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Which Way Wedne$day – Let’s Break the $peculator$

QQQ WEEKLYGosh that was some impressive BS yesterday, wasn’t it? 

As David Fry said: "Most market veterans will tell you when markets rise on bad news that’s bullish. It’s hard to question this experience; but, Tuesday put this wisdom to the test. The news was just dreadful. The Greek situation is by no means resolved which is the slender reed bulls ascribed as a reason to rally. Frankly, all this Euro Zone troubles will continue to bob to the surface as troubles get only temporarily papered over.

What news there was featured awful Consumer Confidence data (60 vs 67 expected) which made the previous Michigan Consumer Sentiment data seemed as bogus as suggested here last week. On top of this was the double-dip in the Case-Shiller Home price data and a large drop in the Chicago PMI from 67.6 to 56.6 vs expectations on 63.

The good news from all this is just a repetition of the previous theme: “bad news is good, and good news is better”. This has dominated bullish thinking as they believe interest rates will remain low offering little competition for stocks. Naturally, another round of $7 billion in POMO Tuesday just threw gas on the fire."

So much was going right for the Nasdaq yesterday we just HAD to short it, going for the SQQQ July $24/25 bull call spread at .35 and selling the June $23 puts for .30 for net .05 on the $1 spread with a 1,900% upside if the ultra-ETF (short the Nasdaq) is over $25 at the July close.  Other than that, we mostly stayed on the sidelines in shock and awe of the amazing display of bullish firepower against a background of some of the most bearish news we’ve hear all year.  

$USD WEEKLYWe did, of course follow through with our plan from last week, which was essentially: "If some idiot is stupid enough to pretend to want to buy oil at $103 for July delivery – we are happy to sell it to them."  This comes from our fundamental concept that oil is in no way, shape or form WORTH $103 per barrel and that, even if it were, consumers can’t AFFORD $103 a barrel and, even if consumers were mindlessly throwing themselves another $2Bn a day in debt ($10Bn globally) without cutting back on fuel consumption – that the Dollar, which oil is PRICED in, is also undervalued and will correct up and kill the PRICE of oil at some point.  

Even this morning, we got another chance to short oil at $103 and now (7am) they have crossed the $102.50 line so that’s a winner for the $103 crowd and a new entry opportunity for others on the $102.50 line on the futures if they cross below $102.50 again (nickel stops to keep risk low).  This is not complicated guys – "THEY" are willing to fake a massive demand for oil but this game only works if nobody makes them pay.

When we short a barrel of oil on the futures, we MAKE THEM PAY for the barrels that they pretend they want.  Right now, open interest on the NYMEX is 376,620 contracts for July delivery, which closes in three weeks on June 21st (contracts open that day must accept delivery during the month of July) and that’s 376 MILLION barrels of oil that "THEY" are currently pretending they want delivered at $103 a barrel within 2 months.  That would be 40 days worth of US imports in a 30-day period all delivered to a terminal in Cushing, Oklahoma that has a 40M-barrel handling capacity for the month.  

Usually, what these crooks do is to "roll" the contracts to the next month.  In June they pretended to want 400M barrels but, by expiration day, all but 20M barrels worth of contracts (20,000) had been rolled or canceled.  I had made a similar observation when I was interviewed in late April, as oil was $112.79 a barrel and there was "only" fake demand for 287M barrels and Goldman was fanning the flames with $200 oil calls.  By May 6th those contracts fell to $94.77 and were still $95.35 on the 17th as traders desperately tried to unload their fake demand contracts into expiration.  

They got away with an easy roll in May and now they are getting brave again so I am going to point out that we can take them down again by offering to sell those 376M barrels of oil for $103 per barrel.  You see, anyone can pretend to want 1,000 barrels of oil, the margin on the NYMEX futures is just $6,000 to control $103,000 worth of oil.  By accepting the BS offers to buy 376M barrels of oil that is being made by speculative jackasses, we, the people can force the speculators to buy $39Bn worth of oil for July delivery because we won’t let them just cancel or roll – will we?  

This would flood the US markets with oil for the entire summer and, more importantly, bankrupt many small speculators and, if we’re lucky, destroy one or two investment banks – simply by making them actually do what they pretend they want to do every month – which is buy 20 times more oil than anyone really wants.  

Is there a risk?  Of course there is a risk – Lloyd Blankfein (for example but I’m sure he would never do this) could pick up the phone and pay 4 Nigerian teenagers $100,000 to fire a shoulder missile at a refinery or he could hire some Somali Pirates to take a tanker hostage (in fact, isn’t there a tanker company the the CTFC is already charging with manipulating the markets?) or he could wire $10M to any one of several OPEC nations to have the leaders or the opposition stir up a little trouble and then have his flunkies at CNBC blow it totally out of proportion.

That’s what makes oil trading so much fun – it’s all based on factors that are out of our control and half a World away so the speculators have dozens of tools available to them to manipulate the market BUT – just like the speculators – we only have to PRETEND to want to sell oil for $103 a barrel.  We can also roll our sale so the real bet is that demand for oil will break long before they can sustain a price spike that will break our short position.  

I have to tell you, I love this plan.  Let’s use their own easy-to-manipulate system against them!  It’s very simple, we just need 376,000 people to short one oil contract each and, as long as we are willing to gut out an engineered spike, we should be able to break them.  

