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Thrusting Thursday – Where’s Our Rocket Fuel?

This is NOT David Ristau's graduation party!We just cannot get this party started! 

Every rally is getting sold into, much the way every sell-off was bought into last year.  Is this a major change in sentiment as the "smart money" takes every opportunity to get out of the market or is this the "dumb money" being stampeded to the exits – once again at the bottom of the cycle? 

Fear is certainly permeating the air and, as I have to keep saying to make our position clear, we are generally aiming for 75% cash with 23% positions that are hedged by at least 20% and 2% in Disaster Hedges that pay 5:1 so we "bullish" but it’s bullish and guarding against a 30% drop – which is more bullish than we were in May, when we were guarding against a 40% drop on our buys.  Anyway, it’s VERY important to keep that in mind as we are picking up very long-term positions and we actually HOPE the market does go lower so we can buy more at low prices because it will be HARD to commit our cash to any rally that doesn’t get us over the April highs and we may have a LONG time to wait for that one. 

So, we are having fun with short-term trades and doing our bottom fishing and, as I mentioned yesterday, we are now taking some upside hedges that can give us 10:1 pay-offs if the market breaks UP on us.  That way, if we have 23% in positions that make 20% and even just 1% in positions that make 10%, at least we pick up about 15% if the market gets away from us.  If we were more bullish, we’d make a bigger commitment but heck, we STILL are not at our weak bounce levels yet so caution is the way to go. 

We need a catalyst to get us going just like the myth of infinite Chinese growth was the catalyst that got the markets through last year we need to sell the story of a US recovery overseas to now get those investors back in the water or we’ll be left swimming all alone with the sharks

Patience Art PrintI was happy with the Beige Book yesterday and we thought the sell-off in the afternoon was BS so our last trade idea of the day was to grab the QQQQ July $45 calls for $1.08 and those will get us our 20% this morning but we’ll take them right off the table if we can’t pop $45 on the Qs and hold it.  That’s what you have to do when you have a lot of cash on the side – just stick and move, stick and move – taking the quick profits and then PATIENTLY waiting for the next opportunity.  I always tell Members to watch "The Man Who Planted Trees," as it’s a great allegory for long-term investing, which is all about patience and persistence – qualities that are hard to come by in today’s fast-paced market. 

There’s an old saying that goes:  "Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow – that is patience."  Teaching options strategies is easy – teaching people how to patiently wait for the right opportunity to deploy them is the real challenge!  We went to cash early (see yesterday’s post) at the top and had to wait for a clear signal to go short and now we are PATIENTLY waiting for a CLEAR signal to go long.  Right now, the going is certainly hard and slow but this is the low-end consolidation that we didn’t have before the last rally and it’s just what we need in order to fuel up for a real move up to new highs once we see some real signs of a recovery

We lost another 450,000 jobs last week, that’s NOT a sign of recovery, nor is our -$40.3Bn trade deficit (despite a huge drop in oil prices) with exports falling 0.7%, outpacing the decline in imports of 0.4%.  The ECB left rates at 1% this morning and Trichet raised the 2010 GDP outlook for the Union to the 0.7%-1.3% range from 0.4%-1.2% BUT he lowered guidance for 2011 from 0.5-2.5% to 0.2-2.2%.  The low end of that outlook is downright scary and we’re all going to have to learn to be VERY patient if this is how the next decade is starting off.   

We’re not out of the woods yet. A "liquidity seizure" stemming from Europe’s debt crisis could drag the global economy back into recession, warns Nomura’s Paul Schulte, and at this point, "debt restructuring in Europe looks inevitable” but Jim Rogers says he is (and I love this) "as confused as anybody else" but the level of bearishness on the currency "usually that indicates a rally… Once a technical rally starts, who knows where it can go from that."  We are short on EUO at $26, betting the Euro holds that $1.20 line and it’s an easy mark to make your exit on the ultra-ETF so a fun way to bet on a bounce

Being long on the Euro means we expect the markets to bounce as the dollar devalues relative to stocks and probably commodities as well.  It will be interesting to see how oil does – it shouldn’t be over $75 but a rising Europ could give it a kick and that will rally the energy sector (we have many long bets there now) and we’ll be keeping our eye on copper, which we took long at $2.81 last week and is now $2.86 and we’d like to see $3.  FCX ($60.75) is our stock play there but, as I mentioned – we don’t ever pay retail for stocks

EU markets continue to move higher today, completing a 2.5% move up over 2 days, which is what I expected from our markets and we were very disappointed by yesterday afternoon’s sell-off.  Fundamentals are nice but, short-term - you can’t fight the tape, so we will be keeping a close eye on our levels.  We need AAPL to pop so the Nasdaq can take off – without them it’s going to be hard to get a rally going. 

The Nikkei gained 1.1% and the BSE gained 1.5% but the Shanghai gave back 1/3 of yesterday’s gains (0.8%) and the Hang Seng flatlined at an unimpressive 19,633.  None of that really matters though.  It’s up to us to show a little strength today and it’s up to the EU not to screw it up by panicking again.  If we can get through today with a nice move, we may actually be able to go into the weekend a little bullish for the first time in ages


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  1. What’s got the futures up this morning?

  2. Phil,
    For those of us new to your site, do those Disaster level plays still hold, or you issuing new hedge levels at this time. Your help in understanding and making sense of this skittish market is superb. Thanks 

  3. Phil, XOM
    I sold July 65 calls (now up 50%) and Jan 55 puts (after rolling down – now up 20%). Do I buy back the calls here and go naked on the puts? Or: roll up the calls to Jan 70? Or: Do nothing yet?  thanks

  4. Exec, the manipulators are sending the ‘buy’ signal for today.  Could be a big day..

  5. lets see if the euro can stay over 1.20 after 11:30 am

  6. I see that.  I’m still holding DDM from yesterday.  Think I might dump during the morning frenzy then buy it back on a dip.

  7. Seems like some economies are doing well -
    Brazil and New Zealand raise rates
    Australia adds more jobs -

  8. IWM Lines
    "59.99 – 6071 – 6137 – 6170 – 6292 – 63.41 -6412 – 6466 – 6557 – 6609 "

  9. New Post Up -

    I have a Buy Pick set in DIG and a Short Sale in APWR.

    Check them out here.

    Thanks and Good Investing!

  10. Its the Euro that’s jacking the markets

  11. look out if the euro breaks through 1.21

  12. JRW…would you post your S/R lines today if you can please.. Thanks

  13.  Morning Phil!
    What is your short play on EUO?

  14. David – nice call on MW!!!

  15.  GS and AAPL weak again ala yesterday

  16. Good morning!

    Nice open but:  ANYTHING under our weak bounce levels on this run (call it from Tuesday’s stick at 9,850, so that’s an official death line) is going to be overall bearish:  Dow 10,250, S&P 1,100, Nas 2,260, NYSE 6,820 and Russell 666

    Woo-hoo for the open though, Qs are $1.32 already and I’m always happy when my gut tells me the right thing (as we were discussing yesterday why I was ignoring the bad-looking sell-off and BUYBUYBUYing).  Having fundamental convictions is a VERY painful way to play the makets but, if you couple it with a good scaling discipline, you can sometimes sleep at night!  8-)

    Disaster Hedges/Jsurti – The only hedge left (and that’s technically not on unless we blow RUT 620) is the TZA that I sent out as an Alert on Tuesday morning (along with the upside SSO hedge to make sure we have a nice upside pay-off).  As I said yesterday, unless we blow 9,850 on the Dow and 620 on the RUT, I’m sticking with my premise that this IS the bottom we were looking for.  At 10,250 I will want to take some more hedges to protect those gains.

    Right now AAPL is a huge concern and it’s holding the Nasdaq down like cement shoes.   This is silly I think, AAPL should not have dropped $20 in a week and, if we are going to have a big move, look for AAPL (now $243) to lead the charge that rams the Nas over the 2,200 line.  That means an AAPL $260 call for $1.10 is a fun play but out at .85 and DON’T BE GREEDY – a $5 move up in AAPL should get us to $1.50

  17. Good morning,
    IWM 60.85, 62.60, 63.02, 63.42, 64.59, and 66.34

  18. XOM/Jomp – Based on my feeling that XOM is too low at $60, I’d say yes to buying back the caller but just watch that line and you’ll have to resell something to cover if we blow it.  Keep in mind that’s turning a well-hedged trade into a gamble.  The "safe" move is to let the caller expire and roll them along, locking in your profits (although capping your gains). 

