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Testy Tuesday – Bottom Busting or Big Bounce?

Wheeee, what a ride!

Finally all our very boring sitting around at 75% cash makes us feel smart as the market makes what we hope is that final blow-off bottom to re-test our lows.  I already sent out an Alert to Members this morning so a lot of this is old news to them but nothing has changed since 4:30 so here's a quick reprise – What we are mainly seeing in the futures this morning is 2 major factors that are driving the markets lower:

1) Japan, where too strong Yen (88.6), -0.1% industrial output, -1.7% exports, rising unemployment (just 5.2%) AND lower houshold spending (-0.7%) numbers sent the Nikkei down 1.25% today to 9,570.  If you think about it though, pretty much all of that is a strong Yen issue because it lowers demand for the exports (making them more expensive) and then factories slow down and people get laid off and household spending drops from that PLUS the fact that it’s now cheaper for them to buy imports so they can buy the same stuff at lower prices. 

So, overall, nothing people shouldn’t have expected but ugly to read about.

2) China, where the Shanghai fell 4.27% today to 2,427, which is a lot because they are a 10% limit down market on individual stocks so you can bet the selling isn’t done if the AVERAGE was down 4.27%.  The Hang Seng was ugly too, falling 2.3% to 20,248.  What sent China off a cliff was kind of silly.  The Conference Board, which is a NY-based research firm had reported that Chinese economic indicators rose 1.7% in April – something at the time (June 15th) we thought sounded a bit high.  Well, funny thing is it turns out the people at the Conference Board must have been high on something because it turns out they made a "calculation error" and the correct number was just 0.3%.

There is a third factor in play and, earlier this morning I thought it was too silly to be considered but, apparently, you can panic retail investors over pretty much anything.  On Thursday, there are $547.5Bn worth of bank-loans from last year's special liquidity program that are due to roll over and there are rumors circulating that the ECB won't renew the facility at all.  The ECB has, in fact, already promised to replace it with rolling 3-month loans at the same rate, hoping to make it annoying enough for banks to seek long-term funding elsewhere.  The ECB is also pissed off at the banks who have taken their money for a year, yet haven't increased their own lending – which was the whole point of providing liquidity.  The same nonsense goes on here but, as I may have mentioned last week, our Fed works FOR the banks and just keeps funneling free taxpayer money to the banks while the banks keep reducing the amount of money they lend to those taxpayers. 

So Asia was awful and, in Europe, it’s another day of protest in Greece and Europe is dropping 2.25% and taking our futures down about 1.25% so far (8am).  Let’s watch those international 2.5% lines (red ones are the downside of course) around our key levels (circled).  None of these charts reflect today’s action, unfortunately but we will be looking for the DAX to show a little strength on that 6,000 line and we hope the FTSE can hold 5,000 and CAC 3,500:

We needed a blow-off bottom and hopefully this is it and not a sign that we’re in another deep downtrend (as many are betting on).  We have our TZA disaster hedge from Friday and Thursday’s SPX and other SDS hedges (like the one on the Buy List) short-term but we are generally too bullish for this drop, especially on our Mattress Play where the June 30th $102 puts we sold for $1.60 are going to be well in the money today (so they have to be rolled to July).   

Since we can expect the VIX to shoot back up to 40, the best way to add protection is going to be selling puts on ultra-shorts against bull call spreads, like TZA July $6/7 bull call at .60, selling Aug $6 put for .48 is net .12 on $1 spread for a 733% upside.  Our risk is owning TZA at $6 but a drop like this should show you that owning a little TZA can be quite comforting in the event of an emergency so if you are protecting $25K invested in a $100K virtual portfolio, then selling just 20 TZA Aug $6 puts (which can be rolled) for $960 and spending $240 more out of pocket buys you $2,000 of downside protection and your risk is owning 2,000 TZA at net $6.12.

Keep in mind that, if you are looking at a $2,000 loss on your $25,000 at this level then if TZA stops your bleeding here, even if the market rallies back and you end up losing $1 on 2,000 shares – it’s going to be the $2,000 you get back on your $25,000 bullish positions.  It is worth sacrificing some upside to protect your principal when we don’t know how bad things are going to get.  Also keep in mind, though, that if have sensibly hedged positions, like our buy/writes, that this drop is NOTHING and doesn't need to be protected yet and that means we can afford to take longer plays with better pay-offs to protect against further downside AFTER we have a real breakdown.  Right now, all we are doing is testing "flash-crash" lows again.

We absolutely don’t want to buy puts as the VIX will send the premiums way up and we’ll be paying top dollar on a momentum play.  That’s why we’ll be looking for some reverse-index puts to sell, like the TZAs because, even if the market turns back up, the VIX will shrink and our buyback won’t be so bad if we decide to take it off the table. 

So let’s not panic – this is why we are 75% in cash and this is why we always have a disaster hedge in place, to take advantage of just such a drop!  Take a good look over the Buy List as we’ll get some excellent entries and also, in the comments on the buy list, we had some 10 margin plays to make and those should also give us great prices into the drop as well as our list of 500%+ plays, which we should also get great entries on BUT – let’s make sure our red levels (-2.5%) hold up first:

Globally money is FLYING out of stocks and into US Treasuries and we are now at record lows (very bad for TBT) so we’ll watch that as well as $77.50 oil (now $76.30) and $3 copper (we’re right on the line) as both are generally bullish levels despite all this panic.  Meanwhile, our friend who initiated the XLB trade we followed last Tuesday was a genius!  The July $32/30 bear call spread was already 100% in the money yesterday at $1.40 (up 75% from .80 entry) and today is likely to be a good day to take that money and run as copper tests our mark and FCX looks for a bottom around $62.50, which is a tempting buy down there.   

If this selling keeps up, it’s going to be a rotten way to end the first half of the year but, as I mentioned last week, we were relentlessly driven down last year from June 12th (8,800) through July 10th (8,150), a 7.5% drop that was reversed in one week and led to the insane rally that took us up to 10.500 in November so it seems a little premature to panic as we fall from 10,500 on June 18th to perhaps 9,800 today (6.66%).

So here we are again, right before the Holiday weekend and, wouldn't you know it – we're heading down!  It's very comforting to see our 5% rule obeyed so well as we fail at the 10,500 mark this week (20% up from 8,750), which makes our EXPECTED retrace (20% of the run) 10,150 so we'll be watching that line closely on the way back up but, for now, we'll be watching that 5% pullback off 10,500, which is 9,975 – which is what we need to hold to call this just a bullish pullback.

I’m expecting Case-Shiller Home Prices to be a relief (9am) and Consumer Confidence at 10am may be an upside surprise as well so maybe our open won’t be all that bad but, right now – the futures are awful!  Ideally, we would at least like to hold those June 8th spike lows and the June 7th close, which were: Dow 9,725 (low close 9,815), S&P 1,042 (1,050)  Nasdaq 2,145 (2,158), NYSE 6,480 (6,512), Russell 608 (617), SOX 326 (332) and Transports 1,921 (1,955).  So scary low numbers to shoot for but much more important to see us hold those closes.

9am Update:  We did get Case-Shiller and we had great numbers – +0.8% vs -0.5% in March and up 3.8% for the year, better than the 3.5% expected and the 2.3% in last month's measure BUT, the S&P took ALL the fun out of the report by titling it: "While Most Markets Improved in April 2010, Home Prices Do Not Yet Show Signs of Sustained Recovery."  Not very catchy is it?  So that has done NOTHING to improve the futures, nor did ICSC Retail Store Sales, which were off 0.5% this week but that isn't stopping them from forecasting +3-4% for June as the calendar shifted Memorial Day sales into the June count so May was better than it seemed and June will look great – next month!

We're going to watch FCX at $62.50, AAPL at $260, CAT at $62.50, PFE at $14, OIH at $95, XOM at $57.50 and XLF at $14 as all are stocks we'd like to sell puts against and all are stocks that should hold their lines in various sectors IF WE ARE NOT BREAKING DOWN.  If they can't keep it together, then we'll be hitting those disaster plays hot and heavy

Let's be careful out there!   

 


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  1. It will be interesting to see if C-S is ok and whether it has an impact on the futures.


  2.  Good morning Phil!  I was up for the most part of the night shorting the minis when 1070 broke.  Got out about 2 hours ago for a good gain.  But now I’m REALLY sleepy but have to adjust portfolio for this.  
    DAX holding the 6K line but FTSE and CAC a tad below your key levels. 
    I too got a little too bearish by selling those puts against existing mattress plays and will have to roll them out to July if no incredible turnaround can be mustered into the close.
    About the TZA hedge, do we employ this at the open, upon break, or upon holding your 2.5% lines?


  3. Phil,  this is a terrible day for this, but when you get a chance I would like to get your take on the steps NJ took to balance their budget.  This austerity movement seems to me to be the catalyst for a move down in the overall market and what they did in NJ may become a model for how states if not the federal government are forced to move.  Thanks and again no hurry on these thoughts!


  4. Phil,
    I didn’t bet your morning warning and have not been getting your sites emails or warnings. This has just been in the past 2 weeks. I emailed Greg but still the problem persists. Thanks


  5. Jomptien, sometimes your email preference resets itself.  so go to your account settings and reclick what you want to get via email


  6. Good Morning!  :)


  7. Looks like we’ll open right at the level I was watching for: /ES 1055, SPY 106. Unless things really look dire, I will put on long positions in SPY today, although starting small of course. A trip to the 1050 area would let us test support from early in the month.


  8. Hey all,

    New buy pick and short sale picks of the day in Worthington Industries and Standard Microsystems, respectively.

    Check out my analysis, entry, exit, and stops for these two.

    We are looking to exit Micron this morning within the first few minutes.


  9. Phil
    I own JULY DIA 105 calls at a basis of $0.78. What would you recommend?
    Secondly, I own the FXP July 38/40 Bull call spread. What do you recommend here? Thanks.


  10. Can we have a tripple bottom? I’m not so sure. I think we break to new lows……


  11. Put my first batch of SPY calls on (July 98s). This isn’t a long-term trade, by the way. Just looking for a bounce from oversold conditions.


  12. Good morning,
     
    IWM 62.62, 62.91, 63.27, 63.64, 64.29, 64.93


  13. question – Phil or any of you sagacious ones, I am not permitted to hold short calls naked, i have July TZA 6/8 call spread the $6 side is profitable at the moment. Would it be smart to roll the long to Aug, say $9 because of lower delta and cost then let the short side expire and sell the long after expiration for a small loss (maybe)?
    thanks


  14. AAPL moving to the 50 after all. Too bad I didn’t stick to my guns on that one.


  15.  so.. buy buy buy or rather wait wait wait? :)


  16. morx,
     
    If you can roll TZA options without getting raped on the spread, great. I find options on it to be pretty much untradeable.


  17. Let’s try to remember, China is even more manipulated than we are; so this was done for a reason.  Perhaps to scare the EU into dropping their austerity measures, if so this is a great buying opportunity !!


  18. There is definetly going to be a big bounce today.


  19. Be very careful catching knives today.. this could very easily turn into a FMD except for some foolishness around 1040.  FAZ could/should be +12% when it’s all done and said.  On the other hand, if we bust through 1040 today and not tomorrow or even Thursday I’ll be a little suprised.  But then, that’s how they line up the bagholders.  When no one thinks it’ll happen. 


  20. so matt are you even thinking this may be oversold?


  21. Add to IWM levels 61.90, as we are already below 62.62


  22. thanks eric, at least you have confirmed that it isn’t a far fetched plan.


  23. lapper/email – thanks


  24. Good morning (well, not really)!

    OK, let’s keep our head in the game.  If you are 75% cash then this is a BUYING opportunity.  Hit the Buy List and start buy selling a few puts (10% of a position’s allocation) in some stock you REALLY want.  Moving up to 30% invested here is not a bad idea.  Obviously we want to wait until the music stops, but THERE IS NOT A LOT OF VOLUME TO THIS SELLING so I think we will hold our low levels, which were:

    • Low Spikes:  Dow 9,725, S&P 1,042, Nasdaq 2,145, NYSE 6,480, Russell 608, SOX 326 and Transports 1,921. 
    • Low Closes: Dow 9,815, S&P 1,050, Nasdaq 2,158, NYSE 6,512, Russell 617, SOX 332 and Transports 1,955). 

    Ideally, we’d love to form a sharp down-spike in the morning and recover back to the maybe Friday’s low or better.

    We are also not getting a good move up in the VIX, which is very strange…. 

    Great plays to take advantage of (preferably at better prices) WITH SMALL BETS are:

    • Sell UNG Aug $7 puts for .25
    • Sell XLF Aug $13 puts for .35
    • Sell VLO Aug $16 puts for .52
    • Sell AA Aug $9 puts for .25
    • Sell TBT July $35 puts for .50
    • Sell C Aug $4 puts for .30
    • Sell BAC Aug $14 puts for .52

    Also, these small plays from our 500% collection:

    20 C Dec $3/4 bull call spread at .62, ($1,240) – stop at .40 ($440 loss) selling 10 2012 $4 puts at $1.08 ($1,080).  No stop on the latter.  If C breaks $3.50 we either ditch it or roll to 2x the $2.50 puts (now .42) depending on how we feel.  That puts us in the 20 bull call spreads at net $160 (.08 per option) with $1,840 of upside if C can hold $4 through Jan expirations.

    Buy 20 TASR Jan $5/7.50 bull call spreads for .25 ($500), Sell 10 Jan $5 puts for $1.40 ($1,400).  That’s a net credit of $900 and our obligation is to own 1,000 shares of TASR at net $4.10 (now $3.92).  If TASR pops, we stand to make as much as $5,900 on the spread.  I like this stock so much I’m not really looking at an exit strategy but, logically, if you stop out the puts at $1.80 then the loss on this trade is limited to  $1,200

    Selling 10 BP Jan $17.50 puts for $2.30 ($2,300) with a stop at $3 (risk $700), buying 10 Jan $30/34 bull call spread at $1.50 ($1,500) with a stop at $1.00 (risk $500).  So, a $300 credit and possibly clearing $4,300 using no cash  $400 cash and $2,300 in margin.

