do not adequately factor in the risks enough to pull money off the sidelines.  There are only two ways to remedy that – Lower the prices or lower the percieved risk by holding the prices over time.   We are a long way from either of those things being attractive enough to pull the more conservative sideline money and, the higher rates go for "safe" investments, the harder it will be to get people to risk their money in the markets again. 


  83. SS,  Nicely timed on TZA.   I wish I could have joined you, but it was all I could do to get my TNA sold with the bad 3G connection I had in that park. 


  84. jcedens – IWM is above my resistance lines, so 1st line of support I see is 67.50 then 67.00


  85. BA : report from Deutsche Welle yesterday there is a defence contract in the air where the Eurpean bidder BEA gave up competing as the US Gov. tailored the contract exclusive for BA, big complains in Europe of unfare trading practice,  possible you will see a jump in share price of BA


  86. VERY bearish technical trading sign …. 14 of the last 16 trading days have seen higher prices on lower volume. I a playing a long position on SDS – buying April calls.


  87. Phil, a while back I had sold AAPL Mar 210 puts at 12.05 (leading up to the iPad announce, I believe). This went the wrong way on me (AAPL nose-dived, as usual after an announcement), so I rolled down and out for even to Jul 195 puts (@19.95). These are now $5.50. I have a feeling there’s a more efficient way to use my capital to earn the remaining $5.50, rather than sticking it out until July and hoping AAPL holds $195. Any recommendations?


  88. Good morning
    Sorry I’m late, looks like it’s been fun. I’m a little under the weather today, but I’ll do my best. IWM line of the day 67.15, S1 66.90, R1 67.47, R2 67.87.


  89. PM/Jbur – The March $47s are $3.25 and I assume you like them long-term for the dividend so why not roll the calls to 2x the June $49s at $2.40 (+$1.55) and you can cover by adding 1x the Jan $55s at $1.55, which has a delta of .28 so your upside delta is 1.28 vs the 2 June $49s at .96.  So a move up higher won’t hurt you, you are well protected for a move down and you make $2 more if called away. 

    CL/Craig – done at $81 on the bounce.  That could not have gone much better for a 1x, 2x, 4x entry…

    DIA/Tcha – The idea was to cover them with the March $106 calls if we fell below 10,600.  It’s not worth it now so you should probably take the small loss and be glad you don’t need the protection. 

    Thanks Palotay!

    BA/Yodi – That’s why we played them 2 days ago!  As well as last year for that matter.  I said from day one that BA would end up with that contract.  It’s very baked in.

    Macro funds aren’t just taking PR hits from Europe’s politicians – they’re also losing money despite the declines of the euro and pound. The funds fell 1% in the first two months; managers say they’re struggling with the lack of sustained moves in developing markets and commodities.

    Any improvement in labor markets is narrowly pitched so far, with 30 states posting monthly increases in unemployment rates in January. Just nine rates decreased; the biggest drop was in Michigan, though at 14.3% it still leads the nation. NFP employment decreased in 18 states.

    Large-cap stocks have been underperforming small-caps for 10 years and counting, so are they due for a rebound?

    Brazil’s Luiz Inacio Lula da Silva calls on Obama to act quickly in negotiating an end to the two countries’ cotton dispute that led Lula to raise tariffs on more than 100 U.S. goods. (ETF: EWZ)


  90. matt
    Did you get my post last night 7:10, on banks ?


  91. Phil/BA
    Thanks … I have a feeling we will see a new resurgance in fuel efficiency issues, as the price of oil stays high. The Dreamliner will benefit, so am looking at a long term position, with this in mind.


  92. Phil, Holding the C sept bull spread 3/4 .57/.20  now 1.08/.46 should I roll the 4 caller to Jan 11 or leave as is?


  93. Mar BIDU put a disaster, rolling to April. Big correction overdue for this stock


  94. ss
    After I put in support and resistance and draw the trend lines, I watch IWM on a 1 minite time frame with VOL, RSI, Momentum, and fast Soch


  95. Cwan,  Re your earlier post,  I’m still using SPX 1148 as my indicator of whether to roll my callers and we got a nice rejection off that line today.  I realize you are/were holding 1150, so not as much cushion as I have, but my plan is still to roll up 2x another 10 points in March if I have to, and then out to April 1210 if the train keeps coming.


  96. PHI./ PM-- is that buying or selling the Jan 55′s? New move to me. Thks


  97. DIA $105 puts can be sold for .73 to cover the upside OVER 10,550.  Buying them back at .60 is a nice gain.


  98. With the bears coming out of hibernation, I am loading up on covered calls for protection and profit.


  99. Phil: you are expecting again a correction, market is high, lots of poor news,
     
    with this situation, selling puts is not the right time, yes,
    but there might still be a NAKED put sale ?? which one ? Mabe  selling calls on something way overbought ?


