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TGIF – The Tale of the Asian Tiger

What a morning already! 

The Hang Seng rose 179 points in today’s trading and finished down 20 for the day – THAT’S how bad the open was!  The Nikkei finished an up and down 100-point swing up 34 points at 9,404 but dove into the close along with the dollar (our 3am trade), which now can be bought with just 83 Yen.  The Shanghai, on the other hand, was feeling hot, hot, hot and gained 1.7% just behind the BSE, which flew up 1.9% to take back the position of Global Leader.

Strong data boosted the Asian indexes overall with China’s PMI rising to 53.8 from 51.7 in August while India’s PMI pulled back slightly from 57.2 to 55.1 but that’s good as over 50 is expansion and 57.2 is running a little hot.  Korean exports rose 17.2% in September, also a little too hot as their CPI topped 3.6% but mainly driven by food prices, which seems temporary.  China’s upbeat PMI reading indicates that the negative impact of government measures to control the property market is probably waning, ING’s Mr. Condon said. This means China’s slowdown will probably be less abrupt than expected, especially in the fourth quarter.

The effect, he said, should be especially positive on North Asian economies closely tied to China’s demand, such as Korea and Taiwan. Fears of lower Chinese demand have had a particularly pronounced effect on Taiwan’s business outlook. The island’s September PMI ticked down to 49.0 from 49.2. "Sturdy domestic demand" should keep Taiwan’s economy on target to grow 7.3% this year, "provided employment conditions continue improving," said HSBC economist Donna Kwok.

[YUAN_1]On our side of the planet, the US markets, especially commodities, got a huge boost as China’s government gave a muted response to House legislation aimed at forcing the Yuan to be valued higher.  Aside from China knowing that they already own enough Senators to Filibuster any legislation aimed at protecting American jobs, the bill was watered down in that it PERMITS, but does not REQUIRE, the US to levy tariffs on goods produced by countries found to have undervalued currencies.

Sharp retaliation by China is unlikely in the short term, analysts said, since the bill hasn’t become law and wouldn’t immediately produce restrictions on Chinese goods even if it did.  In an apparent gesture to U.S. concerns, China has pushed the yuan up steadily in recent weeks; it was up 1.6% against the dollar in September.  "We think enlightened policy makers in Beijing and Washington understand the economic interdependence of the two countries," said Li-Gang Liu, China economist for Australia & New Zealand Banking Group. "A trade-war scenario at this stage is unlikely to materialize."

I love that statement.  "A trade-war is unlikely to materialize" – that’s kind of like telling native Americans that it’s unlikely the Government will take any more of their land – it’s already over!  Our trade deficit with China is $300Bn – that is a LOT of money.  The only reason that doesn’t seem ridiculous is that our country imports over $300Bn in oil as well so it makes China seem "not so bad" while we are forced to create an endless supply of dollars to pay for all the things we import since no one is willing to give us their currency for our junk.

Raising the value of the Yuan may even widen the trade gap as Americans have never been smart enough to stop buying oil when it went up and up in price, nor have we EVER seriously focused on creating a domestic alternate-energy industry to create jobs and secure our economic future.  This is despite the fact that Eisenhower, Kennedy, Carter and Gore (not a President but boy did he care!) warned us repeatedly that we faced – well, pretty much what’s happening to us now – if we didn’t get serious about having a US energy policy.  If we are so dumb that we can waste generation after generation kicking the energy can down the road, why should anyone imagine that we’ll stop buying Barbie dolls from China if the price goes from $9.99 to $10.99?  Clearly the last 25% rise in the Yuan didn’t teach us any lessons:


Meanwhile, let’s keep some perspective, shall we?  The COMBINED GDP of China, India, Taiwan, Korea, Vietnam and Brazil total just 15% of the World’s GDP.  If 15% of the world grows at 8% and the rest of the world grows at 1.5%, what is the total global growth?  Well 8% of 15% is 1.2% and 1.5% of 85% is 1.27%.  A total global growth rate of 2.47% is simply not enough to sustain $3.70 copper and $80 oil…  Speculators, fortunately for the commodity pushers, cannot do complex math like that – they just hear the words "China" and "growth" and they begin to foam at the mouth and throw all their dollars at shiny bits of metal and black sticky goo.

In fact, the commodity/Asian growth bubble is so booming that there is now 70% more money ($136Bn) invested in GLD ($55Bn), EEM ($45Bn) and VWO ($36Bn) than there is in SPY ($80Bn) with Emerging Markets, gold and oil now commanding over 40% of all ETF investments ($900Bn total) – yet another way the US ships hundreds of Billions of dollars overseas each year!  GLD is currently the King of the ETF’s, with $214.9M moving into GLD on Tuesday alone out of $394.7M flowing to all commodity funds.    

Hedge fund managers LOVE to see your money in ETFs as they truly are the dumb money on the street.  Not only are ETFs forced to buy high and sell low but they publish their methodology so any fund manager with a few Billion Dollars to play with can pretty much make them dance a jig whenever he wants to.  If your ETF’s prospectus says you balance your fund in the last hour of trailing based on the day’s average, then all I have to do is pump up the day’s average and unload my stock back into the ETF into the close – this a a recurring pattern we follow in the markets.  

In yesterday’s post I told you to take advantage of the DIA suckers, who bought and bought into the open and we were easily able to pick up the Sept 30th $109 puts for .20 (.15 was the low).  Those puts topped out at $1.55 but I told Members enough was enough at $1.40 as a 600% gain was plenty of money to buy us lunch, with $200 invested in 10 contracts at 10am returning $1,400 at 12:30!  That’s why we are starting to love the new weekly options – it used to be we could only do this stuff once a month…  

So I apologize for being so boring and educational on a Friday but understanding the mechanics of the things we invest in is what makes us better traders.  The rise of ETFs has led to the rise of High-Frequency Trading, which is able to take advantage of both retail transactions as well as the big-fish ETFs, which churn and churn and churn their assets in a volatlie market and throw off tens of Billions of Dollars in profits for the Banksters, who simply insert themselves in between the buyers and sellers and grab pennies Billions of times each day.  Ironically, they now do this using YOUR money, which was lent (assuming 0.25% interest is not considered a gift) to them by YOUR government, who devalues YOUR assets pretty much every single day with the US Dollar finishing at 78.72 yesterday, the lowest level since January. 

This, as I pointed out yesterday, masks the overall deteriorating fundamentals in our own economy with the Consumer Metrics Growth index posting what is becoming some scary readings, as detailed by The Automatic Earth, who point out that the S&P 500 lags the BEA data by about an additional quarter, so it can be shifted backwards about that much.  This does not bode well for us in Q4 if the trends do not reverse themselves.

We have gotten some indication of improvement but a single report does not a rebound make and we already know Japan’s auto makers are posting some terrible numbers for September and we get the US data today so we’ll be on our toes for another excellent opportunity to short the Dow (it could be QQQQ or IWM or SPY as well but yesterday, the DIAs were our best target) but, unlike yesterday, we don’t have an obvious entry before the bell so I’ll have to call an audible in Member Chat.

Rick Davis (no relation) of the CMI says: "The wild-cards in all of the GDP data are inventory builds, exports and industrial stimuli — all of which should reverse or soften in the 3rd and 4th quarters. It will be interesting."  Interesting?  Obviously Rick doesn’t have any money invested in equities or commodities!  Rick was also kind enough to provide a chart that superimposed the 91-day, 183-day and 365-day averages, which detail the alarmingly sharp downward trend we’ve been observing this month that turned us a lot more bearish on the short-term markets:


I would urge you to read Automatic Earth’s entire article (and thanks to John Rolls for pointing it out) as I still feel we’ve come too far too fast.  We went ahead with our October Overbought Eight list, taking short positions into yesterday’s excitement.  Our shortest-term play was our #1 picks, shorting the NFLX WEEKLY $170 calls at the open for $3.50, they finished the day at .25 – up a nice 92% but no where near as exciting as our ETF plays.  Hopefully, we can have some more fun today to close out this exciting week.

Have a great weekend,

- Phil


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  1. Korea / Phil – good catch on the food component of the CPI – last month was chuseok, the Korean harvest festival, which like Thanksgiving here, entails lots of very good food. So of course sellers of food run prices up some.

  2. New Qtr – NFLX downgraded to $120 by Susquehanna – only down $1 pre market
    Wells cuts estimates for BAC GS and JPM
    History suggests high odds for a green day today in markets.
    Watch those weekly calls and puts.  AMZN AAPL NFLX BIDU PCLN indexes etc.
    NY Fed ex GS Dudley doing the bidding of GS and banks today ….

  3.  Hey all,

    We have two new positions in Direxion Financial Bull ETF (FAS) and Gymboree (GYMB). 

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

    Good Investing!

  4. Exhibit A: Steve Ballmer
    Money and brains are not related!

  5. Ok, happy October 1.  Its going to be a busy month for FDA decisions, so a few that I have at the top of my list:

    ALXA – if you are in them, I am getting out first of next week, if not after today’s run up.  I have been doing some reading and the delivery of the drug, whilst it works (the drug has been around for years), may not be enough to propel their approval (Oct 11 is their date). 

    BIOD has a PDUFA on Oct 30, might be worth selling the Oct $5 P for cash, and taking a shot at a few Nov 5/10 C.  The short acting insulins work, just a matter of whether the FDA likes to total data set.  Many feel that BIOD has the goods and one of the insulin co’s will like them as a target (LLY, SNY or NOVO).  If so, why have they not forged an alliance yet?  Very small allocation for me, but worth the risk.

    I have done a lot of reading into ARNA and VVUS.  I will buy a few shares of ARNA (I am a sucker) and will short VVUS. 

  6. Was the ISM leaked?  Headfake?

  7. Pharm – confused; I see why you would short VVUS, but why buy ARNA? Is the rationale that you expect ARNA to rise into the FDA, or you see a distinct possibility of the FDA coming back with a positive (or non negative) decision?