    Selling 10 XLF Jan $15 puts for $2 ($2,000) with no stop at (we would roll it down), buying 20 FAS Jan $21/29 bull call spreads for $1 ($2,000).  Our worst case scenario is we have 1,000 shares of XLF put to us at net $15 (now $14.50) but, of course, we would roll it along to 2012 and more likely enter at around $10.  The upside is $8,000 if FAS gets back to $29, which is up 28% from here so figure we need XLF to go up about 10%, to $16 to get most of this gain in January.

    Looking good so far – we’ll see what holds up with Consumer Confidence.


  25. Got long a little AAPL on the tag of the 50.


  26. CC must be bad!


  27. 52.9 June!


  28. Holy S***


  29. Oh now, consumer confidence is a DISASTER at 52.9, Down from about 63 last month.  That is awful and May was revised down to 62.7.  If this doesn’t put in a bottom then nothing will but much scarier to buy on that data.  Don’t go crazy.


  30. Back out of AAPl at a small loss.


  31. Still a free money day (FMD) to the downside..


  32. Matt
    FMD???


  33. Wow, crazy morning now.  This is so much better than previous dips in terms of buying opportunities.

    I’m offering $3.20 for 1st round of TNA $40 calls, they were $5.50 yesterday.

    Minis/Jdub – Nice job covering!  That’s what our levels are for…  On the TZA, yes, we need more hedges! 

    Mattress plays, the June 30th $102 puts are $2.79 and they can be rolled even to July $101 puts so that’s our plan.  If we break lower than 9,900, then we’ll want to add 1/2 Sept $99 puts (now $5) and put a stop on 1/2 the Sept $108 puts at $10.  Once the 1/2 Sept $108 puts puts stop out at $10, we buy another round of $99 puts (back to 1.5x) and put a stop at $9 on the rest of the Sept $108 puts.  Once those stop out, we then go for our normal .50 per $1 roll ups.  If we break back down, we just add more $99 puts and plan on some rolling next month


  34. Covered those SPY calls on that little bounce. I think matt’s right that the risk today is high.


  35. XOM at new yearly low,  should be a buy here


  36. This should go without saying, but this is no day to be a hero on the long side.
     
    I did have 3 quick TNA forays before the ugly consumer confidence # and took out about 35-40 cents fighting the trend; but I think the rest of today will likely remain ugly.
     
    Watch to see if S&P can retake 1050.


  37. I don’t get it…..TNA…..level 3 bids higher than ask???


  38. Phil
    I own JULY DIA 105 calls at a basis of $0.78. What would you recommend?
    Secondly, I own the FXP July 38/40 Bull call spread. What do you recommend here? Thanks.
    This is a repost but needed your thoughts this morning when you get a minute.Thanks.


  39. If we can’t hold 9,000 on the Dow, the June 30th $98 puts are .45 and we can use that line as an on-off switch.


  40. BP is up on a day like today…. Nice!


  41. I also have the DIA July 105 calls from last week and they are down over 60%, are we cutting our losses at some point or still hoping for a turnaround? 


  42. Hitting the Neckline on S&P


  43. NJ/Trad – Have to be after hours but, in general, they were tough calls made that prove to me that this whole country can balance the budget if we have leaders who are willing to do it.  I think Christie is a bastard for balancing the budget on the backs of the poor without putting through more tax increases but, from his point of view, he didn’t need to as he found enough ways to save without tapping his constituency. 

    DIA June 30th $97 puts can be layers at .30, taking $98 puts off at .60 so you are in the lower puts for just .15.


  44. Vallejo Ca. police earn 120k/yr and 100% healthcare???? 


  45. A free money day is when we have consistently higher highs and higher lows or just the opposite in today’s case-


  46. And they are going to get a 7% raise???


  47. Broke the neckline on S&P.  The legendary Head and Shoulders is complete.


  48. From the technicals we could see the Russell below 600 so I’m not buying calls yet and we are still below the 8ema so this is what TZA is for !!


  49.  Anyone noticed that CNBCs screen quotes are weird today:  Nasdaq -2.8 now, Dow -5.5, GS down 5.5…..the list goes on. Strange.


  50. Sold 1/2 of my FAZ position at 16.47..


  51. Out of TZA for 26 cents; not buying TNA yet


  52. We had a really steep sell off and it can’t be sustained.  I would expect a decent bounce here.   A FMD can often have one pull back that breaks the most recent consitent trend.. but if it breaks two then it’s not a FMD and likely a reversal day. 


  53.  Phil, 
    I am in DIA July 105 still and the RIMM puts from some days ago. Is this a point to DD? 


  54. Email/Jomp – We are having trouble with Yahoo.  They keep booting our EMails randomly.  Best is to either change Email to non-Yahoo (they are the only one) or just go to Member Management and re-check your Email Preferences (spam laws make us uncheck them if your Email provider bounces us as spam). 

    And what Lapper said!

    DIA/Chakra – On the $105s, now .22, your delta is down to .10 and you are down .50 so you need a 500-point move back to get even but if you spend .22 to DD, your basis on 2x is .50 and you are down .28 and you can pretty much get even if we get back to yesterday’s close so that’s the logical move with a month left

    Stopping out DIA June 30 $97 puts at .25 so all done with panic protection for now.


  55. To put some numbers behind my previous post.. if the SPX goes higher then 1050.14, it’s not an FMD.
     
    On FMD days, you shouldn’t play both ways.  You’ll limit yourself too much.  Instead go with the flow and use pullbacks as opportunities to add to your position.


  56. To me, this is clearly a market that wants to go lower and any clawback will be temporary (days).


  57. Expected a big bounce up off of SP 1040 though.  Kind of milquetoast…


  58.  Waiting for AAPL to hammer 253 under it is big trouble IMO


  59. Why is it on big down days it seems like I’m the only one in here?  8-)
     
    We’re stalling for time and just trying to work through the oversold condition..  my last post for a bit.  Promise!


  60. Copper $2.95, holding 4.5% there.  Not good if they break 5% at about $2.94.

    TZA/Morx – That is a good adjustment, it takes money off the table and puts you into a bearish spread at what we hope is the top of a run. 

    SDS was $34.50 this week and you can still sell the Aug $33 puts for $1.50 and buy the July $33/36 bull call spread for $1.80 so net .30 for $3 of protection that’s already .50 in the money.


  61.  CSCO made a decent 5min double bottom at 21.47


  62. Phil,  I agree about the tough decisions Christie made and that he protected his constituency.  The real question for the market is this something that is going to become pervasive across the political specturm and what will be its affect?  Additionally, if there are new taxes added to deep spending cuts, does this exacerbate the affect on the markets?


  63.  I’m using JRW’s system to trade the Nasdaq 100 e-mini today. Made some $$ on the way down, and it bounced right off of my line at 1772. Right now just coasting over the 8 EMA with indecisive looking candles.. I’m in NQU10 for 3 contracts at 1776, stop at 1774. Very painful waiting for some support, but it looks like the downward pressure is easing. 


  64. matt / the only one
    Oh you’re not alone, you’re just enjoying it more than most !!


  65.  Let me speculate that this administration KNOWS that they NEED to make sure that consumer confidence, jobs picture, and economy must at least LOOK like they are improving by election. If things keep up like this they will pass some bill/policy to attempt and prevent deflation and spend spend spend (print, print, print). They know the consequences otherwise. Perhaps that will be the catalyst on the upside…


  66. Phil, Do you have an opinion on selling GLW Aug $16 puts @ .87 for a potential entry?


  67. Phil – I have some July 270 & 280 calls in AAPL that are down huge. What do you suggest. Sell or roll to august? Thanks.


  68.  Hi Phil,
    Need to get some advice here.  Have an SSO position that I placed when I thought my position was tad too bearish. July 37/38 call spread (now worth crap) and sold July 33P.  Should I roll it down to 2 July 30 P for about .12?


  69. Obama statement just now - "Economy is strengthening"…pumping the market back up now…weeeeeeee


  70. Buy/Wait/Russian – A little of both.  You want to improve the positions you have by rolling calls down to better strikes or scaling into naked calls but, at all times, you have to know what downside protection you will be adding to balance out.

    Once we are done with the Dow puts, my next favorite naked protector is SDS $40 puts, now .96.  We can used the 1,045 line on the S&P for an on/off switch and those are more relaxing than the June 30th DIA puts, which expire tomorrow!  Hopefully we will hold the line here and not need these…

    Bagholding/Matt – I will be one dopey-looking IWM bag-holder if we don’t hold 620 on the RUT!

    DIA/Stark – See Chakra above.  If you don’t stop out a position with a 20% loss, then you’d damn well better have planned to DD when it is down 60% like this!  NEVER stick with a position that is 20% down that you do not fully intend to be adding to or rolling if it heads down further!

    Time for the Obama Bounce!  Let’s see, we’re at 9,915 as he begins, usually he’s good for 50 points.


  71. In TNA at $39.08


  72. Damage control Obama and Bernanke at the WH, Bernanke looks green in the face….possible cartridge malfunction


  73.  Phil,
    What do you think of IWM at this level?


  74. can recommend Phil?
    any new trade on TBT you


  75.  I forgot to mention the option of taking the loss.. 


  76. Is Obama’s term over yet ?
     
    The guy needs a photo op w/ Bernanke ?  Yeesh.  
     
    "We need to extend unemployment benefits to keep the economy growing".
     
    That’s some plan ….


  77. Yeah, I don’t think the PPT will let 1040 (and 620 fail today).  Or if it does happen, clearly we’ve overestimated the PPT.  I think it will happen on Thursday.  Unless the EU somehow makes the banks over there feel all safe and snuggly by then..


  78. Cap
    You’ve been doing well with TNA recently, are you in now?


  79. Good call JRW


  80. So was this Obama / Bernanke appearance scheduled?  Or did they suddenly appear on the scene to calm the worried natives?  What a bunch of theatrics.  Doesn’t mean a friggin thing.  Except the govt is complicit in the stock market.  But we knew that..


  81. Out of FAZ at 16.38.  Don’t trust the gubmint.


  82. Out of TNA at $39.98 off the IWM 62.91 line


  83.  The Daily Discourse: What’s Up With Tesla?

     
    I am sure you have heard about the IPO of Tesla Motors that started this morning at $15 share and was selling for $17 per share to help raise $230 million for the company. If you are not familiar with Tesla Motors, the company is a car manufacturer and seller. The company sells the Tesla Roadster through twelve sales locations located in major cities. The companies Roadster is a sports car electric vehicle priced at over $100,000. The company also has now introduced the Tesla Model S sedan, which is set to sell for just under $50,000 in 2012.
     
    The company, despite its IPO, has many skeptics. The Model S has not yet hit the road, and some think it never will. Yet, the company believes that the IPO can help the company to get the Model S onto the road by 2012. The company hopes to sell around 20,000 Model S sedans each year, which is around the same amount of Porsches that are sold. The Model S is an electric car with luxury appeal, which is the first of its kind. 
     
    Thus far in its history, Tesla has not had a single profitable quarter, but the company believes that it can become profitable if it can get its Model S on the road. The company does have corporate backing from Toyota, and it has received loans from the US Energy Department to help defray costs. 
     
    One of the appealing aspects of Tesla Motors is that it is an American company that is making cars that are un-American. The Tesla Roadster is a sexy, luxury vehicle that resembles Ferraris and Lamborghinis, while the Model S looks similar to Bentley and Maserati sedans. This type of luxury is something tending to be lacking among the Detroit brands, and it is no wonder since Tesla is based in Silicon Valley. 
     
    Yet, many other problems with the Tesla plan to success that a nice looking car cannot overcome. For one, refueling is a problem for all electric cars. There are only around 20,000 electric car compatible recharging stations, but that number is expected to grow tremendously to 5 million over the next few years. The Nissan Leaf and Chevy Volt are two main reasons to expect the growth along with the Model S. The two models are expected to be the competition on the Model S, but the type of buyer of the Leaf is not the same buyer of the Model S. The Leaf and Volt do not have the same luxuryof the Model S, which is the point that many skeptics are missing.
     
    The company has Elon Musk. He is the man behind the highly successful PayPal and Space Exploration Technologies. Musk was also rumored to be the inspiration for Tony Stark of the Iron Man films. Musk believes Tesla can be profitable, and he has commented that the company would be if they just sold the Roadster. They were able to make the Roadsterprofitable despite what people said, and he believes they can do the same with the Model S.
     
    While currently the company is running its company on glamour and hype, the company has a niche that I think Americans do not understand because we haven’t seen quality and luxury in American motors in years. It will just take some time to stick, but the American mind on cars is changing. Tesla is at the center of that change.
     
    Good Investing,
    David Ristau

  84. DIA/Amatta – Yes but you must have balance to the downside if we break below 1,045 on S&P and 9,900 on Dow.

    Only one/Matt – because everyone else is making adjustments. 

    Taxes/Trad – Not if you tax the right people!   As I said over the weekend, top 1%’ers and coprorations could cover the whole deficit with just 10% of their earnings.  It’s the same 10% they were given 10 years ago in tax cuts.  We can flip back to a Clinton-style surplus very quickly if we combine tax rollbacks with spending cuts, especially if the sacred military is put on the table. 

    LOL, China now "only" expecting 9-10% GDP growth after today’s bad news.  This is ridiculous.  They WANTED to cut growth, they did EXTREME things to curb growth and now growth is curbed and everyone is freaking out?

    Catalyst/Hannah – Well that should be a given.  Another reason I find it hard to join Matt’s bear camp in July, with elections just 4 months away.  Of course Bush was totally unable to stimulate the economy into the 2008 election, as we dropped from 11,500 in July to 8,100 in October but then we had a ridiculous 1,500-point rally back to 9,600 on Nov 5th, which fell off the table the next day – possibly one of the most blatant cases of market manipulations in history but not enough to get McCain elected in the end. Now we’ll see if the Dems are better at pulling those levers than the Repulicans were. 

    GLW/RJ – Yes, I love those guys!

    AAPL/Nicha – Well, now I like AAPL at $258, certainly more than I liked them at  $270.  You have about $3 in the calls (avg) and I’d roll the $280s down to the $270s for $2.20 and sell the $280s for $2 for now and maybe that ends up at $10 but if they fall further, you’ll want to roll to Aug $280s (now $9) and sell the $290s (now $6.50) and cross your fingers that AAPL really is worth more than XOM after earnings.  My big concern on earnings is margin issues on the new IPhone and IPad.  Generally, AAPL doesn’t make anything they can’t make 38% selling but the $99 IPhone thing worries me as well as the doubling of wages at Foxconn.

