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Will We Hold It Wednesday?

Somehow we ended up bullish yesterday.

I already sent out a morning Alert to Members reiterating a buy on oil futures at $72 (already hit our first target at $72.50, which now becomes our stop line) and we took a longer-term bullish play on USO yesterday as oil came back down from $75.  We got out of our day-trades right at the top in the afternoon so that dip into the close became just another buying opportunity for us where things got so crazy that we actually bought OIH at $91.04 as that is just RIDICULOUS.  Of course we leveraged it with an option play for our Members but people ask for stock picks, so there’s one I like a whole lot!

We were looking for the sell-off as I had put up a chart of the major indexes for Members at 12:27 that indicated a down-trending channel and I predicted a re-test of last Wednesday’s lows "tomorrow," which is now today, of course and the indexes dove straight for our 1% line into the close so we will be thrilled if we just hold it together here and form a proper base to move up from.

That 1% line also happens to be the -5% line for the year to date so we expect at least a weak bounce off that level (which held nicely in early Feb) and is up 5% from last November’s sell-off.  The most disturbing things we need to watch is the incredible weakness of the NYSE, which is below it’s lows of last November and dangerously close to a major breakdown at 6,500.  That and copper below $3 are going to be our major indicators of BIG TROUBLE.  SOX 350 was a very disappointing loss yesterday and we need to hold the 200 DMA at 340 or we are DOOMED

So, other than that, we’re very enthusiastic about our prospects going forward – not so much because things are great over here but because things are so very, very scary everywhere else that US equities seem safe by comparison.   

Japan’s Prime Minister resigned last night after just 8 months in office and the Yen is actually lower now (91.9) than it was at 3am (91.6) blowing our "sure thing" play in Forex for the first time in ages. 

CDS rates are so out of control in Europe that they closed the bond market over there and no companies issued bonds in the US either as investors flee to the safety (???) of government bonds.  Costs to protect European lenders’ bonds from default rose to the highest in more than three weeks. The Markit iTraxx Financial Index of credit-default swaps on 25 European banks and insurers climbed 3.5 basis points to 177 basis points as of 11:10 a.m. in London this morning.  

Also of grave concern (and giving us our entry on OIH), Standard & Poor’s said it will review all companies with operations in the Gulf of Mexico following the U.S. Department of the Interior’s extension of the moratorium on drilling permits. Some 35 companies may be reviewed, S&P said.  Catastrophe bonds also jumed 10% already in anticipation of a severe hurricane season.  “What the markets are saying is that global warming is causing more uncertainty and has caused modelers to adjust their models to reflect those warmer waters and higher hurricane frequency,” said John Brynjolfsson, chief investment officer at Armored Wolf LLC.  Gee, I guess bond traders didn’t get the memo that Global warming  is a myth…

Palestinian activists are sending another ship to run the blockade in the Gaza and Hillary calls the situation "unsustainable and unacceptable," which sounds like we’re taking a tough stance until you realize that Nixon also called the Middle East Situation "unsustainable and (expletive deleted) unacceptable" as did Eisenhower, Kennedy, Johnson, Ford, Carter, Reagan, Clinton and two Bushes so forgive me if I’m not too impressed by Hillary’s tough talk….

So, Europe bad, Japan bad, Middle East bad, commodities bad…  How about China?  Well, Nomura Holdings says China bad too - warning that "Investors should remain cautious on China’s stocks as they face “further downside” risk.  Nothwithstanding the share-price declines to date, sentiment has not yet turned to revulsion,” the Nomura analysts wrote. “A-share equities have certainly become inexpensive relative to history but they are not significantly undervalued. On this measure, there may be further downside."  Not yet turned to revulsion?  I guess they don’t have Mad Money over there…  

China’s stocks hit a 13-month low today, on concern banks’ capital raising and a slowdown in European manufacturing growth will sap investor demand for existing equities and hurt earnings.  Bank of China Ltd. tumbled the most since October 2008 as the lender began a 40 billion yuan ($5.9 billion) convertible bond sale, while Industrial Bank Co. slumped 7.1 percent after a rights offer. Jiangxi Copper Co. and PetroChina Co. paced declines among resource producers as metal and oil prices slumped. SAIC Motor Corp. rose 0.4 percent after the government said it will subsidize purchases of alternative-energy cars. “Investors are concerned about fundraising, which increases the number of shares outstanding and dilutes earnings,” said Wang Zheng, a fund manager at Jingxi Investment Management Co. in Shanghai.

What else can we do with our money but invest in equities?  You can buy a 10-year note for 3% and hope that $134.39 buys you as much in 2020 as it does in 2010…  Sorry, I had to pause to catch my breath from laughing so hard…  or, you can put your money into companies that make stuff AND make profits AND pay dividends, many much higher than 3%.  That’s our 10-year plan! 


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  1. Phil, As a new member, I have been reading the blogs daily and really enjoy your passion and enthusiasim for the markets.  After reading your entry yesterday morning on the bullish call spread on TNA, I than read this morning your belief was the market will sell of later in the day (yest).  Why not wait for the late day sell-off, at that point "than" enter the bull TNA call spread?

  2.  Phil- a few questions regarding your chart…(1) can you explain why the 1% and 5% levels are meaningful? why wouldnt the 2.5% level be meaningful which would be a 50% retrace of the 5% gap up? (2) If 1% is the level, wouldnt that imply that QQQ has to drop proportionately more to catch up to where the other indices are? Txs

  3. test

  4. 5% rule/sns – here you go… essence
    What that causes, over time and volume, is a tendency for stocks to fall into patterns that move in increments of 5%, with more and more weight coming at each additional 5% level (the resistance becomes stronger).  If something is very liquid, it will also respect moves of 2.5% and 1.25% (and probably .67% but I can’t be bothered with that usually) as the vectors of all the various inputs by all the people who think they have the ideal targets tend to intersect.  There is also added weight given to Fibonacci levels at 25%, 40%, 50% and 60% so those become very key.

  5. Hey all,

    New Buy Pick of the Day in Hovnanian Enterprises Inc. (HOV) up if you are interested. We are looking for 2-3% on a 6.00 – 6.10 entry price. We like it for the earnings buzz and pending home sales. 

    Check out my story here.

    Thanks and Good Luck Today!

  6. ARNA – FDA advisory on Sept 16….2 days b’f OPEX.  Nice.

  7. And thanks to Netanyahu, the Korean situtation (remember that?) has completely vanished from the news cycle. It is related to the Japanese situation, though, since Korea is very interested in getting the US bases of their territory, and the failure in that effort is what toppled Hatoyama.  And for the most part, Korea is still interested in getting US bases out of the country, the prime exception being those who are old enough to remember the war and who hold anti-communist feelings.

  8.  Pharm- txs…so by extension, what bounce would you expect off the 1% level today if we get one?

  9. JRW… I see the levels at 63.60, 64.08, 64.44, 65.08, 65.43, 65.73. 66.35
    How close am I?

  10. Good morning! 

    Europe is down about a point so bad over there but we still seem bouncy so we’ll go with the flow while we can.  We are looking for the bottoms of our ranges to be the tops we need to test:

    • Dow 10,200 to 10,650
    • S&P 1,100 to 1,155
    • Nasdaq 2,225 to 2,350
    • NYSE 7,000 to 7,250
    • Russell 620 to 660

    These are the same two greens we had on Friday and I know it’s hard because we get so caught up in the daily moves but IT’S JUST NOISE in the big picuture.   RUT hit a top at 666 so we’ll be watching that for a leadership breakout and we’ll be watching 6,500 as the line of DOOM on the NYSE and you’d damn well better be bearish if that breaks!

    Woo-hoo on oil futures, now up to $72.75 so that’s a .25 trailing stop of our entry, which should perk up the XLE, if not the OIH and that should give us a good day if they can break $73 and hold it, regardless of Europe’s wimpy markets today. 

    The key will be – do we get more than a 1% bounce off our 5% line (the 1% line on the chart this morning) or is this just a weak bounce that will prove we’re in a serious downtrend?  Let’s watch copper (under $3 is bad), oil (under $72.50 is bad), SOX (350 is our good/bad line) and, of course, that NYSE, which is currently like an anchor around the necks of the other indexes.  We’re not going to get a real turn up until the NYSE LEADS us to the upside.

    It’s a tricky trading day because the range we are happy with is -1% from the open to up 1% from the open and whichever way we break from there is going to be critical. 

  11. Good morning
    IWM 63.56, 64.04, 64.52, 65.35, 65.87, 66.35, 66.77

  12. JRW…I’m not far off.  I re-read some DeMark… DeMark is very logical… Just drawing trendlines backwards to the last extreme candle… Where a demark line meets a pivot is a stronger level… Make perfect sense.

  13. Interesting observation regarding those late day reversals – statistically speaking they’ve occurred no more frequently this year than they have in the past twelve years. (And even less than the average if you count the 3PM reversals.)

  14. yip,
    Close enough for me to be able to go on vacation more often !! Good hunting.

  15. I basically went to more cash on the opening bounce. I don’t care to play until some major levels are either overcome or fail.

  16. Sayonara to FXY… it will surely drop further. with the PM resigning in Japan

  17. Thanks JRW..
    Kwan..nice article.

  18. Phil,
    Aha! The iPad works! Thankyou for fixing that.
    Could you please address my AAPL confusion issue I raised at end of yesterday’s session late last night?
    Thanks for your analysis and everything.

  19. TNA/Dean - Well if I knew 100% for sure what was going to happen, then I’d certainly always wait for the exact moment something is going to turn before I buy but, generally, I will begin scaling into a position when the risks seem to outweigh the rewards and then, if I’m wrong, I can make adjustments on round 2.  Also, when you are too bearish, you need to take bullish plays and when you are too bullish, you need to take bearish plays so I will put up trade ideas in both directions that I think are the best on each side at any given time.  Generally, we take a fairly even mix of trades that are good opportunities and we get out when they make some money.  If the indexes then move up and down in a channel – we can make money on our good bullish plays AND our good bearish plays, which is much more fun than having all your money in a directional bet…  It’s kind of like covering both black and red on the roulette wheel but, with opitions, just because you win on red doesn’t mean you lose on black – you may come back on the next spin!

    2.5%/SNS – Of course it’s meaningful.  I just wasn’t worried about it today as we already blew it but it will be upside resistance as we try to recover.  Don’t get caught up thinking any specific index HAS to catch up, especially the Qs or the Dow, which are unduly influenced by very few stocks.  The NYSE is our biggest concern as it’s very broad and it’s not likely the other indexes can move up without it. 

    HOV/David – They are an often favorite of mine and I like them if they hold the 50 dma at $6.  We have a Pending Home Sales Report at 10 but if that goes well, I think you’re in good shape!

    Bases/Snow – I can’t see us putting more bases in Korea.  The last thing we want to do is piss China off while we have no troops to spare. 

