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Wary Wednesday – Groundhog Was Wrong but Fisher Sees Inflation

We are having yet another snow storm in New Jersey.

So much for trusting small rodents to forecast the weather but at least one of the rats at the Fed is finally seeing the shadow of inflation as Dallas Bank President, Richard Fisher said every single one of the 50 business executives he speaks with on a regular basis is looking to raise prices to consumers.  

"That concerns me," says one of our nation's top monetary strategists.  The regional bank chief said he personally surveys about 50 businesses, more than most of his colleagues at the Fed, and that the position on prices is “without exception, in every sector in every size, whether they’re public or private.”  

While I guess we should applaud Fisher for being the first Fed Governor to recognize inflation in our economy – I suppose I should also point out to the Fed that there is a preponderance of evidence that indicates, at this point, that the Earth is not flat – just to help them get caught up with the rest of us.  Still Fisher is somewhat of a prodigy among the slim pickings we have when selecting from Fed brains:

Barring some extraordinary circumstances I cannot foresee, I would vote against the QE3 or even a tapering of the current program. I don't think it's necessary, It's now up to the fiscal authorities to provide the right incentives for businesses to hire more American people, Our job is done. Now the pressure and the job is in the hands of our elected representatives who have the only power to tax and to spend.

TAX and spend?!?  Oh no he didn't!  That's Liberal Commie talk if ever I heard it and, if the Fed is going to base their own policy on the assumption that this Government will either tax OR spend – then we are already doomed because the Keynesians left the building last November and are unlikely to be invited back in until we have our own nuclear melt-down to throw money at (or if the banks need money, of course).  

Speaking of melt-downs, the iodine in the Tokyo water supply has been deemed "unsafe for infants."   While not certain, officials said they suspect that the airborne iodine had drifted over rivers that feed Tokyo's water system and had come down in recent rainfall.  We anticipated this last week and went long on mega-water bottler KO, although some of the smaller importers should do very well for the next quarter too! 

The U.S. became the first, but certainly not the last country to ban food from Japan, blocking the import of milk, vegetables, and fruit from regions nearest the Fukushima plant.   South Korea may be next to ban Japanese food after the world's worst atomic crisis since Chernobyl in 1986. France this week asked the European Commission to look into harmonizing controls on radioactivity in imports from Japan. Food made up just 0.6 percent of Japan's total exports last year but this just adds to the now $250Bn damages tab from this little nuclear "mishap."  

Don't worry about TEPCO though, they will be fine as Japan’s taxpayer, not the nuclear industry, will cover most of the cleanup cost from the worst accident since Chernobyl.  Tokyo Electric Power Co. is, at most, required to cover third-party damages of 120 billion yen ($2.1 billion) under Japanese law.  

Should the government declare the magnitude-9 earthquake and tsunami that flooded its reactors an “exceptional” act of God (as opposed to God's usual stuff, I suppose), the utility may be off the hook in paying compensation that may be demanded by injured workers, farmers and shareholders.  Isn't that special?  

The Japanese government may pay as much as 1 trillion yen to compensate businesses and individuals for damages from the nuclear accident, or eight times the maximum cost for Tokyo Electric, the Tokyo Shimbun reported on March 12, without saying where it got the information.

The Nikkei sold off 1.65% this morning on a very nice call by ZZ in yesterday's chat to short Japan as they were not adequately accounting for the long-term damages.  Perhaps neither are we as the U.S. auto industry likely will face sporadic production shutdowns for several months because of shortages of microchips and other parts that had already been scarce prior to Japan's earthquake and tsunami, analysts say. The shutdowns and shortages may not affect overall production volumes, but could hurt profit margins for the automakers and suppliers. 

Also disturbing: Of 111 housing experts and economists surveyed by Robert Shiller, nearly half foresee a double-dip in home prices this year, "and not a single panelist expects national home prices to recover to the pre-bubble trend in the coming five years." The report comes as Fannie Mae (FNMA.OB) says rising gas prices will directly dampen any housing recovery.  Don't buy the hype, Gary Shiller says – "stocks are anything but safe." The stock market is rising because Fed policy is making it rise, but the economic recovery is much less than meets the eye, Shiller says, expecting another 20% drop in housing.  Needless to say, money is pouring back into bonds.


Meanwhile, Performing its own stress test, S&P finds EU banks would need to raise $355B and governments would have to increase borrowing by 20% in a "severe economic downturn." Yet, somehow, the S&P does not anticipate the region having difficulty pulling through such a crisis.  The BOE today voted to keep rates steady and that finally boosted the Dollar but we're still not back over 76 so don't get excited.  Meanwhile, Japan will need to borrow about $550Bn this year to cover quake costs along with their normal deficit spending yet somehow TBT is back at $36 – as if the World is somehow awash in FREE MONEY (see last night's Member Chat for detailed conversations on this as well as hedging strategies).  

Poor Portugal is not on the right line for the Free Money as their borrowing rates test the 10% mark (and they are about to overthrow their own Government this week) but it's Ireland in the winners circle as the first EU nation to get whacked for 10% on their 10-year notes since the Euro was founded in 1999.   

So plenty of things to worry about on a Wednesday – we went into the close still bearish, as there is probably a whole centipede's worth of shoes left to drop!  

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  1. Interesting phenomenon this morning. /dx rising and gold, copper, oil too.  /dx at 76 now.

  2. POMO Update
    Operation Date / Expected Size
    March 23 / $6.5 – $8.5 billion
    March 24 / $5.5 – $7.5 billion
    March 25 / $4 – $6 billion
    March 28 / $5.5 – $7.5 billion
    March 29 / $1 – $2 billion
    March 30 / $5.5 – $7.5 billion
    March 31 / $1.5 – $2.5 billion
    April 4  / $6.5 – $8.5 billion
    April 5  / $6.5 – $8.5 billion
    April 6  / $1.5 – $2.5 billion
    April 7  / $5.5 – $7.5 billion
    April 11 / $6.5 – $8.5 billion

  3. Jrw- are you short/still planning on shorting the open?

  4. Been quite busy this week with other projects, but here are the results from the screen I have been keeping over the last 7 weeks.
    We went down with the market last week, but overall, still up over 6% over the last 7 weeks even though the S&P500 is now down over the same period.
    I’ll have a complete update next week when things calm down a bit here! 

  5. Phil, what’s up with copper today? Futures are flat to down, dollar is up, yet copper is up 11 cents? Do you like shorting it here?

  6. Judy- Didn’t see your comment :)

  7. If anyone didn’t see it last night, here’s another good hedging post from Phil last night. 
    Phil / Rolling — When do you look to adjust your hedges?  I recall you saying you like short term disaster hedges you genearlly like to be 45-90 days? Long term hedging looks like 1-2 years?

  8. Corporate America would never put the citizens of this country in danger to make a buck, or would they?

  9. Actually, I guess that post was from this morning but on yesterday’s thread.

  10. PP for today….

  11. Rosie says,

    Meanwhile, as we pointed out yesterday, real average weekly earnings in the U.S.A. have contracted in five of the past six months and Bloomberg quotes a director of investment strategy as saying “we have a growth  economy that seems like it is moving faster than it was six months ago”. The article is all about the ISM — an unweighted sentiment index on manufacturing. Incredible as it is, sentiment continues to run at an extremely high level. It is interesting to see how the markets are responding to the news that U.K. inflation just hit a two-year high of 4.4% in February (was 4% in January). Three of the nine Bank of England policymakers are pushing for higher rates. It is interesting because this is very likely what U.S. headline inflation is going to look like this summer as QE2 expires. As an aside, if the U.K. is debating higher rates, how can the U.S.A. with similar inflation by then possibly be contemplating another round of QE? Well, there are many market pundits and players who believe nothing will get in Bernanke’s way. If that’s the case, gold is going to remain a very good place to be. Bullion closed 2010 at $1,420 an ounce and is now $1,429 — early days but on track for an 11th winning year in a row. What other asset class has achieved that feat?

    And, a core exposure to Canadian dollar assets is a good place as well — the loonie is coming off its best session in seven weeks. It has emerged as a safe-haven currency like the Swiss franc … but with a yield and exposure to raw materials!


    The answer(s) is hardly complicated since we have a template for this in 2010. It is a very simple guidepost.
    Last year, from April 23 through to August 27, the Fed allowed its balanced sheet to shrink from $1.207 trillion to $1.057 trillion for a 12% contraction as QE1 drew to a close. A sizeable equity correction coupled with double-dip fears were nowhere to be found. Now, over that interval the …
    • S&P 500 sagged from 1,217 to 1,064.
    • S&P 600 small caps fell from 394 to 330.
    • Best performing equity sectors were telecom services, utilities, consumer staples, and health care. In other words, the defensives. The worst performers were financial, tech, energy, and consumer discretionary.
    • Baa spreads widened +56bps from 237bps to 296bps.
    • CRB futures dropped from 279 to 267, which is a 4%-plus decline.
    • Oil went from $84.30 a barrel to $75.20.

    • The VIX index jumped from 16.6 to 24.5.
    • The trade-weighted dollar index (major currencies) firmed to 76.5 from 75.5.
    • Gold was the commodity that bucked the trend as it acted as a refuge at a time of intensifying economic and financial uncertainty – to $1,235 an ounce from $1,140 and even with a more stable-to-strong U.S. dollar too.
    • The yield on the 10-year U.S. Treasury note plunged to 2.66% from 3.84%.

  12.  Pharmboy – what do you guys use the chart for that you post everyday?

  13. DIA on that chart is right on S1

  14. kmaus – it is the pivot points for various EFTs and futures.  S = support, R = resistance. Not sure if you have TOS, but for day traders, these are key areas where either gains/losses are taken (depending upon the side of the trade you are on).  In TOS, the piviots are one of the studies you can use in the charts.  I use the SPY one for my covers on my long puts, along with the 5d MA.

  15. Phil – when you post your trade for the morning, remember us non-weekly folks.
    Is etrade the only group not offering weeklies, yet?

  16. Phil / Tactics   Mkts seem to want down, but big pomo through Monday and I doubt Ben wants a sell off while Japan smoulders and the PIIGS are teetering?  Still too early to pull an aggressive short trigger for the big fall?

  17. Good Morning all

  18. Good morning!  

    Same old levels as yesterday so not much to report there.  We’re still watching those Major Breakout levels to see if they can be re-taken across the board and the Nas is still way off at 2,683 and the NYSE has also gone red with the Dow barely holding on yesterday and likely a bit below at the open.  

    There was, however, a massive spike up in the futures that didn’t stick – well over 50 Dow points so I’d say they are going to try something and that may have been a little computer test.  As JJFlash notes – we’re finishing the week off with a boat-load of POMO – $22Bn in 3 days and next week is light so you would think it’s now or never if they intend to finish Q1 off with a bang.

    Let’s not be too greedy on the DIA puts (the quarterlies, not the $25KPs, which I will update later).  We’ll want to see what sticks this morning.   Europe is flat and has been wild up and down and oil is $105 with a critical inventory at 10:30 which I will not be around for as it’s Diversity Day at my daughter’s school but I should be back by about 11.  

