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Testy Tuesday – Topping or Popping?

 Looks like we picked the wrong week to short FCX! 

Copper hit a new all-time high in Shanghai this morning (as the guy who owns 90% of London's closed for the holiday exchange supplies sold it to himself for more money than he did yesterday) and gold is back at $1,400 in the futures and that should give us a better entry on FCX puts than we expected for round 2 but Paul Krugman has me worried now that maybe commodity prices are just high because the World hasn't got enough of them to go around.  Usually Paul and I agree but i think he may be discounting the effect of a 10% decline in the dollar a little too much – which is understandable as he is still arguing for more stimulus while I'm arguing that the way they are stimulating now is causing this problem and can not and should not be sustained.  

Still, we have to be pragmatic.  That's why, this weekend, I posted our "Secret Santa Inflation Hedges for 2011" as a follow-on to the "Breakout Defense – 5,000% in 5 Trades or Less" ideas of the 11th and, in the week between the two, we had bullish bets on  HMY, XLF, CAKE, TNA, IWM, CCJ, CHK, EXC, TNA, XLF, UNG, GLD, AAPL, GLW, TOT and AXP – which I had mentioned on the 19th in the weekend post "It's Never too Early to Predict the Future."  Just because I think there's going to be a disaster doesn't mean we can't go with the flow while we wait, right?  

We don't have to like the market to buy it above our breakout lines but we do need to keep in mind that this is a very thin rally that is very likely nothing but window dressing aimed at dragging money off the sidelines so the IBanks who have been propping up the markets can, once again, stick the retail shareholders with the bag as they load up on puts (watch the VIX to confirm) and crash the markets once again.  I've seen it happen in 1999, I saw it happen in 2008 and, both times, the rally lasted longer than seemed logical but the smart play was to hit and run – not to leave your money on the table but to participate in the upswings and then get out.  

Yesterday, for example, we grabbed the QQQQ Weekly $53 calls at $1.38 in the morning and ditched them at $1.85 in the afternoon.  That's 35% on a day trade and made a nice cover for our bearish bets so we didn't get forced out of them on the pop.  Today we will do the same because these low-volume rallies don't impress us, even if they have gotten Paul Krugman to capitulate on commodities!  

Our breakout levels give us very clear indicators as to where to kill the bullish side of our bets.  As our aggressive, 5,000% suggestions are complex spreads – timing is everything.   Those were for Members only and still in progress but back on Dec 3rd, I had put a couple of similar ideas right in the morning post.  One was the FAS April $20/25 bull call spread at $2.70, selling the Apr $21 puts for $2.55 for a net .15 entry on the $5 spread.  The $20/25 spread is already $3.50 and the Apr $21 puts have fallen to $1.23 for a nice net $2.27 on the spread, up 1,433% on cash in less than a month.  Figure margin on the $21 puts to be $10.50 plus the .15 cash and it's still a nice 21% ROI in less than 30 days – THAT's the way to fight inflation!

The max gain on this trade is $4.85 so still a lot of cash to capture and we are feeling good about XLF (it was my "guaranteed" trade of the year in the Secret Santa post), which means we are not inclined to kill the trade at less than 50% of potential but that doesn't mean we don't set a stop on the net at about $2 to lock in the gains.  

The other trade idea from the post on the 3rd was for DBC.  There were a couple of ideas here – the first was simply buying the April $27 calls for $1.  Nothing fancy there, just buy a call and wait for inflation to kick in.  Those calls are $1.30 and were $1.35 Friday so $1.25 stop locks in a 25% gain – also not a bad month for most people's virtual portfolios, right?  The spread play was the Jan 2012 $26/30 bull call spread at $1.40 and you can just take that by itself as well as it has a potential 185% upside – enough to keep you ahead of the game.  That spread is still playable at just $1.55 (up 11%) while the $22 puts we looked at selling for $1.10 to make it a net .30 trade are now .75 and up .35 (32%) so that's net .80 on that .30 cash commitment on that trade or 266% cash back in less than 30 days.  

These are fun trades, we find them all the time and you don't need to put a lot into them to make a lot.  They are especially useful when you have cash on the side (like we do because we think this house of cards is going down and we will be happy to deploy our cash in the wreckage, a la Buffett) and margin is not an issue and, as you can see, you don't have to ride them out to the end to have a very good short-term trade while you wait for a little market clarity.  

We are still trying to stay on top of things with our $10K to $50K Virtual Portfolio but we are stuck dead at $26,000 (virtual net) with 4 bearish positions remaining open.  Our deadline for $50K was Jan 21st and it's not looking good at the moment as this market simply goes up and up every day but I still have the nagging feeling that, the minute we capitulate, we'll miss a beeline to $50K so it looks like we'll stick it out over the weekend, although it's only Tuesday so it may be too early to put on a brave face on bearish bets that clearly are not working at the moment.  

It does seem to me that what's going on with copper is a microcosm for what's going on in the markets.  The trading is very thin, the Chinese markets are selling off with the Shanghai down another 1.7% this morning and the Hang Seng off 1% as well.  Nonetheless, with London closed and no real price check on the market, copper shot up a nickel to touch $4.31 overnight as the Dollar was knocked down from 80.7 to 78.9 – which used to be considered a major move in a currency but is now considered "Tuesday morning."  It is truly amazing what you can get used to

Somali Pirates (aka "Rent-A-Rebel") have seized an fuel tanker, also aiming to drive up oil prices during a thinly traded week (are you seeing a theme here?).  Already the return of $3 gas prices has knocked 20% off the value of used SUVs in just one month, but I sure don't feel sorry for the people who still have them – I was dumbfounded at how many SUVs were selling this year as truly my 6 month-old niece has more of an attention span than the American consumer, who can be burned over and over and over again by the same bad decisions, it seems.  "It's a challenge," says Adam Lee, president of the family-run Lee Auto Malls dealerships in Maine. "How do you tell a good customer, 'You paid $32,000, and now it's only worth $17,000?'"  ROFL!!! 

Of course, I guess you could say the same about "good customers" who keep buying CMG, NFLX, AMZN and PCLN, who expect a good ride but will much more likely end up in a horrible crash.  At $120, we can add FCX to our list of favorites as I don't see them holding the dollar below 80 once Europe rolls into the New Year and is forced to deal with their issues again.   

Getting back to retail shoppers – MasterCard's SpendingPulse survey shows a 5.5% increase in retail spending for the 50 days before Christmas this year.  Total Retail Sales were $584.3Bn, now beating 2007's record $566.3Bn after a 6% dip in 2008 and a 4% bounce last year.  These are blow-out numbers led by top 10% favorites like clothing (up 11.2%), Jewelry (up 8.4%) and Luxury Goods (up 6.7%) and even home furniture put in a positive month for the first time since August.  

For the past year or two, when I’ve seen growth in one area, it seems to come at the expense of another,” said Michael McNamara, vice president for research and analysis at SpendingPulse. “Here, things are actually all moving in the right direction.”  Of course, the broad increase was driven in part by higher spending on necessities like gas and food. And even with the across-the-board gains, some categories, like furniture and electronics, have still not climbed back to their prerecession levels.  “In the face of 10 percent unemployment and persistent housing woes, the American consumer has single-handedly picked himself off the mat, brushed his troubles off and strapped the U.S. economy on his back,” Craig R. Johnson, the president of the consulting firm Customer Growth Partners, wrote in an e-mail.

