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TGIF – Dollar Done Diving or Destined to Drop?

$USD WEEKLY It is ALL about the Dollar.  

This week, the Dollar was smacked down from 76.37 on Monday to 75.04 early this morning for a 1.7% drop on the week, costing US citizens $1.7Tn of their lifetime savings in order for Goldman Sachs to close out their month on a high note as commodities, once again, skyrocketed – pushing the key wholesale price of gasoline back over $3 so gas stations could mark it up to $4 at the pump and charge US consumers $1.15 more per gallon than last year (up 41%) for an estimated $3.75Bn of additional charges levied against 150M US drivers in the next 3 days.  

Hey, that’s only $25 per driver, right?  That’s totally right!  If you are going to steal $2.5Bn, that’s exactly the way to do it – in small amounts over and over again.  If you steal $2.5Bn from one person or from several people, like Madoff, you go to jail but if you steal $25 from every family in America – you go on the cover of Forbes and get to advise the President on Economic policy!  

Also, Madoff’s big mistake was robbing rich people.  That’s a big no-no in America but robbing poor people is called Capitalism and, if you complain about it, you are some sort of Communist and will be thrown off the island so shut up and give us your $25!  Ah, ain’t that America?  

As I mentioned yesterday, we won many thousands of tanks of gas betting against $101 oil in the fake rally and this morning we picked up another .40 win in the futures as I sent out an early morning Alert to Members to short oil at $100.90 and we got a nice ride back to $100.50.  40 cents may not sound like much but the QM futures contracts pay $12.50 per penny per contact so that little move nets $812.50 per contract – that’s enough to tank up the Range Rover AND take care of the monthly lease payment! 

$WTIC WEEKLY This is why the investor class doesn’t give a damn about a $25 rise in the price of gas – we may pay $25 just like the little people but we OWN the oil companies and the refiners and the gas stations and even the commodities and we pay $25 but collect $8,000 on just 10 contracts in 2 hours.  Where does that money come from?  Well, as I said Tuesday, we prefer to take the money from jackass speculators who get greedy and run oil too high but they, unfortunately, got that money from the bottom 99%.  Just one rich guy buying 10 NYMEX contracts that go up 40 cents requires 320 people to pay $25 more at the pump to fund their $8,000 gain.  How many contracts are open at the NYMEX?  400,000!  400,000 contract going up 40 cents at $12.50 per penny requires 1.2M people to hand over $25

How much is oil up from last year?  $30.  $30 x 400,000 x $12.50 is (and you are going to love this) 150,000,000 people who need to pay $25 more for gas.  See how that works out?  Unfortunately for the poor little consumers, we need that $25 over and over and over again to maintain the prices at this level even though we only make the money once.  Speculators don’t care though.  It would be MUCH cheaper for the American public to just hand Lloyd Blankfien $25 each ($7.5Bn) one time than to play this game but we all like to pretend it’s market forces and not evil speculators that are destroying our country because, if we believed that evil speculators were the root of the problem then we may question the merits of Unrestrained Capitalism and NOBODY wants that (well, nobody who counts, anyway).  

So oil prices will fly higher this morning as they try to make it to $30 per person this weekend (maybe $102 per barrel).  Keep in mind that’s JUST the ADDITIONAL money you are paying above $70 a barrel for oil, the number Rex Tillerson of XOM says is the TOP of the fair price range for a barrel of oil if it were not for SPECULATORS (his words).  So there’s nothing we can do about Goldman Sachs and the rest of their Bankster buddies taking Billions of free Dollars handed to them by the Federal Reserve (and, funny thing, it’s YOUR money the Fed is giving them) to jack up commodity prices and screw the American public out of hundreds of Billions of Dollars.  The Banksters are screwing the Global public out of $2.5 TRILLION Dollars a year just so GS can rake in their $40Bn in fees and trading profits, $24Bn of which flows down to the management and traders and $7Bn of which is net profit for the shareholders.  

Would you screw over 150M of your fellow countrymen for a $350,000 (GS average) bonus?  If not, you’ll never get a job on Wall Street, that’s for sure!  As I mentioned in last week’s post, the only thing ordinary citizens can do is make trades like our XLE trade, which is already at net $655 per contract, up another 10% since last week and up 445% since we initiated it as a Secret Santa Inflation Hedge at Christmas.  That’s what "ordinary" citizens can do to fight this BS but, unfortunately, ordinary citizens don’t have options accounts, do they.  In fact, most 401K programs don’t even allow them and certainly don’t allow short selling long puts – regulations are in place to make sure poor people can’t make money off rich people’s manipulation of the markets – that would lead to chaos!  

Florida GOP Lawmakers Live For Big Oil ImageSo sorry poor people, we really can’t help you because you keep voting in criminals to run the country and you put up with idiocy like the Supreme Court saying Corporations can make unlimited contributions to politicians because it’s their "freedom of speech."  I mean, THINK about it for a minute.  Phil Davis, private citizen, can only give $2,500 to an individual candidate and up to $46,200 to all candidates per year and up to $70,800 to PACs but Philco Incorporated can give unlimited amounts of money to politicians and PACs thanks to the Supreme Court.  And they are right you know.  All you poor people have to do is form your own corporations and you too can give unlimited amounts of money to candidates so, really, it is totally fair so stop complaining and give us $25 (which we can then use to make sure no regulations are passed to stop us from stealing another $25 from you – Muhahaha!).  

As I mentioned yesterday, this week’s action is fake, Fake, FAKE and we are waiting for the pump-job today to run it’s course and, as long as we remain below our 2.5% lines, we’ll be adding shorts into the long weekend because we think 75 will hold on the dollar and then, like Richard Gere in "An Officer and A Gentleman" the Dollar will have nowhere else to go but up.  Speaking of UUP, we will be liking them long again this morning and the Jan $20 calls are only $1.85, which is very little premium with UUP at $21.62.  If pressed, we can sell short calls against it but UUP was at $23.40 in January with the Dollar at 81 so that would be perhaps a 50% gain in the UUP calls if the Dollar goes up 7.5% but we’ll be very happy to take $2.20 (20% gain) and run on a good pop.  

Gains in the euro were tempered before a European Commission report today forecast to show an index of executive and consumer sentiment in the region slid to 105.7 this month from 106.2 in April. The single currency slid to an all-time low against the franc after Luxembourg’s Jean-Claude Juncker, who heads euro- area finance chiefs, said the International Monetary Fund may not release its share of aid to Greece next month. “Concerns about sovereign debt are spreading in the region, weighing on the euro,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co.  “The European and U.S. economies are slowing down.” The euro has weakened 2.5 percent over the past month according to the Bloomberg Correlation-Weighted Currency Indexes, which track 10 developed-nation currencies.

And before you go thinking that means we should run to the Yen, consider that "Fukushima Faces ‘Massive’ Radioactive Water Problem":  As a team from the International Atomic Energy Agency visits Tokyo Electric Power Co.’s crippled nuclear plant today, academics warn the company has failed to disclose the scale of radiation leaks and faces a “MASSIVE PROBLEM” with contaminated water. The utility known as Tepco has been pumping cooling water into the three reactors that melted down after the March 11 earthquake and tsunami. By May 18, almost 100,000 tons of radioactive water had leaked into basements and other areas of the Fukushima Dai-Ichi plant, according to Tepco’s estimates. The radiated water may double by the end of December. “Contaminated water is increasing and this is a massive problem,” Tetsuo Iguchi, a specialist in isotope analysis and radiation detection at Nagoya University, said by phone. “They need to find a place to store the contaminated water and they need to guarantee it won’t go into the soil.”  Don’t worry though, perhaps the "SUPER TYPHOON" will clean it all up this weekend….

  • How about Emerging Markets?  Nope:  "Emerging Stock Funds Post 2nd Week of Outflows": Citi Says. Emerging-market equity funds reported a second consecutive week of outflows as escalating concerns over Europe’s sovereign debt crisis dented demand for riskier assets, according to Citigroup Inc. Funds investing in developing-nation stocks lost an overall $1.03 billion during the week ended May 25, compared with net outflows of $1.64 billion the previous week, Citigroup analysts led by Markus Rosgen said in a report today, citing data compiled by EPFR Global. “Investors remained cautious amid lingering credit concerns in Europe,” the analysts wrote.  
  • China?  Nope: "China Drought Ignites Global Grain Supply Concerns": Analysts are closely watching the weather in China, warning any further supply shocks in the grain markets would fuel a further rally in U.S. corn and wheat futures, already stoked by harsh crop weather in the United States and Europe.  China’s consumer prices may increase as much as 5.5% from a year earlier this month, rather than 5.4%, citing Huachuang Securities Co. The brokerage raised its May consumer price index estimate because vegetable prices in southern China had large gains due to drought.
  • India?  Nope: "In India, Bad Loans Rising": State run banks in India, long seen as one of the key pillars in a healthy and regulated banking sector, are seeing a rash of bad loans on their books, the Times of India reported Friday.

So, as I said – the Dollar has no place else to go.  We may be a mess (50% Expect U.S. Government To Go Bankrupt Before Budget is Balanced) but we’re no worse than the others and that means 75 is just too low for the Dollar index and all the manipulative bastards who are using it to screw American consumers this weekend certainly know it so we will be Selling the F’ing Pops today and having ourselves a lovely holiday.

Have a great weekend,

- Phil


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  1.  Phil,
    Short Oil at 101???

  2. /QM is the miniNY Light Sweet Crude and it trades at $12.50 per 0.025 tick.  It is 1/2 a /CL contract.

  3. Oil Line
    R3 – 104
    R2 – 102.9
    R1 – 101.85
    PP – 100.73
    S1 – 99.68
    S2 – 98.56
    S3 – 97.51 

  4. Pharm / ARNA – could a catalyst move this one up to prior highs?  if so, what is timing?  just trying to understand where you stand on this one.  i rode it up to $7 and got out.  wondering if it’s worth getting back in.  Thx. 

  5. Phil/TBT,
    There has been a lot of talk lately about the likelihood that the Fed will unveil QE-3 in the near future.  In fact, one so called expert indicated that the Fed had no choice but to launch it.  He had a great analogy……stating…."the Fed likes everyone to believe that QE 1 & 2 where like training wheels on a bike" and have indicated that since the bike has begun to roll, that the training wheels can be removed.
    He states that this is total BS because " the Fed knows that QE are not the training wheels, rather the wheels…..and they can’t be removed without bad things happening".  I thought that was an interesting observation which I happen to agree with.
    So the question is, when QE-3 is announced, how will it impact TBT and selling of the TBT Puts?

  6. exec, I think all this talk about QE3 is smoke.  It’s just like the Greek / Portugal / Spain / Italy issue.  They trot that out to bring the market down and instill fear and they are now trotting out QE3 to instill greed.  It’s noise.  Although the European debt situation is real-  it’s just that as long as the Chinese and Germans are willing to bankroll the world, it doesn’t really mattter.  Extending and pretending can work for a long time.  QE3 on the other hand, while it may occur, at this point, any talk about it is pure speculation and the market will move a hundred different ways before it could be announced.  We will print for as long as we can get away with it.  And we’ll probably get away with it until there is social unrest in China because of the inflation it creates.  But before it happens, the Fed has to make it LOOK like we tried getting off the smack.  That will entail the market going down and TBT going up.  How much, I don’t know.. but they are probably willing to let rates go up 1% from the point QE2 ends.  Right now, by looking at the bond market, it appears that most of POMO is going there to drive yields down and squeeze the shorts.  I think today, they will shift that some and put money to work in the equity market to make it look like the US is doing friggin great going into the Memorial Day weekend.  I saw it happening right away in IWM/TNA after hours yesterday and now again this am.  They are going to goose her good today I think.  But by end of next week, we’ll most likely be heading back down.  Because this is all very fake and we’ve seen it many times before.

  7. Matt,
    Good points…..however… you really believe they will let this market fall before the next presidential election??? 
    I don’t think so.

  8. GMCR in 25KP
    The new position, long 20 Jul70p and short 20Jun80P uses $18380 of margin

  9. FAS/25K
    could you please lay out our today cover  rollover plan? In advance?
    It’s always more educational to know it and compare with what I think should be done, that just blindly follow directions at the last moment

  10. PP for today:

    ARNA/ter – if many of us could be so lucky.  $4 would be a gift.  $2 would be nice.  I am just under the table and dreaming…

  11. lol
    I got an email this morning with the updates:
    $25,000 Portfolio – Month 4 (16 weeks) 
    Last week we left off $81,138 (net of closed transactions) in our virtual portfolio and we made closed the following:

    10 EDZ June $20 calls at $1, sold for $1.75 – up $750
    10 USO June $39 puts at $1.28, sold for $1.85 – up $570
    20 UUP June $22 calls at .13 ($260), sold for .19 – up $120
    10 USO June $39 puts at $1.25, sold for $1.50 – up $250
    10 USO June $39 puts at $1.20, sold for $1.25 – up $50
    40 FAS May Weekly $26 calls at .70, sold for .40 – up $1,200
    20 USO June $39 puts at .95, sold for $1 – up $100

    It was oil week this week with 4 trades on the same strike.  Hey, when something is working…
    We closed net $3,040 worth of positions this week, running our realized gains up to $84,178 and our whole goal remains to close down the open positions, one by one with as little loss as possible.  Keep this in mind – if we can close our remaining positions without taking a loss (very doubtful), we end up with over $84,000!  
    The following are our remaining open (unrealized) positions:   

    80 FAS June $27 calls at net $4.66 ($37,280), now $1.05 – down $28,880 
    40 FAS May Weekly $26 calls, sold for .75 ($3,000), now .86 – down $440 – stop at $1.10 but, othewise, we just buy them back at day’s end or .75 or less if possible.
    40 FAS June Weekly $27 calls, sold for .60 ($2,400), now .47 – up $520
    40 EGLE Sept $3 calls at net. 65 ($1,400), now .15 – down $2,000 – rolling 20 to Sept $2.50 calls for .25, selling 20 June $2.50 ca lls for .30
    20 HOV Aug $2.50 calls at net $1.25 ($2,500), now .35 – down $1,800 – worth a DD for $700 more.
    20 C July $46 calls at .66 ($1,320), now .11 – down $1,100
    20 GMCR June $60 puts at net $2.55 ($5,100), now .06 – down $4,980 – rolling to July $70 puts ($1) for + .95, selling 10 June $80 p uts for $2 to pay for it.
    16 DIA July $127 puts at $7.50 ($12,000) – now $4.75 – down $4,400
    4 CCL July $42 calls at $2.15 ($860), now .50 – down $660
    20 XRT June $55 puts at net $2.53 ($5,640), now $2.10 – down $860
    20 XRT June $51 puts sold for net .66 (-$1,220), now .31 – up $700 – lets buy these back and go naked for the weekend. 
    6 POT Sept $60 calls at $3.15 ($1,890), now $2.15 – down $600 – let’s kill these, I think $55 is a top.
    7 GMCR June $70 calls sold for net $3.85 (-2,695), now $13.40 – down $6,685
    4 AMZN July $215 calls sold for $5.25 ($2,100), now $1.70 – down $1,420
    20 SDS June $21/22 bull call spreads at .27 ($540), now .23 – down $80

    We have $52,685 of unrealized losses – way up from last week, mainly due to GMCR.  We’re not bullish enough on the overall markets to roll them yet but we can look ahead and see that we can roll them to 10 July $80 calls, now $6.60, where we’d be essentially rolling the loss, not the whole amount.  
    It’s a net balance of $31,493, down $2,100 for the week but we improved 8,000 units of FAS by $1 so let’s hope it’s money in the bank and not money down the toilet!  We have some aggressive moves above but, on the whole, there’s no position there I don’t think we can work with.

  12.  Matt,
    I have 1 TF contract short at 825… It’s up to 835 at the moment.  I like it short again as the rut tests the bottom of the 50sma.
    Should I but back now?  Stay on the sidelines.  Or hold the short and double down if it comes up to the 50sma?

  13.  BUY BACK that is.

  14.  Is the RUT above the 50 SMA this morning??

  15. exec, it’s a looooong time before the next presidential election.  A lot can happen.  And let’s not forget what short term memories the American public have-
    peedlew99, that’s a Phil question.  My feeling, like I said, is that they are going to punch it pretty good today.  That is also how  JRW feels as of yesterday afternoon. 

  16.  shanghai down another -1% last night with asia up….brics trade like shit…but they just account for the growth in our sure that wont impact anything here…BUY! more qe…more qe…more qe…lets crush’em!

  17. peedlew99, just bumped off it.  I don’t think it will last though-

  18.  So, I guess if it’s DD this is the spot then.  Phil?  

  19. Good morning!  

    Sorry about 3 Alerts in one morning but a lot going on today.  The executive summary is we think 75 will be the bottom for the Dollar and we’ll see if we stay under the 2.5% lines and probably use those to go short with stops if the Dollar fails 75.  Also, I like the UUP Jan $20 calls, now $1.80, looking for about $2.20 on a run back up and, if not, we can sell some calls.  

    Oil is too dangerous to play today and we have lots of adjustments to make in the $25KP (2nd Alert), which you can always find under the Portfolio Tab as well.  Let’s watch 12,450 on the Dow as our bullish or bearish line for the morning and, of course, 1,333 on the S&P would confirm the bulls are back in charge:  

    The RUT is right on 835 now and that index has been FLYING so TZA June $40s at .65 make a nice weekend hedge as they were $2.10 on Tuesday so worth a risk as a cover to offset losses if you think you are too bullish.  I have no upside ideas as I just don’t believe it but, over the 12,450 line, the DIA June $124.75 calls at $1.25 are a fun play to pick up a little cash but very tight stops below the line as this may well be the top for them and, if not, I’d try again at 12,500, probably getting the puts for $1 then.  

    Friday’s economic calendar:
    8:30 Personal Income and Outlays
    9:55 Reuters/UofM Consumer Sentiment
    10:00 Pending Home Sales
    10:30 ECRI Leading Index 

    At the open: Dow +0.18% to 12425. S&P +0.2% to 1328. Nasdaq +0.23% to 2789.
    Treasurys: 30-year -0.2%. 10-yr -0.04%. 5-yr -0.05%.
    Commodities: Crude +0.44% to $100.67. Gold +0.4% to $1529.80.
    Currencies: Euro +0.72% vs. dollar. Yen +0.15%. Pound +0.14%.

    Apr. Personal Income and Outlays Income: +0.4% in-line with expected, +0.4% (revised from +0.5%) prior. Personal spending+0.4% vs. +0.5% expected, +0.5% (revised from +0.6%) prior. PCE core price index +0.2% in-line with expected, +0.1% prior.

    Michigan Consumer Sentiment came in at 74.3, much better than 72.4 expected so we should get a nice pop off that but I doubt it will last.

