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Friday – It’s the End of the World As We Know It

Just 24 hours before the World is scheduled to end and here we are?  

I don't want to make fun of religion but I do think it's a little funny to see so many people taking this May 21st thing seriously.  Oct 28th, 1992 was one scheduled date, then 1993 and 1994 but then people gave up until now as far as I know but Harold Camping has made enough of a media campaign with his May 21st prediction that my kids (9 &11) are talking about it in school and two different people who interviewed me yesterday asked me what I thought about it.  

Come on people, even if the Rapture comes this weekend, there will still be Billions of sinners left on earth so LVS and WYNN should be a big buy and, of course, all the classic "sin" stocks like TAP, SAM, DEO, STZ, MO, PM, LO, BTI, PLA, RICK and KKD – lots of good things to invest in if we're still here on Monday.  Of course, if nothing does happen tomorrow, then we have our own past sins to pay for and maybe it will be time to face up to them.

The World is awash in debt after 20 years of partying like it's 1999 and, of course, it's not just the debt but the unfunded obligations that have been taken on by most of the World Governments to take care of the aging baby boomers as they move out of their productive years and into retirement.  This is not a complicated thing – we have known it was happening since the term "baby boomer" was first coined in the 1980s (in "Great Expectations: America and the Baby Boom Generation") and defined those of us who were born between 1946 and 1964 and 2011 is the first year of retirement for the first 5% of that group.

You can (and people have) construct all sorts of doomsday scenarios for what will happen to the US and other countries as our population ages.  Dennis Gartman recently observed that "There are more Depends being sold in Japan than diapers" and, while this may seem like a simple witticism, consider the fact that Japanese automation firm Super Faiths has developed a series of recycling machines that turn adult diapers into fuel for biomass boilers and stoves.  It's not a joke – it's a business opportunity!  Production of adult diapers in Japan topped 5 billion units in 2009, up 7% from 2008 among the World's longest-lived people – given the boomer bell-curve in population plus the increased longevity of the Japanese people, we can expect that kind of growth to continue for a while.  

What may be funny in Japan will become serious in the US where we are "lucky" to rank 36th in life expectancy with men averaging 75.6 vs. 78 in Japan (Europe is around 77) BUT, even in the US, newborns have a life expectancy of 80.8 while a Japanese baby can expect to live to be 86.1 (due to that evil national medical care).  When Social Security began in 1935, the average American only lived to be 59.12 – how's that for a scam?  To be fair, a person who was 20 and made it past the dangers of childhood disease was expected to live to 66.02, so at least they would collect for a year and almost a week.  By the end of the baby boom, in 1964, the average American was expected to live to be 67.94 with a 20-year old expected to make it to 70.25.  

So, already in 1964, trouble was brewing with the SS actuarial tables and they did raise the rates to compensate for it.  Unfortunately, in 2011, the first year the boomers are retiring, a newborn is now expected to live 75.6 years and a person who IS 65 has, in theory 15.9 years to go!  In 1935, there were only 120M people in America, in 1965 there were 190M (15M per decade), 260M in 1990 (28M per decade) and 310M in 2010 (25M per decade) so our percentage of population growth is dropping off sharply as the bulk of our population moves towards retirement.  

Unfortunately, the "lock box" of the Social Security trust fund was raided in the past decade to the point where Geithner announced last week that the system will exhaust all it's assets by 2036.  Now a 65 year-old boomer today is expected to live 15.9 more years (sorry if you are 80 and reading this) and that's almost 2,027 so not too much to worry about if you are 65-70 now but, as we move through those boomers – this situation is NOT going to go away and if we are, in fact, all still here next week – we should probably start to address this problem.  Keep in mind that this obligation, which we will fail on halfway through the Boomers retirement cycle, is not even included in our debt calculations.  

The reason Portugal, Ireland, Italy, Greece and Spain have a debt crisis is because they can't print their own money to cover their debts.  The US, Japan and the EU can just keep writing checks that are backed by nothing more than the signature of that nation's central banker.  In fact, I just went to look at what a Dollar bill does promise us in writing and it's NOTHING – just that "This note is legal tender for all debts, public and private."  What the Hell does that mean?  

Oops, shouldn't say Hell what with judgement day tomorrow and all…  Anyway, not too much going on, which is why I was rambling this morning.  It's option expiration day and we expect to flat-line more or less along our 2.5% lines but we're still expecting the commodity bubble to burst and we're short on both gold ($1,500) and oil ($100 now, was $99 but we rolled).  And waiting for that other shoe to drop.  In this morning's Member chat they were foolish enough to run oil back to $100 – giving us another nice entry in our futures shorts.  

 

It's all about which way we break now.  $98.50 is our goal for oil but we can break that if the Dollar can get back over 75.75, which is the top of the narrow 0.50 range we've been watching.  Clearly, our joke of a Government isn't likely to do anything right but Europe and Japan are so full of potential black swans that we are now on the lookout for a Frankenswan event – where multiple black swans get together and terrorize the global village!  

Other than that, it will be business as usual in the markets as long as they can keep the dollar down and commodities up.  That allows "them" to extend and pretend that everything is OK and, as I pointed out yesterday, that makes those of us in the top 10% happy as we are the speculator class so, if the markets are happy – we are happy because, contrary to what they tell poor people – money does, in fact, buy you a great deal of happiness… 

Most likely we will be short(er) going into the weekend because the chance of things going horribly wrong are greater when the markets are closed.  When the markets are open, the Bots can clean things up very nicely but, as I said, if they lose control of the Dollar – most likely through a failure in the Euro – then look out below.  That 2.5% line on the Russell is key today at 835 – below that and bullishness is a fool's bet.  2,808 needs to hold on the Nasdaq too but  Gap, Aeropostale and Ann Taylor all reported poor outlook (great for our XRT shorts) so all is not well in retail land.  

Have a nice weekend (or at least a nice Friday night, after that – who know?), 

- Phil

 


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  1. Phil
    What did you mean by this statement? Can you provide an example? Thank you.
    …….(and don’t forget still being in but having bought cheap puts to cover is just as good because you can dump the rest of what you own with no consequences). 


  2. Oil Lines
    R3 – 103.50
    R2 – 102.38
    R1 – 100.90
    PP – 99.75
    S1 – 98.30
    S2 – 97.15
    S3 – 95.68 


  3. Good morning,
    Hey the dollar is sent down 3 minutes earlier than yesterday.


  4. Hi Phil I wonder if you could comment on this publication from invertors place. Surly the shut down of 10 reactors will not stop the production and the new building of reactors in the world?
    Cameco Corp: Uranium producer Cameco Corp. (NYSE: CCJ) has been the biggest loser on the list and should be sold immediately. Year-to-date, CCJ stock has fallen 34%, compared to a gain of 8% for the Dow Jones Industrial Average. A quarterly earnings growth of -36% isn’t encouraging to investors either. In the wake of the Japan crisis, the future of nuclear energy is in question and thus uranium demand is uncertain. Don’t hang on to this stock to find out how the chips will fall.


  5. 25K FAS 28C covers – if they don’t expire OTM – where do we plan to roll them? to weekly  – 28C or 2x29C?


  6. phil,
    Looking to add to hedges in the near future as’ the hour doth approach’ …maybe.
    Is TZA jun 37/42 still a favorite (now that June is front month) ?
    Also, your thgts on best:
    (1) top 3 candidates for an offset put sale strike and date (of stocks I would be comfortable owning: JPM, IBM, SLB, HAL, XOM,CVX,BHI, ABT, GE – or any other sugg)
    (2) index to use as a put sale (RUT, DJ, SPX).
     
    Thanks in advance


  7. Phil & all,
    Trying an alternative valuation for US stocks I put up an interesting chart. Think about currency valuation I tried to create a world-currency basket. For simplicity I took the following one third of the currencies in the Dollar-Index (EUR, JPY, GBP, CAD, CHF, SEK), one third of gold and finally one third of USD (hey, it’s still worth something). Of course you can consider this assembly random, but I think it’s a lot less random that a pure valuation in USD. The currencies are roughly weighted by their volumes and I think the latest metal sell-off proved that gold is currently rather a currency than a metal.
    The resulting chart showed some amazing resistant and support lines one the one hand, and on the other hand it puts the recent surge of stocks into the right perspective. I would say that for about 24 months the rally is driven mostly by currency devaluation (and hardly anything else).
    Here’s the chart:
    http://www.pentaxon.com/psw/spy_vs_worldcurrency.png


  8. PP for today.


  9. Phil--you expect a flatline even with the big POMO today? Is that because you think POMO is not a huge factor anymore? Pool example?


  10. Hold on to your shorts….this baby is going down (Slope’s SHJ).


  11. Guy on cnbc said oil will drop to 95.00 and oil drop 50 cents. Suprised they didn’t cut him off


  12. Good morning, nothing new……………….

     

    IWM    84.98,  84.38,  84.06,  83.73,  83.46,  82.96,  82.61, 82.15, 81.55  (and $7 Bill of POMO)  !!

    And what Pharm said; as I said yesterday !!


  13. Yes you did JRW…yes you did.  I should have given you credit.  My bad.


  14. 7 Bill POMO……the Bots are going to be working like ants to keep your predictions from coming to fruition.
     
    Then again……you have to factor in the end of the world which is scheduled for tomorrow.  You have to assume that there will be lots of rich republicans liquidating all their assets so they can take it with them. 
     
    That might make it tough on the Bots.


  15. Phil, let the AMZN May 205 calls expire today, are we still selling the June 215′s to offset our long July 215′s.


  16. Has anyone using SSpro been having issues with the volume study that last few days?


  17. Pharm,

    No prblem, just agreing with you 8-)

    exec / SS Pro

    I use it for my confimation screen, and it’s been fine !!


  18. USO/Phil – you sure know how to call this!


  19. JR,
     
    I upgraded to 4.36 the other day and it’s been grouping all the volume lines together ever since.  what version SSpro do you have?


  20. Manhole explosion at 51st and 3rd, Manhattan. I suppose the end of the world is coming after all!


  21. FXE……


  22. I know this because I can see it from my office window….


  23. Good morning and Wheeeeeeeeeeeeeee! 

    Wow, 75.50 on the Dollar and all this chaos already?  The market may be weaker than we thought.  

    Oil $97.50 AND FALLING!  Great for our USO June $39 puts in the $25KP – $1.75 is great so we can take that money and run as a stop, probably if we go back over $97.50 again.  What it should be, at this point, is a .25 trailing stop!    

    Also in the $25KP, the XRT May $54 puts are, unfortunately, $1.30 but we can roll them to the June $53 puts and pocket a dime so let’s do that and then we’re in a vertical for now.  

    Our FAS $28 callers are .54 and we can pay a dime to roll them to the next week $29 calls, so let”s do that.  

    No danger on the POT or AMZN callers, they should expire worthless.  

    Chart is same as it ever was and let’s watch that Nas line closely (2,808) as a critical breakdown and of course, 1,333 on the S&P confirms a disaster if it fails.  835 on the RUT would be our first bullish sign but don’t count on it as the Dollar is now 75.65 so now it has to fail 75.50 to give the market a chance to breathe.  Amazing how fragile this BS recover was, right?   

    75.75 is key on the Dollar – over that and down we go!  

    Be careful out there!  


  24. exec / version

    I couldn’t tell you; I’d call Schwab !!


  25. TOTALLY OFF SUBJECT: MY WIFE WHO IS V NON POLITICAL WENT ON A RANT THIS AM ABOUT WHY ARE WE EVEN TALKING ABOUT AFGANISTHAN AND THE WEST BANK HOW IS IT GOING TO EFFECT MY LIFE AND THE LIFE OF OUR CHILDREN THIS COUNTRY IS DYING AND WE ARE SENDING BILLIONS TO WAR AND REWARDING OUR FUTURE ENEMIES (EGYPT) …SHE ALSO SAID THIS COUNTRY NEEDS A COO TO RUN IT NOT A CEO..IT WOULD BE FUNNY IF IT WASN’T SO FUNNY..WHEN THE TRUE BOSSES OF OUR WORLD (THINK LYSISTRATA) START GETTING PISSED UHOH.


  26. Pharm:
    I bought a small position in SGEN on your rec. Thank you. What is your feeling with them at $19? I hold $17.5 long calls would you cover or be happy with gains and wait for another entry later? Thank you again.


  27. quite off topic, angelcur


  28. If 82.61 fails, (and I think it will) support at 82.39 and 82.15 next !!


  29. Statement/DC – Can you put that back in context for me because I don’t remember.  

    75.75 already – looks like we’re heading to 76.  Euro failing at $1.418, they need to get back over $1.42.  Pound getting pounded at $1.619, same story at $1.62.   Yen at 81.6 so they should be happy enough but a great opportunity for them to retake 82, which they blew earlier in the week so probably they’ll blow this too.  

    Silver got crushed down to $34, gold $1,488, copper $4.07  looks bouncy.  Oil currently $96.60 and $96 is a buy I would think at long as 76 on the Dollar doesn’t break so that’s likely to be it for our USO puts..    

    CCJ/Yodi – It’s out of 500 working reactors that need fuel every day with 450 more planned so lets say they close 100 and cut 50% of the planned ones (not likely), that’s still 625 reactors down the road vs 500 today so CCJ is long-term growth but you have to want to ride out a lot of crap along the way.  It’s like accumulating PM during the tobacco suits – you know that people will still keep smoking and you know they make incredible amounts of money so you DCA on the way down and wait.  

    FAS/Lol – See above, we can make the 1x roll and that’s fine after such a nice dip.  

