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Wednesday Worries – Ireland “Fixed” – Who’s Next?

So many things are pissing me off today.  

I got my political outrage out of the way in my earlier post: "Thanks for the Gas Money, Mr. President," so we don't need to talk about that again.  Ireland, as of 7:45, has not actually voted to accept the EU's deal, which will pull $20,000 per Irish family directly from national pension funds to pay for the speculative mistakes of Irish Banks.  Additionally, the Irish people are being asked to borrow another $75,000 per family from the EU at about 6% interest, also to pay for the speculative mistakes made by the Irish Banks.  While this may seem insane – it's only a drop in the bucket compared to what Americans are spending to bail out our own speculators so why shouldn't they join the club?  

At least Ireland gets to vote for their obligations, we have a Federal Reserve System where a single man, known as "The Bernank" is able to spend what is now heading towards $3.5Tn of OUR MONEY to bail out his banking buddies.  That's $31,818 per American family spent over two years IN ADDITION to the stuff I complained about Obama and our spineless Government spending in the last post.  

As I said, things are pissing me off today!  I should be in a better mood – we had a fabulous day trading in Member Chat yesterday.  In yesterday's post, I closed with "One last stab at making some bearish profits for us (see Morning Alert)" and you can click on that Alert, which was posted on Seeking Alpha and check out our trade ideas for the $10,000 to $50,000 Virtual Portfolio which included (at 7:22 am yesterday) QID Jan $10 calls, which opened at $1.80 and finished at $2 (up 11%), DIA Dec $114 puts, which opened at .80 and finished at $1.33 (up 66%), XRT Jan $44 puts, which opened at .35 and finished at .55 (up 57%), USO Jan $36 puts, which opened at .66 and finished at .90 (up 36%), PCLN weekly $400 puts, which opened at $50 and finished at $1.40 (up 180%) and NFLX Jan $155 puts, which opened at $1.70 and finished at $2.30 (up 35%) but should look much better this morning, where we will exit.  

Of course I featured the idea to short NFLX last Thursday in the Morning Post (which you would get at 8:30 every morning in progress if you subscribed!) and we talked about shorting oil in the Weekend Post and I mentioned XRT last week as well so it's not like these are even our "super-secret" trade ideas – this is just the stuff that looked obvious enough to risk our small virtual portfolio plays on (as you don't want to take too much risk in a small virtual portfolio, even when it is aggressive like our virtual $10,000 Virtual Portfolio).  Once we got into Member Chat for the morning we went with more aggressive trade ideas like PCLN weekly $410 puts at $1.60, which finished the day at $4.20 (up 162%) and 6 other plays that we're not done with yet plus shorts on the oil futures at $90 that worked out very well.   

So why am I angry?  You can't really have a better day than we had yesterday.  Yesterday is the reason we have sat patiently (well kind of patiently) in cash for a month as we finally got an opportunity to commit to a whole bunch of very obvious trades, the most trade ideas I've had in a single day since early September, when we jumped on Uncle Ben's bullish bandwagon.   Sure we find things to trade every day but these are the opportunities we wait for.  I guess I'm pissed because we had to pull our December short plays off the table because the cartoon bears have warned us that they will be "Buying the F'ing Dips" and we know better than to argue with cartoon bears because it's simplistic little BS premises like that that rule this market.  Ah, that's why I'm angry!  

As I keep saying, I don't enjoy day trading – it's not satisfying but it's what we do while we wait for real investment opportunities to come along.  While it may be exciting to make 100% on a trade in a single day – it's small money and a tedious (and stressful) way to build up a virtual portfolio.  I suppose at heart, I'm a long-term investing coupon-clipper but those kind of investors are being chewed up and spit out in this market and, while we found many, many things to buy earlier in the year, now we're down to one or two long-term opportunities a day while most of the rest of the market looks better as a short.

But you can't even stay short past the closing bell.  Even as I write this post our paranoia in taking the money and running (our usual strategy) on our quick gains is looking justified as the dollar is, as usual, being shoved off it's overnight highs (used to prop up the Nikkei in our famous "3am Trade") during the slower EU lunch break in order to now goose the US futures to give US markets the best possible open on the least possible amount of volume (ergo cost to the Gang of 12).  Despite debasement efforts by Obama and The Bernank yesterday, the dollar still rose back to 80.81 in overnight trading and that sent the Dow futures all the way down to 11,285 but don't despair – they've already been goosed back to 11,350 – just 5 points shy of yesterday's weak close.  

See, in a "normal" market we would have simply stayed short because clearly the momentum was down and the fundamentals indicate that all the efforts of Obama, The Bernank, the BOJ, the BOC, the ECB… are "too little, too late" to put the Humpty Dumpty global economy back together again.  Some of the fundamentals we're watching:  

These are just TODAY'S headlines and they all add up to RISK.  Lack of risk recognition by the markets was the primary reason I called for cash in early November.  We are approaching 2008 pre-crash market highs with many stock trading higher than they were then on LESS revenues than they had at the time.  Meanwhile, 10% of our population is unemployed, consumer credit is down by over $1,000,000,000 (15%), household wealth is down 20% and income is down while the CPI, even by BS Government measures, is up 5% since then, effectively giving those people who still have jobs 5% less to spend anyway.  

And when you consider that discretionary income is just 20% of income – if they 80% they HAVE to spend went up 5%, then that's 4% of discretionary income gone, which is 20% of discretionary income out the window – FOR THE PEOPLE WHO ARE STILL WORKING.  The other 10% have ZERO to spend and that's not good either.  All of this is being ignored as "investors" buy stocks on the hopes that they will expand sales internationally and keep cutting costs despite the same inflations the speculators are using to justify their very high valuations.  We're effectively writing off the US economy and placing all of our bullish eggs in the global basked – even though they have 20% unemployment "over there." – that's kind of nuts, don't you think?

I'm not even going to ask if the above chart disturbs you.  Clearly, from the results of the last election, it does not.  We are over 6M jobs away from recovery and we added less than 40,000 last month.  At least in Ireland, their population is shrinking, with 65,500 people (1.5%) abandoning the sinking ship as of April of this year.  That's less likely to happen in America as Mexico is not that attractive and Canada doesn't want us and most people can't afford to move anyway as they are upside down on their mortgages so we, as a people, sit and wait.  We sit and wait for something good to happen.  Any minute now…  Something good is bound to happen… NOW!   OK, maybe not now but really soon – something good has got to happen, right?  

That pretty much sums up our national policy – we don't actually do anything to create jobs but if we sprinkle enough magical fairy money on the rich, we're sure they'll start hiring people real soon!  Maybe as soon as they are done merging and acquiring smaller companies with all that money where they then create efficiencies by laying off 50,000 people a month (Challenger Job Cut Report) while more and more jobs are outsourced every day ($6Tn worth of jobs are currently outsourced).   And why not?  There are huge tax advantages to outsourcing US jobs – tax advantages that our President is perpetuating as he bends over and accepts the massive Republican tax cuts for the wealthy on behalf of the American people.  

Did I mention I was pissed?  Good, then moving along…  

So we kept our Jan shorts and didn't add any longs because we expect a bounce on the usual opening nonsense but I don't see enough dry powder left for the bulls to take us over that critical Dow 11,500 mark.  Meanwhile, CAT is way too high and they are a Dow component, as are XOM, CVX, IBM and MCD – all stocks that are major components in the price-weighted Dow and are more likely to pull back than move higher.  

EU money printing will not inflate our stocks – it may even boost the Buck and that would be bad for commodities, who had a pretty rough day yesterday (and we shorted a few).  I wish it were easier and I wish we could just say "CAT is overbought so we're going short" but the fundamentals of the stock are trumped by rumors of infinite Chinese demand and inflation expectations that somehow ignore the negative impact of rising steel prices and increasing borrowing costs on the company.  Of course the weak-dollar expectations have everyone moving into stocks, which are just another form of commodity to trade and, even as I write this, the dollar is being jammed back below 80.50 to goose the US open.  

At least we know how this game is rigged and we can have lots of fun betting the suckers never do find that red queen but what a shame that this is what the global economy has been reduced to – a shell game – and it's an empty shell at that! 


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  1. NET $ (.95)%,  dx/y = +.46%
    Met had been positive at 7:15, then fell straight off till now, and the futures have rallied
    Futures = 1225.75, overnight:  high = 1226.50  low = 1217.25
    *reminder emini rollover tomorrow
    oil (.24), gold = (18.30)
    10yr = +1.17%,  30yy = (1.08)%

  2. Good Morning!  Phil, don’t get angry, get even.
    Help the Dems find a candidate that can challenge our current president for ’12.
    You never know, Bloomberg might answer the phone…. ;)

  3. Netflix still getting hammed

  4. Phil, I like your trading your trading advice..but politically..maybe a move to France might be the correct trade for you.dan

  5. Good morning!
    Unfortunately that’s a hollow statement as I watch the shenanigans that started at 8am…
    1020 / candidate — unfortunately, Phil will have to get sign off by the corporate elite, which puts us right back in the dingy being dragged by the ship.