    The G8 communique to be released later will show the leaders agreeing the global economic recovery is becoming self-sustaining, but high and volatile commodity prices posing "a significant headwind." The group also promises to keep an eye on poor government finances. – Great…  IF you believe them

    The "flat, directionless, no volume market is a big achievement," fund manager Guy Monson says, given that "you’ve taken a machine gun to equities this year, we’ve had revolutions, oil at $120, the trauma of Greek debt, war, the nuclear and flood crisis in Japan and the end of QE2." The message: "If you’re patient, the markets will do surprisingly well." 

    The euro will survive, "but I would not bet on all 17 countries," says former ECB chief economist Otmar Issing. Issing says Greece wasonly able to join the euro by cheating on its finances and EU leaders have been "too polite" to enforce adequate sanctions. 

    Losing patience with ongoing countrywide protests, Spanish police start playing rough, using batons and firing rubber bullets to disperse demonstrators. Video here and here

    Clearly not part of the EU periphery, some French economic statistics are very "un-core like." French growth is currently clocking at just 1.6%, while its budget deficit is expected to hit 6% of GDP in 2012. Germany is motoring along at 3.6% with a forecast deficit of just 1.6%.

    Sharply higher vs. the dollar earlier, the euro has given back a chunk of its gains. Perhaps there is a bit of nervousness over a pending announcement following a meeting of Greek politicians to build consensus for more fiscal reform. Euro +0.7%.

    Bond titan, Treasury bull and Bill Gross nemesis Rick Rieder (BLK) explains why the end of QE2 won’t lead to a bond selloff: With the global recovery fully dependent on U.S. liquidity, any tightening should lead to heightened volatility, and a flight to "stable investments like Treasurys."Assuming that Treasurys are still seen as stable. 

    Higher energy costs helped push Japan’s core CPI up 0.6% in April, technically ending 28 months of deflationary readings. However, government officials warn deflation is hardly over, as prices were almost unchanged if statistical and earthquake factors were excluded.

    Market booster this morning:  Citigroup upgrades European banks to Overweight, noting a lot of bad news is already priced into the sector and the near-term risk-reward for European banks has improved. Among the broker’s top picks: Credit Suisse (CS), HSBC (HBC) and StanChart (SCBFF.PK).

    And this:  Not-yet-released draft legislation from the EU could give European banks a break on some Basel III rules by allowing them to count more of the capital in their insurance subsidiaries and letting them issue hybrid capital for longer than expected. The moves would ‘disproportionately’ benefit Lloyds (LYG), SocGen and BNP Paribas.

    "You could drive a coach and horses through that exception," says an analyst of draft legislation for Basel III requirements which would allow EU banks to count more of the capital in their insurance units, paving the way for lenders to increase their holdings beyond the current 10% limit. European financials are up strongly today. 

    Fitch cuts Japan’s credit outlook to negative from stable, saying already high government indebtedness will come under more pressure from the cost of post-earthquake reconstruction. The yen actually shot lower on the news, but remains +0.3% at ¥81.03.

    Chinese shares, -1.0%, close lower for the 7th consecutive session, bringing the cumulative loss since the April high to more than 11%. Tudor investment is among a group of hedge funds bullish on Chinese stocks, loading up on call options on FXI during Q1. 

  20. Here is an idea… 
    Maybe we can also get bailed out like Portugal then!

  21. Yay – has the earnings calendars again but you have to register.  

    Oh no, hosing numbers sucked – so much for Michigan Sentiment – those people are idiots!  

    Pending Home Sales are off 11.6% vs up 1% expected by idiots.  

    Down we go – loving TZA!  

  22. Oh sorry, that was down 11.6% for the month, down 27% from last year.  8(

  23. Phil/Housing/Idiots
    For god sakes……where do these so called experts get their credentials.  Wouldn’t it be nice to have a job that you could be completely wrong and still keep your job.
    There going to have to dump the dollar to keep this market from falling.

  24. Good Morning!
    Phil, April housing was not a good compare to last year – thats when the govt. stimulus came to an end…..

  25.   pending home sales -11.6% in april…wow that is bad…i dont the crash saw a number that bad.

  26. Oil/Peedle – Same as yesterday, short on any cross below a .50 or .00 line with a .05 trailing stop that expands to .10 as you go past the first .25 and to .15 when you pass .50, etc…  This is STANDARD for shorting futures.  

    QM/Edro – Thanks, I thought it was pennies – shows how little math I do when watching the trades!  Maybe I should trade one contract for a while so I can remember what they all are…

    Wheels/Exec – I agree, the Fed can’t stop buying Treasuries UNLESS they made a deal at the G8 to have someone else pretend to be interested for a while.  I think they WANT to stop but they just can’t.  My usual analogy is the Fed is holding a hose and filling a pool which has a leak.  Our leak is $140Bn a month and the Fed is using a $120Bn a month hose and hoping for $20Bn worth of rain to do the rest.  Unfortunately, the data this month shows the leak is getting bigger and the Fed can say they will stop filling the pool but we’ll all end up with no pool to swim in very quickly.

    10:00 AM On the hour: Dow +0.28%. 10-yr +0.11%. Euro +0.68% vs. dollar. Crude +0.21% to $100.44. Gold +0.68% to $1534.10.

    May Reuters/UofM Consumer Sentiment: 74.3 vs. 72.4 expected, 72.4 preliminary, 69.8 in April. Expectations 69.5 vs. 67.4 preliminary, 61.6 in April. Current conditions 81.9 vs. 80.2 preliminary, 82.5 in April.

    April Pending Home Sales: -11.6% to 81.9 vs. -1.4% expected, +5.1% prior. "The magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it’s just a one-month aberration," NAR‘s Lawrence Yun says.

    Amazon (AMZN) may have sold 200,000 copies of Lady Gaga’s "Born This Way" album in this week’s 99-cent promotional offer, meaning the retailer would be taking a loss of ~$1.2M – still a big win, insiders say. "Amazon would have had to pay millions to get a [traditional] endorsement from Lady Gaga… They get new customers and they advertise their new [Cloud Drive music] service."

  27. Guys!  Those are just pending sales.. who knows how many of the previous month’s pending sales actually went through-  Maybe a lot were washouts and maybe most of this months do go through- then we’d be in a situation of actual sales rising month over month.  Very tricky number to read a lot into.  Do we really think they are going to tank the market before the unofficial start to summer?

  28. Phil, TOS paper acc is delayed 20 mins.  might as well be trading with newspaper.  do they charge for live quotes I wonder?  Guys who use it help me out here.   Looking for a cheaper alternative to Reuters ($700 per month and shit charting).  

  29. Phil/Pool,
    So if they do go with QE3… do you think it will impact TBT?

  30. Phil / EDZ – i’m in june 20 call down about 50% since may 20th.  stay put or roll?  also, i’m in SDS 21 call down about 50% since may 17th.   thanks. 

  31. I still think all the talk of QE3 is just that.  If they do have a QE3, and our dollar goes down to 72 or 70, you will easily have oil at 115-120 a barrel not too mention all other commodities including food would go higher, all without wage inflation.  That would pretty much end the economy in a few months.  The high oil prices we have now have already had an effect and will have more of an effect the 2nd half of the year as the earnings will reflect lower profit margins coupled with lack of consumer spending which is not in the current earnings yet.   The whole country will be like Cleveland as shown in this video:

  32. ‘Scuse me if this already known:
    "…Without notifying the public of their transactions, the Feds doled out money to three banks at interest rates as low as 0.01 percent during the 2008 financial crisis, Bloomberg News reported Thursday. Goldman Sachs, Credit Suisse, and the Royal Bank of Scotland EACH reportedly received at least $30 billion. Though the news is particularly upsetting to taxpayers, who funded the move, some experts say the stealth was necessary at the time in order to not spook the markets."

  33. Phil, 
    On FAS, I am long 40 June 27′s and short 30 today’s 26′s (sold for .50)… looks like they are giving up some ground from the big gain this morning. Wait a bit to see if they hopefully come down?  Since I was forced to sell 30 would you do the roll to next week’s 27′s on the 30? Perhaps add the other 40 or at least 20 FAS contracts at this point? (again I have only 1/2 the amount as in the 25K).

  34. i sent something last night about the bonds i will repost as i know alot of you are i am i longer term..i realize my time horizon is unlike you ninjas but i post to contribute feel free to ignore..btw in vermont this week end gas is under four..i may gas up the tractor!

  35. lapper
    TOS paper trading My paper acc runs on real time trust if you have a resonable good real acc with them they dont mind switching.

  36.  Lapper, you have to fund a regular TOS acccount to get the paper trading current.  i think the minimum is 2 or 3k, but that’s still cheaper than $700/mo.

  37. Phil / CSCO – i’m in Jan ’12 17.5 call at $3.56 back in Dec.  what’s my best path here?  roll down to the 16s for .64?  Thx. 

  38. last week or the week before i  posted 9 or ten reasons i liked the treasuries.. i think they are still valid add another couple ii think the failure to raise the debt ceiling today is specifically limiting the supply of t bills and of course the fed is buying without regard to buyers are getting forced out further on the curve..month end stuff like re balancing should push em up higher with a boost from weaker than expected ec data over coming sessions..

  39. Banks / Flips – Was published yesterday. And the entire time, these guys pretended that all was hunky-dory and they didn’t need any money from the government! If you lend me $30 billion at  0.01%, I should be able to pay myself so nice bonuses. But it’s just the way I roll. These guys probably don’t think like that….

  40. The 30 billion didn’t even come close to covering their bonuses.  Top 5 banks last year received about 120 billion in bonuses.

  41. Easy money:
    They’ll make more money than Google on these Android phones! 

  42. Phil, 
    On XRT I am long 20 Sept 53′s (net 3.25) and short 10 June 53′s (net 1.20)  (I took out 10 yesterday for .85). Would you just take out the remaining 10 short’s or actually invest to roll up on the longs? 

  43. Let the market fall/Exec – They "let" the market fall in ’08, didn’t they?  

    GMCR/$25KP, Edro – It’s only selling 10 short puts, not 20.  Also, keep in mind that the $25KP is not meant to be a portfolio for someone who just has $25,000, it’s a risk portfolio allocation out of a $250,000+ total portfolio so margin is not supposed to be an issue.  

    FAS/$25KP, Lol – We had a 1/2 cover of the weekly $26 calls, which stopped out at $1.10 (.35 loss) and now we have just the 1/2 covers of the next weekly $27 calls, now .60, which is what we sold them for.  So there is no plan – that’s just our position over the weekend, 80 June $27 calls covered with 40 next week $27 calls.  

    50 sma/Peedle – I only look at Stockcharts for that stuff.  As to DD question – how on earth would I know what you are referring to?  I assume it’s the RUT but we said 835 is our below point.  I sure wouldn’t go DD so quickly, what would be your plan at 840?  

    Fudge/StJ – It’s all a joke but, then again, what does it matter when the money is fake too?   And you were right about the Yen, they jumped from 81.3 to 80.9 on the Fitch news – isn’t that INCREDIBLE (as in NOT credible)?

    RIMM/Step – Those lawsuits are often a good time to buy.  

    Oil looking at failure if they can’t hold $100.25 (and, of course $100). 

    Euro/StJ – Thus Germany finally wins the war…

  44. Bonues / Rustle – I say we get $30 billions from the fed at 0.01% and ask Kojo to make us 10% a month on 20% of that and we can all retire nicely! 

  45. Phil, I own quite a bit of PFE that I bought at $15.50 and have never covered but am now feeling the need. Your thoughts on the best way to do this?

  46. NFLX..  I guess the dive to 261.50 was the correction..   so frustrating….  guess 20 points in 2 days is not worthy of a breather yet…

  47. Germany / Phil – Only a battle Phil…. They should enjoy their day in the sun! Remember, they have very little fiscal flexibility (they already collect 49% of GDP in taxes) and face a tough demographic future. I guess they are the least worse for now. 

  48. the f n momos make me sick! they can’t ever go down and stay down!

  49. Phil, sold the JUN 18 FAS puts a few days ago for 1.20, trying to cover them at .60 today.  Do you think I should hold them til Tuesday knowing that some time value will be knocked off?  Just don’t want to chance it with a 50% gain in case we do open up down big on Tuesday.

  50. Is anybody making the rolls on the 25K? I see 0 volume on both GMCR 60 puts and the 70′s to roll to… 

  51. Dollar dump/Exec – In effect now, Dollar struggling to hold $75.20.

    Housing/Angel – Yes but not so good compared to last month either.  

    Tank Matt – Ever hear of "sell in May, go away" – Last chance!  

    75.15 – this is how the game is played….


  52. billions/StJean
    If we got one billion, we can get leverage from the banks of 10 to 1 in Prime Brokerage agreement and be real conservative knowing that a 2% return for the month can give you a 200 million dollar profit with leverage.

  53. do you think the tornado situation will have any positive effect on home building? Probably will on supplies at least. mobile homes?

  54. IWM
    84.49, 83.86, 83.67R1, 83.27, 82.67PP, 82.39, 82.14S1

  55. Shadowfax
    Are you ahead on your IWM based trades.  What are you trading?  TNA/TZA?
    Would you recommend it?

  56. morxlntway
    I doubt it will make a dent except locally.

  57. Meanwhile, NatGas up close to 4% today…. $4.53 was a retracement line. Next stop, $4.65. 

  58. Right on schedule with the dollar.

  59. TOS/Lapper – I have no idea what they do with free traders, I have a live account.  At $700 a month, you could just drop $10K into an account and go live at TOS.  


    QE3/Exec – It depends if they do the same thing or if they push money through in a different way (they could do asset purchases to liquefy banks) 

    75.10 – what a joke….

    75.05 – not even time to read another question…


  60. For lots o’ fun in this market of rolling the dice, how about a nice little play on SGEN.  SOMEONE (I will play too) just bought Sept 30cs for 20c.   Why not do the same and sell the July $12.5 Ps for 20c for a free roll.  I love Vegas, and I love SGEN.

  61. FWIW, switched audio on CNBC to Sirius radio on-line, a couple of second delay but commercials not as loud or irritating

  62. Well, here’s $100.90 on oil again so it’s our shorting spot in the Futures with a DD at $101 for a $100.95 avg and risking a .10 loss with a stop at $101.05.  

    For $25KP, 20 USO June $39 puts at .80 – weekend hold. 


  63. edro00
    Right now watching 83.86 and the dollar,  R2 is 84.16 but a weak point at most. 

  64. FAS/Ouch:  My alarm didn’t go off this morning so I just woke up to find FAS flying.  Seems it only does that when I’m fully covered.  So, my plan was to buy back the short 26s this morning over 1.10.  Well, now that they are 1.60 I think I’m screwed.  Should I just take the hit or roll to next week 26s and be fully covered into the weekend?

  65. US cds has moved up meaningfully last 2 weeks… i think that and really bad US data are masking euro weakness…resulting in trader complacency as they incorrectly think market has to go up with euro gains..

  66. This weekend. SVNT will be a new play, buying the stock and selling the Dec $8 C/P for 2.45 for a whopping 30% if called away.

  67. EDZ/Terra –  You can roll out to the July $19s for +.85 and sell the June $20s to some other sucker for .40 so you pick up $1 in position and one month in time for net .45.  

    Cleveland/Rustle – Or maybe Detroit.  Hey, as long as the markets are going up it’s all good, right?  

    Fed/Flips – Yep, good stuff. 

    Holy crap, someone just spent an incredible amount of money to prop up USO as it was about to fail $39.75!  I’d love to say that proves they are going down but whoever this is has a lot of money and is willing to spend it to keep oil from failing this level.  Still, seems desperate and doesn’t change my weekend outlook (to keep shorting).  

  68. Those SPX July 1320/1300 P spread are 5.75.  I got out on the reverse for $7.50, and am buying them again.  This is a directional cover and I buy in increments of 1 or 2 for easing into.

  69. TLT continues to hold its ground, even with the other baloney, shenanigans,  poop, etc. going on….

  70. i will give you the response i got from one of the most famous and successful interest rate traders: 
    what track record to the CDS have that would make them credible to you? Does it mean nothing that the entire US Treasury market is price to reflect not the slightest worry? Why would you put your faith in the CDS market instead? On what grounds?

  71.  more form trader x:
    "many observers see to have a fetish for CDS as though they were some kind of infallible crystal ball. where’s any rigorous evidence for that?"

  72. " there’s a presumption that default risk a major driver in treasuries. it’s just one of many risks. the least one. Perhaps the most black swan-like. But so what? Why assign long shots power they dont deserve/"
    and fwiw he and i shorted treasriess at the same time for different reason and were just as the 138 level..

  73. wow shouldn´t have sold my longs yesterday…..same old story, seems like we will never break down those support levels we been testing this year….@ Phil, dont you think we might go all the way on our range levels short term????

  74. LOL – He blew it already!  

    FAS/Amatta – Wow, you are in a position you specifically asked about and I specifically said was a bad idea?  Why is this not shocking to me?  Also, I had said we need to stop out 100% of our short $26 calls at $1.10 yesterday and I sent out another Alert this morning and Edro posted a copy of it at 9:36, when those calls were $1.10 but you STILL didn’t do the right thing.  Lucky for you, we are probably going to sell off into the close but, if we don’t, all you can do is eat the loss and roll up to 1/2 the next week $27s to stay in some reasonable ratio but you already blew all your potential gains from this week’s adjustments and once again I will tell you that you should NEVER trade these kinds of positions  - you are not a day trader.  I am not a major league baseball player – if I tried to go up to bat at Yankee stadium I would be 0 for 100 or maybe I would get lucky and make contact and a guy would miss the ball and I’d be 1 for 10 BUT – I am smart enough to know that this is not something I will succeed at and I instead try to do things I am good at as it’s far more satisfying.  

    And wheeeee on oil!  

  75. bonds are going higher than anyone thinks..depite the fact they are priced to the music of fantasia

  76. Wow, — they really jerked that site around and it’s pretty messed up now. Going to take awhile to get it all sorted out. They say you get the earnings calendar for free but you can’t get to it.

  77. Phil, 
    To clarify, I did not do the trade I was asking about yesterday (I just left it alone as you recommended).  
    My question this morning was that I was expecting, as you point out, that we would be selling off into the close (I didn’t expect the huge runup, that just started reversing though). So my question was just if I should cover with 20 or the 30 I had and if I should add some more longs (as I have 40 only).

  78. CSCO/Terra – Best path is never own naked calls.  Failing that, try to take action before you are down 75% next time.  You can make up a $2.50 loss (hopefully) by rolling to the 2013 $12.50/17.50 bull call spread at $2.70, which will make $2.30 of your money back if CSCO holds $17.50 which beats the hell out of needing $21.06.   If you REALLY like CSCO, you can also sell the $15 puts for $1.85 and drop the net (including your $2.70 loss) to $3.55 on the $5 spread so there’s even a $1.45 profit in there if they hold $17.50 and, if you don’t think CSCO can take back $17.50 by 2013 – then why the hell would you be putting more money into an open, naked call?  

