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Wishful Wednesday – If Only We Could Hold It

That didn’t take long did it? 

We’re right back to our 5% lines, which I predicted yesterday would be tested (and failed) so today we find out if I am half right or all right – hopefully it’s all right because we pushed our short plays to the lines and added a short on oil with USO May $41 puts, which we added yesterday afternoon for .95 at 2:30 and finished the day up a nickel.  We are expecting the oil inventories to show some demand destruction at 10:30 – analysts are predicting a net 1Mb build, with a 1.6Mb increase in oil and a 300,000 barrel decrease in gasoline and distillates.  A build in either gasoline or distillates will indicate pricing is hurting demand, despite whatever oil number comes up so that’s what we’ll be watching

Yesterday, in the morning post (never miss one with a $1.90 per day Annual Report Membership!), I mentioned the TBT weekly $33 calls at $1.55 would make a good long and those finished the day at $1.87 (up 20%) but they looked good enough to keep into the close and we expect trouble in today’s 10-year auction so we’re being greedy and going for $2.15+, which will make a nice 40% gain in 2 days.  

To make sure you don’t miss our next trade idea – today I will give you a trade idea that can knock 20% to 69% off the $695 Annual PSW Report Membership:  You can buy 10 QQQ May $60 puts for $1 and sell 10 QQQ May $59 puts for .48 for net .52 ($520) on the $1 ($1,000) spread (it’s the net that matters, not the price of each leg).  The maximum gain on this trade is $480 if the Qs finish below $59 next Friday and, if you stop your loss at net $400 (.40 per contract) that limits you to $120 lost and, if this trade loses money, let me know and I’ll give you 50% off an annual PSW Report Membership, which will save you $347.50 so net $127.50 (20%) saved on a Membership – even if the trade doesn’t work.  If it does work – you are honor-bound to subscribe, of course!

What we are expecting, between now and Friday, is for the chart above to form a pattern that will look like the "M" in the McDonald’s arches, coming back to about our Retracement levels as the Dollar heads back over 75 (still 74.80).  Of course we have many ways to make tremendous amounts of money playing that for our Members (we are already short the indexes from yesterday’s chat), but this will give you a quick idea of how you can use options trades to enhance your returns.   

SPY 5 MINUTE As you can see from our chart set, we rolled right up to kiss those 5% levels on the Dow, Nasdaq and Russell with the much larger (and harder to manipulate) S&P and NYSE bringing up the rear.  

The NYSE should be the biggest concern to the bulls as they had no trouble at all getting to our 5% line at the end of April but we’re still close to 1% below the 4% line on our largest index.  As I said the day before the last little dip – they’d better be careful or investors might get the impression all this bullish movement is actually bullshit…. 

David Fry points out that the volume is very light (which means the gains are meaningless), " which makes it easy for HFTs to pump prices."  Dave believes it’s all about the POMO and, at 2pm we get the Fed’s new schedule for the next 30 days of handouts – any signs of the Fed cutting back could be a big negative for the market and we’ll be watching that number closely.  Meanwhile, as Dave says:  


So markets continued to rally due supposedly more M&A featuring MSFT’s buy of Skype and better growth data from China. Ignored was the steep 2.2% rise in import prices which will be passed on to consumers to mark the inflation supposedly we don’t have…   Meanwhile, European investors are pretending some of their members’ problems will get papered over (literally) causing markets to rally.

I was pretty fed up yesterday as well, letting people know in the morning post that I was "mad as hell" but we did take it for another day as we got that 2:15 stick to move the markets higher after the 10am move up that was caused by comments made by Boehner that budget spending cuts must exceed any boost to the borrowing limit and that "raising taxes is off the table" because it would "have a devastating impact on our economy."  

That sent the Dollar lower and sent the markets higher as we are, in theory, out of money on Monday and when the Speaker of the House of Representatives tells you he’s willing to play chicken with US Debt defaults and that he has no intention of attempting to balance the budget by raising taxes – well, it’s not surprising that people will lose a bit of faith in our joke of a currency.  Keep in mind Boehner is talking about wanting $2 TRILLION dollars in spending cuts to match the necessary rise in the debt ceiling and it took Congress the first 4 months of this year to come up with $60Bn…  

Since the market did just what we thought it would and for the reasons we thought it would (dollar weakness based on psychotic political rhetoric), we were comfortable following through in Member Chat on our plan to double up on our DIA $126 puts at our target of .60 from the morning Alert, giving us a 2x position at net .70 – those could be very exciting if the market rolls over and may still be available this morning.  Another fun short we took yesterday was the NFLX June $220 puts at $5.40, which finished the day at $5.20 so you didn’t miss anything so far.  We took a bearish backspread on AMZN, stayed bullish on FAS and TBT, added long-term, hedged longs on HRB (nice discount), SKX and YPF (who should get a nice pop today on a big discovery - thanks Kustomz!) but at the end of the day someone complained that we should make more picks – go figure…  More picks don’t mean more money – the idea is to make the RIGHT picks!   

This morning, the Dollar is right back at our 74.80 line.  Bond pimp Bill Gross doubled down on his Treasury shorts yesterday as his first shorting attempt ran right into the biggest rally in eight months and now his pal Jim Rogers says he’s jumping on the bandwagon and both of those guys speak Mandarin and may know a thing or two about what’s going to happen next.  TLT had a nice run back to test $95 and we have a 10-year auction at 1pm and the June $91 puts at .56 are a fun way to play for a dip as they can easily double up on a 2-point drop in TLT and you can get out with a 50% loss (.28) if they break back over $95, which is what Jim and Bill are betting against.  

Why do Gross and Rogers feel so strongly about our TBills falling?  Well, for one thing, they speak Mandarin and that means they know that China’s April CPI came in at an alarming 5.3%, 33% over the 4% target.  This is higher than was expected by Bloomberg’s 30 expert economists and just shy of a 3-year high after 6 months of China attempting to focus on controlling inflation and 5 months after Premier Wen Jiabao set a priority on keeping the monthly inflation rate under 4% for 2011.  “The data looks bad,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “The economy is slowing more sharply than expected but inflation is not.”  

Even worse, despite a drastic slowdown in Output Growth, from 17.1% in March to 13.4% in April ("experts" had expected 17.6%), Producer Prices remained at 6.8%, indicating severe margin pressure as, not only can’t producers pass on price increases but Premier Wen wants them to charge LESS to curb inflation.  Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at the Washington talks.  Hey – they should all move over here – our Fed Chairman says we don’t have any inflation at all!  

Also on Stagflaion Watch is the BOE, who have now increased the UK’s 2011 inflation forecast to 5% while lowering GDP growth expectations to 1.7%, which would be called a Recession by rational people who subtract the 1.7% from the 5% and find out that the economy is shrinking 3.3% in constant currency but – shhhhhhhhhhh – that’s not the story they want you to hear in the MSM, is it?  

Over in Japan, TM’s profits were down 75% in Q1 and they are blaming it all on the March 15th earthquake so no one is selling them on this news, which I find astounding and I think selling the May $80 calls for $1.70 is a fun way to play for a shock of reality when people actually look at the numbers.  This is part of a very disturbing trend of Japanese companies flat-out lying about their business prospects.  TM sales were off 12% for the Quarter, 2 weeks out of 13 is 15% so we’d have to assume that, IMMEDIATELY after the earthquake, not a single Toyota car was sold anywhere in the World in order to blame the decline on the quake alone – yeah, that’s the ticket

So lots of fun and games today.  Oil inventories at 10:30, the 10-year note auction at 1pm and maybe the Fed will save us at 2pm with an aggressive POMO schedule.  That’s the ticket.


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  1.  Oil Lines
    R3 – 110.10
    R2 – 107.35
    R1 – 105.62
    PP – 102.87
    S1 – 101.14
    S2 – 98.40
    S3 – 96.66
    Volatility is back!

  2. FWIW, dollar lines:
    R2 – 75.38
    R1 – 75
    PP – 74.85
    S1 – 74.50
    S2 – 74.30 

  3. Commodities import to China increased in value, but decreased in volume:
    Price inflation is helping masks the fact. Also in the article, some warning about the price of copper… 

  4. PP for today:

  5. Phil / linux – "by that logic, Linux should rule the World by now". Careful, Android is based on the linux kernel.

  6. Big day for CSCO today! Earnings AH. I am leaning to the upside because they can’t afford to miss one more time! 

  7. Why did FCX options get adjusted? For the dividend?

  8. FCX — Found it, there was a supplemental dividend Geeze, the CBOE site is of no help.

  9.  Dollar at 75, it’s the PP for today!

  10. DIS/MCP: I totally screwed up on these two.  I was long and they were both profitable and I got greedy.  If I had cashed out my positions before earning I could have been up around 30-35% on both of them.  Well, lesson learned.  I should have at least sold half.

  11. daveo / earnings — I’ve learned that same lesson. Now I take money off the table before earnings and readjust post earnings. Take advantage of overreactions and wait for the upgrade/downgrade police if the reaction was muted.

  12. MCP flying, downt worry

  13. FXE bounced right off the 5d MA.  Now pinned b’w it and the 50.  Come on 200d!

  14. Good morning,


    IWM    85.92,  85.61,  85.33,  84.93,  84.40,  84.06,  83.73,  83.40,  82.98  and  $7 Bil of POMO  !!

    If we are green today, I believe we will be red tomorrow; if, however, we pull back to the 84.10ish area today, that might be negated !!  As you can see below noone is actually buying stocks.

  15.  I have an interesting question for you guys, What actually determines the fair value of a currency?  For example, if I wanted to do some kind of fundamental analysis on the EUR/USD what the hell would I do?  

  16. craig – draw a circle on the ground (does not matter the size), throw it up in the air and which ever falls in the circle (more is better), then that one has more value that time.  Repeat….every 20 min.

  17. MCP/pahurik: flying? I don’t know if I would call up $0.25 after a $10 drop flying, but you are right.  At least its going in the right direction. Or, it was heading in the right direction :(

  18. @Felipe
    You can buy 10 QQQ May $60 puts for $1 and sell 10 QQQ May $59 puts for .48 for net .52 ($520) on the $1 ($1,000) spread (it’s the net that matters, not the price of each leg).  The maximum gain on this trade is $480 if the Qs finish below $59 next Friday and, if you stop your loss at net $400 (.40 per contract) that limits you to $120 lost and, if this trade loses money, let me know and I’ll give you 50% off an annual PSW Report Membership, which will save you $347.50 so net $127.50 (20%) saved on a Membership – even if the trade doesn’t work.  If it does work – you are honor-bound to subscribe, of course.
    I’m thinking of having a "ChaztransBonogender" operation done, joining a liberal advocacy group, like AFSCME,  getting a new ISP, and changing my avatar name to AmunRah.  
    Would you then let me qualify for  50% off of the subscription I already have?

