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!

Weak Dollar Wednesday – Which Way Now?

SPY DAILY CHARTEverything is proceeding exactly as I have foreseenEmperor Palpatine

In Monday's post I said: "we really would like to see a little volume consolidation before we make another run at the 1,150 line on the S&P" and we zigged and we zagged until yesterday's close where "THEY" punched it up to EXACTLY the 1,150 line (see Dave Fry's chart) where we, of course, failed – because it's all a load of BS end-of-quarter window dressing but HEY – 1,150, how about that!?!  1,150 is the 7.5% line on the S&P (see Monday's chart) and that goes hand in hand with Dow 10,965 (not there yet), Nasdaq 2,365, NYSE 7,280 and Russell 672.

As I mentioned yesterday, our betting is still all over the place as we may go up on a technical breakout or we may go down and the fulcrum for the markets is currently the dollar, whose devaluation relative to the exchange value for a stock certificate is responsible for the vast majority of our recent market.  We're positioned bearish in that we have 10:1 bets made to the downside on some ultra hedges so we will be thrilled with a pullback but, on the whole, we're still really just protecting our bullish bets – even our review of the September Dozen this weekend couldn't find too many reasons to take the money and run as we just didn't look weak enough to quit on our most bullish trade ideas.  

Our overriding concern is that Japan makes good with their promise to intervene on the Yen, which will boost the buck, knock down commodities and tank the markets.  Why is that not happening?  Well our own Government is doing everything they can to de-value the dollar.  We talked out quantitative easing yesterday and GS issued a report yesterday saying there was NO CHANCE that the Fed would raise rates and, in fact, they may even lower rates to ZERO.  

Now, I don't know about you but I'm holding out for when the government PAYS ME to borrow money.  Maybe then I'll be willing to let them lend me $1Bn as long as they pay me $2.5M a year to hold onto it.  Our greedy little IBanksters couldn't wait though, and they rushed out and borrowed another $500M from the Fed yesterday (POMO) at the outrageous rate of 0.25%.  How are the poor little Banksters ever going to hide all the non-performing mortgages if we're going to charge them $1.25M for $500M in cash?  

Last year, the Fed created $1.5Tn for their banking buddies and charged them a whopping $3.75Bn in interest while those same banks often charge loan origination fees of 1%, which is $15Bn right there!  But, of course, the Banksters do not lend that money back to the citizens who pay for it – they lend it back to the government who lent it to them for about 10x the interest (2.5%) which has the neat side effect of creating a false demand for Treasuries that keep rates low for the banks and inflate the real estate assets they hold on their books.  They also buy lots and lots of commodities on the same premise.  

Sorry to keep hammering on this but it's very tempting to want to BUYBUYBUY here, especially with the MSM back in cheer leading mode but we are on the top of a huge run with very low volume backing the move up and a collapsing currency distorting all the numbers (see yesterday's chart) so now is the time for CAUTION and I want to make sure EVERYONE understands why, especially as exchange rates will color all of the major Q2 earnings reports on the S&P (as the dollar dropped 10% during the Quarter).  

That means we really can't afford to take anything at face value and we have to look deeply into the sub-text, which is all stuff I love to do, as I'm an old-time fundamentalist, but we're still in a very fast-moving market and that can be an explosive combination as the market can react very wrongly to data that all logic would suggest moves it the other way.  Take yesterdays TERRIBLE Consumer Confidence numbers.  Actually TERRIBLE is a wholly inadequate word to describe the carnage of that report.  

September Consumer Confidence was down to 48.5.  The benchmark of 100 is from 1985, which wasn't such a great year either.  That's down 10% from 53.2 in August and expectations were also down 10% from 72 in August to 65.4 in the current survey.

"September’s pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook. Overall, consumers’ confidence in the state of the economy remains quite grim. And, with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months" said Lynn Franco, the Board's Director.    

Consumers’ assessment of current conditions weakened further in September. Those saying business conditions are “bad” increased to 46.1 percent from 42.3 percent, while those claiming business conditions are “good” declined to 8.1 percent from 8.4 percent. Consumers’ appraisal of the labor market was also less favorable. Those claiming jobs are “hard to get” rose to 46.1 percent from 45.5 percent, while those stating jobs are “plentiful” decreased to 3.8 percent from 4.0 percent.    

What's really amazing here is that 3.8% of the people in this country are so out of touch that they can use the word "plentiful" to describe the jobs situation.  One out of 25!  Keep that in mind next time you are on a bus or a plane because those people may be sitting near you – they may even be driving!  Do you really want to be in close contact with people who actually believe jobs are plentiful in America?  They are just as likely to believe YOU would taste good served with fava beans and a nice chianti


The Dow was dropping to 10,740 ahead of that number at 10am, a neat and expected test of our 5% line  (10,710) and you would think the CC news would have sent us even lower but nooooooooooooo – we took off like a rocket and ended up over 100 points higher by the end of the day, up 46 points from the open.  Why?  Because things are soooooooooooo BAD that the Fed's just gotta do more quantitative easing – they just gotta Auntie Em!  Oh sorry, having old black and white movie flashbacks…  

Anyway, so things are SO BAD that the gridlocked Congress is bound to extend tax cuts and the loosey-goosey Federal Reserve is bound to print up another $1.5Tn this year and the Treasury will remain silent even though, technically, only they are supposed to be able to create money.  Japan is either supposed to take this crap or their efforts to fight the tide of dollar devaluation are doomed to failure and the Euro will remain strong and commodities will keep going up and earnings will justify higher multiples and China will revalue their currency to accommodate us – ALL because US consumers are unhappy.  

Sure, that MIGHT happen.  You will have to forgive us if we hedge our bets, though – just in case it doesn't all work out!  

Speaking of things that are going wrong:  Irish banks continue to be a catastrophe (our #1 concern for the week) with CDS rates at a record – and don't forget Ireland already just missed going bust – this is now worse!  Still their 493 CDS rate is nothing compared to Greece, who have gotten used to 817 and Portugal may soon lap them after putting up 446 yesterday – "with a bullet" – as the DJ's used to say about a song zooming up the charts.  

Still an old favorite tune is the ballad of Spain, where Moody's is set to cut the credit rating once again (what is the Spanish word for junk).  Unlike Greece, Spain's economy is in the very exclusive Trillion Dollar Club, 4 times larger than Greece and 7 times larger than Ireland at $1.4Tn (ranked 13th in the World) so it's kind of a big deal if they, as Moody's predicts, are unable to grow.  It's even harder to grow when your whole country is on strike and that's what's happening in Spain today although not a mention of this very significant event on CNBC as it doesn't fit in with this week's bullish premise, does it?  France is also facing a shutdown over deficit measures.    

Fed Prez Lockhart says we don't need no stinkin' monetary easing and tells us that policy makers haven’t reached a consensus on whether to undertake a new round of buying Treasuries, and the need for further monetary easing isn’t clear. “For me personally it is not a foregone conclusion that more accommodation is required,” he told reporters after a speech today in Sewanee, Tennessee. “I am not yet of a firm mind of what exactly that problem is, and for that reason I’m not yet committed to a particular course of action that might involve further accommodation.”  Not a foregone conclusion – stop that madman!!!  

Overall, Europe is down slightly ahead of our open and Asia was all over the place with the BSE blowing the 20,000 line on a 148-point drop (0.74%) while the Shanghai held flat and the Nikkei climbed all the way to 9,559 (up 0.67%), giving us another nice exit on EWJ as it hits our $10 target.  The Hang Seng was the star of Asia with a 1.22% gain but the really big news out of Asia is Hugh Hendry making a $2Bn bet on Asia's failure.   

Hugh HendryHendry thinks that Asia will be the next global market to hit the skids after the subprime collapse in the U.S. and the sovereign crisis in Europe. He envisions severe problems for Japan, when currency strength will for the country to engage in another, more aggressive round of quantitative easing, debauching the country's currency (click here for whole interview).  
So he is making a bet worth $2 billion against Japanese credit, notably in corporations. He sees overconfidence and over reliance on the growth of China as a reason for this position.  He even compared China to Starbucks, noting that they are now investing money in manufacturing the same way Starbucks did in new stores: accepting a negative marginal return on invested capital.
On the subject of a bond bubble, Hendry says that there, "is one going on," and he thinks markets are experiencing a simultaneous "melt-up" in gold and U.S. treasuries.
Hmmm, listen to Hugh Hendry or the idiots on CNBC?

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. DIA/Yodi: Thanks for showing me, yesterday, how different the real market vs. theoretical option prices could be and how much it could fluctuate.

  2.  GMCR – Phil, how would you play them after the big overnight hit?  The story seems to be an accounting error from 2007 and they are cooperating.  

  3. Phil,
    What is your background?  It seems that you have a lot of insight regarding the inter workings of the market and how the big institutions operate. 

  4. Re aapl – Phil. Thanks for talking some sense into me yesterday even if it did not feel good.

    Did have a good quick 20% with some apple puts – learning to follow the rules.

  5. Phil
    Looking at selling some naked calls on pcln, figuring they are due for some profit taking after this end of quarter prop job is over, you agree with that?
    got anything better? bidu?
    just looking at selling some premium today

  6. Yen / Phil – the business with the Yen is not necessarily about the dollar and the US; the more important reason is, as the link I posted the other day
    points out, the bickering between Japan and China, which has a ton of history behind it.

  7. Exec/Background
    Phil is the man behind the Wall Street curtain as similar to the man behind the curtain in the Wizard of OZ…..

  8. Good morning,


    IWM  64.43, 64.93, 65.23, 65.52, 65.87, 66.32, 66.57, 67.06, 67.88 and 70.55

  9.  Hey all,

    We have two new positions we are looking at for today. We are picking up shares of Worthington Industries Inc. (WOR) as a Buy, and we are Shorting Thor Industries (THO).

    Check out my analysis, entry ranges, etc. here!

    Good Investing!

  10. GMCR  buy write stk at 31.25 Nov 10 31c sold for 3.00 downward protection 28.25  Potencial profit 4.5% per month if called away

  11. Acobra/Curtain
    That’s what I figured.  He probably has the CEO of GS and JPM on his speed dial.

  12. Mornin’!
    Can someone tell me what I’m missing in TOS that keeps the current candle visible on the charts? Mine seem to walk off the charts, up, down, or to the right.

  13. rainman
    TOS mine are fine

  14. Phil,
    when you have a chance… I bought AAPL for $209 and sold Jan 11 $290 calls for $20.88.  I am still  in the green on the calls but AAPL is getting close to $290 again and I am wondering if I should roll them or wait. Earnings are coming in Oct. and AAPL will probably go even higher.  I missed the opportunity to sell them yesterday morning at 25% profit because I was busy with other things (taking kids to the doctor).

  15. IMGN getting some traction.  Buying another round of shares here.

  16. RAIN -

    Are you using IE?

  17. David / IE — Yes, IE 8. Does the TOS platform use IE?

  18.  msf65 – AAPL will be called away from you at an effective price of 310.88. I also hold AAPL with covered calls….you/we have locked in nice gains. No reason to roll now. Wait. If AAPL drops near-er to the end of the year, the premium in the call will be crushed….at that point it may be worth it to buy it back and go naked. But, at this point, i would consider sticking by your trade. None of the rolls look appealing to me with AAPL at these levels. Also, if we spike on earnings, i cant imagine it’ll spike much above 310….which is your effective sale price….    

  19. Rain -

    IE 8…oh man. Try it on Firefox or Chrome. That should fix the problem. IE is for dinosaurs. The software is crap.

