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Flatline Friday? Economy and Markets on Hold

Our charts predicted a flatline and a flatline is what we’re getting!

I do so love it when a plan comes together (see David Fry’s chart).  In yesterday morning’s post I predicted that bad data would send us down at 10 am and I rushed out our first Alert to Members at 9:37 with a call to go naked on our DIA Mattress play, which effectively flips our virtual portfolio bearish and we even added the QQQQ July $46 puts at .85, which we exited just one hour and four minutes later at $1.05 (up 28%) as we 1/2 covered our Mattress Plays back to neutral.  

We do a lot of day trading on options expiration week – taking advantage of the lower premiums.  As I said I would in the morning post, we shorted gold at $1,250 and we even shorted AAPL for a nice, quick gain before stopping out.  At 10:37 I had already said to Members: "I’m done with short plays here.  Not going long but that’s a lot of money already and I’m not greedy.  We’ll see if we hold this 1% dip first," meaning we got the 1% pullback we expected on our 5% rule and we know not to be greedy with our day trades!  At 10:57 we flipped to TNA June $47 calls at $1.20 and we rode those up to $1.60 (up 33%) at 11:54 but it was our TBT short put play that made me the most happy as brand-new Member Flipsiceland told me at 12:12:

Thanks Phil, just paid for my 3 month ‘prescription’ for the members service, in one and half hours.

That’s what I really love about my job, as it says on our logo:  High Finance for Real People – Fun and Profits!  We love making profits and we also like to have fun while we’re doing it…  The fun didn’t stop there as we had a nice winner on OIH puts, Copper Futures long and we hit the turn on the nose as I warned Members at 2:25 that: "Volume is very light with just 80M shares on the Dow at 2pm so VERY stickable but I would have to short into a stick save at this point as we shouldn’t be going up other than some desperate window dressing that can be quickly unwound" and at 3:19 we hit the turn almost on the nose as I said to our Members: "Volume at 3:15 is 99M on Dow, still super-stickable so take those short profits!"

JRW posted his target for IWM at 3:20, saying: "It’s all about confluence; I posted something in the last couple of days.  Right now I’m set up for a bounce off 66.36 for a close above 66.90."  IWM bottomed out at 66.35 eight minutes later and topped out at $66.82 into the close.  That may not seem like much but it gave us a big move on TNA, which is what most of us trade to follow the Russell and we got a $1 move on that ETF (2%) in less than 30 minutes.  See, it’s much easier to have fun trading when you know what’s going to happen next…   

We had another very fun, knock-down drag out debate in our Member Chat last night on Capitalism versus Socialism along with the normal Keynes vs. Hayek stuff we usually talk about when trying to solve the World’s problems.  Just when I was running out of liberal gas, our Nobel prize-winning buddy, Paul Krugman chipped in on the NYTime Op Ed page with this great summary of the economic situation:

Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.

Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.

In America, many self-described deficit hawks are hypocrites, pure and simple: They’re eager to slash benefits for those in need, but their concerns about red ink vanish when it comes to tax breaks for the wealthy. Thus, Senator Ben Nelson, who sanctimoniously declared that we can’t afford $77 billion in aid to the unemployed, was instrumental in passing the first Bush tax cut, which cost a cool $1.3 trillion.

While Europe is openly discussing universal belt tightening and long-term sacrifice, the United States are engaged in an "extend and pretend" policy which is, of course, pushed by the top 10% and their Congressional and MSM flunkies, who push the idea that it’s somehow unAmerican to expect the rich to help shoulder the burden of debt they created.  I found this neat little chart last night that neatly sums up the cancer that has been taking control of this country for the past two decades.

Notice how financial workers (a good representation of the top 10%) have had positive changes to weekly earnings EVERY SINGLE YEAR since 1984.  Compound that year after year and you end up with STAGGERING amounts of money that have been transferred to the top 10%.  Where did all this money come from?  Certainly not from economic growth – in 1998 the S&P was at 1,100 – without adjusting for inflation!  Since 1998, the wages paid to Financial workers has gone from a weekly average of $1,000 to a weekly average of $3,000.  EVEN INCLUDING those fantastic salary gains for the top 10% – here’s how the rest of the country did during the same time period:

Not a pretty picture, is it?  These are real wages, a measure of the effective purchasing power of individuals and you can see that the government’s accounting for this vital statistic using their infamous "Core CPI" model is miles more optimistic than the real-world SGS model.  A tank of gas only cost $15 in 1998, not so terrible on a $300 of salary but $50 for a tank of gas gets to be a problem, doesn’t it.  The same goes for food, electricity, heat, shelter, clothing etc.  It’s very easy for the top 10% to get confused as to the reality of the impact of inflation on the bottom 80% as most of us don’t even know how much milk and eggs cost. 

If you are annoyed by people who stand in front of you in line and ask a cashier how much an item costs and then spends a few seconds deciding whether or not it’s worth it – then congratulations, you are an out-of-touch top 10%’er!  If your reaction to that scenario is "Do they really let those kind of people into my store?" then you are most likely in the top 5% and, if you were thinking "I’ll have to ask my personal shopper if that really happens" – then you are probably in the top 1% where inflation only affects you at art auctions and the shipyards.

As Krugman says, Senator Nelson and the other 51 Senators who voted not to extend unemployment benefits because we can’t afford $77Bn while extending $35Bn in tax breaks to oil companies IN THE SAME WEEK are A CANCER that is eating away at the fabric of American society.  This is not Capitalism folks, this is Corporate Welfare.  No, not even Corporate Welfare, although we certainly do plenty of that, this is Government-sanctioned Corporate Piracy as they have taken over our government, boarded our ship of state, looted the lock box and are now walking 1M people PER MONTH off the unemployment plank as their benefits run dry. 

WAKE UP AMERICA – they are robbing you blind!  How can you go to the polls and re-elect these thieves?  They don’t give a damn about you or your home or your family – they only care about the Corporate pimps who dress them up and parade their pet politicians in front of you every couple of years so you will vote to maintain the status quo.  They own the media which tells you over and over again how unAmerican it is to expect the government to reign in Big Business as if it’s Big Business’ goal is to take care of you.  This is like cows voting for the abattoir because they don’t want to be milked anymore!

Anyway, it’s options expiration day and it’s my job to take care of my people and make sure they can take adavantage of this nightmare and make some money because we damn sure won’t be able to count on Social Security to get us through retirement

Speaking of Retirement and ways your Government is going to screw you over completely – unless you are only watching Fox news, it should be pretty obvious to you that taxes WILL be going up in our future.  That means if you invested in a 401K or other tax-deferred retirement account on the premise that you will be taxed at a LOWER rate in the future, you may want to have a serious talk with your financial adviser.  That goes for expected capital gains, home sales and whatever else you can think of that the government will ultimately have to be grabbing if the deficit hawks take command in November and this country is forced into an austerity mode, as we were brilliantly convinced to do in the 30s by the banks who weren’t done grabbing all the land and wanted push the economy down even further. 

We are stagnating here at best and even our fake, Fake, FAKE rally couldn’t convince Asia to BUYBUYBUY this morning as the Shanghai FELL 1.8% on their first day back and th Nikkei was dead flat.   Europe is also flat just ahead of the US open and our futures are flat as a pancake, which is probably where we’ll close but we’re going to be ready for anything and setting ourselves up to take advantage of a possible sell-off next week – allowing ourselves to be pleasantly surprised if it DOESN’T happen. 

Have a great weekend,

- Phil


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  1. Phil -
    Oil futures expiration -
    What usually happens with the futures contracts as we approach expiration? Does they decline as people try and get out of their speculative positions?

  2. A little margin requirement relief for long suffering TD Ameritrade customers like me

  3. BHP -
    Phil I know David was short – but i like it for a buy write with the Jan 2011 – 70 calls and 55 puts for $10 - $11 – like doing it a lot more in the mid – to low 60s -
    having to buy it around 55 with the possibility of rolling seems appealing  but the political risk with the mining tax is worring 

  4. Kuru – that’s good news, thanks for posting. I’m wondering why now!

  5. Hey all,

    I am opening a new short position in Tesoro Inc. (TSO). We are looking to get involved at 12.10 – 12.25 for a gain of 2-3% once covered. 

    Check out my analysis and commentary here!

    Good Investing!

  6. Phil:
    I have short TBT Jan 46 puts, now $9.15 with $7.65 in intrinsic value. Don’t want assignment from someone who bought before the TBT pullback. I’d rather buy more time. Roll to Jan 2012s to increase premium/intrinsic ratio?

  7. So my boss decided to join the iFad revolution and got himself an iPad. He didnt get the black case and asked me to call around and get one from any retailer in the DFW area. All sold out…everywhere. This is a simple little $40 cover that I’m sure costs Apple $2 to make in China. Why wouldn’t they make as many covers as they do iPads. Almost everyone I know who has the iPad has bought one of these covers. Tack on then the $25/month ATT plan and then all the must have apps and you can see how Apple is a cash cow. I love the company and despise all the hipsters who have to have an Apple. Sorry Phil I know you are a big fan and use some Apple monitor.

  8. Just remember when you talk about the "corporate pimps" make sure you also include the "labor union pimps" and "trial lawyer pimps" who own the Democratic party and their politicians. 
    Fair is fair; and truth is truth.
    A pox on them all.

  9. Phil - did you exit GLL short JUL 37p’s when when you said "done with shorts" yesterday?

  10. Phil:
    Gold, Oil Silver have gone straight up in the last hour or so.  Why?

  11. @dezev
    Let me answer that.  I have had SIVR for a year @ 18.59. Sold all the shares yesterday at about 18.79.   That’s why.

  12. Labor Union Pimps? They have been gone for 20 years and average wages prove it.

  13. Cap,
      Thanks for your insights regarding HK; much appreciated. You don’t think selling the puts to go with them and turn the position into a buy/wrie would be appropriate?
    Regarding your comments on birth rate, you are right on the money, if not understated. Western Europe is committing cultural suicide, plain and simple. A birth rate of  2.1 is necessary to maintain a population; anything under that number and more people are dying than being born. The US is right on the cusp at 2.07; Europe ranges from 1.87 in Ireland, through 1.3 in Austria and Germany (the brink of demographic death spiral) to Spain at 1.1, a rate at which Spain’s population is halving every generation! By 2050 in Italy, 60% of the people will have no brothers, no sisters, no aunts, no uncles and no cousins.
    The simple fact of the matter is that the Social Democratic welfare state is not a sufficiently animating principle on which to base a society. It’s the nightmare version of John Lennon’s Imagine: no religion, no countries and, unfortunately, no reason to motivate the creation of new life.
    Where will the new citizens to support the social welfare state come from? Muslim immigration, the only growing segment of most European populations?  I think not.
    Japan offers a glimpse into the future of the demographic death spiral that awaits Europe; toy manufacturers are marketing the Yumel doll, designed not for children, but for the lonely and elderly  – companions to sleep next to them.

  14. Good morning! 

    I am all for taking bearish flyers into the open.  I think much of this week’s move up was fake and a re-test of 10,200 lies ahead. 

    A fun gamble on this premise is selling TZA July $6 puts for .50 and buying the $6/8 bull call spread for .55 so you are in the $2 spread for .05 with a $2 upside (3,900% profit).  As long as you are willing to have, say $3,000 worth of TZA as long-term portfolio protection, then you can sell 5 contracts for $250 and spend $275 on 5 contracts in the spread and you will make $1,000 if the Russell falls low enough to drive TZA up $1.60 (25%), which would be about an 8% drop in the Russel to around 610.

    For the day, we need to see when the market stops going up but DIA June 30th (make sure it’s the quarterlies) $103 puts are .83 and they are worth holding over the weekend.  You can actually sell a weekly DIA put against it, like the $102 puts for .37 but I like it as a naked play.

    USO June $35 puts are .25 with .15 of premium and I like those as a craps roll because we still haven’t had a big sell-off in oil as we near contract expirations with 91M barrels still on order at the NYMEX and only 2 sessions left to get rid of 2/3 of them.  They barely rolled any yesterday and the Aug contracts are $78.04 ($1.25 higher) so that’s an expensive roll!  If they force a liquidation, the bottom could drop out quickly.

    I still like the USO July $33 puts, now .60 too - just remember, we get out on a big dip, hopefully to $75 or lower

    Levels are the same as yesterday.  666 on RUT and 7,000 on NYSE are the only bullish indicators we care about while 2,300 on the Nas or 6,950 on the NYSE or 666 on the RUT are all failures.  1,115 on S&P is a top failure and 1,100 is a doomsday failure now.