  100. AAPL/Ajay – Good idea!  The July $195 puts have a delta of .20 and the Apr $220 puts have a delta of .39 so you risk about $2 per $10 that AAPL falls in exchange for 4x better ime decay.  You could pair that with the sale of the July $260 calls at a pretty crazy $4.60 so a move down would simply be a matter of re-rolling with little hassle. 

    Hey JRW – What a trooper!

    C/Yodi – Be happy with the triple!!! 

    PM/Jbur – That’s adding them (buying) so you are able to roll the caller to 2x without too much margin use. 

    10-year Auction went off all right.  Looks like 3.75% with the usual strageness from direct bidders (ie Fed) but that will calm TBT down a bit.


  101. Situation/RMM – Sometimes, the only winning move is not to play

    With Barclays (BCS) on the prowl for U.S. retail assets, regional banks are riding higher today: Zions Bancorp. (ZION) up 4.9%; Regions Financial (RF) up 4.9%; Huntington Bancshares (HBAN) up 2.8%. The three were up 5-8% at the markets’ intraday highs earlier.  BCS can’t buy them all, this is going to be a nice place to short! 

    To rebuild capital after repaying TARP funds, Citigroup (C +3.7%) launches a sale of $2B in 30-year trust preferred securities (TRUPs) in what could be a major test of market sentiment. The sale is expected to be heavily oversubscribed by institutional and retail investors and yield as much as 8.875%.

    The Treasury auctions $21B in 10-year notes at 3.735% (.pdf). Bid-to-cover ratio is 3.45; indirect bidders take 35.1%; direct bidders take 17.5%. Treasurys trimmed losses: 30-year futures -0.27%; 10-year -0.19%.

    So much for the DIA $105 puts – out even, my heart just isn’t in the bull-side play


  102. Phil, doesn’t that seem too risky? For example, if AAPL falls to $210, I’ll be screwed with the Apr 220 puts. Ah, but I see…I can simply roll out and down again to some July strike and be roughly in the same position I am now.
     
    What if AAPL rises to $240 or $250…then I’ll be sweating with the July 260 calls?


  103. Phil, doesn’t that seem too risky? For example, if AAPL falls to $210, I’ll be screwed with the Apr 220 puts. Ah, but I see…I can simply roll out and down again to some July strike and be roughly in the same position I am now.
     
    What if AAPL rises to $240 or $250…then I’ll be sweating with the July 260 calls?


  104. Phil: TRUE, not even BIDU shorting ?


  105.  Phil, 
    I would like your thoughts on adjusting my BIDU position
    I am short the following:
    10 Mar 490 calls sold @ 22
    10 Mar 500 calls sold @16
    10 Mar 510 calls sold @ 12
    I have been waiting for a pullback to roll these out OR sell some puts against them…and still waiting :-(
    Could you suggest a variation on your ideas from this morning for buying the bear PUT spreads given that I already am short these calls.
    Thanks.


  106. JRW / Banks:  I just read it.  What can I say?  Very illuminating article.  Perfectly illustrates what is wrong with our gov’t.  They need to keep their f-ing fingers off the markets and correct the mistakes they’ve made.  I guess yesterday’s news that they are now willing to pay homeowners and banks to sell properties short is a step in that direction.  Now we know why they want to do that and why they will still come out ahead on a short sale. 
     
    Phil / Capit:  Pretty good anti-call, huh?  But I don’t think we’re through yet.. maybe for the day.  But there will be plenty of follow-on tomorrow.


  107. Wow, the move up is on maybe 1/5 the volume of the move down.  There is NO WAY this is natural.   They take it up, execute a program to sell it back off (taking profits) then buy it back up with NO sellers evident, then when outside buyers begin to get sucked in, they hit the sell button again.  Even the size and shape of yesterday’s move down and today’s move down are almost identical…. 

    Nice release timing moving the market back up:  Global value of REITs is expected to build on its 2009 rebound, Ernst & Young says, pointing to coming IPOs in the $500M-$1B range – they’re "working on several around the country" – and possibly more M&A activity. (ETFs: RWX, IFGL)

    AAPL/Ajay – I like to believe that a company the size of AAPL is not likely to go up or down infinity.  That’s the premise for that bet.  If you accept the fact that it can’t go up infinity then somewhere between zero and infinity should be a place you feel comfortable with.  I’m pretty good with $40 in 4 months as that’s $120 a year so unless you are firmly in the AAPL $340 camp – it’s a good sale.  And, of course, if you are firmly in the AAPL $320 camp – why worry about covering a $220 put at all?