  20. David / TOS — I think we may have a disconnect. I’m using the TOS desktop application, not the web based trading. But yes, I am a dinosaur ;-)

  21. Phil,
    You sure Matt or I didn’t write that post for you today.  This market makes no sense as you so eloquently pointed out.  Good post.

  22.  Good morning!  

    So many levels to watch but the fact that I have not been moved to remove the 2.5% line says it all – still cautious overall.  The lie the market tells you every morning is kind of like when you count down to Santa in December and every morning your kids get more and more excited and meanwhile you (like our Bankster friends) are sneaking around putting up decorations and buying presents all to maintain this hoax that a fat guy will break into your house on Christmas Eve, eat some cookies, drink some milk and drop off a ton of presents.  While you know it’s a hoax (oops, spoiler alert!), you still work very hard to maintain it and, by the time Christmas Eve rolls along – you almost kind of, sort of start to believe it yourself, don’t you?  

    Well, that’s what a prop-job rally is like.  They punch up the markets and every bank sends forth their most bullish analysts and they pay off all their media whores to spread the best possible stories about the economy and the Corporate media spin everything to the bright side and all invitations to bears are rescinded for the duration and, after a couple of weeks of this nonsense, the Banksters start to believe their own BS.  

    Be very careful here.  We could go up but, even if we do, we’re probably just setting up for an even bigger fall.  Only better earnings will change my mind.   Yes, I expected to be at 10,700 and even up to 11,200 AFTER earnings but we have a month before that happens and, now that expectations have been raised so much – it’s going to be hard to sustain the level we might have risen to naturally if the Banksters could have been a little more patient.  

    We should not be impatient with our own short positions.  We may not get our pullback until expirations week so short October plays will be very hard to hold onto.  If we don’t get a nice sell-off by Friday, I would suggest moving any short positions out to November.  Meanwhile, like yesterday, we watch and we wait:  

    • 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

    I know – 5 of 5 green.  Perhaps I am too bearish, perhaps we should be BUYBUYBUYing but tomorrow is the last day of the month so please humor me for one more day – thanks…

    QID Nov $13/15 bull call spread is $1 and you can sell Jan $13 puts for .77 so .23 on the $2 spread that’s starting off $1.50 in the money.

    TZA Nov $23/29 bull call spread is $2 and you can offset that with the sale of the Nov $22 puts at $1.30 so that’s net .70 on the $6 spread that’s starting out $3.32 in the money.  

  23. Yesterday someone was asking about the VZ play Phil had recommended.  I had that play also and just saw that my Jan 2012 $25 short calls were assigned today.

  24. Rain – Ah I see.

  25. Phil,
    Good morning.
    Reading your article from this morning, I want to protect $100k from a short term ( weeks) pullback.
    What is a quick, uncomplicated hedge, which will protect me for 10% decline on entire $100k.
    I don’t mind if I end up spending the money for the hedge should markets keep going up, as long as it’s not more than 1-2%?

  26. Hello Phil, Hello everyone!
    I saw in your post that you exited EWJ.  What is the next play on them. You have mentioned them on many occasions but I’m not sure exactly how to play this and how to interpret the currency markets for the play. thank you for your help.

  27. maya- Buy qid or calls

  28. Phil / 9:59 — Now that post seems like you didn’t have any tea this morning! Great xmas analogy. Did you notice they already started the count down to xmas on CNBC. I’m expecting a big santa rally!

  29.  Phil,
    Wanted to get your thoughts on this hedged short on NFLX:
    NFLX--Sell 2 weekly 170s, buy 1 Oct 175.  
    TOS tells me margin of ~$3500, net debit of ~1.20

  30. I know I shouldn’t be doing this, but I still will – buying Oct 01 QQQQ 49 puts and selling corresponding Sept 30 puts for a Friday fall (don’t think there will be a fall tomorrow) – net cost is 6 cents a contract; let’s see how that works out.

  31. rn – I like that one!

  32. Prakash
    VZ  I take it you were called away. Selling short calls you always have to do the math. I also hold the Jan 12 30 short caller VZ trading now at 32.48. The short caller now pays 4.87 So 30 + 4.87 = 34.87 – 32.48 = 2.39 which is still extrinsic value. You will normally not be called away if there is any extrinsic value left. if you down to .05 extr. you need to look out no matter what month you in.

  33. Got filled at 0.08… and now we wait.

  34.  GMCR/Rev – You never know with these SEC things but 20% is a lot to sell off on this news so best is to take advantage of the heightened volatility and sell puts into the initial excitement.  I like selling the Jan $26.67 puts for $1.90.  If you don’t REALLY want to own GMCR at net $24.77 then you shouldn’t even consider any play on them, right?  TOS says you collect $190 and have a net margin of $162 so a very nice return of 117%  for 3 months if you have that margin level and the worst case is you own it for another 20% below today’s price ($30.77).  

    Background/Exec – I ran my own 100-person company (Real Estate Data) but I’ve been a consultant of one sort or another for most of my life and my Father was a systems analyst and consultant so I’ve got 40 years experience looking over both government and private-enterprise operations from the inside.  

    AAPL/Samz – It does not feel good to take profits.  That’s why it’s so good to BE THE HOUSE – psychologically, most people are programmed to play until they lose.  That’s why setting conservative goals are so important – without attainable goals, you will always feel like you are failing, even when you are ahead, which is extremely counterproductive.  

    For new members, I often forget to mention our friend Dr. Brett (who wrote an article on poker and trading, as we were talking about it the other day).  I cannot say enough how important psychology is to learning to be a good trader and here are some links you can use:

    2010: Volume 1, Volume 2

    Archived years here

    Book: The Psychology of Trading

    PCLN/Rwv (you know you can change that name on your member link!)  - They are super-scary to short but, on the other hand, you can sell Nov $370 calls for $16.50, which is pretty crazy.  I really like doing a 4:5 backspread on those with the Jan $390s at $18 as that’s $7,200 for 4 Jan $390s and you collect $8,250 for the Nov $370s so if PCLN doesn’t pop $375, you should be in very good shape and, if they do, you can add one or two more longs and you have 2 months to roll.  

    Yen/Snow – Yes, it’s super-complex and I could write all week about the various relationships but I kind of concentrate on what affects the dollar and the US markets although the rest is certainly worth pointing out as well.  

    Curtain/Acobra – No, I don’t pull the levers.  I’m more like the dog that pulls the curtain away and reveals the man pulling the fraud.  

    TOS/Rain – Is the little gray bar all the way to the right? 

    Oil inventories – 500,000 barrel draw in oil, 3.5Mb draw in gasoline and 1.3Mb draw in gasoline – that’s nice and bullish for oil.  Worth playing the futures up over the $76 line and USO $33 calls at .90 are worth a toss as a momentum play for a run at $77.




  35. reza99
    Market is on the down site today I am looking out to fill my OCT DIA mattress putters 107p looking for 1.55 again now 1.20 but only slicing in!!!

  36.  Thanks Yodi…I hadn’t been paying attention to that play since it was in my set it and forget it account.  Yes, my stock was called away, so no big deal.  Still have the short puts @ $25.
     I’ll take this opportunity to move up in strike.

  37.  Not trying to pump it, but in a fairly flat market, solar is moving up on decent volume;
    SPWRA with a nice little flag pattern
    take a look…sector rotation?

  38. yodi,
    the VZ 2012 30 call isactually .23 times the current price of FTR at 8.16, which is 1.87. So these sold 30 calls are really $28.13 calls , and there is very little time premium is these babies

  39. TOS — I found a "reset to default" action on the chart that seems to have corrected the behavior. I’ll have to go back and add my studies and see where I break it.

  40. Gld/ seem overdone yet? What entries you like ?

  41. Market/Yodi: Hoping for a market leg down today too; looking to unload DIA quarterly 107Ps.

  42. Phil…ok feeling better today, so I’ll put up the buy/write play I made when I learned your strategy.  I joined in April, so this was one of my first attempts at your strategy.
    UNH    200 @ $33.09 net entry
    Sold April C/P for $1.14 net (bought back and resold them twice)
    Sold May C/P for $0.95 net
    Repeated in June for $1.00
    Then sold Sept $33 C/P for $3.19.
    Sept called away stock with net $6.28 in premiums collected.  It was kinda boring waiting for each month to roll by and then find the right strikes to sell to get some premium, but it worked.  My question though, on the last month, the stock went up over $34.00 and I would have had to pay to get the Call up to $35, so I just let it call me away and will look for another entry.  But had I wanted to keep it, what would be the best solution?  just find a strike, maybe further out, that would give me say $2 for upside in exchange for a $1.25 roll?  IS that a good play?

  43. Basically, if the government uses short-term debt, it exposes taxpayers to interest rate risk. If it uses long-term government debt, it exposes the bondholders to interest rate risk. QE is a special case of this general principle: When the Fed buys long-term government debt from the private market, it shifts interest rate risk from bondholders to taxpayers.
    US tax payers will have to bail out the Fed QE repurchases…
    That doesnt sound very good does it?

  44. Sorry it was a quote from Minneapolis Fed President Kocherlakota today’s speech

  45. Yen / Phil – sure, but what concerns me is the very common viewpoint that the China & Japan currency games are all about the dollar and us. It sounds like you’ve got a broader perspective, but in general we need to be more aware of the wider world, and especially with this problem.

  46. drumkeerin
    Thanks for bringing this up. Possible I am behind the time. Verizon Communications and Frontier Communications, in the back of my mind there is a relation ship but my argument is if I want to close the Jan12 30 caller I still have to pay 4.65, as the stock is trading for 32.54 if I wish to buy the stock I would have to pay the going rate. Shurely I would not get the stock for a 1.87 discount??? Please explain.

  47. Phil    Could you revisit your ADBE play.  I was busy when you put it on last week and cannot find it.  Thanks

  48. Any news on Shadowfax???

  49. Phil – for verticals such as TZA what do you think of selling a later month put at a lower strike price (ie JAN 19 vs. NOV22)? 

  50. Wilsons/ADBE
    From memory it was a January play
    sell ATM put (26)
    and use the money to buy an ITM call spread (22.50/27)
    Not certain about the strikes though, but same principle

  51.  rn273 – Not sure I follow your trade – if you expect the QQQQ to fall on friday would you not buy the puts and sell the Calls??

  52. Mr wil-l-l-lson – (sorry) ADBE trade: Sept 22, 9:29AM

  53.  yodi/drum…..Looking at my account, it shows that the deliverable for the $25 calls I had sold is:
    100 shares VZ and 24 shares of FTR

  54.  JRW/ All – new to the site so I am not sure how to trade on JRW’s IWM numbers. Any help would be appreciated. Thanks. novice

  55. novice – it is just a gamble; I am selling the puts expiring on thursday (Sept 30) and buying the puts expiring on friday (Oct 1). Since the expiries are just a day apart, the marginal difference is less. If QQQQ closes tomorrow above 49, then I would be in the Friday puts for 7 cents. Selling a call to fund the put would put you in a (theoretically) unlimited loss position; here, the loss is limited to 7 cents.

  56. Jodi, the old non standard 30  2012 call is no longer the regular option. the stardard 30 call is now 3.55 or so. as i said you have to multiply .23 times the current price of FTR ($1.80 or so) and your old VZ 30 call is really a $28.20 call option. So there is only a dime or so left in time decay on the now non-standard 30′s

  57. Good Morning!
    The dollar is taking it on the nose… The currency guys are blaming the most recent downward move on the wordage released from the FOMC. Anticipating the coming QE, the USD will continue its race to the basement. Yesterday, the Dollar index 55 day moving average crossed the 200 day moving average – this is significant.

  58. drumkeerin,
    But if you’re short the non-standard VZ 30 call, doesn’t the FTR work against you, since you’ll have to be the one to deliver it?  So, in that sense, it’s a 31.80 call option if you’re short.