    Let’s watch 12,000 on the Dow, of course, 8,200 on the NYSE and 800 on the RUT as critical breakdowns where we can get a bit more bearish but more likely they hold and we can find some upside plays a bit later.  

    There was a bus bomb in Israel and that’s never good.  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    7:00 Fed’s Fisher: ‘Economic Challenges and Opportunities’
    10:00 New Home Sales
    10:30 EIA Petroleum Inventories
    12:00 Bernanke: ‘Community Banking in a Period of Recovery and Change

    At the open: Dow -0.13% to 12004. S&P -0.19% to 1291. Nasdaq -0.24% to 2677.
    Treasurys: 30-year +0.54%. 10-yr +0.26%. 5-yr +0.15%.
    Commodities: Crude +0.36% to $105.35. Gold +0.29% to $1431.70.
    Currencies: Euro -0.59% vs. dollar. Yen -0.11%. Pound -0.84%.

    Market Preview: Futures show some weakness ahead of housing data due out later this morning. Benchmark S&P -0.2%. Earlier: Colgate and Unilever are swapping some assets, BofA’s dividend hike got rejectedby the Fed, and General Mills met earnings expectations. Oil +0.4% to $105.42. 

     MBA Mortgage Applications: +2.7% vs. -0.7% last week. Thirty-year fixed mortgage rate increased slightly to 4.80% from 4.79%.

    PIMCO sees 3 key factors as adding to global inflationary risks: the degradation of sovereign balance sheets, emerging markets becoming exporters of inflation, and aging populations saving less and consuming more. With accommodative central banks, it’s a recipe for a secular move higher in inflation. 

    10 Black Swans for 2011

  19. ADBE – TM&R on shorts? Leave longs alone?

  20.  When POMO begins to only hold us flat and not cause a big rally, is it time to get nervous…ie bearish?  
    Re:  Tokyo Real Estate….well I think you could probably get a good deal, but you might have to pay a premium to be able to see the sky glowing to the North….so I don’t know how well you’d make out on that deal…..

  21. Pharm – u mean u cover the long short puts or cover the puts you bought?

  22. @Phil
    Too late for pondering right now, but for later, is it possible that we have to rethink Inflation, deflation, and stagflation in light of the paradigm-changing dynamics that have been growing more complex by the day?
    Isn’t the essential problem in an 85% service economy, that the prices for our services are completely wrong, distorted, mystifying, subjective,  muddled, and now—some of them—going thru ‘price discovery’ ?
    Aside from the political aspects, the comparison to other nations’ abysmally low labor rates, and non-economic factors, I believe that we will have to massively re-jigger the prices we pay for our Services for inflation data to have any meaning. 
    The starting point for examinaton and analysis of adjustments on a major scale would be: Who gets the most pay for rendering the least service or even, as the financial debacle more than illustrates, perpetrates global destructive, catastrophic disservice? 
    I don’t think it’s agruable that CEOs in average companies, government employees, union employees,  investment bankers, estate and other attorneys, any others engaged in fixing prices for, say, "title searches"n are completely unrelated to value received—-we here pay you a price that either has a value equal to or hopefully exceeds for us the price of our subsrciption or we stop doing so if it does not. This is pure market driven pricing.  Very few of the ones mentioned above are subject to that kind of market-driven pricing, but instead are just the opposite, manipulated in the extreme. 
    Inflation in pricing of products while somewhat more objectively figured, they are contaminated by, say, the money and all perks paid to executives, managers, and other overhead costs that constitute a huge part of the price of any widget. 
    ..for later… 

  23. Holy cow, XLF getting kicked to the curb!  

    Dollar over 76 – interesting if it holds.  Look at the intense damage to the market any bounce in the dollar has – even though it’s not knocking down commodities yet (because they don’t believe it will last).  

    Nice job StJ!  

    Copper/Jrom – Well you have the legitimate rebuilding needs of Japan now but that still makes them shortable at $4.50 if they get there.  

    No volume to this sell-off.  Just 15M on the Dow at 9:45 so can be easily reversed – BE CAREFUL!!!

    Adjust/Rain – It’s not a time, it’s when we get a big enough market move to make it worthwhile.  Within 10% up or down I generally could care less.  Once we go over 10% off target, then it depends how much time and what the ongoing expectations are.  I wish I could say "it’s always this" or "it’s always that" but there are so many factors that go into the decision at any given time. 

  24. I cover the long puts I bought.  Weeklies have been a god send for those covers.

  25. 50% and you’d better be done on the DIA puts!  

    $25KP moves:: 

    • Buying back all 40 FAS March $29 calls for .35.
    • Selling 16 DIA 3/31 $120 puts for $1.25.

  26.  CHICAGO, IL — (MARKET WIRE) — 03/22/11 — Invesco PowerShares Capital Management LLC, a leading global provider of exchange-traded funds (ETFs), announced today that the ticker symbol for PowerShares QQQ will be changed from "QQQQ" to "QQQ," effective March 23, 2011 [today]. The PowerShares QQQ will continue to trade on the NASDAQ exchange and all other attributes of the fund remain unchanged.

  27. Phil, DD on the USO $41 puts in the $25K or leave as is for now?

  28. Phil,
    Where you setting your stop on the FAS calls?

  29. This could be a warning shot on why you have to be careful putting your money in ETFs.
    Nothing like a crisis to expose the weaknesses of the system! 

  30. Honeywell/RJ – Scary, isn’t it?  

    Non-Weekly/Morx – I will try but just try to find something with a similar delta that you can trade.  Like on the 3/31 DIA $120 puts, the delta is .50 so you could sell the Apr $120 puts at $1.95, also .50 for the same effect.  Of course you know I like the 3/31s better because the premium will decay faster and give us a chance to double dip on the Aprils.  

    Aggressive short/Tusca – Way too early.  There is so much money being thrown around that I really don’t expect a big dive.  We could get one anyway but the long-term story is inflation and that gives us S&P 1.450, 1,700, 2,000 etc as time grinds on.  

    WOW – New home sales down 16.9% – how’s that for a double dip?  If the Dow fails 12,000, we have to ditch the short DIA puts in the $25KP already – SORRY! 

    I have to run, back about 11.  

  31. Phil,
    I have a Citi $4/$5 BCS, currently down about $0.30, ~33% covered by an April FAZ BCS.  Should I: a) Do nothing; b) Bail; c) Roll and initiate a new cover?  Thanks!

  32. Phil :  On the 25kp portfolio I had made the alternate trade u had suggested in FAS.  I now have 40 long Apr 29 Call and 40 shrt FAS weekly 30 call.  I am leaning towards letting the weekly 30 expire rather than buying back.  However, should I do anything with the long Apr 29 call. Your portfolio has 80 Apr 32 calls instead.

  33. Phil Nice call on ADBE to sell Apr 34 c Thks

  34. Good call on the DIA puts. Just sold 1/2 on the immediate drop. ‘You can’t go broke taking a profit!’ Now lets see if we can’t oil to drop and make for a good morning (sans the NYC snow).

  35. Phil, I think you will agree 100% with Milken and what he is saying here.

  36. PHIL
    Trying to learn here.  Why did u close the shorts FAS on the 25kp. werent those covers for the long calls. I know that the move was profitable… are you expecting Fas to pick up and if so would you be selling the same calls again for more premium?.  Whenever you have the time thank you

  37. Does anyone have the KO play from last week that Phil referred to this morning? I went back through the week’s posts and didn’t see it. 

  38. Phil – yesterday you mentioned a couple of adjustments to the $25K but I don’t know if they were "official" recommendations – selling 4 ADBE $34 for .90 (perhaps you meant to be $32 – they were closer to .90?)  as well as rolling the UUP’s from April to May $21 – are those official recommendations?  I don’t see them in Pharm’s spreadsheet…thanks!

  39. kevin63v:
    As an investable premise – we’re back to KO again as they bottle water (Dasani, Glaceau) and have the brand trust to be a go-to alternative in a relatively wealthy country like Japan.  They took a nice dip below the 50 dma but the 200 dma is rising fast and, of course, it’s Coke – so we like them long-term anyway with the 2.9% dividend.  You can buy KO for $62.70 and sell the 2013 $60 puts and calls for $14 for net $48.70/54.35, which is pretty good.  You can also be more aggressive and buy the 2013 $55 calls for $10 and sell the $55 puts for $4.50 and the May $62.50 calls for $2, which is net $3.50 on the $7.50 spread.  Obviously, the plan is to roll the caller a bit higher each quarter but even if KO gets away to the upside, it’s still a nice ROI with just $9 of cash and margin used on the trade and your worst case is owning KO at net $58.50."

  40. kevin63v
    It’s at the bottom of all that other stuff! (As an investable premise………) I didn’t expect that to happen. Sorry.

  41. PHIL
    ADBE 25kp, Should we cash the 4 Apr34 calls sold yesterday for 0.99  they are now at $0.16

  42. Pharm – where you at on CLDX? I bought a few of the may 5 calls and thy’re bout to go to zero. Did you roll yours? You still hopeful? should i buy more?
    maybe you saw this: fyi

  43. cnarbais
    Phil is out till 11:00 but I will ask you to consider will it go to $0? Rule: take the money and run!

  44. phil – thoughts on USO given the rises/25K

  45.  cnarbis – whenever a short call drops, the risk-reward for keeping it changes. So, at some point holding out to get your last 25 cents is not worth the risk of FAS bouncing against you. Specially when you have a drop in XLF like you did this morning. So, phil buys back the covers at this point, and then re-sells covers on some POMO induced spike (potentially). Sometimes, Opt and others will re-buy out of the money covered callers, and re-sell closer ITM covered callers to protect longer positions because they have a higher delta and offer more protection if the initial position is to drop. hope this helps a little, and i’m sure phil will add more when he gets back. 

  46. hanna
    Thank you for the explanation…  Following that line of thinking shouldnt we Buy back the 4 ADBE 34 calls now at $ 0.15  sold yesterday for $ 0.99.  Thank again

  47. cnarbais
    I know whay Phil will add, holding is pure GREED! get out of both!

  48. jerconn
    ADBE Apr 34 c was yesterday 1.04 today .15 so a fat profit no good trading today.
    I am greedy just keep them until experation wasting money on broker

  49. KO/Kevin – there’s a bit about it in the wiki; did you see that?

  50.  Kevin
    I recall a mention of selling the KO 2013 $65 puts last week (but that may have been an example of how pay for a diaster hedge) and then yesterday Phil mentioned KO again in that same context:

    20 KO 2013 $50 puts can be sold for $2.70 to raise $5,400 against $10K in margin… 

  51. Shadowfax
    Thank you .  I did already

  52. Kevin/ KO  I have been selling Aug 62.5p 2.40 good value if you like KO

  53. Guys,
    When Phil suggested Selling 16 DIA 3/31 $120 puts for $1.25 was it quaterlies?

  54. ANYONE
    I understand that Delta is the more important consideration but what about Gamma.  Do you guys Use ( Delta + Gamma) to make the comparisons or it is irrelevant.  thank you

  55.  vic55/DIA cover:
    Yes, quarterlies. But he took off the cover when the DOW failed 12,000.

