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Just Another Manic Monday – What Recession?

Wheee, we’re recovering already! 

This is not sour grapes, we played for a recovery today (see Stock World Weekly’s wrap-up of last week) but it’s already getting silly with a half-point gain in pre-markets based on — nothing.   As you can see from the chart on the left, 40 months into the downturn that has given us the worst number of job losses since the Great Depression, we are nowhere near a recovery.  This is terrible, this is unprecedented, this is – great for business!  

Bill McBride of Calcuclated Risk, reminds us that Wall Street’s "dirty little secret" is that Wall Street and corporate America like the unemployment rate to be a little high. Higher unemployment keeps wage growth down, and helps with margins and earnings – and higher unemployment also keeps the Fed funds flowing freely.  Corporations like to see SOME job growth, so people have enough confidence to spend (and they can have a few more customers) but they don’t care if that job growth is in the US or China.  "A SLOWLY declining unemployment rate (even at 9%) with some job growth is considered OK," says McBride.

Paul Krugman pointed out last week that "it wasn’t much of a recovery to start with. Employment has risen from its low point, but it has grown no faster than the adult population. And the plight of the unemployed continues to worsen: more than six million Americans have been out of work for six months or longer, and more than four million have been jobless for more than a year."  Krugman continues:  

It would be nice if someone in Washington actually cared.

It’s not as if our political class is feeling complacent. On the contrary, D.C. economic discourse is saturated with fear: fear of a debt crisis, of runaway inflation, of a disastrous plunge in the dollar. Scare stories are very much on politicians’ minds.

Yet none of these scare stories reflect anything that is actually happening, or is likely to happen. And while the threats are imaginary, fear of these imaginary threats has real consequences: an absence of any action to deal with the real crisis, the suffering now being experienced by millions of jobless Americans and their families.  

Of course, Paul talks to a lot of Democrats and that may be where he gets the impression someone does care about jobs.  The Republicans held a debate last week and, like the proverbial tree in the forest, it didn’t make much sound but the few sound bytes that did escape that black hole of an event were about gay rights and whether or not Osama Bin Laden’s trophy photos should be released – clearly the kind of things we are electing our leaders to decide in these troubled times.   

The big trouble we expect this week is Wednesday’s 10-year note auction, capping off a week in which our Government will borrow another $72Bn, which many feel puts us over the debt ceiling already.  “Debt managers were likely to maintain the status quo, since cutting coupon auction sizes now – though warranted – could add confusion to an already noisy debate,” said economists at RBS in Connecticut. “For example, the cuts could be misinterpreted as an effort by Treasury to avoid the debt limit.”

Speaking of spending money we don’t have – $23Bn of POMO money will be handed out to the IBanks in the first 3 days of the week as the Government props ’till we drop.  The new POMO schedule comes out Wednesday at 2pm and, since this is, in theory, the second to last round, it will be scrutinized for signs of abating but, "in the shuffling madness — no way to slow down." 

Remember GM?  Remember how they were deeply in debt and losing money but people kept lending them more money and the government kept giving them money and everything was going to be OK until, finally, it wasn’t?  Our whole country is kind of like GM now except there is no cosmic entity that is going to come down from above and bail us out since our ADMITTED debt burden is already 25% of the entire planet’s GDP.  Keep in mind GDP is SALES, not PROFITS – that means it would take many, many years for the whole World to pay off the United State’s debt but, of course, we are not alone as the EU has their fair share as well and Japan – well Japan is about $11Tn in debt and they just had a $500Bn earthquake, which is the combined GDP of Greece, Portugal and Ireland but THEY have the strongest global currency – how messed up is that?  

We began looking at the Dollar and its place in the Universe last week and this weekend I began to ask "How Much for that Dollar in the Window" as we seek to discover what a fair value for our currency really should be which, hopefully, will give us an idea of what PRICE (not value) the markets will arrive at to finish the year.  Efforts were made in overnight trading to knock the Dollar back down from last week’s run but 74.50 hung tough at 4am and we’re back over 75 at 8:40 and that’s taking the indexes back down as sentiment changes and people would rather have dollars than iffy looking stocks and commodities.  

People would certainly rather have dollars than homes as Zillow reports this morning that housing prices fell ANOTHER 3% in Q1 this year – down 8.2% since last March with home prices now falling for a record 57 consecutive months – even in the Great Depression, people found a few buyers.  Don’t forget that this is our housing market WITH the Government’s $8,000 home-buyer tax credit boosting us in the first half of last year!  It’s also our housing market with a Fed Funds Rate of 0.25% and mortgages in the 5% range – as I pointed out to Members this weekend, a 2% rise in rates to 7% leads to a 20% increase in mortgage payments so, unless our government can continue to borrow $140Bn a month for less than 3% – we could get a pretty sharp drop in housing prices down the road…

HOMEVALUE_jumpNot only that, but the Foreclosure Tsunami is just beginning with FMCC and FNMAselling 94,000 foreclosed homes in Q1, a 23% increase over last year but that was NOTHING compared to the 218,000 properties they foreclosed on, which was a 33% gain over last year.  So let’s do that math – 94,000 was a 23% increase in sales but that still netted them a rise in their backlog of 124,000 homes, which would have been a 73% increase over last year.  There, that gives us a better view on how fast and how bad things are getting.  FNM reported a $6.5Bn net loss in Q1 – despite the 23% increase in sales!  

People who don’t think this is a huge problem are simply delusional.  Nobody, not even quasi-Government agencies like Freddie and Fannie, can remain in the business of holding onto roughly 500,000 homes that are collecting no rents and costing them property tax bills while they fall into disrepair – it’s a very dangerous combination, especially when the used home market in America is down to 5M all year – INCLUDING Freddie and Fannie’s 800,000 plus whatever other banks are dumping.  No wonder you can’t get a good price for your house and no wonder there’s no indication that things will be improving any time soon. 

The number of homes subject to a foreclosure filing may rise by 20 percent this year to 3.5 Million homes, up from a record 2.87 million properties in 2010, RealtyTrac, an Irvine (Calif.) data company, predicts. The market currently can absorb about a million foreclosures a year, the Mortgage Bankers Assn. estimates. Fannie and Freddie themselves estimate in regulatory filings that it will take "a number of years" to bring their foreclosure inventory down to pre-2008 levels.  As their holdings of unsold homes increase, Fannie and Freddie eventually will need to drop prices and turn to investors, analysts predict.

"I think they’re just [postponing] the inevitable," says Michael Slaughter, a partner at New Providence Capital, a Dallas-based private lender. "If they don’t start with a systematic distribution of these properties to investors who have cash today and will buy them at the right price, they’re going to end up selling the entire virtual portfolio to Goldman Sachs (GS) or BlackRock (BLK) at a tenth of what they can get for them today."

Of course if you think the US looks like a train wreck in progress, you’d better look at the alternatives before jumping ship!  Japan is, of course, radioactive and not a popular choice at the moment and the US we mentioned above but, at 8:30 this morning, the S&P cut it’s rating on Greece yet again to B/C AND put them on negative watch saying: "Although an extension of maturities with no principal discount would likely imply a recovery greater than 50%, our projections suggest that principal reductions of 50% or more could eventually be required to restore Greece’s debt burden to a sustainable level, given trend growth potential of the Greek economy."  

In a WSJ editorial, Timo Soini lays out the case for rejecting any more EU bailouts, calling them little more than schemes, with "opaque constructs … that make Enron look simple," to transfer bank losses to taxpayers. He blasts politicians, either for not understanding, or for being more worried about missing the next invite to dinner in Brussels.  Greek CDS spreads increase by 3.2% as investors confrontrenewed worries about the ability of the country to pay its debt. Irish and Portuguese spreads rise as well, but worst performing of all are Spanish CDS, which rise 4.1%, but remain just one fifth the level of Greece.  

In short, today is NOT a dip we will be buying – we got our little bounce and I really don’t see the fundamentals for renewed confidence – at least not until Wednesday’s POMO release when da boyz can feel safer programming the trade bots for more shenanigans.  

Be careful out there. 

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  1. Phil I have the following May Expiration Put options sold short:
    Only one I am concerned about is TBT; Please help formulate a plan, The rest I will let expire and reload when a more opportune entry presents itself. Thanks 
    FCX SOLD FCX MAY 2011 45PUTS @ 0.65
    JPM SOLD JPM MAY 2011 40 PUTS @..58 
    MDT SOLD MDT MAY 2011 36 PUTS @.55 
    RIG SOLD RIG MAY 2011 62.5 PUTS @ .75 
    TBT SOLD TBT MAY 2011 36 PUTS @ 0.75 

  2. PP for today.


    3 mo trends for IWM, SPY, DIA and QQQ.  Note the 20d MA has held for all the indicies except IWM, where it is now clearly pierced and the 5 & 20d MA are ‘kissing’. 