    Hedges/8800 – I hope you did get to add them.  On your list, better not to ask me stuff like that on a busy expiration day.  We may be heading into a major breakdown – as I said yesterday, I wanted to be short on the weekend so I don’t think today is a very good day to sell puts as we are totally surprising Asia with this sell-off.  

    EDZ is a good play by the way.  Let’s go with 10 June $20 calls at $1 in the $25KP. 


  30. Phil GLW down .40 below 20 any action to be taken to our play?


  31. JRW,
    The 82.6 line seems to be a strong support for now..


  32.  Phil
    You still like SDS hedge? Is it still June 20/21?


  33. Phil:
    Hey, you are suppose to remember everything! :)
    Here is what you said this AM:
    "Phil
    May 20th, 2011 at 7:32 am | Permalink   Dollar rejected at 75.50 and now we see if they hold 75.38 going the other way (which would be bullish).  This is the same BS every day, they ramp up the Dollar into the open while they can hold the pre-markets up on light trading, then the ditch the dollar while the market is open to pull in the EU money while the big boys sell.  If I’m right about this kind of manipulation – it means we are heading for a very large and very sudden sell-off at whatever point the Big Boys are out (and don’t forget still being in but having bought cheap puts to cover is just as good because you can dump the rest of what you own with no consequences)."
    Thank you.



  34. SGEN/dc – I like them for an Aug play.  Let’s take the money and run on what we have for those 17.5 calls.  I will look at something over the weekend, but I think they pull back a bit.  AVEO, SGEN, IMGN and MITI are all good plays.  BIIB was our run away…..


  35. Look at the dollar, a thing of beauty !!   (Breakout)


  36.  I like that chart idea Pentax and I agree, it’s all about debasing the currency, pretty clear here :  

    OK – little spike below our 1,333  and 2,808 but looks like we might get a bounce – bad if we fail to retake them.  RUT has to confirm so if you wan to play bullish the IWM NEXT WEEK $84 calls at .40 are fun for a toss.  They were .75 this morning

    Also, next week $38 calls for .97 were $1.93 yesterday so good as long as oil holds 97.  


  37. Gee, maybe really the end of the world?? For the last half hour Gold has been climbing along with the Dollar (even stronger) !!


  38. Out of TZA; "they" are trying a push !!  I’ll reload for more downside at 82.90ish !!


  39. keep in mind..with volume this light the magical sloppy buyer can jam em up at lunch with less effort


  40. Phil / EDZ – I have July ’11 24 calls bought at $4 back in january.  I had a spread but sold the caller for a gain.  any good roll ideas?  thanks. 


  41. Thank you Pharm.


  42. JRW – I feel they will turn around 82.8 or 82.85 — my 2 cent.. :-)


  43. Careful…..they got the Bot’s and the dollar working today.


  44. Only 5 more points to go until the dollar hits some resistance


  45. This is crazy — everything is perfectly correlated to the Dollar Inverse trading – Tick by tick…. Once you have figured it out – it is fun


  46. POMO/Jabob – I think POMO is a day-after effect, if any.  They don’t seem to get the cash until the next day so keep that in mind.  

    LOL Exec!  

    Europe down 1.35% on Dax, 0.75% on CAC and 0.22% on FTSE – those Brits aren’t too worried about tomorrow, I guess. 

    AMZN/$25KP, RPME – No, either we get a bounce or we cash out more likely, we’ll see what happens next week.  Our net on the 4 longs as about $1 and they are $3 so it’s mission accomplished and just a matter of how much we make – the only way to mess that up is to turn it into a spread and trap ourselves in a position.  Meanwhile, the main point is – Aren’t those just the best trades?!?  

    Here’s what’s killing the Euro – could snap back on Monday – also, imagine the short panic selling by the idiots who followed GS’s super-bullish call on the Euro this week: With weekend elections likely to bring new governments into power across Spain, the fear is they will uncover billions in "hidden debt." A new administration in Catalonia earlier this year revealed a budget deficit double what was previously reported. The discovery of €40B in extra debt in Greece after 2009 elections pushed that country over the edge. 


  47. JRW – 5 bucks IWM bounces off the 82.6 line… :-)


  48. rehat

    Bought back 2/3 of my TZA at $35.84 (about 82.82 on IWM)


  49. Hi Phil — HPQ — is today would be reasonable to sell Jan 12 30 puts for wait till next week, thx


  50. Pharm- any info on this one?
    Founded in 1996 and based in Lincolnshire, Illinois, BioSante Pharmaceuticals Inc. (NasdaqGM:BPAX) is a small-cap specialty pharmaceutical company focusing on female sexual health and oncology treatments.


  51. Fully short now; 82.39 then 82.15


  52. Great call JR


  53. There goes my $5. JRW – tell me where to send you the check — :-0


  54. JR,
     
    Are you set up to play a bounce off .15?


  55. exec / bounce

    I have to be ready ALL THE TIME !!


  56. Crazy morning!!!!!!!  Going long here-


  57. JR,
     
    Do you use "Hot Key" for instant trade executions?


  58. Matt,
     
    I’d like to see a test of S-2


  59.  fitch says extention of greece maturities would be default and market takes another leg lower…haha!


  60. Wow, the dumpage continues.. finger on the trigger to sell!


  61. Phil, I have to agree those are the best trades, easy, low maintenance….lets do more!


  62. European indices biting the dust now.


  63. 2/3 out of TZA; now all out

    I completely missed a supporting trend line at 82.25; SORRY  !!


  64. BTW…..I haven’t really been tracking this end of the world thing. 
     
    Have they detailed how exactly it’s going to occur………mass flooding…..meteorite….implosion???


  65. No problem JRW, you have a big bonus of your calls earlier.


  66. jrw…  lovin your lines..   do you ever put them out on SPY???  


  67. exec, it was written the there would be an IPO for a worthless company and it would explode~


  68. JR,
     
    I don’t see it.  How you drawing that trend? 


  69. Exec: End of world: Ben Bernanke will screw off his head to show his alien body and will tell us that his plan to destroy the world is fullfilled now.


  70. JRW, yesterday at close you were thinking we’d go up the first part of the day.  But, we went down.  Big time.  But you were all over it.  It continues to amaze me your ability to change gears so quickly to play what is in front of you-


  71. Pent…….now that funny.


  72. matt1966, that was hilarious! :)
     


  73. matt,

    Good call; I see a little bounce and then S2 by 1:00 or so,then "they" should try to rally to the close, imho !!

    exec / hotkey

    I have a fellow come out and program things so that they work for me; I’m not a computer guy !!


  74. mortgage delinquency rose 7bps to 8.3% in q1..all due to a rise in the past due category…seriously delinquent rate fell for the fifth consecutive quarter..this is due to a slowdown in the foreclosure process in states like Florida..not a mitigation of foreclosure backlog..all this just means a lot more time is needed to clear foreclosure pipeline..and that’s its going to take longer for the pipeline to clear than it will to eliminate the excess supply of houses.


  75. Fully covered..


  76. IMGN/Pharm  Could be a nice entry.   Sale of July 11 or 12 puts look attractive. 


  77. USO/Scott – Keep in mind that this is all under the theory that there is a vast international conspiracy between oil companies and the Banksters to manipulate prices.  People say that’s crazy and the markets aren’t manipulated but assuming they are sure does work well for me!  8-)

    What happened Manimal? 

    That’s right Angel – if the women start getting angry, then we have real trouble!  

    Well, this is ugly so far – Dollar just touched 75.90 and I think people freaked out that we would break over 76 but that’s put our levels dangerously low.  Of course, with the Euro down now 1.2% for the day – we look flat to them!  

    GLW/Yodi – I thought the idea was to buy if they went up, wasn’t it?  Maybe I’m mixed up about what play you are asking about.  

    SDS/Yshen – Sure, it’s looking good at the moment.  The idea was to have weekend protection but we have a little head-start.  I’m intraday bullish so, if you are brave, you can sell sell the $21 first and then buy the $20s to work into it but don’t let it get too far against you if the S&P can’t take that 1,333 line back. 

    Remember/DC – Oh, I thought it was specific to a trade you asked about, that’s why!  I meant (and you would have had to follow the last few weeks of discussions on the matter) that the big boys run the VIX low so they can buy cheap puts like, well, there is no like now at the VIX is up 10% but let’s say you were buying GMCR at $55 and your bots ran it up to $76 and the VIX was 15 and last week you bought the $75 puts for $1.  You are up $21 and you spend $1 to guarantee you can’t get less than $75 (up $19).  Then, the day before the World ends, you can dump your GMCR till the cows come home and still get net $75 a share.  In fact, it’s better than that because GMCR does 3M a day in volume so if I want to dump 300,000 shares I had bought at $55 I can sell 100K at $76 and then purposely try to cause a panic.  I can hit the bid all the way down to $74 average, so $75.50, $75, $74.50, $74, $73.50, $73..  for another $100K and then I can flush the last 100K down to $72 – Now, what have I done?  I’ve sold 300K at average $74 but now the $75 puts are worth $3 (more if I’m lucky and cause a major panic) so I net out at $77 – BETTER than the high when I decided to sell .  This is something you can totally control when you have enough shares.  

    Oh, even better.  Once the retailers start panicking and you get to the bottom – since you know it was you that caused the sell-off, you can begin buying back in and burning all the short MoMo traders.  Some funds do that just to show a profit on the sale and then get right back in at the lower basis.  

    Cool CNBC showing luxury survival shelters!  

    What a bounce in gold!  $1,501.8 again.  

    Volume/Angel – Good point, light volume for a big sell-off.  65M on the Dow at 11.  

    EDZ/Terra – You want to make about $2 back I assume so why not just flip to the $16 calls at $3.50 (+$2.70) and sell the June $19s for $1.25 (+$1.45) so you are in the $3 spread for net $3.45ish with a month to roll. 

    LOL – What a joke this martket is – now oil flies up to $98 again even though the Dollar only pulled back a nickel to the 75.75 line – I bet on it and I still can’t believe the BS!  


  78. topher7 / SPY

    I watch SPY but I play the Russell !!

    exec / trend

    On a 10 day chart, the low of 5/11 and the low today; it’s a mathamatical variance thing !!


  79. JRW, would S2 be 82.39, 82.25 or 82.17?


  80. Apparently, a steam/water pipe exploded underground. It shook our whole building. ConEd is on the scene taking a look at the damage. If it isn’t the Staten Island ferry crashing into the dock (monthly) an LIRR derailment (quarterly) or a subway emergency (daily?) it has to be a steam pipe!  Regardless, I ordered in lunch, not going out there until the fire trucks are gone…… 


  81. JR/Computer Geek,
     
    It’s no big deal.  In Schwab you go into trade window setting and set up a hot key.  It allows you to hit one key and instantly execute a buy or sell without going through the different screens.
     
    I don’t use it for fear that I’ll come unglued in the heat of the moment……mess up and hit the wrong key and buy rather than sell or vise versa…..but I was wondering if that is how you have your system set up.


  82. matt / S2

    82.15


  83. Can we still play the IWM $84′s or did the drop change the trade?  $0.37 now.


  84. BPAX/pstas – yes.  They have the female libido drug (basically testosterone).  gel liked them, although I have a few reservations b’c of steroid use in women.  Worth a small round, as that could be hot, but not so hot for me. 

    IMGN – July $12 Ps though, yes stock.  I like it.  I think people will punish them a bit.  Could also buy the stock here and cover with the July $13/12 strangle.


  85. We can play this intelligently because all of us here in chat know the real end of the world is coming on 6.3.2011 (JRW)


  86. JR/Trend
     
     
    Hmmmm…….I never would have thought to draw a trend through the lows of 16th and 17th.


  87. USO may next weekly 38 call take the money and run or keep over the weekend thx


  88. Oh Phil, great post again.  Even when your sarcasm carries a very dire warning you make me chuckle.  Better than a morning paper with coffee.  I think I’m profiting more form that personally.  Somehwere in my dusty vault of a brain a recall someone saying  human nature is such that if/when Christ did return we’d just crucify him again.  I am guessing Harold’s calendar is all clear for May 22.  My single request is that you or someone ask him for an interview on the 23rd.  Why not and that’s an interview that would steal nation wide ratings for the night.   We oughta be producers :)
    P.S. Speaking of what could go wrong over a weekend,,,… I always get nervous when the Israelis think they’re being backed into a corner. 


  89. exec

    I have one screen that is divided in thirds; each third is an order window with preprogramed trades, so 3 clicks and I’m fully out, 3 more and I’m fully in the other direction !!


  90. Phil. its just a matter of time before market realizes how bad europe situation really is…whether its now or next year i have no idea since it is already so obvious and nobody has cared…tech holding up well


  91. Well, mission accomplished – I’m ready for a nap – how about you guys?  

    Don’t forget this could just be a weak bounce of a 1.25% drop so about 0.25% retrace is logical.  It don’t mean a thing if we cant’ take back lines and that would be Dow 12,505, S&P 1,333, Nas 2,808, NYSE  8,487 (forget them) and RUT 835.  The Dow is over and the Nas has the best chance of confirming first but it doesn’t matter until/unless the S&P makes their magic number (and they need to hold it, of course).    And, of course, watch 75.75 on the dollar – if that doesn’t fail, I doubt the S&P can take back their line.  

    Fun/Rehat – Yes, isn’t it?  It sure beats having to worry about the fundamentals.  8-)

    HPQ/Gucci – I like them down here so it’s fine to me but they may run up on you, which isn’t a problem if you REALLY want to own HPQ but, otherwise, I’d wait and see if the VIX is higher next week.  