  19. daveo, MCP was 62 at night, 66 is little better:D

  20.  fwiw on the sentiment front : domestic equity mutual fund cash/ assets ration is at ALL TIME record low of 3.19%..i am thinking that with interest rates this low the ratio should be perceived as neutral and not negative for equities…global stock/ to bond ratios is VERY HIGH and rolling over…that’s of course relative and stocks still did well but not stacked up against bonds (jimmy and bill take note)

  21. We may be down until Europe closes, looking at the EUR/USD. Long bond also looking weak !!

  22. ADBE longs back to even!

  23.  also money market mutual funds fall from 47% in feb of 09 to 17. % end of april so with ZIRP maybe further coercion leads to more buying

  24.  By the way guys, I am working on a online book, a guide to robotic forex trading.  I should have the first chapter set up this weekend.  It would be awesome if you could take a look a look and tell me what you think.  I will toss a link up as soon as I have something I am not embarrassed to share.

  25. SDS June 15 call is 4.95 with stock at 19.97 – nice buy here.

  26.  Morning all. This may be of interest to someone – our old friend ARNA released quarterly update last night. Here is the section on Lorcaserin regulatory approval. A 3 month study for the rat mammary tumors would be positive. Still a wild card. 

    Lorcaserin Regulatory Update
    In collaboration with Eisai, Arena is engaged in activities to address the issues raised by the US Food and Drug Administration (FDA) in its Complete Response Letter (CRL) and subsequent communications, and following is an update:

    A pathology working group has completed a blinded reassessment of the mammary tumors found in the rat carcinogenicity study, and the final report is being prepared;
    Arena expects to initiate preclinical prolactin studies of three months and shorter duration once discussions with the FDA to finalize protocols are complete;
    Arena and Eisai believe that prolactin studies of three months and shorter duration will be sufficient to test the hypothesis that lorcaserin causes mammary tumors in rats by increasing prolactin effects on the mammary gland, and currently do not anticipate initiating a 12-month study in female rats;
    To address the finding of brain astrocytoma in male rats, Arena has completed dosing, and analyses are ongoing, of a Phase 1 clinical trial that involved collecting cerebrospinal fluid to provide an alternative means of estimating human brain levels at the intended therapeutic doses of lorcaserin; and
    Further assessments of receptor pharmacology and abuse liability are ongoing.

  27. Phil/DIA- With another big POMO day, would this be a good time to grab some DIA for the reversal?

  28. ADBE – sell May calls?

  29. Wheeeee!  

    Looking good so far.  Nas holding up best and giving us good price on the Q spread (see post above) – other indexes took a pretty quick dip but nothing drastic so far.

    Dollar jumped up to 75 real fast off that 74.80 line – now let’s see if they can hold it and make some progress.  Here’s a nice graphic from Barry showing the size of the EU bailout fund – it’s not about a lack of money, it’s about having the political will to deploy it because none of these guys REALLY thought they were going to have to commit these funds – it’s kind of like selling a put in a stock you didn’t REALLY want to own – they are all scrambling to get out of their commitments:  

    Keep in mind those are Euros so it’s about $1.2Tn, which is plenty for Greece, Ireland and Portugal but not enough for Spain or Italy, who put their own money into the fund that may be needed to bail themselves out.  This is why the Pound (up  0.5% at $1.645) is holding up better than the Euro (down 0.7% at $1.431) as the situation turns from bad to worse with the Greek people now on strike against austerity measures that are required to get the bailout funds.  

    Here’s the big chart of our levels, obviously, we’re watching those 4% lines to hold up as it’s a pretty steep drop below them:

     Oil is coming down nicely at the $102 line but it don’t mean a thing until we get those inventory reports – that’s the most likely thing to break us down today – if oil takes a dive after 10:30.  Man Group (huge hedge fund) lost $500M last week on oil and that’s going to give everyone an itchy trigger finger if oil begins to break down again.  

    By the way, speaking of Hedge Funds – for those of you who were thinking of subscribing to one (none in particular come to mind), you’d better do it soon if you are not very, very rich as the SEC is doubling the qualification requirements so only the very richest people in the World (not even the top 1% anymore) can afford to be in a hedge fund.  Greg (admin at philstockworld dot com) sent out a lot of qualification forms that were not returned, they will be void on July 21st when the requirements change at the latest!

    We are not the only people who are short, short interest on the NYSE is now at the year’s high, which is very interesting with the VIX so low but still in line with my theory 2 weeks ago that "THEY" were shoving that VIX down so they could load up on puts.  Don’t forget, if I own 2M AAPL at $300 and I sell $350 puts to some sucker for $10  - I can dump my AAPL all the way down to zero and that chump still has to pay me net $340!

    So we have our bets down and we’ll have to see what sticks today – it’s going to be interesting, to say the least. 

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    8:30 Trade Balance
    10:30 EIA Petroleum Inventories
    1:00 PM Results of $24B, 10-Year Note Auction
    2:00 PM Treasury Budget 

    Notable earnings After Wednesday’s close: CSCOIAGPSEC,SINASYMC 

    At the open: Dow +0.24% to 12715. S&P flat at 1357. Nasdaq -0.18% to 2867.
    Treasurys: 30-year -0.1%. 10-yr -0.14%. 5-yr -0.09%.
    Commodities: Crude -1.53% to $102.29. Gold -0.59% to $1508.00.
    Currencies: Euro -0.72% vs. dollar. Yen -0.57%. Pound +0.59%.

    10:00 AM On the hour: Dow +0.02%. 10-yr -0.09%. Euro -0.76% vs. dollar. Crude -2.23% to $101.56. Gold -0.64% to $1507.20.

    MBA Mortgage Applications: +8.2% vs. +4% last week. Thirty-year fixed mortgage rate decreased to 4.67% from 4.76%.

     March Trade Balance: -$48.2B vs. -$47B expected and -$45.4B prior (revised from -$45.8B). Exports at $172.7B, a new record. Imports at $220.8B.

    The country’s biggest banks are reportedly willing to pay as much as $5B to settle robo-signing allegations, considerably less than the $20B-plus in penalties being sought by some state and federal officials. Recent negotiations touched on proposed changes in mortgage servicing, and the allocation of penalties for past offenses.

    Planned cuts in the size of a mortgage that can be backed by the federal government may hurt upscale housing marketsNYT‘s David Streitfeld reports. One of the few points of agreement between Democrats and Republicans seems to be that taxpayers should no longer provide support for mortgages as large as $729,750. 

    The Mississippi flooding is expected to cause billions of dollars in damages, with one economist putting the figure at up to $4B. The deluge is heading towards the Gulf Coast, where many of the U.S.’s biggest refineries are located, hastening the return of  $4-a-gallon gasoline.

    Not participating in the moderate recovery in commodity prices is copper, whose fall today puts the metal near last week’s lows. Still-perky Chinese inflation is leading to fears of more monetary tightening, even as signs emerge that growth is slowing. 

    What a wanker!  "What seems astonishing today could become conventional wisdom in a short period of time," says Steve Forbes, who sees a likely return to the gold standard within 5 years. Forbes is encouraged legislators other than Ron Paul have begun warming to the idea.  "What seems astonishing today could become conventional wisdom in a short period of time," says Steve Forbes, who sees a likely return to the gold standard within 5 years. Forbes is encouraged legislators other than Ron Paul have begun warming to the idea.

    Public services across Greece come to a halt as labor unions mount the 2nd general strike of the year to protest austerity measures. Fiscal tightening is about to get even worse as the country seems likely to need another bailout package, surely to come with even more serious austerity strings. 

    Unable to get enough concessions from public labor unions, Connecticut will begin sending layoff notices to nearly 5K workers as it tries to close a $3.5B budget gap. Negotiations will continue as contracts require several weeks between the layoff notice and the actual layoff.

    Following its talks with the U.S., China pledges to remove barriers for U.S. companies in its huge market for government contracts, and to provide foreign firms with greater access to its financial sector. However, some commentators are skeptical that the undertakings will bring concrete benefits. 

  30. AMZN: Testing/ed 205 again. Sold weekly 210′s for .40. Theta of .27.

  31. WHy is NFLX rallying again today?

  32. Good morning!

    China/StJ – Such a slow-motion train wreck that no one knows it’s happening (or at least they pretend they don’t) and guys like Hugh Hendry and Vitaliy Katsenelson who try to point it out are treated like mad men…

    Linux/Rain – Hey I was SCO certified when I used to sell Sun Sparks back in the day – I love Linux but I also know that open source guarantees you can build something pretty good really quickly but it almost never produces anything great – for that you need a man with vision who aligns the people to all work to achieve it.  

    CSCO/StJ – I thought those were yesterday, that was confusing.  Now I really don’t get that big sell-off into yesterday’s close.  

    TBT bucking like a bronco.  Oil $101.77 (stop at $102 on futures shorts!), Dollar still over 75 but just barely, gold held $1,500, silver plunged to 37.27, copper $3.944, nat gas dove to $4.188 and gasoline doesn’t care and is still $3.25.  

    As long as you learned something Dave..  8)

    I’m getting worried on the Qs – it’s like they WANT us to fill those spreads…

    JRW’s up early – you can tell it’s going to be an exciting day! 

    Fair value/Craig – That’s what I’m trying to figure out in my unfinished weekend post.  There are certainly no actual rules, it’s all sentiment really.  

    And what Pharm said!

    Deal//AmunRah – You do all those things and yes, you can get a 50% discount on a Report Membership but, only IF the Q trade is a loser, of course.  

    EU markets are tuning down sharply, red across the board now with the FTSE leading, down 1%, most likely on strong relative Pound to Euro movement today.  

    ADBE/Doro – Woo hoo!  That is excellent as it’s a huge net profit in the $25KP – let’s take those 5 July $33 calls off the table at $3.70 for a nice little 22% profit on the 2nd leg of that spread

  33.  Jabo – why is AMZN rallying? Why OPEN? I certainly dont know. But, please let me know if you find out. Its very strange, specially with OPEN after those earnings which were terrible for the stock price, and yet….

  34. hanna— so we have another opportunity to get killed or short them perhaps?

  35. /HG on a nice plunge.

  36. No wonder CNBC is not covering this – 3.8Mb build in oil, 1.3Mb build in gasoline, 800K draw in distillates for net 4.6Mb build, about 3x what was expected!  

    Oil flying down – congrats to the players! Watch that $100 line.  

  37. OPEN still up near it’s highs for the day.  Still want to see if they can push it to 100, it it breaks over, I’m writing naked calls. Has to be harder now to get it back to 115, since you can’t use the excuse of this month’s earning being great.  Got 2 more months before the idiots (meaning mostly Cramer and his boys) start doing that again.  20 mill in profits and 2.5 billion market cap.  Nothing like a logical market.

  38. Phil / open — I agree, but my point was more about the rapid adoption of Android as a detriment to AAPL (and iOS is the world to some).

  39.  Jabo – lol. I happen to be short CMG and AMZN. Covered my OPEN shorts last week. Of course, CMG and AMZN are both green :) but i’m still hopefully they’ll roll over 

  40. Wow Phil, nice calls!   

  41. Phil – I am in the TNA May 89/94 bcs. Yesterday looked promising for it but you sound like you are planning for a lower expiration day. Time to exit with small loss? Rolling higher doesn’t seem to fit into the trend.  What are your thoughts?

