Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Trade War Tuesday – China, Japan and US at Odds

War does not determine who is right, only who is left. – Bertrand Russell 

Just when you thought it was safe to go back in the water, Japan and China are at it again.  We discussed the "fishing’ incident last week and Japan has released the Chinese captain who rammed one of their Coast Guard vessels.  Now shippers in several Chinese cities said customs officers have stepped up spot inspections of goods being loaded onto ships bound for Japan and being imported from the country. Traders said officers in some cases were taking the highly unusual step of looking at every item in a container instead of following normal practice of examining a small sample.  The heavy searches, which can add costly delays to shipments.  For it’s part, Tokyo wants China to pay restitution and now China’s navy is moving into disputed waters.

China is fighting a trade war on two fronts as they are threatening to retaliate against US businesses operating in China if Congress passes legislation intended to force a revaluation of the Yuan.  The House of Representatives is set to consider legislation this week that would let companies petition for higher duties on imports from China to compensate for the effects of a weak yuan.  Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, according to C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China’s currency, which is undervalued by as much as 25 percent, is the most important trade issue facing the U.S., he said in testimony last week.  

$USDSo we are pressuring China to strengthen their currency, which would make our currency relatively weaker.  One would think the dollar couldn’t get much weaker than it is now (see Dave Fry’s chart).  We’ve been shorting GLD (buying GLL) and TLT, expecting a dollar bounce off these levels but if we fail here – we’re going to have one very ugly chart.  

Of course a 10% drop on the dollar could be just the ticket for the markets – since our stocks are priced in dollars.  That makes them look pretty good compared to cash that’s sitting on the sidelines (or tied up in notes) that’s lost over 10% of it’s buying power since June.  

That’s right, JUNE!  As people who travel to Europe are well aware, prices of things outside the US have gone up considerably in dollar terms.  For our Multi-National Corporate Masters, who collect half their funds overseas, the dollar dive just represents another 10% pay cut for their American slaves, which is why the rich men are keeping the pressure on Congress, Treasury and the Fed to keep that dollar down.  Americans aren’t buying anyway so who gives a crap about their worthless currency?

As The Market Oracle points out, the only people really buying Treasury Bonds, which finance our deficits are the "Primary Dealers," the too big to fail banks who get their money from the Fed and the Treasury through the wide-open "liquidity windows."  Of course they don’t mind tying up their money in dollars as they borrowed dollars to buy the dollars and the Banksters make money on the rate spread.  Banks borrow money at 0.25% FROM THE GOVERNMENT and they lend it back TO THE GOVERNMENT for 1-2.5% and THAT is how the US can give the banks over $4Tn of bailouts and stimulus WITHOUT CREATING A SINGLE JOB! 

Look at what’s happening people:  "They" (Banksters and their pet Government) have devalued 10% of your dollar-denominated assets in 3 months by printing 10% more money – all of which THEY kept.  In fact, one of the parties in Congress wants to keep MORE of the money they are stealing and give LESS of it back to the people so they can make sure they have enough money to pay off the Banksters for all the loans they gave us with the money they stole from us.  Man you guys are SUCKERS!!!  Here is your market rally priced in Euros:

 

At PSW, we’ve been shorting Treasuries for a while now, expecting this bubble to pop and I warned members about this yesterday, saying (about where to keep your money):

I don’t care if you don’t trust the market – trusting the government to pay you back at all in 10 years is dodgey and believing that the dollars they give you after they rack up another $15Tn in debt (not to mention after a decade of unfunded baby boomer obligations coming home to roost) will be worth anything like the dollars you gave them a decade before is not even in the realm of rational.  I am not joking – it’s not…  People buying long-term TBills are simply not thinking things through at all.

Our hedges to go along with this comment were well-timed entries into TZA ($26.70) and EDZ  ($28.10) but, of course, we did our usual hedged option positions (see link).  Earlier in the day I had sent out an Alert to Members with a put purchase on BIDU and so far, so bad but we planned on scaling in and $105 is our expected top so we’ll see how that plays out.  We also picked up a long on FTR (see Oxen Group’s pick) a short on the DIA a short on NFLX (yes, we dare!), more TBT ($31.44) and longs on RIG, HOV and AAPL plus a ratio backspread on WAG, who had a nice upside surprise this morning.

So, on the whole, we had trades for every direction and we can only hope one of them turns out to be right.  The nice thing about the disaster hedges is they pay us over 1,000% if we hit them and that really helps to balance out a little speculative bullish betting.  Generally, we’re following the strategy of building long-term positions in solid stocks that are cheap and hedging by getting a little short on the ones that seem a little stretched in value at this point.  

 Our overriding concern (aside from the macro issues I mentioned in yesterday’s post) is that much of the recent rally, aside from the fact that it’s mainly the effect of a weak dollar – is nothing more than a fake, Fake, FAKE prop job put up by the same Primary Dealing Banksters as they try to razzle dazzle the sheeple with the up market trick while they reach into their pockets and rip away 10% of their lifetime savings in asset value.  

So it should be no surprise that today’s Case-Shiller Home Price Index came in up 0.6% month/month and that’s up 3.2% for the year, which beat expectations of 3.1% by a rounding error (the full amount was 3.18%).  Still the pre-markets are in "razzle dazzle" mode now and up close to 100 points off the 5am lows.  

Very nice – home prices are up 3.2% and the really good news is you get to buy them WITH DOLLARS, and those are worth 10% less so the homes actually cost 6.8% LESS when calculated in real money (and don’t calculate your home’s declining value in gold or you will begin to cry).  As fundamental traders we look at the Case-Shiller Report and we look at the Dollar and we look at the Markets and we RUN AWAY!  I mean really – are you people crazy?  Prove to me that these levels will hold up AFTER the quarter ends and I’ll be happy to get more bullish but, for now, CAUTION!!!

Asia had a cautious morning with a 1% pullback on the Nikkei and the Hang Seng while the Shanghai gave back 0.6% and India held firm at 20,104.  Europe is pretty much flat ahead of our open but also the beneficiary of a massive 5am (EST) prop job initiated by much better-than-expected German Consumer Confidence data and improving UK GDP numbers.   As we expected from our discussion on Ireland yesterday, Moody’s downgraded their debt THREE notches to Baa3.  Portugal is also having serious problems and this week the EU banks have to roll over $400Bn in debt so this party ain’t gonna be over ’till it’s over, as the great Yogi said.  

We get our own Consumer Confidence report at 10am but no other data with Thursday and especially Friday giving us our major data-points for the week.  We played bearish yesterday as those 7.5% lines did not hold up (see yesterday’s post) and we’ll be watching them again but I expect another day of two-way trading as we don’t know how low that dollar can go but we do know that stocks are priced in dollars so a further breakdown in the buck should be able to give us yet another push higher – but it’s a Pyrrhic victory at best…

 


Tags: , , , , , , , , , , , , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Alphatrends S&P analysis from last night.
    http://www.youtube.com/watch?v=_DxycVOWqAA&feature=player_embedded


  2.  WYNN got a semi-downgrade notablecalls.blogspot.com/  , but LVS and MGM moved up. Phil`s BYD play is dirt cheap with the stock at $7 and the Jan 12  7.5 strangle paying @ $4.


  3. Phil,
     
    Interesting article:  I’ve been thinking all along that at some point China is going to stick it to us and bring the entire US financial house of cards to come tumbling down.  I’ve heard all they arguments why they would never do that, however, they are people, and people have ego’s, and ego’s tend to make people do things that you would never expect them to do. 
     
    So what is your view on this.  Do you think the Chin’s have the stones to crash our system?


  4. good morning Phil
    Have been thinking about your AAPL play and protecting profits at current price.
    One of the strategies you like is selling the Jan $240 puts and buying the Jan $290/310 bull call spread.
    In this strategy, am I correct that if AAPL is higher than $310 in Jan, one would have lost out on the upside above $310, especially if it did not go to $240 before then and you were not put the stock?
    How about a combination of owning part stock and part the above strategy? Of course, this reasoning could apply to any stock.
    Thanks for your input.


  5.  AAPL – vertical adjustment -
    Phil I sold the Jan. 2011c 240s – for $23 bucks against the Jan. 2011c at 185 for $45.
    I wanted to hold the 185 until expiration for LT cap gains treatment so I am not interested in selling these
    Anything wrong with buying back the 240s with only $6 of premium and selling the 190s for $20 bucks -
    I realized I am putting my profits in danger if apple falls – but it’s the difference between earning -
    $33 on the original vertical vs $49 on the new vertical so apple would have to fall to $274 - 


  6. Phil/ Ben- AAPL
    Just saw your post from this morning on yesterday’s board.
    Thank you both very much!
    Would still like to hear from you on my earlier post of 9.03 am, Phil


  7.  What is happening to apple, Sinking fast!!!


  8.  Wow. that was an impressive gap down. AAPL was down almost $15 for a second there….a little scary.


  9. Do we have another pre-market pump job or are they just reeling in the bears?


  10.  AAPL—Kinda liked that spike down..  Bought back covers for good profit; will cover again as it should (hopefully) pop back up.


  11.  Hmmm. Something doesnt feel very right here….


  12.  AAPL/RIMM:  Would think that the spike had to do with RIMM’S new tablet but RIMM is down over 3%


  13.  Good morning!

    Levels, levels, levels…  No emotion, no opinions – let’s just see what (if any) sticks.  3 of 5 breakdowns are bad and any index breaking two levels below is bad as it strongly indicates the other are likely to follow at least one level lower (I hope that’s not just clear to me!):

    • Up 7.5%: Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 
    • Up 4%: Dow 10,608, S&P 1,112, Nas 2,288, NYSE 7,072 and Russell 660
    • Up 2.5% (MUST hold): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650

    We lost our green Nas and NYSE on the 7.5% line yesterday and the way the Nas got slapped down at the open, I don’t think it’s likely we get back there today.  2,365 on the Composite is right around 2,000 in the Nas futures so that’s a great level to watch and a great line to short at

    Oil will have a had time holding $75 as we’re hitting our slow driving season and there’s no hurricanes and inventories are at all-time highs and there is still a huge pile-up of front-month contracts at the NYMEX – not a very bullish picture.   If it wasn’t for dollar weakness – these markets would not look pretty at all!  