    Have fun out there!

  15. Good morning,
    IWM 65.39, 65.96,66.28,66.81, 67.16, and 67.39

  16. I hear a lot of liberals (truth in commentary here, I’m not a liberal, I’m a radical – look up the Plaid Adder’s essay on the difference sometime) talk about the need for raising taxes on wealthy people – but very little on raising corporate taxes. I’m not understanding that very well; is it because businesses would shift the expense; is it because the MSM pump that line a bit so the liberals will think soaking wealthy individuals is real radical thinking – what is going on? I have lived in places that really worked to attract business – Nebraska’s a good example – and the state cut all kinds of deals to attract businesses. The idea was the contribution from the business would outweigh the loss in tax revenue etc, but once some of us did the math, it turned out that it wasn’t working that way. Ben Nelson was governor for a good part of the time I was there, no surprise. Although he did at least sign a bill for a state-wide Parkinson’s Disease Registry that I designed.

  17. Morning Phil. I need some help on my TBT position. I have no idea at this point how I can even break on it at this point.
    on 3/15:    BTO Sept 44 call at 5.58
                    STO  Sept 50 call at 2.39
                    STO  Sept 45 put at 1.59
                    Net cost- 1.61
    on 5/17:    rolled the Sept 44 call to Sept 40 call-- cost 2.05 for the roll.
    on 5/24:    bought back the Sept 50 call for .63.
    I do believe that TBT will break upwards significantly at some point, but it’s beginning to feel like time is running short.
    Thanks for any help.

  18. Oil futures/Samz – See above, it’s very important to do barrel counts to see what’s going on.  There are the normal 500K contracts (500Mb) for the three front months and 550M is "too much" while there are still 90M barrels in the month that is evaporating.  That’s a recipe for disaster but, this is coming into July 4th so traders may bite the bullet and pay $1.25 to do the roll, hoping for a holiday bounce and that would suck for our puts but I’m willing to roll up and DD into July 4th, looking for a post-holiday sell-off. 

    $50 buys you 100 DIA $103 puts in a do or die play on a big sell-off.  Almost certainly a loser but could pay off like a slot machine if we fall.

  19. Seeing plenty bids on the Euro.. should find support 1.2363, this should not fail…but if it does there will likely will be more downside

  20. Phil: My Sept TBT position is something we can work on later when you have more time with OpEx being today.

  21.  TSO fell out of the range. I would only short if it gets back to 12.00 – 12.05. Otherwise, we are going to have a dud for the day with no position.

  22. goldman,
    I see your 66.47 line from yesterday is still valid !!

  23. JRW – I have intermediate 66.71, 66.50, 66.36…66.36 is my strong line looking over 2 days

  24. Getting out of TNA at IWM 66.90 unless it still has strength

  25. JRW – I’m out 48.45….too far, too fast for me…coming up on 66.97

  26. JRW – only one pause on that leg up…going to be volatile today!

  27. 1/2 out at $48.56

  28. JRW – my 66.97 isn’t strong…I’m in cash either direction here

  29. Morning Phil, if all i make in a year from your advice is to pay for the subscription, i will still signup forever because of articles like above that give the overall picture.

  30. Margin/Kuru – Nice!

    BHP/Samz – They will suck if the global economy fails.  I don’t think we should be buying anything that you won’t be happy to ride out an EU collpse with.  I don’t think it will happen but that doesn’t mean we shouldn’t guard against the possibility.

    TBT/Chaps – My attitude about an assignment is if someone wants to pay me $1.60 in premium (almost 20%) to take the stock for a half hour before I sell it for cash and then get paid by some other dummy who wants to pay me premium, I’m fine with that.  I have a friend who trades on that premise – selling puts in dividend payers so he gets the assignment, keeps the premium and sells them again – it’s tedious but it works very well.  Anyway, if you want to avoid the assignment, you can roll but I’d rather roll to 1.5x the $42 puts at $6.10 or 2x the $40 puts at $4.80 than give up a year so soon. 

    AAPL/Jimmy – It’s worse than that, Tina and the kids got me an IPad for Father’s day! 

    Yes, Cap, let’s not forget the evil labor unions who took away child labor, unpaid overime and 12-hour workdays and the trial lawyers who allow the little guy to stand up to corportations when they bulldoze over individual rights or callously poison the land or simply kill people to add profits to the bottom line knowing that none of the people whose lives they destroy can afford to take them and their comparatively infinite cash-flow on in a court of law.  A pox on all of them and then we’ll be fine, right?

    GLL/Brook – That’s not a short, that’s a short play on gold and I still like the GLL July $37 puts sold shjort at $1.40.

    Commodities/Dez – Just end of month nosnsense I think.  We may not see a real move in oil until into NYMEX close at 1:30.  They are doing everything they can to raise the front-month price right now so they can get cheap rolls but at a certain point, the traders give up and they all scramble to sell barrels or they have to accept delivery of 1,000 barrels per contract (about 20 trucks full of oil barrels).   Since most traders are pure speculators, they have no way to accept delivery and no way to store the barrels and no way to sell the barrels so it’s either roll or sell the contract at whatever price by Tuesday.  We expired last month at $70 so most of these guys made money, which means many will gamble and most will be willing to wait patiently as long as we hold $75 – we’re just hoping someone panics out today….

    Halving/Kevin – Don’t you think it might be a globally responsible thing to halve our population over the next 40 years?  Are we really still so low on the evolutionary ladder that we think we need to outbreed our competition to secure our place on the planet?  And don’t knock those Japanese dolls, they have ones that can talk to you now8-)

    Taxes/Snow – The Supreme Court just clarified that corporations are just REALLY wealthy people so I look at it as the same thing and have written on the subject. 

    TBT/Jbur – At the moment, the anwer is to wait.  If it makes you feel better you can roll the $45 puts down to 2012 $40 puts and I’d spend $1.10 to roll down the $44s to the $40s and take out the $50 callers for .20 and wait for a bounce to sell something else for $1.  Right now you can sell the $43s for $1 but maybe you’ll be able to sell $45s (now .52) or better.    Oops – now I realize you already did that but early.  Well, then I agree with your position 100% and you are in the $40s for net 5.87 less the sold puts so you need TBT to hit $46 to win.   To win back $5 on your current $1.80 I’d roll to 2x the Jan $36/40 bull call spread at $2, which gets you $8 back at $40 on your $8ish investment (less whatever the puts expire). 

    Well, so far things are going quite the other way on huge volume (191M on Dow at 10:30).   Oil is on a tear back to $77 so this is where it’s a DD on the June $35 puts at .10 if you want to stick with them.  July $33 puts are still .50 so not worth a DD unless we hit .40.

  31. Phil, Could the "bots" be making a mistake by using the strength in the Euro to buy stocks? Could this end badly? Thanks!

  32. Out of TNA at $49.10

  33. Micro/Overall picture  I second your sediments. Great job Phil! I especially enjoyed your 5:50 comments. Props to your staff as well……

  34. Nice news highs for gold. It has shrugged off all deflationary signals (like yesterdays CPI), an uptrending stock market, a weakening dollar, and a strengthening Euro. Very bullish action.
    I’m not as long as I wish I was, and will probably add more on a pullback to the 1250 area, which it will hopefully re-test.

  35. Duds/David – That’s just fine on an expiration day.  Better to sit back and watch the craziness…

    Layering in short plays here – if there’s no sell-off into EU close (11:30) I’ll give up.

  36. Back to naked on DIA mattress play by the way! 

  37. Looking a little like a rounded top may be forming on the major indexes on the daily charts.

  38. DIA Sept $105 puts now $4.55, should be rolled up to Sept $108 puts at $6.

  39. Phil, I’m curious, does Tina ever let you "win" an argument?  ;)

  40. Inflation/
    "Livret A’ French tax free saving account interest rate will be increased from 1.25% to 1.50% or 1.75% on the 1st of August. In an interview this morning, The French Treasurer cited Euro decline combined with increased energy prices have pushed inflation higher.
    It seems that everyone has inflation except in the US CPI reading….

  41. Phil

    Got into the USOs for today at .25 they went immediately south. Went in too heavily with 100 contracts. Should I hold on?

  42. JRW, I know you post the lines but should we assume you entered at a certain point? I am on leave so I have some time to actually follow your plays, but havent had the time to read/understand the methodology so I have just been following your entry/exit points.

  43.  Well that was a nice quick 3%; could have gotten another 1/2% if I hadn’t dumped the first 1/2 early !!
    But i’m a believer in Phil’s Rule 1) TAKE THE MONEY



                                                               2) RUN  !!      

  44. Hey phil i love the IPad i finaly bit the bullet and the 32gig 3g version,
    now i have been up for the last 2 weeks until 3am every morning learning opengl and learning how to write code for it. its an amaizing piece of hardware and an even more amazing piece of software.  if you think this thing is beatiful on the outside, you should see the programming APIs they provide its perfect, leaps and bounds away from the crap you get from the others.
    o well finaly managed to display and spin a tea pot at 2am :) maybe ill do a 3d version of your site next ;) but seriously one could layout a nice ipad app for this site, with comments scrolling by on one side, box popping up to make comments, and forming peoples comments into a thread so you can follow one given person. and we need a better search !! no ??

  45. I may be the only member that lives in Wyoming, an energy state, Chaney land and you might be shocked if you check what happens to workers here. About the worst death rate in nation, if you die on a drilling rig because of a safety violation, your family can’t sue, too bad wife, kids. Halburton or whoever pays approximately $500 for a plywood box, and a card saying, "Sorry about your luck."

  46. Morning Phil – re the DIA July 105 calls coverd w/ Jun 104′s, a few days ago you said,





    /* Style Definitions */
    {mso-style-name:”Table Normal”;
    mso-padding-alt:0in 5.4pt 0in 5.4pt;
    mso-fareast-font-family:”Times New Roman”;

    DIA/Jimmy – Sure, let them expire.  You can always roll to June 30th calls, the $106s are .67!  Also keep in mind that DIA tends to true up to the Dow on expiration day.  Right now it’s about 20 points above it (20 cents) as it’s inflated by bullish sentiment."
    Delta’s switched places today and short call is eating profits on the long. Still like your plan?
    Also APOL – (sure wish i had a gazillion of those puts instead of the MEEs) Should i continue to hold the long put? July 40.

  47. i converted the quote to text.  Anyone – how do you copy & paste?

  48. Shadowfax,

    I lived in Laramie. Graduated UW in ’90.

  49. morxLntway – "ctrl -c" copy…"ctrl-v" paste…or just highlight, right click, select copy…repeat for paste

  50. JRW. Thanks for all you help.  Wanted to know if you use stops, trailing or fixed, hard or soft, ie your finger on the sell button.  This my first post ever.  Been on the site for a couple of weeks, watching and learning.  Like the focus on just one thing.

  51. Capt.
    I had a line at IWM 66.47 so when it turned I went long ( $47.44 ) thinking they would take it to 66.90 or better, then just waited for it to lose strength to get out. I pulled 1/2 too early, but I’m a big believer in Phil’s two rules when you have a profit in a choppy market:
                                                     1) TAKE THE MONEY
                                                     2) RUN   !!    

  52.  Still wrestling with my AAPL exposure.   Rolled my short Jun 270 puts to Jul 270 puts for 8.50, which I’m hoping to hedge that amount against my short Jul 270 calls (which I was forced into yesterday from Jun 260′s that collapsed on Wed).  Down 1.60 on those Jul 270′s, but there is still 7.50 premium there which along with the 8.50 premium from the puts gives me 16 points of cushion on the exposure for July.   Still not comfortable with AAPL given it’s on a new high tear, but it’s all I could come up with after facing the short Jun 260′s blowout yesterday.  Also got some of my margin back.

  53. loopster
    Finger always on the trigger !!

  54. shadowfax / energy state : realy ? wow. yesturday i was listening to NPR  to the senate hearing, and it turns out that right after the explosion on the rig theyt took all the servivors, locked them on a ship with no access to anyone, even loved ones, they could not get word out until they signed a paper saying that they would not talk about anything and that the employer was not responsible for any thing. they had them on a ship with layers for 2 days of not sleeping until they signed. can you believe this ? and the BP CEO said this had nothing todo with us ….
    i almost fell out of my chair, are we living in the US?

  55. goldman – i know i look stupid :) ; i guess b/c i had pasted into word (that’s how i keep up w/ comments that affect what i own) then converted to text and pasted back to comments. Oh well, thanks anyway.