    BIDU/RMM – Yes, see short play above.  That is not the same as selling naked puts. 

    BIDU/Oncmed – Gosh do you think you let them go a little long?  So pretty much you are in the $500s at avg $17, now avg $49.  That is SUPER UGLY.  You owe $147,000 so I’d roll them out to 2x the Sept $530s at $70.50 ($141K) and sell 1x the $510s at $44 ($44,000) for a little extra buffer so you’ve sold a full $148K in premium and you are still a little bearish and the $44K from the $510s would pay for you to roll the calls up to the Jan $650s and, to the downside, the least of your worries is rolling the 10 putters down and out. 

    Pount at $1.495, Euro at $1.364, 90.55 Yen.  Copper $3.36, silver $17.02 (danger!), gold at $1,108 (yay!), oil $81.52 (yay!) and nat gas at $4.50…  


  108.  THIS MARKET IS SO BORING!!!!


  109. bot April April 9 calls GLL………hold, sell, dd?
    Thanks phil
    Phlit


  110. bot April April 9 calls GLL.. @.66…….hold, sell, dd?
    Thanks phil
    Phlit


  111. I think if we top out here and don’t break back over 10,575, then we’ll be testing 10,400 again by Friday. 

    Let’s watch the Nas closely, they may be topping out here at 2,356.  


  112. Just getting back from an errand and back on TZA at 7.42.


  113. Phil
    I am sitting on some long puts on the 105 DIA, looking for a pullback. Would you roll these to a better position ?  Thanks.


  114. AMYL is up for Friday and FDA.   BMO downgrades and says it will not get approval (price 12); Jeffries upgrades price 30; Jesup initiates with a buy ( price 26).  What is going on with these guys? 
    SOMX – date is OPEX (Mar 19).  Tricyclic compound been around for years.  Too bad there are no options….I don’t think they get approval as there are plenty of other things out there…and the drug is generic even if they do.
    SLXP is after OPEX (Mar 24) for encephalopathy.  They probably get approval, as I believe it is a line extension.


  115. GLL/Phlit – They are $1.05, what are you talking about DD?  We have a 2-step process for positions that are up 50%.  Step 1 – Take money.  Step 2 – Run!  I know it’s complicated but if you practice often enough, you may end up keeping your profits…   If you want to press your bet – why not take 1/2 of your profit (so you lock in a 25% profit) and pick up the July $10/11 bull call spread at .35, which has another .65 of upside so if you started with $660 and cash out $1,050 and you take $200 and buy the July spread, you can still make $400 more, which is as much as you would make if you gained another 40% and risked your whole $1,050 but all you would be risking is 1/2 of what you made and you can put the remaining $850 into the next obvious opportunity, which pressing gold certainly is not.

    WASHINGTON (MarketWatch) — The U.S. government recorded a budget deficit of $221 billion in February, the Treasury Department reported Wednesday, even as receipts posted a big increase for the month. Receipts totaled $107.5 billion in February, a 23% increase over last February’s total, and marking the first monthly year-over-year increase since April 2008. Outlays were $328 billion in February, up 17% year over year. February was the 17th consecutive month that the government recorded a deficit.  Gosh I hate to point this out but 17% of 328 is more than 23% of 107….


  116. Out of TZA at 7.40.


  117. Hi, Judah,
    Thanks for your 12:47 comment re SPX 1148 line.
    Yes, I have SPX 1150.  But I also have RUT 670.  I am holding both positions.


  118. Phil: should oilprice fall, my VLO position will not suffer ?? True ?
    have stock 17.39 to 20.44$,
    0.3x caller jan17.5, 2.42 to 4.25,
    1x putters jan 17.5, 2.24 to 1.39.
    Plenty of time but you might have an idea,


  119. ss
    I’m on TNA, if they can break 67.50, it’s a clear shot to at least 66.75


  120. Phil do you have a correlation between OIH and ERY, they look directly inverse over the last 10 days. Or a correlation between OIH and the price of oil?


  121. JRW – I’m with you.


  122. Wow, seriously.  They announce the biggest monthly deficit ever and the market flies up.  This is insanity.  Imagine if back in 1999 someone said the US would, in a single month, have a deficit of $200Bn…   Would you have bet on up?

    DIA/Gel – Well you can’t keep them.  They decay too fast now.  You can sell 3/31 $104 puts for .82 and roll out to the Apr $105 puts at $1.76 for net .30, which is not bad for getting yourself into a $1 spread with another month (assuming you want to stick with it). 

