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F’ing Dip Thursdsay – Do We Buy It?

Caution - Dips Ahead SignJust buy the f’ing dip.

That’s the great advice we had back on December 2nd, as it was pointed out by Captain Broccoli that we should just ignore all the so-called "facts" of the economy and "just borrow money at this ridiculous low interest rate and just buy the f’ing dip."  "It’s not a pyramid scheme, you  idiot," says the Captain – "It’s a dip buying scheme!"  So far, on every little dip we have had since December 2nd – the Captain has had the winning strategy – do we dare ignore his sage advice today?  

Yesterday we had the biggest pullback since November 23rd with the Russell and the SOX, two of our most over-extended indexes, falling 2.5% in a single day.  The Russell essentially gave up an entire month’s worth of gains in a single day because, as I have warned you over and over and over until I myself was bored hearing it, it has been a low-volume rally and the pure physics of the situation means that, when people finally want to sell stocks, there aren’t enough buyers in the world to support the prices they have run up to.  

The Shanghai, which we’ve been watching closely, dropped another 3% today to 4-month lows this morning.  We did the chart of the Shanghai vs the Hang Seng on Friday, when I was droning on about how weak the real Global economy is and how dangerous inflation was looking and how the government was papering it all over, etc.  Even so, I reminded Members in Chat that none of that reality mattered and we still had to buy the dips until it stopped working.  Is today the day or have we finally reached the end of the gravy train?  

We did some hedged buying on Friday with new long-term bullish trade ideas on AAPL, AET, BAC, GENZ and INTC (2) as well as shorter-term bullish trade ideas on CSTR (April) and ABX (quick 50% profit and done).  We also had a short play on PCX (up huge already) and hedged with RKH Feb $85 puts at $1.15 (now $1.80, up 56%) and rolled our losing QID position in the $10,000 Virtual Portfolio to the Feb $10 calls at an average of $1.15 (now .90, down 22%).  This is how we can be long-term bullish and short-term bearish.  Buying the f’ing dips includes taking the money and running on our short-term short hedges, we can always take new ones the next day – especially when they make 56% in 2 days like the RKH’s!  

In yesterday’s session, as we were generally pretty bearish in our short-term positions, we took a stab at covering our gains with some IWM calls but lost a quick 10% on them and gave up.  We were not moved to cover our short positions into the close and, in fact, added DXD Feb $20 calls at .55 and took a slightly bearish earnings spread on GOOG into the close but we also grabbed a long-term JPM bullish play in the afternoon as they were looking oversold on their dip.  

We like JPM as an evil, souless, top 1% play.  Aside from being an evil IBank that takes our tax money and uses it to run up the price of commodities so they hit our wallets from two directions at once – JP Morgan also makes money for each American family their speculating actions thrust into poverty as they are the provider of Food Stamp Cards in 26 states as well as the District of Columbia and business is BOOMING in the poverty segment as JPM’s impoverished customer base has grown from 26M in 2007 to 43M today.  Morgan’s Chris Paton says he sees further growth ahead in that segment – isn’t that just fantastic?!?  

Well, unlike the original JP Morgan, who used to literally beat poor people with a stick, we can’t beat ‘em so we join ‘em although it seem MS had a better report this morning and is also worth a look at $28.  That’s the beauty of our RKH hedge, it protects our long-term Financial plays and, when we get a nice pop on our hedge and we’re ready to take it off the table, we can then use that money to buy even more financials while they are cheap.  Using our short-term bearish profits to establish long-term bullish positions – BRILLIANT!

The Hang Seng joined the Shanghai by falling 1.7% (415 points) to 24,003 but made a small statement holding that line into the close.  The Nikkei dropped to 10,437 (down 1.1%) and that’s now 1,700 points behind the Dow, which is historically wide and why we looked to short the Dow – just in case it decides to catch up.  There’s a nice article by Steven Pearlstein in the Washington Post, following up on my outrage last month over GE’s treasonous transfer of America’s avionics technology to China.  Thanks to all who forwarded that article to Washington where at least it’s getting a little traction now!       

The Bombay Sensex, amazingly, did not fall this morning, with a 250-point stick save into the close as the RBI moved to bail out micro-lenders (in an economy where people earn $2,000 a year, all lenders are micro-lenders) as well as an announcement that there were no plans to end fuel subsidies.  

Food inflation pulled back 1.2% for the week as the RBI indicates they will be raising interest rates so just up 15.52% for the year now but at least it’s the first decline in food inflation in months.  Rising global commodity prices, particularly of crude oil--India’s largest import item--on top of intense domestic demand pressures could keep inflation at elevated levels through 2011. Most economists predict inflation in the 6.5%-7.5% range by the end of the current financial year in March, far higher than the 5.5% RBI estimates.

Brazil is also raising interest rates in an attempt slam the brakes on runaway inflation and we expect that Hu Jinatao to take similar action shortly as Hong Kong’s CPI hit a 2-year high of 3.1% this week and the Mainland posted a 4.6% rise in December.  So Brazil raising rates, Australia raising rates, China raising rates, Europe paying record rates as both Moody’s and S&P look to push them into junk status….  

Can we guess what effect all this will have on the dollar?  That’s right, down we go – or down we have already gone this month with a 3% drop in the past two weeks and thank the good Lloyd for that or commodities and the markets would have fallen off a cliff ahead of schedule!  Speaking of bond risk – Vallejo California has taken the early lead in the "I told you so" sweepstakes as they are looking to offer creditors 5 to 20 cents on the dollar under the protection of the Bankruptcy Court.  “While the city regrets that it cannot pay a higher percentage, the fact is that the city lacks the revenues to do so while maintaining an adequate level of municipal services such as the provision of fire and police protection and the repairing of the city’s streets,” Vallejo said in the filing.  

No city or county has used federal bankruptcy laws to force creditors to take less than they are owed, according to Bruce Bennett, the lead lawyer for Orange County, California, when it filed the biggest municipal bankruptcy in the U.S. in 1994.  Vallejo’s plan assumes the city can’t provide essential services, like police and fire protection, while also paying its debts, he said. Should the city succeed, the case “may become an important precedent,” Bennett said in an interview.  Lenders getting a haircut include Union Bank NA, a unit of San Francisco-based UnionBanCal Corp., part of Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank

If you didn’t take my advice yesterday and read Mike Snyder’s "Austerity in America: 22 Signs that it is Already Here and is Going to be Very Painful," now would be a good time.  It will help you to understand why we are 75% in cash and very well-hedged for a downside move in the markets!  

Let’s finish up the day by accentuating the positive.  China’s GDP was up 9.8% in Q4.  Clearly that porridge is "too hot" and it’s contributing to their runaway inflation but – WOW!  Spain is taking on more debt to bail out their banks but why the Hell not when they know that China, Japan, the ECB and the IMF are all standing ready to bail them out.  The ECB has bigger fish to fry or, perhaps, fewer fish as they are now worried about price dislocations leading to food shortages in poorer parts of EU.  German Producer Prices are rising back at the pace they were hitting in 2008 – before the global economy blew up and Switzerland’s biggest problem is the relative strength of the Franc is hurting their margins so they will be raising the price of watches next month.  

Hopefully, we’ll have a reason to buy this f’ing dip.  I have already tee’d up 2 long-term trade ideas for Members on HCBK ($11.75) and GE ($18.30) from last night’s Chat – the rest we’ll have to play by ear but the oil shorts are looking VERY good today!  


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  1. Futures overnight:  H = 1281.50, L =1273.50, current = 1275.75

    oil (.80), gold (14.90)

    NET $ = .23%,  dx/y = (.09)%
    NET $ has been positive all morning, right at this level


  2.  F = 1278.00 at 8:00 area

    oil (1.21), Gold (23.20) getting hammered

    NET $ just feel negative (.49)%,  dx/y = +.07%


  3. It’s o.k. to TBF’INGD…..
    but only in gold, silver, and palladium.
    Word.


  4. Mike, what the heck happened at 8:00 AM? The dollar started rising against everything – euro, yen, franc, aussie! Wild… 


  5.  Oil futures just fell off the cliff – 88.90!


  6. 10yr = +1.47%,  30yr = +.51%


  7. Correctoin: Arends is da name :)


  8. If you have TOS, check out the marketwatch futures, the only ones up are cocoa, dxy, lumber
    Every other future down -


  9. sorry nat gas too


  10. just note that 1275-1272.50 was just a rough eyeball of max pain I did last Thursday, see what they do expiration tommorrow
    just use as info, was just my estimate
    1272.50 was where the puts evened out with the calls, and on the upside was the 1297.50 area, so they hit both sides now or close


  11. Goood morning,

     

    IWM 80.02, 79.71, 79.29, 78.76, 78.23, 77.74, 77.44, 76.91, 76.31 and only $2 Bil of POMO !!


  12. C = 1275.77, F =1272.50
    10yr = +1.71%,  30yr = +.71%
    VIX +4.68%
    oil (2.33), gold


  13. the main reason I mention the maxpain is that it has not worked much the last 18 mo, os maybe this is a sign of some normalcy returning to markets
    but I am probably too optimistic, probably just the Free Money Boys wanting to make all the profits on their puts & calls before expiration


  14. Good morning! 

    Look at oil go – $89.25 and falling in March, $88.50 on the remaining Feb contracts as they look to dump the last 50M contracts.  $87.50 is a point we might even consider a long play.  

    Same old boring watching and waiting as yesterday – We’re already very short so it’s really a matter of looking for an upside cover if we think things are going to turn back up.  AAPL is down to $335 and the Nas isn’t going anywhere with AAPL down 1% so keep an eye on them.  GOOG has earnings tonight so this will be interesting.

    Don’t forget we want out of those Feb $10 QID calls at $1.15 in the $1050P!  They are $1.05 now and it’s very tempting to take it and run but the FTSE is down 1.4% and the DAX is down 0.6% (CAC flat) so if they don’t improve – I don’t see any reason to panic out of shorts.  The morning is when "they" usually seem to pump up the markets and, if this is the pump – watch out below on the dip!  