  3. Oh, and on NPR last night they reminded me to tell everyone _ I was going to go long SPY!  That’s the day after OPEX, so no worries on assignment……

  4. Good morning,


    IWM    85.61,  84.96,  84.44,  84.12,  83.80,  83.42,  82.98,  82.40  and  $7 Bil of POMO  !!

    Bullish set up here; if not today, then Tuesday !!


    And on IWM, a tale of black candles and crows:

    Crows say LOWER, black candles can be found at tops OR bottoms !!

    We shall see, good hunting !!

  5. The market quote for SPX is 1,469!  GS is making a mistake showing the future level in today’s quote!

  6.  Phil, at what level would you go into Dow puts again?  You were scarily accurate twice last week and took 50% profits both time.  Itching to play the market popping back down on a spike again.

  7. Spot on, although I fail to see how Krugman fits in here ? He has been ranting for far more spending to fix all the things you mentioned, perhaps he has changed his tune ? Can’t have more spending to fix it all and we have too much debt in same sentence and make any sense IMO. But then I am just a Goober. 

  8. LOL Peter…..I saw that too and almost had heart palpitations….but luckily the charts are correct!

  9. Riverside Co, CA……things are getting better….not.

    \Against the backdrop of a deep recession, nearly 1 in 4 Riverside County residents is now receiving public assistance —- the highest level in recent memory.

    More than a half-million people were enrolled for food stamp benefits, welfare payments or MediCal health coverage in 2010, according to statistics provided earlier this month by the Riverside County Department of Public Social Services.

  10. Good morning!  

    Europe is off a point with an hour to go, they are recovering off a 1.5% drop so we’ll see what sticks into the close.  Another downgrade to Greece makes sense so shouldn’t really get such a big reaction overall but it sure doesn’t make me want to get more bullish. 

    Let’s see if we can take out Thursday’s highs before considering upside plays and that’s about 12,700 on the Dow, 1,348 on the S&P, 2,844 on Nas, 8,470 on NYSE and 840 on the RUT.  If we can break those, we have a good shot at retesting Friday’s silliness, especially if they can get the Dollar back under 75.  

    Oil is right on the $100 line so we’ll keep an eye on that and we can make bullish futures plays over that line with VERY tight stops on such a significant support level.  

    XLF is very disappointing so no help for our FAS longs so far.  

    Don’t forget the Nas is rebalanced today so interesting to see if AAPL trades any differently now that it’s "just" 10% of the index….

    Monday’s economic calendar:
    9:15 U.S.-China Strategic and Economic Dialogue

    10:00 Employment Trends Index  

    Notable earnings after Monday’s close: AONEAGOATVI,AVNRBBBBBWC,


    At the open: Dow +0.02% to 12641. S&P +0.03% to 1341. Nasdaq +0.03% to 2828.
    Treasurys: 30-year -0.03%. 10-yr +0.06%. 5-yr +0.05%.
    Commodities: Crude +2.14% to $99.26. Gold +0.92% to $1505.30.
    Currencies: Euro +0.03% vs. dollar. Yen -0.2%. Pound -0.35%.

    Market Preview: Futures cling to gains, with benchmark S&P+0.1%, following a downgrade of Greek debt. European bourses turn lower, and the euro pares gains vs. the dollar. The morning kicked off with some M&A activity from Alkermes-Elan and Hertz-Dollar Thrifty, and some unimpressive earnings from HSBCLater: Employment Trends.

    In D.C. meetings about to start, Tim Geithner will press Chinese officials to raise interest rates. Slack-jawed comes to mind as the response by the Chinese to a country with policy rates scraping zero and a central bank in the midst of QEII urging higher rates upon another.

    German exports rise to $141.4B in March, a 7.3% jump from February, and the highest value ever. The annualized export gain comes to 15.8%. In 2011, Germany is set to re-take from the U.S. the position of world’s 2nd largest exporter. 

    At a minimum, the ruckus stirred by recent chatter over restructuring looks as if it will garner Ireland and Greece lower interest rates on their bailout loans. The EC, worried now about a jailbreak, appears to have dropped its demand that Ireland raise corporate tax rates in return for better terms.

    Goldman Sachs, which predicted the commodities rout, calls for a recovery after last week’s selloff wiped away $99B of market value. Commodity guru Jeff Currie sees "an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten." But other analysts warn that the downtrend is likely to stick for the next few months. 

  11.  Goober     Congrats to you and your son’s accomplishment.  Awesome rider

  12. Dollar 75.25.  Gold a good futures short under the $1,500 line.

  13.  @Goober
    What was your son’s accomplishment?

  14. PCLN,NFLX and OPEN strong again…

  15.  Hoping OPEN can get close to 100 again.  Would love to write naked calls on it.

  16. Consolidation day, with tomorrow being JRW’s up day?

  17. Puts/Jasu – Still 2 weeks to go, way too early to worry about them.  TBT $36 puts are $1.80 but still .20 premium, which is a lot and they can be rolled to June $35 puts, now $1.55 for .15, which drops your net to .60 but drops them $1 in strike.  That’s all you have to do with any of them – try to make small, affordable improvements each month, if you have to. 

    Trends/Pharm – So  anything down is BAD at the moment…  Great sign!  I can imagine Jesus figures he’ll be way too busy on expiration day so that Saturday does make sense…

    Bullish/JRW – That would be surprising if the Dollar holds 75 – we’ll see. 

    SPX/Peter – Any chance of shorting that?  

    Dow puts/Rustle – On a rejection at 12,650, 12,700 or 12,750 they would be more interesting but the higher the better.  I’m accurate because I wait PATIENTLY for an obvious point of resistance that coincides with other indicators like the dollar and metals and oil we track as well as newsflow to all line up and make a fairly obvious call so being "itchy" to make another trade runs counter to the entire system that makes them work in the first place.  Keep that in mind….

    Krugman/Goober – You can have all the spending you want if you plan on collecting enough money to cover it.  We do not have a spending problem in this country.  It’s misallocated (50% military) but the problem is we don’t collect enough revenues, plain and simple.  Idiots on CNBC this morning were questioning the wisdom of $2Bn being spent to put high-speed rails from NYC to Boston.  We are the only remaining civilized nation without high-speed rails and they ask the Secy of Transportation how they know people would want to use a train that gets you from NYC to Boston in 60 minutes – idiocy!  That $2Bn creates about 20,000 jobs and maybe more since everything put into that line has to be 100% American made.  Acela (NY to DC) is the ONLY profitable passenger line in the US and this extends it to connect Boston to DC through NY with a fast, safe, fuel-efficient transport system – no wonder the Reps are trying to block it…

    OPEN/Rustle – I agree, they are post-bubble now and need to get real.  

    Consolidation/Pharm – I think the bottom of that trendline (1,330) needs to test at this point).  

    MacKenzi/1020 – That’s a very good thing for people to read, just to get the gist of what we’re trading against.  

    10:00 AM On the hour: Dow +0.01%. 10-yr +0.09%. Euro -0.25% vs. dollar. Crude +2.16% to $99.28. Gold +0.68% to $1501.70.

    April Employment Trends Index: -0.6% Y/Y to 100.5, the largest monthly decline since April 2009, vs. 101.1 in March. (revised). "It is unlikely that the current pace of job growth can be maintained in the months ahead," The Conference Board says.   

    A roundup of editorial opinion from all parts of the political spectrum makes clear there are few, if any left in Germany who believeGreece can survive without a restructuring. EU bureaucrats also seem to have spent what little credibility they had left with their flurry of denials about Friday’s meeting. 

    The continuing slide in home prices has put 28% of homeowners underwater on their mortgages vs. 22% a year ago, according to thenew Zillow report. "We get tired of telling such a grim story," says Zillow’s chief economist Stan Humphries, who sees prices falling another 9% in 2011.

  18. Phil
    Good Morning!
    I think I know your answer but just in case, I am wrong…
    What do you think of Molycorp at $66?
    Sell some intermediate puts? I suspect though that if the market fails to hold your 100% levels, then MCP and related equities will take much bigger hits than the overall market.
    Wuld love to hear your thoughts.

