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Turning $10,000 into $50,000 by January 21st (Members Only)

We're halfway to goal – let's see if we can double up in two months!  

We began this virtual portfolio on June 11th and we ran $10,000 to $26,000 by October 4th, when I decided the risks of playing with our 160% profit in what was getting to be a very choppy market outweighed the potential reward of doubling up again.  Two months later, I'm not entirely sure I've changed my mind but we've had so many nice, short-term opportunities lately and we've been doing so many short-term, focused trades as we try to keep to cash that I thought this would be an ideal time to sharpen our short-term trading skills and spend time focusing on trades we can all follow and learn from.  

The idea of these picks was to find $10,000 worth of small plays that we thought could gain 500% by Jan 21st as part of a larger virtual portfolio. If you can do this with just 10% of a $100K virtual portfolio or 5% of a $200K virtual portfolio, that’s plenty of risk for these uncertain times and it’s a nice 25-50% bonus on the entire virtual portfolio if it works out. Risk can be a component of a conservative virtual portfolio if we wall it off safely.  We wanted to increase our shopping budget for Christmas and, while 5x would have been nice, 2.5x in the hand beats 5x in the bush – always keep that in mind as we try to turn $25K into $50K.

What kind of trades were successful last time?  It wasn't really directional trades so much as opportunities, like grabbing BP on the cheap and, of course, our lovely artificial buy/writes like C, which was one of our surviving spreads and should finish off at the December goal of 1,150% profit.  Of course we had a better VIX then – we were in the 30s in June and it's not as simple to make money by just selling options at VIX 22 but it's better than 18, where we've been since early October and that's one of the reasons I lost my taste for this Virtual Portfolio – too much risk and not enough reward with the low VIX!  

The lower VIX is a also why we've been taking more directional plays in Member Chat.  If it's a bad time to sell premium, then it's a better (it's never good) time to buy it.  I tend to look at premiums like an appraiser – there are cheap ones and expensive ones and if something is too cheap to sell (always our preference), then maybe we should consider buying it.  Of course I'm expecting the market to dip and the VIX to pop so a very good time to consider getting back into the premium selling business that we love so much.  Before we begin, let's take a giant step back and look at the big picture on the S&P chart:

See folks, this is not rocket science.  I have a 5% rule, Fibonacci has a regression series and they both say the 50% line (1,200) is a BIG DEAL on the S&P and they both say, more or less, that the 40% and 60% lines (20% moves off 50%) are also BIG DEALs and, as Captain Kirk so often tells us – you can't argue with the Big Deal.  Oh, in case some of you are wondering, this is a WEEKLY chart.  Each one of these little ticks represents 10,080 of the 1-minute ticks you folks usually look at.  When you look at the BIG PICTURE, you can see how well behaved the S&P actually is in it's little channels.  For some reason, the Fib tool won't do 1,600 so that's why those numbers are a bit off but you get the idea, we are getting perfectly normal market behavior and you can see by those 6 red circles that this is probably not a good time to bet long.  

Notice that the 5% rule dictates we can expect a 20% "weak bounce" (sometimes called a dead cat bounce) off significant moves.  "Significant" then depends on your time-frame and here it is years.  We can see a move WAS significant after the fact but that doesn't do us a hell of a lot of good in our betting, does it?  So we use the 5% rule to ANTICIPATE what is LIKELY to be the termination of a move and that is, of course, 5%, 10%, 20%, 40% and 50% so those are our "pivot points" and we expect more and more resistance as we move up the scale.  As you can see on the chart, that 40% line gets particularly heavy as Fibonacci sets in at 38.2% and enough people do TA with Fibonacci that it's very hard to cross it without seeing some resistance selling (or buying, as the case may be).  

The "art" of the 5% rule is learning to ignore spikes.  That's VERY hard to do while a move is in progress and that's the sort of thing I was doing early this month as I felt we were in a spike, even though we were breaking our levels.  My logic was based on the dollar being at 75.6 at the time as well as the Fed's POMO announcement.  Since those were clearly both additional upward thrust for the market, I was less impressed by the move over our levels.  Also, note the volume wasn't too exciting either.  You don't want to have red flags like that while you are making new highs… 

That's another reason I'm not impressed with the overall move so far, we have a 50% retrace of our drop from the top but the Dollar has dropped 10% during that time so we kind of need to move the S&P down 10% to compensate and that puts us move along the 40% line than the 50% line and that can indicate a failure to recover, especially as we are double topping (possibly) right here.  If everything goes well: If we don't have an Oil Crisis or Food Inflation or a China Meltdown or a Euro Default or a poor shopping season or anymore US Financial Meltdowns – then I think we can drift along between those 40 and 60% lines and maybe head higher if we clear another year.  If, on the other hand, pretty much any of those things go wrong – it's a very easy ledge to shove the markets over

Inflation is the other wild card.  A falling Dollar can move us towards that 60% line and, once we get over that, it's a clear shot to 100% but that's a BIG move and, in the grand scheme of things, we won't miss much if we play it cautiously until we confirm the 60% line vs. how screwed we can be if we're over-invested in a rally and have another dip like Sept '08 where it was, if you remember, not all that easy to liquidate quickly without taking some big losses.  

That's all my cash call boils down to – playing it safe in uncertain times.  I waiting until I thought the Dollar was bottoming at which point cash (being US Dollars) became a valid investment premise and here we are, with the Dollar up 9% from my cash call so, boring though it may be – sitting on the sidelines has been profitable.  They said I was crazy when I made the UUP call back then and I wrote that Dollar 88 is a possibility (up another 10% from here) yesterday and I've already been getting hate mail on that but check out the weekly dollar chart:

Now I'm not TA guy but dollar bears should be VERY concerned if we break up here as conditions are ripe for a big run.  The EU did get their act together and put up a $90Bn bailout, which may be enough to stop the Ireland slide and they've made provisions for additional bailouts for Portugal, Spain etc. should they become necessary.  Will this be enough to really calm Europe down or will analysts immediately say it's still not enough?  

We'll have to play things by ear as we look at the market reaction this week so don't expect a bunch of plays for this Virtual Portfolio right out of the box.  We still could very much go violently in either direction and we'll just be looking for opportunities in Member Chat this week.  Japan is very happy to get the Yen down to 84 to the Dollar but that will be another wild-card this week as a weaker dollar will worry Japan.  At least some of gold's $1,360 is based on EU fears so it will be interesting to see how it behaves this week if those fears are cast aside.  

No immediate trades on the 1050 Virtual Portfolio then as we'll have to watch and wait for a good opportunity – it would suck if the markets picked now to calm down as calm with a low VIX is NOT the environment we want to try to double up in.  Our financials are still beaten down and that's where I'll be looking first for opportunities.  One trade I'm looking at is BAC, which one would hope can hold $11 so selling 10 Jan $11 puts for .62 ($620) and buying 20 Jan $11/12.50 bull call spreads for net .54 is net .25 ($500) with $3K of potential upside at $12.50.  BAC is a mess and I have to think about whether the risk is worth it but that's the kind of trades we want to look for if the markets are turning positive again.  

 


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  1. I really like your analysis AND the way you think! It makes sense to me.
    I like the way your analysis considers the possible effect of “event variables” (oil shock, default shock, inflation shock, etc) all in relation to long term TA.
    From what I know about the market….it is always “forward looking”. It wants to know where are we headed from here usually based on macro economics, unemployment, earnings, historical P/E, and forward looking P/E. If these economic variables begin to trend in a more positive direction….well I’m just wondering how all this can be integrated into you already excellent analysis?
     
    Randy


  2. This is interesting on China — Chanos (correct Enron, Tyco, mortgage bust prognosticator) has all his eggs in the China-bust market. 
     
    In the article there are some hard numbers on China’s real estate boom, something like a billion new square meters per year, that is particularly interesting. When this bubble bursts, China’s down, commodities down (Canada and Austraila get beat up), dollar strengthens, and interest rates / CPI temporarily go low or negative before a big rebound.
     
    There’s a million ways to play this but what are the best plays to get started on? Obviously something a few months out because timing is so difficult with busts. There is always the theory that missing the first 20% is meaningless because you have the remaining 40-60% to be captured, so do you just wait it out?
     
    My personal opinion is China is particularly vulnerable because politically the citizens of their country are ready to join the 21st century (the whole "actually elect your leaders" kinda thing). So a financial bust will deliver a 1-2 punch, the first being from the financial upheaval and the second from the political.  People are only so forgiving when economic times are good. When they’re bad, watch out.


  3. Phil- i’m still in the new member category (first month). You mention your "5% rule" that you are citing along with fib support. Searched site but did not find anything jumping out as describing this. What is this 5% rule you are referring to?  thx


  4. scottmi- 5% rule- there is a dissertation on this which I saved from July 16th 2009 at 12:55 AM- I don’t have the link but I saved the comment as a MS Word file. If you cannot find it, post your email and I will send you a copy.
    Essentially, the 5% rule says that prices tend to move in increments for a variety of reasons- program trades, rounding, human nature, etc -  a bit confusing but it means on a 100 point move, it would be "expected" that there would be a retrace of 20%. 
    Similar to Fib levels but it is just another tool to evaluate relative pricing levels


  5. Momo stock insanity: 
                      PCLN    CMG
    1 wk:        0.25% 11.50%
    1 mo:         10%      20%
    3 mo:         43%      70%
    6 mo:         115%    82%
    1 yr:           100%     200%
    2 yr:           500%     425%
    5 yr:          1600%   500%  
     
    CMG is up 11.5% this week alone. When I read comments and people are like "well, based on their numbers and McDonald’s etc etc, the valuation really isn’t that high," but here is a major point that they are missing — the numbers they are using came out on Oct. 21st! That was 50% ago. So why is CMG up 50% from 10/21, it certainly cannot be based on fundamental "numbers?" Otherwise they would’ve hit 255 on 10/22, right? So the remainder is momentum. ETF’s, rigged hedge funds, possible ‘buy-out’ rumors (please spare me the laughing on this idea though), and the like swallow retail suckers in then the music stops and the hedge funds already have an ass in every available seat.