Oil topped out at $147 in 2008 so you’d be looking at a $43,000 paper loss but keep in mind that, at the end of 2008, oil was $35.13 a barrel and you would have a $64,000 profit at that price so this works even better if you plan to average in to sell 4 contracts: 1 at $103, 1 at $123 and 2 at $143 which, if we all actually did this with the first 376M barrels, would force them to agree to buy 1.5Bn barrels of oil for an average of $128 per barrel from us for a grand total of $192Bn.  If they are willing to fake that level of demand at $143 a barrel, then we’re going to lose $60,000 ($143-128 x 4 x $1,000) but, if they break and we have 4 contracts at $128 average and oil drops back to just $80 – that’s a profit of $192,000 on 4 contracts!  

Do you know who should do this?  Barack Obama!  The President just so happens to have 726 Million barrels of oil in the Strategic Petroleum Reserve.  The Republicans want the US to sell some assets so why doesn’t the President simply offer to give the speculators what they pretend to want?  The oil would still be in America, it would be delivered to Cushing and put into private storage (which is already swollen with over 1Bn additional barrels for a total of 1.78Bn barrels of petroleum stored in a country that imports just 9.4M barrels a day so that’s a 189-day supply of imports – an all-time record!) where we can offer to buy it again when the price falls below $90 for a quick $5Bn profit.  

How could the Republicans not love a plan that makes $5Bn a month selling oil?  There’s no need to drill baby, drill when we already have a 6-month supply in storage that we can roll over at will (and, when you consider that Canada and Mexico supply over 5Mbd of our imports, it’s really a full-year supply of OPEC crude).  If Obama is unwilling or unable to do this, then I call on our "friends" at OPEC to put their oil where their mouth is and simply sell into the speculative frenzy or even our buddy Chavez – who once offered to sell us all the oil we wanted under long-term contracts for $50 a barrel but was instead vilified by the Bush administration and targeted for overthrow.  Fortunately for Chavez, the Bush administration was already busy overthrowing Saddam Hussein, who had the nerve to try to bypass the den of thieves at the NYMEX and trade oil directly (just a coincidence, I’m sure).  

I spent pretty much all day yesterday warning Members not to fall for the other kind of blatant manipulation as the funds gave us a mega window-dressing day.  Today I will either be a hero or a goat but, when push comes to shove – you do have to go with your gut and my gut was screaming BS at yesterday’s move from the minute we opened all the way until that ridiculous close.  

Today though, we once again have news that is so bad – it may be considered good:  The ADP jobs report for May shows just 38,000 jobs added by the private sector.  That is down from 190,000 jobs expected by economorons (my new term for economists) and down 78% from last month’s 177,000.  The word catastrophe springs to mind as do many other words that have 4 letters and apply to our economic situation…

Of course we’ve been discussing this for weeks but the bullsh*t bullishness was so relentless that even I was concerned I was being too gosh-darned negative yesterday morning.  As I mentioned, that feeling quickly passed and we doubled down on our oil shorts in yesterday’s morning Alert to Members, where we grabbed the USO June $39 puts at .50.  They shot up to .60 (up 20%) by noon but we were greedy and held out for .65 or better.  

It’s certainly been a wild ride in May and, as the great Yogi says: "It ain’t over ’till it’s over" but May is now officially over and it was, in fact, a down month, despite the TREMENDOUS effort that was made in the past week to keep it from being a 5% loss.  Now it’s June and we’ll have a chance in this short week to see what is real and we still have our levels to watch.  Holding the 2.5% lines today will be technically impressive but we only got over those levels by knocking the Dollar down to 74.50 and I’m not at all sure that low level can be sustained and that is where the whole thing begins to unravel…

Can the Dollar be held down low enough to lift the markets?  Well, that all depends on how screwed up the rest of the World looks by comparison.  Yesterday’s Dollar destroyer was news out of Europe that Greece is "fixed" but it’s fixed in rhetoric only as nothing has been signed or voted on and we’ve been down the road of false promises and good intentions many times before in Europe where first it was "just" Iceland, then Ireland, then Greece, then Portugal and we’re just about at the point where they are making the same soothing noises about Italy and Spain that they used to make about Greece and Portugal so I find that to be a very strange chain of logic to follow towards a relatively strong Euro.  

Australia’s GDP SHRANK 1.2% in Q1, the largest decline in 20 years INCLUDING the 2008 global collapse.  China’s manufacturing grew, but at the slowest pace in 9 months at 52, with 50 being flat.  In the UK, May PMI also fell to 52.1 from 54.4 and that is the UK’s weakest number in 20 months and the entire Eurozone’s PMI fell even more drastically, from 58 to 54.6 with Spain and Greece each falling into negative territory below 50!  Spain’s Catalonia region reported a NEGATIVE 2.7% GDP in Q1, twice as bad as expected by economorons who study this sort of thing for a living.  Paul Krugman says eurozone monetary tensions have reached the panic stage: "The water level has now dropped so far that the fuel rods are exposed. We really are in meltdown territory."

While Spain is pulling back money and bankrupting the provinces, China is planning a massive bailout of its local governments – shifting RMB2-3T ($308-463B) of debt off their balance sheets, and mostly onto the central government tab. Local debt is often discussed as a risk to the Chinese economy; it’s been assumed Beijing would need to step in with its cash. Now the worry can shift to central government debt

The so-called Indignant Protests in Greece, purposely peaceful so far, get a bit rowdy as demonstrators block the exits from the Parliament building, forcing MPs to need police escorts to their cars. An appearance by composer Mikos Theodrakis, who calls the bailout a "national betrayal," drew 20,000 protesters.