  56. Interesting re why the income/wealth gap in the US doesn’t play out politically as you’d expect.

  57. TBT is shooting up, all indicators say we bottomed. Of course I may be wrong

  58.  cnarbis/Gamma:
    Phil doesn’t focus on gamma much. IMO, gamma is relevant if you sell strangles. For instance, a front-month short strangle on an individual stock will have a high absolute value of gamma. That just sounds like a bunch of theoretical mumbo-jumbo. But in practical terms, it means the position moves against you quickly if there’s a major shift in the market. That’s because the delta of the position can change dramatically.

  59. K0/Yodi, I like that trade, made a bid for 2.40, make 3 1/2%/mo or get KO for 60.10 – thanks for the idea.

  60.  I’ve been an investing hermit for a couple of months, but keeping my eye on the inflation scorecard. The big question for TBT is this Japanese style stagflation or does the US economy come roaring back, even with "new normal" high unemployment. Right now TBT is a short term buy at best, but even then, POMO continues through June and fighting the fed has been a losing proposition (BIG TIME losing proposition).
    Also, UUP — is it time to buy the dollar?? What an ugly chart, for the greenback. Bernanke = pathetic.

  61. OK, I’m back!  That was hardly a dip at all….

    So game on again with the 16 short DIA puts only now we feel better about the floor so we can sell the 12/31 $120.75 puts for $1.60.  

  62. CLDX/morx – well, it was a net credit for the spread, so I am just holding for now.  We have a month and any data that is released should be a positive and allow us to exit stage left.  I posted last night about CERS….if you are in it, or sold 1/2 a few months ago, then now is a good time to DD or jump in at this price. 1/4 entry please.

  63. thanks chaps

  64. I’m making the call. Housing is done.
    It’s time to buy a house

  65. Phil,
    Are the DIA 120 puts on the 25K part of a mattress or naked? Right at the 12,000 line so are we selling them or not? 

  66. KERX is getting some love (we played them last year for a nice gain), and the CEO also bought some shares.  They are in a bull flag.  Buy shares, stop at $4.25 or ride until $5.

  67. BDC – I am looking at rentals in Kansas….next to my ‘shelter’ and our amber waves of grain!

  68. ADBE/$25KP, Morx – May as well buy back the 4 April $34 calls at .32.  Makes us more flexible on the longs.

  69. PHIL
    I think you meant 3/31 not 12/31 DIA 120.75 Puts

  70. here come the MoMos again

  71. Phil,
    I am missing something 12/31 DIA $120.75 puts? 12/31?

  72. ADBE – i bought them back and dbld dn since i had entered much fewer than you.

  73. vic55
    I’d guess he means 3/31 DIA $120.75 puts

  74. Pharm – just paged through yesterday and didn’t see CERS. do you know the time?

  75. Nerves/Hoss – You have to take the big picture into account as well.  Nuclear disaster in Japan, war in the Middle East, $105 oil, only 250,000 new homes purchased in the entire US all year (that’s just 100 homes per state per week!) – these are catastrophic numbers AND WE STILL DON’T BREAK OUR LEVELS!  You have to respect that…

    I heard Sarah Palin can now use Japan as a porch light…

    Good point Flips.  I was once involved (peripherally) in the Title Insurance Scam and I can write a book on what complete BS that business is.  Just another "service" where the rates are legislated in what is, on the whole, a gigantic make-work program for attorneys.  But, what’s the alternative?  Something you yourself would object to – Government processing of title.  It would save homeowners many tens of Billions every year, bring some of that revenue to the state/county and speed up the process of real estate transfer but there is no chance of reforming this pork in a Million years because it doesn’t cost the Government a thing to line the pockets of lawyers and Banksters – that money is picked right from the consumers’ pockets.  

    QQQ/Jvest – Son of a bitch!  It took me two years to get used to writing 4 Qs and now they are going back to 3???  What kind of arbitrary BS is that? 

    Growth/StJ – That does look pretty good

    USO/$25KP, Ult – No DD, we did that yesterday, right?  Just have to watch and wait.   Big draw in gasoline but offset but builds in crude and distillates:

    EIA Petroleum Inventories: Crude +2.13M vs. consensus of +1.7M. Gasoline -5.32M vs. consensus of -2M. Distillates +0.01M vs. consensus of -1.4M. Futures +0.5% to $105.47. 

    FAS/Exec – No stop – we wait for FAS to run up, sell more weeklies over and over and over.  Or did you mean the weeklies, in which case – good call because that’s exactly what you do when you get a good drop.  

    ETFs/StJ – Good point, which is why we try to stick with the liquid ones.  

  76.   Phil, 
    I never got a fill on the FMCN long calls nor the short ADBE short calls… What to do at this point?

  77. CERS – well, that’s interesting….not sure where any of my posts went from late last night!  Well, it is up above, and here is the link….

  78. Phil – with the pending release of the banks by the Fed in the next day or so…..whadda think about getting more aggressive covers with FAS.  I know that we just bought back the 29 weeklies b’c of a market run up on POMO…but I am feeling a squeeze here with Q end and any sneeze may send this market into a frenzy.

  79. That should say data release by the Feds on the banks…but U get what I mean…

  80. Good morning, nothing new.


    IWM  79.82, 80.34, 80.68, 81.04, 81.38, 81.78, 81.89 and 82.53  (and $7.5 Bil of POMO)

    I have mixed feelings about the current level on SPX particularly. I think that the low is probably in, but there’s no doubt that if this move up is going to fail, this is the likely place for it to fail. SPX has been trading slightly below the 20 and 50 SMAs this week, and they have just crossed bearishly, with the SPX daily 50 SMA at 1303.75 and the 20 SMA at 1302.95. The key target short term is for SPX to recapture those levels and close above them.

    Good hunting !!

  81. snow/jbaker,
      Thanks for the posts regarding KO!

  82. Capt.

    I did short the open, but am now in TNA waiting to see if IWM 80.68 fails or if we go on to 81.04


    Bearish bets made impossible, compliments of UBS. Either that, or UBS’ recently upgraded (with i7 chips of course) computers just cant handle the basis calculations. Either way, is something very fried with ETFs going on behind the scenes?

    IMPORTANT NOTICE: Inverse, Leveraged and Inverse-Leveraged Exchange Traded Funds are no longer available for new or additional purchases at UBS

    Effective July 27, 2009, UBS is suspending the offering of Inverse, Leveraged and Inverse-Leveraged Exchange Traded Funds (ETFs). You will no longer be able to make new or additional purchases and will only be able to liquidate current positions through UBS at this time. Any attempt to execute a trade of such ETFs will be rejected.

    Please contact your Financial Advisor with questions.

    Hopefully iShares and Direxion have some good class action defense lawyers.

  83. JRW.. was waiting for you to chime in.  I’m not buying this reversal quite yet.  Still looking for the other shoe to drop.  But they have this thing on such utter and complete lockdown that they could just go in circles if they wanted to.  Very hard to discern what is BS and what is REALLY BS.

  84.  Phil -
    My usual tza question – been doing well trading in and out with covered calls.
    This am wrote the april 44 calls for $2 – already up .30 – take my 15% off the table now – or assume we are going to move sideways and its a good $2 cover.
    Done this a couple of times now – wrote on Friday – bought back on Monday – should have waited a day – but still picked up a $1 per contract on the 43s.
    Maybe wait for 2 pm stick if it comes. Sideway market is great for this.

  85. BTW, I had a meeting this am and since I was holding FAS long I set a stop.  28.14.  Of course it executed.  At 28.16.   Would someone please show me where on the chart we hit 28.14?  I called in and they said since it was a stop to sell, they go off the bid for a trigger.  So, even though there was never an execution at 28.14, the bid hit it and so the order was placed.  Just unbelievable what they are able to get away with using high powered puters these days. 

  86.  NFLX starting to look attractive for writing weekly calls

  87. Impressive stick!

  88. C/Wassel – Not sure when the split is but it should work to your advantage.  Don’t forget C is at $4.40 so your spread is worth .40, no matter what the net looks like at the moment.  Eventually your caller will have no premium and you will have $0 to $1 depending on where C finishes.  I’d be more likely to take the money and run on FAZ as I don’t see XLF failing $16 and we just got a nice test this morning to prove it.  

    FAS/Etrad – Well I hope you took out the callers at the same time as we did!  You can ride it out but they are just .07 and FAS is at $28.50 so they will likely expire worthless but you have no flexibility if FAS does take off.  Even at .35, I’d rather sell 1/3 the weekly $29s than a full cover on the $30s because you can always do a 2x (or 3x) roll.

    ADBE/Yodi – Was someone else’s idea yesterday.  That’s the great thing about Chat – I can’t watch everything and people make good observations that lead to good trade ideas.  

    Thanks Manimal.  You have to be quick in this market, that’s for sure!  

    Milken/Jabob – Video is gone.  

    FAS/Cnar – Because they were killing us at $1.10 yesterday and you have no way of knowing they won’t be back to $1.10 tomorrow or even this afternoon for that matter.  As I just mentioned to Etrad, I’d rather sell 1/3 of a lower cover than 1/2 of a higher one so if we really think $16 won’t hold in XLF, then we can sell the $28 calls but, as I have said many, many times, I don’t think XLF is going to stay down (like TBT, now back to $36.75) and again and again and again I say, when you make 50% in a day you need to have a very good reason NOT to take it off the table and $1.10 – 50% is .55, which was our break-even so .35 was a gift and, if you don’t know when you are getting a gift – then you will never be a good day trader.  Tomorrow there will be calls to sell for the next week, which will give us another .50 at least so what is the risk in taking .35 now?  That they may go to .20?  I’ll take that risk over risking them going back to $1.10 again.  

    KO/Kevin – I don’t remember the buy/write then but didn’t we just talk about shorting the 2013 $50 puts at $2.70 yesterday?  At the moment I’d go artificial, selling the 2013 $60 puts for $5.90 and buying the $50/60 bull call spread for $7 for net $1.10 on the $10 spread that’s 130% in the money with a b/e around $55.65 and about $15 in net margin. 

    And what DC said!  

    Adjustments/Jercon – No the ADBE $34 calls were .90 yesterday, high of $1.10.  It isn’t the kind of thing you want to chase the day AFTER earnings.  Yes, they were "official" – if I say $25KP and put a number of shares – I would only be doing that because it’s an adjustment I want to make.  I think Pharm is as backed up as I am with adjustments as it’s very difficult to keep up when things are busy and the markets are crazy.   This is why I hate keeping portfolios – they become a major chore and then that just leads to more and more questions back and forth when I’d really rather be watching the markets and finding things to trade.  The idea of this portfolio is to teach people the thought process I go through making adjustments and to illustrate various trading techniques – it is a total nightmare when people start trying to follow it trade for trade and begin complaining that we’re 5 cents off on an entry or exit or taking polls of who got fills etc – all things that have nothing at all to do with what we’re trying to accomplish.  If I do this for a year and all people learn from it is how to slavishly follow every move we make – then the project is a total failure!  

    ADBE/Cnar – You shouldn’t have to ask me that.  How many days are left?  How much can you make? How much can you lose?  If ADBE goes back up and you want to cash your longs – do you want to be stuck dealing with the short puts?  Did we make more than 50% with more than 2 weeks to expiration?  Did we make more than 85% with more than one week before expiration?  