  56. Morning Phil: I like SFL as a company and for div. Would you do buy/write, seling puts strategy to gt to own it? Appreciate your comments on company and strategy. Thanks

  57. Oxen Alert – Position Update

    (Preview of my Oxen alerts that I send out. If you are not receiving the alerts and would like to, let me know. They are pretty crucial to playing my trades IMO.)

    TSO – I entered at 12.16 for my short sale. The market has moved up, but I think this one is very toppy and should decline.

    BHP – I am going to exit now and take a small loss at less than 1%. Exiting at 67.75 for a .75% decline.

    JBL – A nice success story here. We got involved at 13.56, and we were looking to exit at 14.10 – 14.37. We are up close to 5%. I will be exiting in this range today. If this one declines Monday – Tuesday, I may look to reenter for a straight up Overnight Trade. Taking my profits and happy.

  58. My congratulations to those of you that had more faith in mt IWM 67.39 level than I did   

  59. Phil: where can I buy one of those talking japanese dolls. I miss my partner’s converstaions. LOL.

  60. lionel/USO
    DD again at 0.05 on Jun 35 Puts as it looks a bit forced up…

  61. My congratulations to those of you that had more faith in my IWM 67.39 level than I did !!

  62. JRW--would’ve that been a sell sign to you at 11:10? if you still held any. 

  63. ericl
    In 1990 I lived in Montana, did the workers get killed then like today? A few years ago in oil $100 + it was every week. The liability law here sucks. Broke my neck in 2001 by an intoxicated grader operator, They paid less than $5,000 medical I have paid maybe 50 times that and totally disabled because of it. I admit I am a bit bitter about it!

  64. TZA July 6 for .50. still not there yet.

  65. morxlntway – In my world there are no stupid questions…glad to help if I can! =D

  66. Slovenia – Usa 2:1 (55 min goes)

  67. Good morning Phil,
    What do you think about to sell BIDU July 70 Put for 1.95  since they report their earing at 7/19(after expiration day)?
    or to sell BIDU July 80 Call?

  68. Thanks Micro but let’s try to make the money too!  8-)

    Ending badly/1020 – Thanks!  Oh yes, I’m expecting that.  Will suck if I’m wrong but very day bearish at the moment. 

    TNA/JRW – Great timing!

    AAPL over $275 will be a tough bullish signal to ignore…. 

    Oil finally found sellers at $77. 

    BIDU coming back strong, now shaking out all the mo-mo short players all to end up right where they opened the week. 

    Tina/!020 – My kids get to vote, I usually win…  For some reason when her friends vote, I always lose…

    Inflation/Lionel – Well if you don’t use food and energy, your core CPI is well under control.  Mainly it’s held down by the decline in housing prices that has drastically reduced your cost of living on 40% of your expenditures and, fortunately, they don’t count local tax increases as affecting you either.  That’s the joke of all Federal measurements.

    USO/Amatta – Wow, that is a lot!  It’s do or die but you should be thrilled to get even if we dip back down.  Keep in mind it’s only .24 out of the money and USO fell .50 from yesterday morning’s spike up to the same $77 on oil. 

    IPad/Micro – I would love to do an App for this site but I wonder how limited the audience would be to make it worthwhile.  Feel free to play with content if you want (contact Greg if you need anything from us).  My favorite layout it the NYTimes so far, I really enjoy reading it on the IPad.  Also, the Financial Times is great to read there but I find the layout a bit busy. 

    Drilling/Shadow – That sucks but I bet they say "so go get a different job" as if there are any.

    Ouch, oil now in a big squeeze, $77.30! 

    DIA/Morx – Well at some point yesterday, as they rose from .30 to .80 would have been a good time to get out, or even this morning since they opened at .50 and you should have been relieved but now there’s nothig to do but hold them and you can roll them to the June 30th $106s, which are .68 at the moment so you can offer an even roll while you wait or just wait until EOD as the relationship shouldn’t change much and we still might sell off.   On MEE – I would roll down to 2x the $35s but not if you don’t REALLY want to own them.  Keep your eye on the Oct $32 puts and calls at $8 and you can roll to that and buy the stock to cover or just buy the 2012 $30s for $8.60 to cover.

    Pasting/Morx – Do you have a little clipboard icon on the comment box?  If you paste in there and hit OK it seems to work better.

    I’m feeling the crest of the wave here (I hope!).

  69. CRIS – just an FYI to those that have them: Despite Curis’ attempts to stress that much work is continuing on its lead hedgehog signalling pathway inhibitor, GDC-0449, the failure of the largest study to be conducted to date is clearly a disappointment. Shares in the US company lost half their value yesterday on news that patients with advanced colon cancer showed no improvement in survival when given the drug in combination with Avastin.
    Still, with 19 studies listed on involving GDC-0449 in various cancers this certainly does not spell the end for the candidate, and partner Roche appears committed to further work. As such, the apparent evaporation of investor confidence yesterday may be premature.
    All we need is 1.  Buying another round here….1/4 entry.

  70. shadow,
    The Wyo energy economy was coming out of a boom and going into a real rut when I was there, so it was all being downsized. I can’t remember specific stories, but one company — I think it was Marathon — had an especially bad reputation.
    Speaking of oil, RIG is really taking off.

  71. fizz / signal
    I got a sell conformation at 11.12

  72. Ericl
    Thanks for mentioning RIG I have some putters to by back and didn’t even check them today!

  73.  DIA/Phil – I had a second DIA spread – bought July 105 for 1.1, sold June 30 104 for 0.85 – 0.25 on the spread. It hasn’t changed significantly since, except for decreasing today – I am still planning on holding this till the June 30 expiry – would you also recommend that?

  74. Hello Phil,
    Short EEM Jun 42 Put, should I roll to July 41 or Sep. 39? Maybe other better deal?

  75. Phil, a good late morning to you.
    After enduring another rejection from BOA trading desk " we do not permit
    trading in VXX, its for you benefit of course", try to imagine a bank to big to
    fail with ethics.
    Do you/members recommend any one or group of trading sites:
    that does not restrict availabilty of ETFs,
    that does not restrict option trading as promoted by PSW,
     a low "cost to trade" is  also a benefit.
    enjoy the weekend…………pete


  76. Hi Phil,
    For some time now I am in the AAPL spread Jan11 175p short for 14.49 now 3.70 and short 280c sold for 9.48 now 28.87. Iam getting a bit worried about the caller even that there is a feeling AAPL will retracked from the 270th. Any good suggestion thks

  77. Flatline Friday is right. After 2 hours, DIA right back where we started.  Even using Pharm’s zigzag calulation, we may not have a 200 point day.  What do you think, Pharm?  Yesterday you were spot on.

  78. Thanks for the MEE comment, but I was asking abt APOL? What’s your feel on the July long 40 Put? Pretty negative article about for profit educational programs, on the web last night.

  79. Hei Phil. I have question about option strategy "reversal". Stock prize is 0.82  I can short 100, buy 1 strike call 0.25 and sell putt 0.6. I understand right, that Profit is locked in immediately when the reversal is done , I must only wait 7 months to received 0.17 profit (-0.02 comissions)

  80. Phil/Kids  Our kids have voting rights as well. Mom usually wins, which is just the way I planned it…..  :)

  81. BHP/David — were you playing BHP because of the reverse head and shoulders? I’ve played BHP for awhile now with a simplistic strategy (relatively new to options) of covered calls and naked puts and I find that reversals work well to capture premium. Maybe someone with strong TA skills could look at the one year and determine better reversal signals than my not-so-TA entries.

  82. Slovenia – Usa 2:2 (82 min goes)

  83. Juda – I believe our consecutive streak of 100 pt days ends here (aka Phil’s accurate title of Flatline Friday).  I believe we are 31 for 31.   Monday or Tuesday (more likely unless Spain goes) we will have a nice big fat sell off.  I am just taking the time to make a few more SPX verticals at different strikes to layer in between the Iron Condor from yesterday.  (Although I really want to buy the 103 DIAs for 3c JIC.)

  84. Hope some are watching the World Cup…USA just made an amazing comeback!

  85. SFL/Arbolito – You gotta love the 7% dividend, right?  The $2Bn of debt is a worry as they are pretty much a break-even operation after paying dividends and they just borrowed $500M last year so it’s iffy how well they service a 33% increase in loan payments.  That means I’d want to be cautious, buying the stock for $19.29 and selling the Nov $17.50 puts and calls for $4.20 for a net $15.09/16.30 entry, which seems safe enough but I’d still scale in carefully to make sure they make it through the summer with the dividend intact.   If it goes well, you can afford to go doll shopping…

    We’re losing to Slovenia???  That is embarrassing… 

    BIDU/Bob – I wouldn’t do either because the risk of BIDU moving 10% one way or the other on earnings and killing me isn’t worth the reward.  There may be other ways to play, especially if they run back to the $80s but they are not particularly cheap or expesive here and could rocket in either direction on news. 

    RIG – Woo hoo!

    Well, that little pullback may have been nothing more than EU selling, we’ll see as we get into lunch but big boys should be heading out early on Friday and decisions should all be made by 1pm.  I am very heavily betting down now after pressing all morning bets

    DIA/RN – Sure, we’re still expecting a sell-off but just make sure to take advantage next time.  Once you get used to how each leg moves, it’s easier to pick a good place to buy out all or part of the callers. 

    EEM/Bob – Wow, they are either going to pop or drop here and I think, based on today’s Shanghai, that it’s a drop so I’d biy them back and get out.  You can go back in if EEM beats $40 but, so far, rejection for 3 days.

    Brokers/Repeet – We mostly like ThinkorSwim and IB – we have reps at both places but I don’t have the info handy.  Ask on the weekend and we can put up links to both.

  86.  Hi Phil,
    I don’t know if you subscribe to the theory of "pinning" or current pain on OpEx. I think market wants to go down and consolidate but since it’s OpEx, it might have to be delayed.

  87. Good Morning Phil
    My first reading of the morning was your post in yesterday’s AH – Just like a strong cup of expresso, it got my attention. I can’t say I agree with it all, but I am somewhat depressed, as I now realize the work that Cap and I have ahead of us is daunting, in our attempt to convert you to conservative Capitalism. I’ll make another attempt this weekend.

  88. RUT PACK,
    Those of you that are short, beware IWM 66.82; if it fails though,66.28 !!  I’m still in cash.

  89. Slovenia – USA 2:2 (full time)

  90. sitting on top of the todays mini channel.  I will close short if breaks through 67.01-02 level

  91. very bad call by ref which negated one US goal…..replayed 10 different angles….big error.

  92. and 66.82 becomes very important break down if so happens

  93. AAPL/Yodi – Well, for one thing I would buy back the caller as you have 75% of the money with only .50 per month to gain.   On the short $280s, now they are net $20 so you are down $8 on the total trade and you can split that up into Jan $310 calls at $17 and $230 puts at $13.50 so what are you worried about?  I say don’t even do anything until earnings because the caller is still 100% premium. 

    And wheeeee! 

    APOL/Morx – Article is same nonsense that took them down in the first place, I still like them down here.  You should comment to Sam (Insider Zone) and ask him to take a look – he’s a pro at sniffing out real fraud. 

    Reversal/Pahur – It would help to have a real-world example.  It sounds like you are trying to put a collar on a profitable stock or maybe you are looking at a buy/write – I’m not sure.  Try saying that you want to buy X shares of X company and what specific puts and calls you want to buy or sell.  

    Voting/1020 - I like it, teaches them participatory democracy so they understand that we don’t actually live in one.

    Soccer/Roma – That is a major flaw in getting Americans interested in Soccer.  We like our games to count down – soccer counting up is very confusing.   Plus, they don’t call the overtime "Sudden Death" or something else that sounds cool and final.  Plus ties suck, Americans hate it when everybody wins and consider it everybody losing…  Just thought you could mention those changes to FIFA…. 

    Pinning/Jdub – Oh that’s a fact, not a theory.  Max pain doesn’t work but stocks do get pinned into expiration.  We’ve observed that too many thousands of times to have doubts about that.  In fact, just watch GOOG $500, C $4, GE $16, MCD $70, etc. today and that’s your answer.  Even BIDU, as I mentioned, is flatlining Monday’s open at $75.

    Converting/Gel – Yes, I’m looking forward to it (kind of like this).

  94. out of short, lets see

  95. 12:00 TBT goes bonkers…didn’t budge the RUT… Bot-2000 needs some new tricks!