    Europe closed and those guys don’t work weekends so the pressure is off the Euro and they’re up and that’s taking the Dollar back down, should test 75.50 now.  


  92. fairly large reversal higher in brazil…which has been one of worst markets lately.


  93. Who says the US doesn’t produce anything!!!  These are skilled workers.


  94. 95 looks like the pin on TLT.  Nice.


  95. @ Phil Which of the european banks would you buy first if they get cheap enough? STD, LYG…


  96. exec

    Look at the high of the 10th and the low of the 17th; equidistant from the line. it’s actually a formula I use on my primary screen (one of many)


  97. SPPI is rockin’! :)


  98. Okay.. This is my video of the day
    The best 3 minutes you will spend today other than looking at JRWs lines on the 3 min IWM chart… :-)


  99. JR,
     
    Wow…..I had to look that one up. 
     
    You’re talking to a sewer contractor for god sakes……once your words become more complex that "turd"……I start having issues.
     
    How exactly does this formula work?


  100. @Pharm Whats up with SPPI?  Do you own the stock? Any calls worth buying maybe???


  101. @Pharm Whats up with SPPI?  Do you own the stock? Any calls worth buying maybe???


  102. Phil I have been out of FAS since last week, would you start a position here with the June 29′s? (say 40 instead of the 80 you have in the 25K) or do 80 and cover with next week’s 29′s?
    Thanks


  103.  Spain:  the autonomous communities of Spain are not like U.S. states; they are, well, more autonomous — and a lot less transparent.  Basically, as the central government started cutting back under Euroland "austerity" pressure, the auto. comms just ramped up their own spending, and didn’t bother to tell anyone.  Since Catalunya was a separate country for quite awhile, has its own language, and retain much "nationalist" sentiment, it is no wonder.  Lotta fiscal skeletons in those closets.  There are 17 autonomous communities, and 50 provinces, so you can imagine.


  104. Phil/ GLD aug 140 puts…   in small @ 3.50..  pick up a little @ 2..???


  105. Phil:
    I did a half a cover on our 25kp DIA put position.  Sold Jun 124.75puts at 1.82.
    What do u think?


  106. Coming up on IWM 82.84ish; careful, we could fall to S2 and then head up to max pain or just keep drifting up



  107. I’m with you on the nap Phi, got rid of my calls and TZA near the top of the day and now just letting some options well out of the money expire including the NFLX at 250 you suggested.  Another fun week, think I’ll stay flat going into Monday.


  108. SPPI/asa – bought them yesterday.  Just holding stock and going to sell Jun $8 Ps.  Waiting on calls.  Rumors is TEVA is liking them.  TEVA is going on a buying spree for smaller, high priced products to expand their presence.


  109. LivingFull/Jesus Christ/The Rapture:  There is a line from a song which says "If the real Jesus Christ were to stand up today, he’d be gunned down cold by the CIA" by The The, (Armageddon Days are Here again), which seems fairly appropriate for the upcoming rapture…
    I guess it’s time to get really, really short. LOL


  110. Looks like game over for Greece now!
    http://ftalphaville.ft.com/blog/2011/05/20/574481/its-all-falling-apart-for-greece-on-friday/
    This weekend could be very interesting…. 


  111. as a  little redolent theme: see vietnam is down 10% in 5 days…only reason i care is that in 07 bubble it was the biggest of all the em bubbles and peaked before the rest of the world…its down 18% since 2/9 also.


  112. Phil / CYD  Ridiculous sell off this am due to retirement announcement of CEO.  Singaporean HQ, one of biggest diesel and nat gas engine manufacturers in China.  $15 ps cash, 4x p/e   Selling puts in this a no brainer IMO.


  113. Also, the dollar is at support, so a bounce would send us lower !!


  114. More/RPMe – They are earnings or event trades that play off a bloated front-month premium vs the longer months – those are what to look for.  

    End/Exec – Kind of like this:  


  115. A nice DVD set for our Eastern European members:
    http://www.dvdtalk.com/reviews/48167/unknown-war-wwii-and-the-epic-battles-of-the-russian-front-the/ 
    Relive history this weekend.


  116. exec
    If you can a money flow index also shows where the money is going or not.



  117. exec
    82.64 may prove a up down point.


  118. asaenz
    Doing well with DB selling P&C against it


  119. Phil,
    What is your take on FreeScale’s upcoming IPO? A Blackstone rip off or what? Is it a buy or a short or leave alone?



  120. asaenz
    DB cheap today 58.70


  121. Tusca – Do you know if CYD is hooked up with WPRT and or Cummins in NG development ? I know one of the better chinese manufactureres is but I lost track of which one ? I agree with your premise.
     
    Excellent morning caught NKD two directions overnight and BIG sold out this AM . Late yesterday I thought we we seeing a lot of weakness overall. Could just be deliberate manipulations and likely is.
     
    http://finance.yahoo.com/q?s=BIG110521P00035000 not quite this good but close enough !


  122. StJeanluc / Greece   I’m amazed that there is any political support by the Greek population for the absurd austerity requests being made by the EU.  Wouldn’t the Greek voters be better off telling the German banks to eat their loans and then return to the Drachma?  At least tourism would boom again and that’s there only industry.


  123. JRW how do you calculate max pain?


  124. @yodi do you actually own DB stock? might sell some puts today…


  125.  Tusca/Stj:  And if Greece announces its return to the Drachma, Euro banks write off the bonds and the Euro rises?


  126. The link on BIG was up over 2000 % this AM , I got out at 1000% and it has since gone up in price in a down day? go figure. More than happy on this one and wish I had bought more………………the usual after thought.



  127. Greece /Tusca – I don’t think that there is political support! From what I read, Greece is close to a melting point. This could be a test for "austerity".


  128. Euro / Zero – And would stop the Portuguese and Irish from doing the same things when sharks don’t have Greece to feed upon! This cannot end well and no one knows the ending yet.


  129. stjeanluc / Financials

    It would be interesting to see that chart adjusted for the value of the dollar !!

     

    lapper / max pain

    I just hit a button  (currently 83 on IWM)   8-)


  130. asaenz
    Yes owe 700 sold Oct 60p today for 4.60 still holding Jul 60 sold for 13.50 now 4.15 but I do not worry about this as DB is down today due to the Greece Plroblem as well the IMF scandle. sold as well Jun 62.5 calls but wait till they up to 61 again! Not a good day for selling calls


  131. Goober / CYD  Per my reading CYD have a large internal R&D capability.  The key short term catalyst is the move to larger, higher margin deisel engines being encouraged by the Chinese Gov’t.


  132. Time to start spending Ben’s money !!

    I’m back in TNA btw ! We just need to get  to 83 remember.


  133. this from one of our managers:
    Sentiment among our clients is about as pessimistic as we’ve ever seen it. Yet stocks are actually performing well. The slow-motion melt-up painfully continues. Growth has disappointed us, and there has been a recent spate of poor macro statistics. But the most important strategic macroeconomic data continues to point to an upshift in growth


  134. JRW, Right, I was looking at open interest, did not see todays volume on that strike.


  135. Hi Phil:
     I sold YRCW Jan. $2.50 P at $1.55,now $2.03. Lot of talk about stock being delisted. I’m not sure what happens to my position if it does get delisted. Close position and move on? Thank you.


  136. LOL Matt!

    Pipe/Manimal – Will be a lot more of that as we neglect our infrastructure.  

    IWM/Manimal – It’s good as long as the RUT hangs on to 827 but you need Mr. Stick to bail it out as the day goes on.  

    Holy crap, oil just blew right over $99 and testing $99.50 again – that’s insane!  

    Dollar getting whacked back to 75.50 but be careful on bullish plays if they bounce off it.   


  137. YRCW – usually they are delisted from NASDQ if they fall under $1 and stay for specific amount of time (1 months I think)
    They also have option to make reverse split.


  138. Tusca – Do you know which Chinese Co. is hooked up with WPRT/Cummins ? One or maybe several are as well as Indian ? TATA ?


  139. Dollar in trouble now; "they could push us to 84 on IWM and 135 on SPY !!


  140. yodi whats your opinion about STD? i know its a spanish bank, but its really tempting with that 8% dividend yield. it seems to me it has a nice support at $11.


  141. JR/ max pain is at 84 today, no? What calculator do you use?



  142. drcraig

    Bias is 83; so a move to 83.40 or so and back to 83 (134 on SPY)


  143. rumors – Possible drivers of oil spike:
    Total U.S. crude oil and petroleum product consumption jumped 5.2 percent in April from a year earlier to 19.886 million barrels per day, according to the API’s monthly supply and demand report.

    http://news.yahoo.com/s/nm/20110520/bs_nm/us_gasoline_demand_2

    ———-
    Al Qaeda plotted to hijack or sink oil tankers last year to prompt a spike in prices and trigger an economic crisis in the West, U.S. officials said on Friday, in the latest warning based on intelligence from Osama bin Laden’s compound in Pakistan.

    http://www.cnbc.com/id/43110791


  144. asaenz
    STD I am holding 500 stk in moderation They here in Mexico as well I think all Euro banks are a bit down today Good buy at 11.21 Sill Holding the May 13 C against the stock and I sold the other day the Sep 11p for 1.05 You will not get much money for the calls as they pay a high div. But it is always a put play as long as you like the stock.
     DB has only options till OCT and I think after today they will have options until Dec


  145. Jobless rates drop in most U.S. states in April
        WASHINGTON, May 20 (Reuters) – Employment conditions
    continued to improve in almost all states in April, as the
    recovery from the longest and deepest U.S. recession since
    World War Two putters along, Labor Department data released on
    Friday showed.


  146. I would quit short-term longs here – very good chance we flip the other way unless dollar breaks down. 


  147. @ Phil I am much more comfortable going long than short on this market…theS&P has been bouncing off the 1,333 line the past two weeks. How long do you think this will last? Until the end of QE2? If the correction does happen, how low do you think we can go? Thanks…


  148. link for previous post about Unemployment
    http://www.reuters.com/article/2011/05/20/usa-states-unemployment-idUSN2020022720110520
    Sorry for too many posts today.
    I think this one may trigger the stick


  149. USO/$25KP – phil, i closed those out on the plunge. should i reenter with another 1/2 or full position on the USO june $39 puts?


  150. Note the resistance:

    Out of TNA !!


  151. Harold/Living – Thanks but I’m sure he’s booked.  Very clever gig for a radio guy.  He’s 79 I think and never been more famous – maybe he figures if the World doesn’t end he can always retire at this point although I bet people still listen and he’ll just have a new date.  As to Israel – they’ve been a constant worry since 1967 so it’s hard to get worked up.  

    Skilled workers/Exec – Yeah, let’s see the Chinese do that! 

    Banks/Asaenz – LYG is more exciting to me but I want to test a bottom first, we did STD a while ago though. 

    Wow Rehat – I never knew that, thanks!  

    FAS $25KP – Regardless of whether you rolled the caller or not, lets’ try to get back to naked to end the day so tight stops.  The May $28 caller is .18 so .25 if you did not roll.   The Next Week $29 caller is .25 so .30 on those, essentially, a .05 trailing stop now.  


  152. FAS naked,
     
    are you turning more bullish going into weekend?


  153. stockbern / 6.3.2011
     

    LOL !!


  154. Phil – with naked FAS, are you still in favor of EDZ? I didn’t enter yet.


  155. Just when I thought I was out, Phil pulls me back in, rebought DIA puts on your call when Dow was down 29 that I sold earlier when Dow was down 111.  Hard to walk away from a hot slot machine.


  156. CBST – rumors that AZN wants them. Few Jan12 $30 Ps are worth a sell.


  157. CBST has the rights to OPTRs drug as well….


  158. Does coal make any sense down here?


  159. Tusca – Weichi Power Co Ltd is the Chinese Company just found my old notes. There is a Cummins connection in both countries as well. NG diesel in Asia is a huge winner and will be here as well at some point. Asia has no choices for numerous reasons, pollutants and cost have come together as the catalyst. IMO this is a winner big time going forward and if this admin ever gets head out of ass, will be here as well. I expect europe will go this way big time as well in all size vehicles to include passenger vehicles.


  160. I don’t have an exact count but I’d have to guess that CNBC is now 50% commercials.  

    FAS/Amatta – I would wait until next week, hopefully get the July $28s for under $2.  

    GLD/Topher – I would spend that $2 to roll up to the $146 puts instead as you up your delta to .43 from .25 but that delta will rise fast as GLD heads lower so, if you are down $2, a $4 move should get you even whereas a $4 move down on your $140 puts would only pay you about $1.20. 

    DIA/Etrad – That turned out to be a very timely cover!  Now I would take it off. 

    Good job Rustle – I wish I had time to nap today. I’m still an hour behind on comments.  

    Greece/StJ – Be careful because that’s what already killed the Euro.  All that has to happen now is for things not to be as bad as they think and the Euro can shoot back up and kill the Dollar. 

    Vietnam/Angel – That’s interesting, what’s the ETF?

    FreeScale/High – I really like that company but I’ll wait for them to find a real value. 

    Oh this is such a joke – oil jammed back to $100.20 on no volume – this is all to jam gas prices back up as they are also getting gasoline back over $2.95.  Next weekend/week is when they might really go for it into the holiday driving because consumers have been trained to accept that gas prices simply are higher on holiday weekends.  Dollar down to 75.50 test (again).