I like SKS ($10.92) as the laggard in that space.  You can buy the stock and sell the 2013 $10 puts and calls for $4.65 for a net $6.27 entry and, if below $10 and another round is put to you, the average entry is $8.14, a nice 25% discount off the current price (see "How to Buy Stocks for a 15-20% Discount" for details on this strategy, which is one of our favorites).  

The ICSC Retail Store Sales were not so bullish, up just 1% but the Redbook Chain Store Sales had a very strong 4.6% gain over last year which simply indicates that sales are moving out of the retail stores and onto the Web at a very rapid clip.  That's right – even more unemployment as Big Box retailers are able to sell more stuff and use less people!  Of course, we don't know if anyone is actually making profits on all these sales but we're not going to bet against it at this point – clearly the tide is turning bullish on the data front.  

I still fail to see where the money is coming from.  I mentioned to Members yesterday that perhaps the deleveraged consumers are simply re-leveraging for the holidays and we'll be right back to tightness in January as people are stunned by their MasterCard bills – especially if it's combined with rising grocery prices and $50 tanks of gas again.  Home prices continue to fall off a cliff as Case-Shiller tells us we fell another 0.8% in October after falling 0.7% in September and this was NOTHING like the +0.1% expected by analysts who aren't paying attention to reality.  

Keep in mind we're doing all this with record low interest rates.  What happens if our TBTs (as I said yesterday, a buy at $37.50) head back over $40 in January and those credit-card interest rates start climbing on unpaid balances?  The average US household has $8,000 in credit card debt and that number peaks out over $10,000 in January.  Of course, why should consumers restrain themselves when the government grew their debt 22.7% last year – adding a $25,299 debt burden on every single citizen?  If the government is going to drop $100,000 worth of debt on my family this year – the least I can do is get myself a new TV, right?  

I am TRYING, really I am, to get more bullish.  So far, it's a slow process but, if we break out to new highs today and hold them – what else can we do but go with the flow?  


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  1. Futures current = 1255.50, overnight:  high = 1256.50, low = 1253.00
    oil +.37,  gold = +20.90
    10yr = (.60)%,  30yr = (.09)%
    NET $ = +.45,  dx/y = (.65)%
    The NET was as high as +.98% and has fallen straight off since 7:00

  2. China currency forwards
    I wonder who the approved counter parties are?  I am sure no US banks would want to help China increase its derivatives market

  3. Dang Ally bank settled for the crap it dumped on Fannie and Freddie.  Now another settling Residential Capital
    I guess this is the last piece of the crime.  The banks were rescued, given free money (still are getting it), then dumped all of the bad assets to Fannie and Freddie for 100 cents on the $.
    Now the govt has to pretend to be trying to protect the taxpayer, so assess some BS fee.
    End result, we all end up owning all of this crap.

  4. Mike 5885,
    Amazing isn’t it. 

  5. CMG Head and Shoulders pattern article

  6. Ally Financial to settle loan deal with Fannie
    Ally Financial Inc. said Monday it will pay $462 million to settle buyback claims on $292 billion in home loans that it sold to Fannie Mae before the industry tightened underwriting standards in the wake of the financial meltdown.
    GMAC Mortgage, part of Ally’s Residential Capital unit, originates and services loans then sells them to government-sponsored mortgage companies Fannie Mae and Freddie Mac.
    As part of their repurchasing deals, Fannie and Freddie have the option to go back and challenge Ally’s underwriting standards.
    If successful, they could have forced Ally to buy back the loans in question.

    That seems way to small

  7. F = 1255.25 at 9:11
    10yr = +.06%

  8. @Phil
    If I wanted to opt out of the market on a day to day basis for the next six months, using your belief that this market is all fluff, and it is going to be crashed at some point, what chance out of 100 do you think that might occur between now and June, 2011?
    And how would you set it up to take maximum advantage of the downturn, if so?

  9. Good morning Phil The SKS 2013 straddle is 3.50 not 4.65 acording to TOS
    I like SKS ($10.92) as the laggard in that space.  You can buy the stock and sell the 2013 $10 puts and calls for $4.65 for a net $6.27

  10. NET $ = +.23%,  dx/y = (.60)%
    F = 1255.75

  11. C = 1259.86, F =1256.75
    10yr = +.46%, 30yr = +.47%
    VIX (1.92)%

  12. NET $ = +.50%,  dx/y = (.66)%

  13. JR,
    Where’s the support here?

  14.  yodi,
    the SKS Jan 2013 $10 C/P straddle is currently 4.52 on TOS..

  15. Phil I know you love the gold it is shining again at 1402 up just under 20$

  16. Dang that Ally settlement is really bothering me, am I misunderstanding?
    Way to small

    292 B in loans were dumped to Fannie and Freddie, where we the taxpayers are now liable

    the settlement is for 462 M

    462M / 292 B

    That is only that .15%, that is not even .01 for every dollar

    so they expect us to believe as taxpayers that the loans are good and the underlying assets have not fallen?

  17. Sears tries to challenge Netflix

  18. Phil
    How about a short on MCP here around 54?
    rare elements just the "fad of the day"?

  19.  See, now bulls should be very concerned that we’re not making new highs on all these great sales numbers.  

    The Dollar, as we expected, held 80 and is now 80.34 so that’s what’s hurting the bull case this morning (as is, maybe – reality).   I still just don’t like this action at all and, as I keep saying, cash is the best bet going into the New Year.  If you have bullish bets like the ones in the morning post that are up 100%+ in a month already – get them off the table and let’s move on.  I’m sure we’ll find something to trade next year with our cash. 

    I sent out an early alert with the 1050P update and I still can’t bring myself (as an aggressive player) to give up on the short side.  The potential is just too compelling for a win there.  That does not mean I won’t be "buying the f’ing dips" this morning simply because that trade works until it doesn’t but, overall, I still say that if I had to make one bet and put everything on the line for the next 3 months, it would be on the bear side.  Sorry to keep saying it but we take bets in both directions – trying to go with the flow – but it’s important you know where my heart is too.  

    Anyone who doesn’t know we’re watching 11,500 needs to go back to November and start reading posts from scratch again.  For those who are up to speed, let’s keep an eye on the high targets we stopped short of last week:

    Dow 11,600, S&P 1,260, Nasdaq 2,675, NYSE 7,935 and Russell 800 – Those are now the levels we want to see broken and held before we take another round of upside plays and, even if they do it this week – I’m still going to want to see some volume to confirm it.   Yesterday’s full-day volume didn’t even make a busy open…

    So those are the levels where we can get more aggressive and 11,500 et al are the levels at which we’re breaking down.  Between them – where we are firmly, is limbo and we remain in stock market purgatory until we see a little clarity on either side (3 of 5, of course).  

    It’s too early to make a call yet but I’m watching the DIA WEEKLY $114 calls at $1.60 as an upside cover above 11,550 but I’m not sure we’re going to hold it so let’s hope we don’t and get something cheaper!  

    I’m only here ’till noon today so I’m not looking to do much this morning.  Anything but a break higher on those breakouts is just going to be the drift we expected for a low-volume week.  

  20. Phil,
    It’s hard to imagine that 8 Billion in POMO on light volume won’t push us to knew highs.

  21. Banks on the Brink of Bankruptcy again, even has some Treasury comments
    Not much meat, but amazing none the less

  22. NET $ = +.42%,  dx/y = (.54)%
    C = 1257.34, F =1253.00
    VIX +1.25%
    10yr = +.87%

  23. consumer confidence missed, I will have to turn my volume on to hear the CNBC spin get going

  24.  $5 gas/Terra – Sure because spending $100 per tank isn’t going to bother the consumers is it?  