    Euro $1.2115!!! Congrats to EUO shorters!   Pound is $1.465 and it’s 91.3 Yen to the buck and falling (so money is still going into the Yen, which means this is a dollar sell-off).  Copper rockin’ to $2.89, which is jammin’ FCX and oil is way up at $75.76, which is why we didn’t short the oil futures and I’ll be looking to roll up and DD the USO puts at some point but not today.  I also love that gold is still heading south – very good sign

    DDM/Exec – Just keep moving up the mental stops, maybe 10,100 with a 50 point trailing stop once we’re over 10,150.  Also a good plan for our DIA calls that we own and for 1/2 the puts that we sold! 

  19. Phil -
    do you think the Euro tank after 11:30 again?

  20. "ANYTHING under our weak bounce levels on this run (call it from Tuesday’s stick at 9,850, so that’s an official death line) is going to be overall bearish:  Dow 10,250, S&P 1,100"
    I agree completely Phil. Given how this market has performed recently, we need to hold it to a high standard before feeling comfortable on the long side.
    This looks good this morning, but it also has a whiff of the short-covering/panic buying that we saw in the last bear market from time to time. Great if it lasts, though.

  21. Got it

  22. JRW Do you buy as it breaks though levels when it’s already up this much?  Feels like chasing…

  23. Wow, they are NOT going to find China a currency manipulator???  What a friggin joke.  You would think the words "pegged to the dollar" would be a tip-off of some sort

    EUO/Yshen – We were short the ETF and also the July $25 puts, now .80 so not worth chasing now as they need to be cashed on a pullback. 

    Euro/Samz – Not if we keep this move up.  We’re up almost 2.5% and if we hold 2%, it’s a great day and if we pop 2.5%, it’s a fantastic day.  Transports are up 4% already, SOX are up 3.5% and the pokey NYSE is up 3% so I’m going to say we are moving on up from here

    Shortcovering/Eric – Absolutely this is the short-covering we’ve been expecting.  In fact, the volume is pretty lame (30M on Dow at 10) so there’s not a lot to get bullish about based on the internals.  Pisani is just saying – it’s a total absence of selling more so than a lot of buying at the moment but don’t sell short-covering short as fuel

  24. Phil….LOL, no kidding about China they have manipulators for manipulators over there.

    EricL….Gold holds at 1200??

  25. Phil - What do you use to track the Dow volume and the Euro real time?

  26. hi Phil BGZ July 14/16 spread with a sell July 14 put — for a hedge — keep it for noe or close all three leg and headge later when dow get closed to 10250. thx

  27. EricL/David/
    AUD/JPY and AUD/USD are up 2.5%
    We are back to 5/28 levels of "risk appetite" wich transalted back then into 30 more points in SPY.
    This rally seems a bit forced to me as well.

  28. Pimco just reported that it has been buying treasuries – switch from their negative outlook – have they been hurting our tbt postion?? getting a kick out of today’s action

  29. DCTH  all over the place today

  30. exec
    Now is a good time to think about building up your mattress Sep long 103 or I am starting on 104 buy small amounts at the time. I am rolling Sept 103 to 104 for .45 to up 1.00 If you have Jun shorts start buying back God knows only how long this uptrent lasts!!!! Hope Phil agrees with me

  31. Stopped out DIAs as we failed 10,150.

  32.  Phil…What’s the major thing blunting AAPL’s response to the upward trend?   

  33. Best way to keep playing DIA up at the moment is July $105 calls at $1.10 and you can sell June $104 calls against them for .43 and they can be rolled to June 30th $105 calls (.63) and those to the July 107s (now .53) so good cover to the downside, hard to get burned to the upside – I love those kind of plays!

  34. JRW – IWM inside yesterdays 11:45-2:30 downward channel right now…bouncing around the lower level right now…

  35. TD ameritrade very irritating – Is it a conspiracy against the investors?

  36.  Nasdaq feels like dragging on mud

  37. yip,
    That’s what lines are for; right now we are between. The up move failed, so either we try again or we test the floor again, patience !!

  38. Goldman what are you using to create the channel trendlines, just straight lines on either side?  Would you send me a screen shot so I can see that would be awesome..

  39. JRW thanks… Patience!  I need more!

  40. I missed the opportunity to sell short Jun $120 Calls on NFLX @ $5 in premium in the initial excitement!! Shoot.. it went away :(

  41. yip,
    We’ll see. Right now gold is holding 1220. It’s worth watching here, even for those not trading it. If it finds a steady bid at these levels, there’s still plenty of fear.

  42. China responsible for Euro strength… statement of support made earlier today…. Look out for statements later today from ECB (Trichet) as this could be negative for the Euro and down it could go.

  43. Eric…Got it makes sense..

  44. Made a mistake going long on GS – will dump positions today.

  45. AAPL calls/
    Thank you David, you have just offered me a full year of free subscription to PSW
    I guess I will be here for another year then :)

  46. Dilbert call complain, to a manager not the first rep that picks up the phone and ask for free trades…

    2..173 Euro needs to break this number to be taken seriously

  47. yip – I moved my downward sloping trendlines from Wed (11:45-2:30 channel) into today and noticed the same slope, and the same gap distance right now.  It doesn’t confirm anything right now, just interesting to watch.

  48. Post over at ZeroHedge claiming Goldman Sachs is pumping the market.

  49. Goldman…Got it I had that channel too. 

  50. JRW..SS…Goldman…..The 3 min Rut Cross on the 8MA did not work well yesterday or so far today…

  51. If you’ve been on the fence about going long.. now would be a good time!

  52. phil, any new trade on TBT ?  looks like it’s catching a bid finally
    is this another rally to sell into it, or can it carry us up to spx   1105 ?

  53. TIE   Anyone with an opinion on them for the near to mid-term?  I’ve got a spread that needs adjusting and I wonder if I should put money into the trade to put them into premium or just roll slowly higher if the stock is going to come back.

  54. Dow volume/Gold – Power Etrade Pro (my left screen on an IMac) has the Dow volume and TOS (my middle right screen on the Dell) has the Forex charts.

    BGZ/Gucci – Didn’t we do this this morning?  TAKE THE MONEY AND RUN!

    By the way, I did not stop out of DIA/QQQQ/SSO longs because I think we won’t make 10,250, I stopped out because that was a LOT of money to make in 1 trading hour and the risk now outweighs the reward and, at 2.5%, we EXPECT at least a 0.5% pullback.  If that holds, THEN we can go long again.  If it "gets away from me" I’ll take my 100% 1-hour gains and try to console myself… 

    TBT/Samz – Good to know, thanks!  Nice bounce today but still lame below $40.  30-year sale at 1pm might push them back down if demand is still big.

    Mattress/Yodi – Just keep taking any Sept roll higher you can get for .50 and make sure you have a tight stop on the higher half of the cover. 

    AAPL/Iflan – I think it was Shadow’s comments yesterday – those could scare anyone out of AAPL!  $240 is the right price for them.  I took the calls because, in a rally, there should certainly be enough people coming off the sidelines to give them a $5 push at least but that does NOT mean I want to be long the stock at $245 or $240 for that matter.  Like ISRG, they are now fairly valued and we are done with them because we like stocks that are too cheap – and there’s plenty of those.  When the market is flat and steady, then we may buy AAPL for it’s "solidness" just like we may buy IBM, or even AMZN, who are also fairly valued at these prices.  Why buy those though, when VLO is $16.87 and WFR is $10.49 and JPM is $37.50 and PFE is $14.75 and we can hedge them down another 30%?

    AAPL/Lionel – Cool! 

    GS/Kinki – They are always pumping the market!  They make about 45% of all trades – it’s Goldman’s World, we’re just trading in it…

    Nat gas was a 99Bcf build, a bit more than expected.  Maybe a good chance to still take UNG or CHK plays if they sell down

  55. Yodi,
    I haven’t had a chance to read the homework yet so I don’t understand the process yet.  What is a  Sep long 103

  56. ALBANYGov. Paterson went into full doomsday mode Thursday, warning of chaos and anarchy in the streets if the government shuts down.
    "It would create unimaginable chaos around the state and the greater metropolitan area," Paterson said on WCBS Radio 880 this morning.
    Paterson warned that the state would run out of money to pay its workforce – including troopers and correction officers – and eventually would not even be able to put gas in state vehicles.

    Read more:

  57. Kinkistyle,
    Maybe GS wants their prophecy from early May fulfilled: "Goldman Sachs isn’t backing down from their very bullish call of S&P 1,300 by mid-year. Their analysts say the Greek debt woes are unlikely to halt the strong global recovery. Specifically, they highlight the continuing low valuations, stronger than expected earnings, robust recovery and positive money flows. Last week’s strong labor report and robust ISM readings were unjustly ignored in their opinion. They expect the robust earnings recovery to continue into the back half of 2010 and still find the market attractive based on valuations"

  58. 1020 – Thanks

    Here is an update on my positions:


    DIG – This was well out of our range to start the day, so we cannot do anything with it.
    APWR – We got stopped out for a 3% loss. I am reentering this one though at 8.80 to try and recoup some losses, as I think this one cannot sustain the gains it has and will falter throughout the rest of the day. If you aren’t in already or are looking for a position, I would get in at 8.80 or above. Otherwise…scrap it.
    NSM – We are up just slightly on NSM. It had a big drop yesterday afternoon, and we are still looking to gain 3-5% on it from our entry of 13.35. We would like to exit at 13.75 – 13.92. Otherwise, we will be holding into tomorrow morning at open, which is fine with me.