How long before the American people wake up to our own "national betrayal"?  This chart series from Barry Ritholtz’s site says it all:>

click for all 22 charts

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  1. Oil Lines
    R3 – 106.35
    R2 – 104.87
    R1 – 103.88
    PP – 102.40
    S1 – 101.41
    S2 – 99.93
    S3 – 98.94
    Huge volatility again… 

  2. 8:15 AM May ADP Jobs Report: +38K vs. +190K expected and +177K prior (revised from +179K). ADP notes "a deceleration in employment, while disappointing, is not entirely surprising," but this is quite a sharp miss

  3. Could someone explain "open interest" to me? It seems obvious, but I don’t understand the way it’s interpreted by traders. To generate open interest in an option, my understanding is that people have to "sell to open" that option. So a high open interest suggests that traders feel the underlying will move the other way (ie, if traders are selling calls, they don’t believe the stock will rise). A high put/call ratio is commonly described as a sign of fear that the market will fall, however shouldn’t this mean the exact opposite?

  4. Margins / Phil – I guess they are trying… I have an old margin list from TOS (last year’s) and they had $5062.50 for /CL margin and $2531.25  for the /QM margin. I just checked today and now it’s $13,000 for /CL and $6500 for /QM. On the other hand, the margins for NatGas have gone down… It’s almost like a game!

  5. Stjeanluc: I think you have found the "secret lever" to the commodity markets. (think of silver lately)
    here exclusively the formula for commodity margins: (margin) = (volatility of the underlying) + (the negative of the open interest of the exchange members&friends)

  6. Pentax – Indeed… I was not going to mention silver, but look at the margins – from $9787 to $30K! The small guys can’t really play anymore. But that’s the plan.

  7. Phil – What do you think abt those $32 TBT weekly calls from yesterday?

  8. One heck of a bailout in China!
    Jim Chanos is probably right. This is one giant bubble ready to pop! 

  9. And more evidence about China – housing inventories rising. This sounds eerily familiar! 

  10. Phil/Oil:
    Yesterday you indicated that USO would be the best vehicle for shorting oil if the CL futures aren’t available.
    If you were to short USO, which option would you recommend?

  11. PP for today:

    drcraig – open interest is buyers and sellers at that strike.  I think there are a lot of factors going into the movement of the stock prices, and if the open interest (OI for short) is large, there is what you mentioned about the stock not going that high, and thus people willing to sell there, OR that traders believe that the the stock is undervalued and those options represent the best ‘risk/reward’ for the price.  On the P/C ratio, if it is high, yes traders believe that the stock could move down, but if it goes up, it causes an overreaction an the short squeeze could drive the price up beyond where it should be.  Investopedia dot com has a lot of good info on this.

  12. TBT/morx – don’t throw good money away.  TLT is the place to be for now.  If not, go out in time and down in strike.  I believe TBT is going to $30 again.

  13. Unless you are going to short it :) !

  14. Ahhh, Pharm. If only that was the intention of my question. I seem to continually fall for the TBT trick. I bought them yesterday for 1.25. But thanks for your advice.

  15. That and UUP. Can you get an app that sends a shock when you type certain letters?

  16. Thanks Exec. I have read this summary in the past, but was unsatisfied by the inability to know whether open interest refers to options bought or sold to open. I guess you just can’t know. They are simply "open".

  17. So, at least in TNA’s case, almost the entire rise in price due to the massive stick into yesterday’s close has been negated after hours.  I wish someone could explain how this is possible.  There was massive buying into yesterday’s close.  There is miniscule volume after and pre hours of trading.  How is it that ‘they’ can afford this?  Is it because the know it’s going higher today?  Or is there enough money to be made squeezing the bears into capitulation at close and then squeezing the bulls into capitulation at open?  I think if someone could explain how this works we could understand one of the great weapons of Wall St.
    Congratulations Shadowfax!  I held overnight, too, but it was a small position.

  18. Phil, Oil: why cant “they” profit also from declining prices just as they purportedly do on the stock market by goosing the market and then positioning for a fall? What they care is about buying lower and selling to suckers higher but why would that necessarily have to be at $100+ oil? If prices went down to a more realistic $70 wouldn’t they be able to profit as well at that level of pricing (making the same # cents they make on each contract at a higher price? )

  19. oil coming right back up

  20.  Morx:  But in the end we’ll be right about TBT.  And UUP.  In the end we’ll also be dead.  I’m rather curious as to which comes first.  But I’m locked and loaded for the apocalypse [of my net worth] :}

  21.  Pharma,
    You see the Put/call ratio as bearish?  I’ve heard very smart people make to case that this market will refuse to fall much until we work off the high put/call ratio…

  22. CEO of OPK bought another 50K in shares yesterday (that is over 104M shares he owns)  Total float is about 285M.  Either the dude is senile, or he really believes in them…..I vote for the latter.

  23. Matt/the mystery
    I’ve been asking myself the same question for years. 
    You would think that there would have to be a coordinated effort between everyone that offers pre/post market trading to "fix" the price.  It’s hard to imagine that "they" could collude to the point of actually making it happen.
    As for the stick……that totally baffles me.  Is it possible that the Bots save up their firepower until the end and just force the price up?  If so….then they are the ones buying high in a environment in which the object of the game is to buy low.  It just doesn’t make sense to me.

  24. Iwm 86.07 85.24 85.00 84.47 84.21 83.86 83.60 83.43 82.78
    Matt My position was small also.

  25. peedle – I don’t see it either way.  Right now, you are probably correct, but the weeklies really put a crimp on the trading targets, as it is so easy to pin and control the movement so that the big boys do not get crushed (and make more money).  So, in essence, I am not sure of the P/C ratio anymore.  If I were to venture a guess, $135 looks like the pin this week, but tomorrow will be more telling.  That is all based upon OI.