  6. Phil,
    I put a question/possible correction on the Gas money article if you could check when you get a chance.

  7.  Phil - What about the USO 36 puts?

  8.  1020 – last night – there was no taunting, your skin is just very thin when you read things you don’t like.
    and Bloomberg ??  oh please.
    As for the framing of what happened with taxes, Phil says:
    Did we seriously just spend $830Bn to give tax cuts to the rich when we’re already $15Tn in debt?
    To which I say:
    - What really transpired is that we did not RAISE TAXES on anybody, despite the Dems fervent desire to raise taxes on those that already pay almost all of the taxes.  Why didn’t they do it w/ their big majorities in this Congress ?  Simple answer is they thought they could bamboozle us until after the election; doing it before would have ensured catastrophic defeat at the polls; they thought they were gonna avoid the freight train about to smash them to bits.
    - I could also say did Obama really spend $800 Billion on pork disguised as shovel ready stimulus to which he later admitted that there were in fact no "shovel ready" projects ?  Did he really do that ?  And did he really do other things that ballooned the deficit to $1.5 Trillion (+ or -) and the debt to $15 Trillion (ahem, health care) ?
    - In O’s little public tantrum directed at both sides yesterday, not a word was heard about getting the defiicit or debt under control or the need to reign in and reduce out of control spending.  That is the sad reality.
    Of course both sides are deserving in blame in many areas; but on the tax front, let’s be clear, taxes were not raised to help fund a broken government.  Nobody got their taxes reduced, and trying to call the failure to raise taxes as a "cost" is completely disingenuous.
    End of morning political comment … on to trading.

  9. Any docs out there work in the pulmonary/allergy/GI?  Looking at Allergic Bronchopulmonary Aspergillosis and Eosinophilic gastroenteritis and wanted to get some info, numbers, etc. 

    Email me at pharmboy123 at gmail and I can explain.


  10. Phil isn’t the Dec rally about mutual funds painting the tape for year end? 

  11. NET $ (.30),  dx/y = +.24% at the bell
    C =1226.26, F =1226.00

  12. huge drop since the bell
    NET $ (1.02)%,  dx/y = +.26%
    C =1227.20, F =1227.00

  13. Gold being scalped now.   Ahhh, good when a plan starts to come together.

  14. TASR showing signs of life!

  15. Cap – I was refering to your taunting of jromeha.
    Don’t worry about my skin, I apply suntan lotion everyday….. :)

  16. How can this guy sleep at nights, Citi’s Parsons says Citi is too interwoven to fail.  Parsons said maintaining huge financial conglomerates is in the interest of the US economy.  Can he be for serious?  If it’s too interwoven to fail then it’s a matter of national security, make that world security, to break them up ASAP.  They must be stripped of ALL risk.  Say it again beatch-

  17. Pharmboy:
    What’s your opinion on how low gold before it settles to eventually move higher. The reason I think long term it goes higher is because there still exist too many things that have the potential for catastrophic results: EU troubles, North Korea/South Korea, Major city (s) declaring bankruptcy in US and on and on. Fear is the main driver for gold with inflation having only a nominal effect. Your opinion appreciated.

  18. Pharm, when does your ‘plan’ see a bottoming?  Did you hear what the Chinese official said about the US deficit?  He thinks the $ is safe for 6-12 months while Europe gets its house in order and then it’s down from there.

  19. dclark – gold could move down to the 1250 range as Phil has noted.  I think possibly further when retail gets spooked.  Barring of course what you mention above.

  20.  Nice jump in TASR!

  21. Good morning!  

    The Pound is flying because the BOE offered Ireland $7Bn.  I guess that by giving Ireland money that decreases the chance of Ireland defaulting on the $150Bn they owe the UK so there’s your convoluted logic for that move.  

    It’s certainly not the same feel as yesterday as we may build back to the tops.  Copper is jammed up to $4.07, which is good if you missed the FCX trade yesterday but the stock itself isn’t buying the move yet – perhaps it’s just speculators trying to force a blow-off top.  

    Natural gas is also back on a tear at $4.55, up from $4.35 yesterday, we noticed that action in yesterday’s chat.  Don’t forget we have oil inventories at 10:30 so we can expect them to run oil up into those and then it’s anyone’s guess what happens next.  

    There’s also a 10-year note auction at 1pm – that’s always interesting but I can’t see Ben letting it fail so soon after he went on national television to tell us how great everything is.  

    Not much damage done to our levels yesterday (actually none) so we’re still watching: 

    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Watch Levels: Dow 11,220, S&P 1,185, Nas 2,500, NYSE 7,550 and Rusell 715 
    • Up 10% (must hold)Dow 11,220S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • 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 

    Actually, the Nas and the NYSE were red yesterday morning so this is an improvement of sorts.  Let’s watch those lines very carefully for a breakdown signal and I still like my TZAs for a short play, with the Dec $17s still not too bad at .65.

  22. Good Morning Phil,
    Do we get Oil inventories today? What do you expect ? We did have a large build last week and it didn’t move us down.

  23. NET $ = (.66)%,  dx/y = +.26%
    C =1226.73, F =1226.25
    10yr = 1.83%,  30yr = (.61)%

  24. Still looking for the 6/22 pattern in FAS.  So far, so good.

  25. Gold/Pharm
    What’s your plan………

  26.  pharmboy: BMY  Did I miss your thoughts on BMY recently, sorry to ask for repeat, might have missed it due to high volume of politics last few days.  TIA

  27. matt – yeah, and the Chinese also have some tightening to do themselves, which in turn will smack down gold.

  28. Phil:
    Is TZA the only play so far today?  Also, any plan for NFLX or just let it ride?

  29. TZAa for a short play? Calls or Puts?

  30. Phil / TBT   Obamas capitulation overlays another $Trillion p.a. on the deficit.  Can Bernanke’s buying of Treasuries hold up the price when foreigners know the US is spiralling to deficit hell?  I’ve stayed away from TBT for fear of the Fed, but have we now reached a tipping point when TBT is now a safer bet, with sustained debasement of the $ a confirmed long term political strategy?

  31. Phil:
    Are you advising puts on FCX or just keep watching.

  32. that chinese IPO priced at 12.80, opened 27%, over at 110% return overnight
    sounds frothy, if anyone cares to see it
    I am sure the banks and hedgies and some rich clients made out well

  33. Re: TZA – sorry calls

  34. Phil – I still had that old play with TASR  Jan 5/7.5 bull call spread and selling the 5$ puts to pay for it… WOuld you hold here or cover half of the naked puts?
    1020- Thx for the backup. Maybe a tag team cage match Jromeha/1020 vs Cap/Humvee?

  35. I get to referee…. down goes gold, down down down….

  36. Not going to end well anywhere -  Today, Germany tried to sell €5 billion in 2 Year 1% Schatz notes. And while the official tally on the auction was a 1.1 Bid To Cover at a 0.92% average yield, just above our own 3 Year auction yesterday, (and a drop from the 1.4 previously) this was yet another failed auction, as the bank managed to get only €4.33 billion in competitive and non-competitive bids. The kicker: the Bundesbank retained €995 million of the issue, a whopping 20% of the proposed issue size - this is the amount it could not find any buyers for, and the deficit to what have been a non-failed auction. In other words, after the entire world was rushing to buy German paper, suddenly there is nobody willing to get in. 

  37. PODD offers 3M additional shares at 13.85. Good time to watch again to get back in by selling some puts.  Buying here and selling the $15/12.5 Jun11 strangle for3.25 or better is a nice play.

  38. drilling in Mexico
    I would generally take that as a top for oil
    But with rates at 0-1%, our banks ans hedgies will probably bank roll all of the exploration down their for the drillers

  39. jromeha -  Tempting, but a true gentleman would never strike a woman…… ;)

  40. NET $ jumping
    NET $  = +.08%,  dx/y = +.12%
    C =1221.87, F =1221.50
    oil (.49)%

  41. My little inhibitor company continues to climb…..make me proud.

  42. Phil / Mexico drilling    Which cos will be biggest beneficiaries?  Any smaller players where the leverage will be material to eps?

  43. Ireland is STILL debating the resolution.  I wonder if we can still rally off the news that they finally approve it?  

    France/Swell - Au moins en France, nous pourrions couper de votre bourgeois tête!

    Question/AC – How about pasting it here? 

    USO/Yshen – We are riding out the front-month expiration cycle that runs through expiration day next week (although the NYMEX contracts expire the next Monday or Tuesday, the sell-off usually ends the week before) and that’s why we took the Jan puts – so we don’t feel pressured to sell off the initial bounce.  You could pop in and out off it but I think oil is way overpriced right now, shouldn’t even be $85, $82.50 at the most and even that is nonsense.

    Cap – Please keep politics under the last post if you really can’t contain yourself during the day. 

    Funds/Lori – Sure, there’s a lot of that.  That’s why we usually have Santa rallies but we are so top-heavy right now, I don’t see how they can possibly keep it up for 3 more weeks.  

    TASR/Kinki – Well with riots in Ireland and Italy this morning I’m sure most World leaders have their order department on speed-dial…  8-)

    Too integrated to fail/Matt – Isn’t that what Nicole Simpson said about her marriage?  

    Oil/Joe – I think we get a drop today as we had some cold weather and they have really been stepping on imports, redirecting tankers to Europe where the’re also a big cold snap.  So lack of barrels will probably give us a net draw but if it’s less than 2Mb, it’s not going to mean much.  More important to see if gasoline has a build – which would be a very bad sign for the holidays – especially considering that Chanukah is a traveling holiday for a couple of million families last week aside from all the shopping.  

    Other plays/Arnie – I’m kind of watching and waiting at the moment, we have tons of open short plays and I’ll update the 1050P shortly but we closed all Dec naked shorts yesterdays and the plan is to let the Jans ride for now.    After almost losing half our gains I’m trilled just to be up again on the plays we had to roll and DD.  