  161. Phil,
    I can’t grasp what you mean, should we go naked on FAS in 25KP or get 1/2 cover with next week $29?


  162. Here comes the push to IWM 83.25-44; then back to 83 !!


  163. AZN, love high yields…Pharm any love for TRGT


  164. Wholy $moke!  Went out for lunch and now look at the dollar!  This is one crazy market.  Very crazy for opex-  I thought there would be no way to make it to IWM 82.96… now you’re talking about 83.46 before turning down? 
     
    JRW, I’m interested in your max pain calculator.  I’ve built one myself but it was rudimentary and not very predictive.  Is that your proprietary software or do you pay for a service?  How often is it updated?  If it were live data that would be awesome..


  165. They are really jaming the dollar down; we could go higher than 83.44 !!


  166. Phil,  wil do on the GLD. Aug 146 puts..     and still hold the aug 140′s too…??


  167.  CNBC varies its advertising time percentage on a VIX basis, it yields a higher net eyeball count.


  168. matt / software

    Yes it’s calculated off live data.


  169. there is an article on bloomy saying that developers planning most manhatten office contruction since 80s…wow that is bad….phil etf vnm


  170. TRGT – interesting.  Let me look into their lead drug.  Offering was last week @ 20.80, so selling the Agu 20s woudl be ok.  Lots of support @ 20.


  171. 2/3 out of TNA, no all out !!


  172. From Charles Payne (I think he is on FOX Business as well): I’m not afraid of the market which reacts almost exclusively to moves in the dollar than anything else. On that note, it’s hard to justify the Euro being stronger, as bad as things are and heading in this country, I wouldn’t trade places with Europe. Still, I think the downside to the Euro will be limited by forces I don’t understand and I’m not talking speculators. For the moment, there is real tension in Europe as squanderers continue to try to dictate terms of their bailouts. This morning the ECB flat out told Greece to forget about the notion of re-profiling its debt which is a fancy way of saying "put lipstick on a pig" and to get ready to take tough medicine.

    In addition, Norway froze $42.6 million in aid designed to help environmental and health programs in Greece because that nation hasn’t lived up to its obligations and conditions for such aid. Toss in another debt downgrade of Greece, this one from Fitch, to XXX and it’s easy to understand why the dollar is higher. Then there are the elections in Spain on Sunday that could result in the revelation of hidden debt. In the meantime, youth in that nation are being told it’s illegal to protest this weekend which ensures one thing- there will be massive protest. None of this changes the fundamentals of the American market but its crushing American stocks again.


  173. Pharm--do you like EXEL --they will be at ASCO in June
    Tx


  174. I do like them some, Savi.  They put themselves up for sale, and I think we looked at selling the June $10s.  I am afraid that they are getting lots of attention, and then when the meeting comes and goes, they fall like a rock.  Thinkk DCTH, ARIA (early on), CRIS, etc.


  175.  Drachmas/Tusca – Good plan! 

    Manhattan building/Vic – That is good news.  Construction companies have money and land and labor are as cheap as they  are going to get so it’s logical.  

    Outlook/Angel – I would buy that.  I’m only looking for a short-term correction that leads to real growth but we have to get off this commodity train – that’s the most important thing for a healthy recovery.

    Delisted/DFlam – Yes that would be bad but  it’s so hard to tell whether or not those are rumors.  What I would do with Jan $2.50 puts is roll them to 2x the 2013 $1.50 puts at $1.20 so it’s a credit roll and you get assigned YRCW at net about .75 if they are delisted (which is not BK, just too cheap to stay on the Nas).    

    By the way, check out how many contracts settled yesterday on the NYMEX and then look how many contracts they are now pretending to want for July.  This is why the Government needs to step in – it’s a total joke of a market!  

    Month 
    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jun 11 98.60 99.72 95.99 99.60 May 20, 13:24
    -
    1.16 21090   98.44 20686   Call Put 
    Jul 11 99.06 100.29 96.35 100.13 May 20, 13:24
    -
    1.20 302226   98.93 417459   Call Put 
    Aug 11 99.46 100.68 96.75 100.51 May 20, 13:24
    -
    1.19 40674   99.32 89043   Call Put 
    Sep 11 99.85 101.01 97.13 100.84 May 20, 13:24
    -
    1.17 26592   99.67 92184   Call Put 

    Keep in mind that, now that the June barrels are finally gone – we’re back from $95.99 to $100.  

    Reverse split/Lol – Yeah, that did so well for C!  8)

    Sony/Lol – Wow, someone is really out to get them.  

    Oil consumption/Lol – That is totally false.  Mastercard just said demand was down.  They are basing "demand" on deliveries.  Also, it’s not even a real figure, we don’t consume anything like 19.886 Mbd of gasoline – we don’t even consume that much total oil!  Just another form of shenanigans, either API is lying (not mistaken because they damn well know better) or the report is lying or "mistaken".   The tanker thing is good too – they save stories like that and flood the media when they need to jack up prices.  

    Conclusion – Shorting USO is back on for the weekend!  I like the June $39 puts (again) at $1.28 – 10 in the $25KP.  


  176. DEPO C/P stangle is now green!  Not much, but hey…..


  177. USO – that is a tricky chart.  Two gaps, one up, one down.  Hammer being printed today….


  178.  Phil,
    I am short a few MOS Jan 2012 $57.50 PUTS.  These are the left over’s of a MOS spread from earlier in the year.  I am considering doing a 2x roll to $50′s.  Another thought is to extend to $60 2013′s.  Interested in your thoughts.
    Thanks.


  179. JRW, that 83.44 line was amazing.  Shorted a penny from the high for the day! ….at least I hope that was the HOD.


  180. Phil from this morning Having positions in CCJ would like to hear your thoughts thanks
    yodi
    May 20th, 2011 at 9:06 am | Permalink  
    Hi Phil I wonder if you could comment on this publication from invertors place. Surly the shut down of 10 reactors will not stop the production and the new building of reactors in the world?
    Cameco Corp: Uranium producer Cameco Corp. (NYSE: CCJ) has been the biggest loser on the list and should be sold immediately. Year-to-date, CCJ stock has fallen 34%, compared to a gain of 8% for the Dow Jones Industrial Average. A quarterly earnings growth of -36% isn’t encouraging to investors either. In the wake of the Japan crisis, the future of nuclear energy is in question and thus uranium demand is uncertain. Don’t hang on to this stock to find out how the chips will fall.

    from this morning Having positions in CJJ would like to hear your thoughts thanks


  181. Phi, i have some Citi shares at $48, thinking of writing some calls to protect futher downside risk. which strike and month would you recommend? or i should sell every month to try to reduce cost? :) thanks!!!


  182. Phil – I agree on oil < All commodities still will be driven down and I think that is what has been happening all week. They keep coming back though ? SO TPTB must push harder , I guess?
     
    Over weekend, a crisis could kill oil shorts ? always the dilemna. In the end I have a very difficult time being short oil over weekends but will likely put on 1 contract short ? and hope for best.. So who has more power, TPTB or ME arabs fighting amongst themselves and IsraeL ? I have no idea for sure. I will wait until as late as possible AHs to see if any definitive movement is apparent though. I feel Iffy about both directions fro different reasons. Agree 100 is not real .


  183. Phil/ Oil /  OIH in one year goes from 130  to 165, peaks, drops to 150, and a well-supplied market that have experienced demand destruction must now point to lower prices.
     
      Why?  Speculators drove it up before, and they can drive it up again. We are staring a a high level of currency instability, commodities are useful currency hedges, I don’t see a compelling reason to assume a further drop.  What am I missing, Phil?


  184. matt / HOD

    Don’t know, I bailed TNA to save the profit, but did not short. The dollar is at the 50% retrace point, so should climb a little but who knows !! "They" could be setting us up for a gap over open on "news" Monday morning, we’ll see  8-)


  185. European Central Bank official said it was mainly up to Greece to rescue itself — and that Athens could be cut off from aid if it did not act.

    http://www.sharenet.co.za/news/Signs_of_division_between_IMF_Europe_over_bailouts/acd8cf5f15dd0f32e3695658930c670f


  186. Pharm – did you catch this very interesting news (MDT device involved)?


  187. EM are swimming in dollars, wish I could figure out what they plan to do with all that funny money. Maybe buy more silver, gold, oil, copper, or maybe funnel the money back into US treasuries…maybe buy some Euros

    ALL ABOARD, GS next stop 135 all those going to 130 can get off at the next stop and take the express downtown


  188. The more I read about Ahnold the more I realize, he did a great job fitting in with the rest of the Kennedys.


  189. Buying some TZA now !!


  190. BDC – that is amazing.  Electrical stimulation has been around for years (used in severe mental disabilities).  Not surprised that it may help for paralysis as well.


  191. Interesting development!
    Protests in Spain by platform Real Democracy Now has called for demonstrations in Italy in at least six cities in the country, today and tomorrow at 20.00 The cities are Florence are scheduled today at 20.00, and Rome (Plaza of Spain), Milan, Bologna, Padua and Pisa, tomorrow at the same time
    And the story is repeated all over the world
    Berlin joins the struggle for real democracy, support to Spain and joined the protest. "This decision May 20 Berlin Street," announced their posters.
    Paris or Buenos Aires will focus today. Brussels, Birmingham and Bogotá Ahram, tomorrow
    Amsterdam will hold a rally on Saturday 20.


  192.  JR- Not to distract you from IWM, but what does your live pain calculator tell you about AAPL today? Standard pain calculators are calling for 340. 


  193. Prepairing to bail my TZA (1/3 position)

    If "they" can manufacture some news for Monday, this could be the result (IHS) !!


  194. cramer talking up soda right now…


  195. Tx Pharm


  196. drcraig / AAPL

    339, bias 338


  197. JRW / Monday ’news’   Phil seems to be more concerned about bad Euro news over the weekend, Spanish elections and all that, hence EDZ?


  198. Sold TZA on the break of IWM 83.25, lost 2 cents !!


  199. tuskadog,

    Spin tuska, spin  8-)


  200. How long/Asaenz – It will last until we establish a proper range.  We are just range-bound here, bouncing between the reference levels and 5% over so I’m more comfortable going short near the top and long near the bottom and, in the middle, like we are now – it’s really best to just wait patiently.  Don’t forget I said we should have a flat day and we are slowly but surely just working back to flat (from the gap down open).  I also said we might fall off a cliff next week so let’s hope I’m not right about that one.  As to how low we can go – I’d be very excited to take cash off the sidelines back at 1,200-1,250 on the S&P – about 20%.  

    USO/Scott – Good lesson in both directions of "ALWAYS sell into the initial excitement!"  And remember – Rule #2 is "When in doubt, sell half!"  

    FAS/Lol – Not really bullish but not worth keeping the cover at .20 so either we bounce next week or we take a cheap roll down and sell lower calls but I also don’t want to commit more money to a roll right now.  

    EDZ/Morx – We are down but not shockingly so but yes, I still like EDZ.  It’s good to have offsetting bets in a rangy market – you collect one side, roll the other, then collect that side and roll a new hedge… 

    Back in/Rustle – I hope you took that and ran.  Getting too silly to play at this point.  I just want to see where we end up.  

    Coal/ZZ – We just did ACI, still cheap.  

    FAS/Vic – I am saying stay naked on the June $29 calls (or get back to naked).  

    GLD/Topher – No, I would roll to the better strike.  It puts you in position to cover with short puts if you get worried.  

    CNBC/ZZ – Well it’s super annoying.  

    Construction/Angel – That’s not bad, it’s good.  It shows confidence by them and the banks and it means jobs and more affordable (relatively) office space in NYC down the road and that brings jobs and then housing picks up, etc…  All very nice 18 months to 5 years from now.  

    Payne/Pharm – Interesting but is he bullish based on a strong dollar?  It seems like he gets it then it seems like he doesn’t. 

    MOS/Mjj – I’d be careful as they are also a commodity play. I’m not clear on why you are doing anything if you are short the puts as the stock is at $66 so they are $8.50 (12.8%) out of the money and 100% premium.  Unless MOS has a major failure, why change it?  

    CCJ/Yodi – I did comment above on them, didn’t I?

    C/Step – You are down $7 so what I would do is go to the 2013 $35/44 bull call spread at $4.90 and sell something for .30 each month like 1/2 June $42s (now .59).  Ideally, you take $36 off the table (less the margin for the short calls), you have $5 of upside regardless of what happens and, if you make 18 .30 sales, you get your $4.90 back too.  That leaves you in a free spread that could be $9 and C would have to get to $50 just to make you the same $2 this makes (if all goes well) at $43.   If you feel more bullish you can sell less calls or buy more calls down the road and if less bulliish, you can cover a bit more.  

    Oil shorts/Goob, ZZ – Dangerous play ahead of the long weekend.  You have to assume they will pull out all the stops to extract as much money as they can from vacationers next weekend.  Look at today’s nonsens – massive spike in USO at 2pm on the button reversed a sell-off and shot them back to $39.50 – you are fighting against guys with that kind of firepower so pick your battle carefully.  

    Yay, I’m finally caught up!  


  201. Fighting words between Netflix and Dish…
    http://news.cnet.com/8301-13506_3-20064674-17.html?tag=mncol;title 


  202. SHJ…..and JRW’s IWM line 83.46. 


  203. Link for those hard pressed eyes.


  204. Goober, even though you’re paying huge premium I would suggest buying a /cl put rather than straight shorting futures… I’m going a bit further out with some august USO puts… Damn this sucks, having PSW withdrawal symptoms! Started work full-time last week and now I can only log on AH or during my lunches! Wouldn’t it be nice if instead of jacking up oil going into memorial day they actually let it crash!!!!? I’m not holding my breath but hope springs eternal…


  205. Phil,
    What about DIA puts in 25KP, should we cover?


  206. Phil I basicly agree but they will have all next week to do whatever and there is no doubt they can do it all from Wed-Fri, so a weekend short still concerns me ? I am mixed at this point honestly. I will wait until last minute to look for AHs direction but it is Friday so early close on futures.