    Reversals/Kwan – We discussed them yesterday.  I think that logic is flawed as it doesn’t take into account either size or the reversals that turn a 200 point drop into a 50 point drop or the 100-point moves in post/pre-market. 

    Cash/Eric – Very sensible as we’re currently in market purgatory. 

  20. DTV (Direct TV is on a rip that looks like it has no end.  Executed a Buy/Write, buying stock and selling the Jan 38 p&c – 21% discount.

  21. Japan has a political VACUUM at the top.  Just talked to my mom over there, and apparently she feels there is almost no one who has the acumen, intelligence, honesty nor guts to be able to lead the country.  The future of Japan, politically speaking, at least in the near term, seems bleak over there.  A headless country is bound to fall…

  22. in TNA 44.14

  23. Poor man’s HOV play – Aug $5/7.50 bull call spread at $1.10.  Currently in the money so no different than buying the stock for $6 but, instead of laying out $660 for the stock and risking a 20% loss, you can lay out $220 for 2 contracts and put a stop at a 50% loss and you get 2x the upside if it goes well

    AAPL/Maya – I’m fairly certain I answered that last night.

    Headless/Kinki – I think a headless country is more like a headless chicken – running all over the yard and bumping into things…  Can be very disruptive, that’s for sure!

    Pending home sales were up 6% vs 3.5% expected and 5.3% prior (revised down from 7%).

  24. Out TNA at 44.58
    Still not sure of the exit strategy…. but 42 cents in 3 minutes ain’t bad!

  25. AMD just caught NVIDA and Intel’s undivided attention by demoing hybrid graphics/cpu chips which they indicated years ago was their goal when they bought ATI back in 2006.
    Essentially they’ve managed to combine microprocessors, which can do lots of large tasks one after another with GPUs which can do lots of small and similar tasks in parallel. Chips are supposed to begin shipping in 2011. 
    Nice move, AMD.

  26. I am out of HOV for a 3% gain. Great pending home sales new with 6% rise vs. the expected 3.5%. All because of the homebuyer credit, but I will take it.

  27. Nice trade David.  That one worked!

  28. Phil:  It seems to me that in Japan, even when you behead the chickens, the deaths tend to be clean, orderly, and well-mannered :D

  29. Holy moly – 25% of all internet searches are pr0n related. I wish I knew of a way to make money off of that! Maybe trading goddess was on to something…

  30. JRW..Why didn’t you take the trade I took?  It was a staple JRW trade…

  31. How bad is AIG’s Asian unit if PRU is paying $660M to walk away from it?

    Prudential (PUK -0.4%) calls off its agreement to buy AIG’s (AIG +0.7%) Asian unit, and will cancel the $21B rights offer that was meant to fund the deal. The decision will cost Pru around £450M ($660M) in break fees, underwriting charges and currency hedges. (PR)

    Other losers from the collapse of Prudential’s (PUK) deal with AIG (AIG): Credit Suisse (CS), JPMorgan (JPM) and HSBC (HBC). As advisers and underwriters, the three banks would have pocketed hundreds of millions of dollars in fees had the deal gone forward.

    Other news:

    MBA Mortgage Applications: +0.9% vs. +11.3% last week. Thirty-year fixed mortgage rate increased to 4.83% from 4.80%.

    ICSC Retail Store Sales: +0.6% W/W, vs. -0.8% last week. +2.5% Y/Y, vs. +1.3% last week. The warm weather gave a boost to weekly sales, but cool weather generally pushed monthly sales down.

    Redbook Chain Store Sales: +2.5% Y/Y vs. +2% last week.

    May Challenger Job-Cut Report: 38,810, up slightly from 38,326 prior and near a four-year low. "Announced job cuts have, for all intents and purposes, returned to prerecession levels."

    Apr. Pending Home Sales: +6.0% to 110.9, vs. +4.3% expected and prior month’s revised +7.1% to 104.6. Sales +22.4% Y/Y. "The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus," NAR’s Lawrence Yun says.

    The European Commission is planning pan-European supervision of credit ratings agencies, with proposals due out later today to improve oversight and transparency.

    Greece plans to sell stakes in the state-owned railway and water companies to help reduce its budget deficit. "We decided to accelerate the privatizations process,” the Greek finance minister says.

    Germany’s cabinet approves a ban on naked short-selling of all stocks and euro currency derivatives not intended for hedging against currency risks; Germany and France continue to drift apart on regulatory policy.

    According to media reports, Iran’s central bank has announced plans to sell 45 billion euro from its forex reserves and buy U.S. dollars and gold, and other Gulf states are moving to cut their euro holdings as well.

    AT&T (T) lowers prices on some of its wireless calling plans and moves to a model of charging users based on data usage on devices such as the iPhone. Beginning June 7, the carrier will offer new plans costing $15/month for 200 megabytes of data traffic or $25/month for two gigabytes. T shares +0.8% premarket.

    Amgen (AMGN +4.4%) gets key FDA clearance for Prolia, its injectable bone strengthening drug. It’s a potential blockbuster market, and analysts believe Amgen could make billions of dollars in revenue from Prolia’s launch.

    Speaking at the All Things Digital conference yesterday, Steve Jobs (AAPL) took another jab at Adobe’s (ADBE) Flash software, promised not to compete with Google (GOOG) on search, and called Apple’s recent market cap "surreal." (John Paczkowski has the live blogIt’s a good thing most investors don’t understand what "surreal" means! 

    Sometimes, the Devil does your bidding:  Goldman Sachs upgrades Monsanto (MON +3.4%) to Conviction Buy from Neutral. Monsanto has been the second-worst performing stock in the S&P 500 this year, but "bad news is exhausted" and investor sentiment is bottoming.

    With shares down 36% since the Gulf of Mexico disaster, BP’s (BP) precipitous loss of market cap is spurring takeover speculation.

  32. tchay… do you have any thoughts on RIG?

  33. Yip, I’m guessing that JRW got into TNA when IWM hit 64.04 and he is still in.  :)

  34. Juda…LOL… You aren’t half wrong!!! 

  35. Gel
    I just bot some with short puts & cals Jan12, it is very good company and good price plus huge vix now to sell options, but I think it can go lower because lots of their expensive rigs in gulf of mexico (and you know that some projects can be stopped for a while there)

  36. yodi
    June 2nd, 2010 at 9:48 am | Permalink  
    Good Morning Phil
    In my arsenal of C I am holding the Jun c long pd 1.27 now .90 do I take the loss or roll the caller to say Jan11 and sell the same amount of say jan11 5caller to cover part of the loss your thoughts pls thks.

  37. T/Phil – they’re also offering a $20/month tethering option starting June 7th but you have to nix your unlimited data plan and downgrade to the 2 GB of data/month in order to get in on it.
    Sorry about the reversal repost. The one day I didn’t go back and read all of the prior day’s comments…

  38. Yip, I’m playing it today as a "golf day trade" or a clock trade  (SS will know what I mean).  I bought TNA after the first 15 minutes when it was hovering just above 64.  I’ve put in a stop order to protect myself, and now I’m off to an assembly at my kid’s school (9 holes of golf would be my preference), and I’ll be back this afternoon to close it out.  Good luck.

  39. Juda…Love that method.. I’m pulling for you!

  40. yip,
    I’m in TNA at $43.41 (1/2), sorry, it’s a busy morning here.

  41. judah – let me know when you get back. 

  42. judah,
    Am I THAT predictable ?

  43. JRW…incredible I got a lower entry.  Can I bronze that?  I assume that’s a once in a quarter phenom! 
    My question is……I know its not a simple answer…
    How do you know when to sell….

  44. tchay/RIG
    Thanks!….I agree with your comments. The safety in this company, I believe , is the worldwide exposure they have to other opportunities. I executed a 2012 40-60 bull call spread, and sold a bunch of 40 puts.

  45. SS, Still here, got another half hour before I have to leave. 
    JRW,  I’ve been enough of an acolyte that I can at least predict moves at certain times of the day.  And, as long as I get those first lines from you before 9:45, I can usually join you.  ;)

  46. I usually sell when approaching one of my lines AND the strength of the move is waning.

  47.  Yip -

    Left you a comment on my story.

  48. Judah,
    Well done !!

  49. Phil,
    What do you think about Hercules Offshore (HERO)? Stock is at 2.51 and selling 2012 calls and puts at 2.50 strike nets almost $2! Thanks..

  50. JRW…Got it, again it’s not scientific it’s more of feel and watching the weakening of indicators along with falling through at this point if it falls through 64.52 and other things line up you’re out I assume.

  51. judah – been working on something interesting.  Combining what I have learned from JRW about daytrading and levels, with my experience in drawing trendlines I have been trading options using Optraders 5dma trades to trade the channels.  Has been working rather nicely.  Optrader always stays balanced with equal calls and puts on companies that are trending using the 5dma as a pivot.  However, I have found that while these companies trade along the 5dma trend they still travel within a channel.  This is what I have been exploiting.  It is nice to be balanced with stocks that are trending up and others trending down in any market. You can also switch your trade into a vertical to protect theta over night or long weekends.  Currently I am trading calls in AAPL and puts in MMM and ANF. 

  52. Phil,
    What would be a good downside hedge here? I’m thinking EDZ?

  53. TNA..back in 44.44

  54.  Update on TSL

    Got to love when the second-most efficient solar company wants more…

    Trina Solar will engage SERIS to provide research and development services to develop a high efficiency crystalline solar cell by printing contacts on the cell’s rear to increase front surface exposure to sunlight. The Company targets to realize up to 21.5% production efficiency, and up to 23.5% laboratory test efficiency, with project completion within three years following commencement in June 2010. In exchange for the project’s intellectual property rights, Trina Solar will cover the cost of the research project.

    "We are pleased to collaborate with SERIS, Singapore’s national institute for applied solar energy research, to develop and embark on this innovative cell process technology," said Dr. Huang QiangTrina Solar’s Vice President of Technology. "We are confident that the combination of our leading manufacturing capabilities with high-quality research from SERIS, will lead to further increases in the efficiency of our crystalline silicon solar cells, which we plan to integrate into our production lines by 2013."

    "We are excited to have this opportunity to work with Trina Solar in the development phase of this advanced solar cell technology. We expect the technology to be transferred to the production line and ready for commercial production within the next three years," said Prof Armin Aberle, Cluster Director "Silicon Photovoltaics" at SERIS.

    If you aren’t long yet, check out my report from last Friday. Great entry price right now.

    Also, I just posted The Daily Discourse, which continues my examination of the IMF and third world nations.

  55. yip,
    Correct, I’m somewhat concerned that we can’t even break through today’s pivot; but we seem to be bouncing now.

  56. JRW…thanks.
    Pivot of 64.96….I assume you have the same.

  57. gel, rather than RIG, i think you are better off with phil’s OIH play from yesterday.  RIG does have juicey PUT premiums, but so does monsanto, and BP…..