    Watching and waiting (assuming you already took the bullish money and ran and are a bit bearish now).  If we pull 3 of 5 at 7.5% then we can get a little more optimistic but, for now, I’m expecting to revisit our 5% lines at least.  

     


  14.  Phil, 
    Thanks for the DIA end of quarter 107 put…bought yesterday at .27, just sold for .37!  Not a bad profit for 1day….


  15. Good morning,

     

    IWM  64.43, 64.93, 65.23, 65.52, 65.87, 66.31, 66.65, 67.06 and 67.80


  16. Phil / $dollar devaluation?   Europe and Japan are in as big a mess as USA and China seems unwilling to revalue the Yuan.  So the recent dollar weakness could possibly be manipulated (by the others) back to strength, or PIIGS default?  As an investment thesis, following your cynicism about the US economy/currency, should I be adding to my FXI, IDX, PHI etc as a currency hedge and holding less US$ cash.  Or if mkts are at risk of severe decline, should I move only into other currencies rather than their listed stocks, eg hold Sing $, HK dollars etc?  I’m nervous about Canada / Aussie / Brazil currencies if we double dip, as commodities could decline fast.


  17.  aapl – anyone got any news besides rimm ? seems like a good time for a put sale


  18. reza99
    Just like to comment on your concern about the DIA OCT 105p long. Please not only by a drop of 50 pts you find the putter is already .10 in the money for me. Just shows not to rush in to things.


  19. JR,
     
    What are you thinking?


  20. exec/ China – there is no way China want US to go bankrupt; we keep their economy growing.  Their leaders, who remain petrified of any political upheaval need to keep employment high and the economy growing and that means exports, exports, exports.  Now they are working very hard to stimulate domestic demand – but if the US disappeared so would half their economy and their government would fall apart.
    So everybody wants it both ways.  In the case of the Chinese government they want the dollar to be strong (relative to Yuan) as that’s how they get paid.  And that’s how they have been paid – that’s what their savings are in – TBonds.  So they must buy dollars and dollar assets with their reserves, though they recognize this dependence on us is dangerous. But they also recognize they might be fueling a bubble and so want to get out – but they can’t sell all their dollars at once or they’d kill their own economy.


  21.  Do you suppose they jammed it down to create a trading range for today, given that we didn’t have much room left to the upside? Now we can spend the rest of the day recovering. 


  22. exec/China – remember (as was shown in 2008) if you owe the bank $10 million and can’t repay it, you are in trouble.  But if you owe the bank $5 Trillion, and might not be able to repay it,  the bank is in trouble.


  23. DIA mattress getting as well closer to the put sale of the OCT 107p for 1.55 now already 1.41 at times


  24.  Rumor is that Tim Cook is leaving for Apple!


  25.  leaving apple for HP


  26. WOW……Hope your short JR.


  27. BYD/Ben – I still like them.  That Macau stuff is too iffy for me. 

    China/Exec – I don’t think China does anything rashly.  They respect their elders and their elders respect traditions.  They are still mad at Japan over the last war and they still consider us business partners although we are doing our best to sour that relationship with all this China-bashing.  Still, they are not going to cut off their $2Tn (of US Treasury holdings) nose to spite their faces.  Keep in mind, though – that this is a very strange situation as we WANT them to devalue our currency.  We’re ASKING them to devalue the dollar.  When I said to Geithner "Why don’t we just inflate our way out of this mess" I think he bit his tongue at what he wanted to say but I got the impression that he was about to say "I wish!"  So what is "crash our system"?  We are 1/3 of their trade so they would have to deal with our hyperinflation.  They hold 15% of US debt – do they want to be paid back in worthless currency?   Diplomacy with China is like playing chess by mail – it takes many years to unfold and the moves are often surprising but still generally predictable if you are familiar with their strategy.  

    AAPL/Maya – Yes, you do give up the additional upside.  Of course, unless AAPL goes up to $310 overnight, you can add more longs or initiate a higher spread and you can keep putting more and more money into higher and higher predictions until AAPL pulls back and wipes out the top of your bets.  I do not understand what you perceive to be the advantage in owing the stock.  If AAPL dips to $240 then you lose $50 vs $0 if you sold the puts.

    Uh-oh – Our consumers are NOT AT ALL CONFIDENT.  48.5 in Sept vs 53.2 in Aug and 54 expected so we missed BY A MILE!!!  NOW I will be REALLY impressed if they can push us back up today.  

     Aug. Consumer Confidence Index: 48.5 vs. 51.5 expected and 53.2 prior (revised). Present situation 23.1 vs. 24.9 prior. Expectations 65.4 vs. 72 prior (revised). "September’s pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook," the Conference Board says.

    The dollar is “one step nearer” to a crisis and a devaluation may be inevitable, former People’s Bank of China advisor Yu Yongding says. “Such a huge amount of debt is terrible. The situation will be worsening day by day. I think we are one step nearer to a U.S. dollar crisis.”


  28. AAPL, rumors of COO leaving…I hate to think of what can happen to this stock if SJ doesn’t make it to the office some day, I think some traders will consider this more deeply after what happened with today’s little down move


  29. HI Phil — question on the spread of IBM Jan 11 90/100 bull call spread and sell jan 11 120 put for 7.08 the spread waere bot 90call at 37.94 and sell 100 call at 28.68 — would you leave the spread alone and buy back the jan 11 120 short put for now and resell later when IBM pull back more ??? thx


  30. Phil, with MOS reporting next week, do you like its price level or do you think its overextended?  Also, MON is reporting.  I got in around 47 but sold at 60 during its recent move.  Don’t know if this company can get back into the 70 to 90 trading range.  Any opinions would be appreciated.  Thanks. 


  31.  Phil, still have DIA 107 weekly puts – sold them for .55, probably too early but 50% profit in 24 hrs (seemed stupid not to take) – unfortunately only a very small position, but thanks.


  32. Phil/ I have a feeling that you might be impressed over the period of the next two days.
    Let the opening volume drop and markets will crawl back up like they ALWAYS do…
    I am out of my shorts for the day. Will reenter near the close or tomorrow.
    So far it is all according to their plan :)
    They managed to move the markets in Europe from down 1.2% to up .20% in less than 30 min this morning during their lunchtime on no significant news.


  33. Phil/China,
     
    I would agree that the Chinese are much more disciplined and further out looking than our idiots.  So they most likely won’t cut off their noses……however……you have to believe that it must be tempting for them to just pull the plug and watch us go down the drain when the likes of our politicians try and tell them what to do.


  34. Phil/China
    It is my understanding China is no longer buying are TB’s…. is that the case… ???


  35. Stick!


  36. exec

    Missed the down move; I was still calculating levels, but got into TNA at IWM 65.87 ($43.65)


  37.  AAPL/Samz – You sold $240s for $23, now $50 so up $27 out of a possible $33.  Your Jan $185s were $45, now $100 so up $45.  You are up net $18 on the trade and looking pretty safe but you want to PAY $50 ($7 in premium) to buy back your caller and then sell a caller that is $50 lower for a $5 additional discount at $95 so you go from a net cost of $22 on a $55 spread to a net credit of $23 on a $5 spread with a max upside of $28.  That makes no sense so I assume you meant selling the $290s for $20, which makes a little more sense but still raising your basis to $52 on the $105 spread with a net $53 potential upside if AAPL holds $290, which it isn’t actually at.  This seems like an awful lot of fuss and risk to try to make $26 with $100 tied up but I’ll assume you’ve weighed out the tax advantage to the point where that outweighs the additional risk?  Make no mistake on this one, you are raising you b/e from $207 to $237 and the point at which you make the $33 you have pretty much locked up now at $260 rather than $240.  AAPL was below $260 3 weeks ago and there are about 16 weeks left to go – those are all things you need to take into consideration aside from taxes but, on the bright side – if you blow all your profits, you won’t have to pay any taxes at all!   8-)

    DIA/ET – Nice job!  

    Currencies/Tusca – I don’t think any of them are safe if we collapse.  There will be a period in which the dollar collapsing will, ironically, cause a flight to dollar safety.  That’s when we can make moves but betting in advance on the decline of the World’s biggest currency is probably getting too far ahead.  I still think blue chips are the way to go.  They will inflate along with everything else and you can sell options on them and collect dividends – buying Aussie or Canadian dollars is really chasing at this point.  

    Well that was a very impressive market save, wasn’t it? 


  38. Phil/Save,
    Yep…..I don’t get this market…..but it appears that the BOTs are back in control.  What was all that noise about?


  39. All / China

    Phil is correct about the long term nature of China’s positioning; this is their century and they know it  !!  Our "leaders" on the other hand, can only posture base on a failing illusion of strength.


  40. JRW
    Are you still in? My computer has frozen 3 times exactly when I wanted to get into the flow. Discovered the WIFI hotspot next door and shut off my router yesterday. I am  made as hell and not going to take it anymore!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


  41. POMO Tuesday, and the the stick attributed to a declining dollar


  42.  Got creamed trying to catch the falling knife of IWM on the way down (should’ve followed the rules!). Thankfully made up most of my losses with the move back up. I just sold out of calls, waiting to see if we break the next resistance point at 66.65. Looks like it could go either way. Still haven’t had a significant breach of the 8ema. 


  43. Phil:
    I have the BIDU trade you recommended yesterday. Only a small entry for me as I scaled in as you suggested. Bought Nov. 95 puts(5.55) and sold the Nov. 105 calls (6.55) for $1.00 credit. When I asked yesterday for an update on that trade you suggested that I might roll the 95 puts up to $100 for $2.00. Could you please explain why you would do this rather than just holding on to the $95? In other words, I think, given time, the original trade will do fine. Is there some greater advantage to rolling up the put at this point that I am failing to see? Thank you.
    dclark41


  44. shadow

    Yes, I’m still in but if we can’t get over 66.65 on the next try, I’m out !! (We are still North of the 8EMA  BTW)


  45. shadowfax
     
    Please inlighting me living in the jungle what is a WIFI hotspot???


  46. Bought the AAPL jan 11 290 call this morning and enjoying the ride up


  47. Kustomz/
    I dont think They need any reason to stick us up.
    They are the markets at the moment.
    And since volume appears only during sell offs, it seems that we are poised to have this kind of market behaviour for a very long time.
    And surprise we are up on the Dow!