  8. Good morning!

    Korea/Snow – Yes, always keep in mind that you only get half a story most of the time when you read the MSM.  The same lack of digging that’s obvious to you since you know Korea applies to stories you read about any other country, oil, gold, corporations – you name it.  Sloppy, half-assed reporting is the norm, not the exception and traders don’t even read past the headline for the most part and the people who give you the news on TV don’t even read the whole headline – it’s MADNESS!

    Repeating yesterday’s outlook as we have the same situation this morning due to mindless first day of the month ETF buying:  

    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

    We lost the S&P so we’ll be watching them carefully and the RUT and NAS make our best shorts today with both well over the mark so, using 1,150 on the S&P as a stop, I like these WEEKLY PUTS:  

    • QQQQ Oct 1 $49 puts at .07.
    • QQQQ Oct 8 $48 puts at .18
    • IWM Oct 1 $69 puts at $1.20 (almost no premium)
    • IWM Oct 8 $66 puts at .45

    I still like USO nov $34 puts, now .90 as $81 oil is ridiculous.  Gold is ridiculous too at $1,317 but too scary to short with the current mentality.  

    Remember – these are huge gambles so craps roll betting is appropriate (don’t bet more than you would be willing to lose on a roll of the dice at a craps table).  

    Have fun!




  9. Pharm/ARNA- what do u think are the chances of Arena getting approval? I still holding on to my shares. Do you thunk a rejection is priced into the shares? Thank you.

  10. rn – for fun, and thinking that ARNA may get an approvable letter, not approved, but approvable if they get positive data in the DM and a few other issues sorted out.  This cancer thing is way overdone, but that is MYO.  All the tox people I have talked to think that it is a bit crazy.  VVUS, too much on the black box for the drug combo.

  11. ARNA -I think they will be $1 if they get rejected outright.  These will be small positions, and I am talking less than $1K in shares/options.

  12. Pharm
    Do you have any thoughts about Roche (RHHBY) for a longer term play--paying about 4.5% dividend--i got sent a pretty nice write-up by a friend??

  13. Roche – I like them LT but there are no options…..

  14. Dudly/Cap – Good catch:

    The current economic situation is "wholly unsatisfactory," Fed’s Dudley says, noting "unemployment is too high, inflation is too low and the economy has only moderate forward momentum." One possibility he raises (besides further bloating the Fed’s balance sheet): an explicit inflation objective. 

    So much BS in the news today:  

    Aug. Personal Income and Outlays Income: +0.5% vs. +0.3% expected, +0.2% prior. Personal spending +0.4% vs. +0.3% expected, +0.4% prior. PCE core price index +0.1% in-line with expected, +0.1% prior. 

    Much of this morning’s $59.3B gain in personal income came from Uncle Sam, with personal transfer receipts from the government up $35.8B vs. a $500M gain last month, reflecting "the effects of unemployment compensation legislation, which boosted special unemployment insurance benefits by $20.6B" after reducing benefits by $17.1B in July.  That’s 60% of the total gain.  Without the government, it would have been up 0.2% and, of course, that money went into personal spending

    Despite a notable return to growth in the global economy, the outlook for employment has worsened significantly, the International Labour Organization says. Assuming current policies persist, a return to pre-crisis job levels won’t happen until at least 2015, instead of the 2013 it projected last year.

    Japan’s fiscal situation is unsustainable given its huge public debt, and Tokyo remains committed to curb a rise in the yen, PM Naoto Kan said this morning in a speech opening the first parliament session. Kan also hinted at further easing during the BOJ’s policy meeting next week. Earlier today, Japan said core consumer prices fell for the 18th straight month in August.

    Overstretched state budgets are the next credit crisis casualty, Meredith Whitney says, and here’s part of the reason: fat-cat pensions for government workers. Nina Easton predicts a "new rebellion" when cities are forced to "lay off current cops to pay for the vacations of retired officers" and other drastic cuts. 

    China now dominates the market for rare earth elements, withfar-reaching effects on U.S. national security. The U.S. has negligently handed China the power to dictate access to these building blocks of modern weaponry by ceding control of prices and supply, according to interviews with industry executives and policy experts.

    A Reuters report describes how former Federal Reserve employees and big investors are privy to some of its secrets – and thataccess can be lucrative. Zero Hedge calls it "beyond disgusting… leaking the most important decisions… so that a few multi-billionaires can make a few extra soon-to-be-worthless dollars."
    Michigan Consumer Sentiment is at 68.2, down a little from 68.9 in August and is better than low expectations but still the worst number since July, which was released in August and led to a big sell-off.  Right now, they are holding out for ISM at 10 and, based on Chicago’s big number, a beat is expected – not good if we miss.



  15. Ballmer/Diamond – I would say he almost makes a case for the reverse but I classify Ballmer under "nepotism" as he was given that position by Gates and MSFT’s board is in no position to challenge him.  That’s why Allen got out of dodge (or Redmond, so to speak) 

    ISM not good at all!  54.4 is a MISS of 55 and not a good trend:

    Construction spending was up 0.4% so better than expected but construction spending is EFFECTIVELY ZERO in America so who cares if it’s up or down half a point?  Ridiculous thing to even pretend to care about at these levels…

    Now we have Auto Sales to look forward to and, if they suck as much as Japan’s (down 4.1%), we should be revisiting yesterday’s lows.

  16. Into DIA Nov 105 puts for 1.94

  17. My broker (Schwab) doesn’t trade weekly options. I guess I’d better open an account especially for option trading. Where do you suggest?

  18. Wow, why can’t we get this tough on our officials?  

    GUANGZHOU – A former city police chief in South China’s Guangdong province was sentenced to death with a two-year reprieve on Tuesday for accepting bribes.

    The Intermediate People’s Court of Heyuan city convicted Ye Shuyang, former chief of the Public Security Bureau in Shaoguan city, of pocketing bribes worth more than $2.57 million.
    Ye, 54, accepted the bribes between 2001 and 2008 when he served in a variety of Communist Party of China (CPC) and administrative posts in Guangdong.  In return for the bribes, he abused his authority and assisted suspects avoid investigation and protected gambling and prostitution rings. He also interfered in commercial activities to benefit others in return for money.  Ye could not explain the source of assets worth more than 16 million yuan ($2.4 million).
    The court also confiscated all of Ye’s property.
    Ye was stripped of his post in October 2008 and stood trial on Jan 20.  Ye’s nephew, Jiang Haiwen, was sentenced to five years in prison by the same court for taking 280,000 yuan($41,744) in bribes while acting as a go-between for Ye and bribe-givers.

  19.  Phil – quick question from yesterday evening (the prices may be a little old – but same premise):

    I own shares of UCO at 9.39/share…  a week or so ago I sold the $9 Oct calls for 0.55.  They are now about $1.10.  Since UCO is at about 10.12 it seems to me there is zero premium left in them (-0.02 to be picky)… is that a correct analysis?
    If so – I was wondering if it would make sense at this time to buy back the $9 Oct calls at $1.10 to $1.15 and sell the $10 Oct calls for 0.40 (which still have 0.28 of premium on them)… or roll out to a later date – or – don’t touch anything?

  20. Good Morning Guys,
    Has any one has a list of all the 8 OCT short plays Phil recommended thanks

  21. Phil
    I have a DXD OCT.  27/30 spread
    Should I roll, close out?
    What would be the correct spread with today market?

  22. Phil/
    There was no volume today and still no volume today (on different exchanges)
    I cant see funds taking some profits and running. It seems everyone is happy staying on the band wagon for another 15% ride till the end of the year.
    And if there is no volume there are no reasons for a rigged market like this one to go down.
    I am becoming less and less confident in seeing a sell off. Hopefully today is gonna prove me wrong :)

  23. Given the overnight movement in the dollar, US stock indices actually fell compared to yesterday, but who cares…

  24. Thank you Phil, the QQQQs are up 300% and counting.

  25. WOW!

  26.  What kinki WHAT!?

  27. thanks pharm

  28. Anyone who can answer this question please do so.
    I sold 1 gdx jan 12 call not covered. It is now  $600 under water.
    How can I cut my loss?  I am thinking of seling a Jan 12 put for $400 would that be a good Idea?
    Or do you have better suggestions?
    Thank You.        hugs4ever

  29.  I hate this market. Why did we drop on ISM. Then Spike to Dow+75, then immediately drop to almost negative….? Its like the little machines that run this casino have gone crazy….

  30. Phil/
    I have my answer:Short then Rant :)

  31.  hanna, because in the GRAND SCHEME of things, the data is not strong enough to indicate such a strong recovery, CONSIDERING the significant run in the markets for the past few weeks. ALL THESE POSITIVE NEWS I believe are ALREADY priced in the market.. we need MORE to break us above the 7.5% levels..

  32. rav:  Just took a look at my portfolio value and was shocked by the difference from just 15 minutes ago.  Good shock though ;)

  33.  .. and that "MORE" would probably be EARNINGS. The core of the core of the market’s valuations.. so, starting Oct 7th we will start to see where should we be at (fundamentally at least), but we will need to consider the sentiment as well of the global markets based on the economic news around. Such an ART! :)

  34.  Volume not at all exciting for the 1st of the month, just 33M on the Dow at 10:15 with 50M at 11 being "normal".  

    ISM/Pharm – I think they were planning to jam up the markets no matter what the report said.  Most traders don’t understand the reports – they wait for the timing of the report and then assume the market reaction is the correct interpretation of the report.   That’s why we have so many head fakes.  People with real money in the market don’t punch a buy or sell button the second they see a report unless it’s with the intention of pushing technicals.  Big funds take a report into a meeting with a half dozen analysts and the top decision makers and they look at some charts and graphs and then they set an allocation strategy (or just go to lunch to think about it).  That’s why I tend to ignore intra-day moves – it’s just so meaningless. 