    TBT/Tusca – As all our TBT players have learned.  Long-term, yes, short-term – who knows?  I’m sure they’ll be back at $36 again at some point and that’s a safer entry but I don’t like TBT anymore as I had to talk too many people off the ledge in the summer and if you don’t enter the position ready, willing and able to scale in down to $30 – don’t even think about buying that first round.  A panic in the markets sends people into the dollar which lowers the amount of money you have to offer for dollar-denominated securities.  You can’t just look at this country and say "we are screwed" you need to look at the World at large (see above post) and decide how much more relatively screwed we are than other countries.  Since we have already been pretty much priced for totally screwed with a 15% drop in the dollar (now 10%), we’re looking like a life boat to investors who are only just now deciding to abandon other sinking ships of state.  

    FCX/Arnie – It’s a fundamental play.  Ideally you scale in on a pop and wait to be right (20%+) at which point you set your stops and find something else to trade.  

  44. Phil--just got out of the AIB calls for double—Tx

  45.  CMG quietly getting pounded.  235.00 now; down 7, below s2

  46. Pharm – What are your thoughts on CRME?  Looks like it’s ready to fill the gap from 10-21.  Thanks

  47. Phil – Google Translate much… Just make sure not to use it to order food in Paris, you might end up with bull testicles! 

  48. Anybody.  What is the 1050P?  Thanks

  49.  NFLX defying gravity here ….

  50.  Pharm…. why are you so "pissed off" at gold. I believe the fundamentals are still in place…are they not?

  51. CRIS gaining some traction lets see if she can hold 1.90

  52. CRME – interesting.  They make money too.  Could be worth a flier.  I will have to look into their flagship. but they are moving fast and need to get through and hold 6.10.  Another 30% would be nice. 


    1050 arnie is the 10000 to 50000 portfolio.  Look under the portfolio tab.

  53. NFLX struck a deal with Disney-ABC to stream TV shows. If your kids aren’t already pestering you to subscribe to Netflix this should help things reach critical mass.

  54. NET $ falling here, dropped to (.41)% from +,08%,  dx/y = +.25%

  55. Phil
    Would the Jan 12   5/6 call spread be a good trade?
    What would you recommend on C?

  56. Thanks Pharmboy

  57. Gold/gel – not pissed off at it, but I want to get back in…so I need it to fall….

  58. tchayipov and all options LAMBADA player,
    Report : bought NFLX $195 weekly(this week) strraddle and sold $190/200 weekly(next week) strangle for $0.82 credit yesterday, would get about $1.00 credit this morning if I closed it.  But I kept next week $200 call short open(I don’t think NFLX will get 200 next week) and closed the other 3 and got $2.38 credit.
    Thanks a lot tchayipov.

  59. Good morning Phil:
    Are NFLX Jan155Ps still a buy at this level  (2.80)?

  60.  Is there a weekly play for today’s prices ?

  61. 1020 – U must of started buying CRME…..

  62. Gas inventories up, oil down $87.50. Jan USO puts up.

  63. US is going to make sure out 10 year auction looks as pretty as a bow today, they are going to make sure everything is bid for way ahead of time, still may be all anonymous bids and our own bank buying, but they are going to make sure it looks pretty (even if it stinks), after the reaction in our bond markets yesterday

    also that German auction overnight

    just my conspiracy rant of the day

  64. can’t fight the POMO?

  65. 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. 

  66. mike5885
     Bernank puting lip gloss on? Makeup Artists?

  67. JBLU, now DAL cutting capacity blames high oil prices…hotels next…restaurants on high food prices….so on and so on

  68. NET $ sold off all durign the bounce
    NET $ (.91)%, was +.08% at 10:22,  dx/y = +.46%
    oil (.51), gold (29.5)%

  69. Costco sees 5%-10% inflation in beef, chicken and pork in the next 6 months.. do I hear CMG?? :D

  70. Europe will be closing next 15-20 min

  71.  Mike / Auction
    Manipulation is the game they play, and they will have to do a lot more POMO in order to say ahead of the market in order to keep the rates down….. this can’t last forever.

  72.  Added a little to Feb 300 AAPL calls. Been covering with (ratio of) december 320s and 330s which are losing premium. You can do this again in january and then in february to collect a ton of premium and turn it into a call spread. The thesis is 1) the market may continue to go up and 2) AAPL holiday sales will be blockbuster and 3) earnings should be very good.

  73. nothing we do not know, but a good read if you have time

  74. Open question.  If rates go up, the market will probably go down.  People are leaving gold and commodities.  Where does the money go?

  75. NET $ = (.87)%,  dx/y = +.44%
    C =1223.16, F =1223.00
    10yr = +3.70%,  30yr = +.72%
    VIX = flat,  oil (.79),  gold (30.20)

  76. Pharmboy
    any take on OREX more than doubled today on the diet drug story 10.00 up 5.24 thks

  77. Pharm/CRME  Actually, I sold half into that move, let’s see if she can hold 6.10 at the close. Thanks  :)

  78. Pharmboy
    OREX buy stk sell Dec 9c for 1.30 and buy Dec 8p for .12 as protection

  79. Phil, how do you interpret the massive move in the last days in TBT?

  80. Ravalos.  People are spooked by the increase to the deficit from tax cuts.  Looks to me like they may be moving to 3 and 6 month treasuries.

  81.  Phil – thoughts on MUB?

  82. gel: I am looking at the Treasuries this last few days and I picture in my mind George Soros, watching Ben Bernanke on 60 Minutes with his quivering lips on the verge of tears, think to himself: "I could take him on."  ;)

  83. Phil – Adding to TZA?

  84. EIA Petroleum Inventories: Crude -3.8M barrels vs. consensus of -1.2M. Gasoline +3.8M vs. +0.1M. Distillates +2.2M vs. consensus of -0.6M. Crude futures sink, -1.2% to $87.65. 

    That’s not very good for them as it’s a net build.  Good for us though!

    Here’s how you buy Harry Reid offSenate Majority Leader Harry Reid says the tax cut extension could move quickly in the Senate. "It’s further along than most people think," Reid says, contradicting widespread criticism of the plan among Democrats. Reid also may try to use the package to legalize online poker, a move that could further complicate the deal. 

    TZA very frustrating!  

    TZA/Kallen – They are calls but TZA itself is an ultra-short on the RUT.  

    TASR/Jrom – I’d hold on.  You might get lucky and you’re only going to roll to June anyway for +.30 or maybe +.40 so why not just ask for .40 and see if you get it?  Also, if you ask for .20 on the calls you can use that to re-up on the June $5s (.45) to buy some time.  

    Germany/StJ – Good point.  We’ll see how our 10-year goes but they’ve done such a good job of propping up the stock market that they’ve lost the bond buyers.  

    Mexico/Mike – They drill there all the time, they’re just talking about increasing output, which of course, makes the lie that Mexican oil production is in decline and will contribute to the global shortage much more obvious but that was 2008′s "evidence" for $100 oil – I’m sure they’ll have something new next year.  

    Mexico/Tusca – I have no idea who’s big in Mexico.  Probably CVX, BP and RDS.A but they are so big it’s hard to say what impact would be and you have to offset that against generally lower prices for crude.  If XOM discovered 100Bn barrels of oil tomorrow and could pump 2M barrels a day next year – it would crash the price of the 6Mbd they currently pump by more than 20% so it would net them no additional profits (assuming a bit of costs) which is why you rarely see oil companies talking about increasing production – they are all about limiting production.  

    AIB/Savi – Good job taking the exit! 

    I’m STILL watching the Irish Parliament – great fun.  They are all taking 8 minutes to comment and there’s a lot of colorful speakers in there.  

    Google/StJ – It’s better than my actual French, which is very rusty as my last summer in France was back in college.  

    C/QC – I think time is on your side with this one so I prefer the 2013 $2.50/4 bull call spread at $1.05, selling the 2012 $5 puts for .93 as that’s net .12 on the $1.50 spread where the call spread is 100% in the money and the put side is more than 50% in the money and, of course, rollable.  If you are willing to own $10K of C at $5.12, you can sell 20 puts for about $3,600 in margin and spend another $240 cash for the spread and your upside is $2,760 and your margin will hopefully release in 1 year.  

    NFLX/Reza – Not really, we’re on the way out.  I still think $170 is the right price but I’m very concerned about a rally today as they are putting a lot of work into holding up the morning and oil stopped falling for no reason.  

    XLF flying too!   We’ll see if they top out at $15.30 – that was a good sign of weakness before.  

    Europe closed strangely with FTSE down 0.19%, DAX down 0.42% and CAC up 0.61% – all off their highs but up from the opens.  Dollar holding that 80.50 line but lots of downward pressure trying to break it.  I think overall we’re heading to a double top off the opening rally and then lower so watch 11,385, 1,229, 2,611, 7,770 and 777.  

    Oil also worth watching on the $88.50 line, which should be hard for them to break while gold needs $1,400 to impress.  Copper is testing $4.10 and makes a nice short play off that line in the futures (using it as a tight stop).  

  85.  kink… Yep….., Soros is hiding in the bush, just stalking his prey…. thinking this will be an easy one !

  86.  hanna / AAPL….I agreee with your thesis…. is today a good time to sell Feb puts?

  87. Yodi – Dec Ps do nothing for you.  I would move out to February, as the FDA date is Jan 31.  I will be shorting them FWIW.  They moved to 12.30 after hours, so I would expect at least for them to move back into that range.  If not….then this move is bogus.  Argh!

  88. Phil:
    What’s your opinion on HHC, post a pull back?

  89.  Phil do you have any ratio calendar put spreads you like.  Something like the FSLR 3/2 130 P calendar you did awhile back, but on a high flyer you see probably coming back.

