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Fill the Gap Friday – But Which One?

We are in a very interesting spot this morning

At 8:30 we get the Non-Farm Payroll report and the whispers are all positive while the "offical" expectation is that we drop another 100,000 jobs so are expectations too low or too high?  We are also almost dead center between late April's 1,220 top on the S&P and late July's 1,020 bottom with the S&P closing yesterday at 1,225.  We had a huge "gap" as we flash-crashed from 1,200 to 1,100 in just 4 sessions in early May and we jumped off the July 1st spike at 1,010 all the way back to 1,100 in the next 7 sessions.  So we are at the 1,100 middle of the range we've been tracking all year but we got here VIOLENTLY from both directions, establishing neither a proper bottom or proper top on the 10% outside edges of our range

The bulls will be pointing out that 150,000 of today's job losses will be census workers whose jobs ended and the bears will be pointing out that we need to gain 300,000 jobs a month for the next 3 years before we even rehire the people we've lost over that past two years so who the hell cares about any jobs number under 200,000?  If the payroll report is weak, then we are more likely to get QE2 (and maybe QE3 and QE4) and the Fed will remain on hold so the Banksters should  be happy too.  If we get a "strong" report it will be harder to push through more stimulus and scary for the Republicans as it may give people the impression that the Government is accomplishing something so good is bad and bad is good today from that perspective. 

None of this matters because Andy Zaky says we are all doomed - and he makes a pretty good case fo it too!  We've certainly had a boring and generally bearish week as we have been protecting our gains off all those crazy bullish bets we made back when I called the dead bottom of the market on on June 6th in "Turnaround Tuesday – Will CNBC Apologize to America?"  Of course, that was a rhetorical question because, rather than apoligize for their non-stop end of the World proclamations, to listen to, for example, Cramer now – you would think he was chasing people INTO stocks at the time, rather than out of them.  

Oh well, what can you do?   At the time I had published "5 Plays That Make 500% if the Market Rises" and those are already done, well over 300% (why wait just to make 200% more?) and, of course, I put up our Q2 Buy List with my top 20 picks on June 7th so, all in all – we can't complain and we're not greedy so we took the money on our unhedged positions and ran and we don't really care what happens today, although we, as I said, generally bet short – simply because the odds favored us on the short side for reasons I've been outlining all week

By the way, this is THE last Weekend that subscriptions to PSW will be offered at the current prices.  We finally finished moving and upgrading our servers and we'll be launching new products in September but we are no longer going to be accepting Basic and Premium Memberships as those, as well as our newsletter fees, will be very different (and more expensive) products in the fall.  We've mentioned this since June – this is ACTUALLY the last 3 days at the old prices.   

8:30 Update:  Woopsie!  We LOST 131,000 jobs.  Worse than the worst expected and so far below whispers that my 2.5% drop prediction from yesterday (10,450, 1,095) is looking on the money.  As I said above, bad news is really good news so we'll be taking the short money and running this time and getting neutral into the weekend.  

Looking at the NFP numbers, it seems that another 181,000 people dropped out of the labor force altogether, which explains how unemployment stayed at 9.5% in July despite the additional loss of jobs (and don't forget we need to add 100,000 jobs a month just to keep up with population growth!).  Private payrolls were up 71,000 jobs, also a disappointment while government payrolls fell 202,000 jobs so you'd think the Conservatives would be out celebrating the shrinking of Government they've been whining for…  Manufacturing was up 36,000 but service sector payrolls fell a disturbing 164,000 – which makes no sense in light of a positive ISM report so maybe the data is flawed (no big shock if it is).  

We still have Consumer Credit data at 3pm to slog through today and we should get some false support at the open as the dollar drops like a rock on expectations of more money drops from the Fed should punch the Yen back down to 85 with the Euro back to $1.33 and the Pound testing $1.60.  Will that be enough to get copper back to $3.40 and oil back to $82.50?  If not, then there's no real strength to the market.  Fortunately, we stayed away from EWJ longs yesterday because a strong Yen will send them back to 9,500 very quickly and, once again, we are testing that 1,000-point tether between the Nikkei and the Dow. 

So woo-hoo on our shorts – what a fantastic way to close an otherwise boring week.  Now let's see what there is to buy on the dips and we'll see if 1.25% holds to the downside or if we punch down the full 2.5% today (which would be more bullish if we hold that and recover).  Fun, fun, fun!

Have a great weekend, 

- Phil


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  1. oh oh…

  2. Holy Crap! – the downward revision of the last NFP is huge!

  3. Whoops, looks like dem wings is made out of wax…..Look at that Yen go

  4. Phil,
    On the AAPl position, you suggested a $230/$270 Jan bear call position yestrday for a net cost of $16.50 and to sell the Jan2012 $300 C for $31.50 for a  net of positive $15.
    My broker Fidelity states the Jan $230 call,now $44 will be sold, and the $270 bought for $20. He also said that since its so far deep in the money, good chance my stock gets called away at $230 in next few days?
    What am I doing wrong?
    Thank for your help
    maya 1

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     Sector Performances (Today)

     Thermal Imaging

    0.20 %



    Basic Materials
    -0.09 %



    -0.17 %



    -0.23 %



    Multi-Sector Conglomerate
    -0.26 %



    -0.27 %



    Industrial Products
    -0.29 %



    -0.38 %



    -0.45 %



    -0.46 %



    Computer and Technology
    -0.54 %



    -0.74 %



    Business Services
    -0.84 %



    Consumer Discretionary
    -0.88 %



    -1.03 %



    Consumer Staples
    -1.15 %



    -1.37 %





  5. TZA jumped up $1.10 instantly on the jobs report release.  The monkey behind the curtain must of went crazy on that magic "gap down" button…

  6. Not looking good, line in the sand 1107-1106, if it doesnt hold another month of pain coming IMO, no more earnings to juice the markets till Oct.

  7. Vindication… and the report further proves it’s MUCH worse than the sell side analysts have been predicting as well as everyone else.  Today is the beginning of multiple down days and time for my account to exponentially grow. :)

  8. SRFrog where do you get your news?  Where are you reading about the revisions of NFP, I’m curious where you’re getting your info

  9. Great Article and great illustration of what a joke real estate prices, I mean a total joke.

  10. Vindication? Whatchu talkin’ bout Willis?

  11. June revision was a loss of 100k jobs.  The govt numbers are so easy to manipulate, can only wonder what the true job number is today, come next month we will know further.  My favorite revision magic is the GDP revisions…3 years post report!

  12. yipcarl: The Bureau of Labor Statistics , Employment Situation Summary
    The last line of thee report reads: ‘The change in total nonfarm payroll employment for May was revised from +433,000 to + 432,000, and the total change for the June was revised from -125,000 to -221,000.’

  13. Holy cow, leader of shiny happy people Romer left Obama!! Thats 2 gone in the past month…

    Hey at least HAL still has a job

    Gold off a cliff


  14. Good morning Phil,
    I would like to hear your view on futures of /CL trading today at 80.99 short strangle !!!! Nov 110c and Nov 50p paying .42 per contract. thks

  15. That’s right the Bureau of Labor Statistics!  i forgot.  My favorites got screwed up and I lost a bunch of links.
    Goldman….Of course the gov’t numbers are a joke as I have been saying.  The Gov’t can’t run an ice cream shop let alone put together sensitive and detailed information.  You don’t have to be a conspiracy theorist and think they are being cooked you can just believe their incompetence is to such a high level that it looks like they are cooking them.  Smaller Gov’t Smaller Gov’t… Ron Paul is the best we got. 

  16. Yip – from Seeking Alpha "Market Currents" on left of page:
    8:30 AM July Nonfarm Payrolls: -130K vs. -65K expected, -221K last month (revised from -125K). Unemployment 9.5% vs. 9.6% expected, 9.5% in June. 8 Comments

    See -221K last month vs. -125K was reported then…

  17. THANKS SrFrog…..Bureau of Labor Statistics is what I had forgotten

  18. yipcarl
    You have to be smart to make good ice cream and keep it cold !!!!

  19. Phil / QE2 and fiscal initiatives.   So, I assume these are now a certainty starting next week, as Nov looms.  Doesn’t that make stocks more attractive (and the dollar less attractive).  So, how do you think the mkt will handle this stimulus inevitability.  Selling shares is fine, but where else do you park your money?  Global cos, as you’ve explained ad nauseum, offer a better yield than Treasuries.  Up or down from here today?

  20. Yodi.  Ok a hallmark store.

  21. Good morning!

    Well we’re not going to be breaking any levels today so let’s just watch percentages.  We expect a 2.5% drop on the poor payroll report but the market should get some support from the metals sector and maybe even our exporters as a falling dollar boosts commodity prices.  Obviously, that’s no basis for a real rally and, assuming the dollar holds up here, it’s going to be a great chance to bet it up over the weekend as the demand for US wheat will strengthen the Dollar anyway. 

    That makes UUP an interesting play.  I regretted not going there when I called a dollar bottom on Tuesday but today should be even lower, maybe $23.25 so selling the Aug $24 puts for close to $1 would be the way to go or buying the $23 calls for .40 or less could give us a double on a small dollar bounce.

    Ags are going to be going up fast as the combination of low dollar and strong wheat should send them flying so we’ll be watching them for a possible short into the excitement and congrats to the VIX bulls – that was a smart trade yesterday.

    I have no interest in going long at -1.25% but -2.5% would be a good place to take some chances so patience is the key to the morning.  If 1.25% holds and we bounce back – then the whole thing is manipulated BS that will leave me more bearish into the weekend. 

    Either way, it’s best to take money and run on the morning dip on the short side:  ALWAYS sell into the initial excitement!

  22. A little more momentum today on the open but still not enough to continue the trend. We might close flat again today. The spring keeps tightening.

  23.  Wow, DOW down only 45 points after that number? CRAZY.

  24. Gel - Short the Aussie $ here?

  25. Rain?  Flat?  Whose Koolaid you drinking?  We are closing down and this is a great selling opportunity as this downtrend will continue throughout the month.  Do you have any data regarding this opinion or is this just an opinion because you think were in a recovery? .

  26. Half filled mattress at open after being naked overnight.

  27. Deano/Las Vegas- count me in my friend. I’d be there tomorrow. I would add that I think an event like this should only be for members. Meet Phil, meet one another, have some fun, progress in our learning… but not a public, promotional event.

  28. We may even rally to even or up before we fail.  I would like to see a pop to even so I can get more short.

  29. Jbur / Vegas – I agree.  members only.  non-promotional.   I’m IN! 

  30. Deano/LV — count me in.

  31.  yip – you’re not kidding. This is crazy. Wait, i have an idea!! Lets buy more PCLN! Its only at 290! Buy, buy, buy! The unemployed folks have more time to travel after all!

  32. It looks like we are rallying.  Are the powers that be trying to shake out all of the shorts?

  33. My DXD hedge is pointless. The Dow holds even when all my other investments fall. My next hedge will be against an index that’s harder for Ben & the Banks to prop up.

  34. Hanna come on we are in a recovery thinks are so good.  This market rally is so funny to me.  Anyone want to bet this market will close at the lows?  How they can rally this market after a week of crap news besides the hint of good news based on lowered expectations from sell side analysts, the news couldn’t have been a lot worse and they try to pretend things are going to end up ok and rally us?  PLEASE PLEASE PLEASE.  Lower is the word of the day

  35. Taken the money and running!  Wishing I hadn’t lightened up my short so much last night but too much of a risk not to.. I can’t believe we would melt up from here all day… but then, I’ve been wrong about that before-  I would have to say if we do, at that point it would all be about anticipating the next government handout otherwise known as QEII.  Which to me almost feels like blood money-

  36. Out of TNA          That was fun!

  37.  OMG-PCLN doesn’t want to stop!!  sold an Aug 310 call and getting ready to pull the trigger on a hedge for it…

  38.  $TICK had readings of 1K earlier today and now at 491.  This dip is being bought.  $TRIN still above 1 but not by much.

  39. USO $37 puts.  Blew it and didn’t get my sell-to-close order in quick enough on the spike down at the open.  I know I need to get out of this trade, and I will accept losses, but I think I tend to do better if I don’t panic out in the initial rebound but instead wait for an intra-day pullback.  However, the dollar is not helping me.

  40. yip/flat — no data, and I have no opinion about recovery. I’m neutral. I’m just watching the charts and if they couldn’t keep the market down for more then 3 minutes, chances are, we’re going to melt up. Just think like a bot. The best potential to make big money is to move the market. They tried down again today but still didn’t get anyone on board with the plan. The more that happens, the more they’re likely to try up. Maybe someone will get on board in that direction.  Up means breaking the resistance so they might get some TA’s on board as well. The best postion to do that is just below the support and jam it through pre market — just like they tried down today. Just remember that they don’t care which way it goes as long as it moves! Has nothing to do with the economy, numbers, etc. Those are just excuses to make the moves.

  41. matt/melt — you don’t have to belive it. just profit on it. looks like you were right to take the money and run. Bots are in control already. Retail did nothing on those numbers.

  42. Downward revision/SrF – Wow, I didn’t even notice that.  What a load of BS these statistics are…

    Yen/Kustomz – Today would have been a very good day to leave that Yen trade on!

    AAPL.Maya – Is this guy giving you his opinion or stating a fact?  I think the confusion is that it was the bear PUT spread to protect your existing AAPL stock, not calls.  I may be wrong but I’m pretty sure you wanted to protect an existing AAPL position so I suggested SELLING the 2012 $300s for $31.50 and BUYING the Jan $270 puts and SELLING the Jan $230 puts for net $16.50, which gives you $40 worth of downside protection to $230 and does not cap your upside through $300 and it’s $15 net positive if AAPL moves higher and you decide you won’t be needing 2012 protection once this expires. 