  59. I’m back to cash.  Have a busy day and don’t want to be bogged down watching the market. 
    Trade well.

  60. Phil – Sold short front month puts and wanted some advice on whether to roll them now or follow the move up.
    AA – Jun 11 for .67
    GE – Jun 16 for .90
    VZ – Jun 28 for .96
    WFR – Jun 11 for .77
    TBT – Jun 47 for 1.70
    SPWRA – Jun 17.5 for 1.5
    I was thinking of going x2 on the TBT and SPWRAs.  Thanks.

  61. Matt what? You think we go higher from here today?  surprised to hear the bear talk this way!

  62. Gold Mansacks/Phil:  Haha, well, here’s hoping they hold on to those shares until close today.

  63. Phil, you think we go down a bit into lunch and before the treasury auctions? I shorted the futures a bit too early…

  64. More FREE MONEY:  EU President Herman Van Rompuy says the €750B rescue package would be expanded if it doesn’t quell the debt crisis, becoming the first EU leader to float the idea of a larger fund. “There are a lot of offhand statements in the international press about a debt restructuring, but I don’t think it will come to that,” he says.

    Plans to strengthen banks’ capital and liquidity would erase 3.1% of GDP in the U.S., Europe and Japan by 2015 as financial firms curb lending to businesses, according to a study by the Institute of International Finance. The euro area would be hit the hardest and Japan the least.

    Europe’s credit markets were in an optimistic mood this morning, as Spain, Italy and Ireland raised new funds from private investors in a well-received bond auction.

    The troubles in Europe haven’t dented the appetite for Chinese goods, as Chinese exports climbed 48.5% in May from a year earlier, the sixth straight month of gains. Asian stock markets mostly higher.

    Reform of China’s exchange rate remains "critically important" to the U.S. and the global economy, Geithner tells the Senate Finance Committee. China’s fixed exchange rate "is causing distortions far beyond China’s borders" and is an "impediment" to sustainable global growth.

    One day OPEC guides down, now these guys guide up:  The International Energy Agency raises its 2010 world oil-demand forecast to 86.4M barrels a day but warns that up to 300K barrels a day of future U.S. output may be at risk if a drilling moratorium is extended. The Gulf oil spill will raise costs, delay new projects and bring a thorough review of offshore regulation, the IEA says. Oil +1.6%.

    Citigroup (C) is having such a hard time finding buyers for its $50B portfolio of retailers’ credit card loans, that it could end up holding onto the assets for years.

    Apple (AAPL) is reportedly drawing antitrust scrutiny for restricting rivals such as Google (GOOG) and Microsoft (MSFT) in the advertising market.

    Goldman (GS) is reportedly the target of a second SEC probe, this one focused on its $2B Hudson Mezzanine CDO, sold in 2006. Goldman selected the subprime assets in the CDO, but was also the only investor buying credit protection on the entire transaction.  An Australian hedge fund is suing Goldman (GS) for misrepresenting the value of its Timberwolf CDO, which the hedge fund claims contributed to its 2007 demise. The fund is seeking $1B in punitive damages. (see also)

    After BP’s (BP) shares dropped nearly 16% yesterday on the heels of bearish news (I, II), the firm’s bonds and credit-default swaps are trading like the company has already lost its investment-grade credit rating.  It was a question of when, not if, but BP (BP) is now facing a class-action shareholder lawsuit for "mislead[ing] investors prior to the Deepwater Horizon oil spill."

  65. AAPL calls at $1.50 – don’t be greedy!!!

  66. Yip, yes, I am.  But if we break the 10.25 low, which is essentially the low of the opening 5 min tick, I will bail.  Typically, they would be gunning the rockets by now.  But with all the doom around these days, it’s a might harder for them to do it.  But be patient.  Time and money is on their side.

  67. What a joke….. TD Ameritrade Command Center down again — 3rd of 4th time this month, I lost track. TOSers beware, these Ameritrade clowns are the new masters of TOS

  68.  Phil,
    Is it a good day to add TZA hedge? If so what at strikes?

  69. JRW, sorry to bug you in your difficult time, but this has been an issue in my trading.  I bot 63.02 line and cashed out at this level (63.27) as she does not seem to want to go check 63.42.  In your experience is it the right trade or I should risk it going back down to 63.02 by waiting for check of 63.42?  I have a feeling the answer is wait for the line check, but in that case do I buy second half at 63.02 or leave it alone?
    she is at the line as i finish typing this :(

  70. TD not working yet again, these guys suck! They gave me 250 free trades the other day, i would gladly give them all back for a working streamer :-(

    Phil you gots any love for QCOM??

  71. JRW…What I’d like to know is what happened?  You not make trades anymore??

  72. exec
    June 10th, 2010 at 10:34 am | Permalink  
    I haven’t had a chance to read the homework yet so I don’t understand the process yet.  What is a  Sep long 103

    This is the base of your mattress as higher the DOW goes as cheaper you can buy your SEPT 103p of DIA .
    I am buying already SEP 105 putters for 7.30 putting a stop loss at these once at 6.90 So if the DOW goes up to 10250 today you would sell obviously for a loss but than on the end of the run up you could buy the same say for 6.00
    Hope this makes sence. This is prepairing your mattress. You can not do much on the JUn or JUL short site as these you sell when the DOW bottoms.
    Good luck  Always ask Phil for the official position as he is the gury in this

  73. Ok….your buy DIA… it.

  74. lapper,
    If you’re in cash now I would wait for a convincing break above 63.42 or a retest of the floor

  75. JRW….
    So IWM 63.50… Are you in?

  76. yip,
    I’m in TNA now at $40.66 and will sell if we can’t break out.
    I’m just cutting down on the excess chatter.

  77. Got it I think EVERYONE wants to hear about your trades.. There is enough nonsense spewed by all of us I think your Wizard trades most everyone wants to see…
    Thanks…Pls post them..

  78. exec, if you need to ask what is a Sep long 103 you should definitely be paper trading still.  A very valuable advice is to not put any money at risk until you have paper traded, asked questions, read the site and followed the discussion for at least a month or two.

  79. Kustomz – how did you manage to get free trades frmo td? I asked them for it and they refused saying the agreement clearly states they are not responsible or some bullshit

  80. Pressuring QCOM stock

    NEW YORK ( — Shares of ARM Holdings rose sharply Thursday on renewed speculation that Apple would bid for the mobile phone chip designer, according to a news report.
    ARM’s (ARMH) stock rose more than 9% Thursday in early trading on the Nasdaq. Overseas, the stock rose 7%, but soared as much as 30.7% on the London Stock Exchange before losing much of those gains. A Reuters report said traders were buying up the stock on market rumors of possible takeover interest from Apple.

  81. dilbert, did you speak to a manager?

  82. TBT/DMan – How can you possibly not be in it???  That is just mind boggling to me!  Remind me after the 30-year auction – maybe there will be another cheap entry but you really need to move on and find something else to obsess over and never commit to…  As to the rally, I’m expecting to test our targets but I have no opinion about what happens after that. 

    TIE/Eph – I like those guys but not at this price.  They could be good for 20% more but then I’d really be getting out.  ATI is a better value play down here and I like BOOM long-term for when manufacturing comes back also better than TIE at this price. 

    Sept $103/Exec – That’s the current long-leg of our Mattress play, the DIA Sept $103 puts 1/2 covered with June $102 puts and 1/2 covered with June $98 puts but the $103s should have now been rolled up to the Sept $104 puts for .50 (now $6.60) as we always try to roll up $1 in strike for .50 or less when we are fully covered

    Paterson/Kustomz – Damn, that man knows how to give a pep talk doesn’t he? 

    "It would create unimaginable chaos around the state and the greater metropolitan area," Paterson said on WCBS Radio 880 this morning.  Paterson warned that the state would run out of money to pay its workforce – including troopers and correction officers – and eventually would not even be able to put gas in state vehicles.  Even stop-gap measures, such as the state Controller issuing IOUs, would work for only so long.

    "Eventually the banks aren’t going to pay based on IOUs, and you now have no money to pay your police, you have no money to pay your correction officers, your firefighters, your emergency health care workers," Paterson said.  "You could have anarchy, literally, in the streets when the government shuts down," Paterson said.