  42. For your review:

  43.  If I just played oil and nothing else, I’d be thrilled.  For the last couple months, this has been the easiest money to make in the market.

  44. Yeaaaahhhh! Go TEEEEEEVVVVAAA!!

  45.  Some good advice for some of us hunched in front of our PC all day…

  46. great call on USO Phil!

  47.  CSCO/phil – with the big selloff into yesterday’s close, does your crystal ball suggest an earnings disappointment tonight?

  48.  QQQ’s just don’t want to move today

  49.  Thanks’s on USO!

  50. Money markets/Angel – 17% what?  Of all assets?  If that’s the case, then I doubt you’d see any more come out of that end as 20% is crazy low already. 

    EIA Petroleum Inventories: Crude +3.78M barrels, vs. consensus of +1.2M. Gasoline +1.28M barrels vs. consensus of -0.7M. Distillates -0.84M vs. consensus of no gain. Crude futures sink further, -2.7% to $101.10. 

    Microsoft (MSFT) remains hugely profitable but the Skype deal doesn’t change its increasing irrelevance, Barry Ritholtz writes. Microsoft’s original genius stems from its license agreements; it was "never a true technology company," and its list of innovations since the rise of the internet is "astonishingly short." The Skype "Hail Mary" is an attempt to buy its way into smartphones, another innovation it "missed."

    Book/Craig – That’s great.  I wondered where you got to…

    SDS/Jomp – You can also just do the $19/20 bull call spread at .52, which is 100% in the money for almost a double if the S&P stays below 1,350.  If you were looking to make 20% on $4.95, you can just buy 2 of those for $1.04 instead and you are likely to lose a lot less if it heads the other way as the net delta is just .22 so, on $208, a $1 drop in SDS will cost you .$44 while on $495, it would cost you $100.  

    Raj Rajaratnam guilty on all counts – that’s nasty!  Up to 25 years PER COUNT in prison (unless he flips on people up the food chain).  

    DIA/Jake – No POMO at all tomorrow and we don’t know what on Friday until 2pm.  If anything, I think POMO is a lagging effect so you have to look at what the Banks expect to get the next day to see how today might go.  This week was a big schedule Mon-Wed and then nothing Thurs Fri and our rally began on Friday and (so far) ended today. 

    ADBE/Morx – No, I like ADBE, we just had the back leg of an old trade in the $25KP and the caller was wiped out on earnings and we held the longs to see if we could get out money back.  We did and that’s mission accomplished as it was not our intention to hold a long ADBE July call – it was just a bearish earnings play at the time.  

    YRCW not going down, that’s interesting.  

    MoMos/Hanna – Those seem to be what they are using to keep the Nasdaq up.  SOX are green too.  Open with a great recovery for the back leg of that backspread for us as well.  

    Thanks Bruce!

    TNA/Morx – At this exact moment, I would sit tight until/unless the morning lows are broken.  Watch the dollar, if they get it back under 75 you are in good shape but over 75.25 is very bad for you.  So far, it’s a little bounce off our 4% lines almost to the point but, if those 4% levels continue to hold AND if the NYSE makes some progress (not so far) then this could be bullish consolidation and not a sell-off at all.  Keep in mind those charts are days and not minutes so worrying about every little twist and turn of intra-day trading is pointless – what matters it the candles that form up at the end of each day to see if we’re on or off track in the big picture (of course you want us to NOT form a big M on the charts).  

    Oil/Rustle – Congrats!  Last week I was asking "who are these counterparties that keep paying us" and it turns out it’s one of the World’s largest hedge funds – shame on those guys but thank goodness for them as it has been like a broken slot machine…

    Sitting/StJ – Good point, thanks!  

    Thanks Jabob!  

  51. Hey Phil, just sold half of the USO puts, thanks again on those…. do you expect oil to cross below the $100 mark today or maybe later on the week? not sure if i should wait for a better gain on the other half, or sell those as well…

  52. Speaking of Vitaliy – nice article today on "Microsoft Just Pulled Another Microsoft with its Purchase of Skype."   

    This is a totally great chart from Barry, as was  Part I  earlier:

    Medical Costs Part 2 Infographic

  53. Phil
    Is your feelings about Steve Ballmer consensus at MSFT. If yes, what will it take to get rid of him before he destroys that company. Does Gates have no say in what’s going on or has he lost it as well?
    No bump in FAS and with no POMO for the next two days is it worth looking for 1/2 covers today?
    "There is good news for banks as they offer a $5Bn deal to weasel out of the foreclosure probe – if it’s accepted, XLF should fly because they are looking at $20Bn in potential liabilities in robo-signing cases, maybe more."

  54. This is starting to look dangerously familiar:   

    Or we can look at a more recent crash and rally cycle, also on Dollar devaluation (but without all the POMO)

  55. Health care – some years ago I was in a department that included a health services research section. They would give very interesting discussions on the difference between price (ie what was billed) and cost (what a service cost in terms of time and materials). Price of course varied a lot depending upon whom was getting billed, but cost was really slippery – no one would or could say what resources a given visit or procedure actually used. Therein lies a problem.

  56. Phil. ADBE I was not in the 25 k play but holding Jul bcs 30 bougth at 4.58 now 5.95 and sold 35 c for 1.96 now 2.10 thinking of taking some profit by rolling the play to Oct 33/36 for an other credit of 2.10 bringing the cost of the long caller down to .50 . your thoughts thks

  57. Can’t remember who asked about OXGN….but wow.  2/3 float have changed hands.

  58.  Very cool health care chart.  I was one of the dopes who though Malpractice and Obesity were bigger chunks.  Streamline administration and  you solved a lot of the problems right there.  You really just have to tweak the existing system.

  59.  Healthcare – Yes, there are many problems. But, core among them, in my mind.
    1. Culture / End of life care. No health care reform can succeed in the US when a 108 year old women is placed in the ICU for 14 days at a cost of 500k to taxpayers (as sad as that may be to the womens family) [happened at the county hospital i work, because the children could not agree on what action to take]. Very illustrative of end of life care in this country, which is basically "do everything you can until the last second no matter what the cost!"
    2. Doc’s salary’s – yes, they are high. But, most of my friends have 250k+ in debt, and many of our training programs are now 4 college + 4 med school + 1 internship + 3 residency = 12 years. In the UK, cost would be nearly nothing, and the time would be 3+ yrs shorter. 
    3. 3rd Party payer – Say I just had biopsy done. Did i look at the cost? Did i price shop? Did i stop the doc from billing for an extra couple blood tests (that were totally unnecessary)? No!! My insurance was paying! :) Costs can never decrease without pressure from consumers, and they consume insurance costs now, not healthcare costs. 
    4. medication costs – crazy out of control. 

  60. Good for mother’s day!

  61. Hey Pharm, whats your overall opinion of SPPI?? Do you think they might be a takeover target???

  62. Oh, don’t make me open a can of woop (happy) dust on the medication costs… about jumping through hoops to get something to market that is safer than water….it is getting harder if ‘people’ want good, safe meds.  No no no no rants during business hours.


    Back on track.  TSRX….go go go

  63. Nobody wants to die in America! How do you possibly change that? We pay should pay for the way we live. But as usual, in this country, we want the goods and services and want someone else to pay for them.  Does that surprise anyone here?

  64. Phil, cool health care chart. Was going to post about it, but didn’t want to start another off subject discussion…
    Regarding the market comparison between the previous periods and today, it would also be interesting to note the similarity between interest rates then and now and also gold charts (in 1909 most nations were on a gold standard). 

  65. SPPI/asa – not yet.  They need to show sales for their products.  As an entry on them, and to spite A.F. of theStreet, one could go way long and buy the Jan 12 $6.7.5 BCS for 75c, selling the $6s for 60c.  That is 100% ITM and 15c for the 1.5 spread.  I might do that one.  They are in key support area, but the 5d MA is down, so I would put it on the radar and look for an even spread.

  66. My dad would beg to differ on the malpractice impact. He pays almost $200,000.00 annually on insurance premiums. So in order to cover his ass he needs to order all kinds of costly extra tests and examinations that he can provide as evidence in court that he made absolutely, positively certain, and covered all possible bases so as not to be have a malpractice suit go against him, or else that insurance premium jumps another quantum leap.  
    When I was living in Japan, I never had to take all these ridiculous tests that I do here — it was always in and out, and they have the highest life expectancy over there so something is obviously broken with the U.S. system.

  67. You guys have a problem why do you think so many Americans live in Mexico? Malpractice insurance what is that????

  68. Phil – Good morning post on the QQQ put spread. Its up $60 on the $520 net or 12%. Not bad for a morning’s work. You mentioned yesterday some of us have trouble taking profits when we have them. I am guilty of this, with so many of your trades earnings 20% + it becomes mentally difficult to take a 20% gainer off the table and then watch it go to 50….
    One solution is to sell half, and watch the rest……can’t go broke with 10%!
    With regards to this particular trade, do you see it going higher than 20%? I’m not in a hurry to sell half for 30 bucks just yet, especially since I already bought lunch. Thanks!

  69. Don’t worry Phil, medical costs will come down – your friendly "mid level provider" will help you out next time you get sick.  I am smart enough to do something else if I get compensated less.  So, I actually welcome the opportunity to have better hours - 

  70. Phil Insurance what must I do about my long Oct 415 AAPL bought for 11.52 now 5.55 being selling even weeklies 350 and May 360 to make up some losses sell more OTM puts Apple is not jumping any more at this stage?

  71. Still no covering FAS?? 

  72. Phil/25kp:
    Are we expecting a further drop in the mkt? Shd we protect FAS with a cover.. ( I already have a 50% cover with weekly 30s basis of 0.33)

  73. Gold approaching $1500 and Silver $36. Dollar taking a bite out of commodities! 

  74. And poor copper is now at $3.93. The S3 line for today is $3.92 so to paraphrase JRW, we either go up or down from here. 

  75.  CSCO/Jvest – I hope they have a terrible Q so we can back up the truck and buy but I think the bad new is baked in already so I would not bet against them (and we already have longs).  

    Thanks JJ! 

    You are welcome Asaenz!  I don’t think $100 oil holds here but it’s a very bouncy zone, of course.  When you stop out 1/2, generally you should put a stop on the other half at 50% of the gains so you can’t collect less than net 75% of the max (from where you cashed out 1/2) and that keeps you from getting burned too badly.  Going the other way, you just pick a line like $100 where you can go back and commit that other half again if it breaks with tight stops on 1/2 again.  

    Ballmer/DC – Ballmer was the guy who beat up the kids who gave Bill Gates wedgies at Harvard.  Gates hated Harvard, he dropped out.  Ballmer was his guy since college and I’m sure Bill feels very guilty that Steve got "screwed" as he and Paul Allen got all the money from MSFT.  While you may look at Ballmer and his ill-gotten Billions, don’t forget Allen and Gates got 10x what he got each so, from their perspective, he got the loser’s share.  Also, Allen cashed out completely and Gates "only" has 600M shares left ($15Bn), which is "just" 6% of the company so he doesn’t really care what Ballmer does with it and it’s sure not worth their friendship to interfere, no matter what kind of screw-up Steve has been.   