    74.99 on the Dollar and they still can’t save oil!  This is fun!!!

  79. Phil, would you be buying Dow puts now, or wait to see if there’s a stick around 2 or do nothing and wait till the open on Tue?

  80. pharm-
    Nice spx play – how do you adjust it if spx goes down

  81. Phil
    I show money flowing out of all indexes, is the volume so low we go up?

  82. Dollar support is in here.  Next is 74.2.

    As for FXE, what a joke.  Shorting again.

  83. Good morning !!


    Well, you can’t say I didn’t give you the playbook  8-)

  84. edro – at this point, I don’t.  I think we blow through 1300 by July, thus I want it all…..

  85. jabo / sick — keep an eye on LULU if you want a MOMO going down.

  86. MSFT/StJ – That’s very interesting.  

    XRT/Amatta – We’re going naked over the weekend in the $25KP, I think it’s a good strategy because everything could blow up over the weekend and, if not, then we can cover and roll.  

    74.92 – Europe held up 1% into the close but all down from the open.  Euro at $1.429 and Pound at $1.649, both straight up since EU close.  80.73 Yen to the Dollar so everything possible that can be done to trash the Dollar is being done right now and all of it began at 11am, just as Europe was winding down.  I think this is way oversold and I also think that $1.43 and $1.65 are not zones we’ll be crossing so that means 74.90 should hold on the Dollar and the S&P is right at 1,333 and the Nas is just under their line at 2,800 so it’s all about the RUT and whether they can hold 835 but I"m betting not.  

  87.  Phil,
    I see that you’re still spoon feeding your very time consuming client.  Is this someone like your wife’s brother or does he have an incriminating photograph of you?

  88. Cramer was bashing LULU the other day

  89. b1ll / CNBC — try the TOS widget, no commercials! I’d have it muted otherwise.

  90. Pharm,
    What is your trade for FXE – Just selling calls or are you buying a bear put spread.

  91.  Pharm – thanks for the SVNT play, that looks like fun. Decent fill on the stock and the calls, not on the puts yet. Also a big f^&* yeah!! on the Queen song! 

  92. Pharm,
    I like buying the Jun 142/141 Bear Put Spread and selling the JUN 146 Calls naked for a net 0 with an upside of $1…
    What say you..

  93. Pharm - I bought ARIA at 3.51. Wondering about taking half now. Thoughts?

  94. Phil -  have you looked at SEAC this AM as a buyout from Arris? I think something is cooking under the radar in the 15-18 $ a share price range after looking at all the numbers this AM  ? Any thoughts on an entry,  spread going out a ways or wait and see what develops next week ? Pricing could be very different come Tues on up side? Curious, your thoughts

  95. Why will there not be a sell off in Treasuries when QE2 ends?
    Think about it this way. With QE2, the Fed isn’t just buying Treasuries; the Fed is creating an incredible recycling of global reserves that goes into every financial asset class. With so many currencies pegged to the dollar, we functionally exported this monetary policy throughout the world and created extraordinary growth in global liquidity. From Sept. 1 until now, there has been about $10.5 billion a day worth of liquidity coming into the global markets — a staggering amount.
    So what does it mean for QE2 to go away? When liquidity goes away, you often see more volatility. And that usually creates demand for stable investments like Treasuries. So I don’t think we’ll see the sell off that some people predict, and prices and yields should stay in a stable range.

  96. Amatta, you didn’t do the trade and you are asking Phil how to fix it?  How about you save those time wasters for when the market is closed and let Phil do his job?  

  97. is europe open on Monday?

  98.  Hey All, vacationing next week, so just locking in my long term positions. Have accumulated a full position on RIMM August calls now, got some good prices since it retested the 52 week low (42.50) after we entered and bounced off it. Nice price action at these levels. Anyways, will hold for now, and hopefully when i come back RIMM will be $2-3 higher, allowing us to cover with the June or July calls and eventually roll into (hopefully!) a FREE August call spread! :)

    Still holding ARNA with you dreamers out there. Still love Lorquess….Sold some GLUU in the past couple days (probably too much, but it has been on a crazy ride, up 70% in 2 weeks!). Still holding full position in GOOG LEAP calls. Sadly, GOOG is sitting near the bottom of its range. Oh well. 
    good trading all

  99.  Anyone watching XLF?  15.72  Looks to be testing former support line.  Could make a nice short if it fails this test.

  100. PFE/Rpme – You can just sell the 2013 $20 puts and calls for $5.10 and that drops your net to $10.40/15.20 and don’t you wish you had bought 2x at $15.20?  If you get called away at $20, that will be great as you make net $9.60 and, if not, rolling to 2015 whatevers and collecting those dividends. 

    Oh my gosh, NFLX is not up!  Sign of the Apocalypse…


    FAS/Rustle – It’s a gamble, we could gap either way over the weekend so you are taking a 150% of your original bet and risking it on a coin flip that could wipe you out or might make you 1/3 more (up 50% more) – is that a good risk/reward?  


    GMCR/Amatta – I see just transaction on the $70s at $1.13 to $1.15 but it hasn’t hit the $1 yet so hopefully people are patient, which is something you should learn to be. 

    $200M/Rustle – Screw that – let’s just buy $799M worth of oil contracts and pay $1M to a few Nigerian kids to shoot some guns at an oil platform (make sure they do it on Sunday night, just ahead of the Nikkei open).  Then, at the open, we spend another $100M buying futures contracts and then, when the EU opens, we buy another $100M in futures contracts and, once other buyers come in – we start selling like crazy.  Should be good for a lot more than $200M and, if not, we’ll just tell the Fed we need more money…  (don’t actually do this by the way, it’s illegal!)


    Tornadoes are the sworn enemy of the mobile residence Morx….

    SGEN/Pharm – Sounds like fun! 

    FAS/$25KP, Daveo – Same deal as Amatta – you are screwed if you didn’t stop out but it’s a 1/2 cover at .75, now $1.45 and the roll is to the next week $27s, now .75 so the you are essentially just in that 1/2 cover that you sold for net .05 – not a tragedy and the longs are up .40.  I would not do the roll until later, we may get a big sell-off near the close or you could make the new sale at .75 and put a stop at $1.55 so a .80 roll at worst but maybe you get lucky and we sell off (on Dollar buying into the weekend) and FAS drops sharply and you collect on both ends.  

    CDS/Angel – We saw that yesterday and I think everybody’s weakness is masking everyone else’s weakness.  It’s like playing flag football at an old age home.  You are right about CDS, gave little indication of the crisis until it was already happening.  

    Nice on SPX Pharm! 

    All the way/Asaenz – I think this entire week’s gains will reverse in a puff of smoke because it’s all been based on knocking down the Dollar, which makes sense in a vacuum, but not when the alternatives are Yen and Euro and commodities that people can’t afford to buy (not speculators, users).  

    Earnings/Rain – I got it.  No more colors though, that I will miss and no guidance.  Old one was way better. 

    FAS/Amatta – I think the 1/2 cover is correct going into next week even though I am concerned that we crash and burn next week.  You can’t always play what you THINK is going to happen, you have to play the percentages most of the time.  

    And what Bruce said! 

    Dow volume just 55M at 12:30 – very low.  50M at 11 is normal and 20M per hour after that (until the last hour) for a low day.

    DIA puts/Rustle – I’d go for a scale in.  The TZA $40s are still .65 and I like those better than the DIA puts as they are somewhat protected by a low delta but TZA can really fly up when the RUT dives and those should move well.  

    Money flow/Shadow – Smart money is running away while retail buyers are dawn in like moths to a flame as the weak Dollar drives the indexes higher.  Think about the game from GS’s point of view.  They chase people out of commodities with a bear call 2 weeks ago and that strengthens their dollars and they start buying commodities.  Then they make a bullish commodity call this week and the stuff they bought the week before flies up and then they float QE3 rumors to weaken the Dollar and they start trading in their commodities for weak dollars and now that GS is back to holding many, many weak Dollars – what do you think they will do next week?  Downgrade Europe!  They will do something to strengthen the Dollar and weaken the next thing they want to buy….

    Right on the money JRW – I hope you had a little time to play it while on vaca.  

    I know CSL, I need to be meaner….

    Looks like we’re flattening out now.  VIX at 15.65 because this market isn’t volatile at all, I guess…

  101. Peedle/XLF – I think you mean resistance. right?

  102. Peedle/XLF- My bad. I should have looked at the chart. It’s testing support. Might bounce.

  103. FXE – Look at the 136 Ps fly off the shelf in June and July.  I am buying the July 140s.  I don’t have the margin, but selling the July 148 Cs would also be fine.  OH resistance is 143, so a 1/2 entry at most to start JIC they move it up a bit more.  Scaling in is the key…..


    ARIA/BDC – why not sell some calls on them to collect the premium.  June $9s for 40c on 1/2 sale gets you a bit more $$ in UR pocket.  If you like, sell the $8 Ps as well.  That should hold. Oh, and for new ARIA entry, I like buying stock and selling July $9/8 P/C.


    SVNT – UR welcome.  Let’s all that they get bought by an EU or Japanese Co. 

  104. Um, AMAG is going up…at 50d MA, 200 next?  Hope some got in, as my price did not fill…..

  105. Phil or any one I am a bit lost on the following question of CSCO "CSCO/Terra – Best path is never own naked calls."
    are we talking about a long or a short Jan 12 17.5 call thanks

  106. Phil / EDZ   It’s back to where we got in and made money last week.  Should I buy and hold through the weekend?

  107. FAS/Phil
    I already took the 50% profit and covered at .60 minutes after I asked you that.  Could’ve waited another 10 minutes and got it .10 cheaper, but didn’t want to take the chance.  Went into the puts for a quick bounce to begin with because I saw FAS looked oversold.

  108. Phil / $ — I like your salted $ quotes! :)

  109. The VIX is one f’ed up instrument – look at the put side (bid/ask):
    June 15 P –  .10 / .15
    July 15 P – .20 / .25
    August 15 P – .25 / .30
    Sept. 15 P – .15 / .25
    Oct. 15 P – .10 / .25
    Nov. 15 P – .15/ .30
    Same with the 16 P. And the VIX is at 15.76 now… This is all phony!

  110. SEAC/Goob – Nice niche player and probably a good acquisition for AARS as they should have the cash-flow to pay off the transaction but they already popped to an ATH – it’s not the kind of thing I would chase.  If you want to arb them, then why not just do an Jan $7.50/10 bull call spread for $2 and sell the $10 puts for $1 for net $1 on the $2.50 spread and, if they get bought out over $10 – you are up 150%.  If not, you own them for net $11.  

    Treasuries/Kustomz – I don’t see how Treasuries can hold up without the Fed unless the G8 all comes in and goes on a buying spree – which they might to make it look like QE2 worked so they can push it down the throats of their own countries.  All that liquidity causes inflation and inflation causes rational buyers of long-term notes (not the Fed) to demand a reasonable rate of return for paper.  There is no logic to saying that people will just buy 3% paper under 5% inflation in a weak currency just because it’s "safe".  That kind of safe is going to push gold to $2,000 long before it keeps TBills under 5%.  

    LNKD Aug $90/85 bear put spread at $3.40, selling June $95 calls for $1.85 is net $1.55 on the $5 spread that’s $3 in the money and you can hopefully sell another $1.55 call in July for a free ride.  

    Europe/Lapper – I think so.  

    Good RIMM plan Hanna – Have a great vacation! 

    XLF/Peedle – I expect good old $15.50 at the close.  

    CSCO/Yodi – They were calls he bought.  If he sold them he’d be much happier.  

    EDZ/Tusca – I think it’s good weekend protection, just like it was Monday with a quick win.  Now we have a reload and you are right, let’s call that 10 EDZ June $17 calls at $1.55 in the $25KP.  

  111. Phil / Briefing — That link just kicks me back to the home page. I guess you need a subscription. Doesn’t sound like I’m missing much though if they don’t have the guidance and colors. Guidance was key for me. Anywhere else you know to see a list of up/down guidance at a glance?
    75.03 on the tick chart :)

  112. EUR/USD chart from SHJ

  113. Phil/Conspiracy Theory GS
    You cynical b*st*rd!!! 
    How dare you accuse the good people at GS for intentionally leaking bogus rumors so as to complement their portfolios.  They would place themselves in front of a bullet for to protect their clients.  Their fingers bleed from their relentless effort to squeeze every penny out of this market for Grandma Jones and Uncle Albert.
    Do you really believe that these hard working Americans at Goldman would deploy such underhanded tactics…..with the sole intent of deceiving their loyal customers for there own personal gain????
    You should be ashamed of yourself for slandering the "Angel" like professions at GS and attempting to tarnish their impeccable record.

  114. I’m guessing the S* word got me moderated.

  115. LOL exec…u go!

  116.  @Felipe
     "….They will do something to strengthen the Dollar and weaken the next thing they want to buy…"
    Think taking a long position in the October DXY would be advisable?

  117. Phil/VIXX – what about June 22/25 bull call spread – $58 on a possible $300 per contract if it goes to where it was in the first week in May?

  118. Phil, sell 5 June $205 AMZN against the 4 July $215 still outstanding from our previous spread?

  119. FAS/Rustle – Isn’t that much more relaxing?  

    Thanks Rain!  On Briefing, you have to register and, unfortunately, I don’t know a better site for glancing over earnings. 


    VIX/StJ – Keep in mind one month has nothing to do with the other – they are all individual bets on the outcome on that date.  

    LOL Exec!  You do Lloyd proud.

    DXY/Flips – No investing in radioactive currencies. 

  120. IMUC – can’t remember if someone here asked about them, but I received an email via PSW for looking into the company and blogging on them.  IF you like DNDN, then this company has a similar program.  ONTY and NWBO also are in the space of making ‘vaccines’ for cancer.  They are an OTC stock and don’t have much cash left so I think putting an alert on them at $1.50 is good.  No options.  They will have to raise more money soon, hence my 1.50 target.

  121.  One day, CMG and NFLX will be great shorts. Hoping maybe both at $300? Crazy….

  122.  Phil – speaking of currencies, do you suggest keeping the cash balance in my accounts in USD or is there something safer? I thought about putting half of it in CHF a while back and am kicking myself for not doing it. Obviously this is not the best time to switch with the DX down, I’m just curious about your thoughts in general. CAD maybe?

  123. exec
    Love thee Broker, it will come back to you!

  124. Phil / Stick    Would you wait and see if we get the usual 2.00-2.30 stick before placing the EDZ and TZA weekend plays.

  125.  Kurt:  The Chinese are apparently buying CAD.  I’m not sure that makes it a good choice if commodities tank.  There’s an argument that the dollar is the most undervalued for now.  CHF is always a possibility. Sweden is probably a decent choice, although lower liquidity means larger bid/asked, you have to be patient and scale in. My take, anyway.

  126.  Kurt P.S. — CNY — the renminbi — is pretty stable, and there is some chance China may let their dollar peg slip a notch to cool domestic inflation — the only currency with upside potential, rather than just protecting the dollar downside. Again, the dollar is pretty cheap down here, so timing matters.

  127. RIGL – selling the Sept 7.5 Ps for 50c or better.  Offered shares at $8 yesterday, and they have an NDA on the way with AZN for arthritis. 

    Pfizer’s decision to cut all allergy and respiratory drug development work came as good news for Rigel Pharmaceuticals, even though it meant the end of the two developers’ pact for allergic asthma drug candidate R343. Pfizer bought into Rigel’s portfolio of inhaled small molecule syk inhibitors in 2005, and spent the last several years investing the time and money necessary to develop R343 into a mid-stage candidate. Essentially, notes Xconomy, Rigel "got handed a big gift from Pfizer."
    R343, an inhaled syk inhibitor designed to block the major pathways triggered by asthma, is now Rigel’s most advanced in-house project. The company announced yesterday that it was offering 13.3 million shares of stock for $8 each, for gross proceeds of $130.4 million. The funding will support mid-stage development of the drug. Rigel’s other pipeline candidate is a Phase III oral rheumatoid arthritis drug called fostamatinib; partner AstraZeneca is closing in on an NDA filing following strong Phase III trial data.

  128. Phil – Thnx, I was thinking something similar and will wait for further developments until close or Tues? Both parties are represented by banks so I think this is gonna happen and final price will be above 12.50 to 15 IMO. SEAC has considerable cash to sweeten deal for any suitor as a kicker and products are starting to come on stronger with the tech/phone thingy being all the rage. Not much discussion on it  ?

  129. 12:00 PM On the hour: Dow +0.53%. 10-yr +0.13%. Euro +0.89% vs. dollar. Crude +0.02% to $100.25. Gold +0.84% to $1536.50. 

    1:00 PM On the hour: Dow +0.47%. 10-yr +0.08%. Euro +0.89% vs. dollar. Crude +0.15% to $100.38. Gold +1% to $1539.00. 

    "This doesn’t end in June – it peaks in June," says RBC’s Eric Lascelles of the Fed’s easy money. "Policy will be more stimulative in July than it is today," and will remain so for some time. 

    Poor housing numbers, weak consumer spending trends – the list goes on, yet the markets move higher. Ignoring warning signs has been a time-honored tradition on Wall Street, with too many recent examples to list here. It’s called the "see-over" trade, but others may see it as nothing more than an "I see nothing" trade. 

    Greece stocks give up gains and move sharply lower following failure by the ruling Socialists to convince opposition parties to support more stringent fiscal austerity. Bond yields, however, are falling, suggesting markets are not necessarily any more worried about imminent default.  Or that they are being manipulated to put on a happy face….

    The euro is back at its highs of the day despite the fissure occurring in Greece, where opposition leader Samaras says his party will not be blackmailed into accepting deeper austerity. Consensus is nice, but the euro looks to be taking heart from the ruling Socialist’s apparent plan to pass the cuts on their own. FXE +1.1%.

    "We are supporting an economic program developed by Greek authorities that does not contemplate debt restructuring," says acting IMF chief John Lipsky, adding that the IMF, EU, and EC have their people on the ground in Greece assessing the situation.

    Not participating in the rally against the greenback this week is the loonie, which remains at a 2 month low. Recent comments from the BoC have taken the idea of imminent rate hikes and maybe even a bias towards tightening off the table. FXC -3.1% in May.

    Automakers will report May sales after coming back from the Memorial Day holiday, but it won’t look pretty, as ripples from gas prices and supply-chain disruptions come together in the U.S. market. Many analysts think it’ll be the low point this year, but it’s still a big bump in the road.