    October 8 Update: FSLR got tired of trying to shake us off our shorts!  AMZN coming down nicely, NFLX in serious trouble, PCLN dropping like a rock, BIDU barely holding $100, TLT annoyingly strong as usual, MOS getting bought but DE got a big downgrade for good reason and CMG is rocky but they were our long-term short (backspread) so we didn’t expect them to do anything exciting near-term. 

    Broker/Trident – We love Think Or Swim.  Contact scott at thinkorswim dot com – he’s one of the founders and doesn’t seem to mind personally taking care of our members (I’m a contributor to their news posts).  

    UCO/SrFrog – $1.40 now!  The bottom line is they are worth whatever UCO is over $9, which right now is $1.32 and I would expect them to be at $10 ($1) by the day’s end.  I would offer to roll them to the Nov $10s for .20 and, if that doesn’t fill, then why not collect .25 for rolling to the Jan $10s and simply not worrying about it for a couple of months?  If they head lower, you can always sell the $8 puts for $1 (now .55) so no worries.  

    Oct 8/Yodi – summarized above for your viewing pleasure.  

    DXD/QC – Well they are a bit of a long-shot now but I’d just buy back the $27s for .20 and give the naked calls the weekend, in case we totally crash next week.  You could be more aggressive and roll out to the Nov $23s, which are $1.50 (+.55) but your delta is .62 so you’ll get plenty of upside from a dip where you are. 

    Volume/Lionel – I’m a fundamentalist.  The data is turning bad.  The market is a poor investment at these levels.  If earnings don’t come in very strong, we will very likely sell off.  You can rig a market all you want but, one day – eventually, someone has to actually want to buy the stocks.  

    Did I mention – wheeeeee!

  35. Anyone who can answer this question please do so.
    I sold 1 gdx jan 12 45 call not covered. It is now  $600 under water.
    How can I cut my loss?  I am thinking of seling a Jan 12 45 put for $400 would that be a good Idea?
    Or do you have better suggestions?
    Thank You.        hugs4ever

  36. Yeah, that Automatic Earth article that Phil linked to really crystallized the whole bearish argument here.  Things are not so great that we should be busting down S&P 1200.  Everyone is acting as if though QE 2.0 will save the world, cure cancer and brew the best coffee in the world.  At best it should keep us from dropping dead again.  This exuberance based on QE is completely irrational.   I wouldn’t be surprised if David Tepper is quietly liquidating all his positions into this rally.

  37. Anyone who can answer this question please do so.
    I sold 1 gdx jan 12 45 call not covered. It is now  $600 under water.
    How can I cut my loss?  I am thinking of seling a Jan 12 45 put for $400 would that be a good Idea?
    Or do you have better suggestions?
    Thank You.        hugs4ever

  38. Muchas Gracias Phil !!!

  39.  Phil, I did not get into the 380 PCLN yesterday. Do you still reccomend it or bring the strike a little closer. Or am I being a little crazy.  Thanks for giving me faith in my NFLX conviction… 

  40. lionel / market sentiment
    I see the market climbing slowly to new levels by year end… my reasoning is the anticipation of a change politicially in the Congress, as a result of the upcoming elections. To the business community…. this is Hope you can Believe in. Secondly the markets are expecting QE-2 before year end and are starting to price in this expectation.  Lastly, earnings have been strong, and will likely continue, as a result of good management and belt tightening in their operations. I am still playing it conservatively, with over 65% in cash – That is my hedge, along with huge positions in Gold and Silver.

  41. Phil,
    any thoughts about FXY?

  42. Lion,
    What’s your take on today?  You long or short?

  43. gel- what is your SYMC play? Thank you.

  44.  Phil/ I agree with u that the data is pointing downwards, actually the only good data is from China, alot of asian data missed expectations. The problem with QE2 is that if it doesnt work the market is doomed. Maybe we will need mars to save us. Big Ben should not thinker with the market too much let the things get their groove going. 
    Things are looking like a repeat of yesterday. Wont take much bad news to break this market now

  45. Gel/ Market sentiment
    I agree with Phil’s position but what I cant see is how this market will tank if They dont want it to dive.
    So the problem for me is "eventually, someone has to actually want to buy the stock" vs eventually someone has to actually want to dump ther holdings.
    I don’t know who is going to win at the end, but is not as clear cut as I used to think it was.
    I am 90% cash Gel. Just some biotechs and curios.

  46.  Gel/Gold Silver
    What is your strategy on these, seems to be on a tear. Don’t want to get caught a big correction. So I am skeptical of getting in.

  47. Exec/
    I have been short since the opening based on Phil’s morning comment and Euopean markets actions and now I am waiting for a break up of 67.57 or down 67.24 to make a call. No position at the moment.
    I prefer to play the downside with OCT15  SPY or IWM 25% delta put options as they tend to gain extra "fear value" on the way down whereas TZA is just a % down play.

  48. Licking my chops to get short again, but don’t think today is the day
    buying some rut calls thinking we get the usual stick save at 2.30 today

  49. PHIL
    do you have a time frame in mind on when we will get a decision from the fed on QE 2 ?

  50. Dollar/Jordan – If the dollar does bounce, look out below for the indexes. 

    300%/Jordan – Cool but DON’T BE GREEDY!!!

    GDX/Hugs – What strike?  Your logic is sound but if I assume you sold the 2012 $50s for $6, now $12, I would point out that 50% of that is still premium and 2012 is a long, long way from now.  By the way, if you post links sometimes they get held for moderation.  Only worry if I go past your comment without it showing up.  

    ISM/Hannah – Simply not good enough, despite low expectations – the trend is not our friend with 5 consecutive declines from 60 in April, when the S&P was at 1,200 and oil was $87,  gold was $1,125 and TLT was $85.90

    And what Rav said!

    LOL Lionel! 

    Shock/Kinki – It sounds like you need a bullish hedge if you are that volatile. 

    Tepper/Kinki – Probably.  Look at the last few weeks – you can count the bears on CNBC on one hand.  As I said, they jack up the markets and run the VIX down while accumulating put positions and then they sell with impunity.  Oops, I just realized when I said "they" that that’s kind of what we did too… Oh well.

    PCLN/Novice – I just can’t in good conscience, tell you to chase a $20 drop.  Just keep an eye on it, look for them to make a run back and then we’ll see.  If not, I’m sure we’ll find something else to trade tomorrow.  

    FXY/Datuu – I think the Yen will sell off.   Japan CAN manipulate their currency – they can just keep flooding the World with Yen until we choke on them.  If I were them, I’d certainly be doing that because if they can refinance their entire debt at 1% – they’ll be in pretty good shape no matter how big they run it up. 

    Mars/Chyer – I think they have their own problems, what with the water shortage and all…  Venus is no help either due to global warming and, unfortunately, it would have been a fabulous idea to let everything crash and sort itself out in Nov 2008, when everyone still had jobs and money in the bank but now it would be a catastrophe as we have already stressed out the safety net and 10M homes are in the foreclosure process already.  

    Speaking of foreclosures, VNO just failed $85 and the Nov $80 puts are nice at $2.30 with a stop over $85 next week

    Wow, I haven’t had this many short plays in a couple of years.  Very sad…

    Time-frame/Z4 – I said at the last Fed meeting that we’d have to wait until the November meeting so that stands.  If they don’t do QE2 by then, then Santa Clause may be skipping the markets this year.  

  51. AMZN could make a run at the 150 weekly puts.  I don’t think so; but if we get a heavy selloff this afternoon, it could happen.  They are 0.13/0.17 now; were pennies earlier.

  52.  Pharm/ ARNA how far out u are looking for the options  Apr 11 Cs seems to be interesting at 65-70 cents

  53. Dollar has finally made the fall to 78.30 but the Dow hasn’t hit the magical 11k mark, not sure what the catalyst will be but i expect a short squeeze in the USD…of course the catalyst may not surface and breaking 78 would be the nail in the coffin and markets will have no choice but to head higher..


  54. Phil
    i agree with you about the FXY--i know you don’t like to buy premium but would you buy any Puts on it since you think it will sell off?

  55. kustomz
    It seems to me at this point the market has bottomed and will head back up, keep us up on 78 line. Thanks!

  56.  Good charts:  


  57. Lion,
    Which OCT SPY option you in?  What are IWM 25% Delta Put Options?

  58. Here we go with the No Volume push up.

  59. 65 puts on IWM, no I am not in.
    I am playing the push up after we crossed 67.37.
    So I am in TNA

  60. Pharmboy,
    what do you think about SNSS? Is it time for DD?

  61. Wow, Obama boost the markets with nothing at all!

    This is why I say DON’T BE GREEDY!

    FXY/Datuu – I just think it’s too much of a gamble either way.  The dollar was much lower in ’08 and clearly every possible effort is being made to kill it this year to sustain the rally into the election.  You are fighting the Fed here and, short-term, that’s not generally a winning plan.  AFTER QE2 is announced and the dollar spikes down, THEN I might like the FXY play but, if it hadn’t been for BOJ action a couple of weeks ago, they’d probably be at 140 now and that’s where I think I’d put my foot down.  UUP is another way to play a dollar bounce.

    It’s getting so we should start playing these lunch-time pops…

    Don’t forget – we generally flatline on Friday’s now thanks to the weeklies so no surprise if we end up right about where we are now (S&P 1,145, Dow 10,800).  

    SONC still going up!  BIDU holding that $100 mark, RIMM thinking about $50!  ADBE holding it together, SKX on a wild ride but making progress, WFR over $12.  

  62. nicha / SMYC
    At the present I have: 1500 shares, 10 contracts (short calls) Jan 15′s, 30 contracts (short puts) Jan 15. This play must have been a ratio Buy/Write when I entered it.  I should do some rolling today to better positions on the short options, in order to get more income and hedging. I am still VERY bullish on this stock.

  63. Wow those charts look great. What did you use Phil?

    IMO today’s article and posts are just top notch with links to so much good reading.

    Thanks Phil.