    Tesla IPO would be good if they hold $18, that could be a market booster but also bad if they can’t hold it.

    SSO/Jdub – I wouldn’t roll it unless you REALLY want to own 2x.  SSO is only at $33.46 so still on track to expire worthless and the even roll is the Aug $30 puts, now $1.60.  If anything, I would roll to 2x the Aug $30s and spend $1.60 ro roll the $37 call down to the $33s and you can get $1 back by rolling the $38 caller to the $34s if you HAVE TO.

    Not much off a move off Obama.  You’ld almost think people don’t believe that strong economy talk anymore…

    Finally Europe is closing!  Down about 3%.  DAX blew it at 5,966 (pending close) and FTSE 4,931, CAC 3,451 so UGLY!  Now the question is was Europe pushing us down or holding us up?


  85. JRW, I have a pretty nice nice line from the lows of 6/17, 6/23, 6/24, 6/25 that matched up with the low so far today.  That upper line from 6/18 looks good, too.


  86. The Tesla Model S could give all its luxury counterparts a serious run for the $$$…..


  87. 1020 -

    Thank you.

    Look at that picture…beautiful and electric. Luxury buyers want to be eco-friendly…they have the money to be. There just are no options.


  88. judah / lines
    The lows from last wed, thurs, fri may prove worth watching I have it through the middle of today’s spread, now at IWM 62.60 and descending.


  89. Phil, OK. the hedges I have now are the OCT SDS play and the Sept DXD. But that is long term right? What do you recommend then for "balance" with these short term trades?
    Thanks


  90. David - Elon Musk in now broke, after having spent $70 million on Tesla to date.  He will be cashing out between $17-$20 million today in the IPO.  In court notes, he still spends $200,000/month…but is borrowing money from friends to keep up his lifestyle.  The reason I point out his situation is he has been been extremely controlling at Tesla, and has trouble allowing appropriate experts run the show.  I’m rooting for the Model S (even considered buying one), but must say that unless gas prices at least double, I don’t see a ROI for their product at the current price range when initial cost and maintenance is considered (especially the proprietary battery pack costs).  The other major concern is the lack of service stations, their un-realistic 2012 schedule (note the original electric sports car schedule delays…much of which caused by aesthetic delays forced by Elon for no real functional gains or cost reductions), and the current lack of down payment reservations.  The real positive has been the $50M from Toyota, and the almost $500 Million from Uncle Sam…that ensures at least a few years of opportunity for the company…


  91. IWM/Yshen – For those of you who have TOS, go to active trader and run a pivot study on IWM on a 4-hour period.  We spiked below yesterday’s lowest support level at $62.50 but came back to it quickly at RUT 624 and I think if we can hold it today, we should be able to at least get back 64.50, where I would probably be happy to bail if we can’t punch over $65 from there.

    TBT/Dman – I thought I mentioned them earlier?  At this point, if you are protecting cash long-term, I like the 2012 $45/60 spread for $2.50 and here’s my plan.  Sell 10 Aug $36 puts for $1.45 ($1,450) and buy 5 spreads for $1,250 so that’s 5 free spreads if TBT holds up in Aug.  If they don’t, we roll them along but, every time they do expire worthless, we can sell another 10 naked puts and buy another 5 spreads and, if all goes well, we could have 50 or so totally free $15 spreads by 2012, which pays up to $75,000 and you are never risking more than an assignment of 10 TBT ($36,000)

    Balance/Amatta – The shorter-term TZA or just those SDS calls ($40s, now .90) as they have a .29 delta and SDS is up $1.80 today so another day like today and they are up 66% but, as I said, I only like them if S&P can’t hold 1,045 as they are unhedged. 


  92. David/Tesla  20,000/yr. May not meet the demand. Imagine the numbers if they could call her an ICAR…. :)


  93. Elon Rocks….. :)


  94. AAPL…….Informational:    Most active calls today  (CBOE) ……..AAPL ranks 3.  July 270, 5.  July 260, and 7.  July 280.  (Citigroup is 1., 4. and 6. , Yum brands 2.)


  95. ^^^Tesla Stock…be careful with the stock today (I’m a spectator), already dropped from $19 to the $17ish range…not a good day for an IPO…


  96. JRW, I agree. I was watching that earlier, and thought it was holding when it blew right past at 10:25, but then it held a little later.  Still watching it.  Also watching TBT for a longer term signal.  One of these days, TBT will go green, and I’m going to go long.  I wouldn’t even be surprised if it were today.  Well, surprised maybe, but not shocked.


  97. OK thanks.. will have them ready to pull the trigger in that case and double down on the DIA and RIMM puts now.


  98.  Thanks Phil.  I will contemplate rolling to Aug 30 P depending on price action but I won’t hesitate to just go take the loss and offset most of it by taking gains on my short hedges.  Broker makes money, I take a negligible loss but get to live another day.  Just the way TOS likes it!=)


  99. I see 9,900 on DOW as the turning point. Last chance to DD on DIA 105s.


  100. In TNA at $39.01


  101.  JRW, I am trying to follow your entries, but now I checked and TNA already at 39.43… when did you execute?


  102. test


  103. It seems on the 1 min graph that at 11:46… now down to 39.00 is it still entry point now?


  104. For all of you anti-Keynsian "Austerians" out there, here is sobering reading about Ireland’s "success" with austerity:
    http://www.nytimes.com/2010/06/29/business/global/29austerity.html?hp


  105. For all of you anti-Keynsian "Austerians" out there, here is sobering reading about Ireland’s "success" with austerity:
    http://www.nytimes.com/2010/06/29/business/global/29austerity.html?hp


  106. Now its double turns whoever asked about DIA 105 calls do it now before they reach .25!


  107. Out of TNA at $39.13


  108. Anyone else feel like screaming "Uncle" today. I feel like a little kid put into submission. This has to let up eventually.


  109. JRW – That was a sell conformation at 11:54 on 2min IWM…or did it occur at 11:57…or between the two time stamps?


  110. ^^^3 Min IWM


  111.  TBT – Phil I have naked Jan 11 38 calls.  They started out as a spread and have been rolled.  At this point I believe the basis on them is around 6.  You have any ideas on a better positioning of this?  I’d prefer not to do something that has alot of downside exposure like selling a put, as I entered this when TBT was at 50 and I do think long term TBT will do well, but really tired of the relentless hit to TBT.

    Thanks.


  112. Phil:
    contemplating to get either a MO or MON buy/write from your buy list: which one is your best choice ?Then buy the stock, sell the puts but wait to sell the calls?


  113.  Decided to take the slight hit on the SSO and took profits on QID calls for about breakeven. I don’t like the fading price action here with the internals fading as well.  
    Will look to go long via individual names instead.


  114. amatta
    11:46; you should not wait for my entry prices, just buy a market order when you see a signal. IWM crosed the 8ema at 11:45, I place the order check the entry price and post here, while I’m watching 4 other screens and CNBC.


  115.  I hope things pull a "V" this afternoon. Nibbled at 100 sh of TNA at 38.92. Prepared to DD at 37.


  116. goldman
    Conformation was at 12:00, but the sell was at 11:54; I sold at 11:59


  117. Goldman/
    Here is your signal on IWM volume


  118. JRW  — TNA …. sideline.    I expect either the market will close at lows; or we close at or somewhat above 1050.
     
    I am on wait and see mode.


  119. JRW  — TNA …. sideline.    I expect either the market will close at lows; or we close at or somewhat above 1050.
     
    I am on wait and see mode.


  120. Copper right on that $2.94 line. 

    Volume at noon is just 97M on the Dow.  Normal days is 50M at 11 and 70M at noon so ahead of pace but nothing staggering.  Now the key is to see how we do on volume and movement from here.  We gapped down on very little volume, around 15M in the first 20 mins and that means, to me, that the bulk of the volume has been fairly balanced down here

    Meanwhile CNBC just discovered the "death cross" on the S&P, which is what I am pretty sure "they" have been trying to force to get all the TA programs tripping.  It’s not going to come all that fast though as the 50 dma is still about 1,120 and the 200 dma is 1,111 so figure 5 points a day on the 50 dma is a big move so into next week before they can prove a cross, which is certainly going to come now (we knew this last week when we didn’t turn up) and the only question is how severe it will be. 

    Gold is perking up, back to $1,240.  Looks like Europeans were swapping gold for dollars. 

    10-year note at 2.92%! 

    Ireland/Caesar – Well they are getting through it.  Why do people think we have to get through this without struggling?  That is normal in economies, they have up and down cycles.  Our biggest problem is we faked our way through the last couple of busts and racked up debt and created bubbles and now, we finally hit a downturn we can no longer afford to sweep under the rug so of course it’s going to be painful…

    UNG Oct $7/9 bull call spread at .78, selling $7 puts for .49 is .29 on a $2 spread that’s currently .73 in the money.  This is a nice play for a small portfolio as you can commit to buying 100 shares (1 contract) for net $729 and you make a $171 (23%) profit if called away in just 4 months.  

    Uncle/Jimmy – I love the smell of capitulation in the morning.  It smells like – opportunity. 

    TBT/Bgb – Once you are behind like that you want to shift your strategy to getting even.  You are down 50% and need to get $3 back so why not sell some other sucker the $38 calls for $3.20 and roll yourself down to the $32 calls at $6.20 so $38 gets your $6 back.  If we sell off further, the $32 puts are currently $1.80 and if you can get $2.50 or $3 for them and TBT ends up holding that line, you drop your B/E down to $35.50, which is pretty darned low. 

    MO or MON/RMM – I think MO is more solid but MON is a better opportunity if you are willing to stick it out long-term (could be years).


  121. Lunchtime rally attempt  (aka short squeeze)


  122. FXE at high of day…..


  123.  TBT – since this is an ‘eventuality’ play, today seems as good as any to look at LEAPS, e.g. Jan-2012. You can get 60′s and 70′s strikes for the price 80-90 cost a few months ago


  124. June Consumer Confidence Index: 52.9 vs. 62 expected and 62.7 prior (revised downward from 63.3). Present situation 25.5 vs. 29.8 prior. Expectations 71.2 vs. 84.6 prior. "Until the pace of job growth picks up, consumer confidence is not likely to pick up."

    June State Street Investor Confidence Index: 89.7, up from upwardly revised previous 88.4. Asia-Pacific paced regional confidence, up 1.7 to 102.6, North American index down 6.3 to 92.2, and Europe up 5.4 to 97.7.

    U.S. taxpayers are already on the hook for about $145B in housing losses connected to Fannie Mae (FNM -5%) and Freddie Mac (FRE -5.5%) loans. But that number could balloon to $400B, and if housing prices fall further, up to $1T.

    U.S. credit-rating upgrades are poised to exceed downgrades this quarter for the first time since Q2 2007. Rising company profits, high cash levels and reduced debt suggests corporations are healthy enough to weather the troubled economy.

    Roubini to Greece: time to default.

    Brett Arends’ three biggest lies about the economy: unemployment is below 10%; the markets are panicking about sovereign deficits; the U.S. is sliding into socialism.

    The ECB attracts just €31.9B in bids for today’s €55B term-deposit sale, crafted to drain the liquidity ECB has been injecting into the system. The disappointing result will raise questions about the ECB’s vow to sterilize all government bonds it purchases, and is a clear sign of rising money-market tensions as banks hoard cash in preparation for reimbursement of its €442B term loan that expires Thursday.  It’s "absurd" that the ECB won’t renew the €442B ($547.5B) bank-lending program that expires Thursday, say Spanish banks. The ECB is trying to strike a reassuring tone, but euro interbank borrowing costs are at 8-month highs and the euro is falling on concerns the region’s financial system will now be more vulnerable to threats. Euro -0.7% vs. the dollar.

    Fed receives $11.1B in bids for a $2B auction of 28-day term deposits through its Term Deposit Facility – which it could use to soak up cash floating in the financial system as the economy recovers. This was the second of three tests of the facility, and seems to have had markedly more success than that of its ECB counterpart.

    Deutsche Bank’s Jim Reid paves the path for central banks in coming years: "While we fear inflation is the biggest longest term concern, we see deflation as the bigger near-term risk, and a highly possible path in many parts of the Western World. Eventually this deflation risk will probably lead to the Central Bank actions (e.g. more and aggressive QE) that could lead to future inflation. Timing investment decisions is probably going to be tied to these interventions over the coming months and quarters."

    Banks may have as long as a dozen years to cut stakes in in-house hedge funds and private equity units under the new financial legislation – but no one seems to know for sure.

    Coal stocks are deeply in the red on fears a weaker-than-assumed China may reduce its demand for the power plant fuel and steelmaking ingredient. YZC -7.9%. LLEN -7.3%. WLT -7.1%. PUDA -6.5%. ACI -6.5%. BTU -5.5%. ANR -5.9%. MEE -5.4%. KOL -4.7%.

    Sources say U.S. stock exchanges (NYX -3.4%, NDAQ -3.1%) will propose doubling the number of companies covered by a two-week-old test of volatility circuit breakers, and expanding the program to include hundreds of ETFs. The 10%-in-5-minutes curbs have thus far triggered once. (see also)

    Bringing good things to life:  A federal appeals court rejects GE’s constitutional challenge to a law that gives the EPA the power to order companies to clean up sites contaminated with hazardous waste. GE, which has been subject to several Superfund cleanup orders, believes the law violates companies’ constitutional rights, because they have no meaningful opportunity to contest the EPA’s cleanup orders. GE -3.6% to $14.46.

    More good things from the bankers we supportBloomberg Markets magazine breaks open the relationship between U.S. banks’ shadow banking and their role in the funding of Mexican drug cartels. According to Felix Salmon, this story isn’t over by a long shot.

    Reason #297 on why I hate ADRsThe SEC has approved public listings for nine start-ups run by people in Ukraine or Russia, with no revenues or operations and minimal assets, in the past two years. The SEC cleared them to sell stock, in most cases without asking a single question, according to public records at the agency.

    Though Google’s (GOOG) change to its China search engine is a relatively minor one, it represents a loss of face for the firm, which is backing away from its commitment to provide censor-free search in China or no search at all.

