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Which Way Wednesday – New Watch Levels

IWM WEEKLY As promised, we have some new watch levels.

Keep in mind that it is still ALL about the Dollar – that pathetic measuring stick of slipping US solvency that has dropped 20% since the market bottomed in March of 2009.  That makes this a not very complicated premise – we are simply going to remove the falling dollar’s effect from our technical analysis of the market and see where the dollar-adjusted ranges should put us.  Keep in mind that our number one concern for US equities at this time is that a rising Dollar will adjust them right back to where they should be – as much as 20% down from here.  

Don’t worry, it’s not very likely the Dollar will plow back to 2009 highs unless there is a terror strike or the EU collapses – it seems even a nuclear meltdown in Japan (the World’s 3rd largest currency) doesn’t make the Dollar gain any value so we’re certainly not going to sweat the small stuff, are we?

Unlike Dave Fry (chart here), we do have a position on the Russell as TZA makes an excellent disaster hedge and you can cover a great deal of downside with the June $37/42 bull call spread at $1, covering with something we REALLY want to buy on a sell-off like CHK short June $30 puts at .90 for net .10 on the $5 spread with 4,900% of upside if TZA rises 15%, which roughly corresponds to a 5% drop in the Russell. You don’t need to hedge, it’s a 5:1 payoff on a straight bet, which is pretty good protection but, on the other hand, if you have a virtual portfolio margin account, you can sell the RUT Weekly $825 puts for $1.15 and those expire worthless on Friday if the Russell holds our $835 target and, if not, they should be an even roll to the May $760 puts, so another 10% leeway on that one.  

GOOG WEEKLY Another fun way to raise cash in this sort of market is shorting a vertical.  Usually we say you have to REALLY want to own something at the net price but what if you PROBABLY want to own it but want an out?   You can take the GOOG June $480/490 bull put spread which has a $1 credit and $9 of downside risk.  If you would PROBABLY like to buy GOOG under $500 but want to limit your downside risk just in case they totally tank – then this is a nice way to dip your toe in the water.  Of  course, we love GOOG and would be very happy to buy them for $450 in January and we can get paid $16.50 for selling the Jan $450 puts and that’s enough money to buy $8,000 worth of Russell protection and the worst thing that can happen is we get assigned 100 shares of GOOG at $450 (15% off).  

We have, of course, many of these kinds of hedges so we have no fear at all of a market downturn.  In fact, we’ll be a little disappointed if we don’t get one…  

Now, back to our levels:

  • S&P bottomed out at 800 per our 5% rule (we ignore spikes down and concentrate on consolidations) which makes the 50% retrace 1,200 – adding 20% to that puts us up to 1,440 with a significant mid-point at 1,296 (10% below) which is right on the other side of our 100% line off the spike low at 1,333 so a very significant point there! 1,368 would be the dollar-adjusted 45% line below the adjusted mid-point and we’re failing that.  
  • Dow bottomed out at 8,000 so we just add zeros to the S&P and look for 13,330 and 14,440 which means the Dow is underperforming significantly at 12,800, just 45% above the 20%-adjusted low of 8,800 and not even threatening a 50% bounce off the lows.  
  • Nasdaq 1,500 was our base consolidation and that means 2,700 is our adjusted 50% bounce level.  They cleared that and from there our 5, 10 and 20% lines are 2,835, 2,970 and 3,240 and it turns out that the Nas has been topping out at 2,840.  
  • NYSE 5,000 was solid support and that makes 7,500 the natural 50% line with 9,000 the adjusted line and, like the Dow, we aren’t even there yet.  In fact, the 45% line is 8,550 – just about where, like the Dow, the NYSE was rejected.
  • Russell has been our star, coming off the bottom at 450 so 50% over there is 675 and adjusting that up 20% gives us 810 so, this one is a winner with the 5, 10 and 20% lines at 850, 891 and 972.

So now we know where we’re going to be impressed but that’s at Dollar 72 (down from 89.62) and we’d have to adjust the numbers constantly to get them right every day but at least we have a picture of where our indexes are really performing, adjusted for the currency they are measured in (as we’ve seen how horribly unfavorably they are performing against commodities).

Even as I write this, the dollar is being destroyed in pre-market trading – all the way down from 73.5 at 10pm to 72.93 this morning. This is taking our indexes and commodities out of the red so we can have a nice, pretty open for all the retail investors to gawk at. This morning on CNBC, they were discussing how the Dow was flat yesterday and it’s amazing how nothing seems to bother it. The actual fact is that the Dow fell 100 points from 11:45 to 2:55 but then was jammed back up 50 points into the close to make that "flat" day.  

Keep in mind that ALL we are getting from devaluing US currency by 0.6% in a few hours is to flatten out the market open – THIS IS NOT A GOOD SIGN.  It’s like when you have a flat tire on your bike and you pump it up for 60 seconds and nothing happens – CLEARLY THERE IS A HOLE!  This goes back to my old swimming pool example and they have used up the full force of the Fed hose and still the pool is draining and so they added the weak Dollar hose to prop up the markets and still the pool is draining.  Reminds me of the story of the crashing plane – these values are STILL TOO HEAVY:

Only lightening the value of the Dollar is holding the markets up at these levels so the question is – what’s a Dollar really worth? I mentioned in yesterday’s post, that you may wish to argue that your home did not decline 78% in value to the price of silver in the past 36 months – especially to the guy who is offering to give you silver for your home but, if you accept dollars for it – there’s no difference, is there? In Monday’s post I charted the indexes above against silver and US equities are, across the board, down 50% in 12 months against the price of silver.  

THAT IS REALITY FOLKS – these day to day fluctuations are nonsense and it’s going to be up to us to figure out in the next two days what a Dollar is really worth and, from that, hopefully we can place a fair value on the equity markets. 

Meanwhile, it has never been a truer expression – Don’t take any wooden nickels!  


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  1. looks like you are right about GMCR…. figures I had to choose this as one of my bigger shorts — sucks


  2. Since USD nosedived overnite on 4/27-28, I have been very cautious and fearful of what is to come. The sideways channel now established clearly shows the manipulation being performed . To me this a clear sign of just how bad things really are and how desperate the regime is . They are playing with fire with BB at helm and Timmy singing backup to the Chinese as though we don’t manipulate and they do and our printing has caused no inflation ?. I am quite certain other leaders of the world are looking at this charade and pondering their next move in the giant game of chess. Scary to me for many reasons.
     
    Not sure what to make out of reports Osama was executed unarmed ? A bullet to the face and published for all the world to see. I doubt we get past this without reprisal but we shall see. In all honesty I have mixed feelings about it . If unarmed he certainly could have been captured and brouhgt to justice in some world forum or ? Gonna be difficult getting past straight up murder/execution with some of the extreme muslims. Perhaps it will determine if Al Quaeda is real as many have questioned recently or not or at least their effectiveness now ? Lots of potential questions around the outcome. Will have to wait and see what actually happened and why and that may never be known for sure. 


  3. Phil or anyone have any ideas to mitigate my GMCR May short 75 calls sold @ 1.44? Thanks in advance


  4. USD touched down below 73 and so far did not move futures up ?  gotta wonder where this is going


  5.  MGM released earnings today. Wont bore you all with the details unless you follow. Shares up nicely pre market. But, they are doing a great job of improving their liquidity profile. They have pushed out some debt repayments. The revues of CityCenter and ARIA are good, with significant qoq and yoy increases in RevPAR. MGM Macau and non vegas casinos are having a solid year so far. This is really a long term debt payoff play. They lost 0.18 cents this quarter, but its incredible how much their earnings move with RevPAR…. If they trim their debt payments, and could generate slightly more RevPAR, they should be able to make up about 0.45 per quarter, which would be ~$1.8/share. Of course, i’m in the 2013 LEAPs, so i’m biased! :)


  6.  Phil:  Awesome call on the AGQ $150s.  I didn’t get the best fill, but I still picked up 85% since yesterday and it may not be done falling. 


  7. Goober, If Osama was brought back for a trial it would be a circus, I didn’t like it at first but probably best thing to bring it to an end. I don’t think it will change much of anything though.


  8. Oil Lines
    R3 – 115.28
    R2 – 114.20
    R1 – 112.40
    PP – 111.31
    S1 – 109.50
    S2 – 108.42
    S3 – 106.61 


  9.  Holy cow, Batman, OPEN was also good for 50% each on the puts and calls.  Good morning!  I put in a stop and let ‘em run, right?


  10. Hanna – sounds like you had an excellent day , yesterday with follow thru today. nice when you get it right


  11. Probably true , but there will be fallout I imagine and we shall see how it all falls out or fi in fact Al Quaeda is really a threat anymore ? I am actaully surprised  a bit at ending.


  12. Phil, 
    I have 15 TBT May 37 short puts (sold for 1.10, so down 1.00), seems like I have to go all the way out to the Sept 35′s for a roll, or you see something better?
    Thanks


  13. Phil,
    From what I could gather your tactics mostly Buy – DD – roll – sell 20% gain (that is obviously simplified).
    Do you ever ADD to the position that is going your way from the day you bought it? If yes, what is you tactic in this case?
    Thanks


  14. PP for today.

    Today’s Indicies.

     


  15. jomptien
    How they handle the story of his death is just as important if, not more, than the actual disposal of that miserable human being. Unfortunately, the "killing an unarmed man" theme is probably going to gain traction. Not sure this piece of information had to be divulged.
     
    Phil:
    http://www.philstockworld.com/2011/05/04/john-williams-hyperinflation-and-double-dip-recession-ahead/
    Looks like we are in a pickle. We either go done the inflationary path or the austerity one. Not sure there is a middle ground. All it will take is one bad bond or treasury auction and hello QE3. Don’t you think BB will continue to do everything he can to not let interest rates rise? That means the FED will have to continue to be the main buyer of bonds and treasuries that perhaps no one else will want. Bad for TBT (which I own)?


  16. Goober- why don’t you just give credit where credit is due! It was a gutsy call by a man SURE to be serving 8 years as our President! Capture him!?!? Gimme a f$ cking break!! Had this happened when the moron was in charge I don’t think you’d be questioning the results. I can only imagine the zoo that would’ve been the Bin Laden trial. Not to mention the 10s of millions which would’ve been spent on the trial.


  17. Good Riddance!


  18. Phil, 
    On the OPEN play (July 120/105 BPS with the 110 May Calls), cash in the spread and leave the callers to expire? 
    GMRC long the 10 June 60 puts, what is the back spread to turn this into? 
    Thanks


  19. Have a great day Everyone!
     
    :)


  20. dclark
    Don’t think that QE3 is that easy even with a failed auction. QE3 would mean continuation of dollar deterioration and everithing has its limit.


  21.  Agree jrom.  If you think "capturing terrorists" is a good idea, take a look at Gitmo.  When does that nightmare symbol of U.S. legal hypocrisy go away?  Good intel?  Torture and abuse dehumanizes both sides, and produces lousy intel — 10 minutes of reading on the subject will convince you.


  22. I wondered how long it would take for somebody to distort what I said, not very long. What I posed is a valid question not a condemnation nor even political really , but ? do what you will with it. I will expand AHs as obviously there are many avenues.


  23. I was not saying any of it was a good idea/bad idea , I was posing what the balance of his cohorts may or may not do or think?


  24.  just covered my OPEN 105 naked calls at .90 that I sold for $11.00, good day to all.
     
    Let’s recap Crazy Cramer and how he is the anti Phil.  If you listened to him last week and sold your AMZN at 182, roughly 198 now and then bought OPEN as he begged you to do at 112, roughly 94, on 1000 shares sold of AMZN and only 1000 shares bought of OPEN (instead of dollar to dollar), Cramer just cost his viewers a whopping 34 thousand dollars or about 25% loss in a week.  That would’ve bought a heck of a lot of HDTV’s to shoot every time you saw him on TV.