  96. What is window dressing?

  97. What is window dressing?

  98. gel1 – I think you and Cap are doing a great job. Phil has a long way to go but he will come to see the error of his ways as he ages. I used to share his thoughts and views as I was very young and inexperienced. It just takes some longer since they actually believe they are right and others are just stupid. Then at some point in their lives there comes that one eye opening momment and they come to relaize they have been wrong all along. It happened in mine and it will happen in Phils as well. Just takes time and exposure to what is right to know when the dark side has done you dirty. You and Cap need to keep up your good work. I am sure others on this site who are not as far out there as Phil are also benefiting from your thoughts, examples and reasoning. keep up the great work !!!!

  99. Phil, I mean  Puts is overprized if broker havent stocks for short selling. But this moment I can sell stock short 0.82, buying 1 strike jan2011 call 0.25 and sell put 0.6

  100. Phil
    I still have the RIG Whuck 60 putters the loss tobay is about $2.40 down from $10. Hold um or fold um  Next week looks weak. The only news I can find is blame BP and they are getting close to the relief target.

  101.  Hey phil….
    got some gld 120 puts (2.00) -JULY- that dropped about 25 % today….do you think its too early to touch or should I be looking for a certain level that if gold crosses you would recommend getting out. 

  102.  Thanks Phil.  I do subscribe to current pain.  I was able to time a $4 straddle (selling both calls and puts at the right time for .08.  Took 1/2 off for a .03 profit.  Not a big position, just 250 contracts on each side and enough to pay for my subscription =).  Happy to take this all off by 3PM and let Theta do its thing until then.  I expect final hour or so to be volatile coz of quad witching although we probably end up where we are at 3PM  at the close.  I just know that those swings will make me squirm while it’s happening as it did when I was playing GOOG pinning back in March.

  103. DK – that’s funny you should write, " Then at some point in their lives there comes an eye opening moment and they realize they’ve been wrong all along. " I think for many Americans this moment was at some point during the 8 years of W’s presidency, I know mine was. It’s just too bad most Americans have such a short attention span they now want to kick out all the politicians instead of the ones whom supported the past administration’s terrible policies. Ok, well Ill save the rest of my rant for AH or weekend…. 

  104. JRW – so what goes down at the squeeze of 50 and 200 sma…right at 66.97???

  105. DKGuy/
    Mate, you totally sound like Darth Vader… (heavy breathing)… :)

  106. JRW – Answer is everything…weeeeeeeeeeeeeeeeee…=D

  107. that took FOREVER to make it in TZA--but finally!

  108. As we expected, Greenspan (Pimpco’s paid mouthpiece now) came out with dire warnings todayIn a WSJ op-ed today, former Fed chief Alan Greenspan warns that the common perception that the U.S. can borrow indefinitely is misleading and regrettable, "because it is fostering a sense of complacency that can have dire consequences."  Notice how it’s currently being ignored but may be a big thing by Monday (good for TBT). 

    ECRI says slowdown ahead but not recessionThe ECRI Leading Index slips to 122.5 (a 45-week low) from 123, pointing to a further slowdown. Annualized growth fell to -5.7% after turning negative last week for the first time since early 2009.

    At 14% unemployment, Nevada surpasses Michigan (at 13.6%) atop the state unemployment charts, the first time since April 2006 that Michigan hasn’t posted the highest rate. Payrolls were up in 41 states on a surge in government hiring likely boosted by the census.

    Fewer consumers saw income declines in H1 than in 2009, and slightly more consumers expect unemployment to fall in the coming year, according to Reuters/University of Michigan’s Survey of Consumers released today. Consumer spending could slow through 2010, the report said, but a renewed and sustained downturn in spending is unlikely.

    Though analysts and investors broadly welcomed the EU’s decision to publish the results of its bank stress tests, the "devil will be in the detail." Questions abound as to whether the tests will be stringent enough and what kind of government help will be available if the tests reveal shortcomings.  One source says EU banks stress tests will be much tougher than the U.S. ones: "The Americans have run an extremely soft stress test and first looked at how much money they wanted to give the banks. Then they calibrated the stress tests until they had exactly that amount coming out of the stress test. It was not really a stress test. It was an excuse for handing over some money."

    ECB’s Jose Manuel Gonzalez-Paramo says the central bank will "absolutely not" provide banks with capital should stress tests show they need it. While the ECB “will collaborate in the coordination” of the publication of the results, it is ultimately “the responsibility of the national supervisors,” he says.   

    In a letter to G-20 leaders, President Obama asks the group to work closely and "safeguard and strengthen the recovery," noting that "significant weaknesses" linger among the major and developing economic powers. Obama’s letter doesn’t mention China by name, but says he’s concerned about "continued heavy reliance on exports by some countries with already large external surpluses."

    China warns large economies not to use next week’s G-20 meeting as a platform to criticize China’s currency policy, saying "finger-pointing" will damage the world economy. The comments further dampen expectations that China may have been planning a last-minute currency announcement to coincide with the summit.

    Japan’s new government says it will slash corporate taxes to meet its economic growth target of 2% in the coming decade – a goal many economists say is over-ambitious. Japan says it hopes to defeat deflation, which has plagued the country for much of the past two decades, within two years. Economists were skeptical, calling the plan "wishful thinking."

    With record levels of cash on their books, firms are buying back their own shares at the highest rate in months. Analysts see a bullish sign in the timing, since "the spike is highly unusual for June, which is not an earnings announcement month."

    Defaltion: The defense industry faces "a new reality," says Lockheed Martin (LMT) CEO Bob Stevens. Lockheed is bracing for greater budget austerity at the Pentagon, and is preparing to cut the price of the new F-35 planes by at least 20%.

    The DOJ joins a lawsuit against Oracle (ORCL +0.5%) for failing to disclose discounts, thereby overcharging the government by tens of millions of dollars. "If they were giving discounts to commercial customers, they should have extended those discounts to the government," a spokesman says.

    Workers of the World, UNITEFirst Honda (HMC -1.3%), now Toyota (TM -0.6%): Production is at least partially suspended at one of Toyota’s main assembly plants in China because of a strike at a supplier plant.

    BS boosting oil todayGlobal oil output could fall by up to 900K b/d if oil-producing nations follow the U.S. lead and turn off the tap on new development. That’s only 1% of global oil output, but "given that spare oil production capacity is about 6M b/d, roughly 1M b/d can’t be ignored," IEA’s Executive Director Nobuo Tanaka said this morning. (previously)

    NY’s pension fund may bring a lawsuit against BP (BP) for its mismanagement of the Gulf well. The pension fund, one of the country’s largest, owns 17.5M BP shares and wants to "make sure if there was negligence or recklessness that we are made whole appropriately."

    Jim Cramer scoops up 100K shares of (TSCM), his first buy of TSCM in six years. The recent purchases are fewer than the 112,500 shares Cramer sold last year – at a lower price than he’s paying now.

    Sanofi-Aventis (SNY) fell as much as 7% in Italy after a new study rekindled fears about a link between its Lantus diabetes drug and cancer. Sanofi played down the concerns, commenting: "The risk of cancer among diabetics has fuelled intense scientific debates for several decades, but the available data on this subject remain largely inconclusive." SNY -3.2% premarket.

    Verizon (VZ) signals it may start paying Vodafone (VOD) a dividend in 2012, marking the first time since dividend payments were suspended in 2005 that a specific restoration date has been aired. The effect on Vodafone could be "transformative," boosting free cash flow by more than 30%.  Great reason to buy VOD here:

  109. fizz
    How many shares did you buy ? I got 3 fills immediately.

  110.  Hey Phil,
    Thoughts on NFLX. Thinking of scaling in a short position here.  Trades like AAPL and BIDU so I’d rather buy puts/put spreads vs. selling calls.  
    Any thoughts on possible month

  111. lionel – he was my favorite charater in the series.

  112. Unemployment falls in 37 states in May.
    Phil…….are you calling Monday a probable up or down day.    I see it up.   Thanks.

  113. kevinb63 — HK, I guess you could sell the puts also if you like. 
    I would wait for a pullback and a better entry for that, but to each his own.
    GL; let us know what you do….

  114. Big talk in Europe today about the newly discovered fact that many of the pensions are underfunded. This will put more pressure on the Euro. My positionis still the same (bearish) and am doubling down on my EUO spread. My "interesting summer" comment of yesterday will soon play out in real time. For the US – another summertime post:

  115. not enough!! (500 shrs)just playing to making sure I get it for now--no sell signal yet for TZA-would be cross from under 66.28?

  116. Phil,
    Nice call on the shorts !!

  117. Phil, Since things are relatively slow, I was wondering about you view of something that caught my eye in The Big Short.
    There was a comment in the book about how LEAP options are ill-priced when it comes to stock prices that will be driven by the conclusion of some event during the time period of a long-term option.  So, for example, if a company’s stock price has been beaten down by a scandal or litigation or whatever, but there will be a resolution of that particular event in the coming year or two, that LEAP options let you play things as a long-shot, even though the resolution of the event is not a long shot.  That is to say, the outcome may not go the way you hope, but a conclusion one way or the other is not a long shot.
    The trick of course is to find such events.  BP may or may not be a good example.  I think TIVO and its ongoing litigation against Echostar may well be a good example of this.  Either TIVO prevails in the re-hearing at the Fed Circuit and the price goes back nearly to $20 (from $8) or they don’t prevail and they remain mired at the current levels or lower.  The case likely won’t be decided until early next year, but that will pretty much be that. (An appeal to the Supreme Court is not likely.)   And since settlement of the litigation is unlikely, you can sell front month calls up to the point when you expect the case to be decided.  Does that make sense to you?

  118. fizz
    Was that a market order ? It should have been , who’s your broker ?

  119. TDAmeritrade--not a market order, I only put in limit orders at an exact price

  120.  RUT pack – I have a line from a while back that is at 66.54… looks like it stalled there and now support turned to resistance?  … on to 66.28 i think

  121.  I have 4K shares of C at an avg price of 3.48.  Sold June 4 Calls against it and will most likely close that position out or if over 4 at the close, happy to have it called away.  Scaled in with C option strategies Phil and everyone else have chimed about--Jan ’12 2.5/4 call spread and selling 2.5 P against it.  That strategy is just so much more capital efficient.

  122. Those AAPL June 280 calls I sold yesterday for 44 cents are now worth 2 cents.  I LOVE options expiration week.  So easy to make $ selling premium. 

  123. Gel/convert  I don’t think it’s possible to convert dna…… :)

  124. Hi, salvum1, Are you around?  A question about your iron condor strategy on Tuesday (June 15).
    You said:  "1.  I make sure HV > IV; if it isn’t, stop here"  But in a later post on the same day, you used C has an example, and said, "For example, right now, Citigroups HV is .45 and its IV is .73.  If this were an ETF, I would look into writing an IC on it since I would expect reversion to the mean at some point."
    I think you might have made a mistake in the earlier post.  Do you really mean "1. I make sure IV > HV"??  If your premise is regression to the mean, it seems to make sense to sell iron condors when IV is high.  What do you think?
    For reference, here is the link to your first post:

  125. 1/2 out of TZA at $6.47 for 11.5 cents

  126. All out at $6.44

  127. JRW – bounced 66.47 again…noticed it stayed between previous two 38.2% Fib…out for $0.40…playing it safe today!

  128. Window dressing/Exec – Funds closing the month (or in this case quarter) boost their portfolios by buying more of what they have to goose the price into the last day.  Then they turn around and report what a great quarter they had so you give them your money and they can go short next month when they sell all the extra crap they bought to make things look pretty.  Some funds take advantage of this (ones that did well) and cash out their longs into this buying so "triple witching" days like this can be very volatile.  That’s why, the more we went up, the shorter I got.

    LOL DK – I may have to start looking over my shoulders before you guys put a bag over my head and drag me off for deprogramming… 

    Reversal/Pahur – Well sure, that works IF you get your prices but it’s rare that you get the chance.  It’s the kind of thing we used to do when we had paper options (traded once a day) and we’d hunt for discrepancies.  It happens more often these days in flatter markets. 

    RIG/Shadow – Now you can see why I favor the DD to the lower strike!  I think RIG is well worth $50 and you can roll the $60 puts down to the July $55 puts for $2.10 or the Aug $55 puts closer to even so you can do that to avoid paying them off. 

    GLD/Bambi – This is where scaling in serves you well as the proper move is to Roll up to the $122 puts for .70 and then DD if the drop back to $1.50, which would put you in 2x the $122 puts for avg $2.10 (what they are now).  I think gold is insane down here and I have lots of GLL.