  19. Phil:
    I have some TBT position that were suggested in chat. I’d appreciate your suggestion on them (incl just exit them all).
    Short 6 TBT Jan 35 put  (2.52 orig, now 3.90)
    Long 6 TBT Jan 37 call (4.10 orig, now 2.60)
    Short 6 TBT May 37 put (orig 1.20 now 2.75)
    The trades were based on the hypothesis that TBT fluctuates in between 35 & 37.  Odd situation, where I am loosing money on all 3 legs of the sprd.  Any suggestions would be helpful.

  20. Phil
    Good morning.
    I kind of know the answer already, but what are your thoughts on Molycorp at this level($66)?
    A risky entry, especially if the market fails to hold your “100%” levels as MCP will fall much greater than overall market.
    Sell some intermediate term puts?
    BTW, AAPL is 12% of the index, I thought?

  21. /DX is right against its 50 dma right now which has not been breached since January this year. Might be a tough nut to crack again and prove a good resistance point.
    Otherwise, the charts are really bullish now! 

  22. Wilsons – You are mistaken a bit ? When I said my boy Ryan Villapoto. He is NOT my son, although a personal friend who I have ridden with since he was on 60s. My son won a world championship on jet skis a couple of years ago but was also a motocrosser. I helped train numerous of these young guys over the years to include Josh Hill who would have been in the hunt as well had he not gotten a case of stupid ? All these young guys are pulling down millions these days and not from Kawasaki. We all rode Kawis though. I know a lot of people there. 
    Phil I will have to ponder the Krugman thing ? Not at all sure the continued spending at this juncture can be sustained for any reason without disasterous results ? True enough on military adventures, but the waste is systemic in all events as well ? just saying ? I am not very impressed with the nobel crowd.

  23. Phil, 
    On the remaining positions I have from 25K:
    On GMCR long puts are we just sitting wating for all the premium to be taken from us?
    I missed the roll on XRT, just did the short 53 puts which are still about even. Would you still do the roll to the 53′s? 
    CCL still holding to the long Calls? 
    HOV 2.50 calls?  

  24. GMCR/$25KP June $60 long puts.. double down and sell 2 or 3 Sept 60 puts to cover the cost?

  25. I got PUT this AM 500 shares 3Qs. Did not think this would happen but it did. I was up a bit and ended up down $15 after sold all shares  back because I did not have a good feel for direction and was unwilling to take a chance of further losses and holding 30K worth of stock I did not really want to hold. I have noi idea why I got PUT because the ratios did not seem to be appropriate ? Stuff happens.

    • If we call 12,200 on the Dow the recent consolidation then 12,810 was a 5% run up and that held perfectly (daily charts) which means we expect a pullback of 20% of that run (122 or 610 points) to 12,688 – that then, is the level we can short off as we’re below it and it makes 12,700 a more impressive breakout if we get back over it.  
    • S&P consolidation was 1,300 and 1.05 x 1,300 = 1,365 and that looks right so our 20% pullback is 13 points back to 1,352, which is way blown so next would be the 50% pullback at 1,332.5 – not a surprise at all those paying attention. 
    • Nasdaq support came at 2,740 (we get strange numbers due to short-term currency fluctuations) and 1.05x is 2,877 and that looks right too so pulling back 20% would be 27 and that brings us back to 2,850 – isn’t that special?  We blew that already and the halfway point is 2,808 so that’s the do not cross line for the Nas.  
    • NYSE looked good at the 8,280 line and a 5% pop from there was 8,694 and they barely got there, which is probably why they are getting near a full retrace at 8,414.  I’d say if the NYSE breaks below 8,400, the other indexes should all go below their 50% retraces which means the Dow makes a nice short to catch up.  
    • RUT 815 was the place to be for the last few months and 1.05 x = 856 and they blew past that but now fell all the way back to 825 and now need to make that 50% line at 835, which is right where they are.  

    So, to summarize, our 2.5% lines (50% of the 5% run of quarterly consolidation) are Dow 12,505, S&P 1,333, Nas 2,808, NYSE 8,487 and RUT 835.  Those levels need to hold to not be bearish.  

    Our 4% lines, that need to be retaken to get bullish are Dow 12,688, S&P 1,352, Nas 2,850, NYSE 8,611 and RUT 848

    So that’s our range at the moment.  3 of 5 over the top is bullish and 3 of 5 under the bottom is bearish.  Don’t forget Mondays are usually good days for the week and we have 3 very strong POMO days in a row to start this week off.

  26. Phil:
    I have the HOV BCS 2013 $2.5/$5 BCS ($2.05/$.95) now ($.95/$.30) with sold 2012 $5 P ($1.70 now $2.28). Does it make sense to roll the put to 2013 $5P for ($.32) and more time? Thank you.

  27. Phil/AMZN – sold May $190 calls for $5.5, now $12.70. What roll do you suggest? Thanks.

  28. MCP/Maya – They are all about bullish global expectations coupled with China rumors so I do like the short side but a little chasey now that they are down from a rejection at $80.  I’d rather short them on a re-test but, this could be a $50 stock again and the Sept $77.50/67.50 bear put spread is just $6.50 and you can sell the Sept $80 calls for $6 for net .50 on the $10 spread and you only get in trouble if they break over $75 so you can cover that level with a short-term call – IF it happens.

    TBT/Etrad – That sounds strange as it’s 2 short puts to one long but I guess the idea was that the puts eventually pay for the calls so it’s a free long with unlimited upside.  TBT is at $34.50 with 2 weeks to go so I wouldn’t do anything yet but do keep an eye on the eventual roll to the June $37 puts, which are now $2.90 so you pick up another .15 and buy a month.  Our premise hasn’t changed, the timing is just off at the moment. 

    DX/StJ – That’s true but it also means we shouldn’t take a dollar rejection at 75.50 very seriously as long as they stay over 75 because that’s exactly what we expect a consolidation prior to a breakout to look like. 

    Nobels/Goober – I am sure Stockholm will be very sad to hear that.  Stimulus or not is a good weekend topic.  

    GMCR/Amatta – Well, we had a nice dip to $72 on Friday so I’m hoping we see better if the market stays bearish.  If not by Weds, we ditch or roll.  XRT same thing as we’re waiting to see which way things break.  CCL is great if oil heads lower and HOV is still a Hail Mary at $2.83.  

    GMCR/$25KP, Scott – Need to see what sticks today.  

    QQQ/Goober – That’s nice as you got to wipe out the premiums ahead of time.  

    HOV/DC – It makes sense but you have 6 months to see if you really need to.  Just keep an eye on the net roll cost.

    AMZN/Nicha – I’d hold out to see if they get rejected at $205 again and, if not, THEN you better start rolling.  May $190 caller can be rolled to July $200 caller (now $11.30) which still leaves you in for net $4.10 so not a panic yet.  

  29. Good read on Gold.

  30. Phil,
    Since 3/14/11 Monday is actually the weakest day of the week, and since 8/19/10 Up/Down Ratio for Mondays is only 1.05, so Mondays stoped been bullish for some time.
    On the other note I don’t know if we have any lovers of British comedy on PSW but in the "Vicar of Dibley" there is a character called Alice Tinker very charming and incredibly stupid person, she asks questions like – Why do we need Foreign Secretary if so many english girls can do short hand? –  So in one of the episodes she called Stock Market – Stick Market, I find this amazing considering that this was an episode from 1997 if I am not mistaken.

  31.  Phil, what are your thoughts on selling some May put spreads on RIG? I was looking at the 67.50-65 put spread that could be sold for around $1.

  32.  Picked up some weekly 200 puts on AMZN for ~$2, will close if they break to new ATHs.

  33.  PHIL     Your opinion on ATML  RVBD  CY   Please    Thank You

  34. Phil,
    I like yours >> THEN you better start rolling
    Reminded me an African proverb
    Every morning in Africa, a gazelle wakes up.
    It knows it must run faster than the fastest lion or it will be killed.
    Every morning a lion wakes up.
    It knows it must outrun the slowest gazelle or it will starve to death.
    It doesn’t matter whether you are a lion or a gazelle.
    When the sun comes up in Africa, you better start running


  36. YEAH – CITI above $45, first time since 2007.  Oh, I am a bit over excited after that 1:10 reverse stock split!


  38. Hey Phil, any trades on CSCO before earnings?  Its quite tempting since its hard believing that they can go even lower….


  40. @ Pharm Whats your target for CERS? Nice up day today…

  41. Phil -  if markets do run up I will wish I had the shares back, just not feeling good about this AM? Also your IMF comments were interesting as well ? Most have no idea what has happened so far.
    Looking for direction this AM . DX is the issue it seems.