  48. Phil / save — So much for consumer confidence and investor cedence :-(


  49. Taking profit at $45.60 on TNA for $1.95 or 4%


  50. The bad print of the consumer confidence just means everyone is expecting Ben to fire up the printing press.   All bad news is good for the market = a bigger QE. 


  51. I believe we have a floor at IWM 66.49, an ascending trend. I will get back in TNA if we hold there.


  52. Ottomatic / QE — good point


  53. Yen is strong like wagyu!  They have thrown in their chips so that means they have to start devaluing, and you know what that means: buying dollars.  And the cycle goes on.


  54. 550m in POMO…LOL so much for front running stocks

    Lionel your right, I just turned off 3 of my screens and switched from CNBC to Oprah..the down move this morning was the correct (fundamentals) move, just waiting to see if it sinks back in..unless of course the dollar breaks 79 then its up up and away and dollar sinks to 78.30


  55. yodi
    A WIFI hotspot is a very powerful wireless connection used at motels, truckstops, and rest areas in WY and other states. You can pick them up over 1/4 mile or 1,000 meters even more. ATT Verizon have hotspots in major areas so you can get off G3/4 metered data. It is at a house that owner is never home, didn’t own a computer, when he gets home he gets on one of his motorcycles and leaves till dark. Not only that my house was searched, they took paperwork, computers, and my guns. I was interagated by a Wyoming Dept of criminal investigation officer that I have spotted 3 times there, I have to go to Jackson today to answer more questions. I am now on a 2003 computer without WIFI into the modem and I guess he doesn’t like it. That is why I am mad as hell and not going to take it anymore!!!!!!!


  56.  Back in IWM calls around 66.73 with the last sig rune.


  57. Unreal. Dow 11k here we come!


  58. Got locked out of this move also, they don’t want me to even loose money today. WTF!!!!


  59. drcraig

    You’re very good at this !! I’m back in (2/3 position at $45.38) watch out for IWM 67.06


  60. DIA/Yoid: Thanks for pointing that sharp drop out and the morale of easing into positions!


  61. Kustomz/ I would rather be wrong and enjoy a clean market.
    But we dont have one. Look at this circus now :)
    it took them 1h30min to reverse the day and bring us back to yesterday highs…on very bad news!
    Doesnt matter so much since puts on SPY are cheaper now than yesterday close.
    DIA weeklies 107 puts are .17 :)
    So we will reload for later…


  62. reza99
    DIA I got out of the momentum play OCT 105p with a gain of .10 and entered the 107 OCT p short with 1.55 now 1.05. The 107p are part of my short mattress play.


  63.  And out at 66.96. We’ll see if this holds. If it looks like we’re going to pierce 67.06, I’ll be back in. The challenge here is the speed at which breakouts occur. We jump entire levels in seconds! At the moment it looks like my decision to get out was correct. 
    JR- the greatest challenge for me has always been taking a gain. I like stops because it forces me to get out. Today I’m trying to be more proactive and get out as we challenge a level, rather than when we fail it. I just got out on a failure, and hence lost about 6 cents on the options I could have gained. The next lesson I need to remember is NOT to trade in the first 15 minutes unless I have a specific plan. I think that strategy probably saves more in losses than it loses in gains. Hmm… TZA time? 


  64.  Wow, that DIA swing is/was impressive.  Glad i followed rule #1 and sold both my weekly and monthly dia puts.  Will reload  DIA puts if we have a silly run-up today.  IWM looks like its revving up.


  65. DIA/Yodi: Nice timely move Yodi!


  66. drcraig,

    I bailed as well ($46.16); did not go short though. There is small support at 66.72 and more at 66.65, but TBT is not helping. I still think higher EOD.


  67.  Phil/WAG
    when you plan to add more longs? just to try to understand ratio spread adjustments


  68. I agree with you "jomama"


  69. VZ/Phil,
    I don’t want to rush into anything yet but I did a buy write on VZ selling the 2012 25 puts and calls, needless to say I am getting killed on the short calls. I have been selling shorter puts along the way to ease the pain but wondering if I should roll the 2012′s yet? Thanks


  70. Phil in response to your question – My rationale for buying NTWK was that it does low cost software development in Pakistan which it markets through small front offices worldwide (but growth coming predominately from Asia). I know that’s not unique but it is a proven model. Before the 2008 crisis they were earning around .30 I think so if they had kept growing they might have gotten to $5 or even $10 share price (with luck) and then been on mutual fund’s radar or an acquisition target. They may never reach the critical mass where their development center can really start churning out software but I don’t think there are any going concern issues now (their current assets are larger than all their debt). I think the sub 1.00 price reflected concerns that they might go bankrupt but we shall see.


  71.  Back in at 66.77, perhaps a little early. Sig rune, momentum and RSI just over the mark, close to confirmation on 3 minute. 


  72. In TNA at $45.44


  73. pstas
    Your question regarding how I see the inflation developing is accurate. It is a question that may be mechanical, because of so many moving parts, but for this reason will possibly make some non predictable moves, but the end game still results in inflation. Do you agree with this scenario?


  74. Hey all,

    I have a new post up covering all of my Longterm Ratings. I will be finishing up the story by transferring Trina Solar and Green Mountain from a Longterm Position to the new Ratings system I am using.

    Check it out here.

    Good Investing!


  75.  Any thoughts on RIMM regarding new pad and strategy?  I kind of like the direction they are going with their surfpad/integration.  I think they are focussing on their strengths which is enterprise, security and integration.   Ipad is better for me but i think RIMM has a market.  They are definitely priced for failure in no part due to neg sentiment by analysts.


  76. I have another "hot" one for you guys ( and gals ) looking for growth. I bought a large position this morning and will add some option plays over the next few days. The company is Ebix Inc. – EBIX. Last quarter earnings were up 56% an a sales increase upward of 45%. They are a leading supplier of customized software to the insurance industry. Over $100 bil of insurance premiums are conducted on their platforms in over 70 countries, and 11 languages… almost no comprtition. Operating margins are over 40%. Jump in… the water is just fine!


  77.  thanks gel


  78. Phil, I have lots of free margin to use (between 1/3 and 1/4 of the portfolio value), but I feel like we are in the top of our range until we get past the quarter end and then we start to see good earnings announcements before I deploy more of it. At this time, I feel it’ll be the WORSE time to deploy the margin, even if I try to scale in..
    One curious note about what I’ve learned from being a member of PSW. I used to be REALLY BAD at Texas Hold’em.. not that I like gambling, but many of the principles that one learns here can be applicable to gambling situations / card games.. you don’t go all in, or even half-in, until you have ENOUGH information to make an informed decision… at this point in time, I compare the overall market situation with having the first two cards of the game for each player, and I get to see I have very good two cards.. but it won’t do A THING if the three cards that come next do not help you to complete that great play! So, I won’t deploy any margin/cash until I get dealt the other 3 cards (past end of quarters and some earnings announcement) so I see I can have an excellent play! Just to note, I’ve been playing Texas Hold’em and I’m VERY good at it now by applying these principles.. even to the POTENTIAL of having a great play, I don’t go crazy and deploy lots of cash because the play might not be complete once the rest of the cards are dealt..
    Amazing!! I love it!


  79.  Good job on DIA sale Yodi.  That’s why we set targets.  

    IBM/Gucci – I’d certainly ask for $10 or even $9.50 to get out out of the vertical.  The put sale is a matter of taste as you still have a pretty easy $2.20 to gain so, if you don’t need the margin for something else, you may as well let it ride but you and I both KNOW that we can make more than .50 with $9.50 between now and Jan so leaving that on the table is a waste.

    MOS/Ash – I think all those ags are a bit overdone.  You have the Russian crisis and the buyout of POT jacking up the sector and they are both fading factors.  

    DIA/Jo – They are actually Thursday puts and of course you take 50% off the table on a 24-hour trade otherwise you are risking your 50% gain unless you are dead certain there’s no way it can be put to you or you have absolutely no issue with rolling them along but, at .20, I don’t think it’s worth the risk. 

    Impressiveness/Lionel – Yeah that’s just crazy stuff – good call.  

    Noon volume on Dow is 70M – 90M is "normal"

    Temptation/Exec – You sound worldly so, rather than recommend Gupta’s Introduction to Eastern Thinking, I’d recommend Jung and Eastern Thought, which touches on comparatives of various eastern philosophies compared to our overriding Western silliness.  Also, if you haven’t read Shogun – I would suggest that as the book is really about the discovery of the Japanese way of life from a Western point of view.  It’s very hard for Americans, with our 200-year "history" to really comprehend even what Europeans think and they only go back to the Romans and even there you have the huge gap of the Dark Ages…  China, India and Japan look back 5,000 years for their cultural influences – America is just a blip to them with our entire rise to date not even taking up the last 5% of their history books.  

    China/Acobra – They certainly seem to have slowed down.  If they stopped altogether, that would have been bigger news.  We lucked out though as Japan stepped up buying to fill the gap (so far).  

    Speaking of Japan – Dollar is WAY DOWN this morning, with the Euro punching up to $1.36 and the Pound at $1.58 and, once again, we failed to hold 84 Yen, now 83.76 and THAT’s what popped the markets back up as we dropped like a rock starting at 10 and that saved commodities.


  80. ravalos- good analogy.


  81. Another prostate cancer failure: 

    In its second strike-out in two months, Pfizer’s cancer drug Sutent has whiffed a trial in prostate cancer. The company stopped the trial, which was studying Sutent plus prednisone as a treatment for men with advanced prostate cancer, saying that the drug combo was unlikely to prove superior to prednisone alone.

    It’s just the latest disappointment in Pfizer’s campaign to broaden use of Sutent, which is approved for kidney cancer and some gastrointestinal cancers. Last month, Sutent failed a lung cancer trial, and in April a study in liver cancer was halted because of serious side effects. And as Reuters notes, Sutent previously failed a late-stage study in breast cancer patients.


  82. Gel
    Not wanting tp argue your point on EBIX but this stock is today at its all time high does this not look over bought in May still at 14 now 23.79 ???? thks


  83.  Phil
     
    I have a couple questions on hedge adjustments:
     
    1. I have SDS Dec 31 longs with the 36 calls & 31 puts sold – how/when to adjust, am I late in doing so?
    2. I have the FAZ Jan 13 longs, with the 18 calls & 11 puts sold, same questions?
     