    China/Mike – It’s clever because if the Yuan is "freely" traded then they can’t be accused of manipulation, right?  Of course US banks will want in – there’s money to be made!  If Satan had swaps to sell you can bet Lloyd would be taking him to lunch at Rao’s… 

    Woops, Consumer Confidence way off at 52 (56 expected).  CNBC trying to spin it BUT LOOK AT THE CHART!  

    Really, look at this chart and then listen to CNBC or other MSM.  Then look at this chart and listen, then look at the chart and listen – that is the sound of people lying to you!!!  Keep this in mind when digesting your favorite news sources

  25. 20 City Breakdown of housing prices

  26. Interesting that CC is off.  I thought everyone was on board for total recovery.

  27. 10 Tech Concepts from Popular Mechanics, worth a read when you have, even a quick scan is good for education and investment ideas

  28.  Phil: VXX/VIX  
     I didn’t understand why you chose VIX for calls and VXX for puts last week.  Is that still the best play for rising VIX by march?  Do TNA put spreads make sense for playing for a correction?  TIA

  29. Good morning!  NWBO hitting big volume today.  DSCO changed their ticker to DSCOXZ….and moving up as well. 

  30. POMO time?????, rrrrrrrrrrrrrrr
    NET $ = +.69%,  dx/y = (.33)%
    C = 1256.59, F =1252.25

  31. BSDM is picking up steam now as well.  Feb 5/7.5 bull call for 45c.

  32. Not quite tracking USO’s movement today…Crude is up 27 cents and USO is up 21? I know they dont move hand and hand but USO seems like it’s moving a little too much…

  33.  Phil – is this yet another case of really bad data (consumer, home prices) and the market only taking a small dip?
    Or is this week a total BS and I should walk away from the screen :) ?

  34. yshenhar,
    Light volume…..POMO…..Bots in control.

  35.  Crap/Mike – Yep, we are being force-fed it at this point.  Nice $462M wrist-slap for dumping $292Bn worth of junk loans on the American people.  Thanks for reminding me on CMG – that’s very important to watch here.  

    Opting out/Flips – With the VIX this low you can just go for a few long puts – you don’t have to be fancy.  SPY June $120 puts are $5 and the April $120 puts are $3.50 so it costs you about $1.50 if S&P holds 1,250 for a couple of months plus/minus whatever delta move – that’s not a bad way to look the S&P short.  

    If you want to get fancy, the SDS 2012 $20/28 bull call spread is $3 and you can pay for that by selling SPX Jan $1,300s if you want to get fancy on a bet the S&P doesn’t pop 50 points (4%) in 30 days but you need PM to even consider that.

    SQQQ is another good short play at $30.89 and you can go for the March $30/38 bull call spread at $1.50 and those can be offset with shorting AAPL Jan $350s at $4.90 which can be covered with July $410s, now $6.10 if AAPL goes over $330 but, otherwise, they each pay for 3 of the short plays.  

    SKS/Yodi – The last sale on the $10s was $3 and the bid/ask is $2.40/3.10.  The last sale on the $10 puts was $1.65 and the bid/ask is $1.60/2.05.  $3.50 is below the lowest possible combination and you should NEVER, EVER, EVER just pay or sell for what comes up on the screen – there’s a reason they let you put in your own prices – only suckers pay retail!  There is no emergency to buy a stock – you either get the price you want or you buy something that DOES give you the price you want – why would you EVER buy a stock that isn’t at the price you want?  

    Gold/Yodi – If you have nice profits in gold, you may want to consider tossing $5 at the GLD June $140/130 bear put spread at $5 as it can’t hurt you if gold heads over $1,400 other than costing you $5 of the gain but it let’s you ride out a $50 dip if you intend to ignore the stops…

    Ally/Mike – Nope, that’s about the size of it.  Typical…

    NFLX – funny how their business model can be replicated for $700M.  

    MCP/RWV – China just cut exports of rare earths by 11% – it’s a fad with legs so I’d be careful unless we see China itself really start to roll over.  

    POMO/Exec – That’s why we like to go long on the morning dip.  

    Speaking of going long – those DIA $114s (weekly) are now $1.60 with Dow just below 11,550.  One of the things you do when contemplating an entry is to note the behavior along the way.  Kind of like big game hunting….  If you want to be aggressive, we do want it over the 11,550 line as a momentum trade (tight stops at the line, trailing .10, etc. once it’s established).  

    CC/Exec – Nope, only the people you see being interviewed in the MSM.  Ignorance is strength!

    PopMech/Mike – I love that flywheel thing, was reading about them a while ago – very cool.  

    VIX/Red – I just liked the way that combo worked and yes, I still do.  TNA isn’t for a correction as it’s bullish and TZA would not be my top choice of short (see above for 3 I do like). 

  36. Phil/POMO
    It’s interesting watching the 1 min chart after the volume tapers off and the Bots take over.  They hit every downtick to keep it propped up.

  37. Phil
    Would you still do the VIX trade as listed or move the spread up $1 ? Thanks

  38. wow a huge flip flop on the NET $ here, had been positive all day, now negative
    NET $ (.64)%,  dx/y = (.23)%
    see if its POMO, the market should rally with that type of fall, if not maybe a sign of weakness, not sure, just
    thinking out loud
    C = 1257.35, F =1252.50
    VIX +1.64%
    10yr = +.76%

  39.  Ally settlement — that is just ridiculous 
    MCP, short carefully.  Or sell the 60 or 65 calls.  Small amounts only !
    AIG – I read where the govt has a $92 B stake.   That suggests AIG market cap something like $130 Billion.   More than a little bit ridiculous.   They will be lucky to have a $50 B market cap when all is said and done.  Or less.
    Try and figure out how many companies have a $130 Billion market cap … there must be a scan someone can run.
    Today is a POMO day (isn’t every day ?) – ends at 11 am.  So far, not looking too good for a POMO pump, maybe we finally get some kind of real selloff.  Wishful thinking ?

  40. Cap,
    POMO ends at 11:00?  I was wondering what the duration was.  Is that the typical hours?

  41. exec; depends on the day; but most seem to be 10:15 to 11:00 am.
    Now, what we don’t know is how / when the money really gets deployed by the Gang of 12.

  42. Phil I know we head on head on gold. I have never been lucky in buying longs may it be puts or calls you are a sucker 75% of the time. Gold may drop by 50$ may be but it turns back on you like a spring. As long as they play with monopoly money, gold is the people’s first choice. Look at the Germans now changing for Swiss francs, they lost the DM and looking for something better than euro.

  43. Cap,
    That’s what I was thinking.  They could be holding it for the stick save.

  44. I see they’re moving the dollar around again to control the flow of the market.

  45. Can anyone tell me what is "PM"?  I get that it is margin of some kind but I’m assuming that the P does not stand for plenty.  Thanks
    "If you want to get fancy, the SDS 2012 $20/28 bull call spread is $3 and you can pay for that by selling SPX Jan $1,300s if you want to get fancy on a bet the S&P doesn’t pop 50 points (4%) in 30 days but you need PM to even consider that."

  46. Look at the dollar.  What a bunch of BS……

  47. kdubbs,
    PM = Portfolio Margin

  48.  Hey my meeting got canceled (now Thursday) as the guys from NYC couldn’t get out.  They say NY is still a total mess and most of the non-major roads in NY and NJ are still tough to drive on.  That’s why I love my little town – it all looks good to me!  Anyway – so now I’m going to be here for the afternoon.