  6. Bio,
     
    That’s amazing.  Did you ride them up?


  7. VEGAS Update:
    [I'm not sure where I should post this, but I'll do it here, and then I'll repost in the daily chat, after market hours]
    I’ve been in contact with the Wynn about MLK Weekend.  They have directed me to the Encore, which is the new part of the Wynn.
     
    These rates are good for Friday, January 14th to Wednesday January 19th (I’m not sure why they gave me the rate until Wednesday, as most of us would leave on Monday, but it’s there if you want it).  There is no set amount of days.  You can book one night or whatever.  
    The rate is $239 for Friday and Saturday, and $189 for Sunday night to Wednesday.  (I checked the Wynn website, and this is a discount, generally speaking).  
    As for a meeting/conference room, I told them that we wanted a conference of between 30-50 people, with the basic beverage thing, coffee, soft drinks, etc. (of course, being Vegas, they will provide whatever you want). They gave me a quote of $1000 per day, which I suppose is negotiable, but, even if it weren’t, it’s about $35 per person.
    Please note this is all open for discussion.  I chose the Wynn because I like it, and I’ve stayed at most of the hotels there. I am open for other ideas.  
    Any feedback you have would be welcome.
     
     

     


  8. 5% rule – read the content behind the link first and then the article I just linked to.
    You can also click the ‘tag’ at the end of the post labeled ’5% rule’ and see all the content that references the 5% rule.
    In general I find google’s search is better than the one built into this site… you can narrow down posts to psw only by adding ‘site:www.philstockworld.com’ to any google query. So something like ‘site:www.philstockworld.com 5% rule’ will return a lot of relevant results referring only to this site. FWIW.


  9. Kwan--thanks for the link and its really good to know about the google search-- i have had some frustrating times trying to track something down--


  10. how did you draw those fibo lines? why was the starting point 800?


  11. You’re welcome datuu!
    Re: black friday sales this year – according to satellite photos of parking lots the numbers are up over previous years. (35% compared to 31-32%)
    Does this mean people have more money to spend or is less shopping being conducted online?


  12. Esco- thanks for looking into that. I willl be staying with my friend but definitely will contribute to whatever the charges are for conference rooms etc…


  13.  Phil, 
    would you mind explaining why you drew Fib lines the way you did on the $SPX chart? If I had to draw them I would go from the high around May’08 to the low around Mar ’09 and of course the 50% line would lie much lower around 1050.
    Thanks in advance.


  14. Good morning!

    Holiday shopping survey going well – please contribute.  I’m off to NYC again later but for a meeting, not shopping.  

    Variables/Retired – Hey, I forgot about State-level defaults, silly me!  That’s what I find crazy, we’re looking forward as if everything is "fixed" and nothing bad can happen.  I commented a few weeks ago that there is no discounted risk premium in the markets at the moment and that makes us highly susceptible to an event shock – just like in 1999 and 2008.  If the variables (or inflation) trend up, then I will adjust TA accordingly.   Had we accomplished our current levels on a strong dollar, I’d be arguing that we are on the verge of breaking the 60% line if we adjusted up but that’s not the case right now – the distortion is going the other way and a weak dollar makes our markets look stronger than they really are.  

    China/BDC – Chanos makes good points and when China breaks it will be a global disaster of biblical proportions but you have a $5Tn economy with no debt and $2.5Tn in reserves which would be like the US having no debt and $8Tn in reserves – you can ride out a heck of a lot of problems with that kind of firepower!  So we could drop like a rock if China (or one of a dozen other possible blowouts) fails us or we could fly back to our highs on a devaluing dollar and continued Asian growth so I do think it’s best to sit out that first 20% and we can take full advantage of the next 50% after that.  Obviously, we’re not sitting totally on our hands but clearly we’re in a well-defined channel and that means we don’t bet in the middle (S&P 1,200) until we see a move forming and then we can play through to the 40% line (1,120) or the 60% line (1,280) and then go back to waiting to see which way things break off there.  

    Keep in mind that I did call the bottom on the button at 1,000 in late June, even though it looks like a total breakdown on the chart.  What it really was, was a 50% retrace off the move from 800 to 1,200 and the completion of a 20% pullback from the April high so it was worth taking a bullish chance at the time.  I jumped the gun getting cautious in early October but that was a little artificial as the dollar dove and the Fed rolled out QE2 – those are the kind of things that distort the charts short-term and give us those spikes I like to throw out.  

    Welcome Scottmi!  Hope you found enough on the 5% Rule (thanks to all helpers).  Make sure you read the Strategy Section and the linked article on scaling in as well as the comments below that.  I’ve thrown a lot of general explanations of things down there.  Hopefully next month we can get the PSW Wiki started and then we can start gathering this stuff in a more organized fashion.  

    Good point BDC, it’s totally irrational from a value standpoint and I do think a lot of these headline stocks are being used to goose the market.  You can herd a lot more sheeple into the market when someone like Cramer can say "If you had listened to me and bought PCLN last year, you’d be up 1,500%" or whatever…  I get about 20 ads a day like that in my Email – even Gareth (Option Sage) has resorted to that kind of in-your-face advertising for Market Tamer.  I just can’t bring myself to do it but if I had partners or investors in PSW or whatever – I’d probably have to bow to that pressure too as it’s irresponsible NOT to use the kind of ads that seem to work and, sadly, that’s what it takes to bring in new subscribers for most people.  The big difference for me is I don’t really want a lot of new people (and we don’t have a lot of turnover) but we’ll see what happens when it’s time to market the newsletter, which is going after that thicker-headed general public that seems so hard to crack.  

    MLK/Esco – Yeah tick, tick if you guys want to get that done!  It looks like the average cost for the Encore is $300 a night so $239/189 is a good price.  Does the conference room fee include A/V equipment and web connections?  What about lunch?  I would point out that I just put in the Hard Rock into a travel site and it gave me $111 per night but that casino is off the beaten path, although I love the pool and the restaurants there…  That site (link) has a pretty good view of all the hotels on the right side priced for the selected dates so, if anything, it’s a good basis point to negotiate from.  They have very good rates ($240) at THEhotel at Mandalay Bay, which is a fun hotel and those rooms are huge and nice.    Caesar’s has Deluxe at $231 and down to $180 for regular rooms but I get a suite for free there as that’s my usual spot!  I will go wherever but I caution that this thing is getting close and you guys need to get it together or you’ll mash up into the holidays without a commitment and then there’s no way we’ll make a Jan date.  Also, you need to consider (I haven’t been to Wynn so I don’t know) how many "normal" priced tables there are because if people are concerned about $50 one way or the other on the price of a room, I would think they wouldn’t be too pleased if all the blackjack tables are $50 minimums or $25 craps tables etc…  One of the things I like about Ceasars is they have a huge poker room with constant tournaments so I can get up at 3am and play a tournament before my family wakes up but also, across the street, is a cheap casino with $1 craps and blackjack so I can take a walk and go have some fun tossing tons of chips around without worrying about it.  At $25 a chip – you tend to be a little more concerned!  Also, you have to think of 2 dinners and where everyone will eat and if they have a restaurant that’s good for hosting 30 people at a table or in an area and, of course, if we don’t have a poker tournament, then you’ll have to come find me at night!  

    Google search/Datuu – I use that myself to find things.  If you put in "www.philstockworld.com:" and than what you are looking for, it does a pretty good job of searching the posts but not the comments.  

    Satellites/Kwan – CNBC was pushing that system all day Friday like it was the coming of the messiah but A) I’m not clear they are controlling for time of day and B) This completely ignores the fact that almost 10% of all retail stores have gone out of business and NOT generally in the big malls so they are taking no account whatsoever of the fact that somewhere else in a town, in a strip mall or a Circuit City or Linens and Things parking lot (for example), there are 500 totally empty spots where once there were 300 cars on a typical day.   This is a totally flawed sampling method because they don’t have a real history and they are not controlling variables.  Thomson Reuters projects a 1.5% increase in retail sales this year – that is probably about right and it still sucks because last year was up 0.6% and we were down 6% in 2008 so about 3 more years to catch up to 2008 at this rate….

    Here’s the ICSC holiday forecast guide - much more aggressive numbers than Thomson (about 3% expected). Also, don’t forget INFLATION – these numbers are NOT adjusted so 3% would be barely keeping up with even the government’s BS 2.2% inflation numbers and you know PPI numbers are rising much faster than that so – WHERE ARE THE PROFITS?  

    Fib lines/Dougie, Msf65 – It’s a tool in Stockcharts.  I use 800 because I don’t count the panic spike down in the S&P as "real" in the data series.  A very important part of the 5% rule, which I apply to all TA and pretty much no one else seems to, is I throw out aberrant data points.  I mean, they teach us to do that in Statistics 101 so why is it that "professional" technical analysts never seem to do it and treat any ridiculous spike as if it has some significance?  Of course, we have to respect the spikes as there are simply so many TA guys who do follow it but I ignore it when I’m looking for "real" trends.  Similarly, the S&P never quite made 1,600 (1,576.09 in Oct 2007) but it’s close enough that we can call that the rejection point that they’ll need to cross one day and 800 and 1,200 have behaved so well that it has, over time, firmed up my belief in 1,200 being the mid-point and, therefore, if 1,200 is the middle then 1,600 MUST be the top.  