  42. Phil, 
    HOV, I have the play you recommended a couple months ago: Jan 2012 B/W: 4,000 shares @ 3.37, 40 $5 calls (.40) and 40 $5 Puts (1.60) I am down already $8K, and based on today’s commentary I am afraid these won’t be coming back anytime soon. 

  43. Phil, JAG I have a basis of $6.7 on this one (buy write with June $7.50 calls sold for .90 and the $5 Puts for .35) , I know you have been recommending it around $5, with them now at $4.80 would you DD and sell Jan puts can calls against at this level? 

  44. MoMOs and RUT back to normal
    always asking myself why don’t I BTFD?

  45. Phil/EXC, I did a buy/write: buying at 41.22, selling 2013 35 puts for 2.90 and 2013 calls 40 calls for 3.62. Collect dividend in May. Seem safe enough to you? Thanks

  46.  Amatta – will wait and see what Phil says, but I would leave that B/W on HOV alone and look at it again in a couple months. I actually like the stock here, although dont own any. Its had a really rough couple of months. You could do a little tweaking, but dont know how much it will help, and you will be messing with transaction costs. Just my 2 cents. 

  47.  Jabo – because when it dips, you convince yourself that "this time is different" :-) Me too!

  48. Vic55/ Africa
    I really liked the saying
    Very appropo and so true…having lived there…it hit home

  49. Phil
    Following up on elder care. I finally hired a lawyer and my mother is in her home now with visiting nurse and PT. Any questions about medical care in America?

  50.  Looks like I’ll be waiting to buy DIA puts at 12750.

  51. ……….."If they don’t start with a systematic distribution of these properties to investors who have cash today and will buy them at the right price, they’re going to end up selling the entire portfolio to Goldman Sachs (GS) or BlackRock (BLK) at a tenth of what they can get for them today……"
    This couldn’t be the reason WHY the y aren’t distributing them, could it?  I mean Lord Blankfein, and Larry Fink wouldn’t acutually be maneuvering behind the curtain to make sure that the ‘systematic distribution’ doesn’t occur until they can buy them for a tenth of the price that they would have to pay today?
    Almost makes you a believer in CONspiracies if you think that this is all being choreographed.

  52. Shadowfax
    Nice to see you arround again sent you an email the other day checking you are OK

  53. Phil GMCR closed all my positions stock lock and barrel with a good profit only lost on my long putter waiting for it to drop but no luck. What play would you look for now as they are smelling coffee and brandy (Irish Coffee) thks

  54. With play money, the AGQ is more fun than…..

  55. Phil being waiting to play shorts against my AAPL long callers would the weekly 350 be to risky?

  56. Hey all,

    We have just published a report for your looking with four earnings reports that could move stocks and markets this week here.

    We like LDK Solar (LDK), Molycorp (MCP), Sina (SINA), and Disney (DIS).

    We would buy the $10 calls and sell the $14 calls on LDK.

    We would buy the $65 calls on MCP and sell the $75 calls.

    We like Sina’s equity position.

    We would buy the $43 calls and sell the $47 calls on DIS.

    Check out all of our analysis here.


    Good Investing!

  57. yodi
    Still behind on e-mail, last week didn’t even check the computer. The surgen was great, did an excellent job but everyone else only wanted the money. Leaving mom in pain or needing to go to the bathroom for hours was totally uneacceptable to me. These social services people need to go and I mean eliminated, they only cause trouble like my father complained too much, called the police and bared him from the rehab center.

  58. shadowfax glade to see you still up in your old spirit

  59. @Yodi
    Any thoughts on changing your GMCR strategery?  Are you still in the B/W mode?

  60. flipspiceland
    I used to have the stock from somewhat 35$ but it looks to pricy now possible a synthetic long call against a short call would be better. Even selling short puts OTM looks risky. I am waiting what Phil thinks.

  61. PharmboyINO – we put this on our watch list last Sept., are you ready to buy down here or no likey any more?

  62. flipspiceland
    The problem with synthetic longs is you racing always against time loss as with stock you can sit back and smell the roses until they drop by 30%. Holding the APPL Oct 415 still long and have to gamble all the time to make up for loss in value and time.

  63. WOW MrM…..that is one that I had on my list, but have not been paying attention to at all….Data are out.  Let me look at them again.  Chart is very good for a dabble.

  64. David – Thanks for the reminder. I’ve had LDK on my watch list, and almost forgot their earnings tonight.

  65. flipspiceland
    Take OPEN holding the stock since Feb at 84 against now the May 100 c sold at 10 now 1.05
    I plaid as well Phils game Jan 12 long 3off at 13.20 against Jun 115 5off at 9.70 both looking good but look at the loss at the Jan lon from 13.20 to 5.40 even that we are 2000 in the plus we need to set up a new caller after Jun if possible.

  66. flipspiceland
    These are all MOMO gambles not serious B/W

  67. @Yodi

  68. Got out of TNA off my IWM 84.12 line; 3 min confirmation. Made $3. We need to break above here (1349 on SPX see chart) that should be good for 21 points on SPX !! (7 then 5 then 9)

  69. Phil:
    For the 25kp portfolio, are we considering a cover for DIA?

  70.  Phil:  Flip flopping
    On several occasions I have had spreads that moved the way I hoped but did so quickly and left little premium on the long option with alot of time to wait for the short to decay.  Your suggestions to improve the positions are always: brilliant, creative, interesting and alas somewhat confusing.  Quite often the adjustment involves  a phrase like "and that flips you bullish if OPEN moves back up".  or "flips you bearish if DBA moves down".  So I think I’m understanding that the adjusted trade dictates to me whether my position becomes bullish or bearish and I forget about my original premise if underlying reverses and the new position means selling premium going the opposite way.  Am I getting closer to understanding these trades?  Is this what you’ve done with FAS in the 25k, where you’re now selling calls under the strike whereas the trade started as a bullish trade?
    I really hope Jesus doesn’t come back this month cause I’m still enjoying learning this options thing :(

  71. Pharm are you still long TLT? 
    Phill I’m thinking of selling some TBT puts. I wouldn’t mind owning  them, but would rather just raise some cash.  
    Your thoughts would be appriciated. 

  72. Gold/Exec – I don’t know about you but the funny thing to me is when you look at the adds that surround that article pushing gold – it ain’t over till it’s over on that one. 

    Mondays/Vic – Yest but what about after weak weeks?  Dibley is a strange show

    RIG/Aug – Are you selling a put spread to be bullish?  RIG is at $67.85 so you are going to sell the $67.50/65 bear puts spread for $1, betting they won’t go lower.  I assume you have a margin reason not to sell the $67.50 puts naked so you can make $1.90 instead of $1, right – because I like that idea much better.  RIG did test $65.84 on Thursday so what you are really doing is making an upside momentum play over the $66.50 line where you’re willing to risk a $1.50 loss.  I never like risking $1.50 to make $1 – especially in a vertical, which limits your ability to adjust.  If you want to be bullish, I’d rather go for the June $65/67.50 bull call spread at $1.40 because at least your break even is at about the low they tested and you can sell naked Jan $45 puts for $1.45 to totally pay for those.

    ATML/Wilsons – Normal Semi, not much growth, fairly priced.  RVBD priced for huge growth they may not have – I’m not a fan of counting on business spending at the moment.  CY I used to like but mainly because they owned SPWRA.  I think they still own some stock but a lot was sold and now the question is – were they a one-hit wonder and, at $22 a share, I would not be willing to bet on their next album, even though I was loving them when they were $5-10. 

    Good proverb Vic! 

    C/Pharm – It’s a strange way to get a 10-bagger, they are down 2% on the day.  

    CSCO/Asaenz – We have many, many bullish trade ideas on them.  They are still way down and we know they are struggling but I still love the Jan $12.50/17.50 bull call spread at $2.80 and you can almost fully offset that with the sale of the 2013 $17.50 puts at $2.65 for net .15 on the $5 spread that’s 100% in the money at the moment (up 3,200% if successful) or you could play more conservatively and just go for the double on the bull call spread and sell the appropriate puts after earnings.  If earnings are good, maybe you only get $1.50 for the $17.50 puts but that’s still net $1.15 on the $5 spread and you don’t have to worry while, if earnings are bad, you may get $2.80 for the $15 puts (now $1.55) and that’s still a very nice long-term trade. 

    Spain/Angel – Everyone knows they are next but no one wants to talk about it.  

    Direction/Goober – Sometimes, the best way to get a handle on direction is to wait and see which direction things go.  