  59. Mulally — I’m always impressed by that guy. He seems scarily honest (open), intellegent and truely trying to be the best CEO he can be. I’m not sure I’ve ever thought those sorts of things about ANY other CEO. John Chambers comes close, but he’s a bit slippery and isn’t completely open IMO.

  60. Gel- Dollar- I am not a currency trader but just wondering, with all the talk and fundamentals which tend to support the contention that the dollar will fall further, does it make sense to just sell the dollar index short? ((/DX on TOS)?

  61. rn – got it. Thanks. Interesting trade..

  62. This is an odd time for a stick. Europe closed down and they turn bullish here?

  63. Yeah, Buy Bots are just in time for lunch!
    Puts are on sales :)

  64.  AAPL/Msf – Well I strongly advocate getting out of AAPL stock with a 40% profit.  I cannot for the life of me understand what drives people to expect 50% gains in stocks when CLEARLY, if you look over the action of 9,000 stocks over 100 years – you’ll see that a stock gains 50% in a single year about once every 2 or 3 decades.  As I said above, it’s this "play until you lose" mentality that is most damaging to traders.  I would cash out at $288 and, if you really want to stay in AAPL long-term, buy the 2013 $310s for $56 and you still have your $290s as cover with 27 months to roll them up if AAPL keeps going higher and $232 on the side to buy more calls with.  You sell calls every quarter to pick up some cash and, when AAPL goes lower, you use 1/2 the caller money to pay to roll yourself down to lower strikes.  

    AAPL/Hanna – I think they may justify $330 on earnings but that’s a short at that point.  $270 is about where they get a little more interesting as a buy but not when we’re expecting a broad-market pullback and, as above, I think there are better things to do with $288 worth of cash.  

    Matt/Exec – It’s my job to keep everyone on track so I tend to get more bearish at the top of the range and more bullish at the bottom to remind people why we believe in our levels as it’s easy to get caught up in the excitement in either direction and forget our fundamentals.  

    VZ/Prakash – That’s interesting.  At least it was a good day for it as they dropped a bit.  They did run out of premium so I guess the assignment was cheap enough that they wanted in.  That’s an interesting concept though, if you want to buy  10M shares of VZ without having to pick them in the open market, you can buy 100,000 deep calls and then exercise them when the premium is gone.  Also note we are just ahead of ex-dividend date (10/6).  

    Hedge/Maya – I like the above QID hedge.  So many ways that Nas components can miss right now with PCLN, NFLX, AAPL, BIDU, AMZN, FSLR etc. at stretched valuations coming into earnings.   The Nas is up 15% in a month at 2,415 (now 2,371) and that usually doesn’t end too well although they did run from 2,100 (same base) to 2,535 in the Spring (but then they gave it all back in two weeks).  In 2009, the Nas ran from 1,300 (ignoring spikes) to 2,300 then pulled back EXACTLY 20% of that run to the 2,100 base so we can assume that 2,600 (100% up from 1,300) would be a very big resistance point and 20% of a 1,300-point run takes us back 260 to 2,340, which is where we are now so many, many reasons to feel that this level will be retested and revisited in the future, even if there is a tremendous rally.  

    The QID hedge is .23 for a $2 spread so 30 contracts pays $6,000 and costs you net $690 to protect with plus about $6K in margin on the Jan $13 puts.  If QID falls more than 10% (Nas up 5%), you face assignment and Nas up 10% (2,607) means these puts will be about $1.50 in the money for $4,500 lost.  If you stand to gain at least $9,000 if the Nas rises 20% on your long side, then that’s about the right sized hedge.  You don’t want to look to balance out all of the possible losses, otherwise you end up just betting against yourself.  The goal of a hedge should be to MITIGATE the damages.  In the case of this hedge – UNLESS the Nas rises 10% and holds it through Jan expirations, this hedge costs you less than $4,500.  If you have $100K of buy/writes that pay 20% in a flat to up market – then you have $20K coming to you and the $4,500 is a fair price to guard against a decline.  

    EWJ/Z4  - they are kind of rangey from $9.75 to $10, which is not much fun unless you like 2.5% gains on stock.  They were good for .50 on a lower range ($9.30-$9.80) over the summer but now they are attempting to consolidate in the upper end of the range and, along with everything else, will either breakout of fail very soon.  

    Tea/Rain – You are right, all I had was a damned yogurt this morning!  

    NFLX/Jg – Well we did the naked sale of $165 calls so sure, I like selling whatever works on them.  This one I put my foot down on last week as a card-carrying member of the value police.  

    QQQQ/RN – Good plan, tomorrow afternoon is a wild-card but better than 50/50 we hold up through EOD. 

    Solar/Ben – SPWRA is still a huge bargain and so is WFR but much more than our entries.  TSL is near ATH so no way to me and the others aren’t as cheap or as good as those two, nor are the options as liquid to sell. 

    UNH/Hoss – Glad you are better today.  I gave up on store juicer and switched to using the cuisinart, which does a great job on frozen fruit and then you can toss in bananas and yogurt and its a good, healthy thing you can do for yourself to consume mass quantities of fruits.  On the stock, you sold the $33s for $1(ish) and the stock hit $34 so all you need to do is roll it to the net month or longer.  You don’t HAVE to sell every month, of course but, on the other hand, you can see what a powerful money-maker consistently selling can be.  The current $33 puts are $2 in the money and trading at $2.10 but those can be rolled to the Jan $35s even so you pick up $1 in strike, maintain good protection and keep the $1 he gave you.   Meanwhile, you can continue to sell Oct puts – there’s no law that they have to match and you can pick up .84 for the Oct $33 puts vs. just $1.55 for the Jan $33 puts, which makes no sense as you can sell $33s 4 times between now and Jan.  I don’t like taking money out of pocket to pay a caller so you can have less protection – there are not too many stocks I want THAT badly.  

    Wheee, oil hitting goal already and plowed right through $77 for a massive gain on the futures so $76.95 is now the stop (.20 trailing).  The USO $33s are $1.15 already so also effectively done with a .25 gain so watch that $33.50 line on USO (.20 trailing) as well

    Wheee – $77.30!  

  65. drumkeerin
    Thanks for putting light on the matter. I had a long call with TOS and it was adviced to close this option and switch to the regular option play again. The matter is very missleading to me. We have been switched from a regular to an irregular option play and I think this was the reason why Prakas was called away.

  66. TZA- Phil- on the above play are you looking at that as a hedge or a play on a RUT pullback sometime "soon"?

  67. Phil, think you were looking at selling the Nov $33 puts for $0.84…but I see your point, thank you.
    And I gave up on the juicer too, switched to a handmixer and make smoothies everyday.  I use whey protein instead of yogurt b/c of allergies, but it still gets me TONS of fruit.  My bloodwork was awesome, so I’m in great shape according to my oncologist. 
    Cancer still in remission…so YAY!  Now back to work…..

  68. Wow, Schwab just went off-line !!

  69. JRW – played your line for a nice win this am.  drew the rising trend from yesterday through this morning on 3 min IWM chart.  Then bought TNA @ 11:00 when IWM dipped close to trendline with tight stop just below line.  Sold @ 67.85(didn’t get greedy and hold out for 67.87).
    last push up hasn’t driven the stoch to new high, so sitting out now on long side. 

  70. hoss18
    Great News !

  71. novice,

    You can go back through the archives; e-mail admin at PSW for the easy way to do that. Right now we are at my 67.88 line so be prepared to go short (but TZA) if they can’t punch it through; if they do, AND it’s on volume, we may get a short squeeze up (but TNA). Watch the 8EMA on the IWM 3 min chart for conformation.

  72. ADBE can’t get up ?

  73. pstas / dollar index
    This index is calculated with a lot of Euro domination in the basket that is used, so if the Euro is showing strength at the moment, then the index is skewed further against the dollar. I do not believe the Euro will stay strong for too much longer, however. The economic news in the Eurozone is definitely bordering on weakness looking forward. The problem with the Index is that it is a relative value, vis a vis the currency basket.  As the basket of currencies changes value, this will have an effect on the dollar index. I see a lot of weakness going forward in the USD, and this will be exasperated if we get definitive action from the Fed identifying QE  ( I think it is coming before year end ) So… my dollar plays are targeted toward the FX market, where the dollar is paired with a strong currency. ( better odds for success ).

  74. Interesting study on what the mkt. does under Dems. and Repubs.

    Ned Davis is a SEC registered research firm that gives advice to institutional firms, this is the result of their research and from an article published in the Providence journal.  For those of you who feel that Republican policies bring us prosperity and profits and that Democratic policies favor the minorities and are anti business, here are the indisputable facts according to historical data
         Lets look at market performance from 1901 to Sept 15, 2010 under different permutations of political power
    1.  When the Dems controlled the white house and repubs controlled congress the Dow Jones averaged 9.6% return
    2 If Dems controlled both congress and the White house the annual advance  was 7%
    3. If power was split between a Repub president and a Democratic congress the gain was 4.3%
    4 If Republicans controlled both the white house and the congress the result was an anemic 1.6% gain

  75. hoss / congratulations

    I got in a little earlier ($46.46) and still holding, but I have 3 sell orders ready to go !!

  76. Gel- /DX- thanks for the explanation. Makes sense. If one were inclined to bet on a longer term dollar decline- on a trade for a novice- any suggestions- something simple to follow and nor requiring a  lot of hand holding?

  77. TBT flying; "they" may just push us through, as everyone not a TBTF Bank is expecting a pull-back !!

  78. hoss/Phil- what is the point of adding whey or yogurt to your fruit?

  79. Protein, so the energy sticks a little longer.  Fruits are really high in sugar, so if you just eat them, you can crash pretty hard.  I know I’ve done it a few times…lol…

  80. dclark41,
    This is your post yesterday at 9:38pm,
    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."
    I have the same trade, we cost $1.21(5.2-2.5-1.46) to make $4(the spread) if you close the trade as the price you listed, you will get $1.73(6.6-3.7-1.17).  That’s 0.52 profit. 0.52/1.21 is 43%.  Where is up 70%? Also, we are trying to make $4, should we do 0.52/4 is 13%? 
    Phil, Where is my mistake?  Thanks.

  81.  JR- What time was your first trade of the day? I got nailed through a few stops trying to catch the trends prior to 10:30. Things seem to be settling down a bit now, so I hope to catch a good wave. 

  82. What the hell was that on CNBC? Was that… nah, can’t be… wait!.. It was!… Intellegent investment advice! There goes the last bastion of faith I had in CNBC!

  83. 1/3 out ot TNA at $47.96

  84. drcraig


  85. Wise man. 

  86. All out ; last at $47.74

    Will wait to short, this may be a head-fake !!

  87. Phil / juicing

    Does a bloody mary count 8-)

  88. JRW / mary — as long as you eat the celery!

  89. Phil,
    Based on your commentary I suppose we are still holding fast to our SDS March hedge? I am down now 150%…
    The BIDU play, has moved drastically against us… hold still or sell more calls to DD?

  90. Pstas / Dollar
    Other than the FX market, I do mot see a "pure" play on the weakness projected in the Dollar.  Since so many of our commodities are priced in dollars ( gold, oil, etc ) , then a long position in some of these would reflect the dollar weakness… but again they are not pure plays, because the prices fluctuate from other influences as well.

  91. Phil,
    I am interested in your insight how what to do with a runner. I own MSB, have taken profits, still own some and have puts expiring worthless. I like the yield and not mind owning it longer term.

  92. JR/bloody mary – reminds me when I was working from a site in upstate NY last year; a friend gave me a box of cliff’s protein bars and a bottle of Patron – protein and calories, balanced diet.

