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Which Way Wednesday – Beige Book Boost or Bust?

Our last Beige Book was June 9th and we liked that one.  My comment to Members at that time was:

Wow, this is good stuff!  Ben was not BS'ing -  It's a slow, tedious recovery but a recovery nonetheless!  On the whole, a pretty good report!  Not enough to support $75 oil but a nice, not too inflationary recovery is in the works.   It's no quick fix though, as it will take 2 good Qs before corporations will be willing to add staff so I bet not much until next spring unless the government steps in (and they'd better)

At the time, the S&P was at 1,055 and we flew up to 1,120 on June 21st before the next market flip-flop, which we have just flip-flopped back from and yesterday we tested 1,120 again and here we are, back at the Beige Book.  So now, the market is about where it should have been based on the last BBook (and no government help so far).  I thought yesterday was too early to pop through ahead of the data and it turns out it was.  If anything, I'm a lot more worried that a deteriorating report tanks the markets this afternoon (2pm release). 

We'll get a clue this morning as we see Durable Goods at 8:30 and those are expected to be up 1% from down 0.6% in May.  Oil Inventories are reported at 10:30 and don't expect demand to be picking up and no one has even mentioned what a disaster this is during summer driving season (speculators are circling their tankers one more time as they pray for hurricanes to make their long bets pay off).  If we do survive the BBook this afternoon, we have a 10% upgrade to Q2 GDP to look forward to tomorrow morning (to 3% from 2.7%) along with Chicago PMI at 9:45.

We know that Leading Economic Indicators turned down 0.2% since the last BBook, the Philly Fed has dropped from 21 in May to 8 in June to 5.1 in July, Construction Spending fell 0.2% with Commercial far worse than Residential, ISM fell almost 6% with a 10% drop in orders leading the downturn and a very deflationary prices paid, Factory Orders in general were off 1.4% (which does not bode well for today's Durable Goods), Auto Sales slumped 5%Non-Farm Payrolls contined to decline, Consumer Credit continued to shrink, Industrial Production slipped and Retail Sales dipped another 0.5% – so GOOD LUCK getting a good Beige Book report this afternoon.  What remains to be seen is, how the market will react to it.  

 Earnings continue to come in nicely but earnings are mostly reflective of April and May (when we got a nice June 9th BBook) and if things have slipped since, the impact on Q2 (being reported now) would be minimal as the quarter ended 3 weeks after the last report.  Out of about 300 companies reporting so far this week, just 20 have raised guidance – adequate but not what you would call "robust".   We're not getting a lot of lowered guidance either, which is why I called our S&P mid-point on Monday (1,113)  "just right."    

8:30 Update:  Durable Good came in down 0.6% vs up 0.6% expected by people who don't read PSW (we went short on it yesterday in Member Chat) and now we'll see what kind of reaction that gives us.  The futures turned down sharply and we are back to yesterday's market lows at 8:45, down from closer to yesterday's highs, which we were testing around 3am, as Asia was finishing off a nice session where the Nikkei popped 2.7% (good for yesterday's EWJ play) and the Shanghai added 2.26% and the Hang Seng added 0.6% but (and it's a Big But) the Bombay Sensex dropped 120 points and failed our super-critical 18,000 level so Danger, Will Robinson, danger, danger

The charts do not reflect today's move but the EU is up down ahead of our open but they have been getting lower and lower since the open, indicating the mood changed as soon as Asia closed this morning.  Our FOREX trade that (almost) never fails had another big day as the Yen bottomed out at 88.108 to the Dollar at the 4am Nikkei close and fell all the way to 87.50 just after 8am – a VERY profitable move in the currency trade.  Copper is holding $3.20 so that's a pretty good sign and oil is hanging around our sweet spot at $77.50 with gold still stalled out at $1,159 – just above our $1,150 test goal.  Nat gas continues higher at $4.71 so good for our UNG and they threw a nice sale on CHK yesterday, which is a great chance to establish a new position there

Look how pretty everything looks on the US charts.  Gold going down while stocks go up is a good thing as it indicates that fear is leaving the markets but, as I said yesterday morning, we are clearly getting ahead of ourselves if we are going to start popping champagne corks over a 5-day run.  Remember those "death crosses" everyone was freaking out about?  Look how quickly they are turning into "golden crosses," where the 20 dma crosses over the 50 dma, which will hopefully lead to the 50 dmas crossing over the 200 dmas down the road

Thanks to the wonders of high-frequency trading, trends that used to take months to develop now take about 2 weeks – so you have to be quick on your feet to stay on top of these crazy market moves.  We have lots of lovely warning signs to go negative on.  Yesterday I targeted Dow 10,700, S&P 1,155, Nas 2,300, NYSE 7,350 and Russell 666 as our next set of goals and the Nas and Russell toyed with those levels already so they are going to be our leaders or early warning system to the downside.  Transports need to hold that 2,200 line and SOX should break over 380 if we are going to take the Nasdaq seriously.  We DON'T want to see oil over $80 (hurts consumer) or gold over $1,200 (too much fear) in order to have a "healthy" rally.  

Goldman Sachs has already figured out a way to circumvent the Volcker Rule,turning its risk-taking traders into asset managers. Goldman has moved about half of its prop stock-trading operations into its asset management division, where the traders can talk to clients and then place their market bets; the rest of Wall Street may soon follow so fear not, true believers – the boyz are back in business already

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  1. Phil, Great Picture!!

  2.  Hi Phil,
    GLW- earnings are good, guidance look good.  listening to conference call right now.  internal metrics seem to be good as well. only thing i see that could be a negative is glass price decline for Q2 and expected to persist for Q3 and down to flat on their telecom segment.  i guess the former could hurt margins.
    wanted to get your thoughts given that stock price has made quite a run the past month (but then again, most stocks had a similar run as well)

  3. wow, terrible numbers. I have been seeing a summer rally and a  climb of the wall of worry, but now I am unsure.  This economy is slowing massively.

  4. DEO -
    Phil – what do you think – I like them long term – problem is options are not that liquid – don’t know if I like them at $70 – I have been in and out over the last two years
    could do a buy write -
    $70 stock  – $3.90 Jan 70 call and $2.65 for Jan 65 puts –  $63.45 or 2x at 64.24 -
    That’s 9% by Jan on a very stable company -

  5. DEO -
    its also good diversification for me – consumer stocks not a big portion of my holding except for apple

  6. Looks like they are going to jam the markets higher at the open 

  7. Once they’ve rounded up enough bulls, they need a trigger to spring the trap, and bad economic data is always a good one.

  8. How the market is not down 100′s on this data clearly details what a joke it is. 

  9. Phil, you’re mistyping a digit again in the S&P levels above:
    "and yesterday we tested 1,020 again"  should be "and yesterday we tested 1,120 again"
    Having something against testing 1,120, eh? :)

  10. Mistype= another Fat Fingers goof, maybe it’s a tell….

  11. Good morning! 

    I guy interviewed me yesterday and I think I had idea when he asked me to summarize our strategy:  Bulls are idiots, Bears are idiots – we make money selling the traps! 

    Not much to do today but wait for the Fed.  We have our upper level watches of Dow 10,700, S&P 1,155, Nas 2,300, NYSE 7,350 and Russell 666 with the Nas and Rut as our critical indicators of the moment.  I think any jamming higher ahead of the BBook is going to be wrong-headed but the Beige Book is just an opinion so you never know what people are going to say.  My assumption is most of their interviewing was done by mid-July but we popped nicely in the first two weeks of July so it comes down to what days they interviewed people and what interviews they decided to select. 

    Let’s keep in mind that Bernanke doesn’t want to look wrong so they are likely to select things that back up the slow, steady progress with no inflation. 

    BXP had good earnings but still face tough times and they are up at $82 and VNO is also zooming at $83 – that makes them good shorts and we can sell VNO $85 calls for $1.60 naked or go for a ratio backspread, selling 5 VNO Sept $85 calls for $2.75 ($1,375) and buying 3 Dec $90 calls for $3.50 ($1,050) for a $325 credit and you keep the change if the Sept $85s expire worthless. 

    ArcelorMittal (MT -1%) handily beat earnings expectations but investor enthusiasm is muted by the company’s warning that Q3 results will be hurt by a seasonal dip in demand and an economic slowdown in China.

    MBA Mortgage Applications: -4.4% vs. +7.6% last week. Thirty-year fixed mortgage rate increased to 4.69% from 4.59%.

    Jun. Durable Goods: -1.0% vs. +1.1% expected, -0.6% prior. Ex-transport -0.6% vs. +0.9% prior.

    In a new paper, two leading economists are backing up government claims that stimulus spending, the Wall Street bailout and other emergency economic measures helped prevent Great Depression II; without them, U.S. GDP would be 6.5% lower this year, there would be 8.5M fewer jobs and the economy would be experiencing deflation.

    The Bank of England isn’t at the point where it can expect a British recovery unaided by stimulus measures, Mervyn King says, as he warns against reading too much into the surprisingly strong 1.1% growth in Q2 GDP. "I fear there is some considerable distance to travel" before rates can begin to return to normal levels, he tells U.K. lawmakers.

    BP, Transocean (RIG) and Halliburton (HAL) are initial targets of a federal criminal probe which aims "to examine whether their cozy relations with federal regulators contributed to the oil disaster in the Gulf of Mexico," the Washington Post reports. It could take more than a year before charges are filed.

    At the open: Dow -0.15% to 10522. S&P -0.13% to 1112. Nasdaq -0.18% to 2284.
    Treasurys: 30-year -0.05%. 10-yr +0.04%. 5-yr +0.06%.
    Commodities: Crude -0.77% to $76.90. Gold +0.14% to $1159.60.
    Currencies: Euro -0.1% vs. dollar. Yen +0.25%. Pound +0.08%.

    Wednesday’s economic calendar:
    10:30 EIA Petroleum Inventories
    12:30 PM SIGTARP’s Neil Barofsky: Rooting Out Fraud in TARP
    1:00 PM $37B, 5-Year Note Auction
    2:00 PM Fed’s Beige Book
    2:30 PM Hearing: Fed Board Nominations (Yellen, Diamond, Raskin)


  12. No mojo in this tape, even the bots look bored.

  13. Morning Phil! Thanks with the help with the DIA 99 puts I was holding the other day. Would appreciate your opinion on another position… I have 2400 FTR shares which were spun off of VZ a week or two ago. It has a nice 12%+ dividend, which I think is scheduled to be reduced to the 9% area, but the options aren’t so hot. The options are in 1.5 increments with very low premium. How do you sell theta on something like this? What would you do with the position? Thanks.

  14. Phil. what is your opinion about LVS? They just finished (almost) building a huge mutibillion casino/hotel/entertainment complex in Singapore that could give them a virtual monopoly there. They seem to be more or less insulated against a potential recession in US. Thanks, Alik

  15.  NFLX- those not in any short position might want to take a look at the action now.

  16. IWM
    66.00 is a big level of support….now broken
    6435 6485 6520 6600 6650 6700 6721

  17. GLW/Jdub – I like them long-term but we’re in from single digits so harder to love at $17.50.  They are the kind of stock I’d be happy to buy on a pullback but I don’t see them going over $22.50 in the next year so hardly a thrilling place to park cash.  As a new entry, I’d sell the Jan $16 puts for $1.08 as that’s a reasonable net $14.92 entry that can be rolled out to the 2012 $12.50 puts (now $1.16) and THAT’s a net price I really like.  Selling 10 of those is net (of cash) $2K in margin according to TOS so making $1K in 6 months on $2K in margin if they hold $16 is what I like to call a good trade.

    Slowdown/Fjd – Yes, but to some extent, that slowdown is reflected in the pullback we’ve had since last April.  You can see my logic for why I expect a poor BBook today – it’s not that clever.  Other people can read and interpret reports as well and I have to assume the Book won’t be surprising anyone this afternoon so I expect it to be an excuse to take us lower and shake off some weak-hand bulls, trap some bears but that’s about it.  1,100 on the S&P is the "right" price from what I see coming in from earnings and guidance so I’m just as suspicious of moves below that line as I am of moves above it.

    Small total build of 400,000 barrels of oil is expected.  API already showed total build closer to 4M so anything less than 2M net build will be a relief for oil bulls.