  58. SS, I’m going to look at that when I get back.  I originally joined this site as a consequence of following Optrader, but stopped following his trades when I became caught up in Phil’s world.  It has been a while since I looked at his trades.  So, you have been following a few of Optrader’s 5dma-related trades, but as day trades instead?  Now, I really do have to run.  I will catch back up with you this afternoon. 

  59. OUT TNA at 44.74
    Until we break the Pivot around 64.96 on IWM…I’m suspect.

  60. JRW or Yip- could you point me to a post that explains your methodology? txs in advance

  61. yip,
    I’ve got 64.97

  62. sns… I’m about 3 weeks new.  It’s definitely not my method it’s JRW’s.  However it’s easy but hard.  JRW uses support and Resistance lines by looking back over a few days to weeks and establishing Support and Resistance points along with DeMark Trend line drawing..Basically from the tops and bottoms of candles back to it’s next top or bottom.  Pivots are also considered. 
    He also uses a 1 minute chart of IWM with RSI, Stoch, and Mom indicators to partially help his entry/exit. 
    The medium used to trade is TZA or TNA using the IWM for entry and exit.

  63. it’s close… and starting to move again toward it.. I don’t have patients to stay in longer…. I’m just getting my bearings in this though.

  64. sns
    June 1st, 2010 at 1:51 pm | Permalink  
    RMM I believe to some degree I do and maybe JRW will confirm.  The first problem for those trying to figure it out, it is NOT a science, another words there is not wrong level per say.  JRW looks back first like a week and he draws a horizontal lines at major area’s where the market has stopped moving in any direction.  Then he will look further back and establish more lines that have a long history of resistance at certain levels and draws them.  I’m unsure if he combines the older and the newer lines.  Like let’s say an new line of resistance is 65.10 and old line is 65.02…I’m not sure if he take the average say 65.06 and make that his line or whether he takes the older line or newer line that I’m not clear on. 
    Today for instance I have 65.08 as a support level…WHY?  look back at the last time IWM was in this area… 3 days ago and what was the highest point where IWM had resistance before?  65.08.  Look at the candle on 5/26/10 the candle at @ 12pm eastern…  You see that level of 65.08 was prominent that day and once it broke through that level it was the resistance.  I think that’s most of it…. Really not that hard. 
    Once he has the lines drawn he uses those lines as triggers to buy or sell AND if this lines up with a good 1 minute chart of IWM as Momentum, RSI, and Stoch match up he has a strong trade..

  65. AMD/Kwan – Cool, I hope they work well.  There hasn’t been much innovation lately.

    HOV/David – Nice call and, with earnings tonight, a sensible exit

    Chickens/Kinki - Have you ever been to one of those dinners where they cut the tail off the lobster and eat it while alive?

    25%/Kwan – Oh come on, there’s even a song about that:  "The Internet is for Porn!"

    C/Yodi – I still like C but there’s no sense in putting money into it.  You can roll to the Jan $2.50/4 spread and that gives you your .37 back plus another .23 profit if C just holds $4 for the year and also buffers you .50 to the downside.

    T/Kwan – I’m surprised they didn’t do something sooner as their traffic costs have to be huge but I guess, like any smart dealer, they wanted to get their users good and addicted before they start raising the prices….  No worries on the other thing, it was just too complex an issue to rehash. 

    HERO/Make – I like those guys.  It’s doubtful the shallow drillers will get hit with regs like the deep boys but HERO got slammed like they built BP’s rig!  I really like the .40 spread of the 2012 $2.50/5s as you risk less than if you own the stock for $2.50 but you can make a lovely 525% to the upside.  Another perfectly reasonable way to play is buying the stock for $2.50 and selling the Jan $2.50 puts and calls for $1.05 for a net $1.45/1.98 entry

    Wow, what a move al of a sudden.   Oil took off like a rocket from a retest of $72.75 and is now at $73.75.  All the indexes perking up nicely

  66. WOW.. JRW..
    I was confused reading this… I was thinking this sounds like something I wrote…. LOL DUH… I didn’t notice that you copied and pasted it.  Your using my explanation for your method.  I’m surprised but pleased!

  67. Out of TNA at $45.22

  68. JRW..Nice play…Yea it’s stuck around the Pivot and is having trouble moving toward, into, and through that area..
    Would like to re-enter around 44.50 when IWM is back to line 64.50 area unless it steps through the pivot and moves higher…

  69. Bought a large position in NS (NuStar) . A director of the company just bought $19 mil of the stock (Wm Greeley), and holds much more. This company is a LP, like so many of the transmission companies are, but also it the largest manufacturer of asphalt in the world.

  70. yip,
    Thanks for the explanation, it allows me to concentrate on making money
    Back in TNA at $45.09 (1/2)

  71. Jo… I was short OIH last week and made out well. I’m waiting to enter it long after some of the dust ( or should I say oil ) settles. I got out of BP yesterday with a small loss, and feel it is too risky for me.

  72. EDZ/Jomp – I think, despite Nomura’s call, it’s a little too risky to short emerging markets right here.  As oil gets back to $75 it becomes a reasonable thing to hedge but I still think the TZA spread is the best short-term protection as the RUT is still flying high compared to the rest and, if they break down then the RUT can snap hard.  Still, right here I’m bullish for at least a good re-test of our low-end ranges. 

    I’m not liking the way we get caught up at about the expected 1% bounce zone.  Let’s not get too excited about 10,100 and 1,080!

    Methods – I agree with JRW.  I never used to put so much thought into what I was doing.  Like the 5% rule, there is a certain mixture of art and science that a lot of people are not comfortable with but, if it were a "science" then everyone would do it and the algos would exploit it and we couldn’t make money off it.  Short-term trading is about getting the feel of the market and catching the right waves as they go by.

    "Stop panicking," says Dow Chemical (DOW +1.4%) CEO Andrew Liveris to investors, "demand is good." At the Goldman Sachs Basic Materials Conference, Liveris highlighted the difference he sees between Wall Street (where "the sky is falling") and Main Street, where everything’s fine. His order books show improving demand each month.

    Moody’s (MCO +1.9%) CEO Raymond McDaniel tells the Financial Crisis Inquiry Commission that his company’s inaccurate ratings of mortgage-related investments were "deeply disappointing," as chair Phil Angelides calls the ratings service a "triple-A factory." Some former Moody’s analysts will testify that they felt intimidated by bosses to assign rosy ratings to risky debt products.

    Before heading in to answer his subpoena from the FCIC, Warren Buffett tells CNBC that the market will keep demanding "brand name" credit ratings even if the government encourages competition. "Rating agencies sort of evolved into this national duopoly" where Moody’s (MCO) and S&P (MHP) were "there first" and have pricing power, he says. (earlier)

    Workers of the World, UNITE:  Delta Air Lines (DAL +3.4%) is the last major U.S. carrier with less than half its staff covered by union contracts but may not stay that way for long, as it faces a stepped-up recruitment campaign by labor organizers on the heels of the recent federal rule change making it easier for aviation workers to organize.

  73. JRW… I hear you this takes a lot of focus.. Still watching….

  74. Phil:  Yep, I’ve had live lobster, shrimp and small smeltfish.  But in truth, its grotesque and inhumane.
    Supposedly, its probably better to put the food out of its misery quickly and cleanly because in the process of struggling and being "tortured", the muscles release all kinds of chemicals that actually make the meat taste worse.   (At least thats what they taught me at culinary academy).  Don’t know if its Japanese folklore or scientifically sound…

  75. Phil: do you think it is still OK to buy AMGN after it already jumped 8%?

  76. In TNA 44.97.. Not so scientific here.. Just hoping to hold pivot area, create base and move higher…

  77. Overnight Trade

    Hey all, I am doing the Exide overnight trade again. Last week, this worked out for a 4% gain when I thought the company had reported earnings. They are slated to actually report tomorrow morning. This time I have it right on the reporting. If you want to read over the analysis again, I have posted it as an Alert here.

    Let me know if you have any questions.

  78. Gel:
    Regarding NS, did you buy stock outright, or do the usual buy/write strategy? And surprise,  surprise, it has a nice dividend.

  79. JRW
    My 65.08 line seems to be strong line… (i was slightly off seems it’s 65.04 but same area, doesn’t want to break through that)
    Anyone can see where the 65.04 – 65.08 area comes from if they look back on IWM at S&R

  80. OUT of TNA at 45.22
    I definitely don’t have JRW’s stones or confidence in holding yet but it’s working out ok…Except that IWM just broke above today’s resistance… Damn..

  81. NS/Gel – Nice dividend on them!  They are totally in a sweet spot coming off the 200 dma so I like capturing the 7.7% dividend with the stock at $55, selling the Dec $55 puts and calls for $9 for a net $46/50.50 entry.  Nice one!

    Inhumane/Kinki – The lobster I thought was a bit much and the "drunken prawns" scared the crap out me but I love the "just killed" fish, especially the tempura…

    AMGN/Sean – I wouldn’t chase it as I’m not sure this will take them past $60 BUT if you wish you had bought it for $50 then it is very logical to sell the July $52.50 puts for $1.50 or the Oct $55 puts for $4.40 as that’s close enough and gives you some nice downside leeway.  If you want to be gung-ho bullish on them, long-term, you can pair those with the 2012 $50/62.50 bull call spread for $6 and that’s only $1 of premium anyway for the 100% upside play, even without the offsetting puts

  82. Jbur/NS
    I bought the stock…. and will go back in in the next few days to structure a short straddle in order to pick up income down the road. This is one that I traded last year, but downsized my portfolio last January, and cut the ties. This time I plan to keep it long term. This director that just bought the shares paid a little more than today’s price, and he has at least twice as much of the stock already… That is a good signal IMO. I kinda think Chaps also has a position in this one.

  83. I am executing one more today…. buying ROST (Ross Stores) the second largest off-price retailer after TJX. Am buying the stock, and will structure a short straddle for January income.

  84. Just mulling over Phil’s critical numbers--as I have been looking at company and index charts over that past year or so, the markets have been taking those long lines that hang above and below the normal trading range where no open or close happens--it seems to me with 90% or above accuracy and many times to the penny.  Many times these have been major turning points also.  For instance, (using the OHLC chart style shows these well) 6mnth SPY chart--12/14/09 down to 105.47, was taken out on 2/5/10 by the down of 104.58, just exceeding the previous line and then turned up.  Many times I have watched this happen within 10 trading days.  For instance, XOM’s 5/6/10 line down was at 58.46--it’s lowest trade since then was guess what?? 58.46 on 5/25/10!   SNV major line down to 2.60 on 5/5/10, another on 5/6/10 (usually doesn’t happen), but trading in the 2.90 range, up to 3.20, but by 5/21/10 it traded below the 2.60.  Another line down happened 5/25/10 to 2.45, so I sold what I had bought (@2.57) for 2.87, and hope to buy back around 2.45.  It took me a while to believe this.  Maybe their computers get ahead of themselves or something, I don’t know, but it happens often enough not to be coincidence in my opinion. These observations is why I believed the flash crash numbers.  So….. if applying this to Phil’s numbers, looks like we may be in trouble, since the low number for NYSE is6451, below his critical 6500, and it hasn’t gotten there yet.   Dow to go back to 9774, S&P 1040, if this follows through.  Has anyone else observed this?? (I have found It is best noted on a 10-day chart, for trading purposes.)
    Thanks EricL for your response yesterday.