    As the Red King said to the White Rabbit when they discussed proper TA level-setting techniques: "Begin at the beginning and go on ’till you come to the end; then stop." 


  15.  Phil,
    What do you think of UBS and it’s exposure to the EU mess. It is showing a lot of weakness. Question: Would you go short and do you have recommended play.
    Thanks


  16. Vegas --
    Phil, thanks for the info and the ideas.  I will check out Caesar’s; perhaps I can get a better deal for the group, as well as a conference room.  Also, I agree about the $25 or $50 table thing.  I’m not a huge gambler, and sometime’s we’ll go downtown just find some "low pressure" stakes.  No cheap tables at the Wynn.  The location is also in the center of the Strip, with the Wynn being on one end and Mandalay Bay at the other.
    As for the Wynn, yes, I believe the price for the conference room includes AV and wireless (but I’ll confirm), but no, it’s not including food.  But they seemed ready to do whatever, and I can get some basic cost structure.
    And the clock is ticking.  Plenty of flights from where I’m from (SoCal), we’re all traveling from different places.  So, let’s all make a firm decision soon!


  17. escohen- I am in for MLK but I was hoping that we wud stay around the $100 range for hotel rooms. I don’t know if that wud be possible but I am on a budget :)


  18. Phil
    Did I miss something?
    I want the plan to turn 10k into 50k by jan 21st?
    Can’t wait to get started on that one lol
    You just teasing us?


  19. Good morning!  

    UBS/Novice – They are nice and beaten down, looks more like a buying opportunity to me but they have a Madoff issue and Ireland won’t really be "safe" until Dec 7th if they accept the financial gang rape the EU is forcing on them so it’s just a bit dicey.  I’d like to see them go lower so they make a better buy at maybe $12.50 but I wouldn’t want to bet on it happening. 

    Vegas/Esco – Well, if not MLK day, the next market holiday is President’s Day on Feb 15 as a backup but, after that, the rest are the kinds of holidays where people do things with their kids so those are the only two real good dates.  

    $100/Nicha – I’m not in charge but I personally doubt I’d want to stay in a hotel that had $100 rooms!  I’m not a snob about hotels but if I’m going to spend $500 to fly to Vegas for 3 days I’m damned well going to stay somewhere nice…

    Missing something/RW – The only thing you missed is a very choppy market since early Oct.  Hopefully we’ll set a proper direction one of these days and then we’ll have plenty to play with.


  20. PNC Christmas Price Index (buying the things on the 12 Days of Christmas song) jumped 9.2% this year, which is the biggest increase ever.  That’s probably a better indicator of real inflation than the Government’s nonsense…


  21. I’ll keep a log at the end of each day and update the comment when the trade closes (virtually, of course).  Better than constantly updating the post itself and I can Email the comment at the end of day.  All these trades are from today’s Member Chat, of course:  

    Monday’s 1050P trades:  

    • Buy 20 DIA $112 calls for .94, gave up at .84 – $200 loss
    • Buy 30 DIA $112 calls for .75, out at $1.05 – $900 gain.  
    • Buy 5 PCLN Dec $350 puts at $1.25, still $1.25 – looking to DD at .75 or take profit at $1.50.  
    • Buy 10 XLF Dec $14s at .60, now .70 – we decided to hold as we had a nice win on the DIAs so these became our overnight risk.  

    Not bad for our first day trying to make $500 a day.  We’re up $700 cash and ahead on our CAR (Capital At Risk). 

    This is still a very dangerous market and our goal is, as always, to make 20% and run.  Running of course means setting trailing stops and we do lean towards cashing out at the end of the day on unhedged positions pretty much no matter how well they are doing but not every trade is a day trade, of course.  With PCLN, I had said we had a plan to DD at .75.  When we have a plan to scale in, obviously we don’t need to jump back out very quickly.  

    I’m hoping oil jumps to $87.50 so we can short them again.  They are poking around $86 overnight but these small portfolio trades are very, very dependent on whether or not the entry is good to the nickel so don’t assume anything until we see where things are.  I thought we were going to get a nice VIX move up but it squashed back to 21.50 at the close – that’s how fast we can go back to complacency in the markets!  

    Tomorrow we have Case-Shiller Home Prices, Chicago PMI and Consumer Confidence.  Europe had surprisingly strong consumer confidence numbers so we’ll see what happens here but it’s going to be more important what kind of preliminary data starts trickling in from the retailers.  

    Wednesday is a biggies with Mortgage Applications, Challenger Job Cuts, ADP Jobs Report, Productivity and Unit Labor Costs, ISM, Construction Spending, Oil Inventories, Auto Sales AND the Fed Beige Book, which I think may show optimism building into the holidays (as they want to spin it that way) so, if we are going to get a push up, Wednesday should be the day.    

    Thursday is the usual Unemployment but we’ll be very interested to see if they get a trend off last week’s "good" numbers and Friday is yet another major data day with Big Kahuna Non-Farm Payrolls along with Factory Orders and ISM Services.  

    It’s going to be an exciting week and thank goodness – it was getting kind of dull into the holidays!  


  22.  Tell me more about the Vegas trip.
     I’d be interested in going… 


  23.  Phil, you need to tag this article as Portfolio Review because right now it’s not coming up when you click the Portfolio tab.


  24. Good Morning!  

    There are a lot of interesting news items and charts at the end of Tuesday’s comments as I was up early gathering news.  Some will make it to the post and many will not so take a look if you have the chance.  

    Tuesday’s 1050P Activity:

    • We’re calling the Qs a no trade because I screwed up and said puts (they did hit goal at $100) . 
    • 5 PCLN is done with a .50 profit – up $250. 
    • 5 NFLX Jan $155 puts are $1.75, down $125 – those we can hold onto.
    • 10 XLF is done with a .05 profit – up $50
    • 5 CMG $230 puts are $1.60, up $125 – the plan remains to DD at .85 or get out at $2+.  
    • 5 DIA $108 puts were not worth keeping and we got out even

    So another $300 added to cash for the day and that leaves us with just NFLX and CMGs in play, which is scary as it’s about $1,500 and they are insane stocks but everything about NFLX’s move yesterday looked like a blow-off top to me and this thing could do really well on a sell-off and we expected a pop on Wednesday since Saturday so let’s not be all surprised that we’re actually getting it.  

    Tune in for more fun later!  


  25. Wednesday’s 1050P Activity:

    Today was disappointing as we continued up all day but I do think we’re possibly just repeating the the patterns of the 18th (Thurs) and 24th (Weds) both of which led to corrections.  If we’re wrong, we’ll sure know it tomorrow morning as anything less than a break back below 11,200 on the Dow and 1,200 on the S&P means we may actually be breaking up and out here.  

    Our trades are ALL bearish and it’s a little scary but we’re trying to make a lot of money and that’s kind of hard to accomplish without taking chances.  

    • 5 CMG $230 puts at $1.35, now $1.45 – fine
    • 5 NFLX Jan $155 puts at $2, now $2.05 – fine
    • 5 QID $11 calls at $1.30, still $1.30 – less worried than I was this afternoon
    • 10 DIA $110 puts at .90, now .82 – DD at .70 if possible (LOD was .74)
    • 5 XRT Jan $44 puts at .80, now .87 – fine
    • 5 USO Jan $35 puts at .97, now .84 – DD at .73 if possible.  

    Not so terrible considering how disappointed we were by the movement but we were helped by a comeback in the VIX to 21.36 from 20 (6%) which boosted our premiums.  That’s always something you need to be aware of, especially for bearish plays as the VIX tends to go down as the market moves up so you get a double whammy.  This, of course, works to your great advantage when things go the other way.  

    So cash-wise, we’re still up $1,000 for the week, but now we’re carrying a big risk so we don’t want to end the week worse than even and we’ll have to pull the plug if things turn ugly (market up) on us.  We got really good news on NFLX as they got a court ruling against them but, unfortunately, one of the Bernanke Bears said he was going to put all of his money into it and that may boost them tomorrow as it seems to me that a cartoon bear is every bit as credible as Cramer!  

     


  26. Thursday’s 1050P Activity:

    I made a big mistake in yesterday’s post as I totally left out Wednesday’s bullish cover, which was a play I called at 12:15 on Wednesday when we killed the FAS calls.  It was:

    20 FAS Weekly $21 calls at $1.48 – stopped out even already so we’re looking for another long, probably 20 DIA $112 calls for about $1.85 if the Dow gets over 11,250 so let’s keey an eye on that but hopefully that was just a flush.  

    That was supposed to be protecting our shorts but, because it was in a different format that the other trades I was reviewing in that post, I didn’t pick it up when I copied them over for review yesterday.  The purpose of this exercise is to teach day-trading and position management and having a balancing trade is key to riding out market moves like this one.  

    I apologize for missing it and it’s too late now as we hit our upside goal of 11,350 on the Dow as well as our other targets (from yesterday’s chat) of S&P 1,220, Nas 2,575, NYSE 7,700 and RUT 750 above these levels, we’ll be looking at some 500% plays to cover but I still don’t believe we’re going to need them.  