    MarketWatch’s "five risky stocks with big potential payoffs" – 75%-plus earnings growth over the next 12 months based on analyst consensus but with at least three times the volatility of the S&P 500: Meritor (MTOR), Genworth Financial (GNW), Century Aluminum (CENX), Dana Holding (DAN), CBL & Associates (CBL). 

    Broadcom (BRCM +5.5%) shares surge as FBR adds the chipmaker to its Top Picks list, believing it is positioned to grow to the world’s second-largest baseband supplier behind Qualcomm (QCOM). Despite a weak outlook in April, FBR doesn’t believe its wireless business is “structurally impaired” but is taking a breather following “outsized” revenue growth in 4Q10 and 1Q11.

    Three lunchtime reads:
    1) Norris: The audacity of Chinese frauds
    2) After the Greek default
    3) Thirty critical housing charts 

  130.  Thanks zero…. yeah, timing is off right now. We are spending the summer in Europe and I wish I’d stocked up on Euros for the trip at least at 1.40. I guess at this point with the dollar where it is I’ll sit tight, or maybe scale into something. I thought about CNY a while back too. So what do you do, keep your cash in a mix of currencies? 

  131. FXE – Weird volume on those 136s – I really do not understand this strategy…

  132. Phil/TBT question: I have TBT and wondering if I should add more today at this low or wait for next Tuesday (thinking it can go even lower given the weekend/crisis scenario) to get a better dip buying opportunity.  What do you recommend?

  133. Any one Looking for the ex div day od AGNC last was 21st March 21 JUN ??? thks

  134.  Kurt:  I mostly shuffle between USD and Euros, since they are deep, liquid markets. In respect of alternative currencies, I find it’s better to buy, e.g., Suncor rather than CAD, or Petrobras rather than BRL, since they pay dividends, if you are only trying to hedge cash balances. 
    My longer-term forex hedging positions are taken against the illiquid stuff — real estate denominated in unfavored currencies, or venture capital investments I can’t get rid of.  For daily cash balances, Euro/USD is close enough for government work, as they say. 

  135. VIXX/Brook – Yeah but the VIX can’t even stay above $20 so it’s a long-shot at best.  I think the current $15/16 bull call spread at .60 is much more realistic.  I’d rather make 66% at $16 than need $22.58 to break even.  

    AMZN/Rpme – If you mean in the $25KP, we closed the June calls on the dip, about where they are again today and we left our long calls for a bounce but missed a good chance to cash out last week. 

    IMUC/Pharm – Is that the one where they want you to interview the CEO?

    Cash/Kurt – Yes, I think the Dollar is undervalued at the moment – it’s other currencies that are not safe to hold money in.  We liked CAD 10% ago but enough is enough.  

    Stick/Tusca – Well you can watch $85 on TNA for signs of trouble.  If that fails even a little, the RUT will likely fall.  Otherwise, I would expect a pump, especially after seeing the kind of cash that was tossed at USO earlier.  On the other hand, if the Dollar get to 75.06, better get some before it gets expensive!  

    CAD/ZZ – Good hedge for them as they are the ones who actually buy the commodities so it holds prices steady for them, more or less.  

    SEAC/Goob – If you want to play it off the rumor, I would not wait the weekend.  If there is an announcement, it will be over.  

    TBT/Jordan – $32 is a logical floor (pretty much 4% on a 20-year = not realistic) so I think you have to look at averaging down with that base.  

  136. Hey Bruce, what i meant is that I do have the position just not what Phil assumed (that I had made an adjustment to it when he had recommended against it) OK? 

  137. OPTR looks like it want to break out soooo  bad.  Approval is on Monday, but maybe, just maybe the FDA will be ahead of the game?

  138. IMUC/Phil – yes.  Me interview….ha!

  139. radioactive currencies/Phil
    I’ve been playing URG since your advice on when to get in when I brought it to your attention for the last couple months.  Having a very nice pop today.  Looking to get out at around 2 where it has resistance.

  140. Phil / Briefing — Ok, got it. Thanks for the heads up! Sent hate mail about removing features ;)

  141. is the stick coming today?

  142. Pharm…  scalin  in some FXE july 140 puts..thnx

  143.  Phil / BRK/B
    do you know why they are so weak lately?

  144. Phil on as many C plays I hold in one acc I hold 50 2.5 Jan 12 long at 2.03 now 1.62 at present no shorts against it sold Jan 4 and 5 puts against it sold for .84 now .30 up .54 and the 5p sold for 1.12 now down to .96 question is is it worth selling the Jan 4.5 call for .17 cents or better do nothing? holding 60 of the longs

    Believe it or not Mr Stick is peeking around the corner, hope he doesn’t get shot!

  146.  WTF the market drifts and FAS just keeps stuck at the highs! 

  147.  Yes… former support, now resistance… 

  148. amatta
    You must be off line!

  149. I apologize then Amatta but really, you have to cool it with the questions.  It’s not fair to others.  

  150. treasury market is making a fool of deficit-obsessed republicans no less than it is of bill g and standard & poor’ you got political risk rising with that upset in the house race in ny.coupled lowering growth expectations and  no credible gop presidential bid….

  151. STJ – holy space balls Batman, that looks like us 2 yrs ago……no body knows….or do they?

  152. Phil/VIX – the instrument is VXX not VIX. It isn’t a linear relationship to the VIX but it does essentially follow the same moves and was 22.5 three weeks ago.

  153. The VIX is definitely bearish right here.  Hope it still has some significance and is not a totally dead indicator.

  154.  Last night I signed up for Amazon Instant Videos.  They have perhaps twice as many titles available as Netflix for streaming.  How on earth is NFLX going to keep growing when anyone can replicate their service…
    I think NFLX is the next AOL or MySpace.

  155. More on the Fed loans to the banks:
    Conclusion of the article: Why did the Fed set up a short-term lending program which seems to have been aimed overwhelmingly at European banks? And how does lending $45 billion to Credit Suisse support the flow of credit to U.S. households, in any but the most circuitous manner? It’s probably not worth asking the Fed these questions. But it does seem that the governments of Switzerland, Germany, France, and the UK should all be sending thank-you letters to 33 Liberty Street if they haven’t already done so: it’s entirely possible that the New York Fed bailed out their banks without those governments even knowing about it. That’s just how generous we are, in this country. 

  156. Someone is buying Ps….VIX is back to almost even for the day….hummmm

  157. We are having a small buy program!

  158. I have a NFLX account and have given my sign in to 5 other people who use the streaming service.  I know I’m not the only one who does this.  Either they eventually will have to limit the amount of applications you can use it on or their growth will start to slow down very quickly.

  159. Amazon / Peedlew – Here are some comparisons and articles for Amazon and Netflix
    I would not cancel Netflix just yet. Amazon has ways to go! But competition is good.
    BTW, Hulu is really getting annoying. They use to have only a couple commercial breaks in their feeds with one commercial each time, but now it’s 5 or more with sometimes 2 commercials. Unless you pay for Hulu+ but they don’t have everything!

  160. Yes, that was small shadow!

  161. That’s what China is doing with it’s spare change…
    What are they thinking? 

  162. Oh what a surprise, oil is popping into the NYMEX close…  

    URG/Rustle – That’s the good kind of radioactive.  Actually that reminds me:

    Income Portfolio:  Let’s sell 10 CCJ July $28 puts for $1.05.

    BRK.B/Tcha – I think the overall earnings showed weakness.  The same weakness that we see everywhere in companies that serve the broader population so nothing particular to them.  I wouldn’t play them right now, I think they are an excellent early indication of broad market weakness.  

    C/Yodi – I would not sell new, old contracts – you need to convert with new positions.  I would not sell now unless they can’t hold $40 but this is kind of silly cheap for C unless they are worse off then we thought but, don’t forget, XLF has been killed lately and C is just down with the group.  

    Stick/Shadow – They can’t get past the 75 line on the buck.  No stick without that.  

    There’s a thing that makes you go hmmmm, StJ:

    Graphic: Liabilities in the ECB System

    VXX/Brook – In TOS I use VIX.  

    NFLX/Peedle – Right analysis, wrong reality (for the moment).  

    VIX/Pharm – Of course, run the VIX down on a bogus rally, buy lots of puts and panic dump next week.  That was the game plan…

    Free NFLX/Rustle – That’s pretty bad but I can see where limits would piss people off as we have about 5 Tivos and 6 Ipod/IPhones, an IPad and 5 regular computers and 2 laptops in my house and if I sign up for NFLX, I’d better be able to get it on whatever I take that day.  

    Competition/StJ – Cablevision already gives me so much free on-demand stuff I could never watch it all (well not free, I subscribe).  They are testing a cloud DVR service (bad for Tivo) that will have infinite storage of ANY show that was broadcast on ANY channel available at any time in the future on any device a subscriber owns – that’s in Long Island now.  NFLX won’t just have competition, they will be totally leap-frogged and forgotten.  

    Oil failed in the end there.  I guess they marked $100.50 but back to $100.38 already but mission accomplished on gasoline at $3.035 at the close and now smacked down to $3.022 already but too late for consumers to save the money!

  163. stjeanluc / china — they’re buying up land in africa as well for the natural resources.

  164. 2:00 PM On the hour: Dow +0.39%. 10-yr +0.04%. Euro +0.87% vs. dollar. Crude -0.04% to $100.19. Gold +0.83% to $1536.30. 

    If investors are irrationally overvaluing hot young web startups, they may be irrationally undervaluing aging tech giants. Big techs may be uncool, but many shouldn’t be; IBM and HPQ, for example, project profits to grow 11% a year through 2014, and even MSFT is adapting to the post-PC age. At some point, "investing in big tech will seem like a good idea in practice, and not just in theory."

    Although a temporary default by the U.S. Treasury could be disastrous for the credit markets, the implications are far worse for the dollar, according to Bill Gross. "The dollar’s the world’s reserve currency. If it’s defaulted on for any period of time, what type of signal does that send to the rest of the world?

    The shadow banking industry is back, says S&P, "aiming to bolster their balance sheets to take on business the banks discontinue" in the wake of Dodd-Frank. S&P calls for "rigorous" monitoring, warning the shadow firms have "incentives to concentrate debt leverage that has led … to systemic events." 

    Public pensions are headed back into hedge funds - and using the funds’ historical returns to paint a brighter future, as officials are looking everywhere for potential cuts. Average hedge-fund allocation at pensions has risen to 6.8%, from just 3.6% in 2007.

  165.  Phil / AFL
    what is your opinion about them at today’s price?

  166. ever notice NFLX seems to go down on every options expiration day.  This is the third time in a row I’m writing calls on them one or two days before expiration and watching them expire worthless.

  167. @ Phil, what short term trades will we keep through the week-end? uso, dia puts? do you think we´ll get any austerity news from europe on the weekend that might fuel the current rally?

  168. Phil, this trade was buy the AMZN July 215 calls and sell the May 205 calls, when those expire we will sell  July 215 calls or June calls against the purchased calls, which is my question.
    Also, on the 25kp you have that you sold the 4 AMZN calls at $5.25, now $1.70, down $1400.  If you sold them would you not be up?

  169.  Phil: covering long puts
    NFLX is my version of your FAS, I intend to keep selling puts against some long September 260′s puts.  I have been selling weeklies but since the strikes are every $5 and given this weeks move came in such big chunks I am reluctant to lock in even half today.  Knowing you rarely leave naked positions I thought I would just ask your opinion, but feel I’ll leave them naked over the weekend.  TIA

  170. You may remember…………………………

    stockbern (premium)

    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)


    **I mentioned this the other day regarding the 32-33 trading day cycle, with counter moves every 15-17 days. Start with Jan. 28 and you will see it. Cycles don’t last long at times, but this one is working, projecting a low around May 24…and now a high about 16 trading days from there. This also works with the 14 to 16 week top to top trading pattern that has been going on since the March lows…when counting 14-16 weeks from the top from 6/12/09. The last top was Feb. 18..and 15-16 weeks from there is the 2nd week in June.

  171. was something just there then it wasn’t?

  172.  My TF JUN ’11 contract is back to even for the day… even while IWM still is up… 

  173.  Odd stuff, it’s true.  Oil dropped, with Euro still rising.  H’m.

  174. Oh……with that drop…

  175. Lets hope the 83.27 line holds, if not 82.14 81.14 79.63 78.12, not good but JRW is right we go back up, at least I agree, we both may be wrong.

  176. RL fell to support, and now is ROCKETING back up to fill the other gap. 

  177. Phil:For long weekend protection,  do you prefer buying SDS @ $.80 or EDZ @$1.70 .thnaks

  178. @JRW so basically you are saying that if this cycle pattern does work we go up til June 3, and then down as the new cycle begins?

  179. Pharm, check out this way of doing SGEN: Buy SEP 25/30 BCS, sell SEP 17.50 P and buy SEP 15 P.  Net zero cost, pays off at a lower strike, has less downside risk, and best thing is margin requirement for 10 is 2500 instead of 15000 with yours…  I’m flirting with this one…

  180. which means he is going to hold his TNA over night til June 3. :)

  181. A buy signal.

  182. AFL/Tcha – I like them but all insurance companies are questionable with Japan and tornadoes and volcanoes and maybe a bad hurricane season this year so, unless they really collapse back to about $35, not exciting enough.  

    NFLX/Rustle – You aren’t the only one, that’s a great trick to cash in for funds.  It’s all about padding those pennies.  

    Short-Term/Asaenz – I put up a TZA this morning but those are already up 20%, that was my favorite and we added the USO puts to the $25KP specifically for over the weekend and they are up a nickel already and then I added the VIX spread and I’m pretty sure we discussed why I think we may drop over the weekend (protests and riots in Europe and no resolution to Greece will strengthen the Dollar).

    AMZN/RPme – That was in the $25KP, right?  We blew off the 2nd sale as we got a nice expiration and AMZN was a bit low with a reasonable chance to come back between now and July.  Those July calls were not sold, that’s a typo, they were the long end of the July/May spread you are talking about and the May calls expired worthless at $3.10, leaving us in the long calls at net $600 so anything over $1.50 is profit on the overall trade and we decided to be greedy and see if AMZN bounces.

    NFLX/Lincoln – I think so because you have to give weight to all the "positive" news they had this week plus the big move up in the Nas.  That’s going to be hard to match next week and we know it’s inflated so, logically, some air should come out of the thing without more push.  

    Protection/Dflam – Depends on your exposure but the S&P has a hard line to cross at 1,333 so I think that’s the way to go as you should be able to stop out with a small loss as they slowly grind through it (if the market heads higher).  

    74.97 – They really need a new trick to move the markets, this one is getting a little bit obvious….

    Speaking of tricks:  

    Gasoline futures trade near session highs after Exxon Mobil (XOM-0.1%) reports that repairs to its Joliet refinery would take 7-10 more days. Both Exxon and Marathon Oil (MRO -1.1%) have been active buyers in the spot market over the past few days since reporting problems at their Midwest refineries. 

    Isn’t that an amazing coincidence – they issued that statement right before the NYMEX close.  

  183. Phil / Briefing — Turns out if you click on the "yesterday" tab on briefing, you get the color coded guidance. Like I said, will be some time to work out the kinks on the new site I imagine.

  184.  Interesting names down on an up day:
    ABT, INTC, MCD, KO, HAL, BRK-B, AFL, MRK, NU – mostly dividend payers – another sign of a fake?

  185. mrm – I LIKE IT!  I get a 35c net credit.

  186. Enough nonsense for today!
    Have a good holiday everybody. As with every Memorial Day weekend for the past 5 or 6 years, I’ll be remembering the fallen freedom heroes by watching episodes of "Band of Brothers". It usually puts things in perspective rather quickly…

  187. Phil
    The truth in oil we come next week when the idiots realize Joe 12 pack is broke!

  188. Wow Pharm, that’s weird. OXPS prices the BCS at .70 debit and the sold put spread at .70 credit for net zero.  I need a different broker…

  189. OPTR is going down….

  190. Selling Jul $12.5 Ps 90c or better.

  191. asaenz

    That is the history of the last two years !!

  192. Joe 12 pack
    I have a diesel pick um up truck, fill up? $150!!!!!!!

  193. Phil / JRW    His bullishness through to next week has me nervous about my EDZ and TZA.  I guess your case is that the demos in Europe and more bs on Greece will tip the Euro, which will be the key and that outranks the technicals?

  194. rustle123/NFLX to 5 other peopel,  that’s very intersting, can you all sign in at same time or only one can watch streaming video at one time?  Thanks.

  195. stj / band — One of my all time favorite war flicks (series). Have The Pacific Queued up.

  196. @bobhu
    you can all sign in at same time.

  197. This is what JRW is referring to. 

  198.  If JRW is right, which he usually is, I guess I need an upside play over the weekend to protect my short credit momo spreads.  How about the weekly iwm calls just for a big Tuesday am pop before month end?

  199. Thanks Rain.  It’s cool the way they have your Facebook icon if you log in that way.  

    Down stocks/Deano – Could be risk appetite returning but if the S&P is below 1,333, I can’t imagine what kind of technicals people are looking at to think this is bullish.  


    Have a good weekend StJ and anyone else who’s smart enough to walk away from this nonsense a bit early and enjoy their weekend!  

    Next week/Shadow – I’ll drink to that!  

    OXPS/MrM – Yes, that’s why I left them.  

    Next week/Tusca – He’s looking technical, which is what 80% of the market is trading on so I think it’s baked in, I’m looking at the global situation in relation to the Dollar as it’s priced at the moment (74.96) and I think it would take very little to knock it back to 76 and knock the markets down 2% while I think it will take very much for the S&P to get over 1,333 and break it’s falling channel nor do I think the Dollar will fail to hold 74.80, which seems to be what it will take to move the S&P higher, nor do I think Oil can sustain $100 after the "news" of the holiday weekend is over.  

    I’m referring to the same thing Pharm only without the hopeful arrow at the end!

    IWM/Rdn – I hope you’re not asking me, I think it’s foolishness. 

  200. mrm – I use TOS and modified a condor spread.  Got it for 15c credit, I had several orders in to see which one filled first.  15c it is.

  201. Just a smidge more up Phil, then you will get the down arrow…..SPX 1348 or so….


    Have a great weekend all!  Should be around some, but basking in the sun at the beach in So. Cal (I hope), throwing grapes at 1020!  LOL!

  202. Cancel to sell the OPTR 90c July Ps.  I want to see where they settle this.

  203.  As I have said, Phil/Pharm futures would simplify a lot of trading days around here. :)

  204. looking at the TBT 2013 25  puts short . What percent would the Treasuries have to be at that level?

  205. tuscadog

    If you have a long portfolio, it’s always good to have a hedge !