  85. Europe finished flat by the way, they had a very nice stick save in the last hour of trading.

    DAX couldn’t quite crack 6,000 (5,981) but a big turnaround is encouraging. 

    Euro still flicking along the bottom at $1.22.  Pound is $1.434 and it’s 92.25 leaderless Yen to the buck….  Copper $3.02, Gold back to $1,225 and oil hovering at $73.50 with inventories tomorrow.

    ROST is another nice pick, Gel.  Very good screening but don’t go building back up to 100 positions, please! 

  86. phil- if we close above or below our 1% levels, what would be next?

  87. JRW and Yip- txs for your feedback.

  88. Apart from HOV any earnings play today?

  89. SNS.. Glad to help I know how it can be frustrating.  I sold WAY to early…that’s what I need to work on.  I’m the extreme of bird in the hand,….

  90.  Hi Phil: I’m a new Basic Member, and I’ve been scouring the posts trying to figure out the TZA Hedge you posted with the QID hedge  but the math doesn’t seem to work out  in the TZA example and I can’t find an update in the comments I can read.  Also, what about TZA as a Speculative Play (buy call/sell put) as the downside is so limited?  Also, if TZA or another of the ultrashorts reverse splits like SRS did, what happens to the associated options?

  91. sns / next
    More of the same !!

  92. JRW-Phil- I realize more churn, but trying ti understand next levels to key off…so say we close up 1%, are we looking at the 2.5% or the 5%? Or do we retest the 1% (or halfway to 1% line) before moving up (or lower) again?

  93. JRW/YIP.  Trying to learn by watching, After JRW’s buy at 45.09 IWM took an almost immediate downturn to 64.83 along with momentum, RSI & stoch.  What prompted sticking it out?  In hindsight I see support on 1 min in the 64.80 range. 
    Thanks for taking time to share and summarize!!

  94.  Euro peaked yesterday at 1:30.  Seems like struggling to last that long today.

  95. desmoines
    I bailed there because it looked like the move was failing, and I was already up 4%, then 7 minutes later, it hadn’t failed so I’m back in. Even though I’m a permabear, I trade with an agnostic bullish bias because that’s what works in this market !!

  96. judah: are you still there ?

  97. Phil/ROST
    ooops… I’m at 125 positions and done – that’s far better than the 325 I had last year. I sold a short straddle on my ROST shares – selling the Jan 55′s p&c for a 22% discount.

  98.  LOL – "the average porn site visit lasts 6 minutes, 24 seconds"

  99. yipcarl
    Hi Question what does IWM stand for thanks

  100. RMM, Checking in from my iPad to see if the comments now work.

  101. IWM…plug it in your symbol field…It’s the I shares Russell 2000 index. Tracks the RUT – Russell 2000 index
    JRW = Good explanation to Desmoines.. That makes sense…
    Too bad I’m out early now I’m stuck watching unwilling to chase.
    JRW,,,,, I am a perma bear too, I need to learn the ‘agnostic bullish bias’

  102. judah: would appreciate how you enter TNA and immediately set a stop loss ?

  103. RMM, I don’t set a stop immediately. if I have to leave for part of the day and I think I have a good entry, I either set a trailing stop or a stop loss order at about the same place I entered.

  104. judah
     with the ATR of TNA its hard to select a trailing stop. what do you use ?

  105.  Almighty AAPL not looking too healthy today.  June 7 is WWDC of course.

  106.  Our old friend TBT might once again become a rising star. The treasury yield cycle is at a 12-month low.

  107. RMM.. I’ve been thinking as we’ve been talking about JRW’s method. 
    I think you are looking for more of an exact answer when there really isn’t one.  The truth it seems to me is that JRW is grossly familiar with a few simple’s almost too simple that we want to look for something to make it more complicated.
    JRW doesn’t have an exact stop loss, or an exact entry number, or really an exact anything.  Even the lines he draws he will tell you are open for interpretation.  He buys when resistance points are broken ‘into the move’ on the way up and goes short when support levels are broken ‘into the move’ on the way down.  He also uses trendlines that he draws to connect previous sloping lines, if I could attach a chart I could explain better..  These trendlines sometimes correlate with a pivot level or even a fib level at times.  I think ‘into the move’ is the hardest thing to grasp.  you’ve got to have a feel which way the market at that specific time is moving.  As an example look at the SP500.  It was ‘into the move’ between 8-9am, but between 9am and now…the ‘move’ has stopped. 
    I regress, he loosely connects all of that info to a 1 min chart on IWM with a Fast Stochastics, Momentum, and RSI indicator and tries to buy when all the indicators are at the extreme and starting to move back the other way.  I’ve noticed PRICE (support and resistance) is most important for JRW.  If the S&R looks strong he takes the trade and to hell with what the 1 minute chart says.
    This is what I’ve learned.  I’ve made 3 trades on TNA today using this methodology and they were all profitable. I’m up about 1.5% so far today on those trades.  I got out to early on TNA and left 50 cents or another 1% on the table….

  108. Phil-
    I was thinking of entering into a MON position.  I thought about possibly doing a Oct 52.5/57.5 call spread.  What do you think of this or possibly going further out?  Also, is this a good trade, or at least the type of trade you recommend?

  109. yip; txs, chart you can send on AOL.
    Agree with your comment, JRW has the right hunch most of times, today, when I was sleeping , there were noce upward movements, missed it in my dreams.

  110. biodieselchris – that is an interesting stat – I hope that is more of an indicator of a short attention span than anything else :)

  111. Critical numbers/Fizz – I don’t usually worry about stock-specific numbers but it is a serious issue on indexes.  On my 5% Rule, we throw out spikes and, frankly, I think it’s always a good idea to throw out spikes adn that maens that 6,451 on the NYSE is a meaningless bit of data as it didn’t even last an hour.  Going back to March, it’s the 6,650 line that seems to firm up as a serious support and that’s right what we bounced off today.  If we look at the NYSE topping out at 7,500 (thowing out all of April’s silliness) then a 10% move down is 6,750 on the button and 5% is 7,125, which is currently the 200 dma.  Since the NYSE bottomed out (ignoring spikes) at 5,000, 7,500 is a logical spot for a top and that 2,500-point run has a logical pullback of 20% to 7,000.  Since we topped out at 10,000 on the NYSE, I am pretty comfortable using these levels as major indicators and that leaves us looking at 6,750 as a "must hold" line, 7,125 as "improving" and 7,250 as our recovery zone that takes us up to a new trading range.  

    Below 1%/SNS – At this point, I think even blowing our current bounce support would be a bad sign.  Dow 10,150, S&P 1,085, Nas 2,250, NYSE 6,750 and RUT 650.  Not holding those into the close is going to be a real sign of weaknes.  Where we are right now is nothing more than the top of the decending channel I drew out in yesterday’s chat.

    HOV is not an earnings play, Dilbert.  HOV is longer-term.  I’m not very excited by tonight’s other earners but JOYG and STP report tomorrow morning and those should be fun. 

    JOYG has very low expectations for earnings but I think the Q was good, it’s the outlook that concerns me.  Fortunately, it also concerns a lot of people so I do like selling the July $45 puts for $2 and the July $55 calls for $2.65 while going long with Oct $60s at $3.60.  This is similar to the AAPL play but we’re adding the puts as they are rollable and JOYG is a nice little company to get stuck with long-term, even if they miss.  To the upside, you can’t lose on the caller without beating the putter and then it’s a rolling game that puts us net positive on the stock wit a -$1.05 basis on the $5 spread with 3 months to roll

    STP is another beaten-down solar play and they report tomorrow morning.   They are a Chinese ADR and China is pushing alt energy stimulus so I expect nice noises from management but this is a very speculative play that we take the money and run on if all goes well:    $9 puts can be sold for .47 and that can offset the purchase of the $9 calls at $1 but, if this goes badly, you end up owning STP for net $9.53, about the current price so be careful!

    Welcome RDnelson!  Hmm, that’s a lot of questions that I’ll be happy to answer when you tell me – Which TZA play?  It’s not like we only have one and, during the day, it’s kind of hard for me to dig back and look.  Feel free to post in the comment I made at the time (and when I made it is helpful for context) and I’ll see what I have to say about it. 

    Levels/SNS – Hopefully the above is helpful.

    125/Gel – Well I do hope you have disaster hedges firmly in place as you know (from experience) there is no neat way to unwind 125 position in a crash. 

    JRW Method/Yip – Good point!

    MON/Jtiff – One of my favorites last week and still cheap with a 2% dividend bonus.  VIX is still nice at 31 and if you want it long-term, why not just buy the stock for $50.34 and sell the 2012 $55 puts and calls for $21 and that’s net $34/44.50 for a 10% discount if put to you but a very nice 61% if called away at a pretty realistic price for MON in 18 months.

  112. Phil - what do you think about a RIG bull call spread 2012 35/45 and selling $35 puts for net entry of ($3.95)  vs buying underlying selling 2012 $45 p & c for a net 19.80/32.40 since there is no dividend.

  113. Phil
    EXC @ 37.63 with 5.4% Div. The 2012 37.50 puts and calls can be sold for 11.20  Over 90% of their generated power comes from Nuclear. What do you think for an anti-oil backlash play?

  114. Phil….I’m learning! 
    SO BUMMED I left TNA SO early…. :(

  115. Out of TNA at $46.23 for 3%

  116. RMM,  Back now.  You are right about TNA.  It is such a bouncing ball that a trailing stop almost invites the MM to take your shares.  I think the last time I set a trailing stop for TNA I set it at .50 and got stopped out, but was still glad of it.   I would rather use mental stops, but on a day like today, when I got a morning entry, knew I had to be out of pocket for a couple of hours in the middle of the day, and I didn’t want to close the trade yet, I put in a stop loss order below the lowest price of the day.  That way, if Moody’s decided to downgrade Italy while I was out I wouldn’t have gotten crushed.  And now, I’m back, stop order is canceled and I can trade it normally.  If I had stayed, I might have sold at IWM 64.80, so this one worked out for me, kept me from over-trading.

  117. judah: good comment, agree, I see it the same way.

  118. judah,
    Welcome back, no volume at all today; it’s like they missed a decimal point on the algorithms during programing !!