    FAS/$25KP, DC – Yesterday at 1:44. I said we wanted to do a 1/2 cover of the May $30s for $1 but "if we don’t get a move up soon, we’ll have to take what we can get just to offset our own premium decay for the next 10 days."  The ran up to .80 at about 3pm and held .75 through the close.  Now they are back to .57 and, if you did not cover yesterday, then I’d just wait and see if the 4% lines hold and maybe there will be a bounce tomorrow.  Another great example of why Rule #1 is: "ALWAYS sell into the initial excitement."  (also see ADBE already).  

    Health costs/Snow – Well, I don’t want to get into it during the day but this is the whole problem with making necessities like health care unregulated profit centers for private enterprise.  I just look at is very simply – we spend twice as much per person as any other country on Earth and have poorer outcomes.  Oddly the same people who think that kind of data "proves" schools should be privatized don’t think that health care should be publicized even though our education costs and outcomes are roughly in-line (a bit below the curve) while out health care costs and outcomes are close to the worst on the planet.  

    ADBE/Yodi – I do like them as a long-term hold and that’s a wise adjustment as you lock in that $2.10 back in your pocket and then you have a cheap look at a move up longer-term bit just make sure you stop out if they can’t hold $35.  

    Tweaks/Rustle – I think it’s worse than that.  Still, those charts are fabulous as you hear so much BS from people – especially in the media where you think they would have a fact or two but nooooooooooooooo – and it’s good to have something like this to refer to so you know who’s just a spin doctor and who is actually arguing facts.  

    Wheeeeeeeeeeeeeee again!  Bye-bye 4% lines. 

  76. Did something catylize this drop or is it just $ shenanigans?

  77. Oh man YHOO investors feel the slice of the double-edged sword of doing business with China:
    Yahoo Discloses Jack Ma Takes Control Of Alipay From Alibaba
    Yahoo disclosed in an SEC filing yesterday that Alibaba Group, in which it holds a 43% stake, has transferred ownership of online payments company Alipay to a new company controlled by Alibaba CEO Jack Ma.

    "Stifel Nicolaus analyst Jordan Rohan writes in a research note this morning that “there are concerns that the People’s Bank of China will prohibit foreign ownership of a payment solution and having Alipay owned 100% by a domestic entity will be required to obtain the appropriate licenses.”
    Rohan points out that Alipay is the largest online platform in the world in terms of registered users, transactions and total payment volume; he’s been estimating the company’s value at $2 billion. The company has 550 million registered users, compared with 94.4 million for for PayPal at the end of 2010."

  78.  DIA puts looking very nice, good call Phil, in about a week.

  79.  meant 3rd time in about a week

  80. TLT seems to be breaking out…

  81. Phil – I think TBT just got ‘bucked’.

  82. I may not be as smart as Pimpco but I know IF the dollar gains EVERYTHING else goes lower and speculative money goes back into bonds. Its pretty simple.

  83. Phil, 
    FAS how would we have sold to cover 1/2 the May 30′s yesterday if those are the ones we are holding? The 4% levels have not held so now what?  

  84.  Phil,
    wich is the target for the QQQ spread ?

  85. Medical Costs
    Short Answer…. Since, we have off shored and continue to off shore in many industries….. There should be insurance programs (even medicare) to cover your expenses for "medical vacation" to Thailand and India which have A+ facilities, Excellent Staff and American trained doctors…..   The costs of health care would drop dramatically…. Major surgeries are 15% to 26% of American rates……… 
    Hanna: Good points…. both my parents in late 80′s passed away last two years and died at home with hospice….. Once they get to the hospital… it’s game on……… They did have all legal directives…. Death his a BIG PROBLEM for most people…  

  86. Phil,
    IWM BUY May11 83 PUTS @ .73 still in play, or is last friday’s play over? Thanks

  87. Phil/All – I don’t know what Phil is going to say about the target but its almost 50% on the day. Phil shouldn’t have to tell us to take 50% in a day (or at least half)!

  88. A big WHEEEEEEEEE!!!

    The first few seconds of that sell off looked just like the beginnings of a flash crash…looks like a nice flush

  89.  Phil Money Market Fund Assets/Total Market value=16.9%

  90. Out of DIA puts, a fight at 12,600 with volume dropping. I think the bots reached their goal.

  91. Well, I guess we don’t have to wait for tomorrow !!

    This chart is for those who had trouble with the more technical presentation at 12.11 8-)

  92. my theory 2 weeks ago that “THEY” were shoving that VIX down so they could load up on puts.  Don’t forget, if I own 2M AAPL at $300 and I sell $350 puts to some sucker for $10  - I can dump my AAPL all the way down to zero and that chump still has to pay me net $340!

    Are you sure?

    If you sell me puts at 350 for $10 I want apple to zero, so I can put it to you at $350.

    what am I missing?

  93. sparetime / puts — He bought the puts.

  94. Funny, CME halts trading because RBOB is plunging 7%. Did some big guy get caught with his pants down and cried uncle? Unreal, when it goes up 7%, no big deal, let them poor guys pay $4 a gallon, but when it goes down, oh no… 

  95.  margin debt exploding since qe2 got started ..80 billion more since sept 2010…ned davis saying excessive optimism…BTW normal pattern has been stock bottom over next hour..lets see if the MSB (magical sloppy buyer) shows

  96. JRW
    I’ll take that as an entry into TNA? or are you waiting for IWM @83.4;
    observed sigrun at 12:15 @83.67

  97. I didn’t think we would get there, but R3 for the dollar is 75.58 (call it 75.50)…. Eeeeeeeehw! (I guess the reverse of wheeee) 

  98. End of life/Hanna – Very good point there.  The cost of keeping my Dad alive in total misery was astronomical for the last 6 months of his life.  The problem is you have to re-educate the entire population to be more accepting of death.  I always tell my kids I will die one day and I’ve lived a very full and happy life so they should never feel sad about it.  The Doctor’s salary thing is obviously a factor of Med Schools but if we create public medical schools to teach doctors in exchange for loans that are "repaid" by working in service hospitals for a number of years – problem solved!  As you note, the UK and many other countries manage this just fine.  The 3rd party payers and the drug companies are all part of the problem – there are some "businesses" that should not be left open to Capitalism.  If people want to brand me a Communist for that, that’s fine but for most of human history, profiting from human misery was generally frowned upon – now Health Care, Banking, Energy and Law are the biggest lobbies in the US – all things people HAVE to pay for to live in the modern World.  When our necessities are given over to profiteers – of course there is abuse – why does it surprise people?  

    Medication costs/Pharm – That’s ridiculous too but a lot of that system is to make sure no small companies are able to get a "miracle cure" to market without running the very expensive gauntlet that gives Big Pharma about 100 whacks at them.  

    Pay as you play/DC – Good idea but tough to push through.  

    Wheee – $99 oil!  

    Charts/StJ – Go to town but I have no skills in that regard, those are from the chart store via Barry. 

    Malpractice/Kinki – I agree, it all needs to be fixed and, if we leave it all up to Private Enterprise, that should happen – NEVER!  

    Can’t go broke with 10%/Manimal – A very good point!  Yes, that trade was targeted for the M pattern I thought we would make into expiration next week and the Nas is clearly on track at the moment with the Qs at $58.54 so I would just watch that 4% line on the Nas (2,850) as a stop now.  Don’t forget, time decay is your friend as the .50 you don’t have on this trade is all premium that will decay at about .05 per day, which is 10% right there.  

    Compensation/Jo – I think its a matter of revamping the system over several decades.  I think Obama care is just step one in a very long process that must be done over time, starting with opening training schools for nurses we’ll be needing as the boomers get older.  There are plenty of rich doctors in Europe – it’s a valuable skill and they are compensated for it – as you can see above, Doctor pay is really not a big deal if, as above it’s $64Bn excess (and that was all workers) as we spend about $2.5Tn on health care so only 2.5% is "the doctor’s fault".  

    AAPL/Yodi – Well how much have you offset with sales?  It cost less than $4 to roll the Oct $415s down to the $395s at $9.20.  Have you sold less than $4 in calls?  Once you ar down there, the June $365s can be sold for $3.15 and that’s ahead of earnings and pays for 75% of the roll.  If that doesn’t appeal to you – just get out as AAPL is not really moving much.  

    FAS/$25KP, Amatta – 1/2 cover with May $30s against the long June $31s is the goal but now they are .45 and you really want to get .60+.

    FAS/$25KP, Etrad – If AND ONLY IF XLF fails to hold $16, FOR MORE THAN 20 MINUTES, then the move would be rolling down to the June $30 calls for .36 and selling 1/2 the May $29s (now .82) for about .75 and putting a stop at .40 on the $30 calls we already sold.   

    Wow, Dollar 75.45 – go bucky!  

    Gold failed $1,500, silver $35.33, copper $3.92, nat gas $4.16, gasoline $3.10, oil $99.50 – was limit down, now resuming trading!!  ROFL!!!  

    TBT tanked on the Dollar move up but still the auction coming at 1pm.  

  99. Huge moves in commodities and that can’t just be dollar related…
    Gold – Down $30 (1.8%)
    Silver – Down $4 (10%) 
    Copper – Down $0.15 (3%)
    Oil – Down $5 (4%)

  100. jasu1

    Yes, I’m out of TZA and in TNA, and I now have buy confirmation !!

  101. Unreal, they stop trading oil when it reaches $98 and change and when they resume, it goes over $100! Not getting paranoid, but what happened, did they need to reboot the HFT machines? 

  102. Action is commodities is very scary for the overall market in my opinion. Really scary action. There’s so much air under some of those markets, and if they continue to crack, it HAS to spill over in a big fast way to the equity market.

  103. Shenanigans/’Rain – Europe closed and we lost all our buyers.  They had a little stick into their close with Germany and France finishing flat and the FTSE back to down 0.7%.  It was the oil breakdown that tanked us, as we expected it would but now we’re a bit oversold for the day and we filled the gap back to Monday’s close, which should hold so it’s time to get a little bullish I think:  

    AGQ is back to $185 and the June $300s are $3.  Interestingly, you can sell the $100 puts for $2 but that makes it a pretty scary trade.  

    IWM May $84 calls were $2 yesterday, now $1.15 so a stop at  $1, looking for $1.40+.

  104. This does NOT mean we can’t get another leg down, but we are at 1.25 on an average of the indices !!

    If we were to lose it, we could see 83 (2.5% down) !!

    Careful !!

  105. Phil,
    thank you for IWM puts,
    especially for great call to roll and DD yesterday.
    It was fantastic!

  106. I’m long and on the wrong side of the 8EMA, so finger on the sell trigger if we don’t head up soon !!

  107.  its a risk off day for sure but there is also good news out there so lets not get of yesterday consensus forward SP earnings made an all time high 103.3..last high (opps) october 12 2007 (gulp) so a 12% rise in the last six months..chances are stocks will rise faster than earnings..plenty of room for multiple expansion..then euphoria might start getting redolent of fall of 07 when it was 15.1 BUT well below the peak in 99 and 2000 of mid 20′ let’s hope we can get a meaningful decline for some long term pick ups.