    HOV/Amatta – It may not come back and you will be assigned 4,000 more shares at $5 for an average of $3.18, which is 10% below the current price.  Of course the $5 puts can be rolled to the 2013 $5 puts for + .50 perhaps and then you can sell 2013 2.50 calls (now .90) which would just drop your net on the first 4,000 to -0.03 and $2.50 would become your break even which is why we don’t worry about trades that are within 20% of target with 8 months to go.

    JAG/Amatta – I would do nothing until June unless you are really trying to accumulate more.  You sold $5 puts, if you end up forced to buy at $5, there’s your next round right there.  If they don’t get assigned to you, then you have your $6.70 basis and no obligations and then you can sell more puts and calls to lower your basis further.  

    Dipping/Jabob – I’d say by Wednesday you will either regret it more or be thrilled you didn’t.  

    EXC/Jomp – I like those guys a lot.  If they got cheaper, I’d buy more – simple enough.  

    Lawyer/Shadow – Good move!  Reminds me I had an idea to create a medical advocacy group that specializes in going after insurance companies and you can have people pay for it like insurance – say $50 bucks a month and you have people on staff who can help with films and make sure they companies pay what they are supposed to pay and provide the care they are contracted to provide on time.  We could sell it right along side insurance policies and HR departments would love it as they wouldn’t have to deal with those hassles themselves.  That’s an old project I meant to pursue but never got around to. 

    12,750/Rustle – See how patience works wonders!  We’re coming right up to those levels we expected but now they have to pop them or this is just a bounce.  Dollar still holding 75, oil not breaking $101 (but good enough for those longs!).  

    Maneuvering/Flips – Oh that goes without saying!  Of course they want the GSEs to pop so they can "rescue them" at taxpayer expense.  That’s why all their pet Congresspeople are trying to pull GSE funding like it’s a national emergency and why the MSM rhetoric is ratcheting up against Freddie and Fannie again.  They are the worst kind of evil to Conservatives – a government bailout program that actually helps poor people AND keeps the Gang of 12 from making money…

    GMCR/Yodi – Just be glad you were able to walk away.  They seem bullet-proof at the moment.  

    AGQ/Flips – Well on the way to recovery already.  

    AAPL/Yodi  - This week, yes as we really don’t know what the rebalancing effect will be.  

    Interesting mix David. 

    DIA/$25KP, Etrad – If we really think these levels will hold but I doubt I’ll think that until tomorrow at least.  

    Not news Jabob but thanks. 

    Flips and flops/Lincoln – That’s about right.  In other words, I may think AAPL breaks $360 by July so I buy the $350/360 bull call spread but then they jump to $300 on a rumor that RIMM is going BK as IPhones eat into the corporate market-share and we think that’s a bit much so we adjust a play that flips you bearish (like rolling the caller to a Jan $300 call and rolling the $260 calls up to longer $280 calls) under $300.  It’s not that we don’t like AAPL, just not THAT much (same sort of thing you may have heard during a date).  On FAS we vacillate back and forth so a bit more confusing.  Sometimes we think it’s too high, like last week where we held the short puts after they doubled on us and sometimes we think they are too low, like this morning where we stuck them out naked even though XLF was weak looking.  As to Jesus – I heard he’s alright

    TBT/Lori – If you sell the July $35 puts for $1.55 you are in for net $33.45 and those can be rolled to the Jan $30 puts (now $1.55) at least and if you don’t REALLY want to own them for net $27.45 then it’s very foolish to sell puts when the stock is at $34.35, right?  

  73. Just got back into TNA; looking to break North of 84.12 !!  Bull Flag ?

  74. All right, we got our little bounces and let’s hear it for the Dow, who actually broke 12,688 (now 12,708) so we have one green out of 5.  S&P is 5 points off 1,352, Nas is right at the 2,850 line, NYSE is the dog of the field with 134 more to go at 8,477 and the Russell is not our leader for a change with 6 more points to get to 848.  Still, NYSE aside, it’s very encouraging to see our indexes roll right up to their levels like trained puppies – it means all is right behind the curtain and the levers we expect to be pulled are being pulled and that means we can put a lot of faith in our 3 of 5 rule.  

    Chances are this is manipulated because the NYSE is the hardest index to pump so, when that’s the only one that isn’t moving, it makes a great case for the other moves being BS.  

    The Dollar, meanwhile has been slapped down to 74.93 so it looks like they are working hard to get back over our 4% lines – won’t be pretty if they fail it and I think they will so:

    IWM May $83 puts at .75.

    DIA $126 puts at .99.  

    Stops if we hit green on 3 of 5.  

  75. Oops, JRW and I disagreeing! 

  76. Phil / Disagree

    Don’t worry yet, I have a 2:05 sell signal as well; we’ll see  8-)

  77.  Phil
    I like David’s suggestion on DIS, but not so crazy about his spread – any alternates? Thx

  78. Why wouldn’t I want to pwn them at 27.45?  The lowest they have been in 2 years is around $30. 

  79. JRW Phil OK you two gamblers we got a clear buy signal at 14.04

  80. Phil
    That leagal insurance shield is a most needed, sign me up as your first customer and stock holder!

  81. Phil –  what you said is exactly what I said and did, not sure hwo that could be misconstrued. waiting .
    Now USD pulling back hard and markets not really responding like they did a bit earlier? not sure what to make of most of it. so I will watch some more.

  82. Oil with a mega-pump into the NYMEX close.  More fear mongering over floods to boost commodities cause gosh, we’ve never had a flood before – it’s going to be a catastrophe! (end sarcasm font). 

    I agree on the technicals, JRW – I just had a fundamental override for reasons I noted above.  

    Holy crap – look at the Yen!  

    Ok folks, this is the same everything as why we went bearish a week ago – Yen is unbearably low for Japan, gasoline is back over $4 after being "transient" for a whole two days, gold is back over $1,500 and copper is back over $4 and now corn, wheat and soybeans are flying on the flood scare with Greek and Portugese debt flying out of control.  Why would we now go long?  


  84. Phil,
    From ZH


    First ratings agencies were blamed for Not exposing the problems in 2007 – 2008, now they are under criminal investigation for exposing problems. Should we short credit agencies, they are in NO win cituation

  85. 11:00 AM On the hour: Dow +0.04%. 10-yr +0.09%. Euro -0.34% vs. dollar. Crude +3.82% to $100.89. Gold +1.16% to $1508.90. 

    11:26 AM Treasurys that were moderately higher are mixed after a Fed purchase of $7.24B in bonds maturing 2018-2021, of $20.985B offered by dealers. The 30-year yield +0.02 to 4.3%; 10-year +0.005 to 3.15%; five-year -0.02 to 1.845%; two-year -0.01 to 0.545%.

    12:00 PM On the hour: Dow +0.28%. 10-yr +0.09%. Euro -0.11% vs. dollar. Crude +3.97% to $101.04. Gold +1.12% to $1508.30.

    01:00 PM On the hour: Dow +0.44%. 10-yr +0.17%. Euro -0.03% vs. dollar. Crude +3.68% to $100.76. Gold +1.01% to $1506.70.

    02:00 PM On the hour: Dow +0.55%. 10-yr +0.15%. Euro +0.16% vs. dollar. Crude +5.15% to $102.18. Gold +1.14% to $1508.60.

    The "self-appointed wise men, officials and pundits" who advocated "budget-busting policies during the Bush years" are trying to shift the blame for current economic troubles away from themselves, Paul Krugman writes. "It was the bad judgment of the [conservative] elite, not the greediness of the common man, that caused America’s deficit."

    This is supposed to be good news: U.S. consumers are again taking on more debt, ending a string of nine consecutive declining quarters, according to the latest NY Fed report. It’s considered a sign that people are feeling better about their economic prospects. Also, banks are becoming more willing to lend, the first such gain since Q3 2008. 

    A Reuters report lays last week’s plunge in oil on the usual suspects: an overbought market on a 5 month tear got a few reasons to go down, big names turned bearish, stretched speculators tried to catch a falling knife, and finally, computer sell programs kicked in, turning a solid decline into a rout. The list of casualties is long and growing.

    Counterpoint:  "Inflation fears that have spooked financial markets in emerging economies … are likely to prove short-lived," says a report from Capital Economics. A cooling off in price increases by the 4th quarter will lead to a recovery in investor sentiment towards EMs. EEM flat YTD.

    Food and energy making up a relatively large share of spending put India particularly at risk from higher prices, says the IMF’s Anoop Singh. The IMF has joined the RBI in recently cutting its growth forecast for the country as the central bank hikes rates more than expected.

    Without a significant reduction in its debt/GDP ratio, Greece could be shut out of international debt markets for more than a decade, say bond analysts. Under terms of its EU/IMF bailout, Greece is to tap markets for €26.7B in 2012. "The probability (of this) is very close to zero," says a strategist.