  25. Zero -I am well versed in all of it. Stop and think before running wild on emotion.


  26. This AM is a scary example of USD troubles going forward.


  27. vic55
    I am not sure and love hearing other peoples opinions.
    IMO the only threat to the continued short term destruction of the dollar will be from forces outside of the US. Clearly if the dollar strengthens it will dampen the only positive thing happening in our economy. In addition, I view a rising dollar as something BB will try to avoid as much as rising interest rates. The only way to do that would be another round of QE. But again, I am hardly an expert!


  28. goober
    I got fired on on Monday morning on my remark on Bin Laden. My question today is Was not all this a Spielberg set up just to get some positive political traction for a wounded president????


  29. WTF is GMCR worth????


  30. The market is falling and the dollar is falling-hummmm.  Be an interesting day.


  31. dclark
    Not to be pedantic, but if you mean my opinion I’ll shut up.


  32. Phil
    Buy back 1/2 covers on FAS at $29.75?


  33. Not reading a bunch of conspiracy or anything else into it, and reactions here are quite crazy for a legit question/questions ?
    Jromea, I would have said exactly the same and felt exactly the same, you could not be more wrong,  but ? go with your stuff ? and accomplish what . Reread my pots’s and think ! not react mindlessly.


  34. Osama/
    Looks like I missed "pop psychology" class.  What is so interesting about all the discussion in the media on events like these is someone evidently has the ability to draw a direct link between Muslim Extremists viewing a photo and taking specific action of a terrorost’s attacks.  My own opinion is the AMERICAN PUBLIC has paid dearly for the past 10 years in  blood and treasure and should be ALLOWED to see evidence of his death.  In fact, Osama actually accomplished what he set out to do……………… BANKRUPT this country.  If you add up all the costs: assault on civil liberties and monetary costs which have been spent and will continue to be spent……at the expense of a declining USA economy etc…….  Mission Accomplished…


  35. 65 – in some ways true enough, but it all still remains to be seen how it plays out on world stage. I imagine there are actually lots of bad guys still out there who won’t have similar views as we do. But we shall see.


  36. Good morning!  

    As I noted above, the morning pump is fake and based on a brutal attack on the Dollar pre-market.  I see no news so we can only assume it’s manipulation aimed at pumping up the markets and, when we see something like that – it’s really time to lighten up on those bullish positions or at least protect them with disaster hedges, like the TZA play above or our EDZ and SDS hedges from last week (that are doing great already).

    As I said yesterday, we’re looking for 835 on the RUT but that’s with the Dollar at 73.5 and down 0.5 means we multiply 835 by 1.005 and that’s 839, which was exactly yesterday’s bottom but I stand by my mark as the push down in the Dollar is pure BS, meant to bamboozle the suckers.  

    Note our new watch levels on today’s chart – they are good in the Dollar 70-75 range although, of course, less accurate to the outside which is why this has been dollar/index education week – I want everyone to think in terms of the Dollar being a variable in valuing your stocks – not a fixed item.  

    GMCR blew us out on earnings but not so much of a squeeze.  The June $60 puts are fairly hopeless and now down to .50 but we can wait until later to decide what to do on those.  

    Another GMCR trade we had in the $25KP was selling 5 May $65 calls for $3.60 ($1,800) and buying 4 Sept $70 calls for $5.60 ($2,240) for a net $440 cost on the spread.  The May $65s are $12.80 ($6,400) and the Sept $70s are now $13 ($5,200) and the correct thing to do here is take the money and run on the longs and roll the 5 short calls to 7 June $70 calls at $9.40 ($6,580) but that requires a lot of margin.  

    As an alternative, we can add 4 Sept $85 calls at $5.50 ($2,200) and put a stop at $12 on 3 of the Sept $70s, which flips us bearish on a sell-off.  If GMCR keeps going up, we still have our June roll and we ride it out.  

    Oil inventories are 10:30 and we should get a draw in gasoline and a build in crude due to refinery outages but they have choked off imports by 1Mbd so anything less than a build will disappoint the oil bulls and then the Dollar may not stay down at 73 and that can also knock them lower.  

    Oops, too late to pick a short on the opening BS – it’s fading already.  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    7:30 Challenger Job-Cut Report
    8:15 ADP Jobs Report
    10:00 ISM Non-Manufacturing Index
    10:30 EIA Petroleum Inventories

    Notable earnings after Wednesday’s close: ACEARIAATML,BMCBMRCLDCLWRCXOERTSETPEXPDGGGLBL, IOJDSUKIM,LBTYALEAPMETMTZMURNWSAONNNPRURIGTSLATSO,WFMIWFRWINWMB 

    April ADP Jobs Report: +179K vs. +200K expected and +207K prior (revised from +201K). Labor market conditions continued to improve in April, but only at a moderate pace.

    April Challenger Job-Cut Report: 36,490, down 12% from 41,528 prior. In addition to slowing layoffs, hiring is also on the rise; employers announced plans to add 172,590 workers, up 149% Y/Y (though MCD may be skewing the numbers). 

    April ISM Non-Manufacturing Index: 52.8 vs. 57.4 expected and 57.3 prior (>50 denotes expansion). Prices index fell to 70.1 from 72.1. Employment fell to 51.9 from 53.7. New orders fell to 52.7 from 64.1.

    Doug Kass thinks it might be time to sell stocks and raise cash, seeing "no leadership" in this market – "ag, energy and high octane growth all sputtering out." He’s "expanding shorts."

    Words to kill the Dollar:  Boston Fed President Eric Rosengren, calling current monetary policy "appropriate," says responding to supply shocks in energy and food by hiking rates would only make matters worse. Being a service economy, wage costs are of far more importance, he argues. Rosengren becomes a voter on the FOMC in 2013.

    Rumors to kill the Dollar: Asian governments are studying the idea of a common currency that would float vs. the greenback while fixing exchange rates within the region. The so-called RMU sounds enough like the EMU to probably put plans on the back burner for the time being. 

    The euro takes out another milestone in its powerful 2011 bull run, topping $1.49 vs. the dollar, assisted by very dovish comments from the Fed’s Eric Rosengren. The $1.50 level was last seen in late 2009. Beyond that is the euro’s all time high of around $1.60, hit shortly before Lehman went bust. Premarket: FXE +0.6%

    China shares -2.3% following the hawkish tone in the PBOC Q1 monetary policy report. "Stabilizing prices and managing inflation expectations are critical," says the report which also say bank reserve requirement have no "absolute ceiling."

    Eurozone retail sales fell sharply in March, sinking 1.0% vs. expectations for a 0.1% drop. Some aren’t sweating the numbers, saying they’re volatile, often revised, and a late Easter is responsible for much of the decline. Also, it’s near a week into May. Euro +0.2%

    Real estate prices continue to fall in the U.K. where the Land Registry reports a drop of 1.1% in March, the largest decline since February 2009, and bringing the Y/Y pace to -2.3%. Only London is seeing higher prices, the Y/Y increase now at 0.8%.

    A government source expects the terms of Portugal’s bailout deal to push the country into recession for 2 years. With no fat being shaved from state employment or salaries, that leaves higher taxes and cuts in social spending to narrow the deficit. The yield on Portuguese 2 year paper is down 53 bps to 11.29%.

    Watch out gold bugs!  German lawmakers from both sides of the aisle urge Portugal tosell off a portion of its gold reserves to help ease its debt burden. At today’s prices, it’s estimated Portugal has nearly $21B worth of the yellow metal. 

    The Senate report accusing Goldman Sachs (GS -0.3%) of misleading clients and manipulating markets is formally referred to the Justice Department and SEC, Bloomberg reports. A formal referral from the Senate is “much more than a symbolic gesture,” because it prompts an agency to put the matter “at the top of its list."


  37. Phil
    Good morning.
    Sometime ago, I sold BAC July $14 puts at $1.10, now $1.68.
    My thought is that the position is tracking the stock price with no premium and unless BAC moves up in next 74 days, I will remain in a hole.
    Get out into a different position, roll now, later?
    FWIW, I believe the Oxen Gp bought some calls yesterday on BAC.
    Thanks!


  38.  Wow. Quite a plunge going on now….


  39. JR,
     
    How are you positioned?


  40. goober/  My point is SO WHAT….??  Sometimes, we spend too much time "spiinning our wheels" about what "the other guy" thinks, feels, will do etc…… We deed to spend less time on these types of issues and BEGIN fixing our real problems at home…… BUT, I am not holding my breath………..


  41. Phil
    From above:
    "Rumors to kill the Dollar: Asian governments are studying the idea of a common currency that would float vs. the greenback while fixing exchange rates within the region. The so-called RMU sounds enough like the EMU to probably put plans on the back burner for the time being."
    A lot of talk about killing the dollar. Is it any more realistic today than it was a couple of months ago? I seem to remember you shooting down this idea before?


  42. Phil, USO inventories… I did the roll you suggested to the July 45′s paid for the short May 45′s (I have 60 long against 50 short as it covers them perfectly with the delta diff…damn now that we are getting this move down it seems!).Would you do anything going into inventories?  


  43. Exactly who was recently so adament about a trial for KSM in NYC on the grounds of justice ? As I said lots of avenues here and I am surprised but enough said for now. Thinking is a good thing and I will respond further AHs. 


  44. Phil,    I can’t believe my short AGQ 250 put is about to go ITM after 2 days and 110 pts of supposed protection!!!   I’m naked at 5.50, what do you suggest?   I thought the 50dma, which is nearing 250, would provide support but this degree of collapse brings that into question.   Do you suggest to wait until this tsunami is done, or turn it into a put spread?   Thanks for your help on my personal black swan!


  45. Those are May AGQ puts by the way.


  46.  A common currency is a "call" on nothing, since members can bail out.  The dollar will not disappear as a common medium of exchange anytime soon.  The Euro is a common currency, and it’s very problematic, since there are no fiscal controls across the Eurozone.  It only looks like a good idea because the dollar looks so bad, but a common currency is an orphan — Germany could re-establish the Deutschmark tomorrow if it chose to take a few billion in bond losses.


  47. Fear/Goober – I think the Dollar is just the lever they use to move the markets now but there’s a catch.  Some EU fund managers I’m working with see a much sharper correction in commodities than we do as the commodities are falling while the Euro is rising.  Gold topped out in Euros back in December at 1,092 Euros and is now down to 1,053 Euros (about 3.5%) and not looking good.  Oil not so hot either, of course and silver looking scary – they have very different looking technical charts than we do, as do Aussie and Canadian investors, whose currencies are also kicking our ass along with, of course, Japan.  So those countries start dumping ahead of us because they see weakness ahead of us and who is left holding the bag?  

    GMCR/Jomp – I wouldn’t worry about the short May calls.  Lack of a squeeze does not bode well for them breaking $80 so it’s an easy roll for you if you have to.  Over $80 – then worry.  

    MGM/Hanna – Nice job on that one.  

    AGQ/ZZ – Congrats, that’s a nice way to play those ultras when they get too crazy – you just take advantage of the power of a 10% move since it’s magnified to the underlying. 

    Congrats to all the faithful on OPEN.  

    TBT/Amatta – If you REALLY want to own TBT, this is not a problem.  I would just roll over to the next month as they are likely to bounce then as they are in September but not even a hurry to do so now, is there?  

    Whoa, 3.4Mb build in crude and only 1Mb draw in gasoline and 1Mb draw in distillates – the NYMEX bulls cannot be happy with that news.  Congrats to the $112.50 oil futures crows – we haven’t even had a nudge up since our last cross!  


  48. Jez look at those AGQ Jun $150 puts Phil recommended yesterday. I saw the trade in yesterday’s morning post at $1, but the puts were at $1.70 by the time I looked at them. I thought I missed the trade. This morning $4!!