    Meanwhile, we’re not going to count the missing DIA trade but PLEASE – if I forget to put something in or forget to follow up with something in Chat – let me know!  It’s very hard to answer 200 comments a day, scan the markets, keep up with the news (this is my normal day) AND track a special portfolio so your help would be greatly appreciated.  If we are not balanced – you should say "Phil, do you really want to be so out of balance?"  The answer is probably not…

    Following up on the positions we were tracking:

    • 5 CMG $230 puts at $1.35, now $1.85 – the plan was off at $2 but I think we’ll do much better if the market falls today.  We’ll keep an eye on this.
    • 5 NFLX Jan $155 puts at $2, now $2.35 – I truly believe NFLX will take a big fall, but it’s very persistent.   
    • 5 QID $11 calls at $1.30, now $1.10 – DD at .70 if possible.
    • 20 DIA $110 puts at .77 average, now .45 – these were doubled down at .53, and we have 3 weeks left so fine as a hedge to upside plays we’ll be taking if we break higher. 
    • 5 XRT Jan $44 puts at .80, now .72 – fine, no DD plan
    • 10 USO Jan $35 puts at .85 average, now .70 – we doubled down at .73, long time left so we intend to let the January NYMEX delivery cycle play out.  

    On the whole, I plan on giving up and getting bullish on Tuesday if we don’t crash but it’s going to be a very crappy 4 days until then if the market keeps rallying.  Jobs are going to be a big deal at 8:30 but the very big deal is whether or not they extend unemployment benefits for 2M people TODAY!  Then on Tuesday, Ireland’s Parliament votes on the EU aid package and the defeat of Cowen’s supporter in last Thursday’s election has left his party, who are likely to be thrown out of office right after Tuesday’s vote, relying on two independents to pass the aid package.  

    Keep in mind that Ireland is being forced to accept these loans to save Europe – Europe is not saving Ireland.  

    So, ideally, the profits from the DIA calls should have funded the double downs and we should have had money left over to roll up as well but we don’t so we’ll make the most of things.  I’ll have an upside cover in the morning post as well as something in the Alert later.  


  27. Monday’s 1050P Activity:

    We closed the 5 CMG $230 puts on Friday for $2.50 (up $575) and the 5 NFLX Jan $155 puts at $2.50 (up $250) so that’s a total of + $1,825 cash for the week off our $26,000 starting base.  Not bad but it looks like we may be in danger of giving it all back today.  With just 2 weeks to go on our Dec plays, we have to roll out but the question is, are we still bearish and do we have a legitimate upside strategy?  

    • 5 QID Jan $10 calls at $2.30, now $2 – Rolled from to Dec $11 calls for $1.
    • 20 DIA $110 puts at .77 average, now .30 – We were hoping to get out at .56 but that’s not happening, nor is .30 looking good anymore.  When you are looking at a total write-off like this (probably $500 out of $770) you can risk the $270 that’s left by flipping to a vertical.  IF we get a good deal, I’d like to sell the $113 puts for perhaps .70 and then roll to the $114 puts for .70 or less so we spend nothing to move to a $1 vertical that at least has a chance of paying off if the Dow is beaten back from 11,500.  To defend the upside, we can then go for a positive play above the 1,450 line (assuming we open up 100).  
    • 5 XRT Jan $44 puts at .80, now .50 – No longer fine.  We get some retail sales numbers today so we’ll see what they say.  I’m generally inclined to spend .40 to roll up to the $46 puts if possible.  That puts us in 5 at net $1.20 on puts that were $1.30 on Friday with 6 weeks to go.  With just $600 committed, we can easily DD at .80 and that would put us in 10 at net $1 and down 20%, not terrible but again, we need an upside cover before we start raising our short bets but the rolls are necessary in either case. 
    • 10 USO Jan $36 puts at $1.10 average, now .80 – we doubled down at .73 and rolled up from the $35 puts for .25, long time left so we intend to let the January NYMEX delivery cycle play out.  
    • 2 PCLN WEEKLY $400 puts at $1.25, still $1.25 – PCLN took a little dive at the end but we’ll be lucky to get out even on these if the market is flying. 
    • 5 NFLX Jan $155 puts at $2.30, now $2.20.  I regretted not doubling down on those last time they dropped to $1.70 so that’s our plan this time.  On the whole, I want to have shorts over the holidays, even if we do get long on some things for the next couple of weeks.  

    So, we could cash out and be up about $1,000 and, in this very uncertain market, that is not a bad plan.  As I’ll be writing in the morning post, it’s all about the Dow breaking 11,500, which is where we were in early November before things got ugly and we pulled back 500.  This is either an amazing breakout that reflects the New World Order or a double top that reflects the same old BS – I wish I was sure which it was – obviously, I’m smelling the BS but we can’t keep fighting the Global Fed forever as they seem to come up with a new way to pump up the markets every week.  

    Perhaps this is their last hurrah (Europe "fixed", Extending the tax cuts, Extending unemployment) but Ben could still firm up more aid and Germany can give in and drop another $500Bn on Europe and, of course, Japan could always do whatever ineffective thing they do next so there’s still some dry powder for the Central Banks to fire off between now and Christmas.

    May the Lloyd bless us, everyone!  


  28. 1050P Update:  

    We started yesterday at $27,825 with the following positions still open:  

     

    • 5 QID Jan $10 calls at $2.30 (net of rolls), now $2 – fine for now. 
    • 20 DIA $114/113 bear put spread at net .77, now .50 – No reason to change at the moment but we can roll the calls to the Jan $111 puts for about .12 if we have to (keeping the Dec putter) so keep that in mind if the Dow gets over 11,350.   
    • 10 XRT Jan $46 puts at net $1,  now $1.10 – This is the problem I’m having with this portfolio.  It’s meant to be for small players but now there are 44,801 open contracts at this strike!   Come on guys – be realistic… 
    • 10 USO Jan $36 puts at $1.10 average, now .98 – we doubled down at .73 and rolled up from the $35 puts for .25, long time left so we intend to let the January NYMEX delivery cycle play out.  
    • 4 PCLN WEEKLY $410 puts at net $1.92, out at $3.50 (up $632) 
    • 10 NFLX Jan $155 puts at net $2, now $2.70 – Stopping out at $2.50 if we have to, would have been smarter to take $3 and ran so half out there if we should be so lucky as to get another dip.  

    So that’s another $632 back to cash and we are ahead on the rest (net) – not something we want to blow even though we are a week behind (we need to make $2,500 a week) if we don’t hit goal Friday.  So let’s look for an upside cover, just in case. 


  29. Let’s take a look at the 1050P ahead of the markets:  

    We said goodbye to NFLX with 5 at $3.20 and 5 at $2.75 for a $975 gain to cash so $29,432 and I’m still hoping to squeeze $31K by the end of the week, which will still leave us with a tough $19K to make in the next 5 weeks so we’ll have to keep on our toes for some news-driven opportunities we can sink our teeth into.   

    Our open set is not quite as thrilling.  This is very much my fault for never replacing out anchor long, which was 20 FAS $21 calls at $1.48 (don’t look, you’ll cry) or the DIA calls that I screwed up the tracking on.  Even in the original post, we were supposed to go long on BAC at $11 and we folded the 10 XLF $14s (bought at .60) way too soon.  

    My problem in these trades is I hate to chase, especially in small, unhedged positions – and that can work to my disadvantage in a strong uptrend.  We saw the bottom in financials very clearly and entered several positions but we got stopped out by a pullback and then a sharp move up kept us sidelined.  We should have had better balance and once you get off balance – as you can see – it’s hard to fix!  

    What should we do?  Chase XLF at $15.50?  That seems crazy just 2 weeks after we sold them at $14.50, doesn’t it?  While my distrust of momentum plays keeps me from making a lot of big mistakes, it also can lead to missed opportunities but, as I often say – you have to know what kind of trader you are and I am not a big swing home run hitter – I like to hit singles and I like to swing for average.  Every once in a while, we may knock a few out of the park, but those are just happy accidents – my goal is to get 6 out of 10 right and make 20% or more on the winners and not lose more than 20% on the winners.  This makes running a very aggressive portfolio like this challenging to say the least – hopefully we can all learn to be better traders through this process.  

     

    • 5 QID Jan $10 calls at $2.30 (net of rolls), now $1.95 – fine for now. 
    • 20 DIA Jan $111/Dec $113 calendar put spread at net $1.02, now .68 – We spent .25 to roll the Dec $114 puts to the Jan $111 puts to buy more time to be right and now the Jan puts are covering the downside to bullish bets through that expiration.   This play is now effectively a slightly bullish play on the Dow holding 11,250 through next week but the roll is easy enough to make for the putter that we won’t cry if we get our sell-off.  
    • 10 XRT Jan $46 puts at net $1,  now $1.02 – This is the problem I’m having with this portfolio.  It’s meant to be for small players but now there are 44,801 open contracts at this strike!   Come on guys – be realistic…  

    A note on this point.  If you have a lot of people piling into a strike, you create a lot of motive for someone to make sure that strike expires worthless.  Obviously, it’s hard for someone to control a whole sector ETF but 44,000 puts is controlling $209M worth of stock and that ain’t chicken feed.  

    This is much more of an issue when people all pile into a short call or short put as you paint a real target on yourselves to "dare" "them" to try to force you to capitulate.  That’s why scaling in is key.  If you scale into, say, short NFLX Dec $195 calls at $3.50 and they go to $5, then you can DD no problem.  

    If they then pop NFLX to $205 and your calls are $7 but you are only 1/2 in, then you can still roll up to 2x the $210s or just roll to the Jan $220s.  So by scaling in at $195 you are giving yourself a margin of safety all the way to $223.50 – a 10% buffer.  Back to my baseball example – I’d rather try for 4 singles (1/4 entries) where I have a $28.50 buffer on a $190 stock than go for one home run where I move all in at $195 and have no wriggle room on the way up.  Keep that in mind!  