    2,700 MUST hold on the Nasdaq and 11,800 must be retaken on the Dow along with 1,180 on the S&P.  If we get two of those 3 (we already have the Nas) then I like the IWM $77 calls, now $1.11 as upside protection with a stop at $1.05 – 20 in the 1050P.  

    Watch copper (now $4.27) for a turn but failing $4.25 would be bad.  Gold needs to get back over $1,350 and TBT is back at $39, where it has been rejected over and over and over again – so let’s see if that pattern holds, indicating it’s still business as usual from the Fed and the POMO boyz.


  15.  C= 1277.82, F =1274.25

    10yr = +1.53%

    VIX + 4.27%
    NET $ – (.25)%, dx/y = +.31%


  16. Good chart from stjeanluc


  17. Morning Phil. I have some MO naked. Love the dividend, but hate the diminutive option premiums. How do you deal with this? Do you just sell out as far as you can in time? I don’t have as many of these kinds of stocks in my portfolio as I used to because with options plays, they overall just don’t seem to do as well.


  18. Phil / Bernanke documentary    Watched on CNBC.  Standing in front of his old  run down (foreclosed) home in a SC town with 25% unemployment, he looks into the camera and repeats ‘what’s good for wall street is good for main street’.  The arrogance of this man is frightening, but his assertion that supporting asset mkts to ensure a ‘feel good’ psychology has me continuing to believe it’s dangerous to bet against this guy (the Fed) with shorts.  He’ll print whatever he needs to print to prop up the equity mkt and maintain low rates, until he’s deposed.  The $ will continue to plunge and inflation will continue.  The best dips to buy will be gold and wheat?  People have to eat, but oil may be reaching a point of consumer resistance globally?
    Can you recap your 3 favourite inflation plays?


  19. HMY getting hammered again.  gold has not been a great hedge for US dollar weakness recently.  it’s been flat since beginning of October.  TBT has been much better hedge for me against inflation over past few months. 



  20. WOW, that’s quite a rebound in IWM!


  21. Impressive recovery! Should have bought the f’in dip!


  22. Talk about maxpain on AAPL options holder. This week has been stomach churning. Expiration week is usually volatile, but we’ve got to be closing on a record – Steve Jobs announcement, earnings and today’s dive! Time to reach for the Maalox!


  23.  C = 1280.14, F =1276.25

    10yr = +2.13% so selling our bonds here

    VIX + 2.95% falling fast
    NET $ = (.11)%, dx/y = +.26%

    oil (2.06)


  24. Well we have our gap-fill, on to IWM 78.75 or do I sell my TNA here ?



  25. WOW, who could have thought the following sequence of events could have taken place.
     
    The day after the steve jobs announcement I bought 1 AAPL FEB 305 PUT for $2.19.  AAPL blows the doors off of every earnings estimate out there.  One day later my FEB 305 PUT is $2.75.


  26. glad to see them going after the mafia, but what about Wallstreet and congress :) my rant for the day


  27. @stjeanluc
     
    not sure on dollar


  28. JRW--your TNA went from under 70 to 73 at a blink of an eye. WOW! Talk about buying the f’n dip!
    Phil--could the bears actually win two days in a row or do you think this is a set-up?


  29. Something in my gut is telling me that today is going to get UGLY!  I forsee nothing but RED numbers all day in TOS.


  30.  Phil,
    covered my FEB 330 puts on AAPL at 10.25 but have not covered the calls I sold on AAPL yesterday at 4.50.  Does it pay to cover them at all?  30 points on AAPL to go up in a month after earnings with Steve Jobs sick, just seems the catalyst to move higher that much isn’t there.  What are your thoughts?


  31. BOTS are hiding today                                   so far!


  32. For all apple lovers down to 331.60


  33. Die oil, DIE!


  34. so far I have heard nothing, today was supposed to be the SEC release of new DoddFrank rules on securitization and asset backed securities
    not expecting anything, after the CTFC  kick the can las Thursday
    only thing I saw is what I posted earler online.wsj.com/article/SB10001424052748704590704576091692574122826.html
    so maybe that is the kick down the road
    , but if anyone sees anything please post


  35. AAPL scam/Reza – They’ve been doing that for years.  It’s very effective to float rumors like that with any company (and it’s most) that refuses to defend itself.  It’s something I call a hyena attack as hedge funds float stories that attack stocks to take them down – something that often happens in packs to increase the effect.

    Dollar popped 79 – let’s see if they hold it.  

    FAS and XLF zooming!  

    MO/Jbur – Well, if you think it’s cheap, you can just wait but if you are in it for the LONG haul, then just bite the bullet and go long with the sales.  At $24, I like MO too and you can sell the 2013 $22.50 puts and calls for $5.65 for a nice $18.35/20.43.  That’s a nice way to protect a $1.52 dividend (8.3%) and still a nice 22.6% dividend if called away.  It’s nice to have some good, conservative base plays in a portfolio.  

    Inflation plays/Tusca – It’s the 4 plays from the Secret Santa article from Xmas.  I don’t like gold, it has no real value and when people are starving – they suddenly are no longer interested in shiny bits of metal.  Oil also falls by the wayside when bellies are empty (and perhaps, already is) and Bernanke only has "power" as long as people believe the BS he spins – that’s already wearing thin as well and TBT is now $39.3 – if they break $40 – we have some serious problems.  You have to keep perspective – Imagine if I told you that we should invest in Zimbabwe because Patrick Chinamasa could print as many dollars as he like to make people "feel good" about the country’s finances.  You would think that is nuts, right?  Well, he did and it didn’t work.  Now, we know then, that it doesn’t work for everyone so now it’s a questions of where you draw the line?  Portugal?  Greece?  Spain?  France?  Japan?  The US?  We all print money or sell bonds or both and, no matter how big you are, ultimately you need to find a buyer for the stuff you print.  People can lose faith in America and not buy dollars in exactly the same way they lose faith in Zimbabwe – it’s just a matter of how long it takes for us to blow all of our good-faith inertia…

    Gold/Terra – A little of both is prudent.  

    Blogger/StJ – I simply cannot understand how or why "professional" analysts still exist.  They were never good but now we have a clearly superior, much cheaper product – complete with aggregators like SeekingAlpha to give you multiple opinions on almost any stock you want to look at.  

    Recovery/Rain – I just wanted to go with IWM to prevent us from cashing out our short positions.  I still think it’s a head-fake in the morning. 

    AAPL/Craig – Expectations way too high, it was a good call (or put, as the case may be).  

    Amen Mike!  

    Bears/Jabob – See above, I think follow-through.  Don’t forget we hit 2.5% and that’s a very bearish one-day move that, as I said yesterday, is almost a certain indication of a 0.625 to 1.25% follow-through and it’s looking like we already got 1.25% on the SOX and if that holds today, then we should keep going to the 5% rule at least.  

    AAPL/Rustle – What if Jobs comes back next week and announces he’s fine and it turns out to have been a virus?  Don’t get cocky!  


  36. C = 1275.85, F =1272.75
    10yr = +2.19%
    VIX +4.62%
     
    NET $ jumping here, NET $ = +.41%, dx/y = +.16%
    both heading higher at the same time,with oil and gold both lower confrimiing
     
    maybe we have more downside?


  37. JRW
    Your the man my 77.57 – .2% = 77.44+- and we bounced right off that. Way to go buddy! We turned at the opening price not surprising. Hope the BOTS aren’t watching!


  38.  Good point


  39. hard to say some many games with free money and expiration coming


  40. Phil / Head Fake — I don’t know, I’m starting to see some signs of breakdown.  I’ve seen some pretty severe stealth take downs. Many undeserved as far as I can tell.
     
    Whoops! Nice spike in UNG, oh well, not unhappy with 94% gain in 4 months :-)


  41. DECK — looks like another MoMo breaking down.


  42. more hiding in dark pools


  43. PHil, what about MS?  And what do you think about MOS at this point – some say that it’s in play and to expect $100 plus offers from the big boys (BHP, etc) – wouldn’t this be the time to get in?


  44. Speaking of gold, I put together a comparison with numbers and chart of the main gold miners for sh@ts and giggles! Good way to get all the numbers in one place!
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/gold-miners-analysis.html
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/gold-miners-analysis-part-2.html
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/gold-miners-analysis-part-3.html
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/gold-miners-analysis-part-4.html
    Conclusions in Part 4.
    Phil –  Just did that to keep me busy at night since I think that these guys don’t make great investments to begin with. a) they don’t pay great dividends and b) they are so volatile. And I was amazed that they don’t make more money – gosh, if I could increase the price of the services I provide with my business by 44% like gold did, my margins would triple! But still, some of them are quite cheap historically – forward P/E are in the low teen’s and that is 1/2 or 1/3 what they were in the last 10 years. I know you like ABX best if I recall, but based on the numbers are ran, I think that NEM is a less worse investment! There are some real gambles in there with IVN, IAG and UXG for those who like this sort of things! Now, they depend greatly on the price of gold and who knows where that’s going to end up. Anyway, if you have 2 minutes, I’ll appreciate the feedback. Thanks.


  45. Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    9:00 Hearing: Fundamental Tax Reform
    10:00 Existing Home Sales
    10:00 Leading Indicators
    10:00 Philly Fed Business Outlook
    10:30 EIA Natural Gas Inventory
    11:00 EIA Petroleum Inventories
    12:00 PM Geithner: American Opportunity Tax Credit
    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    Notable earnings after Thursday’s close: AMD, ASBC, COF, FLEX, GOOG, IGT, MXIM, PBCT, SWKS

    WOO-HOO!  BHP heading off a cliff!  Very nice for our Feb $85 puts - should be good for a double!  FCX is another huge winner on earnings despite the beat but take money and run there!   

    Mixed output results for BHP (BHP), which saw iron ore production rise 4% Y/Y in FQ2 to a record 33.7M metric tons, while coking coal output fell 30% Q/Q in Queensland and 24% overall. Shares -1.6%.

    Freeport-McMoRan Copper & Gold(FCX): Q4 EPS of $3.25 beats by $0.24. Revenue of $5.6B (+21.5% Y/Y) beats by $0.13B. Shares -0.5% premarket. (PR) 

     

    AIG down nicely too – great call by Cap!  