    That explains the rally, this is a super stick so all the NY traders can cash out and get the hell out of Dodge.  July is traditionally riot time in NY anyway…

    Who’s glad I said no to shorting BIDU?

    GS/Aug – Yeah, they have been pushing hard since yesterday. 

    Cash is wise Exec, still could go either way.

    Puts/Wayne – Right now you wait to see where we are next week.  If we head lower the VIX goes up and you get good rolls and, if we head higher, the putters lose value but some of those are way out of the money and should have been rolled at the bottom.  Just be careful not to over-commit yourself but I agree on rolling TBT and SPWRA – the rest are easy to just roll down and out to longer months (called the Rawhide Strategy).

    Shorting/Jrom – I am not at all short but I did expect a pullback, which we kind of got already.  Volume is still super-light but be very careful with shorts as there is no way the bears fully capitulated yet.  They are probably praying the 2.5% line holds and they get another chance to exit but if we pop this morning’s highs, we could be looking at 4% gains today

    TD/Kururi – I know, that does worry me a lot as I love TOS and would be really pissed if they migrate that way.

    TZA/Yshenhar – If you have no hedge at all and have bullish plays worth protecting then yes, it’s good to add a hedge but I’m waiting to see how 10,250 looks (and the rest of our levels) before worrying about adding hedges. 

    QCOM/Kustomz – Too much lawsuit nonsense with BRCM et al keeps me away from both of them.  Still, this is nice and cheap and AAPL has just madly upped the arms race with the IP4, which makes other smart-phones obsolete already and all roads seem to lead to QCOM for better phone tech and they are pretty low here.  I think I would go artificial with the Jan $32/36 bull call spread at $2.20, selling $27.50 puts for $1.40 so that’s net .80 on the $4 spread that’s 2/3 in the money and your worst case is you own round one of QCOM at net $28.30 (an 18% discount).

    Euro passed first test of $1.20 very nicely and back to $1.211 despite GS calling for $1.15 in 3 months.  Pound up to $1.467 but Yen still going up.  Copper at $2.89, gold $1,224 and oil testing $75.50 (did DD on OIH of course for $1 avg)

  83. yip.
    Out of TNA at $41.56
    See comment to lapper

  84. JRW…thianks.  For some reason I decided it wasn’t breaking and bought TZA at 7.52….I don’t know. 

  85. Dilbert what is going on with your TD account? Mine is showing me the wrong quotes on my account position page. However, the Thinkorswim app from TD is working fine with the correct prices.

  86. Oops, sorry, that was a DD on the USO $35 puts, not OIH!!!  OIH I still like those July $89 puts but now down to $3.25 from ur $5.70 short entry).

  87. Phil, love the Jul 105 call play with selling the June 104 and later 105….great idea!

  88. JRW – the excess chatter is posted by the JRWs in training ;) , we all appreciate your posts.

  89. RE: TD Ameritrade
    I am a fairly new member but originally opened an account at TD Ameritrade  back in March to gain access to TOS since they had recently purchased TOS.   I quickly learned that the version of TOS at TD Ameritrade did not have the same features that my friend had at   I called TD and was told that they were transitioning to the latest version of TOS but that they could give me no idea as to when it would be complete.    I told them that I was going to close my account and transfer my funds to TOS and TD was great about helping me do that.    I assume that the issues you are having with TD now are due to their upgrading their version of TOS.   No telling how long that will take.   Good Luck.    BTW,  I love TOS and hope that their great service does not suffer when fulling transitioned over to TD.

  90. Out of TZA 7.62

  91. Phil – Thinking about entering JPM which do you favor -  buy long (37.82) and sell $37.50 calls and $30 puts for net $23/$29  with 49% upside vs  Bull call $35/$40 + $22.50 puts for net ($0) entry?

  92. Phil, when you recommend futures trades it’s usually the RUT, oil, or copper….What do you think of Wheat at these prices?  Would you agree with the premise that it seems like the’re pricing in a perfect crop (as well as the fact that the dollar is so strong), if the growing seasons isnt perfect and/or the USD doesnt stay up so high then wheat should explode back to over 5$ a bushel…..

  93. phhil, i’m in TBT, looking to add to it, long Sept 37 c and short June 40 c
    add and/or adjust

  94. Phil,
    With all the diaster hedge talk I hear that we should hold the TZA spread and I have. Should I change or hold the DXD 28/40 BCS selling 26puts now loss about .15 or clear out?

  95. any goood trade on GS ?  we know they will still around and this down move could present a good buy… call spread?

  96. We did a good job holding the 2% lines there.

    This is the hardest place to trade and where I miss the most upsides as I have a very hard time going long in the middle of a 5% run but I do think we are still good for a move up to 10,250 et al and let’s watch for key levels to hold on the next test of Dow 10,100, S&P 1,175, Nas 2,200, NYSE 6,725 and RUT 630.  SOX are at the magic 340 line so we care about that a lot and the Transports ($TRANQ) are well over 2,000 so nothing to worry about there but we want to see 2,125 there, about 6% up from the open (not likely in one day). 

    AAPL faltered at our target and anything under $250 for them is going to be a disappointment. 

    VIX is down to 30.88, Dow volume at noon is just 71M so we are back to a major air-pocket rally so far.

  97. Phil
    When you have a moment, could you recommend a B/W on VLO…. Thanks!

  98.  GS banging 52week lows

  99. JRW, looks like the bot program from 5/27 so far.

  100. "Jordan
    June 10th, 2010 at 11:29 am | Permalink  
    exec, if you need to ask what is a Sep long 103 you should definitely be paper trading still.  A very valuable advice is to not put any money at risk until you have paper traded, asked questions, read the site and followed the discussion for at least a month or two."
    There’s no question I have a lot to learn about options and this system.  I know what a 103 long is, I didn’t realize they were trading DIA.  You’re talking to one conservative Mofo so not to worry about me getting myself into a major money losing snagglepuss due to my ignorance.  Currently, and for the last decade or so, I’ve gorilla trading using stocks and ETF’s.  It’s fun and can pull in some quick returns (and losses), however, as anyone who’s ever bought 15,000 shares of FAS or DDM can attest to, it’s not real great for the stress level.  With that said, I’m trying to learn your system because the thought of locking in 20% yearly gains with relatively limited risk is appealing.
    Thanks for your help and feel free to chirp in anytime you want.

  101. Anyone just see that downward blip at 10:02 or are my charts messed up?  I have a print on CLF for 50.80 from 53.80 and FCX at 60.75 from 63.66.  Of 14 charts up, 4 had it. Fat finger trade? Nice 5% for the bot that took the other side.

  102. JRW, and yesterday looked a lot like 5/26.  not that they rerun programs or anything…

  103. Damn!  Whuck was that?

  104. I dont know but I liked it :) gave me a chance to get out of my futures contracts! Got to stop trading them, they (and my Ukrainian girlfriend) are giving me an ulcer! lol

  105. JR….I went to the Ukraine a couple years ago… It’s like the super model capital of the world!!!

  106. judah,
    Good eye !!  If it is the same program, this is the flush before the run.

  107. Anyone seeing a DOW 10060  bounce today?

  108. phil, last time on TBT,  how would you adjust if you had what I have  60  long Sept.  37 calls and 60 short June 40 calls ?

  109. Well, got stopped out of my long.  That sucks.  Was up nicely, too.  If I were smart.. I’d walk away for the day. 

  110. exec 1.2095 on the Euro if it breaks quickly i think the markets wont hold, simply nothing else moving our markets

  111. EricL/RIG
    Are you still in your RIG shorts?
    Did you ply it with a ATM put or with a June or July Put vertical 50/40.

  112. Well, I’m leaving for the day with my 2%
    Good hunting all !!

  113. Good advise JRW.  I did well this morning.  I don’t have any idea why I feel compelled to jump back in.
    Later, I’m going golfing.

  114. LOL. 2%..Nice work JRW.  Post em! :)

  115. What bs.  It’s clear they aren’t trying to start a rally.  Just the same old kill the day traders routine while the overbought or oversold condition works its way through.

  116. Matt… certainly what it looks like NOW…

  117. Phil do you see oil pulling back and market still rallying through at same time?

  118. Yip, JRW, and all--it looks like it’s all headed south now to me.  Be careful.

  119. Fizz… TZA…

  120. eric: could you tell me at what TNA price you went in and out ?

  121. Looking over the charts, the thing that gets me the most is the size of the drop in such a short time.  That is what I keep coming back to when I think about it going up.

  122. What an insane market.  The bots are bending folks over left and right.  Raping, pillaging and plundering.  Good move walking away.