    • 10 USO Jan $36 puts at $1.10 average, now .82 – we doubled down at .73 and rolled up from the $35 puts for .25, long time left so we intend to let the January NYMEX delivery cycle play out into next Thursday.  At .70 I would like to DD if possible.  .66 was Thursday’s low and that would give us 20 at avg. .90, at which point we would look to get 1/2 back out at .90+

    So we have $4,000 at risk here, pretty much our entire profits to date and they are sort of all bearish.  We’re down about $1,200 already so we’ll have to be careful and we MUST find an upside play if we’re heading higher today.  Jobs are at 8:30 so not much we can do about it until the open but let’s get ready for action!   


  30. 1050P Update:

    We left off yesterday at $29,432 and the following remaining positions:

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.80 – were doubled down at $1.90 and still holding out hope. 
    • 20 DIA Jan $111/Dec $113 calendar put spread at net $1.02, now .70 – We spent .25 to roll the Dec $114 puts to the Jan $111 puts to buy more time to be right and now the Jan puts are covering the downside to bullish bets through that expiration.   This play is now effectively a slightly bullish play on the Dow holding 11,250 through next week but the roll is easy enough to make for the putter that we won’t cry if we get our sell-off.  
    • 10 XRT Jan $46 puts at net $1,  now .87 – still crowded at 44,000, we need someone to capitulate! 
    • 10 USO Jan $36 puts at $1.10 average, now .82 – we doubled down at .73 and rolled up from the $35 puts for .25, long time left so we intend to let the January NYMEX delivery cycle play out into next Thursday.  At .70 I would like to DD if possible.  .66 was Thursday’s low and that would give us 20 at avg. .90, at which point we would look to get 1/2 back out at .90+
    • 5 NFLX Jan $155 puts at $1.60, now $1.65 – these are new this morning, looking to roll up to the $165 puts for $1 (now $3, net $1.40).  

     We picked up 20 DIA $114 calls at .75 and those are hardly worth mentioning as they were ditched for just about even overall, perhaps $200 profit and we’re all out as of this morning, risking the weekend short at the moment.  The short DIA puts are still the only bullish cover we have but the up volume is super-weak this morning.  Europe is closing flat and, as I said yesterday – it looks like we’ll be doing the same into the weekend but, if we do get a big sell-off, I’ll be inclined to cash out as our goal was $31K for this week and I’d love to be in cash and at goal!  

    Let’s keep an eye on those financials – they are going to show us the way (but which one, I do not know):  

     

     

    CLICK ON CHART TO ENLARGE

     


  31.  Phil 

    1050P Update:

    We killed the 5 NFLX Jan $155 puts at $2.25 so $325 more to cash is $29,957 plus these plays in progress:

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.70 – were doubled down at $1.90 and still holding out hope. 
    • 20 DIA Jan $111 puts at net $1.30 (added .28 buy-back of Dec $113 puts), now $1.41.  We have flipped back to bearish here and it’s a lot of money so these are going to come off the table about even at 11,505.    
    • 10 XRT Jan $46 puts at net $1,  now .87 – even more crowded at 57,000, we need someone to capitulate! 
    • 10 USO Jan $36 puts at $1.10 average, now .63 – This is our DD point so 10 more at .63!
    • 20 XLF Jan $15/16 bull call spreads at .58, now .66 – fine as an upside hedge, stop is now .50 (raised from .45). 

    We’re looking at losing over $1,000 on our short plays if things keep going up and gaining $840 on XLF so not a terrible balance but we’re not playing to stay even – this is a very aggressive portfolio so be careful tracking it! 


  32. 1050P Update

    We have $29,957 in virtual cash, up $3,957 in 2 weeks but way behind $5,000 goal.  We also have these plays still in progress:

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.85 – amazingly,  these keep hanging in there, if we can get out even, let’s do that and, otherwise, we can stay in for the weekend. 
    • 20 DIA Jan $113 puts at net $1.77 (added .28 buy-back of Dec $113 puts, added .47 to roll up from Jan $111 puts), now $1.48 – Plan was to sell Dec covers but that did not trigger and now, facing the weekend, I’m too bearish to call for a cover.  This is a risky position though and if you don’t want to be that aggressive, there is no shame in taking a $600 loss (which we can very much afford) or, WHEN IN DOUBT, SELLING HALF at a $300 loss.  
    • 10 XRT Jan $46 puts at net $1,  now .87 – even more crowded at 57,000, we need someone to capitulate! BBY earnings were encouraging.  
    • 20 USO Jan $36 puts at $87 average, now .61 – We did a DD at .63 but oil is refusing to go down and we are running out of time in the cycle so expect action by tomorrow
    • 20 XLF Jan $15/16 bull call spreads at .58, stopped out at .50 (loss of $160) – Getting stopped out there leaves us bullish again but that’s the whole point of bullish covers, they are meant to be cheap insurance that you quickly get out of if you don’t need it.  Now we’ll be looking for a new bullish cover if we head up but that Dow is pathetic under 11,500.   

    We’re looking at losing over $1,000 on our short plays if things keep going up and we have no upside hedges at the moment – this is a very aggressive portfolio so be careful tracking it!  It is VERY likely we flatline into expiration so this would be our stance into the weekend.   

    If we do not snap down next week, I’ll probably want to give up on shorting and switch to earnings backspreads to try to make our target.  Seems to me expectations are unlikely to be met by the average company and that can be very profitable for us.  Would be more exciting if the VIX were higher…

     

     


  33.  Phil 

    Good morning!  

    Thanks for Fed link Mike, was a good closer for the post.  

    OK so I’m getting a little philosophical/retrospective in my posts as I TRY to get more bullish but it’s very, very hard.  There is no way I want to be bullish without that breakout so we’re generally in a position where the crowd is all going one way (bullish) and it sure doesn’t pay to fight them by being bearish but that doesn’t mean we have to be bullish – as the great and powerful WOPR once said: "Sometimes, the only winning move is not to play." 

    That poses a problem for our beleaguered 1050P, which was left very bearish and I did say today would be the day we gave up if we don’t get our sell-off so expect a decision this afternoon as this morning’s nonsense move higher is so ridiculous I’m inclined to throw in the towel and get back to cash.  


  34. Catching up on 1050P comments from Chat:

     

    2010/12/21 at 3:45 pm

     Matt’s getting upset – that’s a good sign we’re near a top!  8-)

    We were selling off much more than this yesterday but volume today (3:20) on the Dow is an amazingly low 73M – we were at 140M at 10am on Friday for comparison…

    Due to the extremely low volume, I can’t capitulate the 1050P today.  Perhaps a mistake but I need to see the Dow hold 11,500 for at least a full day.  

     

    Oil down 5.3Mb but gas is up 2.4Mb (no demand) and distillates down just 600K so this is a disappointment and we can short oil below the $90.50 line here.  

    USO Jan $36 puts in 1050P are down to .28 and should be rolled up to the $39 puts for $1 AND doubled down at $1.25 so this is a big commitment to go to 40 short Jan $36 puts at net $1.56 average and 1/2 back out when we hit that mark.  

     

      

    Gotta take one last stab at shorting the Dow at 11,550 – DIA $113 puts in 1050P, now .82 can be rolled to DIA $116 puts for $1 to make net $2.77 on the $1.82 puts so we still need almost a 200-point drop to get even and the plan will be to either sell puts and roll out a month or to DD at $1.23 for a $2 average on 4x and we’ll need a 150-point drop to get even.  

    There are aggressive short adjustments – as I said last week – better to cash out even and save the money if it in any way, shape or form is not just fun money!  

     

     

    USO 1050P/DD – Yes, I did mean 40 short the $39 puts, I forgot to adjust that!  So the current position (still the same cost) is 40 short Jan $39 puts at an average net cost of $1.56 and we are looking to sell 20 at $1.56 if at all possible.  If that fails, our fallback next week will be to sell Jan puts to someone else and use that money to roll out to February.  

     

       

    1050P/Amatta – It’s currently 20 DIA Jan $116 puts at net $2.77 as we have not hit our DD target of $1.23 to make a neat $2 average entry on 40.  If the Dow doesn’t go down and get us back to even and it doesn’t go up to give us $1.23 by probably Wednesday next week, then we will sell PERHAPS AND FOR EXAMPLE the $115 puts, now $1.35 and use that money to roll to the Feb $117 puts, now $3.30 so the same(ish) $2.77 to be in the $2 spread with a 1-month advantage.  

    1050P – Also, it’s 40 Jan $39 puts at avg $1.56, now $1.03 so a big $2K loss there as well if oil stays up.  

     

     Ags are heading higher at the moment, bucking the downtrend.  SOX still leading us down with 407.55 their 2.5% line off the 418 high so they need to retake that to show that this was just a normal pullback off the run from 372 (10% would have been 409 – overshoots of 2.5% are normal).  

    FCX annoyingly still going up.  XLF looking strong.  Oil holding $90.75, copper $4.25, gold $1,382.

    Dollar/Mike – Strange day indeed.  They are still down at 80.65 but it’s not like the Euro or Pound look strong.  On NFLX – I don’t know what it’s going to take to kill them other than the fact of their earnings report.  

    Buy/Write/Eph – PFE is about my favorite "safe" dividend payer.  $17.47 and you can sell the 2013 $15 calls for $3.30 and the $17.50 puts for $3.05 for net $11.12/14.31 so a nice 57% upside over 2 years and a 20% discount if put to you plus a .80 dividend while you wait so even if your margin is a full $17.50, plus the net $11.12 stock, that’s still 2.7% annual dividend on $28.62 while you wait for your $6.38 bonus (22%).  Not bad for a tax-free investment.  