    And what Shadow said!  

    And what Hannah said!  

    USO/JJ – As above – not worth chasing at the moment.  Hopefully they get real soon.  

    Dollar holding 76 – Woo hoo!  

    Gamma/Cnar – What’s that?  Too many things to look at.  I don’t want to say ignore the Greeks because I used to fixate on them to the point where I now know them without looking at a table so I can’t say I don’t use them but they are a waste of time compared to picking a position that’s going to win.  KNOW your stocks, KNOW their ranges, KNOW your supports and resistance, KNOW what news is affecting it and then your choice of positions, your entries and you exits will become obvious.  

    Volume on Dow just hitting 60M at 12:15 – people aren’t even trying and keep in mind we haven’t had a stick since Monday the 14th, so going on day 10 without.  

    Income perception/Pak – Yeah, I see those figures again and again.  It’s what I keep saying about the top 10% being completely oblivious to reality but the bottom 90% aren’t too much more realistic.  One problem is that people in the bottom 98% really cannot even conceive of the wealth of the top 0.01% – it’s not something your mind is trained to comprehend.  Bill Gates makes $4Bn PER YEAR.  While people may think they understand that number, it’s $11M per day – more money than 99.99% of the people in this country earn in an entire year and he makes that on Saturdays, Sundays and holidays too!  It’s $450,000 an hour – as much money as 1,000 top lawyers can bill – and that includes the hours he is sleeping.  You can say you understand it (I sure think I do) but imagine working at a law firm and finding out anyone, even a partner – sitting at your table is making 1,000 times what you are.   That that person can work for 2 hours and make what you do in a year ($900,000), which you thought was a pretty good salary until you met that guy.   When you go to Christies and Bill Gates raises his paddle – what are you going to do?  The richest guy you know is a speck of dust to him and he makes less money than Carlos Slim – who is nowhere near as nice in the way he uses his wealth… 

    UUP/BDC – We’ve been dabbling in UUP and TBT and it sure looks like we picked the wrong week for that! 

  89. Taking my last stand right here for the day with FAZ-

  90. Phil / rant — Nice wealth rant!

  91. I guess bad news have consequences sometimes… looks like someone opened a can of whoopass on CREE after they revealed that inventory were higher than expected and apparently they don’t have much pricing power. Monthly S3 is around 43.50 and we are slightly below that. I don’t like that business, but the courageous ones could take a stand! 

  92. Either this is one of those ball buster days or this is really one of those ball buster days!

  93. Thanks for the info JRW!

  94. And on the subject of CREE, the April 47.5 calls can be sold for at least $0.62 hoping that CREE doesn’t go back over that in the next 23 days. 10 of them makes you $620 for about $5000 of margins. And they can be rolled all the way to $80 by year end if needed. Just sayin’

  95. phil – when you talk about a stick, i assume you mean dow up based upon POMOs.  Is there a particular time of day this happens?  I saw the dow start to move at 12:15 PM.  Also, we were talking about a 2:15ish stick over the past few weeks.  Just gathering info.

  96. Phil – Yesterday I went along with the trade in the $25kp via USO Apr $41 puts at $1.10. (You paid to roll to Apr $41 puts for net $1.20) I’m looking to scale into the position. Generally what are your scale points for a trade in percentage terms? i.e 80% and then 60% or 75% and then 50%?

  97.  House/BDC – No it’s not.  Not only is no one buying at these prices but they are giving FRE and FNM a hard time and if they go, there goes the 30-year mortgage and then no one but rich people can afford houses and prices will plumet and THEN we can go on a home confiscation spree and buy up all the land at dirt-cheap prices and force the serfs to pay us rents for the rest of their lives and call our right of Primae Noctis – Muhahaha!  

    DIA/Amatta – You should have sold the 16 short 3/31 $120.75 puts for $1.60 (11:18 comment). 

    3/31 – Yes, thanks Cnar!  Was in a hurry.  

    What to do/Amatta – We’re out of FMCN entirely aren’t we?  What positions and basis do you have?  

    Banks/Pharm – I have been contemplating it but we couldn’t be more screwed on the April calls so I’d rather risk the very good possibility that we are already way down in anticipation and that we may get a nice relief rally on the release – kind of a "sell on the news" except they already sold on the rumor so now it’s "buy on the news."  

    UBS/JRW – That is very messed up.  There must be more to it than that.  

    TZA/Samz – If you take 15% off the table on 250 trading days, you make 3,750% a year.  Unless you average a better gain than that, then taking 15% one-day gains off the table is going to improve your overall average returns.  Even if you are playing with just 1% of your portfolio and make 15% 250 times, your entire portfolio will gain 37.5% from this tiny little gain taken early and often.  I do keep saying, the faster you make money – the more nervous you should be that it will be quickly reversed.  Notice the low volume was bothering me on the dip – that’s when you wan to have an extremely itchy trigger finger.  Point #5 or whatever:  Rule #1 is: "ALWAYS sell into the initial excitement."  It does not say "…if it’s a real big amount of money," does it?  WHENEVER there is a big move – you switch to momentum mode and get out when the momentum slows down unless you have a SPECTACULAR reason to stick with it.  If your reason is not SPECTACULAR, then that’s why we have Rule #2, which says:  "When in doubt, sell half."   Again – it does not say "sell half only if you make X or Y" and it does not say "sell half after you wait for the whole thing to reverse on you" – no, these are pretty absolute statements for a reason.  So much so that Rule #3 is "If you did not follow Rule #1 or Rule #2 then what the Hell do you think is going to be in Rule #3 that’s going to fix your stupid, greedy dumb ass?"  

    NFLX/Rustle – BooYah ski Daddy – Thanks for reminding me!  Forget the Weeklies, someone will pay you $7.20 for the April $235 calls so those are fun to short.  If NFLX breaks $230, you can cover with whatever weeklies have .50 deltas as a momentum trade (currently the $225s have a .58 delta at $4.50).  

  98. jjflash / stick — the sticks are in constant flux but often appear on nice "round" times like 12:15 but they can happen at any time. Sticks aren’t necessarily POMO related but it would seem that POMO increases the chances. I think it is more due to the direction the trade bots want to move the markets. There is also the inverse anti-stick or club that occassionally makes an appearence. My definition for the stick or the club is when all the majors move in unison (especially when not correlated to the $). That’s either the bots moving the markets or everyone in the trading universe thought that all the stocks in the majors domains became buys all at the same time! Markets dominated by warm blooded traders don’t move like that.

  99. Hello Phil, what do you think about TGP and GLNG (both operate LNG tankers). Would it be chasing at this point or this is still a tradeable idea?

  100. Phil, if I didn’t listen to you, I’d be more fundamentalist and would be losing money thinking how could the market stay up and be near it’s highs after a nuclear disaster in Japan, contaminated water there and hundreds of billions in damages to an already crippled economy which is number 3 in the world, unrest in the middle east keeping oil prices at an average of over $100 a barrel for over a month now, inflation running rampant, still high unemployment, housing getting worse, commodities across the board freakishly high and EU countries facing crippling debt where some might have to default on.  You put all that together and you wouldn’t think, this is a buying opportunity.

  101. Can someone tell me what the "angry birds" craze is all about? Is it just a sheeple story or is there something to that game?

  102. Phil: GMCR.. Still waiting for a gap down that my never happen. Looks like diminishing volume tha past 6 or 7 days, and like the MACD wants to roll over. An all or nothing thing it seems to me. The Apr 50 long puts are obviously naked and I am hesistant to cover.  Any suggests at this point?

  103.  Phil / TZA -
    Point taken – however – it’s a covered call so in my mind it’s a slightly different – maybe not in your opinion – than simply taking the 15% – which I have been doing with some regularity – but $2 is a nice buffer as well to the underlying TZA position.
    How about if i were to say – I have my TZA covered with the April 44s – seems like a good cover or do I roll down to the 41s?
    or something like that -
    Or Phil – Do you think we get a stick this afternoon.

  104.  FAZ/Matt – I think you are playing on the wrong side of XLF $16.  If support breaks – then maybe but betting on it to break when it’s held all year (other than the earthquake for 2 days) seems a bit risky to me.  

    Thanks Rain.

    CREE/StJ – If a business doesn’t have pricing power in this environment, they are toast.  

    Speaking of Toast – I can’t believe HOV is not going down.  

    Stick/JJ – I don’t make POMO a main factor.  It helps but it’s really all about which way Lloyd et al want to yank the markets around to.  Usually we get our sticks between 2:15 and 3:45, the heavier the volume, the later the stick.  Under 145M at 3pm is "stickable" – today we’ll be lucky to clear 100M by then.  In this case, we got a stick already right around when I got back this morning (I must have leaned on the button when I sat down) but, on the whole, we’re just flatlining and following the same reversing or repeating pattern I pointed out on Monday, right on that 3.75% line in day 3 of consolidation – big up or down move tomorrow is very likely:

  105.  Phil – what are your thoughts on why the stick is gone?

  106. @rainman – thanks re: "Stick".  Makes sense.  Sounds difficult to take advantage of unless one has a bigger bot :-)

  107. rustle123 / buy — if (hyper)inflation is on the way, the time to buy was on the japan dip. Is that over BTW? I didnt’ get the memo.

  108. USO/Manimal – The idea is to make a decision each 20% and, after you are 1/2 pregnant – you should be looking for ways to finance your next move by hedging the position.  So the Apr $41 puts are now .85, down .25 and the Delta is .34.  If you DD, you drop the basis from $1.10 to .975 avg and then you are just about a .33 move in USO from being even (back to today’s open).  BUT since you are so close and that is so easy – is that really what you want to do?  If you are very early in the scale and want to aggressively pursue a full position, then yes.  $107 was the top of oil on the last run and we hit $106.35 – it’s probably not going to get much better than that.  If you DD and it fails, what is your plan?  Perhaps if USO goes over $43, you sell 1/2 the weekly $43 puts for .90 (now .95) and that drops your basis on the longs by .45 if it expires worthless and you can use that money to roll up to a higher strike or out to a longer month.  If you are happy with those possibilities – then the DD is a no-brainer.  

    Oh and what Rain said on sticks.   This is great – I can take a vacation soon!  

    TGP/Alik – Good topic for the weekend and they are not so cheap that waiting isn’t a good idea.  This is a sector I’ve been meaning to dig back into.  

