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Another Manic Monday – Greenspan Finally Agrees With Me

Wow, Alan Greenspan and David Stockman both came to my side of the debate in the same weekend and the market rockets – very interesting

First, we had Alan Greenspan on Meet the Press, regurgitating my "Tale of Two Economies," which was our theme for 2010 investing and, of course, is something I have been carping about for many years as income disparity has become critical in this country.  Somehow though, it sounds more official when a crotchety octogenarian says it – so we’ll give the Chairman his due:

Our problem, basically, is that we have a very distorted economy in the sense that there has been a significant recovery in a limited area of the economy amongst high-income individuals who have just had $800 billion added to their 401(k)s and are spending it and are carrying what consumption there is.  Large banks, who are doing much better, and large corporations, whom you point out and the--and everyone’s pointing out, are in excellent shape. 

The rest of the economy, small business, small banks, and a very significant amount of the labor force, which is in tragic unemployment, long-term unemployment, that is pulling the economy apart.  The average of those two is what we are looking at, but they are fundamentally two separate types of economy.

Another conservative darling who turned on his masters this weekend is Reagan’s OMB Director, David Stockman, who eviscerated current Republican fiscal policies in a NY Times Op-Ed this weekend, summing it up neatly with the title: "How the GOP Destroyed the US Economy," which is a must read but here’s a few juicy tidbits:

IF there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nation’s public debt — if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked into the cake through 2015 — will soon reach $18 trillion. That’s a Greece-scale 120 percent of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore unseemly for the Senate minority leader, Mitch McConnell, to insist that the nation’s wealthiest taxpayers be spared even a three-percentage-point rate increase…

…This approach has not simply made a mockery of traditional party ideals. It has also led to the serial financial bubbles and Wall Street depredations that have crippled our economy. More specifically, the new policy doctrines have caused four great deformations of the national economy, and modern Republicans have turned a blind eye to each one.

…The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector. Here, Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation. As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.

But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.

This is an interesting trend I am seeing coming into the November elections, old-guard Republicans are finally taking a stand and saying out loud what’s been obvious to the rest of the country for years – "THIS IS NOT OUR PARTY ANYMORE."  Republicans used to stand for balanced budgets, sound monetary policy and fiscal discipline and, as Stockman points out, the Neocons have jammed our military budget up to $1Tn a year (1/2 of the entire planet’s military spending) while Republican Congressmen have never met an earmark they didn’t like – until Obama took office, of course.  

I’m not pointing all this out to pick on the poor Republicans but this is all setting the stage for the push to QE2, even though that is not either Greenspan or Stockman’s intention (both would prefer to see more belt-tightening).  The mood of the country is clearly shifting and old-guard Republicans are circling the wagons to attempt to salvage what they can of their legacy and that leaves the Bush Republican’ts out on an increasingly unpopular limb as they call for a completely unrealistic policy of tax cuts for the rich and austerity for everyone else.

We were having a policy debate over the weekend (and lots of new trade ideas and strategy discussions in that post) as I prepare for my own upcoming trip to DC, where I can agitate closer to the source and we got into a discussion about wealth and one of our members postulated that it doesn’t benefit society to tax the rich because: "Money is not a "physical" asset that can be hidden someplace. It is a  "debit / credit" entry on a balance sheet that is in a constant state of dynamic eqililibrium."  I made the following point as to why pooling weath at the top is massively damaging to society as a whole:

Art, Gold, oil and other speculative investments not only take money out of circulation but causes TRILLIONS of dollars of damage by inflating what the bottom 99% have to pay for what’s left after the hoarders get their fill.  This is also true of land to some extent as it trades around from wealth to wealth and drags up the cost of land for the poor (same land for more money = NEGATIVE benefits).  Cash is another place money is hoarded – when the top 0.01% skim their profits off the bottom 99.99% and pay their 17% taxes (the actual average paid by the top 0.01%) and then put the other 83% in a bank that refuses to lend money – that money is OUT OF CIRCULATION!  It’s been taken from the American people after they slaved to create it and then the opportunity to re-use what they have created is taken away from them. 

Money is only an asset to the top 1%, for the rest of the country, it’s a disposable item, more like a work chit that enables them to buy consumables but nothing more.  Most of the top 1% can’t see it because they live near the top and only think of money as an asset – which it is when you have more than you need.  Unfortunately, 99% of the people in this country have less than they need and even 99% of the top 1% are simply delusional in their belief that they are on an even playing field with the top 0.01%, who are 100x wealthier than the average person in the top 1% (and that INCLUDES their wealth, which brings the average way up).

What the Republicans are positioning as a tax hike but is really the end of a tax holiday that was put in place under Bush II is now looking more likely and the rest of the World is seeing this as a very positive sign that America is finally waking up and will begin putting it’s economic house in order the way all responsible governments do – by raising an appropriate amount of taxes to meet their financial obligations.  It’s fine if we want to add more stimulus to the economy – as long as we are willing to pay for it.  What has been objectionable to the rest of the World is our current policy of spending more and earning less – something that hasn’t worked out too well on our National balance sheet for the past decade

Yes, Democrats are the "tax and spend" party but the choice has been between the tax and spend party and the "no tax and spend anyway" party and it’s only just now that that argument is coming into it’s proper focus.  On the whole, this is a good thing for America – a possible sign that we are growing up. 

We were already bullish last week and we were only worried that perhaps we had gotten too bullish.  On Monday morning, in Member Chat, we were worried about the downtrending channel and we decided we would go neutral into the weekend (on our short-term positions, our longs are all bullish) if we got a nice stick save to break us over the line I drew in my morning chart:

It came down to the wire but we were confident enough at 3:16 to get back into the EWJ calls (the Aug $9s at .65) which was, as I said at the time "just in time for the Mr. Stick Show" which did, in fact jam us up from 10,395 at 2pm to 10,433 at 3pm and ran us all the way back to test 10,500 before settling at 10,465 at the day’s end, right at the lower end of my happy circle! 

We actually added a lot of new bullish plays on Friday.  As I mentioned in the weekend post, "Bargains Abound for the Bold."  Our FAS Aug $22 calls ($1.25) trade idea should be off to the races today.  We also had long ideas for Members on WFR (always!), PFE, ARNA, AAPL, GENZ, VLO (always!), IWM (huge payoff today on Aug 6th $65 weekly at $1.12) and DBC so, on the whole, another very bullish day of picks!  For a hedge we went with SDS in a very clever Jan hedge that makes 900% at $37 (SDS now $32.50 so a 7% drop in the S&P should do it).      

So far, so good as the Hang Seng jumped 1.8% (382 points) and the Shanghai was up 1.3%, back to 2,672.  The Nikkei is still slow at 9,570 (up 33) but India retook 18,000 with a 212-point move (1.2%) to 18,081.  The big news in Asia was a slowdown in Chinese Manufacturing growth that wasn’t so slow as to worry investors as the Purchasing Manager’s Index fell to 51.2 in July from 52.1, which is the third month of declines while the HSBC China Index actually came in at 49.4, which indicates slight contraction (below 50) for the first time in many years. 

Why is this "good" news?  Because it means that China’s tightening policies are working in the slow, gradual manner they intended.  Economists said the decline in the widely watched purchasing managers’ index also makes Beijing unlikely to take on any new aggressive tightening measures later this year as inflation pressures are expected to ease further.  "The Chinese economy is slowing down due mainly to the ongoing property-tightening measures, but the slowdown is clearly not as dire as some expected. We don’t think the current situation warrants an all-out fight to rescue growth."  

Europe is flying this morning, up 2% ahead of our open and our own futures are up about 1%.  EU Manufacturing expanded but it was all Germany if you break it down, HSBC doubled their net profits and BNP went up 31% so happy days are here again in the EU.  The dollar is way down this morning as the Euro hits $1.31 and the Pound is $1.58 and the Yen (which is killing the mood in Japan) is just 86.5 to the dollar, down from 86.85 in our usual 3am to 8am trade!  Oil popped to $80, which is where we want to short it, especially if the ISM is disappointing at 10am.   

We remain skeptical, especially as we re-test our 10,700 and 1,013 marks – if you want to read my technical commentary on the markets, just go back to the "Charts From the Future" post of July 25th because that future is now! 

Be careful out there. 


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  1. Good morning.  Looks like I missed out on a lively political economic debate.  My take:
    - GEL in a Knockout !
    - Phil – when you are reduced to vigorously defending Jimmy Carter, I realize that there is no hope for you !  :wink:
    - Shadowfax … see my first point.
    Charlie Rangel:  for hilarious video; go here and then click on the "Lionel on Rangel" video.   great take on politics

  2. The question is; do we go short pre-market for a gap fill or more ?
    Is there any reason that we are rallying this morning ?
    Stockman:  Of course the NY Times would print him, just what they like a former Republican repudiating his own past.  Ha Ha Ha.   Who does he work for these days ?  Goldman ? Pimco ? Blackrock ?   must be something like that.  (didn’t see any disclosure in this bio/tag).  Inquiring minds would like to know.   We know where Greenie’s bread is buttered.

  3. Ah yes, now I remember — first Blackstone, then private equity, and disgrace.  But hey, if you promote the NY Times political agenda, none of that matters, we’ll give you Op Ed real estate !
    Collins & Aikman Corp.
    In August 2003, Stockman installed himself as CEO of Collins & Aikman Corp., a Detroit-based manufacturer of automotive interior components. He was ousted from that role days before a Chapter 11 filing on May 17, 2005.
    Criminal and civil charges
    On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in "a scheme … to defraud [Collins & Aikman]‘s investors, banks and creditors by manipulating C&A’s reported revenues and earnings." At the same time, the Securities and Exchange Commission brought civil charges against Stockman related to actions he took while CEO of Collins & Aikman.[3] Stockman suffered a personal financial loss, estimated at $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide. Stockman said in a statement posted on his law firm’s Web site that the company’s collapse was the consequence of an industry melt-down, not fraud.[4] On January 9, 2009, the U.S. Attorney’s Office announced that it did not intend to prosecute Stockman in this case.

  4. Phil
    I own GOOG JAN 2011 730 calls at 0.77. Whats the recommended move here? Thanks.

  5. The dollar is getting crushed.  Everybody must be positioning for a QE2 announcement. 

  6. Well it seems that both Greenspan and Stockman have suffered some revisionist come to Jesus changes in mindset.  I love the old saying, "Do what I say, not what I do." 
    Each participated over massive expansions of federal borrowing and/or printing of fiat money.  Each served administrations that were mighty contributors to the facist totalitarian bankster country we are quick becoming (or have largely accomplished).  The only guy worth listening to is Ron Paul.  Sadly, almost nobody in guvment does.

  7. Is RIMM a short based on middle east blocking of BBerry service ?

  8. Phil, Is the dollar/stock market inverse trade back on??

  9. Hey all,

    I have two new plays for you this morning in Health Net Inc. (HNT) and MannKind Corp. (MNKD). 

    HNT is a Buy in the range of 23.60 – 23.80, and MNKD is a Short Sell in the range of 7.28 – 7.38.

    Check out my analysis and more here. I will be around all day to answer any questions or if you need anything.

    Good Investing!

  10. I’m so lost with this market i have no idea what’s going on which isn’t a surprise.  Why the hell is the world rallying and singing Cum By Yah?

  11. Slow day here on the board…where is everyone?

  12.  Cap, similiar to Google, Blackberry will cave.  I predict that they set up servers in each individual country.  

  13. David…everyone is wondering how this market could be a bigger sham..  They to dumbfounded to type.

  14. Haha…what’s wrong with a little rallying.

  15. For what reason?

  16. It is Monday….ripe for a rally

  17. Yip -

    Good earnings, good news out of China, just got out of a three day pullback. I love it when we rally on these neutral days…great sign of the market’s health. Why should it be declining? In the very, very short term I mean.

  18. Good morning!

    Dow 10,700, S&P 1,155, Nas 2,300, NYSE 7,350 and Russell 666 are our bullish targets – pretty much the 5% lines off our mid-ranges.  Last time we pulled greens on the Nas and RUT before falling back on a Dow failure so if we don’t get the Nas and RUT green here – we can’t take this seriously at all. 

    Remember our current range-bound market philosophy:  "Bulls are idiots, Bears are idiots – we make money selling the traps!" 

    10,550 is the support line we’d like to hold on the Dow.  Failing that will make this whole move unimpressive.  Don’t forget what BS a pre-market move up is on now volume – it’s like sitting in an auction and the guy keeps raising the bids even though no one is actually raising their paddle – total BS! 

    1,113 is our hard pass/fail line for the S&P and 7,000 on NYSE round out or indexes.  Since the Nas and RUT are leading us, their 2,300 levels and 666 levels are MUSTs as well – they have a higher bar set for their success.   

    We have a bullish plays in the Weekend Post on C, UNG, ATVI (earnings) and good discussions on hedging and Mattress plays.   Our very good trade idea for an SDS hedge is:

    Jan $32/37 bull call spread at $1.30, selling Dec $26 puts for .95 for net .45 on the $5 spread.  Obviously the puts can be rolled along if the S&P is up 10% (1,200) and that’s some good, cheap insurance that I don’t think we’ll need.