    Already they are pushing the markets back up, QQQQ WEEKLY $53 calls are $1.38 and make good protection for the Nas going back over 2,650 – you can just kill them if they fail that line or hit $1.30 but we’ve seen enough sticks last week to expect this one – 20 in the 1050P as we have a lot of shorts to protect!  .  

     

    That last set terminated at $1.85 later in chat.  

     


  35.  1050P Update:

    Well, as I said back on our 12/21 Alert, it would have been a good idea to throw in the towel and get back to cash.  Sadly, we did not and that has put this portfolio back in real trouble.  I do hope people heeded my advice the next day, when I said: "There are aggressive short adjustments – as I said last week – better to cash out even and save the money if it in any way, shape or form is not just fun money!" – and, if not then – then please next time take these statements seriously because that was the only premise under which we went for the adjustments as we could have cashed out about even and walked away ahead of the holidays – that’s the smart, conservative thing to do. 

    What we did instead was the very aggressive thing and, if nothing else, this is a great example of how sticking with losing positions can get you into more trouble!  As we’re down quite a bit now, I’m flipping this exercise to a salvage operation so my intent with these trades is now to see if they can be "rescued."  As I often caution Members – our goal when we get behind is to get even – even would be exciting at this point!  

    We took a bullish cover yesterday with 20 QQQQ weekly $53 calls at $1.38 at 10:17 in Member Chat and we took $1.85 and ran at 1:56 after watching it from 1:33 where I said we damned well better protect a $1,000 gain.  Once again, over 40% in a day is that magic amount where it’s not reasonable to expect to do better and $1.85 was already 34% so had we been greedy and waited for 40%, we only would have ridden out a pullback to 32% anyway – see the logic?

    On the bright side, that brings our virtual cash up to $30,737  

     

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.50 (down $550) – amazingly,  these keep hanging in there, if we can get out even, let’s do that and, otherwise, we can stay in for the weekend.  Yesterday’s best price on that Nas drop was $1.68 and last week’s low was $1.38 so that’s the range we’ll need to watch.  
    • 20 DIA Jan $116 puts at net $2.77, now $1.85 (down $1,840).  Well, we had our chance to get out with a $600 loss but now we committed to going aggressively short over the holidays and we’re still between them.  In fact, the plan is to DD at $1.23 for a $2 average on 40 so this was, painful though it may be, our actual plan for the Dow to rise on low volume and give us a cheaper entry.  It’s one thing to make a plan to aggressively scale in (this one was from 12/22) and quite another to execute it!    
    • 10 XRT Jan $46 puts at net $1,  now .34 (down $660) – even more crowded at 61,000, we need someone to capitulate! BBY earnings were encouraging but MasterCard Spending Pulse is up 5.5% so top-line sales are good.  That doesn’t mean profits are good but we can’t really wait that long.   
    • 40 USO Jan $39 puts at $1.56 average, now $1.12 (down $1,760) – we did a roll and a DD to get here and we’re not really expecting relief on inventories but we’ll wait to see them on Wednesday before adjusting

     

    So we have virtual losses of $4,810, which wipes out all of our early gains so keep in mind getting back to even on our losers will put us back to a respectable $4,700 gain!  On the other hand, taking it all off the table now puts us back to $26,000 – where we started.  Let’s keep things in perspective – we were ahead, we gambled with our winnings and we lost – that is NO reason to start throwing good money after bad so our top priority today will be, like yesterday, to identify an upside momentum play that keeps us from sinking deeper into a hole.  

    I’ll be very interested to see what the VIX does around the 17.50 line as looks like we’ll get a positive pop in the morning but there’s a lot of data today and, unfortunately, it’s a half-day for me as I have a 1pm meeting so we can’t get too fancy with day trades.  

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Consumer Confidence
    10:00 Richmond Fed Mfg.
    10:00 State Street Investor Confidence Index
    1:00 PM Results of $35B, 5-Year Note Auction

    The 11,500 line does not seem to be in danger today as the Dow futures are up 60 points from yesterday’s low as of 6:30.  

    I’ll be writing more on retail sales in the morning post but we have to assume we called it wrong and people are buying (2 reports confirm this by 9am) and we can assume that means they are confident so another 2 shots of good news by 10am should give us no reason not to make new highs all around (I’ll put up the levels in the morning post too!).  


  36.  Good morning!  

    Wheee, what fun – nice pop at the open as the dollar gets smacked below the 80.50 line for no particular reason.  Oil flew back up from $90.80 to $91.40 but none of that matters until we see inventories at 10:30. 

    In an ordinary market, I’d want to jump on shorting the Dow at 11,600 but this market is just scary!  Still, the DIA paid a dividend and that has knocked Jan $116 puts down to $115.75 puts, now $1.50, still not our $1.23 target for a roll to the Feb $116.75 puts, now $3.10 for $1.60 and hopefully we’ll be able to sell 1/2 (10 in the 1050P) the Jan $114.75 puts for $1.50 (now $1.10) on a pullback to cover 1/2 the roll cost.  Keep in mind this is, at the moment, committing another $3K to the position and turning it into a long-term spread.  


  37.  Phil 

    USO 1050P/Amatta – Oh absolutely sell half at $1.56!  I’m tempted to kill them all as it’s such a relief and anyone who isn’t willing to DD and roll again should absolutely kill this trade even!  


  38.  Phil 

    USO – Now is the time to DD at $1.04 on the Jan $39 puts in the 1050P that were $1.56 yesterday.  That puts us back to 40 at avg $1.30.  
     

  39. Good morning!  

    I hope you all had a happy New Year’s weekend – let’s see if we can keep the party going in 2011…

    It’s time to catch up on the 1050P, which is going to look ugly on the morning pump job.  We had $30,737 in virtual cash and were starting at an unrealized $4,810 loss as of last week:

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.62 – amazingly,  these keep hanging in there, if we can get out even, let’s do that.  Last week’s range continued between $1.68 and $1.38 so that’s the range we’ll watch.  
    • 20 DIA Feb $116.75 puts at net $4.37, now $3.10 – this is now a long-term spread paired with the short calls.
    • 10 DIA Jan $114.75 puts sold at $1.35, now $1.10 – at .65 we buy these back and roll the Feb puts one strike higher.    
    • 10 XRT Jan $46 puts at net $1,  now .30 –  A few earnings this week to watch:  SONC, FDO, RT, STZ,    
    • 40 USO Jan $39 puts at $1.30 average, now $1.01 – We went half out at $1.56 and back in at $1.04 to drop the basis by .26 and now we want to get another half out at $1.30 if the opportunity comes.  

    I’m back to wanting to kill the $1050P so we can begin working on the less aggressive $25K to $100K Portfolio, which I intend to keep active all year as they will always be fairly small trades, even as the portfolio grows.  Since we started this one with $10K, quitting with $25K is no great shame – just a bit of a disappointment that we didn’t get our $50K target.    

    Pay no attention to that man behind the curtain today as China is closed and Japan is closed and the UK is closed so we are looking at very BS thin-market manipulation in early action.  Oil is testing $82, copper $4.50 and silver $31.  Only gold at $1,420 is the odd man out – not making its highs with the dollar at 79.50.

     

    We continue to watch what Stock World Weekly is calling "Breakout Level 2" at Dow 11,600, S&P 1,260,Nasdaq 2,675NYSE 7,935 and Russell 800 - Those are Friday’s closing colors but we have a pre-market super-pump in progress (6am) that should push the Nas right to that line and the S&P and Dow over so it’s all up to the Nas and RUT to PROVE it’s a rally by taking out their highs – not too likely to happen today and would be significant if it does happen tomorrow.  

    We are, so far, sticking to last year’s script with a very exciting start to the new year – let’s see how long they can keep us on target:

    It wasn’t until AFTER expiration day last year that the decline began.  We bottomed out at 10,000 in Feb and then rallied back to higher highs before crashing again in May (flash crash, then real crash).  We will continue to expect a 5-10% correction, back to 11,000 on the Dow and hopefully that will hold but we’re going to keep an open mind about being bullish as the POMO schedule remains very aggressive. 

    If you haven’t – Check out Stock World Weekly, which does a very nice job of looking forward and backwards this week and also I humbly suggest my Review of the 2010 Reviews that will give us all a good starting point from which to form a 2011 outlook.  

    Looking forward to a prosperous 2011!

    - Phil


  40.  

     Good morning!  

    Of course it’s a good idea to roll bearish bets up, we’re only testing our tops at Dow 11,600, S&P 1,260,Nasdaq 2,675, NYSE 7,935 and Russell 800 - and that’s right where we were last time we had a good rally – waiting for the RUT to confirm.  

    I am not bearish – it doesn’t pay to get more bearish here but if you intend to stick with bearish positions you already have – you’d better like them enough to improve their position when things move against you.  

    In the $25KP, that means:

    • Doubling down on 10 QID Jan $10 calls at $1.35 to make 20 at avg. $1.70, we’re still in range and it will let us get 1/2 or all out even if we pull back again.    
    • Rolling 20 DIA Feb $116.75 puts at net $4.37 to the $118 puts for .70, that will raise the average to $5.10 on the $3.30 position and the next move would be to DD at $2.90 and look for a drop.
    • 10 DIA Jan $114.75 puts sold at $1.35, now $1.10 – at .65 we buy these back and roll the Feb puts one strike higher.    
    • Rolling 10 XRT Jan $46 puts to the $49 puts for .80 and doubling down at $1 for 20 at net $1.40 –  A few earnings this week to watch:  SONC, FDO, RT, STZ,    
    • Rolling 40 USO Jan $39 puts to the $41 puts ($1.95) for $1.20 is $2.50 net – We want to get half out at $2.50 if the opportunity comes.  