    Net/Mike – But it’s the dollar heading higher while the Pound and Euro sell off into the EU close – that’s NOT good for commodities (although you wouldn’t know it based on today’s move) or for equities priced in dollars.  The Dollar is now 80.67 and the Euro is back at $1.31, if they fail $1.30 – it can really hit the fan.  

    Speaking of POMO:

    The Fed’s latest open market operation results in $6.78B in Treasury buys, of $23.567B offered by dealers. Bonds see some additional pressure: the 10-year yield +0.07 to 3.4%, 5-year +0.07 to 2.09%.

    The VIX spiked higher yesterday despite little trading action and low volumes, indicating that investors were using the lull to hedge their 2010 gains. "If VIX rises for three straight days in the face of a flat or rising stock market, then that is a bearish indicator," according to a trading firm head. "So, we’ll watch today’s action with some interest in that regard.” 

    The average price of U.S. gasoline rose to $3.05/gallon, adding $0.07 from the previous week and reaching its highest level since October 2008, the Energy Department says.

  49. C = 1257.25, F =1252.75
    10yr = +1.61%,  30yr = +1.02%
    VIX +1.64%
    oil +.31, gold + 22.50
    NET $ = (.94)%,  dx/y = (.03)%, lowest I have seen on the NET as Europe closed

  50.  Europe closed flat.  

    Gold/Yodi – I know it is subject to short-term runs as people flee to safety but let’s say 30 people are on the floor of an office building and there’s a small fire in the copy room so they all run into an elevator that has a capacity for 12 people.  Is the elevator safe?  Certainly, historically, it has taken many people safely downstairs and it does seem safer to go downstairs than to stay on the same floor as a fire, even a small one but there does get to be a point, perhaps once you get past 20 people in the elevator, where the elevator becomes more dangerous than staying put.  By the 25th person, you probably have more chance of dying in the elevator than even a bigger fire would pose and by 30 people, some are almost certain to be crushed and suffocated, even if the whole thing doesn’t crash – killing them all.  I’d say gold is somewhere between 20 and 30 people at this point and more people are getting on board every day…

    PM/IKdubbs – Portfolio Margin - not a toy!  

    Dollar fully recovered to yesterday afternoon and markets pretty much back as well.  At least that makes sense.  Gold, copper and silver keeping their gains .  Silver popped $30 and no one is saying anything.   

    SLW is outperforming SLV by 60% this year so I like shorting them better than shorting silver because silver doesn’t have the production scalability that gold does so there is no reason for a miner to drastically outperform the metal .  SLW Feb $35 puts at $1.35 were over $2 on Friday so I like them for a quick 20% gain.  

  51. Phil:  Well my FXY isn’t working out well so far, wondering what adjustments to make (if any); I’m still convinced that the Yen will fall but who knows when.    Bought 2012 120  puts at  8.50 now  6.65  Sold 3/11 110 puts at .57  now  .20   FXY currently at 120.28.   My inclination is to roll the March 110 puts up to 115??

  52. CMG/Head and shoulders formation – I’m sticking to my short positions (9x Jan $230 puts / 9x Jun $220 calls).. My idea is to keep the money from the front-month short puts as I don’t see CMG receding all the way to $180 to fill the gap prior to an earnings announcement.. I’m sure this stock will be bid up in January above the $230 line in expectations to Q4.. then we might expect a more proper valuation, but again u never know with these guys and fly all the way to $300. Case in point, I’m going to stick to my beliefs and I won’t adjust the positions amidst this low-volume holiday trading week…

  53. Hum – I think most are on board with the Yen falling, its only a matter of when. Some decent commentators I’ve read see a shortterm bounce into January but the end of Jan should signal the beginning of its decent. Im hoping they’re right….

  54. Jr:  are you shorting FXY  or the futures?  I’m hoping they’re right too!

  55. Easy folks, SLW Feb $35 Put volume is 2,123 contracts vs 31 and 52 for the adjacent strikes.

  56. Some thought-provoking predictions for 2011 by Bruce Krasting.

  57.  AIG starting to come off ….

  58. Good morning,


    IWM 80.16,  79.26, 79.06, 78.78, 78.47, 78.29, and 77.89


    The dollar is near resistance, and if it can’t break through we could see 810 on the Russell before any pullback !!

    I;m in TNA at $73.76

  59.  FCX slowly drifting down.  
    If it breaks lower, my 1st downside target is roughly 117.35.

  60.  Phil, what’s your eventual plan to adjust the USO play from the 1050P? Roll to which Feb puts and cover with which Jan puts?

  61. Testy Tuesday
    For the double penny, the Dow is holding above resistance @ 11,550, S&P is holding above 1,255, but the NAS is below 2,262, and IWM is unable to break resistance @ 78.75. Be careful on bullish bets, with the next move looking down.

  62. Hum – I am long USD/JPY in a very small currency position and own YCS. I usually only do futures for for daytrades playing for a bounce or a fall when I feel a particular area has ran up too high or fallen too far in one day. Oil is my favorite but a lot of times big moves in currencies work pretty well to. this morning I shorted the futures at .012126 and covered at 12100 for a quick 300. It’s too nerve racking for me holding futures for long periods. If I was short the Yen futures overnight I wouldve woken up being down close to 1800 per contract, and since I have less than 25K in my portfolio a 2K hit is HUGE.

  63. Phil, 
    I missed (happily) the FCX trades mentioned… What would be a good entry now to play a pullback?

  64. C = 1257.29, F =1252.50
    10yr = +1.49%
    VIX +1.36%

  65. Great job Jromeha!!, thanks for sharing.   I’ve been tempted to go long copper futures to hedge my puts on FCX, but that market is so damn volatile I just watch /HG  go up and up and up. 

  66. For those that are not students of history……………

       Thomas Jefferson said in 1802:
        " I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered."


  67. Speaking of /HG  copper at all time high  $4.32  (up nearly 1%), FCX down (0.5%)  interesting.

  68. Phil, 
    Re your Gold Comment. 
    My net holdings are now $140K, I have both the ABX and HMY plays from November (up $350 with 3/3 5) and HMY 24//24 12 (down $300). 
    Since you feel there is an imminent crash in Gold, would you suggest killing these or one of them?

  69. JRW:  yeah that Jefferson, what a crank; so out of touch with reality.

  70. Santelli just called this auction result, Lassie classic
    C= 1257.54, F =1253.25
    10yr = +2.54%,  30yr = +1.72%

  71.  FXY/Humvee – Well Japan certainly wants the Yen to fall but what is the choice for investors to go to?  That’s where your problem is – the others are worse!   You are looking at it wrong – why roll to March $115 puts and collect .90 for those over 90 days when you can sell the Jan $118 puts for .45 and those are very easy to roll down to March $113 puts but expire 60 days sooner so, if FXY doesn’t fall, you collect .45 3 times instead of .90 once.  

    CMG/Rav – You just have to watch that neckline and have a plan if it starts to break there.  If the overall market falls, I see no reason for them not to go to $170.  

    SLW/Jvest – Thank goodness I have a lot of ideas.  Imagine if everyone waited for one or two a week….

    Krasting/Terra – That’s a lot of predictions, he must get paid per.   8)

    FCX/Cap – Starting to make no sense as copper is now $4.32 and gold $1,406.  Imagine what will happen if those start falling off!