  64. That GDP chart is also great

  65. novice / Gold and Silver
    I am in no way suggesting anybody on the PSW board follow me on these plays. As Phil will attest, I am a "starry-eyed" gold bug when it comes to these commodities ( or should I say currencies )  I have about 15 positions in this stuff, and I am holding until Gold reaches $2500/oz, and then will re-evaluate. Depending on the prevailing drivers at that time ( inflation or whatever ) I will consider getting deeper in it or liquidating…. I can envision a scenario where Gold could go to $4500/ ox.. A correction is VERY possible and will happen to some degree as the price gyrates upwardly.  All of my stuff is priced in US Dollars, so as the dollar depreciates, the precious metals escalate.

  66. gel1
    WOW! If you think shinny metal can go that high, when will that happen, how long, and where will the market be?

  67. At the open: Dow +0.68% to 10861. S&P +0.79% to 1150. Nasdaq +0.82% to 2388.
    Treasurys: 30-year -0.56%. 10-yr -0.22%. 5-yr -0.13%.
    Commodities: Crude +1.41% to $81.10. Gold +0.6% to $1317.50.
    Currencies: Euro +0.72% vs. dollar. Yen +0.09%. Pound +0.77%.

    10:00 AM On the hour: Dow +0.39%. 10-yr -0.16%. Euro +0.61% vs. dollar. Crude +0.86% to $80.66. Gold +0.53% to $1316.60.

    11:00 AM On the hour: Dow +0.18%. 10-yr +0.09%. Euro +0.88% vs. dollar. Crude +1.04% to $80.80. Gold +0.8% to $1320.10.

    12:00 PM On the hour: Dow +0.3%. 10-yr +0.05%. Euro +0.9% vs. dollar. Crude +1.43% to $81.11. Gold +0.69% to $1318.60.

    Sept. Reuters/UofM Consumer Sentiment: 68.2 vs. 67 expected, 66.6 preliminary, 68.9 prior. Expectations 60.9 vs. 62.9 prior. "It is hardly a surprise that potential reductions in after-tax incomes a few months from now will influence people’s current spending decisions."

    Sep. ISM Manufacturing Index: 54.4 vs. 54 consensus and 56.3 prior. Prices index 70.5 vs. 61.5 prior. Employment 56.5 vs. 60.4. Inventories 55.6 vs. 51.4. New orders 51.1 vs. 53.1Less manufacturing at higher prices and more inventories building!

    Aug. Construction Spending: +0.4% to $811.8B/year vs. consensus -0.5% and -1.4% prior (revised). State and local government spending on construction projects +2.7%; investment in private construction -0.9% to $498.2B, lowest level since Jan. 1998.

    The ECRI’s Weekly Leading Index rises modestly, to 122.5 from a previous 122.2, but its annualized growth rate – watched for the -10% barrier said to forecast recession – rises to -7.8% from -8.7%, its highest since June 18.

    Treasury said late Thursday it will cash out all of the trust preferred securities it holds in Citigroup (C) for $2.25B, and has sold 1.5B common shares, reducing its stake in the bank to 12.4% from 17.5%. C +1.5% premarket.

    Chinese Premier Wen Jiabao will "send a clear signal to the world that China has made a vote of confidence in Greece’s economic prospects" during his weekend visit, China’s ambassador to Greece said this morning. The trip shows China "is taking practical actions to support Greece, the euro and the EU," he said.

    A single trade by Waddell & Reed (WDR +0.7%) is said to have helped spark the May 6 flash crash. Waddell, which sold a large order of e-mini futures contracts during the plunge, will not be named in the SEC’s report but will be described as "a single trade by an entity." Odd that WDR would be involved, since it is not regarded as an active trader.

    Auto sales averting disaster so far:

    GM Sept. U.S. sales: +10.5% to 173,155 vehicles (vs. Edmunds expectations of +10.7%), with core brands up 22%. Top-selling Chevy marque up 19%, with retail sales led by Silverado and Equinox. Buick up 36%; GMC up 42%; Cadillac up 11%. (PR)

    Chrysler (FIATY.PK) Sept. U.S. sales: +61% to 100,077 vehicles, vs. Edmunds expectations of +52.3% – a sixth straight month of Y/Y gains.

    Whirlpool (WHR) and Panasonic (PC) will plead guilty to fixing prices on refrigerant compressors and pay $141M in criminal fines; Whirlpool will pay $92M and Panansonic will pay $49M. Prosecutors allege the two companies (and other unnamed co-conspirators) conspired to fix prices, and followed up by exchanging information to monitor and enforce the agreed-upon prices.

    Another opportunity to sell puts:  Accounting irregularities are the “kiss of death for a stock,” so Jim Cramer says Green Mountain Coffee (GMCR -2%) must be sold. Jon Ogg agrees, predicting that short sellers will attack this high P/E stock. The accounting charges brought to light this week are not the issue because they are small, he says, but they involve revenue recognition issues back to 2007.

    Deere (DE) gets hit with a double downgrade. JPMorgan and Wells Fargo recommend investors take profits ahead of a likely conservative 2011 forecast, and note higher pension and R&D costs on the horizon. DE -1.1% premarket.

    DISH Network (DISH) says Fox (NWS) is blocking access to 19 regional sports networks and other channels, and wants an "unprecedented rate increase of more than 50%" to turn them back on. "Our customers should not be held hostage in order to finance Fox’s irresponsible acquisition of sports rights," Dish says.

    Shares of Gymboree (GYMB) are +21% premarket on speculation it’s in buyout talks with private-equity firms.

    Whuck?  GM will launch a new lineup of full-sized SUVs several years ahead of schedule, an effort to put the highly profitable gas guzzlers on sale as quickly as possible and make up for delays caused by last year’s bankruptcy.   Isn’t this the same EXACT mistake we had to bail them out of last time?

  68. Gel/
    Just entered two bullish bets on USD with options
    1m call @ 1 on USD/CHF .69% of USD
    1m put @ 1.35 on EUR/USD .88% of EUR

  69. Phil -

    That GM story is ridiculous. They will never learn. Geez…so disappointing. Racing to get SUVs on the market…are they serious?

  70. Very nice way to present a watch list:

  71. From Option Monster:  

    The rally in gold continues, but some option traders are looking to profit from a pullback in one key exchange-traded fund.

    We have seen a number of trades go off setting up for a potential pullback. Today fits in that category, but with a different tack. An out-of-the-money put calendar spread will profit if the GLD falls, but within a given range of $125.

    A trader sold 15,500 of the October 125 puts for $0.40 and then bought 15,500 of the December 125 puts for $2.65. The volume at both strikes is above open interest. This trade will take a maximum profit if the GLD falls to $125 through expiration.

    The reason for selling the near-term calls may simply be to reduce the cost of the longer-term puts, with the idea of holding the long-term puts through expiration, which isn’t always the goal of a calendar spread.



  72. MUST READ:  Rare Earths: The New Sputnik


    Another very good one: Why Do Stocks Outperform on Day 1?

    The SEC and CFTC release their joint report (.pdf) on the May 6 flash crash, blaming an errant algorithm set off by a "large fundamental trader" – they mean Waddell and Reed (WDR) – that caused liquidity crises in individual stocks and E-mini futures.

    Ford (F) Sept. U.S. sales: +46.3% to 160,873 vehicles, vs. Edmunds expectations of +37.9%. Ford brand up 49.3%; Lincoln up 25.6%; Mercury up 15.9%. Fusion up 46.9%; Edge SUV up 186.2%; F-Series pickup up 40%. (PR) 

  73. lionel… I am bullish on The EUR/USD…. I think we will eventually see 1.40. I am waiting for a pattern to develop on the USD/CHF and will enter a short position. All of my trades are FX pairings.
    I have never traded options on the currency pairs…. Where do you trade these, and how might I check this out. I have accounts in TOS, Schwab and Fidelity… All pf my FX stuff is at GFT.. Do you subscribe to any allert services? I have one that is out of London that is a chart watching factory that I rely on when I do n ot have the time.

  74.  Phil, what do you think of this play, instead of selling naked puts Mar 11 $23 in GMCR for $2.05 in premium directly ($235 in margin), how about increasing the payout a bit so that it’s better I scale in (I could begin with 1/4 entry) by doing a Mar 11 $20 / $23 bull call spread financed with the sale of Mar 11 $23 Put, the whole play for $0.15 in debit (margin $450)? Profit would be $285 as opposed to $205.. this is to juice a bit more the scaled entry..Also, GMCR sits RIGHT NOW at its 200 SMA, so it might serve as support, but it breaks lower, I can do another 1/4 and if it goes all the way to $23 (which is another support point) I could do the remaining 2/4. THoughts?

  75. I’ve seen some lofty projections for gold. Believe it when I see it, so I’m to assume gold heads higher and those that purchased are going to sit on an asset that serves no purpose other than presumed safety and relies strictly on the demand of purchasers and not much use in industry. Not gold bashing and I do believe it serves a purpose if one wants to diversify but 2500 seems very unrealistic. 95% move in gold from here? Then again NFLX has risen 100% in the past few months LOL…but I believe oil has a better chance of doubling rather than gold..5000k gold is a bet on a  collapse in the dollar, so who’s going to buy all this gold if money is worthless? I just don’t see it happening.

  76. Weekly pins:   NFLX 155  BIDU 100  RIMM 50
    GOOG 525 ?  AAPL ?  AMZN ?
    SPY 114 ?
    IWM 67 ?
    PCLN 335 ?  340 ?

  77. Charts/Samz – I didn’t do it, was sent to me.  Thanks, I was very productive this morning.  I was going to save it for the weekend but, as it was the first day of the month with all the fund nonsense, and, as the other stuff was bleeding over from yesterday’s discussions anyway, I figured I may as well incorporate it into today’s post.  

    $2,500/Gel – I’m not "anti-gold" overall, I just think they are due for a pullback to $1,150 or even $950 if the Dollar pops but I’ll be going long down there.  