    Bob Faulkner thinks the fire sale on Micron Technology (MU -13.5%) is overdone. While its FQ3 earnings report was admittedly convoluted, bottom-line demand looks just fine. "Micron’s quarter is a classic case of needing to separate the wheat from the chaff," he writes. (MU’s earnings call transcript)

     

    Lunchtime reads:
    1) Getting ready for bad times
    2) Bloggers keep lazy economists on their toes
    3) A case for undervalued equities


  125. My XLF Jan $15 put got filled.  But I can’t find FAS Jan 21/29.  Did FAS have a split?  The option strikes are like 21.67, etc.  Which ones do you suggest?
    Thanks!


  126. TEVA – Nice long term play….3K Calls at $50 and $45 P Jan12s moved for a net of $3 if the spread was put on…..I am going to join the party and sell a few Ps.


  127. the 1040 level is clearer on the monthly charts 200 acts as support. Tmr if we close under it, the situation will be really dire. The last time we did it we didnt come back for one year


  128. For a 3% down day, this is very quiet. The whole country is becoming more like Europe so no wonder that  Wall Street is adopting European long lunch breaks :)


  129. Hi Phil TNA October still have 15 position that roll from previous mos Oct 57 short put, would today a good day to roll to Jan 35 short put or wait thx


  130.  Pharmboy—are you buying DCTH today?


  131. JRW/
    What signals are you looking for when a market is flatlining like today?
    It seems it could break up or down indistinctively on this low volume.
    So what could be a buy or sell trigger?
    Thank you


  132. Something happening to C


  133. Buying FAS at 20.09, will sell if we drop below the day’s low.


  134. The lunch crowd needs to leave the bar, where is our wall street spy drunk along with the BOTS.


  135. fortep – I am not buying anything today.  Trying to sell a few Ps on TEVA, rolling my DIA Ps and SPY Ps.  Otherwise, just waiting for 1040 to hold or break. 
     
    Watching ARIA, ARNA, DCTH, JAZZ and QCOR.


  136.  Pisani says that C tripped the circuit breaker by trading 8800 shares at 3.3 (price 3.8 ish now), So shares halted for 5 min. Reopened at the same level they were halted at….strange


  137. lionel,
    Well, I’m set up with 2 TNA and 1 TZA orders ready to go; I’m looking for a break above the 8ema on the 3 min chart or a flush followed by a surge on volume or a failure on volume that says a fund is selling


  138. hanna5:  The glitches in the Matrix are starting to become more and more commonplace


  139. Pharm: I saw that you mentioned TEVA as a ‘nice long term play’. If I understand what you’ve written, then you are purchasing the stock and selling Jan12 50 calls and Jan 12 45 puts. Is this correct?


  140. Phil,  When you advocate 75% in cash, how do you calculate that number?  It is based on your option buying power?  I have a high level of cash in my account, but I have tied up a bunch of margin selling puts on TBT, XOM and FCX.  So my buying power has shrunk substantially.  Any help in this area would be appreciated.
    Thanks.


  141. Thanks JRW for sharing your trading technique


  142. I checked back through the posts from last week but couldn’t locate the suggested RIG buy/write trade? Could someone remind me what the recommended short strangle/straddle was? I was considering selling the Jan 11 50 puts for starters and buying 100 shares of RIG.


  143. Phil - if a $29,000 C trade tripped the circuit breaker…seems like the bots could be programmed to trip the breakers and give investors a "time out" when it becomes profitable to do so…


  144. HHFIV – buying those 50 Calls instead of the stock, but yes flipping it around, one could buy the stock and selling the 50 Calls  & 45 Puts. That would give one a $12 position on the stock ($40 if called away for ~25%) but not quite our 20% discount if it is put to us…


  145.  1040 level – futures have already pushed below 1040, bounced above, and are now about 1040 even. EURO has also come off its bounce.


  146. Phil, what do you think about a bull call spread on TNA ???


  147. Stopped out of FAS.  No more knife catching for me-


  148. Shaking out weak longs here?


  149. TEVA – For less capital and not collecting the dividend, how about the jan12 50-60 bull call spread for $4.30, selling the $45s for $4, making it a $0.30 debit.  Worst case is one owns TEVA for $45.30.


  150.  How can one of the most liquid issues in the whole world, C, drop 15% on a small trade and trigger a circuit breaker?  It makes you wonder how robust the market infrastructure really is.  Is this another ‘flash crash’ event that will just be swept under the rug?   Another investor confidence hit.


  151. If we are true to form we close on the lows, as on 5/20 and 6/4 and that would be IWM 61.90.


  152. FAS/Cwan – You can go with the $23.33s at $4.15 and sell the $28.33s at $2.80 as a $1.45 net on the $5 spread.  I must have been looking at the old spreads when I had the other number

    Very sad weakness here and 127M traded on the Dow at 1:26 so still slow but we no longer have machines boosting us – that’s pretty clear.  SDS $40 calls hit $1 already so they are nice movers to the downside.

    TNA/Gucci – Oct $57 puts?  Ouch!  Well, they are looking like $21 and costing about $60K in margin (unless you have PM, which I hope you do).  You can roll to 2x the Jan $40 puts for about the same margin (check with broker of course) or you can do an even roll to the 2012 $45 puts and those can be split to 2x the $30 puts or even the $25 puts if you have to so it depends how patient you are but now is a good time to roll as you have tapped out your putter’s premium and you can roll to 100% premiums so, at worst, that becomes your additional buffer.  

    Circuit breakers/Hanna – Seriously?  So some joker dumps 8,800 shares of C and halts the stock and starts a panic in the entire financial sector?  Oh yeah, that is SUCH and improvement….

    XLF broke $14 – that’s really BAD! 

    LOL Kinki!

    Cash/Palotay – Yes buying power is fine as long as you manage it and don’t let it get away from you as margins rise.  That’s what I was talking about in "Stupid Margin Tricks" like the above plays.  Our worst case is we get a few assignments very cheap but we get to sell a ton of premium against our idle cash. 

    STT getting hit and hit and hit yet I read they have virtually no CDS exposure and limited foreign debt.  Very strange…

    AMZN taken to the woodshed, down to $110.  AAPL $256, RIMM $51.50, BIDU $68 with GOOG capitulating to Chinese but GOOG is at $457 and also pathetic.  Nas has no chance at all with that group dying.

    Dow right at 2.5% line at 9,880 and 9,875 was our magic number but I’m surprised that we didn’t test 9,800 yet.  All the other indexes are down far enough (3% or more) for the Dow to test 9,800 if it matched.  Hopefully we are flushing out and not starting a new leg down here- gotta watch that volume, which is picking up and will be good if volume grows and we hold and bad if it grows while we fall.


  153. 1:47 Stick, anyone?


  154. If I had to predict a high for FAZ it would be just below the 17.37 for June 7th with an intra day gain of around 14% and pullback to somewhere over 12%..


  155. Pharm… not much green on the screen today… I noticed Teva is up on a horrible day. Is their positive news on this one? Thanks!


  156. Assuming that this sell-off is Street orchestrated (it certainly looks like it), is it possible they are tanking the market because the Fin-Reg reform bill is back in play because of Sen. Byrd’s death?  Maybe they will run the market back up once it appears the bill won’t make it through.


  157. Phil:
    TNA, your earlier $40 play; What are you suggesting…Buy/ Sell, Call/Put…couldn’t catch that one. Sorry..
    Thank you …


  158. jsurti;
    He meant buy the July 40 calls at 3.25…might be an even better trade now if we hold our levels.


  159. RIG/HHfiv – I like the stock at $48.64, selling the Jan $47.50 puts and calls for $18 for a net $30.64/39.07.  You can go artificial on it too with the $32.50/$47.50 bull call spread at $9.70 and sell the $45 puts for $7.50 for net $2.20 on the $15 spread and, worst case, is you get 1x put to you at net $47.20.

    OIH Aug $95 calls for $6.45, selling $90 puts for $4.50 is net $1.95 with unlimited upside and worst-case is you own OIH for net $91.95 (now $94.96).

    Circuits/Gold – That’s what I’m, thinking – that is crazy.   I would think there would have to be "normal" average volume for a period below a strike.  That means every new biotech that gets an FDA decision will trip the breakers now?  And what about earnings?  Could be a great advantage to us, we’ll have to see.

    TLSA suddenly up at $19.

    TNA/Hia – I like the straight calls because we can just dump out if they get ugly(er).   The spread is a bit too much of a lock-up since I fully intend to take 20% and run on the first bounce (if ever). 

    Fin Reg/Kinki – I think the banks WANT this version of the bill.  It was so mild it’s almost pointless, which is what they wanted.  I think it’s just the uncertainty that’s bothering people (again) in that sector.

    TNA/Jsur – That was buying the July $40 calls, now $2.90.

    Morgan Stanley’s Jim Caron scoffs at sub-3% Treasury yields: "Why are 10-year notes below 3%? Fear and greed, but mostly fear. Many in the market have surrendered themselves to the deflationistas."

    Consumer confidence double-dipped in the last two recoveries (early 1992 and early 2003) without the economy falling back into recession, and today’s pullback is far less severe than either of those two episodes, RDQ Economics notes. Much of the drop could be related to the BP spill, not underlying conditions. Notably, employment indicators posted only a modest drop.

    In counting the 10 missteps of financial reform, David Weidner says the bill’s main flaw is that it puts too much emphasis on regulators who have failed in their charged tasks. Besides that, it could have been so much more…

    Goldman gifts Berkshire Hathaway (BRK.A BRK.B) with a Buy rating, saying "the disconnect between the market value of the stock and the intrinsic value of the business is close to a multi-decade high." Firm sees shares 25% higher over the next year on better-than-expected earnings growth. Of course, BRK does own a hefty stake in Goldman Sachs (GS).

    As one might have expected, Apple’s (AAPL) iPhone 4 antenna woes are spurning a potential class-action suit. Steve Jobs’ suggesting users "avoid holding it in that way" doesn’t hurt their case. AAPL -4.2%.


  160. Phil - I know it is a copy and paste, but why would iPhone 4 antenna woes "SPURN" a potential class-action suit?


  161.  Hey Phil,
    Looking at some longer term charts here.  We are now below the 200 SMA on monthly charts.  If we do go down further, 20 SMA at 992.5 and slightly rising better hold.


  162.  Phil – TBT woes…. I have 10 $38 naked puts, roll, or bail? I’m not crazy about being up to my eyballs in margin for another 1.5-2x roll!


  163. Diamond
    A) b/c we live in a litigious society and B) B/c lawyers are money grubbing dirtbags… Most of whom contribute NOTHING to society.


  164.  Thoughts today on BIDU?


  165. jromeha - Look up the definition of "spurn."


  166. Phil Hi,
    On the DIA mattress out of the Jun putters but besides Jul 101 putters I am holding short 104 103 and 102 putters do you recommend to roll them down to Jul 101 or wait and see as the all ITM thks


  167. Did you personally talk to the stickman or what JRW!? Nice!


  168. DD on FAZ at 16.58 for a basis of 16.67. 


  169. diamond,
    If antennae could spurn anything, I bet it would be lawsuits that threaten their beloved caretakers. Thank you for spurring some analytical thought about accuracy and thoroughness. :-) Here’s great stuff  from my favorite spoken-word artist.
     
    http://www.youtube.com/watch?v=OonDPGwAyfQ


  170. Diamond – EXCUSE ME, any time I get the opportunity to bash lawyers I take it (even if I have many friends practicing).. Just read it quickly and thought it was spur.  Your sarcasm is appreciated though.


  171. aclend - LOL!!!


  172. Took half of FAZ off table at 16.7


  173.  Looks like the stick wants to start early today.


  174.  Phil – your lunchtime chart substantiates my theory of Dow 22,000!


  175. Stay away from Canadian Solar…way too many lawsuits and problems with that company.


  176.  this thing could meltdown to 9750 today – be careful


  177. Phil : I wpuld  like to add some more protection but the TZA July $6/7 bull cal with Aug. $6 puts are now net $.35 vs net $.11 from this morning . Can u give me another recommendation.thnak you.


  178. Cramer "This market is too high".
     
    If ever that was a call for a rally tomorrow, you just heard it !  :grin:


  179. Sometimes it’s just better not to trade; Cap called this correctly !! Well, if it’s only a 6% day, missing 2/3 of the move, ( overnight surprise) that’s not bad.


  180. Imagine the horror when people look at their statements this month

    If the Euro manages to fail this afternoon it could turn into a bloodbath 1.2206 is the level to watch


  181. JRW
    I really think your best tecnique is all cash every night and I am totally over the always down suprize.


  182. Kustomz,  Excuse me , but the horror for the last 3 months!


  183. Hi Phil want your opniion on AAPL Jan12 310 short call, may be a good opportunity to roll to front month to August 250 short put and August 280 Short call, I only have 5 position will take 8 position to roll for a small credit. would you raise the call side higher or vice versa the short put ower to 240 thx


  184. Spurn/Diamond – Good proofreading.  I got the gist of it so I didn’t worry about it.

    Did you guys hear Cramer?   He just said that at about 3:40 there are programs that will kick in and drop the markets another 250 points.  Not so much that he said it but he said it like it’s a fact of life.  Usually I’d play for the opposite of anything he says but today, anything can happen sadly

    TBT/DrC – TBT is at $36 and the puts expire in 12 more trading days so maybe just be patient as they still have 20% premium.  The roll you want to watch is a 1x roll to the Aug $36 puts or $37 puts at worst.  If you roll and gain just $1 per month for free, by July 2012 you will be rolling to the $14 puts and maybe that will be low enough to expire worthless.  8-)

    BIDU/Suni – They are upset because GOOG isn’t being kicked out of China, which they were kind of counting on or it’s back to $55 for them.

    DIA/Yodi – Wait but make sure you add some more long puts in case you have to do a 1.5x or 2x roll on your putters. 

    Protection/Dflam – The Dow is holding up best so if we dive, they should fall the most so 2x the DXD $32/36 bull call spread for 50, selling 1x the Aug $27 puts for .80 is net .10 on 2x the $4 spread that goes in the money if the Dow drops 10% but makes nice money on a 5% Dow drop (which would push DXD to $33).  DXD hasn’t been lower than $26 since early may and bottomed out at $24.46 when we were at our highs.