  93. Phil/FDX - I’m holding an Apr 11 $75 call and a $75 short put, net entry $7.50. You had suggested selling  the Apr $90 call after it reaches $7 to lock in a free spread. The spread is up 30% but the $90 call is still only $5.30. Am I being too greedy waiting around for the call to hit $7 or am I just impatient and you still expect it to get there? I’m worried if I wait until after the October pullback that FDX will tank along with the rest of the market and then I’ll have to wait a couple months for another shot at selling a call, hoping vega outbattles theta.

  94. FDX original recommendation:
    "FDX is good now at $82.  Jan $75 puts can be sold for $3.75, which is a fantastic net entry at $71.25 (their spike low in July was $69.68).  The 50 dma is $81, if that doesn’t hold you can cover using that line for on/off.  Riskier way to go is Apr $75 calls ar $12.60, selling $75 puts for $5.50, which is net $7.10 with no cover and the goal would be to wait to get $7 for the $90s (now $4.80) to make a free $15 spread or take no less than $6 for the $85s (now $7) to make it no worse than $76.10 on an assignment of 1x." 
    Just hoping to get your updated comments on the FDX trade while we’re still at the market summit.

  95. amatta
    BIDU play I am more concerned about loosing money on the 95 long putter than on the 105 short caller. Buying options is for suckers!!!!

  96. They are fighting for IWM 67.75 like if it was the bridge of Cambrai

  97. HERO living up to it’s name today!

  98. CHK is right behind HERO.  UNG needs to put its pants back on and get going.

  99. I am betting on QE-2, as I do not see an alternative for the Fed.  I expect  they will purchase a large piece of the assets held by Phoney and Fraudie, as the mortgage problem in residentual real estate is still a monster. The taxpayers will be forced to digest this disgusting sandwich, one way or another. This action is inflationary, so whether you pay taxes or not – everybody pays!

  100. rainman – a close relative of mine worked for Alan Mulally when he was at Boeing, said he was a genuinely bright and nice person. She was stunned by how he was not imperious like other CEOs, he doesn’t ‘talk down to the little people’, a great leadership quality that builds loyalty.

  101. Pharm… not just yet for UNG… it has a "gas" problem.

  102. gel – if I understand Hendry correctly in the interview that Phil linked, USDJPY will go down to the 60s first, then rocket to the 120s.  How would a person play this combo long-term in an IRA?  Thx.

  103.   Shify/Lionel – Not good at all!  I almost used this chart in today’s post but because it was from April and discussing the year going forward, the tenses were too confusing (for the huddled masses, not for you fine people on the inside!) but it illustrates your point very well:  

    Wide World/Snow – Never underestimate America’s ability to completely ignore the rest of the World.   8-)

    Wow, is it rally time already?  Oil popped $77.50 so that’s now the stop for insane daily gains on the futures and even USO….  

    ADBE/Willsons – They had a nice dip too so you can sell puts for good money like the Apr $24 puts for $1.75, which is about net $3 in margin.  Upside, the spreads aren’t so hot but I like spending $6 on the 2012 $22.50s and just waiting for the stock to come back and turn it into a cheap vertical.  If they trade lower, then you can sell puts and turn it into an artificial buy/write.  

    Shadow/Yodi – Nope, I hope he isn’t in jail or something.  Sounds like he’s really not getting along with authorities out there.  

    Later/Lower/Brooklyn – Perfectly valid although keep in mind that if that put is there now, then the higher, shorter-term put you take now can always be rolled to it later.    On TZA, if I sell the Nov $22 puts for $1.40, I am already looking at the Jan $19 puts ($1.50) as my roll-out so I keep an eye on the .10 (credit) roll relationship and if it gets to a .25 debit, then I begin to worry that I should make the roll while I still can (or look for alternates).  $19 is 20% down for TZA and the 2012 $15 puts (another 20%) are $3.60 so I have do a 1/2x roll there to look forward to and then, if TZA keeps going down, I imagine they will create 2013 $10 puts and I can roll down to those and by that time I think I’d really enjoy owning TZA at net $8.60.   

    Dollar Gel – I am seeing A LOT of money lining up on the short side of the Dollar trade.  I’m very concerned that BOJ will do something to squeeze the bears and THEN I think it’s a better entry.  

    Stick/Rain – The EU were the only retailers participating.  Our volume dove since they shut down (just 67M on the Dow at 12:45) so the Bots come out to play.  FTSE was down the least (-0.16%) and CAC down the most (-0.67%) and they all closed at the day’s low.  

    TZA/Pstas – I think this rally dies between here and 10/15 but maybe tomorrow afternoon or Friday so my worry indicator is on high through the weekend, at least.  If we don’t die Monday, I will develop a sudden interest in upside plays until we begin to fade the 7.5% lines

    Great news Hoss – congrats! 

    Archives/JRW, Novice – What archives are those?  Did you ever make a page with links on it?  If not, we should put one up.  If anyone has a collection of JRW strategy links – it would be appreciated.  Thanks.

    GMCR coming back already!

    Yogurt/Nicha – Protein/calcium and whatever little bugs yogurt has in it that are supposed to be good for you but also – it just makes it taste better.  I take a cup of yogurt and frozen strawberries, mangos, pineapple, berries etc. and toss them in the blender with a banana and it comes out like ice-cream and the kids love it.  Probably a grand total of 150 calories per cup and super-healthy.   

    And what Hoss said. 

    HPQ/Bob – I’m seeing the same math you do, 43%.  I wasn’t checking the math, just commenting on 70% but you need to look at the 2 sides independently as the sold $37 puts are almost a sure thing and can be ignored which means you have (hopefully) a net $1.21 cost and the chance right now to cash the vertical for $2.90 (up 140%) with all the cash off the table and a $1.69 profit plus the $1.17 obligation that will hopefully go away but, again and again I will say this – if you REALLY want to own HPQ at net $35.31 (the strike of the put less the profit you take off the table) then you can forget about this play and move on as the worst thing that can happen is you get something you REALLY want very cheap.  

    Think of it this way.  HPQ is at $42.50.  If someone says to me "would you like to buy it for $35.31" I say yes, right?  Now, let’s say, "would you be willing  to pay me $5 to buy it for $35.31 today" – still yes!  So now, all we are doing between me paying $5 to get a $7 discount and me collecting $1.17 to get a $7 discount is haggling over time and price.  

    Intelligent advice/Rain – Damn I missed it!  

    Bloody Mary/JRW – Oh absolutely!  That counts as fruit AND vegetable because we can’t figure out which one a tomato is…

    SDS/Amatta – Which one.  Down means probably a good time to adjust.  BIDU is a Nov put and still $5.25 for the $95 puts so I’m not seeing the "drastic" angle but I do like the roll-up to the $100 puts for $2 and the $105 puts for $2 more if possible. 

    Dollar/Gel – UUP bottomed out at $22 last fall and still $22.80 so a bit more room to fall if you like that bet.   UDN is the upside version (ultra-bear) and they topped out at $28.87, now $27.10.  

    MSB/Randers – That’s a good one.  I just worry about changing tax regs hurting the dividend companies but MSB is solid and makes a nice little profit so no worries other than the fact that they doubled.  You can sell the March $35 calls for $6 which gives you almost 20% downside protection and, if they fall a lot further you can sell some puts like the March $25 puts (now $1) for maybe another $2 or $3.  That keeps you in the stock but protects you well (don’t forget that’s just a 6-month collection), puts a little money in your pocket and worst thing they can do to the upside is call you away for net $41.

    FDX/Jvest – It’s a little greedy but they are just getting natural rejection off $85 so far.  I really expected them to test $86 at least but now the market is freaking us out so just don’t let it get away from you to the downside.  


  104. Phil/HPQ,  thanks, something to learn everyday.

  105. JR
    I plugged TZA into strike pegger and it’s showing a Bias of 16.21.  Is that the maximum pain level that you referred to that the price typically migrates to around expiration?

  106. Phil- There you go again with the font thing!

  107. Phil/JRW,
    I don’t have specific links, but I have a word doc that I’ve been keeping with comments from both of you over the last 3-4 months. It has a table of contents and the dates when each comment was posted. From the dates you could assemble the links. If you want it, I can send it off.

  108.  FDX/Jvest – Since you chose the aggressive stance, consider this.  You can sell the Apr $85 calls for $7.50, which is .50 over goal and $2.30 more than the $90s.  The roll down to the Apr $70 calls is $3.70 so +$1.40 to improve the same $15 spread by $5 in position.   You don’t need to do the roll down unless FDX moves lower and the roll should get cheaper anyway.  If you stick with the $10 spread, you paid net $0 for it and that’s not a bad return anyway.  The bottom line is, FDX goes up and you paid $0 for $10.  If FDX goes down, you can risk less than $3 to make $5 more.  

    Suckers/Yodi – Yeah but sometimes you just gotta play the old roulette wheel. 

    HERO/Gel – About time they got going!  Must be a hurricane thing, maybe enough to punch UNG through $4 finally. 

    Font/Jthom – That is so strange as it totally doesn’t happen in Chrome.  I even have Safari open today as I’m checking them too.   My site looks gorgeous in Safari!

  109. Phil--Tx for the explanation on the HPQ play--I am still trying to understand how to trade these  positions--I sold the vertical and am holding the short  37 puts--Is this right?

  110. Phil / Advice — I was giving CNBC about as much attention I aways do (background noise) and caught the word "skew". I turned to look and there was a woman on there talking about option skew and "selling insurance". I almost had to pinch myself.  Then the anchor said "I need to learn some more options terminology",  and I realized I wasn’t dreaming…

  111. Mr. M / JPY
    Betting $2 Bil by Hendry on the fall of Asia, I think is reckless at the least, and misinformed  for sure. China dominates this entire Asian market, so he is betting the farm against China. The China success story is for real, and will last for a very long time, I’m sure. Their government is well preparred to manage the adjustments that will be needed going forward. They have engaged some of the best minds on the face of the earth to give guidance, and they are not in any way influenced by political forces, unlike our situation here in the US. Most all of the surrounding Asian countries are showing growth that is envious of most throughout the world… even Indonesia – their index is up over 300% for the year. Japan is a different story, and the concerns there are unique to Japan – not all of Asia.
    Playing the Japanese currency at the moment is like playing Japanese roulette with a japanese firing squad. – all risk. The currency keeps rising, negatively impacting their export markets, and frankly I do not believe the MOF has any idea as to how to intervene. The BOJ will surely be making more moves and the cross currency play against the Dollar will become VERY volitile – To me this is just gambling, and I would not suggest it even for an IRA – the hedging tools are not available in an IRA
    Phil has a very good understanding of the Eurozone issues, and I would rather play the short ETF on the Euro, as this one has some serious long term illneses.

  112. exec

    I’ve got $26.06 on TZA $64.92 on IWM



  113. Newsflash- Plosser just came out and said "the more we blow up the FED balance sheet the harder it will be to unwind"- sounds like Nobel Prize material to me!

  114. Phil yodi
    Passed the test but have to repeat on Nov 2. My tradeing account after hours of reloading is working again but I am locked out of email, seems the bad guys aren’t done searching there. It also seems that when I couldn’t make the app. the Tuesday before I didn’t reschedule. I have to bring all my prescription bottles next time so they can count pills, never knew you could get high or make money on High blood preasure or nerve blocking pills. Of course it is not mandatory (not), but was funny watching them loose their temper with me! No answer on my tax papers being returned. Seems their biggest fear is job security with no crime to solve. FREEDOM OF WHAT TODAY???????????????????