    Things look good but we need to see a real move over our levels or it’s just a double top on Testy Tuesday.

  19. Construction Spending and ISM at 10am.   Both could flip us down so SPY Aug 6 (weekly) puts at .53 are a nice, speculative play ahead of the number as I don’t think we’ll fly higher on good numbers and it seems easy to disappoint us as we’re already up 1.25% for the morning.

  20. everything i read out of China was slowing, everything.  Earnings are mixed, How is today a neutral day?  Why should it decline?  We are at a technical turning point if the market rallies and holds over 11k and other levels on the SP500 that’s very bullish this whole new level is nonsensical after rallying off the lows from 9800.  If anything the market should be pausing. I’m still betting this week distribution will still occur and this rally will fade hard after a few more pushes higher.

  21.  Hi Phil,
    Where do you see the Euro going from here?  I’m contemplating putting on a bearish bet that it trades below 1.30 by the end of the year.

  22. Phil, What do you think about buying NLY and selling the jan 2012  15 straddle for 5.10?  With the expectation that the fed will continue to be on hold and that dividend will be safe.

  23. Yes… regarding all the conversation about Stockman…. The US Attorney’s office decided not to prosecute (a Democratic administration no less)….. END OF STORY !!! Greenspan and Stockman and several other Real Mainstream Republicans are now seeing the destruction of the US economy in LIVING COLOR…. the policies they promoted and had underwritten… Welcome to Reality…. 

  24. Yip -

    Haven’t you noticed…better than expected is all that matters. That is what we had in China. The market thinks it prices in everything…then better than expected brings you up. That’s the theory haha. I know there are tons of reason for it to decline though.

  25. Carter/Cap – Yes, Cap, anyone who stands up for Carter is obviously insane.  Why do you find it necessary to berate anyone who stands in front of your punching bag?  In fact, why do you find it necessary to do a character assassination of Stockman the minute he says something negative?  How’s that "non-partisan" stance of yours? 

    GOOG/Chakra – That was an earnings gamble right?  Well nothing exciting happened and they dropped – there’s not much to do with them but maybe hope to get out at .50 if GOOG has a good run as there’s pretty much no way we’ll be seeing even $600 by then. 

    Construction Spending was up 0.1% – WAY better than expected. 

    ISM was 55.5, also way better than 53 expected.  Looks like public spending carried the ball (I told you the mall was packed!).

    SPY $110 puts fell to .45 but 1,120 is going to be a tough line so, if a small gamble, you can see about a DD at .40 (or maybe .35) for avg .45ish and then look for a pullback of the 2.5% line at 1,126 in the very least but 1,120 has a good chance of forcing a retrace back to 1,113.


  26. David can you list the numbers?  T
    he manufacturing number was worse than expected?
    China’s July manufacturing data were the weakest in more than a year as the government clamped down on property speculation and investment in polluting and energy- intensive factories.
    A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics slid to 49.4 from 50.4 in June. A separate, government-backed PMI fell to 51.2 from 52.1, the Federation of Logistics and Purchasing reported yesterday. Fifty is the dividing line between expansion and contraction.
    David please provide the information where China improved please.

  27. Phil, what do you think of NBG?

  28. Edz is at all time low.. Can’t believe how good things are!

  29. DIA mattress players I am buying back 105 Aug putters

  30. Phil, your opinion on USO?  I have an alert for oil above $80 and it triggered this morning so I’m thingking of another try on USO shorts? (e.g. Aug USO $33 Puts at 0.13)

  31. DIA rolling Sept 106p to 107 putters ..43

  32. Yip -

    Here is why the PMI was positive…I don’t make up the interpretations for the record…I just play off them:

    Today’s PMI was the lowest since China’s manufacturing stopped contracting in March 2009. An output index fell to 52.7 from 55.8 in June. A measure of new orders slid to 50.9 from 52.1. An export-order index fell for a third month, dropping to 51.2 from 51.7.

    Of 11 sub-indexes, only the measure of employment gained, climbing to 52.2 from 50.6.

    At Morgan Stanley, economist Wang Qing said the slowdown seemed concentrated in heavy industry, partly reflecting a government campaign to close inefficient businesses to meet energy-saving goals. This “does not necessarily reflect weakening in the underlying economic fundamentals,” he said.

    The PMI, released by the logistics federation and the Beijing-based National Bureau of Statistics, covers more than 730 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics. 

  33.  I love this blog, but it has really turned me off to politics in general.  

  34. I see ‘interpretation’ said it wasn’t that bad but all the numbers were worse.  We’ll I’m glad it makes sense to you! :)

  35. yip…..I was in at a party last night and a beautiful woman asked me to make love to her.  I declined, as she could not give me a good reason why I should do so.    What”s the point?  You don’t need a reason.  Enjoy the rally.  Sell some of your longs for profit during the rally.  ENJOY !!!    But don’t forget your protection either.   :)

  36. jomama
    I just read what is interesting for me the rest just ignore

  37. Phil/Cap  What do you expect from an independent?  Cap, with all due respect, your political views are an insult to all "independents"……..

  38. Lflan -

    HA…stocks and women.

  39. David, Stocks and women, have to pay for both, good ones are not cheap :)

  40. tbt, still not in, today’s my day, phil, what’s the best play right now? to enter?please

  41. i get the bull/bear idiot thing. this volume is pathetic though. how do these guys get away with bidding this carp up . bernanke was hardly bullish . ism was not earth shattering . what am i missing? tia

  42. Lapper -

    Even at 22…I have found that out

  43. JoMama…You weren’t turned off to politics before?  I wish no one mentioned anything about politics.  There aren’t to many topics where two people’s views could be so different, politics.  I wish we would stick to the more mundane market nonsense discussions I can only handle so much BS,.
    Iflan I’m not sure what your analogy has to do with anything, I’m short and losing.  I’m trying to assess what to do and using an analogy bout sleeping with a beautiful women hardly helps here.  It’s a general practice to attempt to discern the logic and price action for further management of one’s trades. .
    The board is offering more and more diminishing returns.  Politics and others asking why asking questions about ones business.

  44. Phil was curious as to your thoughts on ISLN and ETN? Thx

  45. Good morning Phil — FCX — I have aug 67.5 short call , how should I adjsut this , should I buy sept like 67.5 and turn to a back spread ? thx

  46. Gotta be honest.  Based on recent experience, these "feel-good" type of days give me the heebie-jeebies.  On the other hand WFR is down again.  Looking to jump in here.

  47. Hi Sorry I mean sept 65 call

  48. Hi Phil My original main position in BAC is 120 Jan 11 17.5 long 4.71now 1.19 and Jan 11 20 short sold for 1.75
    now .15, 120 17.5 Jan putters short at 2.63 now up to 3.47 as the shorts are rollable tough to roll the long caller. What are your thoughts thks

  49. Pharm/ CLDX
    have a buy/write (sold Aug 5s calls and puts), what is your recomendation: let it expair or roll ?

  50. re: I’m short and losing
    Maybe that’s why you don’t want to make love to the beautiful woman (just kidding!)

  51. Engagement ring – $5000
    Downpayment on house – $100,000
    Toyota Sienna XLE minivan – 37,000
    25 years of putting up with me, and 3 fantastic motivated kids….  PRICELESS!

  52. Phil
    I am still a bit pussled about the TZA play holding Jan 11 70 long 4 calls pd 3.51 today 2.31 and Jan 8 calls short sold for 1.68 now .97. The stk has been ajusted. How do I play this one

  53. gmarts – haha.  Congrats man!  Hopefully I’ll happily get to 25 years some day!

  54. Hello from the beautiful but rainy Outer Banks of NC-  Banks didn’t follow SPX on that last pop.  Am now short FAS.  Will cover over 23.84.

  55. Trice…
    It’s a joke and even though we’ve blown through all technical levels I still don’t believe we hold, we go lower in the coming month at some point.  However August may be totally run by bots and we may be at 11200 by next week

  56. The problem with the RELIGOUS RIGHT is a mindset that I can’t be wrong with god on my side. The true faithful believe god only helps he who helps himself. Everone is wrong some of the time, some like Greenspan feel compelled to admit it to save the world, a world that has not liked us for 10 years because we are the BIGGEST PROBLEM!

  57. Gmarts – 26 years to my best friend and awesome twins. Life is Damn Good!!!   :)

  58. Phil:
    I have a question about adjusting a covered call. I own 100 shares of PPG (Cost basis: 62.61, Purchased 06/2008) and sold an AUG 65 call for 2.45. It’s now at +/-5.95. Do you have any clever ideas for adjusting the position? I understand that I’m a fool letting it go.

  59. Wow, oil at $81.25 and no shorting on strong ISM (though tempting). 

    Ron Paul/Skip – I agree.  Too bad he comes across so crazy on other topics. 

    RIMM/Cap – I think they are already pretty beaten down at $55, the Mid-east thing is fluff to kock them back ahead of the new phone numbers.  I wouldn’t buy them either as AAPL is killing them but not sure shorting is wise.

    Speaking of AAPL – I don’t know about other smart phones but the amazing amount and quality of free apps on the IPhone/IPad make every day like Christmas.  I’m not a power user but I’m pretty sure I’m average and once a week or so I get bored and browse the free offerings and it takes 10 seconds to download a new app and, in month two of my IPad, I have yet to not find something that has managed to keep my very amused for a week or two until the next time I feel like "shopping".  To me, this is a very sticky feature.  Maybe droid apps are just as good but other people show me things on their phones and I generally end up politely nodding and saying "oh that’s nice" even though I don’t think it’s as good as stuff I get for free.

    Kumbya/Yip – Because (and this is what the bears do not get) we ALREADY priced in armegeddon and this is NOT armegeddon, it’s just a recession.  The drop to 800 on the S&P was a silly over-reaction and the drop to 666 was stupid.  Bears have taken an aberrant market movement and turned it into a benchmark against which all should be measured but I say (and I know this is radical), let’s assume that the people who traded TRILLIONS of shares from 2000 to 2006 (before things got silly) had some vague idea of what the marekt was really worth and the average they came up with for the S&P was 1,100.  Add in 4 more years of inflation, a little bit of growth and subtract the financial damages and I just can’t get below 1,000.  Since the market is a forward-looking mechanism and since it looks like we’re going to survive – then 1,100 is very reasonable and a case can be made for 1,200 if we can make it through 6 more months without any major failures

    Euro/Jdub – The Euro is properly priced at $1.35 but will be subject to a fiscal shock in any of it’s member states, which is bound to happen.  If you are bearish on the Euro then you are bullish on the dollar – are you sure that’s right?  If we go for QE or, even if we don’t and they end up extending tax cuts, other countries will knee-jerk sell the dollar and buy the "more responsible" EU currency.    This morning we very much have a weak-dollar, commodity-driven rally – the dollar may bounce back from this but it’s very news driven.  I’d wait to see a silly run in the Euro to $1.40 and then I’d feel better about shorting it. 

    NLY/Hulk – They have held up very well and the 15% dividend makes them worth the gamble I think, especially with your nice, conservative short straddle selection

    NBG/Loopy – I have no clue on them.  No way to know (without crazy amounts of research) what they hold, who they owe, who owes them, etc.  That’s no way to invest in something.  Even with LYG, who I thought I had a clear picture of, it was very hard to deal with the insane fluctuations and they are stable compared to NBG! 

    EDZ/Russian – Keep in mind that those ultras fall apart over time anyway so not too surprising they are at new lows as emerging markets rally back.  Notice EDC is NOT at new highs.  Possibly they will make a good short soon…

    Mattress/Yodi – Thanks.  Keep in mind folks that you want to roll to the Dec $107 puts for .45 and the $108 puts for another .50 or less.  The $104 puts are .88 and can be taken out (no cover on the Dec long puts) and if we break 10,700 then selling 1/2 $107 puts (now $2) if we hold it as those can be rolled to 2x the $104 puts, which is fine if we have $108 December puts.

    USO/Jordan – They are jamming it up for all they are worth, not a very safe short right now although super-tempting.  Lot’s of data tomorrow including Auto Sales but I think consumer picture was up in July.  At $82.50 I’d be feeling more brave but you can short here and use the $81.50 line as a stop.  The Aug $37 puts are $1.20 with USO at $36.44 and you can sell the $36 puts for .72 now but I’d stay naked under $81.50 and hope for a move down that let’s you sell those puts for $1+ to leave you in a very cheap bear put spread

    Your Day/David – There is no "best play"  right now the odds favor some bearish plays as we’re already up 2% and over 2.5% is less likely than falling back to 1% but, other than that, if you were bearish and ignored my "bear trap" comment on Friday morning, then you have to decide whether to ride it out or gnaw your leg off to get out of positions.