  49.  Silver crashing…again!


  50. Phil What we do now with OPEN Your suggested play I think Buy 3 Jan 130c pd 13.20 now 5.05  sell 5 Jun 115 c 9.70 now .85 Close the deal or close short caller and wait with the long caller might recover a bit after today?


  51. Adding/Vic – Sure, scaling in can be done on the way up.  One way we scale in is when we add long calls to cover a short call that’s getting away from us.  We can also add the underlying if we really love the stock.  That’s a bit like the adjustment to GMCR above – we add more calls and set stops on our profitable calls so we have a positive delta on the way up (and we can always add more) or a negative delta on the way down.  If you go up 10% and you DD and put a stop at 5%, you lock in even, right?  It’s a question of confidence but my favorite method of adding more longs remains selling more short puts.  Let’s say you owned GMCR at $50 and sold the $60 calls for $6 and now they are $19.50 and you regret it.  You can sell Jan $60 puts for $5 and roll the callers to the Jan $72.50s at $14.50, that gives you $12.50 more upside at no cost which is better than spending another $7,715 to DD to avg $63.57 and you’d still have the caller to deal with and you’d need to hold $75 to make that same extra $12.50.  Best thing to do is ask me specifics when you think a situation merits it and I’ll be happy to tell you why I think it’s a good idea or not and what combos I see.  

    There goes 835 on the RUT and the Dollar is only 73.05 so it’s worse than I thought it was going to be.  


  52. Phil not sure what you meant by this and the suckers as realted to USD
    As I noted above, the morning pump is fake and based on a brutal attack on the Dollar pre-market.  I see no news so we can only assume it’s manipulation aimed at pumping up the markets and, when we see something like that – it’s really time to lighten up on those bullish positions or at least protect them with disaster hedges, like the TZA play above or our EDZ and SDS hedges from last week (that are doing great already).
     
    I did not see any kind of USD pump, perhaps a failed one ? Please explain the game you invisioned? in more detail. I am VERY focused on USD. Seems to me it will be he next vehicle to greater manipulation than previous QE, after all it is just monopoly money , NO? and can be used as such to manipulate markets in any direction more or less at will, so they hope and that is what concerns me. The so they hope part. 


  53. FWIW, SPY @ 134 and change is approaching the inverse H&S neckline breakout level


  54. Phil:  Gold isn’t selling off the way I think it might.  Which is good.  I’m thinking back to $1450 by June, as a rough guess.  Any option recommendations?  


  55. Wow, according to IB the spread on those AGQ Jun $150 puts Phil recommended yesterday is bid 2.5-4 to an ask of 5.30 with a last trade of 4.5.  I guess I’ll put my sell order at 4.5


  56.  Phil, have to thank you again for not a pick but a discipline.  In the past I would hold puts or call that I wrote till expiration if they were way out of the money figuring why pay anything to cover them when it’s dead money.  Now I don’t take the chance and have used the leverage I gained instead which increased my profits.  Today’s example.  Covered the naked OPEN Calls and used the leverage to write TZA May 34 puts at 1.50  which are currently at .94. So not only did that almost more than make up for the amount I spent buying back OPEN as I was able to write 20 TZA calls and only had 10 OPEN but I still have more leverage.


  57. Phil—what is your thoughts on GMCR’s trading today?
    I am too bias because I am getting squeezed.


  58. Phil – as an adder to my question above on USD. If you were rreferring to USD massive drop as pump for AM then it makes more sense to me. But what a dangerous way to go at these levels ? I am afraid they may break this thing even worse than it is already broken and bring even more complications


  59. 8800 – SPY/inverse, what time frame chart are you looking at? Thanks.


  60. Good morning,

    Installing new software today; same levels as yesterday:

    IWM   84.95,  84.84,  84.44, 83.96,  83.80,  83.45,  83.00, 82.61  but only  $2 Bil of POMO  !!

    I’m long now off the IWM 83.00 line; I believe that to be the low of the day !!


  61. Zero – focus on silver was likely for sake of JPM silver shorts and gold will be next, makes sense


  62. Silver crashing hard, great call Phil along with your market call..


  63. Phil, I sold 4 GMCR May $65 Puts for $4.3, now is about $11, thinking about roll to 5 Sep $80 put to break even.  What do you think.  Tnaks.


  64.  Phil, have 20 USO May 43 puts covered with 10 USO May 45 weekly puts. Should i roll the May puts to June? What’s a good adjustment to the position?


  65. Phil / jobs   The negligible job creation and dire prospects highlighted by today’s ISM surely mean ZIRP and QE3,4,5,etc are inevitable, along with a continuing decline of the $.  I would have thought this ‘news’ would have boosted confidence in the Bernanke ‘put’.  Treasury mkt (3.22%) again agreeing with this synopsis today?  Does my sad conclusion mean there will be a continuing bid for equities and an effective floor?


  66. TBT/Jomp – It doesn’t matter, in the long run, what the Fed wants.  They can’t keep rates down forever on the long bonds once people believe inflation is eating their value (and what fools don’t see that now is beyond me).  Don’t you think Greece didn’t want to see 20% rates on their bonds?  Portugal?  Spain?  You can play all sorts of games buying your own debt and denying your problems but, at a certain point, the rest of the World stops believing you and, in the case of the US – they can’t AFFORD to believe us because our declining Dollar imperils the value of a significant portion of their own assets.  Many, many pundits can’t get out of their US fishbowl to imagine that we are not the greatest, most powerful nation on the planet and that maybe – just maybe – Ben Bernanke does not have infinite powers.  A fiat currency is based on nothing but the faith of the creditors and we have PLENTY of creditors.  We can’t simply elect to let it keep falling because 72 becomes 68 and 68 becomes 62 and 62 becomes 55 and then we have 20-30% inflation here.  Not that anyone in power would give a damn if that happens BUT then US corporations would have to pay more money to overseas employees and pay more for imports and the largest consumer economy on Earth would be relegated to subsistence living – that’s a Global catastrophe – even the goons on Wall Street aren’t going to risk that. 

    And what Vic said.

    OPEN/Amatta – Sure, take the money and run.  July let’s them run back up into another earnings period – no sense in riding that out.  The May $110 callers are just .30 so a .50 stop as it would be tragic to blow that one, right?  GMCR we need to see how they shake out but not a lot of hope there.  

    I will 1020 – thank you!  

    Nice job on OPEN Rustle, congrats.  LOL on Cramer.  

    GMCR/Jabob – I’d say they are not worth $75 and the $75 puts are just $2.25 so a stop at $2 is worth a shot. 

    FAS/Goob – That was a great idea, I wish I had noticed it when I saw the Alert.  Sure, they dropped 50% from where they were – what more can we ask for. Next time we’ll look to take them 1/2 out but, on the other hand, if we go back down there (below $16.25 on XLF) then I wouldn’t buy them back until they prove they can get back over it.  Tomorrow is rolling day don’t forget.  

    10:00 AM On the hour: Dow -0.58%. 10-yr +0.13%. Euro +0.77% vs. dollar. Crude -0.69% to $110.28. Gold -0.12% to $1538.60.

    11:00 AM On the hour: Dow -0.89%. 10-yr +0.23%. Euro +0.31% vs. dollar. Crude -1.85% to $109.00. Gold -0.76% to $1528.70. 

    EIA Petroleum Inventories: Crude +3.4M barrels, vs. consensus of +2M. Gasoline -1.05M barrels vs. consensus of +0.1M. Distillates -1.4M vs. consensus of +0.4M. Crude futures -1.2% to $109.73. 

    With debt-limit debates intensifying, the Treasury plans to keep auction sizes steady with a $72B quarterly sale of debt next week ($32B in three-year notes Tuesday, $24B in 10-year notes next Wednesday and $16B in 30-year bonds next Thursday. The Fed buys $1.5B in TIPS; Treasurys continue a run-up, with 10-year yield -0.03 to 3.22%.

    Strapped for money, Pennsylvania could raise cash for education by drilling for natural gas on its university campuses, says Gov. Tom Corbett, who notes several of them sit atop the Marcellus Shale formation. "We need to think different," says the Governor.

    A few of the reasons Barry Ritholtz is concerned about the next 30-90 days: hot money seems to be rotating from speculation to speculation, rather than inflows accumulating longer-term holdings; traditional measures such as P/E and return on capital suggest stocks aren’t cheap; defensive sectors have found a bid, which often telegraphs a reduction of buying by fund managers. 

    The WSJ reports George Soros and John Burbank have beenselling their gold and silver in recent days. These types of leaks following a large decline are often little more than an attempt by fund managers to make themselves look good or drive the price down further so they can get in cheaper. SLV -1.0%

    Mexico increases its gold reserves nearly 17-fold, buying more than 90 tons of the metal between January and March. The purchases are the equivalent of 3.5% of annual mine output and move the country to 33rd on the list of largest holders of gold. 

    Federal immigration agents question workers at some two dozen outlets of Chipotle Mexican Grill (CMG -1.9%) in several states as part of a deepening probe of the company’s employment practices. Chipotle has dismissed hundreds of workers nationwide in recent months after immigration officials collected documents for audits.


  67.  From an outside perspective, not owning GMCR and sticking to playing NFLX and OPEN, even though it overvalued, it doesn’t seem that bad at 50x (I know that sounds crazy) but compared to the other MOMO stocks, this one is probably the best valued.  Also with Starbucks being added which is not accounted for yet, they might blow out that 1.50 number.


  68. Looks like a second chance on FAS.


  69. Wow…..IWM reacting hard to the dollar.


  70. Can some please explain to me what ‘defensive sectors have found a bid, which often telegraphs a reduction of buying by fund managers‘ from Phil above means?


  71. Phil I did not make FAS suggestion . A great day for shorts, finally ! good to see some of thye pumpers reduced. ES pulling back hard again on USD rise ? 


  72. best keep bids on aapl out there :)


  73. phil
    is it a good time to buy BIDU Sep call? thanks,


  74. Thanks Goober. A lot going on or Phil. I can see how he mixes up names every so often.


  75. Phil,
    Why tomorrow is rolling day? Tomorrow is Thursday.
    Looks like XLF is holding better then others. With sort of negative news for GS and DB it may be even good.
    Also today and tomorrow light POMO days only 1.5-2 B


  76. Phil,
    Whats the story on AAPL flash crash today? Trade took plate on BATS Equity Exchange for 100 shraes @ $321.07 and no one is even commenting on it let alone holding BATS asses to the fire!!


  77. Nicha,
    Inv H &S. Daily charts:left shldr@146.69 (2/18, Rt shdlr@134(4/6), brkout 4/26. The TA theory that SPY may pullback to the necklne approx @ 134 before(hopefully) heading back up to the target of 143 (head to neckline) – emphasis on the word ‘theory’.
    HTH


  78. vic55
    The weeklies come out tomorrow for FAS.


  79. Phil, on the sdsbull /call spread,  I bought 3 SDS June 11 20 calls and sold 3 SDS june 11 22 calls.
    Was that right?  Thanks.


  80. Phil – I will be looking for your rebound plays on some of those that got hammered, if we don’t completely crash


  81. nicha / bid — My take (and observation), is that there is a rotation going on from the commodity producers to the cheap blue chips. Usually fund managers will do this when they turning more bearish believing that blue chip value plays will rise in an upturn and decrease less in a downturn than the more speculative plays.


  82. Well, as I have been known to say before, "we either go Up or Down from here" !!


  83. Clark – thats a fact and you are welcome but not sure why ? my question didn’t get answered………..yet.


  84. high / crash — why would anyone talk about a retail client having fat fingers? It’s only interesting when "they" have fat fingers. 