  119. 28/40Jtiff,
    I think Phil has a better idea. I bought the MON spread 2 weeks ago, was up 20% quick and instead of taking it I tried to sell 40puts last week, now I’m down mucho. Never got $3 for the puts. Maybe it’s a better buy today, the market doesn’t make sense to me and I lost. That was the Jan11 42.50/50.00 bull call spread net $5.13. My DXD 28/40-26, RIG 40/60-60, and TBT 35/41-34 all down, DIA gain TZA even and TNA loss. I have never in 35 years been so wrong for 3 weeks. Be extremely careful buy/sell C & P is safe. I wish you luck and the – last # is sold puts. Phil any solutions?

  120. Phil, I still need for get some more hedges in place.. especially b/c of added longs, and going on vacation for a week!! Should be a little cheaper picking some up today as  opposed to yesterday. Thanks..

  121. In TNA at $45.89 (1/2)

  122. JRW, LOL.  This looks more like a program from March or early April — low volume, helium float.  You’ve probably been in and out three times, since we both entered at about 9:50, while I’m better off for having stayed away.

  123. Jtiff/ Phil
    Sorry I didn’t notice my 28/40 tremor mistake, spinal injuries, can hardly type!

  124. Gel/NS

    I kinda think Chaps also has a position in this one.
    Yep, it’s true.

  125. SS/optrader.  Okay, so I’ve got AAPL up on my screen.  I see where Optrader would have entered.  The channels look nice and steady.  Now, what have you been doing?

  126. ALL,
    I am totally dissabled, that is why I can spend all day here. 14 broken vertibra from L5 to C4, didn’ t join for over a year because in and out of hospitals, now more stable and this keeps my mind going while I can’t complete my electronics projects, that dam tremor and loss of left arm control. This all reminded me of missed morning pills and decide to actually tell about myself. Thanks for everything including new purpose.

  127. phil, what is your current opinion on KEY. the Jan 9 calls and 7.5 put are over $

  128. sorry

  129. in TNA at 45.88.
    JRW I have a resistance line for the SP500 that it broke through that has now become support in addition with the your/our lines, and the 1 minute the entry looks pretty good even if it’s up 5%…that’s the only thing that worries me…

  130. judah – not a good example day.  Channels are very narrow today.  Not worth daytrading tops and bottoms with options.  Hopefully tomorrow will give better range for examples.

  131. Shadow I very sorry to hear that, I wish you the best.  Would you mnind sharing how the heck that happened?
    I just finished with a broken Spiral Tib and Fib fracture, just starting to walk, barely, on my own two feet after 11 weeks…

  132. Phil,   Do  we buy back some DIA jun  101 and 102 putters today ? thanks

  133. JRW….you out?  What are you looking for to get out….looks like it’s breaking down…

  134. SS, I understand.  In general, are you looking at trading in the direction of Optrader’s plays, or both directions within the channel?

  135. yip: you entering at 45.88 ?? trend and momentum was down, you hope for a big reversal.

  136. For after Hours
    Anyone  have a recommendation for a Hotel in Paris  or Munich  ?

  137. Out of TNA at $45.78 for a $0.11 loss

  138.  Phil – Found the TZA  w/more detail in 5/24′s Disaster Hedge posts - Buying 10 TZA June $7 calls for $1.27 ,Selling 10 TZA June $8 calls for .96 (net .31), Selling 5 TZA July $5 puts for .54.  Your post was on selling premium to buy cheap insurance.  Probably outdated now so close to expiration, but I’m more interested in a speculative play on a summer disaster scenario as I have no longs to protect right now.  Thx.

  139. I just half followed JRW in…
    I was hoping for the levels to hold…..Looks bleak I’m close to selling… It was a bit of a chase.
    I’m out.  45.59.. damn..30 cent loser.. Not a good trade, didn’t follow the method .

  140. JRW: the last enrty you did was not the typical JRW move, I saw NOTHING.

  141. yip,
    The 65.34-5 "floor" broke, but I’m set up to get back in if it turns out that this is a FLUSH !!

  142. So for some mid-day chatter.       I got a summary prospectus for a Schwab US treasury money fund ticker  SWUXX
    2009 yield was .01%     now that fund was properly named!   it really does "SWUCKS"

  143. There was nothing it was simply a trade that I was hoping for another push higher I assume JRW was doing the same..

  144. judah – definately in optrades direction.  Starting with full position and selling 1/2 at top of the channel and buying back at the bottom. 

  145. RMM
    IWM 65.35 was holding as a floor, stoch was climbing, seemed like a good idea at the time !!

  146.  Phil / Jobs : Any trade pre-jobs number tommorow? I suspect a big headline number because of census additions….and i wonder how the MSM will spin it. 

  147. JRW….It’s hard to say if it’s a flush or not I have no feel…I’d like to see consolidation around 65.05 area… Oh it’s there now… Let’s see if it holds..

  148. JRW: a flush is ??? when they try to flush out the retail investors first and then run up agIn ?/
    Like clearing the toilet.

  149. Damn, we are NOT breaking out of the channel! 

    10,080 is the 0% line for the Dow and if I were Mr. Stick, I’d use that as my go point and jam the Dow up 100 from there, back to about 1,100 so that’s the game(d) plan for the afternoon if we are getting back to the usual bullish shenanigans.  Which would be fine with us as we WANT to be bullish now…

    RIG/Brooklyn – I like the spread better because we don’t really know what will happen with RIG at the moment so I’d rather go with the smaller commitment and keep the cash handy for adjustments. 

    EXC/RJ – I love those guys as a long-term hold and they are very unfairly sold off.  With a 5.4% dividend you want to own the stock at $37.50 and you can sell the 2012 $37.50 puts and calls for $10.50 which is a very nice net $27/32.25 entry

  150. Could we finish down today?……

  151. Gel, thanks for earlier response on NS. It’s run up a bit and starting to pull back.. waiting for my entry. Also, when you say 125 positions, are you counting the buy/write, the stock + short put+short call as ONE position?… just curious.

  152. SS, Best to get in when Optrade starts his trade, or when he adds to make it a full position, or do you just enter mid-stream?

  153. Time to jam up the Euro so they can get a nice bump in erl into the close

  154. Phil NICE CALL… I think you are onto something
    RMM you got it, that’s what I see as a flush and right now it looks like that could be what’s happening.  held the 65.04-65.10 level well..

  155. yip; your 65.08 line was a good one, JRW did not have this one.

  156. RMM/flush.  Yep.  The bots can smell fear, so they cause the retail investors to panic and take their shares before running it up again.

  157. judah – I think when he enters is best.  I asked him if he still liked the charts he was already in before I entered.  Before entering I then setup the charts with channels and S/R lines and entered at the bottom of the channel for calls and top for puts.

  158. RMM yea that was very obvious to me.  Real strong level of S/R there…
    I think we are going back up and PHIL’s thought is right…if they want to be real sinister they close this area or a bit lower and gap up through that level…
    Back in TNA at 45.55… Not scientific…I just think we will hold the 65.10 area if we blow through it I’m out…  I like the tight stop that’s another reason I took it.

  159. yip,
    I’m holding for a bounce off 64.97-65.04 or a Stick

  160. Phil, thanks for the details on your numbers.  I appreciate having you all to talk with and learn from.

  161. JRW…probably a safer play but I like the 65.08 level… so I went in… plus I think the manipulators are ready to move this market higher, I thought so yesterday and was wrong, I still think it’s coming…. I see a summer rally and an end of summer/fall BIG correction.  8000 or lower on Dow.  Of course that bias/opinion doesn’t help TNA trading…
    OUCH…..dropping I hope it holds!

  162. All,
    It was an accident in 2001, 25 operations, coded during C3/C6 surgery didn’t finish with fuse and now nobody will redo. They want me to take pain meds, been there done that and refuse all even after the last 6 surgeries, the pain goes away faster if you refuse. yipcarl hope your leg gets back soon and hope you avoid the pain pill yoyo.

  163. Damn Shadow… My dad had good man.  I’m healing well thank God.  Best of luck healing up…
    Now let’s hold IWM right here!!!  Where are the manipulators when you need them!

  164. yip:
    its hanging at your 65.08, will it break down ?

  165. EURO broke 15 minutes earlier today than yesterday.  More distrurbing, Mighty AAPL looks like it will break 260.  A nice rhyme with yesterday without exactly repeating.

  166. It has….. I would becareful hard to tell…Now I think JRW method of buying as it moves UP through resistance pts is best bet here instead of hoping for a bounce… I’m barely hanging on… Don’t have a good feeling..  Waiting to see if Pivot at .96 holds if not I’m out for another loss……

  167. In TNA at $45.13 (1/2)

  168. Seems to have held Pivot…now look at 1 min IWM chart…indicators look bullish.

  169.  what in God’s name is the Semiconductor Index symbol in Yahoo Finance?? It used to be ^SOXX and now I can’t find it at all. 
    Christ – the number one website in the world — this kind of thing should have long since been solved. Using carrots and pound and dollar signs in symbols?? How ****ing annoying

  170. Phil:
    Regarding your reco on HERO at 11:13, did you mean 2011, instead of 2012?  TOS gave me 0.95 for the 2.5/5 2010 spread.  But TOS quoted me about 0.40 for the 2011 2.5/5 spread.
    .40 spread of the 2012 $2.50/5s

  171. yip; hard to believe, only when JRW moves in it moved UP>

  172. RMM…We’ll not really he just held true.  He said he was holding for Pivot area, he did and when it held and 1 minute looked like it was turning he jumped… He’s quick!  That’s what you have to be…almost need multiple screens… I should have waited for a more prominent level of support, it was a rushed non disciplined entry….

  173. JRW: it hovered at the real PIVOT line, not your line, so I conclude you also watch the pivot line.
    Now it shows the typical pattern, move up, retreat a little, then move further.

  174. RMM
    JRW used pivots but to a secondary degree HOWEVER I think JRW chose that level more becasue in TODAY’S trading it become a level of support…  look at the 64.90-64.99 price action today..

  175. biodieselchris/Yahoo SOX — only one X  — ^SOX

  176. "Obama expects ‘strong’ jobs growth in Friday’s report"
    Maybe a good time to go long…

  177. LOL.  The manipulation is astounding! 
    I used to curse it, now i cheer it on!   GO GO GO manipulators!

  178. kinki
    Obama has already seen the report, had it rewritten to look better, and YES, it’s a good time to go long !!

  179. Yip, Now, you’ve got it. Drink the Kool Aid and pass it on.

  180. JRW: enormous, it ran to your 65.35 line, wonder whether it goes tHRU,

  181. Drinking and passing…BOY is this good!
    Will you look at TNA…amazing… those S/R lines are astounding so glad I’m back using them, thank you JRW..
    Why did I ever stop…..?!??

  182. RIG Aug $40 puts can be sold for $4.10.  Margin about net $4K so a nice way to double up! 

    Solutions/Shadow – Not sure what the quesiton is as you put out a lot of stuff.  In general, it’s a nice list of plays and I assume DXD is your hedge.  All can be rolled and adjusted if you have to but, unless we break down here, it’s a bit premature.