    Moody’s places Greece’s bond rating under review for possible multi-notch downgrade "if it concludes that there is large risk that Greece’s debt metrics are on an unsustainable path." This follows this morning’s S&P downgrade. Fitch to weigh in later today.

    A senior Irish government minister says the government expects its debt to be restructured within the next 3 years. He describes the recent position of acquiescence to EU bureaucrats as just ‘go along get along’ until action by Greece or the math itself opens the door for a default

    While Spain does face higher funding costs due to worries about Greece, Moody’s sees no reason to alter its credit rating. The agency believes Spain is well on its way to meeting its deficit goals and the Treasury has met much of its financing requirements

    Following a complaint filed by four academics, Portugal opens a criminal inquiry into Moody’s (MCO), S&P (MHP), and Fitch. Claiming severe financial damage for Portugal, the complaint demands to know if the agencies profited from ratings changes. 

    Here’s why the Yen went nuts this afternoon: Despite the yen’s rise close to levels which prompted intervention in March, such action looks less likely now. So far, Japanese officials have made it clear they believe current conditions are different, calling the recent move a sign of dollar weakness, not yen strength. Dollar/yen-0.3% at ¥80.36. 

    Three lunchtime reads:
    1) Roubini: "We haven’t seen the last" of crises
    2) The truth behind "sell in May"
    3) Wild week leaves Fed policy intact

  86. EXC/Jomp – a Jan 2012 syntheic buy/write is a cheap way to get setup.. buy the Jan12 40/45 BCS, sell the Jan12 37.5 Put.. net entry $15 or less. Ties up $618 margin according to TOS. if EXC get’s back to $45, you get $500 for your $15.. a nice 3233% on cash / 81% return on margin.  if exc get’s cheaper, you buy it at $37.50.

  87. TLT – yes lori, still long.  C the end of last nights post.

  88. DIS/Deano – I’m going down this summer, I’ll file a full report.  I do think they are consolidating for a move up but now that they swallowed Marvel – they are very box-office dependent in the summer so I think I’d wait for a pullback to step in, hopefully under $40.  You can always sell 2013 $35 puts for $2.75 while you wait and you can pair that with the $35/45 bull call spread at $5.90 which you can roll down if DIS takes a dip and, if they don’t – then you are $8 in the money already.

    TBT/Lori – I’m saying you should really want to own them there, meaning the puts are a good sell. 

    Health Advocacy National Defense Corp. (HAND Corp)/Shadow – We need a few insurance people who know the ins and outs of the various companies and their practices, a few lawyers and a few doctors and then we can get cooking on putting together a company.  Get the license to "You’ve got a friend" for our TV spots and I think $2M in funding will give us a $500M IPO within 2 years.  143M workers, figure all we need is 10% (14M) to give us $50 a month and we’re worth a lot more than SIRI ($8.4Bn), who only collect $2.8Bn from 18M subscribers ($16.66 per month). 

    Misconstrued/Goober – So you repeat yourself, at the risk of being rude?  

    XOM and CVX good for 20 Dow points as oil hits $102.70 at NYMEX close.  

    Portugal/Vic – I’m not sure if they are a good short as they are very reasonably priced.  Will be very interesting to see if this moves on to trial. 

    Guy Schuller, the spokesman for Eurogroup head Jean-Cladue Juncker, admits he lied to reporters when he denied a meeting was being held in Luxembourg on Friday evening. Shuller fails to see the big deal, saying no one believes anything EU leaders say anyway. Mr. Juncker himself, has publicly espoused lying as an appropriate tool. 

    It’s "big" if the notion of commodity margin hikes as economic stimulus gains traction, Josh Brown writes. A weekend NY Post piecenotes how last week’s hikes broke the back of silver speculators: "It is time to stop dancing around the subject and begin to fight oil speculators. Increasing margin requirements for crude, much like with silver, will drive crude prices lower."

    One of Cramer’s pals steers people the wrong way:  Zillow’s update on the dismal state of the housing market prompts Brett Arends to become a contrarian real estate bull. Among several reasons, he finds "deals aplenty" in the places that have fallen the furthest; prices in hard-hit south Florida have slid to levels not seen since "Miami Vice" was on TV.

  89. Covered FXE on Fri, took the gains off the table (June 145s), but still expecting another leg down (I think the bounce in here for a while).  Sold the May 141 Ps for 90c, and have now the Jun 140s (bought this morning).  If one wants to play the FXE, I think opening up the spread above is good at a full cover, as the 141s can be rolled down to the June 137s even for now.  Will have to watch.  If they bust through the 50d MA (here now), then it is 140, 137.25, then 135 or so.

  90.  Phil: Flip Flop
    Okay I don’t mind you making fun of my dating life but I do take offense to you playing with my head and throwing all kinds of crazy AAPL strike prices at me like some kind of puzzle. With AAPL at 348 translation please: " I may think AAPL breaks $360 by July so I buy the $350/360 bull call spread but then they jump to $300 on a rumor that RIMM is going BK as IPhones eat into the corporate market-share and we think that’s a bit much so we adjust a play that flips you bearish (like rolling the caller to a Jan $300 call and rolling the $260 calls up to longer $280 calls) under $300".  Assume you mean 380 calls and 400 jan callers but not sure what you mean by longer calls, longer than Jan?  TIA

  91. "….denied a meeting was being held in Luxembourg on Friday evening. Shuller fails to see the big deal, saying no one believes anything EU leaders say anyway. Mr. Juncker himself, has publicly espoused lying as an appropriate tool".
    He may not be honest, but at least he’s telling the truth.

  92. Wow, Newsletter is a hit Phil – what’s the distribution on that?  CERS and ARIA up big.

  93. Damn Phil, I think you called the top again.  I am leaning towards you being psychic.  That makes it easier for me to deal with than just accepting you know that much more than I do.  

  94. "…Why would we now go long?"
    er……because we misconstrued the connotation?

  95. Phil,
    Strategy question: assuming a short posture why use DIA/IWM puts vs inverse DXD/TZA? Would the decay outweigh the leverage of the ETFs?


  97. Phil – No rude intended or otherwise, just watching as the USD reactions were a bit different today ? Not sure what to make of it. Picked up a few ES points this AM and just watching since. No idea what close may look like from here, maybe up ?



  100. Pharmboy, you riding the MNTA bucking bronco with me?  It’s quite a ride since April!

  101. A humorous clip from last Friday-
    * Rated PG 13  (you know who you are)  :)

  102. MNTA/mrm – of course.  I tried to sell 1/2 my spread from here….and it did not go through.  Looks like selling the $18 May Ps should be fine for the time being.  SGEN is also getting a ‘lil giddy up as well. SGEN needs to break through here to ATH, then I see $20 in our sites.  IMGN is all over the road as well. 

  103. Angelcur/ Sheila Bair, she’s one of the good guys. Unless she’s moving over to the SEC, her loss may be indicative of the banskers  gaining control.

  104. SGEN, yes me likey, my JUN 17.50 calls are up 20% so far, thanks!

  105. 85M shares traded at 3pm on the Dow – that has nothing to do with C, this is a totally BS no-trading day so the movement today is meaningless. 

    AAPL/Lincoln – Yeah I downshifted $100 there at the end.  I wasn’t making fun of your dating particularly – I’m pretty sure it’s a common experience.  Yes by longer I mean in time.  

    Truth/Flips – I wish there were more guys like that.

    Newsletter’/Pharm – We toil in relative obscurity at the moment as the back end support system isn’t finished so the marketing guys are on hold.  A little risky but we’re building under the assumption we’ll have 10,000 subscribers after 12 months and 20,000 the year after that.  Then things will get interesting.  

    Psychic/Dennis – Call it what you want but it’s just the 5% rule asserting itself in a weak market.  Dollar rejected at declining 50 dma at 75.37 is the real story of the market and that’s off a run from 72.69 (peak to peak) which is 3.8% or 2.5% then 1.25% so a pretty normal progression to a 5% move means we can expect to consolidate there and likely break over.  Using the base of 73 and a 2.25 move up to resistance is a 3% move and a 20% pullback is 74.8ish so holding that line is still bullish and we’re at 74.87 at the moment – very dangerous time for bulls to get complacent.  

    Inverse/8800 – The spreads are very wide and the decay is nasty and if I were more sure, I might want to get more aggressive but I was just making a call on a possible turn so we want to pay as little premium as possible in case we had to bail.  