  123. Phil: I have had the goal of making 500-1000 $ /day by daytrading,
    using TNA for this can be quite risky and requires a lot of work.
    Would it be possible that you publish daily an alternate to TNA trades when you see an opportunity ?

  124. JPM/Brooklyn – Well, you are talking about making $22 vs making $5 and, at the point where you are wiped out on the bull call spread, you would still be up $12 on the buy/write and JPM is a solid company so I’d say buy 1/2 as much of the buy/write as you were thinking of doing on the bull call and you’ll make just as much and not really care if you have to DD at $29.

    Wheat/Jrom – I won’t play ag futures as they seem pretty random to me.  It would be irresponsible to try playing the futures of any market I didn’t know like the back of my hand becasue, even with the ones I do play – I’m thilled to do better than 60/40.  If you want to play food scarcity, try DBA but if Europe collapses – who can afford food?  I think the thing food player don’t realize is that Americans consume 2-3 times more food per capita than the planet’s average.  It is surprisingly easy for Americans to substantially cut down on food based on price issues and any softness in restaurants (who waste enough food every night to feed all of Africa) takes a tremendous bite out of Ag demand. 

    TBT/DMan – My watch must be slow because I’m seeing 12:14, not 1:05…  8-)

    Disasters/Shadow – It depends what you actually bought thme for.  If you spend $1,000 to protect $20,000 worth of bullish plays then that’s your insurance cost and you don’t cash in your life or health insurance just becasue you wake up one morning feeling pretty good, do you?  So do you NEED insurance or don’t you?  That DXD spread is very speculative but has a huge pay-off while TZA was safer(ish) but the MAIN POINT was, that if TBT went down 50% on a 15% move up in the indexes (RUT 720) – I would STILL like to own shares of TZA as long-term insurance at net $3.  That’s why I like that play here – even if the market goes crazy and I get assinged 2,000 shares ($6K), I’ll be happy to own them as general portfolio protection with the expectation that I can sell at least .10 worth of calls on 1/2 every month and that’s a 20% return against my permanent insurance hedge.  If you want to OWN DXD long-term just as much, then that’s fine too. 

    GS/DMan – I only have the 2012 $75 puts left (now $5.50) and I’ll stop them if GS can get over $140 but they have to prove it to me.  After watching BP melt down why do you find GS attractive?  At least JPM isn’t directly being investigated yet. 

    VLO/Gel – VLO at $16.94, selling Jan $17.50 puts and calls for $4.85 is net $12.09/14.80 with a nice 44% profit in 7 months if called away.

    Uh oh, not holding out lines now

  125. PHIL….your view of a buy/wriite on  ERF……tks., GABBY

  126.  IWM looks to be in a down channel again – this time steeper than yesterday.  We’re testing the bottom of the channel now.  I don’t think this looks good…

  127. fizz:  The Fed released the Z.1 Flow of Funds account report at 12 noon and might explain the sudden puke.

  128. Phil
    Thanks for the VLO play – very nice.!

  129. The word today from some very experienced currency traders…. There is a lot more weakness in the Euro that will be surfacing over the next few months. Germany is not at all interested in helping anymore. I am out of EUO at the moment, but will re-enter as soon as the EUR breaks to the downside.

  130. Ukranian girlfriend/Jrom – You are a brave man, my friend!

    10,060/Exec – Good call so far.

    TBT/DMan – TBT is at $39.40 so it’s on target.  Auction at 1pm, then you will know more.

    Quitting while ahead is wise today JRW!

    Oil/Jimmy – I don’t think $75 is sustainable given global economics but that doesn’t stop it from jamming back to $85 where I like to short it because, mathematically, it’s not supportable by global GDP.  At $65 I’m happy to go long based on fundamentals and, in between, generally don’t play.  See you guy think I make really good calls but that’s because I try to wait for it to be obvious before I trade .  If something isn’t at the top or bottom of a channel, I don’t have a lot of interest in playing it.  Since every day there are hundreds of things that are too cheap or too expensive, there’s no need to keep playing the same thing after the move is done. 

    Day trading/RMM – Well you could have made $2,000 in 50 of those AAPL contracts this morning.  I do not really day trade much, I take a position I like and if it does really well in the same day I’ll take the money and run but, other than DIA momentum plays (mainly in the last week of the month) and my futures follies – I’m not much for day trading.  For one thing, it’s too distracting – I’m trying to read and figure out what’s going on in the broad markets so staring at the 1min chart hoping it pays off 3 cherries for hours at a time seems like kind of a waste to me. 

    ERF/Gabby – I like the trusts but I am worried they get hammered by changes in the tax laws.  They are in a perfect spot for a buy/write though at $22.34, selling Jan $22.50 puts and calls for $4.50 for net $17.84/20.17 so a nice little discount and you get your 10% dividend – just make sure you keep up with the news for signs of trouble.

    Z1/Kinki – Good catch! 

    More of the same from the Fed Flow of Funds report (.pdf): Households cut their debt in the first quarter for the eighth quarter in a row, raising net worth at an annualized 8% to $54.6T – still down $11.4T from an early-2007 peak. Total debt rose 3.5%. Mortgage debt fell a record 3.8%.

    30-year went of at 4.182% with 2.87 bid to cover so pretty strong but shouldn’t be too damaging to TBT, maybe $38.80 (now $39.23).  The Treasury sells $13B in reopened 30-year bonds at 4.182% (.pdf). Bid-to-cover ratio of 2.87, vs. a recent 2.69; indirect bidders take 36%, vs. a recent 35.4%. Direct bidders take 20.3%, vs. a recent 16.7% 

    Bear #1: So the ECB maintains its 1% rate, but Nouriel Roubini says it’s zero hour: time for the bank to cut its rate to zero and expand bond purchases to make up for the waves of austerity beginning to roll over Europe. A rate cut’s not enough, he says – ECB needs more easing and to signal that a weaker euro is OK.

    Bear #2: Welcome to "Act 2" of the crisis, George Soros says. "The collapse of the financial system as we know it is real, and the crisis is far from over," he says, calling the situation "eerily" reminiscent of the 1930s with pressure for austerity while the recovery is weak.

    Bear #3 (maybe): Bearish options on consumer staples surged to a record yesterday – though boosted by a big trade of 50,000 puts, likely from a large investor hedging sector exposure.

    Combined global household wealth rose 12% last year, to $11.5T under management, meaning assets have nearly recovered from the 2008 crisis, BCG’s survey reports. Europe remained the top region in total wealth, with $37.1T in assets to North America’s $35.1T.

    OIH with another 5% day!  BP (BP +11.6%) shares are benefiting from energy moving higher, as well as bargain hunters who see overselling not just in BP, but in other spill-related stocks: APC +10.9%, RIG +5.7%, CAM +5.2%, HAL +6.9%. J.P. Morgan’s thesis favoring larger oil-services firms during the drilling moratorium means upgrades to Baker Hughes (BHI +8.8%) and Weatherford (WFT +3.9%).

    On the hour: Dow +1.8%. 10-yr -0.47%. Euro +0.86% vs. dollar. Crude +1.14% to $75.23. Gold -0.3% to $1226.20.

    Three lunchtime reads:
    1) Calling a bear a bear
    2) The high probability of an irrational gold bubble
    3) China’s not the answer for the eurozone

  131. Phil                                                                                                                                                         
    Sorry forgot the prices again DXD 28c @5.68, -40c @2.93, -25p @1.65. THanks

  132. hi Phil what is your thought on APPL 11 position I have in Oct 300 Call from rolling rawhide since march, it was sold for 4.35 now 6.8.  How should I split it to put and call in the front mos or leave it alone.  If you split is there a range you select like +/- 20% change upside or downside  thx

  133. sorry APPL 11 contract Oct 300 short call thx

  134. Bought QCOM stock..ahhh what the hell

  135. Phil
    They are Jan 11 as I forgot that too. I actually doubt I influenced Apple prices but if I did WOW! Diasters are not totally clear except I feel I have more than needed. I’m covering about $80,000 longs and options and do understand how much I need only issue is when need extra, you posted only TZA today?

  136. YRCW down 11% to .20 – disturbing. 

    FDX is a good one for the Buy List:  The 2012 $60/80 bull call spread at $11.50, selling $55 puts for $5.15 is net $6.35 on the $20 spread that’s only $1 below target now at $79.11.  Ordinary margin on naked $55 sale on TOS is net $5,500 for 10 plus the $11,500 spent on the bull call ties up $17,000 to make $13,650 in 18 months.  Worst case is you own FDX at net $61.35 (22% discount)

    TBT held up very well!

    Euro/Gel – I think there is too much interest in them holding $1.20.  Neither US or China can afford to let EU turn to chaos.