    At the open: Dow -0.24% to 11797. S&P -0.17% to 1280. Nasdaq -0.51% to 2712.
    Treasurys: 30-year -0.46%. 10-yr -0.43%. 5-yr -0.28%.
    Commodities: Crude -2.27% to $89.73. Gold -1.55% to $1348.90.
    Currencies: Euro -0.14% vs. dollar. Yen -0.73%. Pound -0.41%

    10:00 AM On the hour: Dow -0.16%. 10-yr -0.44%. Euro +0.01% vs. dollar. Crude -2.69% to $89.34. Gold -1.78% to $1345.80. 

    Initial Jobless Claims: -37K to 404K vs. 420K consensus. Continuing claims -26K to 3,861,000.

    Dec. Leading Indicators: Leading Index +1% vs. +0.6% expected, +1.1% prior. Coincident Index +0.2% vs. +0.1% prior. Lagging Index +0.3% vs. -0.1% prior.

    Dec. Existing Home Sales: +5.6% to 5.28M vs. 4.8M expected. Inventory of unsold homes on the market -4.2% to 3.56M; months supply 8.1. Median sales price -1% Y/Y to $168,800. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” NAR’s Lawrence Yun says. – Keep in mind this is the "National Association of Realtor’s" spin on things.  

    Jan. Philly Fed Business Outlook: 19.3 vs. 20.0 expected and 20.8 prior. New orders index added 13 points; shipments index gained 8 points. "Firms remain quite confident that an expansion of manufacturing activity will continue through the first half of the year." 

    EIA Natural Gas Inventory: -243 bcf vs. consensus of -234 bcf. Futures +1.54% to $4.64. 

    The ECB warns again, noting recent purchasing managers reports show higher input prices are being passed along to consumers. It forecasts inflation will worsen in the coming months before moderating towards the end of the year. The euro jumps 100 pips before falling back slightly to $1.3490. 

    Big airlines see 15% higher fuel costs this year, but they aren’t the only businesses likely to be impacted by commodity price inflation in 2011, 24/7′s Doug McIntyre writes – it will hurt industries from restaurants to automakers to home builders to retailers that sell cotton clothing. "Time to drop earnings estimates," he warns. 

    Hmmmmm: Beijing has taken administrative control of rare earth mines away from local officials who are suspected of colluding with organized crime groups to illegally strip mine and smuggle the metals – no wonder rare earth exports aren’t falling that much. 

    David Tepper is scheduled to appear on CNBC tomorrow, and he’s not as bullish as he was last time. While "the biggest opportunities" will remain in equities, 2011 will be "harder and not without risk," he tells NY Post. "When things go up too high, they will go down." Stocks surged after his bullish September prediction.

    F5 Networks (FFIV) is a major momentum stock in the tech space, and its disappointing earnings and guidance weigh on other tech-momentum names this morning. FFIV -19.5% premarket. Related names: RVBD -9.9%, PLXS -8.6%, NTAP -4.6%, RAX -4.3%, APKT -4.2%, CRM -4.1%, CTXS -4.1%, SVVS -4%, VMW -3.7%, JNPR -2.8%, AKAM -2.5%.


  46.  Mike, looks like these dark pools are another way to screw the retail investors! Lovely…


  47.  Oops, copper did fail $4.25, now $4.23 and not looking good.  Failing $4.20 means things are heading south very fast.  


  48. Good 10:31 call Mike although JRW almost perfect as usual at 10:05 – thanks for getting up early my friend!  

    NFLX $184!  Even the mighty AMZN is falling.  WYNN $115!  - I guess we can hold those QIDs a little longer….


  49. Phil
    Everything looks weak, if oil builds will we sell off?


  50. VIX closing on 19 now… 


  51.  Phil -
    I have a large position in tza that I need help adjusting. I bought the stock and did a protective put spread for a credit by selling calls.
    Bought: TZA @ 14.96
    Bought Put Spread – Feb. 15 puts @ $1.48 – now .90 (down .58) – sold Feb 14 puts @ .90 (now .40 up .50) = -.08
    Plus Sold 4/5 position in Feb. 18 Call for .70 – bought back for .38 = .32 profit
    Up  .11 on total position.
    ———
    ? What adjustments would you make – I am hoping for a 10% pull back in RUT.
    So going to close out the puts – and sell the Feb. 19 or 20 calls – assuming that I will simply stop out of TZA before it breaks 15
    Thanks 


  52.  C = 1272.23, F =1268.75 at 10:00

    oil (2.46)

    10yr = +2.34%,  30yr = +1.41%
    VIX + 7.80%

     NET $ = +.10%,  dx/y  = +.37%


  53. I was also thinking of changing the accounting rules for my business so that I never have to show a loss:
    http://ftalphaville.ft.com/blog/2011/01/20/464471/the-fed-cant-go-bankrupt-anymore/ 


  54.  MOS/Jercon – I put up a speculative play at the end of Tuesday’s post I think.  It was a short of the long $60 puts and you can probably do better on the bull call now but you have to REALLY want them at net $60 as I think AGs are a BS speculative bubble – there is plenty of food in the World, it’s mainly a distribution and waste issue – something governments who fear being overthrown tend to address.  

    Gold/StJ – Well it’s a little more complicated than that.  The miners generally hedge their output and oil is a major cost for them and they tend to sit on inventory when prices are rising and dump it when they are falling.  I like ABX because they are good hedgers and good cash managers and smart acquirers and also because they are sitting on 150M ounces of gold which they extract for $450 and is currently a $900 margin so $135Bn worth of gold net of extraction against a $45Bn market cap run by the kind of guys I would trust to hold $1M for me and keep it safe.  Not so much NEM while HMY is almost the opposite as they run a pretty sloppy operation but slave labor (oh, excuse me – free-market determined local labor) keeps the production costs low and they have 50M ounces of reserves with a $525 extraction cost and just a $5Bn market cap.  I don’t love miners but I do love them compared to buying gold as a long-term hedge and, as you note in your nice chart – they have the best p/e ratio by a wide margin while ABX has the best PEG.  

    Oil with builds across the board.  That should stop the slide for the moment.  

    EIA Petroleum Inventories: Crude +2.62M vs. consensus of -0.9M. Gasoline +4.4M vs. consensus of +2.3M. Distillates +1.04M vs. consensus of +0.5M. Futures -2.95% to $89.1. 


  55.  Oh sorry, silly me.  I should explain that.  It takes pressure off the other commodities and China and India et al to tighten, which is the underlying spook to the markets but it’s only a momentary thing as it’s obviously bearish to $89 oil and bearish to XOM and CVX, who are whacking the Dow too.  

    Watch the Dollar, testing 79 from the top side now as less money spent on oil is stronger for the dollar and the FTSE is now down 1.75% and the DAX is down 0.84% and the CAC went red, down 0.3% so a panic into the dollar can send everything down another leg.  

    Europe closes in 15 mins and is at the day’s lows at the moment. 


  56. JPM being used to prop up the banking sector.  I think it goes lower but we shall see.  FAZ is underperforming TZA today.  :(


  57. Down NOW!


  58. Phil-have ABX July 50-60 Vertical at 4.40 (call at 7.99 caller at 3.59)  It’s only January, but do you have a recommendation here?  thanks


  59. Phil, 
    WYNN finally getting a proper selloff, yesterday I bought back the 107′s as I had no more patience (down $7 on 7 contracts), I sill have 7 115 short (sold at $6.35) would this be a good moment to sell some Feb Puts? You feel WYNN will hold say $105 if we continue sliding after expirations?
    Thanks


  60. this jackass still calling for a govt guartee of Fannie and Freddie debt on CNBC
     
    I know it is and will be, but I can hope


  61. of course I cannot even spell guarantee


  62. Miners / Phil – Thanks for the feedback and the education!


  63. Out of FAZ for now


  64. Good day to all!  DCTH getting pounded all morning, and then…up she goes.  IMGN is the same.  I am still holding my Ps sold in Jan, and selling more of the IMGN 10 Febs.  Trend is down for both, so be careful and do them in small lots.


  65. CCJ another one being hit on no news.


  66. Poor poor MNKD……BOOM!


  67.  C = 1273.40, F =1269.50

    10yr = +1.89%,  30yr = +1.15%
    VIX +7.85%
    oil (2.46),  gold (22.0)

    NET $ = flat,  dx/y \ +.63%


  68. Phil:
    I have a few IWM Jan77s that are losing value quickly; what do you suggest?
    Thinking of rolling to Feb78s; not sure though.
    TIA


  69.  France (.24)%,  GER (.69)%,  uk (1.61)%


  70. Buying a few OREX Feb Ps for fun.  FDA is at the end of the month.  ONLY GAMBLING MONEY.


  71. Damn!  Went out for a smoke and now look what happened.  Got out of FAZ too soon!!


  72. Phil, do u think this is a good time to get out of the USO puts?


  73. Matt – Another reason to quit! 


  74.  I chickened out of my BHP options after taking a substantial position late yesterday, thanks for a great call, Phil, closed it for a big gain.


  75. Nice DOW Vol with 73M at 11:38, Might not be able to recover this one today with only $1.5-2.5B POMO to spend on it.


  76.  Big call volume on XLF per WSJ.


  77. Phil / Shorting   I’m pretty much all in cash now as I think the next few weeks could get ugly. The Russell has run furthest and has a higher concentration of stocks with exposure to the troubled US consumer.  Do you prefer Russell for broad short plays now vs Dow, S&P, Nas, FXI, emerging mkt indexes, BRICS, Europe, Japan, commodity indexes ?  Thanks for the BHP short on my steel/iron ore plunge thesis!


  78. The bearded guy on CNBC blames high tech slide on gas prices. Ever wonder about heating, I heat half my house costing $500 per month which is 1/3 of monthly income, my neighbor has the heat on 45 never taking off coats!


  79. nice little acct change the FED pulled there, thanks for the article
    stjeanluc


  80.  tusca, does that mean you no longer hold SKX shares? Did u bail out?