    DEO/Samz – I don’t play them for that reason (and I’m never thrilled with $70 stocks anyway as the options tend to perform poorly).   It’s a good company but the problem with liquor is that people can still drink but drink cheaper so I do not like them as an easily switchable consumer stock.  I wouldn’t short them either because it’s possible that their swill brands have better margins than the good stuff – you never know.  There’s nothing wrong with your set-up but this is the kind of company that should be on your watch list and you offer to buy a share for $65 and, when that triggers, then you look to see what you think of their long-term prospects.  If you can’t wait patiently – just sell the Jan $70 puts for $5.10 and that’s net $64.90 on 1x and THEN you can sell 2012 puts and calls to lower the basis off the assignment.  If the puts expire worthless, you make $5 on about $20 in margin (25%).

    Jam/Kustomz – Good call, especially the "jam" part as it was total BS. 

    S&P 1,020/Jordan – Thanks.  I would have to say that is now a subliminal target so be careful!

  18. IWM mistake…not 6650. 6670

  19.  Thanks Phil.  MEE--looked like the big boys took a page from BUCY action after earnings report.

  20. IWM…… correction
    6435 6485 6520 6571 6600 6650 6700 6721

  21.  yipcarl – pse AH:  

  22.  Euro keeps trying to test the highs and fails, not much left to squeeze there. If dollar holds 81.80 without further down side shorts may feel they’ve overstayed their welcome and a rally back to 82.40.

  23. matt……Hey!  I represent that!  :)

  24. Matt,
    Where do you see this going today?

  25. Wow, what perfect timing.  Fully covered my FAS short just in time for my 1030 meeting!  Sweet morning!

  26.  Unusual strength in TBT the past 3-4 days. Its been a while since we’ve seen a string of positive days like this….

  27. Hanna not really TBT did the same thing July 1st – July 13th unless  u consider that awhile.

  28. OH NO – MASSIVE build in crude – good golly, what a mess:

    EIA Petroleum Inventories: Crude +7.31M vs. consensus of -1.7M. Gasoline +0.09M vs. consensus of 0.5M. Distillates +0.94M vs. consensus of +2.1M. Futures -2% to $75.97.

  29. That was a bullshit head fake by the TBT

  30. Interesting recovery in USO back to its slow roll down. I would have thought the drop on the inventory report would have stuck a little better.

  31. Phil,
    Could you give, now or after hours, your current assessment of BAC. It never recovered from the whacking it got during earnings and completely missed the latest rally. I know you like it long term as do I, I am just wondering if you have lowered your mental price target for it.

  32. Good Morning Phil,
    JEC looks interesting here, any ideas??

  33. I don’t read much of Todd Harrison, but I thought this was really good. He believes we are in the "eye of the storm".
    The Last Gasp of

  34. Phil – Have we seen such a large build in crude lately? Thanks

  35. Ok,
    Learning slowly!
    “Took out the putter” for the AAPL Oct 230′s….for 59% profit.
    Correct lingo, I hope!

  36. How is energy still positive with oil tanking? Indust weak consumer non cyc weak.. same with cyc…. financials weak…comm green… tech green scratch that tech weak now

  37. Is JRW not trading today?

  38. FTR/Jbur – Best is to just go long and be willing to own more.  You say it’s not much premium to sell (big dividend payers are like that) but you can sell the Feb $7.50 puts and calls for $1.20, which is nearly 20% of the stock’s price so, if you are excited about 9% annually, you should be bouncing off the walls over that return in 7 months.  By the way, if you are not willing to own more than 2,400 shares, the very simple solution is to cash 1,200 shares and free up $9,300 for a stock you are more enthusiastic about and then do the buy/write with 1,200 shares because this buy/write returns 3x more than the stock so 1/2 still makes 1.5x more than keeping all the stock for the dividends. 

    LVS/Alik - Shelly, who owns the place, is a major hustler so I don’t trust anything they say or do.  That doesn’t mean they’re a bad stock, we bought them back in the single digits but their valuation is very stretched and the opening of a new venture like that is a dangerous time for a stock as they have all the debts and none of the revenues so if they have any trouble at all making thier numbers, they will drop hard and fast.  If I were going to go bullish on LVS, I’d go for the 2012 $15/20 bull call spread for $3 and sell the $15 puts for $2.55 so net .45 on the $5 spread with 900% upside and worst case is you own LVS for net $15.45, which is a nifty 40% discount off the current price.  On the whole, I like BYD better at $8.81 and you can sell the Jan $7 puts and calls for $3.70 for a net $5.11/6.06, which is 31% off with a nice 36% gain at $7 (20% off) by Jan.

    NFLX/Jdub – I think $100 is about right for them.

    MEE/Jdub – About what was expected and holding $30 is bullish for them.

    Selfish Elitists/Matt – That is preposterous!  (this message sent from my IPad)

    Oil/Rain – The API report was already bearish and, of course, you never know why oil builds.  Could just be one extra tanker coming in last week.  Big builds in gasoline or distillates would have been a much bigger concern.

    BAC/Kururi – I still like them as they are too big to fail and also not in very bad shape but my $22.50 target by Jan is shot and they’ll be lucky to make $18 as the economy is still in a rut and they also too big to change course.  The MER merger is still more of a drag than a benefit and that’s the biggest fundamental change as they handled it poorly and already lost their chance to convert many clients.  So I like them for a steady, premium selling play but that’s about it.  Of course, that’s not a bad thing at all when you can buy them for $14.05 and sell 2012 $15 calls for $2.50 and Jan $13 puts for $1.15 for a net $10.04/11.70 entry that turns into a straight $10.04 net entry if they hold $13 in Jan and, if not, the Jan $13 puts can be rolled to 2012 $10 puts so effectively you’re at net $10.04/10.02 on that trade, which is 40% covered from today’s price with a 50% upside in 2012 (and you can sell more puts!).

    JEC/Bob – I like those guys as they have done a great job riding out the slowdown and I bet they do great when the economy turns around.  I think they are solid at $35 so selling the Jan $35 puts for $3.30 is hopefully free money and you can use that to set up a 2012 $30/40 bull call spread at $4.90 for net $1.60 on the $10 spread and, if the Jan sale goes well, you can pick up another couple of dollars next year for a better than free $10 spread that’s already $6 in the money

    Eye of the storm/Jbur – Very good way to describe it. 

    Crude/1020 – See above, nothing I would make a big deal about so we may be looking to buy off the $75 line if we get there.

  39. Phil what are your thoughts on AK Steel ($14.00) - Jan 2012 spreads?
    Looking at 2012 – 12.50 – 22.50 call spread at about $3.00
    Selling 2012 put spread 12.50 – 7.50 at about $1.80
    Net debit of 1.20 on the $10 spread.

  40.  Phil—-g’morning!  I’m in a MON October 50/55 bull call spread with a net credit (yes) of .12. I’m at 72% of max profits on spread. I’m thinking of cashing in and in place of (I think MON still has room to move up but worried about market pullback before expiration), buying the October 65 call along with selling the Jan 11 45 put for net credit .26. Seem smart? Thanks bunch!

  41. Phil i cant see the whole post so I don’t know if your credited but is this guy taking credit for your work?

  42. I’m looking at TOS’s site again and I noticed they have a option commission schedule that I hadn’t noticed before:
    New clients can choose from most major web-based brokers’ rate plan. You’ll receive the lowest available rate for which you qualify.
    That got my attention. I don’t know the definition of "web-based brokers" but I think IB has the lowest rates at 0.70/contract (no flat fee on top of that right?). I’m guessing they’d honor IB as web based.
    Has anyone taken advantage of this and who’s rates did you get?

  43. Phil / DDip   I follow your guidance on mkt directions since the mkt is an unfathomable casino to me.  But, I’m worried that most participants are so obsessed with sht term variables that few are drilling down to look at the fundamentals facing developed economies. 
    As I’ve stated in previous posts, the jobs we shipped to Mexico and China aren’t coming back without selfish mercantalism / protectionism, which is not favoured by our top 1% as it hurts stock options.  We papered over the export of our jobs and wealth, over a 15 year period, with financial manipulation, credit, free money and a RE boom borrowed from future GNP.  Now we have 25% real unemployment (and that’s counting all the crap jobs, with no benefits or pensions that we created at Walmart, fast food and chicken processing plants, as jobs).  And, with looming foreclosures we’ve a 5 year supply of housing waiting in the wings, so forget about RE or CRE jobs.
    Without a massive political change to force production back to America, at the expense China etc, we are screwed and there can be no recovery.  We are sliding into Depression as stimulus runs out.  There is also a failure to recognise the impact ZIRP has on the income of baby boomers and the retired.  Ten of millions are now running out of capital and savings and the house is no longer a viable piggy bank.  People can’t remortgage when unemployed.  It’s a looming disaster with tens of millions destined to become dependent on Gov’t for food and shelter.  The talk about the private sector solving this problem is a joke.  They know there’s a net demand decrease coming and there’s already excess capacity.  Without a massive new stimulus program there will be no recovery.  But, there’s not enough political support in the media nor Senate to push this through before Nov.
    I fear we will have to officially recognize a Depression before we develop the political momentum to take decisive stimulus actions like Pickens plan and aggressive trade mercantalism. Europe and Japan have similar problems.
    I hope you are going to hit that alarm bell for us and get us out of the mkt and net short before this ship rolls over?     Any thoughts on when it will roll?  I’m feeling very very uneasy about my net long position and I feel there will be an opportunity to buy stocks again at ridiculous lows during the next panic.

  44. Phil,
    AET just reported and their numbers do not look bad at all. yet stock is down almost 4%.
    Nothing in the health care reform bill looks too ominous for them as the CEO stated on Cnbc.
    They have traded between $25-34 over the past year.
    I am thinking of a buy/write: stock at $27.33, sell the Oct $27 puts and calls for $1.67/$2.16, for a 13% profit if called away in 3 months.
    Or, you own the stock x 2, at net $25.2 .
    Any comments would be appreciated.

  45. Wow Kustomz, that is some blatant s**t!, they didn’t even link to it, just posted. Looks like a lift from the freely available part of the site.

  46. tusca great points and I believe if the US doesn’t show some growth the bond market bubble will go pop as holders of our paper will have less confidence in our ability to pay back our debts and the burden of taxation will slow growth adding fuel to the fire.

  47. Phil, thanks for FTR assistance. Very, very helpful.
    I thoroughly read your analysis of Amatta’s portfolio. Your commentary and suggestions on how to improve things was enlightening. Seems we learn best by our mistakes ( and others), and hope to have enough capital to make it  thru the learning process in one piece.

  48. Hey, I seem to remember there was a name to contact at TOS regarding getting a psw deal on commissions, or is it just per their website?

  49.  kustomz – I have seen older articles by Phil there too – if you go to his website, he links to PSW there.

  50.  in fact, there is a link at the end of the article to PSW

  51. kustomz / TBT   Be careful there.  If things get as bad as I postulate, the 10 yr will be at 2% as we’ll have deflation and any return will look better than the stock mkt.  Witness Japan.

  52. rsn- it’s for the PSW rate.

  53. RUT is again hyper on the way down.  Dow holding very well, considering.

  54. Phil,
    what is your opinion (and target) in CHK ? any trade idea ?

  55. CHK/smala766   A good way to play CHK is to do a bullish call vertical, or a diagonal, betting on gas prices going up later in the summer/fall.  But don’t go too aggressive.

  56. rdn – you can contact scott at thinkorswim dot com
    Phil, regarding the rates that TOS offers to members, when I contacted Scott he offered a flat $1.50 per contract or $0.75 per contract and $9.99 ticket charge. But I was a member at another service that had autotrade at TOS and they gave me $0.65 per contract with a $4.95 ticket charge. Doesn’t look like much, but with my rates, a 10 contract round trip is $12.00 cheaper with the ticket charge rate. Nothing to sneeze at when you are picking up nickels and dimes on day trades. Maybe time to give Scott another phone call!

  57. tusca, if we have serious deflation I would not fall for the usual patterns. Would you buy our bonds for a measly 2% return while our debts rise and GDP contracts? Not with China growing and Germany going gang busters and India AUS Canada all showing strength…they are called the bond vigilantes and when they wake from their slumber Bernanke better put his hard hat on his shiny bald head cause there will be a shit storm aaaaa comin. Lose the idea that we are the leader of the world, companies are abandoning the US for greener pastures across the pacific.

  58. Is it just me, or has anyone noticed that Auto-Tires-Trucks sector is usually either at the top of the sector performances or at the bottom?  Mostly the top, I think.

  59. Good morning,
    IWM 63.61, 64.58, 65.36, 65.97, 66.49, and 67.09

  60. Phil – is Copper a short here? What is report/data is holding it up? I know Im already two cents late, but was still considering it.