    DXD/Shadow – Doesn’t matter, it’s a risky trade based on a very large sell-off that may not come but, as I said, the danger of having DXD put to you at net $26 is much worse than danger of TZA put to you at net $3. 

    AAPL/Gucci – I’d go for the July $220 puts ($4.10) and the July $270 calls ($4.10) as I THINK earnings are after that, which means you’ll get a nice premium roll to Aug in any case. 

    Nice, we held up despite all those bearish statements and now buyers are back.  Same as yesterday, hyenas calling in all favors to try to keep the markets from taking off.

    TZA/Shadow – It was up yesterday and the day before.   Now I’m not chasing but there will be another one at 10,250, assuming we get there.

  137. Phil -
    Still have uso 33 puts – should i dump them – I doubled down at .20 and took my nickle at .25 so I worked off a little of it but not as much as I would like.

  138. Uh oh bears – Money getting pulled out of bonds – TBT flying!!!  If they go through $40, we could finally get a proper move up, both in interest rates and in stocks

  139. The SEC approves new rules requiring a pause in trading in any S&P 500 stock that moves 10% or more in a five-minute span. The change, which agency chairman Mary Schapiro says "will provide time for buyers and sellers to trade at rational prices," could be effective as soon as tomorrow.

    USO/Samz – They are .25 now so getting out even on a June put with a week to go is just fine.  I still have $35 puts but I’m willing to roll to July, that can be tricky with the $33 puts.

    Gold heading down again – good for the markets too.  Oil seems intent on holding $75.50 today. 

    AAPL needs to make a move to get the Nas over the day’s high but SOX fell back to 2.78% so looking like a tough road to break higher at the moment.   Light volume (103M at 1:50) means anything is possible.

  140. Phil: where did you see this info that money is getting pulled out of bonds ?
    I am in bond funds, they do well but of course I will watch when its time to get out when interest rates move up.

  141. Jrom/Ukaranian girlfriend
    Good choice…. They look great and work hard. They do not like competition, so don’t have roving eyes.

  142. Closed DXD spread at loss, TZA spread up a little.

  143. Money going right back into bonds

  144. Bonds/RMM – I have a trader friend who texts me when big moves hit the mortgage bonds, I have no idea where you could monitor it yourself.

    Day Traders:  I would say possible entry point for TNA is going to be $40.30.  Like a futures contract, you can play TNA over the $40.70 line with a nickel stop and then reload at $40.30 with a dime stop so risking .15 in catching one of the two moves up.  Of course, I’d rather man up and sell the $38 puts for $1.80 agains the the $38/40 bull call spread for $2.20 and be in the $2 spread for net .40 but that’s just me

  145.  Phil, I saw your answer to my question from yesterday--Hegdes. I am currently Negative on one of them (TZA) and almost even on the SDS, which is in the money by $2.88 (32/35). I did not get the put sold, so its just the 32/35 expiring next week. You recommend killing both now? As I mentioned I lost 15% on my longs during the time the hedges were in place so they would have been for naught? 

  146.  Phil, I saw your answer to my question from yesterday--Hegdes. I am currently Negative 100% on one of them (TZA) and almost even on the SDS, which is in the money by $2.88 (32/35). I did not get the put sold, so its just the 32/35 expiring next week. You recommend killing both now? As I mentioned I lost 15% on my longs during the time the hedges were in place so they would have been for naught? 

  147. Phil: Are you still advocating 25% loaded, 75% cash?
    I tried VERY hard not to enter too many long-term positions.  But I just couldn’t resist yesterday when I saw the BTU trade.  Now, how can I resist VLO and FDX?
    Maybe I’ll tell my wife to enter a new password and not tell me what it is.  But then she’ll log in and mess around…

  148. Phil/TNA
    June options spreads are way too wide to play them (20% bid ask)
    That is a rip off!

  149. hahaha Phil! So futures contracts arent man enough for ya!? BTW the Ukrainian has her citizenship (its not one of those mail order things!)lol.

  150. TNA – Forgot to mention, just like day trading futures, once you pop $41 you want to have a .15 trailing stop to lock in profit ($40.85) and you can add .05 to the trail with each .15 gained.

    Hedges/Amatta – If they are longer than June you can leave them on as you will be happy if the longs bounce and put them under, right?  I have been saying, take them off if they are NOT protecting anything.  If they are Junes, you are better off taking them down and adjusting with new hedges.   I assume the SDS is June but how can you poosibly be only even on a $32/35 bull call spread that’s currently $2.88?  The most it could possibly be is $3 so you don’t risk $2.88 to make .12 – EVER!

    75% cash/Cwan – Yep, of course you can short-term trade some cash but on commtiments, yes, I think we need to stay flexible until we retake the bottoms of our major ranges and actually hold them for a few days. 

  151. Hi Phil I still have Oct 57 short put, should I roll down to Jan 11 3x 30 short put or should I roll to jan 11 35 short put instead, if RUT drop 10% by year end, then 30 stike is better right? thx

  152. What with CSCO down on such a good day?

  153. Yay AAPL!!!!

    Mystery stock/Gucci – 3x is a big commitment (will you go to 6x if it fails?) so make sure you are sure…

    Listen to Cramer repeating my JPM idea! 

    If we pop those morning highs the short will be screaming!

  154. Phil: how is WMT for a trade ?
    I actually have some long calls, no cover att, jan2012C50.
    Made some $ from frontmonth callers and putters, so right now this at about breakeven.
    What can be made out of this now ?

  155. TBT- Article in the mornings WSJ re: treasuries/Pimco- "reversing course"——--
    So, what to make of this? Just trying to juice the market before reversing again or what?
    In any event, I believe you mused about the possibility of rolling TBT positions out to 2012 at some point if the anticipated moves did not start. I am in some Jan11 spreads and wondering what should we be looking for to signal when the it is time ?

  156. Averages crossing highs right now ,    short  

  157. Now were cooking with gasoline…go baby go!!

  158. Phil, VZ seems in a good spot now. How about selling the Jan 26 P for 1.65 and buying a 26/29 bull call spread for 1.67. That puts you in the $3.00 spread for $0.02 with $340 margin per contract! Worse case scenario, I am in VZ at $24 and change!

  159. hi sorry was in a hurry Oct TNA 57 putter want to roll to Jan11 30 ot 35 put which stike is better

  160. This reminds me of the time I wrote a play to warn Matt against shorting the markets in April of last year (sorry Matt but the screaming comment reminded me of this).

    Is 4% good on those TNA things?  I don’t know what you guys are used to….  8-)

    Watch that 10,150 line on the Dow but now trailing stop can be .25 ($47.75) to lock in a buck – if we’re going to have trouble, it will be here but AAPL may pop $250 and it’s party time!

    WMT/RMM – Useless for a trade but great for selling against.  They never move, which makes them a good income producer.  I’d wait for a move up and sell 1/2 July $52.50s for $1 and then see which way it goes.

    Pimpco/Pstas – You should know not to believe a thing they say.

  161. Phil/TNA
    Nice call Phil!
    We gonna give you a golden box for now on :)

  162. yip I say out ….. or.  TZA  sometime between now and your next line at 64.12

  163. Phil your memory is unbelievable . How can you remember a comment from 14 months ago?

  164. Can we have a round of applause for TBT please !!!!

  165. So far, this day (at least the RUT) has been a carbon copy of 5/27, including the time of day of the moves up, down, and flushes, almost to the minute.  If the pattern holds, there will be a small move up, a flush and then one more big move up just before 3:30.  Or it could all just be a big coincidence up until now.

  166. VZ/StJean – Absolutely, nice trade!

    Memory/Stock – Actually I have a terrible memory for real things (phone numbers, combinations, people’s names) but silly things like that I’m very good at remembering. 

    TBT/Samz – Clap, clap, clap (and I mean the good kind, too!).   To me, trying to keep TBT down is like trying to stop the tide from knocking down the sancastle of low interest rates.  Eventually, we know who the winner will be but one big storm at any time and it’s over in seconds…

    An hour left – this can get very interesting if we pop our levels with this much time on our hands and volume this low (still just 126M).

    Every financial service stock in the S&P 500 is higher today except Goldman Sachs (GS -2.8%), whose shares tumble to a 52-week low as the SEC hunts for fresh dirt and perhaps force it to settle on terms more to the regulator’s liking. (ETF: XLF)

    Oh look, CNBC found another bear:  The economic situation today is worse than two years ago as sovereign debt spreads "like a cancer," Nassim Taleb tells CNBC. "We had less debt cumulatively and more people employed. Today, we have more risk in the system and a smaller tax base," Taleb says. "Banks’ balance sheets are just as bad as they were" two years ago, and "the quality of the risks hasn’t improved."