  81. I enjoy poring through all the articles posted in Phil’s Favorites – thanks for providing all that great information Phil.
    The word "austerity" is one word being bandied about pretty haphazardly right now in many of the articles, and I think we should coin a new term.  I’ll throw "AUSTELLIGENCE" out as a starter, because reducing completely ridiculous expenditures and entitlements hardly qualifies as severe, self-denial, or restricted – terms used in the definitions of austerity.


  82.  Even CCJ selling off!

    Jobs/StJ – That’s true, jobs are not needed.  This is why bubbles are bad, they mis-allocate labor resources and cause huge, unabsorbable unemployment when they pop.  That’s the part where, usually, Government steps in to pick up the slack and put people to work and help create new industries to take the place of what has been lost – something China is super-good at and something which our own corporate media has convinced the voters is somehow evil.  So, the net result is we let jobs and industries die and allow China et al to pick up all of our manufacturing so they are poised to profit from the recovery while we continue to extend unemployment benefits (or cut them off and pay JPM more food stamp money).  

    TZA/Samz – I’d just kill the put spread as it’s turning against you and just be happy to be naked for now.  If you think TZA is going up 30% on a 10% pullback in the RUT, what’s the point of covering at $20?  As you say, your stop is your cover and, other than that, you can afford to watch and wait.  Of course you could cash the stock, sell the April $15 puts for $2 and buy the Apr $14/20 bull call spread for $1.80 and that puts $16 back in your pocket and your worst-case outcome is you get TZA put back to you (1x) at net $14.80, which is less than you bought it for last time and, since you are taking $1 in profit off the table now, the new net would really be $13.80.  The BCS gives you a better upside than the stock up to $21 as all you can make at $21 is $6 but this spread makes $1 more at each strike below $20, which is your upside goal.  

    Rules/StJ – Well a lot of businesses go the other way and never show a profit so they never have to pay tax.  Flexible accounting regulations are very useful things!  Even when I had a fairly small business, I could not believe the stuff we used to be able to get rulings on – such a joke…

    ABX/Drum – I see it as a long-term inflation hedge and the July $50s are now $2.46 and can be rolled to the 2012 $45s ($6.35) for about $4, which is what you are making (about) from the caller so that’s the roll I would look for and then you can sell something like the Jan $55s (now $3) when the other one wears out and that puts you in the lower spread for about the same price.  Do that every year and you should have a winner eventually….    Also, you can roll the .73, $60 caller to the Jan $46s (.42) and then the Feb whatevers to get them to expire quicker and that gives you more flexibility to do shorter sales.  

    WYNN/Amatta – If you capitulated yesterday then you have no faith in the stock so why do you want to put more money into it?  If WYNN misses or guides down or if Las Vegas has bad numbers or if China passes a regulation – they can go far lower than $105 and you don’t believe in the stock so what will you do then?  What is your actual premise for them?  Mine was that they can’t hold $120 (if rolled) after earnings – I’m comfortable with that but I wouldn’t be so foolish as to turn a fundamental bet I strongly believe in into a narrowly targeted earnings play.  

    IWM/Reza – Those were little momentum plays with tight stops.  We think the RUT is going down so why hold onto them?  

    USO/Etrad – Depends what month.  If the Jans, absolutely and, even if February there’s a reason we have just 2 rules at PSW:

    • Rule #1:  "ALWAYS sell into the initial excitement." 
    • Rule #2:  "When in doubt, sell half."  

    We had a Rule #3 which was:  "If you didn’t listen to Rule #1 or Rule #2, what the hell do you expect Rule #3 to say – you stupid, greedy bastard?!?"  Fortuneately, we got rid of most of the dumbasses on the site and were able to cut it back to just the 2 rules again.  8-)

    BHP/ZZ – Congrats!  Sometimes we get lucky and that one was lucky.  

    That’s goal on QID in the 1050P and I think we should take it as we wanted to be done and now it’s just the Dow to worry about.  We can start a brand new $25KP on Monday this way.  


  83. Phil:
    I’m still a newbie here and thanks for the great education so far! Can you help me with TZA?
    I bought TZA Jan 19 calls and then rolled them to Jan 14 calls (in at 1.69) a few weeks ago. Should I sell the call and walk away, roll it out (my concern is that – don’t want to keep buying premium) or exercise, buy TZA and sell covered calls (if so, which look best to you?).
    Obviously, I should have rolled out further and sold a call to create a spread earlier – at least I’m taking some knowledge out of this (and any profit you can help me salvage)
    Thanks.


  84. Phil, 
    I did not get the stop order to kill IWM 77′s at 1.05 (bought at 1.36 when got the green on Dow and Nasdaq)… now way down to .90, do you think we get a bounce? should I consider a DD for a boucne or you think were heading lower, and take the losses?


  85. Pharm – followed you in on the two below. Do you recommend any changes? Thanks.

    CLDX – sold May $4 put for .68, now .83
    buy May $5 call for .55, now .30

    PCYC – Feb $6/$7.5 bcs for .60, now .18.


  86. stjeanluc, so true.


  87.  Shorts/Tusca – Yes, great idea on the ore sector.  I think I do like TZA best (see above spread) at the moment.   The RUT has been unstoppable but they can also be unsavable  on the way down.  EDZ really flew off yesterday’s pick but they would be my 2nd favorite.  

    Heating/Shadow – That’s my beef with all these pro analysts – they HAVE JOBS!  They have high-paying jobs and don’t live in the real world where $500 a month is a lot of money to people.  That’s why their analysis sucks!  

    Favorites/Chuck – Ilene does a hell of a job with those.  We have so many great contributors, I love sitting on my couch with the IPad reading through them.   

    Welcome LDM!  Well yes to taking money and running at $1.75 – with one day to go you should be thrilled to be even as you were going to get your ass handed to you yesterday, when TZA opened at $14.20.  THAT was when you should have rolled or doubled down – now it would just be a new bet and that same rule that says "Always sell into the initial excitement" should tell you that you would be kind of an idiot to chase a 2-day, 10% run by adding a new position now.   What are you trying to do with this position.  Is it a hedge or a bet?  

    IWM/Amatta – You MUST stop overpaying for entries.  That play was to lose, at most, .13.  If you got in at $1.36 and you couldn’t stop yourself from buying them 10% over target, at least set your stop at $1.23.  Anyway, I think we could go either way – that’s why I don’t currently have a bullish call on IWM but also why I just said to take the money and run on the QIDs.  You could hang out until 2:30 and pray for a stick but it’s  a LONG way to even at $1.36 as you now need a 50% gain to get even, which is why we take action at 20% losses, not 33%.  

    11:10 AM The Fed buys $2.2B in longer-term Treasurys (maturing 2028-2040), of $8.169B offered by dealers, in the latest open market operation. Treasurys are off to varying degrees: the 30-year yield +0.05 to 4.59%, 10-year +0.07 to 3.41%, 5-year +0.075 to 2.01%, 2-year +0.04 to 0.605%.

    12:00 PM On the hour: Dow -0.34%. 10-yr -0.5%. Euro -0.15% vs. dollar. Crude -2.52% to $89.50. Gold -1.56% to $1348.80. 

    Bullish sentiment slips again among individual investors (and bearish sentiment rises), but at 50.7% the bullishness is still significantly higher than the historical average. Survey respondents overwhelmingly said their views hadn’t changed from six months ago.

    Boeing (BA -1.5%) will cut 1,100 jobs in the next two years as it executes a plan to scale down production of the C-17 cargo plane, used in military transport and disaster-relief missions. 

    Beyond an expected profit gain when GE reports tomorrow, investors are looking to see how a ramp-up in industrial investments affects sales. The conglomerate is developing new products and has made acquisitions to the tune of $6B in the past four months, and is shrinking the percentage of revenue from GE Capital.

    The 12.3% surge in existing home sales shouldn’t be sneezed at – it’s the first time over the 5M annual sales pace since the homebuyer tax credit – but accounting for the seasonal effect in NAR’s inventory calculations still shows a worrisome increase in inventory: 


  88. Nicha – CLDX is fine for now.  PCYC is most likely dead unless they release some data.  Currently the stock is at support otherwise they are going to move the $4s.  Options volume in the Febs $6 and 7.5s are huge, so I still see something happening.  I am in both, and when I see a trend change in CLDX, I will add to them.


  89. For all those following Income Trader, we put out a trade alert this morning on our section.


  90. Phil, 
    WYNN, I asked as you had actually suggested I sell something for $2.00 in a front month against my short 115 calls… I did have conviction that WYNN is heading down, but it had run my patience to nothing when it kept testing 120 and narrowly failing… in any case, would you just hold on to the 115 short calls and wait for expiration? (with this I would be back to even almost). 
    Thanks


  91.  Phil,
    Your thoughts on writing the Feb 41 calls on TBT and buying the Feb 37 puts with roughly +.20 if both expire.


  92.  C = 1276.74, F =1273.25

    10yr = +2.07%

     NET $ = +.13, dx/y = +.29% both back positve here
    NET $ has been very volatile, almost like peoiple are very confused


  93. Phil
    FFIV  any advice on selling puts?  or perhaps another play?


  94. pal, 7.20, sell june 8 call for .90, sell june 7 put for 1
    any takers


  95. Phil, 
    IWM, I am trying to get a handle on the day trades, but it is hard to follow sometimes… Well I obviously did not intentionally buy it higher, that was the point where I saw the 2 indexes had gone above the target… You posted when it was at 1.11 but only the Nasdaq was above, from what you write I understand the exact point to buy was at 1.24 (when the  the exit was never clear at .13, it would have been .19 if at 1.05 as was on the original post). 
    Thanks


  96. even better play
    PLX at 9.95,  sell may 10 calls for 2, sell may 7.50 put for .95


  97. Phil/IWM
    These Bots are so smart.  They do a fact triple dip breaking through the lows to make it look like a repeat of yesterday then abruptly reverse course.
     
    Wouldn’t surprise me if this thing goes green.


  98.  Transports – bullish percent indexes
    stockcharts.com/h-sc/ui
    Transports are looking way overbought.  Any good setups here?  
    BTW I can put in links but not pictures like the chart.  Also I’d like to change my website address.  Any way to do these items?  Thanks.