    If you are short, it’s REALLY a good idea to have a hedge against follow through of a 3-day push over resistance into a 3-day weekend !! IMHO  8-)

  206.  Well Phil, I guess I kinda was asking, but you have to remember I’m a Recovering Premium Addict.  I’ve pretty much broken my addiction to paying put premium, now I just have to keep from the call premium.  The good news is I already looked at the weekly calls and the pricing did look like "foolishness", so I’m just going to wait till Wednesday and see where we are.  Oh and kudos to Rustle for the NFLX weeklies.

  207.  Holy crap. Apple is actually getting bid UP into a Friday close!!

  208. Have a great and safe weekend to all! Thanks Phil.

  209. OPTR total panic selling now.  Someone wants in.

  210. I have started dreaming about the 200 IYR puts I own, is that a bad sign?

  211. Pharm, are you saying this is a good sign for OPTR?  A month of run-up just evaporated on me in a few minutes…

  212. Well, didn’t play today nearly as well as I would have hoped.  That got me pretty good with the fade and final flush before the stick.  Oh well.  There is always next week!  Have a great break everyone~

  213.  Short oil, short Euro, long Arch Coal and Apache.  I sleep better.

  214. Phil / Facebook — I’ve avoided Facebook (and twitter, etc) so I wouldn’t know. Seems like a problem waiting to happen to allow one login across so many sites, especially with facebook accidentally releasing "private" information on a fairly regular basis.  I’ve avoided them mainly because they appear to be a time sink and because I’m relatively reclusive, although I’m about to take the plunge since I’m going nomadic once my dog dies — selling the house and short term renting while traveling (a slow walk about :) . I figure it will be the easiest way for friends and family to keep in touch with what I’m doing and where I’m at.

  215. Yeah, U and Me both.  That’s why I wanted to get out of the puts yesterday and today for just this reason.  I was buying on the 13.00 mark, and going to start selling puts again.  I also started selling the $15 July Calls.  I hate it when they do that.  12.5 is a hard floor, but does not mean they cannot pound it a bit more.  Look at DEPO!

  216. Have a great weekend Pharm!  

    TBT/Drum – Well it’s down more than 10% in TBT which is 2x the 20-year so a 5% move up in rates, about a quarter point. 

    Good ideas/JRW – I’m just leaning short, not betting farm on it but no way would I be long.  Long, over the 2.5% lines, we can catch that bus and catch up but short – we could open below the 5% lines.  

    Good man RDN – One step at a time! 

    In a televised address following the failure to get opposition leaders to sign on to more drastic fiscal reform measures, Greek PM Papandreou vows to move forward "with or without broader political consensus."  He rules out early elections, vowing to serve until his term ends in 2013. - I say he’s out by August

    Revenue at U.S. banks fell over the last year for only the 2nd time in 3 decades. Earnings growth was mostly from markups in lenders’ troubled loan portfolios. Of the banks in the S&P 500, U.S. Bancorp (USB) had the biggest jump in revenues, +5.7%, while First Horizon (FHN) led the decliners, -18.7%. USB vs. FHN Y/Y.

    Microsoft (MSFT +0.5%) is expected to introduce its new touchscreen tablet version of Windows next week, but is it too late? Citigroup doesn’t think so, believing there’s still room for MSFT to become "#2 behind iPad" (AAPL) because it would have the enterprise market in its favor if tablets pick up with business users, and tablets are still too expensive for mass consumer adoption.

  217. Well guys you all have a nice long week end just gives me some time to do some serious work on Monday No holiday for the poor Mexicans

  218. In essance, yes, a good thing now that FDA decision is over.  Ahh, here we go!

  219. OK, done.

  220. Thanks DC – Have a nice holiday weekend everyone!

  221. Phil / Volumes     Surprised they didn’t take 1333 today given the light volume??

  222. IYR/Rp – Could be a sign…

    Facebook/Rain – I like that "login with Facebook" feature.  Beats telling 100 sites my name and address.  I don’t know why AXP or someone didn’t think of it sooner as I should have a feature that keeps all my info securely for web transaction – something that wouldn’t use my regular CC # but would allow me to buy things on the web without having to fill out a form all the time.  Seems simple enough, right?  Walkabout is a fantastic plan, I’ll be 50 in two years and Tina has been warned I’m off to see the World for a while.  I’m planning to hit 6 countries in 12 weeks, staying about 2 weeks at a time in various time-shares (my walkabouts are kind of luxury ones!). 

    No holiday for Mexicans/Yodi – Not when there’s yard work to do! 8-)

    1,333/ Tusca -I was surprised they couldn’t hold it but, once they blew it, they couldn’t get it back WITHOUT volume.  Clearly there are technical sellers up there.  


    (Daily Infographic)

  224. This is pretty funny:

  225. And this one is intense

  226.  Thanks Phil, except for the "man" part.
    Now that it’s the weekend, I have some questions for you on those Wed/Thurs NFLX ratio spreads I’ve been noodling around with to make sure I understand the concept.   I paper-traded the 5 Jun 265 short calls at 9.40 and 3 long sep 285 calls at $17.35. These are really just an overpriced premium play more than an overpriced stock play, right?  So, assuming the near month expires worthless, or at least at less than the premium received (if NFLX expires at $274.40 that’s still about equal to the $9.40 received for the $265 call), do you just sell the Sep calls and call it a day, or is there still a theta benefit to selling some July calls while keeping the Septembers?  The other question is if NFLX suddenly starts coming back to earth, what do you use for as a stop level on the position, assuming we can’t or don’t  want to go naked on the short calls?

  227. Here’s one for Cap and Flips!  

  228. Today’s Levels.

  229. DEPO- a/h? Any news?

  230. "Taxman" – very good.
    Add this:
    A 62% Top Tax Rate?
    plus Phil’s oil industry nationalization plan and we have a winning platform for 2012.

  231. OPTR- well, that was a pleasant surprise. I forgot about some shares I purchased in a small Roth A/C with a trailing stop. It tripped today at $14.15. Now I can gas up the boat and head for the lake. The bass are hungry.

  232. Almost forgot- thx Pharm. Nice play.

  233. I really appreciate Phil's ideas on hedging and it would have saved me a lot of money had I joined PSW earlier.
    Can someone comment on the following trade idea?
    My objective is Income and Preservation of capital. 
    Am I thinking correctly on this?  As far as I can tell, I am combining a covered call strategy with a bull put spread.  I haven't seen this anywhere but stumbled across the idea thinking about how to protect a covered call/dividend income strategy.
    $Cdn Income trade:
    buy RY at $59.15
    sell Jan 60 call $2.55
    sell Jan 60 put $4.00
    dividends - $1.00 (assumes two dividends)
    buy Jan 56 put $2.43
    At expiration:
    Max profit if RY => $60
    2.55 + 4.00 + 1.00 + 0.85(60 - 59.15) - 2.43 = $5.97
    Min profit if RY = 56: (anything less than ry at 56, the two puts will trade dollar for dollar)

    2.55 + 4.00 + 1.00 – 2.43 – 4.00 (60 – 56 the put spread) = $1.12 

  234.  Hello folks.
    Popping in to catch up a bit; and to wish everyone a fun & safe holiday weekend.
    Sorry haven’t been around here much; just too much on my plate some days.
    Still very active trading.
    Been a good few weeks.
    Loving the weekly options; the only downside is EVERY Friday is options expiration.  gives me a lot to manage.
    As for the markets, still annoyed w/ many of the pumped up momos NFLX and CMG, but totally cleaned up on names like  OPEN MCP PCLN and others.
    Still think we head lower, not higher short term …

  235. 6488bob
    Hi Setting your idea up on my calculator you will receive the following results at date 21st Jan 12
    The calculation is made on 100 shares and 1 option each. Stock at present trading at 58.70 long put 55 put no 56 put ! 2.65 short 60 p 4.90 and short 60 call 2.70
    stock at 50 loss 880.00
    55$  loss 380.00
    56$ loss 180.00
    56.40 loss 100.00 (here you will break even with div added)
    60.00 or above gain 620.00
    The above does not take in to consideration the 100$ div which you will have to deduct or add to the above.
    As well take in to consideration the delta on the long put which is at present only -.36 as your stock always has a delta of 1.00 So the stock has to drop samewhat 15$ before the delta of the long put will be paar with the stock.
    I hope this helps. You find very seldom a fool proof system. Some one always has to pay the piper.
    good trading

  236. Memorial Day/all – have a good Memorial Day weekend, and here is a song to enjoy, remembering Harry Patch.

  237. Good morning!

    Sorry Rdn but, now that you made me look, I have that Beach Boys song stuck in my head!  You are right, it’s a little of both as we are selling premium into the excitement of a "rally" we don’t believe in.   NFLX seemed to be settling into a range between $225 and $250 but then they got a "Facebook pop" as someone floated the following on Fly on the wall (notes from Rocco at Seeking Alpha):

     The following blurb that appeared on the popular Fly on the Wall website, apparently fueled the surge. 

    (Click to enlarge)

    That’s all it takes, "talking with Facebook." The financial pundits went insane over what LinkedIn (LNKD) did the day it went public. Where is the outrage in relation to NFLX?

    Mere conversations with Facebook are enough to send an already overvalued stock about five percent higher? Newsflash -- Facebook users know all about Netflix. While I think it would be smart for NFLX to make its own website more interactive — more of a social media destination — nothing they do can change the largely-ignored story of rising content costs and international expansion expenses. 

    As Rocco notes, this is idiotic.  Is Facebook now the new China, where companies can get 5% pops at will on rumors they may do business there?  Anyway, last time NFLX got a big pop was when Tilson supposedly abandoned his NFLX short position, that sent the stock from $220 to $247 in mid Feb but it was back to $188.89 on the Japan quake, which could not possibly have less to do with NFLX but gives you a good idea of what happens to them in a weak market (down 25%) and they were already at $200 (down 20%) before they had the excuse of a natural disaster.  

    As with many short call plays we take – they may go higher but we figure a 10% pop over the top of the prior range is going to eventually give us a retest when at least the top of the old range ($250) is tested.  

    So our first trade idea on NFLX was from Tuesday and that was:  

    NFLX/Ethan – It’s very hard to buy puts on MoMo stocks where you pay the premium but how about SELLING premium like this: Buying 3 Sept $295 calls at $8.40 and selling 4 June $250 calls for $8.40, which is a $840 credit that’s about the same as going short one call but it’s a lot easier to adjust as the 4 June $250s can be rolled to July $265s (now $7.50) and probably Aug $290s and then Sept $305s and, in between, you can just ad one long to fix your delta if they break over $250.  If we finish below $250 at June expiration, anything left on your long position is a bonus over the $850 you already have in your pocket.  

    On Wednesday they went up more (triggering the 4th long call in the above trade) so, as a new play, we went with:

    NFLX/RDN – Selling NFLX calls is always fun.  You can sell 5 June $255 calls for $9.70 ($4,850) and buy 3 Sept $275 calls at $17.20 ($5,160) for net $310 on the spread.  If NFLX goes over $260, you must add another call and, over $265, you must add another call and you can stop them back out below.  That should keep you from getting burned on a move up.

    Notice the extra $10 move up let us drop the contingency of adding a full cover but we also tightened the spread from $45 to just $20.  No change in attitude Thursday as they topped out at $265 and I put up a new trade idea but really the same trade as Wednesday with $10 more cushion and now, no contingency as we’re REALLY starting to doubt this move has legs:

    NFLX/Etrad – I don’t think they are worth $150, let alone $250 so any plan to short them looks good to me.  Yesterday’s spread is "in trouble" at the moment but that means you can take it at a higher level like selling 5 June $265s for $8.60 ($4,300) against 3 Sept $85s at $17 ($5,100) so it’s about the same trade at net $800 so not quite as good as ours but $10 more likely to work is the trade-off.  

    It’s obviously still a good idea to cover as the stock breaks higher – that is ALWAYS true of backspreads but on Wednesday I felt we needed to PLAN to do that, while on Thursday (with $10 more cushion above where we think it should come back) it’s more of a contingency and buy Friday, I didn’t even mention it as it seems so unlikely (and we have a tighter spread, so less dangerous).  

    Because $250 was a good resistance line, we had all day Tuesday and Wednesday morning to catch that move over $250, no the break over $250, the Sept $295 calls jumped to $10.50 so it cost another $1,050 to up the coverage to 4/4 on the first trade but we had an $840 credit so now it’s a fully covered trade at net $210.  Did it fix the delta as planned?  Well, now we have 4 Sept $295 calls at $13.60 with a delta of .36 ($5,440) and the 4 June $250 calls are $17.90 with a .76 delta ($7,160) so now $1720 and we’re down $1,930.  

    Should we panic?  Not really because NFLX is at $264.50 so $14.50 is the "right price" and that means there’s $1,360 of our unrealized loss right there.  As a roll, the July $265 calls are $14.40 so we expect to eventually get a near-even roll to there and, you could play this aggressively by taking the $5,440 off the table on the long calls (selling into the excitement).  How much did we pay for those long calls?  $210 out of pocket.  That then leaves us with $5,230 in our pocket and – as we do in the $25KP, we have the "problem" of the short calls to wear down over time.  

    So the aggressive move is to go naked and do the roll now, take the $3.50 hit on the 4 rolls ($1,400) and that leaves us short 4 naked July $265 calls for a credit of $3,830 or $9.57 per caller (all premium, which means they don’t get their $9.47 (which is in our pockets) until NFLX is at $274.57).  Looking ahead, the September $295 calls are $13.60 and I’m pretty sure we’d be happy to DD on that roll so we’re not really worried until the July $265s are a 2x roll to the Sept $295s – other than that, we can patiently wait for reality to catch up to NFLX.

    Staying in the spread, you can still do the roll and spend $1,200 to knock out $6,000 of margin requirement if you feel the need but I’d just keep an eye on the roll and not let it get too expensive, keeping in mind you lose .40 x 400 ($160) for each dollar NFLX goes up anyway (from the delta differential).  

    Also, once you mentally commit to a 2x roll in September, the question becomes, why wait?  In a more aggressive posture, you can roll the 4 June $250 callers at $17.90 to 8 June $265 callers at $8.60.  That’s $280 out of pocket and we’ve shoved the caller to 100% premium already and NFLX needs $273.60 in 20 days just for the caller to get all of his money back (and that money is in our pockets otherwise).  Those 8 June $265s can be rolled to 8 July $280s (now $8.20) and those to 8 Sept $315 (now $8.30) so NFLX has to get over $320 (+30%) before we’re in trouble.  

    By the way, always keep in mind that if NFLX pops $265 and you have the 8 short calls, there’s nothing stopping you from slapping on something like 8 next week $265 calls ($4.20) as a momentum play.  Those are going to have a better delta and if NFLX moves up to $275, you’ll keep pace with the callers while having the additional benefit of being able to take more profits off the table once the music stops.  If you take them off on a pullback to $273 (20% of the run) and then they go over $275 – what do you do?  Just buy the $275 weeklies and DO IT AGAIN.  In the very least, you are collecting money to pay for rolling the callers up to a higher strike.  

    The Wednesday spread triggered the additional long on Thursday morning at $19.50 ($1,950), which raised the net to $2,260 on a 4/5 spread.  4 Sept $275s are now $21 ($8,400) and the 5 June $255s are $14.40 ($7,200) so this trade is down to a $1,200 credit, down $1,060 but the callers still have $2,500 in premium so not even worth worrying about at this stage.  Keep in mind that’s WITH the stock moving $10 against you!  The same aggressive strategy could be applied here as well as TAKE THE MONEY AND RUN is a well-known, ancient expression for good reason….

    Thursday’s trade is actually still playable – we haven’t really moved off those prices but, if you are going to go for it – be prepared for a wild ride!  

    The shorter answer (maybe I should have led with that!) is that we want to keep the callers in as much premium as we can for as long as we can in the shortest time-periods (Theta) that we can.  If you only enter these spreads in amounts where you can comfortably roll to 2x and 4x down the road, you can usually give yourself over 33% of headroom and if you couple that with some shorter-term call buying to cover momentum moves higher – you can fund additional rolls along the way and stay out of trouble (unless you get a huge pre-market spike like GMCR – then you are screwed!).  

    And yes, we are adding the long calls as covers so we stop them out even at all times or, you can be brave and just take the money and run on the additional call(s) if you don’t want to risk going fully naked. 

  238. DEPO got a favorable patent ruling. 

    Nice math games Pstas:

    The effective income tax rate would rise to about 41.5%.

    I am including in this analysis the employer share of all payroll taxes because it is a direct tax on a worker’s salary and most economists agree that though employers are responsible for collecting this tax, it is ultimately borne by the employee.
    That brings the tax rate to 47%.

    Then we have to factor in state income taxes, which on average add after the deductions from the federal income tax roughly another four percentage points to the tax burden. So now on average we are at a tax rate of close to 62%.

    I hope you don’t kiss your mother with that kind of overblown logic! 

    RY/Bob – I see Yodi did the math on your idea.  That’s an interesting play on RY and the main strategy is our normal buy/write strategy, which is fine, especially if this is just the first round of several you intend to buy in the stock. 

    With a nice dividend payer (3.5%) in an uncertain economy, I would go more conservative with something like the stock at $58.71 (see, dropping already!) and selling the Jan $55 puts and calls for $8.25 for net $50.46/52.73 (if assigned below $55) plus you can expect a .51 dividend in July and October for $1.02 but not Jan as their dividend dates tend to fall after options expiration.  

    Of course you can roll the puts and calls by then but let’s say the upside on this trade at $55 would be $5.56, or about 10% of the cash laid out ($50.46).  So that’s about .40 less than your spread but the stock can be 10% lower and you STILL make money.  That lowers your need to hedge your portfolio, which in itself saves you money.  

    On yours, you are spending $58.71 less the $6.55 from the short $60 combo less the $1.02 dividend plus the $2.70 $55 put (there is no $66) and that’s net $53.84 but, you are obligated to buy another round at $60 so, at $55, you still have to give the putter net $5 and that raises your net to $58.84 with a maximum loss of $3.84 below $55.  Of course, you are also assuming the dividend is not at risk but consider that a cut in the dividend is the most likely reason the stock would plunge. 

    So your best case is $6.16 (above $60) and your worst case is -$3.84 (below $55) whereas the simple buy/write above MAKES $5.56 at $55 (which is below the 200 dma) and doesn’t lose money until you are below $50, which would be a 52-week low.  I’m generally not a big fan of collars as you are betting against yourself.  IF the stock falls to the 200 dma at $56, THEN you can add some puts.

    This is not, by the way, an endorsement of the trade in the first place as RY is in a downtrend and we think the Canadian dollar is overbought and $50-55 is probably the right price for this bank so I wouldn’t touch them until I see a test of $56 hold up in the first place and then I might want to sell a naked put to initiate an entry. 

    Speaking of which, selling C 2013 $30 puts for $2.10 is a net $27.90 entry with (according to TOS) just $3 in net margin.  So that’s 70% in 18 months if C can hold $30. 