    LOL – check out the Dow – only 9 of 30 are green and GE is up 3 cents.  CVX and XOM can’t even agee on a direction (CVX is too gassy, I’ve told people that many times).   

    Nasdaq is up on 2% SOX with AAPL, AMZN, RIMM and GOOG all up well and that’s pretty much all of them (also the biotechs are on fire thanks to ITMN). 

    Still, how do you fight this nonsense?  We go up and up and up, drop like a rock and lose it all – then up and up and up again.  I’ve tried to do less day trades because it consuses people but what else is there?   Even a day is too long to hold something…


  123. Some pump.  GLD barely holding on to the 20 and 50d MAs.  Huge bearish candle.  Now, just break through and I will be 8) .


  124. Sorry, SVNT resubmitting this month, so we are getting a pop now.  Missed the press release 3/8.  They are moving through R2, so up we go. 


  125. VLO/RMM – They will knee-jerk down with oil and the energy sector but if gas stays over $2, they are in good shape.   You are in good shape with your mix but with just 1/3 cover in Jan at $4.25, you can roll callers to 2x the June $20s at $1.60 which will expire $3 of premium for you in 1/2 the time.  Then you can roll or sell again in June. 

    Correlations/B1 – Well they cover different things.  OIH is going to move more on demand numbers as well as announcements from XLE companies about spending plans and they are also affected by labor costs and steel prices, etc.  ERY is a very different mix with just 15% OIH-type companies and is mainly integrated oil companies and producers and they are NOT an ETF that tracks oil at all.  So ERY can go down along with OIH going up as integrated oil companies face higher production costs down the line – probably what has been happening recently.  

    Bond buyers poured $7.8B into high-yield muni bond funds last year, ignoring the precarious financial condition of states and cities – or betting on government bailouts. "This is moral hazard writ large," says Barry Ritholtz. "Investors in these funds would do well to remember that return of capital is more important than return on capital."


  126. bot 1000 TBT @ 48.30
    bot 20 sept 50 calls @ 3.80
    sld 30 march 48 calls @ .47
    bot  20 june 45 puts @ 1.16
    where do you suggest I roll the march callers?  I/m thinking June………..or what…….. thanks
    phlit


  127. the gas tank has to be empty by now …. what gives


  128. So, would you then play ERY in the perceived trading range in oil approx 72 – 82 , Thanks



  129. STX — any one trading this one, down to 50dma, Phil what do you think on this bull call spread Jan11 15/25 and sell 17.5 putters for cost $1.9, for a $10 spread.   What mos call and putters front mos should I open


  130. I sense a painful stick coming


  131. JRW -This seems to be a tricky range we are in.  I am out of TZA. 


  132. Sorry I mean TNA.


  133. Out of TNA at $ 53.75 for $1.53


  134. JRW III – Questions: What settings do you use on your fast stochastics and what momentum indicator do you use? Thanks!


  135. Sorry, gain of $ 1.03


  136. From WStreet Strategies (3/8).  This was my premise yesterday….Let’s see if the thing posts correctly. If not, here is the link.
    I’m not sure if it was nominated for anything but the movie adaptation of "Where the Wild Things Are" should have won some kind of honor for being completely out there. I guess that’s where individual investors are…completely out there. They sold into last year’s bottom and also, again, missed the end of the year spurt. These investors continue to pump money into bond funds or money market funds. That’s considered the good news for the market, $3.0 trillion plus just hanging on the sidelines. Equity fund managers, however, only have $172.0 billion in cash or 3.6% of total assets, down from 5.7% in January 2009.


  137. JRW – Wow.  When did you get in?


  138. JRW – I see your repost.


  139. If you cannot get the link above, try this one…very compelling.


  140. ss
    Good instincts, you can always get back on if you’re wrong; but especially if you’re long, better safe than sorry !!


  141. diamond,
    I use Street Smart, 14 / 3 / 3


  142. Phil, do you see AAPL taking a little bit of a breather, even retreating a bit before testing new highs again? 


  143. ss
    I got in when I logged in , IWM was bouncing off my 67.15 line.


  144. AKAM, AMZN Flying.  Too bad AMZN is too scary to short!

    TBT/Phlit – TBT can always sell back off.  I don’t like the Sept calls, you are burning a lot of premium.  The March $48s are .97 but are .10 in premium and you can always roll them to the Apr $49s (now $1.05) so what’s the hurry?  When you are selling calls in an ETF that has $1 incriments – take advantage of them to improve your position conservatively over time.

    ERY/B1 – Yes, generally they should correlate to oil (inversely) but keep in mind that they are an ultra and decay over time. 

    C/Pharm – We’ll take the help getting over $4!