  99. Prechter not pulling any punches here on the FED


  100. Able – May 10 Ps are better.  I think PLX flies.  They are a young GENZ.


  101. More evidence that the bears lose even when they should win. 
     
    Caution……graphic….not for the squeamish


  102. actually i  maybe feb 10 puts,  FDA decision feb.25/10


  103. Pharm – r u playing PLX?


  104. here is the SEC regs announced or kicked


  105. reviewing their own assets
     
    gee, hmm all trple AAA to me


  106. phil, thoughts on GE for earnings tomorrow. I think they are going to have very bullish guidance.


  107. exec
    And that looked like a small bear!


  108. Shadow/Bear,
     
    That bear was looking to make a meal out of that guy.  After being bearish for 2 years, I feel like I went a few round with that bear.


  109. pharm, do you have a position in PLX?


  110. Phil, is there a separate area where I can track all your trade recommendations/suggestions? (medium to long term as I can’t keep up with the "Buy now – or its too late kind of trades" at work). Great job with the articles by the way!
    Thanks


  111.  C = 1277.35, F =1274.25

    10yr = +3.48%,  30yr = _1.92%, still selling our bonds

    VIX +4.85%
    oil  (2.34))
    NET $ = +.31%.  dx/y = +.29%


  112. Just a reminder, with GOOG earnings tonight, it may pay to look at some QQQQ options after the announcement but before 16:15 pm, while QQQQ options still trade.
    GOOG is 4.3% of QQQQ holdings.


  113.  Phil / GE
    If you don’t mind stepping through the GE trade with us, since it might be a good day to execute this trade we spoke about yesterday as it’s before GE earnings.  I just want to understand the mechanics.
    The trade idea yesterday was:
    As to GE, you can pay $18.33 for the stock and sell the 2013 $15 calls for $4.30 and the $17.50 puts for $2.65 for net $11.38/14.44 and that makes the .56 dividend a nice 5% while you wait to collect your 32%.
    There for in todays prices I can
    But 100xGE at 18.44
    Sell 1xJan13 $15 Call at $4.30
    Sell 1xJan13 17.50 Put at $2.55
    Is this the proper was to execute a "single instance" of this trade?  If I want to do it bigger, I just make sure that my shares are in-line with the number of options I have.
    Thank you for the assistance and walkthrough.
    Burrben


  114. Buying on recomendation
    All too often Phil’s prices vanish but he did once say put in a limit order and like a box of candies sometimes you get your favorite price


  115. PLX – yes – I have the 7.5/12.5 May BCS that we bought last year (12/1) for 1.75 and sold the Feb 10 P for 1.29 right before Xmas.  That is 45c on the spread, IF the Feb puts expire worthless.


  116.  Any opinions on real estate?  Don’t see much interest expressed here, but the short term data looks like a bottom.  Hard to believe, given U.S. unemployment levels, but I’d hate to miss an opportunity — or think one exists when it doesn’t.


  117. PDLI coming back nicely now.  Small round 2 for 5.10 OR better. 

    IMGN bounced right off 200d MA. 


  118. Burrben – executing as "single instance" is now always best.  it is usually better to break the trade up into parts that are supported by the exchange.  For example, into one instance of buy the stock and one instance of  "sell the Jan puts and calls."  Another way to break it up which I think is even better is to have one instance of a covered call "buy stock and sell the call" and then to sell the put as a separate instance.
     
    If the stock moves tight, you can even just place offers at good prices and wait a couple of days for it to fill.  With earnings this close, this may not work here.


  119. NFLX  Just signed on to look at the market.  I’m short 2 Jan 185/195 call verticals and just put in an order to close out the position…seems reasonable, but wonder if it’s worth trying to save the $160 and see if they expire worthless.


  120. JR/IWM
     
    The spike at 13:48 on IWM…..is that a buying program?


  121. Pharm/PLX – the May bcs and the Feb put sale is now $2.30. Any other plays for now? Thank you.


  122. Here comes the stick…! But the RUT is lagging way behind… Come sticky come 


  123.  Thanks Kojo!  Tell Ilene your box should be blue and to fix it.  

    WYNN/Amatta – Yes, I suggested that to prevent you from capitulating.  After you capitulate is NOT the time to do it!  As I said, you don’t have a good feel for the stock so get out.  If you do not have conviction to play naked shorts out and you are not willing to do what needs to be done to stay on top of them – then it would only be through sheer luck that you end up with winning positions and that is never a good long-term trading premise.  I would certainly hold the short $115 calls through tomorrow but another month depends on what the market does here but, as I said, even the Feb $115 calls can roll to the March $125 calls so yet, I would stick with them and IF I got blown out – THEN I would sell puts to compensate.  

    TBT/Rustle – We’re out of our $37.50/39 range at $39.63 – if they hold that, rates could go up fast so yes to short selling the Feb $37 puts but I wouldn’t go short on calls right now unless you intend to cover by buying the stock at $40.  

    FFIV/Dave – IF they drop severely next week, THEN maybe the puts will be attractive to sell but if they don’t, then you already know how easy it is to knock them back to $107, even on pretty good earnings so what happens to them if there is some actual bad news?  Why is it no one ever says "Phil, I found a Net App company that’s better than FFIV with a strong balance sheet, good growth and a p/e of  11?" – why is it that every day I have to lecture people against trying to follow popular momentum stocks?

    Buying High/Amatta – If the intent is not to lose more than .13 (10%) then whatever you buy it at you should not lose more than 10%.  Ideally, if you buy at a line at $1.24 – well, first of all you shouldn’t, it’s too much higher than where we looked at it – but, if you do, then THAT LINE ($1.24) is where you are getting out.  A MOMENTUM trade means you are buying on MOMENTUM.  That means we are buying for a cross over the line ONLY and expect a run up or down from there.  If, for any reason, that run stops – then our premise is blown and it’s a no trade.  This is a substitute for our futures trades – where losing a nickel is considered a crime.  That’s kind of hard with options but your attitude should be the same, if you go up .10 and then get even – GET OUT.  If you go up .05 and go back to even – GET OUT.  If you go up .15 and go back to .10 – GET OUT.  Get it?  

    Website/Rev – Click on your name above the comment box.  I’m not feeling confident enough to add transport shorts right now.  

    Pretcher/Mike – I like him

     

    The pork laden tax bill may temporarily help the economy, but QE2 will only flow to the Treasury and the financial sector. As we have said before the Fed could end up owning all of the Treasury debt. These desperate actions cannot help but force foreign buyers to vacate the market. These activities of the Fed and the fiscal irresponsibility of government in time can only create more inflation.  The spent and borrow policy is totally profligate and will have to be paid for by future generations, if not defaulted upon.

     

    Bear/Exec – Ouch!  

    GE/Jo – I don’t think it will be exciting but I think they should be in-line.  I put up a 2013 spread for them last night. 

    Trades/Make – The only real tracking we do is for trades in the Portfolio Section but this is mostly adult swim so worry more about the Strategy Section and learning to stop out with profits because once a trade makes 20%, I have zero interest in what happens to it as it’s all greed from that point forward.  If you go through some old portfolio and find a trade that still looks good – then ask.  Otherwise, I put up new ones every day and the key is to find ones that help you to balance out your portfolio so you have a reasonable mix of bullish and bearish bets in your own portfolio.  

    GOOG/Jordan – AAPL is over 20% so worry more about what they are going to do.   

    Go TBT, GO!  


  124. The only other days with this much volume recently were 1/4 and yesterday, both Big Red !!

    I was TZA at the open on follow through, then TNA off my IWM 77.44 line, then the swich to TZA I posted at 10.05; I sold the TZA at 11.59 and am now waiting with mixed signals, FWIW !!


  125. zeroxzero
    Real estate, our developer gel1 dropped membership, buyers market, I am willing to sell my house at $.50 on the dollar with owner financing. NO LOOKERS, my subdivision is 70% for sale and I have a ski resort 6 miles away!


  126. exec / Buy Program

    And it lasted 15 minutes, but had little volume, a test I think. We may be heading up !!


  127. Forgot to mention also 6 miles from Driggs Idaho cultural capital of the world and tee shirts to prove it!


  128. Any reason for this strong rally?


  129. Damn! Should have listened to Capt. Broccoli — Again!


  130.  Buy the F-ing dip was yet again the strategy of all strategies. Phil can you post where we are on Lloyd’s AlphaBot2 program? I was hoping it would tank prior to expiration but it’ll be on Monday unfortunately. I don’t have much dry powder to roll everything to Feb but I have a few like CRM, FFIV, CMG …


  131. exec
    The only program I saw that mattered was the DOW very early, like my early post the BOTS are hidding! And JRW’s comment.


  132. exec

    Nice catch, I got triple confirmation as I was posting you 8-)


  133.  C = 1281.63, F =1277.75

    10yr = +3.54%
    VIX + 2.43% falling fast
    NET $  = +.38%,  dx/y = +.30%
    oil (1.83), gold (19.10)


  134. Big buys of June EEM put verticals today,  total 31,000


  135. BOTS just sold into that IWM move!


  136. Sorry just trying to figure out this EEM trade; someone also bought (sold) 10,000 june 54 calls at $0.50.  Which one was paying for the other?


  137. @jabobeast
    just me but I think its the SEC kick the can
    here have a free year, then tell us what your toxic crap is worth
     
    the Free Money Boys ride again, plus the cashed in on all of their puts earlier in the day


  138.  GE/Burrben – Yep, that’s all it is.   That’s just our normal "How to Buy Stocks for a 15-20% Discount" Strategy, called the buy/write.  We do those all the time in small variations.  Also, what Shadow said – focus on getting your net price – the exact price of each leg doesn’t matter.  

    And what Jordan said!  

    Real estate/ZZ – We just went for the evil SRS yesterday.  HOV is the only real estate play I like at the moment and they’ve been struggling so I have no interest in the rest of the sector but I do like them and you can buy them for $4.61 and sell the 2013 $5 puts and calls for $3.15 for a net $1.46/3.23 entry with a nice 242% gain at $5 and a 30% average discount if it’s put to you.  See why I have no desire to pick another?  This one is fine…

    NFLX/Eph – With possible good news from GOOG and the end of a 2-day sell-off and NFLX just $2 out of the money on your caller – I’d go with "better safe than sorry."  