    Euro is not failing, copper is not failing, oil is not failing – Cramer is an idiot…


  185. Yes Stock, I was just stating this month hasn’t gotten any better

    Are my eyes deceiving me anyone see whats going on with VZ…the mother of all sticks is on the way


  186. Phil: I bought some TNA $40 calls for $3.2 in the morning.  Do you suggest I DD, or get out?


  187. sold remaining half of FAZ at 16.79, reloaded half at 16.7.  And now the flush..


  188. Stick getting sold into


  189. Did Cramer say the program ‘will’ kick in or ‘could’ kick in.. there’s a big difference.  I’m pretty sure the former is illegal..


  190. "Are my eyes deceiving me anyone see whats going on with VZ…the mother of all sticks is on the way"
     
    AAPL too; crazy volatility.


  191. JRW - What are your level below 62.90?


  192. Been accumulating some MON $50 (0.65) calls ahead of earnings; a little bottom fishing, hoping that all the bad news is priced in. Also, the 1 billion stock buyback will start on July 1, and I assume the company will do some new quarter purchases in the first couple days….should prop up the price.


  193. I think someone’s NAS tradebot just went crazy, lol. Very strange action on some stocks.


  194.  RIMM just broke 50.  Love the last 4 words of your last post, Phil! LOL


  195. When VZ took off, T and S dropped and AAPL jumped.  Verizon iPhone?  Can’t find any news.


  196. Cap… I feel much better now… when in doubt position yourself for some "Cramer inverse" plays… I’m now looking for a reverse tomorrow.


  197. AAPL/Gucci – You sold Jan $310s short?   Well those are nice and safe at $35 and pretty much anything you do is going to increase your margin but you can always roll back so I do like selling the Aug spread as long as you realize there is a high probability you’ll have to roll it as not likely AAPL just flatlines at $260 after earnings.

    Whoa – RIMM just got tanked down under $50 – someone is trying to make Cramer’s dreams come true by smacking the Nasdaq.

    TNA/Sean – I’m sticking with mine but will likely sell 1/2 the $38s into earnings to stay more neutral in case of a big drop.  If we do spike down in the morning then I’d be more inclined to take out the caller (with a profit) and roll or DD. 

    Stick/Gmarts – Cramer just told the CNBC followers (and probably Street.com crowd) that they should prepare for DOOM at 3:40 so, in the very least, he has scared people out of buying.  More likely he’s looking to pike on the short plays from the idiots who follow him so they can get the mother of all squeezes into the close.  There’s no better rocket fuel than people who get gung-ho bearish and then get forced to buy as an index gaps up on late program trading. 

    Cramer/Matt – He either said would or his tone implied it.  He stated it emphatically, like it was a fact and he explained how the programs would kick in and drive the market down so fast and hard your head will spin. 

    VZ/Eric – Holy cow!  Well, this is what I expect to happen at some point.  Watch VNO and BXP, they may give us a turn signal – right now they are at lows. 


  198. goldman
    That’s 61.90 not 62.90, 60.85 and 58.68


  199.  VZ, RIMM…bots in command…that’s what Obama and Bernanke talked about today..how do we save the 104.40 on the SPY


  200. VZ to offer iphone.

    That explains both of them.


  201. Also explains RIMM


  202. According to TOS, Bloomberg reports Verizon to offer iPhone by January.


  203. In small TNA at $38.02


  204.  also for VZ…2% of the DOW30 up 1% will help save any "line in the sand"


  205.  OK, i dont own RIMM, but…..This is still the largest player in the smartphone market; still a core business phone; could make $5 / share this year, and has a decent balance sheet. Its trading like they’re gonna go under tommorow….And, I love my blackberry! 


  206. Adding another 1/2 of FAZ at 16.76


  207. Man, CNBC is laying it on thick…they need violins in the background


  208. Out at $38.07


  209. drcraig/TBT
    It is very obvious the TBT positions have not played out as expected. The demise of the European debt markets have pushed the treasuries up – this was not on our radar.  Rather than sacrifice past profit, I have capitulated and rolled out all of my positions (down and out to 2012 ) and will break even at the worst, and will not make much at the best.  Will watch for a reversal, and will enter new positions at that time. I guess there is a good saying – "we do not know what we do not know" – so apropos to these positions that looked so promissing!


  210.  All this action while BP "quietly" goes up 3.5%


  211. I don’t know how Cramer can make such comments.  That, along with his fireside chat on the Today show, has to be crossing the line.  Who is he?  America’s stock advisor?  I’m short but it even bothers me-


  212.  Wave after wave of selling, needs a miracle to hold 1040


  213. Sold half of FAZ at 16.84.. playing it safe.  Will load back up once we break the day’s high..


  214. I’m usually comforted by the fact that if I’m doing the opposite of what Cramer is advocating I’m going to make money.


  215. wow, that was quick!!  Loaded back up and a little more at 16.88 this could get rocky!


  216. Ya’ll have a good one. I wish I followed Cap’s advice today! Now I’ll go pick up my gf at the airport. She’s bringing me some somagon (homemade Russian spirits) which I will need after a day like today.  


  217. JRW nice call on 61.90
     
    The VZ thing — is that fact or a rumor ? 
     
    I am thinking RIMM could be a buy at the close today.


  218. Here we go…..


  219. C’mon, let’s blow the roof off 16 and head to the promised land of 17.38!


  220. They are chasing folks out of RIMM into the end of Q


  221. FWIW… Cramer is definitely short the market, and using his "bully pulpit" to energize the minions, to hopefully make his projections play out. What a dork!


  222. just bought some RIMM for a trade …


  223. matt / FAZ
    You certainly have earned your mint julep today !! Congrats.


  224.  Cap--i’m looking at the VZ options..no sign of it being bought


  225. AC- thanks for the video. Hilarious, and the only levitation of the day.


  226. The VZ thing is rumor, confirmed by "two people familiar with the plans."
    Link: http://www.bloomberg.com/news/2010-06-29/verizon-wireless-said-to-start-offering-iphone-ending-at-t-s-exclusivity.html


  227. I guess Cramer was right..


  228. Wow, massive 5 min volume in FAZ / FAS.. a little troubling.  Looking for a reversal….  EVER VIGILANT, EVER ONWARD, EVER NEVER!!!!!!!!!!!!!!!!!!!!!!!!!!


  229. DNDN – Pharm – anyone have any news?


  230. In all fairness, Cramer has played the market well since July 09……


  231. Unloaded half at 17.05


  232. rimm seems to be finding support at 49.58 level


  233.  DNDN/samz3700--i see no news..just that it trades with an over 4 beta.  so it’s actually "outperforming" the nasdaq in relative terms.


  234. reloaded half at 16.95.. getting fishy round here…  I don’t trust the gubmint and especially not CRAMER!


  235. Everyone make an offering to the god’s of the stick save.


  236. VZ/Boobs – It’s the same analyst that has been saying for 2 years that any day AAPL and VZ will announce a phone.  Amazing how many times you can get a reaction with the same exact story. 

    FCX getting to $60!  X at $39 (lots of materials going down) but TSLA at $22 and there was an IPO any of us could have grabbed at $18 today!

    Man, these spikes are testing our resolve aren’t they?

    RIMM/Hannah – Very good deal at $50.  Buy 100 shares and likely to pay for your next phone

    TBT/Gel – Not sure about "break even at worst" the way this is going.  By 2012 maybe people will be buying 20-year notes for 1.5%….

    I cannot believe these prices!  So tempting to buy things…

    Someone is just dumping the horsemen, which makes sense since Cramer has his people trained to watch them as in indicator so they have to be freaking out with 10 minutes left on his doomsday clock.

    Dow volume now 192M so beyond what would normally be stickable and pretty heavy (70M) in last 2 hours.  Of course, we’ve only dropped 0.25% on the Dow on 70M shares traded so evidence suggests there are buyers down here.  I don’t see us dropping more without bad news, which, of course CNBC may have ready to roll out at 3:39.


  237.  TOS – another "glitch" my charts are frozen again.  Don’t know what’s up w/ TOS and all these glitches lately?


  238. Anybody playing the 3:40 anti-Cramer stick?


  239. RIMM/Cap: Gap support from April ’09.  I think I will make a long bet here


  240.  TOS is stuck saying IWM is 61.57 – when it is really 61.85


  241. In RIMM 49.52; out 49.93.   Nice hit and run;  I think it should go higher, but I am happy to take the $ and run !


  242. Starting to think Cramerica has been had… again.  My basis is low enuff I’m hanging in there.  If anyone wanted a crack at FAZ.   Go now with a .10 stop


  243.  So Phil,
    Do we become scavengers here with Short term hedges?


  244. srfrog – I had the same problem.  Called them & had the rudest service I’ve experienced thus far.  Basically, the guy said it was my fault & there was nothing he could do.  I restarted my machine & it seemed to fix the problem but all my watchlists were set to "default" when reopening… 


  245. MT Jan $27.50 puts can be sold for $4.45, that’s close to 20% on a put sale!

    BTU Jan $35 puts can be sold for $4, nice entry on great coal company.

    SHLD Jan $55 puts can be sold for $6, stock is at $67.10.


  246. What?  No boom??


  247.  Have 200k 95 % cash.  Was thinking of picking up some VZ.  Still don’t really get the options so should I just buy it?
    Thanks.


  248. Will bail with FAZ below 16.8


  249. Ministick! Openup? against the crammer jammer/


  250. Remember, its not our job to save the market !  Don’t be a hero.
     
    That said, there are some good buys out there if you are looking beyond the day trade ..


  251. IWM/SrF – I have $61.83 at 3:42, same as Esignal and Etrade.

    Scavengers/Jdub – Not too much.  July expirations come up real quick and this is a pathetic day.  Until we put in a real turn back up we don’t want to overcommit. 

    IWM July $58 puts at .97, selling June 30th $61 puts for .46 – if they expire worthless tomorrow it’s a cheap net entry and if not, we can roll into a vertical.


  252. Phil/TBT… My 2012 strikes are 32-35, and as we get closer I will DD and roll lower if necessary. I might have 350,000 shares at .05 by the time this crazyness ends, but if that plays out, then the world has gone back to the stone age and who cares anyway!


  253. BOOM BOOM BOOM BOOM BOOM
    BOOM BOOM BOOM BOOM BOOM
    BOOM BOOM BOOM BOOM BOOM
    BOOM BOOM BOOM BOOM BOOM
    HAPP 4TH EVERYONE!!!!


  254. try etrade. The rep spent an hour with me last week cleaning up my machine! reloading JAVA, etc. I was impresssed


  255.  but this is no time to be a value investor as key support has been violated


  256. New version of the TOS iPhone app sucks. It keeps asking for password to execute a trade. Also there is N annoying popup everytime you click on the ‘remember me’ button.


  257. Closed out all my covered calls that have 25% profit…. will go uncovered into tomorrow’s market.


  258.  That C fat finger really wasn’t a fat finger at all


  259. 2 good TZA trades of IWM 61.90, 8 cents and now 15; out for the day at 8+%


  260. Took out 83 cents today on TNA on the long side !  Hilarious.
     
    Some bot is trying to stick it now !


  261. Sold half at 17.14


  262. IF this is a bottom, how fast of a move up would you all expect? Back to what levels?


  263. Even with a bad jobs report, the sell-off may have occured…..


  264. The fibonacci of June 7th close and the open on the 8th is 17.18.  Why get greedy-


  265. etrade spent 1.5 hours this morning with me, very nice but pro was designed by an idiot and they don’t know how to run it. 1 step forward 1 step back! Don’t like theTOS talk either.


  266. AAPL approaching its lower uptrend line at 253.


  267. Wow, look at AMZN down $9 !


  268. Looks like the PPT’s turn.


  269.  Wow someone must be covering shorts…


  270. VZ/Lori – Sure it’s a good stock.  When it goes up a bit you can sell calls to protect yourself if you want.

    TSLA $24.43 now.

    Woops, someone is buying JOE – it must be a bottom.  Interesting combo with BP – maybe good news on spill?

    Dow looking to take back 2.5% line, which is where it was when Cramer told everyone to go short.   S&P back over 1,040 so catastrophe averted for the moment.

    Dow volume at 3:56 is 227M so no commitments yet. 


  271. Matt,
    …glad you’re finally having a good day!


  272. MorxIntway – I use EtradePro and learned that it is a good idea every Friday (once a week) to go into Java Control Panel, Temporary Internet Files Settings, and Delete Files…  This clears out any accumulated clutter in the Temp file.  The file is recreated when you start next time.


  273. lori/VZ
    Keep in mind this stock is held by many that are seeking dividends. In January, the administration hopes to rtevise the dividend tax from 15% to the top marginal rates. This will hurt the stock as many will sell prior to the tax change. The only hope is that the coming elections will negate the power of the tax and spend croud, and the dividend tax proposal will die.


  274. What an impressive come back to just 1040 in the SP500.. Unbelievable, no doubts this is heavily manipulated..


  275. Matt    I havn’t seen you this happy in months.   Congrats on your great day.


  276. Well, I got stuck with half of my position.  Will unload after hours.  It’s clear they were positioning themselves for a relief bounce tomorrow.  Cramer should be taken off the air.  Think of the fools he burned again-
     
    Despite the disgusting taste he puts in my mouth…. what a day!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


  277. Phil, what do you think of Jan ’11 PBR 33/40 bull call spread at net -$2.83 against sale of Aug 33 put for +1.75 for a grand net  of -1.08, with PBR now at 34.18?


  278. thanks Grant


  279. gel1           I everybody sells their high dividend stocks, where will the money go?


  280. I find need to clear internet temp files twice a week and clean disc every day. I am still dumbfounded by noone knows how to really use etraepro, they were patient from 8 to 9:30 when I said have to go.


  281. Gains in my daytrading;  overall my account balances pretty much flat for the day … nice !


  282. Thanks Gel.


  283. shadowfax -
    what do you mean by clean disk every day? Do you defrag it or something else?


  284. Thanks guys-
     
    New intraday low on the S&P and NAZ, new closing low on the NAZ.  Nothing new on the RUT or DOW.  Phil, what about the NYSE?