  108. Alipay/Kinki – Ouch for Yahoo but how do we buy shares of that company?  

    Thanks Rustle!  

    TLT/Brook – Get your head out of those 1 min charts dude!  

    FAS/Amatta – See above for position.  

    Q spread/Amala – If I had a "target", I would have just gone with a weekly call.  Vertical spreads are generally targeted to the close, however, when you are up 50% with a week to go – if there is even a slight doubt in your mind that you might not collect – you should cash out because you are then risking 150% to make 50% more (33%) so unless you are better than 75% certain that you’ll make that 33% – it’s a bad trade.

    That’s an important concept for all.  Generally, you want to be 66% certain (2/3) that you’ll make at least 20% on a trade.  That way, unless you are terrible at guessing, you should make 20% more often than you lose it.  Once you make 20% though, you are risking 120% to make the next 20% so, unless you have become MORE certain – the odds are turning against you.  Once you get 20% more, you are then risking 140% to make another 20% and it’s already turning into a bad trade where you really need to be 6/7 certain (85%), otherwise, what is the point of risking it?   

    With a vertical spread, you SHOULD be getting more certain the more it makes because it means you are getting further in the money as the time of the trade runs down so we can hold those longer than naked calls or puts, where the risk is clearly against us retaining our profits and gets worse and worse the more we make. 

    Medical vacations/Acobra – There are actually companies who contract for that.  You can negotiate with a US company (if you are big enough) to exclude certain procedures that can be done more cheaply by sending your people overseas and then contract with a foreign company to cover your workers.  

    IWM/Jasu – Oh no, now it’s chasing, just flipped bullish on IWM in case the note auction goes well (very possible) and we get a big stick. 

  109. JRW
    Thanks for the insight into how you are monitoring your position / entry.  That type of comment does me a lot of good.

  110. And what Manimal said!  Holy cow guys, 50% in a day is soooooooooo greedy!  

    Thanks Angel – That seems very low to me.  

    Good call Rain.  

    Puts/Spare – Sorry, I meant buying puts, not selling them in that AAPL example.

    The 10-year gets a B+ from Santelli at 3.21% on $24Bn in notes but a poor bid/cover (3.1) which they are going to ignore because the yield was so low.   That’s keeping TBT down on a knee-jerk response but the bid/cover is the real story so $34.50 should hold on TBT and that means the May $34s at .88 make a nice pick-up for another move up.  If they fail to hold $34.50 – it’s dead but if the Fed disappoints with the 2pm POMO schedule, we could be up $1 real fast.  

  111. good day, buy MCP weekly  65 puts today 1,35 and 2,7 out

  112.  looks like silver’s continued weakness was the play.
    AGQ from 380 to 185, and still has downside.

  113. RBOB/StJ – Good point but that’s all part of the rigging, right?  As to the commodity moves, sure they make massive, outsized moves based on Dollar strength – just as they did the other way on Dollar weakness.  Check out that news item from Steve Forbes above – he’s a moron but he’s a moron with one of the World’s most influential magazines and Conservatives follow him like Justin Bieber fans and he says the dollar will be dead in 5 years and we’ll all be trading gold.  That’s the mentality that went into making these bets and, not too surprisingly, there are many, many stupid rich people in the World because, contrary to popular belief – not everyone who is rich got that way by virtue of their superior intellect and work ethic – some are just lucky and create an illusion that they are smart and then they are followed by many, many people who are neither as smart or as lucky, like lemmings off a cliff…

    Good timing JRW!  

    Air/Hanna – That’s just what it is.  Here’s a good chart for real estate:  

    And what JRW said – We’re just playing for a weak bounce on the 5% rule (the 1.25% lines) – this does not in the least mean we are bullish!

    Fantastic/Lol – Fantastic!  Congrats. 

  114.  CSCO – just initiated 12.5/17.5 2013  Call Spread for a debit of 3.1.  Will sell puts tomorrow if they disappoint on earnings.  I think Chambers will pull everything out of his arse to make this earnings report satisfy the street.  

  115. Phil, 
    FAS,  When was there a roll to the June 31′s from May 30′s? I have been following as much as I have been able since I got back from overseas but never saw the roll. That is now .60… and covers would be the May 30′s for .60 (if they get there)…. Should I wait for a bounce and try to do it for the .40 and THEN sell the 30′s for .60? 

  116. Doc’s salaries & tuition – see, having taught 15 years or so at medical schools, I can tell you this is another part of the mess. We cut taxes, so cut support to our state schools. So universities make it up by raising tuition – and that’s not really a tax, is it? – and one place they raise it the most is on those whom they figure will earn lots when they graduate. That’s been working for a while, but docs’ pay is beginning to really lag the tuition increases, leaving a lot of fresh docs with 3 – 5 years as a resident (cheap labor for teaching hospitals) making 50 – 80k per year (I know, that doesn’t sound too shabby) and a huge loan on their backs. Add to that the problem that state medical boards have long limited the supply of docs by limiting the medical schools and by putting up exam barriers to out-of-state or country types. One of the worst examples is actually in dentistry – the Washington state dentists put up some remarkable barriers in the past. It’s a mess.

  117. @biodieselchris
    If I had puts on that 2 weeks ago, I might’ve just taken off a month and been on an island.

  118. Oil futures can be played up off the $100 line now.  

  119. Can’t break 84.06, so out even !! Time to wait and see.

  120. Gold futures can be played up off the $1,500 line too!  

  121. Alipay/Phil:  A reverse-merger IPO on the NYSE? I love how China keeps playing these foreign investors for fools.  I wonder if David Einhorn knew about this when he took a large position in YHOO based on the value of

  122.  Phil -
    I am up 6% today – yeah! so you can imagine how much I have gotten squashed over the last couple of months – although a good part of this is from a short on the euro.
    Any suggestions for some longs to pick up?

  123.  Phil,
    I suspect the "malpractice" percentage in the above chart does not include the premiums paid by everyone in the medical industry but represents only legal fees and settlements.  I for one would like to know the cumulative total of all malpractice insurance premiums paid each year in America.  I think it would be a mind boggling total.

  124. Puts/Spare – Sorry, I meant buying puts, not selling them in that AAPL example.

    You said “And i sell some sucker the 350 puts,”

    Now that you are buying them , does that change who the sucker is?


  125. Phil…I can’t recall if my comments are posted immediately?  I’d like to send you some investment data that would not be posted (immediately) here.  Let you look it over/edit  after hours.  I think it may be better for you to keep in your back pocket for the benefit of all.  attn Phil from livingfull?  Which address would be best?

  126.  how is the vix still at 17??

  127. Snow
    Yes, Limit the number of doctors and increase the number of lawyers…….. WTF !  I am just wondering… As professional’s go… Longtime (older-successful) professionals need to make sure their piece of the pie does not shrink with too much competition…..  just my thoughts from a little experience with lawyers………… AND has been the case for many years with Alternative "medicine" practioners competing for business….

  128. what is the volume like today?

  129. QQQ may20 58 puts up 100+% after opening

  130. And dollar is at R3… Man these lines have worked well today. We go up or down from here! 

  131. Buy program, we still have to take out 84.06 !! (then 83.73 is a floor)

  132. JRW
    What is up or down? Been out since 12:30 with no true clue. I’m up 2% and trying to decide to quit or not.

  133. 2.5 million IWM shares within 5 min…somebody’s placing a bet

  134.  Possible explanation of the silver and RBOB moves…

  135. Will be interesting to see if margin buyers end up liquidating commodity positions near EOD today, in a similar move to what we saw last week on some of the big down days. Could pressure the market. Also, there appears to be some selling into the market when it tries to rally significantly about 12600.

  136. FAS/Amatta – This goes right back to the fact that you should not be in trades you do not understand.  We had this exact same conversation yesterday because you missed the roll already and now you don’t know if you should have rolled – AGAIN.  What did I say to you yesterday at 1:05:

    FAS/$25KP, Amatta – Yes, the idea was to make the roll from May $30 calls to June $41 calls for .40 but time is now working against you as the May calls lose their value much faster than the Junes so you must execute that roll by no later than tomorrow if you intend to stick with it.   As to selling short calls – as I said, I’d rather sell 1/2 a may $30 than the weekly $30s but, unless the 4% levels break – there’s no reason to be bearish at all on FAS. 

    The May call is out of the money (all premium) with 7 trading days left so it will lose about 1/7th of it’s value every day – you can’t stay in it – it’s like a time bomb ticking down on you.  If you don’t understand something as basic as that then you should not be going anywhere near these trades.

    Sounds like a lot of work to do on that front, Snow. 

    Alibaba/Kinki – That was the only thing I liked about Yahoo but it hasn’t done them much good. 

    Longs/Samz – Not at the moment other than the usual WFR, CHK, CSCO, TBT, HOV and C but, if we’re finishing below our 4% lines then waiting is your best strategy. 

    Malpractice/Csl – I would like it if you contacted the chart guys and got them to do that.  It would make an interesting addition. 

    AAPL/Spare – Yes, to be clear, we USUALLY sell suckers puts (the premium makes them suckers) but if you are one of THEM and you own 2M shares of AAPL and you know you are going to dump them, then you do BUY puts from an unsuspecting sucker (us in that case) who is guaranteeing to pay you $340 for your AAPL shares no matter how low they go.  Since you KNOW you will be dumping AAPL and causing the panic – then you have the advantage in the transaction.  

    Secret info/Living – You can send it off to Gred (admin) with a note.  

    VIX/Samz – Total joke at this point.  

    10 minutes until Bernanke saves the markets (or else)

  137. XOM down at the 2.5% rule makes for a good long to end the day.  WEEKLY $80 calls at $1.20 with a stop at $1

  138. M
    While continuing initiatives like expanding its Internet operation, Macy’s is also taking steps like broadening its youth-oriented offerings, investing in new businesses like outdoor furniture, and starting to use Apple Inc.’s (AAPL) iPad tablet computers in stores.

  139. Woohoo!  Been out all morning.  I’d almost forgotten I’d held TNA short overnight after yesterday’s ridiculousness.  Covered a little while ago and am now long.  It’s much more palatable to BTFD when you aren’t already underwater!

  140.  another low reading is the domestic equity mutual fund cash/assets ratio at an all time low of 3.19%…

  141. Copper at its lowest level now since December, when the market was closer to 11k, or about 1500 points lower. Large disconnect here, since copper is thought to be a leading indicator on demand/growth.

  142. BEN
    More the same POMO!

  143. shadow / 12:30

    I switched to TNA then, but out now and waiting.

  144.  Magical Sloppy Buyer…is trying if he can’t get traction it oculd be an UGLY close…if the tips spread were a stock i think i would short careful euro decline today will mean forced selling into the close..i think that MSB is toast today

  145.  An update on deficit projections and the causes:

  146. New POMO schedule is LIGHT at 93Bn but only covers through June 9th.  There is a holiday but a little disappointing – certainly not rally fuel – SHORT-TERM BULLISH BETS ARE OFF!!!:  

  147.  brazil also trades like shiite worst in the world was hedgies fav a bit ago…

  148.  phil, is tbt call still on?