    Wow, what a stunning recovery!  Only 13M shares traded in the first 12 minutes on the Dow so very slow so far (for a big data point).  Sorry bears… 

    California/Yip – So your example of catastrophe is that some moron paid $1M for something that is considered a dump in 90% of the country and now they can’t sell it for 3x the national average price of a home twice the size?  Why does a return to rational pricing constitute a disaster?  Do you know how great it is for the real economy if people stop wasting their money speculating on homes and other commodities?  How much more money will movie companies and restaurants make if people decide they can make due with one $30,000 car every 5 years instead of one $50,000 care every 3 years?  What if people save for new appliances and vacations instead of a "bigger and better" home every few years?  You are down on the old economy and the old economy is dead – you can’t keep digging it up and showing us a rotting corpse to prove that the current economy is still sick.

    CL/Yodi – You know I have never played futures on WTIC, the regular trading is crazy enough.  We are having a weak-dollar rally this morning and we’ll see what happens after that but our stocks are looking very cheap at the moment to Global investors since they are priced in dollars.  IBM, for example, is pretty much flat for the year to us but has fallen 10% to the Yen.  So oil is going to be crazy unpredictable but I’d still rather just go short at $82.50 since that’s just more money than people can afford to pay (so demand goes down) and Japan will pull out all the stops to support 95 Yen to the dollar. 

    QE2/Tusca – Absolutely it’s bullish in general.  MORE FREE MONEY!!!  That’s usually good for a week or two of silly run-ups and THEN the big crash.  Bottom line is private jobs were ADDED, government jobs subtracted – THAT’S WHAT THE CONSERVATVES WANTED!  As I said in the post, they should be popping champagne corks and BUYBUYBUYing on this news so we’ll just continue to watch our levels and see what holds up next week but now we lost the potential news that was going to get us over the top.  Over the weekend we’ll have to see what else might do it but, probably, it all comes down to QE2 or bust….

  43. Reactions/Phil LOL, that was quite a list of possible reactions to the NFP – looks like someone with money out of that list is happily buying after the pre-market drop.

  44.  jdub / PCLN – dangerous, dangerous stock to short in any way. It could rally another $50 if the market goes up….just on momentum. Would go with Opts strategy on this one, and only short when the trend changes….JMO

  45. Phil – those 50 slots are quickly filling up, better start planning!

  46. If we end the day positive I’ll be LMAO

  47. dbarakat/LMAO — all the way to the bank!

  48. Its a nice Friday in August and I hear there are some bargains on Priceline (airline/hotel tix, not the stock) so maybe not enough air-breathers to fight the robots today.

  49. IPAD- I know there are some IPAD junkies out there – my wife just got her early b-day present- an IPAD 64G and I am trying to figure out how to make my Verizon MiFI modem connect to the IPAD. I am a complete Apple novice- any help on what icon or file to go to the make this happen?

  50. Rain… Your logic makes sense to me, more than the market generally however if by tuesday we are higher I’m covering all longs i have and going net long because if this doesn’t drive the market down today the bots are most certainly in control and going to take us higher.  Still I don’t think so.

  51. Phil and all,
    seeing the pictures of the Singapore hotel,  and your statement about the US becoming a third world country struck me as profoundly true. Sad but true.
    I was in Singapore for a few days 10 years ago with my family. We took a tour to Sentosa Island, which was modern, beautiful, and all our little female tour guide could talk about was how Singapore was pushing into electronics, and how Singapore has the largest and most modern ports in the world, and how Singapore ports load/unload more ships, faster than Port of Long Beach and Los Angeles. She was soooooo proud of her country and what it is and is going to do. So much patriotism. I left feeling that this was quaint, but why be so remarkably proud, and how could a little city-state, run by an old benevolent dictator do all this?
    Well, I recently read that the net worth of the average Singaporean is more that that of a US citizen. And many of the properties you see on one of the links above are in the millions ($1US=$1.35 Singapore). I don’t remember the last time I saw a large building project, giant cranes. Yes, Phil, we have lost something as a people, as a republic, but I don’t think most people realize it yet.

  52. jromeha/Aussie
    Oh, yes…. we will see good times for the Aussie today – HOWEVER, the Kiwi is showing strength against the AUD, and I am long the NZD.
    A word of caution …. with the jobs report so weak, I think we will see QE next week ( my opinion only ) and I will have some nice plays for you later in the day, should this materialize. I am looking at some exotics that will be a nice ride.

  53. Here is a good stat for all….oh, and as for QE2, well, gel is right, and we are gonna shoot way up to the highs and fall to the lows soon there after….the little stat link says it all.

  54. Jbur     I agree with you about Singapore.  I have been there twice in the last decade.  It is an impressive place that
    is well run.  They have definitely built up there economy and the people that thrive in its environment.  Great observation on your part.

  55. I have been in a currency play for three weeks that "keeps on truckin" – I am short the USD against the Singapore dollar.. If we get the QE next week the dollar will weaken, and the Asian currencis should strengthen against the Dollar. This is starting to look like fun!

  56.  Research In Motion: Headlines crossing that Blackberry services back in Saudi Arabia crossing the wires; recall yesterday it was announced that the Canadian government was in talks with Middle East governments so should not be a surprise  (52.92 +0.69)

  57. yip/bear — I’d be careful. If they get enough momentum, 10,700 will stick. I really don’t understand why you are so bearish, but then again I’m a perma-agnostic. It makes me sleep better not taking a side. The trick is to make money being agnostic. It’s exactly what the bots do – and who makes the money on the street?

  58. Good Morning Phil — Dia mattress — still 1/2 cover over the weekend  with aug  105 short put?

  59. Oh, Oh, Options House is currently having some "technical difficulties"

  60. Selling $7 Aug10 ARNA P for 50c. 

  61. Since volume is so low today, it might be an opportunity for the Street to pin prices at their weekly option max pain strikes — which seem to be lower from here for many stocks — so it might turn out to be a bearish day today. 
    Just something to keep in mind.

  62. The rats are starting to leave the sinking ship… Romer is one of the first – she smiled a lot, but was never pleased with the direction of the economic remedial efforts. Our boy Larry Summers usurped her responsibilities and kept her in the closet
    With the jobs report so dismal, there is one thing that could be considered as a plan for reversal – hire 500,000 custodial workers to clean up the mess the administration has made of the economic recovery. We are losing jobs, not the inverse, that typicially is the case in the first year of a recovery. All records have been broken in this regard.

  63. Jbur,
    I’ve had persistent problems with TOS all morning, as well.  Usually only happens on high volume days.

  64. Phil
    You are correct in that I want to protect an existing, rather LARGE position in AAPL.
    So, the $270s and $230s are PUTS, and the 2012 $300s are CALLS to be sold.
    So, will Buy the Jan $270 Puts, Sell the $230 Puts, and Sell the 2012 $300 CALLS?
    Promise not to bother you again until Monday if you confirm this as I don’t want to go make a big mistake and freak myself out later

  65. Phil--would you advice on picking up some YRWC today?

  66. Phil sometimes I don’t know what you’re reading or responding too, what are you talking about?  Are you serious with this response?  You said, ‘ So your example of catastrophe is that some moron paid $1M for something that is considered a dump in 90% of the country and now they can’t sell it for 3x the national average price of a home twice the size?’
    Excuse me?  Some moron, ‘my example of a catastrophe’?  How about most everyone, ESPECIALLY in your blue states, who purchased a house from 2003-2007 in almost every major market?  What are you talking about?  It’s not isolated to one moron as you infer?  Furthermore you said,  ‘Why does a return to rational pricing constitute a disaster? 
    Huh?  Did I elude that prices coming back to more appropriate level a disaster?  What are you talking about?  How I have to explain this is beyond me. Any moron can figure out that reasonable and affordable home prices are a good thing, that’s not the question,  housing not  an isolated issue that has no spill over?  Why am I even explaining this?  The disaster it seems you are missing is that homes expanded to such a degree that they are now in a prolonged retraction which will grossly affect your green shooting(not) economy.  The prolonged retraction may end up putting us in a better more affordable place but it’s doesn’t happen without a lot of pain and financial loss. 
    Then you said,
    Do you know how great it is for the real economy if people stop wasting their money speculating on homes and other commodities?  How much more money will movie companies and restaurants make if people decide they can make due with one $30,000 car every 5 years instead of one $50,000 care every 3 years? 
    Really?  Great bud but what your not addressing is the damage that has already been done?  When you have 25% of homeowners underwater (for now, will get worse) or with stage 5 cancer can they can change their eating habits to stop cancer or stop spending habits but they are still dead or broke.  This also affects the other homeowners who live near by. The economy coming back to reality is a good thing yes, the collateral pain which I am speaking about that will be caused is not.  Then you said.
    What if people save for new appliances and vacations instead of a "bigger and better" home every few years?  You are down on the old economy and the old economy is dead – you can’t keep digging it up and showing us a rotting corpse to prove that the current economy is still sick. 
    I can’t keep pointing out the glaring problems that still exist and will continue to affect the overall economy and stock market?  Excuse me?  You assume I don’t know a lot quite often perhaps you shouldn’t do that, you don’t know what I know or don’t know.  You act like you know but no one does and your response here was totally nonsensical, I’m. sorry.

  67. phil – ‘sorry bears’   this report was crap . please . you have it on one of your favorites ,zero hedge is comparing to 1983 !  how can anyone in there right mind buy this crap . why are you so bullish . its tough to get a read on you . you appear to be a perma bull , am i correct? i mean no insult here ,i am just trying to get a better understanding

  68. Mattress/RN – Great call, I forgot to update that one.  We should sell back again once the commodities calm down.

    PCLN/Hanna – I think that’s the next stimulus, give all unemployed people airline and hotel vouchers (maybe toss in some cash for spending) and let them fly anwhere in America to fill up the hotels and restaurants…  I think PCLN is having fun squeezing the shorts today, we’ll see what happens at $300.

    Volume at 10:15 on Dow is pathetic 25M – you would think it’s a vacation day, you can’t trust anything that’s happening at the moment

    Blood/Matt – Whatever it takes at this point.  How long can we keep extending benefits? 

    USO/Poindexter – They are almost 1/2 premium so be careful.  If we don’t head lower you may want to consider selling the $36 puts (now .55) and rolling over to the Sept $37 puts (now $1.63) for net .07 as it puts time on your side and the $36 puts can be rolled to Sept $34 puts (now .52) for a $3 vertical. 

    Goal on UUP by the way at $23.25.

    Reactions/Snow – That wasn’t a list of POSSIBLE reactions, those are all expected reactions.  It’s such a stupid and debatable (and, ultimately, changeable) data-point that we have a bunch of QE2 fans buying and the dollar diving and commodities flying and next comes the real selling now that the optimists have bought their 25M Dow shares…

    Planning/Jrom – I’m not planning.  Pick a weekend and send me a plane ticket and I’ll free up some time - I have Zero time to plan this thing other than to say I need time to play poker!

    VZ/Pstas – I didn’t even know you could do that.

    Singaport/Jbur – It’s sad that most Americans don’t really travel and see the world (but they sure do like to give their opinions of it).   I have been acutely aware for years that our lack of infrastructure spending by our government (blame your favorite other party) and, even more so, our current profit-focused corporations, who think R&D is what they play over at the House of Blues, are dooming this country.  The "lesson" learned from the .com crash was "don’t invest in new things" rather than "there were spectacular investments and there were scams – learn to tell the difference and you can get rich."  I suppose it’s the all or nothing culture we’ve developed – all the average US company does is defend it’s turf and that turf is shrinking every day that another one of the World’s 6.7Bn people comes up with yet another better mousetrap than the tired old stuff we’re peddling. 

    I didn’t mention it earlier but GS, JPM et al are using our TARP money to IPO Indian firms for FREE.  They are trying to get into the markets over there but what are they really doing?  They are building the next generation of Indian companies that will take jobs and revenues out of the US and they are slowly but surely abandoning the sinking ship that is the USS USA.  The best part is - if India blows up in their face – WE’LL bail them out again!  

    Good chart Pharm (still can’t post graphics?).  Yay New York – we are still making those Millionaires at a pretty good clip.  If I can make it there….


  69.  I think Sept drop will be even more brutal, QE 2 will come then, Big Ben knows he needs to do it, no point doing it now. The effect will be nothing positive. Asian economies are decelerating, not reflected yet

  70. I got to say this has been an emotional rollercoaster for me, 20 min ago I was ready to call EMS…heres to hoping HAL short circuits

  71. pstas - Go to "settings" icon then click on "network" then click on Wi-Fi then choose network (put in miff code). Voila! :-)

  72. There goes new low for the day on S&P, back at good old 1,113 – if that fails we’ll be at 1.25% in no time! 

  73.  oops "MiFi code) …

  74. Low risk trade for ARNA….if you don’t mind owning in Aug – buy Jan11 6/7.5 bull calls spread, sell the Aug10 7 P for a net 5c credit.  I think we will get a pull back on them here and then they pop back up.  DCTH did the same thing and this minimizes our risks into Sept. 
    Graphics/Phil – workin’ on it!  :)

  75. what did I miss at 10:30? Volume picked up and it doesn’t look like the bots.