    GM/David – I am dumbfounded.  I am also pissed off that this can even be "allowed" as I’m pretty sure we, the people, essentially own that company now.  There are rumors that Obama wants to raise fuel standards significantly so I guess they don’t believe he can get it done.  

    GMCR/Rav – I prefer just the naked puts when the stock still may fall (GMCR, case in point).  Buying the vertical is a much more aggressive way to play as you are locked into a time and price target.  As you note, you can sell March $23 puts for $2.05 and that’s $235 in margin so almost 100% in 6 months if they hold $23 – why even bother messing around with anything else.  The March puts can be rolled to the 2012 $16.67 puts (now $2.25) so you are covered for a 40% drop in the stock with a 100% upside – again, why mess around?  If you want to make $285 vs $205, just sell 40% more puts!   

    Oh, I’m going to try to remember to indent trade ideas now in addition to bolding them as I notice that the bold isn’t as obvious in Chrome as it is in IE.

    Down again it looks like.  They only managed to hold up the market for as long as the lunchtime volume was down.

    Three lunchtime reads:
    1) Twenty rallies about to reverse – according to short sellers
    2) Strategic defaults threatening all major housing markets
    3) IMF: End the credit rating addiction 

  78. Phil,
    Is FCX a short at $87.40, or wait until 90?

  79. Short stranglers,
    Looks like the October short puts and short calls have only given up 1/2 of the Theta decay as they should have in the past 2 weeks.  The small jump in VIX from 21.6 to 23.1, plus some earning volatility in the Oct expiration week may play a small role.  Well, they have given up more than their daily Theta today, and the decay may accelerate in the next few days.  Good for option sellers, not buyers.

  80. Gel/
    I go through a "human" broker for options and check prices wth ETF options (some crosses are offered) for the volatility and the skew.
    No I dont susbscribe to any services, but I read about resistance and support levels in order to set the strikes accordingly.

  81.  Phil/re GMCR, thanks for your clarification! I agree. Just for my education, when would u then recommend doing a bull call spread with short puts? 

  82. Hi, All,
    I’ve been on business trips and can only check in once in a while.  That’s why I’ve be quiet.
    A question to IB users:
    I opened an account at and funded the account.  I was dismayed that I can’t use their full-featured TWS platform because it uses some non-standard IP ports and my company’s firewall blocks them.
    I then tried their WebTrader.  I CAN’T find a way to enter a multi-leg options order.  Not even a bull call spread!  Can anyone confirm that IB’s WebTrader does not have the feature to enter a spread order?  I know that WebTrader has fewer features.  But I didn’t realize that it’s THAT BAD.  It really sucks!

  83. gel,
    currency options trade like all the others (FXE, FXY, FXC, FXA, etc.)

  84. Now give me your best currency trade idea.  :-)

  85. I have the TZA Jan 26/31 vertical for 2 and sold the Jan 22p for 2. At 26 today, does it ever make sense to take an .80-85 cent hit and roll down to-say- the Jan 22/27 spread for about the same money. Or should I just do the latter too? Or should I just figure that this is insurance! and I have 3 months to go.

  86. Aclend/
    These are currency ETFs options.
    They are great to check the volatility but you cant modify the expiry date and more importantly they are thinly traded.
    Some crosses are not offered AUD/JPY is an example.
    And lastly they are traded only during US time…which for some FX plays is not suitable.

  87. Phil/USO - what is the impact of QE2/dollar weakness on the price of USO? Seems that could be legitimately driving up Oil as priced in US Dollars? I’m thinking about a double-down on USO Nov $34 puts but possibly

  88.  Phil, what do you think of the financials for the 4th quarter? Maybe GS?

  89. Thanks, lionel. I misunderstood.

  90. Hi Phil, re CMG  I think yesterday we set up a play mar11 190c long nov 175 c short. Are there any changes as David thinks the stock will dive and my good friend Cramer things the same. Meanwhile the stock is up 1.48 today.
    thks for any correction

  91. gel1
    ise also has fx options--they have more options on different currency pairs:

  92. kustomz / Gold
    This whole pricing scenario has a lot of moving parts… the largest influence other than emotion ( flight to safety, worry about currency devaluation, need for hedging, fear of the IRS, and on and on ) is the comparative valuation historicially when adjusting the pricing for the decrease in vakue of the USD. The price of Gold should be $2300/ oz, when you adjust the price to reflect the price it is in 1970 dollars. Another big, issue, exclusive of "emotion" is the fact the demand for gold lately far exceeds the mining supply coming into the maket. Lots of reasons to be "bullish", INO

  93. I trade this FX options, but no more. They have to wide spread for me.

  94.  SONC/Phil
    I finally got a fill on the Mar7.5 @.60 but there seems to be no interest in filling the 5/7.5 even though I have been moving the up incrementally from 1.90 to 2.15 with no takes any suggestion or have I just missed out and hold the 7.5?

  95. Cwan: As an IB user, I’m afraid you are right with WebTrader. One thing you could do, is use TWS to put in complex spreads at a limit price. Then when you are at work / on your phone and can only use WebTrader, the spread order is still open in your account and you can modify the net price to massage your trade. But, you can’t enter a new trade, or see the detailed pricing data on WebTrader.

  96. IB webtrader is really bad.

  97. Thanks, Lionel….. most of my plays are fundamental plays, however I try whenever time allows to do some that are based for the most part on technical analysis. I believe most of the professional traders are chart watching nerds that watch the same charts and follow the same analysis tools. This is why I set my stops a little below or above the chart signals. The guy in London, has a big reputation, and a large following. His track record is 65% positive. I usually look at all of my source data before I make a move…. so far it is working out.  Fundamentally, I am "gung ho" the currencies that are commodity based at the moment, as I see the commodities getting a price boost as the argument for inflation builds. The "exotics" have been my best plays lately…. not doing much with the currency ETF’s though, as I prefer the leverage of the pairings.

  98. Weekly pins/Cap – Nowhere near as strong as expiration ones.  

    Since the crisis, Americans have doubled their investment in emerging markets, putting as much money into them as they did in all of 1995-2005, according to Citi Investment Research. 

    FCX/Kurur – They are sure getting there but it’s all about the dollar, which doesn’t look like it’s gathering any strength.  I’d be patient for copper to fail $3.65.

    GMCR/Rav – I think we need to see them firm up a floor.  There are still going to be shareholder lawsuits but selling the puts here is a reasonable risk as the entire downturn today could be simply Cramer’s scaring people out of positions so his fund buddies can scoop them up.  

    Hi Cwan!  Sorry I have no clue on IB.  We do have a rep though, although I don’t know his name…

    TZA/Drum – I wouldn’t pay the $31 callers $4 – that’s just nuts!  The $26 callers can be rolled down to the $23 callers for about $1.10 so that’s the way to go.  If TZA drops $3 more, THEN you can pick up $1 by rolling the caller down and take another $3 roll (or maybe out to Apr calls to buy some time).  

    Wow, CNBC says 2 out of 3 analysts are still bullish on gold.  I am so having peak oil flashbacks at this point…  BAC says 15% more to go…. 

    USO/Jvest – QE2 will make oil more expensive in dollars.  I picked Nov on the expectation it would need time to play out but I think it may be a little early to DD.  After this week’s report, we can expect a pump over the weekend and speculation into the next inventory and THEN we have a nice DD opportunity, or maybe a roll-up.   $36.50 would be a good spot to get more aggressive.  

    Financials/Aug – Future is very uncertain so I don’t like playing them.  If XLF got back to $13.50, I’d like to sell puts or even do a long artificial buy/write but BAC is very weak and the internals on the regionals are iffy and who know what the hell the IBanks will say so we should wait to get reports from at least some of them before making bets.  

  99. datuu… Thanks!

  100. gel1
    i understand and agree with what you just said to kustomz about gold--the piece i don’t get and would appreciate your opinion on is--how does this end? unless we are going back to the gold standard there is going to be some kind of fiat currency and unless you think the dollar is going to zero how do you unwind your gold position without being crushed in the rush to exit--particularly bullion?

  101. neverworkagain & Jordan:
    Thanks for the info on IB WebTrader.
    Sigh…  I’ve tried several brokers.  My aim is to find a second broker besides TOS.  I do have an account at TOS.  But I don’t want to put all my money into one broker.  So far, TOS is the only one that I really like.  All other brokers have one major flaw or another.

  102.  CMG/Yodi – Why change?  It was a bearish backspread looking for a dip but with a hedge against it not happening. 

    SONC/Newbie – If it doesn’t fill then just don’t take it, paying $2.15 for a $2.50 spread is pointless.  Not a penny over $1.90! 

    01:00 PM On the hour: Dow +0.28%. 10-yr +0.01%. Euro +0.81% vs. dollar. Crude +1.81% to $81.42. Gold +0.53% to $1316.50. 

    The Fed needs to step in with stimulus, Chicago Fed President Charles Evans says, or surrender to a vicious joblessness/deflation cycle. One of his top concerns: "the possibility that we might be in a liquidity trap." Evans – like New York’s Dudley, striking a dovish tone – rotates into an FOMC voting spot next year. 

    Daimler (DAI) Sept. U.S. sales: +18.5% to 21,088 vehicles. Mercedes-Benz up 22% to 20,666; Smart down 48.2% to 422. (PR)

    Kia Sept. U.S. sales: +39% to 30,071 vehicles. Its U.S.-built Sorento tops sales again at 10,112, up from last month’s 9,038. Soul up 117% to 5,346. (PR)

    Toyota (TM) Sept. U.S. sales: +16.8% to 147,162 vehicles, vs. Edmunds expectations of a 13.4% increase. Toyota division up 20.5%, Lexus division down 5.5%. Cars gained 6.5% while light trucks increased 33.8% companywide. (PR)

    Auto sales looking pretty good overall, just a Japan issue it seems

  103. Phil GMCR
    I entered the play buy write stk at 31.13 now 28.85 sold Nov 31c for 3.00 now 1.83 and sold the Dec 26.67 p for 1.43 now 2.23 I am covered on a down draft until 26.57 any changes thks ?