  61. rainman – let us know if u find out more on te collision at TOS. Thanks n

  62. Jromeha, how did it go with your position last night? Not in Asia, NY and FLA..In NY at the moment….Speaking of NY i was in Upstate NY over the weekend Monticello to be exact and I can tell you all that area is in a depression.

  63. I’m thinking copper has a decent chance of going higher. Bloomberg is reporting that copper inventories have been declining for the last couple of months and the Shanghai composite has started to trend upwards (currently above the 20 and 50 dma, with the 20dma turning upwards). FCX has reacted by moving up as well. I bought calls in them.

  64. kustomz / growth   If the US, Europe and Japan are in recession/ depression, austerity etc, then you can foreget about superior growth in China (as they run out of stimulus), Germany, India Canada and Aussie.  US mercantalism will bring jobs back here at the expense of countries like China.  Low global growth and poor equity performance could underpin low rates on Treasuries, as in Japan.

  65. Kustomz – Made covered with a 1.3 cent gain on the contract right after the durable good orders were announced (yes, I did end up doing school work and watching it all night!) which was much better than the 3 cent loss I was looking at most of the night! Thx again for those links!

  66. Watching the SPY is like watching a computer play pong with itself only slower, I wonder if that’s where the programmers got their code?

  67. Tusca, we don’t make anything here. The wheels are in motion they are abandoning the US. The US grows weaker as the ROW grows stronger and attracts investment. If we don’t bring back manufacturing the death spiral will continue.

    Good new JR, and your welcome

  68. JRW.  Had that 65.36 line from you before.  Brilliant, my friend.

  69. If the markets are waiting for BB data for direction things could get ugly if they dont hear good things from said data. Ben the fluffer better be on his game.

  70. BP/
    Hi Phil,
    I have a long share position in BP (1.000 @ $43.94) which I bought a while ago (when the oil spill was not even a nightmare) after joining you I sold 10 Jan12 30 calls at $9 (now around $12). Remember "drifting my gains" I posted a couple of days ago. After a thorough reading of the site and getting familiarized with your approach to options I am trying to optimize the position. I am tempted of selling out the shares, that will free $37K, and (here you come in) opting for another strategie:
    1- rolling the 10 Jan12 call to Jan11 for a credit of 2$ and sell Jan11 30 put, in this case I will be exposed if BP trades below 30, how do I cover in case this is the best approach?
    2- put in place a buy/write strategie, in this case which will be your levels and time-frame? and what must I do with the 10  Jan12 short calls?
    Thanx for your comms

  71. Ipad – may be poor man’s laptop
    I know – i thought this was crazy but then talked with a colleague whose 70 year old mother is going to get one  -
    It does everything she needs – surfs the net and sends email – for a lot of people that is all they need – they are not doing excel or editing video or a thousand other things – they want email and web surfing.
    I was thinking of it as an addition to my lap top as a reader and it seemed expensive - but if you have basic needs and you like apple products for $500 bucks you get an ultra light net book – I know not near the functionality but a lot of people might not need anything more -
    Propably not the demographic of most people buying right now – but many people may not need their laptops -
    Many of my colleagues are leaving laptop at the office or home and just taking the Ipad

  72. AAPL/Maya – Good job! 

    AKS/Aug – I only like MT and they aren’t so great either.  We don’t make anything out of steel in the US so what is the point of American steel companies?  Not only that but the Asians make it cheaper so there’s no logic to the idea that we can export our steel – if it’s cheap enough for us to export then they will be shoving imports up our asses at some point.  We shorted X like crazy in the upper $100s and we bought them in the $20s but got out with a double and totally lost interest since (last spring).  There’s no way we have a recovery strong enough to make steel a good bet.  Try AA – similar macro picture but Americans do know how to drink soda and lots of other little things keep the mills humming over there – including the auto sector when it comes back.  AA is at $11 and you can sell 2012 $10 puts and calls for a whopping $4.25 for a net $5.75/8.38.

    MON/Fortep – Taking a free 72% off the table is VERY SMART.  They are only 5% in the money and a lot can happen.  I don’t know why you’d buy the Oct $65 call for $1.15 when you can take the Jan $55/60 bull call spread for $2.55, which is net $1.10 with the sale of the Jan $45 puts and I don’t need to tell you the advantage of a nice, cheap, in-the-money bull call spread, do I? 

    Benzinga/Kustomz – Thanks.  It’s one thing if people steal the free part of my morning post but quite another if they try to take credit for writing it! 

    TOS/Rain – That’s interesting, I haven’t seen it yet.

    Depression/Tusca – All the stuff you are saying may be true for America but that doesn’t mean it will affect the bottom line of American corporaitons, who could care less if we all die screaming as long as new customers place enough orders to replace us.  I’m sure you read my "Tale of Two Economies" outlook and you are very focused on the "Poor Man" economy – those suckes only account for about 20% of consumer spending and the real trick for the top 10% (who are 4% unemployed and spend 66% of the money) is how to snip that dead vine away and leave themselves with just the good stuff.  Look at KO’s earnings – US sucks, rest of the wold is EXCITING.  That’s pretty typical and it’s not going to change as you and your 300M buddies will merit the same historical footnote as Babylon when it all comes crashing down and 6.7Bn other people move on without you.

    AET/Maya – Fine choice.  They are on my watch list and I was fence-sitting on them all week but I didn’t trust the market to hold up enough to make a play on them.  The did as I expected and the sell-off was silly so good choice for a spread.

    Thanks Jbur – I do intend to finish that up tonight if someone reminds me.

    CHK/Smala – They may go lower but I think it’s an opportunity.  HES just went through with a shale buy so it can’t be as bad as the press is making it seem.  Very nice pop in puts can be taken advantage of by selling Jan $21 puts for $2.25, which is a nice net $18.75 entry and I’d just see how that plays out but you could also go for the 2012 $15/22.50 bull call spread at $4.20 for net $1.95 on the $7.50 spread and another round of puts to sell in 2012 if you want to. If they do head lower, you can roll the $15s down to widen the spread.

    TSO/Stjean – I was not happy with the last conversation we had, where he indicated that Ameritrade policy was to deal with each user based on their activity.  That means there is no particular "deal" for Members as some will do better than others.  I shopped it though and no one had a particularly better deal, other than Option House, who still seem to have a clunky platform so not as good at TOS for complex trades.  That’s another thing people should consider, having an account for block trading with Option House (flat $10 per trade) and keeping the smaller stuff at TOS or IB.

    Debt/Kustomz – The real issue with debt is you can’t sweep debt under the rug if you have a shrinking population and deflation – that’s the toxic combo that will undo us long-term.  It has been easy to sweep debt under the rug since Nixon took us off gold because the GDP back then was $5Tn so 40% debt puhed back for two decades only hit the 1990, $9Tn GDP for 22% and 50% 1990 gdp was $4.5Tn and jamming that 20 years down the line was "just" 1/3 of the current GDP but if we sweep our now 100% debt to GDP of $15Tn under the rug where 300M people in 2010 generate $15Tn and we have 2 lost decades like Japan then in 2030, we may have 275M people, mostly retired, generating $12Tn in GDP with that $15Tn in rolled debt plus another $15Tn we rack up over 20 years so then we’re at 200% of GDP debt – just like Japan.  Now the funny thing about Japan is – that’s just what they did yet they not only survive but many people would still rather have Yen than dollars so the reports of the United States’ imminent demise are GREATLY EXAGGERATED.

    Autos/Jordan – I think that may be because they are now a very small sector and get whipped around easily (no drag to hold the middle). 

    Copper/Jrom – You know, it kind of is a short here!  Too dangerous to short futures though.  I’d go with shorting RTP, who have earnings on the 5th and you can sell Sept $50s for $4.50 so I like selling 5 of those ($2,250) and buying 3 Jan $52.50 calls for $6 ($1,800) so that’s net $450 in pocket and you need to spend about $1,500 more (net $1,100) to add 2 more Jan $52.50s if they surprise up and then you have 3 months to roll.

    Copper/Aug – there is no indication at all that China will be able to eat meaningfully into their massive copper stockpiles but, as I said above, it’s crazy to short the futures with sentiment improving.

  73. Anyone long LLEN? They reported today and upped years estimates. +7.34%.

  74.  Hi Phil,
    Wanting to add an insurance play into my portfolio.  Do you like AET better than UNH?

  75. GREATLY EXAGGERATED….take the greatly out of your statement then possibly I could find it in my heart to forgive you. Come on Phil comparing Yen to the dollar, you know better than that. Japan will always try and kill a strong yen and Japan has over 1T in reserves, how much money (reserves) is the US sitting on?

  76. tuscadog
    It is obvious you are a "deep" thinker and you have a handle on the problems we have at the present and many more that we face. I have extrapolated these same statistics, and while factoring in the fundamental forces that are in full play, as we try to find solutions, I believe, looking forward, we as a country are in a very dark period economicially, and the progression appears to be imminent.
    If one studies history, and looks outside our borders for similar situations, it is apparent the countries of Europe entered this same pattern of decliine many years ago. Take England, for example, as well as France – their economies morphed into what they are today, primarily a result of Socialism and union dominance. This set of circumstances destroyed incentive to innovate, and penalized those that were productive. They are now left with very little growth, except for government, and debt that is killing the productive industrial base they once dominated.  We here in the US, have become Europe and are following the same track – an emphasis toward government dominating everyon’s life and controlling the direction of corporate behavior…. even telling corporations what products and services should be offered or produced, and then setting up schedules for employee pay.  We are being destroyed from within – our political choices have doomed our future.  Yes, we do have 25% unemployment, and it will get worse, unless the government, in its desire to control everything hires more for the expanding footprint they are creating.  There will be no more innovative efforts in the private sector looking forward with this scenario in place. That is where jobs are created, historicially. The current effort to expand the union influence is repugnant to any business expansion. There are so many folks that can not understand why all this negativity is in play…. but the reasons are blatently in focus right before our eyes, but so many want to just say this whole transition is a mystery.  We are now very much in a world market, that places other countries around the world as our prime competition. The emerging markets are booming, and are now reaching an "overheated" level. – We however are economicially in a serious funk, that was created by us, and us only. The final blow to our future is currently being strategized in our Congress and White House, and it is in the form of tax policy, social engineering and a unbelievable naive approach to sociaiistic ideals and debt expansion.  Stay tuned, as you have only seen the tip of the iceberg, in this effort to totally bury our future for decades to come. We have discovered who caused this mess, and it is us.

  77. Remember RIMM – back up 4% today

    Transports are holding that line – flat for the day.  SOX are leading us down at 1.25% with RUT 2nd at -1%. 

    10:00 AM On the hour: Dow -0.07%. 10-yr +0.06%. Euro +0.12% vs. dollar. Crude -0.74% to $76.93. Gold -0.14% to $1156.40.

    11:00 AM On the hour: Dow -0.11%. 10-yr +0.1%. Euro +0.15% vs. dollar. Crude -1.33% to $76.47. Gold +0.15% to $1159.70.

    12:00 PM On the hour: Dow -0.2%. 10-yr +0.08%. Euro +0.02% vs. dollar. Crude -0.99% to $76.73. Gold +0.23% to $1160.70.

    More S&P 500 companies are beating earnings expectations than in U.S. companies at large. But that doesn’t translate into stock bumps: The index’s average one-day change in reaction to earnings is -0.34%.

    To double-dip or not to double-dip? Credit Suisse says the usual preconditions – a flat or inverted yield curve, positive real short-term rates, inventory level above trend – are not in place. But double-dips have a long tradition, and the arguments for a slowdown – less stimulus spending, end of the inventory correction, weak housing – are numerous.

    Credit Suisse says equities are in a "difficult cycle" with the ISM rolling over and earnings revisions turning negative – usually leading to a sideways market at best – but they’re still overweight stocks it says are discounting a 10% earnings decline in 2011, "which is probably overstated."

    Oh no, Bill Gross agrees with me!  Without acceleration in population growth, deficit spending can’t be successful in the “new normal” because deleveraging and re-regulation produces "structural headwinds" that lead to a slower economy, Pimco’s Bill Gross says. If you want an example of what deleveraging in the face of a slowing or negatively growing population can do, just look at Japan.

    Twelve of the 372 U.S. metropolitan areas had at least 15% unemployment, and 10 of those are in California. Las Vegas was the worst of the big cities, at 14.5%, and the Washington D.C. area was lowest at 6.4%.