  115.  Natural Gas – The sector seems to be on the move today.  I went out of the UNG hurricane hedge about 10 days ago, but kept CHK, which is moving up today.  I’m also watching RRC.  Anyone else going into RRC or natural gas today?

  116. The Treasury sells $29B in seven-year notes at 1.89%  (.pdf). Bid-to-cover ratio of 3.04, vs. a recent 2.91; indirect bidders take 50.3%, same as recent average of 50.3%. Direct bidders take 13.4%, vs. a recent 9.7%. Treasurys trim losses; the 30-year yield now +0.01 to 3.67%; 10-year +0.01 to 2.48%.

  117. JR/Pain
    Are you using this gizmo?  What are your settings?

  118. Another laughing point is they still can’t believe I passed the drug test in Sept 08. Not takeing drugs is beyond their scope. I refuse to another without a court order, the judge doesn’t agree I guess, all charges dropped.

  119. Judge agrees with me I guess!

  120.  Phil
    what do you think about GOOG backspread?

  121. The above chart clearly demonstrates that there really is no recovery, just increased federal spending and debt.
    (from Mish)

  122. Gel/ Hugh Hendry
    He is betting on a default of 10Y Japanese Corporate Bonds.
    He says the cost of insuring these bonds is very small compare to the potential gain if they default.
    That is because who will bet that a Japanese corporation could default on a 1% coupon bond?
    His idea is that Yen strength will slowly kill Japan manufacturing sector.
    I think it is a cleverly design bet with lots of leverage. It may have costed him $4m to bet $2bn and he will recoup half of that with the publicity and the new money flowing to his fund.
    Now do I believe in this bet? If Hendry tells us which basket of corporations he had choosen I would have an opinion.

  123. So, if tomorrow is a POMO day AND the last day of the quarter AND there’s lots of potential bad news to send the markets rocketing higher, wouldn’t it be worth a bet to hold TZA overnight (tonight), then switch into TNA before the rocket takes off at 9:48 am, then get back into TZA overnight for the real fun to begin on Friday? Or maybe just skip the TZA tonight and start in the morning?

  124. Hello all …. shenanigans continue unabated …  I am fed up !
    JRW … my Schwab platform never went down FWIW ….
    NFLX, just sold 1 $175 call for 3.80
    Energy rallying … EOG finally moving up !
    Mixed messages in the papers … yesterday an article about sales of music downloads being NEGATIVE year to date.
    Not good for lots of folks, including AAPL and AMZN.
    Icahn giving up it seems on big Las Vegas unfinished casino he just bought … liquidating the furniture.
    NY Times owned free paper Metro NY has a 2 page centerfold ad:  JUDGEMENT DAY is coming.  May 21, 2011, the end of the world.  
    I would really, really, really enjoy a 3-5% pullback in the market, if not more.
    Just thought you would want to know …

  125. Shadowfax,
    Well nice to hear you back. I feel the Gestapo coming back in the US. My hair stands up on this type of treatment, Happened to me once arriving at Miami airport treated me like a dog and wanting to give me an other name. I told them they should read the name in my passport if they could read. After two hours they gave up and said it was a missunderstanding.
    The same story with gel, truely I aswell would leave the place.

  126. NFLX – note to fellow shorts, this alert just came into my Fidelity account "Netflix continues to mint new life highs on a near-daily basis. Today, a new potential bullish pattern has developed that could see additional gains if it triggers. The pattern in question is a potential bullish flag that would become active only on a move above $166. Upside potential for the pattern, if it triggers and completes, is to the $185 area."

  127. Cap/ Pullback
    It is pretty sure we will have one soon, but March quarter is a great example of for how long they can keep the masquarade on. We tumbled at the end of April.
    So They can keep us going until end of October. This is why I am a bit scared of putting too many shorts at the moment.
    Furthermore we have elections early November. So it may be brutal and short. Hard to play :)

  128. Phil/GLD, maybe you missed my earlier post.  Would you short it here? Or is the QE2 talk scaring you.  I am getting bullish on QE2.  Try to write something longer on why soon.

  129. mrmocha- I understand Mongolian deman is quite high for NFLX and that they plan to open a major outlet in bangladesh!

  130.  PHIL—I have AAPL jan11 200 calls 2/3 covered with jan11 270 and 280 calls. My net at 3:2 ratio is 46.81 although it is even less as I have been selling against it for some time. So at 46.81 I’m up to roughly to 85% of potential profit from the spread. I was planning on holding the long calls and rolling up the shorts until expiration. But reading your advice to a previous AAPLette, I’m thinking I should take the profits here. I do have other AAPL positions but a higher strikes and not as deep. I thought about staying with the 270 and 280 short calls and balancing them with some long APR11 310′s. What do you think? 

  131. At the open: Dow -0.24% to 10832. S&P -0.23% to 1145. Nasdaq -0.41% to 2370.
    Treasurys: 30-year -0.05%. 10-yr -0.09%. 5-yr -0.07%.
    Commodities: Crude -0.26% to $75.98. Gold +0.14% to $1310.10.
    Currencies: Euro +0.04% vs. dollar. Yen +0.31%. Pound -0.02%.

    10:00 AM On the hour: Dow -0.33%. 10-yr -0.06%. Euro +0.09% vs. dollar. Crude -0.32% to $75.94. Gold -0.05% to $1307.70.

    11:00 AM On the hour: Dow -0.42%. 10-yr -0.09%. Euro +0.11% vs. dollar. Crude -0.2% to $76.03. Gold +0.17% to $1310.50.

    12:00 PM On the hour: Dow -0.03%. 10-yr -0.19%. Euro +0.37% vs. dollar. Crude +1.67% to $77.45. Gold +0.31% to $1312.30.

    01:00 PM On the hour: Dow -0.1%. 10-yr -0.1%. Euro +0.4% vs. dollar. Crude +1.94% to $77.66. Gold +0.16% to $1310.40.

    02:00 PM On the hour: Dow +0.05%. 10-yr -0.22%. Euro +0.31% vs. dollar. Crude +2.35% to $77.97. Gold +0.24% to $1311.40.

    MBA Mortgage Applications: -0.8% vs. -1.4% last week. Thirty-year fixed mortgage rate decreased to 4.38% from 4.44%.

    EIA Petroleum Inventories: Crude -0.5M vs. consensus of -0.3M. Gasoline -3.5M vs. consensus of +0.6M. Distillates -1.3M vs. consensus of +0.2M. Crude futures erase losses, -0.01% to $76.13.

    The Treasury sells $29B in seven-year notes at 1.89% (.pdf). Bid-to-cover ratio of 3.04, vs. a recent 2.91; indirect bidders take 50.3%, same as recent average of 50.3%. Direct bidders take 13.4%, vs. a recent 9.7%. Treasurys trim losses; the 30-year yield now +0.01 to 3.67%; 10-year +0.01 to 2.48%.

    Oh yeah, this must be why we’re rallying todayU.S. CEOs grew less optimistic in Q3, with The Business Roundtable’s economic outlook index falling to 86 from 94.6 in Q2 – the first decrease since the beginning of 2009. 66% of respondents expect sales will grow over the next six months, down from 79%. Only 31% expect to add to payrolls, down 8 points. CEOs reduced their 2010 GDP growth forecast to 1.9% from 2.7% previously.

    And we knew this was BS: Yes, Case-Shiller’s 20-city home price index rose 0.6% in July, but analysts say the report – based on a three-month average – still incorporates two months of tax incentives, which means we won’t get a true look at post-stimulus housing demand until the end of November.

    There’s really nobody out there in the mortgage market other than Fannie (FNMA.OB) and Freddie (FMCC.OB), and their loan limits as well as tight underwriting are pricing many potential buyers out of the housing market, Diana Olick writes.

    Bankruptcy filings haven’t kept close to the pace of consumer debt defaults – which could be due to a shadow consumer bankruptcy system, made up of alternative service providers and schemes that may be sending ripples through credit pricing.

    No, wait, THIS is why we’re rallyingS&P updates its look at the creditworthiness of G-20 nations, saying growth prospects for all are "lackluster" due to financial dislocation and continuing deleveraging, especially by households. The firm improved its deficit forecast for the U.K. and Australia; Argentina benefits from favorable trade terms; and growth in the U.S. and Canada will be lower.

    Here’s why the "recovery" feels so much like a depression, according to Mish Shedlock: When you take away government spending from GDP, it’s clear that there’s no real recovery at all, just more government spending and debt.

    The European Commission’s Economic Sentiment Index rose again in September, to 103.2 from 102.3 in August, defying economists’ expectations. The improvement was led by a jump in industrial confidence. Other business components also gained confidence, but consumers grew less optimistic about the economic outlook.

    The euro’s headed as high as $1.40 thanks to "massive dollar shorts," Deutsche Bank (DB) analyst Alan Ruskin says. Europe’s currency is something of a safety valve, but make mo mistake, the market’s centered on the dollar: "That’s the primary focus: dollar funding, dollar weakness and who might benefit on the other side."

    Anti-austerity protests erupt across Europe, including Spain’s first nationwide strike in eight years and tens of thousands marching in Belgium. An Irish cement truck driver slams into the Irish parliament, protesting the Anglo Irish Bank bailout which now includes a fresh €5B, and becomes a folk hero.

    Minneapolis Fed President Narayana Kocherlakota: Fed bond purchases won’t have a huge impact on the economy, in part due to $1T in excess reserves at banks. The risk of higher inflation isn’t heightened by banks holding more excess reserves than they already do. The recovery is "distinctly modest," but there’s nothing good about jobs: "The lack of vitality in the U.S. labor market can only be termed disturbing."

    Philadelphia Fed President Charles Plosser: Opposed to a new round of Fed bond buys. "Monetary policy is not a magic elixir" that can fix everything; it’s not designed to fine-tune employment or fix structural mismatches. Sees no sustained deflation; growth is slower but will resume speed.

    Boston Fed President Eric Rosengren: Doesn’t quite make an aligned trio with fellow Fedspeakers, as he favors aggressive policy and urges colleagues to be open to QE. "We do have options" despite pushing rates to the zero bound. Remember the goal of asset purchases: stimulating the economy by reducing long-term rates to where they would be, if the fed funds rate could be cut further. (Earlier: Kocherlakota, Plosser)

    Look for states to suffer a collapse similar to the banking industry implosion of 2008 as crippling deficits come back to haunt them, outspoken analyst Meredith Whitney said Tuesday (video). Whitney, famous for calling the financial sector crisis, warned banks aren’t out of the woods yet, predicting a sharp drop in housing prices and shrinking trading revenues will decimate Q4 earnings.

    Bailing on China?  Goldman Sachs (GS) reportedly looks to garner up to $2.05B by selling part of its stake in Industrial & Commercial Bank of China – which would be the second time GS has cut back on its (hugely profitable) investment. Its remaining piece is still large, at $8B, and the move comes ahead of possible dilution from new issuance at ICBC.

    Once this is done with, C may finally take offTreasury says it will sell part of its $2.2B in Citigroup (C) trust preferred securities – all at a net gain for taxpayers, since the agency got the securities for agreeing to share potential losses on a pool of assets, but no payment was made and there’s no further obligation to pay.

    This week’s nine scheduled IPOs – in what may be the busiest week for IPOs since late 2007 – includes Liberty Mutual, potentially this year’s largest. However, Barron’s recently reported that Liberty’s IPO was getting a "rocky reception" and that the company might be forced to cut its offer price from its expected $18-$20/share.

    Already uncertain Liberty Mutual Group shelves its plans for 2010′s largest IPO due to poor conditions, but says it has "more than adequate capital" to conduct business.