  104.  Phil,
    Several weeks back, I put on a trade--selling ME downside puts after their rig fire incident and hedged by some APA put ratio spread since APA is awaiting approval on their purchase on APA.  I am know unwinding 1/2 of that trade.  I basically sold some Nov. 20 P on ME for 1.50 and Feb 20 P for 1.75.  The Nov puts are now about .15 so from a risk reward perspective, it’s not that appealing anymore.  Basically for the Nov. 20 P and APA put ratio, it comes out to a net gain for $1.15 per combination ( 1.35 on the ME puts and -.20 on the APA spread).  The Feb puts are still worth about .40 so there’s still more premium.  The shareholder vote on the merger is on Nov. 10 so I still have some time to burn those who bought the puts from me.
    You asked me to update you on how this trade goes so just updating you and anyone else who was interested then.

  105.  Phil,
    HTZ was down big yday on DTG deal being off. Down again today.  Is this a name worth looking at to go long?

  106. Brokers – IB has a nice pricing structure and low margin rates, but in terms of interface, they are still behind.  They are working hard to improve, and I do see the improvements, but IB’s interface is not nearly as connected to their customers and responsive to their needs as TOS’s.
    The thing I like most with IB is their pricing structure.
    As an example, on Tuesday I executed 100 contracts of QID Oct $13 at $1.55 for a total commission of $19.35.  How?
    I traded more than 10,000 contracts in the last month, so per contract commission is $0.50.  There is an unavoidable Options Regulatory Fee of 0.0135 per contract.  The contracts got routed by their SMART algorithm to NASDAQOM, which has a Penny Pilot Issues rebate of 0.32 per contract for adding liquidity.  Total: 0.50+0.0135-0.32 = 0.1935 per contract.
    But again, the interface is not nearly as nice as TOS, and what’s worse, if you tell them that they don’t really seem to get it.  They may implement the feature you want, but maybe in 2-3 years…  Tradeoffs.

  107. datuu
    I strongly doubt we will ever see a gold standard… it is too restrictive for the governments that are inflating/deflating their fiat currencies. It offers more flexability, and unfortunately, less stability as a trade-off. Gold bullion, and its derivitives, because of limited supply is becoming a currency. Confidence in fiat currencies has hit rock bottom, with the latest knowledge of the debt problems in the Eurozone and the develpoing doubts about the future of the dollar. Gold is finite, whereas dollar printing is "at will". Gold will always have a "value comparison" when determining relative price, and this will always have a market within which to trade one against the other. Paper currencies, as history has proven, are nothing but paper, however precious metals are finite and cannot be replicated like paper currencies. This understanding of the comparison is now becoming more important, as was have seen the dilution of our currency lately, and the world is on notice. Even sovereign entities are starting to hoard Gold ( China et al ) as they realize it is one of the last finite vestages of real value. The end game ????  Guns, Gold and Pharm’s Bunker ( reservation required – only gold coins accepted, thanks you )

  108. SKX – the up/down has gotten so predictably wild lately. For anyone else following, one thing I’ve been doing is buying back callers when SKX plummets and then selling the calls again when it shoots up.

  109. Phil / SUV’s — Amazing isn’t it? Maybe they’re going to be electric with 19" rims and low profile racing tires like most of the SUV’s out there today. I laugh my ass off whenever I see a hummer with big rims, low profile tires. Funnier yet is the look on the drivers face when  they notice me laughing. I bet an interesting statistic would be the number of 4 wheel drive vehicles out there that have actually been off the pavement.

  110. Corn limit down.  Soft commodities displaying some definite un-hyperinflationary action today.

  111. Speaking of NFLX -- a lot of AAPL fanboys probably bought up NFLX when it was announced that it would be on the new AAPL TV. I preordered the new AAPL TV and it arrived yesterday. The Netflix interface is cool I guess, but it reminded me once again how all the instant stream movies are lame. To get the cool movies on Apple TV you hand your money not to Netflix but to Apple via their itunes instant rent thing.

  112. GMCR/Yodi – Not unless something more drastic happens. As you note, it’s a profit above $26.57 and they’re at $29.13 – that’s the whole beauty of a buy/write – you get to relax through the nonsense!   If you wanted to be aggressive, you could have taken out the caller this morning for a quick 50% but then you’d have to sit naked over the weekend, hoping for a bounce back but, AS PER OUR STRATEGY, making a quick 50% is something you always need to strongly consider taking off the table, even if it’s a single leg of a trade. 

    ME/JGW – That was a very good call, nice job!

    HTZ/JGW – Well now we have to think of them in terms of having an Avis/Dollar competitor if those two get together.  That means price pressure and loss of #1 position in market.  I think they were up despite the bad economy on anticipation of making this deal and getting some pricing power and they seemed to want this deal pretty badly, which makes me wonder if their growth targets are obtainable without the merger. So, with too many "what ifs" in the equation, it seems like a stay away to me but worth keeping an eye on if they retest $8.50, where they become attractive by themselves.  

    SKX/Jvest – Good range trading.

    SUVs/Rain – I think there should be severe penalties charged to SUV drivers who get less than 25mpg and that limit should double over the next 10 years.   It doesn’t matter how rich you are, you should not drive a vehicle that uses 2-3 times more fuel than a standard vehicle as you are harming other drivers.  It’s not a zero-sum game, your excess demand sucks up more barrels and forces people who use less fuel to pay more per gallon, even though they are, in effect, subsidizing your fuel waste with their conservation.  

  113. Hey all,

    I have finished the new Longterm Rating on Nordstrom. We are initiating coverage at Hold with a price target at $45. Needs to drop a few to become a Buy.

    Check out my thesis, valuation, etc. here!

    Good Investing!

  114. NFLX – finally we’re back to the "normal" insanity levels of last week.

  115.  Jordan, I agree on NFLX, or PCLN, or FSLR, or even AMZN.. but why oh why is CMG holding up SOOOO WELL!?!? No news whatsoever for this stock in a long time. Nothing at all. With all the commodities pushing up, I wonder how CMG is doing in terms of food prices for these guys to get their margins either squeezed or increased. I’m very impressed of how well CMG is holding up.. TRULY impressed. If THE LEAST of the variables surrounding CMG’s business turns out to be bad, this stock will take a big fall.. 

  116. Corn/Kinki – Well that we expected.  DBA down sharply but DBC up at the same time due to oil, which is only 40% of it so a mismatch there and a shorting opportunity.   I like the Nov $25 puts at $1.20 and you can sell the Nov $24 calls for .75 to knock it down but then you need to buy the ETF or deep calls to cover if they go over $24.25 on momentum, which gets messy so, just the puts….

    NFLX/Jvest – Oh, I learned something today!  NFLX went on the Canadian markets last week and THAT is why they had that relentless surge.  I learned that from my BNN pre-interview – which I have to go to shortly! 

    Tea Party/Rain – I bet we could make a fortune selling those at a rally.  I wonder if any of them would catch the irony?  

  117. ravalos – Why is the wrong question to be asking.  The right question, as a trader is "now that CMG is holding up, what can I do about it?" :)

  118. Phil -

    When do I get to be on the BNN? I’m sure they’d love my pretty face…haha.

  119. Phil, in your first comment above, did you mean to say you would roll bearish bets to November today or next Friday?  I think your comment was from earlier in the week, so back then you probably meant Friday, today, not Friday next week.  Just checking.
    USO – oh a month ago I was so heavily bet for it reaching $35 and it never even broker $34.  Now look at it!  Too bad my bet is off, and I took a loss then.

  120. ravalos / CMG
    This is their DNA…. they know their market and recognize there is a trend toward better quality, and  a healthier lifestyle…. they are taking business away from the others that are still selling calories and obesity.  I would not take the chance of shorting this one…. the fundamentals are too strong!

  121. Phil
    Is there a ratio on disaster hedges to long positions?  I am really heavy on these right now.  I’d like a metric on how many I should keep.  Having said that I have a large short position on NFLX so I want to protect my position on these into the Nov expiration.  Sold a bunch of calls just before the end of the day yesterday when they were at 170.

  122.  Jordan, that question would be appropriate if ANY bad news comes from CMG or related to CMG AND the stock HOLDS UP.. but it hasn’t been the case.. or even if good news come out, we would need to see the reaction.. but at this point, from a simple valuation point of view, it’s outrageous! I’ve been to Chipotle many times over many years and I don’t see any change in terms of people eating there on the same restaurants. The only thing is that they are growing with new stores at an accelerated rate.. which I doubt. I guess it’s more the PERCEPTION that once this chain goes to international markets things will accelerate.. but really? A Chipotle in Europe would be such a boost? McDonalds yes because it has lots of brand awareness behind it even if the food is simply two pieces of bread and something VERY STRANGE in between.. but Chipotle? Who knows Chipotle in Spain? Sweden? Mexican food is already there though, so for that story to unfold we have to wait a LONG time, and then if it’s successful we can then give CMG a much higher valuation, but in the meantime!? oh please..

  123. Interesting….OIH on 8/4 was at ~110, today it is 114.  USO was at 36.xx, now 35.5.  CVX was 79, now 82.  XOM was at 62.XX, today 62.XX.  What is there relationship b’w these OIH and USO?  I assume it is RIG and BP that have propelled OIH higher?


    BHI needs to play catch up.  They have a gap to fill.  What do you think about them Phil?


    What is oil’s ticker on TOS?  /NG is natural gas.

  124. kinki / $100 — I wonder if I can get the seconds at a discount!

  125. Pharm / oil — /CL

  126.  gel, I agree completely with you, as a business concept and the food they serve they are very very good. I’m just trading the velocity at which the stock’s price is reflecting things that will take at least one or two years to unfold, and with almost perfect results required!! At least from my experience in NYC, the Chipotles I’ve been to do not really strike me as "I’m eating the healthiest food on earth" mentality.. not really. 