    Way to go Jdub!

    GW/Jrom – I agree, that was my politicizing moment.  Up until then I thought politics was merely interesting, now I see it’s a matter of life and death and drastically affects my children’s future.

  129.  Hi Phil,
    So sorry for the numerous posts.  I want to get into the tech space.  Not an AAPL fan only coz i’ve got burned trying to go against the price action and with my luck, if decide to go long, it will start to fade and drop a bit.  Been so much better off playing RIMM and GOOG.
    ANYWAY, wanted to get your (anyone else for that matter)  thoughts.  I don’t have enough capital to build a big tech position and now have to decide between a few players.  Should I go with large caps like IBM or more growth oriented stocks that make a play in cloud computing?  I used to hold HPQ and don’t mind going back into it but between HPQ and IBM, I’m inclined to go with IBM.
    As for growth oriented stocks, soooo many to choose from!  I like SFSF and CRM for SaaS play but also like VMW.  If I like VMW, then I ask myself, why not go with EMC where I get VMW (cloud computing) and a storage play.

  130.  … umm, spoke too soon I guess, maybe just needs some consolidation here.

  131. fizz / limit orders
    Great for options and buy-writes but no time for that in a momentum day trade.

  132.  JRW – sometimes when you say you made a trade – I see a huge spike on my 5min IWM chart on TOS lol!

  133. srfrog: LOL! Its a big middle finger to all the traders out there.

  134. Phil/deprogramming — you can avoid getting deprogrammed if you stay close to shadowfax ;-)

  135. jdub929,
    know it wasn’t addressed to me but if you are tech bullish you might consider TYH. It’s triple leveraged so can work with a small amount of capital.  Caveat is that the leverage cuts both ways.

  136. Gel1 – I did want to give you credit for one of the trades I jumped on back in April. You suggested a buy write on EW that I entered in on 4-14. The stock will get called away from me today but I will have made 11,932 in premium on 1,000 shares for a return of 11.4% in 2 months. The trade turned out great and thanks for the suggestion.

  137. Copper rejected at $2.90, not a "real" rally at all.

    NFLX/Jdub – They are good for playing pullbacks and one day they may finally remember they have a p/e of 55 but they are a very dangerous short.  Their year’s don’t end well but hard to count on that.   I’d sell 5 July $130 calls for $5 and buy 3 Sept $140 calls for $7.80 and see how it goes.

    Monday/Iflan – Nope, not after this run.  I think oil still needs to sell off and that will hit the markets and the above data is concerning.  Also, EU markets have been up and up for 8 or 9 days now – also screaming for pullback.  No way would I bet this up but I’ll be only a little bearish into the close (mostly USO puts).

    EUO/Gel – Well I’m off the short side now as it’s not worth the risk into the weekend so now, when I say good luck, I REALLY mean it!  8-)

    Shorts/JRW – Well I was close to wetting mine if they went up any further!

    Leaps/Judah – Sure, that’s what we do all the time but notice the reality of that (TBT, BP, RIG, APOL) is that when the stock dips a little further, people tend to panic anyway, even though there’s 18 months to correct.  So the trick isn’t just finding beaten down stocks to play but scaling into them in such a way that additional downside won’t force you to bail out.  Tivo makes sense if you have the stock but not the leap as they could settle any time and the caller will bury your leap.  You don’t want to bet on binary events, you want to bet on survivablity so we love jumping in on bad earnings, bad events or, as recently, bad markets. 

    Tech/Jdub – Remind me on the weekend (comments on weekend post) as I’ll be going over the Buy List anyway so I’ll have all my analysis screens running. 

    1pm – that may be about it for the fun kids….

  138. ARNA/
    Today is a good day to buy back the July Puts sold at 50c for 35c

  139. srfrog,
    Yeah, I guess I was about 1/4 of the volume in TZA that minute !!

  140. Is the paint dry yet?

  141. Anyone else having trouble "Refreshing PSW" over the last hour?  I keep getting that "Waiting for", and even some failed "Could not connect" messages.  Could be my computer and/or IE8…not sure…

  142. Lionel – U can!  I am holding on to them b’c if VVUS gets knocked over, ARNA is gonna fly.  Look at AMLN today with the Novo and Roche setbacks.

  143. Phil/
    When you say "1pm – that may be about it for the fun kids….does it mean to salvage DIA and USO June short plays, or should we leave them on?

  144. JRW III/srfrog/spike,
    I was going to ask what the 12:56 spike in IWM was….then I saw your posting…….was that you JRW?

  145. that’s a wrong print ocelli

  146. Pharma/
    Thanks for the info.
    ALKS is benefiting also

  147. Sellling WFR July $12 puts for .80, been collecting .50-$1 for 3 months in a row now and never get to buy them but it’s always a wild ride!

    Three lunchtime reads:
    1) HFT: Monsters in the market
    2) Three time bombs put portfolios in peril
    3) A double-dip recession?

    All that excitement and 1:15 Dow volume only made it to 232M so pretty dead since 10:30.

    RUT still at 666…  Notice they and the NYSE (6,984), which are the two hardest indexes to manipulate, are both below their breakouts while the others are well above.  Very suspicious

  148. Phil, I have a losing position on DECK. I had sold short 2x Jun $150 calls @ $5.4 in premium, but the stock shot up now to $166.. I’m thinking on rolling the callers to Sep $165 for a net credit of $.50 and then waiting for a pullback to either sell some puts or cover buying some longer dated calls.. I would take a temporary loss of about $2,000 but I think DECK is flying way too much.. what do you think?

  149. Clearly weak market action—will need be surprised if we finish down 120 points today

  150. Refreshing/Gold – I’m not getting it.

    1pm/Lionel – The DIAs are the 30th and I’m sticking with over the weekend but the June (today) USOs are dead (my avg now .10, happy to get even) so just wating to see how we close.   The July USO puts are still good

    DECK/Rav – I agree, they are crazy high but also with great growth and Cramer pumps them constantly so just be careful with them. 

  151. Nice H&S pattern intra-day on the indexes.

  152.  Phil,
    There was an article on Zero Hedge with Chanos talking about shorting the oil majors and ford….i was wondering what your take was on Ford…and what your thoughts are in general about when the big boys (soros and co.) talk up some of their plays….does it depend on situation or is it usually around the time theyre probably done with the play.

  153. phil – my ISP and/or router/firewall doesn’t always like to connect to PSW on certain days.  Today it happens to be ISP related, as my Pro just disconnected too (lost my charts!)…so it is definately on my end.  Some days I turn off the pictures at PSW and that helps.  Of course it could be my "super computer" that I built back in early 2000 (I run PSW on this third computer)…not so super anymore, but I’m too cheap-n-attached to throw it away…LOL

  154. Peter D, i hope you are getting settled into your new home.  When you have time i have some long, detailed questions on the Short Strangle strategy concerning trying to use vega and farther out in time option months when you need to DD on a position verses rolling to 2x.  I have done several simuations and have been very surprised at what the results were.  Please let me know when and how (through this board or through email) you would like to discuss.  Thanks for the guidance.

  155. goldman
    I use a reciently restored 1999 Dell to moitor PSW using XP no problem. When I have your problem removing all cookies, delete browsing history, disc clean, and defragment usually works. I hve tried one at a time but never found a consistant issue. The shotgun technique works most of the time. Good luck

  156. goldman
    If this keeps happening especially if you use vista add more Ram memory. Your hard drive may be clogging up with hold this while I do that and go back too much.

  157. Phil…..AAPL has had a good runup the past few days.  I’ve got October 250 and 220 longs that are well into the money and fully covered now, expecting some kind of near-term pullback.  What’s your best protective play for this specifically.   I do NOT want to sell the options and take profits, as I beleive that AAPL will continue upward through earnings.  Thank.s.

  158. Phil/EUO
    I made the post as I believe many are convinced the downward drama is over – not so, IMO. The Euro could, of course, drift higher short term  because the Forex is the largest market in the world and traders have many different reasons for buying the currency – ie Swiss CB. or hedging, whatever. The fundamentals are, however, ugly at best, and this pressure will prevail long term. I believe mid summer will be the pronounced pivot point, and I have structured my spread using November strikes.

  159. Phil….re above.  I’ve considered some July 260 puts for insurance on AAPL, or even some QQQQ puts..  Have you a better idea? 

  160. DKGuyEW
    Glad to hear you were riding that one with me. You played that one really well – I originally was given the lead from a "conservative" analyist that I have had as a friend for many years. He was a rock star on Wall Street for many years, and has never given me bad advice.

  161. lflan: AAPL too difficult to trade today on quadruple witching day.

  162.  Hi Phil!  
    I’m a new member, trying to find my way around, mostly still reading and researching for now.  Nice article.  I especially liked your grocery store analogy; it hits the nail right on the head as I have reflected on very similar experiences.  My wife and I on a few occasions made fun of people buying cases of soda, frozen pizza, ramen noodles and potato chips only to realize that this is their diet because they can’t afford anything better.  Fresh, non-processed food, is becoming way too expensive for those with stagnant wages (soilent green anyone?).

  163. ss,
    BTW, I sent you an e-mail a few days ago, hopefully it didn’t end up in your spam filter.

  164. shadowfax – thanks for the help, yes I completely agree on not having enough RAM.  I just deleted the cookies…forgot to do that lately.  I usually re-format my HDs to clean them up.  With third slower computer, I had to uninstall Norton 2010 and load a generic AV…seems the OS loads are not as big of an issue as the anti-virus program eating up the CPU cycles.  Plan to pick up an new HP soon…with triple moniter output, etc.

  165. JRW – Thanks, but didn’t get it.  Try again dowupdown at gmail dot com.  Notice it is not down up down.

  166. JRW – perfect channel…trying to break 200 on IWM…your thought?

  167. goldman
    Norton and McAfee cause lots of problems and never find anything wrong. Microsoft’s security essentials slows about half as much and it’s free. I actually use only Spybot Search and Destroy, immunize and file shreader are great, run as administrator and also free.Only download from CNET downloads or microsoft for security ess, other sites come with bad baggage.

  168. goldman,
    I’m not seeing any strength from either side. but it doesn’t seem to want to go below the support trend now at 66.59 (ascending)

  169. Hi, Robert RE short strangles,
    Please post your questions/ideas here, as I am interested as well.

  170. Robert,
    Sure, you can post the discussion here.  We had many long posts on the short strangles just a few months back.  I won’t be around much today as my family is heading to the beach for the weekend, so I can only comments on Sunday.

  171. Phil / JRW:
    Stickable into close today?
    Shall we kneel before All Mighty Stick to beg Him to show us The Way?

  172. JRW – 66.59 is Thurs 38.2% Fib….the upward channel is perfect right now…top end hits the first low today, last low Thursday…interesting to watch but no clue which way we break!

  173. Anyone – i was doing some virtual trades on the CBOE website and am wondering if there is a site that you can plug in your option and then plug in the possible closing price on expiration and see the result. The one i was working with only allowed the entry and i had to figure out the closing myself.

  174. cwan
    Well it looks like they’re trying to pin 666 on the Russell; you’ve gotta love Lloyd’s sense of humor. But there’s still 2:45 and 3:30, so we’ll see !!

  175. JRW – I don’t know if you keep the old Fibs but we are bouncing between 50% Thurs and 61.8% Wed…wish you could see my chart, there are only about 5 pauses and/or reversals today out of close to 30 that I didn’t have a line for…either your lines, my lines, old fibs, trend lines, etc…you have turned me into a TA addict…LOL!  I even have a DeMark training planned this weekend…my wife thanks you for this new hobby…=D

  176. Big boys/Bambi – Yes, I would take anything they say with a huge grain of salt.  If you see Soros, who has many Billions, taking the time to run around on TV shows telling you he likes something, then you can bet he is on the hook for hundreds of millions he either needs to unload or push higher.  It’s not worth Soros’ time to drive to the studio and wait to get on air unless hes’ going to generate $10M from what he says that day.  That’s true for the other big guys too.  That’s why Bill Gross and Co are such creeps.  They are managing a $1,000,000,000,000 bond fund yet they spend all their time running around and "warning" people about pending disasters.   Bond managers are the worst because they don’t get paid like Hedge Fund managers so for them it’s a volume business and they are alwasy looking for fresh churn.    As to F, all the car companies should do well going forward based on pent-up demand so I wouldn’t short unless they get to silly levels again like $15, where we went short last time.