  26. hanna is not gonna be happy after vacation, RIMM is getting crushed on NOK’s earnings.  Ouch.

  27. Phil on the shorts USO/XRT
    I entered the USO trade 1x @ .56, what is the goal for exit on this one? 20% and trailing .05 stop? 
    XRT I am naked 20 Sept 53 Puts (down net $1.10 overall) what would be the next move on these?

  28.  I think it will not be the same this time around.  Everyone including my mother (really) is either hedged or ready to try and profit from a downturn.  How could a major correction sneak up on this market?

  29. NFLX up again

  30. Boom…..

  31. Sold a few calls in DEPO at the Jul $10 for 25c (spread was 15-30c), and they when through like hot cakes….I think they have more to run…..

  32. TLT / Pharm – Do you have a "prediction" for TLT? It is now over it’s 200 DMA and I see the next R line around $99. We last saw that in November. Also, is there a way to calculate rates from TLT price? This latest move seems to me like doom for TBT. Just to go back to 40, it would need TLT to go to 82 (based on calculations made from the last time TBT was at 40). That would be one big drop…. Unless we see a sharper TLT drop, but I don’t see that as I would expect more bad news before good ones and bad news seems to be good news for TLT.

  33.  Phil or Pharm – I am still stuck with 10 June 34 TBT puts. I can roll them to September 32s for about even. Is that a wise move at this point? Or pay extra and roll down to September 31s? Or just bite the bullet and get rid of it this thing before it gets worse?

  34.  TLT up can only mean "flight to safety."  If U.S. Treasuries represent "safety" — perhaps because no one believes that the dollar’s low level is sustainable, and holding U.S. equities is a bad idea with a rising dollar — it makes perfect sense.  TBT is just another victim of the currency wars, then.

  35. Stjean – please don’t use words like "doom" around us. Has a very negative affect on my attempt to smile and look cheerful.

  36. Good morning! 

    FAS falling fast.  Now I wish we did fully cover but too late to chase.  

    This is very bad as the markets are down half a point, giving up all of that ridiculous stick into the close and now chewing up yesterday’s ill-gotten gains as well.  Oil is hanging tough at $102.30 but still a good short below the lines as long as the Dollar holds 75.50.  

    We’re watching those 2.5% lines to see if they hold up, keeping in mind we should at least see bounce support at Dow 12,505, S&P 1,333, Nas 2,808, NYSE 8,487 and Russell 835:

    Only the Russell is clearly above the line and, if they intend to lead us (as they usually do) to higher ground, then it’s the 4% line at 848 that’s going to be a key cross for them while a RUT failure at 835 will be a very bearish sign.  As we expected last week – it’s the NYSE that’s the anchor holding the rest of the market back.  

    I still like the SQQQ play from yesterday (outlined in the morning post) and I still like those USO June $39 puts, now .55 but that does not mean I still don’t think we should get 1/2 out even at .65 in the $25KP to get back to 20 puts.  

    In the Income Portfolio, let’s buy back those DIA short June $120 puts at .35 (.50 profit) as that’s a nice win and we can sell something again later.  

    Wednesday’s economic calendar:
    Auto sales
    7:00 MBA Mortgage Applications
    7:30 Challenger Job-Cut Report
    7:45 ICSC Retail Store Sales
    8:15 ADP Jobs Report
    8:55 Redbook Chain Store Sales
    10:00 ISM Manufacturing Index
    10:00 Construction Spending
    12:00 PM Fed’s Pianalto: Labor Markets and Federal Reserve Policy’
    12:30 PM Fed’s Tarullo: ‘U.S. and international financial regulatory reform’
    2:00 PM Hearing: Fed Lending Disclosure

    At the open: Dow -0.2% to 12544. S&P -0.16% to 1343. Nasdaq -0.2% to 2830.
    Treasurys: 30-year +0.48%. 10-yr +0.29%. 5-yr +0.17%.
    Commodities: Crude +0.03% to $102.73. Gold +0.02% to $1537.10.
    Currencies: Euro +0.22% vs. dollar. Yen +0.72%. Pound -0.28%.

    MBA Mortgage Applications: -4% vs. +1.1% last week.

    May Challenger Job-Cut Report: 35,135, virtually unchanged from 36,490 in April. "Despite several signs of weakness in the recovery… most employers realize that these types of ups and downs are typical during recoveries. So, it is unlikely that we will see a sudden resurgence in corporate downsizing in the months ahead unless there is a major shock to the economy."

    ICSC Retail Store Sales: +0.4% W/W, vs. -1% last week.+2.8% Y/Y, vs. +3.1% last week. "The East Coast heat wave during the May 28 week boosted demand for seasonal goods and helped offset cool weather in the West to drive up same-store sales by 0.4%."

    May ADP Jobs Report: +38K vs. +190K expected and +177K prior (revised from +179K). ADP notes "a deceleration in employment, while disappointing, is not entirely surprising," but this is quite a sharp miss. 

    April Construction Spending: +0.4% to $765B/year vs. consensus +0.1%, +1.4% in March. 

    "Frogs of the world unite," urges Bill Gross, likening Treasury investors to frogs being boiled alive – they don’t notice it’s happening until they’re dead. Rather than simply lying there and taking it, he suggests looking for the "safe spread" by buying floating rate notes with less durational risk. 