    USO/Mampcs – The Jan $39 puts are now .98 and they can be rolled to the Feb $40 puts, now $2.10 and that can be offset by selling another sucker the $39 puts for net .12 to roll to a $1 diagonal spread with a $1 higher strike and another month to go – this is why I feel we can wait another day.  

    DIA $114 calls up to $1.80 so protect $1.75 at this point with a .10 trail above that and it can move to .15 once we clear $195.  

    5-year not auction was bid to cover at just 2.61 (bad) at 2.149% (high) so very, very bad and very, very good for TBT and should be good for a Dollar pop too!  

    Oh, kill the long DIAs for $1.80 – too risky! 

  72. so are we on PSW part of the banks & corps or part of the people with homeless children?

  73. Cap

    As of October 2007


  74. JRW…
    I have read that quote many times.
    Strikes horror in my mind as I look toward the future of my chilren (5) and grand children (60…

  75. JRW
    I see a sell signal, volume selling TNA buying TZA but we broke your 78.78 level. Penny for your thoughts!

  76. shadow / direction

    I am currently long TNA; my indicators are all UP !! TBT up, dollar fade, Order weighted indicator up, trading above the 8EMA, etc, but my sell orders have been keyed in since I bought in 8-)

  77. Phil,
    I signed up two months ago as a regular member.  My request is that you post (aggregate) details of initial trade setups on a separate page.  For example, above you list "buy SPY June $120 puts…" .  So, when you first suggest a trade like that, put all the details on a separate page with the date.  Now, one has to jump around various posts to find details. Having a separate page listing at least for all the major ETF trades - SPY, SDS, DIA, XLF, etc chronologically would be very helpful (and help the learning curve).
    Right now the Portfollio page is not useful. OpTrader page Excel file is marginally helpful. 

  78. shadow

    Also be careful at IWM 78.90 !!

  79. Phil I see you are very negative on my Chili restaurant. CMG I am still short the Jun 195p and Mar 240c Do you really think it will go down to 170. Might need to buy some putters for protection, in case rav will blow up the restaurant!!

  80. Phil,
    "USO/Mampcs – The Jan $39 puts are now .98 and they can be rolled to the Feb $40 puts, now $2.10 and that can be offset by selling another sucker the $39 puts for net .12 to roll to a $1 diagonal spread with a $1 higher strike and another month to go – this is why I feel we can wait another day." 
    So we roll the 40 Jan $39 puts to 40 Feb $40 puts AND sell 40 Jan $39 Puts. Correct?   What is happening tomorrow that  makes a diff? 

  81. JRW
    Thanks, I thought I was reading things wrong and did’t get in anything although TNA is up and that is what I had on Q.

  82. Wma -
    It’s not going to happen. There are periodic requests like this and the answer is always no.
    Takes too much time etc.

  83.  AIG flying…. I see a Form 4 filing by CEO but don’t know what it says; must suggest he bought some shares but that would be stupid and probably not accurate.

  84. wma/samz3700 / trade log — if someone wanted to volunteer to keep the trade log, maybe phil would have his admin give you access to create a page for it.

  85. C = 1258.28, F =1253.50
    10yr = +2.89%
    VIX +1.30%
    NET $ new low, NET $ = (1.08)%,  dx/y = (.03)%

  86. USO – i’m good for holding another day (or more) but Phil, rather than rolling up another dollar, are we really just holding onto this loser too long? How much drop are your really expecting/what is your conviction on this? By the time the rolling get’s done, we will need USO to crash to near 30 before break even? DD’s notwithstanding, you have lots of other ideas that may offer a better return.

  87. Phil
    What is going on with oil. If the dollar drops seems like it is going to 93+

  88. wma – I suggest you paper trade the DIAs, as they are the stalwart of the protection in a portfolio.  Otherwise, I keep a spreadsheet myself on some of the other trades.  IF you need links, ask, as some of us have the older ones.  Here is one for the DIAs which gives a basic understanding of how they work.

  89.  Phil, here’s the link that explains the Volume By Price chart overlays that JRW sometimes adds to his charts.
    Pretty useful indicator for short-term charts; perhaps more telling than Price By Time.

  90. Phil – when do they have to roll contracts?  I know you’re getting bombarded with questions about /cl and USO but Im considering throwing in the towel on the USO and reentering in a week or two before they have to roll the contracts….

  91.  Thanks JRW for the list !

  92. TBT :-) ….great call Phillipe …as usual

  93. Good job working it, Jrom!  

     FCX/Amatta – Was the Feb $119/110 bear put spread at $3.60, selling the Jan $120 calls for the same.  The calls are back to $3.60 and the spread is still about $3.60 and I still like it in theory…

    Jefferson/JRW – One of my favorite quotes although possibly not actually said by him.  My attitude is, so what, it’s still true!  

    Gold/Amatta – Well the idea of the trades is to be a way to use gold as an inflation hedge without messing around with the metal.  I wish I knew what 3/3 5 and 24/24 12 meant but I’d say if ABX is up and HMY is down then maybe consider taking the ABX money and running and working on HMY for the longer term.

    Sides/Morx – There are empty homes, yet there are homeless people.  There are jobs that need to be done, yet there are people without them.  There are empty hospital beds, yet there are people dying for lack of care.  I’d say I’m on the side of efficiently allocating capital to solve problems…

    25 largest/JRW – Don’t forget AMZN!  At $82Bn, Cramer says they should be on that list…

    TBT testing $39.  

    Details/WMA – This is not a hand-holding site.  I am here to teach you how to trade, not to trade for you, I have a hedge fund that does that.  Also, I do not have time to sit here and monitor every single trade.  I do set up occasional portfolios we track, usually one in any given month, right now it’s the 1050P under the Portfolio Tab.  It is very strongly suggested you practice paper trading until you are confident that you can make your own exits.  This week we’re not busy so I have few questions to answer so I’m calling out penny by penny moves but I can’t do this every day.  Not only that, but if everyone runs in and out of the same trades at the same time then it’s not only a mess but it sets up the Members so they can be targeted and taken advantage of like Cramericans are – another outcome I don’t want.  Optrader does a lot of handholding as he tracks only a few positions at a time, try learning his system as well but generally, I prefer to look at longer-term trade ideas that do not require a lot of hand-holding although the strategy section, the linked articles and the comment attached can be fairly easily summarized at "Make 20%, set stops and get out – lose 20%, get out – try to win more often than you lose."  I don’t think it’s all that hard to follow…

    And what Samz said! 

    CMG/Yodi – I’m not "very" negative, I just don’t see them as being worth $7Bn with $150M in profits.  $7,000M is a lot more than $150M so, given the choice, smart investors would be better off keeping their $7,000M and I do feel that, over time, they will realize this.  As you sold both sides, you are just going to roll the loser (if any) anyway – there is not sense in throwing money away on covers out of fear when the stock is currently perfectly in between your short straddle.  

    Tomorrow/DD – Inventories.  If we’re going to get a $2+ sell-off, that would be the reason.

    AIG/Cap – Too hot to handle.  

    Log/Jvest – I’m still not going to sit here and try to corral a half-dozen directional trades every day.  I spend my day talking to you guys and reading and that’s how I can be effective.  If you would rather I spend my days staring at the 1-minute charts of some ETFs, I’m sorry but that’s no fun for me…  If I see a market turn forming, I call it out – I like to think that you know what to do when that happens.  Not only is it annoying and distracting for me to do it but it also then attracts the kind of "give me a fish" traders who add nothing to the board and fill up chat with endless questions about the same 5 or 6 trades over and over and over until all the real traders leave and that’s all I’m left with – no thanks!  