    Thanks


  84. I used to have a hedge with SDS by having 5x Oct $31 / $36 bull call spread, along with 5x Jan 2011 $29 Puts short, right at the time when the SP500 was on the verge to break below 1044.. and then it shot up like crazy. Since then, I’ve been closing long positions taking advantage of the up move, so that hedge is no longer necessary for me.. so what I did at one point (about a week ago) was to roll down the short Oct $36s to Oct $32s, leaving just $1 for the spread.. then as I realized we crossed the 5% levels, I closed 1/2 of my long Oct $31s, and just when we went down a bit yesterday I closed the remaining 1/2.. so now I have two naked short sides, the Oct $32s and the Jan 2011 $29 puts.. thinking that the Oct longs will expire worthless since I believe will be hard for the SP500 to fall 7.5% from today’s levels (which would put my short calls in the losing side).. and thinking that I will manage the short $29 puts by rolling rolling rolling until I get to keep that money. This way I’d savage the play and incur no cost at all on the hedge (in fact, I would earn a profit). Timing is crucial, but I think I did the right decision by removing partially this hedge as I don’t have that many longs to protect.


  85. Temptation / Exec / Phil – let me butt in here with a favorite, TJ Ried’s "Confucius Lives Next Door". He’s pretty thorough, gives you the western viewpoint on confucian societies (trust me, his book works even better explaining Korea) through interesting anecdotes, and while he comes across as rah-rah Japan, in his last chapter he admits that and lays out where he could be wrong & why.


  86.  Phil, what do you think about shorting or ANF puts here?  Their last earnings were quite poor with awful inventory.  Most ANF stores i see are empty and they should be getting hit pretty hard with the unemployment etc.


  87. yodi / EBIX
    Good point…. however I see a lot of growth going forward. – the fundamentals and technicals are compelling. Just last month Fortune listed EBIX as the third fastest growing company in the world, and they are the fastest growing firm in the tech sector. This company is a master at acquiring and integrating small businesses in its industry. They will soon be expanding into Brazil with their portugese language platform, and are working on platforms for the Middle East. Stock is up, but the winners keep going up. I bought AU yesterday and it is flying today. Many would say it was already up, yes, but still has room to run. One thing I like about this stock – hardly any competition.


  88. Phil: have 2000 SLV @ 18.00. sold Jan 2011 21 call for ..85. Now in the money. Any suggestions with this trade. Remember I want to reduce my exposure to SLV, but I remember you said once you did not like SLV a lot. ANy suggestions. Thanks


  89.  yodi 
    Two things I see though, all-time high, no overhead supply, and great volume on this move.
    Gels right on the fundamental too.
    I put together  a Nov 24/26 spread selling 2x the Mar 23 P to cover the rolls, and by the time I entered it I had to adjust .40 higher.
     


  90.  That trade is`nt being filled either, its moved away. Maybe EOD  fill.


  91. EBIX – 30% of the float is short….wow.  Days to cover are 11.


  92.  gel1/inflating our way out
    I was following your discussion w/pharm yesterday and I feel very much the same as you.  What are your favored ways to play gold and commodities for the eventuality of inflation?  What is your guess re: timeframe that rates will be pressured up?  Thanx


  93. pharmboy, EBIX short float, current as of what date?


  94. Pharm – can you translate that into new-bi-knowlogy, please?


  95. Gel on EBIX--could one sell puts as a way to get in at a discount--if so what strike and month would you suggest?
    Tx


  96. EBIX  gel ben,
    looking at buy write Nov 24 caller at 1.50 and 22 putter for 1.40 2.90 dicount 0n a 24$ stock 21.10 if called away 13.7 % over two month if called away.


  97. SLV/Arbolito — I don’t think it’s that complicated.  You have a 21% gain.  That’s good, and you’re certainly met your goal when you sold the 21 call.  If you think silver is going up, you can always buy back the 21 and roll up to, say, the April 25 and more than make up for the "loss" on the Jan 85.  Or, if you think silver has reached the top, leave it alone, and you get the .85.  If you think silver is going to sell off, better to just take the small loss on the Jan 85 and liquidate and find something else. 


  98. AAPL does not want to get over 288 we need Iflan’s bust!!!


  99. AAPL still waiting for the stick to sell the weeklies


  100. Phil- If you were GS- why would you not do what they did today? You sell into the open pounding the crap out of the high flyers- which they did- you creat mini panic- which they did- you buy from all the panic stricken down $5-$10 per share- which they did- and POMO to the rescue- which it was- and then you dump your stock back to the same idiots that sold it to you earlier- which they did!


  101. Short date as of 15-Sept.  Again, I don’t know when the positions were being taken, but trying to get the info.

     

    morx – the amount of stock someone has borrowed from an account to short.  If you own the shares, the ‘firm’ where your account is can loan them to someone else to short.  This is supposed to change with the new rules where the ‘firm’ should tell you they are borrowing your shares.  In short….no pun intended….someone is betting opposite directions.  Days to cover are the # of shares short / average volume/day. 


  102. redlog / Inflation
    Our Fed is populated with members that are far more fearful of deflation, than the risk of overinflation when it comes to their policies. A good dose of inflation could set free many of the imbalances we currently are harboring in our economy. The "big Kahuna" is residential real estate with so many homeowners contemplating foreclosure. The better solution is to inflate the value of their property through a weaker dollar.and in doing so create equity for them. Then deal with the inflation problem later.
     
    I agree with you insofar as the best investments to hold while this paradigm plays out – gold, and commodities are logical. I also like the currencies. The strong currencies, particularily those that are commodity based are good choices. I like the CAD, AUD and CHF for plays against the USD. The interesting thing about commodities,is that so many are priced in Dollars, and with the ecomomy growing so well in many areas of the world, they become a "double" play. I like the ETF plays on the commodities, and same for gold, although I am all over the place on gold miners as well. I guess I fit the "gold bug" profile that Phil talks about. So far, it is working well.


  103. yodi
    what is lflan’s bust?


  104.  Noise/Exec – Just another reminder of how quickly the rug can be pulled out of this market.  Someone is just desperate to paint a good finish on the quarter but it does seem like they’ve taken it as high as it will go and now the effort is all in maintaining appearances for as long as possible.  This is just what I said would happen this week though as the small funds take advantage of the pumpers and make their exits while the big boys, who have no one to buy all their shares, are accumulating puts for the big dump next week.  That’s why the VIX is back at 23 despite the "excellent" performance.  

    Not taking it/Shadow – Maybe try a computer with some encryption?

    BIDU/Dclark – Spending $2 to gain $5 in position is always a good deal.  If you can roll the $100 puts to the $105 puts for $2, then I like that roll too as the original $5.55 out of the money $95 puts become the $9.55 in the money $105 puts.  Keep in mind this is November so the trend is our friend and, also, that keeping in good position allows us to potentially sell the Oct $100 puts if we get worried (now $3.25), and that would pay for most of our rolling!  

    WAG/Tcha – Yeah, that was a worst-case burn for us!  5 Oct $31s were sold for .65 ($325) and 3 Jan $33s were bought for .85 ($255).  Now the Oct $31s are $3.10 ($1,550) and the Jan $33s are just $2.60 ($780) for a $700 loss!  Our premise is blown as the numbers were great so we can only follow through by adding 2 Han $33s for $2.60 ($520) and rolling the 5 Oct $31s to 5 Nov $32s (now $2.50) for hopefully an even roll at some point.  That will put us in 5 Jan $33s at net $450 (original $70 credit) with an obligation on the 5 short $32s.  The long-term hope is to roll those $32s to Dec $33s, also even and the Dec $33s to Jan $34s (if WAG keeps going up) and then we’re in a $1 vertical for less than $1 so a save if nothing else.  Since they are right at $34 now, there’s no need to do anything (step 1, buying 2 more calls) unless they break over as we still expect a broad market pullback).

    VZ/Jomp –  There is no such thing as "getting killed" on the short calls of a buy/write.  If you sold puts and calls you have a net entry of X and if the stock goes up you will get called away at the caller price and that is your "worst case" the profit you make between your net entry and the caller’s strike.  It does not matter if your trading package shows a loss (but it shouldn’t) – you have to know FOR A FACT that the premium will eventually expire and you will be left with the math of the trade.  The 2012 $25 puts and calls are currently $9.30 with the stock at $32.85 so they have $1.45 of premium remaining.  That’s the end of your trade, you can only gain $1.45 more over the next 15 months.  There are many ways to adjust the trade – You can cash out early, you can buy more VZ stock, you can roll to the 2013 $30 puts and calls ($9.50) or, with VZ on a $7 run – you can buy back the putters and sell them again on a pullback.  It really all depends on what your long-term intentions are with VZ.  Also, I would mention that you can sell the stock for $32.77 and buy 2x the 2013 $25s for $7.80 and roll the $25 2012 callers up to 2x the $30s about even and that puts them into premium and still gives you good protection and, if VZ breaks higher, you have plenty of cash on the side to add more calls.  

    NTWK/Kjb – Ah, see – now I feel better about them!  Still, be very careful as they are clearly subject to insane swings.  They fell to $1.44 this morning and now back to $1.64 so how much faith can you have in them and where would you be stopping out of a stock that swings over 10% in an hour?  Stocks like this are pure speculation and, generally, if you like them, then you should wait for bad news (like we did on YRCW) and THEN buy it.  Right now they are up 40% in a week (and over 100% in a month) and I don’t care if the stock is "only" $1.65, it’s still 40% too much most likely.  My logic is, if the company were that amazing, why are there only 5 institutional shareholders with more  than 100,000 shares ($75,000)?  If you buy $16,000 worth of this stock – you will own more than UBS (and they very likely ended up with it through some joint underwriting thing)!  I certainly don’t have the ability to do due dilligence on an Indian ADR with a limited track record and spotty earnings but I assume that some of these other guys did and have not been motivated to buy more since dipping their toes in the water….