  207. YES!!!!!


  208. Back in TZA (2/3) !!


  209. AMAG – I am going to pick up a few hundred shares.  Only 240M market cap, and whilst there drug is not going to achieve blockbuster status, could be a nice little 30% bagger. Sell Jan12 17.5 Cs for 1.85 or better.  Net 14 on the stock or so.


  210. Bonds have been on fire, equity markets are high on crack…my translation of whats going on


  211. FWIW, in my experience on opex days they typically overshoot a strike and then work there way back to it.  Assuming 83 is the strike for IWM, they’ll go below here and then work there way back up.  I’m now half covered on my TNA short.  Looking for 83.90 or so to cover the other half.


  212.  Look at the hatchet job on poor AAPL!


  213. Pharm, great chart

    "They" always like to break through at mutiple resistance; see acending and declining resistance cross just above.

    This is why I wonder about Monday "news" !!


  214. Matt….yes….unless of course 133 on SPY is the target…I had both 133 & 134s…just to piss us off.


  215. JRW what’s IHS?


  216. Out of TZA off my 82.96 line !!


  217. lolkha

    Inverted Head and Shoulders


  218. Lolk – Inverse head and shoulders.


  219. Pharm,

    I still have 134 on SPY, fwiw !!


  220. NFLX/StJ – It’s only a matter of time.  

    Oops, here comes the Dollar and there goes everything else.  

    Crashing oil/Jrom – Well there is the outside possibility that that’s why Alalweed was on CNBC – they want to make a big show of doing something to drive prices down (at least that is what I hope he was here for with the USO puts).  

    DIA/Vic – No, if we’re going to have a mega-crash, it will most likely come over a weekend.  

    Mixed/Goober – There is always the option of not playing at all until you feel sure…

    Monday/JRW – Yes, if they "fix" Greece over the weekend and Spain doesn’t go too badly, the Euro could fly and the Dollar could fall and all resistance will be futile.  


  221. Phil – I considered that as well , the sideways option so I will look for AHs direction and if none I will play a blank until Sunday @ 2:30PM and 3PM
     
    For whatever reason I ahve a strong intuitivbe feeling something will ahppen tehi weekend one way or the other and cannot decide which way ? Truly mixed signals. We shall see by 4:15 PM today or Sunday ?


  222. Could all be based in PRVADA spin as JRW suggest’s, but it does work………………………


  223. Well, didn’t get my 82.90 on IWM.  Had to ‘settle’ for 82.97.  I think I’ll hold a small short position of FAS over the weekend.  I don’t think everything will be ‘fixed’.  In the meantime, I’ll be camping in the beautiful Virginia Piedmont!
     
    JRW, thanks for the valuable information today-  I’m out.


  224. Given the dollar break out at 14:50, upside is limited, downside should be limited to IWM 82.82; we should finish here (83) so I think that’s it for me today !!  7% on the day,AND matt and I got to make something on the downside together, all in all a good day.  8-)

    Have a great weekend all  !!


  225.  Phil — do you have futures options hedges that you would suggest? 
    I lightened up 1/2 of my remaining June SDS and TZA hedges this morning into strength. I did not pick up the DIA puts. I like being able to adjust the position after hours if needed. Again, I’m not really covering any long positions, just speculating on a mini (or maxi I guess) crash. I’d hate to not be short if we have a crash. I thought about a few June 30 ES 
    1300/1250 put spreads at $8.50 or so. Any thoughts? 


  226.  Arch Coal rocking upwards.


  227. JRW – your agnistic market thinking has helped me a lot and you obviously have your niche dialed. I have picked up a lot for my own use and expect more to come. Thanx for all that , it has been a big help in lots of ways. I also find it very interesting you brought in your own computer geek to tune up your own experience. Excellent indeed.


  228.  Phil:  Yes, ACI was your play, dead right, thx.


  229. Someone wants to make name for himself -  Sell Apple t o buy LinkedIn,  Let’s see how it work out.
    http://www.menafn.com/qn_news_story.asp?storyid=%7B381A3A84-8307-11E0-B24D-00212804637C%7D



  230. Goober:
    Is Cummins the US company to invest in if you are correct? Not confident owning a Chinese company (CYD).
    Thank you.
    "Tusca – Weichi Power Co Ltd is the Chinese Company just found my old notes. There is a Cummins connection in both countries as well. NG diesel in Asia is a huge winner and will be here as well at some point. Asia has no choices for numerous reasons, pollutants and cost have come together as the catalyst. IMO this is a winner big time going forward and if this admin ever gets head out of ass, will be here as well. I expect europe will go this way big time as well in all size vehicles to include passenger vehicles."


  231. Have a good weekend JRW – we’ll try not to let things slip in the last half hour.  

    At the open: Dow -0.14% to 12588. S&P -0.13% to 1342. Nasdaq -0.23% to 2817.
    Treasurys: 30-year -0.05%. 10-yr -0.01%. 5-yr +0.01%.
    Commodities: Crude -0.2% to $98.73. Gold +0.24% to $1496.00.
    Currencies: Euro -0.49% vs. dollar. Yen -0.13%. Pound +0.01%.

    11:18 AM After a little retrenchment, Treasurys are higher again and headed for a weekly gain after the Fed’s purchase of $6.94B in bonds maturing 2016-2018, of $14.876B offered by dealers. The 30-year yield is up 0.01 to 4.31%, but 10-year -0.01 to 3.16%; five-year -0.03 to 1.8%; two-year -0.005 to 0.52%.

    3:00 PM On the hour: Dow -0.24%. 10-yr +0.14%. Euro -0.66% vs. dollar. Crude +1.26% to $100.18. Gold +1.43% to $1513.70.

    ECRI future growth gauge the Weekly Leading Index slips again, to 128.7 from last week’s downwardly revised 129.6, and annualized growth in the number slowed to 5.3% from 6.4%. 

    The Bundesbank sees German growth slowing, saying the "explosive" start to the year "considerably overstates the underlyingeconomic momentum." The bank continues to warn on inflation, saying the "price climate has deteriorated significantly." 

    The Labor Department reports payrolls climbed in 42 states and the unemployment rate dropped in 39. Nevada unemployment declined the most, falling 0.7% to 12.5%, but the high rate still leads the country. North Dakota unemployment shrank to a barely visible 3.3%.

    The Athens General Index, -1.9% today and 4.3% for the week, closes at its lowest level since 1997. Greek ADRs: NBG -1.5%CCH -1.1%HLTOY.PK -3.3%. More ADRs.

    Fitch downgrades Greece to B+ from BB+, making the country’s debt "highly speculative" instead of "non-investment grade speculative." The report looks to have put in at least a temporary bottom for the euro, which has bounced 50 pips in the minutes since its release. FXE -0.9%.

    Greek bond yields surge to new all-time highs in the wake of the Ifo’s Hans-Werner Sinn’s comments and, well, because the country seemingly has no way to make good on its debt. Greek 10 years +53 basis points to 16.52%. NBG -0.9% in Athens.

    New ECB member Jens Weidmann backs up Jean-Claude Trichet and Juergen Stark in saying the bank will no longer accept Greek paper as collateral should even the most minor restructuring come to pass. The threat amounts to a nuclear option as the move would deny the Greek banking system most of its funding. 

    With weekend elections likely to bring new governments into power across Spain, the fear is they will uncover billions in "hidden debt." A new administration in Catalonia earlier this year revealed a budget deficit double what was previously reported. The discovery of €40B in extra debt in Greece after 2009 elections pushed that country over the edge. 

    While patting Ireland on the back for making a "strong start" towards fiscal reforms, the IMF says risks to the success of the rescue have risen. "Financial market conditions are more adverse … spreads are at unsustainable levels." The solution: upgrading the EFSF, i.e. bigger bailouts. 

    Joe Mysak piles on Meredith Whitney, saying her assertion that local officials would cater to their constituents before their financiers is misguided. The evidence shows just the opposite, says Mysak, who claims any path other than repayment of debt would be "catastrophic."What is it about bankers and their flacks and that word?

    "The banks have won this war against the regulators," says Felix Zulauf of the 2nd round of EU bank stress tests, which he sees as neither stressful nor testing. "I do not understand how … (the banks) walk away like that after the recent crisis."

    Joe Weisenthal says Christine Lagarde’s insistence that Greece move even faster on reforms if it wants more aid make her a fine choiceto lead the IMF. This sort of philosophy has been IMF policy forever, "with horrible results."

    S&P cuts its rating on Credit Agricole (CRARY.PK -1.8%) due to its exposure to Greece.

    The Japanese practice of cross-shareholdings, convenient to entrenched management, but damaging to other investors, continues to haunt. The collapse in TEPCO (TKECY.PK) shares is causing write-downs at many of Japan’s major financials. We haven’t even gotten around to bondholdings yet. SMFG -2.5%MTU -1.8%MFG -1.4%.

    The average age of cars on U.S. roads has never been higher, and even the best-built vehicles need maintenance, causing Morgan Keegan’s John Lawrence to take a shine to automotive aftermarket retailersAZO and MNRO have already sped past estimates, and he thinks related companies such as GTPNK and SAH also look like winners.

    Kapitall’s 15 potentially undervalued stocks in rally mode that have not yet priced in analyst upgradesGTHOTTDKDACASCA,MPELDARAKRXHLSIPGPGGGCRRSNHYKLICPII.

    An explosion at a plant of Foxconn’s (FXCNY.PK -1.6%) – key supplier/builder for Apple (AAPL -0.7%) iPads and iPhones – has reportedly killed at least two and injured 16. 

    Netflix (NFLX) now has more subscribers than any U.S. cable or satellite provider, finishing Q1 with 22.8M subscribers, squeaking past Comcast (CMCSA), which had 22.76M subscribers. The big difference is growth: Netflix added almost 9M subscribers over the last year, while Comcast lost about 700,000 video subs.

    Three lunchtime reads:
    1) Treasurys: Watch out for tail risks
    2) Profit margin squeeze continues to grip the economy
    3) These silver growth stocks are oversold 


  232. Have a nice weekend all.  MITI should be up as well as I will add the one above TRGT in the chat section.


  233. Now, if the banks would only make the loans !!


  234. FWIW – FXE has traded its float today…..


  235. Like being able to trade in and out of DIA puts twice in a day with decent profits.  Thanks for the entertaining week Phil and have a great weekend.


  236. Why would they do that JRW?  They are buying Tbills.  Better ROI!


  237. Clark – I like WPRT better, but Cummins would be the engine company. Also CLNE if and when you can see NG getting blessed. For US I am waiting for the blessing. I will be playing CYD first of next week if direction is formed and perhaps TATA ? If any blessings are seen coming forth NG plays will abound as well so I wouod be ready with your picks ahead of time. The reason I am bullish on asians is NG is already blessed anmd they are leading us in usage and technologies now, that is why WPRT has fromed alliances already in China and India. We (US) have missed the boat on this huge ! It may be a turning point for many things as more and more factories of US companies are being built in China/India as we speak. In a round about way, some on US taxpayers back ! is that salt in the wound? 


  238. Pharm / DCTH – looks like it is bottoming out here.  what do u think?  i may buy back my short caller. 
    Nice call on SPPI. 


  239. Thanks for another amazing week Phil.  Keep calling them like this and I’ll be able to retire much earlier.


  240. Futures/Kurt – It’s kind of a dangerous way to play.  If you want to speculate on a crash, you can go with something like SDS Sept $20/24 bull call spread at .90 so $9,000 buys 100 of them if you want to spend the same as the other spread.  SDS should move up about $1 for each 2.5% drop in the S&P so $22.50 by the time the S&P get to 1,300 and, at 1,250, it should be at $24.  You can offset that by selling 10 SPX June 1,200 puts for $2.60 ($2,600) so if the S&P doesn’t fall 10% and put you in the money on the put play, you cut 1/3 off the cost.  If you think the S&P will go lower, you might not want to use that one but you get the idea.  At net $6,400, it’s a $40,000 spread if it pays off.  

    Arch/ZZ – That’s why we went with it.  Rumors that India needs more coal and China needs more coal and nuclear power is less popular so = more coal….  Even if not true – it’s got legs!  

    Wheeeee – look at the Dollar catching bids over 75.75 into the close – reality encroaches on the market….. 

    You’re welcome Bruce! 


  241. Terr – DCTH.  Yes, I will only have calls and sold Ps after the weekend. SPPI.  Thx.  Sell the Jun $10s if they get to 40c or better.


  242. If you can find any…we’re doing a short on LNKD.


  243. JRW..
    Thanks for your lines and trade calls.. I have being using the /TF to play them – made a little today..
    Have a great weekend


  244.  Euro and Pound and Yen have all been going down since 1:30 against the Buck – oil did not react nor did gold so maybe a prop job – hard to say…. 

    Oh well, that’s the bell – have a great weekend everyone!  


  245. Goober:
    Thanks for the info. (and thank you also Tuscadog!). I will study this group over the weekend. 
    You too Phil. Great entertainment this week. I tell all my conservative friends about your site. This is one place where I look forward to hearing from the other side! Have a great weekend all!