    USO/Scott – Absolutely we are holding it too long.  As I said two weeks ago, we’re only moving forward as an exercise in rolling and salvaging a trade.  We should have gotten out when we were down $400 otherwise.  At the moment, we’re just playing this one to try to get out even.  

    Oil/Samz – "THEY" are pulling out all the stops to jam commodities higher.  Money was coming out of commodity ETFs in November and that put the scammers into crisis mode and they took advantage of the low volumes that started around Thankgiving and have been jamming up ever since, trying to herd the sheeple back in so they can post a winning year and make for the exits down the road.  

    Thanks Pharm!  

    Volume by Price/Jvest – Thanks.  It is a useful new thing.  

    Speaking of volume by price and oil, note how there was weak demand for USO below $38 but people got very interested as we ran to $90 oil (USO $38+).  

    Roll/Jrom – Usually the Tuesday after options expiration so they have a while to mess around with it on this period still.

    TBT – Thanks Kustomz!

  94. TD – the yoyo looks ready to drop again

  95. EU does not offset bond buys
    Phil, is that monetization just like here?  more devaluation through printing?

  96. Any trade ideas for APPL before earnings which is Jan 18th.

  97. SLW Feb35Ps is a popular trade today: volume of 6377


    Net Change



  98. Ooops, the table didn’t turn out as I expected; well you get the idea.

  99. Phil Thanks on CMG was thinking on the same lines, you got a point not buying for suckers, though sometimes a long put is called for. Remember the 95p BIDU play we made some money on that one.

  100. And the top 25 by market cap now:























    AT&T INC






















    BP P.L.C.






  101. HI Phil :
    back in july , you recommended and I bought ( in IRA account) BSX at $5.69 and sold 2012 Jan. $5 C at $1.72 for net $3.97 . BSX now at $7.70 with C at $3.05 for net $4.65. Since there is about 9% remaining of original targeted 26 %,any suggessted changes? Thank you for your help.
    ps: spreads on $5 calls are $2.77 ask, $3.20 bid

  102. Allstate sues over mortgages
    We should start a pool, how many hour or days before there is a BS settlement?  I will take 48 hours :)

  103. NFLX, 
    Nice discussion here with interactive analysis on NFLX valuation…

  104. wont happen, but I wish there was a full trial
    We deserve some price discovery, transparency and real justice.

    These BS pennies on the dollar settlements we have been seeing lately, do nothing as a deterrent

    These firms rob billions, pay millions over and over, jmho
    sorry for the political  rant, I am going for a walk

  105. Mike – I just wish we would handle it like the Chinese and put these people to death…..

  106. Phil
    Thanks for commenting on USO, I rolled up once and now it seems only worth out, time usually fixes things but I would love any hints when to roll Jan Puts to Feb, Apr, or whenever. Also glad I didn’t play today as the first warning was my cat is sick and going to the vet, never do anything when day tradeing a la JRW.

  107. I almost forget
    May we all live so long and enjoy a great life
    Roy Neuberger: Legendary investor dies at age 107

  108. Execute Bankers, is there an APT for that?

  109.  Speaking of things to read:  2010s Worst 10 ETFs.  VXX is the winner! (spoiler alert)

    TBT over the line and the Dollar is at 80.68.  Bill Gross saying Treasury has painted themselves into a corner with the Fed rapidly becoming the only buyer says end game here is "not good."

    Speaking of minor adjustments, looking at the 1050P:


    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.55 – No reason to think we can’t get back to $2.05 and it costs .15 to roll to Feb $10s so we can play this game for a while.  
    • 20 DIA Jan $116 puts at net $2.77, now $1.70 – We’re not going to get our $1.23 and the Delta is .53 so we need a 200-point drop in the Dow to get even.  I don’t doubt that will happen but what sucks about buying premium is you have to be right on direction AND timing.  Do I think the Dow can drop to 11,350 next week?  Yes but, if not, then we will get our DD opportunity at $1.23.   
    • 10 XRT Jan $46 puts at net $1,  now .34 – Talk about a crowded trade!  I’m encouraged that they didn’t go up on today’s news but very unlikely they get back to $1 as that would take a 5% drop in XRT in less than a month.  After today, though, I’m a  little more inclined to stick with it as clearly retail is overbought.     
    • 40 USO Jan $39 puts at $1.56 average, now .98 – we discussed this one before.  Delta is .48 so very doable on a pullback I’d like to roll to Feb $40 puts for $1, not $1.12 so I’m watching that one.  


    Failed EU auction!/Mike – Wow, why is that not bigger news?  


    The European Central Bank failed to attract the 73.5 billion euros from banks on Tuesday needed to offset its seven-month run of euro zone government bond purchases, instead managing to draw just over 60 billion.  The pace of the ECB’s government bond purchases picked up last week as the bank spent 1.121 billion euros reflecting the bank’s ongoing attempt to calm euro zone debt markets.
    The central bank takes seven-day deposits from commercial banks on a weekly basis to offset its spending, but the failure to fully sterilize the purchases is likely to reflect the fact banks are keeping hold of their funding around the traditionally tense year-end period.  "It has happened before but I wouldn’t make too much of a big deal out of it," said ING economist Martin Van Vliet.  "The end of year is typically a quiet period and banks books are closed so it shouldn’t be seen as a sign that tensions are returning to interbank markets."


    Famous last words???

    As to is it monetization – No because they are actually selling bonds to various banks and the banks are not willing to part with the cash.  The ECB buys bonds from the various zone governments and then offers it to banks.  Until now, the banks have been willing to buy but maybe it is seasonal/weather related.  We’ll have to see if it’s a trend but note the Euro and Pound took a sharp dip today while the Dollar and Yen rose.  

    AAPL/Nicha – Premiums aren’t really high enough to justify the risk of selling front-month positions against a stock that could easily go +/- $35 in either direction.  I do like selling Feb $330 calls for $12.70 against Apr $320 calls at $25 for net $12.30 on the $10 diagonal.  It’s a bullish play hoping to take advantage of the volatility crush after earnings.  If they go down, you can add a put sale.

    SLW/Reza – Hey, maybe we’ll make Andrew’s list today.  

    CMG/Yodi – Yes, if something fundamentally changes or a significant level breaks, then a momentum cover can be called for.  

    BSX/Dflam – Hey, good one!  Too bad you couldn’t sell puts, that would have been huge.  That’s why I don’t like IRAs – you can make more money than they tax you if you don’t have the restrictions…  Not much you can do with it other than either cash out (not worth waiting for 9%) or you could offer $1 to roll caller to 2013 $7.50s, which you may get if there’s a good spike and then you have another $1.50 that’s worth waiting for.  

    ALL/Mike – I don’t know.  It’s not like the government suing.  Maybe they got the goods from WikiLeaks.  

    Trefis/Amatta  - I like those guys, they do some good stuff.

    Sick cat/Shadow – Always a bad omen. 

    107/Mike – Damn, that’s old!  

    App/Shadow – There’s an App for everything

    Take revenge on bankers in this fast-paced castle defense game. Defend the White House and save the US taxpayers’ money before it gets stolen! It’s time for you to give them what they deserve!

  110. No executions, how about gray bar hotel time for stealing, over $1,000 = feloney = no guns = no right to vote!!!!!!!!!!!!!!!!!!!!!!!!!!!