  37. Pharm 97 on TLT 8-)

  38. Doom / Morx – Sorry… Didn’t mean to darken such a cheerful day! ;-)  

  39. LOL!  What a friggin racket this market is!!  Whose BTFD now?

  40. FU CMG,PCLN,and NFLX!!!!

  41. I think today is our May 2nd. 

  42. Man, that was one seriously orchestrated drop!

  43. matt
    Blew right through my 84.21 pivot point. Where is the bottom?

  44. Funny, gold held up really well…..:-)

  45. I am so proud to share citizenship privileges with both Bernanke and Trichet who are on their way to destroy the financial world as we know it.
    I wonder if I could use that on my next resume! 

  46.  Phil, 
    RIMM, I am short the Sept 47.50 puts from your recommendation about a month ago. They continue sliding hard (I am down over $5K on them already), I know its early but just concerned with the underlying story. Are you still bullish on them? When would I have to start looking for a roll? 

  47. Can some one explain to me why just about every time the market goes down these momo stocks like CMG go up??? thanks

  48. why are all the f n MoMos up today again?

  49. good question Yodi!

  50. exec, pull up a 60 min, 5 wk chart of TNA with volume.  Yesterday and today over 2 million shares were sold within the first hour of opening within approximately the same price range.  I think this might be how they can afford to goose the stock intra day.  If the intent is to get out, they have supported the price beautifully to do so-

  51.  praise the lord I stayed short XLF yesterday!  More downside coming?  Maybe buy back 1/2 here?

  52. TLT – I think a few weeks ago, I pointed to $95, then $97.5, then $101 as the targets….$99, sure then.  Since TBT is an ultra, we expect them to lose value.  At what rate, I don’t know b’c I tend not to play it, or any ultra for that matter.  That’s why buying or selling it or any ultra for anything but a short term investment (ie, swing trades) to me, is a losing proposition.  Are rates going up, sure, but Japan is still waiting.  So will we.

  53. RIMM – Interesting that NOK takes down RIMM in sympathy but both GOOG and AAPL are up. It seems that the market has decided that these last 2 will rule in the smartphone market. 

  54. ISTA – well, support here.  If they move through, then the calls are not just toast, but burnt toast……

  55. TLT / Pharm – Thanks. I was calculating the TBT decay based on previous values. The last time TBT was at this level, TLT was at 102. TBT rose to 41 when TLT dove to 88! So 14 points of down TLT gave 9 points to TBT in 6 months. But you are right, decay is hard to calculate. 

  56. Pharm, that’s a good point on Japan’s rates not moving up despite all the printing.  However, Japan is an export driven country whereas we aren’t.  However, as the world’s largest consumer market, the exporters have a vested interest in keeping our rates low for us.

  57. Someone a while ago mentioned that one reason momo’s go up when indices dive is that some traders have to cover their shorts on momo’s as their portolio margin is squeezed by the larger portion of their net long portfolio being pressured by the downward movement of the indices.   Clearly this may be large hedge funds or the i-banks, not small potatoes.   If indeed this is true, one would expect a large down movement later as short covering subsides and traders reestablish shorts in a less bullish market environment.

  58.  xlf 15.53!!!
    Now I’m just gloating, but YEAH!!!!!

  59. Phil, since the market is falling while the dollar is falling also, do you think it would be wise to add some downward positions?  I am well hedged for a drop but It seems like it could really break loose….  If the dollar recovers, wont that send the market down further?  Any suggestions on downward plays?  TIA.

  60. I bet this is the May 2nd I was looking for on May 31st instead of June 1st.  Dumba$$!

  61. Open interest/Dr. C – It’s just the amount of calls or puts that have been purchased.  The counterparty doesn’t have to actually have the commodity to create a contract, you just need a buyer and a seller of the contract itself.  I high amount of puts vs. calls mean more people are betting on things to go lower – you are making the simple more complex than it is.  

    NFLX $271!  

    Margins/StJ – It is a total game.  Some days I hit a contract limit selling the same number I sold the day before without a trigger.  That’s why we have to take those adjustments seriously but, once the marginal traders get flushed out – it makes very little difference to the pros what the margins are. 

    VIX up 7% today (so far).  

    TBT/Morx – Those TBT $32 calls fell 50% in one day on a clear panic to US cash but we can’t count on it lasting less than 2 days so the move is rolling to the June $32s for .35 and then doubling down at .98 for 2x at avg $1.34.  

    China/StJ – On Mofo of a big shoe to drop over there.  

    USO/Exec – I still liked those June $39 puts this morning.  They just hit our target of .65 and now back to .60 so I still like them as we bottomed out at .50 and oil still has a long way to fall.  

    Open/DrC – The amount of contracts open is simply a reflection of how many open contracts there are.  USO, for example, has 27,159 June $39 puts open at the moment.  That means that, should USO fall below $39, there are 2,715,900 shares that can be put to a contracted buyer (the put seller) for $39.  On the call side, there are 14,937 $40 calls open so 1,493,700 shares of USO will be called away buy buyers who have an OPEN INTEREST in owning the stock at $40 and paid for that interest through the purchase of a $40 call contract, 14,947 of which are open at $1.17.  

    How/Matt – There are index puts and there are futures and all sorts of fun ways to make money.  Keep in mind I have been warning you guys for weeks that the low VIX and high push combo make it possible for traders to accumulate MASSIVE amounts of cheap puts (like the above-mentioned 2:1 open put/call ratio on USO) that will let them dump tens of millions of shares are any price with complete impunity.  So they can well afford to jam things higher and let them drift back down as any sales they make over their put prices are pure bonus.  