    STX/Gucci – I’m worried that there’s too much solid-state memory going out now and it’s eroding thier base.  I’d like them at the 200 dma ($15) but not so much at $19.   I loved them at $5 but up 300% they have no appeal to me at all.   So your spread works but it’s not one I’d jump into as they failed to hold $20 so I think it’s best to wait and be sure of what they do finally hold. 

    Cash/Pharm – That’s not much!

    Copper $3.37 keeping me from worrying about the run-up.  Gold $1,107, oil at $81.82.

    Wheee again!


  145. Pharmboy, thanks for SVNT, I’m up 67% on that one so far!  Regrettably, I was in ITMN with you last year but stopped out in December at 12, missed that flier…  Look at the action on BVTI, what’s up there?


  146. SRZ - how many 30-day candlestick charts do you see with only two red days? What a beatiful run.


  147. Phil – I think it explains the moves.  With $3T on the sidelines, not going into Mutual Funds, where is WS gonna make their money?  They need retail to get in…but they are not.  Every time they do get in, they sell off.   People are just gonna sock it away rather than put money market.  The slow grind up is gonna catch up sooner or later, as we all know, and if retail starts to increase its in, that is the time to short…..MFs have to follow a pattern to get lured in.


  148. BVTI – well, they received orphan status…WOO HOO … hence the run up….who cares.  That does not mean approval.  We can apply for orphan status at PSW for the euphoria of the market.  Doesn’t mean anything.  With that candle, you could short.  But because they are a $1 stock, too dangerous.


  149. Well either they Stick it today ( 1148 ) or it’s a set up for tomorrow


  150. Phil, I am in the TZA April 7.5 call play.  What do you think about selling April 7.5 puts for 0.67?  I am just thinking something to balance the time decay on the calls.  I really don’t mind owning TZA at around $6.60.


  151. Finger on the trigger for a TNA buy if 3:30 brings Mr Stick !!


  152. AAPL/Lolo – I think they should pull back off $230 or $228 since their last consolidation was around $190 so 20% back is going to be $222 so watch that line to see if it starts looking like support. 

    Lure/Pharm – I think that the IBanks are in the process of extracting the rest of what they did put in and their money is moving to the sidelines and what we have left is a fairly empty balloon of a market. 

    Volume 140M at 3:30 – light but not as light as usual – could be trouble for Mr. Stick.

    TZA/Robert – I’d be a bit more patient on the calls. 



  153. Phil/PALM
    I have this in my portfolio and it stinks – Is this a good time to toss it ?


  154. phil- thoughts on YRCW?


  155. Wow, struggling to keep those financials up.  Someone is selling alot of them.  No worries though.  The tradebots can handle it.


  156. This sell-off is WITH a $149Bn stimulus bill being approved in the Senate!

    The Senate approves a $149B package of jobless aid and tax breaks. The bill now moves to the House of Representatives.

    Based on year-over-year percentage change in federal withholding tax revenue, job losses have bottomed out and may be ready to turn higher. "But to move above zero [growth rate] will require that some net new jobs get created… In 2002, we had a massive real estate building spree going on and creating jobs for everybody from copper miners to i-bankers. We don’t have anything like that today."

    Austerity should be left until later since it would be a classic policy error to tighten too soon, says David Blanchflower, and we should "beware the fools and madmen" who argue any different. "Fiscal and monetary stimulus should continue at least until half of the loss in growth since the start of the recession has been re-established. Later is better than sooner."

    Birinyi Associates: "The current financial sector rally – if it were to emulate the average – is still in its infancy in terms of both breadth and length." (ETF: XLF).


  157.  Oxen Alert – Position Update 

    HRBN – We were able to exit at 24.90 for a solid gain of 2.80% on our Short Sale of the Day.

    We went 1/1 on the day, which is great. I think HRBN is due for more pullbacks through the next couple days, so if you want to increase your risk…hold onto it.

    If you are like me and are happy with 2-3%, then it was time to sell and still is time to sell. 

    We will try to get a winning Buy Pick tomorrow. ERY would have worked if I had not had such stringent entry ranges.


  158. XRT is at the same place it was in the summer of 2007. Are you guys out shopping like the summer of 2007?  I’m certainly not.


  159. Stick beating/Pharm – THIS is the way to do it!

    PALM/Gel – They are pretty oversold, I’d give them a chance. 

    YRCW/SNS – Hopeless.

    Has anyone noticed that whatever they feature on CNBC gets sold off 5 mins later?

    Woops – down but not out, Mr. Stick hits the button with 10 mins to go!


  160. Did anyone get on the AIG train?
    I tried Eric’s April 40/36 bear put spread.  No fills so far.  I think I’ll pass.