  127. Pharm CL

  128. ravalos – you may be right about brand awareness, but I do not know a single person that has tried Chipotle and not liked it.

  129. Phil/SUV
    Yes I finally have found a point of total disagreement with you :)
    As a SUV owner (Yes I drive a Ford), I totally reject your position.
    I almost never use my car since I live near my work.
    So why should I be penalized for using a vehicle of my choice when bottom line I use less fuel annually than a long distance commuter in her/his Prius?
    Let s tax oil like in Europe at $3.50 a gallon and  people s attitude towards cars will change.
    Taxing consumption yes/ taxing cars no…

  130.  Jordan, I’m definitely not arguing people don’t like their food. It’s very good.. well, I take that back. Take this from somebody who was born and raised in Mexico.. it’s NOT that good. I guess that’s part of my bias on it, but comparing it to some other mexican concepts in the US, yes it’s good, plus healthier (relatively speaking of course). But I’m not questioning their food’s quality of business practices, I’m just questioning the investors’ sentiment in regards to their story from this point to the future.. but, shorting a stock from a valuation point of view is a very foolish thing sometimes, but hey, I’m stubborn so I know that at ONE POINT in the future I will get to keep this premium! :) I just need to have the flexibility and patience for it..

  131. ravalos / CMG
    You are most likely right… however the avarage consumer of their product may have that "perception"

  132. Lionel
    My guy in London just sent me a text… Says for the first time in four years,  does not want to set any direction with the USD in the pairing —- too uncertain and volatile!… says he will have some non dollar pairings for recomendations later today. Sounds scary to me re the USD.

  133. $100/rainman: sure you can!  If the Fed can get QE going, ALL $100 bills can be had for a significant discount.  If they can just get the presses working, goshdarnit. :D

  134. kinkistyle / printing presses
    That is a good one … maybe order some new ones from China.  And we are wondering if inflation is in our future ???

  135. Just an FYI.  YRCW has new ticker after reverse split 25:1  – YRCWD.

  136. Gel/
    We are midway between expectations and realities.
    USD collapsed most likely because of a higher probability of QE. But EUR has the same thing happening in December with ECB deciding or not to stop providing European banks with more free money.
    If EUR/USD keeps going up then German exports will suffer so ECB will extend their cheap refinancing operations, which will be a negative outcome for the Euro.
    I think that we are close to a short term top on the EUR/USD. EUR has been quickly (1 month) gaining traction even against a strong currency like CHF. It just doesnt make sense.
    Now I dont want to short EUR vs CHF because I expect SNB to intervene soon.
    Therefore EUR/USD and CHF/USD
    Let s hope I am right!

  137. Phill,
    The QID and TZA trades, would you open new positions just in case market tanks next week?

  138. BNN/David – Well, you have to be at the NYMEX at 5pm, that’s kind of annoying.

    Printing press problems/Kinki – What, it wasn’t running fast enough?

    Rolling/Jordan – Well, as a rule of thumb we don’t hold any current month past the Wednesday before expiration week (7 trading days left).  I’m not inclined to give up based on today’s action but that would force a roll on Monday if we shoot up (and we may get M&A news or QE news or whatever, so keep that in mind).  I did mean today at the time and, based on that, we didn’t get the sell-off we’d hoped for (we’re flat to Monday) but, on the other hand, we still look very toppy too.  On USO, they are often frustrating.  We had one good one this week but called a top too early. 

    CMG/Gel – They are a great operation but, with 1,000 restaurants, they are past the easy stage of growth yet they are still priced to double up over 3 years in a poor economy.  

    Disaster Hedges/DD – In general, you should be looking to offset 1/2 your expected losses from a 10% drop at most.  In theory, we should be able to add more shorts on the way down to 20% and, if not, then your cash itself becomes a hedge as you can DD and get a 10% discount on the stocks you currently own (and that, combined with the hedge, leaves you down just 5% on a 20% drop).  The less cash you have, the more you need to hedge but try not to overhedge.  Frankly, if you are lookiing to protect short NFLX $170s from yesterday, I’d say cashing them out for $8.40 gives you great protection as you’re up about 33% in one day and you can’t possibly make more than 66% more in another month and a half so, even if you win, you have only diminishing returns over time to look forward to.  Why spend money to protect that.  If you go to cash, I’m fairly confident we’ll find something to trade on Monday and, of course, Rule #2 is:  "When in doubt, sell half."

    OIH/Pharm – Higher oil prices = more exploration in more difficult places.  Good for OIH. 

    BHI is good but SLB much better.  Oil is /QM

    SUV/Lionel – Save it for the weekend.  I drive one too but I support any penalty they want to charge.  How about a mileage tax then, that would be fair to you but penalize guys who need them legitimately for work…  

    OK I have to go address Canada!

    Hopefully it’s a nice, dull flat-line into the close..

    Have a good weekend everyone!

    - Phil

  139. Good interview Phil!

  140. Givem hell Phil!!

  141. Hey David Ristau … you had a short on THO in the $32s the other day.  What is your view now at $34 +. ??
    I think it would be helpful / useful if you would follow up on some of your plays …  or are they supposed to be just for that specific moment in time ?

  142. Phil if you want to tick them off, say something like "The Queen is a man" on Canada TV.

  143. Lionel
    I agree with your fundies… however a large percentage of FX traders are technical geeks that have a large influence on the direction.  For instance, my guru in London is always focussed on the S & P when it comes to USD trades. He failed on his last call because he is counting "waves" in the S & P and noticed we were in the fifth, which is a very strong signal for a reversal…. Ok, fine, but the FOMC had a larger influence than the technical signals. This is why I, as a trader look at EVERYTHING, as I assume you do as well. The guru is coming out with some new trades soon ( non USD ) and I will post, just for reference purposes.  I trust nothing, and so far it is working.

  144. Thanks for everything Phil!  Break a leg…. Eh?

  145. Thanks all for the oil.  OK, they topped then in here on 8/4.  ‘They’ really need to move it through then.  Dollar or not, construction is down overall, and the summer driving is over….When oil gets to 83/4 area, then good to start the short.


    Hope David R. is there with you Phil….Would love the 1-2 punch… 8)

  146. Phil…. Don’t piss off the French, by suggesting conservative political viewpoints!… These guys play rough  ( burn cars and go on strike )

  147. gel1: Earlier in the week I recall someone commenting about the importance of holding the USD at 78.30. What level is critical?

  148. LPS, now that is a drop….

  149. Hi, Jordan,
    Thanks for the info on IB.
    What’s your experience with their charge of canceling/changing orders?  At TOS, I do change orders quite often.  It’s free anyway.  So, I don’t even think about it.

  150. Phil,
    thanks for the TZA 26c to 23c roll info. I completely missed that angle.  you are worth the bucks!

  151. gel- I am reading your recommended book – Technical Analysis by Kahn. Any suggestions on a book on fundamentals? Thanks.

  152. HPQ down 3.3% today.  Any news?

  153. cwan- HPQ prolly because of the choice of the CEO.

  154. HHFIV / Dollar levels
    That comment was probably made by Phil… he probably was reflecting on the $ weakness and the level he believed to be significant as a resistance level. Breaking a trend line could signal market direction short term…. particularily commodity pricing.

  155. cwan / HPQ
    The board just announced a new CEO for the company… a very bad choice as interpreted by the market…. nice to have you back!

  156. gel1: Thank you. Which trend line should I be watching?

  157. Thanks, gel1 and nicha,
    Did they choose the woman that caused problems with the last CEO?  8)

  158. Phil and JGW on HTZ:
    Just sharing. Something that I didn’t know until a couple of years ago is that while HTZ is the largest public car rental company, the largest in the U.S. is privately held Enterprise Holdings.
    "Enterprise Rent-A-Car is the largest rental car company in North America,[6] and has more than 5,399 “local market” locations (91% of all transactions), and 419 airport locations (9% of all transactions).[citation needed] According to Detroit News[citation needed], Enterprise purchases seven percent of all new automobiles sold in the United States."
    I guess this could be considered competition.
    Were it not for my son being a manager for ERAC, I would have had no idea.

  159. cwan: I’ve been using IB in addition to TOS. I’m getting used to it. Their portfolio margin is good. Their commissions are good except for SPX, because they pass along the CBOE charges, which TOS doesn’t.
    If you run negative cash balances, IB gives you great rates. It seems they basically pass their borrowing costs directly through to their customers, or close to it. Meanwhile TOS gouges customers with 7.45% markups from the Fed Funds rate. I asked TOS today what they charge if you run higher debit balances. They said 5% over $100K. I told them that now that they’re part of TD Big Brother, Inc. they should start emulating IB.

  160. cwan… ha, ha… no , but what a publicity coup that would have been. They wen’t for safety this time, this guy is definitely not interested in women, and visa-versa – just numbers!

  161. HPQ, you got to love the volatility its been an ATM machine for me :-) great weekend and looking forward to listening to Phil’s interview

  162. HHFIV… trend line is Phil question… I defer to his expertise.

  163. Rahm leave to become "da Mare" of Chicago. This Bloomberg story contains nothing new to anyone who follows Chicago politics but interesting for others perhaps – especially regarding Rahm’s "expertise" as and "IBankster".
    "Emanuel, 50, earned at least $17 million in three years as an investment banker after leaving the Clinton White House, public records show.
    The route Emanuel later took from government service to private-sector wealth is common for people with top Washington connections. How quickly he made his millions is rare, said Dave Levinthal, a spokesman for the Washington-based Center for Responsive Politics, which tracks the revolving door between government and business."
    We should perhaps file this under: "Classic Leftist Do As I Say/ Not As I Do Activities" or under "Ironic Statist Administration Lecture Topics"

  164. Election rally?
    Republican House takeover not in the bag yet.

  165. @ Rahm… hmmm, l seem to remember a Republican Vice-President Chief of staff who was convicted of FEDERAL crimes and sentenced to prison (before pardoned). I guess we filed that under "classic rightist being a  criminal scumbag but being let off the hook by your scumbag buddies."