     M&A staged a comeback in Q3, with the busiest quarter in two years led by moves like BHP Billiton’s (BHP) pursuit of Potash (POT) and Intel’s (INTC) acquisition of McAfee (MFE). Record low borrowing costs, and a cumulative $3T in company coffers helped spur $563B of announced transactions. 

    Down 21% revenues and down 55% in profits!  Oh THIS must be why we’re rallying:  Nintendo (NTDOY.PK) shaves its full-year outlook, predicting sales of ¥1.1T, down from ¥1.4T, and net profit of ¥90B down from a previous estimate of ¥200B. Nintendo said the change reflects stronger-than-expected yen appreciation and its current sales performance. (PR)

    Three lunchtime reads:
    1) Don’t let talk of a bubble scare you out of bonds
    2) For economy to rise, dollar must fall
    3) Three stock bargains based on sales

  132. yodi
    I was hauled out of line at Nashville TN airport, searched for bombs, they didn’t like my tone!

  133. Phil and all. I am not at home so I do not have the bill number. Their is a pending bill before committee that would impose a 1% fee on all transactions with a financial institution. deposits, withdrawals, direct deposits of your paycheck. This is so we do add any new taxes to people making less than $250,000 per year- only in AMERICA!

  134. Lionel… Thanks for the clarification  re the Hendry position. It appears he is betting against the BOJ being able to change course… after 10 years of failure… maybe a good bet, but still risky

  135. shadowfax… glad you prevailed… I was almost ready to call my Sherrif friend in  Cody, and ask for another favor!

  136. HR4646 for all who are interested

  137. Gel/
    I am not sure if he cares that much about Japan as a country.
    He just said in his interview that the credit spread for commercial paper in Japan was exceptionnally low due to a low interest rate environment. His point is that credit risk remains irrelevant of sovereign interest yield levels.
    Fair enough.
    I am sure he went to Japan and picked a bunch of highly leveraged corporations who are susceptible to default on their bonds. But his bet looks more like a publicity stunt to me than anything else.
    To his credit he surely knows something about the Japanese CDS market that I dont.
    But since I dont bet on CDS…I am not interested in his bet!

  138. Well, here we are; the trend line meets the Big R. This should give direction for the rest of the day !! 

  139. First Dennis Kneal is an idiot
    Just a few thoughts i use to keep myself grounded, this is a Fed (weak dollar) market and not much else….I feel they need to get as many funds (bag holders) on the wrong side of the trade before they dump…

    Hedge funds, Bank PT desks, money market outflows of over $1t, commodity prices, dead housing market, currency wars, sovereign debt, austerity, insane PE’s, trade wars, gold/bonds, politics, taxes, Cramer saying markets are unbreakable and price targets must go higher….etc etc…all negatives for the markets

    but dont let the obvious negatives dissuade you from investing in the markets for more than 15 minutes, we can always fall back on the Fed premise of QE2….its a disaster in the making..IMHO

    Bullish sentiment rose among financial advisers surveyed in the weekly Investors’ Intelligence poll from last Friday.
    The percentage of financial advisers who are bullish on the market rose to 41.4% from 36.7%, while bearish sentiment fell to 29.3% from 31.1%.
    The percentage of financial advisers expecting a market correction fell to 29.3%0 from 32.2%.
    In the week ended Tuesday, 78.41% of stocks listed on the New York Stock Exchange were above their 10-week moving averages.
    Also, 67.43% of NYSE stocks were above their 30-week averages. ….

    With that being said I think the dollar can weaken to 78.30 before a real bounce takes place, and an all in push to 11k, my only guide to possible market strength is weakness in the dollar and frankly nothing else

  140. Hey all,
    Too bad I didn’t get this finished yesterday, but my longterm rating is done on Green Mountain Coffee (GMCR). The stock is down 15% today, but I think it has a lot more downside to go, another 20% or more. Current rating is Sell with a price target at $22.
    Good Investing!

  141. gel1
    Thanks for the offer but the rest of WY hates anything Teton County that includes Cody, Jackson gets 100 times the park traffic and all the rich people live there!

  142. Lionel – or it could simply be the 3pm sell program bot !  LOL

  143. Portugal austerity news ??

  144. Doc/Aug – That would be great, I can turn it into a post.  Thanks!

    HPQ/Savi – Very right as long as you don’t consider owning HPQ at net $36ish to be a problem.  If you do, then stops would be in order.  

    CNBC/Rain – I think they are trying to broaden their topics as their ratings are sucking.  Probably another factor in them getting more bullish – bearish does not get good ratings.  

    Hendry/Gel – I think his comparison to SBUX is apt.  They failed to manage their growth and they imploded.  Clearly China has over-expanded and is now pissing off all their trading partners so they are in a risky situation.  Hugh is a very, very smart big-picture guy who I’ve been at odds with in the past but I sure have to seriously consider his position when he makes a move like this.  Good idea to short the Euro – pretty much either way they lose.  

    Plosser/Jthom – And he figured it out all by himself!

    Shadow is FREE!!!! Yay!!!!  I say get a case of Flintstone vitamins at Costco and put them all into unlabeled plastic bottles and let them count those too.  

    Nat gas/Rev – I haven’t heard any hurricane news.  There’s an app for that and I should probably get it…

    GOOG/Tcha – No way.  As we see from WAG spread, 10% move is very bad for backspread and it’s bad enough going $2K behind on WAG – not worth risking going $20K behind on GOOG.  If they have a massive run and look toppy, maybe then.  

    Switching/RDN – If you can do it without getting dizzy then, sure.  I’m very content just riding out the toppy action with a bearish tone at the moment.  

    Shenanigans/Cap – I think you mean "Fed up".  Liquidating furniture may just be redecorating.  Pullback should be coming before Judgement Day…

    NFLX/Mr M – Well $185 is easy enough to roll to…

    GLD/Rexx – Yes, I did miss it.  I already called for GLL too early this week.  I still like the Jan $31/35 bull call spread at $2, selling the $31 puts for $1.60 and that’s .40 on the $4 spread that’s $2.66 in the money and worst case is you are in at net $31.40.

    AAPL/Fortep – AAPL, NFLX, HPQ, IBM, DELL… Are all priced to do great and expand forever on unlimited Asian growth.  I am getting severe 1999 flashbacks!  The $200s are too deep in the money no matter what.  In the very least – take 1/2 off the table and roll out to 2012 or 2013.  I don’t understand the aversion to cash.  IF AAPL pops $300, THEN you can use all that cash you have to buy more calls.  Cash is nice, cash is good, cash is cool…..

    1%/Jthom – Are they trying to force people to use mattresses?  

    Good summary Kustomz!

    GMCR/David – We sold the puts, calling a floor here. 

    Selling is very likely those small funds taking advantage of the big boys’ urgency to keep things up.   That’s why possible breakdown tomorrow afternoon as people who have reporting cut-offs (1pm is normal) can close their books with a win and start dumping.  

  145. JRW
    Your the leader when should I get out, 67.06?

  146.  Uh oh – Financials leading us lower!  

    IWM Oct $66 puts are a fun play at .99

  147. Cap/
    I like the idea of sell bots. Very funny. But you know that they dont exist :)
    Only SEC and CFTC think that trade bots can crash a market.
    But we know that only volume can.

  148. Seriously Shadowfax, even if your sheriff hates the Cody Sheriff, it would certainly start making them think twice before harassing you if they realized well-connected people would start asking questions.  If you haven’t noticed, bullies don’t tend to pick on kids who have older brothers on the football team…

  149. rdn4rv gel1
    Your right Teton county kisses the rich’s, I have to watch my tone!

  150. jo – not sure if you are around today, but Sabrient has GILD as a strong buy. 

  151. NFLX – sounds like Fidelity is long NFLX and unloading into quarter end.  What a joke stock.  What a squeeze.

  152. Phil:
    Could you please explain your why you choose long dated options or hedge short dated ones? I noticed specifically on the QID hedges you have suggested both types. Is there any advantage to either? I am long the QID April $13 and want to create a spread that I never finished. Does it still make sense to go with the April 17 and sell the April 13 puts for net .72? ($3.20 entry on long call/ short call current $1.17/ put sell current $1.31) Thank you as always.

  153. NFLX; could end the day at 180 or 150.   Me thinks at 3:30 someone passed the word that they may as well upgrade it into the end of the Q tomorrow  …. LOL.

  154. The pattern on IWM I have seen before (I am looking at 3 day chart).  A close below this level would be a break of a short term trend line and could foretell a multi-day down move.
    Or not !

  155. 03:00 PM On the hour: Dow +0.03%. 10-yr -0.23%. Euro +0.56% vs. dollar. Crude +2.21% to $77.90. Gold +0.19% to $1310.90.

    The WTO says the U.S. ban on Chinese poultry is illegal, giving Beijing a win in China’s first complaint launched against legislation signed by Obama.

    The SEC and CFTC are still negotiating how certain events will be described in the upcoming report on the May 6 flash crash. To pinpoint blame, Barry Ritholtz says they should look in the mirror. "Wall Street requested various regulations, modifications and restructurings, and they were completely accommodated" by the SEC, CFTC and others.

    Shares of videogame publishers are under pressure following Nintendo’s (NTDOY.PK -7.6%) earnings warning and announcement that its 3-D hand-held videogame system will miss the year-end holiday shopping season. ATVI -1.5%, ERTS -1.8%, THQI -1.9%. And over the long term, "The iPhone (AAPL) and smartphone market is killing the category,” one analyst says.

    FedEx (FDX +1.2%) says it will increase average FedEx Express shipping rates on U.S. domestic and export services by 3.9%, effective Jan. 3. The full average rate increase of 5.9% will be partially offset by reducing its fuel surcharge. FedEx Freight and less-than-truckload shipment rates will increase by 6.9%, effective Nov. 1. (PR)

    Looks like we’re being saved agian – led by NFLX making new ATH because that NEVER gets old, does it? 

    Dow Volume is at vacation levels of 102M at 3:20 – very, very low.

    Tomorrow data is GDP at 8:30 (revised Q2, should be 1.6%), 450,000 Job Losses – also at 8:30 and  Chicago PMI at 9:45 (miss of 55 expected at this point).  Big day is Friday with Personal Income and Spending and PCE at 8:30 and Personal Income is projected up 0.3% for Aug, which may be a miss and Personal Spending is projected up 0.3% for Aug, and consumer sentiment makes that sound like a miss too.  At 9:55 we get Michigan Consumer Sentiment (67 expected, probably too high) and Construction Spending at 10 that no one expects anything out of along with ISM (55 expected – who knows?) and then Auto sales throughout the day with Sept maybe worse than expected. 

    So, on the whole – reasons to be fearful that mount and mount into Friday.  It’s going to be fun! 

  156. Oh Phil, come on now … I am sure there are LOTS of good reasons to add another 1/2 Billion to NFLX market cap today.

  157. Phil:
    I have a bear CALL spread on NFLX (Own 175 Jan Call/ Sold 165 Jan Call) Does it make sense to roll the 165 call to May 175′s at this point? Keep waiting for it to go down, but does it hurt meet to flip the trade to a bull call spread and leg out when the eventual fall takes place?

  158. RUT holding up much much better than S&P

  159. Phil/
    Are you considering that we could have a flash crash tomorrow?
    People are so impatient nowadays :)
    Do you think they can wait until Friday?

  160. And how bout BIDU, it ended last options expiration week (8 trading days ago) at 85-86.  Now 103 ?  Yikes.

  161. Interesting that PM and MO have both been on a 3 month rip and are at 1 year highs.

  162. shorting… do it after 2:30 and pray for a flash crash ;-)

    The halt for a 10% decline would be one hour if it occurred before 2 p.m., and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20% decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30%, at any time, trading would be halted for the remainder of the day.