    Missing/Trice – See above comment to Yip.  I used to go to the Friar’s Club in NY, where a lot of old show-biz guys like to hang out and have lunch.  I’d run into Jack Benny and Milton Berle and Henny Youngman and they looked like they were 1,000 but what does everyone say to them?  "Hey, you look great!"  And they meant it too because half the guys we ran into I was surprised they were even still alive so the fact that they could stand up and shake hands seemed amazing.  That’s about where our economy is at the moment..

  60. Hi Phil;  I have SDS March $40 / $48 bull call spread at $1.22 net ,now $ $1.13 Should I sell the Dec. $ 26 puts for $.95 as u recommended this morning  with the  Jan $32/$37 spread. thank you.

  61. Yip:  Unemployment and Payroll info coming out this Thursday and Friday, so its very possible we fall off after Wednesday.

  62. Shadowfax – Amen Brother…..

  63. My wife is without a doubt the best investment I ever made. Without her and the kids as a motivation, I’d probably be sitting in a butt-sprung green plaid Barca-lounger in a run-down singlewide down by the banks of Misery Creek drinking Old Milwaukee Light by the 30 pack, watching Jerry Springer wondering if the WWE will survive after the upheavals of Mega-Smackdown XXI.

  64. yip,
    forget about what you think the market "should be doing" based on your pessimistic outlook and follow Phil’s directional advice and 5% rules. It’s simple, if he says, "We regained such and such levels and that is bullish", then play for the next 5% up. I have not done well on the short side because it takes more attention and finesse so, "if we lose, such and such levels and that is bearish", I primarily ride out the drop and look for new buying opportunities. As we climb back up, I methodically take profits on what is working. Re: Mattress plays, I usually stay light on those but without covers and cash them out when we get a drop, all the while realizing that the long-term propensity of the market is UP. It takes a special skill set and capital base to be primarily short because you are fighting against most of the rest of the world that wants the market to go UP. I’m not sure this is helpful but you lamentation reminded me of my past experiences and frustration. I still use my mind but decided (since I am a relatively newbie to trading) that Philknows this stuff much better than I so why not follow his advice as an experiment and see what happens. Through that process, I’ve devised a system that works for my personality, risk tolerance, liquidity, frustration tolerance, and cognitive strengths and weaknesses.

  65. HHFIV/PPG — why not cash it out? there is very little premium left and you’ve made your max profit. If you still want to own it, sell some puts. You can sell the Sept 65′s for .90 which would be about a 1.5% discount to what you’ll sell at now (or 12%/year).

  66. HHFIV/PPG — on second thought, since the position is only 100 shares you’ll need to take commissions into consideration.

  67. Kink….Most likely however our illustrious author Phil, ;) thinks this is where we should be.  Phil you certainly have a bullish opinion and sentiment for saying both bulls and bears are stupid.  I am a bear for sure and to my own demise as of late. Your claims for an obvious higher market is certainly a bullish and follows a confident upward sentiment.  Your guiding a lot of people, I hope for your sake your right but if your wrong your going to get very burned in the court of public opinion.  Things are bad even if you don’t know it yet.  It will all come to fruition, whether it’s next month or two years, we are so far from from or recovered it’s not even funny however discussing this further feels like I’m going for Bush and you’re going for Obama or the reverse.

  68.  Thanks Phil.
    So i’m looking at EUR/JPY off its high but EUR/USD still near its high (or at its high).  EUR/JPY usually gave me a good 15 min head start on commodity/material/energy driven rally.  
    So let’s see if start to fade from here.

  69. aceland
    Go with the flow! What a consept, what works!

  70. women/stocks — still can’t figure either one out! The both sure like to change their minds!

  71. TBT trending down, low volume retrace to 1113 seems more likely.

  72. Boy this market is fake, fake, fake.  I don’t know how anyone can get excited about it and say it’s ‘right’.  It’s a sick casino.  Going up or down.

  73. Aclend.  Thanks.  I am frustrated, well you should why I’m frustrated very soon.  When the market drops right back down you will see my frustration abate.  Not because I will be making money but because reality is more comfortable then fantasy and that’s where we are now.  I’ve taken about 6 mattress plays and lost them all. I’ve also took a few other plays like TASR and it hasn’t worked well.  Phil is a very bright person who has good idea’s whose writing is even better  but he like no one in this business is an oracle so i would be careful about how much faith you put in someone.  Secondly to say it’s harder to be short than long has no basis in mathematical fact or otherwise.  When the market is up your losing, when the market is down your winning, it has nothing to do with what you or anyone else is wanting to happen. When I was short in Oct of 2008 I was listening to many others saying the same thing as Phil and  when the market fell 30% in a week that wasn’t harder for me because more people wanted the market to go up, believe me.   I’ve been trading for 15 years and I’m venting because I’m pissed about what a sham I believe this market is, yea I know that doesn’t make me money and it clouds my view that I know but I just can’t help be blinded to the fact we are in no sustained recovery or market uptrend.

  74. Phil    Would you add another January TZA hedge at this point or just wait.  Thanks

  75. Matt.
    can I ask you a question?
    I totally agree with you, now how or do you think your bearish and cynical mindset throws you off trading?

  76. yip…..I wasn’t really trying to be flippant about the market or your situation, but rather, trying to make a point through analogy.  The markets go up, and they go down.  a saavy trader will learn how to make gains while the market moves up and while it moves down.   This is what separates the dumb money from the smart money, the loser from the winner.  I want to try and get a sense of where the market is headed, and where individual stocks or ETFs are headed, but as to CARING which way they go, I am indifferent, at least from an investment standpoint.  Certainly I care that millions are out of work, etc.  but I certainly do NOT care whether AAPL goes up or down.  As long as I can SENSE where AAPL might be headed, I can make $.  So my advise to all traders is to care about your fellow human beings and to act accordingly, but to develop INDIFFERENCE to market movements.  Until you become indifferent, you are likely to lose money, as you will do things like hang onto a stock you ‘love’, or one you ‘think’ ought to be going up, not down, or failing to take profits because you ‘think’ it might or should go higher.   Lack of indifference leads you to dwell on unimportant matters, wasting time that could be used formulating winning trades.  Become educated, but INDIFFERENT, and the  $ will flow in your direction.   

  77. Phil / 10:04 …. what character assassination of Stockman … its all factual.  Was just curious to see why his NY Times op ed was even published.  Now we know.  Image rehabilitation.
    I could care less about the guy; you are the one who gave him headline billing.

  78. RIMM / Phil … I agree w/ that take.  Shorting it pre market while it was green would have been a good play.
    Look what you did to SPG Phil w/ your "mall is packed" comment.  REITs setting up again to be good shorts at these levels IMO.   Unless you believe Brookfields lies about the Manhattan market.

  79. Phil,
    At the end of your post this morning, you state ‘we remain skeptical as we test 10700 and 1013′……that should be 10700 and 1113. No?
    This is the third time you have done this…..bearish signal perhaps?

  80. I phone / I pad Apps.   THIS is what is wrong w/ our economy.
    Too many smart people spending too much time either developing or playing with Apps.
    Its all Apple’s fault.
    And Bush’s.

  81. Iflan,
    Very well said on the ‘Indifference and caring about fellow humans’ and making money in the markets.
    Would love to share AAPL views with you sometime…perhaps by email or phone if you are available

  82.  Algos now controlling AIG

  83. Bearish/Yip:  I am kinda in the range-trading camp, so I am probably not as bearish as you or Matt.   I think the May 6 flash crash showed me fair value in the markets.  Because when all the robots shut down that day, real buyers came in and bid the market back up at the SP 1065, DJIA 9900, and RUT 640. So I believe thats the pivot point and we trade around level. A
    lso, I’ve gotten trapped twice now at 1100+ a couple of times, so if it happened again, I think I would cry real tears.

  84. Phil
    Everyone deserves the iPhone view. So much easier to read comments.

  85. Phil / Small Caps    Enjoying my 55% long position today, mainly energy, and holding my 45% cash.  Looking ahead, the internationally focused big caps have limited downside, but, the small caps focused on the US are going to have problems when the foreclosures accelerate and savings / unemployment benefits run out going into 2011.  What is the best small cap etf to think about shorting at some point.  I used to use RWM, but that’s only 2000 companies and many of them have international exposure.  Is there a way to pick up all of the smallest US companies in an ETF I can short when you become more bearish about the mkts in general?

  86. Cap/Apps — I’m working on a "point the finger" app if you’re interested. As a smart guy, you’ll spend less time pointing the finger and helping our economy. ;-)

  87. Cap
    Phil’s headline is in line with the what has happened today. The world depends on the American consumer and now he is missing. The world just took a deep breath because a couple people now see their error. Witout real change by congress on taxes and the shame financial reform bill, worse than nothing, we will be consumed by deflation, all but the top 500!

  88. Cap, what’s wrong with people spending time developing apps? They’re creating more value than you spending time filling a private message board with your comments about stock market speculation…

  89. I am recommending a short of SLG here (62.50)

  90. Iflantheman – Well said, though tough in practice. JRW is a perfect example of the word "agnostic"……

  91. Phil – Ron Paul, I was wondering what crazy things that he says? I don’t know as much as you do about him but what I hear I like. He wants out of foreign wars and would like to abolsh the fed. Thats about all I know though

  92. Politics/Yip – Well, if you’ll notice it’s the conservatives who tend to feel the economy is in shambles and we are all doomed and need to buy gold and crawl into holes (thanks to Glen Beck’s relentless messaging) and that everything Obama does is a disaster and that we are on the wrong path and stimulus doesn’t work etc.  Now I try to point out the other side and get shouted down and I try to have a bullish premise and get shouted down BECAUSE of the big picture and politics etc. that very much affect your investing.  If you want to ignore politics – I’m sure there are lots of sites that pretend they don’t exist but this isn’t going to be one of them because I am a fundamental analyst and analyzying politics and how that affects our long and short-term investment outlook is not a side show and perhaps your feelings that they are may go a long way to explaining why you don’t "get" the markets. 

    ISLN/Jrom – I don’t like storage companies.  It’s become a commodity play and it just keeps getting cheaper every year with AMZN and other big names cutting into the business.  It’s hard to compete with AMZN because they are selling spare capacity to offset their costs while a company like ISLN has to sell the same service to cover all of their costs and make a profit.  ETN is more interesting but not cheap as a recovery seems already priced in for them.

    FCX/Gucci – Yeah, copper is at $3.36 so not good for FCX short.  Aug $67.50s are down to .72 and, if you want to stick with it, I’d roll those to the Sept $62.50 puts at .74 (you can always roll up if you get more bearish) and sell the Aug $67.50 puts to some other sucker so it’s a free roll that buys some time but, unless we get more of a China slowdown than we’re seeing or really poor housing numbers, it’s probably a dead play.

    BAC/Yodi - I have a headache trying to decipher this.  I think you are saying:

    • 120 Jan $17.50 calls at $4.70 (now $1.20)
    • 120 Jan $20 calls sold for $1.75 (now .15)
    • 120 Jan $17.50 puts sold for $2.63 (now $3.47)

    So the original play was an artificial buy/write but I can’t understand how you took a $2.50 spread for net $2.95 – very hard to win if you do that.  The other leg is the short put to pay for it, which drops the cost of the bull call spread to .32.  So, best move is to cash your $1.05 bull call spread and you can roll the $17.50 puts along to the 2012 $15 puts (now $3.10) and if they expire worthless, you actually have a profit.  If you want to continue to be more bullish on BAC long-term, then you can put your net .72 (assuming you spend .40 to make the roll) back to work by taking the $1.50 you cash and buying the 2012 $12.50/17.50 bull call spread for .97 (so .08 less than $1.05 leaves you in for net .64 on the $2.50 spread). 

    LOL Chaps!  It all goes back to not being able to get your kids the GI Joe with the Kung Fu grip.

  93. rainman; jvest …. you guys need a humor chip !
    whats the matter; can’t poke fun at apple ?
    you guys, what are you doing here anyway, get thee to an apple store and buy stuff !
    shadowfax, you are another story completely my friend ….
    if only we were taxed more; than everything would be allright.

  94. 1020  JRW is a great example of someone who has mastered ‘indifference’.  He is in and out of TNA/TZA as needed, for profit, with absolutely no discussion as to which way the market ‘should’ be going.  In redneck terms, "It just don’t make him no never mind." 

  95. Regarding Stockman…. the only factual information that matters is the conclusion… the US Attorney’s office obviously did not have a very good factual case to prosecute.  Newsprint etc is always ready to "hit the headlines" with the accusations when government agencies talk fraud… BUT, you never see any headlines years later, when anyone is absolved or the case is withdrawn…. just the way our system works….   

  96. Yip, My bias definately clouds my objectivity.  Every now and then I manage to be agnostic but I quickly grow tired of it.  I handle my bias by having a block of stock short.  I then cover and uncover the block in varying percents when we are going up.  That way, I massage my bias without getting totally whacked when the market disagrees with me.  BTW, I’m now fully covered.  We could very easily turn down here though..  off to the beach!