    Putting it together/Rustle – You need to rent Alice in Wonderland (the original) and watch it a few times.  Take drugs if you have to but that’s pretty much the mindset of the markets.  As Grace Slick says:

    When logic and proportion
    Have fallen sloppy dead
    And the White Knight is talking backwards
    And the Red Queen’s "off with her head!"
    Remember what the dormouse said;
    "Keep YOUR HEAD

  109. Phil / FAZ:  Did you know Risk is my middle name?  But seriously, I hear you.  And the longer this thing takes to go somewhere the less likely it will be in the direction I want it to go-

  110. PHIL
    I never got a fill on the short DIA 120.75 puts for 1.60, and its gone.  Is there other way to cover the DIA longs

  111. Rainman – Screw angry birds! Today is Wednesday, after Wednesday is Thursday, then FRIDAY!!!!!!  lol. Tell me some of you have seen this video!!! The lyrics are terrible but it IS entertaining!!! My favorite quote from the comments section was someone saying they could, "eat alphabet soup and sh!t better lyrics."
    More power to her though. She will make a boatload of $ of this ‘song’ and her lyrics aren’t really much worse than that Beiber dude’s lyrics or most of the Black Eyed Peas recent songs! Plus, she is only 13 or 14 so people really need to cut her some slack.
    Ugh…Back to writing forms as to why the Air Force shouldn’t fire me! lol. Phil, this is hilarious. They are cutting about 2k AF officers over the next 24 mos (the right thing to do b/c we do need force reductions), but they could potentiall kick out a bunch of people whom just completed their masters or PHDs on the AFs dime! You’d think them investing 200-450K for our education the past 2-3 years would be enough incentive to keep us in and get their money back! Well, you’d be wrong. Because we (all the officers in eligible year groups at this school) have been out of the loop the past 2-4 years and don’t have as many deployments (and the awards/decorations which come with them), our retention packages could potentially suffer… Whatever though. I love the AF and the people in it. If they somehow decide to not to keep me in after paying me a good salary to go to grad school I’ll just focus on the positives (and there are a bunch!)

  112. Phil / Gold & Silver   I’m getting killed on my silver short ZSL and gold short not much better.  Should I stick with it or capitulate?

  113.  Phil: Thanks for the attaboy.  But even a stopped clock is right twice a day.

  114. Hello Phil…..Out of the country quite a bit lately.  Away from the chatter here.  Talking to international  port/shipping executives.   The following article informative on a few levels but particularly bulk shipping.

  115. 25KP/Phil – I understand your exasperation with the pleas for micro-management of the portfolio – but this is a learning experience, and for myself, at least, very useful. I am getting it, not feeling the need for the hand-holding as time passes. So stick with it; teaching is often like this (from an old teacher).

  116. FAZ / Matt Risky 1966:  Done!  This market has severed it’s last link to reality and is now floating about La La Land.

  117.  Ok – I got greedy and made it 25% on the tza.

  118. Sorry matt,

    I did say I was in TNA  8-)

  119. Phil – okay, hear you loud and clear. But since I missed yesterday’s trade (sale of the ADBE $34 calls), does is now make sense to sell the ADBE $31′s (around $1)?  Or ADBE made its move already and no point?  

  120. Matt
    Sorry and I’m out of TNA @78.22, too scary may reload.

  121. Matt,
    This market is simply reflecting that the Bernanke has everything under control and resistance is futile.

  122. Angry birds/Rain – It’s a fun little IPhone/IPad game.  They had a good free version and it’s addictive so everyone passes it around like a virus.  Very good business model when you have a quality game as they are very generous with the free content but it still leaves people wanting more and it’s only like $5 for a massive version and they update is with free (no crappy charges) theme levels for every little holiday and they even let you buy a cheat for a buck so you can bust through a level that’s giving you trouble.  I would sure hire that guy to design games.  

    GMCR/JBur – 23 days to expiration means I will wait until next week to decide.  

    TZA/Samz – That’s fine if you intend to stick with it but I’m saying you can take profits and then re-cover, rather than passively letting the position bop up and down on you.  It depends what your goal is on the overall spread and what you think you’ll end up with at the end.  On the stick – this is a stick – the question is, will it stop?  

    Stick/Yshen – I didn’t say it was gone, I said it hasn’t shown up and that I expected it to come back – like this.  

    DIA/Cnar – What do you mean gone?  $1.50, $1.40, $1.30 all went by since then.  Now it’s 25% later and I’m thinking of stopping them out so I can’t really tell you to jump in at this point.  You can roll the May $118 puts up to the $121 puts for $1.15 and then sell the $120 puts for .90 – that’s a move that makes sense at the moment.  

    Video/Jrom – Are you sure she’s 13?  Looks the same age as the driving kids.  It’s so heavily produced that it seems like some record promoter is trying to manufacture something out of nothing and making "the next Bieber" but hey, the Monkees were pretty good, right?  On the idiotic policies – that is truly amazing (see cartoon above of 20 years of paychecks per missile) to see where the priorities are in this country.  

    ZSL/Tusca – I think silver is about 20% overpriced right now but so far, so wrong.  What’s your position?

    Twice/ZZ – Hey, twice a day beats Cramer!  

    Great find Living – all should read this article:

    The 2003 closures led to an increased reliance on both oil and coal-fired power generation. There was an unexpected spike in Japan’s steam coal imports (including anthracite) in July and August 2003 to more than 15 Mt per month compared to an average of 14 Mt per month during the 1h03. This was a key factor in causing the chronic shortage of dry bulk tonnage at that time that led to the record-breaking surge in freight rates.

    $25KP/Snow – Oh I’m sticking with it but I must be allowed a little temper tantrum once in a while or I will go crazy. 8-)

    ADBE/Jercon – No, we think ADBE recovers over time and they are July longs so now it’s a patience game.  

  123. Always 5 moves ahead of the game. I appreciate the options on USO. Thank you.
    Hahaha – In my office we use the term getting pregnant with a deal here as the point of ‘irreversable commitment.’ It always gets a few chuckles and an occasional raised eyebrow from HR. 

  124. Is this the Lloyd is a rat ralley?

  125.  Apache moving up smartly right now. [APA]

  126. Out of TNA at 78.35 average off the IWM 81.04 line for $3 !!

  127. JRW
    As usual you made .13 more but looking good now to be out.

  128.  radiation in tokyo water – advisory against infants drinking

  129. Well… well… let’s see what happens now-  XLF snuffed at it’s opening level.  Oh how I’d love to see it close at it’s low for the day!  I mean, shouldn’t the housing news affect the banks?  Oh wait.. I don’t think they hold any mortgages anymore not to mention the news didn’t even affect the builders!

  130. This really is incredible. 
    What is the market rallying on today?  The wonderful housing report….the less bad radioactive levels in Japan’s water system…..the lack of an American fighter jet going down in Libya…..the relatively unsuccessful suicide bombing in Jerusalem…..the lower than expected fuel prices…..the near collapse of Portugal’s government.
    Gotta love this market.

  131. JRW got the chart
    Where did your post go? Are you saying you fear relaqoding?

  132. My typing is bad but not that bad.

  133. JR,
    That’s an awesome chart.

  134. JR,
    What is your take…….are we set up for the reverse stick today???

  135. Sorry about the size; this was the only way it would upload !!


    shadow / reload

    Not afraid at all; i’m buying a break above IWM 80.04. Next stop 81.38 (if "they" can)

  136. JRW Thanks!

  137.  why did GMCR just go parabolic?

  138.  Well exec, you ignored the obvious good news of the Eiffel Tower being evacuated due to a suspicious package and govt shooting / killing crowds in Syria.  How silly of you.
    Just another day in the asylum … NFLX OPEN BIDU PCLN

    link for tracking real inflation
    I got it from this SA article that is worth a read

  140. Whee doggies, look at that market fly!  

    10:00 AM On the hour: Dow -0.05%. 10-yr +0.23%. Euro -0.47% vs. dollar. Crude +0.79% to $105.80. Gold +0.33% to $1432.30. 

    11:00 AM On the hour: Dow -0.33%. 10-yr +0.29%. Euro -0.33% vs. dollar. Crude +0.69% to $105.69. Gold +0.92% to $1440.80. 

    11:11 AM Bonds are holding gains after a Fed buyback of $7.56B in Treasurys maturing 2018-2021, of $30.766B offered by dealers. The 30-year Tsy yield -0.02 to 4.42%; 10-year -0.02 to 3.31%; 5-year -0.03 to 2.01%; 2-year -0.01 to 0.64%. 

    12:00 PM On the hour: Dow -0.07%. 10-yr -0.01%. Euro -0.55% vs. dollar. Crude +0.62% to $105.62. Gold +0.81% to $1439.20.

    01:00 PM On the hour: Dow +0.21%. 10-yr -0.09%. Euro -0.48% vs. dollar. Crude +0.99% to $106.01. Gold +0.81% to $1439.10.

    02:00 PM On the hour: Dow +0.47%. 10-yr -0.03%. Euro -0.51% vs. dollar. Crude +0.55% to $105.55. Gold +0.71% to $1437.70.

    Feb. New Home Sales (PDF): -16.9% to 250K vs. 290K expected, 284K prior. Months’ supply 8.9 vs. 7.9 prior. Median price $202,100. 

    Dallas Fed President Richard Fisher says he sees “extraordinary speculative activity” in the U.S. after the Fed pumped record amounts of stimulus into the economy. He reiterates his view that no further stimulus will be needed after the Fed finishes its planned $600B of Treasury purchases through June. 

    Yes, two of the Fed’s most-watched data points show rising inflation but not the third: labor costs. The Fed believes price pressures without wage pressures are not sustainable, Societe Generale’s Aneta Markowska writes, so it will not raise rates until it sees confirmation in the labor market – unlikely before the middle of 2012.

    No shift in policy, the Federal Reserve says, but the New York Fed is starting a broader test of more reverse repurchase operations, designed to drain liquidity from the system when the day comes to tighten. The Fed recently expanded the list of counterparties to include money funds – a sure sign of the size of the repos that will eventually be needed. 

    The stock market is only about halfway through a bull run that will catapult the S&P 500 another 60% over the next two to three years, Laszlo Birinyi tells CNBC. "If we cobble together all the long bull markets, we come up with a historical projection of about 2,100 out two or three years from now on the S&P."

    Corporate insiders cut back on their selling as the Japan crisis unfolded, and Mark Hulbert says that’s fortunate; it would have been an ominous sign if insiders had continued to sell at the same fast clip they had set in previous weeks. It would have meant that they had little confidence that the prices of their shares would recover any time soon.

    U.K. Chancellor of the Exchequer, George Osborne, currently delivering his 2011 budget to the House of Commons, will not propose any new spending cuts or tax increases beyond those already implemented. He forecasts inflation, currently at 4-5%, to drop to 2% in 2 years time.

    More from George Osborne’s unveiling of the U.K. budget earlier today: the OBR cuts its GDP growth forecast to 1.7% from 2.1% in 2011. "Britain has a plan and we’re sticking to it," says Osborne, explaining why the government is sticking with its austerity budget.

    "Finally coming to a head," is how fund manager David Albrycht describes events in Europe regarding the sovereign debt crisis. Yields in Portugal of 6.5-8% and Ireland of 9.5-10.5% are "unsustainable and unstable … people are betting Germany will step up."

    According to Japan’s nuclear safety agency, the radiation levelat the Fukushima #2 plant today hit its highest level since the start of the crisis500 millisieverts per hour.

    A poor country with just a trickle of oil, and nearly every citizen armed, trouble is coming to Yemen no matter what writes Victoria Clark. The U.S. should end its cynical embrace of President Saleh, and instead try to assure the success of the revolution there – even if it means re-splitting the country in two.

    Syrian security personnel come down hard on protesters in the southern town of Darra, killing at least 15 over the past day. Activists are calling for massive protests across the country on Friday, a day to be called "Dignity Friday."