    Hey Cap!  Gotta love those weeklies.  I’m also thinking we still need a real correction.

    Here’s Barrys succinct summation of week’s events:

    1) Gasoline prices continue to fall, down .07 on the week and UoM confidence climbs 4.5 pts from April in response
    2) Apr New Home Sales bounce (off a very low bottom)
    3) German IFO business confidence unch but better than estimated
    4) Great 5 and 7 yr note auctions reflects lack of any concern with debt ceiling issue


    1) Pending home sales even more awful than thought
    2) Inflation eating into both spending and income
    3) Initial Claims disappoint again, above 400k for 7th straight week
    4) Durable goods soft (but March revised up)
    5) Richmond mfr’g contracts, follows weak NY and Philly #’s
    6) Q1 GDP weaker than expected
    7) Great 5 and 7 yr note auctions but what does that say about the growth outlook?
    8) Shanghai index now down 7 straight days to 4 month low
    9) WTH (heck) with Greece at this point? Hopefully we’ll know next week, Irish yields rise to new high
    10) Euro zone economic confidence # and mfr’g and services composite index both fall to 7 month lows.

  239. Things are Spinning out of Control – Smith.  Damn fine writer.

  240. Great article Pharm – and things are out of control now! No one knows what is going on and they are just experimenting and plugging gaps where they appear. It will not end well! 

  241.  phil, thanks for explaining NFLX in such details. still don’t fully understand when you mentioned "the weekly momentum calls". if i have only 8 short call and NFLX just pops over 165, do you mean i should buy 8 weekly 265 calls to cover. (1) if it does go up to 270, i’ll take a profit from weekly calls. what about the loss in the long calls? shall i roll or just wait (2) if it suddenly goes below 260 (say one day before expiration), basically i’m screwed on the short term but make money on long term. shall i sell both the long and short calls to break even? Much appreciated. 

  242. Ignore user functionality is on! That was quick. How does it work?

  243. Pharm – thanks for the great article.

  244. Japan’s crippled Fukushima nuclear plant is not fully prepared for heavy rain and winds of a typhoon heading towards the country, officials admit.
    Tokyo Electric Power (Tepco), which runs the plant, said some reactor buildings were uncovered, prompting fears the storm may carry radioactive material into the air and sea.
    Typhoon Songda is expected to hit Japan as early as Monday.

  245.  That is awful news, I’m sorry for Japan. 

  246. AFL- I have a buy/write from last June which I am inclined to close out as I can capture 80% of the max profit:
    Stock @ $42.50; $40 p/c (Jan 12)  sold @ $19.20.
    Given AFL’s Japan exposure and the pending uncertainty, seems possible to be able to do this play over again later at a better price.
    Any suggested alternatives?

  247.  I caught HBO’s "Too Big to Fail" this weekend, and thought it was very good. I was kind of hoping that during one of the meal scenes with Hank Paulson (William Hurt) Paul Giamatti (the Bernanke) would take a sip of red wine and ask, "wait, is this merlot?" 

  248.  Phil: Sparky
    Sparky asked the following and you asked to be reminded, I’d also like to see your response,
    May 27th, 2011 at 7:43 am | Permalink | Ignore this user
    Yesterday you said no to selling Nov puts on KO at $62.50, a little over 6% down from it’s current price, and below its 200 day moving average of $62.96. Your comment implied that you would wait until the stock failed its 200 day before you would go long.  In a later post you explained the strategy of deploying a million dollar portfolio selling puts. Could you offer some color here? If you had that million dollars to invest at the moment, would your advice be to wait for for a pullback, or begin selling puts now? And if you were to sell puts, but not at the 200 day, how would you pick the prices? 

  249. From Maulden:


    According to Dealogic, European banks have to refinance about €1.3tn of maturing debt by the end of 2012. This is the sort of pressure point capable of triggering a liquidity panic unless Euroland policymakers become much more proactive in the interim. But, as noted, it may take more market stress now to force precisely this sort of policy response. That implies a much greater correction for the euro against the US dollar than what has been seen thus far, and a further correlated sell-off in risk assets, including commodities (Chris Wood, writing in Greed and Fear).

    There are just so many risks in Europe that it is hard to make a list long enough. I think the risk to the world markets is higher than the subprime risk, at least from what I can see today. I know that the leaders of Europe think they can “contain” the risk. So did Bernanke in the summer of 2007. You cannot contain this until you actually admit the problem.
    Our credit institutions are so intertwined that a repeat of the 2008 credit crisis is entirely possible. Who plays the role of Lehman? Let me count the candidates. Greece. Ireland. Portugal. Spain. The ECB. Any number of large European banks with massive Irish exposure. Greece alone could be dealt with. That is why ECB leaders are right to talk passionately about contagion risks. But ignoring the political realities is not the way to deal with it.
    The simple fact is that at some point, whether this year or the next or the next, depending on how long they can kick the can down the road and how long German voters are prepared to bite 27% of the cost (NOT a given), Greece is going to default. Maybe the plan of the ECB is to keep financing Greek debt until it is off enough bank balance sheets and onto the back of the euro through the ECB balance sheet, before they pull the plug.
    Whatever the plan is, right now Europe looks like a very dysfunctional family. The potential for a messy divorce is quite real. Can you see Greece or Ireland giving up sovereignty to Brussels? Really? Then you should buy Greek bonds at 24%. They are a steal. At a minimum, Europe is in for years of expensive “therapy.” And we have not even gotten to their version of their health-care and pension crisis.
    The euro appears to me to be a massive short. (Note: I and my family leave the eurozone [Tuscany] June 16-17. Just saying.) You should limit your exposure to Eurozone sovereign debt and bank debt. If you are invested in US financials that write credit default swaps to European banks or hedge funds, you are not investing, you are gambling.


  250. Conrad Black is a very familiar name to Canadians but not usually to Americans. He is an extremely intelligent man (although many would use different words to describe him) who reached great corporate heights. But he and others ran afoul of US law and he was charged with 13 criminal counts, all for fraud. He was eventually sentenced to 6 1/2 years in jail and he served several before he was released on bail in 2010, pending the results of his latest appeals (he has never admitted any guilt). Mr. Black did a lot of good while in jail. He tutored students, enabling them to receive their high school diplomas and he taught many courses, including American history, plus many other things that benefited his fellow inmates. He also occasionally wrote articles for the National Post, a national Canadian newspaper which, IMHO, is a very good newspaper. His articles have always been fascinating and he continues to write them while he continues to fight the remaining charges against him. I was reading one of his articles last night in my favourite watering hole and a man beside me commented that the National Post was a very good newspaper. We began a conversation and I discovered that he was a well known local criminal trial judge and we had an interesting discussion about Conrad Black. I was surprised to discover that he thinks that the charges were a joke in the first place – I don’t have an opinion. As we were talking, a friend of mine, a well known trauma surgeon, and his wife walked in. I introduced the judge to the doc and it turned out that they had both just returned from the same Serbian wedding and they were both complaining about the endless Serbian music – LOL. They hit it off immediately and I went back to my reading. But I digress.
    The I believe the article I read last night will be of interest to readers here. It is titled, "A world of financial ruin," and succinctly sums up much of what has been written right here. He throws in a little humour here and there for good measure. If you’re interested you can read it here.

  251. Stu…If your at a Serbian wedding you must drink, dance and drink some more!! Otherwise, yes the music can get to you ;-)


  252.  kustomz – sounds like most weddings I go to only you are doing it so the lousy DJ doesn’t get to you

  253. Stu – An excellent read indeed, a breath of fresh air and reason ! This article points out the absurdities that the extreme partisans live by and call rationale and I have been attemtping to point out at this site. Other sources readily accept the basic concepts of how broken our "system" is and realize fully the two party thing is really all the same game rolled into one . 
    There is a tremendous amount of intellectul dishonesty at this site, disguised as rationale, but is really nothing more than group think and self induced emulation by the parties that play the game all the while running away from and defiling any real truth and justifying such with nothing more than group reinforced nonsensical slap downs that actually only prove how absurd and wrong it is on an intellectual level . Lots of distortion of reality and facts as well, but with enough in blind agreement it passes as the holy grail even though it is nothing of the sort. Sorry to say, but we see the same thing across the board in all of our society, still about a 50/50 split in thinking.    
    I am gleaning some good trading information ,which I explained in detail why I came here, but it can be some what testing when faced with the above dogma. In all honesty I think Phil could spend his efforts/ brain power much better if he would simply let go of the partisan thing of Donkys are near perfection and all else is simply wrong. Doesn’t take much to figure out this is not exactly real thinking and very closed minded, the opposite of what liberals claim to be. The two party thing is a big part of the problem not the solution. Nearly all are criminals.  
    I will elaborate on your link later , gotta head out to BBQ……………………………. A good read

  254. Lots of discussion recently about the system being  broken and the illusions
    the solutions lay some where in the middle of political events not at the partisan level. Good ideas and differnt simple honesties are starting to come forth out of necessity. The old partisan thingy is dead and needs to be replaced with something based on rationale and reason not lobbyist and special interest politicos. 

  255. SPX- where do we go from here?
    The next week or so should be very interesting as the long term lower channel support line on the chart (essentially the 100 MA-going back to Sept, 2010) may converge with the more recent declining support line dating from the high on 5/2/11.
    If we break downward- lower target is 1272. If an upward break develops, then 1400+.
    For now, the long term uptrend continues intact.

  256. Thought this email was worth sharing before I go as well. I received this from a person just minutes ago who has been a great help to me in my market endeavors/learning.
    Yes, me too. Anyway, Happy Memorial Day to you, Thank You for serving as a youngin’, who would have thunk you and your ‘friends’ were fighting for the current state of nonsense.
    Yet think about those who didn’t make it, in ALL the wars. They must be doing grave spins with Holder at the DOJ and this whole ‘modern’ day bullshit system, including the collusion between money / banking / politics. Sick fucking shit. 
    Thanks Again from the Bottom of my Heart .
    You, sir, are welcome. Yes many would be rolling over in their graves. Vietnam was a mistake no doubt, but when all is said and done basicly all wars are mistakes one way or the other. They are reflections of how wrong and ego driven humans can be and how we perceive the world we live in and the planet we live on. Believe me, I do think about all those who perished or were disabled one way or the other. It always brings tears and great sorrow, so I cannot carry it too heavily or it would crush me and keep me from doing good and saying what needs to be said and living as some sort of example. I truly believe in walking your talk. Sometimes it is a simple thing to do and can actually make a difference, sometimes it is very difficult because of the politically correct garbage we have descended into. This system is severely broken and will have to change and that change will not be necessarily a good thing as it happens , but we must look to the greater future or we are worthless and deserve exactly what we get. Have you noticed how many articles are talking about how broken the system is recently????? That is a good thing indeed. I imagine both Hayek and Keynes would consider what has transpired to be quite extreme and neither would condone the Obama/Holder unholy alliance with the Fed/Gov/Banks.
    Hayek said "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can can design" and they have designed now haven’t they ! On the other hand Keynes said "The ideas of economist’s and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed the world is ruled by little else, practical men, who believe themselves to be quite exempt from any intellectual influence, are ususally the slaves of some defunct economist ". Certainly Obama and Holder and many other elites on both sides of the fence consider themselves to be exempt now don’t they ?
    Have a great weekend !
    This weekeend is for respect and reverenece for all those who have given previously and presently. I hope we can make some better sense out of our world going forward. Not just the US but All, as all have made many mistakes in judgment. 

  257. Goob – I think Phil has advocated

    The old partisan thingy is dead and needs to be replaced with something based on rationale and reason not lobbyist and special interest politicos.

    Two parties, three, four?  How many does one need?  Spain, Ireland, Japan, etc all have more than 2 in their systems, and how well are they doing?  I don’t think there is any intellectual dishonesty on the site, just different views, many of whom believe they are ‘right’ and/or ‘deserving’.  Regardless of ones view, we all know it is broken – it comes down as to how to fix it.  Taxes, austerity, union bashing, illegals?  This country is more divided than ever on many fronts, and it is my hope that the Gen X/Yers can get this ship righted, and soon.  Obviously the baby boomers won’t, as they are as divided now as they were in the ’60s.  Name calling, bickering, pointing fingers etc. is not going to solve any problems.  Higher taxes are coming for those better off (top 10%ers), so we need to swallow our pride (yes I include myself in the top 10% and will sacrifice even though I don’t agree with bailing out banks that should never have been in the first place…but I want my children to have a fighting chance), and begin to rebuild what has been ripped down by a few that will never see the inside of a jail cell.

  258. Whoa, this sounds familiar?

    Sir James Goldsmith interview on The Charlie Rose Show 11-15-1994

  259.  Pharmboy: Goldsmith
    I don’t know how you find a Charlie Rose show from 1994 but really interesting.  I don’t know what the solution is but his point about focusing on very narrow economic indices seems very precient.  Thanks for posting it.

  260.  Pharm / Great interview and foresight by Goldsmith. Thanks for posting.  

  261. There is a consensus that the U.S. needs "fixing", and we all acknowledge that Americans brought up on an outsized slice of world GDP will have to learn to share.  But in respect of fairness and balance within the country, I shall continue to rail against allowing corporations — U.S. corporations or otherwise — from making any political contributions at all in the United States.  They are not citizens.  They are not human, and hence have no patriotism to any country.  Their managers are paid to maximize profits and competitive positions, whatever their nationality, and are bound to do so.   And their ability to distort the American electoral system into an unrepresentative farce is blindingly obvious.
    Whether a two, three, or ten party system —  whether Republicans, Democrats or Independents — nothing can change given the immense financial footprint that multinational corporations, domiciled in the U.S,  stamp on the outcome of U.S. elections. The river of large corporate contributions has highjacked the U.S. political process.  It is destroying the essence of representative democracy in America. Democracy has been transformed into an extractive industry in which Sellers of Products distort the incentives and disincentives embodied in our system of laws to encourage excessive consumption, excessive leverage and a minimum of regulation.  If they leave the country a dessicated carcass, it’s not their concern, they just run more numbers and move on to more promising pastures.
    This is neither a Democratic, nor Republican, nor Independent issue.  Voting for a different party or candidate in each successive election can change nothing, because these candidates are inevitably beholden to the interests that paid for their campaigns.  Large corporations have concentration of both wealth, and purpose, that few citizens groups can hope to match.  Humans are simply outvoted by the Machines-That-Sell, with predictable results.  Popular movements like the Tea Party unwittingly serve their interests by selling the idea that voting for the "right candidate" or the "right party" can put America back on track.
     Forget it.  Pillaging America of whatever wealth it has left has a higher Present Value to these multinationals,  given the country’s trajectory, than any potential Future Value, so getting while the getting’s good and moving on to greener fields, like Asia, make more sense to the beancounters.   This course contains the seeds of these corporation’s own ultimate destruction, but since they are not governed as a group, they are blind, deaf and dump.
    Hence the Multinational Corporations are not the problem.  A political system that has been corrupted by allowing politicians to seek comparatively large contributions from entities whose political interests are profoundly unrelated to the balanced and prudent management of the national economy.  America will continue to be bled white until it finds the courage to eliminate this tremendous distortion of Constitutional intent.

  262. Good morning!

    The Dollar is holding that 75 line rick steady.  Euro $1.428, Pound $1.647 and 80.83 Yen to the Dollar.  Oil $100.07 (winner!), gasoline $3.02, Nat gas shot up to $4.55, gold $1,537, silver $38.00, copper $4.15.

    Futures are trading but pretty flat.  Asia was flat, UK is closed and DAX and CAC are flat. 

    Just try finding news of coordinated protests in France and Spain in this country!  Despite the suppression of information, I still think the Dollar heads back up this week.

    The G8 was a "no protest zone":

    Organisers criticised the French authorities for not allowing them to demonstrate in the chic resort itself, deploying 12,000 police to keep out just a few hundred activists.

    From Barry:  Greece seems to be coming up a lot around here today. I mentioned How to Fix Greece in this morning’s reads; John Mauldin discusses how dysfunctional Europe is here.


    David Kotok extensively looks into the Barron’s piece here.

    But not all of you have a subscription to Barron’s. so have a gander at this infographic, from that article. It tells quite a story:



    How to Fix Greece


    Barron’s MAY 28, 2011 

    Department of Duh: Study says top lobbying banks got biggest bailouts

    (ReutersSee also Financial Lobbying and the Housing Crisis (NYT)

    How optimistic is the stock market really? (Market Watch)

    May’s swoon disconcerts investors (

    If I Take Down Fox, Is All Forgiven? (NY Mag)

    I hope you are having a good holiday! 

  263.  Thanks for the interesting reading.  It gives me something to do in the thunderstorm this morning.  Let me add:
    There’s a Right Way and a Wrong Way to Deal with a Jobs Crisis.  Why is Germany Doing so Well?
    In brief, the article notes that Germany has more flexibility in how unemployment is given out and employers can basically cut worker’s hours in part across the board, rather than laying them off.  There is an incentive to keep people on the payroll through part-time unemployment subsidies.  So a company can give 1000 employees Friday off rather than laying off 200 people and reduce the payroll by the same amount, and the German government subsidizes some of the difference for those who lost a day a week from their paycheck.  It doesn’t cost the taxpayer any more than complete layoffs would and people still have jobs, so they don’t default on mortgages etc.  Interesting…
    A friend of mine who works for IBM brings up another point that is key here in the United States.  The rewards for working hard are enormously skewed.  IBM just had a great earnings report and is rewarding its employees in the United States with more layoffs.  They are moving everything they can overseas and upper management is getting huge bonuses.  What angers my friend is that IBM is built on hundreds of smart engineers who have produced countless patents that of course belong to IBM.  Without the brainpower in the US, IBM would not be what it is today.  But the rewards go disproportionately to the top management, but the real reason for success has much to due with a very skilled workforce.  He feels that the upper management is just sucking all the value out of the company while they can.
    Seems like this is part of the problem:

  264.  Phil
    A small suggestion on the site regarding the placement of the ignore link – put it on the far right – so that its not mistakenly clicked instead of the permalink.
    Also – looking to get involved in the wiki project in some small way. Is there a guideline somewhere for use & what we hope to accomplish?
    Have a good holiday, Phil & all!

  265. DNA based computing – I worked on a version of that in grad school! Only good for certain types of problems, much like that canadian company’s "quantum computer" is.

  266.  Goober: Holder?
    What’s with your vitriol towards Eric Holder?  Son of an immigrant, Reagan appointee to the Superior court who prosecuted bribery and corruption cases against John Jenrette and Dan Rostenkowski.  Seems like that’s the kind of activity you would approve of.  Hard for me to understand how the Attorney General for the past two years is a proximate cause for the many problems we face today.
    As someone lacking your certitude about things I very much try to learn from others and find it much easier when I read or listen to someone who wants to make me think rather than bludgeon me with their thoughts.   While I disagree with Phil on some things he always presents his ideas with facts, (charts/tables/links), but just as importantly with a sense of irony and humor.  This last attribute can be very effective when trying to open peoples minds.
    Thanks for your service.  My wifes brothers both flew choppers in Viet Nam and only one made it back. 