  97. Maya1…       I review and answer emails in the evenings, checking them rarely during the day.

  98. Phil, what do you think of this play on FSLR: Bull Call Spread Dec $90 / $100 with a sale of Dec $95 put @ $4.90 (for the whole thing). Max profit of $5.1 in 5 months (100% over investment, 20% over margin), 20% drop protection from today’s price. I’m willing to own FSLR @ $100

  99. TZA/Yodi – TZA was chopped 20% so, at $30 it’s effectively $6.   You paid net $1.83 for the $4 calls, that’s really all you need to worry about.  Other than selling the $4 puts for $1.30 to drop your basis, there’s not much you can really do to improve it if you want to stay in the hedge other than selling $6s (now $1.60) but hardly worth it for .70 more and cutting off your upside.

    At this point, with volume just 60M coming into lunch, the odds do favor taking short-term bull plays off the table on the assumption that we won’t break 2.5% on a day move, especially with the RUT and Nas still not over their levels.

  100. Im gonna dip my toes into shorting copper here at 3.393 – this is just BS!

  101. That’s it……I’m all in short on the Pork Bellies.

  102. Cap/Appl — I was poking fun at apple. I’m not an apple fan (don’t have one apple product) and I completely agree with you on apps. Perhaps not very good humor but I labeled it coming from my humor chip with --> ;-)  

  103. Me too Matt……I have a difficult time holding a long position for any length of time.
    I keep thinking some event is going to turn this market inside out.  Like Israel going off on Iran or something.

  104. Phil,
    any adjustments for these two trades:
    1) Buy FAZ and finance it with Sell FAZ 8/10 P14 and Sell FAZ 8/10 C14
    2) Buy FAZ 9/10 C16, Sell FAZ 9/10 C19 and finance it with Sell XLF 9/10 P14

  105. cap
    I believe in taxes designed to born by the ones that can most afford it. That means more on the rich and less on the poor. Marginal rates to 50% progressively. I also believe in taxes on corporations and never subsidies, if you don’t make money no taxes. I live by and in 0 debt, so should our government. Truely free markets which we don’t have, that GM should be out of business and the new loan to low credit scores idea backs my point, they are not fixed like other points I made. I did not vote for Clinton and Against Bush X2, I am Bi-Party!

  106. All, funny you should be talking about women, wives, and marriage. Our 35th anniversary is today!! To the woman I met first day of our junior year… of high school! What more can I say?

  107. Phil you got this all right the only thing is the Jan 11 long call is a 15 caller not a 17.5 caller so it is a 5 $ spread I guess I should still do what you suggested as I donot think BAC will come out of the woods soon thks
    BAC/Yodi - I have a headache trying to decipher this.  I think you are saying:

    120 Jan $17.50 calls at $4.70 (now $1.20)  (120 Jan $15 at 4.70 now 1.20)
    120 Jan $20 calls sold for $1.75 (now .15)
    120 Jan $17.50 puts sold for $2.63 (now $3.47)

    So the original play was an artificial buy/write but I can’t understand how you took a $2.50 spread for net $2.95 – very hard to win if you do that.  The other leg is the short put to pay for it, which drops the cost of the bull call spread to .32.  So, best move is to cash your $1.05 bull call spread and you can roll the $17.50 puts along to the 2012 $15 puts (now $3.10) and if they expire worthless, you actually have a profit.  If you want to continue to be more bullish on BAC long-term, then you can put your net .72 (assuming you spend .40 to make the roll) back to work by taking the $1.50 you cash and buying the 2012 $12.50/17.50 bull call spread for .97 (so .08 less than $1.05 leaves you in for net .64 on the $2.50 spread). 

  108. Matt/Exec – me to. Im just doing Phil’s/David’s/Op’s daily/swing trades. Not going long in anything. Im waiting for that event to, although Im not sure Israel bombing Iran would do much to the stock markets besides drive the price of oil up to 150$ again….

  109. Jrom,
    True…..but remember…..oil hitting $150 a barrel was the final straw that took us down.

  110. rainman … my bad !
    shadowfax … but our government and their reckless spending habits and corruption IS the problem. 
    How do you classify people who make $200k as rich ?  They already pay more taxes .   Why should they bear the burden of an ineffiicient, ineffective, reckless and corrupt governing class ?
    We are not ATMs for these crooks to determine what our ‘fair share" is.
    If you think you are undertaxed, pay more taxes.  Voluntarily.  Nobody is stopping you.

  111. Hi phil I am confuse so my short call august 67.5 now  7.8 buy it back and switch to august short put 67.5 and sept 62.5 short put , so switch short call to short put right

  112.  Phil: Rudimentary?  Am I correct that once premium on caller is less than 50% it’s time to roll out/up?  All other things being equal of course.  Thanks

  113. Congrats on the 35 years Jbur ! As guys, we sometimes gripe about our women, but imagine life without ‘em.

  114. gmarts:  I’d probably be drinking that beer and watching smack-downs at the trailer park with you!

  115. Phil where would you initiate a QID trade ?

  116. JBUR

  117. Thanks Jbur, Beer and wrestling is better with a buddy!   :-)

  118. Cap
    I do not think making 200 or 250K as rich. To me the rich have millions and max taxes should go to people making over $10,000,000 per year and they can afford it, a fair and progressive rate. No debt spending because people, corporations, and governmentSSS have forgotten the promise to pay back with interest. I disagre with your statement they pay more taxes already because it is not the total paid but the per cent %%%%. I agree Warren B pays more than me but his rate is app. 17% and mine is 35%, that my friend is regressive! The masses are onto that lie, the rest are fools or suckers.

  119. Maybe the Democrats should back away from the $250k income line and talk about placing a higher tax bracket at $1 million. That would make it reeeeeally hard to spin at tea parties. A million isn’t what it used to be, but the Digit Rule has a powerful effect on people.

  120. Shadowfax:  Unfortunately, I believe, that the masses are NOT onto that lie; from what I can gather the masses seem only interested in reality tv shows, celebrities and intoxication.  Without an informed and enthusiastic electorate this system will continue to be gamed by the powers that be.

  121. jvest
    Great idea, that would stop the twist that cap and stupid government ceeps trying to sell. Change by law or by revolution, I choose the former.

  122. jvest:  too many people (and hence too much money to tax) between 250K and 1MM.

  123.  Phil,
    Re: FAZ
    I have the Aug $15-$17 and the Sep $16-$19 Bull Call Spreads as a hedge.  At what point on the calendar do you recommend I either roll or close these positions.  

  124. RUT down to new lows of the day.  Not much strength in the small-caps today.

  125. Gmarts- agreed, however it depends what kind of women you’re talking about. Me personally, I’m shorting American women and long Aussie/eastern european/Asian women. J/k…. Kind of..

  126. All:  About taxes and income:
    Not that I agree with this at all, or feel it is morally right to do so, but, I have several acquaintances who are $10M + earners who don’t pay anything close to even what Buffett pays (17%) in personal taxes. All of their trading accounts are in trusts offshore, and they don’t pay a dime in short term capital gains, long term capital gains, or taxes on interest…. UNLESS they choose to repatriate some of the cash, and that is done ONLY when they want to buy something, like a new home, new yacht, or new car. 
    Do you realize what kind of advantage that gives those guys when it comes to compounding dollars? Joe and Jane six pack can never keep up.  No, I’m not one of those guys.  I pay my full allotment of taxes and have no gripes about doing so.
    Just thought I’d throw that out there for your consideration.

  127.  Phil, 
    I got stuck with a large position in one of Oxen’s plays (SLAB) (Made a huge mistake on an order right at the close and entered 2,000 shares instead of 200, when I tried to get out the market closed and the after hours was so illiquid that I had to stay with the position). Earnings were good but their guidance was a little soft for revenue. I have since sold 900 shares at a 2.5% loss but the other 1,100 are now down close to 6%… The position is way out of whack on my porfolio (20%)… Do you see a way out trying to limit any further downside and looking to recover the loss for these portion? To my very untrained eye it seems the stock has made a double bottom at 40 … 
    Thanks for your help..

  128. Jbur:  That sort of story makes me viscerally sick; I guess greed knows no bounds.

  129. I don’t know jr…. My Chinese born best friend has a rather upscale Russian wife, and her Jimmy Chu budget has gotta be astronomical…..  My farm girl wife has learned to appreciate the joys of international travel, leather seats and and a home with views, but never ceases to be aware of how blessed we have been in this great American  life!

  130. I don’t know jr…. My Chinese born best friend has a rather upscale Russian wife, and her Jimmy Chu budget has gotta be astronomical…..  My farm girl wife has learned to appreciate the joys of international travel, leather seats and and a home with views, but never ceases to be aware of how blessed we have been in this great American  life!

  131. Oops, sorry about the double post

  132. Good morning,


    IWM 64.60, 64.93, 65.13, 65.98, 66.51, and 66.88

  133. humvee4me:  Yeah, I agree with you. That fact that it’s nauseating is part of the reason why it’s kept hidden from common knowledge. Why would you want your neighbor, pastor, or best friend to know you essentially pay no taxes? Let alone the IRS possibly finding out.

  134. humvee
    That superiority view is another twist, the people you mention don’t vote at all so they don’t matter. Nobody is paying to get the unemployed or paycheck to paycheck viewpoint out and the .01%ers flood the media with what works best for them. So the problem if we can agree there is one is as Phil says our elections are controled by those 3,000 who have almost all the money and power. I believe every member is not broke and none of us are in the top 3,000. Sorry if I insulted any Billionairs on this site, I recomend all the .01%ers save $250 per month and take that out of circulation also, you need to stop wasting you stash on Phil Davis, continue saveing us, stash your cash.

  135. Hi Phil-
    Thanks for the tips on selling puts to generate some income while holding cash.
    I would like to apply some of your strategies to my IRA account as well but there are some restrictions on trading in IRA’s (according to my broker):
        can’t sell naked puts or calls (even if covered by cash!)
        no spreads
    so all you can do is buy puts/calls or do buy writes.
    Any suggestions on how to adapt for these trading rules?

  136. jbur
    I hope those you know you keep at a distance as their next digs are most likely The Graybar Hotel. Maybe all that money will by them a toilet seat.

  137. shadowfax:  I don’t think its a superiority view; go down to the mall, walmart, sears, or nordstrom.  Its all about our narcissistic selves, and its especially evident in younger people.  One of our best friends are obama supporters and we were speaking with their daughter, who graduated from UCLA a few years ago, about politics not long ago.  Her reason for voting for Obama was that "Michelle Obama looks good in an evening gown" —  true story. 

  138. knuklhead — when you sell the naked put, just buy a much lower put. If it is way out of the money, it will be practically free. Technically this is called a bear put spread or a vertical credit spread or whatever. It’s essentially the same as a naked put but brokers tend to be more happy with it because it cuts your margin requirement quite a bit in exchange for only a slight ding on profits. For example, if you sell a $25 put on some random stock, you can buy a $15 put along with it. That way the put is technically not naked, and your max risk is only $10 instead of $25.

  139. Looks like we’re stalled here for a while; gonna go out for a jog.

  140. shadow:   Very, very  distant now since we are on different moral continents.

  141.  knuklhead,
    Fidelity will let you sell cash covered puts, and do spreads in an IRA.  No naked call selling though…

  142. Wow, getting ready to leave the scorching KC area, and the market itself has a bit of summer heat.  Gotta love the range, but they are really juicing the shorts.  Matt, I am with you, keeping the faith and waiting for a shoe to drop.  It’s gonna get fuggly.

  143. IRA/knuklhead – boy, this comes up a lot! Someone should volunteer to do a writeup, including differences amongst brokers, document it some. My broker (TDA) does allow writing covered calls, and theoretically would allow the rest, but I’ve read, I think in wikipedia, that money used in an IRA as margin is thereafter regarded by the IRS as taxable.

  144. Did someone here say you can calculate the beta of a simulated account in TOS? I’m new to the TOS system and can get the delta but can’t find the beta. Went around in circles with support without getting an answer. Help?

  145. NLY/Phil/Hulk – Looks interesting but is a Jan2012 buy write a bet that interest rates stay low through Jan 2012 since their profit is based on the positive arbitrage between short term rates and long term rates or have they sufficiently hedged a possible uptick in rates?

  146. jbur
    There are 2 in my neighborhood, too close for me, I’m moving.
    I have found graduating from college is less than high school 20 years ago, most of them could do math with pencil and paper then they learned how to do it faster on a calculator. The young don’t do math, not kool, a downer!

  147. rainman – top right click on the box that says beta weighting and compare to your choice of …..

  148. JRWII
    Got a nice pop this morning and out about 10AM, wasn’t convinced of the retrace got bored and missed reading and responding to the political, social, and economy debate. IWM and the rest are disconnected, whats your take on this?

  149. Religion/Shadow – See, there’s a topic I refrain from commenting on but you’ll like this blog by Patriotboy, who used to do this really great series of caroons called "Republican Jesus."