  76. IPO/Phil – 4 cents Phil, not free ;)

  77. Phil/R&D — house of blues — good one. It sure makes me blue.

  78. Rain… Haven’t always been a bear my friend but being a bear in 2006 saved me TONS of money because I sold my house in 2006,  I saw this coming.  That house is now worth 55% less then when I sold it.  I was 100% short beginning of 2007 and held that through 2009.  I rode the markets up from 2004, was a year late and sold beginning of 2006.  I’m not bearish for no reason.  In fact the reasons are as clear as day but everyone wants to get their jollies on what sell side analysts say.  This economy is a joke and how anyone thinks bailouts create a bustling economy is nuts, stupid, motivated for something, or confused.  We just went though what they are calling ‘worse then the Great Depression’ and we can see why they say that as we ‘averted a major disaster’ (really?  how did we avert it?  pumping money into a broken system?  Really?  Can someone explain that?)  but somehow some people can only comprehend green shoots and an up market.  How more people don’t see the house of cards continues to baffle me.
    Where’s the stick?  No stick as I said, this market goes lower. 

  79.  All

    I have the following in for Phil in Vegas – let me know if I missed anyone:


    So far very short of our goal of 50, but its early.

  80. Trice… no he says he’s not a perma bull but what he says and what he writes doesn’t seem to jive. 


  82. well, here’s our 1113 test……

  83.  Hi all,
    I’ve been patiently reading and following posts this summer. I thought I’d pop in my head today and say hello.

    I really appreciate the community here. Lots of back and forth with a sprinkle of sarcasm to keep it interesting. 
    I’m a high school teacher, so I’ve been very tempted sometimes to chime in on the union/salary drama =) I’m sure you will hear about it sooner or later. 

    Two things I’ve really come to love about the market that used to terrorize me: 
    1. When the market goes down, I have a plan and some part of my portfolio is making me money. Just loving that. The hedging posts are great, thought the mattress is still keeping me busy so I’m sticking with less efficient hedges that take less time to manage for now.
    2. When I go back to work next week, I have a great plan to carry me to January.
    Phil – I’ve been following your comments on seeking alpha for years and I finally have enough money to put to work. It’s a small portfolio, but I enjoy it. Thanks for all of your thoughtful information. You always seem to have an answer for everything that makes me think …. hmmm ya that makes a lot more sense. Keeping it focused on the goal. Avoiding the political banter (mostly) during the day is welcome.
    Pharm – since my degree is chemistry I have a tendency to like the biotech plays. I’m in Arna for a bit and have sold calls recently. I did well in DNDN and CTIC a few years ago but I just dont have the time to keep up with it. Great to have someone who has the time and energy to watch all the dates and events.
    JRW – impressive eye for the charts! Loving following your moves though I dont play along at this time due to my limited funding.
    All – really enjoying the community here. I dont follow lists or read blogs generally. Classes start back next week (California starts EARLY) so I’ll be busier and I just wanted to post before I get super busy trying to convince 200 15 year olds that there is a wonderful hobby called "thinking" that they just might like to try =)

  84. Wow, that was intense. Shorted the Aussie $ futures at .9140, .9170, and .9177 and just covered. I think Ill quit when Im ahead and start working on my thesis (which Im a lil behind on)…. Ya’ll have a good weekend…. And Gel look forward to reading your currency plays later!

  85. AAPL- I am evaluating some possible spreads and am curious about any upcoming AAPL events- other than next earnings in Oct. Any scheduled events/trade shows/other potential new product dates, etc. that anyone is aware of and can share?

  86. We closed on Friday 7/14 at around 1100, Friday 7/23 at around 1100, friday 7/30 around 1100.  Any bets on where we close today? ;)

  87. pstas – Did you get your iPad Wi-Fi/MiFi working?

  88. Kink…nice observation….1100 looks right. down just over 2% for today makes sense.

  89. EMC being punished.

  90. diamond- just tried it and it wil not connect. It automatically connects to my home/office wifi network. I suppose I have to disconnect from that first? Can’t see how to do that.

  91. Phil / My Unhedged longs    Fall seems to be gaining momentum.  Should I cover or wait for bounce?  I still think aggressive QE2 and fiscal initiative will come quickly now, but mkt already expects this now, so downside should in theory be limited.

  92. Dolllar/Gel – We got the bounce on UUP but lame so far.  85 Yen is a tough nut to crack. 

    RIMM/Dent – We knew that was going to be worked out, didn’t we?  I hadn’t even mentioned it because it was so silly.

    DIA/Gucci – We were naked into this morning but 1/2 cover is good over weekend, hopefully at the gap at 10,450.

    Weeklies/Kinki – That’s going to be crazy if we start pinning every Friday.  Just when you thought the market couldn’t be more of a joke too….

    AAPL/Maya – Yes, the put spread protects you from a drop to $230 and the sold calls pay for it.  Keep in mind this was based on your bullish assumption that AAPL was going to hold $230 (because you had suggested a play I didn’t like as much at that level) and will not do you much good below $220 (as you have $10 extra leeway on the spread) so at about $240, you may want to add more protection. 

    YRCW/Savit – Not today.  If we finish down at 1.25% then we very likely have a bad Global Monday morning (Asia gets very upset when we don’t have jobs, which is ironic since they have our jobs) and that should take us back to the to 2.5% lines.  If we make it to 2.5% (the gaps) and hold it today, then we may establish a higher low on Monday.  Either way, gotta wait and see on YRCW.

    Nonsense/Yip – Well you are right then and I will refrain from pointing out possible flaws in your logic.  As I have said many times – the bulls are wrong and the bears are wrong – we are in a trading range and likely to remain there for some time.  Homes will be low for a long time and the economy will be slow for a long time and if it makes you feel better to constantly point out evidence of a slow economy then enjoy yourself but I will continue to point out the other side of one-sided articles if you choose to post them here, just as I will often point out the other side of bullish articles.  If you need someone to agree with you all the time – this may not be the right place.

    Bullish/Trice – I am not bullish, I am rangish.  I have been bearish all week and now we return to the middle of my range so I am neutral.  If we sell off below my range next week I will be "bullish" – this is really not that confusing, is it?  I said yesterday that a negative report will send us down 2.5%.  Today I said we had a negative report and we should get a 2.5% drop.  Was that being a perma-bull or just telling you what’s going to happen?  Now we’re dropping and I’m telling you we’ll hold 2.5% and Monday possibly down 1.25% lower on a spike to about 10,300 but not too likely we fail that and then, hopefully, some sensible consolidation to form a proper base  to build off but you still won’t see me picking a lot of bullish plays unless we get a silly sell-off well below 10,200 and 1,100.

    The Fed is meeting on Tuesday – you bears feel free to bet the farm to the downside if you want but I think it’s a BAD idea.

    Bob Reich says we need 125,000 jobs a month to keep up with population growth – even worse than I thought!

    .04/Rn – I stand corrected.  Good to know they are not just giving it away!  8-)

    Welcome Skeyptycal (good name)!   Good luck with that thinking thing – you have to compete against 40 hours a week of video games that emphasize reacting over thinking…

  93. High risk, but worth it to me – from EP Advantage -





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    Curis (CRIS) shares were hit (once more) in June by the failure of anticancer drug GDC-0449 to meet its primary endpoint in a metastatic colorectal cancer (CRC) trial. While the company has been nursing wounds for the past month or so, its share price has started to climb once again to about half its start-of-year high. Speculation is emerging as to the trial’s failure, suggesting the problem could be a result of an aggressive treatment regimen, or specific to the mechanism of action in CRC (Ya think….very difficult to treat). The focus has now shifted back to other tumour types, as both analysts and Curis see upcoming phase II ovarian cancer data as pivotal to the progression of this drug.
    I like them if we can get ‘em below 1.70 again.

  94. pstas – Under Wi-Fi settings on iPad, you have to actually "choose a network" (the MiFi name). Check to make sure the MiFi is on …

  95. Pstas
    Go to settings, wireless, options, networks and choose in of existing ones at your place of current iPad location

  96. Weeklies/Phil:  No kidding, right?  Great business tho.  Sell options above and below the max pain strike and let Goldman do price manipulation for me. B) 
    Probably only work for the remainder of August tho.  Oh well.

  97. Reactions/Phil  – "That wasn’t a list of POSSIBLE reactions, those are all expected reactions." – Oh my goodness, I see what you mean! So glad I’m subscribing to this place.

  98. Let’s watch that $14.50 line on XLF – if that fails then we have some major problems.

    WFR up 2.5% today – go figure. 

    IWM is on drugs with .47 on the TODAY weeklies (.20 in premium) but if you can take the $63 calls for $1.30 (almost no premium) and either stop out at $1.20 or sell the $64s if they get back to .80 that’s a .50 spread into the close.

  99. yipcarl…. Your sentiments regarding the economy, and the resolution are right on… you have "nailed it"

  100. Phil your remarks below I sold the PCLN Aug 300c (short) do you think it will over run 300.00 it really looks crazy in a down market like today thks
    PCLN/Hanna – I think that’s the next stimulus, give all unemployed people airline and hotel vouchers (maybe toss in some cash for spending) and let them fly anwhere in America to fill up the hotels and restaurants…  I think PCLN is having fun squeezing the shorts today, we’ll see what happens at $300

  101. diamond- don’t want to turn this in to a tech support site- perhaps email?
    I select the Verizon device; it is on; I enter the password; press "Join"; error message pops up- Unable to join the network, etc.


  103. Phil… Are you serious?  I definitely don’t need you to agree with me, your initial rebuttal was senseless.  You said it again above the market will be bad for a long time and yes you say your not a bull or a bear but I don’t see how that’s true you are much more of bull then a bear.  I took 5 – 6 of your sticks and lost them all.  However if you were a little more bearish then I would have been 4 for 6 or 5 for 6 on the sticks.  Let’s face it you are bullish but like to say you are even keel. 
    Yes GEL and why most people don’t see it, intelligent people even, baffles me.

  104. pstas – The MiFi has to be connected to Verizon to show up on the iPad Wi-Fi settings. If for some reason your MiFi cannot connect to a Verizon cell, then it will not show on your iPad.

  105. Pstas…Apple support 800 275 2273

  106. diamond- I am able to connect to the network via my HP net book- it is on now. The MiFI option appears on the IPAD but will not connect after entering the password.

  107. Many wonder why this recession is so difficult to turn around this time. I believe it has much to do with opportunity for the businesses that were already looking for a revisionary strategy to become more "lean and mean" in order to limit risk and enhance efficiency. When the economy contracts, and the shuttering of plants takes place, then management takes a further step, and moves its production elsewhere, many times offshore. Those jobs are gone forever. Additionally, the remaining workforce becomes more efficient as they want to retain their jobs – no need to rehire.
    The other reason is the Fed has no further room to drop interest rates – they are already at zero. That leaves but one solution – create new businesses which is the best solution as they need new labor. Government hiring ( WPA ? ) is the absolut worst idea – the jobs are not permanent.
    Those jobs that have been lost are gone forever …. the administration and their union cronies just do not get it.

  108.  Phil… answer at your leisure… how will the Sept. pricing change affect current subscribers?

  109. Longs/Tusca – Well if you didn’t hedge them before, I don’t think you want to lock in losses now.  Tuesday will be a very big deal but, if anything, better to just add to a 10x disaster hedge (SDS) than give up your upside as there’s a lot of bears to squeeze thanks to this dip. 

    Reactions/Snow – And here we go around again

    PCLN/Yodi – As always, if you sell a naked call or naked put you have to be REALLY ready to be short or long the position for the long-term.  $300 is a silly price for PCLN but that doesn’t mean they can’t get to $330.  Since the Aug $300s are $8.40 and the Oct $330s are $7.50 what are you really looking at other than a $1 loss and an annoying wait?  If, on the other hand, you now have reason to believe that PCLN will be over $338 in October, or $370 in January ($9.30) for that matter – then of course get the hell out now but, otherwise, what do you care what people are willing to pay for it today?  Especially the relatively few people who are trading it…

    PCLN – Actually, at this point, I find the Sept $280 puts compelling at $9.50 and you can sell the Aug $280 puts for $3.90 to cover for a $5.60 spread and you can roll the putter to the Sept $260s ($4.60) about even if you have to for a nice $20 vertical that’s partly in the money (or you wouldn’t be rolling).

    Bull/Yip – I am long-term bullish and VERY bullish compared to you, that’s for sure and gosh I can’t think of a single reason why.

    The big drop in payrolls last month was a surprise but some analysts say that details such as hourly wages suggest the picture may be better than it looks.

    With a weak jobs report behind, and a Fed Open Market Committee meeting to come Tuesday, fed-funds futures traders lower their bets for a rate hike: Odds for an increase to 0.5% at the June 2011 meeting are priced at a 20% chance, down from 32% just before the NFP report and 76% as recently as last week.

    With the Fed in play next week, Guggenheim Security’s Thomas Di Galoma says today’s report could signal a new round of QE, in whatever form it takes. "The only thing I can say about this morning’s jobs figure was it was a pathetic report… The revision on last month’s payroll is troubling, and I believe the Fed will lean towards QE at next week’s meeting."

    Fitch gives a two-notch boost to the ratings of Ford Motor (F) and Ford Motor Credit, pointing to Q2 earnings ("strong automotive cash flow") and debt reduction that exceeded their expectations.

    A turnaround in the ECRI Weekly Leading Index, which rises to 121.8 – highest since June 18 – from a revised 121.0. Annualized growth rate rose to -10.3% from -10.7%, but that’s still below the -10% said to be a recession predictor.

    Continued supply shortages are crimping sales in the electronics industry, leaving companies scrambling to reconfigure products and stockpile parts. Companies that have seen a Q2 sales hit include GE (GE), Ericsson (ERIC), Whirlpool (WHR) and Motorola (MOT). The shortages, though easing, are expected to last for the rest of the year.

  110. Pstas
     Your question is a benefit to me – I’ll be doing the same this weekend with some new Apple stuff (thanks again Diamond), so I’m following you!