  246. WOW!
    This last push SPY under 134 was amazing!



  247. Phil,
    There is no doubt that as you say, “it is all about the dollar”. What I do not understand is how the market is moving in real time with the dollar. Are the vast majority of trades in this market trades that are programmed to move with the dollar? I doubt that most retail investors even look at the dollar charts.


  248. colonel goobs you know soros owns 10% of wprt?…vix inidcating an up day money i sense euro is on th everge of a major break down gold up today big euro flaccid ..not good


  249. Phil / 2.5% levels   So now 3 of 5 below and S&P on the line.  Bearish for Monday?


  250. Phil Pharm JRW..great week thank you and to the rest, great weekend
     


  251. Some thought on LinkedIn
    http://www.cjr.org/the_audit/linkedin_bubble_trouble.php
    Key sentence from an SEC filing - It also warned investors, in its recent filing, that it expected its revenue growth to slow as costs increased. It said it did not expect to be profitable in 2011.
    Is everyone mad? 



  252. i should say i do trade futures and do special situation equity plays..so my perspective is primariliy macro..i do ok in my futures accounts..but i enjoy the perpsective i gleen from everyone and hope to make a bit of a contribution by providing research that i subscribe to and generate..lets see if europe can continue hiding behind reality this week end..remember germans=french w good cooking


  253.  Nice piece on Greece: …why investors are fleeing Greek stocks and bonds faster than a chambermaid flees an IMF Director’s hotel room."  http://dailyreckoning.com/lessons-to-be-learned-from-the-greek-debt-crisis/


  254. Hey All,
    Another note on RIMM that i wanted to post but been busy today. As you may know they have no stock buy-back plans currently outstanding. Also, no one on wall street believes the 7.50 EPS target management is sticking to. Went through some research reports in the past couple days – one report (Citi financial, i think) notes that most wall street firms and channel checks show EPS of about 6.70 for the full year. Other then stating that "we’ll do well in the back half of the year" management cannot explain concretely how they get to EPS 7.50. Now, interestingly, the BOD votes for new share buy-backs at the end of June, to start July 1. They have been aggressive in the past at these levels buying back their own stock. Citi asserts (and i agree) that BOD / management will pursue a 10% buy-back (~2-2.5 billion). This will tack on about 0.65 cents to full year earnings, and get management much closer to their target that they seem so secure with (about 7.35 for the full year with buyback, without much effort).

    Anyways, thought it was an interesting analyst note, and would be a nice catalyst for the stock (at the end of June). As you know, i am still accumulating August calls at these levels.

    Have a good weekend.


  255. Angel – I knew he was in WPRT but did not know how much. Last I heard it was 3% a while back, so 10% makes me even more bullish. But he is also a big stake in IOC ? and I can’t tell if they are real or not? AHs gold popped up and oil hasn’t done anyhting so I am neutral until Sunday night. Yesterday I saw overall weakness comng and it did but what really has my attenttion is this . TPTB have been pouinding commodities hard on purpose and Gold and oil have both held their own under extreme pressures. Wheat and corn also came back this week and all under a stronger USD when all is said and done. Top that off with European nightmares finally coming to fruition/reality and MENA squabbles and again we are on pins and needles expecting something to pop one way or the other. The downward push on commodities could have been a deliberate entry point mechanism . If not TPTB will have to push it all down further next week, I guess ?
     
    I will probably make some mushroom tea from the bumpy red mushrooms and meditate on it over the weekend !!!!!!!!!!!
     
    Phil – Appparently regular nimrods like me cannot post photos? I tried to post a photo of me walking thru a foreign land with an AK 47 with Russian sniper scope in 2005 that I purchased from a Russian arms dealer at the border. A sweet unit indeed, 300 meters and all withing a 9" group. Not doable with a conventinal AK but the illuminated low light scope makes all the difference in the world. Kinda like night and day….but that was in a different time for me ! before I got smart ?


  256.  At the close: Dow -0.24% to 12575. S&P -0.28% to 1340. Nasdaq -0.19% to 2818.
    Treasurys: 30-year +0.13%. 10-yr +0.14%. 5-yr +0.1%.
    Commodities: Crude +1.26% to $100.18. Gold +1.43% to $1513.70.
    Currencies: Euro -0.66% vs. dollar. Yen +0.01%. Pound +0.4%.

    Market recap: Stocks fell broadly, with the Dow and S&P posting their third straight weekly drop, as retailers offer weak outlooks that point to cost concerns. The euro fell hard on a downgrade of Greece and spiking Spanish yields. Oil had a whipsaw session before rallying to a1.2% gain. Gold reclaimed $1,500. NYSE decliners led advancers two to one; trading volume was light. 

    European financial shares reflect worries about how Greece’s troubles will be resolved. Jitters spread to Spain, where CDS on its sovereign paper jump 6.6% as protests against the status quo grow despite a government ban. DB -4.0%STD -3.9%BBVA -4.3%,CRARY.PK -2.4%UBS -1.6%EUFN -2.1%.

    Just because companies are taking advantage of low rates to issue debt at breakneck speed – a record $53.7B in corporate issuance this week – that doesn’t mean investors ought to get on board, Jeff Cox writes. Investors hunting for yield often will do better to buy dividend paying stocks rather than paying top dollar for corporate debt.

    Sell your Apple (AAPL) and buy LinkedIn (LNKD), advises John Shinai. Apple has had a fantastic run, but "even Jobs’s Midas touch can’t conquer the law of large numbers." LinkedIn sits at the head of a trend that’s just getting underway – "a huge shift in how companies find candidates."


  257.  amazing that CRM went up on that terrible news. Watch the cash flow there, something is rotten in Denmark. I didn’t catch them this time around but I’ll get them eventually. 
     
    Even more downside in play to capture now. 


  258. CRM – should’ve got those June 125′s for 45 cents. that’s a steal!!!!
     
    Hopefully I get a shot at these Monday before the bag deflates.


  259. Clark you are welcome but be careful and wait for SIGNS, like US blessings before entering US companies IMO. Everything is so iffy right now but some of it could be simply another form of manipulations. As you know it is incredibly difficult trying to find definitive direction with so much manipulation in place as a norm. Now we are trying to figure the manipulations on top of the old manipulations to determine the next manipulation…pretty whacked indeed. Asia is already on board with NG as a fuel for transport and they will lead the way as they already are , that includes India. I beleive this market will crush electric cars as they simply are not technologically feasible yet due to batteries/storage issues and overall HP constraints energy tranfer issues and at 30-40 K a pop they are hardly in a quick payback zone . What is economically feasible will win out and I think that has lready started but like I said, not here in US yet. We are still beating the electric car drum and going no where fast while asians have sided with our most advanced technological companies and moving on!
     
    There has been some talk recently from transportation and energy secretary’s about blessing so pay attention ! I imagine it is being talked about as well behind the scenes but then they would have to admit being stupid so far wouldn’t they ?Unfortunately this is how our political system works on both sides and my reasonong that they are nearly all criminals.
     
    Good luck to all and enjoy the sunshine !   


  260. goober / AK 47

    300 meters, 9", Must have been seriously reworked !! At that distance, I use a Blazer 338 Super for that kind of result !!



  261. Phil – Dylan Ratigan will be on Bill Maher tonite….
     
    Have a great weekend everyone….. :)


  262. JRW – almost as good as a Dragunov but won’t go to 600 meters. very greatly improved indeed with a special recoil block that also made a world of difference. no real major mods, just dialed in with laser sighting unit to scope. Kinda like your IWM trading indicators !
     
    Thanx for all the help so far , I have picked up lots of pointers as I mentioned. 


  263. Today’s levels


  264. Thanks DC!  Have a good weekend.  

    If you can see after hours trading, check out the USO chart.  They flushed down to $38.40 before they found a buyer!  

    LOL StJ – that’s a keeper: 

    Dollar/RJ – You are right, Retail investors are always looking at the wrong thing.  If you go to the Stock World Weekly archives you will see we kept banging the Dollar drum week in and week out for most of this year yet only now is the MSM finally catching on that the Dollar affects the markets.  HFT and other programs use various key indicators from time to time BUT THEY CHANGE!  I used to consult on trading systems so I look for things that I feel are moving the markets – last cycle it was oil and for a while it was REITs and, currently, it’s the Dollar.  It’s not like everyone changes at once, a fund manager has to always tweek his bots (and it’s usually a team, not one guy) and he tries to identify the best indicators.  

    As more fund managers begin using the same indicator – that indicator becomes more reliable because all the various bot programs start to key off the same thing.  This is like the way we now key our trades off the Dollar so we serve to reinforce the the idea that the dollar controls the market because now we buy and bail depending on the Dollar.  That then may lead another fund or group to start keying on the Dollar.  Just like any trade, at a certain point it becomes too crowded and then people like me (not a sheep) will begin looking for something else that’s moving the markets in unexpected ways.  

    For example, I was using something called the Valero Rule back in 2006, in which we keyed our oil trading off the movement of a single stock.  That indicator had a 2-year run but then fell apart as oil got silly in 2008.  Almost as important as finding leading indicators is knowing when to let them go.  The reason many traders (and even whole funds) blow up accounts is because they get into a groove (something both Hanna and I were in last week for sure!) and they make a lot of money but then they don’t sense that what worked recently no longer works and they keep applying a strategy that is no longer appropriate for the new market conditions.  That can sometimes lead to very bad mistakes – the markets are not algebra – what works one week does not necessarily work the next and we all have to learn to let go and move on once even our most favorite indicators begin to miss the mark.  

    Bearish/Tusca – I would say yes.  We were weaker today than I thought we’d be, which makes it harder to be sure about Monday as Europe saw us weak and reacted already so it’s up to Asia, who will likely pull back (I don’t know what’s holding Japan up anyway) and then the question is – how overdone was Europe’s bounce?   Notice on the chart set, that they are all below their 50 dmas and above the 200 dmas (in Europe, Asia is below, below):  http://stockcharts.com/freecharts/candleglance.html?$HSI,$NIKK,$BSE,$DJSH,$FTSE,$DAX,$BDI,$CAC,$GOLD|B 

    So an optimist could say it looks like everyone is set to pop back up but a pessimist may say we have a weak and failed recovery off a month-long downturn and only the 200 dmas are keeping this from getting extremely ugly.  

    By the way, since the 50 dma’s all death-crossed in Asia, it makes it tough for them to fly higher without some consolidation around the falling 50s – that makes the risk-reward lean bearish on that side of the World.  The EU dmas are more neutral and suggest a consolidating channel will form BUT a break below the 200 will bend the 50s down to match the downward (from the top) slope of the Asian indicies.

    Thanks Kustomz!  


  265. Vic/Phil/Manhattan Office Buildings – it’s another function of lots of capital sloshing around and office buildings trading up to pre-crash valuations. In fact, all the projects mentioned have been stalled for about three years except the one over port authority which is about ten years old. Also, look where the info came from – a commercial broker – sort of like a a portfolio manager talking his book – it creates urgency for transactions.  None of those projects can start without tenants..


  266. Brooklyn – I was thinking the same thing, somebody talking their book. Developments always start with lots of talk. Makes a good sound bite for the media and or pumpers. I cannot imagine any new poects going forward until some inventory has thinned out considerably but we do live in strange times ? Where red means go and green means stop !
     
    Phil as usual I am gleaning more and more information here not just your option trades. Lots of stuff to absorb.
     
    I notice you refuse to use the term PRAVDA ? It’s OK you have my full permission at any time. If you ever get out this way give me a holler and we will go out and pop off about 500 rounds just for kicks and then go catch a salmon or steelhead ! Not into hunting cause I don’t like killing critters, I would much rather observe them, which we could do as well. Thanx for another observant and interesting week.    


  267. Phil – your comments above in white about the indicators and changing paradymes ? I have had a thought for some time now and would appreciate your thoughts on this. Since I am a relative newbie to any market trading of any sort, I have noticed that some of my friends who are long time particpants are getting creamed in the last 3 years because they are older buy and hold kind of guys. Since I had no previous stereotypes going on and stepped in with open eyes, all previous paradymes have changed and it seems to me this has been a great advantage to me as I was starting without a bunch of old baggage you might say. This occurred to me about a year ago and seems more and more valid as time goes on and I observe others in boomer age range (50-70) around 60. Kind of weird in a way because I was very apprehensive and stressed at first when I chose to go down this rabbit hole(for lack of confidence/knowledge), but now it seems my "lack of" has turned out to be a blessing in disguise? 


  268. goober – how would you get into Tata from the US?
     
     
    goober 
    May 20th, 2011 at 3:53 pm | 
    Permalink  
    Clark – I like WPRT better, but Cummins would be the engine company. Also CLNE if and when you can see NG getting blessed. For US I am waiting for the blessing. I will be playing CYD first of next week if direction is formed and perhaps TATA ? If any blessings are seen coming forth NG plays will abound as well so I wouod be ready with your picks ahead of time. The reason I am bullish on asians is NG is already blessed anmd they are leading us in usage and technologies now, that is why WPRT has fromed alliances already in China and India. We (US) have missed the boat on this huge ! It may be a turning point for many things as more and more factories of US companies are being built in China/India as we speak. In a round about way, some on US taxpayers back ! is that salt in the wound? 


  269. An excellent article/video everyone should check out over weekend. Especially you Phil, even if you have already read the book. His opening statements are some of what helped me to start thinking corretly back in 2007 and saved me a lot of grief since as he got me headed in the right direction.
     
    http://www.zerohedge.com/article/extended-confessions-economic-hit-man
     
     an excellent expose’ indeed….a must read/view piece of work for sure.