    Hedges/Jbur – Unless you are going away tomorrow, I think it will be cheaper then too!  If not, and we head down, then the VIX goes up and we still get good deals. 

    Spine/Shadow – Hey that sucks!  Just be patient with trading, the less you force, the better you’ll do! 

    KEY/Drum – I haven’t been able to figure out what’s up with the regional banks as we keep getting mixed signals.  I went for LYG last week and that’s working well so far so maybe time to add another and KEY is an old favorite of ours from the $5 days.  I’d have to say they are safe enough for buying the stock at $8.12 and selling the Jan $7.50 puts and calls for $3 for a net $5.12/6.31, which is a nice 25% discount if put to and 50% if called away in 7 months so why be greedy?

    DIA/Yodi – No, my target hasn’t changed but might if Mr. Stick lets me down (as if he would).

    Paris/QC – I like the Intercontinental for business and hanging out as it’s in a great spot.  If you are doing the romantic thing though, the Ritz has a certain Je ne sais quoi that can’t be beat (great pool, great bar, great food).  Never stayed in Munich…

    Oh cool, perfect 2:30 stick just off my mark.  We’ll see if we get my finish

    Swucks/Stock – LOL.  Reminds me of the new word going around NJ, which is "whuck", short for WTF that I think Tina Fey started a couple of months ago and turns out to be quite useful in reacting to the markets…  8-)

    Jobs/Hanna – Tomorrow is just the usual 450,000 pink slips.  Friday is NFP and that should be a bullish-sounding +500K thanks to the census but nothing to get too excited about unless we get a huge beat. 

  183. Jbur…. yes, 125 positions includes everything that moves daily independant of each other. For instance, a buy/write has 3 positions – stock, sold calls and sold puts. Last yea when I had over 300 positions, I was unable to adjust much, as I was wearing out my index finger just scrolling. Fortunately, the market just kept racheting up, and I was long on everything. This worked until the third week of January, when the administration slammed the banks, and I lost 300K in one day. I immediately closed out over 200 positions, and have paid more attention to Phil and his hedging strategy.

  184. Doubling TNA at $45.96

  185. Chaps/NS
    LOL…. my memory is better than my trading skills. I recal when I jumped in last year, you said it was a good play – you still are right on!

  186. JRW… I never know when to blow.  My inkling is we finish at the highs but I just couldn’t resist 60 plus cents… OUT. at 46.12

  187. Phil, our ship sails Saturday morning so I have a couple of days. Thanks again.

  188. Out of TNA at $46.28, 10% trades, up 5% on the day !

  189. JRW: a gutsy play but HUGE again, congrats.
    Its amazing how well you read what the BIG money will be doing. CHANNEL-SURFING .

  190. JRW nice man nice… Now I’m learning.
    1.14 in profit for 2.4%
    Whoo Hoo!

  191. Smelling fear/Judah – Actually, yesterday someone pointed out an article that explains the bots don’t just "smell" fear, they are actually designed by teams of psychologist to create fear in the hearts of traders so they can exploit it.  That’s why I can tell you what the program will do at 2:07 – I used to help write those things before they turned totally evil…

    Damn Shadow, that does suck.  Fortunately, stem cells may help in the near future (as long as you don’t morally object). 

    Nice entry on that last TNA, JRW!  This (10,180-10,200) should be about it as I don’t think they want to be too showy today.  If the SOX and TRANQ pop 2.5% (now 2.35%) we might go higher but, otherwise, let’s just be happy to hold up here

    Yahoo/BDC – Slowly but surely they are letting it all slip away from them.  Little things here and there that no longer worth through budget cuts and neglect….  Very sad…

    HERO/Cwan – Yes, my bad, the PUT sale was the 2011s, the bull call was 2012 so ideally, the puts cash expire worthless and you have a free $2.50 upside for the next year.  Ignore TOS’s quote and make the offer, the ask on the 2012 $2.50s is ridiculous and the last sales were .78 and .43

    Astounding/Yip – "Oh I used to be disgusted, And now I try to be amused…."

    Sailing/JBur – Great, lets get it done tomorrow as Friday is a possible problem.

  192. Damn, one of you guys bought a lot of HERO!

  193. yip,
    Congrats, just be ready for some more if we see Mr Stick as they did in Europe !! R at 65.74, 65.87,

  194. Biodiesel
    When Yahoo does that I go to the hated ms the dreaded NBC they have a tab under markets, Look Up whatever, I have even foud pink slip listings there.

  195. yip: it has reached R1.

  196. Thanks…JRW….
    Broke through the 65.74 about to blow through the 65.87 it looks like…Can we really squeeze more?  I guess why question it just cheer on the manipulation!

  197. DIA Mattress: Take 1/2 of the putters off?

  198. Phil,
    Thanks !!

  199. It has and blew right through it…. I noticed my line of 65.73 was also the R1!  I didn’t even know that..
    WOW.. This market is nuts..

  200. Phil – how about Anadarko APC as a safer way to play than BP – similarly wacked but much less liability (25% passive investor). Buy underlying  for $44 and sell $35 puts and $45 calls for for net  $23  for a net entry $16 with a 2.2% dividend (on the entry price).  Or 2012 bull call spread 35/45 with the sale of a $30 put for a net entry of $0.

  201. yip, I’m in awe with you guys.. I know you cannot post charts here, but would it be possible for you to email me a chart where you draw the S&R lines so I can get/understand the methodology? I get lost when you guys explain the lines.. I’d appreciate it. My email is

  202. JRW and yip: this last upward move almost lasted 1 HR<

  203. RMM good observation…I’m not sure it’s done!

  204. Phil,
    Doesn’t make sense but my 50/60 BCS was fine but 60 putters? Seems like I made another typo. Today will cost $10 to change strike. Rig is down, should I wait or bite the bullit?

  205. JRW: today the pivot and R1 lines did well, the first time I see themalso do what YOUR lines usually do.

  206. Rav
    Sent you the same chart I sent RMM…

  207. yip:
    draw a line thru the highs today: its amazing.

  208. SS, Now, this was a set and forget day.  I could hold that morning trade to the bitter end, but I’m finally getting out here.

  209. JRW: your line 65.87: HUGE. amazing, you and the BIG money are aligned.

  210. Mattress/Daveo – I don’t think this is a top yet, tomorrow I will get nervous if we move 1.25% or less and pull back but this is a very nice one-day move, even if it is a low-volume BS stick.  The difference is now it’s OUR low-volume, BS stick so YAY!!!

    Big margin ($3K) but I like the GOOG July $450/500 bull call spread for $33, selling the Dec $440 puts for $25 for net $8 on the $50 spread and worst case is you own GOOG at $448.

    APC/Brook – I think you want to stay away from the deepwater drillers until we see what the regs are (and then their insurance costs go up etc.).  It’s probably an overreaction but HERO is more unjustly down and doesn’t have that level of exposure.

    BCS/Shadow – No, I missed that one, that on is a whuck for sure!  Give me the basis on that position and I’ll tell you what I think for adjustments. 

  211. judah / set and forget
    I’m with you, today, using your system, I would have made as much playing golf !!

  212. yip, I’d appreciate it if you send me the chart as well. cwancalo at gmail dot com.

  213. JRW,  I can’t trade with your speed and frequency, as much as I try.  But I’m patient.  So, $3.50 on TNA today, which is as well as I’ve ever done trading that stock — all because my boy was in a play at school so I had to leave the trade alone.  I should probably buy him a present.

  214. RMM…You got it start getting familiar with a couple securities/indexes and focus on old highs and lows OR current highs and lows….that and big numbers…. That along with a trendline – demark, maybe a fib, maybe some indicators on a chart for secondary..
    S and R is all you need.
    Juda what a pheNOM buy and hold day trade!!!!

  215. Bought DELL, strictly on oversold conditions

  216. judah – Play 1 of our original playbook.

  217. Phil, OXPS lists the margin requirement as $44K on your GOOG spread, not $3K. 

  218. judah,
    It does seem he’s earned the commision !!

  219. SS/playbook.  Yeah, the old screen play.  Nice to see the bots haven’t forgotten how to run it.

  220. opt – any trades before the end of the day? 

  221. Phil- say we end at 10,200, a clear break above the 1% bounce and at the low end of your 10,200 – 10,650 range…what do you expect to see follow through tomorrow? if so to what levels?

  222. Oops.  Wrong board.

  223. Phil, RIG. c40 @22.82, c60 @ 12.32, and p60 @ 10.70,  net debit .20

  224. Judah, if you don’t mind me asking, why have you decided to not work the SPX short strangles anymore?  I like that strategy and i am curious about your decision.  Thanks for the comments.

  225. Phil, credir .20 sorry

  226. Phil- Any thoughts on buying the TZA $6 June calls for $1.15 with the hope of flipping them for $1.50 tomorrow or Friday?

  227. Hi yip if you sending charts please put me on the mailing list as well  and thank you
    I try to set up something on TOS but I can not follow your moves, with all the interpretations.

  228. Phil: Big money had stamina, the TNA channel going UP lasted over 1 hour. Wonder which specific stocks did the same.
    (jan35 callers are 40 % green but I won’t touch them).

  229. Trading AAPL…..I believe breaks 270 within seven days.   Looking to sell full June covers then. 

  230. GOOG looking strong but no decent volume. 

  231. Charts:  I suggest people post charts on if you want to share them.  Then you can just put in the links.  Also, it’s a good site with tons of charts uploaded every day with many interesting viewpoints

    Stocks need to rise in a hurry, Concept Capital says, noting that just 8.6% of all S&P 500 stocks currently reside above their 50-day moving average – well below the 20% level at which a bull market is called into question. The current streak below 20% stands at 8 days – just three days short of the longest ever streak for a bull market.

    GM May U.S. sales: +16.6% to 223,822 vehicles, vs. Edmunds expectation of +12%. Surviving brands (Chevy, Cadillac, Buick, GMC) +31.8% to 222,305, leaving just 1,517 sales of phased-out brands. (PR)

    Ford (F) May U.S. sales: +21.9% to 196,912 vehicles, vs. Edmunds expectations of +22%. F-Series truck +49% to best month in more than two years; record Fusion sales, +13.1% to 22,381. Ford adds retail share for 19th of past 20 months. (PR)

    Chrysler (FIATY.PK) May U.S. sales: +33% to 104,819 vehicles, its first time over the 100K mark in more than a year, vs. expectation of +28%. Chrysler brand +29% to 20,699; Jeep brand +6% to 22,948; Dodge brand +73% to 42,242; Ram brand +12% to 18,930. (PR)

    Kia May U.S. sales: +20.6% to 31,431 vehicles. U.S.-built Sorento leads sales again with 8,166. (PR)

    Daimler (DAI) May U.S. sales: +21.9% to 19,871 vehicles. Mercedes-Benz +26.7% to 19,176; Smart -40.6% to 695. (PR)

    Toyota (TM) May U.S. sales: +6.7% to 162,813 vehicles. Toyota Division up 3.6% to 140,597; Lexus up 31.3% to 22,216. Light trucks up 16%. (PR)

    Hyundai (HYMLF.PK) May U.S. sales: +33% to 49,045 vehicles. Top-selling Sonata +92% to 21,195. Tucson SUV +227% to 4,395. (PR)

    Nissan (NSANY.PK) May U.S. sales: +24.1% to 83,764 vehicles. Nissan Division +24.1% to 75,673 – including Altima +19.2% to 21,950, Versa +95.6% to 9,842, Sentra +59.6% to 8,968. Infiniti +24.6% to 8,091. (PR)

    Honda (HMC) May U.S. sales: +19.1% to 83,764 vehicles. Accord +33%, Acura +24.3%. (PR)

    Volkswagen (VLKAF.PK) May U.S. sales: +20.3% to 23,543 vehicles. (PR)

    AT&T’s (T +1.2%) introduction of usage-based pricing for its smartphones brings some much-needed common sense to the wireless industry. The new plan also will provide “long-term revenue growth” for AT&T and help the company "limit, or at least get compensated for, abusive usage” from the heaviest users.