  111. I am taking advantage of the drop today to do some long buying… If we get QE on Tuesday, the market should reward the longs, I believe.

  112. Gel / jobs and unions.  Some unions have done some silly things, but blaming them for the job collapse is wrong.  The ‘free trade’ obsession of both parties during the past 20 years has created a global rush to the lowest common denominator.  If you want Americans to have the same average income as Bangladeshis, keep pushing for more free trade agreements.  A return to patriotic mercantalism is the only hope for meaningful job creation.  Lets start with energy import replacement per Phil’s recent nat gas  and solar arguements.  But please let’s not just import the solar panels and windmills from China – which is what will happen under the currently naive trade rules.  No one in Washington is addressing this core issue.  QE will achieve nothing until we rewrite the trade rules to ensure American job creation.

  113. gel1 – Just glad to help. If you have any other Apple network or setup questions … just ask! :-)

  114. Hi Phil, I cannot figure out how QE2 (namely, buying bonds by Federal Reserve) can influence TBT. Do you have any thoughts on this? Also, do you have any opinion on DIOD (down almost to 52 week lows on poor earnings of OTHER semi-conductor companies, but  yesterday have beaten analysts expectations and provided Q3 outlook that have also beaten expectations) and UAUA (I know that you are always bearish on airlines, but its expected 2011 P/E is 3.94, they already have hefty profits, their debt was recently upgraded with a possibility for a further upgrade, and when I recently was looking for their ticket from Newark to Beijing the cheapest available economy fare was >3500 – so I bought a ticket from CAL for “mere" 2000). Thanks!

  115. Tusca / jobs and unions. During the M&A hey days a few years ago I started to do a lot of arbitrage. I learned about risk arb, time arb, M&A arb. What I came to realize is that when all the doors were thrown open on free trade, what the large international corporations started to do was "labor arbitrage". They simply took what they considered an overvalued asset ( American labor), sold it, and bought a cheaper asset ( foreign labor). Another way to look it is that the American worker became a liability to trade off.  It’s unfortunate that workers went from being individuals with unlimited potential, to assets or liabilities at all, but this is what happened.
    Trade barriers, regulations and so on… I don’t know. How does one do that and still say capitalism is free? Just posing some questions.

  116. Phil, Do you see any plays developing on AMAT? Their solar unit has been killing them, but expectations seem to have adjusted, maybe too far. Earnings on the 18th. Thanks, Geomancy

  117. Phil : On the APPL defensive spread u gave MAYA at the beginning of todays commentary, is there a option name for it ?  

  118. QE: what is it when you use it here ??????????

    Queen of England


    Quantum Efficiency

    Quality Engineering

    Quality Engineer

    Qualifying Examination

    Quality Enhancement

    Quality Evaluation

    Special Handling (Scott Catalogue prefix; philately)

    Quadratic Equation

    Quantitative Easing (Japan)

    Quod Est (Latin: Which Is)

    Quadrant Elevation

    Qualification Examiner

    Qualified Entity

    Quality Expert

    Quantum Economics

    Quick, Escape

    Quarterly Examination

    Quadrature Elevation

    Quality & Efficiency Foundation, In

  119.  RMM – Quick & Easy??? ;-)

  120. RMM, Quantataive Easing…… Fed buys bonds

  121. Sorry: what is QE2 ?

  122. jbur:  Ever notice that many arbitrage spreads start to tighten up as more people get involved and the market becomes more efficient?

  123. JMM wow. 
    Quantitative Easing.

  124. tuscadog / jobs and unions: Right On !!

  125. QE2 + Quantataive Easing part II, fed has used this mechanism previously

  126. RMM – Quick Exit or Enter

  127. How to play QE2?

    I flipped short TBT rolled puts (which had earned some good decay back) into TBT calls.

  128. I think it’d be pretty funny if the Fed decided to implement the "Queen of England", although "Quick, Escape" actually isn’t that far off… :D

  129. Gel, historically speaking, recession are a cycle that will not be broken in a short period of time no matter what the policies are. For example - Reagan’s first big tax cut was signed in August 1981. Over the next year or so, unemployment went from just over 7% to just under 11%. In September 1982, Reagan raised taxes, and unemployment fell soon after. Even with an incredibly large tax cut, it took over 12 months to help with the unemployment figure. No reason for it to be different today (the stimulus was over 50% tax cuts).  

  130. kinki:
    Absolutely, that’s how it always is with whatever strategy or technique one uses. Which why it amazes me that JRW is willing to share as much as he does.
    M&A arb spreads got down to pennies/ less than a 1% profit back in late 2007 and I knew that game was over. The big boys were playing with so many cheap dollars ( carry forward dollars) that weren’t even theirs, that they were willing to take huge risks. Well, we all saw how that movie ended.

  131. tuscadog
    I respect your opinion, and agree with both Phil and yourself regarding energy independance. I could never figure out why we are living year after year with massive inbalance of payments, primarily because of oil imports. We have the alternative supplies right here in this country, but the environmentalists and other interest groups have tken over our better judgement. The result is well known because of this lack of judgement… we are in hock up to our eyeballs.
    The union issue is whole different situation, and I as a business owner know better than most. I might add, as well, I have studied in depth the historical ramifications of the actions of the unions and the results this movement has had on our society. Because of the methods used by the unions to achieve their desires, and additionally because of their leverage, as well as  the support of the labor laws that have been enacted by politicos that are interested in only their longevity, we are now experiencing the results of this imbalance. The jobs have gone overseas. Businesses always are looking for better profitability and will do anything to assure long term success. If a union is threatening this purpose then the decision is very easy for management. I, in the past, made that decision, and broke the union before it ruined my business. Difficult decision – not at all.  Was it Jack Benny, who was known for his excessive thrifty behavior, when he was held up by a thug who gave him an ultamative while puting a gun to his head " give me your wallet or your life" – Benny said "let me think about it"  For all business people I know of, the decision is easy – shut the place down, before they put you out of business. I wish this was not the case, as I believe in the right to "negotiate" your position, and it is healthy and makes for harmoney in the workplace. But when one side has all the leverage, it is usually used wrongfully, and this is what is happening today because of our "out of balance" labor laws. Unions have ruined many industries, and the industries closed down. – Who won?  I won’t bore you with examples but they are everywhere. Meat packing industry… all of the companies were destroyed, and new ones that filled the gap hired illegals to fill the jobs of the former union workers. — I know I have a biased opinion, but it is supported with facts.

  132. arb/jbur:  I think the same thing happens with the labor market as well, as the workers in China get more proactive about wages and/or more of them start jumping out of windows, the spread between U.S. wages and Chinese wages gets tighter, so multinationals need to find other countries to exploit, until they run out of cheap labor.  I think once we tap N.Korea, that arbitrage is probably done for, hehe.
    As for JRW, I think it actually helps him that more people follow his system, because he is the ULTIMATE FRONTRUNNER on the IWM trade, so he is on the top of that pyramid.  Laggards like me always get left holding the bag.

  133. Diamond- got it working. This posted from the IPAD. I was entering the wrong security code/password. Forgot this was a replacement unit.
    How do you refresh the comments from here?

  134. Jbur / jobs and unions   I agree, I don’t blame the CEO’s for shifting the sourcing offshore, they are just managing their stock options according to the mkt access rules Gov’t put in place (though their selfish lobbying was pretty effective in getting those free trade agreements in the first place!).  Only Gov’t can reverse these foolish trade agreements, probably at the insistence of our increasingly desperate 25% unemployed (while fighting a corporate rearguard action).  Unless we stop being globally magnanamous and getting selfish about helping fix America, we are mired in recession.  I worked internationally during all of my career, so I know what we’re up against.  I ran factories in 11 Asian countries, based out of Singapore.  The American elite are the best educated, but boy are our working class dumb and getting dumber.  A huge challenge.  We’ll have to keep them all on drugs.  They’re already on drugs, so maybe making them free would save policing and jail money, Phil has written on this.  There are whole ethnic sub cultures in America that don’t even know what a family is anymore, they think it’s a gang.  No other country has this kind of social breakdown and collapse of basic civics.  The best arguement for a big military is that it keeps these kids off the streets and out of jails.

  135. Pharm,
    what do you think about selling ONTY sept $3 puts?

  136.  Pharmboy: would you consider selling ARNA Sep 9 calls and Sep 5 puts for $2.50? Profitable up to ARNA $11.50, worst case own ARNA at $2.50 in Sept? Looking for a way to sell these substantial premiums. 

  137.  pstas – GREAT!  …  just refresh page.

  138. phil
    any thoughts on crus

  139. stjeanluc
    Recessions do take a while to recover, as you say. My earlier comments were to expose the comparative first year employment recovery statistics. The employment percentage change after the first year in a recovery is as follows:
    April ’58 – 4.5%
    February ’61 – 3%
    November ’70 – 2.35%
    March ’75- 3.25%
    July ’80 – 2.25%
    November ’82 – 4%
    June ’09 – NEGATIVE 1%
    These nimbers show two things to me – our resolution efforts are misdirected, and times have changed from the past – the jobs are not coming back because the employees are not needed for many reasons ( see my previous statements ). Local and state governments, for one, can no longer afford the employment and the taxpayers agree.

  140. Getting it/Gel – I love how it always comes back to flawed administration policies.  There is no possible way for you to see "green shoots" until you are stuck in the weeds is there?  On the other hand, I do admire your agnostic trading style despite your "whatever is the opposite of rose-colored glasses" outlook.   

    Subscriptions/SrF – Since we are pretty much full on Premium Memberships, we’re going to do what we’ve always done and double the prices.  That way, when someone leaves, they get replaced by a more expensive someone else, which is a nice, slow way to increase revenues.  Obviously, if you have a long-term Memebership, there is no change at all in this cycle and, even for the monthly subscribers, there will be an existing member discount that can be combined with a very simple referral bonus to keep you very close to the current rate.  That stuff will be detailed as soon as we figure out the math.  Other than a normal inflationary increase, it is not my intention to burden current members with increases but we now have to turn Premium Members down so no sense selling it so cheaply either.  We are hiring an editor and putting out a weekly newsletter and we’re thinking of having a "voyer" membership with limited comment access but no questions.  The issue for me is I just don’t have time to answer 300 questions a day so I’d rather keep the Premium group small and, since I’m very happy with the group we have – I’m going to keep it an exclusive club going forward. 

    IWM looks like $1.50 might be it.  

    Europe closed down 1.25% on CAC, -1.17% on DAX and – 0.62% on FTSE. 

    Oil weak, back at $81.15, gold holding $1,209 like it’s trying to make a point and copper $3.35 with UUP bouncing as expected (now $23.36). 

    QE2/Alik – TBT is contrary to rate paid on 20-year notes.   More money in circulation WITHOUT inflation (in deflationary environment) puts downward pressure on rates – kind of contrary to what people expect.  When the economy starts heating up (if) and that money begins to move, then the multiplier effect kicks in and inflation comes back and then it no longer seems like a good idea to tie up money, which is suddenly in demand, in low-interest notes.  That sends the 20-year rates higher and shoots  TBT up but we are not there yet by a long shot.  Right now, QE1 went down the gaping hole left by the sub-prime melt-down and QE2, unless it’s massive, will be lucky just to finally fill it to the point where it’s going to look safe to swim. 

    The problem is this:   We had (all examples) $11Tn real dollars in circulation and those dollars were doing all sorts of stuff and people (and banks) THOUGHT they had $50Tn worth of Stocks and $50Tn worth of homes so the money was pretty much lent out at 10:1 leverage and people were paying their home loans with income that was coming from stocks and wages to the tune of $7Tn a year and everyone was very happy.  Then we have a crash and now homes are worth $30Tn BUT HAVE THE SAME MORTGAGE and Stocks are worth $30Tn but are no longer providing incomes and the people still need $7Tn a year to pay off their loans because no one has forgiven them.  Figure stocks knock off $1Tn of income and 10% unemployment knocks off another $700Bn and we have a $1.7Tn payment shortfall – the biggest hole that has to be filled. 

    So people start defaulting on 10% of the properties and the banks write of maybe 30% of $5Tn ($1.5Tn) and now "only" $1.5Tn worth of loans need servicing.  All QE1 did is fill that $1.5Tn hole in the banks balance sheets but until we create jobs and increase income again, the banks will need another $1.5Tn every year to cover their shortfalls.  Actually, it’s less than that because they only "NEED" the shortfall between what the borrowed for (0.25%) and what they didn’t collect but what they need to avoid is more write-offs because that costs a huge amount of up-front money. 

    That’s why I keep saying what a mistake it is to bail out the banks and not the people.  Bailing out the banks is just pouring water into a pool with a giant hole in it – you will never fill it and every time you stop, it will get worse again.  We need to change the way we think about what government’s responsibilities are but, sadly, there are many, many powerful people who see the American people as a burden to be cast off and not a resource to be nurtured.  It’s very difficult to go to bad for our poorly educated, poorly motivated, poorly positioned population but what the hell does "let capitalism take it’s course" in this situation? 

    I guess we could all start investing in the new kind of green tech I’ve been hearing so much about

    DIOD/Alik – Well I like companies that have symbols that are obvious but I don’t know much about them..  Quick glance looks good though.  As to UAUA I think all the airlines had a great run and I’ve only liked CAL (which we played ages ago) and LUV but none of them are strikingly cheap.  Don’t forget airlines drop 20% whenever something blows up so, sadly, it’s best to wait for that to happen. 