    Declines/Amatta – They can profit from declines and they do but declines are good for the country and rises are not.  I am just advocating we punish those who seek to profit from raising the prices.  If they were pushing oil below $40 a barrel, I’d be inclined to call a floor and say it’s time to buy but, as we’re at $103 ($101.70 now), I think it’s safer for us to play it like the top of the channel than the bottom as it’s not a random number – billions of people have to ultimately buy oil so it can’t afford to live in gold’s fantasy land where rich people sell it to each other over and over again without ever taking possession of the physical metal.    If oil were $85, I would have no interest in playing because it could go $15 in either direction but the ENTIRE key to playing the markets is to recognize a channel and then buy low and sell high within the channel.  You cannot look at every number like it could go up or down – that’s why you end up bailing at inopportune moments and make poor entry and exit decisions.  

    LOL ZZ – We’ll see what happens first.  

    Mystery/Matt, Exec – Don’t forget that the end of the month is a trigger for fresh 401K money to be allocated so it’s really the working poor of this country that were yesterday’s bag-holders, not the funds, who simply used their bots to buy and sell to themselves and drive up the price for the retail suckers who blindly buy through ETF allocations that are encouraged by one of the 5 choices they typically get by their "adviser" at work.  

    74.38 on the Dollar did not help much.  

    RIMM/Pharm – And this cancer thing is serious.  Lawsuits will follow.  

    Goals/Amatta – The goal is always to make 20% but 10% is nice to so when you make 15% you damned well better take 10% and run if it pulls back.  Why are you day trading?  I really can’t believe you are day-trading – it completely dumbfounds me!  On XRT, Sept puts expire in 107 days and XRT fell 74 cents this morning – is this really where I need to be focusing my attention on this morning?

    Gold is flying – $1,544!  Silver back over $38 and could get a nice pop too so a good futures play above that line.  AGQ $255 calls are just $2 and that’s a pretty good deal with AGQ at $200 as a 10% rise in silver to $42 would put AGQ at $240 making them a good hedge against a weaker dollar.  

  62. Pharm / ISTA – how about a july 7.5 put at $0.25 as a hedge?  if they don’t get approval, won’t they fall hard?  not sure how liquid it is.  NWBO doing well.  any news on them?

  63. Cell phones and cancer – that has been going around for ages (at least 10 years), and the rates of glioma are not higher than they were 10-20 yrs ago.  Phooey, I say.  RIMM has to do with NOK, once the leader, now the lagger. 

  64. strong support 83.60
    Out of TZA

  65. ISTA – I don’t want to throw more money at them.  That is why I noted that this was a binary event, and a gamble at best.  Where they settle remains to be seen.  I think they get approval, but $10 now will be a tall feat.

  66. Look at FAS!  It’s taken out 4 huge days of gains in a little over 1 hour of trading!  Yeah, this is a healthy market.  And they wonder why there’s no volume!  Only folks left are sharks and wanna be sharks.

  67.  Phil,
    Any thoughts on this dip NOT coming from a rise in US $$’s?

  68.  Everyone I know how used to swear by their Blackberry is on an iphone now.  I NEVER see BB’s anymore.

  69. I know WHO..

  70. Matt,
    More like sharks and chum.

  71. AEZS – if you still have it, they are at their top from a few months ago.  I would sell another 1/2 and let the rest run.  I am out.

  72. Phil / afford it:  Good points.  Of course it’s through options.  Should have known that-

  73. Netflix (NasdaqGS:NFLX) initiated with an Overweight at Barclays…

  74. Phil, 
    On oil I understand your position clearly, and I couldn’t agree more. My question was merely why would "they" want  to continuosly take oil higher if they can profit either way…(can’t they do the same at a lower price level?)
    Day trading, as have said I am left with the FAS, XRT and GMCR from the 25K. And I am trying to come out of those with a profit or at least even. BTW I did ask yesterday if we should fully cover FAS, which obviously was the thing to do if it was, as you correctly called it, a fake move up to window dress. 

  75.  15.50 is clearly where the bulls are defending XLF.  

  76. Phil--am I on ignore :-(     --on the original NFLX  spread--would one roll the 4 NFLX June 250  callers  to 270s now ?—and have 3 sept 295 calls
    also what do you think of NRGY?

  77. By the way, the reason silver may go up 10% is not so much that the Dollar will drop 10% as they may once again reduce the margin requirements on silver.  

    Mom/Peedle – I think she’s made a wise decision.  

    NFLX, CMG, PCLN, WYNN, BIDU – it’s a MoMo-fest holding up the Nasdaq and could become super-ugly if it breaks.  

    TBT/Kurt – I would just roll them along IF you have to as we still have 16 days to June expiration.  How low do you think rates will go?  Will people buy 10-years at 2.5%?  That’s what it takes to get TBT 10% lower, to 30.  Are you expecting 2% – how long will it last and can I have you refinance my home loan at that rate please?

    Bad Cop/Crazed Cop/StJ – I love that title!  

    RIMM/Amatta – Is it September already?  By all means panic.  If you don’t REALLY want to own RIMM at the net strike then you shouldn’t have sold puts in the first place – this is something I have said perhaps 1,000 times in the past year.  RIMM took a sharp dive today and if you insist on reacting to one-day moves in a stock, you can still roll the Sept $47.50 puts (now $8.40 with $2 of premium) to the 2013 $40 puts at $8 and, if you don’t REALLY want to own RIMM for a net below $40, then why did you not stop out when these puts moved from $4 to $8 over the past month that you’ve owned them?  That is not a rhetorical question – I am really trying to figure out what it is that goes on in your head.