  163. Phil / Costco vitamins
    Ha!… solid proof your sense of humor is firing on all cylinders today!

  164. Choices/DClark – It depends on what we’re looking to protect and, of course, what move we anticipate within what time frame and THEN it also depends on what strikes I think are particularly attractive, which is based on lots of other factors.  Your QID Apr $13s, for example are $1.61 in the money at $2.85 so $1.24 in premium paid by you.  The delta on them is .70 so you get the majority of a move up and, of course, down as well.  You paid $3.20 so negligibly down at the moment but my issue with this trade is I expect the Nas to fall NOW and then go up through Jan and MAYBE dip again into March so I wouldn’t have a lot of hope for the April spread.  If you are hedging April longs, that’s different but if you sell the Apr $17 calls, you are locking into a target that will never give you a great payoff until maybe Feb – if you are lucky.  

    On the other hand, you can take the Jan $13/17 bull call spread at $1.20 and sell the Jan $13 puts for .72 for net .48 on the $4 spread and if QID goes up, you are golden and if QID goes down, you will be able to roll the putter to the Apr $13 calls for + .50 (or maybe the 2013s for much more) and then another $1 will put you into another in the money $3 or $4 spread but at the lower-adjusted strike to reflect your initial loss.  So you get two cracks at the same trade and a much quicker pay-off with the closer spread.  Don’t think of your spreads as static – think of your positions as the opening moves of a chess game that will unfold over time as you shift your positions based on what unfolds on the other side of the board.  

    Why oh why is NFLX not saving us?!?   8-)

  165. Phil, how would you compare Motley Fool Effect vs Cramer Effect? Fool is pumping NFLX right now, which might explain in part today’s herd entry. Ironically the title is This Is No Digital Media Bubble.

  166. JRW
    i noticed your post last week about your monaco passport--just in case you haven’t seen it the Financial Times has special section today about Monaco and some of the challenges its facing--

  167. NFLX/DClark – Oh I hate those things!  I’d roll the $22.70 $165 caller to 2x the Nov $175 calls at $13 (+$3.30).  The cover would be rolling the $18 $175s to 2x the March $185s at $19 and you can sell 1x the $155 puts for $9.40 to pay for it (if margin isn’t a major issue) and also to buffer against a further move up that forces you to roll.  So, without the put sale you kick in $17 more but you push the callers towards an early retirement and if you get another 2x sale at $10 between Nov and March, it’s a free add-on on the long side.  

    Wow, what relentless determination to pump up the market.  They ran the FDX story on the last break and FDX started going nuts even though it’s hours old news – amazing!  Transports are now green… 

    Flash Crash/Lionel – I don’t think they can afford to allow another flash crash.  There are supposed to be breakers in place and investor confidence is already shot – another one of those days and people will start sleeping on their money. 

    BIDU/Cap – We did them and we’re busy being burned by NFLX at the moment…  8-(

    Oh look, CNBC found a bullish guy for the closing comments – what a surprise! 

    Fool/Jvest – I think they do get a good move but they don’t have the irrational, visceral sort of reaction that Cramer is able to get out of investors.  Everyone and their mothers are pushing NFLX at the moment and you can’t argue with the price action as they go up and up and up.  As Cramer says "If a stock is at $80, it’s going to $100 and if a stock is at $150, it’s going to $200…"  don’t ask me to explain it, he actually said this to viewers….

  168. I’m heavily short in NFLX with 4x Oct $170s, easily rollable to Nov $190s and 3x CMG Oct $170s, rollable to Nov $180s.. ALL NAKED.. I just find it ridiculous! I have the margin to sustain the brutality of their ascending move…. until it stops! 

  169. datuu

    Too late, I already bought a small house (they call it a villa so they can charge more). Everyone has fiscal challenges, I did that for strategic fexibility in case we lose control in this country.

  170. Phil/FDX – thanks. I went ahead and sold the FDX Apr $90 calls for $6. (A $15 spread for net $1.50 ain’t bad either.) When the big pullback comes I’ll buy back the caller and then maybe re-enter later at $7.
    BTW, I love your explanation from Monday about selling naked calls and rolling until you win.  "Remember, you only have to be right (about a pullback) once, they (your callers) have to be right every single time. "

  171. JRW / Monaco
    Very prudent choice, IMO, for a lot of reasons.

  172. LOL.  Its like streaming video over the Internet will revolutionize the world or something.  Like its some sort of new paradigm that will save our global economy.  All I can do is shake my head in wonderment when I see that price divergence with relatively "sane" tech names (even AAPL showed some connection to reality today).

  173. The SOBs just allow me to check days of email all too latew to matter.

  174. Speaking of NFLX above.

  175. kinki, we got it! :)

  176. Shadowfax
    Go to and download their free xB Browser, it is a Tor based encrypted VPN, and give it a try.  It’s slow but it will terminate you to the web out of the US.
    Maybe you can get around some of your difficulties that way.

  177. Pharm
    EHSI at $0.18 – do they have their fingers in anything interesting?

  178. YRCW
    The company plans to amend its certificate of incorporation on September 30, 2010 to implement a reverse stock split with a ratio of 1:25. The reverse stock split will be effective on the NASDAQ exchange on October 1, 2010. The reverse stock split will reduce the number of authorized common shares to 80 million from the current 2 billion and reduce the number of outstanding common shares to approximately 48 million from the current approximately 1.2 billion.

  179. edro00
    How do you get it free? It tells me they want $35 per month.

  180. EHSI/edro – I don’t see anything interesting at this point.

  181. YRCW/edro – maybe it is time to short again :)

  182. Does TOS have the best prices on options on Futures or is there a better brokerage firm?  I am being charged $2.50 per contract on the options on futures.  Thanks for answering.

  183. edro
    I fear that hideing like that will only increase the presure on me, ie. it will make them mad, that is why I put up with tests without any court anything. I actually have no record of anything, the last speeding ticket was over 25 years ago. So it costs $35 per month, slow, and may make things worce, what am I missing?

  184. Shadowfax
    Glad you’re OK.  Try  They claim to be able to cloak your IP address providing you with a fresh new IP address every few minutes or so and the Premium account changes your IP on demand.  Apparently they have IP addresses all over the USA and they switch them around so nobody can tell where you are in the country.  I suppose that means someone from Nigeria can make off that they are in Idaho.  That can’t be good for somebody but it might work for you.

  185.  Man you guys know a lot of clandestine stuff!  Imagine if we all got together and used our powers for good….  8-)

  186. Anyone
    If I were to incript how would it effect a WIFI hotspot that seems to be the spy network next door? Would I have to put it on all computers and would it stop at my router? I actually believe the government spys know more than us because we don’t actually think like a criminal. My router is type N,  2 chanel, seperate 2.4 and 5 whatever bites and I actually connect by eithernet cables. Thanks

  187. Clandestine stuff- avoiding the government? What’s not good about that?

  188. Phil  Great chart but extremely scary!

  189. Are you using your router wirelessly or is it a wireless router you hardwire to?  If its a wireless router, and you suspect someone’s piggybacking your signal, just turn on the WAP or WEP encryption in the router itself and assign a passkey only you could guess at.  (also, if you do this, you need to set a password to protect the router because most routers come with a simple password that’s easy to crack.  ie my Netgear came with IP userid Admin Password 1234….now it’s something you would have a hard time guessing at).
    Ahhh…fun with routers…bye bye uninvited guest… for the encrypting your IP, that’s a whole different ballgame that I know little about.  But I’m sure there are people around here who could help.

  190. hoss
    I have a wireless modem but did everything except reading BS direct connected. I have stopped that now. I use the highest level of security, changed everything yesterday and take the cheat sheet with me because I made it so off the wall I won’t remember. I also take the laptop with me every time. I believe they have already tapped back in and don’t believe simple incription will work, after all they can donload that also. Am I stupid?

  191. Interesting that you post that Phil, b’c if one looks at the shaded areas, those last ~ 15 yrs.  Thus, if we are in a deflationary/stagflation, and this ‘environment’ started in 2000 (or so), we have a few more years of bouncing around the zone (2014-2016).   I noted that over a month ago, that bonds, then should do very well over the coming year or two (TBT should move down), and then…..Gold should continue it ascent into the heavens as well.  Unless, of course, this time is ‘different’.  Q3/4 earnings should prove to be very interesting.

  192. No you’re not stupid.  Just offering a simple suggestion to make your router a bit more secure….like I said, beyond that there’s a whole realm of stuff you can do to defend your network, but I know little about it.  Sorry.
    But definately lock down the wireless component, and change the password regularly.   Sniffers can find open wireless networks pretty easily…heck iPhones sniff for open networks all the time, don’t let yours be one of them….

  193. Pharm
    I believe I went from low to high blood presure after taking VIOX, then BEXTRA, and then ??? can’t remember the still legal one. Now I don’t or haven’t taken anything even over the counter since 2006, but my whatever the lower number is will not go down. I don’t expect an answer from you but just wanted you to know what happened to me, the rest of my family has low blood presure, below normal!

  194. Debt Map / Phil – whew, North Korea’s good. Wow, so is China. And East Africa’s in fine shape.

  195. More Bond Bubbly

  196. Celebrex?  Sorry to hear that.

    Those don’t have anything to do with blood pressure, though.  Since they are COX2 specific (Bextra and Vioxx more than Celebrex), the blood thinning ability is lost (ie, aspirin).  Naproxen/NSAIDs, have the same effects as Vioxx studies show.  If your stress levels are up (consciously or not), more ‘adrenaline’ could be in the blood stream causing high blood pressure. (?) 

  197. Phil:  4% of Americans think that jobs are plentiful, that’s less than the 6% who think the stimulus package created jobs in the private sector
    which of course pales to the percentage of Americans who believe Elvis is still alive !!

  198.  Go to
    and change the option to total debt. Phil has put the Debt per Capita picture on. With Total Debt BRICs look bad too.

  199. Pharmboy
    Thanks but how do I deal with that, bottom line I have failed at under 100 on the bottom number and I know who causes it even though they will not back off!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    When or how do I get a break not to mention this has caused refused surgeries even a colonoscopthy?

  200. On the more good news front, hiring freeze at Morgan Stanley … MS
    Obama on the tape saying "see, I saved even more jobs at Morgan Stanley !  my policies work dammit "
    ok, I made that quote up, but its something he would say, its identical to all his other BS.

  201. Phil- We are collectively using our knowledge for good- we are trying to make noney and in my book that is good!

  202. jthoma
    It is good and the whatever happens on this site is doing good while the US is destroying from within.

  203.  JRW- This was a rough day for me. How do you handle trading on whippy days with lots of false breakouts? I went back through the day’s charts and found 6 confirmed breakouts, and 3 confirmed breakdowns based on your strategy. Only one would have led reliably to gains (10:47 run from 67.50-67.89). The rest would have stopped out based on a significant loss, or a confirmed breakout in the opposite direction. Two were simple failures of the 8EMA (1:48, 2:41), which I take as highly discretionary based other variables (volume, position relative to a line, other market events). One was a failed test to breakdown at 67.48, so you might not have entered until the breakdown of the line was confirmed as well as the 8EMA. The other was at 2:41 and could have easily lured one in long, and by the time you knew what happened you were back testing 67.48. Two of the 6 breakouts were not at lines (2:41, 3:22), two were at support (10:03, 1:48), two were at resistance (10:26, 10:47). Of the breakdowns two were a break through support of a line, one was a breakdown challenging resistance. One was not at a line, just a failure of the 8EMA that was confirmed (2:52).
    It’s tough to know what to do with this data besides resign to the fact that some days are just too choppy for amatuers (and probably a lot of pros). Unless you’re in on the manipulation! I’ll probably sit out IWM tomorrow morning, expecting more of the same. I’ll probably look for shorting opportunities after lunch. 