  161. RICK is selling off – that’s a bad leading indicator…


  162. There goes ISIS.


  163. Phil,
    Also was short some AEO into earns….do u see any reason not to hold short at this point?  TIA.


  164. Pharm & Phil,
    Do you guys watch this type of videos on YouTube all day?  No wonder PSW is such a depressing place.
    8)


  165. Played the Stick for another $ 0.46; so $ 1.49 or 3% for the day and 8% for the week so far. I’m REALLY looking forward to making something on the SHORT side !!


  166. Pharm, Do you aggregate your positions/thoughts where I can use them to review and think about?


  167. JRW – I know you give me your lines, but I just can’t seem to get in sync with your plays. Good job.  I’ll be trying again tomorrow.  As for the short side, isn’t it about damn time!!!  The daily chart for the RUT since 2/8 is unreal.


  168. AIG/Cwan – I think they are worth a toss due to the turnover.  There are a very high percentage of bagholders at this price.  

    AMZN – I forgot to talk about this Colorado thing.  AMZN cut their affiliate relationships in Colorado (screwing people who ran businesses through them) but that doesn’t change the fact that the state wants sales tax collected on-line.    Of course AMZN is freaking out about this because if it spreads it’s a mess for their business and destroys their major competitive advantatge.  So of course they are up 1.4% today…

    I think a lot of webby stocks popped off the CSCO router, which will make web life better but this won’t happen overnight.

    AEO/Onc – Well retail is on a roll and they reported very well so maybe not the best short.  Maybe you want to at least sell the Apr $17.50 puts to cover, just in case. 

    Depressing/Cwan – Hey, what’s wrong with psychotic puppets?

    Nice job JRW!

    AAPL gyrated back to yesterday’s high at the close – interesting…


  169. Phil, what are your thoughts on the Trust banks (STT/ NTRS) in the face of their weakness when the rest of the Financials are moving up?


  170. PSW depressing? I chuckle all day.  I thought the stick beating was hilarious. 


  171. Hey, Eric,
    Did you get your AIG Apr 40/36 put vert filled at 2.75?  I just got my order filled at 3:54!  That was 2 minutes after I submitted my comment above at 3:52.


  172. dflam:
    That was why I put a smiley in my comment.
    "Depressing" I meant in the sense of we almost always wanting the market down.


  173. Phil, a long time ago we bought HOV Jan 5/7.5 bull call spreads for 0.4 and C 5/7.5 spreads for about .35…. all of a sudden Jan 11 is looking a lot closer now than it did a year ago :) Should we try to close these out at a small profit, especially HOV?


  174. BA/Phil – A while ago, I established (on one of your recommendations) the following position, long BA 2012 – 55 Call and short BA 2011 – 65 Call,  at a cost of 5$ per. Now I have almost double my money (thanks) and I would like to know your recommendation:
     
    1 – Cash in?
    2 – Wait to collect an extra $4 in premium on my 2011 and then cover and let the 2012 ride?
    3 – Roll up and if so, to what?
     
    Tell me what you think. I appreciate all your hard work.
     
    Thanks, Pierre


  175. ss
    That last plat was not off Support, it was off the trend , and line from the opening low and the midday low, and it was a pure Stick play. I posted that I was preping for it.


  176. JRW – I did see your post about the stick.  I had to get up for a bit, came back and it was too late.  Hopefully, we get to make money off of TZA soon enough.  Cheers and have a good evening.


  177. ss
    Let’s try that again; I did say I was under the weather today !!

    That last play was not off Support, it was off the trend line from the opening low and the midday low, and it was a pure Stick play. I posted that I was preping for it.


  178. Good luck to all as tomorrow may be the Battle Royale for the SPY gap at 1148-50.  See you all here !!


  179. JRW – I see it.  That same trend line has been support since the opening on Friday.


  180. Aclend, thanks for the IB’s portfolio margin update.  That’s a good news.  Although I don’t like their trading user interface, it’s worth putting money there given the favorable PM calculation.


  181. You’re welcome, Peter.


  182. Trad – no I don’t have an aggregate place.  I tried to use WSS for a while, and it was very cumbersome to me, so most of my info is here.  I have thought about something like Opt’s spreadsheet but having a day job makes it a bit of a challenge.


  183. Pharm, No worries, I will just go back through all the posts.  Thanks!


  184. Phil…I’m holding AAPL July 200 calls, half covered with March 220s and half covered with  April 210s .   I will probably have to roll these out.  How would you manage the roll, and when would you roll?