    I still like RIMM long-term but this cancer thing (as I have been saying for 2 days now) is very serious and it’s not a good time to press any bets on Phone makers nor is it time to panic out of them. 

    MoMos/Yodi, Jabob – Because, by nature of their outsized runs, they make up a disproportionate percentage of the indexes.  Let’s say PCLN started off as one quarter of 1% of the Nasdaq 100 at $50 and now they are 2.5% of the Nas at $500 but they are still just a $25Bn company with just 1.2M shares a day traded on average so you can get a lot more manipulative bang for your buck pushing money into PCLN (say 100,000 (10%) shares at $500 = $50M) than CSCO which is a $91Bn company that trades 73M shares a day at $16.60 so 10% of CSCO is 7M shares x $16 = 112M) to try to move CSCO up, more than double and the heavy cap means you are much more likely to get buried by sellers if you break trend.  

    XLF/Peedle – Too dangerous to guess at the moment.  

    Decay/StJ – Yes, it is hard to calculate but that’s a great way to benchmark it!  

  78. stj: Great article on volatility and correlations.

  79. Down/Robert – Absolutely.  it’s very bad if the dollar is down AND the market is down because we have NO evidence that the relationship is broken and, therefore, we have to assume that the dollar drop is masking more weakness than we’re seeing at the moment.  I hate to chase such huge dips but the Nas still has a long way to fall if they break below their 50 dma at 2,795 and the QQQ July $57 puts at $1 are a nice way to play.  If the 2,800 line holds up, you can short the weekly $58 puts (now .41) as a momentum play or just a 1/2 cover to lower the basis with many weeks to roll. 

    RIMM June $37.50/40 bull call spread at $1.65, selling the $37.50 puts for .83 is net .82 on the $2.50 spread that’s still 100% in the money with a 205% upside at $40.  

  80. Thanks for the explanation Phil!
    But I still say FU Momos!

  81. phil..  TZA june 40 calls..  sit tight and watch still or add some here?

  82. Silver / Phil – This validates what we said earlier. Not content to just play with currencies to move commodities, they now play with the margins. Hey, Mr. GS, you want 10% on the silver to cover your longs, by all means, we’ll lower the margin by 50% so that retail guys can come back into the fray for the next round of skinning! Need to cover your shorts, let’s raise margins and the skinning begins! It’s just unreal! 

  83. Barclays 
    This is utter nonsense: MARKET TALK: Barclays Positive On Internet Sector, This is stupidity from 1999. Surely they don’t pay people to do in depth analysis and recommend stocks that have doubled or tripled with the same dumb logic from more than decade ago.  Wow what an interesting area to start covering the INTERNET, surely they are the last to jump on this bandwagon.

  84. Volatility / Jbur – The charts in the article does seem to point to troubles ahead although you could not tell from looking at the VIX which is now a joke! 

  85. Hoping this 40 point pull back is as big of a stick they get today.  Love to see us finally come out with a day we’re down over 150.

  86.  Phil, 
    RIMM I qualified the question saying "I know its early" and said because of the new information "do you still like them?" to which you are saying you are not so sure anymore. AND no I am not panicking out of the position, but rather trying to have a plan in place (as I didn’t foresee nor do I think you either, a 20% drop in 1 month). What goes in my head? I was fine owning them at net $45 otherwise I wouldn’t have taken the play, however things change as you are yourself pointing out! I don’t know why is it that when I ask a question you immediately take it negatively and lash out with demeaning comments.  

  87. it seesm NFLX is the only momo that never come down and it is the only momo i shorted :(

  88. Some ADP/Job number correlation analysis:
    I guess we’ll have to downgrade expectations for Friday – which would of course lead to a rally! Mo POMO! 

  89. OPK: Hello Pharm, You know, of course, that CEO of OPK (Philip Frost) is also the Chairman of Board of TEVA.

  90. Cancer/RIMM – putting on my epidemiologist hat, I am frankly a bit taken aback by the WHO report on cancer (or was it brain tumors of all sorts, an important distinction?) and cell phones. This is not new research, it should be emphasized, but a consensus by this group on what’s already out there. What’s already out there is pretty unimpressive. There’s a good, balanced (I know, weird, eh) article in today’s LA Times, with interviews from Jon Samet and David Savitz, both very respectable and capable epidemiologists. Samet comes down on the side of "more research is needed, let’s keep on eye on this", which is a long way from recommending restrictions. Savitz takes the stance of "where is WHO coming from on this; the research is mostly in the no harm category." The one thing I don’t see, and that I’m too lazy to look up, is what the mechanism of harm might be, and what other gadgets (that may have been in use a lot longer than cell phones) might also generate the same harmful effect. Do regular phone handsets or headsets also generate whatever "radiation" (using the term broadly)  WHO is concerned about? Something worth looking into.

  91. Phil/NFLX, I have June $220 long puts at $4.4 (now $0.25), sold half number of June $230 puts for $1.1, short Sep $250 call at $23 (now $39.5). I need to make adjustments this week as I’m going away for vacation until the end of June. I’m thinking of rolling to Sep calls and puts as the earnings should be in July. I just do not beleive this is a $250 stock, let alone $272! What would you do for adjustments? Take your time and we can discuss after hours for a better plan. thanks a lot!