    Lobbyists descend on Washington as agencies hash out the specifics of new financial regulation, and many of them will be former colleagues of the regulators crafting the new rules. Their influence will be crucial to the final shape of the 2,300-page legislation, as agencies have been given sweeping power to create new rules – hundreds of them.

    Who needs lobbyists when you write the laws?Foreign-based companies stand to save billions in litigation costs after an overshadowed ruling last month by the Supreme Court for National Australia Bank (NABZY.PK) that essentially says U.S. securities laws don’t apply overseas. Scanning the dockets for winners: Vivendi (VIVDY.PK), Credit Suisse (CS), Infineon (IFNNY.PK), SocGen (SCGLY.PK) and BP.

    A $30B-and-growing cash pile makes Google (GOOG) the no. 1 candidate for issuing a dividend or buying back stock, says a Bloomberg ranking of 118 S&P 500 companies that have never declared a dividend. Other companies near the top of the list are Celgene (CELG), First Solar (FSLR) and Gilead Sciences (GILD).

    Discussing its earnings, Boeing (BA -1.6%) says it’s cutting its capital spending outlook this year to $1.7B from $1.9B, moving investment in a second Dreamliner assembly line to next year. The next-gen jet is behind schedule, but Boeing is working with suppliers to ensure they’re ready to ramp up for production.

    Three lunchtime reads:
    1) Eight more reasons why a double dip is coming
    2) Drip after drip of deflation data
    3) Three small stocks with heavy trading volume

  78. In TNA at $44.52

  79. Can someone verify that Interactive Brokers charges a flat fee 0.70/option traded (options >= .10) without any other fees? Does anyone know of cheaper rates?

  80.  Phil -VZ has been on a nice little run lately.  I can’t figure out why, though.  Best I can see is the ruling about jailbreaking iphones.  Do you have any ideas and do you think it’s a true reversal back to +30?

  81. rainman/getting TOS to match IB’s commission – nope, I tried but they have a good rely: the IB commission is exclusive of exchange fees, and these can be add/subtract liquidity fees, order cancellation or modification fees, etc.  It’s not really and apples to apples comparison to compare TOS’s per contact commission and IB’s 0.70/contract fee.
    Realistically, once you add in exchange fees, order cancellation/modification fees, etc, IB’s commissions, on a per contract basis, come closer to $0.90

  82. JRW… i just wholly examined that entry, I have no idea how you do it.  NONE and I’m not beginner. 

  83.  Yip – Looks like a classic JRW entry to me. Sig rune on the 1 min at 12:50-51, RSI and momentum over their marks and pointing up, and confirmation with a bar over the 8 EMA on the 3 min. I’m reluctant to jump in on anything over lunch these days. Too much sideways trading and false breakouts. 

  84. Hi Phil-
    Since you recommend being about 65% cash right now, where’s a good place to park it and get a little better than a quarter percent?

  85. Phil- I have 100 shares of ERX bought at $37 now $30. Also 100 FAS at $31 now $22. Bought these long before I joined this site. What should I do?

  86. drcraig: you say RSI and momentum over their marks, what are the marks  you use ???

  87. Phil: I have BAC stock at base 15.4$, what’s outlook and should I sell premium now ?

  88. Jordan/fees — ok, thanks. I wonder if they consider Fidelity a web-based broker — 7.95+.75/contract and the 7.95 isn’t per leg. I think shwab a buck more.

  89. rainman/IB’s commissions – No, they have additional things on top of the $0.70 per contract.  It’s all explained, but not many people read carefully or they have wishful thinking.  Yes, $0.70 per contract is nice, but that’s not the whole story.  With every order, you also have a "Options Regulatory Fee" of $0.014 per contract.  So, bottom line, the lowest you will ever pay for executing 100 contracts (an example) is $71.40.
    But, if your contract executes on a particular exchange, then you can end up paying more.  For example, if it executes on BATS, and removes liquidity (easy to do if you place a buy order at the bid or a sell at the ask, or anywhere inside that) then there is an additional $0.30 charge, so your total for the 100 contracts will be $101.40.
    Now, if before your 100-contract single order executed on the CBOE, you moved it around (canceled, replaced it, or modified it) three times as it was sitting on the exchange, then you’d get charged that a fee by the exchange (this is not really IB’s fee, they just pass it along).  So in this case, if you place 100-contract buy order at the bid, then change it three times to go toward the ask, and as you submit the third modification, your order is hit and executes, you’ll get charged 71.40 in commissions, and then another 3*2.00 for the order modifications, and you’ll get a partial offset of these order modification fees of 1.98.  So total is $75.42. 
    Bottom line, for a sample order, as I described, getting $0.7542 per contract is still a respectably low "all-inclusive" commission, but people that expect a simple, flat, $0.70/contract, will be disappointed.

  90. IB Fees – one really nice thing about IB’s fees is that on option expiration, if a contract is exercised on you or by you, you don’t get charged a commission or a fee for the exercise.

  91.  Phil what do you think about BSX at this level today????

  92. Wow, just read that the Washington DC medical marijuana initiative is being delayed because the DC statute has a nation’s first requirement that it be priced on a sliding scale thus allowing the poorest to get it for FREE!  Can you imagine??  Where do people come up with stuff?????    …but not to worry, the dispensaries have to be at least 300 yards from schools.  I can’t believe this is happening..

  93. Phil,
    I still have some DIA 8/10 P99 … How about adding some DIA 8/10 P95 for a Bear spread and collecting .25 if DIA doesnt go under 100 (or to 95) … Any suggestions? Thanks.

  94. Out of TNA at $44.51

  95. Dr. Craig thanks, but I must be looking at something different.
    You said
    ‘Yip – Looks like a classic JRW entry to me. Sig rune on the 1 min at 12:50-51,’
    AT THIS TIME FRAME. 1250-1251 I SEE BOTH THE 1 MIN AND 3 MIN RUT under the 8MA = Bearlish
    ‘RSI and momentum over their marks and pointing up,’
    The 1 minute RSI and MOM point up and down all the time, go back and back test that entry(not sure how if you have the RUT above the 8MA at 1250 or 1251?  I don’t understand how you see it over the 8MA and bullish when it’s under on both charts for me) and tell me how many times there are false signals.  Also to RMM’s point what marks?  JRW has indicators he doesn’t share I don’t blame him but we cannot take these entries with limited information of what he does making it impossible for any of us to follow.  So we just get to sit back and watch JRW acquire money per day the rest of us wish we could acquire in a years time.
    ‘and confirmation with a bar over the 8 EMA on the 3 min. I’m reluctant to jump in on anything over lunch these days. Too much sideways trading and false breakouts.’
    Exactly too much sideways and false breakouts

  96. 300 yards from school and right next door to any fast food place….

  97. matt/dope — yeah, it’s just a ploy by the upper .01% to get the poor stoned so they can squeeze for more blood from them while their high ;-)

  98. loopy — good laugh on that one.

  99. I mean selling some DIA 95 ..

  100. Matt, welcome to the New Regime…. Free weed is the new entitlement. What about free sex for the ugly poor?

  101. DR Craig.  Can you check again for me what your 8MA on the RUT is doing at 1250-1251 it’s clearly below the 8MA.  If yours is above please make sure you are using 8MA not 8 Exponential Moving average.  If you are using 8MA please tell me who your charting service is because it seems your data is right and mine is wrong if that is the case.

  102. Interesting poll question on Fox and Friends this morning: "With 47% of Americans not paying taxes --47% -- should those who don’t pay be allowed to vote?"
    I must woken up in an alternate 18th century universe! 

  103. yip / entry
    Well it was a mistake!! But at the time we were crossing the 8ema on volume and even though it was the middle of the range, I thought it was worth a shot given TBT’s position. Sorry, I pushed it and should have waited. So 65.35 or 65.97 !!

  104. Yip – I wouldnt say it is impossible. You definitely have to be refreshing your screen fairly frequently but if you are you can usually get in TNA/TF within 10 cents of his price. Since he usually makes 30-50 cents on his trades that leaves you with 66-80% of the profits still to be had.

  105. yip/8ma — isn’t that supposed to be 8EMA? if so, I don’t think you’ll get a proper back read since it’s time weighted.

  106. gel1- You have an ineluctable desire to attribute every malady this country/world faces to government.  You make very subjective statements about government’s deleterious influence on economic activity without providing objective data/studies to prove your point.  Thou dost protest too much.

  107. Phil--what do you think of BPFH--if you do ,what would be your strategy?

  108. JRW I so much appreciate that.  Thank you I was literally getting a red spot on my head for scratching it. 
    DR Craig, I assume after further review Sig Rune wrong!  :)

  109. Phil – what’s your gut tell you about the move we’ll get at 1400? I know some might consider it a dumb question but since you’re instincts are right 60-70%+ I want to position myself for trades in the direction you point to. I only have 1 screen so I it’s harder to position myself for multiple trades….

  110. Nat gas at $4.80.

    BP/Cmsos – Why mess around?  You are in for net $34.94 and BP is at $37.82 so all this is is seller’s remorse on the calls.  Bottom line is you expect to collect $30 cash in 2012 for your stock so you are looking at at $4.94 loss if you leave it alone.  You can sell the stock for $37.82  now and buy the 2012 $27.50 calls for $14 so $23.82 net in pocket and $2.50 more to collect if they hold up is $26.32 to get out now.  There’s no good way to get your $35 back other than rolling the caller to 2013 or 2014 when available.  If you cash out here you take $25.50 off the table and you can get your $10 back by taking 15 2012 $25/35 bull call spreads at $6.40 ($9,600) and selling the Jan $35 puts for $3.70 ($5,550) which leaves you a clean $10K to look forward to in 2012 (and you can sell more puts). 

    Auction went very well on 5-year notes.  1.796% with very strong demand so a market boost at the moment.  Not very helpful for TBT if people want to tie up money for 5 years at 1.8%.

    IPad/Samz – Tina put it on the book stand in the kitchen and ran a "how to cook" video off the Web.  It also has access to a couple of hundred thousand recipes and keeps a grocery list that can be transmitted to the printer.  It’s a TV guide and 100 other magazines and newspapers and it’s a much louder IPod for my kids, who like to watch YouTube on the big screen (vs their IPods or even the little screen you get on a PC).  It’s like a swiss-army knife of a device that is all things to all people and I’ve only had mine for a month and we clearly need another one due to demand. 

    LLEN/Rain – No idea on them.

    AET/Jdub – Well they are insurance and UNH is not really as they are a service provider so pure exposure is AET.  They are not exciting, just good and solid, which is nice to have sometimes in a portfolio.

    Reserves/Kustomz – At the moment, it seems we can create about $2Tn a year of fresh reserves.  If they change a couple of rules, we could have $5Tn in reserves by the end of 2011.  That stuff is a farce.  I still think we will end up inflating our way out of this and we probably would have started already if the deficit hawks hadn’t pulled a coup in Europe. 

    Wow Gel – need some coffee or what?  8-)

    IB/Rain – That’s my understanding.  We have a rep there but I don’t have his number handy.  The only better deal is Option House, which is $10 flat – so better if you are doing more than 14 contracts at a time or Trade Monster – but that’s new (Najerian’s) and I have no idea if they are good or not. 

    VZ/Jtiff – Maybe because they generate amazing amounts of cash and they are hitting the end of a very heavy investment cycle.  Oh, and they pay a 6.7% dividend with a p/e of 12 so, if people are willing to buy $35Bn worth of 5-year notes at 1.8% then you have to figure a few people would be willing to invest $350M (half a day’s trading) into VZ stock for 3x that rate of return.  Also, they AREADY don’t have the IPhone – they can only get good news on that front down the road…

    Cash/Knukl – Oh we like to use the cash to sell naked puts and take some short-term trades.  Check with your broker, they should have something like an ovenight sweep account for your cash (in a big account) to at least get you about a point.  Here’s an example of what to do with cash.   VLO Aug $16 puts are .21.  You can sell 20 of them for $420 and, even if you had to put aside full margin at $32,000, that’s a 1.3% return in 3 weeks or about 20% annual for a simple thing like that.  We did EWJ yesterday on a call play and you can get .10 for selling the Sept 9 puts, which would be another 7.5% down for the Nikkei.  Lots of fun things to do with cash and if you are happy to go for 5% ROI on plays like this, you can go even safer while you wait (and that monthly compounding helps too!).