    Keep in mind that’s committing a lot to the bearish case and, without a pullback it will turn the trade into a big loss as opposed to killing it all now, still near even at about $23,000.  


  41. Today is a major pumping day with so many Gang of 12 analysts upping key index components and AAPL jumping 2.25% and oil flying up to $92.50 and copper testing $4.50 – you are supposed to capitulate – you don’t think they do all this just to put on a show do you?  They want you to give up and buy back their calls and take down your puts and buy stocks (from them) to cover – that’s the whole idea to a rally top – the people in control don’t make any money until the greater fools rush in where they no longer wish to tread.  

    As I said on the weekend – it is possible that there is no end to this move up or, at least, not one we’ll see for a while.  In the 1050 note today I said today is the day to cut losses if you are not committed to rolling and pushing and the risk of loss becomes great now because we are no longer playing with profits – this is just one last shot at trying to turn those trades around before it becomes pointless to pursue them.    

    The hardest thing you can ever do in the markets is stick with a position that’s going against you.  I don’t have anything magical to say about this because there has never been this much money dumped into the markets before so my calculations as to where the top is (already we’re 5% over the 11,200 I expected we’d top out at) may be off as we’re dealing with Trillions in stimulus and many, many moving pieces in a $15Tn economy with a market running on 10x leverage so it doesn’t take a lot of miss to be off by a lot.  My premise is based on the fundamentals I laid out this weekend – do NOT follow bearish bets if you don’t think that’s the case because it could be a very painful path trying to get the timing right on the short side.   


  42. DIA/Amatta – Oh yes, patience always pays off on those.  Either you get your price as it keeps going against you or the stock pulls back and it turns out you didn’t need the roll after all!  The rolls were tracked under the post on the 1050P Portfolio Tab, I think we rolled like last Wednesday and it was a combo with the sale of the short puts to pay for it.  The roll up to the $118 puts was fresh this morning to compensate for the jump up.  


  43. DIA/Amatta – Well it’s worse than that as we hit our .65 target to buy back the putters and that knocks another .32 off the net of the longs.  I hope you mean Feb $118 puts and there’s not much to do from there but wait at the moment.  If we get a 200-point drop back below 11,500 we will be gladly getting out near even but you will need another 100 points to do the same so you need to keep your eye on the March $118 puts (now $4.25) and think about selling something that will give you at least .50 to fund the roll when the opportunity arises.  At this point – it’s more like a mattress play that you have to work until it pays off. 


  44. XRT/Reza – Yes, that’s the plan there but if those earnings come in strong – it’s time to give up as it’s "just" a $1K and we have bigger fish to fry. 

     


  45. 1050P Update:  Wow, what a difference a day makes!  

    • QID – no progress but still good there.  
    • DIA – no progress, holding 20 naked Feb $119 puts at net $5.30 (.35 credited from buyback of Jan puts).  Just have to wait on these too.  
    • XRT had a nice dip and we can look to just kill them even ($1.40) so we can concentrate on the above rescues.  
    • USO is now up nicely with 40 Jan $41 puts at $3, up from our $2.50 adjusted net and that’s $2K in profit so DON’T BLOW IT!  VERY TIGHT STOPS ON 1/2 ($2.75, .25 trailing) and all done at $2.50 (.50 trailing) so we pull at least $1,000 out of this one.  

    Congrats to all who stuck with this – it was looking bad but we pulled it out!  


  46. Dollar rejected at $79.75, copper heading back up – may as well take $3 and run on all 40 USO puts in 1050P!  


  47. XRT turning up but nice $1.50 – make sure you are done there on 1050P!  


  48. Riding USO/Amatta, Savi – When in doubt, sell half is the best rule of all.  It’s essentially scaling out but my attitude on a trade like that is that we invested a lot of cash and we’re thilled to be even but once we spashed pasted even ($2.50) to $2.75, I was willing to risk the .25 and would still be happy to get out even.  Once we hit $3 though, that became serious money and simply not worth risking because I would no longer be happy going back to $2.50.  Had we been early in the scale, had we not been VERY wrong about oil initially, had we been ahead on our other open positions – then I’d be more inclined to risk but that’s not the case so we need the win and we take it while we can.  


  49. XRT/DrMtv – You have to be following the whole trade.  That roll wasn’t done today, it was done on Monday morning, when the trade was going against us and we got a good price.  One of the things I’m trying to teach in this exercise is timing those rolls as it is counter-intuitive but you have to take advantage of being wrong – it’s when you get the best prices.  The basis was $1 so $1 + .80 cost off the roll = $1.80 for 10 and then buying 10 more (DD) for $1 = 20 at an average of $1.40, where we dumped back out of the entire trade even yesterday.


  50.  DIA and QID/Amatta – No, we’re unfortunately back to Monday’s highs, where we pressed those bets in the 1050P but the logic is the same – we are taking a last stand here and a lot happier about it now that we booked a profit on USO and got out even on XRT so we actually could even stand to press them some more now that USO isn’t weighing so heavily on us.  At the moment – best to watch and wait to see what they can make stick.  Certainly by Friday we’ll want to throw in the towel if things don’t improve (for us, not the market).  

    Oil/Mampcs – Yes, they must get those 310Mb worth of contracts out of Feb by expiration day (21st) so they have 12 sessions to dump 280Mb of oil into the longer contracts and Feb is already pretty full. Hopefully oil gets back to $92 and we can jump back in on USO puts. Dollar down to 80.35 so they may be able to pull it off.


  51. Looks like we might have gotten out of those XRT puts early with 14 misses vs 11 beats! 


  52. Stick/Jabob – Volume is low enough (132M on the Dow) but it’s going to be up to Consumer Credit in 5 mins.  Monday is iffy,. that’s why I said take money and run on Q puts – not worth the risk but we are still aggressively short in $1050P (and running out of time).  


  53.  Still, it’s "Buy the F’ing Dips" until it doesn’t work anymore and AAPL is still fueling the Nasdaq all by itself and, at over 20% of the Nas, it can do that if it wants to.  I like the DIA Jan $116 calls at $1.10 for  an upside momentum play above Dow 11,600, with as stop below that line, maybe at $1.


  54.  DIA Mattress/Yodi – Now don’t lose your head….  ROFL!  I’ve been waiting all weekend to say that!!  Anyway, yes to selling DIA Jan $115.75 puts for $1.15 against June $118 puts, now $6.90 full cover as they can be rolled to Feb $111 puts (now .95) but a stop on 1/2 at $1.30, just to be safe.  

     

    Speaking of DIA – Those $116 calls are still $1 at the 11,600 line and we still like them as the upside cover.  


  55.  Speaking of overbought.  The 1050P has just two positions left:

    • 20 DIA Feb $119 puts at net $5.30, now  $3.60 – These are waiting on earnings before we capitulate.  
    • 20 QID Jan $10 calls at $1.30, now .90.  They have a delta of .93 so just a .50 move in QID (5%) gets us even.  Can the Nas realistically drop 2.5% in 10 days?  That’s a tough call and mainly up to AAPL.  This is a $800 loss and we’d like it not to become a $1,000 loss so we’ll watch .80 very closely but I’d really like to see the Beige Book tomorrow (2pm) before pulling the plug.  

    So Russell 800 or bust and I don’t like anything long (other than our long-term hedged plays) until we are firmly over that line.   Meanwhile, in additiona to still liking the NFLX shorts, you know I like shorting oil futures off the $90 line, where we still are this morning.  

    Our premise is that NYMEX traders will be forced to dump about 250M barrels of oil over the next 10 days to clear the Feb contracts and the announcement of the Alaska pipeline coming back on-line should trigger a drop so the USO Jan $39 puts at $1 are the way to go and I like those enough that I’ll call it 20 in the 1050P as well and yes, we will be doubling down or rolling if oil goes higher.  


  56.  Oil/Jrom – They are pounding the Dollar and driving everything up.  This is going to be a great short I think, now $91.  

    USO $39 puts good for a DD at .80 so 40 in 1050P at .90 avg.


  57.  USO/Amatta – Any time you hit 20% – it’s a decision point, whether up or down.  Meanwhile, you probably did not miss much as they should get a goose into close back to that $91 line.  Tomorrow we have inventories and maybe another pop up but then the sell-off should begin.  They have already dropped Feb down to 226M barrels with 270M in March and 97M in April so the same 600M barrels being shuffled around but now stuffed to the gills in March.  May is still 81M and it looks like June is swelling at 101M already.  It is doubtful they want more than 26M in Cushing so 200Mb must get spread over those next 4 months.  8 sessions left, 200Mb to go = 25,000 contracts per session must die.  Anything less than that is a problem so we’ll have to watch to see if they are on or off track this week.  


  58.  USO/Bob – Note for the 1050P.   I just went over the NYMEX and I will be very surprised to lose on this one. Of course I have been very surprised before, especially with oil so it’s a matter of whether you want to risk it overnight. By doing that though, we’re pretty much committing to rolling up and out (to Feb) if it goes against us.

    AAPL/Dflam – Above $300 you keep the $2 and get another $50 for the spread, that’s right. $29 + $23 is $52.