    Google’s (GOOG) Chrome operating system will be released in the "late fall," says a top exec, as the company gears up to take on Microsoft (MSFT).

    For the third time since December, New York state delays paying its bills. "Had we not done that, I think we would have been close to broke," says Budget Director Robert Megna, warning the "next big bottleneck is in August and September."

    Also at the FCIC hearings today, Warren Buffett foresees a "terrible problem" for municipal debt, "and then the question becomes will the federal government help… I don’t know how I would rate them myself. It’s a bet on how the federal government will act over time."

    Credit markets aren’t looking less risky today, as the TED spread (a key measure of money-manager nerves) is widening again for the 10th time in 11 days.

    Acknowledging the incentive for some homeowners to walk away from their mortgages, Bank of America (BAC +2.4%) rolls out its new earned principal forgiveness plan for borrowers behind on their mortgages and whose loans are at least 20% underwater.

    With uncertainty (and regulatory risks) piling up around offshore energy, investors are starting to focus on plays onshore, and Credit Suisse’s Jon Wolff says gas looks good: "Domestic shale gas should emerge as a key solution to bolster energy security." Today, natgas futures +3.3% to $4.387.

    Shares of companies connected to the Gulf oil spill – BP (BP +3.1%), Transocean (RIG -3.9%), Anadarko (APC +5%), Halliburton (HAL +11.6%) – have suffered huge hits, but more big investors are saying the value of existing holdings, such as rigs and drilling platforms, means plenty of value remains in the stocks despite the dim near-term outlook for profits.

    Obama says the Gulf oil spill should send an urgent signal to Congress to complete work on energy legislation encouraging investment in clean energy fuels, rolling back “billions of dollars in tax breaks” for oil companies and launching a cap-and-trade system that would place a ceiling on carbon emissions.

    Airline passengers would be allowed to make and cancel reservations within 24 hours without a penalty and would boost compensation by as much as 63% if carriers bump them off flights, under new rules proposed by the Department of Transportation.

    Three lunchtime reads:
    1) Relative value, according to Mr. Market
    2) High-frequency trading: Fast, loose and out of control
    3) Three cheap tech stocks for defensive investors

  232. iflan/AAPL
    Please elaborate on your sentiments for Apple breaking $270

  233. Phil,
    Can I write something up on the Strategy with a screen shot so people can see the strategy?  This way I don’t have to email to everyone….
    As long as it’s ok with JRW..
    JRW…You can contact me here if you would like to discuss. Phil already knows the address…

  234. All out TNA 47.35

  235. Nice call on yesterday’s long OIH Jul 104.1 calls Phil!

  236. Robert/strangles.  First, I should say that I have made money every month on the strangles and I am indebted to Peter for his time and advice.  Over the past six weeks or so, I found myself spending more and more time unproductively worrying myself over the strangles. SPX never ended a month within 5% of my putters or callers, while my put verticals were in the money the past two months, so I made good money and should have been calm and content.  But, during the periods of high volatility, I found myself checking the futures through the night and playing out scenarios over and over.   During the day, I would focus on the strangles, which was also mostly unproductive.  I finally concluded that it hasn’t been worth the mental stress.  I’d rather be in cash in the morning and in cash at night, with nothing hanging over my head. 

  237. shadowfax / TNA
    Nice job, wish I would have held into the close, but had to sell when it hit my trend line.

  238. JRW
    Thanks used your 66.35 out 47.35 best move this week I’m going on a TNA/TZA vacation other than the hedge spread.

  239. judah: how can you emotionally go thru this trade today ? particularly if your bet was large. It worked, good for you, you must have nerves of steel.

  240. RMM
    No steel here, mellted away last week. Today made sense last 2 weeks??????????????????????????????????

  241. Judah, thanks for the comments.  You have mentioned "hunting for cheap verticals" in the past, would you mind describing in more detail what you mean?  Today i was looking at Julyt 1020/1010 at $1.30 but never got filled.  Do you like the $5 spreads better than the $10 spreads?  I really like this strategy when you balance it with the buy / writes.

  242. I would pair that with a 925 / 1200 July on the next dip.

  243. yip,
    I post as much as I can; I appreciate your willingness to share as well !!

  244. Yip, it would be great if you or JRW could use that charting site that Phil mentioned.  I would like to learn from the charts as well and i am sure there are a lot of others that would as well.  Thanks a bunch.

  245. RMM/nerves.  LOL.  If I get a good entry in the morning, I think it is easier to hold it throughout the day and close it out at the end than finding the right entries and exits multiple times.  As this one turned out, it would have worked even better to sell at 4:00.  The way JRW trades takes nerves of steel IMO.  My way just takes a willingness to ride out the day’s ups and downs, which just fits my personality better I guess.

  246. Phil- I read the Hugh Hendry letter this AM. Had to go through it a couple of times. Hard to sort out the historical references.
    In any event, an interesting read, indeed.
    A couple of things I take away from his viewpoint:
    1. China- don’t trust the numbers. (we already know that) . They are ready for a fall. Too much capacity,etc.
    2. Deflation then inflation- not sure I get the reference to a "deflationary event" followed by inflation/ perhaps hyper-inflation?
    3. Dollar has formed  a bottom, going up from here? Again , I don’t see the logic. Perhaps you could comment.
    4. And finally – this seemed to come from left field and what I found the most interesting- his reference to the corn price anomaly. This could be a major deal. Any thoughts here and if you agree, how would you play it?

  247. Hendry- forgot this one- He says he put together a "short credit portfolio" of cyclical industrials, etc. which are seemingly ripe for a big fall. I assume he is talking bonds here but this would be a nice list to look for shorts? Any access to this? or comments on what he is up to?

  248. Robert/verticals.  Probably the best move I’ve made this year was to place a raft of buy orders for $5 put verticals for .10 and .20 during the Flash Crash.  They all ended up in the money.  I’ve done a few more for June, mostly to protect my last SPX putters, but they are very hard to fill and I may just have been the beneficiary of the panic surrounding the crash.  When I’ve gotten them, I’ve just set up low ball bids, way out of the money, but still above my putters.  It isn’t much of a strategy, I’ll admit.

  249. RMM,
    Thanks for emailing the chart looking at the graphs it looks as it is only one stk trading but lets have a look what Phil is suggesting thks

  250. Phil   Is there a reason that the JRW RMM and Yipcarl comments on mkt direction bets only appear on the site towards the end of the day eg TNA today.  They seem to be pretty good at converting your directional guidance into specific big leveraged daily index bets.

  251. judah: tough guy, of course on UP days its great, on flat days ok, but on down days: UHHHH,
    did you have conviction that today might be an UP day ? and why ?

  252. Wheeee!  What a great day to be bullish!  Gotta love the stick man…

    OXPS/Mr M – TOS shows me net draw on buying power of $4,570 per contract for selling Dec $440 puts and that’s on their Free Trade account, which I started using as they have no possiblity of showing me PM from my live accounts on that one.  How can they charge you $44,000 in margin for shorting the $440 puts for $25?   Even at no margin whatsoever you would collect $2,500 against the possiblility of owning 100 shares at $440 so $41,500 is the absolute maximum possible they could hold on this trade.  Then you have to consider that EVERY broker gives you 50% margin on a stock purchase so that knocks off another $22,000 for a net $19,500 in the worst possible light and, frankly, if that’s what OXPS says it takes to sell a put and you are not under some IRA restrictive thing (and even if you are, you can do better) then it’s time to leave and find a better broker. 

    Follow-through/SNS – Anything less than another 1.25% to get us up about 5% for 2 days will be very disappointing

    RIG/Shadow – Well, the main issue is you let it go WAY too long.  It’s not about your call spread, which is $8 in the money anway and you paid net .20 for them - it’s about what you do with the $60 putter, now $17.50 and I’d either roll them to 2x the $45 puts or 2x the 2012 $35 puts, which would have about the same margin, maybe less.  My preference would be for the 2x Jans as you can always roll them along to 2012 anyway.   If you are worried about all those eggs in the RIG basket – you can also consider rolling your $17.50 RIG Jan $60 puts to 2x the OIH Jan $84 puts at $8.30.  It’s the same premise but it mitigates the risk of RIG going BK.

    TZA/GS – If we have trouble making it over out levels (see NYSE) tomorrow then maybe worth a shot, especially into the weekend but if Jobs are solid on Friday, we could be back to the top of that range very fast!

    Channel/RMM – One day does not a turn make but it is very encouraging. 

    Strategy/Yip – Yes, there is supposed to be a way for members to guest post.  Contact Ilene (at philstockworld dot com) and she can hook you up or, if it’s just the chart, you can do that thing.

    OIH/Kururi – Yeah, when I flip long on something I’ve been shorting, it’s usually a good sign!  8-)

    Hendry/Pstas – Keep in mind he’s been very gloom and doom for ages.  Deflationary event, as I understand it, would be a Sovereign collapse – not too different from our last credit crunch and hyperinflation is what I expect too in the end.  He sees the EU as collapsing just because it’s messed up, I see it as growing pains also, I see the US as being every bit as bad as Europe, we’re just not showing it yet.  As to corn, I haven’t looked into it but it’s an interesting point, isn’t it?  It bears looking into if you remind me on the weekend but I just took it as a thing to start looking out for rather than an emergency research project.   I don’t have access to Hugh’s list and again, I don’t nec. agree with his premise.  He and I had a parting of the ways in March of ’09 when he joined the fallout shelter crowd and I decided life will go on. 

    Low-balls/Judah – It’s a great strategy actually.  It just doesn’t pay off very often. 

    End of day/Tusca – I assume it’s because you are Basic and don’t have access to Premium chat until after 3pm. 