  90. Phil, 
    I have been holding for a few weeks the NFLX 190 calls which are finally up 60% they were obviously down big time … also the CMG 250 Calls, now finally in the green (up 30%) do you recommend holding these at this time (I hate to leave money in the table that is all premium, but the way they keep ramming the market and these things I don’t know…)

  91.  gel1 – AAPL, I think the stock will fly on rumors of good sales, and when these come out and why are impossible to predict. So, i am adding in slowly. I have about 1/2 of a full position. If it drops to 310 i will add the rest, and cover with the Jan 330s. You should be able to get in the 300-350 Feb call spread for about $20. Specially if you sell some Decs first, let them expire, and then sell feb 350s (or Jan, etc). 

    TBT – Yay! Yay! Yay! 2012 calls going crazy the past couple days. Congrats to the rest of you who doubled and tripled down on the way down to $30! :)

  92. Hey!  Some Irish Minister actually figured out that the companies they attracted with huge tax incentives that have now needed bailouts are relocating to the next tax haven (Malta, apparently) now that they’ve trashed Ireland’s economy.  They are leaving nothing in their wake but broken leases, defaulted loans and thousands of unemployed workers…  Would be funny if not so sad.  

    Fed/Mike – Isn’t it amazing?  

    Where/Arnie – If rates go up significantly then bonds get attractive, that’s normal.  Same as the last crashes, people run to cash, then hit the consumer stocks when the government steps in.  

    TBT/Rav – I think that’s normal.  Why would anyone want to give us money for 20 years at 3.5%?  We’ve been looking for 4-4.5% from day one – that’s low but at least realistic.  Still, short-term, it can be jammed down 100 times on the way up – look at the pattern for TNX.  

    MUB/Hunter – Sorry I have no clue.  I don’t follow those but look out below if they can’t hold last month’s lows.  

    Soros/Kinki – Surely you are aware of Soro’s plan to destroy America?  

    $15.33 on XLF and $4.10 on copper and $88.60 on oil – the dominoes are falling on the bears so be careful!  

  93. NFLX--cut to hold by Jeffries

  94.  yes, I registered   !!!!!!!!!!!
    who wants to build a The Bernank website????

  95.  hanna / AAPL
    Thanks for the help… I plan to chase the Feb bull call spread today, and then maybe sell some puts. January should be a good month for equities, and I’m expecting, as you are, good earnings from Apple.
    TBT…Since our disappointments last year, I have been careful with this one… but you made the call recently, and I am just  following you – good call!

  96.  Phil / TZA frustrating – YEA!!

  97. 10yr top of the hour
    10yr = +3.75%,  30yr = +1.15%
    Net $ = (.45)%,  dx/y = +.28%
    oil = (.39),  gold = (26.90)
    C =1225.19, F =1225.00

  98. Phil
    Still have Jan 2011 40s.

    I know you exited a long time ago, but what would you suggest.

    Also, what’s the current play on the 2012s?


  99. Phil
    In the 1050 DIA play you asked a reminder if there is a possible error

    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.   

    We don’t have any calls to roll???

  100. Commodity snapshots (thanks Mike):  

    Now Irish are debating whether it’s OK to call the ministers liars directly to their face of if you have to only call them liars in the abstract – doesn’t seem to be anything to suggest they aren’t actually liars, just a question of propriety…

    HHC/Reza – I don’t know what kind of land they have (numbers are sketchy) and they don’t seem to have pulled back to me. 

    Ratio spreads/Reza – The reason we don’t have them now is because the VIX is so low.  It’s a play on relative volatility and theta decay.  It works best in a high vix or around earnings or some other event (but not pharma events as they are too crazy) so feel free to look for candidates with high front-month premiums.  

    NFLX/Amatta – Congrats!  A lot of stress to get there though.  I’d say that up 60% is fantastic so you do want to stop out at 50% on at least half if it crosses up and then the other half at no worse than even so you make 25%, which is a damn site better than losing.  On the whole, my opinion of value on either of those hasn’t changed and I still thing both expire worthless below my targets  

    TBT/Hanna (and many others) – Congrats on that one too!  

    The Bernank/BDC – Classic!  Now we need to make a talking Ben cartoon that we can feed all of his policy statements into and update it whenever he says something.  We need a heckler cartoon and a Ron Paul cartoon and we will get millions of hits!

    Cool, we are getting pretty much the action we expected, nice blow off top with our commodities and now we head lower.  Who says this stuff is hard to predict?  

  101. quote of the day
    "We can no longer live in a society where the public employees are the haves and the taxpayers footing the bills are the have-nots,"

  102. SO much for mortgage rates at 4.2%. Oh well, no money to buy a house so I guess I get one at 7% in two years. GOod thing TBT will help with the down payment   8)
    GO HARRY REID — Hahahaha yes!!!!!  that online poker bill came out of nowhere — GET’ER DONE! Finally we can be compliant with the WTO and no illegally block legal commerce.

  103.  auction coming
    10yr =+4.74%,  30yr = +1.65%
    C = 1223.08, F =1223.25
    again I beleive they will try to make it look pretty, based on last few days in rates

    see what happens

  104. NET $  = (.32)%,  dx/y = +.33%

  105. Mike – I would hardly say public employees are the ‘haves’, but we do seem to make up a much larger portion of what is left of the middle class……

  106. Bio – why dont you just go to the Tulalip, much better than online….

  107. Wow TBT $39!!

  108. No real change in levels today


    IWM 77.28, 76.98, 76.36, 75.94, 75.56, 74.84, 73.70 blah, blah, blah….the channel of the last several days remains intact !!


    76.36 could be key; remember, very little POMO today !!

  109.  Phil, this is absolutely hillarious:
    " Irish are debating whether it’s OK to call the ministers liars directly to their face of if you have to only call them liars in the abstract – doesn’t seem to be anything to suggest they aren’t actually liars, just a question of propriety"

  110. NFLX Jan $155 puts at $3.40 – don’t let $3 get away now.  Let’s do 1/2 out at $3.20 and the rest at $2.75 now in 1050P.    

  111.  Phil
    We were always right on TBT…..just off on the time frame ( the eurozone interupted our timing temporarily )

  112. Man that dollar sure has one crazy chart.  It’s all over the place today.  Sickening how correlated the banks are to where it trades.  Needless to say, I didn’t get my 6/22 chart.  However, the play was ahead 1.5% before turning around.  Unfortunately for me, I was getting my kid his flue shot during the turn around and I had to close my FAS short even.  I am one penny wise and pound foolish mo-fo.  Phil, I agree.  A lot of effort being spent keeping us up.  At least the banks.  Don’t know about a blow off top today-

  113. FWIW……………………..



  114. Not to get into poitics, but…………………………from Jesse

    Obama’s Deal


    Surely the financial crisis is over and the Banks will cease their threats and demands.

  115. JRW
    Do you see 76.36 a floor or brerakdown? Thanks

  116. NET $ taking a dive since the auction
    NET $ (1.06)%,  dx/y = +.46%
    10yr = +3.10%, was +4.74% at the auction, so quick money for the banksters
    30yr = +.38%, was +1.65%
    C =1224.72, F =1224.25

  117. thanks for the charts jrw

  118. shadow / floor

    Yes, but as such a break below might be a good short entry. My charts are telling me we pull back ti SPX 1212 and then go up to 1255-60 as a TOP

  119. TBT/Samz – I’d sell the $41s for $1 to some other sucker and let him be the optimist, then you can spend $2 to roll to the June $40s in anticipation of selling the June $44s (now $2) for more cash once the Jan callers expire.  

    DIA/Doro – Ah sorry about that, that’s my put/call dyslexia kicking in!  It’s the Dec $114 puts (now $1.26), we should be rolling to the Jan $111 puts (now $1.46) and if the Dec $113 putter expires worthless, we can then sell a lower put in Jan and roll up (1050P clarification).

    Gov/Mike – Still distracting public’s attention from the real power.  Sure, string up the teacher making $80,000 or the garbage man making $60K or the Senator making $200K but pay no attention to the lobbyists (roughly 20 for each elected representative) behind the curtain who spread an AVERAGE of $250,000 each around to make sure that no one ever looks at the people who paid them $3.5Bn last year to buy their power.  Do you know why they like government pay to be lower?  Easier to bribe!!!  

    Blow off top/Matt – That was yesterday, now we have the collapsing tent.  

    LOL JRW, that’s a very good one.  

    Chart/JRW – What are the lines on the left side?  

  120. Phil / lines

    Support down, then resistance up Pivots.  See, I do use more than just the 1 minute chart  8-)

  121. TASR!!!!

  122. PARD!!!  :) (glad i’m not serious)

  123. JRW
    Thanks that was one of your best charts every, the pivots tell the rest of the story!

  124. I’m so tempted to do a short strangle on ISRG (Jan $300 call / $220 put) for $5.50 in premium and $2,700 in margin.. that stock has been trading in a downtrend range for a while, but the low VIX makes me think it twice! Anybody doing short strangles nowadays?

  125. NET $ (.48)%,  dx/y = +.27%
    C =1226.56, F =1226.25
    very tight, again rollover is tomorrow on the eminin

  126. CNBC is trying to gain viewrs, pot, the only free market commodity, prices downon high grade! Market leader to deflation?