    PPG/HHF – When you sell a covered call, there is little penalty for a big move up other than the regret you are currently experiencing.  You got paid a nice $2.45 so effectively you sold the stock for $67.45 and it’s now at $71 so you missed out on $3.55 of the move.  You can roll the caller along to Jan $70 calls, which are $5.20, so it would cost you about .80 to gain $5 in upside but then you are also taking on the risk of the stock falling back to $65.  Since you already bought it for $62.61, the sale at $67.45 is a nice win so be sure you want to risk it.  Of course, if you wish you had bought another 100 shares at $62.61 then you can sell Jan $65 puts for $3.30 (net $61.70 if assigned) and roll the caller to the Jan $65 calls at $8.40, which puts net $5.60 in your pocket for 6 months against your now net $54.61/59.78 buy/write – not a bad outcome if you then get called away at $65 and you have 10% built-in downside protection to the same call away you’d have today and another 20% before the trade loses money.

    SDS/Dflam – Well it’s a damn site better than hoping SDS gets to $48.  Keep in mind that this is insurance and we still expect/hope it wil lose but, as long as you are protecting an adequate amount of bullish positions, I like the risk/reward of the spread.

    Wife/Gmarts – Wow, you really do need to be wrangled, don’t you?  8-)

    Uppiness/AC – Good point and don’t forget short selling is banned in Europe again and all markets now have 10% stops that kick in so it makes it easier to be bullish as you can’t be burned by more than 10% on a big drop (well, a little more depending on your fill when trading resumes).  If you have unlimited upside and 10% downside, you can afford to be a bit bullish.

    Bearishness/Yip – There’s nothing wrong with being bearish and there’s nothing wrong with being bullish but try to be no more than 60/40 bearish.  If you take essentially bearish buy/writes, that pay 20% if the market simply doesn’t go up and breaks even if we are up 20%, then that’s a sensible way to play it.  If you play for the market to fall off a cliff, you may score a big win or you may get ground into dust but I can assure you that if you ALWAYS play the market to fall off a cliff and stay down, then you will get ground into dust, just as every bear player in every market in the entire history of trading has done since the dawn of time because we live in an expanding world with more people and more economic activity every day and unless we actually start killing people off – betting against more activity long-term is just pointless.  I don’t know why bears don’t get this concept…  

    Market/Matt – The markets may be manipulated but the stocks have a real value.  I have a choice of putting my money in a bank for 2% or in Bonds for 4% or in commodities that are iffy or real estate that is more iffy or in stocks that earn $1 per year for every $10 I give them and are expected to grow that amount over the next few years.  Not only that but I can pay myself a dividend of 20% by selling options against them.  That’s a pretty simple choice to me.

    TZA/Wilsons – I am for adding hedges here at 10,700, 1,120 as I think we get rejected again but we’re in a range and (see recent 5% Rule post) we need a catalyst to get us higher and I’m pretty sure that catalyst would have to be QE2 so I’m a bit bearish on any move up without that fundamental.  It’s all about what we hold overall and what Europe does – perhaps we’ll look at the charts again tomorrow. 

    Good point Iflan!  Reminds me of articlle I wrote caled "Bond Investing, James Bond That Is" where I talked about being detached from your trading.  Also, for Yip and anyone who is having trouble with the trading head game, I strongly recommend treating yourself to an IPad and sitting by the pool reading Dr. Brett’s excellent articles on Trading Psychology

    Factual/Cap – Yes a CEO got sued with his corporation by investors who lost money.  That never happened to anyone else before did it?  As was pointed out to you earlier (but I guess you missed it with your zealotvision) the bottom line is he was not guilty but all you need is a charge to label someone for life, right? 

    REITs/Cap – I’m still of the opinion that REITs are not great shorts (other than quickies when they run too high) as the big fish are gobbling up all the small fish and next comes the price fixing…

    1,013/Maya – Yes, I do keep doing that don’t I?  Well, what’s 100 S&P points between friends, right?  I am bearish up here unless I am drawn into bearish arguments by the perma-bears, in which case I tend to sound very bullish but I’m not.  If I were very bullish, I wouldn’t be picking trades that have 20% downside protection and adding disaster hedges every time we have a nice move up.  If I were very bullish, I wouldn’t be calling for 65% cash.  I will say over and over again that I am rangish and, right now, we are just above the midpoint of our range (10,200, 1,100…), which is what I think is the "right" price for equities in the current environment.  So the closer to 5% higher we get (10,700, 1,155) that we get, the more bearish I get and if we go 10% higher, I’ll probably be arguing with the bulls with the same gusto I’m currently arguing with the bears but that’s the difference between rangish and the others – I think there is a CORRECT price for the markets so whether I am bullish or bearish is a function of which side of the line we’re on more than anything else

    Apps/Cap – Yes I have wasted a lot of time playing Telsa and some gravity puzzle game I forget the name of.  Haven’t found anything that makes me more productive other than the newspapers, which saves me about an hour a day and a ton of clutter. 

    AIG/JDub – Dear Lloyd, lead us not into temptation…

    IPhone view/Samz – I’m very excited about the IPad app!

    Thinking small/Tusca – Well there’s the IWC, which is the Russell Micro Cap, which is good for your premise but I would urge caution as the malls in NY and NJ are packed and the restaurants are packed and maybe EVERYONE is insane or maybe things are better than the data suggests or maybe I am living in some kind of positive economic bubble in the Northeast that doesn’t exist in the rest of the country – I welcome comments on that subject. 

    Ron Paul/Jomp – He tends to see the world very black and white, not much compromise in him.  On the whole, I really like the guy – he’s just a bit extreme on some things and doesn’t seem to have an "off" switch, which you kind of need to be President.  He has handlers now and much of his stuff has been cleaned up but here’s a good summary from 1996, when he was running for Congress.  Ron Paul believes religion should be an important part of government – I’m totally the other way on that one.  He thinks Global Warming is a scam (as do many right here!), he thinks evolution should be taught as a theory equally along with creationism and I’m sorry to you religious people who belive that but we need to train children to be skeeptical scientists, not true believers or we’ll raise a nation full of people who do nothing but drink beer, watch TV and go to sporting events where cars drive around in a circle 500 times.  Ooops, too late!

    "If only we were taxed more; than everything would be allright." – Finally a quote from Cap I can use!  8-)

    FSLR/Rav – Well, I don’t actually like them but I do think they should hold $100 but I would not play it as, if they don’t, then I REALLY WOULD NOT want to own a lot of them long-term. 

    Copper/Jrom – Just be aware they last topped out at $3.67.

    Humor/Rain – You have to adjust your humorous observations for the Republican brain

    Israel/Exec – Yes, we were just discussing that possiblity – in 1973! 

    FAZ/2Face – Are you saying you bought FAZ and sold the Aug $14 puts and calls?  Well FAZ is at $13.12 so the combo is worth .88 if they expire today but currently priced at over $2 so it makes no sense to do anything right now.  When the premium is pretty much gone from them, then you can look at rolling to Sept or Oct whatevers.  On the second one, the Sept $9/10 bull call spread is deep oin the money adn currently .85 and the $9 puts are a dime so this seems like a huge winner so just get the hell out if FAZ can’t hold $13 and be happy.

    Congrats JBur! 

    BAC/Yodi – Oh yes, $15s are better then but same logic applies. 

    Well, in 90 minutes since last volume check, we’re up to 79M on the Dow so well below low on the volume side.  That means anything can still happen.  Europe finshed up at the 2.5% rule, that’s another 1% pop for us into the close so watch out bears – just in case….





  150. SPY P/C ratio is 2/1.  The weeklies are more like 4:1….very interesting.

  151.  AIG/Phil: LOL!!!  I just think they pump this up into its earnings on Friday.  

  152.  Note TBT has been weakening on this most recent small spike up….Added some DIA August 107 puts as a hedge up here.

  153. shadow / Russell Disconnect


    As the recession deepens, the Russell Co’s have greater risk than the larger indexes which are made up of multi-nationals that have easy access to credit and growing markets (Asia) !!

  154. Phil:
    have WMT 2012 calls 50: nothing with it ATM , what makes sense to add/sell premium ?

  155. Looks like Google is giving Apple a run for their money:

    The smart phone market grew by 64% annually worldwide in Q2 2010. At the same time, shipments of RIM’s BlackBerry smart phones grew by 41%. Helped by the continued strong performances of devices such as the Curve 8520, it was once again the second placed vendor with an 18% market share, while also retaining its leadership position in North and Latin America. Despite a period of turbulent PR, initial shipments of the iPhone 4 were predictably strong and contributed to Apple’s 61% growth and worldwide market share of 13% for the quarter. But analysis of Canalys’ detailed, globally consistent data shows it is the collective growth of Android device shipments across a range of handset vendors’ portfolios that is most remarkable. With key products from HTC, Motorola, Samsung, Sony Ericsson and LG, among others, shipments of smart phones running the Google-backed Android operating system grew an impressive 886% in Q2 2010.

    ‘The latest release of our detailed and complete country-level smart phone shipment data for Q2 2010 clearly reveals the impressive momentum Android is gaining in markets around the world,’ said Canalys VP and Principal Analyst, Chris Jones, commenting on the publication. ‘In the United States, for example, we have seen the largest carrier, Verizon Wireless, heavily promoting high-profile Android devices, such as the Droid by Motorola and the Droid Incredible by HTC. These products have been well received by the market, with consumers eager to download and engage with mobile applications and services, such as Internet browsing, social networking, games and navigation.’ The United States smart phone market grew 41% year on year. It is the largest smart phone market in the world by a significant margin, with 14.7 million units accounting for 23% of global shipments in Q2 2010. Android devices collectively represented a 34% share of the US market in the quarter, and with growth of 851% Android became the largest smart phone platform in the country. 

  156. Oil is up over 3%, gas is down more than 4%.  Strange.

  157. Phil
    If you have a moment can you have a look at the TZA play below . thanks
    August 2nd, 2010 at 10:42 am | Permalink  
    I am still a bit pussled about the TZA play holding Jan 11 70 long 4 calls pd 3.51 today 2.31 and Jan 8 calls short sold for 1.68 now .97. The stk has been ajusted. How do I play this one

  158. Multple Monitor Setups - A few of you guys mentioned you had 4-6 monitor set up.  I’m thinking of a setup like the "powerquad (2×2 optimized) or the "zenview arena" setup as seen here:  I really like a larger center monitor, surrounded by smaller ones.  I currently have a five monitor setup…. two 27s side by side with two 20s set vertically on each side of the 27s (and a 17" laptop for PSW)…but I don’t like the width of the setup (like watching a tennis match while trading!), so I’m thinking of going vertical with the monitors. Any opinions on vertical setups, are there pitfalls of having monitors stacked 2-3 high?  Thanks!

  159. "Multiple"…why is it that I catch the spelling errors about 30 milliseconds after I hit the submit button!!!

  160.  Hi Phil,
    RIG up big today.  Is this a short or just a "do not touch"?

  161. goldman
    I have 1 monitor vertical and have not turned it on since last week. My eyes notice side by side, look up I disconnect from others. I have not decided what to try next. I have the 30 millisecond problem and blame it on typing in the box is small and the post is big. I passed the driving eye test without correction but the dash is total blur, your vision may be the reverse? Good luck!

  162. Jordan – Very strange, especially since we will most likely have our first decent hurricane in 24-48 hours.
    Phil/Pharm – love the advice when in doubt sell half. Sold half of ARNA on Friday, looking forward to buy back in at the end of the day and selling some puts….

  163.  harm/ CLDX
    have a buy/write (sold Aug 5s calls and puts), what is your recomendation: let it call away or roll ?

  164. Everyone — Phil said "I am bearish up here unless I am drawn into bearish arguments by the perma-bears, in which case I tend to sound very bullish but I’m not."
    I think this was worth repeating. I think sometimes people miss Phil taking the other side of an argument/stance and think Phil is flip flopping around. I’m not sure if I catch it beacause of my experience with east coast cynicism or some other reason but it’s something to watch for and ask if you don’t know if he’s flipped or not.  

  165. Thnx for the lines JRW…

  166. 2:30 Stick right on time off the ascending trend line of Friday’s bottoms (now at IWM 66.00) !!

    Watch out at IWM 66.50 and 66.80-88 .

  167. Phil,
    Malls and restaurants down here in Miami, FL are also packed despite our ongoing crises.  I went to see a movie (at a mall) on saturday and there was absoluely no parking spots left.  We had to wait in line for about 10 minutes to valet.

  168. rainman and the rest
    I assume some think I am in the bullish camp and mostly look up but right now I own 3 stocks all in red, 2 spreads, and about 80% cash. 2 weeks ago I was 60% cash no buying except day trades, net seller. I hope to get out of another stock Wednesday on earnings. Waiting for better buy points after earnings because of phil’s rule #1 contra, prices go down after the party.

  169. phil
    do you still think we should close short term bullish trades today

  170. Guys thanks for the feedback I had to step away… Matt that’s an interesting approach.. thanks. Phil I hear you about politics, it’s tough for me when I believe wholehearted our political system is a total sham we’ve got demoblicans and repbulicrates… that’s about it.  It’s alot of noise to keep people arguing for the right and left so they never address the real issue at hand.  That politics is a bunch of BS and they are all out for themselves and their constituency.
    PS most of the time I am in cash.  I am up 35% this year overall but after the last 2 days it’s 20%.  Many points made here are true I was more just venting and hoping to hear some reasonable thoughts. 