  149.  its a safe bet to assume that soem of these commodity bulls that got killed recently and remained bullish doubled down and are getting creamed

  150. I cant think of a single reason that in the face of this massive commodity sell-off (and with skimpy POMO) that big buyers would come into this market at these levels. So, i’m gonna lean short into the close and overnight, unless something crazy happens in the last couple hours. Gonna pick up some more DIA puts, and industrial name puts. Tight stops if we recover by close today.

  151. Next week (OpEx week) is light for POMO – Just $22Bn but at least something every day.  This week, with tomorrow and Friday now added, is about $30Bn.  

    The previous POMO (4/13-5/11) was $97Bn, before that $102Bn (3/14-4/11).  From Nov-Feb 9, it was $105, $105, $112 and then $97Bn 2/11-3/9 so it does seem to be somewhat winding down and that’s exactly what we thought would be a sign that spooks the market.  

    This is dollar positive (now 75.50) as we stop printing so much money and dollar positive is SHORT-TERM negative for TBT as a strong Dollar means we don’t have to pay a high rate on borrowed Dollars (while it’s going up) but then the reality is that, if the Fed isn’t buying $100Bn of Timmy’s paper each month – who will and at what price?

    Bottom line – it looks like we’ll be getting our M pattern, maybe sooner than we thought.  

  152. PHIL the Xom play just for the day or longer?

  153. A couple of earthquakes in spain – about 5.5. some damage. not sure of impact yet.

  154. BXP May $105 puts at $1.30 are a fun downside play.  

  155. How much POMO will be left after this one ends on June 9th?

  156. No way Phil – bullish bets are ON!  There have been others…..but hey!

      With Astellas Pharma and OSI Pharmaceuticals haggling over price, BNet Pharma wonders which biotechs could be next on the buyout menu. Mega-mergers might have been all the rage in 2009; however, with few targets left, the focus will shift to smaller acquisitions. Big Biotechs Biogen Idec and Gezyme could be on the menu, given Carl Icahn’s involvement in the companies.

    • Vertex Pharmaceuticals‘ promising hepatitis c drug telaprevir is in Phase III trials, and the company has a pipeline of drugs that features treatments for cystic fibrosis, epilepsy and inflammatory diseases.
    • GlaxoSmithKline is already partnered with Human Genome Sciences on its lupus drug Benlysta, which analysts predict could lead to $4 billion in sales.
    • Alexion Pharmaceuticals boasts Soliris, the world’s most expensive drug, which pulls in about $400 million a year. The developer has four Phase II trials for other indications of the drug, which is currently approved for a rare blood disorder.
    • Sales of pulmonary arterial hypertension drugs Remodulin and Tyvaso have led United Therapeutics to $370 million in annual revenues.
    • With $844 million in sales last year, Bayer and Onyx Pharmaceuticals‘ kidney and liver cancer drug Nexavar came close to the blockbuster mark. Four Phase III trials are testing the drug for additional indications.
    • Auxilium Pharmaceuticals is looking for more uses for its Testim testosterone gel and Xiaflex, a drug for hand contracture disease. (Um, going back in o the Dec spread.  Will look at them).
    • Allos Therapeutics won approval last year for Folotyn as a treatment for peripheral T-cell lymphoma; trials for cutaneous T-cell lymphoma are under way. (at 2.50 now, down 10%.  Buy in here for 1/4 entry.)

  157. Seems like there is tight correlation between the indices today.  Not that it should come as a suprise.. but today looks planned.  Still long tna but am under no delusions it’ll work.  Sure looks like more selling to me with FAS leading the pack down.

  158. Article above was from March 9….so there are some good ones from it, and I highlighted the ones we are playing, or played FWIW. 

  159. Jabo around 70b left after the 9th

  160. matt
    XLF is below 16         Trouble!!!!

  161. Losing 83.73; buying TZA !!

  162. Phil
    i bot  AAPL Jun 360 Calls when it’s over $8. now it’s $4. shall i dd? thanks,  

  163. Phil, 
    FAS yes I do understand that!  That is why I asked about a week ago about rolling and then yesteday, now the roll is .60 versus .40 so I am asking if it is still worth doing or what other alternative is there? AND what to cover it with if not expecting a bounce tomorrow? 

  164. This about a Hedge Fund :
    "BlueGold, a $2.4 billion London-based fund, has suffered losses of about 20%, or nearly $500 million, so far this month, according to someone close to the matter…..Despite the upheaval, BlueGold, led by Pierre Andurand, is exiting few positions, according to someone close to the matter."

    I wonder what happens if oil goes down another 10% and they actually need to start exiting positions? Oops.

  165. UTHR/Pharm    Nice big trade in August  c/p

  166.  I know the market is rigged, etc, etc, but I don’t see how we can have a very bullish day tomorrow.  POMO is bearish, don’t think jobless claims will be good, and there is definitely growing concern for the Euro again.

  167. Phil / pomo   When do the banks get the Cash, ‘Operations date’ or settlement date one day later?

  168. Out of TNA just in case this little miraculous rebound doesn’t last the rest of the day..

  169.  M/Kustomz – That is going to be good for AAPL.  I think AAPL should franchise their whole retail experience – it really is Retail 2.0 – I only wish they had more stuff I could buy on a regular basis as it’s such a pleasure to shop there.  

    Good one Matt!   That worm turns hard and fast, doesn’t it?  

    Copper/Hannah – Copper should never have been this high.  People were buying and buying into stockpile building that had nothing to do with demand.  To some extent, it makes it a broken indicator for a while but, of course, we know the markets shouldn’t be this high either.  

    Deficit projections/StJ – Very good perspective for those with eyes to see

    Now when you consider that the War and the tax cuts and the commodity profiteering CAUSED the financial crisis – I think we can pretty much figure our where things went wrong and it isn’t because we pay teachers too much money!  

    Brazil/Angel – Any commodity exporter is screwed if we hit a correction.  That’s why we love our EDZ hedges.  Yes on the double downs – look at Bill Gross puffing up his chest and saying he’s doubling down.  He’s not doing that because he wants you to be rich – he’s doing it because he’s already done it and he needs people to follow to bail him out.  If that guy has to capitulate – things can get very interesting indeed.  

    TBT/JJ – Not worth it for now but does not change my long-term view, still a good accumulate down here for a move up in the Fall (hopefully).  

    Oil $98 – How light and sweet it is!  $98.50 SHOULD hold (fun if you are a very nimble futures trader but, otherwise, not playable).  

    XLF still holding $16, that makes me pretty comfortable with banking longs.  

    XOM/Yodi – Done already.  As I said on the POMO note – kill the short-term bullish plays!  

    How much POMO/Jabob – I wish I knew but it’s not very clear.  Most people think the next sheet will be the last if they don’t extend (so we can go back to pretending).  

    Bullish/Pharm – Well YOUR bullish plays are pretty market independent.  It is a good chance for people to get in.  

    XLF/Shadow – I ban thee from glancing at the 1 minute charts!  

    AAPL/Ethan – Er, no.  We don’t have any particular reason to think AAPL goes higher.  We got out of AAPL longs as we came into Monday’s Nasdaq adjustment.  While they did hold up better than I thought, they are not likely to buck a Nasdaq downturn so, if anything, you should roll back in time and sell calls to work into a long spread that sits AFTER a catalyst like July earnings.  

    FAS/Amatta – IF you are going to stick with the play, you MUST do the roll.  The price is not at all likely to improve because the June calls have 37 days to expire and the May calls have 9 so you will lose premium 4 times faster than the calls you want to roll to if you wait.  As top selling – at this point, you are better off waiting and praying than taking .45 for 1/2 the May $30 calls.  Even getting .60 sucks but at least that’s .30 per long and pays for over 1/2 of the roll but with 9 days to go you can get in big trouble on those short May $30 calls and .45 is not enough compensation for the risk.  

    Oil/Hanna – Oh that’s when it gets real fun.  That’s like Amaranth a few years ago when nat gas would drop 10% on consecutive days.  

    Bullish/Rustle – Not too likely.  Bulls should be happy if we just stop going down at this point.  

    Cramer is on – unbearable!  

    POMO/Tusca – It is my understanding they get it the next day.  

  170. JRW--are you having a bad day?

  171. Phil I’m down big on xrt.  Should I roll out to July 52′s from the june 53′s,  puts.  Thanks.

  172. NYSE must  retake that 2.5% line at 8,487 for there to be any hope for the bulls – pretty much it’s acting as an anchor dragging down the rest just like it did below the 4% line.  

    LOL – I went to pull the video of Cramer foaming at the mouth and saying BUYBUYBUY and "I told you so" to the bears but they have redacted it on CNBC already.  

  173. Phil XLF
    Changed to 3 minute!

  174. Phil XOM well that play worked out OK bought 1.20 sold 1.30

  175. Short TNA with a tight stop

  176. XRT/Lori – If you are in the $25KP position, which is 20 June $53 puts at net $2.08, now $1.35, I don’t see the need to move them yet as we have 5 weeks to expiration, the market looks weak and the delta is .44, which means a $1 move down gives us about $1.79.  Also, there is no July, only September and we are only short-term bearish so not an attractive alternative.  

    XLF/Shadow – Good man!  8-)

    XOM/Yodi – 10 cents is great.  When you take a poke at a support line you should treat it like a Futures trade and just grab those nickels and dimes if you get even the tiniest bit nervous. 

    Now we are holding Thursday’s close, even on the NYSE and we were gapped up Friday about 1% so be very careful about overnight bearish positions.  I favor neutrality here as the 2.5% lines should provide support to the downside and, when they start breaking, we can buy more bearish plays but, for now – it’s still a bit early to think the stick man – especially the pre-market stick man – is dead.  

  177.  why does CNBC redact any video with Cramer since they always put a disclaimer up saying his views are not the views of CNBC?

  178. Euro about to test 1.420…lets see what happens

  179. USO WEEKLY $39 calls at .80, selling WEEKLY $39 puts for .60 is a bet $98.50 holds up tomorrow.  Severe penalty if it doesn’t, of course.   

  180. JRW and Phil,
    Thanks for the guidance earlier.
    Holding on to the IWM 84 calls in at 1.03? Lets see where this goes

  181. Covered TNA for .5%

  182. WTF NFLX and CMG????

  183. Looks like they are going to try and kill the commodities market and speculators along with it,  trying to divert money back into bonds?

  184. I say no stick into close, if anything at all close lower.

  185.  I say anti stick or WTF also.

  186.  OK, stick.  

  187. Now a maybe save, no stick, could be wrong. Know when to fold um?

  188. CMG up 4.60 conclusion poeple eat more tortillas as steaks are to expensive today

  189. QQQ Trade up 67% now at .87 – now way do you play that for the last .13 next week!

    Cramer/Rustle – Because he sucks and they have to change history so people don’t catch on to what a joke he is.  Amazingly it works – no video of bad calls means they never happened in Cramer’s world.  

    You are welcome Jasu.  I like those calls here for the possible stick. 