  141. Diamond- Geez- this is like learning to ride a bike again.
    Where is the "refresh" button?

  142. Speaking of risk arbitrage, it reminded of a funny anecdote. 
    Back in the pre-Y2K days I worked for a hedge fund that specialized in risk and m&a arbitrage (they were also experimenting with algo trading and neural networks, which was what I was stuck doing), but I left to work as a senior programmer at a tech startup.  That hedge fund turned out to be one of the big feeder funds to Bernie Madoff and the manager is now being tried for securities fraud. 
    It ran for 13 years after I left.  Man, I wish I stayed, I’d probably be filthy rich right now (emphasis on the word "filthy")…  sigh…

  143. With a DD in housing QE2 will do nothing as banks will just hoard the money just like they did with the first round of QE.
    O’ lord if theres a short squeeze in the dollar look out below.

  144. Phil
    Assuming we will have some QE next week, how are you playing this possibility, and do you have any favorites other than the index plays?

  145. Gel / Unions   Private sector union representation is negligible in the US compared to Germany, where even an 18 year old new hire gets 6 weeks vacation a year.  Yet, they are the # 2 manufactured product exporter globally.  Reason:  patriotism, nationalism, education (especially technical schools), gov’t/union/ business cooperation, especially on structural priorities and initiatives.
    France took over civil aircraft leadership from Boeing for the same (selfish) reasons.
    Your arguement of meat packing just reinforces my point.  If our Gov’t enforced our rules, the competitors meat packing plants wouldn’t be full of illegals.  We get the Gov’t we deserve and the mass population of the US is so dumb and uninformed that they elect representatives who allow special interests to create’ the trade and industrial policy rules’ which allows the masses to be raped and abused.  The US is today devoid of and industrial/commercial strategy to keep us near the top.

  146. Phil
    What do you think of a buy/write or short puts on MHS.
    I like the sector and would like some  H/C exposure plus below comments by your favorite stock analyst for his charitable trust are pretty bullish.(his portf. performance gives him year end bragging rights as the bigger the profit the more attention he gets giving to charity)
     Today’s N/L could be good entry??

    -  adding to  Medco Health Solutions (MHS:NYSE) at $47.62.
     - Medco’s stock is down 30% from its high, mostly because health care is out of favor and because of competitive pricing in the pharmacy benefits management (PBM) industry.
     - Selling is overdone. This is one of the best PBMs in the sector, with strong management and a great balance sheet (currently buying back $3 B of stock).
    - The company guided for 18%-20% earnings growth this year. 
    - At p/e 14x 2010 and 11.8x 2011 shares are attractive, given the hugh tailwinds that exist within the generic market ($100 billion of branded drugs  going off patent over the next 4 years,). 
    - Medco is  gradually shifting toward higher-margin mail order business. 
    - The stock has historically traded at 22x forward estimates, and has only 3 times since  2003 traded below 13x.
    - One concern is when existing contracts expire, it will need to be more aggressive to retain business. 
    - Earnings rose 20%, revenue grew 10%, adjusted prescription volume rose 6% and revenue per order was 1.5% higher than forecast.
    - The decline in gross margins  is pushing shares down 8% on report day.
    - Gross margins are a function of mix ( retail vs mail-order business, with retail having lower margins) but company has begun to focus on the mail order which grew over 30% on a sequential and Y-Y. 
    - Difference between Medco and competitors,  (ESRX) and (CVS), is that it offers an information platform and comparative effectiveness work, providing  value added service and cost savings to clients. 
    - Medco has a 99% retention rate with its existing customers and in the current quarter posted  new sales record of over $5 billion year to date. 
    - The business remains strong for Medco and the PBM industry and valuation is compelling. Shares are oversold.

  147. pstas - Refresh = on the right side of where you type in the URL (the curved arrow) NEAR the Google search box in title bar.

  148.  Aug USO $37 Puts sold to cover. Whew!  Patience paid off--out at 13% gain over 2.5 days.  I appreciate the advice Phil.  Even though I decided to just get out, your advice on transitioning to a vertical play really helps me understand what to do in these types of situations with time running out on an option.

  149. Diamond- got it . Thanks for the help.

  150. Phil / Green Shoots
    Yes, I believe "green shoots" are the only answer to jump start the economy…. but I do not see older businesses ( other than tech ) pouring on the fertilizer. The tech companies are not looking for too much expansion domesticially as far as employment goes, but are expanding their footprint overall. Last weekend I had a visit from a friend that recently sold his semiconductor business. He was sad about it, but he faced the reality of the entire manufacturing is now leaving for foreign destinations..
    The "green shoots" are going to have to come from NEW enterprise, and I, yes, do believe the administration is a state of befuddlement as to how to energize this endeavor. I have to assume, they have their focus on union interests, and that is a non starter. How long do we have to wait until they finally understand how to address the problem. They are not listening to the business community…. probably just listening to idealogues such as Larry Summers, who has no experience whatsoever in the business area.

  151. Ohhhhh SNAP!  Great morning at the beach and I come back to this.  8-)

  152. Labor/Jbur – The problem is everything is stacked against the small businessman, from health care costs to lack of funding and the entrepreneurial spirit is being drained out of our kids by a school system that has been rewritten to preach standardization – just turning us into cogs for the machine and eliminating potential future competitors to Big Business.  Even the individual investor is punished as he too, is a dangerous variable that must be eliminated.  If you want to see what’s wrong with this country – here’s an air guitar band that made it through two rounds of eliminations in America’s got talent – there’s a great shot of the stunned real musicians, who praciced their whole lives, watching them in the waiting area.  This is what we accept in this country – not just medioctity but a total lack of effort.  It might be cute in a talent show but it’s killing this country as we can’t compete on the World stage.   

    AMAT/Geo – I do like them down here.  They are being punished for investing in a solar future and not getting instant returns.  I think it was a good decision but $60 oil could kill them so I think a 1x entry risk is better, something like the Jan $10/12 bull call spread at $1.45, selling 2012 $10 puts for $1.30 is net .15 on the $2 spread that’s $1.78 in the money and worst case is you are assigned 1x at net $10.15.

    AAPL/Dflam – Not really, I made it up.  It’s a modified version of a collar trade, taking advantage of AAPL’s big premiums and, of course, with a bullish assumption that they won’t drop more than 15%. 

    QE/RMM – Why Queen Elizabeth the Second of course.  Obama has been in secret meetings with her in the kitchen of the Bilderberg Club (he’s not allowed in the main hall since he was born in Kenya), where she has promised to fly over with a few of here friends and have a New York shopping spree based on the madcap adventures of those Sex in the City girls.  Should provide our economy with quite a boost!

    Oil breaking down and gold pulling back – copper is below $3.35 on a nice dollar comeback.  We’ll have to see how much downward pressure this causes

  153. pstas - When you get a chance, go to the iPad iBooks icon, click on "store" button on top left corner, then search: iPad User Guide. It is a FREE book that will help you. There are also a lot of other FREE books to download. Also in iPad "App Store" (icon) there are MANY great apps that are FREE (many news, mags, finance, etc.). Do not pay for any until you look at ALL the ones that are free. :-)

  154. Tpuckett – Just my opinion and I definitely dont have the knowledge that Pharm has but it seems pretty dangerous considering if they get approval they will most likely go well above 11.50.

  155. Phil – thoughts on selling next week expiring IWM 64 puts (0.9) on Sept 65 puts (2.96)? Did the same yesterday with todays 65 puts sold against sept 66 puts, got out of the spread at 10%.

  156. tuscadog / Unions
    The union movement in Germany works very well, and I agree that thereis a big difference in their environment. Their union labor laws are balanced, which makes it fair for all parties. I believe we, in this country, have a unique problem that does not exist in Germany. Our wiork ethic stinks in comparison. Much of our labor force is not educationally preparred for the job descriptions of today, and would rather just wait for the jobs to come to them,,, ain’t gonna happen!
    Our society, in general, needs an overhaul, and in order to achieve this goal, we first have to overhaul the quality of our politicians. We shall see!!!!

  157.  jromeha – thanks for jumping in. I thought since it had more than double already in the past month that maybe some of that was baked in. But I have a lot to learn in pharma. I already did a buy/write with ARNA at 7  selling Sep 7 straddle at 4.40.

  158. ARNA--when is the FDA decision? anyone

  159. I do not see the house on opposite side of street. Dense smoke. Very impressive evening in Moscow

  160. Phil: QE2 is a big, fat ship,
    Germany and German people: its the education stupid and a less confrontaional attitude between managment and union because the union and workers share the earnings more fairly, just compare the wealth/income distribution between the USA and Germany and you have the answer

  161.  Savitri – 9/16

  162. Tx

  163. My sister has been a pharmacist for Walmart for many years.  Last week we were talking about the economy etc.  She was telling me how Walmart (non union) was handling the economic down turn.  Obviously, my sister has a very good position but works with assistants who are lower middle class people supporting their families.  Walmart has been changing working schedules for many of these people.  When they cannot adapt because of family commitments etc they ususally have to leave to find another job… the result, is Walmart hires someone with less experience, time of service and much less pay without having to provide benefits benefits for the initial employmnet period. Several of these people are immigrants/citizens originally from other poorer countries.  They came to America years ago for AMERICAN OPPORTUNITY…. Guess the jokes on them…. 

  164.  Yip, I want to put some support in for Phil.   I consider myself successful, intelligent and well educated and I feel Phil repeatedly nails what’s going on below the surface.  But that cannot be tied to whether "Mr. Stick" shows up or not because that is a function of market manipulation, not the economy, and the outcome is based on quantitative analysis bots doing battle in low volume markets as if they were Roman gladiators.   I take Phil’s ideas and then do my own analysis and when it lines up I pull the trigger.  If I win or loose, it’s on me.  Anyway, I understand you like math.  So do I.  I have a warm spot in my heart for the use of group theory, linear algebra, complex Hilbert function spaces & the like.  In my spare time I have research projects going in complexity theory and computational complexity.  One of the lessons applied directly to markets by geniuses like Prof Didier Sornette who’ve done pioneering work in the application of fractal mathematics to stock markets:  Humans like to find cause in circumstances near to observed effects.  But in reality, the information contained in the volatility of stock prices is FAR removed from simple connections.  If you could Fourier analyze stock "waves" into their component simple waves, it would reveal both competing and conflicting strategies operating on different time-frames.  One can not say that the market "shouldn’t be going up."  That is what is senseless.  The market only does what it must do given the massive complexity of the constraints to which it is subject. From this competition between order and disorder, price "emerges."   More on this topic over the coming months.     Sornette wrote a great book, heavy on math, Why Stock Markets Crash.  I have two copies and they are both dog-eared.  I think that the "house of cards" perception of the economy (in isolation) plays little to no role in predicting market direction for investment purposes, especially on the time scales we chat about here.  My fear is that the house of cards perception is one that has been force fed to us by a complex set of political forces.  I would be skeptical.  

  165. Roma – tbi v Mockve! You lucky bastard! I remember countless evenings eating at goctinitcya Rossiya in one of the cafes near the top that had a sick view of Red Square!

  166. RMM
    Germany… you understand it well. I had a plant in Frankfurt… no problems whatsoever. We exported our stuff to the other countries in Europe, and "made in Germany" on the products allowed a premium in our pricing. The Germans have been the leaders in quality for automobile manufacturing for as long as I can remember – all unionized. It has worked in Germany exceptionally well, but was a total failure here in the US. I believe I know why – we have the worst labor laws in the world. We all know why they are what they are and for what purposes they were enacted – ver sad…. as this has been a major contribuling factor causing the downfall of our manufacturing base. Our jobs left  the country, but Germany still has their jobs. There is no secret why they prevail!

  167. Poindexter: good post.

  168.  Phil—-how about a SEP 18/17 short strangle on VLO for 1.30 credit. B/E at 19.30/15.70. 15.70 would be good entry if put as that’s the low for the past year. 

  169. Germany / Tuscadog:
    Very good analogy.  In my travels and visiting friends in Eastern and Western Europe.  One big difference between cultures of America and them…. Individualism v. family and community.  Greed v Share…  What is so interesting is many of their views of American society decay in many areas are coming true.  But, we as American’s have a way of "looking down our nose" on all those "dysfunctional countries"…… He who laughs last etc…….. 

  170. Poindexter:  Thanks for sharing. You put articulately what I have to keep telling myself every day when I try to "be right" about the market for a set of reasons I think I understand. As much as I empathize with Yipcarl’s frustration, I think Phil’s ‘rangish’ thinking is playing the statistics of what the most likely outcomes could be. Sure, there will be spikes, and you have to have some cushion built in to take the heat during those spikes. But your trading strategy, built for navigating the markets for your whole life, should play the odds, not a hunch based on the current economic situation. And that is exactly what Phil’s option strategies, and premium-selling strategies do… become the house at the casino.  I look forward to you sharing some more deep thoughts in the future!

  171. jromeha

    Hotel Rossiya have taken down under a root. many years ago
    Did you have some business in Russia?

  172. What a sham this whole week has been.  A major squeeze on Monday for no reason what so ever followed by a melt down all week until today’s whammy.  The question is, do we take out Friday’s low today?  I just don’t know.. but I am definately keeping some short iron in the fire.

  173. matt1966: America the manipulated, you think I should keep my SDS ?

  174.  Anybody else have that idiotic "Black Betty" song in his head because of Phil’s link to America’s Got Talent this morning? Thanks for that one, Phil.

  175. QE2/Rexx, Gel - Well, assuming we get stimulus plus easing then I like SPWRA, WFR, AMAT (above) and XLF all as stocks that are fine to own if things go the other way but may do very well in a new stimulus bill.