  85. JRW,
    Adding my congrats and awe regarding your IWM 84.41 reversal call Tue. I am curious, given the speed at which TNA/TZA move. which order form you use to enter/exit: limit, stops, market? I missed the reversal/inflection point with a limit order and am gun shy about using a mkt order. Thanks for the guidance.


  86.  Rain:  I checked, it looks like your right on.  PG&E [PCG] is by far the most heavily purchased stock on the downtick, down 1.09% at present, down 2.32% on the week.


  87. rainman – thanks for the explanation.
     
    Also, thanks for the MT & JBL trades. I followed you in on them.


  88. It appears USD is being used to flush out commodities especially gold/silver/oil/ag.Maybe they are paying atenttion to behind the scenes threats/rants ? or simply correcting recent runaways as it seemed in some ? could be.


  89.  Phil: thank you
     
    Once again I have to thank you for two key lessons.  1) planning ahead for adjustments (knowing where to roll to) and 2) SCALING.
    I feel good closing a profitable OPEN short position that had gone the wrong way on me and required two adjustments and also feel ok with GMCR going the wrong way since I have pretty good idea of how to manage it.  When I saw GMCR last night AH rather than panic I just starting to plan my adjustment.  As long as nobody buys them out I’ll be fine.
    cheers


  90. Great news
    Lawmakers told $2 trillion debt cap raise needed: sources
    http://www.reuters.com/article/2011/05/04/us-usa-budget-limit-idUSTRE7434UG20110504


  91. I think I mentioned AGQ was the trade of the century  for a few weeks now.
     
    It’s magical to see it actually play out: May 250 puts at 3.20 last thursday now over 30.
     
    A 10-bagger with more upside. Phenomenal.


  92. Rainman,
    The issue is serious and caused a big ripple. This shit should not happen as it suggests that standing orders for AAPL buys is thin and w/o support right at the point AAPL is on possible breakout.


  93. F
     
    This better NOT be the low of the day. I HATE watching the DOW try to claw back day after day!


  94. Diesel, that is a lot of money. I had one like that a short while ago on an overnite on GOOG 2 earnings ago, 5.50 calls went to 50.magical indeed. It really does get your dobber up to be so rite occassioanlly.


  95. Highlander, rainman/AAPL – where do you see the trade at $321. TOS shart low is $346.88.


  96. Nicha,
    Correction: left shldr should read 134.69 (2/18) in my 11:45 response below.

    Inv H &S. Daily charts:left shldr@146.69 (2/18, Rt shdlr@134(4/6), brkout 4/26. The TA theory that SPY may pullback to the necklne approx @ 134 before(hopefully) heading back up to the target of 143 (head to neckline) – emphasis on the word ‘theory’.
    HTH


  97. nicha,
    Schwab has it on StreetSmart.com. TOS is famous for missing such things. Also goog for it. Reuters has brief write up on it.


  98. Phil,
    I also want to recognize for the lessons and guidance on scaling, adjusting positions, and staying with the trades that go against us by DD and selling calls and puts.
    The 25KP taught me that I am NOT a day trader. 
    The Investing for Income reinforced that I need to look mid-term to long-term on trades and focus on 20% gains. 
    I now have complete confidence I can make 20% annual returns on the longer term trades.
    Thank you!


  99. 8800

    Thank you for the kind words; 84.41 was one of my lines so I was ready for it when other indicators were showing a turn. I always use market orders (usually 3 so that I’m not as obvious on Bot radar); please read this when you have time 8-)


  100. ……Anyone see a bottom in silver ???


  101. JRW
     
    I say we go up unless of course we go down.


  102. JRW – excellent read above on note


  103. BAC/Maya – Basically, you are long on the stock at $12.32 and the stock is now $12.54 so the question is – do you hate them so much that you’d pay .22 to get out of the long position?  If you want to throw away .22, you can roll the puts to the Jan $12.50 puts at $1.25 but, if you don’t REALLY want to own them for net $11.50ish – then you SHOULD take that .22 loss now because you are going to be miserable watching this one until January unless they really take off. 

    Dollar/DC – No, it’s ridiculous.  That’s what I’ve been saying, "THEY" pull this kind of BS every time "THEY" want to knock down the dollar and, in my mind, I keep score – very much like counting cards – so, today, Boston Fed Rosengren gets a point added to his "THEY" score as do NOT the Asian governments, but the WSJ (who have over 1M "THEY" points already) who put this up as "news" with this kind of timing and, of course, we have to look at Natasha Brerton (she’s one of Rupert’s girls from London), who broke the story for Dow Jones but, OH LOOK – Dow Jones is owned by Mr. Murdoch as well – what a coincidence!  

    USO/Amatta – I thought the premise was you weren’t going to be around?  I would not have covered at all (and we didn’t) being here to watch it.  Oh well, it’s just a question of rolling them down to June if you have to, maybe put a stop on 10 if we break below $108.50 to get more bearish and another 10 off if we break $107.50.  

    AGQ/LV – Isn’t that wild?  I think I said at the time you have to know you’re not going to panic and take the loss when they drop 50 points or so and here we are with the $250 puts up to $28!  This is silver $40 so it’s really a call on whether it holds or not but it’s not that likely that silver keeps selling off that rapidly to feed AGQs drop unless something kicks the dollar back over 74.  Meanwhile, you can roll the puts to 2x the June $190 puts at $14 and those can roll to the Jan $130 puts, now $14.50 and, at that point, I’ll probably want to be long on silver!  Keep in mind you can always slap on some higher puts (or longer puts) if silver does blow $40 and use that line as a stop.  

    All currencies that aren’t backed by metal are a call on nothing ZZ. 

    AGQ/Manimal – I was only guessing at the open at 6am, sorry.  The concept was the important thing so keep that in mind next time.  

    XRT/DC – Slow, steady progress.  

    OPEN/Yodi – Oh we were bearish on them, the long calls were just a placeholder and the spread is up nicely (25%) so we’re done.  You can leave the short calls as it’s a pretty safe bet you’ll collect that $255, which is another 25% but it’s not like we were bullish on them in the first place.  There is a good chance they get some buying interest from $88 and retest $95 so maybe you want to give them some time as long as the S&P holds 1,333, which seems safe enough at the moment.  

    Pump/Goober – It’s the markets that are being pumped through the mechanism of taking the Dollar LOWER (say good night, Gracie).  See above Dollar comments – I don’t think the World can take us going much lower – certainly not lower than 68 but that in itself will risk a major crisis.  

    Gold/ZZ – I think the Aug $135 puts at $1.45 are a nice deal as the $145 puts are $4.40 (up 200%) – you’re not going to do much better than that for leverage on a 7% drop in gold and the $125 puts are .45 so risk $1 to make $3 is a good risk/reward profile.  

    AGQ/Cdtbud – Good idea selling into the excitement.  If they turn back up, it will be tough to get that ask but silver still weak and the Dollar only 73.17 so could go quite a bit lower still, maybe sell 1/2 with a stop on the rest if silver retakes $40.   

    Thanks Rustle, that’s what I love to hear, nice job!  

    GMCR/Jabob – I’m surprised they didn’t get much more of a squeeze with all those shorts on them.  

    Danger/Goober – If you are an IBanker with tens of Billions of dollars of stocks and commodities and the bubble is bursting on you – you will do anything you can to protect your bonus – even undermining the security of your country and impoverishing its people – after all, it’s just a switch you can throw…. Don’t forget the IBankers are the very embodiment of the Conservative dream – they are "every man for himself" Capitalists who don’t think they should pay taxes or do anything other than make as much money as possible and it is perfectly "moral" for them to do everything they possibly can to make more money short of breaking the law but, if it’s only going to result in a cash fine – then even that is just part of the equation.  You should be rooting for them to destroy the Dollar – they will make Billions and pay record bonuses to offshore accounts and shell corporations and then they will outbid you for the house you wanted to buy with a cash offer. 

    83 holding up so far JRW but here comes the Dollar so we’ll get a proper test.  

    Thanks Kustomz!  

    GMCR/Bob – I’d give them a day or two to settle down first.  

    USO/Mampcs – Good job being 1/2 coverd.  As I said to Amatta above, maybe just put a stop on 5 at $108.50 and the other 5 at $107.50 and THEN you are ready to sell June puts.  

    Jobs/Tusca – Clearly the Fed is unable to create jobs using their current tools so more of the same would be beyond disastrous.  I think the Fed is at the point of diminishing returns and, frankly, the poor jobs creation is an argument against more tightening as they have already sacrificed their price control mandate ostensibly to promote job growth – now they are failing on both counts and that is dangerous ground for them, especially with Ron Paul chairing a committee and calling for their dissolution.  Also, keep in mind that the current data indicates the Fed has done nothing but lie about the economic situation all quarter.  Lie after lie after lie to justify their wrong-headed policies.  They can’t just expect to go back and do it again for another quarter.  


  104. Nicha / MT, JBL — You’re quite welcome (I think, I forgot what the trades were :o I still have positions in both though.


  105.  Gold put/calls coming along nicely, following silver.


  106. GMCR finally it can be shorted. Sept 50 puts are down 56% today to 1.05
     
    worth 3 contracts


  107. There goes IWM 83!


  108. I’m short now as I do not fight my 3 min chart !!

    Speaking of charts,here’s a good one for perspective !!

    Click to View
     


  109. Amazing how well the transports held up

    May 3 (Reuters) – Korean Air Lines Co Ltd , the world’s top freight carrier among commercial airlines, reported a 41 percent drop in quarterly operating profit, hit by higher fuel costs, but expected cargo demand to improve following the earthquake in Japan.

    Japan earthquake = WINNING!!
     


  110. Leverage/Rustle – sounds great! by ‘increased leverage’ do you mean a position with greater delta? or just more room to run?


  111. Phil,
    >> They can’t just expect to go back and do it again for another quarter.
    Why not? They are doing it for decades +/- one quarter – drop in the backet


  112. Phil – why would I be rooting for them? If you read my comments/thoughts you will find that statement to be100% wrong ?your partisan badge is showing again big time. Just because I don’t like Obama and BB does not mean I like the other criminals. I have stated that  clearly, so ? Your anti conservative cheerleadering is whacked ?
     
    Conserve  -  ative     break it down, conserving is a good thing as opposed to wasting and both parties waste big time. It is a thinking process as much as a doing process and none are doing,  just talking.


  113. kustomz / DJT — Might be a short in there somewhere.


  114. Riase the debt ceiling. Buy more treasuries! Bury the dollar! 
     
    What a great strategy! These guys are so smart good thing they went to top schools and figured out how to be financial geniuses! I’m al smiles, nothing to see here move along!
     
     Black Hole Sun


  115. JRW – are in only one today ?


  116. Phil / JAG   I’m down a bit on this.  Would you sell, hold or DD?  
    ps You’re right about the Fed, but since Ben is petrified about becoming the author of the 2nd Depression, I suspect he’ll avoid any tightening and will have to prop us the equity mkt with more QE (and the ongoing $ slide is his least bad worry).  If equity mkts collapse his Ponzi is fully exposed – he just can’t afford this and will dig in hoping (vainly) for a miracle.


  117. For your consideration:

    Be very alert when you see three black crows appear on a chart. Their appearance indicates a period of powerful selling pressure. If on the fourth day the stock cannot gather strength, then lower prices are likely ahead.


  118. Phil--GMCR is up almost 21% with the market crashing? You don’t think there is a squeeze? It couldn’t even drop below 76 for more than 5 -10 minutes?


  119. goober,

    I do not understand your question.


  120. By the way Phil some of the very things you have been soap boxing lately are actually quite conservative thoughts/practices. I think you have the word and its true meaning mixed up with current spin  mantras. These guys are not real conservatives in any realm. Many think I am quite liberal in some of my views, I find that quite amusing as well . Like my thoughts on GOM being destroyed and EPA turning blind eye ? That makes me a tree hugger liberal greenie? or a horrible conserve – ative which is it  ? I like to conserve, a very thing !