  127. At the open: Dow -0.06% to 11356. S&P +0.11% to 1225. Nasdaq +0.25% to 2605.
    Treasurys: 30-year -0.36%. 10-yr -0.5%. 5-yr -0.4%.
    Commodities: Crude -0.14% to $88.57. Gold -1.12% to $1393.20.
    Currencies: Euro -0.22% vs. dollar. Yen -0.71%. Pound +0.33%.

    10:00 AM On the hour: Dow +0.13%. 10-yr -0.44%. Euro -0.02% vs. dollar. Crude +0.06% to $88.74. Gold -1.23% to $1391.60.

    11:00 AM On the hour: Dow -0.13%. 10-yr -0.88%. Euro -0.35% vs. dollar. Crude -0.98% to $87.82. Gold -2.31% to $1376.50. 

    11:15 AM Today’s POMO results in the Fed buying $1.6B in TIPS maturing 2012-2040, of $6.149B offered by dealers. Treasury bonds maintained a weaker showing: 30-year yields +0.06 to 4.42%, 10-year +0.14 to 3.27%; 5-year +0.18 to 1.9%. 

    12:00 PM On the hour: Dow +0.01%. 10-yr -0.81%. Euro -0.13% vs. dollar. Crude -0.26% to $88.46. Gold -1.75% to $1384.30. 

    01:00 PM On the hour: Dow -0.12%. 10-yr -1%. Euro -0.25% vs. dollar. Crude -0.63% to $88.13. Gold -1.82% to $1383.30. 

    MBA Mortgage Applications: -0.9% vs. -16.5% last week. Thirty-year fixed mortgage rate increased to 4.66% from 4.56%.

    Along with the 10-year yield surge signaling higher mortgage rates to come, it’s taking lower and lower rates to get owners to refinance (chart) – suggesting that drops in the refi index (-1.4% this week) are likely to be compounded in coming weeks. (earlier: MBA mortgage applications

    EIA Petroleum Inventories: Crude -3.8M barrels vs. consensus of -1.2M. Gasoline +3.8M vs. +0.1M. Distillates +2.2M vs. consensus of -0.6M. Crude futures sink, -1.2% to $87.65. 

    The Treasury sells $21B in reopened 10-year notes at 3.34% (.pdf), the highest yield in seven months. Bid-to-cover ratio is 2.92, vs. a recent 3.13; indirect bidders take 44.4%, in line with recent averages. Direct bidders take 11.4% vs. a recent 10.2%. Treasurys eased losses but were lower all around, with the 30-year yield +0.12 to 4.49%; 10-year +0.16 to 3.3%; 5-year +0.18 to 1.9%.  After seeing how rising Treasury yields can take the starch out of an equity rally, investors will keep an eye on today’s auction of 10-year notes. Yields continue to rise this morning, up another 4 basis points to 3.20%.

    Spiking bond yields could blunt the fiscal impact of the tax deal, Randall Forsyth writes, likely pushing 30-year fixed-rate mortgages back toward 5% and inflicting higher borrowing costs on states and localities. The message the bond vigilantes are hearing: “Forget fiscal consolidation for at least two years, and just possibly even worse – forget Uncle Sam biting the bullet before the bullet bites you.”  

    Credit-card use ticked down from 2006 to 2009 – but otherwise, electronic payments have grown to make up more than 75% of noncash payments, a Fed study shows, indicating growing comfort with electronic clearing. That’s a 9.3% annual growth since 2007. A full 44% of checks written were for bill payments or point-of-sale consumer purchases, but those types of payments are dropping nearly 11% a year. 

    The tax-cut deal means boards may be more comfortable raising dividends rather than pursuing buybacks, S&P’s Howard Silverblatt writes. The deal as proposed extends a 15% tax rate for qualified dividends and could shift $74.5B to individual investors, he figures.

    The housing recovery is "here to stay,” Toll Brothers (TOL) CEO Douglas Yearley says, expecting improvement in 2011 and a "big year" in 2012. The home builder is seeing more “quality” visitors at its sales offices, a sign that buyers are less skittish about the market and more serious about making purchases, Yearley says.  HOV now $4.27 by the way!   

    Home Depot (HD -0.75%) raises its earnings guidance for the second time in two months. The company expects 2010 adjusted EPS of $1.97 (up from $1.94), 2011 sales growth of 2-2.5% and 2011 EPS of $2.19-2.23. Analysts expected $1.95/share this year and $2.22/share next year. 

    Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) are reportedly being pressured to reduce the loan balances on underwater mortgages. An agreement would shore up the housing market by removing the threat of another supply glut, but would add to already-significant losses at the GSEs. 

    McDonald’s (MCD -1.4%) same-store sales rose 4.8% last month, breaking down to a 4.9% rise in both the U.S. and Europe, and +2.4% in Asia/Pacific, Middle East and Africa. Analysts expected +5.6% for global sales. Currency fluctuations will knock one to two cents a share off of Q4 EPS. (PR

    Yum Brands (YUM -1.3%) expects to double its number of KFC outlets in Africa to 1,200 by 2014, in a bid to double its revenue on the continent to $2B. Africa’s improving political stability, vast population and growing middle class in Africa have led Yum to set its sights on the continent – and chicken is a dietary staple there.

    Here’s the entire market in a microcosm: After failing to find a buyer for its stainless steel unit, ArcelorMittal (MT) finalizes plans to spin it off. High raw materials costs amid slumping demand have forced the stainless industry to attempt consolidation, but unacceptable valuations have prevented any deals.  Overpriced company with slumping sales and compressing margins can’t find anyone to actually buy something for anywhere near the BS paper value of their stock!  

    Three lunchtime reads:
    1) El-Erian: Tax-cut deal alone won’t add enough jobs
    2) Does "emerging market" still have meaning in the world of P/E ratios?
    3) Bear’s Lair: The perils of bailouts

  128. Gov/Mike – Still distracting public’s attention from the real power.  Sure, string up the teacher making $80,000 or the garbage man making $60K or the Senator making $200K but pay no attention to the lobbyists (roughly 20 for each elected representative) behind the curtain who spread an AVERAGE of $250,000 each around to make sure that no one ever looks at the people who paid them $3.5Bn last year to buy their power.  Do you know why they like government pay to be lower?  Easier to bribe!!!"
    Nice, scary perspective and right, thanks for keeping my eye on the ball
    even worse out there, then I all ready think it is by many magnitude

  129. Interesting – the mastercard website has been hacked in an effort known as "Operation Payback" because the company stopped accepting WikiLeaks donations. The site is completely inaccessible at the moment (and has been for quite some time).

  130. 1050P   I didn’t enter the DIA play,   what would you suggest if entering today  the January’s ,   the 114/113 spread or ?

  131. Phil / MT — is that your quote or someone elses? What’s the beef with the value of MT?

  132.  Worrysome Wednesday… for me, because I’m in a lot of gold and silver plays – I’m frankly worried ( maybe others as well) that the Chinese may raise interest rates rather soon. This is a negative for gold and silver (47-1 ratio ) and will wait for next week to add to my positions…. mostly silver, I think.

  133. Kwan
    In 1976 I was the only one cleared to work the credit card computers, they took up 2 floors, without an armed escort the elevators were locked. The solution was the stairway which you could get high on second hand smoke. WikiLeaks, banks, charge cards, and CNBC maryjane features. A link?

  134. "Does "emerging market" still have meaning in the world of P/E ratios?"

    Does PE ratios and valuation matter? scary, famous last words

    Remember 1999, valuation always matters. Just like real earnings and not accounting gimmicks matter.

    Market very overvalued, based on 100 years of data

    ignore value at your own peril, jmho

  135. Hi Phil:
    At you recommendation last July , I bought GE  Jan. $14 C at $2.43 ( now $ $2.99)  and sold Jan. $16 C  for $1.19 (now $1.16) and sold Jan. $15 P for $1.18 (now $.12) for net of $.06 on $2 spread.Since my current profit of $1.65 is 86 % of max. potential profit of $1.94 , I am thinking of rolling position to Sept $15 /$17 bull call spread at $1.20 paired with sale of Sept. $16 puts at $1.31 for net credit of $.11 on $2 spread currently $.99 in the money. Any better ideas? Thank you.   

  136.  dflam – well played!  GE has been great for these kind of spreads.

  137. gel / FYI

    You want to trade THIS chart ?!!


  138.  Phil / PCLN Weeklies — Phil, above you wrote in at 50 cents and out at $1.40 (up 180%). How/when exactly did this happen? On Monday you wrote: "PCLN/Cap – Good catch!  Dec $400 WEEKLY puts at $1.25 were $8 on Friday.  Worth a chance for 2 in the 1050P."   I got an even better entry than this at $1.10 and luckily got out at $1.15, for a net 0% gain. Did you really make 180% from Monday to Tuesday?  I know we can’t always time our entries perfectly, but I don’t know how you got in at 50 cents and out at $1.40. 

  139.  Gel, how about hedging your gold (kind of a oxymoron) with GLL

  140. Regarding Wiki-Leaks attack.  I’m guessing US government started first round of attack by launching the denial of service attack via one of their contractors on Wiki-Leaks (Did you know Boeing is developing offensive cyber weapons).  Most likely, our government launched the first salvo in a cyber war.  They would never guess that someone might actually retaliate.

  141.  Does this mean we should be short NFLX "next quarter"  ?
    bespokeinvest Bespoke 


    Departing $NFLX CFO: "not sure you’d want to be short this quarter." When do you ever hear a CFO say this? $$
    Seriously, what a dumb ass thing for a departing CFO to say (if he said it).  Look at the stock between noon and 2 pm !  Weekly heaven.