  204. dccraig
    JRW’s lines are as good as they get. I missed all the lines you mention and in the end I made $.03 today, end of quarrter is maybe why. I didn’t see any claims by him doing better, maybe I missed it. Day trading is hard, I have beat his claims but he seem to be the best most of the times. I loose way more often than him but overall even though I made less than $100 today it was posative, waite till after Friday, or as Phil has said Buy TZA and hold till the market backs off end of quarter. Next week will most likely be consistantly down intermittantly.

  205. Cap/7:48   ?????   I know, you were tired and…….. :)

  206. JP Morgan suspends foreclosures, following GMAC — political ??
    Japan out w/ bad industrial #s tonite….
    RIMM Blackberry Playbook – tablet targetd at business – but not out til 2011 ?
    7" screen, supports Adobe Flash, 1GB RAM, MULTI TASKING, … hmmmm

  207. Phil/JRW,
    I emailed the documents to admin @

  208. An /ES floor-trader from OptionMonster basically backs up what Phil has been suspecting the whole time:  Every time there is selling, the mutual funds prop up the market for end of quarter window dressing. But not getting enough buying support to break resistance. Very low volume.

  209. You know, if they wait like a week or so before they flush the dollar down the drain, it would be a HUGE win for Obama and the Dems going into the election.  Just think what they could say if the market went to 12,000 before the election….
    "They fixed EVERYTHING!  Just look at the DOW"
    They aren’t any better then Bush’s flunkies….all they give a crap about is how to stay in power.  Sorry Phil, rage all you want, truth is the Democrats have had unassailable majorities in both houses and the White House, and have largely squandered it in a chase to appease constituents and unions and their special interests rather than manning up and fixing what’s really wrong with this country.

  210. I was quizzing one of my brother’s tonight who works for a large mutual fund / investment management company what his view on this market, quarter end, outlook, etc. was.
    Interestingly (and curiously) his firm / group is not very macro focused, they are simply focused on "beating their benchmark" which in this case is the S&P.  He says they absolutely do not chase performance and buy because others are buying or the market is going up (they don’t hedge either, which I think is idiotic).
    In essence, they have certain stocks they like and they buy some at prices they like and sell some when they reach certain price levels – seems like staying fully invested and buying and selling at the margins.
    So, according to him, they are skeptical about valuations and this run and are not the ones propping up the markets.
    Basically, they seem to ignore the market, which also seems dumb to me, except to measure their performance vs. their benchmark.
    I won’t name the firm, but its a pretty big one.
    1020 – a bit of my wiseass humor – hiring freeze = not layoffs = JOBS SAVED BY THE STIMULUS  :wink:

  211. Hoss, you are right on about the squandering of opportunity.
    However, the Dow could go to 15,000 and it won’t reflect on the economy or voter anger.
    The Dems are simply toast this election … there is nothing that can happen in the next 30+ days to save them.
    They don’t get it.  You have John Kerry running around saying things like "we have an electorate that doesn’t always pay that much attention to what’s going on …"    The old voters that disagree with us elitists must be simply stupid line.
    Well, Lurch, that’s why you weren’t elected President - you are are stupid elitist that doesn’t pay attention to what’s going on.
    This is pervavise among politicians, and particularly the Democrats who can’t understand why their policies are unpopular.  Same goes for their media friends, like David Broder, who whines that the voters "are having a temper tantrum"  (again too stupid and childish to know what is good for them).
    So what does Obama do ?  He calls in Mike Dukakis (!) for a strategy session.  You can’t make this stuff up.  I guess Jimmy Carter still had an upset stomach.  And he goes to church for the 1st time in 5 months instead of playing golf to brush up on his religious bona fides.
    So, I ask Senator Lurch, who exactly isn’t paying attention here …
    There is no level of the DOW or S&P that will save the Democrats this year.  Its the economy; its jobs; its deficits; taxes; spending; health care; corruption & arrogance.  Its gonna be a bloodbath for all incumbents; and since the Dems are the party in power, with the most incumbents, and responsible for much of what people are pissed at, they will bear the brunt of the anger.
    And for those who want to blame Bush for everything, go right ahead, but he can’t be voted out again … been there, done that.  Change happened, and people don’t like it.  
    (no disrespect intended to those of you who support the O man)
    Rant over …

  212. hoss
    I happen to agree… ALL of the politicians are concerned only about the preservation of their job. Most are such failures, that they fear losing an election, as nobody would hire them. There is an old Texas saying.. " The proposition that it is entirely possible to find an honest politician, is equal to the task of attempting to pick up a piece of shit by the clean end"

  213. gel1
    That is agreat sumation of shit!!!!!!!!!!!!!!!!!!!!!!

  214. Cap
    The "O" chose the Univ of Wisconsin to give a speach, as he assumed the crowd would be receptive. I can understand this totally… most of them were probably drunk on beer. When in College, I spent a weekend there… nobody was sober. The frat house I stayed in had beer on tap as a permanent fixture.

  215. Cap – I’m afraid there is nothing that can happen in the next 30+ days to save… "US"…….

  216. Careful gel, I went to school in Wisconsin, and beer is not the only thing they are drunk on!  8)

  217. Pharm… The campus in Madison has to be one of the happiest places in the US to get a degree.- Now that is a real party school!

  218. Pharm… a lot of Botany majors, as you point out !!!

  219. Hmmm. Just read this in the NYTimes :
    " In 1970, when someone earning $37,000 had the buying power of a $200,000 income today, there were 25 income brackets. The taxpayer with $37,000 was taxed at the middle of the scale — 13 of the brackets charged higher rates to those with higher income. Congress reduced the number of brackets in the 1980s in an effort to make the tax code simpler and to cut down on the abuse of shelters and deductions. "
    I never knew the difference was quite this drastic. Why dont we have a 200-500k bracket, a 500k to a 1mil bracket, a 1-5 mil bracket, and a 5 mil+ bracket. I doubt anyone here would argue that the person earning 400k should pay the same as the person earning 30 million….

  220. Good post Hanna5.  I  wish I were livin high on the hog like the middle class in the ’70s; before the republicans took over the government. Obviously the top 10%ers wouldn’t want to go back to those brackets, or to a flat tax, after spending so much money installing all their deductions, loopholes, & exemptions.
    To the Whiners with Blinders : you guys are good comedy, like Limbaugh, Beck, & O’Reily.  I think Obama & the Dems
    have accomplished quite abit in 18 mos. They ended the "endless war in Iraq" (Cheney’s dream), & have Gates trimming the considerable fat from the military budget.  They passed badly needed healthcare reform aimed at eliminating fraud & promoting best practices (maybe we can get back into the top ten list on low infant mortality).
    They closed the "doughnut hole" in the prescription drug plan. And most impressively, they passed financial reform
    All good things, & inspite of roadblocks & stiff opposition from those milking the government with waste & fraud.
       And while I’m here : Elizabeth Warren is an American Hero in our time. She may be the only person Lloyd & Da Boyz
    can’t control.  She’s too smart to lie to, too honest to bribe, & too pissed off & dedicated to be deterred.  We need more people like her in government . IMO
    or not    .  .   .   Enron for All,   vote republican

  221.  Good morning!

    Thanks Aug, I’ll look that over this weekend.  

    I still read you guys first  to find out what’s really going on in the World before even bothering opening a paper!  So you are right Jthom, we are the epitome of "the collective good" over here…

    Good point Humvee but you know the old saying – 50,000 Elvis fans CAN’T be wrong.  

    Tough Day/DrC – Do me a favor.  Promise next week that you won’t attempt ANY trades until they look so obvious that they are screaming for your money.  There are weak supports and strong supports and, as you note, you saw 6 "opportunities" today and only one was actually a good one and JRW was on ALL DAY and called all out of TNA at 12:37, which would have been a great time to go short as we hit major resistance at $48 (IWM $67.95) AND the guy who calls it the best bailed on the long side in 3 rounds.  Rather than trying to make essentially random up and down bets over and over again, why not take in the overall market premise (that we are overbought, manipulated and toppy) and wait for that manipulation to give us a top ($67.88 was JRW’s 2nd highest resistance line in the morning) and THEN make your bet.  Some days, there may be no good opportunities at all but that’s OK because going 2 for 3 over 5 days is still better than going 12 for 30 over 5 days, isn’t it?  

    Good video Kinki!

    Unassailable/Hoss – How is 131 Republican filibusters on 160 pieces of legislation introduced since Obama took office (and pretty much 99% of all legislation issues by Democrats) considered unassailable?  How about calling it subverting the will of the people.  How about calling it holding America hostage to achieve political ends?  How about calling it the politics of infantilism?  What’s really wrong with this country is that some people can somehow reprocess what’s really happening into some gross distortion of reality that justifies and crime committed by the corporate thugs and their pet politicians.  Have you really been that brainwashed that you love your captors and beg for your next beating?  

    Of course Cap totally agrees with you…  To bad that, if he did actually have a point it’s completely lost in his juvenile hate speech.

    Brackets Hanna – good point but I doubt the conservatives would agree.  They "simplified" the tax brakets into ones that grossly overcharge the "middle class" and grossly undercharge the upper class.  And, as I keep saying – it’s all about corporations anyway, who used to pay 1/2 the taxes and now pay 6% – that’s our entire deficit right there.  

    Nicely said Ekor. 

  222.  Cap - here’s a trip down memory lane

    "Triumphant Republicans are readying a legislative steamroller on Capitol Hill to push through conservative measures favoured by the Bush administration but until this week blocked by the Democrats’ control of the Senate."

    "At the Banking Committee, a champion of business deregulation takes command in the person of Richard Selby, a conservative from Alabama. He replaces Paul Sarbanes, the Maryland Democrat who was prime architect of last summer’s Bill that attempted to clean up corporate behaviour and impose higher standards for auditors."

    "Democrats fear that financial and accounting industry lobbyists will now use their influence with the Bush administration and allies in Congress to water down the Sarbanes reforms. The White House has already cut back on previously agreed funding to strengthen the Securities and Exchange Commission market watchdog agency."

    So next time someone says "Gee, we never saw that coming" remember this was Jan 2002 and this whole article pretty much screams "LOOK OUT, IT’S COMING!"

  223. Also, let’s remember how Cap USED to benchmark the success of a politician:

    Let’s spin this correctly Phil:
    The Democrats opened their convention and the market dropped 200 points.
    McCain gained 2% in the polls, and the market rallied.
    There you have it !

  224. Ah, Phil, you spin cracks me up !
    "Hate Speech" ?    Prove it….
    And you are now trying to point to Sarbanes Oxley as some kind of wonderful effort ???  That’s a laugh.  It has crushed small public companies w/ massive unnecessary costs while bankrolling the accounting and legal professions.
    Democrats and Lawyers together ?  That must be a new one.
    Surprised you didn’t come to the defense of the ultimate Financial Criminals, er Reformers … Chris Dodd, Charlie Rangel and Barney Frank !
    or is that just more hate speech ?

  225.  Thanks for the reality check Phil. In retrospect this was just not a good day to aggressively trade for the upside. I should have realized we were more than likely going to end up going sideways with the low volume end of quarter nonsense going on. The next few days will be interesting. I’ll try to keep my finger away from the trigger. I’m considering a put vertical on IWM, or maybe just the long puts, as you suggested.  

  226. My InteractiveBrokers platform seems to be down.  Is this an issue with other people too?

  227. IB is back again, false alarm.