  121. JRW – Are you only in IWM toiday ?


  122. Some good info here on Euro, I cant see how a liquidity problem wont hit European banks and ECB expected to raise rates tomorrow…at least thats the bet taken
    ECB FOCUS-Money market recovery hits periphery hitch
    http://www.reuters.com/article/2011/05/04/markets-money-idUSLDE74210T20110504

    Rain always a nut to be discovered…so says the blind squirrel


  123. goober

    You know I play TNA / TZA !!


  124. JRW / black crows -- As always, your timing is impeccable! I was just starting to notice the formation of the crows on many charts. Although not perfect, FCX is a good one, especially if you remove the last hour pump yesterday.


  125. JRW you were talking of IWM earlier and that thru me off, which is why I asked


  126. GMCR/Rustle – I agree.  I did the analysis last night and they, like CMG and WYNN have enough underlying fundamentals not to consider them insanely priced at 50 but, still, they will eventually fall back to the 30s so it’s not like we can’t say they are not overvalued but, to be kind, we’ll call it getting ahead of themselves.  

    FAS/$25KP, DC – Now the short $29 calls are back to .90.  Keep in mind they were $2 on Monday morning so yay!  We collected .50 and .90 selling the short calls and that’s plenty of money to roll out to the June $31s (now $1.40) but that roll gets cheaper if FAS goes lower as does the short calls and FAS looks weak on a weak dollar so I’m inclined to try to wait for tomorrow, when our rolls are clear for the next week.  

    Defensive/Nicha – That’s Barry’s comment.  Defensive sectors like Pharma, Telcom, Consumer Staples – especially dividend payers, are where people transfer their assets to when the market looks weak.  Don’t forget there are many, many funds who MUST be invested in something so they just move to the least objectionable-looking place.  

    BIDU/Ethan – I don’t like them at all.  I think we could be heading into a much bigger correction than this so I would wait to get a better bargain.  

    AAPL/High – They are being reduced from 20% of the S&P to 10% – I’m amazed they aren’t much lower every day.  Those spike outs happen every day – I don’t see why AAPL would suddenly draw attention.

    SDS/Lori – It’s the right way to do a spread, yes.  

    Rebound/Goober – Not looking very bouncy so far, Dollar at 73.27

    Rotation/Rain – Yep, that’s what we’ve been doing all month (last month).  A little ahead of the curve but we got some very nice entries.  

    Up or Down/JRW – Once again, I think you have nailed it! 8-)

    Excellent Lincoln – I’m glad to hear it! 

    $2Tn/Kustomz – If they want it to last out the year then yeah.  

    AGQ/BDC – Yep, you gotta love those ultras when they get over-excited.  

    Thanks Pete!  Sorry about the $25KP not going well but that’s the difference between gambling money and investing money and, as long as you clearly separate the two – it’s OK to have fun while we wait to collect our 20%.  

    Interesting chart JRW – I wonder how many people have been counting on that and how disappointed they will be when we’re not at 1,540 this month?

    ROFL Kustomz!  

    Bucket/Vic – Not a drop in the bucket when they’ve already drained the ocean to get us this far. 

    Conservative/Goober – I’ll see you at the next Green Party meeting then.   Elizabeth May just got elected the first Green MP of Canada – 2012 might be their year to take over Washington too!  

    JAG/Tusca – It’s a long-term hold/accumulate.  The dollar may bounce short-term but, long-term, it’s inflation that will drive commodities, not Dollar weakness.  Obviously, with gold declining it’s a hold, not a DD or accumulate.  We’ll just have to see how low they can go.  

    GMCR/Jabob – On earnings like this it’s not a relative squeeze.  Plenty of people headed for the exits on that news but feel free to go long as we do need counterparties to sell to.  

    ECB/Kustomz – Good point, if they don’t tighten, Dollar could pop back up.  Would be cruel if they do tighten after forcing Portugal to accept brutal austerity program.  


  127. green party, throw in some conserving as in fiscal responsibility and less overall governmnet and I could go there.


  128. Phil--I am short and losing my A** on GMCR!!!! Telling me to go long is an insult--esp. when you were touting it as an insanely priced stock at 60! I appreciate your advice and insight but not telling me to take the other side of your trades.


  129.  Phil
    I bought back at $29.75 1/2 FAS. As usual I was early. 8(  Be nice if it stays down here tomorrow so maybe we can roll to the June 31 for the resonable price you suggested. Will you look to get to half covered at $30 tomorrow? Thanks.


  130. goober,

    Have you not read this ?


  131. Phil,
      With May expiration less than 3 weeks away, I’m wondering if you have any advice regarding the fix it strategy you suggested some time ago for my FAS position, consisting of held May $28 calls. looking to sell May $29 calls for no less than $2.68, which in conjunction with the $1 spread would get me even?
      I feel like I probably should have sold the $29s and bought them back a time or two already and reduced the looked for $2.68, but I find it easy to fall into evaluating the decision in terms of: Phil’s call or my gut feeling, Hmmm, I think I’ll go with Phil. This is why I don’t think you can emphasize or repeat too often the sentiment expressed in articles like the one about 10K hours to master things and making trades based on evaluations of why you’re buying and what you’re intentions are.
    FWIW, I started trading in the 25K portfolio based on the incisive analysis consisting of: Do I have 25K? Yes. Do I want to turn it into 100K? HELL YES! Even though I felt like an amateur half court guy playing Pro fast break, I tried rote mimicking the trades. After a while of doing so, I thought to myself: This is NOT what Phil is trying to teach and it’s giving me agita on top of it, so i stopped. This may seem amusing naivete, but I found it a concrete and useful lesson.
    Anyway, FAS seems suspect to me, so any counsel would be welcome.


  132. Phil, thanks for the roll suggestion on the May AGQ 250 Puts.  Do you have a rule of thumb on timing the roll to the next month (2x).    Even with AGQ now at 235 my position still has 20 points of premium and  2 1/2 weeks to expiration and a theta -.80/delta -.52, whereas the Jun 200 Puts have a theta (right now) of -.35/delta -.27.   Since I have motion sickness but not panic, would it not be better to wait as close to expiration before rolling forward?   Am I correct in comparing the difference in delta to the difference in theta or is the size of the underlying move the primary determinant?  It’s hard to think clearly with this kind of volatility minute to minute!


  133. USO/TNA – a cursory glance at these two on adjacent 15 minute charts caused a double take on correlation. Not super tight, but sure look to be moving in related ways right now. I’m guessing is Dollar driven…


  134. Bulls still defending the previous low but I’m not optimistic here as the selling appears broad based. Close right here today (3 black crows), then the chances are good that there would be further pullback ahead. so the bulls need a sharp rebound somewhere before the close. Sometimes it’s difficult to remain agnostic !!  Ben ? Jamie ? Lloyd ?


  135. JRW – yes that is what I commented on above as a note. I just read it earlier when I commented.


  136. Phil,
    on FAS -> We collected .50 and .90 selling the short
    When did we buy back the short? I thought we are still fully covered with 29 calls


  137. goober,

    This may also be helpful; it’s not in the main post !!

    The setup that will probably be the most help to you is my 3 minute conformation chart, as my 1 minute has proprietary software. Basic settings are 2 day, 3 min, candlestick chart of IWM (I never watch TZA or TNA). Overlay TBT on the chart and add pivots, 40 and 200 SMA’s, Bollinger Bands, an 8 or 9 EMA and my daily confluence lines. In sub-screen 1: MACD,Stoch/RSI14momentum and Signal line. In sub-screen 2: Volume.

    This will give you good results by simply changing position based on a breaking engulfing candle followed by another engulfing candle on the new side of the EMA. You will be late on entry and exits as compared to the one minute chart, but you will have fewer false entries !!

    Also, understand that I have 6 screens and am  always watching dollar futures, Weiss Order Flow, and a myriad of other contributing factors as mentioned here.


  138. CHK bouncing off major support here.


  139. JRW, I sense a disturbance in the force, Lloyd just keeled over and made a loud guttural sound I’ve never heard before

    Played DD off the 2.5% line, like magic

     


  140. Resistance at IWM 83.45 (top of channel)!!  Go Jamie !!


  141. I’m also noticing a number of issues at or near their March lows.


  142. kinki / CHK — watch the 100 dma.


  143. JRW – thanks, I do same on 2 screens with many as you in boxes. I would rather be a little slower and have less false signals by far. Absorbing a lot here in more ways than one might imagine. Everything is information is it not ?


  144. jabobeast
    GMCR Covered calls is always the right way to play these suckers. I started with the stock at 34 and have been rolling calls and  selling puts ever since


  145. I’m getting sell signals for this rally; ready to bail at IWM 83.50ish !! (then 83.84ish) Looks like the normal reversion bot mean trade. /es 1344, IWM 83.50 target hit. what a surprise…


  146. Phil/Euro, the chances they raise rates are pretty high..sounds crazy but they need to attract foreign investment, they need the money


  147. Phil,
    Are you referring to the ‘Green’ party or the ‘Green Tea’ party?


  148. here comes the stick?



  149. Highlander – A mix would be good, you know kind of like diversity ?
     
    I hate that phrase the way it used out of context to reality.  


  150. USD moving up, game over


  151. CNBC with an emergency lunch special on gold and silver.   I wonder what the "experts" will say?  Very funny that the sponsor is Monex Gold – at least TRY not to be so obvious…

    Oh wow – industrial demand is the fundamental support for silver and jewelry too  - AMAZING!  Then at the next break Bill says very loudly that Gold is going to $4,000 an ounce – stay tuned to find out why.  I can’t wait.  We’re just lucky the folks at Monex are even willing to sell us their gold, I think…

    Green/Goober – It’s actually not a bad economic platform:  http://www.gp.org/committees/platform/2010/economic-justice.php#245108

    Going long/Jabob – I was only responding to your positive commentary.  I think they are overpriced now as I did at $60 but I can also see a better case for the bulls now so it’s something you need to PATIENTLY work through if you want to stay short.  These are very dangerous MoMo stocks and it’s NEVER a good idea to make heavy bets on them.  Don’t forget the GMCR June $60 puts in our $25KP were left over from a spread in which the short Apr $65 puts expired worthless so they are down just net .35 on on 10 contracts ($350) so we can afford to ride them out.  The other spread we took, was a 4/5 backspread that is currently down $1,000 but workable – that’s they way you play momentum stocks – not all one way or the other and certainly not in a way that exposes you to losses because they can and do move 20% ANYTIME, especially around earnings.  

    FAS/DC – That’s a perfectly fine play.  I’m trying to gut it out but that was just an aggravating move up to sit through and now we have to fear the stick.  You move was prudent.  Yes, my goal is to be 1/2 covered into the weekend again but mostly my goal is to have the callers pay for the roll!  

    FAS/Kevin – I’m sorry but I lost track.  You have naked May $28 calls that were $3.20 on Monday and are now $2.37.  The May $29 calls topped out at $2.56 at the same time – what was it you were trying to do?  

    Roll/LV – No I do not.  As a rule of thumb, once 75% of the caller or putter is intrinsic (less than 25% premium) I will then LOOK for where I want to roll and then I will look at the spread of the roll and note that and then just make sure that net price doesn’t get away from me.  It’s a little more complicated tough as I like to pick a line, like silver below $40 (not on a spike down but a real move) and then I’ll try to guess from the Deltas where a mental stop should be set or, perhaps, I’ll set up a fallback position to roll to – in case the first one fails.  So, with AGQ $250 puts at $31.50, the roll would be to 2x the June $190 puts even.  Now, what’s your tolerance?  The $250 puts still have $20 of premium and the only thing you do know for sure is that premium WILL disappear in 2 weeks.  So rolling now means you will pay the putter a $20 premium over the current price and he will laugh all the way to the bank.  Let’s say AGQ drops $50 more to $190, how much are the $260 puts?  $51.  What can they be rolled to?  The June $215 puts are $24 so it’s a $45 roll down if AGNC drops $50 more.  What roll down are you looking for?  $40.  So you may actually get a BETTER roll if AGQ goes lower and, if they go higher – you didn’t have to roll at all.  