    Super computer/Goldman – You are probably overloading the graphics chip or the Ram.  Try running site on a real machine for a few days and see if you have problems.  Frankly, I consider the time it takes me to wait for a page to refresh or for a page to resolve to be an expense so I am happy to get better PCs and better graphic cards if I think the performance will make a difference.  Get a chess clock and time how much of your day you spend waiting for stuff on a clunky computer and you’ll see the wisdom in upgrading…

    And what Shadow said!

    AAPL/Iflan – Are you kidding me?  Oct $220s???   How about cash those for $60 and take the Jan $270/320 bull call spread for $19 and you can sell the $240 puts for $16.70 if you are so gung-ho bullish that you’re willing to risk those $220 calls against AAPL getting bad news.  That puts you in a $50 spread for net $2.30 and AAPL would have to drop to $180 before you lose the $60 you are risking now.  If you keep the Oct $250s, you can aggressively sell July $260 calls against them for $19, taking 1/2 off the table there and you still have $50 of upside on the Jan bull spread if they take off PLUS $40 of upside on the Oct/July spread.  That’s protecting your position – taking $76 out of $97 off the table and you STILL have $90 of combined upside.

    EUO/Gel – That’s fine I guess but be careful with that bet, it’s very dangerous.  Global markets picking up and if Asia whips back around then people will be talking recovery and you will feel just like all the bears did in Feb – April and that will be your summer. 

    QQQQ/Iflan – As AAPL is now 20% of the Qs, the Qs do make cheaper insurance but I feel better if you bite the bullet and cap your upside at $320 and take your profits off the table.

    Oil held up well into the close, over $77 still so it’s going to be crossed fingers into the weekend on that one..

    Welcome Dbarakat!  Mmmmm, soilent green….  Make sure you read the New Member’s Guide and do take the time to read a month’s worth of posts and comments as it really gets you up to speed with who everyone is and whate we like to trade (and why).   By the time you are done reading all that, any question you are likely to have should be a very good one! 

    Stickable/Cwan – Hard to say with the big morning volume but we’ve been dead since.  The only big intraday volume we’ve had all week was yesterday’s very nasty sell-off at 2pm and that just makes me think this is all BS to lull people into a false sense of security.

    Yawn!  These expiration days are losing their excitement with the bots pinning us out all day.  I am short into the close, about 60/40 on short-term positions so way shorter than is prudent but with the NYSE below 7,000 and the Dow only 50 points under 10,500, I’m not seeing how they can make a big pop on Monday but, as I said, China could wake up and rally and that could give us a strong open so 55/45 bearish is the smart way to go over the weekend

    Global stocks are seeing their best sustained rally in nearly a year, with the MCSI World Index up for the ninth straight day – gains that are "very comforting," says JPMorgan Funds’ David Kelly. "They suggest this is still a bull market" on a perception that European measures are sufficient to solve debt issues.

  177. SSO double bottomed out at $33 so I like the SSO July $37/39 bull call spread for $1.14, selling  the $34 puts for .65 which is net .49 on the $2 spread (300% upside) that’s $1 in the money to start.  A nice offset if you are worried you are too bearish.  IF we do tank, then yay on the short plays and we roll the puts down and out and accept the loss on the spread if we have to.

  178. Phil/WFR puts.  I love those types of plays.  Though really boring, I’ve been selling DBA 24 puts each month and rolling when needed, for an average of .45 a month.  That’s better than 150% annual return on the margin required and I only have to spend a few minutes a month at opex time.  Boring, but a good kind of boring.

  179. JRW goldman, cwan
    I have been following your levels and they are accurate. Ihave a few other signals S&P that signaled buy about 10:05 and 12:35 and a sell about 10:30. 2:45 passed what are you looking for at 3:30?

  180. Phil,
    So what would do the most damage, a close here, higher or lower ?

  181. shadow / 3:30
     A move, assuming "they" don’t have us where they want us already !!

  182. Phil – I couldn’t agree with you more concerning buying a new computer…I’m ordering the HP this weekend, thanks for your honesty.  Exactly one of the big reason why I wanted to become a member here, so you could help beat the truth into my sometimes thick skull.  And the wife wants an IPad…what do you think…yes to that too…=D

  183. Shadow – we are in the center of an upward sloping linear channel on my screen (50 sma at exact center)…66.93 upper/ 66.70 lower…all I can say is it keeps sloping up, until it doesn’t…yeah, that is not very useful, I know…=(

  184. WFR/Judah – I know, it’s tempting to do nothing but…

    Damage/JRW – Close flat does the most damage, that’s why they happen so often.  Last opex we got a big move with a DIA 10-bagger but that’s a total rarity.

    Still, that being said, the DIA $105 puts at .50 are a fun downside play into the close if you don’t mind a .15 stop (maybe 10,470)

  185. goldman
    Jam with max ram windows 7 never crashes but remember to load Java 32 and 64 bit or etrade pro will not go.

  186. Goldman/Ipad- not meaning to butt in, but haven’t you learned to ALWAYS say yes to the Mrs. and be happy? :)

  187. JRW – your 20k at 47.77?

  188. All,
    Anyone picked up a DELL from their Dell "outlet store"? Working with 1Gig and hating it….Thanks

  189. Speaking of selling puts, XOM October 57.5 p’s can be sold for $1.40 for a $56.10 entry…

  190. IMW and S&P showing weak buy at 3:15

  191. So Phil, if we do close lower you just let the DIA puts expire and you collect at the point of closing?

  192. jbur – strange enough, the Mrs. usually doesn’t ask for anything…I’m usually buying her stuff she doesn’t ask for…LOL

  193. S&P went sell IMW neutral

  194. goldman / 20K
    Not me; I’m still in cash. I may have to settle for 4% on the day, but I’m hoping for a stick.
    BTW I have been breaking up my trades lately, a 6, 7 and 8 instead of 20 or 22; just in case the BOTS are learning, or maybe shadow has me paranoid !!

  195. Goldman/iPad.  My wife and kids use my iPad so much, I’m thinking of getting a second one so I can have mine back.

  196.  OK. Here we go.  I saw that big vol spike in GOOG.  I bet they blast out those who sold 500 calls, then shoot right back down below 500 into the close.

  197. A dime is good on the DIAs!  Don’t let the nickel get away (.05 trailing stop), don’t forget we close in 45 mins!

    IPad/Goldman – If you are the kind of person who sits on the couch with a ton of newspapers around, this will clean up your living room.  It’s also a nice EBook reader but I have plenty of paper books still to read so haven’t usde it for that.  For me, I get to flip through a dozen newspapers while I’m sitting by the pool or at breakfast so it’s worth it’s weight in gold to me.

    XOM/Brook – Don’t forget earnings that will be impacted by lack of Gulf drilling.

    DIA/Mox – No, you can’t let them expire, you get assigned!!!

  198. JRW – LOL, good idea…never know where Lloyd is peaking!  I didn’t think you bought in larger chunks, I’ve never been able to track you via Level II to be honest (and I know nobody can track me as Etrade breaks my order into about 10 bizzillion chunks as their execution is less than stellar…I’m about to dump them again, even though they just gave me 500 free trades to stick around…
    Judah – You guys are talking me into spending my profits today…bad influence, the peer pressure to do the right thing is unbearable!  LOL

  199. goldman/judha – We have 2 ipads – we love’m – they have replaced the dvd players in the car for road trips.

  200. Phil,,are you expecting a downward revision for XOM earnings based on the gulf stuff?

  201. brooklyn/XOM
    Thanks for the play… I was able to get the  $1.40 …. Nice entry if assigned, otherwise nice free money!

  202. Buying a Macbook Air this weekend for the wife – she thinks "thin is in"…. hope it works!

  203. Check out my new longterm position in Nordstrom Inc. (JWN). The company is trading below $39 and has a price target of $53. The company should be able to grow over the next few years significantly, and I am a big fan!

    Good Investing! 

  204. You gotta love the spread on the DIA vs the underlying. Still $0.10 with 20 minutes to go. B.S.

  205. I have seen one ? and it was the other day Phil said buy TZA calls @ $1.20 held there for some time then showed $1.60 just before he posted out @ that price and stayed there for quite a while. How much does Phil trade or is he tracked by the BOTS?

  206. Guys
    About 18 months ago I got tired of loading drivers and rebuilding windows machines, and got macs for the family. Mini’s for the kids, and an "Air" for the wife. Now – no more reloading drivers, constant reboots etc. The Air is the most popular machine, used all the time by all. Good stuff – and I have my weekends back!

  207. shadow,i just started doing some spreads on tza – the bid/ask on calls seems a bit  wide at times.  But it seems to fill eventually.

  208. I agree about the Macs. I have one and love it!

  209. RuT volume just spiked 5 fold…"they" tapped the pedal it would seem!

  210. XOM/Jo – Hard to say what the impact will be on XOM in particular but sure, 6 months of no drilling with wells that produce 50Kbd is about $100M per month per well so if XOM has a dozen, that’s going to hurt even them.  Good buying opportunity of coruse but we also have to factor in costs going up long-term on drilling.

    MacBook/Gel - I think for just browsing the web and reading the IPad is far superior to a notebook but for serious computing, you still need a keyboard and a full O/S.  Maybe if I didn’t have kids I’d find Dragon more useful, it does seem to work very well but my house has constant noise..

    DIA – see how nice it is when you only try to make 10-20%?  In and out…

    Bots/Shadow – Any block trading is picked up by bots who will try to kill your trade if they can, no matter which way it’s going.  If they can get a million momentum traders to bail with 10-cent losses on 100 shares each – it’s a good day’s work!  As JRW suggests, you need to break up your trades or scale in, even with day trades and also you have to train yourself NEVER to chase, which is the hardest part.   I try to purposely make calls when the momentum is against us so that people have a chance to enter so I pass by about 20 before I find one I think will work.  I forgot to mention a .60 target on the DIAs and I will always forget to say take 20% profits and other very obvious things when I am in a hurry…

    Wow, maybe Apple is taking over…

  211. JRW – IWM back in channel….I’m surprised you didn’t buy off your 66.59 line…that line was 100% accurate on the reversal!

  212. David/JWN
    I like your pick and the analysis… I did a buy/write, buying stock and selling a short straddle with the October 40′s

  213. phil, but that assumes that they sell each barrel of oil immediately?  (xom)

  214. jomama
    I have trouble with TZA options never filled @$1.20 for me and the diaster spread took all day to get in and get out another day. JRW trades the stock bid and ask are close so market orders work, also no per contract fees. I am paper trading now but next week may transfer some cash to try stock day trades, not as much profit not as much risk in the ultras.

  215. Phil/FXP   I have some JUL 35 FXP puts.  Got in at 1.1  It’s down about 50% at this point.  Do you see a pop in the Chinese market next week or should I already consider rolling it.?

  216. goldman / line
    Yeah, I probably should have but no conviction, and it’s Opex, so maybe I’m being too cautious but I’m up almost $300 on the week (27%) so if I let one get away, I still don’t feel so bad. Time for a Scotch !!

  217. Gel1 - 

    Sounds like a good strategy.

  218. JRW – Another amazing week, nice work!  I’m just trying to pick your mind to see why you didn’t move, conviction and weekly performance make sense to me.  Plus why risk a flustrating move EOD.  Enjoy the Scotch, hopefully see you Monday!  If you figure out how to transfer the chart discussed Thursday (  I lost most of my fibs when my internet locked up…can send you my chart to see how they compare (I’ve given you the color red for my lines…LOL)
    Phil – Thanks again for this amazing site…and your investment knowledge.  I’m ordering an HP and IPad tonight…thanks again for the "wake-up" reply…

  219. Looks like a stick was attempted and sold into but they managed to get everything green so mission accomplished for the day

    XOM/Jo – Yeah, just figuring $70 a barrel and sold. 

    FXP/Kyw – I don’t think Asia will do much but I don’t see the $35 puts doing you much good unless you get a good move early next week.  You are new and the most important thing I will tell you is to stop being the sucker that buys the puts and calls we are selling!!!  You cannot win when you constantly buy premium out of position, you are setting yourself so statistically behind the 8-ball that only sheer luck can save you.  Read the new members guide, the strategy section and a month’s worth of puts and comments and you’ll see me say variations of this (but also many detailed examples) over and over and over to new people (and a few thick-headed old ones!).   THEN we can get to work on your positions!  8-)

    At the close: Dow +0.15% to 10450. S&P +0.12% to 1117. Nasdaq +0.11% to 2310.
    Treasurys: 30-year -0.38%. 10-yr -0.25%. 5-yr -0.13%.
    Commodities: Crude +0.79% to $77.40. Gold +0.66% to $1257.00.
    Currencies: Euro -0.14% vs. dollar. Yen +0.05%. Pound -0.05%.