    What to do/Nicha – Use stops, for one thing!  Well, luckily you have shares, which is easier to fix but you have shares in Ultras, which decay over time so hoping to get even by sitting around is futile.  I don’t like ERX long at all but you can try to win $7 back by shifting to the 2012 $13/25 bull call spread at $6 and sell the Oct $25.80 puts for $2.60.  Worst case is, you are back in at net $30ish and, if this round goes well, you can pick up another couple of dollars on another put sale until your long spread is free.  FAS is a better case as we do think the banks come back one day but you still have the decay issue.  Still you can sell the Oct $22 puts and calls for $7 and that’s a good start as it brings your bais down to $24/23.

    Oh my gosh, almost BBook time!

  111. Yip, just an fyi.  When SS first came up with the 3min8period method, he used EMA.  Now, SS (and I) use 5min12period, also EMA.  But different folks find different things work for them.  As the great Ben Hogan used to say, you’ve got to dig it out of the dirt yourself. 

  112. JR your right on that!
    sorry this question has been asked 100x but aren’t you using the Straight 8 Moving Average or are you using the Exponential Moving Average?  I remember when I heard this initially I remember thinking …why aren’t they using EMA…
    Are you using Exponential?

  113. Phil,
    Strange movement on the market today.  What’s your feel for the close?

  114. I have two new trades now lined up for us. We are getting involved with Teradyne and Skechers for two Overnight Trades. 

    I am in TER at 10.15. I am in SKX at 35.50.

    Check out my analysis, etc. here!

    Good Investing!

  115. Judah…I see thanks Ben Hogan!
    So your Hogan fine tune is a 5 min chart, with 12 EMA? 

  116. matt1966
    In my traditionally conservative, primarily  military (USAFA) and  evangelical Christian (New Life Church, Focus On The Family) city of Colorado Springs, there are FOUR new medical marijuana facilities that have sprung within several miles of my home, in the past 6 months. When driving to my health club on Monday, I noticed a new store in a mostly vacant strip mall that simply said "Hydroponics". Full legalization of weed is in the cards, as is state and federal taxation… kind of reminds me gambling a decade ago when we were asking will it be legal, where will it be legal? But ultimately, the revenues that were needed by states won out.
    I have a great idea, perhaps weed can be a future profit generator for MO and PM.

  117. yip
    What charting do you use? SteetSmart Pro shows a big green candle crossing the 8ema on volume; and my 1min shows as drcraig has pointed out. Perhaps, if ss is monitoring , he can forward his software; it performs quite well for him !!

  118. Tighter credit standards, not good

  119.  Phil,
    re selling GENZ Jan 70call
    would you please comment on advantage /disadvantage of
    1. sell Jan 70call for $4
    2. Selling Aug 70 call  for 1.75, and then rolling them over

  120. Whos going to blink first

  121. Well, no news in BB, so can they still sell the news? Can’t see any reason to buy either….Meh

  122. Beige Book is out

    As expected, sighs of slowing all the way through but nothing terrible that jumps out at me.   

    Only 4 of 12 districts see improvement – nothing GOOD can be drawn from that but the key is when were the interviews done?  A week on one side or the other of July 7th would make a huge difference

    That’s no surprise, the question is, how will markets react to it.  I’ll have summary in a little while. 

  123. wow, overwhelming action

  124. Oil just does not want to go down, even with that big build!

  125. Jbur…Matt.   I think they should legalize everything.  People are going to end up in the same place.  HOWEVER who would be in our prisons?  Almost no one.  Legalize everything.  The Saints will still end up the Saints, and the Sinners will still end up the Sinners.  Think of how much money could be spent on education in treatment if we didn’t imprison everyone who sold or used drugs?   In Amsterdam where just about everything is legal they have one of the highest rates of non drug use in their population than anywhere.  Furthermore if anyone is worried about drug use you should be worrying about legal drug use.  I’ve tried most drugs prescribed and otherwise and I can tell you this drugs are all bad HOWEVER besides Heron and Meth no illegal drug is as bad as the legal drugs who are prescribed like advil, they might as well be over the counter.  If you think your 1 pill a day Xanax, Valume, prozac,  Ambeint etc is better, think again.  

  126. ^TNX – Big drop just after 1pm. It made a new LOD right after Fed Beige Book but not by much. Looking at this to decide if should hold TNA that I bought into earlier today

    As of now, TNA long looking good – ‘fun’ hearing CNBS spinning a ‘soft’ Beige Book – just as expected…

  127. This is how i read it, they haven’t gotten the jam up to sell into…pretty soon they sell regardless

  128. JRW I use Tradestation mostly and it’s always been great I love it.
    I just looked at the 8 EMA and the MA and BOTH of them the RUT was below these MA lines until 1253 when it spiked.
    Is there somewhere I can post a screen shot this is relatively important.

  129. Yip, yes. SS and I have been using a 5 min chart with a 12 (and 20) period EMA charted.  It is a nice visual and less jumpy than 3min.  There are trade-offs, of course, in that 5m12p will keep you in longer on false moves and real moves both.  As for Ben Hogan,  I think of JRW as the great Ben Hogan.  Even though Mr. Hogan published his classic book outlining his method for hitting great golf shots, people used to think there was still some "secret" he wasn’t revealing.  Mr. Hogan’s method worked for him, but he was unique and essentially told the world that he got his swing by "digging it out of the dirt" and suggested that others do the same. 

  130. Judah…Thank you I get it and who can argue about JRW however I might compare him to Tiger Woods…

  131. jr Japanese tanker in the Straights of Hormuz

  132.  yipcarl – i agree with legalization of some drugs…but many more then just Heroin and Meth are dangerous. Ecstasy, PCP, cocaine? We prolly should keep these illegal too! Boring market today!

  133. In TZA at $31.17

  134. Here’s Bill Gross from PIMPCO on CNBC to pee all over everything and sell some more bonds.
    Right on schedule, this is getting tiresomely predictable

  135. Phil,
    I’m quite bearish on the market and have a few thousand shares of SPY sold short.  Figure the market will be below 1000 long before it’s above 1200 and am patient to wait a few months.  Any ideas?
    (no rush on a response)

  136. kustomz — good call! Well, at least I won’t be falling asleep now.

  137.  dezev /bearish – if thats true, there are positions which are much less capital intensive, with much higher return that you could take on. why did you choose SPY short? 

  138. Kustomz, yeah I read that but I thought it was a wave…..I would figure that with the big build and a not so great biege book (especially with the rally we’ve had) that it would go down further. Oh wells, made 40 cents and looking to short again if it gets to 77.20

  139. Not buying the buying, they slowed the selling pressure to get the computers to bid up the market..waiting for AAPL for direction before making up my mind

  140. Out of TZA at $31.49; look to IWM 65.35 again !!

  141. BBook summary:

    Information was collected on or before July 19th, so there was a 2-week market rally into the latest reports.

    Economic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City Districts reported that the level of economic activity generally held steady. Among those Districts reporting improvements in economic activity, a number of them noted that the increases were modest, and two Districts, Atlanta and Chicago, said that the pace of economic activity had slowed recently.

    Manufacturing activity continued to expand in most Districts, although several Districts reported that activity had slowed or leveled off during the reporting period. Districts also noted improved conditions in the services sector. The five Districts reporting on transportation noted increased activity. Tourism activity also increased across the Districts, although the Atlanta District noted concerns about decreased leisure travel to the Gulf Coast. Retail sales reports generally indicated a continued rise in spending, and several Districts noted that necessities continued to be strong sellers, while big-ticket items moved more slowly. However, most Districts that reported on auto sales noted declines in recent weeks. Activity in residential real estate markets was sluggish in most Districts after the expiration of the April 30 deadline for the homebuyer tax credit. Commercial real estate markets, especially construction, remained weak. Banking conditions varied across the Districts, with some Districts noting soft or decreased overall loan demand; credit standards remained tight in most reporting Districts. Recent rains had mixed effects on crop conditions, while activity in the natural resources sector increased. Overall labor market conditions improved modestly across the Districts, with several reports of temporary hiring. Consumer prices of goods and services held steady in most reporting Districts. Input prices also held largely steady, with only a few reports of cost increases. Wage pressures continued to be contained on the whole.

    Manufacturing and Other Business Activity
    Manufacturing activity in most Districts continued to move up since the last report, although the pace of activity slowed or activity leveled off in the New York, Cleveland, Kansas City, Chicago, Atlanta, and Richmond Districts. Automobile manufacturing was a bright spot for the Cleveland, Chicago, and St. Louis Districts. Automobile parts suppliers also experienced increased demand in both the Richmond and Chicago Districts. Fuel demand at refineries in the San Francisco District improved, while gasoline demand was steady in the Dallas District. Firms in the semiconductor manufacturing industry reported relatively strong sales or demand growth in both the Boston and San Francisco Districts. Firms in aircraft and parts manufacturing saw sales pick up in both the San Francisco and Dallas Districts. Manufacturing firms in the Boston, Philadelphia, Kansas City, and Dallas Districts were optimistic that demand would continue to improve in the following months. However, Cleveland’s contacts expect demand growth to taper off, Philadelphia noted that the balance of positive over negative views had narrowed, and Atlanta reported fewer firms planning expansions in production. Richmond, Chicago, and Dallas reported that firms in construction-related manufacturing experienced weak demand; construction supplies sales were flat in Kansas City, and Minneapolis reported that a firm in the sector was increasing production. Steel production declined in both the Chicago and Cleveland Districts. Some manufacturers in the Atlanta and San Francisco Districts reported high excess production capacity. Capacity utilization was below pre-recession levels in Cleveland and edged lower among steel producers in Chicago.

    Housing drives the market and housing and commercial construction are dead.  How can commercial construction come back if we have less employees?  How can housing come back if fewer people qualify for loans and the population doesn’t grow?  How does anyone think that we can address these problems through capitalism (ie. without stimulus)?

    Activity in the services sector improved across most Districts since the previous report. The freight transportation industry experienced gains in the Cleveland, Atlanta, Kansas City, Dallas, and Philadelphia Districts. Boston, Minneapolis, and Dallas reported a pickup in demand for some consulting firms. Tourism activity increased in the San Francisco, New York, Minneapolis, Richmond, Kansas City, and Atlanta Districts. Atlanta reported that leisure travel decreased in the Gulf Coast, but some of the lost tourist traffic was offset by the presence of cleanup crews, oil company workers, and the National Guard. Information technology firms saw increased business in the Philadelphia, Chicago, and St. Louis Districts, while activity was flat in the Minneapolis District. Demand for healthcare services was flat in both the San Francisco and Richmond Districts, while activity increased in the Boston District.

    Consumer Spending
    Reports on retail sales during the early summer months were generally positive, although in most Districts the increases were modest. Retail sales in the New York, Philadelphia, Minneapolis, and Kansas City Districts were higher than year-earlier sales, and Dallas reported solid gains. But sales in the Boston District were mixed compared with the previous year. Recent sales increased slightly in the Cleveland, Atlanta, Chicago, and San Francisco Districts; sales in the Richmond District weakened; and sales in the Kansas City District were flat compared with the previous report. Several Districts cited apparel, food, and other necessities as recent strong sellers, while big-ticket items were weak sellers. Contacts reported satisfactory inventory levels in the New York District, mixed inventory levels in the Boston District, and low or declining inventory levels in the Richmond, Atlanta, and Chicago Districts. The outlook for sales was mixed: Retailers in the Philadelphia, Cleveland, Kansas City, and Dallas Districts reported that they expect modest positive sales growth in the upcoming months; contacts in the Cleveland, Atlanta, and Chicago Districts reported a less optimistic outlook going forward than in the previous report; and retailers in the Boston District reported a cautious outlook.

    Ouch!  That is NOT a good retail report.  Not very bad but you can’t really stretch it out to say good either.

    The Districts that reported on auto sales during the early summer months generally noted a decrease in recent sales. Since the previous report, auto sales in the New York, Philadelphia, Cleveland, Richmond, Chicago, and San Francisco Districts declined, while auto sales in the Kansas City District increased and were unchanged in the Dallas District. Compared with last year, auto sales in the Atlanta and St. Louis Districts were higher. New York, Philadelphia, Cleveland, Chicago, Kansas City, and Dallas all reported that inventory levels were low or declining. Auto dealers anticipate little change in sales for the rest of 2010 in the Philadelphia District and expect sales to increase slowly in the Dallas District. Contacts in the Kansas City District expect continued strong demand, while those in the Cleveland District do not anticipate strong growth in the coming months.