  267. Speaking of computing, Lockheed-Martin just bought one of those Canadian-constructed quantum computers. I’m pretty sure they just went on sale a few weeks ago.

  268. A very simple explanation of the impact of government spending on the economy: 

  269. Phil, All – check out the book project under PSW Wiki above. I have updated the following:

    Core Strategy I – Fundamentals
    Core Strategy II – The Premium Business
    Rolling Options – Basics
    Covering and Hedging – Basics & Mattress Plays
    Portfolio Management

  270. Spinning/Pharm – That’s depressing!

    NFLX/Ethan – Whether it’s 6 or 8 or 10 or whatever, the idea is to grab a bullish play on the stock when it breaks higher than you thought it would.  Don’t forget, you don’t need to make $10 if the stock goes up $10 because you only need to pay for the roll spread.  So, if you sold the June $255s, now $14.50, you can hold them assuming NFLX doesn’t make $265 which means they will expire around $10 or less and you will roll them to July $275s, which are now $10 or $270s at worst (now $12.20).  If NFLX goes over $265 then your premise is blown and you slap on 10 (for example) weekly $260s at $7 and those have a .67 delta so let’s say NFLX goes up $5 to $270.  You make $5 x .67(ish) for $3.35 and the difference between the July $270s ($12.20) and the July $260s ($16.90) is $4.70 so you should have paid for most of a $10 roll by then on a $5 move up in the stock.  

    Of course you want to roll them HIGHER but looking at the cost of the roll from something $10 lower gives you an idea of what the roll will cost you after a $10 move goes against you.  You should NEVER be surprised by a move, you should ALWAYS know how a 10 or 20% move will affect you and know what you intend to do about it.  Knowing what your options will be down the road allows you to budget for and prepare for them and helps you make better decisions about your current move.  So, point being here that KNOWING that $4.70 pays for a $10 move against you should have you quickly taking profits at $3.35 on a $5 move since that covers you very nicely and maybe, if it’s a good pullback, you won’t need that money as well and it goes right in your pocket (where all money should go).   As to the other what-ifs – let’s look at them when they happen. 

    IGNORE/All – Yes, we have our ignore buttons now.  In theory, if you click to ignore someone, you simply no longer see their comments and a list of who you are ignoring appears below the comment box and you can unignore them just as easily.  

    Typhoon seems to have hit Southern Japan and got weaker so far.  I was in Japan during a Typhoon one summer – it was intense!  Sheets of rain that went on and on – just incredible…

    AFL/Pstas – I’d take it and run.  It’s shaping up to be a bad year for natural disasters already.

    Too Big/Dr. C – I was disappointed with how dry it was.  Not too accessible to the general public.  Needed a Pacino momentto clarify things…

    KO/Lincoln, Sparky – It depends if there are other good things to do.  I’m about to update the income portfolio so we’ll be looking at put candidates there but I want to see stocks that I think are already unfairly near or under their 200 dmas to sell puts to.  KO, as I said is at $66.41 and just broke below their 50 dma at $67 and are well above the 200 dma at $62.55.  We KNOW that KO is priced in Dollars and will fall with everything else but also KO has benefited from the weak dollar as their significant overseas sales translates into better Dollar-based income on their reports.  This is why I loved KO back in October when I interviewed Kent.  At the time I said it was "no longer cheap at $61.15" but we did a conservative buy/write with 2013 $60 calls and $50 puts back then for net $51.65/50.83 – there’s a deal that’s worth doing! 

    Having $1M to invest should make you more patient, not less.  There are 9,000 companies on US exchanges and maybe 3,000 worth investing in at some level and, on any given week, one or two of them may stumble hard enough to give you an opportunity to buy them on sale.  Even if you don’t have an absolute value in your head like I do for stocks, you can at least assume that the 200 dma is a reasonable indicator of what many, many people were willing to buy the stock for over the past 6 months.  That means they’ve seen 2 quarterly reports, 2 earnings, and read 6 months of news and they feel KO is worth $62.50 but then I’m going to discount that a bit as they were also "worth" $42.50 in 2009 (while PRICED at $34.82 in March of that year).  

    So somewhere between underpriced (partly due to a strong dollar) at $34.82 and overpriced (due to a weak dollar) at $68.77 is the truth and that truth is NOT $66.50, is it?  So let’s say the average of the two is $51.80, which was my value call on them back in October.  Have their prospects improved considerably since then or just their PRICE (measured in Dollars) and sentiment (due to being chased by an investing public that is blind to the affect of the Dollar on price and earnings)?  Since I don’t really see fundamental changes to the business and I consider the Dollar weakness to be "transitory" – I’m not at all anxious to jump in on KO just because it fell $1.25 off it’s all-time high.  

    So I love KO, I love the stock, I love the CEO, I like what they are doing with the company and I would be happy to own it 20 years from now but I could say the same thing about a Dali I see at an auction – it doesn’t mean I HAVE TO buy it, does it?  If I’m at an auction and I see a painting I think is worth $100,000 – do I buy it for $100,000?  No, because I can go to a store any time and just buy it for $100,000 and stocks are a lot less rare than paintings.  When they start the bidding, do I bid $50,000?  No, why would I – I don’t want to tip my interest off and I want to see if anyone else is interested first.  In fact, once the painting goes past $75,000, I’m going to have pretty much no interest in it because it’s no longer an investment with a very high chance of return – just a bit of art I like but I’m just as happy with a cool Warhol print of Superman that’s $3,000 that would fill the same spot on the wall.  The Warhol will not likely go up much in value but I have $97,000 left to invest in something that will and I’m sure, if I’m patient, I’ll find something that’s more likely to make me 25% than a painting.

    Now you can sell KO 2013 $55 puts for $2.90 for a net $52.10 entry and that takes up just net $5.50 in margin to make $2.90 (52%) which is a reasonable rate of return to make a "place-holder" bet – one you don’t expect to have put to you but would make you very happy if it were.  I do believe KO can easily drop 20% back to not far from $52.10, and I would rather wait to get them closer to the 200 dma but, if you are very impatient and have nothing better to do with your money – that’s the way I’d start a position.  

    Strong statement from Mauldin, Pharm!  

    Black/Greno - Very good article:

    Unless the United States has the most spectacular cognitive awakening since Brunhilda, if not Lazarus, the laws of arithmetic are going to assert themselves in Zeus-like terms. Meanwhile, the European Union is a water-logged vessel in a tempest, frantically bailing.

    Germany will not indefinitely remain so encumbered with guilt for the Third Reich that it will go on eating the costs of the false prospectus Goldman Sachs assisted Greece and others to file when they joined the Euro. The Germans have only tolerated it up to now because the strain Greece, Portugal, Ireland, Spain and eventually others put on the European banking system and the Euro,keep the Euro in fairly close downward mode with the U.S. dollar, which assists German exports. What a splendid irony that Germany, reviled as the rampaging hun in olden time, is now being entreated by genuflecting masses of its former ungrateful subjects to occupy and dominate them again, at least economically.

    You need guys like Black – with nothing left to lose – to tell it like it is. 

    Dogma/Goober – You do realize you are once again the only person here who can’t manage to shut up about politics, right?  You have already topped the ignore list so congratulations, I guess….  

    And what Pharm said! 

    And what ZZ said! 

    Good clip Pharm. 

    Constitutional intent/ZZ – Hmm, I’m not sure what the intent was.  Most of the people who worked on the constitution were in the top 1% and they created a weak and fractious Federal government by design.  Were they really looking out for the people’s interests (certainly they weren’t looking out for slaves’ interests) or were they just making sure that Government could never interfere with commerce, as it often did in the old country?  Corporations were not legally recognized as people until 1886, after Grant, Hayes, Garfield and Arthur had packed the court with the most onerously conservative judges in history.  Even then, no court was really crazy enough to call a Corporation a person, the only language regarding the personhood of a corporation was ADDED to the decision by the court reporter who, it just so happened,. was the former President of the NY Railway Company, commenting on the case involving the Southern Pacific Railroad.  

    IBM/Rev – That is just sad.  If IBM is forgetting that R&D keeps our corporations great, then this country is lost.  

    Good suggestion Deano.  On the Wiki, I don’t think there are or should be rules.  The success of Wikipedia is it evolved over time so I’m at least wanting to give it a while to see what happens.  Just go up and do whatever you think is interesting and useful and other people will add to what you do and help clean it up as you will also do for others – I would encourage everyone to participate and contribute.  If you find something useful – just put it up, my understanding is the links will sort themselves out over time but I know pretty much nothing about how Wikis actually work. 

    Quantum computer/Kwan – It’s my understanding that pretty much no encryption will be safe from a quantum computer.  LM NEEDS to get a quantum computer the way they’ve been hacked lately!    

    Good explanation StJ.    Good for Greece on the other one.  

    Thanks Nicha!  

    This is brilliant, by the way: "An Alternative Annual Report for Chevron" – gives you the other side of the big oil story.  

  271. good story about providing jobs by improving the conditions of the city:,28804,2026474_2026675_2074274,00.html

  272. Thanks nicha!
    deano – no real guidelines yet beyond just getting the content all centralized in one place. Part of it will become a book from what I understand, the other part will be a place to point people for frequently asked questions and things like that. It’s a slowly evolving work of art…

  273. Phil – I second moving the ignore this user a little further to the right. I’m afraid I’m constantly afraid I’m accidentally going to click it with its proximity to the permalink (which I use all the time).
    How do you ‘undo’ that operation anyhow?

  274. Oh I see it now, nevermind!

  275. Phil / Gordon Long article re death spiral:
    This matrix is too complicated for my small brain, help!  It seems that everyone is potentially ‘screw.d’?  But, in this looming disaster the countries with the resources to feed and warm themselves will fare least worst? ie the USA and Brazil.  China will be a disaster as, with the rise of mercantalism, those export factories won’t be needed by impoverished US consumers while manufacturing rises again in the USA.  The export, RE and finance based parts of Europe will fall hardest, especially those with no energy resources.
    I think the article says the BIS will print what ever they have to in order to prevent the 2nd Great Depression.  Will inflation overcome all else? How will you work this into your long / short investment thesis?  Boy, I’m liking my EDZ and TZA more after reading this heavy stuff!  Also sounds like I should be buying more gold producers?

  276.  Phil, the next installment in Robotic Forex trading 101 is shaping up.  I am trying to implement a forex version of your scaling in and 20% rule.
    What I am curious about is that I have seen us use the scaling in and 20% rule differently and I just need to know which do you think would be more usefull.
    Case 1:  Double down at a 20% loss then close out half when we get back to even to lower our basis.  Keep doing this untill either profit or 20% loss on the whole position.
    Case 2:  Determine what size makes a full position, (say 4.0 is a full position).  
    Buy 1.0 take profit at 20% of 1.0 if we loose 20% on then double down.  Now we are at 2.0.  If we loose 20% of 2.0 then double down again.  Now we in for a full position.  If we loose 20% of the full position then close out.  (this is basically a summary of how you manage positions in the salvage play.  
    If you were actually going to use an automated version of one of these, which one would you like more?

  277. Phil—Tx so much for the detailed trade configurations for NFLX—you would think that I would have absolutely no questions--but I screwed up and did not add a NFLX call when it went over 250-thus I still have the 3/4 295/250 call and callers(the original trade)-- do you think selling the 295 calls and rolling the 250s callers to 265 June and leaving them naked would be ok as suggested by you even though I did not fully cover?

  278. I have question for anyone about the 25K portfolio- I have not been following the moves or the discussion so pardon my ignorance – when a trade is discussed in daily chat, is it sent out as an alert or only listed periodically on the updates?

  279. Phil - I am not at all surprised about topping the ignore list. I knew you would roll that out as a proof of something ? The truth is we actually agree on many issues, I simply choose NOT to align with either side at this point in time because I know it is just a game on all of us and I am not afraid to say so. As far as I am the only one bringing up politics, nothing could be further from the truth. I have lost track of how often you embellish the democrats and go out of you way to demonize the repubs. All I am saying is they both deserve our disdain equally, when all is said and done. The rolling out of   "you topped the list"   is proof of the dishonesty I mentioned. I think we can all do better than this and I am not afraid to say so. I simply think your efforts could be put to far better purposes and results, by letting go of the donk is perfect thing, which in fact does run thru your dialogues as a permeating theme. Beyond that I think anybody who would use the ignore thingy needs to rethink some of their own stuff. Anybody can ignore anybody they choose without such a  "tool". That is what it is , a TOOL and a form of group think manipulation but dressed up to appear very civilized and intelligent ? These are the exact same ploys Obama and Holder use everyday and people are starting to see thru it all for what it is. Dishonesty ! I simply think you are a very smart guy but very misguided and could accomplish much more without the dealings I have mentioned . It is very easy to get people to agree with you in a captive audience and closed cell thinking paradyme, so not a big accomplishment by any involved.
    Lincoln -  keep in mind Phil gets paid how many thousands to write and rebuff what ever he chooses and you and I don’t, nor do we have a staff to implement such . Not saying that is right or wrong, just saying that is what it is and I don’t have the time or the inclination to supply such a vast amount of evidences that would or could state my case. I have done some of that and nobody really cares like the articles about Holder being aware of ATF gun running while the gov establishment is saying entirely different and blaming every other force for poltitcal reasonings. That was from either CBS or NBC ? by the way. Or the idea of insisting on a public trial in NYC for KSM , yet it is just fine to execute Osama unarmed ? Again not saying he should not have been dealt with, doesn’t any of this seem like huge double standards of what is percveived as justice ? You and every one else will simply have do yor own reseaerch to come to your own conclusions and I am sure you will.
    Zero – I think you hit the nail on the head on numerous counts. The most significant being the corporatocracy use of lobbying to buy their way to any endeavor they desire via the corruption of congress and others. You forgot to mention the revolving door policies of congress getting those cushy jobs after they leave office and a few other pieces of the puzzle. But it is a complex hive of corruptions no doubt by all concerned and party is not an issue when looking for the criminality of conflicts of interest present at all levels and the extreme levels that this has occurred and seems to be getting worse , not better. You are one of the thinkers. There are some here and that is a good thing.
    I find politics and economic issues completely inseperable at this point and very much an intellectual/philospical tie as well. I do agree any discussion should be in , off hours , but in all fairness, I don’t write the articles which always bring in the questionable thesis’s and beg differences ? Also when I came here I knew exactly what to expect, so not at all shocked or dissapointed. I came with time limits and lately those have been increased due to events beyond my control which I am obligated to deal with. If any want to live in a one sided loop that is their choice, of course. Good luck to all .

  280. NIcha – That si an excellent  idea. I have spent a lot of time looking for and searching out all the different sources/ideas here and an organized page/resource is a great idea especially for newbies. There is a lot of information here but being able to put your finger on it when you need it is another matter, again especially for newbies.

  281.  Tusca / small brain — Agreed, if you follow the synaptic connections as they course through the "Death Spiral" you end up at your local camping store buying cases of C-Rations and a dozen body bags.  I worry about comets from outer space, too.  But not much.

  282.  Tusca / mercantilism:  Very true, you’re quite right about China, I think.  I doubt that China has managed to develop a sufficiently functional domestic economy to survive the collapse of their mercantilist model unscathed.
    Their diabolical plan to  make tens of thousands of U.S. factories disappear by artificially pegging the Renminbi to the dollar succeeded in vacuuming over a Trillion dollars into Chinese coffers. Unfortunately, not being experienced capitalists, they reinvested it in U.S. dollar bonds and reproduced the U.S. real estate boom with a White Elephant-based real estate stimulus program. That money’s gone, &  U.S. market’s going fast.  
    Spaniards say, "En el pecado, la penitencia" [Roughly: a sin contains the instrument of its own punishment]

  283. Phil – not being a smart ass or picky, but, after reading the lengthy NFLX explaantion I came away even more confused and had to go back and reread to get it ? In all honesty I think some of the trades here get way too complex as is evidenced by some of the comments lately. I really believe in KISS although I know it is niot always possible , But I do think it should be a goal or part of  any plan. Personally I find the blend of options and futures much more straight forward and far less effort. I realize things change along the way, thus adjustments,  and I am a newbie here so that may be part of my reluctance to play some of the trades mentioned . Most of the trades peopl seem to be having trouble with go back a ways and I have paid attenttion to that and been quite cautious. So largely still reading and observing fixes and hedges at least as much as putting on trades, or more so. FYI
    For the record , I could care less about a popularity contest. You need to do that for your business reasonings , I don’t. we can disagree on anything and that is fine. But if any go back and read , you will find we actually agree on far more than disagree. The only contention is how we got here and who bares responsibility for much of it. It is not a one sided conclusion as you seem to think. I really have no other point actaully, when all is said and done . I think Zero offers the best synopsis and any solutions if in fact they exist at this juncture. Not sure given the additional damages endured since 2008 in the form of additional debt burden as supposed solution and all has gone to bankers or politcal cronies. You have mentioned it yourself many times but never ascribe responsibility to this admin ? Not sure why that is ? as it is blatantly obvious. A paradox to me.

  284.  Goober – not to pick sides, but I happen to agree with Phil’s political views and find "the other side" misguided and incorrect. I don’t make a point of discussing it on this site (or most other places) because most people who are of one persuasion are generally not interested in being "converted" by the other side. I think it was Heinlein that said "Don’t try to teach a pig to sing. It wastes your time and annoys the pig." I find your non-political comments to be very interesting so I have no plans to ignore you (or anyone else), but at the same time I do pay Phil for his insights into trading, and I find it hard enough to keep up with all of the comments on the site as it is without wading through a lot of political commentary. I personally find Phil’s posts interesting, and I could definitely see being annoyed by them if you’re "on the other side", but at the same time it’s clearly a big part of who Phil is, and a lot of his trading ideas are guided by his outlook. I don’t think you can have one without the other.
    If you want my views in a nutshell (I’m sure you don’t), I think a lot of Republicans lately, with the Tea Party leading the charge, are trying to hand over as much control to the corporations as possible. The Democrats are by default on the other side, but aren’t doing much to stop them. And the Democrats have plenty of problems of their own. Obama had the perfect opportunity to stand up to the corporatists and banksters, but chose the easy way out by taking their money and doing their bidding. But, given the choice between Palin/Huckabee/Romney/Trump and Obama, I’ll have to pick Obama. But, my first choice would be someone with balls and the interests of the regular person in mind, like Dennis Kucinich. Of course I know he’ll never get elected, alas. Maybe Stephen Colbert? 