    Over $78, I’ll be liking the IWM $77s again, likely at $1.15 but ONLY over that line as a momentum trade.  It’s a defensive trade against our open 40 DIA puts in the 1050P (20 of the IWM calls) so the most we want to lose on it is $200 and we are thrilled to make $250, which is 10%.  


  139. On the oil trade sold /CLJ1 march 78put future for .50 on today’s dip


  140. Nice call Shadow.  I was getting tempted to buy in late.


  141. FAS selling since 2:12


  142. shadowfax – how do you differentiate btween the bots and human trades?


  143.  Alpha 2/BDC – As I said earlier in the week, I thought they would at least hold us up through expirations and the Dow topped out at 11,850 and now 11,785 so it’s all right on track really.  SWW did the chart as follows but I was saying that you really need to line up the expiration days, which pushes the blue lines back a week and Tuesday’s 11,850 was goal ahead of schedule but you can imagine that blue peak coming on the 12th on this chart followed by a drop of just 75 points over the next two days and we’re right on track:

    Here we go! 

    IWM – I also like selling the $78 puts for .50.  Can’t do in $1050P but it’s a nice play as they expire tomorrow!  


  144. Shadow

    I think your 77.57 is now today’s floor; resistance at 78.05 and 78.20ish and then of course, 78.76 !!


  145. It’s comical how they move this market at will with the dollar.


  146. Where’s Assange when you need him?  I thought maybe he’d pick today to dump his info on a large American bank.  Woulda been beautiful-


  147. With IWM at $78, the $77s are $1.18.


  148. Strange day. They want to push it higher but it seems like there are a ton of sellers??? What do you think Phil? JRW?
     
    Is that what you see?


  149. I don’t know about a ton of sellers, volume on DOW is not THAT big.  Volume-wize, yesterday and today have been very orderly.


  150. Jabo,
     
    I think Phil is correct.  They’re trying to hold it up through expiration…..problem is…..no POMO and the smart money is heading for the door early.


  151. I have 3 trend lines coming together at IWM 78.07 at about 3:00; A good place to launch a Buy program !!


  152. HCBK at $11.30 – 2012 $12.50 puts now selling for $2.05 and make a great entry as is.  When they bottom (maybe $11), you can buy into the stock with tight stops and wait to get at least $2 for the $10 calls (now $1.85) for a net better than 7/$8.50.

    Dollar/Exec – Good point and notice how it’s not really helping commodities.  That is not a good sign for those speculators.

    Sellers/Jabob – Volume is still very low, just 80M on the Dow at 2:45 (110M is normal, even in this low-volume) so it’s not like the bots should be overwhelmed by sellers – more like the unified front is breaking down and some of the IBanks are front-running the collapse, trying to get out early.  


  153. nicha
    Basicly it is a speed plus volume that only the biggest players could manage. JRW is maybe our biggest player but I have never seen his trades move anything, I do agree 77.57 to .44 is a floor but only the DOW shows strength today and that is only 30 stocks. For interest only I am looking at 3 minute to 3 second changes and I miss a lot of them and the volume is something I only get delayed so far. I did see a tripple zig before JRW bought in and then BOT sells in the fraction of second range.


  154. JRW
    Did you buy TNA at 14:08 to 09?


  155. weightings of dx/y


  156. SPX/RUT Short stranglers,
    Just want to say that I’m looking to position the short strangle spreads with Negative Delta at the end of today.  Remember that going down usually has higher velocity than going up.  I took advantage of the jump in VIX to nearly double my total sold options.  Still have plenty of margin for more in case we get a real correction.


  157. the formula anways


  158. shadow / 14:09

    That’s me; scary that you can find me that easily !! EXEC got the perfect entry; I bought off my IWM 77.74 line


  159. CTFC commenting on ag swaps


  160. "Under the plan, the Commodity Futures Trading Commission
    would remove existing requirements that traders of agricultural
    swaps — used by buyers and sellers of farm goods to protect
    against the risk of price movements — have a net worth of at
    least $10 million.

    Instead, participants will be subject to the same
    regulations as all traders in the swaps market, the CFTC said"

    probably not a good thing, basically no rules on the other stuff anyways


  161. JRW
    I also have 3 trend lines converging and pointing up, is that why you expect a move up?


  162. 12:00 PM On the hour: Dow -0.34%. 10-yr -0.5%. Euro -0.15% vs. dollar. Crude -2.52% to $89.50. Gold -1.56% to $1348.80. 

    01:00 PM On the hour: Dow -0.17%. 10-yr -0.6%. Euro -0.05% vs. dollar. Crude -2.25% to $89.74. Gold -1.4% to $1351.00.

    01:10 PM The Treasury sells $13B in 10-year TIPS at 1.17% (.pdf). Bid-to-cover ratio of 2.37; indirect bidders take 37.9%. Direct bidders take 3.2%. Treasurys dip again: 10-year yield +0.09 to 3.44%; 5-year +0.095 to 2.03%.

    02:00 PM On the hour: Dow -0.05%. 10-yr -0.84%. Euro -0.05% vs. dollar. Crude -2.12% to $89.86. Gold -1.67% to $1347.30. 

    3:00 PM On the hour: Dow +0.04%. 10-yr -0.79%. Euro flat vs. dollar. Crude -2.42% to $89.59. Gold -1.39% to $1351.20.

    The FTSE 100 -1.82% is the developed world’s worst performing market today as worries about a crackdown on growth in China sink commodity prices. With its heavy weighting of resource stocks, the FTSE is "just an option on global growth." (RIO) -3.43%. (BHP) -3.02%. (TUWOY.PK) -4.01%. (XSRAY.PK) -5.45%

    Up 90%, this market has run further and faster than any previous rally, outpacing in just 20 months every other rally’s 24-month record. But the resulting concern about a short-term correction doesn’t mean the long-term bull is dying. In terms of overall rallies, the present run is merely half the average length of rallies over the past century.

    Geithner and his Financial Stability Oversight team’s report on banking regulation is embarrassingly weak, Simon Johnson says. Its vague conclusion that “there are both costs and benefits to limiting bank size” and thus will not make recommendations on size makes clear that Geithner isn’t serious about reducing systemic risk and is intent on "allowing the big banks to prevail." 

    New technologies to extract natural gas from shale and coal beds leads the IEA to double its estimate of global gas reserves. "A few years ago the U.S. was ready to import gas, in 2009 it had become the world’s biggest gas producer," says a gas expert at the IEA. "This is phenomenal, unbelievable." 

    To Chesapeake Energy (CHK), the downward spiral in natural gas prices isn’t a threat. As the most active user of derivatives to hedge gas prices in his industry, the firm could still make money even if gas prices skidded to zero, CEO Aubrey McClendon tells CNBC. “It hurts our competitors, so once we get hedged, we kind of want lower gas prices." 

    Three lunchtime reads:
    1) High-quality, cash-rich stocks that could move on buybacks
    2) Can Geithner prevent a U.S.-China trade war?
    3) What’s moving interest rates?

     

    Shanghai 1990 and 2010:  

    Picture 17.png


  163. Phil / Ben  Every  time I decide to short based on fundamentals I have to shout out loud – "Ben and his i-bank accomplices have enough ammunition to keep this bs mkt in an elevated range, and he’s said this is his current priority mission!".  Short term, I think we have to wait for a major external event to happen (eg Irish default March 12th) rather than investor sentiment dragging this rigged mkt down against a massive Federal $ tide? 
    Medium term, Ben will have a difficult time propping the mkt when corp margins are being squeezed by commodity cost inflation which the (running out of liquidity) bottom 90% will not be able to fully absorb in higher prices (so will cut volumes purchased,espec. discretionary like clothing, vacations, new cars, home investment).  But, it may be Nov reporting of 3rd qtr results before this becomes evident, unless they provide earlier guidance?  Interesting short investment themes, but timing of entry very perplexing to me?


  164.  By comparison – here’s New Orleans 5 years ago.  We don’t need another picture because our Government has done NOTHING to fix it since:  


  165. more on that SEC punt
     

    "Under the first rule, issuers will need to file a three-year repurchase history with the SEC by February 14, 2012 and then updated quarterly.
    It applies only in cases where investors and issuers had a repurchase agreement included in the offering documents, and covers all asset-backed issuers, including municipal issuers. However, municipal issuers would get a three-year phase-in period to comply."
     


  166. Phil/Shanghai,
     
    Holly shit…….In 20 years they grew a city. 
     
    I’d like to see a 20 year spread on Cleveland.  It won’t look like that!!!


  167. CNBC get real, the builders can’t get close to existing house declines, commodities need to drop by 50%. FAS is selling off and my next project is to track support resistance and trends on them.


  168. Phil:
    Following on your question, TZA was meant as a hedge and insurance against a market dip. However, I would also like to be able to turn a profit (or at least recoup some of my loss from the prior call from which I rolled this one). What is the proper play when there is a loss on one option and it is rolled over to a new one which does not recoup the loss – should you keep rolling?

    By the way, in an effort to contribute something to the conversation, the IRS released the 7520 rate for February at 2.8% (currently 2.4%). Anyone who has been contemplating a GRAT or other trust which relies on the 7520 rate may want to consider this increase.


  169. Peter D    What strikes are you looking at for March?


  170.  the SEC is letting the banks and issuers, review themselves and commnet on the quality of their own assets
     
    banks are getting till next year
    municpals 3 years
     
    and it is still not real, because they will review themselves
     
    cannot make this stuff up


  171.  Bought Feb ABX calls 1.7542,  now 2.28, awesome call, Phil.


  172. Phil
    Didn’t you post the buildins are empty in China?


  173. Phil – yeah, those city comparisons over time are amazing. Dubai is a good one to look at as well. On the downside, the smog looks much worse in 2010!