    So, if you want to buy a stock like this because you think you found the next big thing and you just can’t wait for it to come down in price – set up a sensible scale at least to buy in with.  Let’s say you have $3,300, which is enough for 2,000 shares.  You can buy 500 at $1.65 and if they rise to $1.95 (20%ish), you can buy 500 more and you would be in 1,000 shares at an average of $1.80 and you are up about 10%.  Then you can set a stop on at least 1/2 at $1.80.  If it goes up another 20%, you buy another 500 shares and raise your stops – you may not get all the shares you wanted but you can’t lose!  If the stock falls back, then you can double your 500 shares at $1.15 and you would have 1,000 at $1.40 average and if the stock drops back to 75, you can buy another 1,000 at .75 and you end up with 2,000 shares at $1.075, which is 35% lower than the current price and you would have spent just $2,150 of your $3,300 allocation so even if the stock drops all the way back to .25 (assuming you are not sick of it), then you can buy another 2,000 shares for $1,000 and your average cost drops to .55 on 4,000 shares.  That’s how you can manage speculative entries with scaling.  Of course, if you aren’t ready, willing and able to commit to buying 4,000 shares at .55 – why on earth would you buy a single share at $1.65.   

    Dollar getting crushed!  TBT at $30.93,  TLT at $106, copper $3.63, gold $1,308, oil $76.80 – even natural gas is $3.99.  I mean, come on folks – if people finally want natural gas more than they want dollars, we are in trouble! 

    Oddly lumber is not going anywhere.  It was $325 in April and now $231 – that does not bode well for housing.  

    Green Mountain/David – I like those guys but they seem a bit stretched at $37.  

    RIMM/Jo – I haven’t seen it yet but it’s certainly bothering AAPL a bit. 

    EBIX/Gel – Good niche player.  I like those but a little chasey maybe? 

    Hold ‘em/Rav – That’s excellent!  You are dead right, the principal is the same and poker players who learn patience and cash management skills are the ones who win tournaments.  Your assessment of the current situation is also spot on – lots of posturing by the players at the table but there is not enough information to commit to at the moment. 

    SDS/Deano – I don’t know what your entry was but down 50% on the vertical is the rule of thumb for adjusting.  As it’s insurance, that 50% is the cost of your insurance for that period of time.  The hard part is ignoring the put price as that’s what kills you but that $31 put, now $3.60, is $2 of premium and can be rolled to the March $29 puts or 2012 $23 puts even.  You have .80 left in the spread and you can add a buck and go to the March $27/33 bull call spread, which is $2 in the money with $1 more upside potential.  FAZ, on the other hand, is still on target so you don’t need to do anything until we see how October shakes out.  The $1.10 you have there can be rolled but don’t forget if you just cash it out and let the putter expire, that’s going to be a profit and we’re not really expecting the financials to collapse anymore.  

    Wow – PCLN hit $350!  


  105.  gel, what do you think about canada etf – ewc?


  106. Phil/Jung
    Which one?  search.barnesandnoble.com/Jung-and-Eastern-Thought/Harold-G-Coward/e/9780887060519/ or search.barnesandnoble.com/Jung-and-Eastern-Thought/J-J-Clarke/e/9780415104197/
     
    I couldn’t agree more with the American way of thinking.  You have to believe that they get insulted by the American Arrogance given our short history and know it all attitudes.
     
    Our biggest problem is our so called leaders can’t think past the next election cycle.
     
    Thanks for the recommendation. 


  107. Phil/Noise
    So that’s how it works.  So have you loaded up on puts?


  108. savitri / EBIX
    Selling puts ATM will get you the discount. Yodi has a very nice Buy/Write. I am sitting on the stock with a stop loss @$19.00. I will definitely add a short strangle to the stock, converting it to a B/W. I will probably target January options, as I am posturing for 2011 income.


  109. Phil
    I have to show for a mental reevaluation at 4:45 eastern. I have had multiple calls to make sure I will be there. I am bringing a friend, 2 checkbooks, and a credit card with $1,000,000 limit for bail. This country has gone to hell. Have been stopped on every trade today, hope I am here tomorrow! Thanks


  110. Maya1 bust means the Iflan magic


  111. Shadowfax
     
    Check out http://www.xerobank.com
    They sell an encrypted VPN that terminates to the web outside the US


  112. Carter should know better than to come to Cleveland.  You just don’t show up in Cleveland, you have to first spend some time in some nasty places in order to build up your immune system before visiting our  infected town.  news.yahoo.com/s/ap/20100928/ap_on_re_us/us_carter_hospitalized


  113.  Phil- assuming you are correct regarding the hedge fund pump job, should the selling begin Friday morning, or Monday? 


  114. Phil/ What is your feel about PCLN? The stock is up 20% in September and 100% since the 1st of July.


  115. Does anyone know how the VIX is calculated?


  116. http://en.wikipedia.org/wiki/VIX
    Exec/ check Specifications section on wiki


  117.  Gel1/ thx for your thoughts.


  118.  Very good way to work SDS Rav!  That’s the key to these hedges – if you learn how to work the legs, you can turn almost anything into a winner.  

    This is a very impressive display of 20M Dow shares being traded to boost the Market Cap of the DJI by $30Bn, that’s $1,500 of market movement per share traded!  

    Confuscius/Snow – That sounds good. 

    ANF/Jo – I think they are already priced for poor eanings, about 20% less than last year for the current Q so it’s all about guidance.  Certainly they are a good candidate for a backspread as $45 would be too much for them as the most they can earn is $2 a share in 2011 and that would be a forward p/e of 22.5 with questionable growth.  So – selling 5 Jan $45s for $1.55 ($775) and buying 3 May $43s for $3.75 ($1,125) is a nice $350 spread and all you need to do is hold $1.20 of value to be a winner.  

    SLV/Arbo – Sure, you can sell 2,000 shares for $21.27 ($42,540) and buy 20 2012 $22 calls for $3.30 ($6,600) and that covers your callers, who can be rolled for a whole year while you cash out $1,640 in profit, get your whole initial investment off the table and whatever value you maintain on the spread above will be additional profit for you.  

    SOX up big today but not the Transports.  

    GS/Jthom – Sure, that happens every day.  At these volumes, retail trading is meaningless – the market does whatever Lloyd’s machines want it to do but, as I said earlier, I think the volume is smaller funds dumping as they can afford to go to cash but large funds have no one to sell to so they have to load up enough puts to offset their selling before they make their move.  

    Oil with a big dump into the close – rejected from $77, now $76.40 with inventories looming tomorrow


  119.  Does anybody track changes in open interest at various strikes over a period of days for <selected stock/index>? If so, how do you do it? Do you print out closing tabs? Is there a website that follows this? 


  120. Phil
    What are your feelings on MON these days? I’ve been rolling and rolling on my MON long spreads that were recommended last April for 6 months now and continue to get killed…. based on today’s information, is it worth the risk to stay in the trade or just take the losses and move on?  


  121. edro
    Thanks for the info, Today I hope they realize I am not a danger to anyone 15 dropped charges, no proof just ???? people that don’t like me. They had to retun my guns in July and they are PO’d. Wish they would give me my proven leagal drugs back so I can flush them! I want my tax documents!


  122. Jo / EWC
    I have played this one for a long time… very safe and not real exciting. The fundamentals point to continued upward movement… I think it is a good candidate for a naked put sale. When oil continues its upward move, or the US dollar gets crushed this one should move nicely…. The same goes for the EWA ( Aussie ETF )… they have the benefit of their exports to China, whereas the Canadians rely on their US exports. Both countries seem to be under very good management.


  123. JR,
     
    Did you get in TZA?


  124.  gel, EWC seems surprisingly heavily weighted towards banks (i would have thought natural resources)


  125. Tx Gel


  126.  good luck shadow, i hope it works out in your favor.


  127. DCTH expects to file their papers with the FDA in Q4.  Device turnaround at the FDA is usually 6 mo, so mid-next year one would expect to hear from the FDA.  I am still long the stock, selling P & C along the way. 


  128. Into Nov $50 QQQQ puts for 1.98


  129. Here’s another warning from market maven, Meredith Whitney wrt sorry state of munis:
    http://finance.fortune.cnn.com/2010/09/28/meredith-whitneys-new-target-the-states/
    Phil and others:  Is there a way to short munis?? I don’t know of any muni CEFs that trade options. Is starting to short munis for a 2011/2012 melt down a good move?


  130. Good Luck Shadow!


  131. Here’s another warning from market maven, Meredith Whitney wrt sorry state of munis:
    http://finance.fortune.cnn.com/2010/09/28/meredith-whitneys-new-target-the-states/
    Phil and others:  Is there a way to short munis?? I don’t know of any muni CEFs that trade options. Is starting to short munis for a 2011/2012 melt down a good move?


  132. I have finished the story on Trina Solar’s rating. We have a Hold rating on Trina Solar with a price target at $38.50. The stock is a buy below $27 and is a sell above $45. 

    Check out my thesis, valuation, risk, and more here.

    Good Investing!


  133. DTCH – Here is the link. Expedited review.


  134.  Jung/Exec – I don’t know off-hand, I read it ages ago.  I’m pretty sure the Clark book as the Coward one sounds more biographical and that wasn’t the point of the one I read.  

    Puts/Exec – At this point they are what they are as we took them Friday and Monday and unless we pop up to the 10% line, there’s really nothing to do but wait. 

    Good luck Shadow.  If anything happens, I have dibs on the "Free Shadowfax" T-shirt concession, OK?  

    Xero/Shadow – That’s something I do agree with.  Tina has everything encrypted in our house (she used to manage CompUServe’s Houston office and was a security consultant for AMEX in NY (had she not gotten pregnant, she would have been in the WTC on 9/11!).  

    Cleveland/Exec – And Cleveland is just a stepping stone on the way to Detroit… 

    Selling/Dr Craig – Well there’s no real hurry until options expiration week so it doesn’t have to be right away at all but this seems like such an unnatural prop job that I think if the government doesn’t do some major stimulus over the weekend, we’ll be giving back half our gains next week (10,400). 

    PCLN/Lionel – They will be on my October’s Overbought 8 list that I’m working on.  