    NFLX & CMG/Jabob – What a crock – and they both take off at the exact same time like they have something in common other than both being part of a manipulative Bot trading program.  It is a good, early indicator that they are attempting a stick into the close.  

    Commodities/Kustomz – Well they must die in order for our bullish Q3, Q4 premise to kick in. 

    Yen still strong at 80.94 so this is all about EU weakness relative to the Dollar which means the Dollar has room to run if the Euro stays flat and the Yen heads lower.  

  190.  Ah, stick?

  191. CMG – and this is on news that the probe into their hiring practices is wider then expected, and legal costs will have "slight" impact on Q2 overhead. Oh well. I guess news doesnt matter when its just a computer program trading the stocks.

  192.  MSB rule number one never ever ever let stocks close on lows…this isn’t a good sign for tomorrow

  193.  Phil I have to thank you again – another amazing day for me thanks to you.  I was short oil and took your QQQ trade this morning.  I don’t play every day and I get back to cash, you have spoiled me as I don’t need to work every with trades like this.  Thanks for all that you do here.  

  194.  Sold BTU May 21 60s for $1, now $.92, BTU now down 3.5%

  195. jabo / MoMo — Why do I get the feeling you are on the wrong side of the MoMo’s? :) or more like :(

  196. 1.4185 and the Euro will breakdown again, amazing to watch them jam up the Euro a few pips and the whole market gets bought at the same instance

  197. Totillas/Yodi – I’m making steak quesadillas for dinner tonight – what does that count as?  

    Bots don’t care about no stinkin’ news Hannah. 

    Thanks Damion!  That’s a great idea, we could all only trade 3 days a week – the question is which 3?  8)

    BTU/ZZ – Each stock has it’s own VIX based on recent movement, that’s what’s holding the price up but it’s either on target or off target – that’s what’s important.   That reminds me, Cramer was talking about coal last night, specifically herding the sheeple into BTU:

  198. always on the wrong side
    just hope to end up on the right side ;-)

  199. looking more like no stick.  didn’t touch my dia puts yet, taking the chance on tomorrow.  Figure if I had two great trades in the last week on them, will take the chance into tomorrow.

  200. Phil Totillas/Yodi a rich American!!

  201. rustle123 – i’m with you on those DIA puts. Dont like the feeling of this market, so gonna hold overnight.

  202. Phil
    sorry is this the  trade from this morning  ?
    QQQ Trade up 67% now at .87 – now way do you play that for the last .13 next week

  203. Wendys raising prices. Chipotle raising prices. Etc. Yet, everyone projecting increased sales of these higher cost items in coming quarters. Where will the poor consumer (who still has limited access to credit) get this extra money to consume more stuff at higher prices. Its certainly not coming from wage growth.

  204. > 12,625 could break out!

  205. Hanna
    Haven’t you heard that consumer credit is expanding with a speed of a bullet train? :-)

  206.  wrong about the stick, hoping for bad day tomorrow.

  207. SKX fighting the tape today.

    It’s good to watch Cramer now, while everything is going the wrong way and listen to the gibberish he spouts to back up his calls – makes you realize why you shouldn’t trust anything you hear from TV pundits, who think a good trade is one you make a good catch-phrase out of….    Notice how "obvious" it is that we’re going higher and how all the "experts" he’s consulted agree and how he’s got so many great reasons to buy it’s not even worth talking to you if you don’t agree with him.  

    BXP looks like it’s feeling some pressure.  

    QQQ/QC – Yep, that was the morning trade, now back to net .72 but still a nice gain off the .52 entry (40%).  When you have short-term spreads like that, it’s good to have a broker that lets you put in an ask for the net or, even better, set a trailing stop on the last net sale so you don’t have to watch it.  Obviously, anything over 50% in a day is fantastic.  

    Prices/Hanna – That’s where this whole thing falls apart.  Totally irrational outlooks yet "expert" analysts say the S&P will zoom higher on record profits.  Only if we have record wage inflation to pay for them. 

    Wow, big stick!  Call it a 2:30 start today.  These guys crack me up…

    Credit/Vic – That will top out soon.  We had some good contraction but now the consumers are borrowing up to their eyeballs again.  

    Stick Rustle – You never go wrong taking a profit.  

  208. Yay!  My boys are making a move:

    In a letter to the CFTC, a group of 17 Senators demand a crack down on speculation in the energy markets. "The wild fluctuation could only be the result of rampant oil speculation, plain and simple," says Ron Wyden. It’s unknown if a copy of the letter was sent to the Fed whose near 0% rates let speculative positions be financed for next to nothing. 

  209. OK, that was a FANTASTIC day – let’s do that again tomorrow!  

  210. Today was fast and furious…..nice.

  211. Phil / commodity swoon   Do you expect this correction to boost consumer spending as well as boost margins of all corporate commodity users?  Might be the key to preventing the real economy from sliding into a deep Recession later this year?  Is it bullish for all non commodity stocks?  Helps China stocks also?  UK mkt most damaged my commidity slide with all the miners – UK mkt a short?

  212. Phil,
    I got my PFE called away yesterday. I had the sold Jan $15 calls. It made me wonder about the NLY trade in the income portfolio. By starting out by selling deep in the money calls won’t you have a good chance of getting called away early? Seems that if they wanted my PFE dividend 8 months early then NLY would not be in my portfolio very long if I sold $12.50 calls.

  213. Not to point out the painfully obvious, but the Middle East conflict, writ large, is getting worse, not better.  Bahrain is interrogating 16 year old Shia school girls with rubber truncheons.  Assad Jr. is showing his displeasure at popular protest by shelling cities with tanks.  Yemen is less creative, just garden variety shooting of peaceful protesters.
    I don’t link this to the price of oil, or of anything else, but even a slightly grey swan could burn short energy positions in a hurry, oversupply of the actual product to the contrary.  In fact, this is the first day I can remember this year where supply actually trumped fear and loathing in the oil market.

  214.  ABX / Phil – Phil, are you liking ABX down here after its sell-off today?  Thinking of a Jan 13 40/45 BCS and selling the Jan 13 $45 put.  

  215. Stuman – IMHO I think GG and ABX go back and touch where they started when QE2 began.  Thus, November prices…..which is $42 area for ABX.

  216. BAM! CSCO shares up 3.6% on a nice earnings beat of 42 cents/shr on 0.38 cents expectations and whisper estimate of 0.39

  217. Commodities/Tusca – I wouldn’t short the UK, they are net importers despite the North Sea Oil.  It’s the commodity exporters who get damaged and Canada is an interesting one if oil and gold tank because NO ONE is betting against them right now.  But yes, that was my overall theory – that the commodity bubble would pop and drag down the markets but THEN we will begin to recover and have a proper rally into the end of the year.  Right now, we are in the painful part.  Also, we do need some higher wages still.  

    At the close: Dow -1.02% to 12630. S&P -1.11% to 1342. Nasdaq -0.93% to 2845.
    Treasurys: 30-year +0.33%. 10-yr +0.22%. 5-yr +0.18%.
    Commodities: Crude -4.71% to $98.99. Gold +0.17% to $1503.90.
    Currencies: Euro -1.46% vs. dollar. Yen -0.27%. Pound -0.12%.

    Market recap: The second commodities crash in a week sank stocks, after higher than expected oil inventories pushed Nymex crude back below $100/barrelTrading was halted briefly in oil and gas futures, and price limits for crude, heating oil and gasoline were raised. The dollar rose vs. the euro on renewed Greece worriesgold and silver slid, andTreasurys rallied. NYSE decliners led advancers three to one.

    CSCO kicks ass!  Cisco Systems (CSCO): FQ3 EPS of $0.42 beats by $0.05. Revenue of $10.9B (+5% Y/Y) in-line. Shares +3.7% AH. (PR)

    Symantec (SYMC): FQ4 EPS of $0.38 beats by $0.02. Revenue of $1.7B (+9% Y/Y) beats by $0.1B. Shares -0.4% AH. (PR

    After his Malthusian turn on the commodity sector a couple of weeks of ago, Jeremy Grantham turns bearish on equities, calling the S&P 40% above fair value. Without further QE from the Fed, he fails to see how shares can maintain such lofty valuations. (pdf

    Whuck?  Inflation "will not remain above 2% beyond this year," Cleveland Fed President Sandra Pianalto says; commodity and oil prices would have to rise enough and persist long enough to spill over into a wide range of other consumer goods, and "so far, this has not happened." But slow economic growth means it could take five years for unemployment to fall to 5.5%-6%.

    Atlanta Fed President Dennis Lockhart: Don’t count on real estate to add much to GDP over the next two years; the economy is improving (expects 3-4% GDP growth annually) but housing’s a big headwind. CRE is weak but there are signs of stabilization; single-family is where the risk is. Unemployment should slowly drop to a base just above pre-recession level. 

    About time these guys got some "parental supervision":  Banking and business leaders reportedly are meeting with Tea Party-backed House members who pledged to stop raising the debt ceiling to explain what they think would happen if the members carry out their threat: "Interest rates would spike; S&P and Moody’s would downgrade U.S. debt, raising the price of borrowing; there would be a market selloff – it would be a disaster." 

    Eddy Elfenbein had been expecting the Fed to raise rates sooner rather than later, but based on the plunge in short-term Treasury yields, "apparently Mr. Market disagrees and expects rates to stay low for a while longer." To clarify just how low interest rates are, Elfenbein says that if you were to lend Uncle Sam $1M for one day at one basis point, you’d get about $0.28 in return.

    Bank stocks trade broadly lower (XLF -1.2%) as investors consider the possibility of a settlement of allegations of improper mortgage servicing practices. Nomura breaks down the banks’ $5B offer and figures that Bank of America (BAC) would pay the biggest chunk of the settlement at $1.5B; Wells Fargo (WFC) would have to pay ~$1.3B, JPMorgan Chase (JPM) $800M, Citigroup (C) $400M.

    Bank of America (BAC) is "still struggling mightily" but making progress in digging out of a pile of bad mortgages, CEO Brian Moynihan tells shareholders. Its biggest risks: regulatory demands and the potential cost of principal writedowns. All shareholder proposals failed, including a review of foreclosure practices backed by New York City’s comptroller. 

    Freight shipments rose in March to their highest level in nearly three years, the U.S. Department of Transportation says. The amount of freight carried increased by 1.9% over February, pushing the agency’s freight transport service index to a 33-month high.

    Job openings increased in March to 3.1M, up from 3M in February and the first time since Nov. 2008 that job openings have been at or above 3M for two consecutive months. The job openings level has trended up since the end of the recession in June 2009 but remains well below the 4.4M openings when the recession began in Dec. 2007.

    After market moving inflation reading out of China, it’s worth remembering any relation the number has to reality is likely by chance. Wikileaks cables have Chinese officials admitting economic reports are mostly "man-made." China recently tweaked its CPI gauge, putting less emphasis on food and more on property.