  174. HCBK
    I’m really trying to start working on my executions, so please ignore if if this is too basic.  Just want to make sure I’m doing it right.
    Trade was:
    Sell 4xHCBK 12.50P for $2.05 (done at $2.05)
    But 400 HCBK stock at 11 (Limit order entered for $11, GTC)
    Sell 4xHCBK 10.00C for $2.00 (Limit order entered for $2.00, GTC)
     
    Since I can’t always sit in front of my screen and respond to alerts and/or watches, I’m trying to figure out a way to best get into these trades and good prices, and not miss the boat.  Any comments are appreciated.
    Original Comment:
    HCBK at $11.30 – 2012 $12.50 puts now selling for $2.05 and make a great entry as is.  When they bottom (maybe $11), you can buy into the stock with tight stops and wait to get at least $2 for the $10 calls (now $1.85) for a net better than 7/$8.50.


  175. shadow

    I have just seen them pull the trigger when they can knock off several resistance targets (trend or S/R lines) at once. But as the time came and went, they tried and failed at 14:55-58 so I got out at $71.40ish !!


  176. Shianghai / Phil – nice, very informative really – the same is true, maybe even more so, for Seoul – although a lot can’t be captured in a pic. National health care, reforestation, good transportation system (people over 65 ride everywhere free).


  177.  Wow, that was close on IWM, skimming right on that $1.05 line, now back to $1.10.  Stick not looking to strong here but we do have a promising 200 minute moving average running up to intercept at about 3:30 if we can hold on that long.. .  $78.10 seems to be a tough nut to crack at the moment. 

    Ag swaps/Mike – Are they kidding?  That would be a disaster.  Ags are the only things that aren’t driven up to ridiculous prices by speculation. 

    Ben/Tusca – Yes, we cannot fight the Fed.  That’s why XLF is my favorite long as that’s where the money goes first.  Short-term, I expect Europe and Municipal crises to weigh on the market and any little thing can send us down 5-10% but, after that, I expect the free money to hold us up unless something really terrible happens.  

    Oops, there goes IWM.  Pretty lame stick – are they really going to let us close red?


  178. JRW
    Good move you are playing things too tight for me. I see an open down if IWM closes under 77.44 the low on 1/7. What do you think?


  179. Phil / DF and RICK – I know you had great plays on these earlier but they are still relatively low compared to where they began 2010.  Any new spreads you like here?  thx.   


  180. The audio output chip for the iphone and ipad is made in the USA, that should cut the unemployment rate!


  181. p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 12.0px Helvetica}
    td.td1 {width: 1225.0px; padding: 0.0px 5.0px 0.0px 5.0px}

    Phil, what do you recommend?
    I have the 135 January calls for $12 and now they are at 20.  Do I roll to Feb 135 calls and sell weekly puts on IBM or DD at 145 and sell the monthly 145 puts?
     
     Thanks


  182. shadow / 77.44

    I agree , but that’s why I bought those puts!!

    Support now at IWM 77. 62 and 77.44; too close to the close for me though 8-)


  183. Phil—dead market tomorrow or should we expect a wild ride up or down? Thanks for the sage advice today (every day)!


  184.  sorry about the last post.
    Any trades for the GOOG earnings. Premiums seem quite high even $50 bucks away from the strike?


  185. CNBC touting LSI logic another looser depending on consumer spending on phones but where is the real profit not the parts and people don’t have any money.


  186. jabobeast / Tomorrow

    I’d say we stay in today’s range, unless, of course, there is an earnings surprise  !!

    JMO 8-)


  187. Phil
    Are there people in those buildings?! Nice job on your calls as of late. Still working on main job and have had to put things on hold for bit. Great exercise if you can do it. It really helps you to see that there is always is another day when trading in this market.


  188. stockbern,
    Your post made me laugh.  After posting my comments and taking a break, I was thinking that whoever ask me what strikes I have in mind, I’ll ask that person which strikes they think are suitable.  That way, we can discuss and work together.  So I’m actually smiling and ask you what strikes would you pick and why?


  189. TZA/LDM – If you just buy the calls, you WILL lose money MOST of the time.  The way we protect, say $50K of bullish positions is to SELL 10 Apr $14 puts for $1.45 ($1,450), which obligate you to buy $14,000 worth of TZA at $14 (1,000 shares).  Then we take the $1,450 we collected and we buy 10 Apr $14/19 bull call spread for $1.50, adding in $50 of cash.  Now, $14 is 10% down in TZA so you won’t get assigned unless your $50K of bullish positions are up at least 3%.  If your bullish positions are buy/writes, then anything over flat should make them 10% and they should have at least 10% of downside protection in that time-frame so what you are really doing with the TZA is protecting against a greater than 10% fall, which should send TZA up 30%, well past $20.  

    So anything up in the RUT pays you at least $5K on your longs and if you are up 10% and TZA is down 30% to $12.50, then you would have lost $2,500 on the hedge against $5K in gains on the long side.  At that point, you can roll the puts (the July $11 puts are $1.10 and the 2012 $9 puts are $1.25) so the puts will cost you nothing unless the RUT gains another 10%, at which point you will make more money on your next set of hedged longs.  

    When you roll your losing put – the 10% move up in your stocks becomes your buffer for the next round and you don’t really need a cover above the short puts and calls you sell again.  There is not, however, some magic way in which you win under all circumstances.  A small move up or down or flat and you should win on both sides but a big move in either direction and your hedge works against you.  This kind of hedge vastly improves your odds of making 20% consistently, year after year but it does not allow you to make money on both sides no matter what the market does.  Generally we have a 15-20% margin of safety and, since 95 out of 100 years the market moves 8% or less – it works most of the time.  

    Those DXD Feb $11s are back to .55 (yesterday’s entry) they made a dime earlier and make nice weekend protection. 

    Congrats ZZ!  

    China/Shadow – Not in Shanghai.  

    HCBK/Burrben – Yeah, not meant to be tricky!  Just don’t be dogmatic with levels.  Once you fill puts, then you should be looking to buy the stock.  It bounced off that low and is back to $11.40 so you need to buy it before it gets away and, once you have the stock, then you NEED to sell that call leg on any pullback but sometimes you can get lucky and get a good ride before you have to cover.  

    Seoul/Snow – Yep, Singapore too.  Lots of good examples and, sadly, none in America.  Pretty much what’s wrong with this  country in a nutshell.  


  190.  DF/Terra – Well they took off so nowhere near as attractive at $10 again.  RICK also way up from where we played it so I’d have to say not to them as well until we get through next week without a big drop.  

    IBM/Rehat – I’m not sure.  You own the calls?  Then I would cash out and be happy.  What is the actual position and basis of your contracts?  

    Tomorrow/Jabob – Could be anything tomorrow.  Options expiration day has been flat for about 6 months but you never know when we get the 2.5% drop and tomorrow is a good candidate.  Very much depends on GOOG too.  If they miss, all hell breaks loose!  

    GOOG/Rehat – I had a spread in yesterday’s post but it’s already up too far and I wouldn’t chase.  

    Good point DC – Patience is the hardest thing I have to teach people.  


  191. Here is the actual report from the Financial Stability Board, what a joke


  192.  Phil,  I have made some money on the latest run up in TBT and taken the profits.  I still have some short puts that are solidly iTM, but is there a play you would use for the next leg up, or wait to be sure the antics of the fed or some drama in europe doesn’t push the yields back down for a better entry.  Thanks


  193. The pricks programming the bots today really like breaking up orders to get you to chase.  Almost every order today was initially executed as a partial fill.  Very unusual.  Times must be tuff!



  194. Phil/ IBM,
    I meant to say I sold the JAN 135s short at $12 and they are up to $20.
    Should I roll to the FEB 135 calls and sell weekly 135 puts to recover
    or DD at $145 and sell the $145 puts
    Thanks


  195. WOW  i didn’t think they boys could pull it off but they did they made Phil’s levels on dow sp nasd


  196.  Wow, GOOG already out with a 10% beat!  That should be good for at least $650.  


  197. GOOG flying????


  198. matt / pricks — Yup, had the same experience. Bite and run, bite and run. Funny, sometimes had bots joining me on the bid/ask as well but when I got executions, they didn’t.


  199. Well, 7% on the day, but MUCH BETTER PLAYED than yesterday; and the two days have doubled my YTD return !!


  200. GooG backing off now? Oy Vey!


  201.  Oh no – Larry Paige becomes CEO – that will kill GOOG’s rally as no one trusts him to run things.  


  202. Larry Paige CEO? why? 


  203. GOOG beats and sells off!
    That and the HP news AAPL beats and sells off where is leadership now?


  204. Phil I love this just about as clear as you sometimes!!!!
    IBM/Rehat – I’m not sure.  You own the calls?  Then I would cash out and be happy.  What is the actual position and basis of your contracts?


  205.  No big sell-off on GOOG news. Slow melt-up in futures tonight?


  206.  ISRG out with great numbers! but no guidance.. that’s strange..


  207.  Peter-strangles- Looking at either Feb 1375/1100 or Mar 1400/1025. How about you? 


  208. ^rut off about 4% over two days with s&p only down little over1%


  209.  Proftis/Trad – Good man!  If we pop $40 then we can go aggressive upside but even though we broke $39 today, we’re still range-bound – just maybe the range moved up $1.  Best time to buy TBT will be after something bad happens in Europe and the Dollar rallies and drives rates down – then we can go long and strong again.  I don’t know about you but I still remember everyone capitulating on us at $30 over the summer.  I don’t want that to happen again.  

    Bots/Matt – The lower the volume the more CPU cycles they have to devote to specifically making your life miserable.  

    Bottoms up/Mike   – OK, that kicks ass!  I wonder if it’s environmentally sound.  Not clear on if the magnet stays in the base and, if so, what is the cost of the cups?  

    IBM/Rehat – Ah, that’s much better information.  I do think IBM is toppy at $155 but deserves $140 so a tight window.  I would just be happy to get my $8 back so I’d go for selling 2x the Feb $155s at $2.80 and, once you get rid of those, then try to make a few bucks on something else later.  The Feb $155s can be rolled to 1x the July $160s ($5) which is why I like that trade as you are pretty much spending $3 to roll the callers up $20 and then you make $5 of $8 back.  Keep in mind I like IBM too much to be very bearish on it.  