  270. Updated Levels. New and improved, now with 1.25% lines and an updated level color scheme.


  271. Nicha - I have access to Indian market on IB and I have that data feed . All my data feeds are thru Hong Kong not US for a reason. At IB you can choose your data feed source network. If you go to Indain markets make sure you check out currency difference it is huge and watch for a while before you trade it, it has its own weirdness, like market maker scams X 10 so never make market orders . I think you can get TATA thru europe exchanges as well or maybe Hong Kong.


  272. Good morning! 

    The World hasn’t ended yet so I guess I’ll catch up on comments.

    Madness/StJ – Well it’s fine if they don’t make a profit if they have prospects but this is the same lunacy as we had in 1999 when anyone could have a $10Bn valuation with no track record because it was going to be SO EASY to get to $1Bn in profits because everyone in China would certainly give them a dollar!  That’s the standard dot com web model – give something away for free, get lots of people signed up and then estimate that you’ll have the same level of growth when you start charging.  In 20 years, it has never really worked out – GOOG makes money from advertisers, not from users, AMZN sells stuff…  

    Perhaps PCLN is one real one as they use the Web to do the business of what used to be thousands of travel agents (all unemployed now).   LNKD took in $243M and made $15M last year.  A p/e of 100 gives them a $1.5Bn valuation and they were asking for 300 and got about 1,000.  What really bothers me is – what are they going to do to generate more money?  They already do try to monetize their service and it’s a long, long way to $500M in profits for a $10Bn market cap or even $150M for that matter.  What should really bother people about LNKD is that their entire plan for getting revenues is to become MWW (as that’s the bulk of the revenues they claim now and what they talk about growing).  Monster is ONLY a jobs site, has an entrenched user base, a known name and, after 44 years in business (they evolved from an executive search firm), has $914M in sales and lost $32M dollars last year.  

    RIMM/Hanna – Unlike other companies, they are buying their stock while it’s cheap.  I guess we can give them the benefit of the doubt and assume they are simply caught in a trough in their development cycle- I’m sure they know when their new stuff is coming out and aren’t too unrealistic about their prospects.  It would be odd to think they are using the firepower of a 10% buyback just to prop up the company for 6 months.  

    No Goober, nimrods like you cannot post photos.  You can post a link to a photo and all the people who are interested can click on it.  Although I’d like nothing better than to see you walking around with a gun, someone else may think we all need to see their kitty cat or their car or a baby with a cigar or another 50 charts of the Dow, etc. and then this page would take 5 mins to refresh and be about 20 pages long so, unfortunately, we may miss out on the occasional gem like yours.  

    Speaking of links – I love the "House Porn" section of the WSJ – they have a good one this week.  

    CRM/BDC – Don’t they have ".com" in their name?  Say no more….

    Mervyn had to write another letter to George.

    It turned out froth didn’t cause the commodities rout.

    Ratigan/1020 – Thanks, I don’t want to miss that.  

    Talking/Brook – Yes, very true – so many projects go through the stirring up interest phase first and just as many never end up happening.  

    I’m glad you are learning something Goober – I figure you are a long-term project!  8-)  You are right, it’s a great advantage to come into the market without prejudice.  That’s why Wall Street always seems to be giving huge accounts to kids – they actually outperform the veterans on the whole because a firm like GS gives a lot of kids small accounts and the ones that are in a groove get fed more until they have a big fund to manage.  What GS, JPM etc are best at is pulling the plug before the worm turns (ie. taking the money and running).  We have to change our strategies as market conditions change and, more than always remember, as the great WOPR once said: "Sometimes, the only winning move is not to play."  

    Confessions/Goob – That is a GREAT book!  I hope everyone here has time to read it or at least view the video set on Zero Hedge – this last one is a great summary though (and the subtitles should make you think of the perspective of an average person in Egypt or Iran seeing and hearing this): 


  273. A weaker dollar is in America’s best interest and has driven the turnaround in U.S. manufacturing, Paul Krugman writes. Thank goodness the Fed and Obama "ignored very bad advice from right-wingers" who favored a stronger dollar and no aid for the auto industry – otherwise, "this comeback wouldn’t be happening."

    Why the GOP wants to weaken the Consumer Financial Protection Bureau (LA Times)

    Jim Grant rips the Fed, warns of 10% inflation and waxes nostalgic for a time when Washington let prices fall in crises rather than goose them up. Stocks, bonds, gold… almost everything is overpriced: The Fed "has unilaterally taken it upon itself to levitate asset prices… So the things that we take as prices freely determined are in fact manipulated."

    Inflation? Just look at the deflation all around you - cars, clothes, home energy, hotel stays, furniture and appliances, electronic gadgets of all kinds. "There’s no grand conspiracy to keep the headline number down," Matt Busigin writes.

    America Is Bankrupt (But Not the Way You Think) (HBR)

    Is the glass half-empty? In a weak housing market overwhelmed by foreclosure sales, tight bank credit and credit-wracked buyers, seller-financed home purchases are gaining popularity, particularly in hard-hit places like Michigan. With a deep stretch, contrarian thinkers may read this as a sign the housing market is near bottoming out.

    Las Vegas looks a lot like the new Detroit (Market Watch)

    The extend and pretend exposé – coming to a bank near you (FT.com)

    Has the US passed peak productivity growth? (What Matters)

    "Moral disaster… potentially catastrophic… dwarf Lehman." Jamie Dimon trots out the usual phrases when asked about the possibility of a Treasury default. It’s unknown if he was asked about the morality and consequences of $2T deficits which are being partially monetized by the central bank.

    Goldman Sachs’ (GS -3.1%) fall today amid stories of more subpoenas completes a 10% slide in the few sessions since Matt Taibbipointed out the possible perjury in some of its executives’ testimony before Congress. The shares are now lower than they stood before QEII began, and trade just a hair over book. 

    Goldman Braces for Federal Subpoenas (WSJ)

    Euro booster?  The IMF approves a €26B loan to Portugal, of which the country will receive €6.1B immediately.

     

    Barry’s Succinct summation of week’s events:

    Positives:

    1) Relief for the consumer as gasoline prices fall .10 from last week’s high
    2) Initial Jobless Claims fall to 409k from 438k (but still above 400k for 6th straight week)
    3) Refi’s rise to 5 month high as mortgage rates fall to 5 month low
    4) Housing starts/permits below expectations as we have enough existing homes on the market to last 9.2 months at current sales rate
    5) German ZEW economic current conditions component hits record high, dating back to 1991

    Negatives:

    1) Greece reaching boiling point, Spanish 2 yr yield up almost 30 bps on week
    2) Germany ZEW 6 month outlook falls to 5 month low
    3) Existing home sales less than expected, not a surprise but still huge drag
    4) Housing starts/permits below expectations, continued impact on construction
    5) May Philly and NY mfr’g survey’s well below forecasts as mfr’g showing signs of moderation
    6) Motor vehicle production falls sharply in April in reaction to Japan disaster
    7) Bloomberg consumer confidence falls to lowest since Aug
    8) UK CPI hits 4.5%, 3rd highest reading since 1992

    Also great from Barry:  "End of Worlders: Classic Game Theory Error":

    There is an Evangelist named Harold Camping, who claims the world will end tomorrow.

    He has violated the first rule of forecasting: You can give a price target ($0) or a date (tomorrow) but never both at once.

    Besides, the end of world forecast carries additional risks. People have been making Armageddon forecasts for, like, forever. So far, not one has paid off. Oh-fer-∞.  (Perhaps the long  shot odds are attractive to risk takers).

    But its a stupid bet for the simple reason that there is no upside:

    a) If you are right, your counter-parties will be dead and unable to pay off the wager.

    b) If you are wrong, you look a fool AND have to pay out your obligations (Hey Moose, Rocco,help the judge find his wallet )

    The Mayan predictions of the end of the world holds no sting for them — their world ended a long time ago.

    Harvard historian Niall Ferguson knows this lesson well — in Colossus: The Rise and Fall of the American Empire, he describes the inevitable decline of the United States, but neglects to give a “Sell By” date.

    Judgment Day? Five failed end-of-the-world predictions (CSM)


  274. R 503 

    JD

    Inf


  275. Does anyone know at what time the rapture is coming because I have some errands to run… 


  276. Rapture- they have rolled the tarp onto the field so it is "rain delay" for now.
    Rumor has it that Rapture may be re-scheduled pending completion of Phil’s oil industry nationalization plan. The powers that be think it would be a nice bonus. :)


  277. Here is another:


  278. Stj – If everything goes as Oakland minister Harold Camping predicts, the Bay Area will suffer a world-ending earthquake around 6 p.m. Saturday, God-fearing Christians will ascend to heaven and everyone else is in big trouble for eternity.

     

  279. Pharm, thanks. I have to assume that everyone on Wall Street will be around for eternity. Game on then! Might have to switch to watching 15 year, 50 year and 200 year moving averages…. 


  280. Pharm -
    I cannot find an updated version of the 25KP.  Did you move it.
     
    BTW thanks for keeping it up.


  281. Here’s a great 1941 video to help you prepare for the Rapture.  

    And, of course, how could we forget Rapture:  


  282. Hi Phil--I am so frustrated--I have way too many positions in my 3 portfolios--this has been part of the reason for a100k loss --I want to get rid of my dead positions and ones on life support (as the rapture will not help them) which will be about a total 200k loss—this will enable me to concentrate on the income portfolio , the 25k and some day trades —oh wise one and stock market guru what is your advice? Please do not tell me I am an idiot to have let this happen-- is it even a conceivable thought that I could make this up in a year or two — total portfolio value of the 3 rogue accts are about 2.3M post loss.
    Thanks


  283. Edro – I have been very busy at work, and much to mrm or jomama’s chagrin…..I have not updated it in a while!!! Phil has it here.  My apologies, but it has been hard to manage work, that one, mine, the write ups, SWW and my two boys! Oh, and my bride!


  284. New post here in MITI and TRGT.


  285. I won’t be here most of Monday.  I’ll have a post up in the Morning but will not be available until late afternoon.  Sorry on what could be a crazy day but it was unavoidable. 

    Brand new $25KP Update is up but please keep that for $25KP-related chat.  

    Frustrated/Savi – 10% down is not devastating but if that bothers you, you shouldn’t even be considering $25KP-type trades as those can go up and down 10% a day.  Right now, the market may be correcting – if it is, it’s going to be a great opportunity to get in and begin to establish some long-term positions.  The most important thing to do is think about what you expect the market to do over your investment time-frame and consider what kind of risk tolerance you would have if the market were to do the exact opposite.  

    Take a look at our Investing for Income Strategy – that’s very mellow and is doing way better than 10% a year and, if you don’t need to take it out as income, it’s still a nice, conservative long-term growth strategy.  What you really need to get a handle on is, based on your age, income, assets etc – where you want and need to be over time.   This is where an investment adviser should be able to help focus your goals.  Most likely though, he’d also say, if losing 10% on a portfolio bothers you – then you shouldn’t be messing around with aggressive trades.  

    I’m not sure what constitutes a dead position.  If you own CSCO, I would not consider it dead – just as you don’t consider your car dead if it gets a flat or your kid dead if they break a leg – they say time heals all wounds but PALM and GM would dispute that but it does tend to heal most wounds suffered by blue-chips, which is why I prefer them.  If on the other hand, your "dead" trades are CSCO Jan $20 calls, which are now .35 – then I would point out that you are not INVESTING in CSCO at all – merely speculating on the PRICE of CSCO in January.  

    Keep in mind that, if you had $2M worth of Jan calls in May of 2008, you were pretty much wiped out.  But, if you had $200,000 worth of Jan puts that forced you to buy $2M WORTH of stock when it was PRICED at $1M – by now you probably got all the money back as the PRICES once again reflect the VALUE.  

    Had you been playing for a 10% gain by selling $200K worth of puts that were 20% down and had you rolled those puts to Jan 2010 puts at slightly lower strikes – for the main part those puts would have expired worthless and the entire effect of the crash would have been that you made 5% in 2008 and 2009 instead of 10%.  If you make 10% in 15 of 20 other years and none the rest, you still average 7% a year with the conservative strategy.  

    $2.2M at 7% a year for 22 years is $9.7M.  I know I say this a lot but it’s very important that people understand the power of simply earning consistent returns over time!  

    That’s what rich people do with the majority of their money – they don’t try to double it up out of fear of inflation.  When I was10, I had a paper route and I was trying to save up $2,000 because that was the price of a brand new VW Beetle at the time (there was a big sign near my house).  So I had a goal and I took 1/2 of my weekly $25 and put it away and that was $650 a year so I could have a car by the time I was 14 (which I did as I got my first car 4 months before I got my permit at 15) and still have some cash to spend.  Had I not bought that Barracuda for $800 in 1977 (my taste changed and it was a good deal) and instead put it in the bank for the last 34 years at 7%, that $800 would be $7,982 – still enough to buy a decent used car.  $2,000 for a new VW would be $19,956 – pretty much keeping up with inflation but losing a little.

    That’s why RICH people are happy to be conservative, they don’t care if their $100M loses 10% of it’s buying power over 34 years – they just want to NOT LOSE the $90M.  The problem with less rich people like most of us – is we worry about if we will have enough and that causes us to want to chose more aggressive strategies and the more aggressive strategies are RISKIER.