    Real Estate and Construction
    Nearly all Districts reported sluggish housing markets in the months since the homebuyer tax credit expired on April 30. While some Districts, such as Boston and St. Louis, reported an increase in May and June home sales on a year-over-year basis, some contacts noted that these sales may reflect closings of homes under contract by the April tax credit deadline. The Boston, Philadelphia, Atlanta, and Kansas City Districts reported that home sales are expected to weaken going forward. Residential construction remained limited in several Districts. In the Atlanta District, residential construction activity softened from already weak levels. Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home. Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District.

    Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts. The New York District noted that commercial development remained generally sluggish despite some pickup in office and retail leasing in New York City. Atlanta, Minneapolis, and Dallas reported that construction activity continued to be weak or to decline, and Cleveland reported that the increase in construction from previous reports has begun to diminish. Philadelphia reported that projects funded with federal stimulus support were near completion with no prospects for additional major construction, while Chicago reported that public infrastructure construction picked up. Developers reported difficult credit conditions in the Cleveland, Richmond, St. Louis, and Kansas City Districts, while the Dallas District reported a few developers going out of business. The outlook for commercial and industrial real estate across the Districts ranged from further declines in activity to slow growth.

    Banking and Finance
    Reports on banking conditions were largely mixed across the Districts. Banking activity in Richmond and loan demand in Kansas City increased modestly. Overall loan demand was reported as soft or weak in Cleveland, Atlanta, and Dallas, while total outstanding loan volume decreased in recent months in St. Louis but was steady in Philadelphia and San Francisco. Demand for commercial loans was flat to increasing in the Philadelphia, Cleveland, Richmond, Chicago, and Kansas City Districts; in contrast, St. Louis reported a decrease in commercial loans outstanding, while New York, Atlanta, and San Francisco reported restrained or decreasing demand in this lending category. Demand for consumer loans was weak in Cleveland and eased in Philadelphia; Atlanta and St. Louis indicated a decline in consumer lending; but demand for consumer loans increased in New York and Kansas City. Demand for residential mortgage loans eased in the Philadelphia District but increased in the New York District; Cleveland reported residential mortgage activity below expectations at given rates; and real estate lending decreased in St. Louis. Credit was limited for commercial real estate loans in Chicago, and demand fell for these loans in New York and Kansas City.

    New York WAS holding up better than most.

    Most Districts reporting on credit standards continued to note that lending standards remain restrictive. New York reported tighter credit standards for all categories except consumer loans, while Kansas City reported tighter commercial lending standards. Reports on credit quality were mixed in Cleveland and Kansas City, while quality was stable in San Francisco. Credit quality improved slightly in Philadelphia, Richmond, and Chicago. In the Dallas District, nonperforming loans have stabilized and are not expected to worsen. Meanwhile, Philadelphia, Cleveland, and Richmond continued to report delinquencies above historic norms. Delinquency rates in the New York District decreased for consumer loans but experienced little or no change in other categories.


    Agriculture and Natural Resources
    Recent rains improved the dry conditions in the Minneapolis and Dallas Districts and reduced irrigation needs in the Kansas City District. In contrast, excess precipitation caused some crop damage in the Chicago District and some delays in the winter wheat harvest in the Kansas City District. Parts of the Atlanta District experienced some crop stress due to dryness and heat. Contacts reported that crops were in good condition overall in the Atlanta, Minneapolis, Kansas City, and Dallas Districts, but crop conditions worsened slightly in recent weeks in the Chicago District and were mixed in the St. Louis District compared with last year. Producers in the Chicago District continued to expect good yields for their corn and soybean crops, and the outlook for cotton yields in the Dallas District has improved.

    Overall, activity in the energy sector increased since the previous report. Oil production in the Atlanta District and oil and natural gas production in the Cleveland District were relatively unchanged, but other activity picked up throughout the Districts during the reporting period. The number of drilling rigs increased in the Dallas District, and production continued to expand in the Kansas City District. Additionally, oil exploration in the Minneapolis District and oil extraction in the San Francisco District increased. Activity in the Minneapolis District’s mining sector increased in recent weeks, as did production and demand for coal in the Cleveland District. Kansas City reported that contacts expect to see continued growth in energy production.

    Labor Markets, Wages, and Prices
    Labor market conditions improved gradually in several Districts. New York, Chicago, Minneapolis, Richmond, and Atlanta all reported that labor markets improved, albeit modestly in some cases, while Boston and Dallas reported that employment was steady. Philadelphia, Atlanta, Richmond, Chicago, and Minneapolis reported that temporary employment experienced increased demand. Contacts in the Philadelphia, Atlanta, Dallas, and San Francisco Districts said that they continued to rely on temporary staff over permanent hires. Cleveland, Richmond, and Chicago saw hiring in the manufacturing sector. Cleveland also reported some new job openings in the healthcare industry. Boston and Cleveland noted that firms in some services industries were hiring mostly for replacement. Dallas reported that firms in the energy industry experienced significant regional layoffs as a result of the deepwater drilling moratorium. San Francisco noted continued high levels of unemployment and limited hiring.

    Wage pressures remained largely contained across most Districts. Boston, Philadelphia, Richmond, Minneapolis, and San Francisco reported little or no change in wages, while Cleveland, Chicago, and Kansas City reported that wage pressures were small or remained subdued. Dallas reported that wage pressures were mostly nonexistent, with the exception of the airline industry.

    Prices of final goods and services were relatively stable in most Districts. Several Districts indicated that prices of raw materials also held steady, and only a few Districts reported input price increases. Steel prices moved slightly higher in the San Francisco District, but Cleveland and Chicago reported that steel prices were down. Chicago and San Francisco noted an increase in energy prices, but Atlanta reported that energy prices were mostly stable since the onset of the Gulf oil spill. Increased prices were noted for some metals by the Philadelphia, Minneapolis, and San Francisco Districts. Transportation costs increased in the Atlanta, Dallas, and San Francisco Districts, and the Richmond District noted that shipping lines were attempting to raise rates.

    What a Blah Beige Book this is.

    Nothing worth jumping into the markets over but no knockout punches and, as I said, timing is everyting.  The big deal here is that now I’d say bad news will NOT be ignored and we have potential bad news tomorrow if GDP falls short of 3% (doesn’t look like it based on earnings reports) or if Unemployment Ticks Higher or the Chicago PMI sucks. 

    Nonetheless, the Dow is holding 10,500 andf the NYSE is holding 7,000 so all is not lost yet and we should 1/2 cover our Mattress play by selling the DIA Aug $104 puts for $1.65 – in case we recover from here.

    Also a good idea to lighten up on short-term, directional bearish plays as we can always reload below 10,500 and 7,000

  142. jcaesar
    I have to admit my opinions are subjective, all based upon objective data that does engulf us like coccoon. Where can you go to isolate youself from information that does not have political origins?  Our entire lifestyle and economic world is driven by political decisions…. damn near 100%.  Why do we care, as traders and investors, what the news is out of Congress, the Fed, the White House  Committee decisions, Elections, etc, and not to mention what other countries are doing to change their discount rate, or whatever they do to influence the direction of their economy?  IT IS ALL POLITICAL, and it has more of an influence on how we trade than anything else. Citing quotations or whatever to make my point is ludicrous…. the data is voluminous, and broadcast everywhere in the media, and we all know what it is. How one interprets this massive amount of information makes it either of importance or not.  Ignoring it is always an option, but not advisable. My intepretation is certainly  a subjective opinion, and I offer it for educational purposes only… not to promote idealogical political bias..

  143.  Yip – You’re real name is Ryan, right? I recalled we swapped emails at some point but I don’t recall if you ever identified yourself by userid. Anyway, I just emailed you annotated clips of the charts at 12:50-51 demonstrating JRW’s entry. If there’s any way to post them here, like with a link or something, feel free. 

  144.  drcraig – pse forward the clips to me also, I’m doing fairly well on JRW’s system but want all the info I can get.
    Also, Yip – pse contact me AH
    real name -Jim

  145. gel, enjoy reading your posts and I must concur Dr.Gel

  146. Craig,  Thanks a lot for the chart.  I just sent you back and email with my charts attached and you will see mine is different.

  147. drcraig,
    Thanks !!

  148.  newbob
    I tried to sell some naked calls yesterday which executed but go a call back from option trader that trade was not permitted.  Do I need a new clearing broker or is their position correct?  No hurry.  Thanks

  149. yipcarl, et. al. - F.Y.I. regarding posting charts online:

  150. yip/dr/charts — me too, me too! can I get some charts?….   20 minutes till wapner…

  151.  stick or no stick?

  152. Short TFU10 at about 2:45 for 650.50, stop over the 8EMA. Technically good short entry based on usual criteria. I’m surprised JRW is not in TZA again. I should probably heed that as a warning!

  153. If we can just get through 65.95, it’s IWM 64.58, here we come !!

  154. drcraig / TZA
    I am; I said I would when we got back to IWM 65.35 !! (NO WARNING) Just didn’t post as I am taking up too much board space today !!

  155. Volume on the Dow is 95 million shares so far.

  156. gel1 – To say politics/government has a role in life is a truism.  That’s of course NOT what I asserted about your comments. I said, to quote myself, that you have a "desire to attribute every malady this country/world faces to government."  
    What is so obviously apparent to you is not to others, like it or not.  If it were there would be no reason to have a discussion/debate.  We would just say ditto back and forth (like on Rush). 

  157. Diamond thanks!
    Rain,…the charts were just assessing if my data was off nothing interesting but now that I have this link I’ll post things I find interesting.

  158. Oh oh, Trend line at 64.85(a 3 point line); be carefull !! (Then maybe 64.58, a 7 point line)

  159. They are fighting tooth and nail to hold 1100 /es

  160.  And out at 647.30, mere seconds before the spring upward!

  161. Out of TZA at $32.12; I still FEAR the Stick !!

  162. yip/chart — I understand that yip, what I’m interested in is actually pretty mundane. I wanted to see the actual scaling of the charts. I’ve seen too many times that zoom levels can change signals as well as accuracy of how a chart is drawn can have an impact on signals. That doesn’t sound like your situation, but nonetheless, I’m still interested for comparison purposes.

  163. JRW….I posted that 64.85 early this AM it’s also a support level from previous traffic….all others learning should be able to see why we choose that level at least on the previous support front. Reference date 7/23

  164. Rain just sent them

  165. JR,
    Do you fear it enough to go long?

  166. TOS — $7 ticket charge, .75/contract

  167. This decline today looks way to organized and disciplined for me. Something fishy is going on…

  168. Phil, what do you think about AMR? Straddle 2012 $5 strike is almost $5

  169. Phil, You mentioned above selling DIA 104 puts above to 1/2 cover mattress play.  I’m in that one, but wondering how the 1/2 cover move affects my situation:  I believe I understood your advice yesterday and left my DIA Oct 93 short puts in place and used my money to roll up my DIA Oct 100 puts to Oct 104 puts.  The Oct DIA 104 puts are doing nicely today.  I haven’t yet made my money back on the loss I had in the DIA Oct 100 puts, but should I get out of this bear put spread?  I’m out of my other bear plays:  I got nervous on the Aug bull call spreads on FAZ and DXD and sold out of those yesterday for a few hundred dollar loss…probably should have waited a day but being on vacation wasn’t sure I could get to my computer.   The rest of my portfolio is long the Fab 9 plays and I’m not worried if the market takes those back down to the July lows.

  170. I agree lion

  171. CORRECTION:  Phil, I meant I’m NOT in the mattress play…but have a bear put spread to deal with.

  172. BSX/Tcha – I like them but it’s a long-term, patience play.  Easy enough to buy them for $5.75 and just sell the 2012 $5s for $1.80 as that takes you down to $3.95 right there with a 25% upside.  You can sell the $4 puts if they hit $1 to make a $2.95/3.48 spread or just be happy with the call-away at $5.

    DC/Matt – Time to open up shops 301 yards from the nearest (soon to be very) HIGH School! 

    DIA/Twofaces – I’m not clear on that one.  If you have the $99 puts and they are doing well, why turn it into a bear spread rather than just take the gains off the table?  Surely you don’t think the Dow is going below 10,000 do you?  Now that the Dow is blelow 10,500 you can just use that as a stop line on the play (with 7,000 on NYSE to confirm). 

    Voting/Stjean – ROFL!  Too bad it’s true…

    BPFH/Savarti – Seems to me their advice wasn’t so hot in the downturn.   Takes a long time to win back a reputation, not the kind of thing I’d play.   Options arent’ just think, they are dead so no way to hedge them intelligently either. 