    Israeli Interior Minister Eli Yishai, visiting the scene of a bus bombing in Jerusalem, calls for retaliation. "Recent events require us to take action, if we don’t do this we will lose our power of deterrence." Southern Israel was hit earlier today with rocket attacks from Gaza.

    1:50 PM Breaking: The Eiffel Tower is evacuated after a suspicious package is found at its base. 

    After a brief, shallow dip following the earthquake, silver continues its breathtaking move higher, popping 2.5% today to another post-Hunt Brothers high of $37.17/oz. SLV +2.0%AGQ +4.6%SIL+4.2%

    Cree (CREE) lowers fiscal Q3 revenue and margin guidance on weaker-than-expected demand and weaker-than-expected pricing. CREE-7.8% premarket. Shares of LED lighting peers also lower: RBCN -5.9%,LEDS -4.8%VECO -3.9%AIXG -3.6%. (PR)

    Today’s S&P 500 laggard Adobe Systems (ADBE -5%) has been pummeled after it warned of business impacts in earnings yesterday. But firms including UBS, Macquarie, Citi and Deutsche Bank stay bullish, seeing upside and a still-attractive valuation. 

    Financial stocks (XLF -0.6%) pare early losses but the sector remains lower amid news that Bank of America’s (BAC -1.8%) proposal to distribute capital to shareholders in the second half of 2011 was refusedby the Fed. Also, analysts cut estimates for Q1 bank earnings after volatile markets caught traders by surprise.&nbsp

  141. Those were some good lines JRW- 
    exec, we need to have ourselves checked out for Bart Simpson Syndrome.  You know where he keeps putting his finger in the socket and says, "Ow!"?

  142. Holy Toledo What Happened to my colors?!?

  143. Hmmm….. Eastery!

  144.  Kwan … do we really need a reason  ?   GMCR   lol

  145.  WTF ?

  146.  Phil – looking at a play on The Shaw Group….they got smacked with the Fukushima disaster because of their nuclear contracts, but they are diversified and also provide remediation services.  With refinery and industrial plant damage in Japan, and a HUGE remediation issue with Fukushima coming up, they look interesting.
    Here’s my play either  Sell Jan 12 30P for $3.50 so net entry at $27.50 which is just below last week’s level and 10% above the 2008 low 
    or….the .Jan 12 30/40 BCS for $4.65 and selling the Jan 30 Puts for $3.50 giving a $1.15 entry on $10 spread betting that if things don’t get worse at Fukushima, then SHAW could recover to its pre-quake highs.

  147. re: Remember what the dormouse said;
    "Keep YOUR HEAD

    Slick and the Airplane did everything but keep their heads. I think the lyric is actually, "FEED your head." :)

  148. What’s up, green type?

  149.  Dude, these colors highlight the Valley Girl look to Matt’s posts….thx Phil….

  150. Don’t worry JRW – only people with small charts think that size doesn’t matter. 8-)

    GMCR/$25KP – NOW it’s a good time to do something.  We have 5 Apr $50 puts at $1.10, now .22 and we can spend $1.45 to roll them up to the $60 puts, now $1.65 and they were $2.50 yesterday.  

  151. Jrom/Video — My daughters watch that Rebecca Black video all the time, and the very funny remixes of it, which are all over YouTube.  The whole thing is just hysterical.  The "official" video has 36,000,000 views, but she didn’t write the song, so she won’t get any publishing income.  However, the song is No 42 on the iTunes singles chart!  So, she’ll make money on that.  The producers are nobodys (her parents paid them $2000 to record her), but this is about the raw power of social media.

  152. hoss18
    Like you me its hot?

  153. That was typed "mean", more than one problem, Maybe Plil overloaded.

  154.  No, I was being sarcastic and teasing Matt…just didn’t work

  155. GMCR May $65 calls can be sold for $4.75!  

  156. Phil, 
    ADBE my basis is 1.50 and FMCN it is $1.90…

  157. Sarcasm is always welcome!

  158. Matt,
    I actually did well today.  I put a buy on TNA in at $75….and the damn Bots couldn’t resist and dove all the way down and grabbed it.  I didn’t have the balls to hold it though……got out at S1 and missed a lot of the move.  I have to learn how to hold longer…..only problem is I’ve been burned so many times that I just took the money and ran.  I’m in TZA now……but it looks like the Bots are planning on punishing the Bears some more today.

  159.  @cap
    Bet you’re glad you didn’t go into NFLX yesterday.

  160. Cap,
    How foolish of me.  If I had seen the Eiffel Tower and the rest of the news you pointed out……I certainly would have DD on my long and rode it all the way up.

  161. Cap – of course you’re right – GMCR doesn’t need a reason…

  162.  rustle; in the NFLX now though ..

  163.  Definitely "Feed your head …"
    druggie language

  164. So Phil you feeling more confident on EGLE after the maritime article?

  165. exec
    Better early than late!

  166.  Look at BIDU; Holy …. S$$$$%$%#$%@#$
    What a scam this market is

  167. Buying TNA again here !!

    $78.34 average

  168. Billion prices/BDC – We’ve been using that.  Way more real and very scary.  

     SHAW/Hoss – Yes, I picked them on that dip.   They are a great long-term hold.  I think $40 this year may be aggressive – if you want a little risk then you can sell the Jan $35 puts for $6 and buy the $20/30 bull call spread for $7.30 and that’s net $1.30 on the $10 spread that’s 130% in the money (hmm, sounds familiar) and has a b/e way down at about $28 – not bad for a $33 stock.  Of course just selling those puts isn’t bad either but why not put the money to work if you believe in it?  

    Feed/Chaps – I knew that.   The danger of cutting and pasting from unreliable sources.  Keep your head is like what they played on AM radio so the parents wouldn’t freak out. 

    Green/Shadow, Matt –  Something funny in my last post, Greg fixed it already.  When I copy Chrome to Chrome it picks up a lot of crappy fonting I would rather do without.  I don’t have that problem copying from IE but IE8 is the culprit that crashed my PC every time so I’m just sick of them.  Greg told me you said to go with 9 but I’m on XP so I guess it’s time to buy a new computer finally.  

    ADBE/Amatta – OK, that was clue number one.  Now how about tell me which ones you have?  Are they the same as the $25KP?

    EGLE/Morx – When was I ever not confident?  Shippers are too cheap, it’s just a question of when people figure that out.  BDI is up 50% off the bottom and holding up well.  Not my fault if we are a month ahead of the curve….

  169. …and blastoff!  I’m on the JRW Rocket Ship!   Whhwhhwweeeeeeee!!

  170. ROFL!  BIDU up over 5% on no news.  They are just running everything to goose the Nas today.  Probably timed it with the QQQ change to confuse the maximum number of people.  

  171. Phil….Your post about them changing QQQQ to QQQ jogged my memory about an event of about 10 years ago.  There was a company with the letters XOOM.   For unknown reasons they changed it to XOXO.     Many thought it strange that they would change their letters from something that sounded like the stock was going to rocket,………. to just kisses and hugs.  :)   

  172.  XP?  Oh, dude!!  Windows 7 is way better.  Annoying way of aggregating files from locations it doesn’t disclose, but much better functionality.  I’ll bet your chipset is really old school, too — RAM and processor speed really matter.

  173. Phil, 
    I have HMY 12/15 with with 2012 10 Puts. I rolled the calls to August and left the callers alone (May expiration)… Net is 1.29.. Would you roll the callers now or just leave as is or even take the money and run as I am not sure you are too bullish on Gold in the medium term? 
    Speaking of metals I have the April 42 SLW short calls… net 2.08, now 3.90 time to DD or a roll? 

  174. This is what happens if you don’t use your stick in 10 days!

  175. and out.  Biggest nut for the day.  Thanks JRW!

  176. Phil
    If you have a fast processor you might just buy Windows 7 Professional, much better, been using 1 year now and explorer 9 is very fast.

  177. And $ is 76.05 and oil 105.73
    What does it all mean?

  178. Are we going SPX over 1300 today?

  179.  @cap
    I’m still waiting on NFLX to get to at least at 70 RSI, still can easily move to 240.

  180. matt

    You are most welcome  8-)

  181. Great call JRW and congrats to Matt for going with the flow.  

    Portuguese President Silva is prepared to accept the resignation of Prime Minister Socrates and call an election to choose a new government, reports Jornal Publico. A meeting between the two is scheduled for 3PM ET, at which Mr. Socrates is expected to offer to step down. 

    Quite the bear trap today.  

    Chips/ZZ – I have an old Dell power-edge that was the best thing you can buy about 3 years ago but now a dinosaur I guess.  It’s got my Mac display card in it so it’s going to be a pain in the ass to change and it usually takes me about two weeks to get used to a new computer (I am very demanding on them) and I have a low tolerance for annoyance, especially when I’m working so hopefully this will last until Christmas, which is a nice, slow time of year in the markets and a good time for me to walk away for a couple of days while Tina puts on here nerd hat and upgrades everything.  While I love new stuff – I HATE changing old stuff. 

    HMY/Amatta – They are at $13.50.  Why would you wan to roll May $15 callers?  Obviously, you should have taken them out when they were a dime but now you want to pay more – that makes no sense.  I’m not too bullish on gold but I like HMY as an undervalued miner who stand to benefit from shifting currency flows as well.  SLW as this point I would wait and see what sticks over the weekend. 

  182. At this point does anyone think its worth it to nibble on some DIA quarterly puts for tomorrow (after today’s top off)? To borrow some logic from Phil, The 3/31 $119.75s are $0.71 and were $1.29 this morning, $1.25 yesterday.  This is in anticipation of Portgual’s govt bailout, but not sure if the scenerio is already priced in.

  183. chrome – i’ve had to surgically eliminate it from my PC machines after testing it out (or when it came installed on new machines). chrome did not play nice with a number of things, and really really got annoying. and to clean it up, had to go in and delete a zillion registry entries. it tries to own everything. really rude software, imho. harrumph!

  184.  Best speculative bet of the week, megamillions on Friday.  Downside $1, upside 193.6 million in a lump sum (pretax).

  185.  Nike [NKE] up 2.5%, Best Buy [BBY] up 1.2%, attracting lots of attention from shorts — NKE really huge attention.

  186.  Hmm, we have jobs tomorrow and Durable Goods, which probably suck so there’s a way we can turn back down.  Friday is GDP but it’s the 3rd estimate of Q4 so not the biggest mover unless there’s a real shock (2.9% expected).  Also Friday we get Michigan Sentiment, which is probably down a bit with the high gas prices.  We’ll see if we can pop 1,300 and hold it on that data and then next week is a Datapalooza with lots of housing that can give us a really rough ride so – like I said before – if they are going to pop us – now would be the time…. 