    Jobs have gone overseas/Gel – So remove the unions and their "protectionist" influence and our labor force competes evenly with people who make $2,000 a year (AFTER striking for more wages) perhaps plus whatever transportation savings and that helps America how?  There’s a difference between what’s good for businesses and what’s good for the American people.  How will it improve the lot of 300M people to work for $12,000 a year (if they can even get that)?  The only way to get there is through prolonged economic contraction (deflation) and, eventually, we will be able to buy homes for $75,000 and cars for $2,500 etc I suppose and then we will be able to compete with India until it is there turn to buckle under again and compete with Africa.  None of that matters as long as there are 600M people in the world occupying the top 10% who have 80% of the money and buy 80% of the stuff – the rest of the people are just expendable labor to keep those top 600M people living in the lifestyle to which they are accustomed.  What a wonderful world it will be

    CRUS/Sydney – A bit pricey in a tough growth environment.  You’ll notice that when the market goes down I tend not to like anything that isn’t a major brand name trading at a discount.  Companies like CRUS sell commodities and can be replaced by XXXX in 2 seconds.  They had a terrible year last year and have been killing the comps but the party is over next year unless we get a big move in the economy.

    Filthy/Kinki – That’s all right, keep your eyes open and there are plenty of scams left to join.  8-)

    MHS/Ban – I like them long-term but I don’t think they are cheap, they simply ran up last year for no good reason and now they are closer to a fair price ($45-50).  They don’t pay a dividend so not much reason to own them and you can go with a 2012 $40/55 bull call spread at $7.20 and sell the $40 puts for $3.50 which is net $3.70 on the $15 spread and worst case is it’s put to you at net $43.70 (10% off) and your upside is $11.30 at $55, which is $3 better than you would do if you bought the stock.  So 25% better upside and 10% free downside protection (and rollable) is a good way to start a position, I think.

    USO/Poindexter – Very nice!  Mostly I am very proud of you for learning: "I tend to do better if I don’t panic out in the initial rebound but instead wait for an intra-day pullback" - that is HUGE progress towards being a better trader!  If you get used to thinking in terms of various exits, you can more realistically assess when you really need to worry about a position and when you can afford to ride it out. 

    New Enterprise/Gel – Amen!  We need to create industries that won’t get exported and energy creation and public transport are two major ones (if they don’t make cars here, why should we buy them?).  There is still a global need for food and we can do that too but I think energy production can employ 10M people in a decade as well as decreasing our trade balance by at least 5Mbd, which is $146Bn a year right there.  All the US government has to do is say "we will spend $50Bn less per year on the military for the next 10 years and we will spend $50Bn more on energy research and production until our Defense budget is $500Bn a year for armed services and $500Bn a year for energy production to create a strong, energy-independent America" and you’ll have capitalism take over and start working for those government dollars.  Our military spends $100Bn a year on fuel now so we’re really only trimming 40% of the military budget if we can give them electric tanks….

    IWM/RN – I do like the Theta spreads on the weeklies as they are way overpriced BUT I’m not that bearish on IWM so I’d go for the slightly riskier Sept $63 puts at $2.12 and figure, if all goes well, you’ll get .50 four or five times against that. 

    Damn, I knew we should have shorted those Ag plays this morning.   I let all that Russia nonsense scare me off. 

    Math/Poindexter – Interesting take.  I never read that one.

    Speaking of sticks – good conditions for one this afternoon.  Only 83M Dow shares traded at 1:45.  QQQQ NEXT WEEK $47s are .19 and make for a fun upside gamble.

  176. Would you add to VLO on this drop, Phil?

  177. Phil – told myself I was going to stay away but couldn’t… Anyways, do you like CREE going into earnings?
    Roma -I know, I heard that they were tearing it down. I thought they took it down in 2009?  No, I studied abroad in Sochi in 04-05 and was selected for a military language program in 2006 that sent me to Pete but I liked Mockva much better and travelled there every weekend.

  178. Phil / Mkt psychology   There seems to be a push in MSM now to negativity about prospects, "end of summer rally etc".  Do you think more (generally ineffective) monetary QE will :
    a) Do anything to improve corp profits? 
    b) Reverse building negative mkt psychology?
    I assume meaningful fiscal QE, including major structural initiatives is unlikely given the gridlock in the Senate?
    I’m a bit sceptical that the Fed can reverse this psychology on Tuesday.

  179. Phil/BXP – time to roll the $4 AUG 80 puts to Sept?

  180. jromeha

    They took it down in 2007 and now have started to build new hotel on this seat. What is Pete?

  181. Poindexter
    I enjoyed your post and believe you approach the market in a very healthy context… Yes, Phil does supply the broad  background music for our individual efforts to have success. There are so many moving parts, and a vast cornacopia of information is needed to analyze the targets we have selected. One cannot isolate one source of data in making decisions, but we all need to make our decisions on a consortium of much data that sometimes is in conflict. We, ourselves, are the final arbiter. I look forward to more of your posts.

  182. AMAT – Just downgraded by S&P from SB to Buy. Thanks for your take, Phil!

  183. Phil: SDS: close for a good gain or keep ?

  184. Roma – St. Petersburg. What are you doing out there? Ive been meaning to get back to Russia and was thinking of going next summer if I can get some time off.

  185. ARNA/tpuckette – Sorry, been in meetings and missed some of the non-action. I would advise against selling anything in September unless you want to OWN ARNA.  IF they get approval, I can see them at 15-20 in a matter of seconds.  Date is Sept 15, 2 days b’f OPEX..

  186. Phil
    We definitely need to be enery independant – we have the resources, so why can’t we get this done?  If we don’t – then we should blame ourselves.  Energy independance = fiscal inteligence.  Unions definitely have a place – so lets rewrite the labor laws to make all of this work.  Good luck on your mission to DC !… if we see a change, then we should thank you.

  187.  Phil—I’m in the OCT UNG 7/9 spread and sold the OCT 7 puts for a net of .48. I’ve doubled down once and would like to take advantage of this pullback but remember you saying never dble down more than twice, just change strikes. So . . . would you recommend rolling the whole position to a 6/8 spread?

  188. Pharmboy;
    What are your odds of approval of Arna, you called it from the start.

  189. Hey all,

    I have a new Longterm Position that I am entering in Jack in the Box (JACK). I think the stock has a great long term capability. 

    Check out my analysis, fair value estimate, and more.

    Good Investing!

  190. jromeha
    I hear live. Welcome

  191. Pharm,
     what about my question about  selling ONTY puts?

  192. Oops, mini stick just failed 

  193.  PharmBoy, I don’t have a ARNA position – I’ve just been watching from the sidelines – But i’m gonna engage in a pretty speculative position  7.5/15 Jan Call Spread for 1$  (Bid Ask is between .9 to 1.4)  This is a rare all or nothing swing for the fences bet for me – but i kind of like the risk/reward.  Your thoughts?

  194. VLO/Fortep – As long as you are planning on buying to cover at $18 it’s a good plan. 

    Rangish/Never – Notice it’s the bulls and bears that get frustated, not the neutral crowd.  If we’re in a range and you want to be bearish, you have to wait and wait and wait for us to get to the top of the range (this week) and then you get your nice, big gain if you are non-greedy enought to take it off the table before it bounces.  Same goes for bulls the other way.  As you note, if you maintain a market neutral strategy based on selling puts and calls then you make money in the middle and, if you are agnostic, you can simply place a bet whenever one side or the other of the range is stretched.  The main problem for people who only want to play one side is a lack of patience and, of course, if you wait 2 months for a downturn and then it comes and it’s just a little one – that can be extremely frustrating but – to each his own…

    Short/Matt – Low volume on the drop makes it kind of hard for me to imagine there’s a major seller waiting in the wings.  Anyone who thought Jobs would be good and pumped up the market this week is probably also in the QE2 camp so patience until Tues afternoon but if the Fed doesn’t come through then – that may be a good reason for bulls to hit the exits. 

    Black Betty/Tpuckett – Sorry, was not my intention but it just killed me that people voted for those guys, shattering the dreams of two other performers who actually practiced to get there. 

    VLO/B1 – I like them at $16.50 so any combo that gets there is a good entry but there’s not much sense in going in now when we have a better than 50% chance of continuing lower next week.

    Speaking of chances, VIX only up 5% at 23 – not very fearful.

    ROFL – Now CNBC is attacking Billionaires for giving charity and "costing" the Government tax revenue.  Man I am so fed up with these people – now we attack generosity!  Meanwhile, is it just me or does CNBC find it necessary to respond to whatever I write about?? 

    CREE/Jrom – Way too high for my taste.  Priced for massive growth so any slip-up would not be good.  Earnings are the 10th so you can sell the idotic Aug $75s for $1.25 against the Sept $80s at $1.30 so .05 on the spread and, if they do really well, you’ll have to spend about $3 more to roll down to Dec $80s and then work the spread for 3 months. 

    QE/Tusca – If it’s just more Fed nonsense, I’ll be shorting any rally but if it’s accompanied by a real job-creating stimulus package – then I will be liking our chances.  Also, keep in mind this is an election year and all of Congress is polling in the 30s so we can expect both sides to finally agree that they need to buy votes to stay in office – leading to SOMETHING getting done.  The Fed can’t do anything on Tuesday by itself EXCEPT reload the Gang of 12 with hundreds of Billions of dollars to play the markets with – THAT they are good at!

    BXP/Brook – Sure, you can roll out to the Sept $80 puts ($2.10) and sell some other sucker the Aug $80 puts for .85 to pay for it. 

    SDS/RMM – Unless you REALLY need a hedge, that was take the money and run this morning.  You can always leave the profits to ride for a little free protection.  

    DC/Gel – If we see a change then I’ll be as surprised as anyone but I think it’s our patriotic duty to try. 

    UNG/Fortep – Ah, I was very wise.  This is a storm trade so the expectation is a hurricane hits the gulf and nat gas goes over $6 and UNG goes up $2 but October is tight so you have the Oct $7/9 spread at .68 offset by the short $7 puts at .36.  The Jan $6/8 bull call spread is $1.08 (+.40) and you can roll to 1/2 the Jan $8 puts at $1.20, which picks up .24 per current put so the whole roll is net .16 to drop your calls $1 and add 3 months and you go from getting 1x put to you at net $6.48 to having 1/2 x put to you at net $8.64 but that’s offset by 2x anything over $6 so your b/e is around $6.88 if I did the math right (you make 2x .88 on the longs and lose $1.76 on the stock that’s put to you). 

  195. I don’t recall who suggested PCLN run to 300; so far topped out at 298.99.
    I got short 1- 300 call at 7.20
    Hopefully that is safe enough !
    I can’t borrow the stock which is one of the problems.

  196. I don’t like to play odds with the FDA 42laurel, but I think it is better than a coin flip.

  197. Pharm/VIAP
    This "Hail Mary" play is up 27% today and I just know it is you goosing this one again!  Thanks, I feel much better now about Via.

  198. Phil / Outsourcing   Another developinng job disaster captured nicely in a comment by Sean Brodick.  Try and head this one off on your trip to Washington.
    "#5) The Off shoring Trend Continues. Multinational companies with American names are eager to sell you products and take your money, but they’re just as happy to ship your job overseas. And this trend is accelerating. A 2008 Bureau of Labor Statistics report found that over 30 million (one-fifth) of service industry jobs were vulnerable to off shoring.
    These aren’t just call-center jobs. Along with telemarketers and data entry, the BLS also included high-paying, highly skilled, knowledge work — scientists and engineers to architects and fashion designers, managers and business analysts.
    The BLS study found that the at-risk service jobs were higher-paying ($61,473 vs. $41,610) and more highly skilled — more than half of them (54 percent) required college degrees and eight in 10 required "some college."
    When a corporation can pay someone in China 60 cents an hour to do your job, there’s no real competition. That’s one reason why I’m in favor of "fair-wage" tariffs on goods and services.
    So, small businesses and Main Street should continue to get squeezed. And Wall Street gets to party with the money it’s saving."

  199. MEE finally making a move! 

    WYNN still strong. 

    HOV may be playable again next week. 

    And wheee!

  200. What a nice stick!
    We must be at the top of the range, Phil :)

  201. ARNA/Jo – if you can get it….yeah.  I cannot get mine filled from earlier, but still trying….

  202. Hi Phil.  Hate to be nosey but may I ask if D.C. is Vacation (hopefully) or a "mission from God"  Sorry if I was sleeping in class when you first wrote about the purpose of the trip. Have a good time! 

  203. Phil, here’s a new trick they’re using to squeeze the last buck out of players.  Pushing the pedal to blow past stop limit orders.  That last surge blew right past my stop limit with a .05 spread.  Should have been more then enough except for extreme situations.  Today is not an extreme situation!  Times must be really tuff for them.  Or, they’re just greedy.  Hmmm..

  204. Damn, .30 already on the Qs – 1/2 off the table with a .05 trail is a good idea as that’s too much to turn down.

  205. VIAP/gel – LOL!  I wish…..

  206. VIX will head for the rafters if we do not get the QE… I believe most are expecting it, and Monday should be a good up day.
    Just a reminder for all (Matt you will like this) …. The market is entering a very "seasonal" cycle – historicially,  The weakest market period of the year is August, September, October. Lots of opportunity for VIX players, as the coming elections could also add uncertainty. What a "tug-a-war" this is turning into – Poindexter is right!

  207.  Pharm, got it filled for 1.2.  I may buy a Bearish put spread to offset the risk.  So, I would be a big fat loser if ARNA didn’t move after earnings! 

  208. Phil/Agnostic — another benefit of being agnostic is you can’t  be wrong!

  209. ARNA/Jo – sell the Aug 7s to help defray the costs a bit.  They should (better) hold, otherwise I will be their biggest share holder….