  166. Kururi- Rahm- you may well be correct in your recollection however, I do not recall anyone in that administration lecturing us peons on "Wall Street greed" and "making too much money".

  167. chaps,
    How much does the CBOE charge for index options?  Is it $0.44 for SPX options greater than $1?

    is there additional fees and do they charge fee for RUT?

  168. cwan / IB order cancellation/modification – yes, you pay for order cancellation and modification. It is just as described on their commissions information page.  They give credit for executions so if you have, say 10 executions, you can change/modify an order a couple of times and you won’t get charged.  But, if you style is to place an order, modify the price or quantity 10 times until eventually it gets executed, then be prepared to add $10 or more to your commissions.

  169. Hi, Peter D & Chaps,
    Have you begun to play Nov SPX strangles yet?
    I still have a few Oct callers that I am still awaiting further time decay.  I am thinking, but haven’t started, selling Nov putters.  I am kinda worry about the markets being toppy and am waiting for a pullback.

  170. Peter D/CBOE fees:
    Hi Peter: According to IB , yes. And $.35 for those under $1.00

  171. For those who couldn’t see Phil on TV, BNN runs their shows on the web also:  videos, "Will the Markets Momentum Continue? [10-01-10 5:00 PM]\"

  172. cwan/Nov short strangles:
    Just my opinion: I have the general feeling that the market often "overpays", especially for puts on longer dated options. So I tend to always keep a healthy number of options in the month beyond the current month. I’ve been in Nov options for over three weeks. Deep OTM options, like the Nov 900 puts I’ve owned, have decayed by roughly one half in the time I’ve owned them.
    I start with a few put verticals as insurance in that outer month, and add more as they move closer to being the current month. For instance, I’ve had about 1/3 of my November puts covered by put verticals, and am now looking to add more. The advantage of put verticals, versus straight puts, is that they don’t decay much at all.

  173. That’s a good point pstas… i think people like him have an MO of playing hardball and nestling into those who have the power. If he had come up from Texas and not Illinois, he’d probably be in Republican power circles.

  174. Chaps / SPX strangles,
    Thanks for the tips.  I tend to be fixated on getting as much as possible out of strangles.  But, today, I discovered that Nov putters lost a lot more values vs Oct putters.
    How do you deal with the put verticals after they have served their purposes?  Do you sell the long legs and wait for the short legs to decay?  I’ve done that for Oct.  But I worry about having too many putters from the short legs, and therefore, I refrained from adding new Nov putters.

  175. Pstas … ROFL laughing.  Lets see how Rahmbo tries to break the residency requirement rules (he doesn’t qualify).
    Kukuri67 … such a non case (Scooter Libby) if there ever was one.  They come after a guy for a crime he didn’t commit ("outing" a CIA "spy" who was a) not a spy; and b) not outed; and c) the guy who did it was Colin Powell’s lapdog Richard Armitage; who stayed silent while Libby got roasted. 
    So they "get" the guy on a technicality of supposedly lying to the FBI in his quesitioning.
    Which of course is like Roger Clemens lying to Congress for the high crime of not admitting steroid use to a committee of Congressional bozos who should have much better things to do.
    And of course the Congress themselves, who lie to the American people habitually daily (Barney Frank anyone ?  Charlie Rangel ?)
    And finally, of course, Bill Clinton who got off from being impeached over his own lying under oath in the Lewinsky matter.
    So yes, great analogy Kukuri, you nailed it, the biggest crime / ethical lapse of the Bush admin … Scooter Libby convicted over his recollection of what he told a journalist.  Wowsie.
    Have a good weekend everyone !   I rocked it today …

  176. cwan/put verticals:
    I’ll sell off the long legs of the put verticals, as outlined below, if I can afford to take on more short put exposure as we near expiration.
    Near expiration (like we are now)and if I have the time to trade, I generally buy back short options whose price is under $.50 and move closer to the money trying to sell whatever is selling for a little over a $1.00. When that option’s price then falls below $.50 – wash, rinse, and repeat. So you work your way up towards the money, if you will.
    So if the short leg of a put vertical falls into that category of something I’d be willing to sell near expiration (i.e, selling for about $1.00), and I can afford the short put exposure in the grand scheme of things, I’ll sell off the long legs to leave the short legs exposed as short puts. This is probably roughly in line with Peter D’s rule of selling off the long legs of put verticals when you’re within two weeks of expiration and the short part of the vertical is sufficiently (more than 10%) OTM.

  177. Cap
    Who told the big whopper lies Clemens or Cheny/Bush? I would rather have that trillion dollars spent
    in the USA rather than wasted in Iraq.

  178. I think someone is putting together a book…here is a good book chapter from yesteryear on stupid option tricks..  I have tons more bookmarks if interested on many different subjects.


    I did not get to the BIOD trade today, better than entering in this choppy market.  I will try again on Monday.

  179. Just read this page on iPad, the comments are backward(newest first).

  180. my comment to cwan from yesterday replying to his question is still "awaiting moderation" so here it is, hope it goes though:
    cwan / IB order cancellation/modification – yes, you pay for order cancellation and modification. It is just as described on their commissions information page.  They give credit for executions so if you have, say 10 executions, you can change/modify an order a couple of times and you won’t get charged.  But, if you style is to place an order, modify the price or quantity 10 times until eventually it gets executed, then be prepared to add $10 or more to your commissions.

  181. Two of my comments are awaiting moderation.  First time this has happened, seems to be something in the text of the comment, but what?  My other comments, both before and since, have gotten through just fine.

  182.  Phil,
    Is your interview with BNN available online?

  183. From Birinyi Assoc. -
    S&P 500 Levels to Watch – Possible Golden Cross
    Back on September 14th (link to post) we suggested that the third time could be a charm for the S&P 500, and a few days thereafter it broke through previous resistance at about 1125.  Now comfortably above the 200-day average and having held the 1125 level the market is pausing at 1150.  1150 is a short term high from January and also the 176% projection level from the March-09 – June-09 Fibonacci Projection.  Technicians are watching it closely and based on the chart below their actions are having an impact.  Look for a close above 1150 to confirm the recent uptrend.
    On different, but still technical, note: the 50-day average is now rapidly approaching the 200-day.  Shown below, it is going to take a significant sell-off to avoid a golden cross.  (We wonder if or when this point is going to come up in the media.)  The bottom line is that we’re in a new month and a new quarter, momentum is to the upside and look for a big move either today or Monday which will set the trend for the rest of the month.
    New support @ 1125- resistance @ 1150.
    QE2; projected election rally; some positive earnings news w/o dismal guidance- we are climbing the proverbial wall of worry and going higher. Monday may be very interesting.

  184. Time to short oil? But what about the dollar?

  185.  My latest thoughts on covered calls are up on my website.  Click on the user id.  I am thinking more about how to do hedges in an IRA.  Anyone interested in a wider discussion of that issue?

  186.  revtodd – unfortunately, i think that hedges are easier in cash/brokerage accounts.  My major hedges are SDS call spreads (March)  and 2012 FAZ puts (sold puts).  Phil’s DIA hedges are very diffucult to manage if you can’t cover/uncover like he does during the day plus it requires skill, timing and experience.  SDS spreads are a great ghetto hedge!

  187. Good morning!  (Ran 

    Ticking off Canada/Cap – Well I did say they were a nation of bagholders, was that good enough?  

    Dollar uncertainty/Gel – You have to take the BOJ seriously, they could really jam up the dollar on a short-term move. 

    YRCWD/Grant – That will be interesting. 

    Hedges/Rrahbar – Sorry I was out the door but the same ones we played all week should work unless we get a crazy dip Monday.

    HPQ/Cwan – I’m still rolling around that choice.  On the one hand, it’s smart for HPQ as they need to push more into software and, logically, they have enough seasoned guys in hardware that it’s not like they need a lot of direction from the top but, then again, that’s a dangerous model as the company can end up lacking direction because the hardware people will be disinclined to listen to Apotheker on hardware issues (not to mention the normal resentment from people who were passed over).  HPQ gets very attractive in the low $30s and isn’t too shabby at $40 so we can watch it for an entry opportunity.  

    HTZ/Jbur – That’s right, I forgot about them!  Thanks for color commentary – very useful!  

    Book/Pharm – Oh yes, we must get onto that!  This thing with my Dad has me running around like crazy, I haven’t gotten any forward motion going, unfortunately.  Also, comments under "Stupid Options Tricks" are a must read in the Strategy Section. 

    Moderation/Jordan – Our new spam filter is great but a little aggressive.  Once I white list you a few times it seems to leave you alone after that (worked for rainman, who was having an issue a couple of weeks ago).  I was told that changes in the pattern of spam it does filter cause changes in false positives so it’s hard to say what it is but I think your comment (11:01) may have sounded like a solicitation for a brokerage.  

    Oil/Pstas   – If it wasn’t for the dollar on the rocks, oil would be way lower.  40Mb takes 8 weeks to work off at 5Mb per week!

    Ghetto hedges/Jo – LOL!  I agree, the mattress play is for a more active management in this kind of market while the disaster hedges are meant to be "set and forget."

  188. OK, here are a bunch of chapters:


    Smart Portfolio Managment Pt 1 Pt 2 Pt 3

    Vacation Proofing UR Portflolio

    5% Rule

    How to Buy Stocks for a 15/20% Discount

    Short Strangles (Peter D) Pt 1 & Pt 2 (not sure if these can go in?

    Stock Market Parachute

    DIA Puts Explaination

  189. Another DIA P explanation.


    Bookmarks actually coming into use!

  190. OH no, TOS has an update…..

  191. Hi Phil — Are we still short  NFLX or the reverse today is a fake , I still hold Nov 175 short call should I decrease my position?? Thx