  285. LOL Gel – I agree 100%! 

    Support/Kustomz – Yes but when I see this kind of sustained effort being put into breaking support, it makes me wonder why someone is working so hard to convince us to sell…

    How fast/Jimmy – I can’t figure out what the game is unless we are going to pop 400 tomorrow, which doesn’t seem likely.  We needed 10,250 to get out of the technical penalty box and we went 300 points in the wrong direction today.   Copper fell 5% today to $2.938 but that’s miles higher than $2.72, where it was when the market was this low in early June.  Oil was $70 at the beginning of the month and we RALLIED 800 points in 2 weeks off those levels.  The Euro was lower to the dollar ($1.19), the Pound was $1.43 (now $1.50) and the Yen was at 93 (now 88) but the difference was Greece and Spain were unresolved and Finreg was unresolved.  Now the EU has pledged $1Tn to back their members from default and Finreg is a done deal in pretty much this form – so why back at the June lows???

    Congrats Matt -  That’s why you are the master of the bear pit!

    PBR/Tenger – I think I’d rather sell 1x 2012 $30s for $5 and buy 2x Jan $29/34 bull call spreads for $3 so you are in 2x the $5 spreads for .50 each and your worst case is a 1x assignment at net $31.  Don’t forget, ideally, if the top of your call is in the money then the long putter should be down a bit and even if you buy him back for $4, you still spent net $5 to make $10.  You can do the same trade and roll the Aug puts along (like my TBT idea earlier) if you don’t mind watching but I really do like the more conservative spread. 

    Good Job Cap!

    Good job everyone for not freaking out on a nasty day

    NYSE/Matt – They didn’t make either low, which was very surprising after dropping like a rock. 


  286. Lots of big spikes up on the indexes at 4pm on the dot.  Don’t know if they were flushing shorts (bad for tomorrow) or testing resistance (good for tomorrow).  Futures not very perky so far


  287.  One thing I did wrong today was sold those QIDs to offset the losses on my SSO.  Ugh!  Got rid of other Puts too early--NFLX & AAPL.  Bought some Aug puts on the XLF earlier today when there wasn’t a good reaction after FinReg would pass w/o bank tax.  Sold half of those into the close and will hold the rest overnight as I have some C and BAC long positions.
    So I have put spreads for the near term (July and Aug) on the ff:
    -BRK.B (still relatively strong)
    -RIMM (bought it before earnings which is now deep in the money and will look to sell downside puts if there is any stabilization in the 50 or 47.5 area)
    -XLB (followed big money with the 40/38 put spread--took 1/2 off today)
    I have no short term longs as I took a loss on my SSO position.
    PFE/MO/INTC/PBCT/C/BAC/QCOM/BUCY/RIG all taking a big hit.I was looking to sell a Put on MO but it couldn’t hold 20 so I’ll watch to see if goes down to test lower half of 19 before selling those puts.  Otherwise, I will be happy with Sept 19 covered call with a net entry of 18.28
    Remaining hedges: 
    DIA- July 103/100 Put spread (did not play this one well)
    TZA- too many positions to list but all in the green (Thanks Phil!)
    VIX-Aug 25/30 call spread (bought when VIX was below 25
    SPY-103/100 Aug P spread


  288. samz3700
    One of windows system tools is Disc Cleanup and right next to it is defragmenter, once per week it really speeds things up, ignore their you don’t need it yet, by that time you will want a new computer.


  289. Lori/VZ- perhaps you are already aware of this, but VZ is putting  their wireline business  into a subsidiery which will be spunoff to VZ investors. This will then be merged into Frontier Communications. I received in the information packet to shareholders recently, and from what I could calculate based on the provided numbers, VZ shareholders will receive approximately 1 FTR share for every 4.25 VZ shares. The information packet is available from Sec.gov. Hope this helps.
    http://www.mobiletechnews.com/info/2009/05/14/121528.html


  290. Is there ANYTHING we can do to protect America from Cramerica.. or is he too valuable to us as a contrarian indicator?  He is a weasel of the nth degree.  How can he live with himself?


  291. Stockbern…. If there is a rotation out of the high dividend stocks, it will go directly into high growth stocks. A lot of these high dividend paying stocks are held by folks that are in the upper tax brackets, and have held the dividend payers for income that is sometimes half of what they are paying on their ordinary income. If the incentive is no longer in these stocks, I believe the target is in growth stocks that will offer capital gains, and these taxes are projected to go from 15% to 20%. This is a lot less than the "smash and grab" policy the government is hoping to pass relating to the dividend payers. In January of 2011, the big energy trusts in Canada are,  for the most part,  an investment of the past, as the government of Canada is terminating their "pass through" dividend benefit. Say  "good bye" to those dividend payers. Most of the trusts are converting to corporate status, and some will pay dividends, but the payouts will be sparse in comparison. I am in a lot of these trusts, and will dump my units soon, before they depreciate for the same reason I believe the high dividend stocks in the US will depreciate…. they are not as attractive if the government is taking too much of the income. 


  292.  Hey Phil,
    You prob noticed these too:

    BP: This is probably what’s keeping it afloat for now:
    http://blogs.wsj.com/marketbeat/2010/06/29/retail-investors-diving-into-bp-shares/
    AND
    Interesting that $NYA, $RUT, $DJT and $SOX did not breach June 8th lows at any point today.
     


  293. gel1
    When do you think its time to bail on dividend stocks as I have too many mostly down now?


  294.  gel1: or they could take their money out and put them into high yield bonds vs. growth stocks.  Problem with growth stocks is that government could start to look into any sector which they can tax or regulate which add costs to companies to comply with hence hurting their bottom line.  First it was healthcare, then financials.  Cap and trade would be next I suppose and maybe card check?  
    I want to make this disclosure right now--this isn’t a political explanation.  Just my thoughts which I think has some type of merit.  Then again, Phil may dispute this line of thinking…yikes! 


  295. Phil- during the day when you give out suggestions and those trades go the other way, at what point do I get out? For example the UNG trade today or the July QQQQ 44/46 bull call down close to 50%. I have a 15k IRA account and small losses like these are hurting me.

    Also, I have Jan 12 60 calls. Is there a way I can cover them?


  296. Look at TSLA.  In a huge sell-off event like today, an IPO managed to get 40% bump.    And here we were wondering if it could hold $18.


  297. hi Phil : Couldn’t get the DXD $32/36 bc spread for additional  protection that you recommended even close to the $.50  you suggested so  I bought Oct.TZA $4 C at $4.10 about 10 minutes before close since I got concerned when S& P broke 1040 support & wanted  more protection overnight. Plan to get other leg executed to sell Oct. $12 C for $1.20 tomorrow. do u agree with the $12 C sale? Should I also sell puts? TZA closed at $7.97 so $3.97 ITM on $8 spread. thank you for your help. 


  298. Dividend Stocks:  While it will no doubt come to pass that tax on dividend income will increase next year, a 3% dividend may be a higher return than a 30 year T Bond by then.  So that begs the question asked above:  when you sell your dividend producing stocks where do you put the money?


  299. Support/Kustomz – "Yes but when I see this kind of sustained effort being put into breaking support, it makes me wonder why someone is working so hard to convince us to sell…"

    Effort by whom? "They" and ‘Them"
    I see a sustained effort not to break support. Clearly "they" keep saving the market from a melt down as demonstrated this afternoon. This is where matts frustrations stem from. The Fed has feed trillions into the markets giving a green light to speculation things will be free and easy forever. I think the sellers realize that free really isn’t free and Governments around the world need to tighten their belts leading to slower growth (hopefully not collapse) that leads to risk aversion.

    Nothing wrong with waiting for the smoke to clear and to see some leadership in some of our favourite stocks before we get stuck without a place to sit in this game of musical chairs.
     


  300. jdub gel
    The rotational screw will only end when they put it to the 1%ers. I planned on selling my dividend stocks this year but the sqeeze has already taken a few years dividends away. Hope either of you have an idea of when to bail?


  301. I suppose that public corps could put more money into stock buybacks and pay less out as dividends, which would increase share price and thus increase potential capital gains


  302. We just don’t freak out in front of everybody. From today, "honey, would you.." "NOT NOW! Were going to be digging in dumpsters if this keeps up!"
    Amazing how my account can be thousands of dollars down and buying back a covered call for $60 makes me feel like a success.
    Shadow – what do you need to know abt PRO? i don’t know much but maybe someone else here could help?


  303. Phil, any new thoughts on MEE? You recommended buy/write back at 38 and lately they’ve been around 30 for a while. They filed a lawsuit against the mining regulators. Trying to understand if the fundamentals are any different. I haven’t seen it on the past couple buy lists.


  304.  Humvee: I have yet to hear what the outcome is on my biggest Canadian Trust-PWE but I have trimmed my position on it by 1/3 already and will start to scale out of it on strong days (which I hope we still would have).  I will also continue to trim holdings (not too much) w/ high dividends and will put some money to work on high yield debt--emerging market and corporates as I do not see interest rates spiking anytime soon.  I have TBT to protect against any sudden interest rate shift until the unemployment numbers here actually get any real traction and the EU (ex Deutschland) turns things around.


  305. morxlntway
    First I want to save my charts screens because loading pro and resetting all those screens takes a 1/2 hour every day. Second I want to save the options layout some how that can be accessed without the wait to trade. So far the only way to get a fast trade is to go back to the trade page which makes pro 1/2 worthless. That would be a great start. I have 3 computers and pro won’t let you load on more than one. I have discovered how JRW trades and see all his signals but pro will only allow misses by too late!


  306. And only pro has the tools  that refresh real time, I tried everything else.


  307. Phil / End of month window dressing push?  What happened to that concept? I thought the machines were in control.  Are the funds trying to reduce their customer load!  I was playing for a spike into Wednesday and planned selling that day.  I got it wrong again I guess? or do you still anticipate some gamesmanship/stick tomorrow?  I’m still a Ddipper, but I thought it would be later in second half as I suspect 2nd quarter earnings will still be ok overall, especially for blue chips, big tech and oil integrateds.


  308. kustomz:  the Fed won’t let the market tank, and there isn’t enough genuine buying interest to sustain a bull market, so I guess shearing the sheep between 1040 and 1150 seems like a good way to turn profits.  Keep hope alive so that the Matts and the Phils of the market never fully capitulate. 
     
    Except those little flash crashes seem to be getting more and more frequent these days…


  309. Shadowfax/Dividend payers
    Timing the rotation is directly related to the sentiment of the fear and expectation of the tax change. One must remember, the tax increase is really corrosive to the best interests of those in the higher tax bracket, because of the differential between the typical lower rates on dividends compared to their marginal rate.. Someone who is in the lower marginal tax rate bracket, then their only concern is the number of sellers of the stock, because of the rotation to other investments.
    As a caveat… all of this concern might be a moot point, for the reason a change in majority status in the Congress, could reverse the tax increase, and furthermore, spark the markets upwards.  ( It is common knowledge the markets do not support the current administration )


  310. jdub/PWE
    From the mouth of the best analyst in Canadian  energy trusts… "CEO William Andrews said in the latest earnings report he will keep the monthly distribution steady at least for the current quarter, but won’t confirm the rate will stay the same post-conversion (to corporate status), until the first quarter results come out in May. The distribution outlook does not look prommissing, given that in years past the trust was heavily focused on just payments." Andrews stated  "As a corporation, Penn West will focus on total shareholder return. This will consist of both growth and income from dividends"
    I still think these trusts are attractive, as they morph into traditional corporate entities, but will be a mix of capital gains growth and dividends. One must recognize this structural change is for the benefit of the taxing authorities, and therefore overall return will not be as attractive as it has been in the past


  311. gel1
    Thanks that all makes sense to me. I am in so low a tax bracket I didn’t pay a dime in federal income tax last year and based on the losses will not this year. I accually voted for Obama because 1 he preached change and the alternative was worse, 2 Obama has no clue how to fix things including he has advisors on both sides which only causes arguments, 3 the final blow was not realizing the best thing for America was put of health care until he fixes the economy. I really wish I did what I did in 1994, I bought a bumper sticker that said, "Don’t Blame me, I didn’t vote for either! Going back to BUSHNESS is not the answer either. The 1%ers have to pay a share.


  312. Say it aint so!
     
    "Randall Lane claims in his new book that Jim Cramer took ex-baseball player Lenny Dykstra under his wing, "single-handedly [creating] the concept of Dykstra-as-financial genius." Now, Cramer is ensnared in a scandal, as Dykstra allegedly agreed to take $250K of stock in exchange for recommending it to subscribers of a newsletter he wrote for TheStreet.com."


  313.  Thanks Gel for the PWE update.  I really did plan on taking some off the table anyway but whatever 2nd thoughts I had, it has greatly diminished.
    If yields decrease and open to the Forex risk, I’d rather put the money somewhere where there is one less variable to worry about.  


  314.  Hi Phil,
    TBT- is it possibly a good time to go long TLT against longer term TBT holdings?  And if so, I take it a good time to scale off of the TLT would be when employment/CPI/PPI figures actually improve on a sustained basis right (although tough to do as those are lagging indicators)?
    Thanks!


  315. Hey everyone,
    I know most of you hate my sumations but yesterday I bought RAM memory to max out the last computer through Amazon at 1/3 the cost. I thought ebay was bad but Amazom set a new low. I would vote their stock down all the way. I think others will agree and it shows already. Beware!


  316. kinki, im concerned with liquidity and your statement "and there isn’t enough genuine buying interest to sustain a bull market" sheds light on how this very fact can cause a serious meltdown that’s not expected by those who rely on the Fed coming in to support what we believe to be a technical trading opportunity. All sellers and no buyers = an unstoppable meltdown. Just something to think about.


  317. I tuned into Cramer at about 6:08 and he was asking his producer permission to be positive on the market.  I missed the opening minutes where he might have possibly given an excuse for the call he made earlier in the day.  I also missed him actually making that call.  I still have to work for a living and no, it’s not in a TV shop.  After asking his producer for permission to be positive, he said he might go on the Today Show with it.  Can someone help connect the dots?  What is going on with this scumbag?  Can he be real or was I watching a cartoon?
     
    Two things are clear to me:  1) his call was a ruse to get people to dump.  There was massive buying into the close on the financials and  2) he is the type of person who, when I was a kid and I saw him on the playground, I would seek out to beat the $hit out of him.