    Can this save PCLN? JetBlue (JBLU +2.2%) says traffic in April rose 6.1% to 2.5B passenger miles from 2.36B in April 2010, and estimates that passenger revenue per available seat mile increased 13% Y/Y. JetBlue’s momentum has abated somewhat since the beginning of the year, though traffic gains remain above those of other legacy carriers. (PR

    Drill baby, drill!  U.S. regulators approve a Royal Dutch Shell (RDS.A) plan to drill for oil deep under the Gulf of Mexico, the second deepwater exploration plan approved in the Gulf since the government lifted its moratorium last October. Regulators determined that Shell’s plan met new safety standards; environmental groups have signaled they would challenge such a ruling in court. 

    Along with its plan for "Chromebooks," Google (GOOG) is taking a not-so-veiled swipe at Apple’s (AAPL) online commerce fees, touting a 5% transaction fee vs. an oft-repeated "30%" – the amount taken by Apple’s App Store, but also Facebook for its virtual currency.

    Todd Harrison, a former Galleon managing director, speaks out for the first time: "When history reflects on this era of inequity, Galleon will be the poster child for greed; the people have spoken, and they’ve done so loudly."

    Three lunchtime reads:
    1) Profile: Gross, the vigilante
    2) China’s currency and trade balance: two pictures
    3) Piling back into silver for the long haul 

  218. Oh boy, Chambers opens his mouth and down CSCO goes.. :(

  219. Looks like we’ll be able to sell some CSCO puts tomorrow and pick it up cheap…. 

  220. Today’s levels

  221. Dem sum big red candles der Ilene!

  222. CSCO really is a dog with fleas!

  223. AUD and CAD may have peaked. 

  224.  Small consolation, I thought CSCO would beat and they did, but…. might trade below $17 tomorrow!

  225. Incredible ; CSCO goes from up 3.5% AH to down 3.5% AH after chambers talks. Yikes. And, the numbers looked pretty good. Isnt this the guy who always use to give a sunny rosy picture of everything?

  226. Nice handy chart on level of taxes for various countries:
    I always find it funny when I travel to Europe that everybody talks about the US deficit. Sure it’s a big number but as the chart shows, we seem to be the ones with fiscal flexibility. Sure, the German have only a budget deficit lower than 3%, but they also collect taxes to the level of 45% of GDP compared to 31% or so in the US! That 14% difference would be $2.1 trillion more taxes in the US generating more than $500 billion in surplus. Not taking into account that the US spends probably 2% more of GDP in defense (more if you include Iraq) letting Europe sleep well at night! And the German government negotiates medication prices (they all do in the rest of the world) which is of course forbidden in Medicare Part D and that would probably add to the kitty. Add all that, and we pay off our debt by 2020! It’s not just a spending problem (although it would be nice to take a knife here and there).

  227. Phil
    Anyway to combine the story of 17 Senators wanting tougher oil futures rules with one of your short history lessons of how we are here and how we got here with the links for our elected Sen/Rep’s? Most don’t understand much more than the buzzwords "free market" and "supply and demand".  It might help to get some grassroots feedback to our elected officials. Something we can also pass on to our unknowing  facebook friends that will make them "MAD AS HELL" and not want to take it anymore, either. Maybe we can get some more to join in!  Viva

  228. Hanna – Chambers always paints the picture the way he sees it.  All I know is that when Rosenberg brought their warning on outlook to my attention last fall, I listened (stj also noted it after the last earnings).  They used to be a leader, now is it AAPL?  AAPL is doing well, but the stock is stuck, and I am afraid the smart money is running for the hills.  Same goes for GOOG.

  229. Of course our represenitives don’t understand the oil manipulation.  For heaven sake how many of us understood befor we started trading!  These guys have full time jobs.  OK phil, you want it to stop, write us up a short understandable explaination of how the oil manipulation works. 
    We all have a huge list of friends.  Someone knows someone and we will pass it on. 
    Other wise just BS complaining.

  230. Pharm – i think you bring up an interesting point, of tracking these so called "leaders" or "canaries" and seeing if their action can tell us anything about the overall market. Lagging bellweathers like GOOG and AAPL could be telling us that smart money is not playing at these levels (this jives with the recent uptick in short interest overall). Another interesting sign has been the severe commodities volatility, spawned perhaps by a combination of the dollar strength and the bubble they had formed. Then you have the high beta names, which plunges in Feb and March (LULU, OPEN, CMG, NFLX) and although have rallied, have failed to reach new highs. We are also seeing rotation without real leadership, and a failure of our previous leaders (energy/oil). I think, as some others do, that these constellation of factors are indicating a top has already been reached for the short term/medium term.

  231. Phil,
    when you talk about oil futures, when do you start looking to next months?
    You don’t wait until expiration day, do you?

  232.   Phil, I mentioned the securitization of underwater U.S. real estate by the Fed.  Here’s an Australian REIT [U.S. retail properties] that is gaining attention.  I’m scouting for tradable vehicles.

  233. Phil,
    what’s your opinion on CYH?

  234. Phil/JAG,
    I have the buy/write from awhile back at 5.53, selling Dec 5 calls for 1.27, now .70 and selling Dec 5 puts for .68, now 1.02. Any adjustments you would make or too early yet. Thanks
    Also that is really helpful when you put in your morning post the stocks that have earnings that day or before the bell the next day – nice touch.

  235. Good morning! 

    PFE/RJ – If it gets called away you can just buy it again and sell calls again, no biggie.  As long as you collect as much premium on the spread as the dividend would be, what do you care which way you get paid?  Meanwhile, that guy did you a hell of a favor as PFE is down about .50 since!  What’s the quarterly dividend?  Just .20.  So, if you buy PFE back at $20.50 and sell the 2013 $15s for $5.90, that’s .40 of premium and each quarter you EITHER get your .20 dividend or you get your premium early – the point is to net PFE down to a pretty safe $14.60 (or you can sell the $12.50 calls for $8.25 for .25 premium and a $12.25 net entry) and that makes the .80 annual dividend 5.4%.  That’s all this play is about, setting up to collect a fairly safe 5.4% that’s taxed at 15% vs messing around with muni bonds.  Plus, of course, you can use margin leverage to by 2x or more and double that return on cash and then you can sell the 2013 $15 puts for .88 for another 5%, etc…  These are just boring little plays that are meant to be safe.  In fact, your deal is so good, people will, on occasion, take the stock away from you but that’s OK – there’s always someone who will sell.  

    Middle East/ZZ – Yawn!  It’s getting like Israel and the aggressor de jour – after a while, it’s hard to care.  Reminds me of the George Carlin bit – WE LIKE WAR!  

    ABX/Stu – I like them down here but they should be getting downer so maybe wait until gold firms up.  We could correct to $1,250 pretty easily. 

    And what Pharm said. 

    CSCO – I love Chambers.  He’s the only CEO who’s not lying to you and he’s being punished for it but he get’s my money as one of the only guys who actually has a long-term plan based on a REALISTIC assessment of the Global Economy – not the fantasy land others are basing their protection on.  

    AUD & CAD/ZZ – I agree, it was a good run, time to go back to USD.  

    Nice charts, STJ:

    The United States Is a Low-Tax Country-1

    4-13-Tax Ependitures are Substantial-7

    Notice that Social Security is a tax that is ONLY paid by people who make up to $106,000.  Medicare/Medicaid also very disproportionately paid by the bottom 90% and then there’s the top 0.01% – our corporate citizens, with their "contribution" to our society clearly laid out in this chart.  WHERE THE F*CK DO I SIGN UP TO REVOLT AGAINST THESE BASTARDS???

    State and Local Taxes Are Regressive

    State Revenue Losses Far Exceed Other Recessions


  236. Senators, Oil/Doro, Lori – That’s what was going on when that Danny guy interviewed me a few weeks ago.  I sent them a ton of material (all been covered many times) and the guy had 4 Emmys and is making a documentary on the subject and stirring up all kinds of trouble.  This is something Sam Antar and I got started last year as he had some good connections to rattle the cage.  I had tried to do something like this in 2008 (even went down in Washington to help build a case) but the bubble popped and the market collapsed and oil went back to $40 and no one would pursue it but now we get to say "we told you so in ’08 and we’re telling you again" and it’s working, finally.  But yes, remind me on the weekend and I’ll put something up that you can send around – the more the merrier.  Also, nice job by Matt on his latest Goldman expose (main page on our site) – slowly but surely, we WILL take our country back.  

    Actually, I forgot to mention it but CNBC had some big copper producer on and he was proudly telling them how great his business was because he produces copper at a cost of $1 per pound and his margins are the best they’ve ever been…  That’s NOT how things are supposed to work!  If a person is producing a commodity for $1 – it’s not supposed to sell for $4 – something has gone very, very wrong in the World for this to happen and that something is speculators (including the Banksters, of course), plain and simple.  Oil is the same, global average extraction costs are $24 a barrel.  Oil was under $50 from mid November of 2008 through late April of 2009 – Did ANY oil company have a losing Q1 ’09?  No, they MAKE money at $50 a barrel – everything else is excess and that excess is currently $50 x 88M barrels a day x 365 days a year or $1.6Tn a year in oil costs alone.  Then there is the refinery markups (at $4 per gallon a 42 gallon barrel is $168 so ANOTHER $2Tn ripped out of consumers’ pockets at the pump) and then there is the food and other inflation that all that leads to, good for another couple of Trillion a year at least.  So about 10% of Global GDP is excess charges causes by speculators.

    Oil Futures/Lol – I play the QM contract and I never hold it overnight (unless I am watching it or have stops I feel comfortable with in thin trading).  If you are talking options – I play whatever contract has the best-looking risk/reward at the moment, I don’t really care what month it is, which is why I sometimes mix them up – in TOS, you just find the best contract and click on it – you never have to enter the actual info yourself. 

    REITs/ZZ – We just shorted BXP.  Rising rates will not be their friend.  

    CYH/Lol – Solid long-term growth business.  They dropped a lot as they tried to overpay for THC and have finally given up and that’s considered a negative by some but I think it’s a good thing except now we know management is itchy to overpay for something so I’d be careful until we find out who their next takeover target is but a dip back to the mid $20s is a good entry.  

    JAG/Jomp – You have a $3.58/4.29 position and the stock is at $4.59.  The point is to establish a long-term position in the stock so it’s really not worth worrying about until/unless it’s 20% below that ($3.70).  Even then, what’s going to happen?  You’d want to roll the puts out to something lower and longer (not available yet) and the calls will expire worthless and then you’ll sell more calls to lower the basis.  The problem is you need to UNDERSTAND what is happening to your position because you are counting 100% of the put against yourself while also counting the caller against yourself too.  You need to be SMARTER than your broker and not pay attention to their net $2.87 they currently mark the trade at – it does not at all reflect what would happen if those options expire at $4.59, which would be that the caller would be zero and you would be assigned another round at $5 and your average entry would be $4.29 and you would  have a .20 profit, not a .71 loss that is shown at the moment.  

  237. BXP SHORT Phil looking at BXP’s latest 10-Q they have $7.9B of debt, but only 4% or $318M is variable rate debt..are there other  factors influencing your thinking on that play?

  238. Ben B testifying on the Dodd-Frank implementation before the Senate Banking Committee@10

  239. Can’t wait to see your movie Phil.  Will give your write up on oil speculation to a Senater at the neighborhood block party
    this Sunday if it’s ready.