  185. Hi, Peter,
    So far, do you find other brokers besides TOS and IB offering good portfolio margin policies?
    I recall last time you worried about IB’s policy of automatically liquidating positions without warning if your margin is below threshold.  Did you talk to them about it?  Is it still something to worry about?
     
    BTW, have you tried IB’s web-based platform?  It’s probably much simplified.  But who cares as long as it’s reliable and allows you to enter multi-leg trades.  You can always use TOS to get quotes and do analysis.


  186. Hi Cwan,
    Just TOS and IB so far.  TDAmeritrade will be offering it once they are up with TOS, but they are in the same holding company.  I was excited about Fidelity, but found that they don’t have PM after emailing and calling them.  OptionXpress PM wasn’t good.  I heard OptionsHouse has PM for over $1M, but no GTC orders (as you said).  For Schwab, a quick search on their Web site doesn’t show they have PM.
     
    For IB, I do have the Web-based platform in my computer.  I need to try it some more.  As for liquidating the position, we just need to be more conservative as I don’t think they can change it.


  187. SP futures dropped like a rock after market closed, hope will continue tomorrow :)


  188. Hi, Peter,
    Forget Schwab.  They don’t have PM.  I asked already.
    Trade Station does not have PM, either.  I asked already, although they said that they might offer PM in the future.  Trade Station is attractive in their commissions, $1 per contract, no ticket fees, no minimums.  I don’t know if they have a web-based platform (important to me).  I haven’t tried them yet.
     
    Right now, I have 2 brokers, TOS and Schwab.  TOS is great, and Schwab sucks.  I am looking for a broker to replace Schwab.  Maybe IB will fit the bill.


  189.  To all….news.yahoo.com/s/ap/20100311/ap_on_he_me/us_med_heart_test
    This is some light reading to give you some further insight into what’s wrong with the health care industry.  A study of several million patients who underwent cardiac catheterizations showing that  a large portion of the studies were unnecessary , revealing the patients to have no heart disease.  Very very costly.  And dangerous for the patient, as many had complications just from the angiogram.  Why all the unnecessary studies?  Want the short answer?  Two reasons:   1. Fear of being sued.  2.  More importantly, $money.  There’s an old joke told amongst doctors in the hospital….’What’s the indication for a coronary angiogram?’   answer:  ’ The angiographic suite is available’      


  190.  On SPX margin, do we have a quick comparison summary on SPX strangle from TOS and IB PM accounts? 
    This week’s McMillan Option newsletter I subscribe to came out after Wed close and some key points:
    " $VIX has now risen three days in a row. The first two days were just fractional gains — pennies, really. But today, as SPX staged its usual last-half-hour rally, VIX actually started rising sharply, and closed at the highs of the day (see chart below). There are plenty of other instances in the past where a three-day VIX rise after the market had been rising for quite some time, was actually a strong sell signal. This is a warning sign flashing brightly."
     
    "The VIX futures had been trading with large premiums to VIX, although that premium has shrunk over the last three days (as VIX has risen). Meanwhile, the term structure continues to slope sharply upward. The premium and the upward-sloping term structure are positive, but too much of a good thing (i.e., too sharp of an upward slope) is yet another overbought condition.
    In summary, this market is due for a correction, and the longer the bulls manage to stave it off, the worse it will be. You know that when the market finally breaks, there will be a rush of sellers all trying to squeeze out the "exit" at the same time – at least for a day or two…"

     


  191. I was thinking that in Phil’s weekly wrap ups, I could post my entries in the comments section, this way people can go back and look at what I said about a particular company and the picks he/or I recommend.  Don’t forget though, I also have a post every few weeks on a few companies that could be independent of what is done on the daily board, and we do our best to make sure everyone is aware of it.  If that works, I will do my best to remember to do it in those.


  192. Wilson, I’m Sorry,   Wilson !
     
    http://www.youtube.com/watch?v=e-zaO-hUYag


  193. Whatever Happened to Beeks ?
     
    Sen. Franken in a more suitable role then ….


  194. Now you have me seriously wondering what an economic implosion might look like on my new 3D TV? I wonder if it will reach out of the TV and holographically try to take my money? Scary thought, like that 3D Jaws III movie where the shark comes after the audience? BTW – All very good points, it makes you think doesn’t it?