    USO/Bob – Too late! 8)

    ETFs/StJ – It’s because they all roll over into contango. For instance, The Feb contacts are $89.50 and the March contracts are $90.50 and Feb is $91.50 so if USO rolls 50% to each contract, they lose $1.50 (avg) per contract this month. That cash has to come from somewhere and it shows up in a reduced NAV for the fund each month. Do that 12 times a year and you are causing some pretty significant damage. XLE is, of course, not oil but oil companies but they move with the price of oil and, since no decay, a better track! 


  59.  Not looking good for the 1050P but let’s do the right thing on the assumption that this is just the blow-off tip we expected at S&P 1,280 and RUT 800:

    20 DIA Feb $119 puts at $5.30, now $3.10 can be doubled up to 40 at net $4.20 and, of course, 1/2 out even if possible.  
    20 QID Jan $10 calls are .90 (down .40) and we need that $1,800 so we want to just get out for $1+ if we can today.  
    40 USO Jan $39 puts at .90 are now .62 and those are worth rolling up to the $40 puts ($1.25) ahead of inventories to get a better delta but we’ll have to pull the plug if oil inventories justify $92 (I very much doubt it).  

    These are very aggressive short plays that risk our profits but if you believe in the downside, then a move up like this is an opportunity to press your bets, not cut and run.  
    Those USO puts would be my play of the day, I’m loving oil short here but, so far, it isn’t loving us!  


  60.  Rolls/Morx – At a certain point, you don’t want to put fresh money in if you can avoid it and you look for ways to sell puts to pay for your rolls.  For example, in the 1050P, we have 40 USO Jan $40 puts at net $1.53 and they are now $1.23 so we are down .30 ($1,200).  If it looks like we can’t win, then we can sell the Jan $39 puts for .57 and use that money to  roll to the Feb $40 puts ($1.86).  If we are lucky, the Jan puts expire worthless and then USO crashes after expiration.  If we are not lucky, it goes up and we sell more puts and roll or it goes down fast and we roll the putter into a bear put spread in Feb (the Feb $37 puts are .55 with a .20 lower delta so we lose about .20 to roll the puts to a $3 spread).  Notice the idea is to know what you will do if the position goes up, down or flat and to be comfortable with what you need to do in each circumstance. 


  61. Oil inventories down 2.2Mb (not much) but gasoline UP 5.1Mb and Distillates up 2.7Mb so a TERRIBLE report showing weak demand even with refinery utilization down 1.6% which means I’m liking the futures short here ($91.90) as well as our USO puts.  

  62.  USO/DC – Well it’s often they react to the oil number first and then rational players look at the net total (big build) and you get the real reaction but it’s usually within 15 minutes, not 40.   As you can see from the oil chart, it’s pretty much "sell off -spike – sell-off" every month but it’s a little tricky calling the top of the spike.

    Keep in mind this is the front-month contract and they still have 226M open barrels for delivery as of next Friday (8 trading days) that has a 45Mb capacity and is almost totally full as is.  So, at best, about 26M barrels can actually be accepted and the rest must be rolled to March (270M) Apr (97M), May (81M) or June (101M) by next Friday’s close.   UNLIKE options, where we have to find a buyer for our front-month contracts – the NYMEX allows traders to ROLL their contract to the next month without ever selling it.  That is the main reason this scam can go on month after month.  Right now, March is going for $92.36 and the goal of the Feb pumpers is to get that price (currently $91.20) as close to March as they can to make for a $1 or less roll.  Feb is up $1.86 this morning and March is up $1.78 and June is up just $1.59 so the plan is working this morning and it’s mainly a question of who breaks first as some people don’t want to roll and will begin cashing in on the first signs of weakness and who is going to buy a barrel contract that expires in 8 days at the high for the month?  


  63.  USO/QC – Those are a roll up to the Jan $40s, now $1.12 (net .60).  If we don’t get our sell-off by next week – we never will so not much point in going to Feb.


  64.  USO/MJJ – My answer does not convey the 10 minutes I have spend contemplating this position but I still think it’s worth holding.  They are down to 195M in Feb now so 30M contracts rolled out today. 


  65.  As you can see, I’m doing a lot of soul-searching as I try (and I really am trying) to get more bullish.  You’ll notice I don’t talk about the news much when I’m trying to get bullish because the news isn’t very bullish and I have this brain disease – where mine functions – and I have trouble shutting down the parts that tend to think in what I used to consider objectively but is now considered critically, since any negative thoughts are now considered somehow too critical.  On the whole, it’s all very "1984" where I worry about thought-crime…

    Anyway, 1,285 on the S&P, 800 on the Russell and our 11,850 goal on the Dow is our goal between now and expiration day and then we have to capitulate and go long the week after.  Until that week (24th), I still like yesterday’s short plays from the 1050P and especially oil as the dollar is now 79.50 and oil is STILL stuck at $91.50.   QIDs are good too as the Nasdaq is ridiculous.  

     

    QID Feb $10 calls are .95 and that’s where we’ll be rolling our Jan $10s in the 1050P if they don’t work out by next Wednesday (+.15) and INTC has earnings tonight so that’s our bearish play of the day.  Oil may turn down on a disappointing Nat gas report at 10:30 but not likely if the Dollar is under 80.  We lost another 445,000 jobs today so that keeps the Fed on the table indefinitely (as if they needed an excuse) so not much chance for a dollar recovery unless something bad happens in Europe.   

     

     


  66.  USO/Amatta – I see $1.32 for the 40 puts, that’s up a lot from yesterday’s low of $1.  USO is at $38.80 so they are "worth" $1.20 with expirations so close – it’s all about the actual move down in USO now, the premium is a gonner.  

    MRK/QC – They just halted a study so I wouldn’t catch a falling knife today but $33 does start getting attractive.  I still like PFE better overall.  

    Downs/Samz – Yes, imagine how far down commodities would be if the dollar wasn’t down 2% in 2 days.  Don’t forget that 79.58 is our rising 50 dma, which is where we expected to fall to and pop back off of.  Right now we’re at 79.45 so we’re either spiking below the 50 and ready to bounce or we’re breaking down and totally screwed!  

    USO/Willie – Very possible they drop .50 after inventories but right now it’s about the Dollar (above) as a breakdown in the dollar will send a lot of people running into commodities – which is kind of the plan that was put into motion by Geithner yesterday morning to help out his pals at GS to make their $100 mark on oil.   I did not think it would work but the coordination of China and Japan stepping in to bail out Europe along with our own pledge through the IMF to make more money available has totally turned sentiment on the Euro around and is squeezing the hell out of the bears from $1.29 just yesterday to $1.333 this morning – that is a sick move for a major currency!  


  67.  USO Jan $40 puts back down to $1.05, good spot to buy.  


  68. TZAs jumped to a nice $1.66 – now we protect the dime gain, probably at IWM $80.   Keep in mind .20 is very nice for a quick trade.  Same goes for the USO $40 puts, back to $1.35 so if you did that quick trade from $1.05 you are now greedy!  


  69.  Wow, INTC flew up on still no news.  

    Oh, here it is .59 a share on $11.46Bn so beat (.53) and beat ($11.36Bn) – now we need to hear outlook.  Gross margin 67% – that’s crazy!   How can they guide those margins higher?  Oh, they can’t 64% next year..  Well, this is no Nasdaq-killing report, that’s for sure – not looking good for QID.  


  70.  Good morning!  

    Lots of cross-currents this morning.  Dollar still 79.50 but refusing to die so far.  Oil down to $90 so today we’ll be taking it and thankfully running in the 1050P!  


  71. Good morning!  

    It’s take the money and run time on the USO puts.  We should at least get our net $1.53 back on the Jan $40 puts on the $10KP and we are done with this annoying trade that was taking up too much cash.  It’s just not worth the risk into the weekend.  

    We’re still watching the QID Jan $10s but those are not looking good and we will probably take the loss today (net $1.30 on 20) although with USO gone, we can afford the hold or roll so let’s see what happens.  

    Our 40 DIA Feb $119 puts are very frustrating at $3.40 as we doubled down at $3.10 to net $4.20.  Of course we would love to dump these even and be done with them but that requires a 100-point drop in the Dow to 116 and I don’t think we’ll be that lucky today unless Consumer Confidence is really awful.  Still, I don’t want to take a $3,200 loss so let’s sell the Jan $117 puts for . 95 to hold us over the weekend and we’ll just have to deal with the roll down if the Dow breaks lower.  

    Not even the oil pullback is bothering the market – I’m not sure anything will.  


  72. Long weekend/Mike – Oh thanks, I forgot actually.  All the more reason to cover those DIAs and make that, hopefuly, our only remaining open play in the 1050P.  

    USO/Amatta – I hope you took them all off at $1.60.  Way too risky over the weekend with just 4 days left to trade.  We might be crying over the missed opportunity but at least we’ll have cash to trade another day. 


  73. $1050P – Rolling 20 QID Jan $10s at .70 to 20 Feb $10s at .85 for .15, which makes avg $1.45 so we DD at .85 and have 40 at avg $1.15.  


  74. QIDDrum – Well since we were saved from doom on USO I got brave and went for a DD on the QID Feb $10s (now .82) and I think that’s worth the risk into expiration and the following weekend.   Same goes for waiting on the puts as $12 isn’t all that far away if AAPL falls.  


  75.  USO/Amatta – NYMEX boys are still on schedule of 25M per day and 4 days left to sell but March is getting crowded with 362M barrels and Feb still has 129M so 100M to dump next week.  Conditions still ripe for another sell off but weekends are very risky to stay short – which is why I was very glad to kill those puts earlier.