  318. Shadow – I use Pro on one computer. I’ve tried 2 but you are right it doesn’t work. Re charts, I have 4 screens running, 3 are only charts and have 4 or 5 charts per screen so that’s about 12 charts always running. I shrink the charts by dragging the edges so i can see 4 on a page then on one page i also have a large one in the background that i can click on to bring it forward. If i double click on the top line of a shrunk chart it goes to full page and vice-versa. One thing i have learned is to get all the charts back to the sizes & positions i want and save the layout before shutting down or else, you are right, they wont be there in the morning.
    Let me know if i m telling you stuff you already know. Got to check the charcoal.


  319. Matt, the jackass needs to go down but this and my ministick outlook may = good tomorrow. Maybe today is as low as it goes, right now my car is being trashed by HAIL!  fffxxcckk the world I’ve had enough


  320. Matt

    He didn’t say "short the market" or "sell the market." He made observations about the way the market was acting.  He made pessimistic observations about the way the market moves at the end of the day: "Now I know a lot of people will say, ‘Wait a second, it just rallied from 270.’ We’ve all played that game. We know what happens – the ultra-funds come in in the last half hour, they rebalance – you go down 500 in the last minute."  It all seemed like rhetoric to me and not specific statements of "short the market."  I think that is an inaccurate observation and unfair to Cramer. 

    Furthermore, at the beginning of tonight’s show, he stated people are overly negative, but we still have a little way to go down.  On that way down, he is compiling his buying list and is being very cautious.  I don’t know how these statements, which I’ve seen him make the same statements over the past few weeks, are any different than the statements Phil makes (e.g. when Phil says stay 75% cash and we are waiting to buy and be cautious).
    Finally, you have to differentiate between short-term and long-term positions.  When an analyst says "I’m bearish X" or "I’m bullish Y" one day, then 2 weeks later they are the complete opposite, you can’t say "they are a fraud! They had a complete different position two weeks ago!!" I’m sure your opinion on the market changes constantly.  I know my opinion changes every second based on new information acquired.  
    Nonetheless, I do feel sorry for the average investor who sees someone like Cramer and takes his word for doctrine….I feel bad for anyone who sees any analyst and takes their word for doctrine…  The only reason I watch CNBC is to get the news and their spin on the news because they can impact the way the market moves (e.g. when they are negative nancies the market tends to go more negative than it normally would).  But, I never take their word as doctrine or as advice without thoroughly analyzing the markets for myself.
    Point of story: Listen to yourself and make your own decisions…then blame yourself or thank yourself for the results of those decisions, don’t blame Cramer or a similar talking head. 


  321. morxlntway
    I tried for about 10 minutes to save 1 screen and gave up on what etrade told me this AM. Any instructions how to actually save the screen?


  322. At least the barley survived more beer for the masses! Bud loves my stuff and buys it. Sorry Cramer but I don’t like your style.


  323. Well said rstuart, good advice for everyone. Matt is not one to worry about, he has his own opinion on the market and likes to "rev it up" once in a while. I just can’t understand why he chose the pink box……  ;)


  324. Nice on XLB and other hedges JDub!  Ideally, if we simply make enough money to stay even on the way down (assuming you are a long-term bull) then that’s the money (short profits) that we can use to roll and DD our longs, which gives us more of the stuff we like for when it goes up without increasing our basis.  Over time, that can become very powerful. 

    Cramer/Matt – Way too valuable as a contrarian.  If he didn’t make us so much money, I’d really be ripping into him.   As it is I just try to warn people so I don’t feel so bad when they are dumb enough to follow him.  CNBC has already redacted his statement at 2:30 and removed the video of his "stop trading" segment.  Check out the amazing lack of Cramer in CNBC’s daily archive… 

    Dividends/Gel – I don’t think 20% is too bad.  I do wonder with the trusts though, what are they going to do with the money?  They could buy back their own stock and inflate it constantly, then it would still be a nice deal with long-term cap gains, right?

    BP/Jdub – I think what’s keeping them afloat is that they make $2Bn a month and that means they can afford a $50Bn crisis and still keep going.  At $100Bn, it would be smarter for them to reorganze through BK and over that and they may be done for but I believe that they may get away with this for $50Bn or less.  People tend to forget what an absolutely staggering amount of money $50Bn is.  Also, by Novemeber they will have as many pet politicians as they can stuff into Congress for a lot less than even $50M!  Check this guy out

    Dividends/Shadow – You don’t want to be too heavy in dividend stocks because, if they change the rules, they will all sell off together.

    Thoughts/Jdub – There’s no dispute about that, the government MUST raise taxes and they’ll pick the low-hanging fruit first.  It would be nicer and better for the markets, if they just laid out one grand plan to balance out and got it over with so the uncertainty would end but, since each item will be fought like a battle in a war (great for getting campaign contribuition, by the way) then there will be seriously unfair taxes in some places and not others.

    Trades/Nicha – See the strategy section.  The quick answer is 20% and the long answer is you need to scale into positions.  I’m not sure what QQQQ position you are talking about but I assume you mean selling the UNG Aug $7 puts for .25, which are now .29 and just fine with UNG at $7.67.  Also, when I say "start by selling a few puts (10% of a position’s allocation) in some stock you REALLY want" in bold letters at the top of the comment, skipping that whole concept and selling a ton of puts is a REALLY BAD idea.  The reasons we start a position with small, manageable bets is because that gives us the flexibility to roll and/or DD.  Not sure what 2012 $60 calls you have so please clarify that. 

    TLSA/Kinki - I think it was a pretty good sign but didn’t seem to wow the investing public.  

    TZA/Dflam – Very hard to crack your code.  I take it you bought the TZA Oct $4 calls for $4.10 and you hope to sell Oct $12 calls for $1.20 to cover but TZA is at $7.91 and needs to jump 50% to put you in the money so you are playing for a 17% drop in the RUT to 511 and you need RUT to not rise 4% to be even (12% drop in TZA).  The payoff on this trade is max $8 on $2.90 invested and you have nothing if TZA finishes below $4.  I would rather sell 1x the 2012 $5 puts for $1.77 and buy 2x the Oct $8/12 bull call spread for .75 so you have a .27 credit and your worst case is you own TZA for net $3.73  To the upside you make a clear $8 if TZA is at $12, less whatever you owe the putter if you decide to buy him back.  You can stop out the bull call spread at .35 and salvage a .97 credit so now your worst case if the RUT keeps going up and up is you are in TZA for net $3.03.  By selling more premium than you are buying you get more upside and something of value remains if the position fails

    Support/Kustomz – We have had nothing but downgrades and negative newsflow for weeks.  You can say, "Yes, that’s because things are going to Hell" and you would be partially right but we’ve also seen how a different spin on the same data has let us rally like crazy on news that was just as terrible.  Meanwhile, I’m not bullish but this sell-off is nothing like what we’ve been expecting as we’ve sat on cash since the end of April so I don’t think it’s a bad idea to do a little more bottom fishing at the level we bounced off before.  If we head lower, then we can wait patiently for a better bottom to buy into but last time we had a harsh sell-off from 10,500 to 9,800 was the flash crash, which recovered in 2 days and then June 7/8, which recovered in 5 days.  Maybe this time we recover in 12 days or maybe we foll through the cracks but we may fly right up tomorrow if the EU simply clarifies their lending provisions. 

    And what Stockbern said about buybacks!

    MEE/JVest – They are like BP, they had a disaster and it will be a long, slow recovery.  Also, the whole sector got slammed on the china thing but notice how far off the mark they fell from their peers.  I like that for a recovery still but it’s a patience play.

    End of month/Tusca – It’s a total bust, isn’t it?   Of course, who’s to say the machines don’t want the sell-off?  We had a huge move up into March expirations and now we’ve retraced all the way back to February, which really makes you wonder how the hell we gained 2,500 points in our spring run.   I agree with you that earnings, at least, should give us a boost and I will stay bullish until we violate the prior lows, which doesn’t seem too unlikely at the moment, unfortunately.  

    Dykstra/Diamond – Somehow nothing in that story surprises me. 

    TBT/Jdub – Europe just had a failed note auction today.  All it takes is one failed auction here and TBT goes to the moon and TLT heads south.  TBT is a hedge against cash.  If you don’t have a lot of cash that’s getting more valuable as TBT goes down, then it’s a bad position for you.  The dollar is up 10% since April and TBT is down 28% so it’s doing its job.  If you have $100K in cash and put 5% in a TBT position that was set to double if rates shot up, now your TBT position is down to 3% but your cash is 110% – that’s all a hedge is supposed to do.  To now start buying TLT is to hedge your hedge and then you don’t even know what you are hoping to happen anymore!

    Unfair to Cramer/Rstuart – I would very much like to see the tape if you have it or the transcrips (isn’t there some kind of rule that transcripts should be available on TV shows?).  If I was unfair, I will take it back but from what I heard him saying, he was clearly warning that there would be a massive drop at 3:40 of 250 points.  I don’t "blame Cramer" for steering me wrong, unless he’s right, in which case I probably bet against him and got screwed.  I blame Cramer for should know better than to use that kind of influence to stampede people in and out of stocks, especially hot-money momentum plays that can burn even the most experienced traders. 

    Are we headed for another global recession in 2011? These 23 doomsayers think so.

    IMF chief Dominique Strauss-Kahn acknowledges downside risks to the recovery but says it will proceed without a double-dip. He would consider putting the yuan in the SDR basket, and "the sooner the better," but the currency’s value needs to be freely determined by the market before anything can happen.

    International air traffic jumped 11.7% in May, while freight traffic, a leading growth indicator, surged 34.3% from a year ago, the International Air Transport Association says. "Passenger traffic is now 1% above pre-recession levels, while the freight market is 6% bigger,” IATA’s CEO says.

    Sen. Dodd says lawmakers may end the $700B bank bailout program early to pay for the financial regulatory overhaul. "The plan is to reconvene the conference later this afternoon, the idea being the elimination of TARP… except for the existing obligations," he says.

    Randall Lane claims in his new book that Jim Cramer took ex-baseball player Lenny Dykstra under his wing, "single-handedly [creating] the concept of Dykstra-as-financial genius." Now, Cramer is ensnared in a scandal, as Dykstra allegedly agreed to take $250K of stock in exchange for recommending it to subscribers of a newsletter he wrote for TheStreet.com.

    The drop in the 10-year Treasury below 3% is "screaming, look out for deflation," Art Cashin says, but Evan Newmark says the "bond market is wrong." Citing some good things that actually came out of G-20, Newmark asks, "Are things bad enough that the 10-year Treasury should be at prices last seen in March 2009 when the S&P 500 traded under 700?"

    The House votes to give homebuyers who qualified for the federal housing tax credit until Sept. 30 to close their pending purchases, extending the deadline from July 1. The Senate is considering similar legislation.

    While the Case-Shiller report on home prices was “fairly positive,” Karl Case says, home building is "dead flat in the mud.” Housing starts have been at 15-year lows for the past 18 months, and vacancy rates are increasing, he says. Partner Robert Shilling says the "depression scare" is back, and the possibility of a housing double-dip must be considered.

    As the rest of the market heads south, Tesla Motors (TSLA +28.5%) stages a late-day rally in its debut, trading 32% above its IPO offer price at one point in the session.

    General Mills (GIS): Q4 EPS of $0.41 in-line, guides FY11 EPS below consensus. Revenue of $3.57B (-2.1%) vs. $3.55B. Shares -3% AH. (PR)

    Market recap: Stocks and commodities fell across the board, as a global selloff resulted in a flight to safety. The yield on 10-year Treasurys dipped below 3%, lowest in more than a year. The S&P tumbled 3.1% to 1,041, its lowest close of 2010. The one-two punch was a drop in consumer confidence here and a downward revision of Chinese leading economic indicators. NYSE decliners outnumbered advancers nine to one.

    At the close: Dow -2.65% to 9870. S&P -3.1% to 1041. Nasdaq -3.85% to 2135.
    Treasurys: 30-year +0.89%. 10-yr +0.41%. 5-yr +0.23%.
    Commodities: Crude -3.27% to $75.69. Gold +0.23% to $1241.40.
    Currencies: Euro +0.01% vs. dollar. Yen +0.9%. Pound -0.05%.


  325. Would someone please remind me to short TSLA tomorrow… this is reckless enthusiasm for a stock that takes exhuberance to new levels. It will be years before this company will ever have profits, and furthermore the science behind this hype is is "still progressing". This has to be the riskiest "long play" investment that I have seen in a long time. As an IPO it was priced very aggressively, and then overly subscribed on hype. The perfect setup for a dramatic fall. IMO


  326. gel1
    I agree and will add in spite of the ridiculous the car is fast 0 to 60 but stops at 125. My STI does 0 to 60 in4.5 sec. and is electronically limited to 150, under $35,000. The car nuts won’t buy it and for $100,000 you can buy under 4 sec. and 190. Short it but maybe not tomorrow! A Honda Accord will do 130.


  327. Phil… Yes, taking the capital gains rate from 15% to 20% is no big deal, and few even care. However taxing the dividends at ordinary income marginal rates takes away ALL of the incentive to invest in these stocks,  that place emphasis on these dividend dispersements.  Why go from 15% to 39.5% all in one day… it is NUTS.  I do know the reason why this proposal has so much traction – the present administration thinks the dividend dispersement is helping the upper income earners through reduced taxed rates. Geez, have they forgotten about all the folks on fixed income that rely on this income?  I can tell you – they do not care, as their target is is to get the big guy, no matter what the collateral damage is to other investment classes.  What they do not realize, the upper income earners are not as dumb as they are,  and can devise a new creative system to receive fair renumeration for their invested capital, without confiscation by the tax grabbers. Invested capital deserves a preferentail return, as there is risk associated  with  the deployment of this "already taxed" resource.


  328. gel1,
    I just checked, TSLA is not available for trading at TOS.  Maybe it’ll be available tomorrow, but might be hard to short.


  329. shadowfax… What is the appeal of this "experiment"?  After all of the "greenies" buy this thing, there is not much of a follow-through market,, and stock price is based upon income, and not environmntal hopes for the future. This contraption will be popular with guys wearing green suits and will demand the car to be painted green. Great for stealth visits to places you are not welcome, as the thing makes no noise.