    VIX/Exec – Sure it’s just the expected move of the S&P over 12 months based on the theoretically fairly auctioned prices of put and call options being sold.  Best summary of the proper calculation is this:

    2003VIXEquation.bmp

    Open interest/Fortep – I think Shaeffer’s does something like it and Option Monster (chart below) shows you largest changes in O/I, which is pretty much the basis of what they do but I think Andrew Wilinson’s (main page) in-depth analysis is the best way to follow changes in interest as he really digs into the stuff for you and comes up with a half dozen stocks worth watching every day.  

    MON/Kururi – I like them on the dip but it’s because the EU seems to be moving not to allow their evil seeds so I’d wait for the downgrade police to come by at this point.  I love them again at $45 but that’s their new range I think so if you are not willing to reposition at the bottom – this is not for you.

    QQQQ/RN – good timing.  

    Munis/Reza – I don’t know but it’s a good thought.  Must be something we can look at.  

    Nas right on that 2,365 line, NYSE just under 7,280 – they need to hold if this whole move up isn’t just BS.  


  135. Jo… I made a fortune on their banks last year, most notably BMO and RY. Their banks are some of the best in the world, so that is a positive for the ETF. I thought oil would be the largest holding, but vicariously the banks are the beneficiary, anyway, from success in the oil patch. I see their oil business continuing to show growth, as the US is the largest importer, but China is continuing to build their Canadian imports. This could be a good play on Canadian banks which have zero loan problems, unlike the banks here in the US..


  136. Thanks Phil


  137. Question What happened at 14.15 PM that makes the DOW nose dive ?


  138.  thanks gel, appreciate the input – looking to initiate a position in my IRA account.  Will buy on some fear (1 to 2 weeks)


  139. Hello All,
     
    I know how to setup stop orders for stocks and simple options, how do I setup loss order for spreads?  Thanks.


  140.  Phil/ hedges again
    did I understand correctly:
    when you buy call spread on EDZ,TAZ,DXD and sell puts, when call spread lost about 50% of value, you add around a buck and move them lower and couple of month away, and you roll short put down and couple of month away for about even, this way you lose about not more than 50% of your call spread and off course compensate it with gain of your long portfolio


  141. Jo… I am holding a large position in RDY, with stock and short puts. I have some profit in it but wondering if my funds would be better deployed in something else that is "generic" oriented.  Do you have an opinion on this one?


  142. Pharm—I don’t recall what your feeling is toward ALXA. Are you in long term? or for particular momentum play? I own the stock and last week sold the Oct 5 calls for a nice amount relative to share price although I see the volatility is very high. What’s the endgame?


  143. China/ just to see what its like on the other side of the trade war, I suggest  Last Train Home    http://www.ifccenter.com/films/last-train-home/a new documentary.  From the intro:  "every spring in China, 130 million workers return home for New Year’s–the world’s largest migration, an epic spectacle of a modern country tied to a rural past".  Its pretty amazing – a couple spends 51 weeks of the year doing piecework, living in a dorm room; and they only see their kids during new years (and they have to ride a train 1500 miles back to their home).
     
    Its not exactly riveting, but it brings a good perspective on whats going on.


  144.  In at IWM 66.66, playing for the stick. Technically entry looks early, but favorable. I missed the move down as I had to leave for a bit.  


  145. Phil, There is the EU thing you mention plus the wire services are attributing the corn seed harvest results (see link below) as the reason for today’s drop. Does the seed issue alter your opinion any?
    http://www.reuters.com/article/idAFN2816101820100928?rpc=44


  146. Phil…. yes, and Detroit is but a stepping stone to "Hell on Earth"


  147. ALXA – date is the 11-Oct for the FDA decision.  Drug is approved, they have just improved the delivery.  Don’t see why they will not get approval, but I don’t know the market share that the nasal delivery will command.  If you are up, lighten up a bit and play with the gains.  I am hoping for a bigger pull back to the $3 range.  I may buy some $5 Oct Cs for fun (mo more than 30c, but I would like them for 20.)


  148. Phi: SLV I can’t follow your math. Bought for 2000 for 18 and received .85 for the sold 21 call. Now you say sell 2000 for 21.27 and buy 20 2012 calls for 3.30 and that cover my callers. I think I have to close my caller before I sell the stock which would cost me 1.61. I understand that spreads are different strikes but same expiration, so I cannot combine a 2011 with a 2012. Am I wrong? If I want to roll the caller should I not buy back the 2011, an d then buy the 2012 bull call spread22/24 for .64 allowing me to stay in the silver game maybe for another year ? Sorry if this is too long, but I really need to understand the math and I can’t with shorthand. Thanks.


  149. phil;
    I own the weeklies on dia put 107. what is your take , hold over nite or close.
    I bought today.


  150. Tomorrow are the releases of the Tankan survey in Japan and Confidence indicators in Europe.
    Both are expected to remain flatish.
    That should help them to lift up the markets event if we end up in the red today.like Europe and Asia.
    It is interesting to mention that index vol on puts has slightly picked up since this morning


  151. I am here to reiterate my daily gripe:   This Market is Horse&%$@
     
    I really can’t stand to watch this most days now….


  152. Fed gets the last word today
     
    The Fed will likely move to a more open-ended, smaller-scale bond buying program compared with the $1.7T it bought in 2009, sources say. The final decision will depend on incoming data about economic growth and inflation, but the approach currently favored would announce purchases of a much smaller amount for some brief period, and close monitoring of the economy. 
     
    "The Fed still has a lot of arrows in its quiver" to boost the economy, and needs to focus on managing expectations, Fed’s Kroszner says. The Fed should "do enough to satisfy the market that (the economy’s) not getting into a disinflation situation, but not do so much that inflation’s going to explode," he told CNBC this morning. Some economists, including Nouriel Roubini, believe the Fed is out of bullets.
     
    Gold closes floor trading over $1,300 and is hovering just below today’s record high, +0.8% to $1,309/ounce. So on one side you have folks looking at the Fed’s easing and seeing the metal headed to the moon, and on the other: contrarian sell signals like a German firm’s plans to bring its bullion-vending machines to the U.S.
     
    Deflation watch: Goldman Sachs’ probability model says there’s a 26% chance the Fed doesn’t think money is cheap enough, and will cut near-zero federal funds rates to absolute zero as soon as November. Meanwhile, the firm figures there is no chance of a raise to 0.5% before 2011.   MORE FREE MONEY!!!
    At the open: Dow +0.08% to 10821. S&P +0.02% to 1142. Nasdaq +0.23% to 2375.
    Treasurys: 30-year +0.02%. 10-yr +0.05%. 5-yr -0.01%.
    Commodities: Crude -0.55% to $76.10. Gold -0.27% to $1295.10.
    Currencies: Euro +0.18% vs. dollar. Yen +0.19%. Pound -0.55%.
     
    10:00 AM On the hour: Dow -0.53%. 10-yr +0.27%. Euro +0.25% vs. dollar. Crude -0.8% to $75.91. Gold -0.13% to $1296.90. 
     
    11:00 AM On the hour: Dow +0.07%. 10-yr +0.21%. Euro +0.73% vs. dollar. Crude +0.04% to $76.55. Gold +0.65% to $1307.00.
     
    12:00 PM On the hour: Dow +0.21%. 10-yr +0.22%. Euro +0.92% vs. dollar. Crude +0.46% to $76.87. Gold +0.7% to $1307.70.
     
    01:00 PM On the hour: Dow +0.34%. 10-yr +0.3%. Euro +0.93% vs. dollar. Crude +0.29% to $76.74. Gold +0.92% to $1310.60. 
     
    02:00 PM On the hour: Dow +0.53%. 10-yr +0.32%. Euro +0.9% vs. dollar. Crude +0.26% to $76.72. Gold +0.8% to $1309.00. 
     
    03:00 PM On the hour: Dow +0.15%. 10-yr +0.37%. Euro +0.7% vs. dollar. Crude -0.52% to $76.12. Gold +0.79% to $1308.90. 
     
    ICSC Retail Store Sales: +0.4% W/W, vs. -1.4% last week.+3.6% Y/Y, vs. +3.3% last week. The marginal gain makes up for prior weakness this month and keeps the monthly sales on target of +3% Y/Y.
     
    Redbook Chain Store Sales: +2.5% Y/Y vs. +2.2% last week. Sales of school supplies and apparel were good, but margins, due to markdowns, were thin.
     
    Jul. S&P Case-Shiller Home Price Index: +0.6% M/M vs. +1% prior. +3.2% Y/Y vs. +3.1% expected, +4.2% prior.
     
    Aug. Consumer Confidence Index: 48.5 vs. 53 expected and 53.2 prior (revised). Present situation 23.1 vs. 24.9 prior. Expectations 65.4 vs. 72 prior (revised). "September’s pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook," the Conference Board says.
     
    Sept. Richmond Fed Mfg. Survey: -2 vs. 11 last month (above 0 = growth). Among the index’s components, shipments -4 vs. 11 prior, new orders 0 vs. 10 prior, jobs -3 vs. 12 prior
     
    Sept. State Street Investor Confidence Index: 88, down from August’s 92. Among regions, Asia Pacific gained 4.4, to 107.9. But confidence dropped 7.3 in North America, to 87.9, and fell 1.2 in Europe to 97.2
     
    The Treasury sells $35B in five-year notes at 1.260% (.pdf), a record low yield. Bid-to-cover ratio of 2.96, vs. a recent 2.8; indirect bidders take 50.1%, vs. a recent 43.3%. Direct bidders take 8.7%, vs. a recent 11.5%. Treasurys added to today’s gains: the 30-year yield -0.07 to 3.65%; 10-year -0.07 to 2.46%; 5-year -0.05 to 1.23%. (earlier:POMO
     
    The gap between the rich and the poor grew to the widest amount on record in 2009, according to newly released Census figures. The top-earning 20% of Americans ($100K plus/year) earned 49.4% of all U.S. income, while those in poverty earned just 3.4%. The ratio - 14.5 - is up from 13.6 in 2008 and a low of 7.7 in 1968. 
     
    Don’t look for a global double-dip recession, says OECD chief Angel Gurria – but don’t expect unemployment to go down anytime soon either. OECD countries are still in midcrisis, but the financial system has stabilized and "as a whole isn’t threatened." 
     