  210. Phil / QE2  Is it really realistic to expect that the Fed can organize (your quote) "a real job creating stimulus package" by Tuesday?  Surely their wheels don’t turn that quickly?  Tthough I thought fiscal initiatives originated in the Administration/Treasury, then went to Congress, so not really the Fed’s role?

  211. How can CNBC say that giving billions to charity is costing tax revenues: A) There is no estate tax now so no tax revenues lost this year and B) their plan is to get rid of the estate tax anyway. No loss there either! CNBC is just one big joke… 

  212. Deano – not sure if you bought ARNA at 7 today…but looky there!  Out of those….

  213. Jo – U can also sell the 6 Aug P for 10c…and a ton of them.  Should be safe.  I read that they passed FDA inspection at the manufacturing plant…..

  214. Speaking of crazy overvalued stocks – NFLX is flying again.  Lots of momo stocks moving fast.  I have a plan to combine PCLN, NFLX and PCLN to make an airline with a gigantic on-line sky mall magazine that let’s you watch or read anything you want while on the plane – should be able to get a p/e of 800,000 for it!   8-)

    Protecting those jobsNew legislation that passed the U.S. Senate requires all companies with U.S. staff that have more than half their U.S.-based employees on skilled-worker visas to pay thousands of dollars in special new fees for each worker. Indian technology outsourcing firms would be hit hard.

    Protecting those bonds: Bill Gross looks at the yield curve and sees the Fed keeping interest rates the same for another two to three years. The difference in yields between two- and 10-year Treasurys is a near-record 233 basis points (0.49% vs. 2.82%), which tells Gross “the Fed is on hold for a long, long time. When you get down to 50 basis points [on two-year notes]… there’s not much left on the table."

    The reality Gross is trying to fight:  Record low yields are spurring an exodus from Brazil’s bonds into stocks. The country’s dollar bonds gained 3.4% in July, vs. an 11% surge in the Bovespa. Brazil – Latin America’s largest economy – is expected to grow 7.2% this year.Record low yields are spurring an exodus from Brazil’s bonds into stocks. The country’s dollar bonds gained 3.4% in July, vs. an 11% surge in the Bovespa. Brazil – Latin America’s largest economy – is expected to grow 7.2% this year.

    And moreA TIPS oddity – five-year Treasury Inflation-Protected Securities offering a negative real yield – may be because buyers are expecting higher inflation than the bond yields would indicate. But don’t forget the relative illiquidity of the TIPS market.

    Goldman Sachs cuts its forecast for 2011 U.S. GDP to 1.9%, from 2.5%, and forecasts some "unconventional" easing coming that will include more asset purchases. The firm still expects 1.5% growth this year, but a smaller pickup next year as Congress resists further stimulus.

    Ugly chart of the day: The current employment recession is much worse than anything we’ve seen since WWII, and the trajectory of the recovery has clearly taken a sharp drop.

    Declining cigarette sales and disputes over how much tobacco companies owe U.S. states may cause defaults on related bonds issued by California, New York City, New Jersey, Ohio and Virginia. Defaults on securities backed only by tobacco-company payments "could start occurring as early as 2030," a report says.

    Three lunchtime reads:
    1) Econ bloggers’ consensus is grim
    2) Banks resist vouching for their mortgage securities
    3) Stocks ignore green shoots’ turning brown

    2:00 PM On the hour: S&P 500 -1.38% to 1,110.
    10-year Tsy +0.5%.
    Crude -2.3% to $80.12.
    Gold +0.42% to $1,204.30.
    Euro +0.8% vs. dollar.

    3:00 PM On the hour: Dow -0.64%. 10-yr +0.55%. Euro +0.62% vs. dollar. Crude -1.38% to $80.88. Gold +0.7% to $1207.70.

  215. Phil / Short:  You are probably right.  There aren’t any sellers left and probably never really were that many.  All they do is pull the bid and the stock goes down.  It’s that simple.  There don’t have to be any sellers.  They just raise/lower the bid and ask to move the price around.  They consittute such a high volume everyone else is practically insignificant.  A really frustrating market to trade.  You really just have to be a whore and do whatever they want you to do if you want the money!

  216. Rosenburg Writes:

    We need a little perspective on the economic backdrop because I am becoming increasingly concerned. The fact that some at the Fed are beginning to warm towards the idea of more quantitative easing, vocal support from a growing number of Democrats to extend the once-reviled Bush tax cuts, and now chatter of another government-led bailout of “upside-down” homeowners, suggests that I am not alone in this concern.

    Even before the release of the nonfarm payroll data, we received the ADP number for July, and while fractionally surpassing market expectations, the results were simply awful. To put it into some perspective, when the economy was coming out of its lull in 2003 and 2004 we were already north of 100k on ADP, on a monthly basis, and by 2005-06 we were printing 200k-250k numbers consistently. A 42k print is actually horrible and is telling you that the economy is either fundamentally weak or that companies are still rationalizing on labour.

    Again, to put a 42k print into context, it printed 78k in December 2007 when everyone thought a recession was being averted (it started that month). That same month, the ISM non-manufacturing index came in at 52.3 and if I recall, the widespread sentiment at that time was that we were seeing a pause that refreshes. To sum it all up, the data points don’t tell you a whole lot right now that is very good. They certainly don’t give anyone a green light for cyclical exposure any more than the December 2007 data-flow managed to do. And, as for the non-manufacturing ISM, like its manufacturing counterpart, showed that the number of industries reporting “growth” is on the decline — down to 13 in July from 15 in June and 16 in May, and at a five-month low.
    What we know is that we are heading into the third quarter knowing that there was minimal growth coming from that key 70% of the economy otherwise known as the U.S. consumer. July’s data on chain store and auto sales were both below expectations. Personal bankruptcies jumped 9% in June (138,000 personal filings during the month) and 2010 is now on track to be the highest in five years, with respect to consumer insolvencies (908,000 thus far or just under 1% of the total number of households). If capital spending is going to do the heavy lifting, keep in mind that just to keep the economy steady, it has to accelerate by nearly 10 percentage points for every percentage point slowing in household spending. Now that is a daunting task.

  217. Matt,
    You’re right…..this market is a farce.  They set you up with all the BS news that they spin via their talking heads.  Then press the market setting a trap for the bears.
    How can you beat them with stops when they can see them and manipulate the market to take them out.

  218.  Pharm
    Still thinking about what I’m going to do with ARNA. At lease part of it will be Phil’s spread, but I may do that with a date of this Jan not 2012. Also, I’ll be selling some with Sept premium, likely played both ways. You?
    Are you in for LV?

  219. matt/whore — stop calling me a whore!  Also, it’s the pimps that make the easy money, just be the pimp.

  220. Deano – Sept premium will be hard to erode due to the volatility with them.  I have Aug 6, 7 P sold, hold the stock and have tried to initiate a few spreads that I cannot get filled, but will be patient.  I do not like to sell P after August, cause IF the advisory committee says no, then ARNA goes to $1……This is an all or nothing with them, so I am comfortable with August…..

  221. Phil:for my BAC stock I might want to sell some premium, but what ?

  222.  Pharm
    BTW – I am up more than 125% so far on my ARNA investment, so thanks! If we make it to LV, I owe you a brew!

  223. Phil – do you think they will continue this stick or will we get a minor sell off at the end? Im thinking of shorting the RUT, this is ridonkulous!

  224. was that it for the almighty stick today?

  225. Somebody mentioned Black Betty earlier ?

  226. I am game for LV.

  227. exec/stops — some platforms offer conditional orders. see if you can use them like a stop order then the market shouldn’t see it.

  228. AAPL hit the pin target!  A little pocket change for the day.

  229. Here’s a suggestion.  GET SHORT NOW. HOLD OVER WEEKEND.

  230. Phil, regarding the UUP play, I guess it was a day trade or we keep it till next week?

  231.  Pharm
    I am thinking of Sept, selling the puts, buying the calls, ~$0 net investment, but willing to roll down if its not approved. Given the data is much better than VVUS, and that VVUS was only cut in half, if I’m willing to roll down to 2x, have it put to me, and do a buy write or sell covered calls I think its a cheap way to play. Am I crazy?

  232. Sold some more December 5 puts naked on ARNA… Don’t want to miss the party!

  233. Shucks, why don’t they take it all the way back so we’re flat for the day?  It’s like the market can’t go down anymore.  I need to stop trading in August.  I’m now flat for the day.  Lost all my gains from a nice morning. 

  234. LOL gel – December?  Party already started for you in N. CA?

  235. Outsourcing/Tusca – They took our jobs

    LOL Lionel – See what fun it is when you don’t care…

    DC/1020 – I go a couple of times a year to cause trouble.  As I said the other day – I know some guys who know some guys and it’s good to be more than an Email to them. 

    Stops/Matt – Stops have gotten worse and worse.  A smart broker would figure out how to protect it’s clients and then use that as a feature. 

    Agnostic/Rain – That’s a good one too!

    Fed/Tusca – No, they can’t do crap.  They can only provide the funding backstop but it’s up to Obama and Co to make an initiative and put something through.  Expect a very big speech on stimulus AFTER Congress goes on vacation as the Dems want to put the ball in the people’s court and make it very clear that the only reason there won’t be a stimulus bill the moment Congress re-convenes on 9/13.  From there they only have until Oct 8th before they adjourn for elections so a lot of fun positioning into the election. 

    Whoring/Matt – Hey, there’s a reason it’s the oldest profession…

    Rosenberg/Pharm – So what does he want to do?  Sounds like he’s against tax cuts, stimulus and QE – is he an austerity guy?  I’m getting a little annoyed with all the "smart" guys who only want to tell you what won’t work.  I like stimulus and taxes not because it’s the ultimate "perfect" solution but because I think the other choices can be nothing but too little, too late to make a difference.  When you have 25% unemployment, robbing from the rich and giving to the poor is the best way to give the people hope – they’ve been doing it for 1,000 years, why stop now?

    BAC/RMM – I’d hold out for QE2 at this point.  You could have sold the $15s for $1 a week ago, seems like a real waste to suddenly decide to cover now. 

    Stick/Jrom – I’m done with this "rally" – that was a nice little gift and we don’t look a gift horse in the mouth.  Neutral over the weekend.  We may get a little dip if Asia freaks out about all the unemployed customers but clearly it’s QE2 fever over here and that could last until 2:15 on Tuesday

    UUP/Cmsosa – Day trade really.  Weekend is totally random but I’ll be liking it again off this line next week

  236. cmsosa
    I would have a concern about the direction of the dollar until after next Tuesday (Fed announcement)… if we see some easing the dollar might take a trip south. Just the inverse if we see nothing…. really a crap shoot.

  237. You wish may be granted Matt!

    More depressing charts: The employment-population ratio decreased to 58.4% in July, its third consecutive monthly decline, and the percentage of the working age population in the labor force fell to 64.6% in June, well below the 66%-67% normal rate.

    New York’s attorney general sues makers of LCD screens, including Sharp (SHCAY.PK), LG Display (LPL), Hitachi (HIT) and Samsung (SSNLF.PK), over alleged price-fixing. The lawsuit filed in New York’s state supreme court alleges that the companies "engineered a cartel that dominated the $70B market for LCD screens" for the past decade.

  238.  Vegas
    All – Pharm’s in how about you? Cap, Matt1966, gel1, RMM..and everyone I have not mentioned – 50 is the goal and we’re at 10. Should be fun and you should at least glean one idea that pays for the junket.
    Let me know & thanks,

  239. Come on Nasdaq, you can do it!

  240. Phil : I’m looking at CAT and/or CMI for a Jan. 2011 buy write in a small Roth account. Any preference for either. I considered 2012 but VIX is so low I thought  2011 premium would be best & roll over later.Also, where do u think market goes next week ? Than k you.

  241. I’m in if everyone shows up in their trading outfits as described previously…

  242.  deano
    re Vegas — i’m in

  243. Pharm/ARNA
    The way I see it – what is so bad about the FDA concerns about negative heart implications, when the fat guy will die anyway of a heart attack more likely.  Better to play the odds., I think. Don’t know if the FDA looks at it that way though!

  244. Phil -  I have been a long time "charter" subscriber".  I am roughly half way into my current annual subscription.  So what exactly will the new rate be?  Can one renew now, adding to their balance?  If the rate doubles I will have to seriously consider bowing out.
    "Since we are pretty much full on Premium Memberships, we’re going to do what we’ve always done and double the prices.  That way, when someone leaves, they get replaced by a more expensive someone else, which is a nice, slow way to increase revenues.  Obviously, if you have a long-term Membership, there is no change at all in this cycle and, even for the monthly subscribers, there will be an existing member discount that can be combined with a very simple referral bonus to keep you very close to the current rate…"
    I have no luck with referrals, I don’t know anyone to refer.  So I can’t count on that.

  245. Las Vegas…. I’m in if the wife and girlfriend think it is OK

  246. gel: LOL

  247. That stick sucked. I can see Lloyd just leaning back smoking a cigar right now with a devious grin….

  248. OMG Gel – U R 3 fer 3 today (LOL).  If the FDA thought that way, why give drugs?  Just let ‘em smoke, eat and die anyway!

  249. Gel / Vegas  I’m in if you introduce me to your girl friend!

  250. gel1 -’lucky you. Always dreamt about having a girlfriend while being married.

  251.   All
    Updated list of attendees:



  252.  Does  the VNO play still have potential

  253. Phil
    You mentioned the memberships are going up for those that submit comments. I hope my "controversial" commentary did not contribute to that decision…. if so I’ll drop it

  254. Deano, depending on the timing, I’d be up for "Vegas Baby!"

  255. tuscadog… will do – I’m overworked!

  256. nicha… it is like trading spreads – a real balancing act !