    Figure that 6.5% is essentially a "safe" rate of return.  As I mentioned, it’s what my Dad had been getting for years, even during the crash in a diversified account.  Let’s say that it was 90% safe (still a 10% chance of losing the money in a black swan event and saying "those never happen" is, obviously I hope, foolish) to make 6.5%.  I would say that trying to make 10% (50% more) is 50% less safe and trying to make 20% is probably 100% less safe – in other words, you have a fairly equal chance of making or losing money.

    Risk is not generally mispriced – if it were, then actuarial accountants would rule the World but risk tends to be about right.  If you sell an AMZN July $220 call for $2, you are getting a 10% "point spread" on AMZN and you are betting $2 that AMZN will fail to go over $220 while someone else is betting the same that they will.  There’s also the factor that his loss is limited and yours is not but the key is – compared to what?  

    Well the AMZN July $200 calls and puts are $10 so that tells us that there is an almost certainty that AMZN will move up or down $20 (10%) because you can sell the puts and calls for $20 and any move less than that would make you money and you always need to assume (on liquid positions) that the prices of the main strikes are correct.  

    So now I know that selling the $220 calls for $2 puts me on a razor’s edge and, since my risk is unlimited, it just doesn’t seem very smart.  But, knowing that AMZN is likely to move $20 in 2 months does tell me that I can expect a 10% channel between here and the July close and that means that if AMZN moves well above that channel EARLY in the channel but does not break the top of the channel at $220 that THEN the sale of the July $220 calls for, say, $10 DOES become attractive.  

    Again, this goes back to our theme of saying that it is better to pick stocks and sectors you plan to become an expert in and learn those like the back of your hand.  You can’t possibly look at ISRG, for example, if you have not been following it – just because it’s mentioned by Cramer or another Member next week and make a determination about whether or not a recent move was valid but if AMZN falls because there was an explosion at Foxconn and you know that AMZN doesn’t even make Kindles in China – then you KNOW it was on overreaction and you KNOW the July $185 puts are overpriced at $7 (last week’s high) because you KNOW that’s the rising 50 dma and you KNOW there has been extremely good support at the 200 dma (also rising) at $170 so you BELIEVE STRONGLY that your real risk is not unlimited but about $15 and you are collecting $7 and the Jan $155 puts are $7 and at net $148 you wouldn’t mind owning AMZN so you are able to instantly take advantage of the opportunity the same way you can walk into a store and see a pair of Levis on sale for $20 because you KNOW you want it and you KNOW they are a good deal at $20. 

    Keep that in mind – 3 portfolios already sounds like a problem and I bet you have more than 20 positions too.  It’s OK to have a long-term portfolio that is full of very low basis stocks you intend to hold forever that you rarely touch AND a short-term portfolio with 10-20 positions but once you get past 20 active, it begins to be a problem – and that’s for experienced traders.  

    If you wait and you are patient, there are opportunities all the time. You can track 100 stocks (hopefully only a couple of sectors) and try to know enough about them that you know when they are good and bad values.  It’s always good to start with 10 stocks you LOVE and then, naturally, you should end up learning quite a bit of their top 5 competitors.  That’s 50 stocks right there.  

    For example, I know virtually nothing about Biotech.  I understand the workings of Big Pharma and I’m comfortable with PFE, BMY, MRK because one drug doesn’t really make or break them so it’s more of an overall business view and I used to be comfortable with companies like DNA and GENZ because they too were not do or die on a single drug but the stuff Pharm knows is outside my expertise.  Once in a while, something like DNDN comes along and I decide to take the time to understand them because they were such a good STOCK to play but I just don’t have to the time, or the background, to follow the whole sector like Pharm does so any time I decide to play a biotech (which is very rare), I generally play it like a casino bet or a horse race where I got a tip – very hedged and not too much!  

    You have to recognize your limitations and, in fact, embrace them.  They need to mark for you what you can and cannot do.  That’s the first step to being a better investor – figuring out what investments you actually understand and are comfortable with and which ones you are not.  Warren Buffett says:  "Understand what you own.  Investors who buy and sell based upon media or analyst commentary are not for us.  We want partners who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it’s one that follows policies with which they concur."  He also said: "In the end, what counts in investing is what you pay for a business — through the purchase of a small piece of it in the stock market — and what that business earns in the succeeding decade or two.  Don’t get suckered by big growth stories.  Avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be."

    Buffet has returned an average of 16% over 34 years – that would have turned my $2,000 into $310,886 instead of $19,956 at 7%.  As one of the richest men in the World reminds us:  

    Though we have lagged the S&P in some years that were positive for the market, we have consistently done better than the S&P in the 11 years during which it delivered negative results. In other words, our defense has been better than our offense, and that’s likely to continue.

    And THAT is how you make 154 times your money in 34 years!  


  286. I ate one of the cans of beans I kept in my basement saved for the day of rapture or other made-up disaster. Tonight it’s peaches!


  287. Pharm:
    Not to pile on, and only if you get the chance, a longer term play on SGEN. Thanks.


  288. SGEN/dc – not sure if you own the stock….but how about the stock with the Dec $20 C and $15 Ps.  1/4 to 1/3 entry, as ASCO is coming up, and I don’t want them to fall back down and go boom.  Data are due in August, so plenty of time, and the run up has been impressive.  I am a bit disappointed in myself that I did not push them more….. things are a bit crazy for me right now with the vultures circling.  I am telling you Pharma is all over the place right now, looking for good targets and compounds/drugs/antibodies that have several applications. 

     

    Specialized medicine is here folks, so if you see a company, point them out (thx Kust for TRGT)….I will do my best to look into them.  As Phil used to say, the more eyes the better here, as it makes for a good community of investors.


  289. Phil
    I know the losses are not devastating but it totally bothers me that I have so many  positions and I cannot keep track of all of them--what I want to do is clean shop and go with your Income portfolio and 25k and a few day trades.  Since joining PSW I have managed to clean up one of the large IRA accts with your help . But the others have some old positions like ENER, and ARNA, and that are showing pretty large losses—my thought is  to realize these losses and have funds ready to put to work as opportunity presents itself —  I have no problem with managing the 25k portfolio  as I know there is a plan.
    Tx Phil for taking the time to respond


  290. Savi – ARNA – not sure how much you have of them, but they are trying to get something going in the EU as well as satisfy the FDA cancer concern.  Why not give them a bit more time and sell the Oct $2s for 10c against your position.  That way, if called away, you can make up 70c of losses and you don’t have to manage it.  Just my thoughts.


  291. Very important to watch….note what happened to the yields during April-Aug last year and where we are now.  When the fed’s eased, the rates went UP!  Now that easing is ending….rates are going down.  That should tell us where the market is going……blips or no blips…


  292. This must have freaked out people in Iceland yesterday due to the timing:

     Iceland’s most active volcano erupts, triggering 50 small earthquakes and an 18,000 feet high smoke plume. Scientists don’t currenty think this eruption will lead to air travel chaos like that caused by the April 2010 eruption of another Iceland volcano. 


  293. Savi – Let us know if there any position that you might want to turn into long-term fixes.  Pharm had a nice idea on ARNA, perhaps we can come up with some others but, as I said above – you must be realistic about how many positions you can watch and manage.  If you don’t have time every morning to read the Yahoo news on each of your companies (and the whole article – NOT just the title links!) before the market opens – then you have too many positions. 



  294. This guy is great, I’ve seen his work in NYC:


  295. ARNA. I buy stock agen some months ago ~1.5 and sell okt 1,5C 0,47 Trade looking safe today.  Friday stock go up 10c, but I think very safe trade ise buying stock and selling Jan 1C 0,8 entry and 25% up if called away.


  296. Strangles- Excellent month selling short strangles – better than 4% but took on more risk via short strangles on CMG; OPEN; & PCLN- in addition to the usual SPX plays. All very profitable. For once, my timing was great across the board having sold the stock short calls near their peaks; rolled them down for more premium and then cashed them in on the decline. Textbook plays not likely to repeat in June unless there is another runup on these issues.
    I like these again for June but will be a bit more cautious this time given the current market conditions.


  297. Where do we go from here?
    Once again, the long term index trends are intact- up. Dollar continues within it’s downward channel but testing the upper range. The 50 and 100 MA’s are converging and still acting as support. Still looking for the much anticipated correction but as last week, my gut tells me it is not coming- yet.


  298.  pstas: momo strangles
    I’ve been shorting calls on these stocks and scaling in and rolling when needed works nicely.  curious what kind of spreads you set up between your short puts and short calls on any of those strangles you care to give more detail on,  TIA


  299.  Phil: betting on a horse race
    The sense I am developing with my options trades is that I assume I will always need to adjust, and I’m getting comfortable with that.  If I scale in and am willing to roll it’s as if I bet on the exacta at the track but once the race starts they let me adjust my bet by moving it to different horses in a later race :)


  300. Lincoln- Strangles- my general guideline is +8% on the call side and -12% on the put side. I tend to go with a much wider strike on the put side – more like -15 to 20% to play it safe. As you may know, it is the puts which can cause the most heartburn and sleepless nights. SPX is the "safest" play, IMO but the low VIX reduces returns significantly. That is what prompted me to dive into the MOMO’s . It worked well last month. I like these especially now with a toppy overall market. I will be watching for a run up on these to sell close in call strikes and sell puts on a  pull back. Also considering going out to July with intent to close them out prior to expiration capturing the decay- especially if we stay rangebound here.


  301.  Phil
    How does buying the JUNE 16 XLF puts look here? Is it too soon to tell whether end of QE2 will drop the financials?


  302. Hi Phil Looking at the 500k portfolio where we bought 2000 shares of AGNC and sold the Jun 28 call against it. Have been playing this stock for some time now and find that it runs up now Jun 21 div day to about 31 /31 $ per share I normally have been selling the 30 p against it. In the above case I am sure the stock will be called. My concern is this high paying div stock could be in for a root awakening after q2 will be stopped.
    To protect against a sudden down draft should we not look at it simular than the NLY play by selling the 17.5 or 20 Jan 13 caller with a delta of 1 or .84 so we have a cussion of 12.50 to 11.00 of down draft protection. Your thoughts pls thks


  303. Phil AGNC well I see there is still .15 premium in the Jun 28 caller and it was your intention to roll which is also a very good idea. In my thoughts above we possible would not be hassled with called away every 3 month receiving the 18% div and having a down draft protection to about 17.50


  304. Phil,
    I’m new.
    Do you have somewhere an article explaining all this attraction to dividend stocks.
    (They pay dividend and drop for the same amount. And without dividend I could easily just sell several shares and get the same result) what am I missing?


  305. Phil--I love this site—everyone helps each other
    Yes, I do have way too many positions to keep track of and will cut back--will post my most troublesome ones and would appreciate any feedback

    Pharm—Tx so much for the input on Arna-- I have 4000 sh @ 6.30 and 34 Jan 1 calls@1.62
    The other losses in biotech are Pdli 2500sh@10.65 and1200 of Dcth@15.65 --although with Dcth I have been following your rec and selling some p/c to bring the cost basis down

    Tx again


  306. Savi – PDLI – sell the Nov $7/5 to reduce your basis.  The dividend is a big driver there.  DCTH – fine.  I would sell Sept $9s Cs and possibly the $6 Ps.  Not sure what your basis is, but that should be fine.  Sept can be rolled if necessary, but I don’t see any big catalysts until year end.


  307.  lolkha – Dividend stocks : Wait thats not right! They dont "pay dividend and drop for the same amount" – or else PFE which pays 0.8 dividend on a $20 stock (about 4%) would drop by $16 in 20 years, or be worth roughly $4 a share in 2030. Hmmm. What actually happens is altho the stock may drop by 0.8 the day it goes ex dividend (although this does not always happen) it is usually made back up slowly over the course of the next months.

    What you are doing is gaining security and predictability. You get 3-4% a year no matter what (Assuming no change in dividend policy, which we must be vigilent for). Also, you get to participate in stock upside. This is very different then selling some shares, as you say, where you would be 1) less exposed to stock upside and 2) have a finite number of shares to sell as you shrink your position.

    Dividends can be compared to selling calls against a position, which is locking in a cash payment and giving up some margin of upside in return. Both are methods of monetizing future gains for current cash and reducing uncertainty.

    These types of positions and more aggressive ones have a place in your portfolio. Notice, that you can combine dividend stocks with put and call sales to significantly increase the cash return on a stock regardless of what the share price does (certainty of return).
    Hope this helps 


  308.  Phil,
    I’ve been following the blogs now for 3 month and am uncertain how to "jump into"  the 25K portfolio.  I’m not sure whose recs to follow.
    RNM


  309. rnmar – start following here.  I would wait for a new position to target or if something is already ‘down’ take a look and see if it is worth while.


  310. USD way up , ES down 7 points/gold-il getting hit/ NKD down. Looks like commodities will get driven down further at least for a few more days? Gold /silver /oil have held their own very strong considering the deliberate pummelling. 1500/35/100 or there abouts as they keep bouncing back under huge pressure from TPTB.
     
    USD could drop in AM but I doubt it ? We shall see.


  311. TBT/TLT-
    "U.S. Treasury yields could rebound from their lows of the year as a wave of corporate bond sales hits the market."
    http://online.wsj.com/article/SB10001424052702304520804576339000564166630.html?mod=WSJ_Markets_LEFTTopStories


  312. QE2 was a bust
    Economic data is worse than before
    http://www.marketwatch.com/story/qe2-was-a-bust-2011-05-21?mod=MWCommentaryandBlogs&mod=marketwatch
    "But even the stock market boom hasn’t been what it appears. An analysis shows that most of the rise in the Standard & Poor’s 500 Index SPX -0.77% under QE2 has simply been a result of the decline in the dollar in which shares are measured."