    Angela Merkel joins the chorus of upbeat forecasters on Germany’s (EWG) economy, saying 2010 growth "seems to be clearly higher" than previously forecast. Last week, Germany’s Deputy Finance Minister said the economy will grow by more than 3%, rather than the 1.4% forecast in April – an outlook confirmed by a BDI report earlier today. 
     
    The cost of insuring Irish CDS spikes after yesterday’s downgrade of Anglo Irish Bank, as concerns about the cost of supporting the country’s banking system continue to worry markets. Spain held a successful bond auction with "very little concession on price," despite speculation of an imminent downgrade of its triple-A credit rating.
     
    "The case is clear" for additional bond purchases by the Bank of England, says policy panel member Adam Posen – without which the country may fall short of its 2% inflation target in 2012-2013 and risk Japan-style deflation. 
     
    Asian Development Bank upgrades its 2010 growth forecast to 8.2% from 7.5%, saying Developing Asia’s robust recovery is gaining momentum. "The one big cloud hanging over the region’s otherwise sunny short-term horizon is the continued fragility and uncertainty of recovery in the industrialized countries," ADB said.
     
    The dollar is “one step nearer” to a crisis and a devaluation may be inevitable, former People’s Bank of China advisor Yu Yongding says. “Such a huge amount of debt is terrible. The situation will be worsening day by day. I think we are one step nearer to a U.S. dollar crisis.”
     
    Get used to a world of lower-than-average returns, Pimco’s Bill Gross says, as "the most likely consequence of stimulative government policies… will be a declining dollar and a lower standard of living." Such a“new normal” is “idiotic,” counters optimistic Ken Fisher. “The next 10 years are going to be just as good as the 1990s.”
     
    There’s no irrational exuberance in the stock market today, and Mark Hulbert says that’s a good thing on the contrarian grounds that themajority is usually wrong about the market’s direction. He believes the net effect of the stock market’s gyrations since May is that it has "wrung a lot of bullish sentiment out of the market."
     
    Enthusiasm wanes for the new BlackBerry (RIMM -3.6%)PlayBook, as shares give back yesterday’s aftermarket bump. Reviews are mixed, with UBS’ Maynard Um seeing a “mixed message” – PlayBook is billed as an enterprise tool but looks more consumer focused, so in that context it may be viewed as late, “particularly with an iPad refresh likely [in early 2011]."

    Walgreen (WAG): FQ4 EPS of $0.49 beats by $0.05. Revenue of $16.87B (+7.4%) vs. $16.83B. (PR)  


  153. Thanks all and a special one to all doctors who try to help people. I was given sp? oxycodone, oxicotin, hydrocodone, morphine, and more. I guit all of then because I didn’t like the YO YO effect on pain. They were sure I was a drug dealier or abuser only why did I have the stuff. I didn’t take it, sell it, or give it away. Now it sems What I have has to have come from something against the law and they won’t stop. I haven’t been allowed to trade today and I will leave here ASAP Thanks everyone!


  154.  And out at 66.97. Didn’t want to push my luck. 


  155. Good luck Shadow … sounds like you live in a fun town.
     
    NFLX is the 1st of the Overbought Phil Index 8 that looks like it really wants to break down !


  156. Cap – this is for U!

     

    WSJ, FT, NYT and IBD are all high on the hog – and they are our MSM.  Leads to Bob Farrel’s Rule #9:  When all the experts and forecasts agree — something else is going to happen.


  157. Pharm… Your neighborhood is the most recent winner of the Case-Shiller award for real estate appreciation for the past 12 months… up 11%.  Many comminities are continuing to decline. As the saying goes – location, location, and I’ll add weather.


  158. Shadowfax…. hang in there – never give up!


  159. Pharm – You are darn right !
     
    Gel … the correct phrase is "Never Give Up, Never Surrender !"


  160. from what i have heard, weather wasn’t the drawing card this week.


  161. If they push us so high, they must fear something after market.
    ABC or Fed?


  162. CAP-re your 3.34pm
    Is the Overbought Phil Index 8 out yet? I don’t see it.


  163. PCLN/Lionel – They will be on my October’s Overbought 8 list that I’m working on.
    Drunkeerin/ this is your answer :)


  164. CMG should also be on that October’s Overbought 8 list :)


  165. WAG- interesting tidbit from conference call as reported by AP:

    President and CEO Greg Wasson said the company made a larger profit on sales of nonpharmacy items — products like food, drinks, cosmetics, and magazines — because of successful promotions and a reduction in discounts.
     
    http://finance.yahoo.com/news/On-The-Call-Walgreen-CEO-Greg-apf-1642397004.html?x=0&amp;.v=1


  166. Gel – Yeah!  That’s b’c they were all short sales or close outs.  On the coast in Carlsbad, we are holding up fairly well.  As one moves inland, then the dynamics change.  Downtown condo market though…OUCH!


  167. EWC/Gel – I agree, very solid general ETF to invest in with a huge currency advantage.  

    2:15/Yodi – Doesn’t matter, they fixed it already. 

    Stops/Bob – Really it’s about just keeping an eye on them although TOS does let you set a net  stop, the problem is they trigger on a whim if there’s a big move so you end up getting stopped out of a lot of things you shouldn’t.  All hard stops are bad that way.  

    Notice the news above.  Poor consumer confidence, poor investor confidence, mediocre retail sales, gold skyrocketing – yeah, everything is just great, isn’t it?  

    Hedges/Tcha – Well if you want to stick with the insurance then yes.  Sometimes the insurance will have done it’s job and, as I said, you cash the 50% and roll out the put and hope to have it expire worthless.  Keep in mind if you sell a $2 put and buy a $2 spread.  If you cash $1 on the spread and expire the put worthless you are up $1.  If your rolling path on TZA, for example, drops a Jan $23 puts to the 2012 $15 puts and then the 2013 $10 puts – after the RUT is up so much that TZA is down 60% – you’re going to want to own TZA as an upside play anyway!  

    Train/Rexx – Yeah, that’s a strange thing but I suppose Americans did similar in the Depression as men went around the country looking for work to feed their families.  This generation hasn’t got a clue what hard times actually look like.  

    Seeds/Kururi – See above.  The seed thing is on their new product, which is meant to replace round-up and isn’t testing well so MON has some issues at the moment. 

    SLV/Arbo – Bought 2000 for net $17.15 = $34,300 and, of course, you have the obligation to the caller.  If you sell 2,000 for $21.27, that’s $42,540.  You buy the 20 calls for $6,600 and that leaves you with $35,940, which is more than you paid.  The calls cover the sold calls and then you roll the callers along and wait to see what you end up with.  If you are trading that much money (assuming it’s 10% or less of your portfolio) you don’t HAVE to buy back the calls first but you can also buy the long calls first, then sell the stock and you are fully covered.    Sure, you could do the vertical instead but you accomplish the same by leaving the spread I suggest and if you roll that to a vertical, your caller would be in the $28s, not the $24s for an extra $1 out of pocket, which is all profits anyway.

    DIA/42 – Those are Thursday, not weeklies!  They were .55 earlier today, if you didn’t take that, you really need to consider what you intend to do tomorrow if you do keep them.  We’re getting a big finish and I doubt "they" are going to let the market drop before Friday and probably next week so those $107 puts are not likely to do you any good but – if they are ever going to pay off, overnight is your best shot.  

    Tomorrow/Lionel – Also, no US data tomorrow leaves them free to play all day

    LOL Cap!  It is an amazing thing, isn’t it.  Check out the RUT – total nonsense into the close, now back over 672, up about 2.5% from the day’s low.  

    Good luck Shadow.  

    Overbought 8/Drum – I don’t want to put it up until we’re at the tippy top, probably for Thursday am or maybe tomorrow.  I haven’t been able to look at them and say "this has got to be the top" yet.  

    CMG/Rav – That is a good one. 


  168. Nice big fat hanging man on the charts across the board today on all charts.  They are squeezing the ____ out of the shorts.  I can’t wait for the pants to come off.


  169. They are trying to kill the (Panda) bears!!!
    I think it is today, the entry day on short plays. Where can they go from there?


  170. Are there any shorts left?


  171. lionel- they maight have wanted to fight meredith Whitney and the municipal disaster speech!


  172. ok, my short calls for the quarter are gonna lose, gotta roll em.
    So, we will get through the whole month without as much as a 1% pullback. I simply don’t understand what I am seeing here.


  173. I must be attracted to overbought equities… but they keep going higher for fundamental reasons. I have taken profit on PNRA two times, and will re-enter in the next few days for the third time. They just got an upgrade with a recommendation stating the company has a strong pipeline of initiatives that will drive sales and profits sharply higher.. I will do a buy/write on this one with a 2011 expiration.


  174. This market is nuts, but hey, I’m a trader so I’m doing what I do best…selling my longs into the rally, taking off my naked puts, adjusting my hedges and following JRW’s pivots to day trade as something to do.
    Thanks JRW…caught the TZA from 67.06 down to 66.65 after seeing the Stoc diverge….then rode TNA back up from 67.05 to 67.52. 
    Had chemotherapy today, so was not able to follow along too closely, so I know there’s alot left on the table, but 3 out of 4 today not bad at all.  Your lines are awesome to play against, thanks.
    Thanks Phil, your site has really changed my trading for the better.  I’m too sick right now to post it, but a couple of my buy/writes from April I have been working finally got called away recently and I was going to post them as an anatomy of the trade because they just drove my entry down so nicely.  Both were called away for gains over 10% in six months.


  175. Pharm / real estate
    I think the report was reflecting appreciation in prices for homes. If so, then that is a far better investment than Treasuries. San Francisco was not far behind… hmmmm.


  176. Wheee – punch it Maverick!  

    Volume at 3:53 is 137M on the Dow – if this were 3pm we’d say it’s a low volume day and easily stickable.  

    Copper $3.63, Gold $1,310 but oil fell to $76.  If we have a big draw in oil tomorrow, we could be looking at a huge up day as that sector has been lagging.  

    XLF at $14.50 – still not back to where they were a week ago at $15 so that’s another sector that could take off.  SOX are testing 350 and if they pop that there’s a lot of stocks in that sector that are still low (we had the USD play for the SOX from early Sept).  

    I think they really need to get us over tomorrow as Thursday has too much news to fake a move up.  

    We expected a crazy week and this one is already off the charts!  