    Global stocks are seeing their best sustained rally in nearly a year, with the MCSI World Index up for the ninth straight day – gains that are "very comforting," says JPMorgan Funds’ David Kelly. "They suggest this is still a bull market" on a perception that European measures are sufficient to solve debt issues.

    Gold pushes to new records today, with futures +0.8% to $1,258.30/ounce. Year-to-date, gold and the dollar have been traveling companions, with gold futures up 15% and the dollar up 10%.

    Stocks that could profit from the misery at the Gulf coast, WSJ‘s MarketBeat says, include dredging companies, such as Great Lakes Dredge & Dock (GLDD), that help build sand berms. Also, makers of blowout preventers for wells offer potential. Even shares of Cameron (CAM), which made the preventer installed in the BP (BP) well, are beginning to bounce back.

    Anadarko (APC +2.9%) and Mitsui (MITSY -2.4%) aren’t off the hook in the Gulf oil disaster, Rep. Ed Markey says, and should set aside money to pay a share of claims tied to the spill. Anadarko owns a 25% stake in the project, and Mitsui Oil Exploration holds a 10% stake.

    Global military spending rose 6% to $1.53T in 2009, despite the economic travails of the developed nations, and is expected to continue surpassing global GDP growth. Josh Green says defense cuts would be one way to pay for things we desperately need – such as another stimulus.

    For clues to the next financial crisis, watch what’s left out of the new rules coming out of Congress, Chuck Jaffe says. "It’s clear that the politicians actually recognize some of the biggest problems, but it’s equally clear that they’re not willing to take the hard steps needed to go all the way to eradicating trouble."

    Have a great weekend everyone! 

    Happy Fathers Day to those that are and have fun in Vegas to those who aren’t…

    - Phil

  220. "Frustrating", not flustrating…LOL…Phil, can I pay extra for a spell check capable account??? =D

  221. For all of you who think there is nothing but a MAC.
    If you hate the PC because of XP and some of Microsoft’s previous operating systems I fully understand. But, I have two PC’s that have been running Windows 7 since late last summer. I have had zero problems with either one of them locking up or having driver problems or quite frankly any problem. I despised XP, but Windows 7 really seems to be a good product.

  222. goldman / HP
    Make sure you get a business model from their site; the consumer stuff won’t last. Something about a "mother board" !!

  223. +1 on Windows 7, leaps and bounds above XP! Almost… dare I say… Mac like?


  225. TEST     

  226. Fun for Gel and Cap to obsess over:

    MacroAdvisors goes out on a limb to make the call that the “Chances of a “Double-Dip” are Essentially Nil.”

    They do so based on a recession probability model:






    Percent Job Losses During Recessions, aligned at bottom, May 2010


  227. Phil
    I learned the chase game many years ago and that is why I piss off all brokers. They always tell you about what you should have bought yesterday but want you to do it today. I also made about 3% today without day trades including the DD on RIG putters. I was slow because I don’t want to own 1000 shares at 55 but I suppose you have a cure for that. I had to laugh hard today about your and my liberal agenda. I was totally conservative until 1998 so age changes both ways. I started using "unsustainable" then because G.W. Bush didn’t seem to know that Reagannomics not only didn’t work, he was smart enough to reverse everything except the banking laws in his second term. Supply side, trickle down, remember the Lafer Curve, Bush just didn’t get it, he even souded like a moron. What failed? Banking! What still needs to be fixed? Banking! Who stole all the money? Bankers! In 1996 I ran out of money building my present house, tried to borrow $20,000 to finish. They approved me for $10,000 with a full lean, I had 5 times that in credit card credit. I just moved in unfinished. Unions help get us out of the depression, WW2 finished the issue by sending millions to war and put the women to work building a war machine here in the USA not China. Conservatism was a great idea until it turned into the relligious right, these people have no problem screwing you with god on their side, they justify the lie bcause they are sure they are right.

  228. Phil – what is the trigger  for upside plays with longer dated options such as JAN11 FAS bull call 10/20?  A time frame plus market conditions or purely market conditions (ie monetize as soon as reasonably profitable?).

  229. Phiil, do you mind commenting on HOV?  I’m in buy/write with a basis of around $3.20 if put to me.  Right now I’m still in good shape, assuming it is around this price at the end of 2011.  But with housing continuing to look weak, and HOV losing about a third of its value in the last couple weeks, I’m getting a little concerned.
    Has your outlook on HOV and housing in general changed? 
    This is pretty much the only play that I have from your buy list that looks a little shaky by the way, everything else is looking great, and my account is up 10% in 5 weeks, with about 60% still in cash!  So your efforts are much appreciated.

  230. Happy Weekend to all and Father’s Day to the Fathers! 

  231. David Rosenberg:
    As far as shipping is concerned, the bulk of the traffic now is in empty containers — the volume of inbound vessels to the Port of L.A. sitting empty has soared 365% on a year-over-year basis while empty outbound traffic is running at +52%. Empty containers being shipped to and from the ports of Long Beach and Seattle have soared as well — +35% and +92% respectively, far outpacing the growth in shipping activity with filled containers. We are trying to figure out what that means but it could well spell some slowing in global trade volumes, as was also evident in the two-way export-import flows in the latest U.S. foreign trade data.
    Deflation Dynamics
    It truly amazes us how so few people in the business get it. Everyone has inflation on the brain because everyone has spent his or her entire professional lives living with it. Or maybe because the double digit inflation rates of the 1970s and the 1980s are seared in everyone’s memory.

    Go back and read the Homer and Sylla classic on the History of Interest Rates. Outside of wars, deflation is the norm, not the exception. The exception has been the experience of the post-WWII era.

    The U.S. inflation rate peaked in 1980 at nearly 15%. By the summer of 2007, it was down to 3%. It had gone from 15% to 3% even though the baby boomer balance sheet exploded. The aggregate nonfinancial debt-to-GDP ratio surged from 135% to 220% over this timeframe, and yet the inflation rate collapsed by 12 percentage points. The reason was due to classic supply-related shocks — globalization, capital deepening, massive gains in technology, productivity, freer trade, lower marginal tax rates, which spurred the trend towards secular disinflation.

    However, in mid-2007, the secular credit contraction came to a thundering halt. Deleveraging is the new secular trend, and since we entered the other side of the credit mountain, the inflation rate is down to 2% and the core rate of inflation is 90 basis points south of zero. Imagine that when the oil price was at $10 a barrel back in 1998, the core inflation rate was 2.5% and today, at $75 a barrel, the rate is below 1%. Now that is a deflationary stylized fact, if there was one.
    The situation now is one of debt destruction, not debt expansion, and it is only a matter of time before we see prices in the aggregate start to deflate. We are not talking about 10% or 20% price declines — more like 2% to 3%. Enough to jeopardize the lofty earnings estimates embedded in equity market valuation, enough to thwart the progress needed to resolve our intractable deficit and debt problem and enough to take bond yields back down to their 2008 microscopic lows.
    Yet there is some pricing power:
    While many of the sectors were flat-to-negative, equity investors may want to take note of the sectors that are seeing pricing power. Hotels and motel prices were up 3% on the month, following a 1.6% increase in April. This helped break a long spell of deflation in the sector, with the year-over-year rate rising to 1.8% (the first positive increase in 23 months!) and on a three-month annualized basis, prices are up 21%.

    Food at home, a good proxy for pricing power of grocery stores, saw the second monthly increase, taking the year-over-year rate back into positive territory. Delivery services (ie: UPS etc) prices were up another 0.5% MoM and are running at a very impressive 18% YoY, the best in nearly two years.  (This is why I like KR, SWY, etc and asked last week about a boring, dividend growth stock(s))….)

  232. rj_jarboe/rainman/goldman
    I bought a new windows 7 loaded up computer in March. No crashes, no bugs, no antivirus, 1 problem Etrade techs had no clue that if you use the 64 bit system Java must also be 32 and 64 bit loaded. I bought a Apple IMAC 10 days before and it failed to run parellels, safari wouldn’t stream, firefox is one handed, and I took a 15% restocking fee to return it. The final blow was it got some sort of bug that was unfixable. I spent over 40 hours on the phone and all they could say was maybe an antivirus program will fix it. XP sucked vista was not a fix. Also the apple would not run multiple screens, my projector, a blue ray player, no HDMI input, or my printer at 3 times the cost. This and the G3/G4 is going to be limited and I know of 2 people that found out how fast and bad that is with verizon 5 Gig limit. If you trust wifi and only use ipads at home ok but this boat will no longer float! The wally world bestbuy guys sell more than bad motherboards, everything is built to a final cost spec. What killed circut city? cut rate TVs computers, I tried to fix a CC Tosheba TV and foud the circut board was pressed paper and burnt up from overdriven compoents, unfixable and unbelieable!

  233. pharmboy
    You actually get it we are in a deflationary spiral and there is no fix for it, it feeds upon itself until everyone is broke, out of work, my old economics books warned about it. Then it was just left out of books but it did not go away. Expanding population didn’t fix China, controling it created some prosperity and now the big bubble is popping. Great stuff! Thanks

  234. Shadow – Thx, but it is not me that writes the above but David R  (my things are in bold like Phil does)..  There are postings on PSW by Prag. Capitalist sometimes that uses his stuff, but I try to read him regularly. 

  235. pharmboy
    You would not post it if you didn’t believe it. The first lession in engineering is copy, life isn’t long enough to make all the same mistakes again. Once you learn someones whatever it becomes yours, that is knowledge.

  236. Phil,
    "AAPL/Iflan – Are you kidding me?  Oct $220s???   How about cash those for $60 and take the Jan $270/320 bull call spread for $19 and you can sell the $240 puts for $16.70 if you are so gung-ho bullish that you’re willing to risk those $220 calls against AAPL getting bad news.  That puts you in a $50 spread for net $2.30 and AAPL would have to drop to $180 before you lose the $60 you are risking now."
    I only short AAPL Jan 11, 180 Put(with 50% profit).  is this trade good for me too?  Should I touch my Jan, 11 180 Put?

  237. Just defending the newbie: You probably intended FXP as a momentum play but somehow they just stuck around. (hope pasting works. I don’t have a little box at the top, only for links)

    June 15th, 2010 at 3:26 pm | Permalink  
    Callaway/JRW – Oh yes, they were a father’s day pick of mine last year when they were down around $6.  I contructed a play that paid for a set of clubs!
    SOX at 5.4% now and Transports just popped 2.5% so it looks like they’re going for it today.  FXP July $35 puts at .95 are a fun way to play a big move in China.

  238. Hey whoever
    You may think I am stupid but I keep hearing people trying to doplicate old winners. If it was awinner great but please consider this, the real trick is finding the next winner. How many people got the lottery ticket twice? ONE after 20 years! go figure those odds.

  239. Phil; cool charts.  Have a good weekend; happy father’s day.

  240.  Phil….Great charts….Where do you find this stuff?  

  241. Hey all,
    Seriously, I did make 1900% in1 day in 1987. The fact is if you bought at the low you would be up today but less than 1% for 23 years. Please think first Phil doesand his membership fees are his real guarenteed income, the rest is gravy and he does winthe race!

  242. For all you AAPL investors, I think this could raise revenues for AAPL by 15-20%, and I expect that the margin on the accessories is very high. Combine that with any kind of an "iPad effect" that increases adoption of Macs and iPhones, and I think the eventual growth could be much higher.  :

    In a research note released today, RBC Capital Markets analyst Mike Abramsky increased his estimate of 2010 iPad sales from 5 million to 8 million, citing upcoming international launches and continued strong sales in the U.S. as evidenced by retail store shortages. For the current quarter, which runs through late June, Abramsky is predicting iPad sales in excess of 1.8 million units in the United States and an additional 600,000 in the nine new countries receiving the device on May 28th, pushing quarterly sales to 2.5 million, up from earlier estimates of 1.5 million.