    Levels/Z4 – Isn’t it scary that they go right to the line like that?  

    7%/JRW – I told you to get up early! 8-)

    At the close: Dow -0.01% to 11824. S&P -0.12% to 1280. Nasdaq -0.77% to 2704.
    Treasurys: 30-year -1.11%. 10-yr -0.71%. 5-yr -0.44%.
    Commodities: Crude -2.64% to $89.39. Gold -0.13% to $1344.70.
    Currencies: Euro +0.05% vs. dollar. Yen -1.14%. Pound -0.57%

    Market recap: Stocks posted modest losses as worries over more tightening from China outweighed better-than-expected measures of U.S. jobs and housing. As China goes, so goes commodities, and commodity prices and materials stocks slumped broadly. Treasurys fell after weak demand for a sale of inflation-indexed debt. NYSE decliners led advancers nearly three to one.

    Google (GOOG): Q4 EPS of $8.75 beats by $0.66. Revenue of $6.4B (+29% Y/Y) beats by $315M. Shares +1.9% AH. 

    Capital One (COF): Q4 EPS of $1.52 beats by $0.18. Revenue of $3.7B (-16% Y/Y) misses by $179M. Shares -0.8% AH (PR)


  210. Room to run?

    Great recession chart.   


  211.  
     
     


  212. Here is how the beer cup works Phil


  213. Phil, you still around? Just checking :)
    Bloomberg reports:
     Alleged Mafiosi Arrested in Biggest One-Day Mob Bust
     Those arrested today include leaders and members of La Cosa Nostra families in New York, New Jersey and Rhode Island. 


  214.  


  215. pstas,
    Those SPX Feb 1375/1100 or Mar 1400/1025 are quite conservative.  Feb 1375 is down to $0.4 today, thus doesn’t give much downside protection.   I posted the 1140/1345 on Jan 10 for about $5.3 credit.  They are down to $4 today, even with rising VIX.  Since we are a little bit frustrated with the run up, I would go for more aggressive strikes of 1175-1190 for putters.  On the caller side, I’d be aggressive also with 1330 in anticipation of more weakness.  I also have plenty of margin for adjustment and margin is the key to our success with short strangles.


  216.  Thanks, Peter.
    I have been selling on the conservative side the past few months given the low VIX and not wanting to get caught in another fat finger sell-off. I sleep better this way along with maintaining a healthy surplus margin. 
    Just curious, what do you like for put verticals for Feb?


  217. Peter D   pstas   Thanks for the  response.  I’ve only been strangling SPX  since the fall and still in the learning curve.  I kinda felt like I was the guy in law class who was called on and hadn’t read the assignment, and then had to bluff his way through the breif. 


  218.  Beer/Mike – Very cool stuff.  They are really hitting all the right aspects, including the promotional.   That’s the kind of company I used to contact to offer to work with when I did consulting – really innovative stuff.  

    Mafia/Psats – Hmm, maybe a good night to get a table at Rao’s. 8)


  219. Shadowfax – someone on the radio (NPR) said only $6 worth of materials went into the iphone from China. The phone is assembled in China but most of it originates in the U.S.
    They went on to say that this is true in a lot of things and it causes our trade deficit to look worse than it really is.


  220. Hi Phil;
    In the last few days,the  10 year treasury went from  3.25 % to  3.45% hich has caused my pipeline and  other MLP"s to declinein my IRA account. What’s your opinion as to the change in the 10 year treasury for  the next  6 -12 months? thanks.


  221. I have a question: GOOG’s market cap is 200Bln.  AAPL’s market cap is 300Bln. 
     
    Then why is AAPL 20% of the QQQQ ETF and GOOG only 4%?


  222. Cramer on Wednesday night: "if you’re scared, if you’re worried, don’t be afraid to ring the register."


  223. From Barrons:
     
    http://online.barrons.com/article/SB50001424052970204126004576094243328821286.html
     Strong markets can brush away one-off bombs, but when enough are dropped things can become problematic. The number of severe markdowns in several sectors this week appears to me to be nearing the threshold. From semiconductor maker Cree (CREE) nose-diving Tuesday on a poor outlook to fertilizer stock Mosaic (MOS) in a two-day skid on divestiture news, the market’s reactions have been brutal.
    It isn’t the news that gets technical analysts worried. It’s the reaction to the news that is flashing a warning sign. And then it’s the parade of stocks that seem to overreact to the slightest disappointment. 
    I contend that the selling is not overblown but is the market’s way to tell us that investors had bid these stocks up too vigorously. Some call it "pricing for perfection" in that anything less than spectacular news cannot support their respective high prices.
    For now, the major indexes are still holding the bears at bay. Unless the bombs stop falling at their present rate, it might be time for the bulls to curb their enthusiasm.


  224. pstas,
    Good on you for having large cushion for better sleep!  My vertical was overrun, SPX 1110/1120.  I’m looking to buy March’s now, 1200/1190 or 1210/1200.


  225. This is whom we are trading against (see recent job posting below).  No wonder I need your help Phil!  I do want to learn C++ one of these days…have not heard of Python before.
    This leading US Investment Bank is recognised for their cutting edge approach to finance and their award-winning Quant teams are under-going massive expansion plans at their offices on a global level. This training scheme will be offered to between 5-8 different people, but all must have a strong educational background, with a genuine interest in finance and a flare for competition.
    Training offered is unique and product exposure is vast, which allows candidates to fast-track to senior managerial levels in no time. Candidates will start by joining the Commodities team, and will rotate around the different Quant desks across 2 years (FX, IR, CD/EM, EQ etc). After the 2 years training the successful candidates will receive, they will then have the choice of which quant team they would like to join.

    Responsibilities for the Front Office Quant Analyst role:
    -Develop models and implement them in software for pricing and risk managing commodity index and basket derivatives.
    -Partner with the trading desk on all related risk management and pricing issues.
    -Develop pricing and calibration tools.
    -Benchmark and compare results of various techniques including historical simulations
    -Explain model behavior and predictions to traders, identify major sources of risk in portfolios, provide guidance, and maintain smooth running of production analytics
    -Liaise with sales and other groups on models and tools

    Requirements for the Front Office Quant Analyst role:
    -PhD in Mathematics/Physics/Financial Engineering or other related topic is ESSENTIAL.
    -Must have stochastic volatility, vega, and stochastic skew and smile dynamics experience.
    -Coding experience, preferably Python and/or C++, with emphasis on numerical methods.
    -Excellence in probability theory, stochastic processes, partial differential equations, and numerical analysis.
    -Those with some previous experience in a quant analyst/model validation team will be at an advantage, but this is not essential.

     


  226. JORDAN - NAZ – depends when they join the index right? I would assume GOOG’s market cap has increased 4X versus the NAZ average, and 20X for AAPL? Is this close to how it works? (I have no idea)


  227.  Phil, 
    MBIA, what do you think for a short? The financials look appealing for it. Fundamentally, the potential of the s@*t to hit the fan with municipal debt should put some pressure? The financials not delivering recently just adds a little fuel to the fire?


  228. terrapin,
    Yeah, we have a lot of PhD and doctors on this board too.  So here a fun ad:
    - We, at PSW, the leading blogging site, recognized for our complex options trading strategies.  Our members need to have the capacity to learn dizzying arrays of strategies, including buy/write, iron condor, short strangles, calendar, diagonal, and back ratio.  Additional skills such as reading charts with 8MA, recognizing levels as well as resistance, differentiating between buying and selling options, between naked and covered, between puts, calls, putters, callers, and knowing that the ultra ETF’s decaying with time are ESSENTIAL.
     
    Bachelor degree is not required.  No need for quant analysis experience nor coding experience nor English.  Must have a cool alias as name and must not be color blind (it would be hard to pick up trades otherwise).  Must have ability to flip among various Tabs in the Web site and not comment on the wrong chat board.  Must put your common sense at home and do the opposite of some other member trades, as suggested by them.  Must have knowledge of VIX (and especially stay away from having longs VXX).  After 6 months of learning and blowing up an account or two, you are free to chose a lower risk strategy, be patient or lower your profit expectation.  Your path to be a senior investor is highly fraught with dangerous temptations, greed and over-leveraging.  Having enough margin and minimal greed is one of the ways to success.  Who said options aren’t fun!


  229. Nice, Peter. Change that to after 2 years…


  230. Phil, 
    I don’t know if you had come accross this, but its a pretty interesting tool from Google to analyze economic trends as reflected by their search data… (something akin to the shopping survey you commissioned us to do over the holidays         8-)   http://www.google.com/finance/domestic_trends


  231. Peter – very nice fits me to the tee.

    Phil – this should probably be on all your promotional material :)


  232.  Jordan — GOOG / AAPL weightings for index … good question.
     
    MBIA –  yes, a short.  But hard to borrow.  My strategy is to short on all news driven spikes.  Generally have been selling $13 and $14 calls.  now $14, & $15.  This month’s will expire worthless unless they get bought out tomorrow !  Ha !
     
    AIG … hee hee giggle giggle.
     
    GOOG …. would have flown if not for the Schmidt / Paige news bomb.
     
    ISRG … wow
     
    PCLN …. closed my 430 short call today for $1.  Had sold for $13.
    Now in the Feb $465 for $7.10, even thru earnings.
     
    Paul Volcker stepping down as Advisor to Obama.     Who is left ?   Turbo Timmy and Uncle Ben (the latter allegedly independent) ??   Oh yeah, and Barney Frank.


  233. Phil,
     
    1) I have 10 SDS Jun $25 short puts at $3 now $3.5. Should I roll or sit tight?


  234. Pharm,
     
      Would like to get your opinion on the following for 2011 and any suggestions on how to play them: KERX, AMAG, HGSI, SVNT, ARIA (leukemia drug). Thanks.


  235.  gap and go today?


  236. Phil/Zion, what do you think of a Buy/Write on Zion. Buying at 23.74, Selling  2012 22.50 puts for 2.85, Selling 25 calls for 2.65. OR, would you do a BCS? Didn’t you say a long time ago they were the canary in the coal mine? Chart looks great. Thanks