  257.  gmarts on the list!

  258. gel1/spreads — :-)

  259. gel1 -’trading spreads. Lol. You must be a pro by now…at both.

  260. Consumer credit declined for the fifth straight month, down $1.3B in June after dropping an upwardly revised $5.3B (from $9.1B) in May, as U.S. consumers continue to pay down debt and increase savings.

    Preference/Dflam – I think CAT overall because dirt needs to be dug but engines can often be put off for another year.  I’d certainly wait until next week to see where we are. 

    Outfits/RDN – Oh that’s a great idea, we all walk around vegas in our pink leather Hello Kitty racing suit! 

    Rates/Grant – Yes, if you renew before the rates go up then your rate says the same, of course.

    Wife and Girlfriend/Gel – That’s what adjoining rooms are for!  As to memberships – you pay by the word and I can retire in style!  9-)

    Well that was an interesting day, wasn’t it?

    Have a great weekend everyone,

    - Phil

  261. Well that was a valiant effort. -0.2% is damn close to flat and 50 points to resistance can be broken  premarket.

  262. Thanks to all have a nice week end

  263. Phil – So the new rate will be $5,000?  What day is the last day to renew at old rate?

  264. OK, I have seen almost everything, but wow, am I annoyed.
    This market is once again firmly on the track to grind higher and higher until it collapses. Not the best thing for a short strangler, let me tell you.

  265. Renwal/Grant – Won’t be until September.  Programers will make site changes first and they were 3 weeks late getting the new servers up so I’m not going to hold my breath (but, to their credit, it went off without a hitch other than a small billing thing that’s fixed so not bad for a major system migration). 

    Nas futures are now positive – very brave once trading stops…

  266. Phil – September, good.  Gives me time to save up.  I thought earlier today you said the rate change was in three days, which had me in a panic. 

  267. Not a bad week everything up 13.9% this week. Thanks everyone helped!

  268. I gotta say that if the subscription rates double, I’d have to leave this great board. I can’t afford such an expensive subscription with my rather small portfolio (compared to the millions’s portfolios from many members). In addition, I almost never ask questions except the ocassional two or three every week. I enjoy just reading the comments and learning from them. Unfortunately I’ve also tried the basic subscription and it’s not enough for me to see just limited content. It’d be a sad thing to leave this board but I gotta say I’ve learned enough with the time I’ve been here. Until I grow my portfolio a bit more I might be able to come back…

  269. Phil, When you know, please let us know the deadline to renew at existing prices and what the subscription rate will be going forward. I can already sense concern for the unknowns…… Have a great weekend everyone!

  270. LV – I’m in.

  271. Fun at HP… CEO leaves after allegation of sexual misconduct and HPQ takes a 10% tumble! 

  272.  ravalos – I AGREE! … I just joined about 3 – 4 months back and have been learning quite a lot since … but like you – I have a smaller portfolio and the increase in price would kill my ROI – I would have to opt out too!  It’s really unfortunate considering I did take a chance on this site and it has proved to be so helpful thus far…  
    Phil – how about holding rates flat for current members (I pay monthly for example – so for me it would stay $250/mo until I cancel)… and only having the increased rate for new members (what I originally thought you were doing)?  That way – as current members learn more and become more experienced traders, they can drop out when they are more comfortable in their trading – rather than forced out… then you will have a more gradual shift to your increased prices – and no abrupt cancellations?  I feel that due to having a smaller portfolio than most I will be forced out earlier than I would like due to cost issues.

  273. A good article- IMO: not intended as a political statement except as it pertains to our current economic plight. Whomever can fill this role, Democrat or Republican, could rally the troops and lead the country out of this mess. It is my view that the hurdle we now face is more psychological than anything else.

  274.  stjeanluc – I know – time to buy HPQ @ 10% off?!  That’s what I’m thinkin’

  275. Phil,
    I tend to listen more than talk on this board, but I want to provide some customer feedback on the rate redesign.  Seems you face what we call in the policy world "tragedy of the commons" in that people pay the same price, regardless of how much they use/abuse your expertise.  I think it would a shame if subscribers like Ravalos would be priced out because, in part, of a very small percentage of members who frankly in my opinion abuse their subscriptions by treating you more as their on-call personal investment adviser (replete with requests for daily portfolio analysis and adjustments). I think asking Phil ONE (or two sometimes) detailed questions per day is reasonable. But these occasional over-the-top requests like "Phil, can you review all my portfolio positions and recommend adjustments plus give me bullish plays for options expiration plus can you make me a grilled cheese sandwich, trim the crust…" takes away from the others who are paying the exact same price for the service, but never or rarely burden your time with questions. I don’t know how this is solved, maybe the only thing to be done is to ask that people police themselves and don’t go crazy on the questions.    
    What would be nice for subscribers who can’t afford an increase would be at least offering a cheaper "voyeur" membership, where they could have access all posts and daily comments plus the tabs (strategy, portfolio, etc.) in real time, but they can’t ask questions.  It’s win-win. They win because they can still benefit from yours and the groups’ expertise and interaction. You win because you do not have to answer questions from those members. 

  276. Rates:  We are keeping rates more or less the same for current members.  I don’t know the mechanism yet but it will be some combination of accelerating your time discount and a referral bonus signing up a friend to a trial of the new newsletter – that kind of thing.  The announcement today was more for fence-sitting report readers because last time we raised rates we got tons of Emails saying "why didn’t you tell us?  I was going to join…"  So this time we’re giving plenty of notice and will send out an alert tomorrrow to make sure everyone gets it. 

  277. Phil…. Just a thought – I know you are one who really likes to help anybody that is motivated to advance their wellbeing. I also respect your better business judgement and I support your business model, as I have benefited  immensly as a member – Last year I proffited 80% from my trading efforts, and I will say much of the success was attributed to my membership at PSW  ( I went from an average investor to a level I only dreamed of).  I would like for you to consider a plan that would allow those that glean valuable information from PSW, to continue without additional expense. This would help many who are at the entry level, but are confined to a budget ( we all have been there), but still have the investing bug, and would love to continue, as it must be working for them.  I believe if they were able to continue to receive this valuable data (read only), then your notoriarty in the investing world would expand exponentially, and this could be beneficial for all.  I realize education is not free, and must be helpful for it to be worthy, however the opportunity exists for you to be beneficial as a mentor, as long as it was affordable.  I offer my thoughts only as an outsider who admires your compassion for the underdog, and also admires your intellect and expertise.  I, in no way, am presumptous to suggest I should unduly influence your business direction, as I fully respect the independance of the process of your decision..

  278. kururi… I was trying to say pretty much the same… but your words make more sense.

  279. HP… boy!!!  sex can really be expensive…. that "Hurds" my  stock value – down 10%  Geez.

  280. Vegas ?  Sure why not … if the scheduling works out.
    I kind of recall we tried to do this a couple of years ago but it never came off.
    But count me in …
    What a ridiculous end of week "rally" !  Matt, you must be really pissed.  Me, I SHOULD HAVE taken a flyer on TNA when I saw the possible turn; but then again, I am no JRW …

  281. I’m in the "can’t afford a more expensive membership" camp…just wanted to add one more for the little guys since I see this as a true test of Phil’s populism. I know you wouldn’t want to be one of those greedy unrestrained capitalists that doesn’t care about the little guy…not after all your "preaching."  :-)  

  282. Phil: What’s wrong with this country……    Yeah that youtube link was a great example; personally, I think that "what’s wrong with this country" distills down to the change in our culture over the last few decades.  I’ve posted on the subject several times but I think it is important stuff.  We have a completely different culture than say Germany or Singapore (or most of Asia for that matter) and we are losing our ability to compete--hell, many of us don’t even want to compete. 
    We now want a perfect, painless, stress free life--human life never has been this way and never will.  We’re more worried about our children’s self esteem than what their doing in school.  Nobody has problems any more, we have "issues".  I could go on and on, but I think it all boils down to:    we used to think, now we feel ; our hearts overrule our brains all the time in this country. 

  283. I’m in for LV, but we better have rooms on two separate sides of the hotel  (Left & Right); who knows what might happen when the beer, wine and wild turkey flows!

  284. I hope I can afford to remain as a member, also.

    I realize now that I was the guy you were selling options to!

    Now that I consciously focus on not buying premium except for the small “throw away” trades, I’ve been following the weekly options since they came out. I’ve ended up making pretty good returns using spreads to sell atm options while hedging them with itm or calendar options. Has anyone else been toying with these? I have about 60% cash and I’ve used it to increase my portfolio value about 20% this week with just those.

    Selling GS 155s for 40c (they traded as high as $1 but I was slow to get the trade setup haha) this afternoon after the spike up got me a very profit. I traded it as a calendar with the Aug 155s to neutralize delta and capitalize on the decay.

    Just interested to see if anyone else was using spreads with the weeklies. I liked the calendar better for the quicker trade but have used directional spreads mostly this week.

    It has been a great help to me to pay a little to speed up my options education. I think of it as tuition to the Phil School of Dont Be The Sucker.

  285. Looks like BRK came out with a 40% drop in earnings due to derivatives paper losses (bad investment IMHO even if they turn out to be profitable) many of which don’t reach expiration for at least another 10 years.  But operating profits soared 73%, so thats some good news!  BRK is large enough to be accurately representative of the broader economy.  Which is why the derivative losses are ironic.

  286. Membership/All: My understanding is that existing members will be close to or a little bit more than what we pay.
    I hope so because I am in the category of very small portfolio (20K).  I follow Phil, Optrader, David Riastu and Pharmboy. So far Oxen’s trades have been good for me. With Opt I have done well too but I took on a position without respecting position sizing and stops and lost over 40% of my portfolio. Doubling the membership rates would cripple me. But I don’t believe that’s what Phil meant…fingers crossed :)
    I am still in for LV though. Wouldn’t miss the opportunity to meet Phil and others.

  287. Vegas would be nice in fall…..

  288. Nicha: that was another problem I had in using appropriate trade sizes. I paid for that mistake, too! Since I read and reread the sections about hedging and suggestions for 10k and 100k portfolios (I’m somewhere in between those two), it has given me a ton of piece of mind that I am positioning things in a smart way. I’m about 40% in Dec/Jan plays with a few small hedges that I have been legging into as the market moves so the net is fairly small.

    I have to admit I didn’t think about the great importance of these things much at all even though I’ve read tons of investing books over the last 10 to 15 years. Seeing the trades on here and the discussion has helped me a ton to put things in perspective. I used to hope the market didn’t crash. That was my plan. Now I have a plan for a 5% drop or a 30% drop just in case. I know better ways to position to make profits from neutral or slightly bullish markets.

    Some things will work out and some won’t, but I feel positioned well for whatever comes in the next 6 months and I have some cash sitting around to take adv

  289. … Advantage of opportunities.

  290. I love Vegas, but I doubt I can work that out until Christmas time haha. I’ll just watch poker on tv and live vicariously through the big guns on here.

  291. CAP; love that link to Michelle’s extravagant vacation

  292. Deano
    Count me in too for LVS(LV)…..
    when is it planned for? A Fri or Sat, I hope….and in the fall when cooler

  293. skeptycal- hedges, I don’t have any because I didn’t think they were important to small portfolios. I need to read up on them this weekend.

  294. Phil
    Thank you for your patience with the AAPL spread.
    I still wish we could use simpler language for buying and selling puts and calls.
    Place a B or S in front of the trade and specify Put/call?
    Or maybe I just need to get more practice? If so, the hand holding in the meantime is appreciated.
    I read the entire article and all the posts daily, although sometimes at the end of the day.
    Trade only when necessary or if I see something.
    Have made a little money with DIA, RIMM puts, FCX puts since joining a couple months ago, all on your recommendations.
    My core position is 30% long portfolio in AAPL mostly, a little C, and BAC with buy/writes, watching closely, and selling AAPL if needed. That’s why I asked for the preservation spread, which I need to think about and perhaps get into next week.
    LEARNING a lot though!
    Since I promised not to bother you till Monday, you don’t have to reply to this.
    Good weekend.

  295. Nicha: the way I think of it is this. If my long positions go down 5000 in one day, do I want to sit and feel like that and have nothing I can do about it. Or, do I want to have something sitting there that I can sell for 5000 cash and decide what to do with the other stuff with a clear head.

    In the past, waking up to a large loss (and options multiply everything) has made me make stupid decisions out of fear. This way I figure I can at least get some of it back and be able to make correct decisions since the emotional pain won’t be near as bad. I might even feel smart to watch all the cnbc guys chatting up the end of the world while I only took a small loss or maybe even a gain.

  296. I am in for LV

  297. nicha:  Great thing about Phil’s recommended positions are that they are usually ALREADY hedged by 15-20% by selling options when you enter them, so that you only need to hedge the further 10-25% of losses that may occur from a true disaster.  But since that event way out of the money, its not that expensive to hedge.  Or if you feel confident, that 1st 15-20% is probably all you really need.

  298. Las Vegas sounds great!

  299.  Vegas update – let me know if I missed you

    deano ban2
    nicha  gel1
    snow gmarts
    humvee4me  CaFords 
    jromeha Cap 

    terrapin22 1020
    rainman   Maya1
    Pharm rvnelson 
    rdn4evr willsons

  300. Keep it up Deano! We are at 38% after 2 days :)

  301. Deano: I’d enjoy the opportunity to meet everyone. Please count me in for Las Vegas.

  302. Thanks Gel!

  303.  HHFIV
    You’ve been added to the list – look forward to meeting you in LV!

  304. deano : IF Las Vegas is Nov. or later, put me on the list thanks.

  305.  dflam
    You’re in – look forward to meeting you in LV!