    Continued strong iPad sales in the U.S. are estimated in excess of 200,000 per week, nearly double that of current Mac unit sales.
    Checks indicate that US iPad sales remain strong post-launch, driven by rising consumer visibility to iPad’s user experience, sustained PR/word-of-mouth marketing, 3G iPad launch, and broadening iPad apps/content. We believe Apple is now selling >200k iPads/wk, greater than US Macs (est. 110k Macs/wk) and just below US iPhone 3GS first qtr (246k/wk).
    RBC’s data also shows a positive effect from iPad accessories, with record "attach rates" as customers purchase cases, docks, and other items to go along with their iPads. Abramsky estimates iPad accessories adding an additional 15-20% in incremental revenue for each unit sold, well above 6-10% estimates for the iPhone and iPod.

    RBC continues to carry a $350 price target on Apple’s stock, which is currently trading at approximately $240 per share.

  243. Shadowfax, put the bong down and/or step away from the microwaves~  8-)
    Deflation / Gold Setting New High:  I don’t doubt that there are some deflationary pressures..  even perhaps upon us now.  I also think we’ve got a good chance of going through a period of depression.  But before that happens, I think, as Phil has alluded, that we’ll have Stimulus II.  Perhaps the world over.  For that reason, I think gold is still the best hedge against currency devaluation; not TBT.  Because along with Stimulus II, quantitative easing will be trotted out to keep bond rates artificially low.  By the time we see yields really go up on Treasuries, we will have already gone through at least a couple scary financial events that will send people fleeing into gold (along with some flight to US Treasuries).  I’ve mentioned Stimulus II, the devaluation of the Euro is another because of recession and the failure of a country(s).  Gold will benefit from all of these.  Treasuries will benefit from some of them.  Either way, gold goes up and yields (TBT) goes down.  I will soon be joining EricL in aquiring a cache of Au.
    Happy Father’s Day Gents~  I’ll be spending my morning in bed with the usual cliched services provided.  First coffee, then the paper finishing up with breakfast.  Or at least that’s the plan.  With 3 under 6, I might not make it to breakfast but it will be fun trying.  Peace to all-

  244. mat1966
    I haven’t had a bong for years although it is cheaper than scotch. the issue is gold isn’t even a good conductor it is shiny and doesn’t corode but to conduct electricity it needs to be cleaned regurally. copper, silver, even silver oxide the bkack stuff on your real maybe only plated silver ware is a better conductor than gold. What is the stuff realy worth??

  245. Farmland in Kansas my friends ( am going to start looking)….pan for gold (on the downslope from Colorado), dig for oil (close enough to TX/OK for that), grow UR own food and a few tornados for entertainment.   The super farms are on their way out.  Family farms are back in!!!

  246. Pharm…. For survival purposes, you might have a novel idea. The tornados are brutal, so make sure you have a su-terranean living space nearby. Years ago, I was travelling on a country road near Winterset, Iowa and was caught in a tornado. I was driving away from the storm, I thought, but it was quite entertaining when a large barn passed right in front of my car, left to right about three feet off the ground. Back in the 30′s during the depression, the farmers were far better off than the urban dwellers.

  247. pharmboy and gel1
    For the roses and all I n about 1985 ? I was chased by tornadnos on interstate 70 Kansas, I saw about 6 and mostly north touch down. The scary story was about 2008 in Nabraska on I80 east, never anything to see to cause but trucks, buses, trees, whatever on their sides, upside down, wind, and rain. never saw a cause and nowhere to hide from unknown forces, the radio was dead, and no clue what was happening.

  248. Shadow, I enjoy your posts but at the same time I have no clue what the hell you’re saying half the time! Either way man, you crack me up and are a trip! keep on truckin’.Ya’ll have a good weekend!

  249. "Pharm"-boy buying farmland?…=)  If you are a serious about long term "farm investing", the land deed is only a small part of the equation…purchase the mineral rights deed also…

  250. Phil – Ahhh noooo, I just read your article…you posted JRW predictions previous day!  The good point is it will draw in lots of day traders to PSW…the bad point is it will draw in lots of day traders to PSW.  Hellooo JRW day trader tab! =)  You know, somewhere we could post important day trader technical data such as the following:

  251. Window dressing/Exec – Funds closing the month (or in this case quarter) boost their portfolios by buying more of what they have to goose the price into the last day.  Then they turn around and report what a great quarter they had so you give them your money and they can go short next month when they sell all the extra crap they bought to make things look pretty.  Some funds take advantage of this (ones that did well) and cash out their longs into this buying so "triple witching" days like this can be very volatile.  That’s why, the more we went up, the shorter I got.
    Thanks for the info Phil.  I’ve heard about window dressing for years but never new what it meant.  Makes perfect sense.  If the logic holds true, we should be looking to do some shorting next week.
    Have a nice weekend.

  252. goldman

     superrr laughable

  253. If deflation is the norm, why has the dollar lost all of its purchasing power over the past 80 years or so?  Do you mean that deflation is the norm during time periods when there was a fixed supply of money, i.e. a metal standard, as opposed to fiat money. 
    "Go back and read the Homer and Sylla classic on the History of Interest Rates. Outside of wars, deflation is the norm, not the exception."

  254. Amen Shadow!!!  (on the Bankers, not the Mac stuff as you’re sounding a little fixated there…)  8-)

    FAS/Brook – With a spread like the FAS Jan $10/20 bull call spread, it’s now $4.10 and FAS is at $24 so you have an expectation of coming into full value by Jan if all goes well.  Jan is 7 months away and there’s $6 left to gain so about .80 per month should be made between now and Jan.  That then is our trade plan.  We will then be either on or off plan going forward.  As a rule of thumb, if at any time I get 2 months ahead of plan or behind plan, then it is time to take action.   So if we get a quick move up to $5.70 in the next 2 weeks, I’d be very inclined to pull them off the table unless I felt VERY confident that they were NO WAY going to pull back below $20.  Of course, that’s looking at that leg in isolation – if you sold the $10 puts for $4 and they are now $2 then and you are up $2.10 on the bull call and $2 on the short puts on a net $0 entry, now I’m risking all that JUST to make another $7.70, which would be nice but I’ll feel like a much bigger idiot if I blow it so I’d probably put a .50 stop on the putter and a .50 stop on the bull call spread to lock in a pretty nice gain.  Also, of course, it depends what you are using it to hedge or what you do have hedged against it. 

    HOV/Palotay – I like HOV because they are concentrated in the Northeast, where land is scarce.  Also, of course, they are not in NYC but people looking to cut back expenses are moving out of NYC and into the suburbs so we get our own little population explosion despite the economy.  I went through this living in Rockland County, NY after the early 70s recession – it was stunning how quickly things picked up there – they were bulldozing farms every other week and turning them into picket-fence neighborhoods….  Builders will always be subject to the rumors of the moment but HOV has $587M in the bank and about $2Bn in debt and they just stopped losing money this year (even) and most of their losses were write-downs and they have about  $2.2Bn in tax losses carrying forward so I’m willing to pay $326M for a company that makes between $100 and $300M in a good year.  I would NOT be willing to pay $650M and the people that did so in May were idiots and the people who didn’t cash out then were greedy bastards, who hopefully learned a lesson.  I’m thrilled to see them come back down to our BUYBUYBUY point ($4) and feel free to remind me if it heads lower as we’d love to both add more and buy out our callers on the turn.  By the way, look at XHB and look at HOV – it’s not like they are singled out. 

    Empties/Pharm – That’s strange.  I think to some extent it reflects the drop in the BDI coupled with the general trade imbalance that piles up shipping containers where they are not needed and depletes them where they are needed so it’s a good time to move things around.  I would say that it would be interesting to note where the empties are going because that may be a pretty good indication of which country is expected to have good manufacturing numbers in the next couple of quarters. 

    Deflation is the norm since the industrial revolution as we are STILL benefitting from quantum increases in manufacturing capacity and the age of transport has allowed us to move things efficiently from where they can be made to where they are needed while a combination of computers, the web and "just in time" manufacturing efficiences have kept the lid on things for the past 20 years despite a 25% increase in global population.  I don’t know that you can count on that continuing to cover up what is cleary a rapidly growing demand for everything from commodities to finished goods PLUS the doubling of the global money supply AND the leverage that is applied to it. 

    To really look at inflation you have to break things out.  People used to pay $1,000 for a TV set and $3,000 for a computer and $1,000 for a stereo or an air conditioner and they would save for all those things.  People used to spend a year’s salary on a car and those are actually cheaper (if you want cheaper) and then you have to look at size deflation in consumables that masks price inflation.  So there is a lot of money that used to go for luxuries that now goes to necessites and that seems to balance out but not for the poor, who are not substituting but merely trying to survive.  We are now at the point where people (bottom 80%) literally have no money left to spend and no more credit to spend so we are getting price deflation in bottom 80%-serving companies (as we expected from the Annual Outlook). 

    Of course, the Big Kahuna is the rates.  Keeping rates low keeps the cost of money low and that means the food companies and the manufacturers can pay their debts without needing more money from the consumers but what happens when they tick up and everyone gets squeezed?  Do manufacturers keep eating low prices until they go bust?  How far can consumers cut back if prices go up?  Can the government afford to let any of that happen? 

    AAPL/Bob - I’m pretty sure that extra 50% is pretty secure on the Jan $180 puts so it’s a matter of preference like whether or not you feel you need the margin.  The overall trade idea is, I think, good for anyone with margin who like AAPL, which is why it was bolded.

    FXP/Morx – Oh man, now I had to go and look it up!  That was an overnight gamble and I did reiterate the next morning (to you in fact!): "Do you mean the FXP July $35 puts from yesterday?  If we can’t hold our levels, those are not worth keeping (still .95)" and then, in that SAME comment, I said to Cally: "Thanks!  That’s damn good to know.  That sucks, it’s why we didn’t get a move in FCX so absolutely let’s get out of that one."  Which is why I forgot it was my trade – we were out of it so fast it just went off my radar… 

    Winners/Shadow – Good point.  I very often say – Take 20% profits off the table, we will certainly find something else to trade tomorrow.  It does take a while for people to believe it though, especially as most stock services only have about 3 ideas a week!

    Charts/Iflan – Most of those were on Barry’s site.  I was just throwing stuff down I might want to talk about over the weekend while I was catching up.  He and I trade things back and forth but, during expiration weeks, I am so focused on Member stuff that I get way behind finding interesting things on my own!

    ROFL Matt!   I think you are right about the stimulus of course – what choice do they really have?  Enjoy father’s day, my kids (8 & 10) are already planning to do other activities with their friends as soon as it’s polite to leave their old Dad alone…

    Traders/Goldman -  I hope not, we’re already day-trader heavy but, that’s the market right now, I guess.  Remind me next weekend, now that things are calming down, to put up a Day Trading post that people can jump back to and make technical comments. 

  255. Phil, Your inflation/ deflation comments cleared things up for me a bit.  Yes, we must recognize the reduction in size of consumer goods as a mask on inflation.  There is also the issue of quality degredation.  I have come to believe that the quality of many of the manufatured products we buy is much less than it was 20 or 30 years ago.  Have you noticed how often your wife’s hair dryers burn out out?  And the room air conditioner I bought 25 years ago lasted longer than the one I bought 10 years ago.  But even here we have to think twice.  For example, the quality of the cars we buy are far better than what we purchsed in the 80′s.  Frank

  256. newbie question – it’s a weekend so I’m asking a novice question question about syntax. Got Phil’s "Happy Father’s Day" email with no respond link, so I’m asking questions here that pertain to that email. In it Phil recommends:
    "WFR is a nice little chip co.  $11.76 for the stock and you can sell the 2012 $10 puts and calls for $6 for net $5.76/7.88"
    I look up the 2012 $10 calls bid at $3.85 and the 2012 $10 puts bid at $1.84. Selling one of each against 100 shares of WFR brings in $5.69 for a net debit of $6.07/share.
    FIRST QUESTION: Phil seems to say the income from the sale is $6, but I’m seeing 11.76 – 6.07 = $5.69, why the difference?
    SECOND QUESTION: What does "new $5.76/$7.88" mean? I can’t find any combination of either selling just the call, or selling just the put, or selling both the call and the put that will give me either of these two numbers.
    Perhaps it’s just a question of differences in the quotes, but being unsure put my whole understanding in doubt.

  257. tenger – Phil usually uses the mid point between bid and ask.  He was probably in a hurry when he came up with the $6, but I’m seeing $5.87 for a midpoint sale.
    The "5.76/7.88" is the "not put to/put to average" price.  So if WFR closes over $10, the puts will expire worthless and the shares of WFR that you bought at $11.76 will be down to a cost basis of $5.76 (assuming you got $6 for the puts and calls).  If WFR closes under $10 the stock will be put to you and now you own half your shares at $5.76 and half at $10 for and average of $7.88.