    Treasury chief George Osborne signals the U.K. government’s first display of support for BP (BP), stating that it is important to "remember the economic value BP brings to people in Britain and America." Some in Britain have expressed concern about Obama’s attacks on BP and its dividend, a significant source of income for many British pension funds.

    Foreclosure filings in May dropped 3.3% from April but rose 0.5% year-over-year, according to RealtyTrac. Default notices and scheduled auctions were down M/M and Y/Y, but bank repossessions hit a record for the second month, rising 1% from April and 44% Y/Y.

  167. TBT- so, my memory if faulty- you did not muse re: rolling positions to Jan12?

  168. Phil hold into tomorrow? Im feeling hold ….

  169. Stock…I’ve been in and out all day.. IN TZA again now at 747, stop at 738

  170. I don’t like that KKR is planning to do the IPO now — totally contradictory with a bottom.

  171. Coincidence/Judah – I think they call this an "A4 Thursday" down on the control room.  8-)

    Actually, if you go back to the 26tth, we had a similar big dwn day then too with the gap up on Thurs am.  Doesn’t look good for tomorrow though if that pattern holds. 

    CNBC is now worried about jobs. 

    TBT/Pstas – What?  Muse?  Anyway, I think TBT gets to 60 this year or next year so I’m happy to roll everything along until I’m right.  They are an ultra but they are an ultra that tracks something that barely moves so they don’t deteriorate too quickly and, at some point, one of these note acutions will fail.  We’re selling $2Tn, Japan is selling $1Tn, Europe is selling $1.5Tn – we just don’t send China that much money…  The only way to keep notes low is to have the Fed buy them but that’s printing money (no matter how they try to hide it) and, eventually, that money will hit us as inflation (very simply, the supply of money dillutes it’s relative value) – especially if it’s not being stored up in homes.   That causes inflation and then people can’t accept instruments that only pay 4% for 30 years – not even other CBs are willing to take that kind of long-term hit and then rates MUST rise to a level that takes into account the dillution of the underlying currency plus the future discount of inflation. 

    Hold/Kustomz – If we pop up 10,200 into the close, I’ll be selling all short-term bull plays and, if we don’t, I’ll sell the Junes and maybe keep some July calls.  Don’t forget on June – if tomorrow is bad then you do what into the weekend and then it’s Monday and all your premium is gone in 32 hours of trading and you have no time to recover a loss…

    KKR/Jordan – Good to be suspicious. 

  172. RUN SMOKEY!

  173. Out TNA at 7.45, there moving us up! 2.5 cent loss, I paired in..

  174.  SDS 32/35, yes they are June. Also the TZA. No I meant to say the SDS 32′s are 2.88 in the money… but I paid 1.90 and currently 1.60, so I am -.30 X 30 contracts. AND my longs ($150K) are down still 13.5%, so the hedges did absolutely nothing but put me more under water!  On the TZA its worse… My question is if I leave them in and hope the market goes flat for the SDS and then I get $9,000 back. with the TZA market needs to go down 3% I figure…. THEN the hedges would have worked perfectly as I would be fully covered for the losses on the longs. 

  175. Come on anti-stick! Sry

  176. This is the  move upwards I was calling for.  Unfortunately, they shook me out before the run.  I didn’t think it would take till 12:45 for the surge to begin.  Total low volume bs.  They definately got rid of the weak hands today before running it up for themselves. 

  177. fellas, Im betting the no pass line!

  178. Phil, you think copper will hold?

  179. euro continues to grind higher against dollar – nice uptrend going for the last couple of days

  180. Phil  Mattress again are we still going in at full cover or shall we buy back some of the 102 p jun ? most of them I rolled to 98 p jun already

  181. BOOM  You mentioned them earlier…what do you think about selling the Sep 15 puts for $2.00 as a way to leg in?

  182. Phil  Mattress again are we still going in at full cover or shall we buy back some of the 102 p jun ? most of them I rolled to 98 p jun already

  183. Any suggested DIA put plays to get into now in case we do head lower tomorrow?

  184. WFR is on sale with a 35% discount on the Jan buy/write selling the 11 p&c

  185. VNO with a huge move off the bottom – we’re back to our usual bullish BS it seems.

    SDS/Amatta – Well they are still $2.30 in the money and SDS loses $1 of the S&P gains 1.5% so I would hope your stock positions are recovering while SDS is going down.  Next time, let’s go over your whole hedge after hours to see what your total coverage will be.  Of course we’re already down 7% on SDS from 2 days ago, which was really the time to cash out.  Anyway, there is a huge amount of risk to running a June bear hedge out to next week.  If you can cash out with a small loss, better that than a big one.  Also, I think you miss the point on disaster hedges as they are there to protect you from 20% drops in the market, not 10% ones so if we don’t get a 20% drop and you can get out even close to even – that was free insurance.  The real issue is you don’t seem to have covered your longs as our buy/write plays absorb the first 20% of the drop. 

    Copper/Iprosp – Well we got fairly positive constructio news in China so I think they hold $2.85 but getting over $3 will take better news out of Europe. 

    Mattress/Yodi – I’d go for it and stay full covered.  Not too terrible a downside risk as long as you rolled up to Sept $105 puts on the long side.

    BOOM/Eph – Great way to enter!

    DIA/Jimmy – I would not bet on a down move tomorrow.  My targets should get tested.  You can sell naked $104 calls for .53 as it’s going to be tough to get another 250 by next week but I wouldn’t.

    WFR/Gel – Always a good play on them.

  186. The PCI, based on an analysis of real-time diesel fuel consumption data from over-the-road trucking in the U.S., climbed 3.1% in May and +9% Y/Y, suggesting the economy may be on the upswing.

  187.  Gel, WFR got cut in 1/2 over the last month or so. Do you know the reason?

  188. Hi Phil
    stuck with
    10 TNA Ju 46 c @ $3.20 now @ $1.1 and
    looking for best roll on 20 SSO Ju 37 C @ 1,15 now .65

  189. Gel, nevermind, got it… They got crushed in the rush out of solar. Might be a good spot to enter now. 
    Phil, how about selling the Jan 9 P at $1.08 and buying a the Jan 7.5/9 bull call spread for $1.01. You get paid for the $1.5 spread.

  190. Looks like we’ll be close enough to sell into the excitement on this move.  There’s a reason Rule #2 is "When in doubt, sell half."  Even if you are dying to be long tomorrow, so much better to take a little off the table into the close – just in case!

  191. Phil, I meant for WFR…

  192. This close absolutely kills me.  I’d maxed account my account this morning buying FAS but got flushed before the pop.  I’d be up huge.  I just don’t know why they can’t spread the money around a little more then they do.  Greedy bastards.

  193. FAS is now at the top of its channel.  Should be a down day tomorrow.  Out.

  194. Phil, Wow, that was fun. Almost like I had a copy of the GS trading program.  A4 Thursday, it was.  Maybe tomorrow will be A5 Friday.  Peace out, man.

  195. WFR/Stjean – Trouble in Europe, where they get paid.  Currency exchange, worries about subsidies for solar installations.  Same problem as SPWRA, who already ran up for us.  Yes to your play, I’m very bullish on WFR long-term.  

    TNA/Ban – Well, in your case, tomorrow may be another day!   Not too much risk in waiting is there?  I’d roll out to July $46 calls at $3.60 (+$2.30) and sell some other sucker the June $46 calls and let them eat $1.30 in 5 days.  Worst upside case for you is you roll them into a vertical, otherwise, you have this roll for net $1 and then you can sell the July $44s for about $4 and you can roll down to the $40s or whatever works out. 

    Channel/Matt – I agree we’re now into a risky area.  Could go either way but if Asia comes out trying to play catch-up then Europe can get another pop (assuming they don’t mess something up in the morning) and then we have momentum.  Don’t forget EU selling was holding us down this morning so if they change their attitude – it’s another squeeze.

    A5/Judah – I hope not, the 28th was a rough day but it was into the holiday weekend so not a typical day.

    On the whole, this day could not have gone much better!   Later all….

  196. I bought some DXD at the close.  See if we can get a little Friday profit taking to pull the market down a little.

  197. Matt…I hear you

  198.  Phil
    I hold a spread on SSO DEC10 C 33/37. SSO had a big move today, however the spread didn’t move much. Some is due to little volume on the options – but even the bid/ask isn’t representing what I thought it would move. The Delta of the $33 strike is 0.63 vs. 0.47 for the $37 and based on bid/ask they moved roughly the same. So is this expected for options/spreads with far expiration date? 