    Week of March 28 – April 01

    Date ET Release For  Actual Consensus Prior
    Mar 28 08:30 Personal Income Feb   0.4% 1.0%
    Mar 28 08:30 Personal Spending Feb   0.6% 0.2%
    Mar 28 08:30 PCE Prices – Core Feb   0.2% 0.1%
    Mar 28 10:00 Pending Home Sales Jan   NA -2.8%
    Mar 29 09:00 Case-Shiller 20-city Index Jan   NA -2.38%
    Mar 29 10:00 Consumer Confidence Mar   NA 70.4
    Mar 30 07:00 MBA Mortgage Index 03/25   NA +2.7%
    Mar 30 07:30 Challenger Job Cuts Mar   NA 20%
    Mar 30 08:15 ADP Employment Change Mar   NA 217K
    Mar 30 10:30 Crude Inventories 03/26   NA 2.131M
    Mar 31 08:30 Initial Claims 03/26   NA NA
    Mar 31 08:30 Continuing Claims 03/19   NA NA
    Mar 31 09:45 Chicago PMI Mar   NA 71.2
    Mar 31 10:00 Factory Orders Feb   NA 3.1%
    Apr 01 08:30 Nonfarm Payrolls Mar   170K 192K
    Apr 01 08:30 Nonfarm Private Payrolls Mar   187K 222K
    Apr 01 08:30 Unemployment Rate Mar   8.9% 8.9%
    Apr 01 08:30 Hourly Earnings Mar   NA 0.0%
    Apr 01 08:30 Average Workweek Mar   34.3 34.2
    Apr 01 10:00 ISM Index Mar   61.9 61.4
    Apr 01 10:00 Construction Spending Feb   NA -0.7%
    Apr 01 15:00 Auto Sales Apr   NA 4.61M
    Apr 01 15:00 Truck Sales Apr   NA 5.61M

  187. Out of TNA at $ 79.24 average;  $1.00 more !!

  188. phil – newbe question.  The world is in turmoil, the vix has moved down to 50 dma, do you believe vix will go up or continue to calm down in the crazy market?  I’m thinking of going long the vix.

  189. Because I do not think we gap over 1,300 on the S&P and because we’re up so much already – I do want to buy back the 16 3/31 DIA $120.75 for .95 and leave the May puts naked overnight.  

  190. Intel Declares Quarterly 18.12 cents Dividend = 3.5% yearly

  191. JRW, way to gut it out!  You know, if they went for 81.78, IWM would still be within a $2 range which is pretty typical for it over the last several months.  It would be a very bold move.. but not outside of the ordinary.  Time to strap in?

  192. Phil,
    if I cannot day-trade and have to keep DIA 120.75P overnight?
    Would covering them by 120P do the trick?

  193. This is a classic example of how manipulated this market is. 
    Given the news today….why would the market be going up?

  194. Phil I love pussles
    ADBE/Amatta – OK, that was clue number one.  Now how about tell me which ones you have?  Are they the same as the $25KP?

  195. JRW matt
    I got out at 79.22, $835 today, good day for me.

  196. I may have exited too early, but still almost 9% on the day !!

    And, best of all, matt made money on the LONG side !!

  197. escohen5 – Thank goodness my daughter is still a little young for that stuff! That song is so catchy in a really annoying sort of way! I agree about the power of social media and think it’s pretty remarkable. Seen her on Leno yesterday and she seemed like a pretty decent kid…

  198. JRW
    Your rule, better rich than right!

  199. LOL, what a joke:  "OECD Chief says Japan crisis won’t have long-lasting impact on Japan and Global Economy."  From Ransquawk.
    My back-of-the-envelope calculations suggest that Washington State, alone, is going to take at least a $3B hit over the next year.  That’s the same as the entire State deficit.
    Just a flesh wound, I guess.

  200. exec / news

    Buy the rumor, sell the news !!

    If the news is bad, it’s a double negative (the market goes up) !!

    Good hunting tomorrow 8-)

  201. In TNA at 79.03.  JRW, I was long with FAS this am.  It was a cover for my FAZ.  But it got stopped out by a phantom tick.  So, I try and get long, even if it is a cover, but when the machine dicks me like that it’s hard not to get pissed!

  202. Phil / Silver   Just holding 1000 shares of ZSL.  Hang in or capitulate?

  203. exec / up — because uncle Ben said cake or death!

  204. Did anyone happen to see Cramer last night???
    That Dude must be on crack!

  205. DIA/Manimal – I think odds have tipped to favor a dip tomorrow but you’re fighting the Fed buying puts.  I figure we buy back our short puts and if we get popped tomorrow, then we roll up and sell something higher to pay for it.  

    Chrome/Scott – LOL.  I had been using IE8 and I started using Chrome and it’s about 5x faster so I can’t go back now.  I still had one window I used with IE but recently my system is crashing about every other night and I’ve been blaming IE but it may be evil Chrome making me think it’s IE’s fault.  

    Mega/Rustle – But the odds are 175M to one.  I wonder if you could feed every possible combo into a machine and buy every possible number.  You’d clinch the grand prize and then all the small prizes too.  It would work if you can deduct what you spend against what you win and just pay tax on the profits (as long as you aren’t unlucky and tie for the big prize too).   Probably best to do that when the prize is up over $300M to give yourself more of a margin. 

    VIX/JJ – That was an excellent play 10 days ago at about the same spot.  I’d go with the May $16/April $20 spread at $3.60 and hope you luck out and the VIX stays calm but, if not, you can roll to a better vertical or do a creative cash-out. If the VIX slams down, you can sell May $17 puts (now .30) for $1+ to offset as 17 is a pretty low VIX that’s unlikely to last.  

    INTC/Lol – About time they did something.  

    DIA/Lol – I’d just stand pat then.  Don’t make it too complicated – I’m just going with my gut, which could be wrong.  If you want to hedge, then spend $1 to roll up the long puts $3.  

    Why/Exec – $550Bn from the BOJ is a big help.  Just took a few days to circle around to us.  

    Ticks/Matt  - No hard stops unless you can’t possibly watch it.  

    ZSL/Tusca – I would wait and see if they can take $37.50.  

    Good one Rain – I love Izzard.  

    Cramer/Exec – No, missed it.  

    Oh here you go guys – news so bad it’s good:  

    The horrific housing data (IIIIII) prompts some to wonder if the Fed will launch QE3 when the current round expires in June. Faros Trading believes it: “This dip in housing will translate into a double dip on the overall U.S. economy, further rolling forward any stimulus exit plans set by the Fed, and setting the stage for an announcement of QE3 in July.” Or is this simply much ado about the weather

    Gaddafi’s air force "no longer exists as a fighting force," says the top U.K. air commander, adding, the allies now operate "with near impunity" in the Libyan skies. "We have the Libyan ground forces under constant observation and we attack them whenever they threaten civilians or attack population centers."

    Whuck?  Oracle’s (ORCL +1.6%) sharply worded announcement that it will stop developing technology around Intel’s (INTC +1%) Itanium chipsparks outrage from Intel partner Hewlett-Packard (HPQ +1.1%): “We are shocked that Oracle would put enterprises and governments at risk while costing them hundreds of millions of dollars in lost productivity in a shameless gambit to limit fair competition."

  206. Phil
    Now that I have sold out, your system seems fast enough, XP has problems every day, 7 never, I think the CD is about $140 and you could load and update in a couple hours at the most. Upgrades are cheaper but  Professional which you want or the one over it ?name, you can totally control away from home.  Small price to pay for a huge upgrade.

  207. Christ……there you have it…….launching pad for QE3………More Free Money!!!

  208. "Matt made money on the long side!!!"  Now its Biblical
    Nice trading y’all

  209. Phil
    It is not IE8, XP is the problem I got spyware every day until I stopped using it. IE9 is 10 times faster than IE8 and seems 2X chrome. I avoid google because they are control freaks, esp. searches, use them last.

  210. Out of TNA even.  Ran out of time. 

  211. Phil same problem with Chrome, not as stable as IE.

  212.  6.6Mb more oil in storage than we had this time last year:

    Stocks Change From Last
    03/11/11 Week Year
    Crude Oil 350.6 values are up1.7 values are up6.6
    Gasoline 225.0 values are down-4.2 values are down-2.2
    Distillate 152.6 values are down-2.6 values are up4.5
    Propane 27.362 values are up0.276 values are up2.262

    Stock Price Graphs.

    And look how much less we are importing per day – that’s shorting us 7Mb per week and we’re still building inventory!  

    U.S. Crude Oil Imports Graph.

  213. matt1966
    The signals today were not normal except the bottom. Wouldn’t surprise me if we open down tomorrow also.

  214.  Phil – do you plan to cover FAS tomorrow with next week’s options?

  215. Get me the right name and I’ll try it out Shadow! 

    Biblical/Hoss – Well said.  

    Oh yay, they found a scapegoat!:

     A piece of drill pipe trapped inside the Deepwater Horizon’s blowout preventer enabled last year’s BP oil spill in the Gulf of Mexico, according to a forensic report. The blowout preventer was manufactured by Cameron International (CAM -2%). 

    Needing to raise €1.44B in capital and not liking the deal offered by true investors, Banco Base, Spain’s 3rd largest savings bank, will do what comes naturally and seek state funding to fill the gap. The bank plans to come back to the private market in a year or two. 

    Talks are ongoing between Nasdaq (NDAQ +1%) and ICE (ICE+1.2%) about pursuing a bid for NYSE Euronext (NYX -0.8%), CNBC reports. Nasdaq’s board apparently is ready to proceed, and it has lined up $5B in necessary financing; it considers a $350M breakup fee excessive but not a deterrent. 

  216.  FAS/Yshen – That is the plan.  Hopefully we don’t have a big sell-off.  

  217.  Somebody dumping into the close.  

    Volume for day 111M at the moment – pathetic.  

  218. Phil,
    NKE is off of high by 15%, it seems that 75 was the low, that being the case I am thinking of selling 2013 60 put and buying 2013 65/75 call for a net of about $1.  Any suggestion?

  219. Wow, what a ride!  

    I can’t wait to see what happens tomorrow.  

  220.  Now that they pumped the hell out of NFLX, back to reality ?
    CBS plans on pulling Showtime content from $NFLX, just a month after striking a $200M deal

  221. shadow, agreed on tomorrow.  Looks like the downward trend is still very much intact.

  222. Exec: Cramer, yes, he is verifiably nuts. If you go back and read some of Todd Harrison’s stuff (one of Cramer’s old hedge fund partners) he in as much says so. He would say one thing one minute, something else the next minute; smash computers in their office etc. Fun guy to have around!

  223.  Phil
    I am holding spreads on TZA as a short term hedge for the long plays 9not B/W). I tend to just sit on them and watch them go up / down with the market moves.  You made comments to others on how those can be played between the levels – can you give a general explanation on how to do that?
    (I have Apr 38/44 @ $2.30 – was up as much as $2.9 last week, now $1.8)

  224. Phil
    I think your system is 32 bit and windows 7 Ultimate may only work on 64 bit and from what I just found online is it adds home premium to professional. Windows 7 Professional has a 32 and 64 bit CD. At Tiger Direct the price for Windows7 32 bit is $139.99 today. I’m sure you can buy it locally everywhere, even an Apple store.

  225. NKE/RR – I’d be cautious as they are bound to have rising costs and I’m really not sure they can pump sneaker prices any higher.  They are a very discretionary purchase for a good number of the customers – like tires and clothes in general – when families get pinched they wear their shoes longer and opt for the non-luxury brands so I don’t think NKE is a no-brainer in this market.  Anyway, as a 20-year hold, I still like them so yet to the short $60 puts for $4.20 but I’d go for the $55/65 bull call spread at $7.30 for a net $3.10 on the $10 spread that pays in full where the other one doesn’t even break even.  Also, because of the $55 calls, your b/e is down at $59.  