    Dollar-driven/Scott – Yep, you can see in the futures that the Dollar headed down at 12:30 and the markets headed up right after that.  To me, that’s no reason to switch horses.  We can expect the way down to be lots of losses and bounces and RUT 835 and Nas 2825 is the bottom of my expected range so I’m sure not going to be impressed if all they can do is struggle back up to hold it.  We need at least a better than 20% retrace of the drop from 865 so that’s 6 so back around 841 is just a weak bounce off the 3.5% drop.  In the 5% rule, we’re trending for a decelerating fall of 2.5% (Mon/Tues), 1.25% (today), 0.625% (tomorrow), 0.3% (Friday) for an almost 5% drop but the 5% line should hold 821.75 and, of course, the bounce there is to the 4% line at 830.4, which is (coincidentally) right about where we turned up today.  So a weak bounce off what should be strong support at the 4% line is certainly nothing to write home about.  

    FAS/Vic – We didn’t buy back the short.  We sold and collected .50 and then sold and collected .90 so we are sitting on .70 of cash against each of those shorts and, if we have to, we’ll burn it to roll them higher tomorrow but, as I said above – we look weak and XLF never got back over $16.25 again to make us nervous this afternoon DESPITE the little index rally so it’s looking pretty lame at the moment.  

    GMCR/Jabob – I suppose you’ve read Sam’s take on them (Insider Zone).  That’s why I favored them as shorts – seems like there is monkey business but, so far, no whistles have been blown.  

    Green Tea/High – That’s a good name.  We may be able to confuse enough people to make a strong showing. 


  152.   Phil:  What about EDZ?  Down almost 12% in one week.  Worth a shot?  How would you do it…IF you would do it.


  153. Buying TNA back here (IWM 83.24) !! I believe we get a second leg up !!


  154. Gob I wouldn’t bet on the dollar moving up today with ECB rate decision tom


  155. goob^


  156. I could not have been more wrong on that , USD popped up and bam they flipped it went the other way and POP the ES.
     
    JRW did you get caught as well ? or did you hang. looked like a clear signal to me


  157.  Phil, bought DIA puts two days ago when mkt was up 40 and covered them today when they dow was down 110.  Is it a good time to reenter them or do you think we get more of a stick towards the end of the day?


  158. All the MoMos are almost green now other than OPEN??? WTF? 


  159. Phil,  in the below answer for LV, why did you use the $260 puts to compare to in the event of a $50 price drop?  Wouldnt you want to use todays $285 puts for the $50 drop to figure out what the effect on the $235s would be?  ($235 +$50).  I was following you up until that point.  Sorry for the basic question and TIA.
    Roll/LV – No I do not. As a rule of thumb, once 75% of the caller or putter is intrinsic (less than 25% premium) I will then LOOK for where I want to roll and then I will look at the spread of the roll and note that and then just make sure that net price doesn’t get away from me. It’s a little more complicated tough as I like to pick a line, like silver below $40 (not on a spike down but a real move) and then I’ll try to guess from the Deltas where a mental stop should be set or, perhaps, I’ll set up a fallback position to roll to – in case the first one fails. So, with AGQ $250 puts at $31.50, the roll would be to 2x the June $190 puts even. Now, what’s your tolerance? The $250 puts still have $20 of premium and the only thing you do know for sure is that premium WILL disappear in 2 weeks. So rolling now means you will pay the putter a $20 premium over the current price and he will laugh all the way to the bank. Let’s say AGQ drops $50 more to $190, how much are the $260 puts? $51. What can they be rolled to? The June $215 puts are $24 so it’s a $45 roll down if AGNC drops $50 more. What roll down are you looking for? $40. So you may actually get a BETTER roll if AGQ goes lower and, if they go higher – you didn’t have to roll at all. 


  160. Ferrell/1020 – He needs better writers but he does a great Bush.  

    EDZ/ZZ – We just did them the other day.  Was the June $15/18 bull call spread at $1.15 with various offsets to make it a .50 or less play.  That spread’s in the money now at net $1.80 and I wouldn’t chase as we are down at our target drop at the moment.

    Now it’s the Nas that’s fully recovered already. Dollar back to 73.15 – we’ll see if it holds.   

    12:00 PM On the hour: Dow -0.89%. 10-yr +0.22%. Euro +0.16% vs. dollar. Crude -1.47% to $109.42. Gold -1.38% to $1519.20.

    01:00 PM On the hour: Dow -0.99%. 10-yr +0.27%. Euro +0.08% vs. dollar. Crude -2.16% to $108.65. Gold -2.04% to $1508.90.

    02:00 PM On the hour: Dow -0.68%. 10-yr +0.17%. Euro +0.22% vs. dollar. Crude -1.68% to $109.18. Gold -1.73% to $1513.80.

    The unexpected weakness in the services sector adds to the already long list of data released in the past month that points to a slowing economy. Amid all the softness, it’s unlikely that Friday’s report on April job growth will surprise on the upside

    Asked for guidance on what’s needed to keep the government borrowing, the Treasury tells lawmakers a rough $2T increase in the $14.3T ceiling will keep operations going through the end of 2012, Reuters reports. The administration says it’s still up to Congress to decide. 

    Seeking to further diversify from the greenback, South Korea considers investing a portion of its more than $300B in foreign currency reserves (7th largest on the planet) in yuan-denominated securities. U.S. securities currently make up about 64% of SK’s stash. 

    Remember the famous post-earthquake G7 intervention to cool the yen’s temperature? The Japanese currency is on the move again, threatening to take out the ¥80 level, and likely to start intervention chatter again. 

    China faces a serious credit collapse down the road if political calculus keeps it from "decisive" monetary tightening now to put the "inflation and credit genies back in the bottle," writes George Magnus. This Minsky moment would hit global markets and shock conventional wisdom betting on continued yuan appreciation. 

    David Rosenberg calls BRIC stocks "the new leading indicators," noting they bottomed months before the S&P in 2009. Their recent swoon – all down 8-12% – could signal a coming correction in U.S. shares. Rosie is all over the place, giving up his bearish stance on the S&P only a few days ago. 

    Perhaps learning a thing or two from Greece and Ireland, the EU/IMF look to have shown more mercy towards Portugal, allowing more bailout money than necessary and giving the country easier to hit austerity targets. Hopefully, this will give Portugal the space necessary for true structural reform.

    The section of Goldman Sachs’ Wednesday note called "Timing the Peak" seems a little less than bullish: "At the sector level it pays to be alert but patient as returns are generally smaller in absolute terms following the ISM peak." After such a peak, highly cyclical sectors like materials and IT consistently underperform, David Kostin writes.

    Two of the three remaining bidders have dropped out of the race to buy Citigroup’s (C) $13B subprime lending business, NY Post reports. Bidders aren’t happy with Citi’s financing package, while Citi is reluctant to sell the assets at less than book value since it would signal that more of its non-core assets are worth less than marked. 

    Intel (INTC +0.2%) says new Ivy Bridge processor chips based on a new "3-D" manufacturing technique will be produced by the end of the year - giving the company a strategy to keep Moore’s Law (suggesting that transistor density doubles every two years) going along despite what some thought were physical limits, using a "skyscraper"-like approach. 

    Jim Chanos piles on after First Solar’s (FSLR -5.8%cautious comments about Euroepan solar subsidies and the delay of a major project, predicting shares could drop to "the mid double-digits.” Chanos tells CNBC: "Insiders are selling lots and lots of stock [and] are leaving the company… Frankly, solar still is at a point where it does not compete with natural gas." SPWRA -1.3%STP -3.4%TSL -4.3%.

    Canada’s Conservative Party majority victory should be a boon for oil-sands stocks (SUCVECNQ) given the diminished likelihood of new taxes or regulatory shifts, IHS Global’s Claudia Mahn says. But, on the flip side, the left-wing NDP Party’s strong showing could mean an extended debate over the country’s carbon policy. 

    As part of a favorable initiation of coverage on "brokers and universal banks," UBS puts a "Buy" on Citigroup (C) with a $5.60 target, based heavily on the global power of its brand. UBS is also bullish on JPMorgan Chase (JPM) and Goldman Sachs (GS), but neutral on BofA (BAC) and Morgan Stanley (MS). 

    Ralcorp (RAH +4.4%rejects ConAgra’s (CAG +1.7%$4.9B buyout offer and adopts a poison pill defense to prevent outside control of the company. "We are confident that Ralcorp has a strategic plan and a proven management team that will continue to generate significant shareholder value in the future," Ralcorp Chairman William Stiritz says.

    Three lunchtime reads:
    1) Dallas Fed: Inflation measurement gives us food for thought
    2) Will high oil prices bring a new recession?
    3) Here comes an emerging-markets bear


  161. Phil,
    Let me understand it correctly. You looking at FAS short calls and long calls as two separate trades, as soon as you sold shorts you consider thats a money in your pocket that can be used to roll long calls independatly from the fact that short calls are currently loosing money. You will deal with short call position later.  Am I correct?
    (The reason I asked is that I thought that I have to actually make money on the short side before using them roll the long side)


  162. goober,

    See posts, I sold TNA at the trend line then bought it back just 15 minutes ago; looking for IWM 83.83 then .96 then 84.44 !!


  163. Phil,
       Regarding FAS, I own Mar $28 Calls that cost me $3.68. The plan was to sell Mar $29 Calls for $2.68 or better to get me into the $1 spread to get back to even. What should I do at this point with expiration less than 3 weeks away?


  164. Kust – I was surprised to see a big candle and another, then to reversed and now back up again. lots of mixed signals. Probably done until closer to close and AH for a while. 
     
    Thx for heads up though.


  165. JRW   thx.


  166. If they can break this line, things will get very Bullish, they’ve already broken it on the Russell !!


  167. Phil/writers    ?….But Phil, He’s George Bush!…. :)


  168. Good call on TNA JRW!  

     DIA/Rustle – The best way to play is to first consider there are 250 trading days a year and THEN say "IF the Dow runs up into the close, I’d love to grab the DIA $127 puts back around $1.20 or less.  If that happens, then I’ll buy some and, if not, then I’ll have a good night’s sleep and see what’s on sale tomorrow."  

    $260s/Robert, LV – I have no idea.  I was looking at too many numbers.  I think I was looking at the $280 puts because they are no $49 so it couldn’t have been the $260 puts I was looking at then.  The $290 puts are $57 at the moment and that’s the price of 2x the June $225s at $58 each so a $65 spread from there.  It’s very fluid, the important thing is the concept!  

    FAS/$25KP, Vic – I look at the whole trade as a rental business where I try to generate money and improve my long-term position.  The last move we made generated $5,600 in "rents" on the Friday $29 short calls.  That tenant is causing a lot of damage to our place and we are resigned to possibly taking a hit this week and hopefully move these guys out and get some more productive tenants next week.  Meanwhile, we don’t like to have less than a 2-week spread between the caller and our calls (no more time to roll) so we already know we have to spend our usual $4,000 this month to buy another month to rent out to shorter-term tenants.  In any given week, we prefer not to dip into our "bank" (our portfolio cash) if we don’t have to but, if it buys us a clearly improved position, we do consider it.  

    QQQ Friday $49 puts are a good deal at .40 with just .17 of premium.  