  142. Lines/JRW – No, I mean the red and gray bars on the left side but the pivot points are interesting too. 

    TASR – 4 countries placed follow-up orders on X26 and our own government bought 700!  If you want to see a tough guy, check out the cop at the end of this video.

    ISRG/Rav – I think they are fair priced around $250, which was old support back at $220 I’d be buying to the $220 put sale seems fine (but in a crash, you will own them!) while the 200 dma is at $310 and falling so not a bad area to sell but, as you note, not much fun when the VIX is so low.  

    CNBC/Shadow – They try to do these hip things but then they do the same old boring report and kill any subject.

    MA/Kwan – See, now there’s something that should bother people because any ECommerce company could be taken down like that at any time but no concerns at all in that sector.  

    DIA/Humvee – We’re just hoping to get even so I don’t think it’s worth chasing unless you get a really good entry on a Dow pop.  If the Dow is heading lower, there are other ways to play. 

    MT/Rain – Not MT, per se, just the fact that they can’t sell a division as all pricing (including MT’s current price) is inflated.  I like MT long-term but now is not the time they should be popping and, as you can tell – they need cash. 

    Silver and gold for Gel.  Listen to the snowman – sell before it melts!

    Dividends/Mike – Yeah but the banks all cut dividends to not comparing apples to apples.  

    GE/DFlam – What a brilliant recommendation!  I’d say yes to cashing out but then I’d wait for a pullback to go back in.  They are nearing the top of the range at $17.50 so why should you pay to be the test pilot.  If they get over, you can adjust and if they don’t – you get a much better entry.  If you want to be fancy, you can sell Sept $17 calls for $1.50 (or wait for the test line) and buy in with stock or lower calls IF they cross $17.50.  Otherwise, you make a little cash on the pullback towards your new entry.  

  143. Based on the last 180 days, 90 days, 30 days, and 2 weeks of IWM 60 minute charts, we should reverse the up trend tomorrow or Friday, as per etrade pro.

  144. JO / GLL
    Great idea… I would only do an overnight trade though, this i a "dangerous" ultra, and gold has the momentum long term. Silver has more momentum going for it, relatively speaking, as the ratio needs to force a catch-up in silver pricing, but more to the point – lots of short interest in silver, that will soon become toxic. ( ouch to the shorts )

  145. lets watch Kramer pimp for China

  146. wow 10year is only +1.83%
    way 4.74% earlier, nice payday

  147. NET $ (.56)%,  dx/y = +.32%
    C =1227.66, F =1227.75

  148. Time to short Apple and whirlpool because of Kramer. I also plan to sell IWM puts at JRW’s 76.36 levels today, don’t trust chart trends anymore.

  149. Phil, bought SCO this morning at 10.75, would you let it ride after seeing the inventory number today?

  150. did anyone gamble on YOKU ?

  151. EU seeks curbs on energy and food speculators

    "No one knows what is going on in the markets in Europe. They are playing catch-up with the United States. Regulators there already know more about how the markets work."

  152.  Following Jo’s suggestion ( ""hedging your hedge" )…. I’m doing just that – entered Hanna’s suggestion for a bull call spread on AAPL. and weighted the ratio with the sold calls, and then hedged that hedged play with a hedge on the spread by selling closer in puts – ITM…. after everything settles down, I try to figure it out and roll for better positions, and ride to the finish line with a lot of profit ( I hope )

  153. PRGN/Phil:  Any thought on this beaten down Greek shipping stock?  Looks like its near its "Greece Shock" lows again.  With a 5.6% dividend yield, seems like a good covered call income generator.

  154. yes on YOKU--small position--all out too soon--oh well

  155. Phil:
    Any views on the close today.

  156. Spiking bond yields could blunt the fiscal impact of the tax deal, Randall Forsyth writes, likely pushing 30-year fixed-rate mortgages back toward 5%
    Who’da thunk that we’d ever call a move to 5% on a 30 yr bond a "spike"….ah, we’re in a brave new world.

  157. Lines/Phil:  I think those horizontal lines are a Volume profile at each price level.  Good for figuring out areas of resistance and support.

  158.  Phil / Silver and Gold
    Ha, ha… That snowman looks like a "recycled" Col Sanders hyping KFC… His chicken was nasty and now his Christmas rendition is just as bad.. I’m not selling…. but adding to my stuff on all dips ( regardless of the pundits calling for a downdraft  ). The fundamentals are there for gold to top $2,500… and I hedge that bet with FX plays on the worldwide QE efforts.

  159. PCLN/Ajay – I didn’t trade it.  The official trade came after the early Alert in Chat but I was just saying that the position we still liked in the morning Alert, the $400 puts (our original position) opened at .50 and closed at $1.40 for a .90 game but our actual trade was in the 9:35 Alert which was, I thought, pretty clear, where I said:  

    I see PCLN way up at $424 where the weekly $400 puts have dropped to .60 so we want to spend $1 to roll up to the $410 puts and double down at $1.60 so we’ll have 4 at an average of $1.73, which is fine and also a great new play at that price.  

    So we gave up on the $400 puts at .60 and bought 2x the $410 puts at $1.60 and those closed at $3.50 on our trailing stop (.70 off the high of the day) for a $632 total gain ($760 less the loss on the original) rather than the relatively meager gain we would have just stuck with the originals.  The whole point of the 1050P is to TEACH entry and exit strategies on small positions along with scaling and rolling.  Please save these kinds of questions for after hours or weekends as it takes a very long time to try to go back and reconstruct a trade for you.  This is, in fact, why I hate keeping portfolios – inevitably it degrades into "what about this" and "when did that happen" – not to pick on you but it’s not what I like to do with my day. 

    SCO/Rustle – Playing ultras on oil is always a little scary but I think it’s a good move into next Thursday.  I would play them with an Apr $10/13 bull call spread at $1 and sell the Jan $10 puts for .45 as that’s net .55 on the $10 call and your worst case is you are assigned at net $10.55 (lower than your entry) and, after the Jan puts expire, you should be able to sell April puts as well and make yourself a free spread.  Bonus on this is those puts can be rolled even to the July $8 puts so a $2.85 downside cushion on that side.  

    YOKU/BDC –  Yes, I keep those certificates with all my alchemy supplies.  8-)

    EU/Kustomz – "Washington’s tough regime?!?"  no wonder we are so screwed if they thing Washington is tough on speculators.  If course, I wrote some time ago that it’s the EU regulators who make the whole ICE scam possible with their TOTAL lack of regulations – even by our lame standards.  

    PRGN/Kinki – I like TNK and DRYS the best.  It’s really hard to unravel all their LTV ratios and various covenants, so picking a good shipper is a lot of hard work.  I don’t know that PRGN is a bad one – I simply don’t know if they are good.  With the BDI down at 2,200 and threatening to break 2,000, none of the shippers are too thrilling at the moment.  Plus you have a lot of spare capacity coming on the line and half the ships that are being used are holding for speculators and if that unwinds, these guys are in big trouble so be careful in that sector.  

    Close/Arnie – There’s no data this week and just the normal jobs tomorrow but if they show a bad trend to confirm the poor NFP report – we can dip hard so I can’t see people going long into the close.  Next week we have big data, a Fed decision and options expiration so it’s going to be wild.  I think we’re flat to down through Friday from here.  

    Spike/Eph – Good point. 

    Volume at price level/Kinki – Really?  Then it’s buy and sell volume at prices?  That’s cool!  

  160.  JRW / Silver
    The chart looks horrible, but the channel is tight… I’m looking for a long term profit, and a correction may be in the cards.      ( lots of short interest ), but my strategy is to accumulate on dips… day trading is not my long suit, as I am in too many positions to watch the charts… Maybe next year, I’ll change my style, and become a "money making" student of JRW

  161. shadowfax/ Aapl
    what did Kramer say that makes you want to short it?
    and is that the only reason or something more you know?

  162. IWM failing the ascending support trendline !!


  164. Phil : Which one is the briliant recommendation,yours or mine? Just kidding. I know which is the one.

  165. My point exactly Phil

    Just when it looks like TZA is going to run they flip the switch 

  166. Banks/Mike – ROFL!  If anyone ever wanted a list of who is in the Gang of 12 – just read this article:

    All of the top-10 banks in foreign exchange declined to comment for this article. Those banks are: Deutsche Bank AG, UBS AG, Barclays Capital PLC, CitigroupInc., Royal Bank of Scotland Group PLC, J.P. Morgan Chase & Co., HSBC Holdings PLC,Credit Suisse GroupGoldman Sachs Group Inc. and Morgan Stanley.

    Brilliance/Dflam – It’s a group effort! 

    02:00 PM On the hour: Dow +0.04%. 10-yr -0.67%. Euro -0.14% vs. dollar. Crude -0.25% to $88.47. Gold -1.88% to $1382.50. 

    So much for buy and hold: On Dec. 31, 1998, the S&P index closed at 1229.23 – almost exactly where it is today.

    UBS talking up their new exchange already:  Currency options will be the play in 2011 as UBS predicts "super-volatility" in foreign exchange rates, with trading ranges on currency pairs doubling from this year’s levels. Implied volatility on currency options averaged 12.34% this year vs. an average of 10.6% this decade. 

    The elimination of the Build America Bonds program from the tax compromise could remove the "last pillar" of support from the municipal debt market – a "black swan in the making." Without BAB, states will find it more difficult to fund a $140B shortfall next year, possibly pushing troubled states like CA and IL over the edge.