  253. RMM,  I don’t ride the losses down, I close them out quickly, on TZA or TNA.  Mostly, I try to follow JRW and listen to Phil.  As for today, Phil was pretty bullish, so I did start the morning looking for an entry to play up.  IWM dropped to one of JRW’s support lines, so I got on.  Had it continued down, I would have taken the loss before it got worse.  As it was, it moved up, I had to go my son’s school, so I placed a stop loss order to protect myself and when I returned I just rode it out for most of the rest of the day.  If I had stuck around, I probably would have closed the trade out earlier, so I got lucky.  Theoretically, one can do the same thing with TZA, but I don’t seem able to play the down days as well as the up days.  Also, I listen to a Pandora station during the day, it keeps me calm.  :)

  254. Hello All,
    Anyone knows why VISA drop today?  Should I sell my V for little profit?    Thanks.  Have a good evening!!

  255. i’ll write something up and share it with JRW and if he concurs I’ll keep it handy or post it somewhere..I need a few days…

  256.  gel1
    Reasoning for believing AAPL hits 270 within a week……
    Market in a general bullish correction mode.
    272 is a number they’ve already reached (several weeks ago).
    ipad sales (U.S.) have exceeded all expectations.
    European markets just now opening for ipad.
    New product announcement scheduled for Monday.
    No bad news on AAPL ….anywhere.
    So up she goes. 
    6 month and 12 month trend lines suggest it should be over 275 now.

  257.  Phil, 
    Since all the levels are now green is this a moment to be bullish? BTW, I still haven’t found the top 10 plays or buy list? 
    Also what to do about the short term hedges, namely I hold these ones that have hurt me badly:

    TZA 06/19/2010 8.00 C

    TZA 06/19/2010 9.00 C

    TZA 07/17/2010 6.00 P


    SDS 06/19/2010 32.00 C

    SDS 06/19/2010 35.00 C


    QID 10/16/2010 16.00 P

    These last 2 I couldn’t get the PUT for the first one and the CALLS for the second one…

  258.  Oops sorry, I had put in the positions from excel in a nice tidy fashion not occupying much space but the Html transferred like that… I know not to do that next time!! 

  259. Speaking of what the Internet (and all media) is really for:

    How can you not adore the lunatic headline writer behind this soon to be legendary Bloomberg article:

    Porn Stars in 3-D Lure Consumers to New Sony, Panasonic TVs


    There are money quotes all over the place:

    “I want to try it out,” said Satoshi Miyazaki, 33, who pays about 2,000 yen a month to watch adult cable channels. “I need something dramatic to justify replacing my TV. This could be the motivation.”

    Dude sounds like he needs a girlfriend, badly.

    Here’s more from Bloomberg:

    “Porn star Mika Kayama is at the frontier of a push to develop videos and content in Japan that Sony Corp. and Panasonic Corp. need to lure customers for their new 3-D televisions.

    Kayama and Yuma Asami, the top actresses of adult-movie maker S1 No.1Style, will star in the country’s first DVDs for the 3-D format TVs, providing content analyst Yuji Fujimori says can trigger the success of the new sets. Sales of adult videos in Japan were 108.6 billion yen ($1.2 billion) in 2009, according to Takashi Kadokura, an economist who runs Yokohama- based BRICs Research Institute. That represents about 30 percent of the overall video market in the nation, according to Kadokura. . .

    Closely-held S1 No.1Style will offer “3D X Mika Kayama” on June 7 and “3D X Yuma Asami,” Japan’s first pornographic titles in the new format, on June 19 to coincide with the release of Sony’s 3-D Bravia models, with more titles to follow this year, according to the producer, who uses the professional name of Sakon . . .

    S1 No.1Style spent three months making its first 3-D films, triple the time for a normal production, said 29-year-old Sakon.

    Actors Moves: “It was a different filming experience using a new camera,” he said. “Actors needed to move more slowly, furniture had to be relocated and lighting rearranged to make it work. But it was worth it. We’ll make a profit out of this.”

    Toshiya Shimizu, a 28-year old Tokyo resident, said he may wait for the cheaper 3-D computer.

    “I want to rent the DVD first to see how good the image is,” he said. “I’d like to watch Yuma Asami in 3-D.”

  260. iflan/AAPL
    Good reasoning why your expectations should play out. I would add one more…. they never disappoint, and their stock price has always been their resume. Many of their employees are paid in stock, and this is a very strong incentive. Thanks!

  261. Phil,
    Before V  took a dive from the mid 90′s, I SOLD 10  jun85 puts for about $1.80, now $13.85
    Now I am in a big hole, not having seen the move coming to $70 for V.
    What can I do to recoup? A simpler strategy would be preferred, or if you think I am sunk already, willing to go and sit on a mountain and forget all this trading business

  262. PS, thanks for the AAPL advice last night/this morning.
    You DID answer the question

  263. Man….was in an all day mitigation.  First time I looked up the DOW was up 225.  Stuck in my DXD position.  Dagg…..need an escape hatch tommorrow.

  264. The good news……David’s ZQK call is up 4.5%……whooohooooo

  265. Yip,
    I’d like to see that chart too. Are you going to post it or my email is
    Thanks, Aaron

  266. Phil
    I am one who believes GS will definitely be disciplined by the government, but this is not a big deal in the grand scheme of things, and will be no problem for GS. Do you have a suggestion for a January bull spread? Thanks!

  267. Yip,
    Can you put me up for getting the chart also? My email is:
    You guys are doing doing great and thanks for the time you spend sharing.

  268. Visa/Bobhu – I think it may have been the MasterCard Spending Pulse survey showing clothing sales down 3.7% along with a dip in Electronics and Appliance spending.  V and MA are all about total sales volume plus with gas prices down, even those manadory purchases are dropping off.  I have not been a big fan of the CC companies.  Not just US but the EU is trying to put a cap on their interest and fees and, as margins squeeze, retailers are likely to either apply margin pressure to them or begin pushing their own cards.  I actually had a business plan I tried to get going with NY State to turn driver’s licenses into swipeable cards that would allow drivers to use one card for ID that can be connected to loyalty accounts at hundreds of retailers but there were too many privacy concerns - I’m sure at some point something along these lines will take off and seriously challenge the credit card system.

    AAPL/Iflan – Just keep in mind you are not the only person who knows that and, if Monday’s announcement is along the lines of that thin macbook – there could be a big dissapointment sell-off. 

    Bullish/Amatta – Certainly not too bullish yet but you let those hedges ride way to long if you are looking to get your money back.  Obviously not cashing out short-term plays between the time TZA was at $8.50 and now that it is back to $6.89 was not the best idea, especially as we turned bullish at those bottoms.  You have a tremendous amount of protectecion so I hope you are protecting a massive amount of stock that’s doing well.  With TZA, you missed the point of the hedge by selling just 30 puts because if you had sold 60 July $6 puts, you would have a net credit of .05 and TZA is still at $6.89 with the July $6 puts an easy roll to the Oct $5 puts (now .60) so no concern at all.  As it is, you lose what you lose on you spread and you’ll be short the 3,000 x .39 on the short puts but best to let them ride until you can only get an even roll, then do the roll and hope the RUT doesn’t gain more than 5% by October.  Again, though, if you are protecting an adequate amount of long positions then the RUT gaining 5% by October shouldn’t leave you too concerned about the possiblity of being $3,000 short on the TZA puts…

    SDS at least is rollable.  You had a $1.90 spread and now it’s a $1.20 spread and you can roll that to Sept $33/37 IF you still want protection at this level.  QID is still good as protection but be aware that you risk assignment.  Asssignments are never a problem if you REALLY want to own the ultra-ETF as a long-term hedge.  If you owned QID now at $17.50, you could sell Oct $17 calls for $2.65, which is 15% 5 months.  If you get paid 3% a month for holding downside protection that’s 36% a year ROI on your insurance. 

    MUST HAVE BALANCE!   If you have balance, then "losing" on insurance plays is a non-issue.  If you are using insurance plays to gamble it’s like buying $5M worth of fire insurance on your $200,000 house that expires on June 19th and then you freak out because you didn’t have fire…

    V/Maya – Never a problem if you REALLY wanted to own V at net $83 as you could flip to a buy/write and sell the Jan $75 puts and calls for $27 and drop your basis to net $56/65.50 and you would be thrilled that your worst-case is you get to own BP for 25% less than it was when you sold the put.  If you NEVER sell puts in stocks you don’t REALLY want to own, you will have a happy life.  I ended up with quite a lot of SPRWRA at May expiration as my $12 puts were assigned to me but I found myself out at $13.25 just 2 weeks later with a happy ending because I REALLY, REALLY, REALLY wanted to own SPWRA long-term and the quick move up was just a nice bonus.  With V, If you don’t REALLY want to own it at net $83.20, then you can roll about even to the Jan $80 puts ($13.25) but if you REALLY wanted to own V and were scaling in then the best move is to take full advantage of the sell-off and roll to 2x the Sept $75 puts at $8 and you pocket $2.15 more and that puts you in V at about net $73 in Sept.  If you are worried about them heading lower, you can sell 1/2 or all Sept $75 calls ($4.25) with tight stops on at least 1/2 and that should cover you for a roll down to Jan $65 puts.  If you didn’t REALLY want to own V at all and you are just trying to work off the loss and you want to stick with V to do it, then you can just split the current $13.80 puts into the Jan $70 puts at $7.70 and the Jan $75 calls at $6.50 and then just roll the losing side along to another spread until you hit your goal but it’s much easier to fix when you REALLY want to own the stock and are scaling into the position.

    GS/Gel – If you are willing to own them for $125 then I like selling the Jan $125 puts for $11.30 and buying the $125/145 bull call spread for $12 so net .70 on the $20 spread and about $25 total margin so not bad for 6 months work.  Be aware though that we took the call money on the GS longs and left 1/2 the free 2012 $70 puts on the table (now $5) as I still think there’s a small possiblity (and worthwhile gamble) that they get hammered lower if things turn ugly.

  269.  Phil, 
    Thanks for the answer. I do understand that this is insurance. I have $170K in long positions--the ones we have discussed in the past (so the idea was to protect against a 20% drop with these hedges). I have been waiting for market to rebound in order to sell most of these positions into strenght, however the positions have lagged the ups and when the market goes down they have lost more than the market. At the same time the hedges have lost as per my post. So the balance I was looking for has not worked. 
    I didn’t realize I had to sell the hedges as you mention--I understood they were to be left alone for protection. From reading the posts every day, I have gathered that you are in a holding pattern, neither bullish nor bearish. 
    With this being said what do you recommend I do with the hedges (I also have the DXD and SDS for October), all in all I figured as I said I had coverage for a $30K pullback in value from the longs…

  270.  I don’t understand the TZA comment: I followed the trade as recommended 1/1 June Calls and 1/2 July Puts,  just rolled it up $1 (which you mentioned back then I probably shouldn’t chase) but it was too late… but in any case I am missing something because i figure if I had sold 60 puts I would be even more under water on the trade as they have appreciated in value not depreciated??