    1400/Jrom – Did that mean 2pm?  Well we expected a sell-off but as long as we don’t get a big one I think that the markets have already priced in a poor BBook and are ready to move on.

    Close/Exec – I don’t think a stick as it would be so fake that people might actually wake up and notice something funny is going on but a drift in around 10,500 and 1,100 is a kind of victory all by itself. 

    Weed/Jbur – They can’t make it too legal as it is literally a weed and pretty easy to grow.  No need for big tobacco when you can do it yourself.  This is the main reason pot was banned in the first place – competion for cigs and alchohol that the average farmer could grow on their own too easily (and it makes rope and clothing too!).

    GENZ/Ed – Selling Aug $70s is much better.  As long as you are willing to stick it out through a short-term spike up, no reason not to do it.  Downside is, if they are bought for over $72 - you eat it, vs over $74 the other way.  Since there may be a real deal in less than 60 days and you may not get a 2nd chance to sell and a real deal below $70 will zero out the Jan calls anyway, I prefer doing the 2x sale in one shot, even though less profitable compared to rolling monthlies. 

    Tiresome Gross/Gmarts – It is sickening once you start noticiing isn’t it?

    SPY/Dez – I don’t agree.  I think we stay within 5% of 1,100 to consolidate but then the move favors an upside break unless we get some bad global macro news.  I just think there are better things to do with the money – like taking advantage of short-term bearish plays when the market runs high, like it did this week and then back to cash for the next silliness. 

    All this and volume at 3:30 is just 100M – VERY LOW and very stickable but, as above, I don’t think we get a big stick.

  173. Phil why do you think BYD is looking weaker than MGM, WYNN

  174. California is officially broke…state of emergency declared

  175. hahaha YES Phil, I meant 2….Sorry, bad habit.

  176. Oh I have just realized! With 105m volume on Dow, it was a robot-only trading session. My apologies to the Wall Street HALs for disturbing a perfectly engineered chart :)

  177. That’s funny…..they finally figured out their broke……..the strange thing is…..they want to use California as the model for the rest of the country.

  178. exec / long
    Probably should be, but no, too late in the day for me !!

  179.  thanks a lot. Phil (re:genz)

  180. jcaesar
    What is apparently obvious to me, I agree, is definitely not obvious to the majority of others, and for this reason I offer contrarian statements.  If the great majority agreed with my beliefs, then much of what we see today that is profoundly negative in the eyes of so many ( educational standards, debt levels, crime, economic malaise etc, etc.), would not exist.  I believe our decay as a society is a result of activity that I in no way would have my support. I have to ask…. Are you proud of what America has become as a statistical benchmark for moral and economic values?  If you are not, then you are a contrarian just like me, and where do you place the blame for this condition?. Phil places most of the blame on greed and the imbalance of wealth. Our government incentivizes behavior and the acceptance and molding of values, so it is at the foundation of our current status.

  181. JR,
    How late do you trade?  I grabbed a little TZA for the close.

  182. AMR/Roma – Buffett says never buy an airline and I generally agree.  As a math play, I don’t have a problem with the 2012 $2.50/5 spread for $1.50, selling Jan $6 puts for .75 but I have no reason to think AMR will do well, just worth a chance that they don’t do that badly. 

    DIA/Poindexter – Are you talking a Mattress play as a hedge?  If that’s the case A) you should be in Dec long puts, not October and B) it’s insurance, you aren’t supposed to make money on them unless we have a 500-point drop.  Let’s discuss in more details after hours but when I see the words "few hundred dollars" and hedging in the same paragraph, I have to think you didn’t read "Smart Portfolio Management" for small portfolios (see Portfolio Tab).  Oh, now I see not in the mattress play but that’s probably worse, not better. 

    BYD/B1 – I like them better, not weaker.  WYNN seems pricey to me and MGM has that whole City Center fiasco to still deal with. 

    Cali/Kustomz – Link?

    2pm/Jrom – That’s good because I thought I missed a great shorting opportunity on an S&P spike!

    Bots/Lionel – My thought is that "THEY" let the retail sellers (which includes small funds) have their little panic attack after a big event like the BBook and then they just wait for the selling to subside and then "turn those machines back on."

  183. exec
    If I’m in a winning position and moving in my direction, I’ll wait until 3:58 or so, as profit taking occurs at the last minute.


    TOS (thinkorswim)/matching rates -- I just emailed them for fun to see if they would match Options House rates. They gave some excuses about apples-to-oranges and made a couple false claims about OH, but they did offer $1.50/contract with no execution fee. That was before I mentioned anything about a "special philstockworld rate" … So in a followup, I mentioned PSW and also refuted some of their claims about Options House. They responded with, "for philsstockworld we offer $.75 per contract with a $9.99 ticket charge." So that’s even a bit better for larger orders, though still not quite as low as OH. I followed up asking about Interactive Brokers, and they said they don’t match IB either, but do offer the flat $1.50 rate for IB clients.


  185. drcraig_ I have been away from my desk for the past hour. If you would email me annotated clips of the charts at 12:50-51 I would very much appreciate it. I don’t think I’ve ever gotten the chart setup right! Thanks.




  186. RE: California--  Phil can we agree to swap our governor for yours.  You’ll get the demo (and a kennedy to boot!)  and we a repub, we’ll both be happy. 

  187. Phil, I guess I have not been paying attention, but why do you refer to City center in Vegas as a "fiasco"?
    Is it due to condo sales?  Thanks

  188. 2:00 PM On the hour: Dow -0.16%. 10-yr +0.33%. Euro -0.03% vs. dollar. Crude -0.46% to $77.14. Gold +0.42% to $1162.90.

    3:00 PM On the hour: Dow -0.45%. 10-yr +0.42%. Euro -0.13% vs. dollar. Crude -0.8% to $76.88. Gold +0.34% to $1161.90.

    4:00 PM At the close: Dow -0.37% to 10499. S&P -0.69% to 1106. Nasdaq -1.04% to 2265.
    Treasurys: 30-year +0.4%. 10-yr +0.45%. 5-yr +0.37%.
    Commodities: Crude -0.95% to $76.76. Gold +0.44% to $1163.10.
    Currencies: Euro -0.08% vs. dollar. Yen +0.46%. Pound -0.01%.

    An unusually optimistic outlook from the Milken Institute expects modest but sustainable growth in GDP, consumer spending and jobs. “It might be in vogue to chime in with the doom and gloom, but the historical record and key indicators provide a much more positive outlook," the report’s director says.

    The stimulus may have helped prevent the bottom from falling out, Martin Feldstein writes, but the economy looks to be slumping as it winds down. Stimulus programs "failed to provide the pump-priming role that was intended. They provided an early spark, but it looks like the spark did not catch."

    U.S. economic activity continued "weak" in June and into July, the Fed said in its Beige Book report, in the latest sign that the recovery may be running out of steam. Overall activity was broadly flat in the Cleveland and Kansas City districts, while Chicago and Atlanta said the pace of economic activity had slowed. Stocks slipping: Dow -0.3% to 10500, S&P -0.5% to 1107, Nasdaq -0.9% to 2267.

    Wall Street’s ability to absorb bad economic news signals a breakout rally soon, Todd Horwitz says. "Even with durable goods being down, the market is still not being hurt that much. It looks like it’s consolidating here, and holding up very well. And it looks like there could be a big bounce to the upside."

    Tighter standards are paying off for Fannie Mae (FNMA), CEO Michael Williams says, as the GSE is "building the strongest book of business we’ve seen in the last decade" – even if it will be harder for future generations to buy a home. Some profit-taking after yesterday’s +47% run in the stock; FNMA today -13.5%.

    This chart of the Case-Shiller Housing Price Index dramatically displays the housing bubble and recent short-term bump – and how real estate prices likely have much more room to fall.

    Calling financial reform "eviscerated," Joseph Stiglitz says a crisis "can and it almost surely will happen again, because we didn’t deal with the problem of too-big-to-fail banks… And we didn’t really deal effectively with all the kinds of excessive risk-taking, all the problems of lack of transparency that were at the core of this crisis."

    After previous sales of Aston Martin, Land Rover and Jaguar, Ford (F) is set to wrap a $1.8B deal transferring Volvo to Geely and bring a close to Ford’s investment in European luxury brands. The U.S. automaker – whose stock is up 30% this year – has increased focus on its own nameplate.

    A U.S. district judge blocks the most controversial sections of Arizona’s new immigration law from taking effect, the first round of what is expected to be a protracted legal fight.

    In some areas, the solar-energy sector is hitting its magic number, providing cheaper power than local coal-fired plants, with a trade-group spokesman saying a "tipping point" is coming in the next 12-24 months. Panel efficiency’s up, but future savings will have to come from squeezing supply-chain costs. (ETF: PBD)

    Shares of Research In Motion (RIMM +3.9%) surge on speculation it will unveil its long-awaited touchscreen handset designed to battle the iPhone (AAPL -1.3%) at a joint BlackBerry-AT&T (T -0.1%) event in New York next Tuesday. They don’t want to miss one of the key seasons," an analyst says, referring to the back-to-school period.

    Why would Uncle Rupert publish this story as if it happened today when this happened on Friday?  Regulators close seven more banks, bringing the total of failed banks to 103 for 2010 – surpassing 100 for the second straight year.

  189. Phil it was on Bloomberg

  190.  Phil/ BSX
    I already have a position:
    15xJan11 5s CALL / 10x Jan11 7.5s CALLER / 10x Aug 7s PUTER which is result of couple of adjustments and rolls and under water 
    Any recommendations how to adjust it to get higher chances to get money back / make some profit (I’m down $2500 now)

  191.  AKAM getting raped after hrs

  192. Phil – another question, I’m looking to buy an Ipad, Did you buy yours with 3G?
    Your positive comments earlier motivates me to go buy one!  Thanks

  193. Phil, sorry for any confusion.  My attention this week is more on the beach here in Cape Cod than on the stock market. I’m in the Fab 9 plays, except WMT, and I’m in the "chip shot" WFR.  I have the one misguided bear put spread long 5 DIA Oct 104 puts & short 5 DIA Oct 93 puts.  I have learned my lesson on the bear put spreads and now simply trying to make the best of it I can based on your advice.  I also have leftover a UYG short put  Aug 40 which I thought I would let expire.  I’m up in my PSW portfolio 2% for the month.  I haven’t worried too much about long term hedge because I have 401(k) money that is a little too bearish (short small cap, short S&P and short CRE);  I’m winding that portfolio out to cash so I can roll into an IRA I can trade according to PSW.  (I have beat the market in that mutual fund portfolio this year, but only up 4% YTD).  When I return from vacation I will read the Smart Portfolio Management post.

  194. Today not so good down 6% onday trades down .5% on portfolio, day trades up 2% this week. JRW, Don’t have all your tallents or luck but I still will say overall UP!

  195. Phil:  that Case Shiller chart looks scary I agree.  But if I am understanding it properly it refers to a "standard house";  a standard house today is much different today than 100 years ago.  It might mean that people will need to settle for a 3 bedroom house instead of a mcmansion for it to be affordable.  It strikes me it’s like trying to compare a computer prices to years ago; yes prices have come down and look how much better they are.

  196. Well, 3% on a day I got up late is not so bad; too bad I missed the early morning TZA play though.
    See you all in the morning !!

  197. thanks, David Ristau
    got in SKX for 35.2 at the close, sold 5 min. later for 38.2

  198. Hi Phil, I have an artificial buy/write and a puts sold on underlying stock. Can I setup a trigger on TOS to sell the whole position if profits is >50%? thanks

  199. thinkorswim users, is there a way to do a Buy/Write (buy stock, sell calls & puts) in a single order ticket? I can’t figure it out. The closest options I can find are (1) sell the calls and puts by selling a Straddle (but then there’s no stock leg), or (2) sell a Collar with Stock, which buys the stock and sells the calls but then, whoops, it wants to buy puts instead of selling them. Is this possible, or do you always just execute Buy/Writes as 2 separate orders?

  200. @jvest
    ditto… The TOS is one very busy page, far too much information.  Is there a way that others have found to whittle it down?