  169.  Phil – I think your QQQs are $59s, no?


  170. Out of TNA !!


  171. FAS/Kevin – Ah, well that would have been nice but you got a chance to escape with a .40 loss with just 2 weeks to go – that would have been a great time to exit.  Oh well, now they are $2.40 and you can spend .70 to roll them back to the June $28s (or roll to the $29s about even) and then plan on making 6 weekly sales that will work off that $1 loss like a 1/2 sale of the next week $30s for about $1 tomorrow.   There’s .50 per long back already!  

    SQQQ June $22/25 bull call spread at $1.15, can be offset with sale of RIMM Friday $47.50 puts at .57 or the WFR May $11 puts at .45 or PFE May $21 puts at .75.  

    QQQ/ Manimal – Thanks – that was the $59 puts, of course!  

    The Treasury Department floats $2T as the additional amount in the $14.3T legal limit on federal debt necessary to ensure that the U.S. government can keep borrowing through the 2012 presidential election, Reuters reports. 

    If higher margin rates helped take the starch out of the silver market, could they do the same for oil? "I don’t think it would be the same," says Jusin Wiggs, noting the high amount of retail money (relative to the size of the market) chasing silver, as opposed to crude.

    Yemeni production and exports of crude have been halted for nearly a full month after an attack on its main oil pipeline. Not a significant player in oil, Yemen did produce 110K BPD of the light, sweet crude currently in short supply because of the Libyan shutdown.


  172. Phil -  I want to make sure I get your concept too on the AGQ Put.   With $20 premium and 2 weeks, let it burn even though the underlying may still move in a big way.   I think I agree because I believe the implied volatility will drop (I expect) from the mega-values of the last two days, and theta will be working in my favor also.   Roll (or maybe not needed) when the price is less than 25% premium since the decay(theta/delta) vs the volatility risk won’t be in favor as much.  Do I kinda have it?


  173. I will be playing direction off IWM 83.45, fwiw !!


  174.  I find myself in the strange position of being long the banks (BAC and GS) and short tech (AMZN, LULU) and retail (ANF and CMG). Strange basket, but working ok so far….Also, of course, MGM long! :)

    lvmoda – i would be very careful with that AGQ put. If it were me, i would close it and take the loss. Yes, you may be able to recover the premium. But, the worst case scenerio is if you leave it open, and SLV pulls back to support in the low $30s. That would be another 20% + downside in AGQ which is another $50+. Although, this all depends on the size of your position relative to your account. The one thing you must avoid at all costs is getting yourself in a situation where one trade becomes catastrophic and can take down a large chunk of your account…


  175. A Hawkish JCT could signal a slowdown due to inflation and no matter what the ECB does tomorrow we may see money flow into US treasuries. A similar scenario played out in 05 and the US dollar gained for the rest of the year. Something to think about.


  176. This is why I get so pissed about the oil reports!  Check out this BS:  


  177. JRW – how mant ticks to get in one way or other ?


  178. Phil,
    Word is that the woman jury member, who was holding out for a ‘guilty on all counts’  decision only got sick after she ate the special lunch sent compliments of the Indian Deli down the street from the court house!!


  179. Please note SLW and SVM are pulling out of the dive!!!


  180. Perfect 5% rule: FCX previous close 53.20, low of the day 50.54.  50.54/53.20 = 0.95 exactly.


  181. GMCR,PCLN,NFLX,CMG—-1999?


  182. AGQ/Lv – That is the theory but do keep in mind that silver COULD collapse in a panic, this is not a low-risk strategy but neither was the trade in the first place.  If you are worried, you could sell the June $310 calls for $15 and put a stop at $20 (the price of the $285s so about $25 up) as you’d be happy to lose $5 if AGQ jumps $25 and puts your putter back out of the money and, if they go lower, that’s another $15 added to your rolling fund.  

    Banks/Hanna – Well no one is giving Tech and Retail stocks a few Billion a day to play with…  

    Dollar/Kustomz – I just think we are generally at the breaking point.  If we hold these lines the commodity bulls will come charging back with a vengeance and I pity the World’s people on the next bubble – especially if it’s rice, which will push many countries into chaos as that’s been substituted for pricey grains so far this year.  

    LOL High – stranger things have happened.  Did you read "The Juror?"  

    Silver/Yodi – Topped out at $49.75, 20% pullback of $10, $2 bounce is $42 (weak).  Not bullish again until they get over $45 and they are still working on $40.  


  183. goober

    Many indicators, looking like TNA again !! (At least on the 1 min chart)


  184.  Phil:  My high tick on the AGQ 150′s was $5.  Awesome.


  185. jabo / 1999 — don’t leave out DECK, CROX, LULU and BIDU!


  186. jabo
    1999 or 2000-2001?


  187. EGLE/Phil:
    I have a artificial EGLE buy/write I put on as an inflation hedge and it looks like its deflated quite well on me. Just wondering if you could suggest a good roll?
     
    Sep 4/5 Bull Call Spread selling the Sep 4 Put for a net .05 entry. 
     
    Thanks a lot!


  188. JRW  USD is calling the shots at every tick . lots of moving all over the place


  189.  Phil: Open put spread
    I’ve got some July 120 puts I covered with May 105′s with the move today premium is gone so it’s not clear to me if there is a better option other than rolling to the June or July 105′s, thoughts?  TIA


  190. JRW may your trends stay consistent and your confirmations predictable, Im off to BBQ enjoy and stay frosty people!


  191. Go bucky… you can do it!


  192.  goober – JRWs strategy, at its foundation does not involve the USD as far as i can tell. But, assumes implicitly that the moves in USD are reflected in his indicators. I.e. he sees this in real time as the stock market reacts to the currency markets. If you are interested in his strategy, look at the basics outlined on his page. Note that he does all of his "lines" and off of IWM, but in order for extra leverage (profit) he actually trades TNA and TZA. He makes it seem like a simple trading strategy, but it is very hard to replicate his lines without him here. I suggest paper trading with his tools for a couple months before trying it if you want to.


  193. Phil,
    I was negative the Euro and had sold the May 142 Calls for 1.47 when the Euro was 1.39..
    With MAY OPEX coming I am looking to roll to June or Sept, as I am sure that the Euro cannot sustain the 1.4 mark agains the dollar for too much longer. What roll/ trade would you recommend.
    TIA


  194. Well, waste of the last hour (no trade), still, better than 7% on the day !!  Tomorrow should be telling !!


  195. Damn-  Bucky’s down on the floor and trying to get up but someone’s got their boot on his throat!


  196. yodi, also note the bullish engulfish on SLW, I added more today.


  197.  Sold USO, looks pale.


  198. Got my 20% on the QQQ puts, thanks Phil.  Very nice call on end of day weakness.  

    I’m a technical guy, can’t for the life of me see how you look at those intra-day charts and make these contrary calls but keep it up please.  


  199. mrmocha
    Precious metals They have been going up strongly and it is no surprise to me that they need to have a pull back and a breether. Same with the market in general. I am as always still a believer in these metals contrary to Phil.
    Mostly play the stock against call and put options.


  200. Phil what is wrong with your friend Ballmer today the stock is up???


  201.  Bought some SLW call options into the close. Will see tomorrow if it recovers. Thanks for the heads up MrM


  202. Phil/SKX – would you touch it now? What strike would you use to sell puts to offset TZA vertical. Same question for FCX.


  203. Hi Phil: On BMY, set up an artificial  and bought Jan. $20 C at $6.02 and sold Jan. $22.50 P for $1.78 and June $26 C for $.76 for net $3.48 on $6 spread which is now at $5.37.


  204. JR 
    Good day. 
     
    That 83.45 line was dicey at the end.  I guessed right on the break down for a nice pre-cocktail wheeeeee.


  205. Hanna – I know it isn’t one of his main ones but I imagine he has it up there. I think he realizes I am doing something a little different with ES and trying to formulate my own indicators for a bit different purpose to some degree.  Thx though
     
    What me be different ?
     
    JRW , I had a great day Thx
     
    Off on  a 100mile round trip to town and back early evening.


  206. Phil/BMY:
    Hit send button in error. As I said previously ,BMY spread now at $5.37 versus original cost of $3.48. Will let June $26C expire,but roll to Sept. $26 C is only about a $.20 premium and Jan. $26 C are $.40 premium. For such a small premium, it might be best to close position. Any ideas? thank you.


  207. JR
     
    I was curious about something.  When you trade, inevitably a new trade will turn against you.  At what point do you pull the plug on the trade.  Do you have a set stop loss, dollar value, percentage, or do you just go by feel.  These freakin Bots are sneaky as hell and they can whipsaw the heck out of you.
     
    I have a tendency to hold my losers too long.  How do you gauge when to bail?


  208.  AGQ/ZZ – Cool.  If you ever notice an ETF gone wild, that’s the way we like to play them once they pull off those parabolic tops.  That way, you don’t have to guess the top, there’s plenty to be made on the downside momentum.  Also, that’s why I’m liking SQQQ and TZA again, beaten down the other way makes them attractive.  

    EGLE/Kinki – That one just keeps slip-slidin’ away.   The premise was to have an upside if all this BS of the Transport rally and commodity demand for dry goods was real but, of course, it is not.  It’s really just about the Sept $4 short put, now $1   and there’s no good roll other than maybe 2x the Dec $3 puts at .40 but the best bet is to just wait for the 2012 positions to open up and then you can roll the puts.  The other side of the spread is dead so you just have to get lucky.  Earnings are next Tuesday and I really can’t see how they will send us lower than this and, once again, BDI is on an uptick.

    OPEN/Lincoln – Well you have a $15 spread that’s well in the money so now your goal is just to expand it.  The May $105s are $15.70 and they can be rolled down to the June $100s at $13 but that’s not really exciting, is it?  You have no premium at all in the July $120 puts so why not take that $30 off the table and grab 2x the Jan $75 puts at $9 and then you can roll the May puts to 2x the June $90 puts at $6, which will cost you $6 but your longs are well covered and you pushed the puts into all premium.  That’s a PLAN but you don’t have to do anything right now, maybe they bounce but I’d still add 1x the long puts and at least put a tight stop on the current puts for now.

    Oil sticking around our $108.50 expected target – very nice!  

    Euro/Rehat – What is that, FXE?  Those are $5.90 now!  There’s a reason I don’t play those as they suck to roll but I’d give back the $1.47 and roll them up to the June $145s, now $4.05 because at least they are 1/2 premium.  I think the Dollar comes back but I’m not sure when.  

    20%/Bruce – Nicely done.  No need to be greedy – as I said above, we have 250 days to do this, if we can make 20% on just half of them that’s 2,500% – all we need to do then is try not to lose too much on the other 125 days!  Also, keep in mind I am not at all a TA guy.  I use TA because it’s part of the fundamentals (you can’t ignore it if a lot of other people use it – if they used zodiacs, we’d be talking about them too) but that’s just AN indicator.  Also, the 5% Rule rules – as I said earlier, we EXPECTED the RUT to run back to 841 so, to me, that "rally" was a 5% Rule failure and nothing more.  The Nas rallied too on the same weak Dollar move plus a boost from the INTC announcement that will have no lasting effect so I decided to short the Nas on the opportunity.

    MSFT/Yodi – A safety stock and also part of the Nas rebalance on Monday.  

    SKX/Brook – Yes, I still like them.  They had tough comps and are getting a lousy exchange rate as they mainly produce overseas and sell here into weak dollars in a weak market.   Fortunately, overseas sales are picking up but it’s going to be a slow, tedious process for them.  I like selling the Jan $17.50 puts for $2.20. 

    FCX/Brook – Too dangerous with copper and gold looking toppy.  Back in the $40s they get exciting again but at $51, it’s not worth selling the puts and they don’t have earnings again until July so doubtful they get a big pop and they already announced a 25% beat last month so what’s the upside catalyst going to be?  