    Hedgies/Angel – Well it’s reasonable for the buyers of bonds (lenders) to want a rating and rate of return that accurately affects the risk they are taking while it’s reasonable for the sell of bonds (borrower) to not want to rating to understate their ability to pay otherwise they can be burdened with unfair levels of debt.  BUT – if we allow lenders to sue the raters – this whole thing can get ridiculous pretty quickly.  

    Close/Goober – Obviously, they are trying to hold this level and, with this kind of volume, it would be pretty sad if they can’t.

    Woodstock/Angel – Mine’s in Killington but a resort property – we get free wood, which is the best!  I love Vermont, would be happy to live there if they would upgrade the train to high speed.  

    Baird/Angel – you would think the Bansksters would be happier to see her go.  I guess until her replacement is named it’s the devil you know vs. the one you don’t…

    LOL 1020! 

  106. >> Among several reasons, he finds "deals aplenty" in the places that have fallen the furthest
    Yesterday Savi was asking about good places to live around DC area, today after reading Arend view I reminded myself that when my family moved from Ohio to DC in 1994 we were surprized by two things – much higher prices and much more RE available. That was a time of government shrinking. From 1994 to 1997 we were looking for a house and I remember going through different areas of N. Virginia and Maryland – everithing was on sale. In some neigborhuds every third house was for sale. N. Virginia -> unpopulated, Maryland was a farm country even in areas like Potomac, Bethesda, ChevyChase. And now when every area is overpopulated and prices around DC still close to where they were in 2007, I can’t even imaging what will happened when goverement start shrinking again to reduce a debt. So I will postpone my next RE purchase.

  107. 3:00 PM On the hour: Dow +0.47%. 10-yr +0.15%. Euro +0.18% vs. dollar. Crude +5.34% to $102.37. Gold +1.37% to $1512.00.

    Brazil faces "deindustrialization" due to the strength of the real, claims the head of Siemens’ Brazilian operations, arguing for the possible imposition of further currency controls. High real rates have failed to cool the economy or bring down inflation as money from the developed world continues to flow into the country. EWZ -4.2% YTD.

    Megacap stocks have underperformed their smaller-cap brethren during the recent rally, trading at a 20% discount to the broader market. But small-cap breadth has turned weaker, and some observers are beginning to see "big ‘n’ boring" looking beautiful for the second half of the year. Morgan Stanley’s top five megacaps with the potential to outperform: BACJPMMSFTAAPLPM

    Could Apple (AAPLsomeday be worth $2T? That seems plausible to James Altucher: "Last quarter, Apple’s earnings growth was about 90% Y/Y. That means… it’s not unreasonable for Apple to trade for 90x earnings. In the past 12 months, the company earned $20B; 90x that is $1.8T." And Altucher’s math doesn’t even consider the potential for accelerating growth. (earlier)

    Goodbye, fiberglass tables and industrial steel chairs… hello, wooden tables, comfortable faux leather chairs and newly painted interiors. McDonald’s (MCD) is undertaking a $1B-plus store makeover to look more grown-up. And if the venerable chain has its way, it will stillhook kids with toys until they grow up and gorge themselves with 500-calorie Big Macs

  108. ONTY - if one is in the spread, I would take 1/2 off.  Also the Aug $5 Ps have lost value, I woudl also remove 1/2. 

  109. Out of TNA with a 10 cent gain; switching to TZA on multiple signals.

    Phil wins this one  8-)

  110. Phil – Do you anticipate the IWM $83 p’s ok to hold overnight or to risky?

  111. …Silver closing near high’s of the day.. any thoughts for tomorrow / rest of the week???

  112. OPTR is off to the races as well.  Man, the biotechs are ruling the roost!  FDA is at the end of the month so selling the May 12.5 Ps should be safe.  I am covering my stock here with the May 12.5s and letting them go for a small, but manageable gain.  I do not know how much is built into their price ($250M peak sales is forecasted).  We have a our June vertical with the Ps sale, which is enough risk.

  113.  so glad I got out of oil on Thur and Friday.  The gas pumps aren’t going to have change the price at all soon.

  114. Altucher (AAPL article above) is another one of Cramer’s boyz.  Seems like that branch of "THEM" is working hard to pump up the markets today – I bet on Mad Money tonight Cramer will tell us how strong the markets are…

    Thanks JRW – I feel much better about the shorts now.  

    IWM/Manimal – Yes, I planned on that, which is why I chose May rather than the weeklies, which would have given us more leverage but too dangerous for an overnight hold (as you have no time to recover).  

    Silver/Topher – AGQ June $450s are $2.20 already, up 120% from Thursday’s entry - that’s the way I like to play something as silly as silver since now we can cash half, put a 50% (of the profits) trailing stop on the rest and lock in a 90% gain on the whole trade.  I wouldn’t chase silver up as we’re now in the dangerous middle of the range but, when we are at the top and bottom of the range ($35 to $45), it’s a fun way to play a big move in either direction.  

    Clive Capital, the world’s largest commodity hedge fund with $5B in assets, lost more than $400M, about 9% of its assets, in the oil swoon last week. Meanwhile, the Astenbeck Fund, run by longtime oil bull Andrew Hall, lost about 12%, or $300M. If they were able to hold through the weekend, they likely made a chunk back today.  USO +5%.

    The U.S. is in the midst of a "zombie consumer" generation that will dent GDP growth for years to come, "card-carrying double-dipper" Stephen Roach says. "Stuck with a legacy of excessive debt, inadequate saving, and facing high unemployment, higher underemployment, weak incomes and holding on to assets that are under water," U.S. consumers aren’t coming to life any time soon.

  115. And out of TZA with a 7 cent gain; that’s it for me today !!

    3 1/2% on the day; tomorrow should be telling !!

  116. WFR back in the sweet spot of $11. 

  117. Phil
    Anything that we can do needs to be done, When? NOW!

  118. WFR looks like it’s not done sinking.

  119. Huge IMW dump @3:54. 1.9M

  120. Oil/Rustle – It’s all about making non-greedy exits.  

    JRW is a case in point (if we can call 3.5% in a day not greedy, that is).  

    WFR/Pharm – Solar very out of favor at the moment.  

    How on earth is the dollar going down compared to these jokers?

    Trying to save their political hides, German politicians are talking tough, but even something as benign as a voluntary restructuring would be disastrous for all, says Richard Barley. It’s time for German politicians to start laying the groundwork for another contribution to Athens.

  121. @JRW
    Gotta tell ya, if you take out all the numbers and letters, and leave only the lines in that last chart you posted, then do it in oil paint, it could pass for a Picasso, Braque, or Klee.

  122. Well that was a fun start to the week! 

  123. Phil, on the Newsletter.  I subscribe to a couple that have so many followers that the picks always go up exponentially. Of course using your strategy would we not sell calls on Pharmboys picks to your sheeple, I mean subscribers.
    Am I learning?

  124.  Flip:  Anyone of which would probably be worth more than ten thousand shares of most equities these days.

  125.  rpme:  Baaa.

  126. Phil Your thoughts on how USD reacted today and or why. From about 1:30 PM when USD fell hard, markets never were in sink with USD after that ? at least not as they were previously or last week. Once volume fell off it was totally controlled by machines(But nothing new there) I went long ES at USD drop off and it never materialized. Just curious if you see something I don’t or any possible patterns/ploys being formed.
    Take a snooz, go fishing, come back eat dinner and trade some currencies.

  127. Solar out of favor, and SPWRA is zapped up (or at least 60% of it) by an oil giant. 


    AUXL – someone put a floor on them.  2K of Dec $20Ps went through at the bell.

  128. All options plays from Wikinsons market briefs at IB are bearish considerably today.

  129.  Solar / Out:  Hope Pharm gets the nod of the market g-ds on solar, since I picked up some LDK today.  Out of favor is good, right?  And if I should be in JASO instead, feel free to speak up, anyone.

  130. EXEL – someone picked up (inference, but we know the CEO is in sell mode b’c they hired GS) the Nov $11/20 BCS, selling the $10P for 70c.  Not a bad deal.  Lot’s of movement in their options at different strikes.  Might have to go with the long dated ones.  I will look into their drug a bit more closely.

  131. EXEL. That is 70c net debit on the entire thing…..FWIW.

  132. NEW LEVELS! This is based upon Phil’s "This Week’s Trading Range" email to Members this morning, and is the very first version of these levels. If there are any errors in this please speak up ASAP and I will get this updated.

  133. Nice Ilene. I’d like to see that baseline though. Any chance we can run a set of all 5 charts. Would be good to discuss as we need to be fast on our feet depending on which way thins break.