  171. CLDX – I am letting them go….for now.  We can try again if there is a pullback…

  172. JRW…PS… I saw your post about the RUT having international exposure.  Interesting point….however the Dow and SP500 are both higher than the RUT today and it’s lagging?  Perhaps when the post was made there was a variance?

  173. JR,
    I’ve noticed that the Russel is weak compared to the DOW.  I haven’t been following this exchange very long but have noticed that it typically tracks pretty close to the DOW. 
    Has your experience with this exchange reveled any patterns when you have this kind of disconnect?

  174. UNG (United States Natural Gas Fund) is down 4%.
    UHN (United States Heating Oil Fund) is up 4%.
    Anyone have an insight into this?  What is going on?

  175. yip
    JRW said the RUT has less international and more vunerable to recession than the multinationals and it was and still is disconnected, maybe a buy if it sticks up to the rest. I am in cash now, 2 large block sells but TBT is riseing.    ??????

  176. Exec…. Last week or the week before Phil pointed out that the RUT was lagging the Dow and SP by quite a large number.  You see that the RUT caught up fast, had a couple 3% days when the others had 1.5%.  I’m hoping it’s lagging this time but for a turn the other way this time!

  177. Dbar, well at least you’re an investor and could afford the valet parking…  :-)
    In reality, I sometimes feel that as a community here, we’re a bunch of millionaires decrying the excesses of billionaires. Myself, I would like to join them,( I WANT one of those miniature giraffes!)  The flip side of this vis-a-vis taxation etc, is that I feel as though I’ve spent my whole life scratching like a fiend to try and amass a little bit of wealth and security for myself and my family, and I’m worried as hell that the government is going to come around next week and kick the stool out from under me.
    I make it a point to examine my beliefs and assessments on a regular basis to try to determine which of them are supported by the evidence, and which are merely notions I hold for some other reason. I’m less sure of any of it than ever before. The only things I KNOW are that love is the only thing that truly endures, and that I have certainly been blessed beyond my merits.  As to the rest of it, who really knows.
    I’m thankful for being able to pay the parking valet.

  178. Pharm,
    I covered all my ARNA as it climbed at 6, 7, and then 8 w/ August calls but I want to double down when appropriate. What kind of pullback are you looking for? Thanks.

  179. $150/Exec – Yes but then we had the stimulus checks and were still drawing home equity lines at the pump to charge our gas.  There’s no way we can afford $4 a gallon now and the main reason consumers have cheered up is gas is down to $2.50, back over $3 will spook them fast. 

    How do you classify people who make $200K as rich/Cap – Well when you have 293M people who make an average of $40,000 and you have 7M people who make over $200,000, then the people who make $200,000 are considered "rich" by 98% of the population – the real question is – how can you NOT classify them as rich?  The real inefficiency of the government is allowing income to be so inequitably distributed that we have such a massive disaprity between rich and poor.  Is $200,000 your isssue?   The marginal rate on income over $180,000 goes up 3% so a person earning $200,000 pays 3% of $20,000 more in taxes – that’s $600.  I know that’s a lot of lattes but it’s not aimed at them.  Would you be happier to raise the level to $500,000 and tax people above that line an extra 5%?  That makes a lot of sense but it’s the jackasses at the top, who resist the tax burden, that are shifting that $600 expense down to the poor guy who "only" makes $200,000.  Hell, if we can get people making over $10M to pay 10% more taxes, we can CUT 5% off everyone else!  Would you argue that those peole shouldn’t be classified as rich too?  In order for 100,000 people earning more than $10M a year not to pay 2% more taxes (than the 3% already planned), 10M people earning $200,000 have to pay 3% more.  That’s where your guys pushed the bar – you can’t have it both ways – you shove the tax burden down to the people below you and then scream that the Democrats are taxing the poor – too bad the people aren’t as stupid as you expect them to be….

    FCX/Gucci – I’m sorry, I thought something else.  You SOLD Aug $67.50s, now $7.95 and all you can really do is roll them up to the Sept $70s at $7.25 or perhaps 1.5x the $72.50s at $5.60 or you can combo those with the sale of the Jan $65 puts at $4.75 – all ways to hedge out the trade and improve the position. 

    50%/Red – As a rule of thumb, whenever you are up 50% on any kind of position you need to do a long, hard think about what you want to do with it.  50% flips your risk/reward profile against you so you need to be damned sure about collecting another 50% or you are better off going to cash.  More often with a call or put you sell, you can keep going since they are (presumably) out of position and losing money every day so, unless your sentiment changes, there’s no emergency to change it.  For short-term trades, usually I say that with more than 2 weeks left, you take 50% on a short sale off the table and 70% with 2 weeks to go and 85% in the last week unless you are 95% certain the caller or putter will expire worthless.  Of course, if it’s a putter and you are totally willing to roll or get assigned (like an Aug AAPL $230 put that is still .50) , then you can afford to take more risk but otherwise, you should be looking for the exits with tight stops.  On longer trades, just translate weeks to months with the same guidelines.

    QID/B1 – Nope, earnings are 75% over and were strong so what would we be shorting?  That’s why I went back to SDS – at this point we’re hedging against unforseen global disasters – nothing specific about a sector seems to be an issue. 

    Million/Jvest – I agree, the Dems have let the line shift and that’s put them at a rhetorical disadvantage.  Hopefully we can push it back and focus the conversation like a laser where it belongs, at least they can get to $500K but $1M would require too much push on the top 0.05% so hard to get through. 

    FAZ/Cslan – Well Friday when we went long on FAS might have been a good time!  The $15/17 spread is dead as a doornail and the Sept spread won’t last long if the banks keep moving.  If you want to maintain or try to get even, Oct $12/14 bull call spread is .70 and you can sell Sept $12 puts for .40 to keep it cheap as long as you don’t mind rolling those along.  Of course, this whole trade makes no sense unless you have plenty of bullish financial postiions. 

    Taxes/JBur – The whole system is like that and corporations are far worst than people.  The government collects a total of $2.5Tn in taxes and corporations pay $400Bn on $6Tn in earnings (and those are subject to all sorts of nonsense anyway) while individuals pay the rest yet they can’t even find people who are willing to push the conversation there as it is political death to even suggest that coporate America should pay their fair share ($2Tn).   GE, for example has $156Bn in sales, declares an income of $29Bn and pays no taxes ($1Bn credit).  A VAT-type tax on sales of 10% with no deductions would generate $15.6Bn in taxes – apply that to all corporations and we would collect over $3Tn in tax revenues and we wouldn’t have to charge any income tax at all.  It’s a re-thinking of the business model but the bottom line is, if you sell something, you pay tax on it.  If your corporation is set up to lose money, then plan on losing 10% more to pay your taxes.  This will not stop the formation of new businesses that make money but might cut down on the BS businesess that are run to be tax write-offs. 

    Doesn’t it seem superfluous to have a stick save when we’re already up 1.5%?  Why not save it for a rainy day? 

    SLAB/Amatta – They’re not a bad company but they disappointed people and got whacked for it.  You locked in a $1 loss on half and you have a $2.50 loss on the other half so you are down about $1.75 per shares.  I say cash out and sell 20 Jan $40 puts for $2.65, which has a net margin of $14K (vs $40K you tied up) and pays you a small profit if they expire worthless.   The 2012 $30 puts are $2.20 so you have 25% cushion on your roll if you have to and they are an excellent play to put $60K into (a bit over 10% then) as a long-term hold at net $30.

    Naked/Knucl – That’s kind of BS.  If your IRA is trapped where it is, that sucks but my understanding is TOS, for example, lets you do that stuff where others don’t so give them a call and get the facts (obviously your broker will give you a song and dance).  Think about how ridiculous that is that to "protect" your IRA they only let you buy risk, not sell it (except the covered call).  There is no logic at all to stop people from selling a fully margined naked put as it’s no different than buying the stock at the net.  Anyway, if you have cash and can only sell covered calls, then take volatile stocks (that you don’t mind owning) like AXP, for example, and do a 1-month spread (AXP at $45, selling Aug $44 calls for $1.80) which pays .80 unless AXP falls 4% in 3 weeks.  The profit doesn’t sound like much but do .80 a month and that’s $9.60 on net $43.20 for the year or a nice +22%.  Same rules apply, just hunt for things you think are cheap that are right on a strike you can sell and put a little cash to work.   UNG is $8 and you can sell the $8s for .27 and 12x .27 is $3.24 or 40% annualized return.  Since UNG is one we like long-term anyway and your worst case is they drop to $7ish and then you buy more and sell longer calls (Jan $7 calls are $2.22) then it’s not a bad place to toss $8,000 to make a quick $270.  What Jvest says is very good advice but I took it that you can’t do a spread at all.

    NLY/Brook – Hey, they survived the last 3 years (in good shape too) so I’m willing to bet they can survive pretty much anything! 

    WMT/RMM – $52.50 is the 200 dma, I would expect they test it and, if not, there is the 50 dma at $50.50 so worth waiting patiently and seeing which way they go. 

  180. Good Morning, folks…. a couple rounds in the ring with Phil yesterday put me in fatigue mode – he is one tough opponent!.  Have been selling many positions today that are long and profitable – taking profits.  Low market volume and a spike towards the upper trading range makes for too much risk for long positions, IMO.  Will pretty much sit on the sidelines until the Fed meeting and then jump back in, as the direction of the market will be more defined at that time.  Congratulations to JBUR for 35 years of conviction…. a lesson here for everyone – do your research, make a conviction and stick with it  ( good trading discipline as well! ). Still watching the currencies for the breakouts identifying some nice trades!

  181. The VIX has several support areas @ about 22 FWIW. 

  182. Phil:
    have BAC stock: nothing with it ATM , what makes sense to add/sell premium ?

  183. Rounds/Gel – LOL! I know the feeling – I’m a martial arts student myself, and we have a guy in our gym who’s been a boxer since he was a kid. Don’t ever let anyone tell you a martial artist will easily defeat a boxer!

  184. yip, exec

    The LARGE cap indexes can better weather a prolonged US recession.

    JRW III (premium)

    shadow / Russell Disconnect


    As the recession deepens, the Russell Co’s have greater risk than the larger indexes which are made up of multi-nationals that have easy access to credit and growing markets (Asia) !!


    BUT 1 DAY DOES NOT MAKE A TREND. And I’m playing the Russell to catch up (see chart at 1:00)

  185. Phil:  "There you go again"  using that 6 Trillion number for US Corp profits; I just can’t buy that Corp Profits are 40% of our GDP. 

  186. Here we go again with the politics.
    I got an idea……..only people making 200k or more a year can vote.  :)

  187. Vote/exec – wait, you’re going back to the ways of our Founding Fathers?

  188. total us corp profits in 2005  was 1.35 Trillion according to this:

  189. Snow/Vote……was there a time when you had to pay taxes to vote?

  190. Wow!  This is one of the silliest free money days we’ve had in a while!

  191. the rallying cry was :  No taxation without representation    Now it should be :  No representation without Taxation

  192. Taxes/Exec – including poll taxes in the South?
    but essentially, yes, in that initially only white male land owners could vote in the US. My g-grandmother would roll over in her grave – she was jailed 3 times for marching for the vote. Ironically, she also ran a saloon all through the Prohibition & never once got even arrested for that.

  193. Phil / Saving the Stick Save for a rainy day


    We’re not going to do that because that is not what currently amuses Llord Blankfein !!


  194. JRW - 3min showing a perfect ascending slope bouncing off the lows since 12:48…so if they march the RUT up to 666…then what comes Tuesday? (especially considering all the economic data due 8:30am).  Double Dog dare you to hold 10k overnight…=)

  195. Another stick? Watch for the club at 10,700. Trying to make themself look good after Friday’s incompetence.

  196. Wheee!

  197.  JRW, that is awesome – thanks for the nice laugh!

  198. JRW/Lloyd pic - LOL…the pic should show him covering her eyes, and an iceberg tip with the word "reality" in front of the boat.  By the way…the trend line just got blasted…

  199. Humvee…. "no representation without taxation"    I agree – everybody should have a little skin in the game. Otherwise, the most corrupt politicians can "scam" the votes of about 40% of the voting public, making promises that can never be in the best interest of the country… That would make a great bumper sticker ( certainly deserviing of a copyright )

  200. JRW
    I was clear on the international but yip seemed to reverse it. I was busy at 1 and that passed and TBT was going down when I got back. The disconnect was only today and because I’m in cash and 15% up today good for take the money and run rule. I don’t have your steel nerves and have my rule, when in doubt stay out. Good luck into the close, hope you outdo my day. What you showed me is worth many $$$$$$$, THANKS buddy!

  201. Gel,
    Isn’t that what’s happening now?

  202. It appears Lloyd is doing more of "God’s Work" – saving a damsel in distress from jumping off the Golden Gate Bridge.