    BMY/Dflam – I’d take that and run.  You’re not going to wait a year to make .63 are you?  The question should always be – can you make more than .63 with $5.37 of cash between now and Jan?   The secondary question is how safe it is vs what you are moving to (very important).  

    Well that was a fun day.  I love it when the markets make sense (or at least a little). 


  209. exec / holding too long

    Please reread my main-page;

    My #1 Rule has always been NEVER LOSE MONEY.

    Remember my Rule #2, it’s better to be rich than right!!

    So, ether a failure of the trigger line, or an opposing break of the 8EMA on the 3 min confirmation chart !!

    Hope that helps 8-)


  210. Another great clip, this time of silver , pretty much spot on
     
    http://www.zerohedge.com/article/silver-bears-are-back
     
    se ya later


  211. Today’s levels.


  212. I will be trveling tomorrow (not available), so, I expect a push up in the mornig; if it fails, short !!


  213.  JRW,
    One of the pic on pivot point strategy notes is no longer valid. Can you find a replacement pic?
    http://www.forexwiseman.com/images/Fibonacci/pivot%20point.jpg


  214. At the close: Dow -0.68% to 12720. S&P -0.7% to 1347. Nasdaq-0.47% to 2828.
    Treasurys: 30-year +0.41%. 10-yr +0.14%. 5-yr +0.03%.
    Commodities: Crude -1.92% to $108.92. Gold +0.05% to $1516.10.

    Currencies: Euro +0.05% vs. dollar. Yen +0.44%. Pound +0.13%. 

    Market recap: Disappointing data on jobs and the service sectorcombined with a string of lackluster earnings to send stocks broadly lower. Energy and materials shares led the decline. Silver continued its descent and has dropped 19% from its peak, dragging down other commodities including oil, gold and copper. NYSE decliners outnumbered advancers nearly three to one. 

    The SEC asks Congress for a $1.4B budget for FY2012 – a $222M increase – and the CFTC wants $308M – a ~$100M boost – as the agencies say they are still hurting for cash in their struggle to fill crucial jobs, enforce new Dodd-Frank rules, upgrade market surveillance technology and pay for travel. 

    Breaking in a fresh, lying son of a bitch:  In his first speech as president of the San Francisco Fed, John Williams says high inflation is "very unlikely" because rising commodity prices spurred by global demand aren’t likely to keep climbing. The economy faces “persistent headwinds” such as high gasoline prices and a “severely depressed” housing market, yet “has enough forward momentum to overcome” them. 

    Remember what I said earlier – fines are just a cost of doing business:  UBS (UBS +0.3%) agrees to pay $160M to settle charges that it participated in a bid-rigging conspiracy to defraud state and local governments, the Justice Department announces. The bank admits the illegal and anti-competitive conduct by its former employees and accepts responsibility for it, according to the DOJ statement.

    Clearwire (CLWR): Q1 EPS of -$0.97 misses by $0.44. Revenue of $258M (+142% Y/Y) beats by $20M. Shares -2.3% AH.

    JDS Uniphase (JDSU): FQ3 EPS of $0.22 beats by $0.02. Revenue of $454M beats by $6M. Shares +10% AH. (PR

    Leap Wireless International (LEAP): Q1 EPS of -$1.26 misses by $0.19. Revenue of $780M (+14% Y/Y) beats by $41M. Shares +0.04%AH. (PR

    News Corp. (NWS): FQ3 EPS of $0.26 misses by $0.01. Revenue of $8.26B (-6% Y/Y) misses by $0.16B. Shares -3.5% AH. (PR)

    Great for our OIH short, bad start to the market tomorrow:  Transocean (RIG): Q1 EPS of $0.96 beats by $0.16. Revenue of $2.14B (-16.9% Y/Y) misses by $0.11B. Shares -1.7% AH. (PR)

    Whole Foods Market (WFMI): FQ2 EPS of $0.51 beats by $0.05. Revenue of $2.4B (+12% Y/Y) in-line. Shares +2.9% AH. (PR)

    MEMC Electronic Materials (WFR):  Q1 EPS of $0.09 misses by $0.04. Revenue of $736M (+68.1% Y/Y) beats by $97M. Sees full-year revenue of $2.8-3.1B vs. $3.4B consensus. Shares -0.5% AH. (PR)


  215. ricktao


  216. @Phil
    Fines are a cost of doing business, which are then loaded into the sales price.  Bet on it.


  217.  AKAM- Phil, what LEAPS , if any , do you like here. 


  218.  JRW,
    Thanks for pic posted. But I am unclear about pic relations with the context "Confluence" & Fib numbers.


  219. Phil, that is an interesting clip that Goober posted from Zero Hedge.  I would be interested to know your thoughts.
    Thanks.


  220. EGLE/Phil: OK. I’ll just toss it into a corner to stew while I wait for the 2012 options. Thanks alot.


  221. Good article on ZH  Sorry, Jobs Are Not Coming Back


  222.  etrade is killing me an option commissions. if they dont do well reducing it, i am considering OH and IB. any yeas or nays on either?


  223. Silver margin is raised 17% for the 4th time in 8 sessions by the CME?  Give me a f’ing break!   Talk about hitting the kill button.  


  224. Vic i think the guy that penned that article needs to widen his scope. What we have is a commodity bubble that has been attracting investment to emerging markets… Oil, farming, metals and yes manufacturing that have created many jobs. We are merely the consumers of the toil involved in retrieval and the creation of said production. As a developed nation we don’t have much need for commodities besides food and oil. Emerging markets on the other hand need steel, copper, oil, food, concrete, along with man power. This should be the driver of commodities, not speculators with money to burn.

    Ben’s dilemma along with the the Governments of emerging markets are that speculators have created most of the inflation we see today. There is a balance that is unachievable with current policies in place. All you need to do is look at what China is facing and the actions that have been implemented for evidence, things have gotten out of hand.


  225. Kustomz
    I think you are right to some degree, but lets remember that the whole move to Asia has started 20 years ago in search for a cheap labor and companies will stay there as long as their labor cheaper than ours, which means forewer considering 1.5 bln China population. That is all what it is. Commodities came into picture a lot later and speculation in the commodity markets are as old as markets themselves. Speculators were cornering everithing under the sun – corn, cofee, silver and even tullips for ages.
    But current situation with speculators is slightly different – if FED wouldn’t bail out the banks in 2008 and wouldn’t continually stuff them with a freshly printed money that has to go where the profit is - we would have a lot lower conmmodity prices.


  226. By the way goober, i never twisted your words around…


  227. Just got home and its late so I will be short and sweet tonite and save my points for weekend. My  AM post on Osama did not in any way infer he should not be dead or that it was a bad thing. My point was that releasing all the details was probably a very bad idea and now it is complicated with Obamas no photo policy. Also, I was a bit set back that Obama and Holder were adamant about prosecutiong KSM in NYC in the name of justice and then Obama takes full credit for an executiuon? Doesn’t anybody else find all this a huge double standard and mixed messages big time? I do? I am surprised he actually did this given some of the previous rhetoric about Gitmo and torture and KSM ?  Then of course you have this
     
    http://www.zerohedge.com/article/justice-department-plays-fast-and-loose-law
     
    which only adds to the confusion of decisions and policies for me. I urge everyone to read and watch video. Something is very wrong in America and with this admin. So while Obama/Holder/Hillary/Napolatano are all saying it is the right wing maniacs supplying guns and the borders are safe, this is happeninjg and they all have to know it???? WTF is going on here ? How can any of you dems possibly sweep this under the rug and turn a blind eye to all mentioned above ? My only concern with Osama is will we get retaliation likely for telling all details? I think it is very likely because some if it is salt in the wound to the crazies in Islam , Like Suffat. I will give a follow up on Suffat over weekend. Too many things here for me to discount and simply say hooray we got Osama. And fianlly don’t you all find it strange it took us 10 years to get this guy and then we find him in the circumstances revealed? Come on, this entire story is iffy at best and GWB obviously was part of the program. I have never made any bones about not liking or respecting Obama, but that is not the point here. Far too many double standards here and too many things that don’t add up to a good solid truth above and beyond Osama. Personally I am glad he is dead, but that is not the point either. I simply have mixed feelings about some of the circumstances and some of the dealings of our current admin as shown above as well as mentioned.  So how can Obama and Holder be so incredibly hyper bigoted and claim such double standards as justice? That will be the question and the answer going forward, it only undermines our credibility and increases Jihadi anti US fervor. So it does not make any sense when taken into full perspective. I would have been pissed about KSM trail if I lived in NYC as well and now it seems to have vanished , like magic ? Does no one else find all this troubling? Or is it just easier to not think and pounce on a guy like myself who raises the questions, which is essentially kill the messenger mentality is it not ? Check out the article, it is an eye opener indeed from CBS itself, a main paradyme player of PRAVDA and the article was uppressed almost immediately . Who could have a or would have done that ? Is this what any of us want for our country ? Our top officials involved in and supporting the banks  laundering mexican drug money for years while they go on TV and tell a totally differnt story and many lap it up for a lack of question? even when your lying eyes tell you vastly different? Something is very, very wrong and Osamas death in the end won’t mean much except perhaps an attack on the west . I think we should have kept the details to ourselves and amongst those that did the deed and that was my main question/point this AM . I also find it ironic that not one person here could actually do the deed, yet many can find fault with my legitimate questions and I am likely the most likely person here or one of the few that could or would do the deed? Kind of like that movie where Jack says  "The truth, you can’t handle the truth" ! More details over weekend gotta go , but some of my thoughts to chew on . Thinking first is a good thing and the partisan thing is truly a burden at this point and not productive at all. Part of the problem not the solution. I would find it very difficult to kill a man in cold blood that was not armed and able to fight back. This was an execution, plain and simple. Nothing more nothing less but previous rhetoric from the very same people who ordered it is a huge double standard and that is the real underlying point that will likely come back to haunt us all. I doubt ACLU makes any points on it and will also show  huge double standard ? We shall see soon enough.  


  228. Vic, I agree if they had less money to play with (tax them) it would be a different ball game :-)


  229. So the CME raising margins 17% again after such a massive drop in Silver the last three days.   I always thought that was done in rising markets to reduce speculation.  Another rigged market where fairness and transparency are gone and another indication of why this country and its lack of accountability and enforcement in financial markets are leading it to collapse.  So if JPM is massively short Silver and cannot deliver, how and why is it that the CME would raise margins in a dramatically declining market,  if not only to further reduce paper contracts and prices (just like the silver bears in Tyler’s virtual reality indicate) to the benefit of JPM and other insiders, and to the detriment of fair markets?  I can imagine the amount of margin calls in the AG market these last three days, and now more?   The solvency of the market, or at least a major player, must be at risk.  Screw the little guys, or whoever took the other side of JPM’s trades.
     
    Why doesn’t the government force NYMEX to do this to oil contracts, and give the lower 99% a break at the pump.   If they can drop AG 40% in three days by reducing speculation,  then they could get oil from $110 to $66  for the people by reducing paper speculation in oil.  What would that do to the economy, the stock market and the dollar, not to mention the deficit?   Of course it’s not going to happen.  Why?  Because da boys are making too much money and aren’t ready to collapse the market.   The oil companies and banks, I believe when history is written, will be held accountable.
     
    Losing money due to flawed, incomplete or incorrect analysis is one thing, but being a victim of insider manipulation is something else.   I am slowly coming to the conclusion that the banks have already determined that the country is doomed and that our laws, ethos and morality are simply obstacles to their own survival, kind of like a deathrow prisoner who does whatever he wants since it doesn’t change the final outcome.  


  230. I’m helping my daughter to study for History exam about French revolution.
    It’s scary how our current situation mirrors 1776-1787.
    to the some minute insignificant details.