    Volume finished the day at 133M on the Dow – super low.  

    Launch Rain – Impressive but why the hell would someone want to do that?  I guess there’s a sneak factor but how many F-15s fit in a sub?  

    Yshen – remind me later if I forget. 

    Thanks Shadow – I’ll check it out.  

    China is Not a Bubble:  It’s the Hindenburg:


    The Financial Times published the article “China’s Growth Model ‘Unsustainable’” while offering that “Communist party leaders speak openly about the superiority of ‘Socialism with Chinese characteristics’ as evidenced by the country’s apparent resilience in the global financial crisis.” I am convinced that they don’t believe their own hype, and usually when officials say all is well and under control, like in Portugal, my birthplace, it’s time to run for the hills. But in the same article, Yu Yongding, the “former head of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, a leading state think-tank, as well as a former member of the central bank’s monetary policy committee,” voiced his harsh opinion of current conditions.
    In a scathing indictment of the country’s extraordinary growth story, Yu Yongding listed rising social tensions, choking pollution, a lack of public services and an over-reliance on exports and investment, particularly in real estate, as threats to the country’s economic future. “China’s rapid growth has been achieved at an extremely high cost. Only future generations will know the true price,” Mr. Yu wrote in an opinion piece published in the state-controlled China Daily. “[China’s] growth pattern has now almost exhausted its potential. So China has reached a crucial juncture: without painful structural adjustments the momentum of its economic growth could suddenly be lost.”



    At the close: Dow +0.56% to 12086. S&P +0.29% to 1297. Nasdaq +0.54% to 2698.
    Treasurys: 30-year -0.08%. 10-yr -0.07%. 5-yr -0.03%.
    Commodities: Crude +0.36% to $105.35. Gold +0.08% to $1439.20.
    Currencies: Euro -0.59% vs. dollar. Yen +0.05%. Pound -0.7%.

    Market recap: Stocks turned higher after overcoming early selling pressure, ignoring weak new home sales and reports of radiation in Tokyo’s drinking water. But the move may have reflected technical factors more than fundamentals, and volume was light. Crude pushed past $105 to its highest level in 29 months. Comex gold rose to a record $1,438; copper jumped 2.7%. NYSE gainers led losers four to three.

    CBS Corp.’s Showtime unit said it will remove some of the premium cable network’s shows from Netflix Inc.’s streaming video service, days after the online video distributor said it planned to offer its own original programming.


    "We’re perplexed by this," said Netflix spokesman Steve Swasey. "We have great Showtime shows available on our service, and we expect to continue with those shows. We have a very good relationship with CBS and all its channels."
    Separately, Netflix suffered a technical disruption to its streaming service Tuesday that left subscribers without access to it for several hours in the late afternoon and evening. A spokesman said it was perhaps the worst such disruption that has occurred since the service was launched in 2007.

  226. Dollar moving up!

    The euro ticks down a few pips after Portugal’s Parliament rejectsthe austerity plan put forth by PM Socrates. Socrates is expected to address the nation shortly, where he will likely announce his resignation. Euro buys $1.4111. 

  227. Phil / Launch — I have no idea why you’d want to do that when you could more easily launch a tomahawk instead. Of course, it’s fun to try if it’s the tax payers are footing the bill!

  228. Socrates/Portugal: Well, you know when Socrates is resigning, things are really bad. I notice he didn’t go out in the honorable Socratic way out and sip a little hemlock…

  229.  NFLX: Shorting
    Even though I’ve been shorting calls too early I’d rather crazy up moves like the last week than a logical, methodical move up.  Two weeks ago it was all about it would bounce off the 50 day.  When that didn’t happen they had to use a little upgrade voodoo.  Who the hell is buying this now that didn’t want it at $192 ????  Wonder if anyone is going to want to take profits off a 20% run since March 10 th???  This is really getting to be entertaining, almost like renting a crazy movie ;)

  230.  Windows 7 – You pretty much have to use the 64 bit version if you’re using over 3Gb of memory which most systems have now. Also, you can’t upgrade from XP to Windows 7 – only from Vista. You have to do an install from scratch which is probably preferable anyway.

  231. I would second grenowoods recommendation to go to the 64 bit version of Windows 7 if your system can support it! And go with at least the Pro version which has a couple nice features over the Home version especially if you work on a network. 

  232.  I just installed windows 7 on my old XP box – Pentium 4 with 2GB ram – the installation was quick and no major issues except some drivers that I had to search for. Overall works much better – I don’t run anything heavy on it and the OS takes about 1gb.

  233. Silly me, I saw the article in ibd about nflx outsourcing to amzn cloud for greater reliability and thought amzn should be up and nflx down.

  234.  Phil – I remind you about my earlier question about managing short term hedging spreads

  235. re:  W 7,  my experience
    It’s taken me nearly two weeks and a half dozen calls to M/S Tech support and 6 Case numbers to get W7 to work correctly.  Naturally, I needed to buy a new Motherboard, with 4 gig memory,  and Video Card capable of handling the new doodads and thingajigs.  I also need several new programs for Works and Quickbooks and others to do W/processing  and spread sheets and other applications.
    Because I needed a new hard drive the main p/c, install was the biggest problem.  Apparently even though W7 is a complete installation, not an upgrade, you must have had a previous version of Windows (Vista, XP, etc.) installed to be able to activate W7 when it’s installed. AND the 3 for 1 Home Premium I bought, for $149.95, which allows intallation on three computers, needed, after install, about an hours worth, 70, count ‘em, seventy updates!
    It installed pretty much flawlessly on the laptop (except for the 70 updates again, two of which were unnecessary and had to be hidden by M/S tech support to get rid of the yellow exclamation points in the device manager) old hard drive except for, as one mentioned, updated drivers for video contoller and some others. I needed M/S tech support for that.
    W7 does work great and has many new features that I like including, finally, a little mo/day/year calendar under the clock. Networks are a real pain on the Home Premium as there are two ways to use them: HomeGroup and Network if you have different OS (XP, Vista) on other computers. Be prepared to use W7 on all computers to get around the headaches.
    But the switch to W7 did not go for me as smoothly as others have posted.
    If I had not had multiple failures on my main PC, because of an outdated MoBo, and faulty hard drive that would not load XP consistently,  I would not have bothered with the W7 installation as XP Pro works for my requirements just dandy.

  236.    Flip&Phi:  Unless your a tech-y guy by nature, computing is at all times minor nightmare.  I’m more the "techy" kind, and smashing computers is one of the few things upon which I agree with Cramer.  I don’t do it, because they don’t care.
    Given the potential trading cost of having a computer outage, the marginal cost of matching up the latest hardware with the latest software is trivial.  Real tech guys build their own, and feel contempt for those of us who could care less and just want to get on with it.  I wouldn’t race a car or bike that I worked on, either.  Buy a high end machine with multiple memories, megaRAM, mega quad processors, get Windows 7 Professional, and — by far the hardest part --find someone who can move you seamlessly from the old to the new computer, backing up all the way.
    Hanging with the "old familiar" doesn’t work after awhile, whether in romance or computing.

  237. info from someone in Japan:

  238.  Wow morx, that’s strong stuff.  Tsunami plus nuclear accident will be expensive for Japan to put right, and may drain those domestic savings which enabled the Japanese government to run up the natonal debt hugely with  porked-out bridges-to-nowhere type public works projects.
    Laying on the paint with a broader brush, if the U.S., Europe and Japan all hit the international bond market at the same time, while the Chinese are having their own down home real estate loan contracton, the resultant soaring price of capital will ignite the Mother of all Stagflations.

  239. Jim Rogers – shorting tech ETFs

  240. Good morning!

    Futures are popping , up more than half a point already.   We are back to "doesn’t matter" mode already but we’ll see what happens when jobs come out as well as Durable Goods. 

    Dollar holding 76, Yen just under 81, silver over $37.50, Gold $1,442, copper $4.45, oil $106.35, gasoline $3.02 and Nat gas $4.40.  We’re right back to where we were before the quake – as if nothing happened….

    After doing some research it seems trying to put Windows 7 on a 3-year old computer is probably going to be very annoying so now I’m just going to wait for a brand new pure 64-bit system with lots of processors and Gigabytes of ram so I can have quick access to clips of old movies – 10,000 years of tool development will allow me to make even more obscure cultural references than ever – DaVinci must be pleased!  

    NFLX/Judy – There’s an obscure cultural reference for that!

  241. @Phil
    I’m in IAG at 16.  It has moved steadily upward for the last 7 months to 23. I have been rolling calls at ever higher prices and so far have managed to keep all the gain. 
    Is there another strategy you would suggest for this gold miner?

  242. Short-Term Hedges/Yshen –  Taking a look at this chart of TZA (3 months), you can see that it pretty much moves between $38 and $44 so it’s really a matter of respecting the channel and, when you get closer to $38, you can afford to use that line (maybe down to $37.50) to take a chance and take out your $44 caller and then re-sell on the momentum.  You can also use the dip as an opportunity to roll down.  Also, don’t fixate on $38 and $44 – of course we take a spread like that with the expectation that the channel is drifting higher so, over time, the floor may be $39, then $40 and that’s good because it means you are on track.  Just keep in mind that you don’t have to make huge wins – just picking up .25 here and there makes a huge difference in your spreads (as does losing it so very tight stops whenever you go naked).  As you see, you were up $2.90, now $1.80 so that’s the "range" you want to pay attention to but where is your note pad that marks where the Russell was at each stop along the way?  A lot of us play the RUT so when we start to go long or short off levels – that’s a good sign for you to think about adjusting your covers too.  

    Thanks Flips – That’s what I’m worried about.  

    Techy/ZZ – I used to be Director of Network Sales for Entree Computers before they got bought by IE.  That was back in the days when you actually had to know stuff to design a network!  Sadly, I have let the last couple of decades pass me by though and now I just have no time to know about computers anymore.  My Father was a systems analyst and worked with me before he died, I married Tina, who’s nickname is "High Tech Tina" – so that part of my brain has just atrophied from lack of need over the past 20 years.  At this point in my life, I just want things to work when I turn them on and I think part of my frustration is that I used to be able to take a PC apart and put it back together and write code to get things done and now it’s all Greek to me so I get extra frustrated when they don’t work right and I don’t know why.  

    Japan/Motx – Devastating scope.  I read a great story about how various villages survived in northern Japan, cut off for almost 2 weeks before rescue came – a lot of good stories there.  

    Rogers/Scott – And let me guess, he thinks we should buy commodities, right?  

  243. IAG/Flips – Not really, sounds like you have it under control but at some point you want to take those profits off the table.  You can cash at $23 and flip to the 2013 $20/30 bull call spread at $3.40 and sell the $17.50 puts for $2.60 and that’s net .80 and the worst thing that can happen is you are back in at net $18.30.  You still get $9.20 of upside up to $30 and you can still sell front-month calls and roll them along.  

  244. Something tells me today is going to be another sick move up for no reason.