  330. gel1 phil
     I am one of those that are stated as colateral damage.I am unable to do almost everything and the dividend sounded good to a person who couldn’t make it on a $1,500 per month check. My income from dividens was reduced from $600 to $250 and the stock is down, Medicare premium has increased and doctors have rejected me, all in 2010. I joined this site to maybe put an end to this flush out and now what X 10,000,000 people. I sold land this year at don’t ask to get out now it is my stupid dividend stocks. What next? I doubt anyone knows.


  331. Phil: I have the same problema as Jomptien  have not been getting your sites emails or warnings in the past 2 weeks. Any problems?
    Jomptien Phil,
    I didn’t bet your morning warning and have not been getting your sites emails or warnings. This has just been in the past 2 weeks. I emailed Greg but still the problem persists. Thanks


  332.  Thanks for the attention Phil!
    Yes, long term bull but I see us going down much further from here.  If I’m wrong, great.  If I’m right, I know I can sleep tight at night not worrying about the minis.
    BP-I agree they make a ton of cash but I’d venture to guess that the $2Bn/month revenue will most likely be decreased (by what amount, I’m not sure) by the cost of the cleanup, slush fund, plus additional financing cost when they decide to tap the credit markets.  I should have reworded by comment to say that those investors are possibly the reason why the share price is hovering and not falling much further at the moment.
    Uncertainty--totally agree with this one.  But I think due to politics, it will be a gradual fact finding mission for those who follow the markets.
    TBT/TLT: Thanks for the clarification.  


  333. BP: can’t be evaluated until they bring on the lawyers. I sold 2011 31 calls, so far, looks good. Don’t think they will BK, but I wouldn’t be bullish on them.


  334. shadowfax… The tax proposals are not anything but proposals at the moment…. also, if Congress has a major change in November,  from what it is today, then the tax changes that have been "floated" will never take place.  Dividend income should have a preferential tax treatment, the same as capital gains have at the moment,  but try to sell that concept to someone who has never invested their hard money in anything, and probably was on a trust fund and/or scholarship for his entire life. That IS the problem!  This background, as described, applies to so many of the "pointy headed" intellects that make up our elected government. They, my friend, have never walked in your shoes!


  335. cwan…. I have been shorting the GBP/USD all day, and I think this play should be good for a week or two… so far so good.  I’ll work on this one in the AM, and give you some targets for stops and limits. Still no word on JPY, and why it is so strong. I’m curious as hell, as it is even chalenging the CAD


  336. jel1
    If only I could walk.


  337. ON THIS WEEK-END POST YOU EXPLAIN THE WAY TO HEDGE A PURCHASE OF 300 SHARES OF SPY AND GETTIN SOME DOWNWARD PROTECTION BY SELLIG PUTS AND CALLS FOR THE MONTH OF MARCH.
    > WHILE I UNDERSTAND THE TRADE, I WANT TO KNOW IF ONE HAS TO WAIT&HOLD ALL THE POSITION TILL THAT DATE (MARCH)IN ORDER TO TAKE FULL ADVANTAGE OF THE PROTECTION.
    > ALSO I WONDER IF THE SAME CAN BE EXECUTED AND ACHIEVED WITH THE INVERSE POSITION, NAMELY SELLING SHORT THE SPY CONTRACTS AND HEDGE IN THE SAME MANNER WIHT THE SAME PUTS AND CALLS SALES (INVERSE OF COURSE).



  338.  BP/barfinger: I too don’t think they will go belly up unless this relief well is a total bust and I followed Phil’s position vs. BP BK here :
    http://seekingalpha.com/instablog/6284-philip-davis/76309-phil-s-take-on-bp-and-an-options-idea?source=kizur
    few reasons why I don’t want to go outright naked on calls or puts against BP:
    -some other big petro name out there could be buyers of BP’s global assets
    -when they tap the credit markets, they get a much better than expected result
    -positive relief well news could happen (unlikely but not impossible) earlier than scheduled 
    Any of those could potentially have a positive impact on BP, shooting those calls’ IV skyrocketing.  Phil’s options idea are doing great right now as I was able to take advantage of some technicals like buying back those July calls and selling July 29 weekly calls a few days ago (29 served support a few times before finally giving way).  Also great that there are now weeklies on BP options.  Helps me be able to  trade around positions easier.


  339. Shadow – back from dinner. I just go to the top left corner, click on Layout then save as. Once you have saved it as something, it should stay the way you leave it when you save before shutting down. The trick is to take a minute and check each screen, chart, etc and make sure you haven’t changed them during the day and then expect them to be back the way you had them at first.
    Hope that makes sense.


  340.  Gel1 on Yen strength: I think it could be the case of risk aversion.  Canadian and aussie dollar both down today.  Aside from USD, JPY is next safe haven currency.  Swiss Franc also up today.


  341. Phil – Thank you. From last Friday’s post:
    1)
    Phil
    June 25th, 2010 at 11:30 am | Permalink 
    ……You want to try to make profits off directional plays, like the QQQQ July $44/46 bull call spread (now $1.16) so 2 contracts is $232 and you stand to make $168 if the Qs make it to $46 by July expiration and you can be really happy taking a $100 profit off the table….
    In the above trade I have a loss of $110.

    2) I have XOM Jan 12 60 Calls that I bought for $8.70 now $6.20. I wanted to find out how I can cover those.


  342. Phil
    http://www.businessandmedia.org/articles/2010/20100629161743.aspx
    You can watch the stop trading clip at the bottom.  Is there a different part of the stop trading show that I’m missing where he states there will be a drop at 3:40? (I looked up the clip after it happened as I was showering during the bit so I could have missed something…) If not, my interpretation of his comments still stands as follows: The markets are absolutely crazy and could easily swing down…don’t be fooled by the upward rally we are having…be very careful because who knows what the hell will happen.
    And I agree.  He should know better….but I do believe he is entitled to express his opinion.  People should know it’s Cramer and to filter his messages accordingly.


  343. jdub/JPY
    I agree on the safe haven scenario, which is strange, as Japan is one of the worst for debt/GDP ratios. It scares me. I was thinking, as I cruised the charts today, that it might be the recent softness in commodities that is the cause – as these countries are very dependant on commodity sales.


  344.  gel1/JPY- i failed to add in that one statement which you mentioned—commodity based currencies--CAD & AUD.  I had in my mind risk trade=commodity trade but failed to elaborate.  that’s useful to all the others on the board.  


  345.  Phil or anyone:
    I’d like to short coffee but don’t want to go into the futures market.  Has anyone traded a coffee stock that correlates well with movements in the price of the commodity?
     
    Thanks!


  346. gel1/TSLA – did you notice that over half (10M shares) traded in the first hour drop?  There was also a fantastic 20% run-up EOD, with limited EOD day trader cash-outs when we hit the intraday market lows (which makes me question if it was day traders that ran the stock up).  I agree that the stock should have headwinds long term and the run-up was out of line with reality, but perhaps some funds needed some window dressing on a down day…and "they" might keep up the alpha tactic on Wednesday for end of quarter?  In a logical world on Wednesday, I would think it should re-test 22.15 and even perhaps 21.30…but logic is why I didn’t follow my plan to buy the IPO this morning, yet my "gut" thought it would spike up, I just didn’t previously think it would be 40% while the markets went into chaos…yet now thinking about it, the chaos could have drove investors into an "IPO self-fullfilling prophecy" trade…


  347.  Forgot to mention, only those with options so $JO won’t do.  I’d rather go with puts (or put spreads if VIX remains elevated) vs. outright shorts.


  348. Gore / Cap – Oh ho hum! There is so much to be gained from making an allegation, if there even  really WAS an allegation and not just the claim of one, that it is useless to presume validity. Wake me up when there’s something actionable, or better yet, profitable. The fact that AG might be a philandering a-hole should hardly come as implausible. He’s a politician in the USA, for christ sake. And, for better or worse, I don’t think that any outcome of such a claim would have any bearing on AG’s pet topics any more than Michael Jackson’s behavior had on the quality of his music, or Edward Teller’s personality (Father of the H-bomb and model for Dr. Strangelove) had on the use or utility of nuclear weaponry.


  349. TESLA  MOTORS  IPO - TSLA
    Phil… I missed out on the stock today. I’ve put $5k down on the Model S and would love to see this company take off! I’m nervous about the stock, however am still interested.
     
    WOULD YOU enter now our wait a week or two?
     
    Thanks!


  350. rstuart4201, thanks for the clip.  I didn’t really need the schooling but I guess I left myself open to it!  Watching the clip, I would agree with Erin and Jim and not the Congressman that this bill doesn’t reflect a 1000-2000 point difference in the market.  All this bill does is clear up some uncertainty in the market as to what its impact on banks profits will be.  Is that worth 1000-2000 pts?  I don’t think so. 
     
    That being said, I think CNBC is guilty of blurring the lines between a trader, who has a bias, and a reporter, who shouldn’t have a bias.  To use Cramer interchangeably for both roles is wrong and in my opinion shouldn’t be allowed without in the least, lot’s of very visible disclaimers.


  351. During the top of the most recent melt-up, Cramer started to go on these rants about the fakeness of the rallies.  Lo and behold, the bottom fell out and here we are.   Actually I expected him to say that stocks were cheap at 1040 so BUYBUYBUY, and the fact that he doesn’t is kind of disturbing. He’s been a great contrarian indicator in the past, but maybe he is having a mini-Howard Beale moment here.


  352. kinki, that’s the problem with being a liar.  No one believes you even if you are telling the truth.  Cramer’s cred is shot and unrecoverable.  I don’t watch the show but will catch a bit here and there.  And over the years, I’ve never really heard him say anything was fake.  His saying is there is always a bull market somewhere.. so I just took him for a perma bull chearleader.  I have heard him say sell, sell, sell.. but not for the entire market!  Interesting-


  353. Good morning!

    TSLA/Gel – I wouldn’t short them or touch them.  They are new and full of promise and expectations and their value can get as silly as people want it to be.  Of course they are not likely worth what looks like $25 at the open this morning but you won’t be able to prove it until their first earnings report and, if that’s an upside surprise and Cramer puts his dogs on it, it could go on for ages.

    Dividends/Gel – I’m wondering how many state pension funds benefit from dividend payers and if this would affect them.   Even if they don’t pay the tax, surely they realized that changing the law will drastically decrease the amount of dividend-paying companies,  If I were a lobbyist, that’s the angle I’d look to attack from.

    Dividends/Shadow – You can make your own dividends by selling calls.  Turn it into long-term capital gains by selling long calls.  You buy C for $3.73 and sell the 2012 $2.50 calls for $1.72 (net $2.01)  so you can buy 2x the stock and collect a .49 profit at $2.50 when called away and that’s 24.3% over 18 months AND free protection on your stock.  Even better, you get ALL of your "dividends" up front but don’t have to declare the profit until the calls expire and, of course, they are offset by any losses you may have because they are part of your trading an not dividends.  So, to an options trader, no big deal to not collect dividiends

    Emails/Arbolito – If you are on Yahoo, same answer, Yahoo has been a nightmare for us so you need an alternate Email.  If not, then just go to Member Management and check your Email Preferences to see if they are checked off: https://www.philstockworld.com/membership/member.php

    Hedging/Onfeld – I think your caps lock key is stuck.  Perhaps have someone fix that problem.  That hedge was an example to cover an upside play that was set to expire at the same time.  Yes, you need to match your hedges to the risk you are hedging so if you have long-term plays, you need long-term hedges and if you have short-term plays, you need short-term hedges.  If you hedge by just taking the opposites side of SPY, that’s called a butterfly or iron condor and you drastically lower your upside potential becasue you are pretty much just betting against yourself.  My goal is to use hedges that begin paying early, so you can win on both sides at once and especially I like it because you can completely win both sides in a flatline, which happens a lot.

    Gore/Cap – What are you 12?

    QQQQ/Nicha – Well 2 contracts is fine but still, you need to take action sooner than down 50%.  As it stands, the Qs are at $43.37 and we have 12 days left to trade and we think we’re at a bottom so I would buy back the $46 caller for .24 (maybe too late this morning) and roll down to the $43 calls for .60 so you spend .84 ($160) to put yourself .37 ($74) in the money with no upside cap.  Then if you get back to $2 (even) you get the hell out and don’t play ANY short-term plays anymore if losing $100 is going to freak you out.  XOM is another one you should not be in naked.  I’d sell the $62.50 calls for $5.20 and spend $3.75 of it to roll down to the $52.50s so you are in a $10 spread for net $7.25 and you make 50% if XOM gets to $62.50 by 2012.  If you start with $15,000 and make 50% every two years, in just 10 years you’ll have $113,000 so don’t sell the strategy short!  

    Cramer/Rstu – They cut the clip!  You can see it ends in mid-statement.  Look at other CNBC clips and see if they do that.  Your boy is being edited for future history.

    Coffee/Jdub – No clue on that.


  354. Phil,
    I’m hurting on a few artificial buy write spreads on TBT, along with a $47 September I sold a few months ago, that I have rolled down to 2x the Sept $43 puts.  I’m short a total of 5 put contracts.  The new margin requirements on triple ETF’s has drastically affected my available buying power, and I’m starting to think it may be better to just close my various TBT positions, at a significant losses, and just do a buy/write on BA or something similar that looks like it will pay close to 60% in 18 months (Assuming BA holds $60), making up for my loss in TBT, with less than half the margin requirement.
    I’m in 4 $34/40 Jan 2011 Bull spreads, and short 4 $34 2011 puts to to reduce the basis on the bull spread.  This along with the 2 September $43 puts, has a margin requirement of $10,000 on my $30,000 account.  My loss in TBT according to TOS is about $2,400.  I foolishly got way too aggressive with these positions, and TBT is way too big of a portion of my portfolio, and I’m eager to put this mistake behind me.
    Thoughts?


  355. BA – I actually like that play.  Something more mellow like buy BA Jan 2012 $40 call for $25, sell BA Jan 2011 $60 put and call for $15.25.  Come next January, sell again Jan 2012 $60 put and call for what will likely be about $20.  Or, instead of the call, buy the BA stock and collect the $1.68 annual dividend.


  356. Wow, I didn’t realize that GS has a P/E ratio of 5 at current levels.  Wow again.
    Maybe they should also be on our list?