  134.  Hello Phil. 
    You got it. Give me a little bit to get that set up, I have to run some errands this afternoon but will be on this in the evening, I’ll have that up for you by late evening.

  135.  OPTR- Pharm- your above note on this was a bit cryptic. Are you saying it is "fully valued" and thus, you are selling your shares on that basis or do you have additional exposure? 
    They had a good earnings report although I have yet read the details. Any info? 

  136. Zero – the single biggest negative for solar recently has been europe, everything else remains the same. Solar is not viable without subsidies,  as presented at present time and no sovereigns seem to have any inclination or money for such with UE and RE in tank. Look at FSLR, where they were and where they are now and they are the lead dog. I would be very cautious in that realm. Could be some downside plays likely on longer term spreads 3mths/6mths /1 yr ? The reverse psychology you mention likely won’t apply on an issue totally dependant on subsidies that are very unlikley to happen. I wouldn’t go there just yet except short and I love solar. It could all change if policies change and or UE / RE improve considerably, big ifs right here.
    Snooz over 

  137. New format for Daily Levels – showing all five charts. Any thoughts on this layout?

  138. biorules—-Tx for the info--very much appreciate all input

  139. ilene – I rather like it.
    angelcur – try hitting that caps lock key of yours…

  140. Phil—what is your opinion on  ROIC and/or  HI for the income portfolio?

  141.  Thanks, Goob  --  There is some kind of viable solar market out there, but its structure and scale — and whether they would support public investment — is unknown to me.  Maybe solar takeover fever will kick it up; there’s always luck when all else fails.   In respect of the house project, the research you pointed me to indicates that most cost-effective temperature regulating system appears to be using mass as a heat sink, and lots of it. Simple.  

  142. CME hikes margin requirements for crude oil trades   – per Market Watch

  143. Ilene, I like it!

  144.  Ilene, I like the format…..

  145. OPTR/pstas – Apologies, I was thinking of work and trying to get out what I was doing b’f close. I have the stock, a bull call spread in June and sold puts.  The stock was naked and I sold the calls today to cover it for the rest of May expiration.  If it stays above 12.5, it will be called away for a small gain.  I am not sure how much is baked into the stock price for their FDA approval May 30.  I compare them to DEPO as both have about the same market cap….only DEPO has a market potential of 10X the size! 


    Thus with my sold puts, I have enough risk built into my positions (and others if they are in the same ones).

  146. Nice Ilene and Elliott.

  147.  MSFT buying Skype!! ? Most likely, so says WSJ. 7 billion dollars!

  148. Scotti/EXC, I like that one too – but already in the buy/write.

  149. Zero -your welcome , concrete is teh simplest. A monolithic foundation well insulated is a good start and mass interior wall orientated to south and west is easy to do. Gotta have a foundation any way and it doesn’t cost anymore if designed in than wood, likely less when all is said and done in most places. So you are mpore than halfway there just in correct design. Convections and insulation do the rest. Hot water in floor and mass wall as welll can be assisted by solar and window insulation panels/screens. Very basic and simple, cost effective stuff but works.
    Solar is being marketed wrong IMO. But there is a market , just not efficient yet. Too many players still using hype and needing public funding to be viable. Not a good equation . Just how efficient is a large tank painted black with a solar powered circualtion DC pump?  VERY…….the opposite of what is being marketed. So do your own thing ! Good luck with it.
    Got skunked again. Not even one fish rolled , way calm and warm, took my shirt off. A few days ago it almost snowed.  

  150. TULL……………………………………………………

  151.  Yeah, Tull.  Saw them in Philly May 1, 1971, touring behind "Aqualung" between April and May gigs at the Fillmore East.  One of the best ever, and I’ve seen ‘em all.  The best was Allman Bros. closing of the Fillmore East, 2nd night, which was the basis of the album. Wandered out at 6 AM.   Other top five:  last concert of the Electric Flag w/ Mike Bloofield, Fillmore East;  Pink Floyd in quadrifonic at Irvine Auditorium doing Saucer full of Secret’s "Set the controls for the heart of the sun" in 1970, Summer Jam June 1971 Watkins Glen with Grateful Dead, Allman Bros and the Band doing a triple set [with thunderstorm], and Jimi Hendrix, Boston Garden, 1968, unreal!!  No nostalgia, though – listened to the most recent Kings of Leon today, worthy heirs of the Allmans, and getting better all the time.  Here’s a cut from the London O2 concert.

  152.  Addendum:  It would be sacrilege to leave out Led Zeppelin, August 22,1969, outdoors at Pirate’s World, Hollywood, Florida, in a ranging lightning storm. 

  153. Zero/Shows:. Wow, what a list. Incredible to have been at those shows during such a seminal time for music. Missed it by a generation, but what I’d give…I’ve seen the Allman’s many times, but to have been at that show…try My Morning Jacket (if you haven’t already )-in the same general vein as King’s of Leon…

  154. Levels/ilene – the new chart is great! I really like the 5%, 4% etc names for the levels. Much more comprehensibile for me.

  155. Great list , I still enjoy them all and have been tripping on some of them lately. First time I heard Hendrix "watchtower" was in 1968 on Hwy 13 near Cambodia, all of us were stoned on Cambodian bud, smiling and saying come on mofo’s lets get it on !  we were surrounded by  a thousand NVA and certain we would all die . Some did and some didn’t. Lots more of NVA died.  A black guy had one of those little reel to reels and was blaring Hendrix for 2 days and nights of absolute carnage. Truly a living hell to observe and be part of. When I returned I was crazy as a loon for years. That song still has a very deep meaning /trigger for me.
    I liked Frank Zappa and the Mothers as well before all that era and used to hang out with Alice Cooper later and JIm Morrison in Glendora California and Hollywood.  

  156. Can’t forget the Doobie Bros , that wuld be simply wrong. I think Michael Macdonald has gotten even better with time and is a great human being !

  157. "Skype had sought between $5 billion and $6 billion to sell itself"
    … but Steve Ballmer negotiated a price of around $8 Billion. :-)

  158. Zero  – This winter I went on a Pink Floyd trip and litsened to everything they did several times. Much of dark side of the moon is very relevant today. Almost prophetic same with watchtower. Interesting stuff. 
    Diamond sounds like Ballmer was trippin as well ?

  159. ATVI/Phil: Reported 0.13 per share earnings on .08 cents expected and raises guidance a little past expectations, so nice beat. 
    Activision Blizzard Announces Record First Quarter Financial Results

    It sounds like they are going to really push their digital gaming end using "micro-transactions".  E.g. they will release new downloadable content/maps etc.. for a small fee on a continual basis.   So this creates a subscription model for games like Call of Duty.   How soon before we all get to beat Osama to death with a wrench? 
    And there is this little tidbit: Since Call of Duty: Black Ops First Strike launched on February 1, players have spent an average of 58 minutes per day playing online, exceeding the 55 minutes the average user spends per day on Facebook.
    OK.  So its sounds things are good for the time-being.  Its not that far of a leap to port their games over to IPad and Android tablet systems and utilizing 3G/4G networks to download content, so there is definitely growth in their future.  Gives me confidence that in the worst case scenario, ATVI stays in its little $11-$12 channel, so Phil’s spread should be an decent investment.

  160. EGLE: Eagle Bulk Shipping posts Q1 loss
    Took a .09 cent per share loss on a one-time writedown of bad debt in their Korean Shipping lines.  But, they beat by .01 cent, revenue rose 60% to 86.7 million and they are reporting 99% utilization rates, so hopefully they are painting a bottom here.  Ferchrissakes, its about time they do.

  161. Hmm… my ATVI post got moderated. Strange.

  162. Thermal mass/goober – Hey goober, I like the concrete/thermal mass notion, but I don’t think I understand how you’re doing cooling. A building that impressed me even back in the late 80s is Moos Tower on the U of Minn medical campus in Minnesota. They blow air through deep underground flues, bringing the air to the constant temp in such places, so it’s use of thermal mass. It may be just a frozen north sort of thing, but it works pretty well for cooling in summer, and in winter when you pull in outside air, it heats it enough that you don’t have to burn so much fossil fuel to heat the air up. Moos Tower, like a lot of buildings on that campus, had numerous floors below ground level – not sure I remember, but it was something like 6.

  163.  Snow, I’ve read, and seen videos on underground tunnel cooling.  It should work where I am, because the sea is close enough to prevent much ground heating, and there is already ground cover sucking up the sun. I’ll work it, thanks for reminding me, I was getting lazy.  I think I read that at 10 meters, ground temperature remains constant.