  177. Come on, finish out the deal…SPX 1150….come on….touched it on the NOSE!


  178. Gel, check out the AUD/USD, 3 cents away from parity…
    I am thinking of selling 98 calls on my long position for 1 month.
    So if we tank, USD flies and the calls expire worthless.
    I dont think AUD will collapse, rate hike imminent, so I want to keep my position until 1.02.


  179. Didja see that crapola ?   SPX 1150.00 flat.
    C’mon ….


  180. Hi Phil is today short squeeze into the close — or still window dressing from the large fund company to look good with their investor-- thx


  181. THAT I WILL AGREE WITH Gel.  I want to max my house to the hilt here and buy more….oh wait, that’s what happened last time! 


  182. Phil… a very nice recomendation is the ETF that follows the Singapore $… I do not follow it, but that has to be a winner going forward.


  183. Pharm… lightening does not strike twice in SD… only in Kansas.


  184. lionel… AUD is like AAPL… we know it is going up long term. Just sit and wait.


  185.  Oh the humanity- I knew I shouldn’t have checked on the market once more before heading out for my run. I missed out on another 25-30 cents on my IWM calls. Oh well, gotta know when to hold ‘em. Good job hoss. I’m still out with a small loss for the day thanks to stupidly trying to catch IWM as it fell through our levels this morning. Had I not made those trades, I’d have a 2% gain on the day. I’ll keep at this for a bit since I seem to be getting better. I’m getting slaughtered on commissions though- OXP charges me $37.50 for each buy/sell of 25 IWM options. I think I paid something like $600 in commissions today. I’m thinking of going back to futures since they’re cheaper to trade, but they scare me sometimes. Like when OXP autocancels an order, then replaces it without telling me (while I manually enter a new one), or they have ‘problems’ communicating with the clearinghouse. Good times. 
     
    Is TOS back to normal yet? 


  186. lionel… yes, the rate hike is imminent, but I think it is a few months away… when the yuan is revalued the AUD will jump like a bullfrog that has been tazered… that is coming for sure.


  187. yodi / 2:15 — I think that was the club which started with those 3 red candles promptly at 2 pm (on the dow). I think someone who controls the up/down switch gets back from lunch at 2pm. Often the shenanigans start at 2pm right on the nose.


  188. Hoss – sorry you’re having to deal with the chemo. Hope you are feeling better tomorrow.


  189. Gel:  AUD   I agree with your assessment, curious what your favorite play is.   I think futures options are pretty expensive, especially since the time frame is not known; you just buying futures, or ETF.  Thanks


  190. You have to love the media.  Low volume day…..total manipulation by the BOTs….and you get a headline like this:
     
    news.yahoo.com/s/nm/20100928/bs_nm/us_markets_stocks


  191. lol Exec! Didnt see that one! What a joke…..


  192. gel I set up a buy write on PNRA. It gives you by selling the Jan 11 90 caller 5.50 resulting in 2% per month. Not to hot I think.


  193. rainman
    I like the 2.00 PM club idea


  194. Phil I do not know if you still remember the advice you gave me after the bottom fell out of ITMN. from 45 to 10
    1.      ITMN/Yodi – I thought you got out of those in March?   See I like playing them when they are down under $20 (hedged to under $10, I think it was) but once they pop they become ridiculously dangerous, as you see.  The premiums got really crushed on those.  So you collected $1,450 and owe $3,35 for about $1.9K x 2 down down.  You can just sell a dozen Oct $12.50 puts on the assumption that they are once again worth about the $15 they were trading at and at least they are 1/2 premium and realistically rollable.   Should be less margin too.
    Sold 22 Jan 11 putters up 5,200.00 up to now thanks to you!!!!
     


  195. yodi / PNRA
    I set up my plays for tomorrow on this stock as follows:
    1. Buy 1000 shares
    2. Sell Nov $90 puts ( 10 )
    3. Buy Jan ’11 90 calls ( 10 )
    4. Sell Jan ’11 100 calls ( 10 )
     
    My reasoning for the strikes and dates are as follows:
    Morgan Keegan has raised it’s price target to $105 by year end, which I think is VERY conservative, The cmpany operates 1400 company owned  and franchised outlets in 40 states. During the recession most restaurant chains cut prices and portion sizes… Not Panera, it kept its portion sizes and its labor force. The company however offered new attractions as well as upscale new products. All of this is paying off… the average check has grown by 8%. Same store sales jumped 10%, and earnings went up 35% on a 14% increase in sales. Operating margins have gone up 19%.
     
    Now the impressive stats. The company is about to double its workforce, by adding 25,000 new employees. Obama might like that one! History will repeat itself -Earnings have climbed by double digits for nine straight quarters. This company sells QUALITY at REASONABLE prices to a broad based customer base. Much of the business comes from "trade up" business from cheaper fast food eateries. The company reports earnings for the 3rd quarter on Oct 26… thus my reason for selecting the short  put sale in November, as a projected discount on the the stock purchase. The other option plays are based upon my projections, factoring all of the fundamentals, and of course the implications of the potential monitary and fiscal changes that will likely occur before year end.


  196. Humvee / AUD
    I have been playing this strength primarily in the FX markets. The best action, I think, is to go long this currency against some of the weaker ones. USD falls into this category, as well as EUR ( developing ) for a long term play. I do not play the options, but I believe Lionel is tracking this very closely. I’ll post much mor on this currency as this scenario develops. Hope Yellowstone is treating you well – terrific place to be this time of year!


  197. Gel
    Why are you buying the stock in Panera and the call spread? Another site I subscribe to has them their #3 short. The thinking its been in a channel since Feb 73-88 and due for a pullback.


  198. gel
    Well a very inpressive argument on PNRA . I hope you right, as there are a lot of birds on the roof. You set your play on even possible taken the risk of doubling your stock position by Nov. even that they trade at 88.69 now I feel there is always somewhere a downturn. But on the other hand they in deed have good write up. Still the food business is very competative and has its ups and downs. Possible you got a lucky nose for these things.


  199. Gel:  thanks for the info, I’m likely start a very small position and go from there; we’re slowly getting  to Yellowstone, currently in Idaho; weather is awesome so far, the heat wave that California is having is giving us highs mid 80′s, haven’t had to get into long sleeves yet.  Take Care


  200. Phil:
    I did the HPQ trade (Jan. 36 calls @ 5.20(now 6.60)/ Jan. 40 Calls sold @ 2.53(now 3.70)/ Jan. 37 Puts @ 1.46(now 1.17). Should I try to roll the Jan. 40 calls out? This trade happened faster than I expected so no time for theta affect on the sold put and call. My guess is that HPQ may come back and hold around 40. The trade overall is up 70% perhaps I should cash out, but I still like the stock at these prices. What would you suggest? Thank you.
    dclark41


  201. doro / yodi / PNRA
    I do not think this is a technical play, and I’m going by the fundamentals… you must agree they are compelling given success during the economy weakness. The management is the principal reason this company is weaving its place into the record books. Much like AAPL, they continue to reinvent themselves to achieve so much more. With the stats as they exist… A short play would be a hangman’s noose, I believe.. My play is very bullish, but then, that is my sentiment.  I have played this stock before, and did well, so I feel somewhat confident. This company has blown out so many projections in the past, and for this reason, I am not very concerned… plus I have a hedge… maybe I will place more weight on the hedge ( short calls –  and go for 20 contracts. I’m playing this one on the published facts, and not too much emotion.


  202. That headline about "Latecomers" rushing to get into the market is hilarious !


  203. Cap
    What is ‘crapola’?


  204. Cap
    It’s after hours and I am just kidding…
    I deal with ‘crapola’ daily


  205. ARNA/arg – the question is, what is the short interest now.  Sept 15 is the last known date, and that was right after the panel.


  206. David Good morning just for the onces trading Green Mountain coffee beeing investigated by the FCC for cooking the books, down 12%


  207.  Good morning!

    Another day and another sharp move up in the futures saving the open at 5am.  Dollar is pressing new lows with the Yen at 83.63.  

    Gold touched $1,315 and is still $1,311 and oil is at $76.43 with copper at $3.65 with $3.70 being the top of our range.  Nat gas still being rejected at $4.  

    Squeeze/Gucci – Yes, when you get past 10% without a pullback, you often get a squeeze up to about 2.5% more but then you are up 12.5% with a 20% pullback expected (2.5%) so that means shorting at the 10% mark with positions that don’t carry a lot of premium cost is a very good play from a risk standpoint.

    Singapore/Gel – EWS but check out Hugh Hendry’s $2Bn bet on Asia collapsing! 

    OXPS/Dr Craig – I moved from OXPS and I’ll take a malfunctioning TOS over them any day.  But TOS is fine now, it was just transitioning issues and no problems since.  You will LOVE their futures trading platform – makes you feel a lot more comfortable about trading them as you have such excellent control.  

    Good headline Exec!  Happy days are certainly here again.

    ITMN/Yodi – Excellent!  Congrats on that save, so glad it worked out…

    PNRA/Gel – I love that place, glad they are doing well.  They were a favorite pick of mine in ’08 and ’09 and are very notable for being a company that made it through the crash with flying colors but I always have a hard time getting into things that are up more than 50% from my last entry, even when they do deserve it.  They have very strong growth priced in so just be careful on earnings as they could dump 10% on a small miss.   

    ARNA/Aug – I’d say that’s a fair assessment of their odds of going BK.

    HPQ/DClark – Seems right on target to me so it’s really a question of how confident you are with that $40 line holding.  I’d draw a line at $41.50, which should still be up 50% and just get out if they don’t hold that but then, your logic needs to be – if you think they have a very good chance of testing $41.50 and that’s going to stop you out – then why not just cash out now with a 70% gain and not worry about it?  Watch that 50 dma at $41.64 – it’s no accident they stopped there yesterday.  If they pop it – that’s you new stop line.   If you REALLY want to own HPQ at net $35.83, then you can leave the naked puts and that’s most of your remaining potential gain.  

    GMCR/Yodi – Now we may get a buying opportunity.  


  208. BIDU – Thanks for your help Phil, I think I got a good spread figured out.
    PNRA – Gel, I like your reasoning.  I’m going to work on something with Panera too.


  209. :( =)


  210. :^)


  211.  O:O


  212. :idea:


  213. =))


  214. :) )