  111. Out of TNA at $74.52 for 75 cents or 1%; no sell signal, just at one of my lines and I should go as I have extra family here this week 8-)

  112. Thanks Phil
    That failed ECB auction should be the biggest story fo the day, but not even a mention yet.  Markets should be spooked, but I should no better.
    Probably the only reason that CNBC keeps talking about the bad US bond auction today, because it is better then reporting the worse news of the ECB  auction.
    Like a magic trick, watch this hand, never mind what the other is doing

  113. JRW
    Good move family rules, hope Dr Betts is learning, "Cats rule Dogs drule"!

  114. Phil / Bunge BG  Still trading below B/V,with low p/e.  Is this a better way to play ag inflation globally than DBA?

  115. Cool Saturn storm

  116.  Good interactive map of gas prices.

    Still waiting for TASR to get back into the $5 club.  

    Magic trick/Mike – Good analogy.  

    I like this

  117. Breakdown IWM below 78.78, anti-stick and JRW is out.

  118. Phil the DECK play is really going nowhere. I still hold the Bear put 85/80 7.03 now 4.60 and sold the 80p for 4.39 now 2.22 sold the Mar 105 call for 2.00 now 1.62 The long 85 putter is loosing value and as the stock is below 85 it shows as ITM and I will land up with the stock. Normally you land with a stock on a short putter but long I do not much like the DEck stock. What move do you sugest.? Thanks

  119. In response to Krugman, there was another good article in yesterday’s NY Times.  In the debate between the Malthusians and the Cornocopians you should put your money where your mouth is!   I was glad I saw the article because during my snow day yesterday I watched a 2005 video about aftermath of peak oil which was quite disturbing.  I sure how the Cornocopians are right.

  120. Phil I like your dream on the TASK it is indeed up 0.01!!!! I still have some stock for you to buy.

  121. Thanks JRW!   :)

  122. DECK getting a little bit real.  

    GM not real at all:

    General Motors (GM +2.4%) shares look strong today on a flurry of bullish analyst coverage, but GM could be hurt by Beijing’s decree that it will limit the number of new license plates next year to ease traffic congestion. Dian Chu says the move could spread to other large Chinese cities and cause "a huge blow to the auto industry."

    Other news:  

    Short sellers haven’t been this gun-shy in years – with an S&P 500 short interest at 4.15%, lowest since December 2007. Is there anyone left for bulls to convince, or can a Fed-supported market drive short levels even lower?

    Institutional investor confidence was up sharply again in December, according to State Street’s Investor Confidence Index – up to 104.4 from a revised 96.4, and over the key neutral reading of 100, suggesting a new allocation to risky assets. North America (+7.7, to 103.1) and Asia (+7.4, to 102.9) readings were up, but Europe slipped to 99 from 109.8. 

    The year’s second-to-last Treasury auction’s weakness sends government bonds for a loop with declines across the board: the 30-year yield +0.10 to 4.5%; 10-year +0.10 to 3.43%; 5-year +0.09 to 2.11%; 2-year +0.05 to 0.74%. Tomorrow: seven-year notes on sale.


    The latest Case-Shiller data proves that the housing market has already double-dipped and will get worse, Nouriel Roubini says. The suspension of foreclosures has prevented a glut of properties from coming to market, but the end of the moratorium will boost supply and, combined with weakening demand, bring further price declines.

    Corporate profits have risen at a 33.1% annualized rate since bottoming out in Q4 2008, the fastest growth over seven quarters in history, Deutsche Bank says. But such a torrid pace isn’t likely to last: “Some slowdown in profit growth is inevitable, as companies cannot continue to produce the kind of profit gains that we have recently experienced indefinitely.” 

    Chain-store sales jumped 4.8% in the week before Christmas, according to a report from the International Council of Shopping Centers, strongest Y/Y growth since April. Many people got Christmas Eve off from work and finished their holiday shopping that day, which likely provided an additional boost. 

    Among lessons learned in 2010: Don’t take part in the charade of making 2011 market-level predictions, says Raymond James’ Jeff Saut. 

    Basic materials paces sectors so far today, with miners benefiting along with a push in precious metals prices – Silver Wheaton (SLW) up 4.5%, Newmont Miners (NEM) up 2.3%, Barrick Gold (ABX) up 2.5%, Paramount Gold & Silver (PZG) up 9.7%. Gold’s surged past $1,400, +1.7% to $1,406; silver +3.4% to $30.26.


    Acutely aware of public anger over costly housing, Beijing will not stand for that.  It will use higher interest rates, lending curbs and a battery of direct controls, from thwarting land speculators to levying a property tax, to deflate the real estate market.  "The first half of next year will be a hard time for the property sector," said Chen Dongqi, deputy chief of the Macroeconomic Research Institute under the National Development and Reform Commission, China’s powerful economic planning agency.

  123. Dec Consumer Confidence at 52.5 was below estimates of 56.3 and down from 54.3 in Nov. Both the Present Situation and Future Expectation components fell. While we’ve seen signs of a better labor market, especially with initial jobless claims of late, the improvement was not very evident in today’s data. Those that said jobs were Plentiful fell to 3.9 from 4.3 and those that said jobs were Hard to Get rose .5 pt to 46.8, the highest since Feb. Positively, those that said Business Conditions were Normal rose to a high in this recovery but things were not incrementally better as those that said things were Good fell to the lowest since Feb. Those that plan to buy a home rose .1 pt but remained punk at near the lowest since ’82. Those that plan to buy a car fell to a 6 month low. One yr inflation expectations rose .2% to 5.3%, the most since May. Bottom line, a blah report but consumers took out their wallets this holiday season anyway. 

  124. Phil / Disconnect   The awful Treasury auction / rates, gold spike combined with confirmation of RE double dip by Schiller should have equity mkts on edge.  Why do so many institutional investors feel bullish that our incompetent, corrupt Gov’t can fix the deficit / interest rate exposure, RE, rising unemployment, etc., problems in 2011.

  125. Sneaky for Uncle Sam to stay in mortgages

  126. Phil / TASR — TASR is headed for a golden cross soon. Might be a good time to get in if you believe such voodoo :-) Buying at 4.85 and selling the Feb $5 p/c will net you 16% in 7 wks if it can take and keep the $5 level. I’ll wait to see what happens at $5 and the cross though…

  127. This is at least the second comment I am posting but since I am only a Report member I do not see the comments. I can only see them after 7 days and even then I am not really sure how to go about that. I have not found any clear way to get to 7-day-old reports.
    Anyway, I think this article is important for Phil to see since he frequently talks (rants?) about income inequality. Maybe Ilene should post it if possible.
    This is one of the money quotes that I think Phil ignores or is certainly not sufficiently aware of:
    In terms of immediate political stability, there is less to the income inequality issue than meets the eye. Most analyses of income inequality neglect two major points. First, the inequality of personal well-being is sharply down over the past hundred years and perhaps over the past twenty years as well. Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does. Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark. I don’t have a private jet or take luxury vacations, and—I think it is fair to say—my house is much smaller than his. I can’t meet with the world’s elite on demand. Still, by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.
    Compare these circumstances to those of 1911, a century ago. Even in the wealthier countries, the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world’s culture. The living standards of Carnegie and Rockefeller towered above those of typical Americans, not just in terms of money but also in terms of comfort. Most people today may not articulate this truth to themselves in so many words, but they sense it keenly enough.
    I enjoy Phil’s comments but at this point I am happy with the Report membership (although not that it has more than doubled) since I benefit mainly from Phil’s macro analysis.