    CDOs and CDOs-squared were just "fraud to cover-up fraud," and the firms making mortgage-backed securities knew the loans they were securitizing were fraudulent, Janet Tavakoli tells a Federal Housing Finance Agency summit. The banks held the U.S. government hostage as the market started to collapse, she says, resulting in the bailout. 

    More net neutrality issues:  France Telecom (FTE) and other European carriers need billions to upgrade their networks to cope with growing wireless data traffic, and want bandwidth hogs like Google (GOOG) and Apple (AAPL) to contribute. The data explosion caused by ‘net users is "a challenge for carriers like us,” says an FTE executive. And if the operators don’t get the money they want, there could be a cold war. 

    PCLN???  "The story this year has been to try to go from the bottom up – not try to get themes, not try to get big ideas," Laszlo Birinyi says. "Look at individual names." With that in mind, his top five stock picks for 2011: Hermes International (HESAF.PK), Priceline (PCLN), Polo Ralph Lauren (RL), BP Prudhoe Bay (BPT), Cummins (CMI).

  167. Phil / PCLN – Thanks for the explanation, Phil. I typically don’t try to ask these questions so I apologize. I know it’s hard to re-construct the trade and it’s even more annoying to explain precise entry/exit prices. I had missed the other comment, so was completely confused how you were arriving at those numbers.

  168. ARNA  up 10% today:  2012 1/5  Bull Call spread is  $.53 and $.58 in the money

  169. Phil
    I have the 2011 March 35/38 bull call spread with march 33 puts
    Should I roll to   ?

  170. Phil, I know you negative on Gold and Silver. We had quite a drop today but look at it now it recuped all losses!!!! One up for gel 1

  171. Phil / Bandwith   Good insight re France Telecom.  Which cos your favourite beneficiaries of huge increase in supply of bandwidth?

  172. AIG stopped tradeing! Why?

  173. Phil,
    Fortune’s top 10 stocks for 2011 – MOS, AGU, DOW, RIG, RDSA, LEN, EWBC, RCL, AAPL and ENTR.  Any trading ideas?  or should we wait for a better entry?  Thanks.

  174. AIG – pending news.

  175.  Phil / Brilliance
    Are you referring to silver and gold plays?…. I need a play from you ! 

  176.  Bio Chris … the   ROFL !!
    Gotta put up the QE video, the 60 min interview; and a video montage of all of his lies the past few years ("the subprime crisis is contained"   "we are not monetizing the debt"  comes to mind).
    Sounds like great fun.

  177. Dennis Kneal on FOX now LMAO, and even better news WMT ends the extra dollar an hour for Sunday workers…things just keeps getting worse for Americas middle class

  178. wow, I can’t believe there are still so many people buying NFLX, almost get even.

  179. NET $ (.14)%,  dx/y = +.23%
    C =1227.31, F =1227.00

  180. Have to run, reminder
    emini rollover tomorrow to March = H

  181. That’s OK, AJay but please go back and read carefully yourself before asking.  Just go to the prior posts and do a CTRL-F on PCLN or 1050P – that’s what I have to do….

    JPM/QC – Yeah, it’s annoying when you are so far in the money so early, isn’t it?  Not much to be done, puts have a lot of premium and so do the callers.  If you roll you take a low-risk trade and turn it into a higher risk trade, which doesn’t make a lot of sense with $1.50 more to gain on a $3 spread.  If you want to get more aggressive, you can roll up to the $36 puts at $1.10 and put .50 more in your pocket but $2 is 5% – do you feel you are completely immune from a 5% pullback between now and March?  

    Silver (not gold)/Yodi – Yes, it’s silver mania.  Just like housing, oil and tulips before it’s going to be the investment of the century and you have convinced me, based on your 24-hours of observation, to change my mind!   8-)

    Bandwidth/Tusca – I haven’t given it a lot of thought but good idea for weekend chat.  

    Dollar down to 80.39, market not getting much action out of it.  

    Fortune/Bob – I’ll be very motivated after a sell-off but those are all pretty expensive at the moment.  I like HOV better than LEN although hard to pick at $4.63 when we’ve been in for so long.  

    Play/Gel – My play would be to cover those silver gains! 

    Middle Class – Kustomz – WMT Workers???  

    TZA $17s at still at .65 – pretty much sums up the day…  

  182. Wow, the stick is back… I’m a bitch, I’m a bitch, I can stick it back!

  183. Man these bots sure fight for their closes!  This one has been telegraphed since noon or so.  With the afternoon’s so utterly under control, how is it that the mornings look so wild with the dollar getting batted around?  FAS just hit my limit to sell.  25.31.  I just knew they were going for hod.  I figured they’d close her a penny below yesterday’s open.  But now it looks like they are going for a penny over.  It’s all part of the plan.  What a recovery from yesterday!  On less volume, too.  The difference in volume yesterday were the panic sellers they bamboozeled.  And that’s how the world goes round.

  184. vxx @ 38.95 (-1.19)
    Hope it can keep over $38 till expiry.
    AIG to use AIA proceeds to repay N.Y. Fed

  185. Phil,
    It is not my 24 hour observation I am working with AU for over 25 years and I am watching it like a hawk every day!!!!

  186. highest close on cash
    ok, no I have to run, really late

  187. David Rosenberg put out a note today about the credit contraction being over.  He looks at the consumer credit number, which shows an expansion in October of $3.3B in October.  On closer examination, the raw data(not seasonally adjusted) shows a $700M decline.  And all of it is basically supported by a $31.8  Billion expansion in federally supported credit.
    Take out the federally supported loans, and consumer credit actually plunged $32.5 Billion to the Nov 2004 level(9% YoY decline).  Adding in the same figures for September and consumer credit has contracted $76 Billion.
    My question, if banks use lending at 10X leverage to create money(ie taking the obligation and 10X levering it up in our fiat system), is a $76 Billion contraction roughly equivalent to $760 Billion in money being removed from the system?  If so, no wonder all the programs to prop things up only appear to tread water.  The pool is draining as fast as the Bernank is filling it up.

  188. I phone turns into universal remote (thanks Kwan!)

    Nat gas $4.60 – Finally! 

    Copper holding $4.10, oil $88.45 (trouble at $88.50?) and gold $1,381.  

    Stick/Rain – Didn’t get the RUT up – that’s a trend-changer.  

    AIG says it will repay in cash all amounts owed under the credit facility with the Federal Reserve Bank of New York. Shares halted, with last trade at $42.23. (PR

    Goldman Sachs (GS) thinks banks may start lending again, citing Bank of America (BAC +3.5%), Wells Fargo (WFC +2.8%) and PNC Financial (PNC +3.5%) as painting "an improved loan demand picture, with expectations for organic and market share driven growth in 2011 across various loan products." Regional banks up sharply: RF +6.3%, FITB +5.7%, STI +3.8%, KEY +3.4%.

  189. The whole day between the lines and in the channel; I never made a trade, what a waste of time !!

  190. Currency options will be the play in 2011 as UBS predicts "super-volatility" in foreign exchange rates, with trading ranges on currency pairs doubling from this year’s levels. Implied volatility on currency options averaged 12.34% this year vs. an average of 10.6% this decade.
    Whoa boy! I’ll bet the seizures we’ve been witnessing in the dollar are due to practice runs by the bots they’re going to unleash on us. Phil’s 3:30 post is also part of it…

  191. JRW, that’s ok.  You followed Buffet’s first rule.  You are a disciplined SOB!

  192. Phil / stick — yeah, but the rut was closer to flat than the Dow and I think the Dow is more important for psych reasons.  Joe 401k doesn’t know what the Rut is!

  193.  yeah, I only had one trade today also  (not counting a few sales of Jan calls and puts of various stuff to position for next month).

  194. Phil, yea the new middle class..haven’t you heard, they lowered the bar man

  195. Gang of 12 and new FX market for banks only.  Wow.  By the sounds of it, they don’t have as much control over FX as they used to have and this new initiative is an attempt to right that.  Can you imagine?  Out in the open collusion by banks around the world and there probably isn’t a damn thing anyone can do about it.  You thought this market was a crap shoot before..

  196. Have the Irish voted yet?

  197. matt / FX12 — just like the promo, they’ll be catching anyone leaving their houses with bags of money. I think it’ll be a game changer. This is just their replacement for their lost Proprietary Trading desks IMO.

  198. When Ben Bernanke initiated his policy of QE2 he explicitly stated that his intention was to suppress long-term rates and create demand for loans. What he’s done instead is create a panic about inflation and money printing. In the end, there is little evidence that QE2 is having any sort of positive effect. It has not driven the dollar down, there is no such thing as a wealth effect in the stock market and input costs have surged. Most importantly, however, it has failed spectacularly in keeping rates low.

  199. I had to come back in and post
    Another Austrian Theory Cartoon

  200. @Phil
    Buy and hold is like owning a late model car vs say, a 1964 Stingray.
    All you can do on today’s cars, without taking it to the dealer or repair shop, for the most part, is change a flat tire.
    At least you can get your hands dirty on the ‘vette. Change the plugs, pull the heads and grind them down for more compression, adjust the valves, replace and add on practically anything you want with the right tools and knowhow and except for some stock late models, with a 427 hp, bored out, fuelly injected iron under the hood with the turbo charger sticking up out of the middle, an altered differential, with a Hurst six-spped, —-- beat the bejesus out of anything on the road.
    Now how much more satisfaction and performance, engineered by thyself, is that over the new model that you dare not lay a finger  on  without an elaborate electronic setup costing tens of thousands dollars?