  203. goldman / 10K

    No thanks, out of TNA at $45.56 for 70 cents

  204.  Brook- I think a NLY is both a bet on rates and how they manage they portfolios.

  205. Phil
    System upgrade passed into the close, very nice improvment, Thanks for making the investment!

  206. Phil/Tuesday Data - Personal Income, Personal Spending, PCE prices, Factory Orders, Auto Sales, Truck Sales….so what data do you see moving the markets on Tuesday, if any?

  207. Phil: shadowfax says system upgrade: I have not noticed a change, what am I missing if anything ?

  208. Android/Stjean – Tina is very pleased with her Droid (she is an Apple hater and goes out of her way not to buy them) but we just compared resolution with the same GOOG maps and the difference was amazing.  Not that that’s the point, Phones are a very personal preference and no matter what AAPL does there will be competition but I remember the Razr phone from Mot dominating the market for about 5 years – IPhone is beating all of their metrics so far.  Don’t forget that their 22% US market share is for selling the most expensive phone in the market – they aren’t even at the discounting phase yet. 

    Gas/Jordan – They ran up a bit fast and I think the storm they were tracking is not looking as strong as they thought. 

    TZA/Yodi – See 11:52

    Stacks/Goldman – My main monitors are set up like the "Power Trio" but my Dell server (which is kind of old now) couldn’t hack all the streams so I have an IMac to the left of my left screen and a 17" laptop with an extra monitor on the right and I simply put the things I look at less further away from me.  I keep thinking about stacking up but I’m pretty comfortable with the way things are although I do wish it all worked on one keyboard.   As shadow notes, vision is a big issue for these set-ups – you may not be comfortable with the results in some set-ups and it’s hard to find places to try them.

    RIG/Jdub – I certainly wouldn’t chase them but things are looking much better for them and BP. 

    Flipping/Rain – I don’t know how many ways I can say I’m playing a range overall.  I will be just as suprised if we break up (over 1,155) as I would be if we break down (below 1,045)…

    Mall/Dbarak – Isn’t that strange.  Funny because right now there’s a doom and gloomer on CNBC telling us how awful everything is….

    Closing trades/Jerri – This is pretty much where things fell apart last time.  The Dow and S&P and NYSE are higher but the RUT was at 672 and the Nas was 2,307 so now we have the opposite of what happened a week ago tomorrow and we snapped back hard.  Maybe we punch over but maybe we don’t and if you have nice profits on a single-day 2% move up, you should at least take some off the table – just in case. Wasn’t it just Friday we opened down 120? 

    Venting is good Yodi but just make sure you can step back and get a fresh perspective rather than digging in to what the "old you" was predicting. 

    UNG/Jordan – They had a run from $7.20 to $8.20 in 2 weeks, time for a pullback and they need to test the 50 dma at $7.85 anyway.

    Nas futures are back at their reject point of 1,900 from last week.  RUT still not to interested in testing 666. 

    Thankful/Gmarts – You said it!  I think way too much time and effort is spent by people accumulating wealth.  Mainly it’s a game for people who already have $100M+ because it’s virtually impossible for them to say they NEED another $10M.  Sadly, that excess drains the resources out of society to service whims, and not wants and the next $100M they make but don’t need simply deprives 100 other people from earning $1M because it is, on the whole, a zero-sum game.  When did we have a huge tech boom?  When there were 1,000 companies making computers and chips and programs and trying web ideas – we had an entrepreneurial boom and we created stunning amounts of jobs and yes, we wasted a lot of money but we also invented a lot of cool things that have made all the old-line companies more efficient (so efficient they don’t need workers anymore!).  Anyway, not the place for an essay but the point is to be thankful for what we have and try to value the things that are really important.  Also, where do you get those giraffes?

    BAC/RMM – XLF is up 2.5% and they are up 2.85% so no need to do anything until the trend stops.  If we head down, the VIX gets higher and you sell options for more so no hurry and, if we head up, you get more for the calls at least.

    Corp profits/Humvee – As I’ve said, hard to find but here’s a note on Q4 from March: "Before-tax profits increased $108.7 billion, or 8%, in the fourth quarter…"  So $108M is 8% of about $1.3Tn so there’s $5.2Tn over 4 Qs right there and Q4 was still pretty slow.   Anyway, that’s just their DECLARED profits.  Financial firms pay more in bonuses than they declare as incomes but that’s another scam.  I’ve come to believe a VAT is the only way we’ll ever get corporations to pay their share, there are way too many games they can play otherwise.    I see your second link and I will tell you that’s a result of the fact that no one can get good statistics on this but think how ridculous $1.35Tn is when XOM makes $40Bn by itself.  Does XOM make 3% of all the profits in America?  If so, you would think their market cap would be a bigger percentage of a $40Tn stock market which, by the way, with a 15 p/e ratio, does happen to work out to exactly $6Tn in earnings. 

    Only the rich can vote/Exec – Isn’t that our current system?

    Lloyd/Gel – Where is his other hand?

    Yep, system seemed to work no problem in our first full day.  Major congrats to programmers for that as it was a major move to a whole new hosing environment with new servers and new back-end stuff.  Now they just have to get busy on 20 pages of notes I gave them for changes! 

    Data/Goldman – Well Income should be up with spending but this is June data so a little tricky on the timing.  PCE still down, Factory Orders per GDP were down so Auto Sales are the wild-card.  Doesn’t seem like anything there will be a booster but if June data looks good, it may be time to get a bit more bullish as I’m quite sure July was better than June. 

  209. Phil…. Just look at the smile, and we all can make an educated guess!

  210. "we just compared resolution with the same GOOG maps and the difference was amazing"
    Hi Phil, iPhone was much better?

  211. Phil/One Keyboard — do a search on "KM switchs" (keyboard mouse switch), that should get rid of extra keyboards/mice.
    range — I understand quite clearly that you are not bullish or bearish and think we are range bound. I just see comments from others occasionally that seem to indicate that they think you’ve changed to bullish or bearish. I think sometimes it’s because of a stance on an issue — say, you take a bullish stance, some might now think you’re bullish and out of the range. Also, I think some short term bull/bear trades have caused some confusion if they aren’t specifically indicated as short term. Specifically when you say a particular short term level is bullish or bearish and don’t indicate it’s a short term signal. For example, your chart with the circle on Friday where you said: "Must finish in this zone to be neutral into the weekend, otherwise, a bit bearish is wiser" . I understand this is a short term call and doesn’t change your long/mid term outlook but I think some might think you’ll be out of the range forcast and bearis if the line failed.  Maybe it’s just my imaginiation but I’m pretty sure I’ve seen it several times. I’ll see if I can point it out next time I see it.
    Dow had it’s first failure right at its 200pt range today (10,670) so I took a short position. Worked out until I stayed in it too long :-( and we went to a 220pt range.

  212. Phil/Lloyd/ Where is his other hand.  VERY observant, and gave me my second laugh on the pic. 

  213. Now I know where it is.   It’s guiding the ………boat         Into the ………harbor.   

  214. Phil:  Trying not to beat a dead horse, but I believe the numbers you quote were at an annualized rate.  Here is a copy and link from the US dept of commerce; actually its not that hard to find.
    Corporate profits from current production — profits before tax with inventory valuation and
    capital consumption adjustments — was revised down for all 3 years: $31.1 billion, or 2.0 percent, for
    2007; $97.6 billion, or 7.2 percent, for 2008; and $50.9 billion, or 3.9 percent, for 2009. For all 3 years,
    downward revisions to corporate profits before tax more than accounted for the revision. These
    downward revisions were partly offset by upward revisions to the capital consumption adjustment.

    These numbers were released July 31, 2010
    I am not arguing with you about corporate tax rates, merely  that it makes no sense to believe that in a 16 Trillion GDP economy that corp profits are 6 Trillion Dollars (40%) unless you are trying to push a certain political point of view! 
    As Joe Friday says:   "Just the facts, just the facts"

  215. rainman
    Thanks for the search to use one mouse keyboard, wish I had time to check it out now. I bought the new microsft wireless mouse with extra buttoms hopeing to do it but quit 2 months ago as I hate what is no called programing because I have no idea what these people are actually saying, online help, more cofusion.

  216.  Phil, 
    RE: SLAB
    You suggested selling the postition for a now $1.85 loss x 2,000 $3700. and selling 20 Jan 40 Puts for $2.65, so a $1900 profit (at this point I would be happy to break even… so I guess selling only 14 would do it.). How about selling 11 Jan 40 calls for $3.60 against the 1100 shares I hold (if they are called away I break even, if not I at least have reduced my basis by $2 over the whole 2,000 shares to 40.8). 

  217. On Ron Paul, if these are some of his core beliefs (below) we don’t need him.  Gee, do you think that the Chinese or the Japanese are still debating whether creationism should be taught alongside evolutionism?  I’m sure.  Global warming a scam?  Try reading the science.  The fact that there are a lot of people in this country who have these wrongheaded beliefs are part of the reason that there is little hope for the future of this nation. 
    Ron Paul believes religion should be an important part of government – I’m totally the other way on that one.  He thinks Global Warming is a scam (as do many right here!), he thinks evolution should be taught as a theory equally along with creationism and I’m sorry to you religious people who belive that but we need to

  218. On Ron Paul, if these are some of his core beliefs (below) we don’t need him.  Gee, do you think that the Chinese or the Japanese are still debating whether creationism should be taught alongside evolutionism?  I’m sure.  Global warming a scam?  Try reading the science.  The fact that there are a lot of people in this country who have these wrongheaded beliefs are part of the reason that there is little hope for the future of this nation. 
    Ron Paul believes religion should be an important part of government – I’m totally the other way on that one.  He thinks Global Warming is a scam (as do many right here!), he thinks evolution should be taught as a theory equally along with creationism and I’m sorry to you religious people who belive that but we need to

  219. Phil, 
    on TNA I experienced a situation akin to SLAB above. Where I got stuck with 500 shares from a day trade (bought at 37.88 and it went down the next day to 34.7 so I was facing a $1,500 loss) you suggested I sell 5 calls forward month which at the time were $1.5 out of the money… So far so good obviously with now TNA sitting at 45. So if they expire above 35 I keep $1,000 for my troubles. 
    This got me thinking why not buy equal proportions of TNA and TZA and sell respective calls for each to benefit with the premium decay? What am I missing there because it seems too simple. (TZA and TNA decay wouldn’t matter as the calls will reflect this…)

  220. Phil/Hand …. I finally figured it out – the other hand is in her purse!

  221. Grim outlook for RIMM:
    Nielsen has its own angle on the smartphone numbers game out today, and the results vaguely resemble thenumbers from Canalys. Perhaps more interesting than the ever present market share tug-of-war (Nielsen pegs Google, RIM, and Apple at 27 percent, 33 percent, and 23 percent in sales to new smartphone subscribers, respectively) a note on brand loyalty turns out ugly for BlackBerry: while 89 percent of iPhone owners plan on getting another iPhone, and 71 percent of Android buyers plan to re-up, only 42 percent of BlackBerry owners plan to stick around. The defectors are pretty evenly split, with 29 percent planning to go iPhone, and 21 percent to go Android. That compares to 2 and 3 percent in the iPhone and Android camps planning a move to BlackBerry. We’ll see if BlackBerry 6 can solve this little problem for RIM, but the few tweaks we’ve seen so far seem hardly capable of stemming the flow. 

  222. Phil – personal observations of local economies-
    I live in central Kansas. The unemployment rate for our state is less than 7% so we have not been impacted as heavily as other states. The aircraft industry has been hit very hard, with Cessna and Raytheon (Old Beechcraft plant) both laying off nearly 50% of their workforces. These were two of the largest employers in the area. Still, you can’t get into an eating establishment without a substantial wait. The shopping mall parking lots are full, the concert arenas are selling out, theaters are doing very well (they are constructing a new IMAX, but with promises of 10 year tax abatement from city), Lowes and HD are very busy on the weekend. Major construction projects are serious weak areas. It seems that capital intensive projects are nearly non-existent. Siemens is building two new plants for wind turbines, but these are being built out in two smaller communities where labor costs are lower. Existing homes in my neighborhood have been selling pretty slow compared to two years ago, but in the last year alone there have been nearly 30 new homes built and all of them have sold. There are currently another 10 under construction that have sold signs in the yard. It appears from conversations I have had, this is pretty indicative of the entire area. My wife purchased a new vehicle yesterday and the dealer told her that their problem is not enough vehicles in GM’s supply chain. He said that most of the vehicles they receive are sold before they are unloaded and the rest by the end of the week. I have a hard time seeing a recession in our area (I’m sure some of the unemployed would have an easier time). If commercial construction would pick up I believe we would be in pretty good shape.

  223. Thanks, Phil and all on the IRA trading rules.
    My broker is TDA.  According to my account level, I have Level 2 option authorization which is the highest they allow for an IRA.  Level 2 allows:
        buy puts/calls
        cash secured puts
        sell calls against stock (buy/write)
    I called an acct rep and he checked into it and confirmed that the middle two are not allowed.  I explained how rediculous that was (similar to how Phil put it).  He told me that these are IRS rules, not TDA rules.  I am going to enquire further up the chain and will get back to everyone.