  285. It’s funny how they scrutinize your life once you talk about running for president. And why people bail out when skeletons start to appear: 

  286. Wow, look out below… Another dollar dive in the evening! Down 0.40 since the close at noon today! 

  287. tusca – on a lighter note, I have a question for you regarding shoes. I have high arches and my feet get tired quickly.  I will making a trip to India in September and have a lot of walking to look forward to. I have looked at shoes from Merrill and Ecco’s. Are there any suggestions you can give?  Thank you.

  288. Does anybody get the ‘trade trigger alerts’ from All About Trends page?

  289. dollar diving and futures flying…surprise surprise..looks like a painful morning for the shorts!

  290. nicha:
     Not that you asked me, but I have walked in a lot of conditions. Dry and breathable is good — that means Gore-tex or other water-vapor passing laminates, to keep your feet dry, both from perspiration and puddles..  I wear at least medium sox, which will also wick moisture [good synthetics, wool gets soggy].  And, unless you know you will have no rock scrambling to do, avoid the famous "Vibram" hiking soles.   I gave up Vibram after almost sliding off a granite ridge — they are dead slippery — and buy "approach shoes", with much softer [hence stickier]  climbing-type rubber compound.  They wear faster, but they stick, and that is often very useful.  It comes in handy in the desert, woods-crossing-a-creek, anywhere you really would rather not slip — which is just about anywhere.
     Lastly, insoles.  Those that come in even the better shoes don’t compare with the high-zoot insoles you can buy, you can usually just toss the factory insoles in the trash. The after market one absorb shock much better.  The best are visco-elastic polymers, like Sorbothane, and they make a big difference on the downhills or any rough country hiking. You can cut them for a precise fit. There can be a weight tradeoffs with insoles, shoe weight also matters, so it depends on your pace, how much weight you intend to carry, and the terrain.

  291. A high instep can be addressed through insoles, many of which take orthotic form.  Any top sports or hiking store should have a tech that can tailor shoes, sox and insoles to your conditions.  And I have had good luck with various models of Merrells, that you mention.

  292. Kurt – Fair enough. but in all honesty I gave up on republicans quite a while ago and the dems before that. So to think I am on the other side is a considerable mistake. Some how we have to get away from the corporatist elite running the entire show and raping as they go at our expense. The taking sides thing is the problem not the solution at least as related to the two common sides . I noticed there was no support of nationalizing the oil companies idea, so would you call that a political idea and is it worthy of dissent or discussion. I did not bring it up ? and I did not even comment on it as I saw it as complete evidence of extreme political thought. So is it possible to have it both ways ? I am simply stating what I believe , nothing more or nothing less. I wish more people would do the same, I think we would all be better off for it, rather than hold our tongues. IMO that is part of why this counbtry is in such a mess right now, from holding tongues and acquiesance. Of course you and everyone else are free to do as you choose, at least so far.
     If you have actually read what I have posted you will see Phil and I agree on far more than we disagree, so I find it really weird all the angst when I comment about something nobody wants to hear or face or deal with ? Just saying that’s what mirrors are for. If we want to go forward we will have to come together in reason and not political diatribe. That can only be based in honesty. So far we aren’t doing so well with the two party thing anyway. 

  293. Kurt – Here is what I don’t get. You infer that the reps are giving it all away and in bed with the corps. What about Jeff Immelt and numerous others who are neck deep up Obama’s ass ? I guess I don’t see how you can come to the conclusions you do? And in fact I do want to hear your views/opinions . To assume otherwise is a huge mistake and also part of why this country is so effed up. Why is everybody so afraid of words and dialogue even if it is in disagreement and why so much angst ? A totally valid question IMO . More discussion/dissent not less ! How else can we get to a better place unless all conditions are considered ? 
    Personally I believe the answer to the question posed of why afraid of dialogue , is becasue some are afraid of different points of view or their perpsective losing ground/sentiment/validity and are threatened by any opposing or different ideas . I do not find this healthy or progressive, I find it regressive . Just my thoughts. 

  294.  Goober – I guess a holiday evening discussion is a good place for political talk. That’s the main point I was trying to make, that sometimes it gets in the way of trying to make money, or at least focus on the trading. The only reason I put you in the other camp is that you kept painting Phil with the "donkey" brush, and the way you made it sound you were firmly against all of that. I don’t think of myself as a Democrat, though in general their stated policies (or what I infer they are or should be) are much more with my views than the Republicans. There is a great chart that compares left vs. right but I can’t find it at the moment. This one is not bad:
    When I go down that list, I find myself agreeing with most of the Liberal points, and not many of the Conservative points. So that’s where I’m coming from. Like I said, I will vote for Obama before I vote for one of the Republicans, but that doesn’t mean I’m happy with what he’s done. I think he totally sold out to corporations and banks. The Jeff Immelt example is perfect. What the hell was he thinking? Patriot Act extension? No thanks. But, then I read about his trip to Europe and I find myself happy that he seems to be on good terms over there again. I feel a lot of ties back there, especially Germany. I think that’s healthy, though I realize most people in this country could care less, or probably think he’s somehow stabbing the US in the back by doing that. Anyway, not having been around that long, I get the sense that Democrats today are a lot like Republicans 30 years ago, or maybe a bit earlier, and many of the Republicans today would have been thought crazy right-wing loonies back then. What I really don’t understand is how they can get the bottom 50% to vote for them in such numbers. I can understand rich people voting with their pocket book, but what are the other people thinking? Are they really that susceptible to marketing (I know, the answer is "yes, yes they are"). 
    Not to suck up to Phil, but I have to repeat that I find myself in agreement with a lot of his rants. I personally think the idea of nationalizing the oil companies is worth exploring. I have no qualifications to say that, and I haven’t thought through the ramifications, but I do think it’s criminal that we’re subsidizing them, that they’re taking huge sums of money off the table by selling something that is a national resource, that they’re not paying anything remotely like their fair share of taxes, and that that we’re not taxing the hell out of oil to discourage its overuse. I think peak oil is real, I think climate change is real, and I think burning as much oil as we possibly can and encouraging our citizens to use as much of it as possible is a criminal mistake and a disaster in the making. And then to subsidize the companies making money off it, give them tax breaks, and let them make a killing at it is just plain stupid. When it does finally start to run low, we’re going to look back and wonder why we burned it all up driving around, when there are so many useful things we can do with it. Eventually (whether it’s in 5 years or 50) the stuff is going to be really hard to get out, and we’ll have to pay a lot more for it than now just because of that. That will end up reducing its use, but that that point it will be too expensive for many things. And of course it will be that much harder to do everything our civilization is dependent on. 
    The reason I’m reluctant to get into political discussions is that most people I talk to are either in one camp or the other, and the ones I agree with I can talk to all day long but not accomplish anything, but the other camp (I have many more distant family members that fall in that camp, including the Palin camp) it gets awkward and personal real fast. When I was younger I was happy to be antagonistic and abrasive, whether it was getting in people’s faces about religion or not being vegetarian (grew out of that phase, or got more cynical I guess is more accurate), now I just want to get along. There’s not much point in antagonizing people I otherwise like to hang out with when I see them. I think they know how I feel, and if they want to discuss it, I’m happy to do it, but generally it’s just not satisfying. I do wish it weren’t so polarizing. There’s nothing wrong with having different beliefs, but some people get really pissy when they realize you are actually one of those pro-baby-killer people, or condone two men getting married (oh, the horror). 

  295. You might be surprised that I am more of an ecologiocal guy than most. But not because I believe evrything that has been said aboput gl;ogal warming, I don’t, Simply we ahve wasted all our natural resources with little if any planning of the results for future outcomes., It simply does not make sense to think an endless consumption paradyme is viable. So where is the EPA on using Corexit in the GOM as this is a dem admin is it not and no dissnet and lots of cover up taking place on the GOM after affect. And it is still leaking ? So why all the hush hush ? Here is where i see the dishonesty in dem thinking and there are numerous examples If this happened on Bushs’s watch t would be a horrific example and many would be calling for impeachment ! The same is true of Osama assasination, if GWB did that the ACLU and dems would be demanding some sort of legal proceedings . You and I both know this is true so why would anybody be willing to go along with his and why all the phony double standards ? This is why the democrats have such low credibility, because of their double standards on such issues and it has nothing to do with what I might say. I can’t and won’t go along and I am not a GWB fan for different reasons.  The donk thing is simply a common expression I use and means nothing more than democrat.  
    As far as the oil companies  and ehir absurd tax preferences and profits, I agree completely it is all out of whack with reality . I simply think natioanlization is a very bad idea especailly with this president. When would it end ? The tax subsidies can and should be removed . It would be interesting to know exactly how much that effected their profit margin but i would bet it was a lot, which if true would mean it is a huge ripoff of taxpayers , but isn’t POMO and other spending doing the same thing , just differernt recipients/benefactors? I honestly don’t see how you guys can justify some of your reasonings and come to the conclusion that I would vote for Obama more or less no matter what ? I just don’t get it as I see them all as working against all of us . Ultimately that is my real point.
    Some of the things I have posted are intended to create levity and expose small bits of personal ensights/life matters/dealings. I can assure you I have lived a far differnt life than most and have little fear of saying what I think/feel because my experiences have been far different than most .  I have only touched the tip of the iceberg you might say. that’s just the way it is and I don’t want to change any of it. I like being me !
    Phil – in rereading some old post’s I forgot to answer you about how do you know when your dreams start ? Well, you have to want to be in your dreams and it takes a certain conscious effort, you cannot fight it. A good thing to do is to write down a list of all the dreams that have stuck with you over a long period of time, years and decades. We all have them, the ones that standout maybe even from childhood.  After making a list you will find that the list will grow as time goes by and you become more aware of even more that you had simply forgot or repressed . Every now and then take out the list and ponder what it all means and in a while it will all start to make more sense on many differnt levels and it will open up an avenue in your subconscious that allows a much greater acceptance and easier entrance and particicpation in ones dreams . You will actually begin to look forward to them as a part of your sleep as an experience. As that happens, more and more becomes exposed in your dreams and you will have a greater understanding of their meaning/signifigance. It takes a little time but not much and it is free and your going to sleep anyway ? It is simply inner ensight and messages. It has been said that when we pray we are talking to God and when we dream and meditate God is taliking to us. Who knows for sure , but dreams are very revealing at a minimmum, of our inner self.

  296. Phil time to start using muzzles.  Screen after screen of political trash.
    Political parties in so called democracies are designed so stupid masses kept arguing which one is better and who’s fault everything is, while controlling class kept on doing what they do, which is basically fucking the little guy while enriching themselves.  If you don’t agree with that simple statement, you should think long and hard about it.  If you do – what political discussion can there be?  The only discussion needed is a survival one.  Which exactly what Phil provides (ty PHIL)

  297. Well, I can sum up the recent discussion by simply saying:  And what Kurt said.  I have nothing to add to that and better things to do in a short week, thanks! 

    The WSJ reports Germany, just wanting to get a deal inked, is dropping - for now – its push for restructuring in which private investors would bear losses on their Greek debt holdings. The move is a victory for the ECB, which had threatened the nuclear option if even the slightest restructuring were allowed. The euro and stock index futures shoot higher. 

    Now THIS, I find worthy of discussing as it’s moving the markets this morning.  More extend and pretend action, of course but LOOK HOW WELL THAT WORKS!  Investors, Globally, are essentially children that you can fool with a game of peek-a-boo, apparently.  Hide the debt for a second and they simply forget about it and then they are shocked when it reappears.  This is total madness but it seems to be a madness we can depend on – it’s when it stops working that we can panic.  

    Gordon Long takes and extreme, and not incorrect macro view of the situation but so what?  As Keynes says, in the long run, we’re all dead anyway or (much more importantly) retired/out of office/fat from bonus checks – all of which means our current leadership is happy to destroy the future in order to put off dealing with reality in the present.  I used to think at least the Europeans would be realistic (clearly the Chinese commodity stockpilers/empty city builders and the Japanese 200% debtors are not) but that’s completely out the window now with Berlusconi now on the way out in Italy, to also be replaced by some guy who tells the people they can have cake and eat it too and never get fat, etc….

    With LeGuarde taking over the IMF, running on a platform of NOT bailing out Europe, is Germany going to step up and provide 50% more bailout money in the future (IMF has typically put in 1/3).  Zapatero looks like he can’t win an election either in Spain, indication that neither Spanish or Italian people are going to stand for austerity and S&P already downgraded Italy to negative watch.

    Greece, Portugal and Ireland are all looking like the coyote after he has gone off the cliff but before he realizes he’s about to plummet to his doom.  Of course, only the Governments are playing the pretend game, the Greek people themselves are more realistic:  

    Monday, May 30, 8:23 AM Worried about access to their cash in the event of a national bankruptcy, Greek citizens are withdrawing it from the banks in ever-increasing amounts. A total of €1.5B was taken out last Thursday and Friday. As comparison, €2B was withdrawn for the entire month of April.

    Earlier:  The EU elites are pulling the Greek government one way, its citizens the other. Protests by OTE Telecom and Hellenic Postbank staff against privatization follow a mass demo last night against further austerity. This week, the EU and IMF are due to give their verdict on Greece’s drive to cut the deficit.

    So Greece was in panic Monday morning and Germany folded – that’s the real story.  With all the rhetoric and all the posturing about Greek austerity and asset sales, etc – when push comes to shove, Germany just can’t pull the trigger.  If they can’t let Greece go (the smallest of the PIIGS), how are they going to get any sort of concessions from the rest.  Ireland must feel like total suckers now for falling on the sword to protect EU bankers when Greece just said "F you, we’re done" and still got paid.  

    So I don’t think too much of the futures pop and I still like shorting oil here at $101.50 as it’s still not affordable for 4Bn people who use oil – no matter how much money Greece gets.  

    Used to Treasury or the Fed conjuring up however many hundreds of billions are necessary to paper over difficulties, Americans may be surprised by Stephen Jen’s argument that there is a limit to the amount of aid the EU core can gather for Greece. It may not just be politics holding up a 2nd rescue operation. 

    Shanghai’s attempt to snap a seven-day slump fails at the last minute. While some economists aren’t worried about the recent Beijing-induced drop in growth, others worry deeply entrenched inflation will force China to keep its foot on the brakes for a long time.

    So tragic it’s funny:  Ken Feinberg, the lawyer in charge of BP’s (BP) $20B fund for victims of the Gulf oil spill, is starting to reduce his operations having paid out just $4B after processing over 80% of claims. However, BP still faces legal challenges, as thousands are unhappy their claims have been rejected. 

    Yeah, those Democrats are just as bad as Republicans (ie. (in case it’s too subtle) how misinformed and ridiculous is that kind of statement – a complete and utter denial of evidence that at least SOME PEOPLE are doing SOMETHING to reign in the madness in an almost totally corrupt system – notice there are no longer Congressional investigations – those all stopped in January):  Senator Charles Schumer and four other Democratic senators have asked the FTC to probe record profits at oil refiners, with Schumer yesterday saying there’s evidence that "illegal practices…could be punishing drivers." He believes refiners may be fixing prices by cutting back on stockpiles. 


    Even though U.S. gasoline use is declining, refiners have kept U.S. stockpiles below average by curbing production and exporting more gasoline.  That has kept prices up — and doubled oil refinery profits. Refineries are on track to reap their best profits in years.  “It’s a good day to own a refinery,” said Steve Mosby, vice president of Admo Energy, a fuel supply consulting company for fuel retailers.  At one point last week, the margins for wholesale gasoline sold in the Midwest were more than $1.20 a gallon, rivaling levels briefly seen after Hurricane Katrina in 2005.  Oil executives were grilled Thursday by a Senate committee over why an industry earning $35 billion in profits in the first quarter should still receive $4 billion in annual federal subsidies and tax breaks.   “Don’t punish our industry for doing its job well,” said John Watson, CEO of Chevron.  Increased refinery profits weren’t the focus of the Capitol Hill hearing, but oil companies acknowledge that margins are rising. ExxonMobil reported $10.9 billion in first-quarter earnings and said increased refinery margins were one reason its profits were up 69 percent from a year ago.
    Russia’s central bank raises its deposit rate by 0.25 percentage point to 3.5%, surprising markets by tightening policy for the second month in a row. However, the bank leaves other rates unchanged, including the benchmark refinancing rate. 
    Germany pledges to shut down all of its nuclear facilities by 2022. With nuclear power supplying nearly 25% of the country’s energy needs, it will be up to alternative sources to fill the void, a process Angela Merkel hopes to help along with a series of bills to be introduced next week.
    Barclays (BCSwould reportedly consider buying one of Spain’s troubled regional savings banks, or cajas, as long as Spain’s government insured the bank against historic loan losses. Barclays CEO Bob Diamond met Spanish PM Jose Luis Rodriguez Zapatero last week. (previous)

    Let’s hope assurances that today’s housing market woes are "contained" turn out better than last time. One thing’s clear: QE2, which seems to have boosted consumer spending (and equity markets), did nothing for real-estate


    Stock markets are at the "tipping point" of a correction, Nouriel Roubini says, as data from nearly everywhere show a slowdown ahead. “Until two weeks ago, I’d say markets were shrugging off all these concerns," he says, but "we’re going to see the beginning of a correction that’s going to increase volatility and that’s going to increase risk aversion."

    "Cautious optimism" is the takeaway from the latest Deloitte survey of midmarket firms and their growth outlook for 2011. While most believe the economy will continue to grow through the remainder of the year, very few believe it will be a robust performance. Why? Government debt levels, of course. 
    We’ll have to see if the Euro can get back over $1.44 and the Pound $1.65.  The Yen fell below 82 again to the Dollar but it didn’t seem to bother Japanese exporters, who are in free trade talks with the EU now so the Nikkei jumped 2% this morning – giving the global markets a nice push.  
    Neither gold ($1,537) or copper ($4.15) are heading up so it’s hard to believe that a strong economy is driving things at the moment.  Gasoline is $3.045, nat gas is $4.586 (and Germany says no more nukes in 12 years) while oil is holding $101.12 at the moment, after testing that $101 line.  The Dollar is 74.7 and we’ll see if they can keep it below 75 into the open with the futures currently up about 0.666%, which is, of course, Lloyd’s call sign….

  298. Rick Santorm is such a tool

  299. Didn’t wake up until 8AM missed all the fun this morning but oil shorts are working so far.
    Lapper you missed the entire point, but as I read I see a lot of that, here. Just worry about ourselves and everything will be just fine ? I admit I do the same to some degree though, we all do actually. Muzzles, isn’t that what this admin does , that ought to work well for all of us ? A form of censorship. No wonder America is so screwed up ! you prove my thesis.
    Phil – of course you don’t want to respond, too many indefensable positions and good point made .