  201. For your amusment, if Uncle Ben was in charge of the DOT instead of the FED, we might see something like this 8-)

  202. WHY is oil up 32 cents after its close?

  203. Phil/Anyone
    I previously sold ntap dec 55 calls. It wasn’t going my way. As ntap  broke up this afternooon I bought enough stock for the calls. After ntap rose over 55, I sold a little of the stock so that the combined position is more neutral for overnight. I gain/lose about as much on the stock as I lose/gain on the sold calls.
    Does this type of covering make sense to avoid having it go against you for a loss? I do realize that if the stock stays above above 55 : great I get called. If it pulls back I can sell the stock. And, I could go nuts if it chops around 55 for another week and 1/2.
    My plan is to keep the neutral position collecting the decaying premium and deal with it a little later.
    Any thoughts or comment are greatly appreciated.

  204. jromeha
    don’t know. /dx a little up since oil close  so there must be some other reason for it to be up in after hours futures trading.

  205. good one JRW

  206.  Phil / NFLX
    Are you looking for a reentry to the puts?
    If so – at is it still Jan?

  207. Judy:  what do you know that i don’t about NTAP, I’ve been riding it up from 30 and its a bright spot in my portfolio.

  208. and one more, maybe the punishments will finally become a deterrent, but I will not hold my breathe
    Europe Suggests Jail Time for Insider Trading

  209.  OK, I’ll work on the THEBERNANK.COM !!! 

  210. Guys – Vegas Update:

    Mandalay Bay Rooms: 169;  THEhotel Suites: $209
    Meeting Room included w. $3k F&B commitment
    Hard Rock Hotel: 
    HRH Paradise Tower: 129;  HRH Tower $169
    Meeting Room included w. a $2.5k F&B commitment
    AV is $750 additional
    Can we do a quick vote and I’ll get it going? I have not recently stayed at either hotel, so need input here. Thx

  211. humvee
    Based on today’s action this seems to have blown over now. But there were questions about complicated share counts, slowing growth, etc. around the earnings release. I thought it would be a longer hangover for it.  And, it has been to some extent. Compare ffiv with ntap in the last few months including daily volume pattern. However, I sold the 55 calls.

  212. TLT- Pharm- you have been a "fan" in the recent past. Getting beat up pretty badly. What do your "bond ghouls" have to say?

  213.  deano     Is the date set ?  January 15-17?

  214. deano,   Mandalay Bay is a little nicer but farther away from all the action. We have to decide asap, since we are barely one month away.  R/T airfare for me out of DFW is all ready $450.  Did you check with the Venetian/Pallatzo   Perhaps we could set up our own poker games , act  as the house and pull  $5-$10 bucks out of every pot to fund the food and drinks, kinda like a tax on the rich.  I know that never work, and not everybody will play poker .

  215. Deano/Vegas --
    Mandalay Bay — I’ve stayed there many times, but not lately; good restaurants and bars, very good sports book (for the horsies!), OK rooms.  Also a Four Seasons there, inside.
    TheHotel — at the same place, but nicer rooms, very modern designs.
    Both MB and The Hotel are at the far end of the Strip.
    HRH — never stayed there, but seems fun…sorf of a "frat boy" vibe, if you like that sort of thing.
    HRH is off the Strip, a couple of blocks.
    Doesn’t really matter to me, and the rates are fine.  I defer to Phil and others.

  216. Anybody have a link to the main article on the 5% rule? I am having trouble finding it.

  217. aclend

  218. Any dude:   Regarding,  "ThinkorSwim"
    Is there any way to get a relatively uncluttered screen? The default looks like a Jasper Johns on acid.

  219. Ok, WHY is oil up 53 cents?!? Bc brazil kept rates steady (AS EXPECTED!!!)?

  220. Thanks rj!

  221. Thanks Judy!

  222. Those fockers took oil rift to my stop, what a docking joke…. Wiped out all my gains today.

  223.  flipspice/TOS,
    Click triangle next to Account Info in upper right and that whole column goes away. Click again to get it back. Generally the triangles will toggle whole sections/subsections to expand/collapse. Look at Setup in upper left for some other choices. If the color scheme is bothering you (I don’t like the black background myself although it has a cool trading room feel to it), you have to deal with that at the login screen – click Configure. I’m sure there other things you can do to clean things up, the thing is just jammed with features. I’ve found the folks on chat really helpful. Upper right Support/Chat > LiveSupport > Create Support Request and tell them what’s bugging you. They’ll get to you pretty pronto.
    Also recommend the SwimLessons which are found in Chat and start at 11 CST each am. They vary in depth and utility depending on where you’re at and what interests you, but I’ve found many of them super helpful. I usually learn something each session.

  224.  Gah! Got my right and left turned around somehow. Account Info and Chat are on the left and Setup is on the right.

  225. @pakdog

  226.  pstas
    Tomorrow looks like a good day to buy TLT – Thanks!

  227.  pakdod…. GRRRR !

  228.  jromeha… The Irish have not voted yet…. the bars are still open !!!!

  229. Deano – HRH

  230.  Very interesting comment attributed to RBS from Daily Reckoning.
    The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist.

    It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms.

    Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month.

    The Communist Party learned from Tiananmen in 1989 how surging prices can seed dissent. "Inflation is a redistributive mechanism in favour of the few that can protect living standards, against the large majority who cannot. The political leadership cannot, will not, take risks in that regard," said Mr. [Tim Ash, the bank's emerging markets chief].

  231. deano – HRH works for me. I think everyone should vote asap. The longer we wait to book tickets the more expensive they get.

  232. TBT- Gel- this could fall more. It has been declining on rising volume. I am going to watch/wait for a turn.

  233.  gel – any change in your plans? Will you be able to make it to LV?


  235.  willsons
    dates are fri. 14th with arrival for dinner, meet sat & sun, 16th or 17th for departure. 

  236.  I am gonna top that, Bio Chris …
    Here is a tax idea (close a big loophole for the super rich) that makes sense and I could support:

  237.  nicha…. I will miss you guys in LV… my plans are still intact to be in Costa Rica for 10 days. What I gain in weather enjoyment, I will miss in fun, I’m sure

  238. Gel – it seems like the dollar will weaken tomorrow. Will you use tomorrow/Friday to initiate any currency plays ahead of China’s reports sunday?

  239. The key to our economic malaise was found in the front page of the newspaper this a.m..
    Fortune Brands is spinning off, breaking up, and otherwise doing what every entity of size and diversity needs to do to cure 90% of our problems,  including the biggest one of all, busting up the United States or any other mishmash.
    The question needs to be asked: Why in keerists name were a faucet company, a liquor company (one of the best and tastiest brands in the world, Maker’s Mark) and security business, and a cabinet maker combined in the first damned place?
    From one to three. Go forth and multiply. 
    Fortune shareholders or would be ones should give the Board a standing ovation for leading us into the light,  the way out of the darkness.

  240. @Cap
    WADR, using tax policy to run an economy is always fraught with a kind of schadenfreude that reflects a an envy of and bias against those who actually create ALL the jobs that make the world go ’round. 
    When I sold a company I founded and paid the lower cap gains tax rate I didn’t feel I should have paid twice as much in taxes.  But the amount, compared to a Jobs or Gates was a pittance. You have repeatedly disdained using taxes to modify behavior on this board so it’s a surprise that you would endorse the idea of taxing capital gains at o.i. rates.
    That being said, a graduated Cap gains rate, progressively rising (as do o.i. rates) wouldn’t be all that onerous to any savvy business builder.  But if that capital gain is reinvested in growing other businesses, (as certain 1201 ? real estate transactions now do) there is no sense in giving the Federal and State governments one red cent of it to piss away on some boondoggle pork barrel project to reward a campaign contributor like I see 75% of the Pennsylvania budget being used for . 

  241. Good morning!

    Wild action this morning.  The dollar was down at 80 when the Nikkei opened and they ran it up to 80.37 at the Asia close (4am) but then it got more legs and hit 80.66 and nobody (in power) wants to see that so they’be been pushing it down for 2 hours and it seems to have, so far, ruined a planned pop into the open.  

    One problem may be the Obama Tax Cuts, which seem to be catching a lot of flack.  My guys say the Senate is iffy and the House is no way at the moment but those are the same guys who thought the Dems would easily hold the Senate and would do OK in the House in the last election so they have a long way to go to rebuild their credibility with me!  

    Ideally, we’d love a no vote that freaks out the markets (remember when the Republicans defeated TARP?) and then we can do a little bottom fishing so – boring as it seems, cash remains king for now…

    There’s no news driving the markets and Asia is still looking weak (good for our FXP play!) and India is down 2.5% so EDZ might be a good pickup this morning if you want to hedge – remind me in chat and we’ll see how it prices out although we’re cutting it close on our October play there.

    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!  

    To save sending an extra Alert this morning, our watch levels remain:


    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Watch LevelsDow 11,220, S&P 1,185, Nas 2,500, NYSE 7,550 and Rusell 715 
    • Up 10% (must hold)Dow 11,220S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • 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 


    So, once again, it’s the NYSE that’s in play at the 7,750 line to give us an idea of direction.  Oil $88.50 is also worth watching as is copper $4.10 and, of course, our beloved Dollar and the 80.50 level.  XLF at the $15.50 line is another good one so plenty of things to watch this morning.  

    There’s Natural Gas inventories at 10:30 and Nat Gas is at $4.61 at the moment.  They are expecting a good draw but they may be a short on the futures if they get a nice move up to maybe $4.75 as it’s too much, too soon for them.  

    So we’re still betting down but we’re resigned to the possibility of up. 

    Have I mentioned cash is king?

    Be careful out there, 

    - Phil