  201. jvest:  i don’t know of a shortcut for a buy/write at TOS; i always have to enter two orders

  202. Wow, GENZ shot up to 71+…  Any news?

  203. Wow, GENZ shot up to 71+…  Any news?
    Sanofi to make formal Genzyme bid-source

  204. Wow, GENZ shot up to 71+…  Any news?
    Sanofi to make formal Genzyme bid-source, no bid price?

  205. jvest: You can build any custom spread you’d like on the "All Products" screen by doing the following:
    (1) Hold down the Ctrl key.
    (2) In the options chains displayed, click the Ask price of each strike you want to buy, and click the Bid price of each strike you want to sell.
    (3) Adjust the price to your liking.
    (4) Profit (hopefully)!
    Bingo.  Custom spread with one price.  It’ll even guess the name of the spread (e.g., Vertical) if it knows it.

  206. Phil/ Case Shiller Chart - Robert Shiller’s data was one of the main reasons I sold my home near the peak in early 2008 and also liquidated 95% of my investments in November 2008.  I get a big fat smile every time I see that chart (actually had it posted on my "wall of data")…that chart helped save me a small fortune.  The truth was in the data, the timing required some luck…

  207. JRW/Sleeping in - I too hit the alarm and slept late today also as I didn’t think we would have much action until an hour before the BB data.  I’m really not a morning person…I have no clue how investors like you and Phil (5am dude) get up before the sun rises!

  208. Jvest- I had the same question a few months ago about doing the buy/write. TOS rep then told me that it has to be done in two separate transactions. Surprised me since I have always been able to do it in one at OH.

  209. boobearsdad:  thanks for that TOS information; so much of its software potential I leave untapped.

  210. Well, that was an interesting day. 

    Notice we have that Russell and Nasdaq downside leadership that we’re looking for in a break-down.  2 days of that would have to be taken seriously! 

    TOS/Jvest – So pretty much they will match any rate that isn’t very cheap? 8-)

    Governor Swap/Humvee - You can have Christie and Arnold would love Jeresey as most of our political business is done in restaurants by men smoking cigars.  Christie is busy carving up the state for his buddies in the name of cutting expenses – if he keeps going, there won’t be much left to govern for the next guy anyway.

    City Center/1020 – Yes, huge debts not filled.  This isn’t like A condo didn’t fill, they put $10Bn into this thing with 900 condos in 3 buildings (expected to take back about $4Bn right there but not even 1/4 sold at lower prices) and 6,800 hotel rooms in an already half-empty Vegas.  My understanding is the mall is only 2/3 full too – not unexpected in this economy but they had to pull handstands with financing to get the thing finished in the first place.  They are currently selling land in Atlantic City to pay their Vegas debts and that’s never a good sign.  Also, don’t foget their partner is Dubai World, so don’t expect them to be chipping in!  I liked MGM last year at the bankruptcy expectation price of $3 but we got all I ever expected from them – they didn’t go BK….

    BSX/Tcha – I’d just buy time and roll the Jan $5s ($1.15) to the 2012 $5s ($1.75) for .60 and roll the Aug $7 putter ($1.46) to the 2012 $7.50 putter ($2.55) for $1 so you pick up .40 there and then you can wait to see how we do into Jan (you can sell 5 Jan $6s now for .65).  If we are up, you can roll callers along and if we are flat or down, you can roll caller to 2012 $5s (+$1.75) and roll yourself down to the $2.50s ($3.40).  That spread would clear $3,750 over $7.50 and at $6.50 it’s $2,750 and $2,250 at $6 so you don’t lose money (more money) until under $5. 

    Uh oh – GENZ taking off after hours.  WSJ says SNY making formal bid for $75 a share.  If that’s true, then M&A is back in full force.  If you sold calls, we roll to the highest call we can afford and sell puts to cover as they will still get arbed for the deal falling through.

    AKAM/Chyer – In-line getting punished.

    IPad/1020 – I am at the point where I prefer to read many papers on the IPad – that’s something I didn’t expect.  Tina got me the 3G for Father’s Day (I had planned on waiting for v.2) and it’s nice to know it’s there even though I don’t use it.  You can apparently just pay $25 for any month you want it so that’s my cost of taking it on a trip but, if the hotel has good WiFi – might not be needed.  I will warn you that you very quickly get used to actually, finally having the Web at your fingertips and you start getting annoyed when you can’t just look something up whenever/wherever you feel like it… 

    DIA/Poindexter – I’d roll the putter out to the Aug $103 puts ($1.35) as those can be rolled back to Sept $98 puts ($1.25) and, of course, back to Oct $93 puts but the difference is the Aug puts expire in 3 weeks and you will maintain (hopefully) most of your value and then you can sell again or cash out.  On UYG, that’s only a question of whether you need the margin for anything.  If not, it’s free money.  2% for the first month is nice – do that consistently and you can retire well. 

    Housing/Humvee – I agree, it’s very hard to compare.  There’s a very valid arguement to be made that virtually anyone with a home, electricity and running water is living a life of luxury compared to middle class people of the 1900s but when did we lower the bar for human advances so low?  WHERE’S MY FLYING CAR???

    Artificial/Jossie – I don’t use that but there is a way to group a trade although it may matter if you entered it as a full position or not.  Call tech support – they are super helpful.

    Buy/write/Jvest – I usually do the short put leg and then bull call spread or covered call as 2 legs but I like to "work" the trade on each leg.  It would be cool if we could get TOS to add it to their list of plays but Boobearsdad seems to have the right way to do a custom entry but I’m surprised it will mix the stocks and options.

    Shiller/Goldman – I was in the real estate data business in 2004 and I sold out – I thought the market was toppy then!  Now I’m restarting the data business, hopefully not 2 years early again! 

  211. FYI all-- I’ve had much success (5 nice wins, zero losses to date) shorting companies the day of earnings that are near their 52 week high or have had a big run up recently.  Just sell current month calls with a strike at least 8-10% above the current stock price (you’d be surprised how much premiums are in those babies even at 10% higher). A combination of volatility crush and good earnings getting rewarded with sell-offs.  These are good companies too.  AMZN, NFLX, VECO, AKAM and V all nice wins using this methodology. I have long plays that will offset if I lose, plus if I have a loss, like Phil says "roll baby roll."

  212. Phil’s right.  No way to do a custom spread that includes stock.  I was thinking of an artificial buy/write!

  213. Phil/Where’s My Flying Car??? -

  214. Oops.  Meant to buy 1/3 FAS to fully cover at end of AH.  Instead I sold 1/3 of FAS so I’m 2/3 short overnight!  Fat finger?  Dohh!  I hate brain farts.  Where’s that luck of the bear I need..

  215. goldman that car is amazing!  I love the one of it parked in front of Suburbia-

  216. Phil,
    I’m looking to put about 10-15K into intermediate-term (3-6 month) high risk/reward plays (that are salvageable). I reviewed the "Turning 10K into 50K" but didn’t see any current (bolded) recos. Do you recommend just waiting a bit on this type of play and what are your other thoughts?

  217. boobearsdad — thanks for the tip. Although, it won’t let me do a stock buy/write or an artificial buy/write either. On the artificial, it lets you construct it as a 3-leg spread, but then the price field just says NOT TRADED. So I guess it just punts when it doesn’t recognize it.
    This annoys me for two reasons: (1) I’m used to Optionshouse, which lets you construct any stock/option combo with up to 4 legs in one trade, and (2) it seems like a nice way for them to charge more fees when you’re on a rate plan that charges a per-trade fee.
    I’ll get used to it I guess.  :)

  218.  Just kidding, it does allow the artificial buy/writes. It turns out I had just selected an invalid strike price. I wasn’t paying attention b/c OH doesn’t display strike prices that are invalid. (It had allowed me to choose C Jan 2012 calls/puts at $3 strike, which doesn’t actually trade.)

  219. Apple
    Safari Extensions Gallery
    Extensions are a great way for you to add new features to Safari 5.0.1. Built by developers, Safari Extensions use the latest HTML5, CSS3, and JavaScript web technologies. And they’re digitally signed and sandboxed for improved security. You can install extensions with one click — no need to restart Safari.

  220. For anyone interested in a Mac product, but do not want to pay full price:
    Apple Certified Refurbished
    Apple tests and certifies all Apple refurbished products and includes a 1-year warranty, as well as free shipping on all their refurbished products.

  221. AppleInsider
    Apple’s newly updated Mac desktops feature only ATI graphics
    "Despite ATI’s absence from Apple’s notebooks, the relationship between Apple and AMD, the owner of ATI, could expand to even greater lengths in the future, as AppleInsider reported in April that the two companies are in advanced discussions to bring AMD CPUs to its Mac line. Currently, all Macs are powered by Intel processors."

  222. kustomz – Yes, that is very interesting …

  223. DAVID POGUE –
    Reliable Dictation, to a ‘T’
    "Back in December, Nuance began offering a free iPhone app, Dragon Dictation. You speak; the company’s computers in Boston analyze your snippet; within seconds, the converted, typed text appears on your screen."

    "But this was no altruistic move; Nuance had an ulterior motive. Its computers keep copies of those hundreds of thousands of dictated messages (no names attached, of course), creating an amazing central archive of American voices and speech patterns. Nuance engineers later exploited this gold mine, using it to test out new recognition algorithms to improve Dragon’s accuracy. Sneaky, eh?"

  224. NVDA lowers guidance
    The Santa Clara, Calif., chip maker, which specializes in chips that help computers render moving images more effectively, said revenue for the quarter ending Aug. 1 would drop to $800 million to $820 million from the previous forecast of $950 million to $970 million range. down 9.75% AH

    May be time to put a play together for AMD

  225. kustomz – "May be time to put a play together for AMD"
    Exactly my thoughts! :-)

  226. Out almost all day at a very mind numbing meeting.  Had a TZA trade on, but couldn’t monitor it, so I had an automatic exit; got about 1/2 the move; would have been better off having no order on … oh well; what can you do.  Not exactly the type of trade to leave unattended so you can go to a 5-hour meeting.
    FYI, here is an interesting piece on the court ruling regarding the AZ illegal immigration enforcement law.

  227. Phil – I think that for the most part the media and pundits are in general too negative. When this many people are group-think believing one way then I feel compelled to take the other side. I guess I am now buying if everyone is selling.
    The world’s governments cannot chance another meltdown at this juncture as it would be too costly, too unpredictable and perhaps too uncontrollable as well as jeopardize too many jobs, positions and legacies of the people in power now. We are now near the inflection point that action will be required (and taken) to make sure that this market does not roll over.
    I believe that the summer rally will prevail and if we have a slight pull-back in late September or early October it will be brief and over well ahead of the November elections. The rally will then continue intact into January 2011.
    The fundamentals of the companies reporting are not that bad and their forward guidance does not warrant the negative (over)reaction from the market. I may be wrong, but that is how I will invest …

  228. Yip/Drugs, You said:
    Jbur…Matt.   I think they should legalize everything.  People are going to end up in the same place.  HOWEVER who would be in our prisons?  Almost no one.  Legalize everything.  The Saints will still end up the Saints, and the Sinners will still end up the Sinners.  Think of how much money could be spent on education in treatment if we didn’t imprison everyone who sold or used drugs?   In Amsterdam where just about everything is legal they have one of the highest rates of non drug use in their population than anywhere.  Furthermore if anyone is worried about drug use you should be worrying about legal drug use.  I’ve tried most drugs prescribed and otherwise and I can tell you this drugs are all bad HOWEVER besides Heron and Meth no illegal drug is as bad as the legal drugs who are prescribed like advil, they might as well be over the counter.  If you think your 1 pill a day Xanax, Valume, prozac,  Ambeint etc is better, think again.
    I coulden’t agree more, so much spent to house non-violent prisoners and we are not getting tax $ from it. We finally learned our lesson with probition. While we are at it why not close 90% of our military bases overseas and get out of Iraq and Afganistan – just today I heard billions are missing and Dept. of Defense has no clue. I was in Vietnam and saw 1st hand of the waste there and now worse with private contractors and a big mercenary force let alone the HAL’s and other companies of their ilk scamming the DOD. Maybe this would go a long way to decrease our deficit. Don’t forget we were the "ragheads" that fought England for our freedom that had a much superior force – and won. My rant for today

  229. Boomer Statistics per

    $400 Billion: Amount that will come out of annual U.S. consumption as thrifty boomers push savings rate from 1% to nearly 5%.
    47%: Boomers share of national disposable income in 2005 before the bubble burst. Boomers contributed only 7% to national savings.
    2.4%: Forecasted GDP growth over the next three decades as boomers ratchet back. GDP has grown 3.2% a year since 1965.
    69%: Portion of boomers aged 54 to 63 who are financially unprepared for retirement.
    78%: Boomers’ share of GDP growth during the bubble years of 1995 to 2005