  195. Iflan- Medical cost- good article. This made me think about a comparison to my business. I am a contractor in the construction trade operating in a specialty, niche market. Most work we do is based on quotes & bids. The "best" jobs, however are what we call T&M – time and materials – where the scope in not easily defined up front and the difficulty factor is elevated. I am virtually guaranteed to make a profit and in most cases a substantial one as the time clock/billing runs on the customer’s dime. While this presents opportunity for larceny, there is an ethical responsibility and self-preservation incentive to avoid such nonsense. Although my customers are hardly experts, they are savvy enough business professionals to know if they are getting ripped off.
    Well, it appears that most medical "jobs" are T&M and as you point out, if one has larceny in one’s heart, look out as the customer/patients are almost completely at the mercy of the medical professionals.(And the medical pros are at the mercy of the legal pros).  Since there is a virtual cost/price  disconnect between the vendor (service provider) and the customer (patient) the result is inevitable. And, although I am sure to get some flack on this, it is my experience observing and interacting with a variety of social and professional "classes"; larceny on a minor/petty scale is quite pervasive and the longer left unchallenged the more it evolves to be the norm. Your angioplasty "joke" bears that out.
    As such, it is apparent to any informed observer that the current "reform" effort is misguided as it does little or nothing to address the disconnect. As a related aside, I listened to one of those PBS panel interviews last evening where one participant was an insurance industry spokesman/flack. He pointed out that the total insurance industry profit/admin cost margin is about 4% of the total medical expenditure tab. While I have no way of verifying this number, even if understated by one or two hundred percent, it is not where the real money is.
    So, the bottom line is that the insurance industry bashing is a smoke screen because the real culprits are the service providers who function on a cost-plus mode in a non-market oriented environment. The present runaway cost condition will continue until either market forces are allowed to work or bureaucratic controls are imposed.


  196. Pharm, That would be really helpfu.  These are not always easy companies to understand and having the weekend to review and study would be great.  Thanks


  197. Good morning!

    Trusts/Trad – It’s so hard to see what’s under the hood at these places.  I don’t know enough about NTRS but STT is a pretty solid-seeming operation but they don’t pay a dividend and, with the VIX low, we’re not being paid enough of a premium to risk ownership.  I’ll be writing about that when I update the Buy List next week – a lot of plays that make sense when you’re collecting a 10% monthly premium, no longer have the margin of safety when all you can do is collect 5% or less. 

    Spreads/Ajay – I haven’t changed my mind about the Jan targets BUT I do expect a pullback from here so you could always cash out, wait for a dip and re-establish in 2012.  HOV has been on a good tear and C is finally getting a little respect, on C especially you may want to see how they handle $4.

    BA/Pcaouet – Nice!  Well your more or less best case today is you roll the caller to the 2012 $70s even and then you are in a $15 vertical that pays you $5 more in 2 years or, as you say, just wait it out since we are confident on BA but I say take profits off the table and you can always play for upside with the 2012 $60/67.50 bull call at $4.20 and you can sell 1/2 Apr $75s for .55 and if you collect .20 per long contract per month through Jan 2012 – that’s a free trade.  So that’s $7.50 of more potential upside, very well hedged and you can put your other $5 to work on a new trade!

    LOL – they just tapped $82 on oil again.  I’ve never seen so many opportunities to short like this!

    AAPL/Iflan – I’d wait until next week.  Maybe you pay the March caller nothing and that solves your April problem.

    Futures/Tcha – Yeah, that was pretty funny, right back to the lows of the day once the show was over.  Nikkei didn’t seem to mind but China flatlined again and Europe’s down a bit at the open. 

    Angiograms/Iflan – Be careful there, you may get accused of wanting to ration health care!  8-)

    VIX/Balance – That’s a good point (although it’s kind of the point I was making for 2 weeks).  This is very good for our VIX spread too! 

    Wraps/Pharm – That’s a good idea!

    Wilson/Cap – I forgot about that one (and thankfully about that movie!).

    LOL Lance!

    Bureaucratic controls/Pstas – Well that’s what will have to happen eventually.  Death panels or whatever they want to call it but care needs to be supervised and allocated by professionals who keep both the patient’s and the system’s interest in mind.  In Europe, doctors are paid by the government and get bonuses based on the overall health of their patients (including bonuses for getting them to quit smoking and lose weight) and get questioned when they as for too many tests.  The labs are also government and don’t go out and buy doctors dinners so they will send more work over and neither do the pill companies.  Keep your patients as healthy as possible as cheaply as possible is something that has to be trained into the next generation of doctors in this country. 

    Futures moving off the bottom already, oil very dangerous to short here but fun for scalping nickels until they break back over


  198. Timmay goes to town for Wall Street.  The EU’s efforts to curb their member nations’ dealings with risky Wall Street has gotten his shackles up.  Nothing pisses Timmay off more then someone coming after his Wall Street!
     
    http://www.cnbc.com/id/35810944/comid/1/cache/40#comments_top
     
    We don’t stand a chance of enacting meaningful reform with this administration and session of Congress.