  224. fjd10595, are we that panicked as a country that we need to compare ourselves to the Chinese (Dictatorship) and Japanese (dying population, dying economy)?  You come off as being very intolerant.  If we are so liberal and open minded of a country, why is teaching creationism alongside eveolution such a bad thing?  Can’t we as Americans decide what we want to believe instead of what the public education system tells us to believe?  Are creationism and evolutionism mutually exclusive?
    Do you want a leader or do you want an idol?  Can you name one president who you agreed with on every issue?  Can you explain how making more room for religion in our government will impede our ability to right this tragic financial wrong?  Thanks-

  225. Matt, if you want to offer theology or philosophy classes to teach the principles of creationism, that would be OK and that could be done in the public education system. But it is not a science (as far as I can tell, it is a religious belief) and should not be taught alongside evolution as such. 

  226. Matt I with you 100%.  FJD last week made a statement that he claimed was fact which was totally untrue about Randal Terry of a pro life group.  I would take what he says with a grain of salt.
    LOOPS!!!  That is a SUPER COOL site.  Everyone should check it out…

  227. Yes indeed that was a FMD ….
    Phil / "how do you classify people who make $200K as rich/Cap" …. I don’t, its your commie socialist democratic leadership that does.
    The fun part of discussing politics w/ you is that its so easy to get you all riled up and yet you are often wrong, but never in doubt !  :wink:
    Only the rich can vote ?  How about only the dead can vote; only the non-existent can vote; vote early vote often.  Y’know, the ACORN way … O knows all about ACORN.

  228. Matt; agree w/ your comments on intolerance.
    Unfortunately, its a key trait of the left.  Too many ideologues.
    Their way or the highway.

  229. Reposted from Friday night (deleted in update):
    Apple to Open Covent Garden Retail Store in London on August 7th

  230. Reposted from Friday night (deleted in update):
    Stanford School of Medicine equipping students with Apple’s iPad

  231. matt,  I am not intolerant.  My assertion that religion (creationism) should not be taught to school children does not show me to be intolerant.  It shows me to be a person who wants legitimate science taught in the schools.  Faith based teachings can be done in the home or church, not in the public schools.  By any objective standard of review, creationism does not hold  the scientific and logical underpinnings held by the theory of evolution.  If you think otherwise then your thinking is very far from the mainstream and I suggest you read some books on evolution.  Whether China is a dictatorship or not, they teach legitimate science in the schools.  Same for Japan, which you seem to disparage by your remarks.  If we re-litigate the Scopes trial and fail to teach our kids proper science then those societies will have an edge over us.  By any objective standard of reivew, creationism is not science.  It is faith.  

  232. There’s an app for that …
    UK soldiers use iPad app to train for Afghan operations

  233. Yip, my comments on Randall Terry last week were accurate.  I said that Terry advocated violence.   I have heard Terry make statements that were intolerant and hateful.  I obtained the person’s history from Wiki and pasted it here.  The Wiki history shows Terry to be a person who advocated violence against doctors who performed a legal medical procedure.  I also heard Terry speak during the Terri Schiavo travesty.  Jeb Bush’s disgraceful handling of the matter in one fell swoop turned tens of thousands of conservatives into independents because they realzed that the conservative party had been hijacked by radical fundamentalist christians like Jeb.  We don’t want it, and that doesn’t make us intolerant.  Jeb can go to church and have those views.  He should not press them on society.  When the nation was founded we did not have politicans running around proclaiming personal audiences with God and trying to force their religious views on others.  Just the opposite.  There was to be separation of church and state.    It is in the constitution.

  234. Jumping in on the end of the conversation: pubic schools teaching creationism vs. evolution as a science.  Evolution is based in science whereas creationism is not, it’s a religious belief. I was going to make the analogy between teaching Math vs. teaching numerology in math class.  Here’s wikipedia’s description of numerology which brings up other similar analogies: 

    Numerology is any of many systemstraditions or beliefs in a mystical or esoteric relationship between numbers and physical objects or living things. Numerology and numerological divination by systems such as isopsephy were popular among early mathematicians, such as Pythagoras, but are no longer considered part of mathematics and are regarded as pseudomathematics by modern scientists.[1][2] This is similar to the historical relationships between astrology and astronomy, and between alchemy and chemistry.

    Teaching kids what all these things ARE is fine, but beliefs formed from the pursuit of the scientific method can and should be distinguished from beliefs based on mythology and mystical thinking.  For all I know the mystical thinking may be correct, but it’s still not a science and should not be taught as such. 

    p.s. Wiki goes on to touch upon the stock market t.a. system of Elliott Wave theory:

    The term can also be used for those who place excess faith in numerical patterns, even if those people don’t practice traditional numerology. For example, in his 1997 book Numerology: Or What Pythagoras Wrought, mathematician Underwood Dudley uses the term to discuss practitioners of the Elliott wave principle of stock market analysis.

    p.s., I will try not to stir up controversy, just felt inspired to throw in my own two cents worth.

  235. As it happens, here is an article that appeared in today ‘s newspaper on taxes
    Soaking the Rich:  How the Middle Class will pay
    The Obama administration’s approach is to look at tax policy mainly through the prism of class warfare. This means that some of the 2001 and 2003 tax cuts can be extended, but only if there is no direct benefit to anybody making more than $200,000 or $250,000 per year.
    That’s bad news for the so-called rich, but what about the rest of us?

  236. Matt/Yip/Cap – so where does it end? If Christians got their little creationism theory out there than being tolerant would mean we would have to include Buddhist, Muslim, (insert your religion here) as well. Doesnt matter though, our public school system is a joke and most likely I will be sending my daugther to a Catholic/Christian school where they teach that crap no matter how many loans I have to take out…. My #1 goal, keep her off the pole! lol.

  237. FJD
    I’m not going into a philosophical discussion with you.  You are 100% dead wrong, you have no idea what you’re talking about.  I’ve been following Operation Rescue and Randal Terry’s since 1988.   Honest to God there are few people or organizations that I know more about, I’m not saying that for affect it’s the truth.  I can tell you this with absolute certainty…… Randal Terry does not advocate violence whatsoever…..  in fact he has put more unlicensed doctors who injured and killed women from botched abortions out of business than anyone in the business.  He protects women from violence and educates them on the truth of their procedure.  Furthermore the issue is not Jeb Bush or or the topic of abortion.  The statement that you made is that Randal Terry sanctions violence.  Randal Terry wrote a paper after the murder of George Tiller the infamous 3rd trimester abortion doctor explaining why it was the worst thing can could have been done on multiple levels.  I remember the paper specifically because I felt his points were on the mark.  Now your on this board stating Randy Terry advocates violence when this guy your claiming sanctions violence made a peaceful impression on me.  You’ve got to be kidding me.  I’d like you to produce one piece of written evidence that he ‘sanctions violence’ as you said.   if you would like me to procure the paper Randal Terry wrote on the matter I’m sure I can find it.

  238. JR…I love it.  I’ve got one on the way.  lol.  No POLE!

  239. Yeah Randall Terry…what a winner…. amazing what a volatile mix of stupidity, racism, bigotry and zealotry can produce. It makes him the PERFECT Tea Bagger Presidential candidate. Go Sarah and Randy 2012!!!

  240. If people believe in creationism does that mean it should be taught in schools? If people believe that the world is flat does that mean it should be taught in schools? Sometimes there is a difference of opinion but that dosen’t mean that these opinions should be taught especially in public schools. If they want to teach it in catholic schools then ok. Religion is a private thing. Evolution is science and that should be taught. I know some people think that Islam is a violent religion pointing to the radicals but what about the crusaders in years past? Did that mean that Christanity was a violent religion?

  241. Ooops… seems I painted with too broad a brush.  Did I claim Creationism to be a science?  No.  My point yesterday was that the things Phil attributed to Ron Paul, which to me is third person information and may not be totally correct in the first place, didn’t preclude him for me from being an able leader to get us out of this financial mess.  I dream of the day we have a real leader again whom I can rally around all their issues.  But that day may never come.  In the meantime, I’m all for giving Ron Paul an opportunity.  As an independent, I really don’t see any other choice.  If he doesn’t run, I may simply not vote.. which would be the first time in my life.

  242. Good morning!

    IPhone/Bob – Apple had an extremely clear resolution advantage, I was surprised but the satellite images were much clearer (GOOG has updated maps that are excellent in most places now). 

    KM Switch/Rain – I’ve seen those but then I can’t use two mice at once can I?  Big range test today, we’ll see if the major indexes can hold their new highs but PG missed so maybe not…

    Profits/Humvee – Well then all the more reason for a VAT if that’s all they are showing but again, I don’t see it unless those figures are net of losses of other companies.  That’s been going on for years as they’ve deducted the trillions lost/written off in the financials from the trillions earned in other sectors to lower the earnings and was something I pointed out in the crash as an investing premise in the S&P 500 (since AIG alone was taking $10 of earnings out of the S&P’s net $85, it was not a reason to avoid all of the other 499 companies who were dragging the curve up).  If you look at table 11A, where the numbers you site are coming from, you’ll notice these are "Corporate profits with inventory valuation and capital consumption adjustments" which is not at all what coporate profits are.  In fact, here’s something that is beyond funny – notice that, on that table, dividends paid are $718Bn in 2009 while taxes paid was $254.9Bn.  I guess it’s possible that divends are 1/2 of total profits and I guess it’s possilbe that XOM earns 3% of all corporate profits with $45Bn and that WMT ($13Bn), CVX $23, GE $17, T $13, BAC $4, BRKA $8, IBM $13, JPM $9, VZ $6, PG $12, JNJ $12, MSFT $17, UTX $5, GS $12, PFE, $8, PEP $6, KO $7, CSCO $8, DIS $5, INTC $5, NWS $5, AAPL $8, MO $7, OXY $7, which add up to over $260Bn by themselves in just 25 companes out of 9,000 represent can lead you to conclude that the sum total of the other 8,975 companies make about 1/100th of that on the average – which I guess is possible because that would mean that corporate earnings America are about as unfairly distributed as income with the top 0.03% of coportations making 20% of the profits. 

    Oops, now I’m out of time – gotta get the morning post up!

  243. Hi Matt, I had just skimmed the recent comments and was surprised about some of things mentioned regarding Ron Paul.  I don’t agree with him on everything, but some things, I do (e.g. audit the fed). If it’s correct that, "Ron Paul believes religion should be an important part of government," as stated above, that seems contradictory to libertarian philosophy, not to mention (oh I just did) the idea that Church and State should be separate.    

  244. Oops, I will chime in on the creationism thing.  I think religion is just fine as something you teach on Sundays but keep in mind, as FJD points out, that this country was founded on the (at the time) very radical concept of SEPARATING church and state because our founding fathers thought that much of the evil of those now-socialist nations was the way the church had infiltrated governments, holding undue influence.  I am pretty much dumbfounded that people want to open the door to religious teachings in the school almost 100 years after Scopes.  How much of our children’s science education should be dedicated to creationism?  20%. 10%?  That’s 10% of the time that China, India, Europe… pretty much the whole world will be moving ahead of us and that’s assuming that the damage done by confusing children with the concept of "facts" and "faith" doesn’t carry over to the rest of their schooling where we end up with an entire generation of people who belive the truth is a matter of opinion and aren’t able to think their way out of a paper bag without having their opinions spoon-fed to them by the MSM.  Oh wait - we already have that, don’t we? 

  245. Forget about if we should be teaching religion in schools!  Far more important that we start teaching finance in schools!

  246. Good morning Phil, 
    I am traveling to Europe for 2 weeks from tomorrow and I need your for help urgently to putting my portfolio in a completely neutral stance. Here is a link to the positions, if you don’t mind suggesting what I need to do to be as close as possible to fully hedged.
    Thanks a lot.

  247. Ilene, yeah, that is quite a contradiction for him to have.  But then, maybe he isn’t as much of a libertarian as we think?  Or, he really isn’t for co-mingling church and state.  It’s pretty clear what the Constitution says.  I doubt he’s that far out there to interpret it any other way then literally.  I think it’s more along the lines of making sure things like ‘in God we trust’, the pledge of allegiance and the Ten Commandments aren’t stripped from every facet of life by the constitutional fundamentalists.  To me, that is NOT what the Constitution is about.  When it was written, from everything I’ve ever read, they were mostly God fearing men who just wanted a limit placed upon God in our government and not have decisions/laws made to enforce some religious interpretation.  There is no doubt in my mind that simply the mention of God in government is not a violation of their intent.   Oh well.  Ron Paul has my vote if he runs.  Next controversy..

  248.  Phil, thoughts on PG earnings?

  249. I’d probably vote for him too (unless someone better were running against him… yeah, I know, what are the odds?), because on the points he and I may disagree on, I don’t think he’ll succeed in changing anyway, but he may be able to shift somethings (financial matters) in a better direction. 

  250.  Sorry Phil ir is SDS, how about selling the 28 puts for 30cents to bring it down to 50cents may do it later