  128. rainman
    TASR Golden cross I think it is more like an iron cross if you need stock just call on me

  129. Phil
    Short levels? I wish I coould post some interactive charts, blocked, but the disconnect is over 50% and the last time I find anything similar was 2008, even that was less.

  130. yodi / TASR — what was that deal again? You had some calls for sale?

  131. Wow – stick on iwm did not hold.
    Cannot remember the last time that happened.

  132.  BG/Tusca – They are farm products, DBA is actual produce – not the same.  Just because grain prices rise does not mean BG makes more money although a likely connection.

     Saturn/Mike – Global warming?  

    DECK/Yodi –  So it was net $2.64 and you sold the March $105 calls for $2, right?  That’s net .64 on a $5 spread and currently the spread is at $2.40 so what is the problem.  It’s a March play, not a December play.   You can kill the vertical now if you are worried and just ride out the short call – $105 seems safe enough.  Don’t go into these plays if you don’t have the patience for them – you don’t make much money early that is both the good and bad thing about them.  The last play we did on them was weeks ago, shorting the $85 calls for $5 – there’s a nice, simple play I liked…  

    Good article Eph – all should read.  

    Why/Tusca – I think it’s more an issue of where else are they going to stick their money.   Don’t forget that many institutional investors are bound to invest in only one type of thing.  I’m setting up my hedge fund as an "opportunity fund" and that is very hard to do – very few have the flexibility to "do whatever makes money at the time" as it’s difficult to attract investors when your investing premise has the word "whatever" in it.   As you know from the site, we change our investing style from time to time, depending on the market – the majority of fund managers are very narrowly focused and their choice is cash (which really pisses off the investors) or putting money into whatever they raised funds to do.  That’s why you get people on TV talking up so many things that are clearly no longer good ideas.  

    Mortgages/Mike – Old news.  

    TASR/Rain – Good idea!  

    Inequality/MPlaut – Thanks, I’ll take a look.

  133. 1020 / Thanks

    Not sure what I did, but you are welcome; and I hope it worked out well for you !!

  134.  Charts/Shadow – Just use Chartly and post the links.  When you go there and see what it looks like to have hundreds of people posting charts, you’ll realize why we don’t let people!  

    A little sell-off right at the end but the Dow is up 20 so mission accomplished for the day.   Dow volume 114M – low but way better than yesterday. 

  135. Well the Bots were loyal soldiers once again.  Bought the dip on TNA this morning and watched the relentless Bots do their thing. 
    Easy money.

  136. Good CMG chart


    Interesting S&P and VIX ratio chart:  

    AAPL Caution Chart:  

  137. Phil / Hedge Fund    When will you have details on this?  How will you find time to manage this site and the Fund (which could be a big $#)?

  138. Joel Achramowicz just said on CNBC that AAPL shoild buy Dell….  was that a joke??

  139. Phil/Shorts
    That is interesting about the level of short sellers.  I guess the shorts have finally capitulated.
    Probably time to short.

  140. exec
    Short or hold your shorts, the shit is about to hit the fan, the Bernank QE2 is not working and even CNBC is broadcasting those people who don’t believe the FED has the power. Why is the dollar still up along with interest rates?

  141. Shadow,
    Thanks for the advice.  I decided not to short this week due to the low volume and POMO.  I agree the shit’s about to hit the fan……unfortunately…..I’ve been saying that for the last year.
    One thing is for certain.  All the indicators are saying we are due for a sharp selloff.  Probably after the new year when the buyers come back.

  142. NFLX to expand overseas ;countering the Sears competing partnership news.
    Potential shr booster for another short setup?

  143. Reza – I dont know about all western european countries but in the countries that I have travelled to it seems like the availability of bootlegged copies is huge, so I dont know how many people are going to wait 5 months and rent a movie when they can see a quality bootlegged copy of the film just a week after its release in movie theaters.

  144. Jromeha -  I do not dispute your conclusions; they may be well-grounded.
    I am merely suggesting that on such MO stocks, any headline of a potential intrnational video dist. deal, IMO, would technically boost the price of the stock barring any unforeseen change in the perceived outlook of NFLX.

  145.  Still in Orlando this week. It’s very busy. Went to the 2 large malls and it was packed this week. People in the parking lot fighting for parking spaces.
    Was at Disney Hollywood Studios and all the fast passes for all the rides were gone before 11AM. It was full and the shows were packed.
    Seems like people are out spending money.

  146. JRW/not sure    I always appreciate your "sharing" with the rest of us!  :)

  147.  AIG / Phil — yes, too hot to handle for the moment.
    The WSJ is out w/ a pretty good piece on AIG:

     The author, in comments, also tries to address the market cap question:
    The $8 billion is what’s currently owned by private investors, i.e. shareholders other than the government. 

    Right now the government owns 79.8% of AIG, so the $8 billion owned by private shareholders represents the other 20.2%; and total market cap is roughly $40 billion. 

    After the government increases its stake to 92.1%, AIG will have about 1.8 billion shares outstanding in total. The market cap will then be about $84 billion, assuming that the shares are worth roughly $47 apiece without the implied value of warrants the company is going to issue.

  148. Hedge Fund/Tusca – Not sure on time-frame, anyone interested can contact Greg (admin@phils…) as there are qualification issues.  Already have partner on fund who’s run one before, not a solo effort, of course.  

    AAPL/Bob – It would be a joke if they did it. 

    Shorts/Exec – It’s been trending that way for a while.  Bullishness is extreme to say the least but what if "everyone" is right? 

    Dollar/Shadow – Because both we and Europe had crap auctions but the knee-jerk is always a flight to the dollar first – that’s super-liquid and then you can move into whatever else you need.

    NFLX/Reza – Yeah I’m sure they’ll be announcing something in China soon.  

    Good point, Jrome.

    Good chart Aug.  See though – we could go much lower….  Thanks on DIS too, they may be a buy. 

    AIG/Cap – Well if those figures are right then they are pretty significantly over-valued.  

  149. Phil
     I tried to patch some charts I created but my new system that took about 6 to 8 weeks to get up and blocks every spy program will not allow me to post anything without giving control to the BOTS or whoever demands it. I had to relooad the BIOS, modify, load the rest and all I can say is security is priority and like JRW says I don’t know how to post on the super system I built without compromise but will keep trying on the weekend. I will share with anyone how to build your own and share the secrets to make it work. The only problem is windows 7 profesional 64 bit interaction. Someday if I make a few extra bucks I will try to do it by Apple. They are even tighter lipped and maybe imposable to do. Sorry!

  150. Apple store in south beach was packed with users by far the busiest place.

  151. mplaut — Thanks for the article! I’d put it on the must read list Phil:  The article really doesn’t get going (for me) until it starts talking about "going short volitility", which is about half way through.
    Some juicy tidbits to whet the appetite:
    In that same year, the top 25 hedge fund managers combined appear to have earned more than all of the CEOs from the entire S&P 500.
    It is naive to think that underpaid, undertrained regulators can keep up with financial traders, especially when the latter stand to earn billions by circumventing the intent of regulations while remaining within the letter of the law.
    For the time being, we need to accept the possibility that the financial sector has learned how to game the American (and UK-based) system of state capitalism.
    The underlying dynamic favors excess risk-taking, but banks at the current moment fear the scrutiny of regulators and the public and so are playing it fairly safe.