  199. Well done Phil

  200. Yshenhar  & smart guys,
     I have a similar deal with the spreads. I think Phil said yesterday  that the price has to blow clear through both legs & hold to expiration to collect full value on them. You can adjust by rolling your 33 to 35 to collect some profit,  then roll it back down later when it’s cheaper, or hold for that last $.
      Someone – I bought a spread yesterday, & tried to sell it today (up 34%), but was REJECTED. & told "Not allowed to use overnight liq. funds on this account."
    Can anybody tell me what that’s all about ? Thanx

  201. ekor
    If you with TOS you need to have in exess of 25,000 Liquid Funds in your trading Acc.  otherwise your second trade which you wish to roll over again will be rejected. Hope this helps.

  202.     yodi,
    thank you

  203. member…love the site.I’m long 1k faz from 7/09 and way under water. Any advice on how to dig me out of a stupid position over time?

  204. Hi, ekor,
    Your suggestion of rolling up the long leg of a bull call spread is interesting.  So, by rolling up, you take some of the profits off the table.  But then, when the market goes down, you roll it back?  How would that help in the end?  Let’s say the market goes back to where it was, don’t the options’ price get back to where they were approximately?  In order to roll the long leg back down, don’t you end up paying back whatever profits you got from the roll up?

  205. Phil/patterns, So a serious question on the topic of my more jocular post earlier — do you think that, due perhaps to the large numbers of trades executed by programs, there occur frequently repeating patterns such as the striking similarity between the 5/26-5/27 trading days and the 6/9-6/10 trading days on IWM?  With respect to those two sets of days, the amount of the pre-market gap up, the rises and falls, all occurred at similar times of the days and by similar amounts.  I recall you joking once that we should come up with labels (A4 Thursday) and when we spot a pattern, we just shout it out.  That’s more than just a jest, right?  There really are days that are carbon copies of other trading sessions and occur over and over.  I don’t mean every day (and I don’t mean just with the RUT), but with enough frequency that such pattern spotting can assist in trading.  I traded today looking at 5/27 nearly the whole time, and it was as if I had a roadmap of each move in the market.  It was the first time I’ve traded when I could see what was going to happen before it happened.  The same would have been true for yesterday (looking at 5/26) though I didn’t notice it until later.  So, I was thinking that similar to the rationale behind your 5% rule (it works because of the way the trading programs are set up), there may well be validity to identifying certain repeating pattern days, right?

  206. Juda…That is a fascinating study… Labeling them is genius…Why don’t you start keeping track…

  207. All SPWRA Investors
    From Barrons – SHARES OF SOLAR-POWER company SunPower have had a difficult stretch, falling 38% in the past three months. The slide has apparently made them attractive to two top insiders at the company who spent more than $1 million to buy shares in SunPower (tickers: SPWRA, SPWRB) this month.
    Chairman Thurman Rodgers bought 100,000 B shares on June 7 for $1 million, or about $10.36 each on average. Chief Financial Officer Dennis Arriola bought 15,000 B shares on June 2 for $171,000

  208. Just a small Hammer for tomorrow. I think Angila Merkel rejected to spend more money on Opel (GM)

  209. deano
    Good pick up on SPWRA I hope they get out of the woods with all the oil on our nice the beaches. Possible with a solar panel or two we can light up a 12V bulb in Obama’s head. 

  210. Yip, and Juda--I think what you are saying is very probably since numbers and patterns mean something to computers. So I am glad you pointed that out to us.  I had said in an earlier post that  I have been convinced that those long lines out of normal trading levels indicate the price a stock will be at sometime in the near future(usually the next 10 trading days.)  AA made one today, back down to 10.80.   XOM’s stick on 5/6 was 58.46, it’s low was that very number on 5/25.  The Dow’s was 9774--it went just below this.  Watching SNV--it’s stick was down to 2.45, its low has been 2.48, since. These are only a few that I have watched take place.  AAPL’s is $199, so still waiting to see if that happens--doesn’t seem possible right now, but we’ll see what it does.

  211. Phil; you gave up and are now trading TNA ?   Too funny ….

  212. Fizz….That’s pretty much it.

  213. Yen-Shyang Hwang, Taipei; Joseph Tsai, DIGITIMES [Thursday 10 June 2010]

    Compal Electronics has announced consolidated revenues of NT$73.37 billion (US$2.26 billion) for May 2010, up 2.6% on month and 93.4% on year, while combined consolidated revenues from January-May reached NT$364.91 billion, up 88.9% on year.
    Compal shipped 4.1 million notebooks and 235,000 LCD TVs in May and expects to ship 4.4 million notebooks in June and reach a total of 12.5 million units in the second quarter

    Number of stored freight cars falls in May, logistics report shows

    In May, freight cars in storage represented 23.8 percent of the entire fleet, down from 28.7 percent in January, according to the 21st annual “State of Logistics Report” recently released by the Council of Supply Chain Management Professionals and presented by Penske Logistics.



    Mobos | Jun 10, 14:52

    Affected by dropping demand in Europe and China, first-tier motherboard makers Asustek Computer, Pegatron Technology, Micro-Star International (MSI) and Gigabyte Technology all saw over 10% on-month revenue drops in May 2010, according to the companies.



    TSMC revenues hit all-time high in May 2010

    Bits + chips | Jun 10, 15:11

    Taiwan Semiconductor Manufacturing Company (TSMC) has seen its sales hit an all-time high for the second straight month. The chip foundry registered consolidated revenues of NT$34.82 billion (US$1.07 billion) in May 2010, resetting the record of NT$33.81 billion in the prior month.


    First-tier motherboard makers see over 10% on-month drop in May revenues

  214. From David Rosenberg:  As for valuation, the median of our models show that indeed, the S&P 500 has closed the excessive valuation gap that has been in place for the past nine months. But bottoms typically occur when the market slices almost 20% below the median fair-value line and besides that, the Shiller P/E, while coming down in this correction, is still sitting at 20x, which is 20% above the long-run norm. In other words, the market is not as cheap as the pundits, who rely on year-ahead EPS estimates, deem it to be.
    He also has an interesting chart on secular bull/bear markets…..they last 16-18 yrs and we are in yr 10 or so of it FWIW. 

  215. Phil – do you really think that things are going well and Bernake was right…remember this:  Back on March 28, 2007, he told Congress (the Joint Economic Committee) that “…the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” And his call on the economy, at the July 2007 semi-annual testimony to Congress was “the U.S. economy appears likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy’s underlying trend.” Well, real GDP growth in the second half of the year was just a smidge below 3% so one would think that based on what he had to say back then, Mr. Bernanke’s view for 2008 would have been somewhere between 3% and 4%. Instead, we got 0.4% real growth in 2008 (and then -2.4% in 2009).
    Now he says:  “the economy — supported by stimulative monetary policy and the concerted efforts of policymakers to stabilize the financial system — appears to be on track to continue to expand through this year and next.” He added that “the effects of the [European] crisis on economic growth in the United States seem likely to be modest.” 
    Where are you Matt?…..this should be music to your ears!

  216. cwan120
    You seem to have the right idea about the roll ups. I have tried about everything and somhow this seems like another idea that was lost in premium. I just closed some today at loses because roll anything is last resort when you already missed the BOAT and no mater how you try you end up out more. Some of the time anything works just don’t assume as in make an ass out of you and me eventually.

  217. Looks like the trade wars have begun…per
    According to China Daily, the state-run paper that is widely regarded as the government’s English language mouthpiece, Beijing is ordering local officials to adhere to a new "made in China" policy when buying anything.
    "Under the draft regulation," the newspaper reported earlier this month, "the priority for government procurement would be on domestic products.
    If domestic products cannot meet the criteria for local content, purchasers should give priority to foreign products assembled in China." China Daily estimates the Chinese government spent about 700 billion yuan ($102.5 billion) last year on goods and services, a good chunk of it imported.

  218. fizz:  I am hearing you on those "anchors" or "tentacles" that get sent down on certain stocks.  the "flash crash" was probably just an expanded version of this phenomenon across many stocks. 
    If you look at all of them, they all occured right at noon today.  For whatever reason, there was an event that caused a coordinated lack of bids on several different stocks at the same time until it hit an established "support". 
    On the XOM 1m chart for today (6/10) , you can see three distinct "tentacles" shooting down and bouncing off the same price: 60.03.  Once in AH trading at 8:54AM, once exactly at 12 noon and one right around 4:00PM.  AA also had the same phenomenon at 8:55AM and 12 noon.  AAPL had one that shot down to 243.19.    All of them around 3% drops from high to low.
    I’m with you.  Thats where the prices are headed, one way or another.

  219. cwan / shadow,
      I’m not advocating rolling legs like that, necessarily, but like on a EDZ disaster hedge  Jan12 45/70 BCS, I rolled the 45 up to 65 to cash out as I think we’ve seen the low for this year, or if not I still have a $5 hedge with most of my money back out to do other things with.  Next spring, I’ll probably roll to a new hedge.  Is there a better way ?