  92. Looking at a couple charts, they can bring NFLX close to 300.  It it goes straight up to that point, I am writing many open calls on it.

  93. Oil – so what channel do you see now – 100-105?

  94. And like you say to me, it also dumbfounds me that just one minute ago you said to me it is not a good time to press any bets on the handset makers, and the next minute you are putting up a new play on them? 

  95. Phil/USO
    Buy June 39 puts correct? 

  96. This is not a market that is bouncing.  This a market that will sell off further by end of the day.  IMHO.  I’m looking for TNA=84.

  97. Matt,
    How are you playing this today?  Did you sell your short?

  98. I would think you have to be pretty bearish with the market down this much with no strength in the dollar.  If the dollar just comes up to 75 we’re  looking at over 200 pts for the day.

  99. and I still think about the fact that high oil pricesfor an extended time have been the spark that has crashed the market every time.  We’re getting to extended time level since we’ve been averaging over 100 a barrel since mid Feb.

  100. Be careful…..they have a lot of POMO powder in the keg and will probably double down by dropping the dollar to salvage today.

  101. Oil
    New England beach travel was very low this year on the big holiday.

  102. Phil / Fundamentals    I stayed with your take on fundamentals, and kept my $100k of TZA and EDZ overnight.  I just don’t see where any good news comes from next.  Inclined to just hang in there with these and add you USO and QQQ puts.  Or, should I cash in now and buy back after the usual afternoon bounce.  BTW EDZ has only gone up 1.8% today and is still down 3% from my Friday entry – puzzling relative small increase in this index, so seems this one has the most room to rise on looming global weakness ?

  103.  By the way… Thank you Phil, for keeping me clear of any long plays yesterday!

  104. As I was posting 83.73 is an up/down point, the answer was there.

  105. Covering here for an hour or so..

  106. Phil,
      Would it make sense to roll Jun SDS $21 calls (purchased for ,38) to Jun $20 calls for $.45 and sell the Jun $21 calls  for $.38 to put me into the $1 spread for net $.45?

  107. Btw, where is Snow today?  Some people see dead people.  I see patterns!

  108. @Phil do you like any long play for the remainder of the day? dont you think they will try to gain back at least half of the losses? i know the dollar is down, but i believe all this week they have a pretty strong POMO on their sleeves…

  109. If anyone needs sugar, I have a guy who’s got 250,000 tons a month unclaimed in Brazil because his Middle-East buyers are in turmoil!  They also have diesel fuel and jet fuel….  If nothing else, will be worth watching sugar as it tests the 50 dma.  

    Dip/Peedle – See above, weak dollar masking even worse dip. 

    They/Amatta – Depends who they are.  They are XOM, who make more money on higher oil – that’s simple, right?  Oil is not like gold – 89M barrels come out of the ground every day and MUST be sold and MUST be used or they pile up fast and make a huge mess.  Figure a barrel is a 1 square yard 3 feet high so 4,400 barrels is an acre so 88Mb is 20,000 acres of oil a day that must be put somewhere.  Also, just because FAS would have worked out based on our premise that the rally was false – the level by which you would have been screwed had we been wrong would have been insurmountable – you just don’t take risks like that – ever!  

    And there goes XLF $15.50…

    NFLX/Savi – No, I see you.  Sorry if I missed one.  I would not do anything with NFLX as there are 16 days left and the market is weak.  Of course you should have bought another call but water under the bridge now.  I’d actually sell the long calls and hold the short calls naked at this point and rebuy 8 July $300s (now $4.50) ONLY IF NFLX pops $275 with a stop on 1/2 back under that line – just to stop it from getting totally away but the Sept $295s are $16.20 and that is a take the money and run situation.  

    TZA/Topher – You really need to be more specific.  Of course we’ll get a bounce off a 1.25% drop back to the 1% line (weak 20% bounce on 5% rule) so you can cash out (selling into the initial excitement) and look to take a new position if they move further down or you can set a stop at the 1% line at about 840 and hope we make it below the 1.25% line – which is not likely in a single day. 

    Gold $1,550, silver $38.32, copper $4.13 is way lagging so this is a panic move to gold and silver and not at all economy-demand driven.  Oil hanging very tough at $101.93 with the Dollar at 74.42, Euro $1.444, Pound $1.639, Yen 80.82 (way too strong).  Nat gas is $4.62 and gasoline is still $3.029 with inventories tomorrow.  

    Unreal/StJ – It is amazing.  What kills me is the lack of regulation on all this nonsense.  

    LOL Lincoln!  

    Why/Amatta – Because you ask so many of them!  I cannot micro-manage your positions and – much, Much, MUCH worse – you have absolutely no respect for my time and decide to ask me about 4-month out positions when clearly it’s a busy day when many, many people have more urgent matters.  Also, it’s incredibly annoying that you didn’t stop out with a $1 loss, in which case now would be an excellent opportunity to get back in at a much better price.  Think about what you are asking me – it’s the same very basic rolling adjustments we talk about day in, day out, week in, week out, month in month out – I have given my opinion on RIMM and the telcos several times in the past few days but you demand personalized attention so I can tell you something you have historically ignored 75% of the other times and you wonder why I take it negatively????

    Good one StJ:

    Cells/Snow – I have no doubt there is some harmful effects from any type of transmitting device but the harm is "negligible" and the instances in which cell damage is not quickly repaired and turns cancerous is probably akin to being struck by lighting but, with Billions of users – that’s a lot of "victims" for lawyers to represent.  I don’t think it will amount to much and, frankly, it would be nice if the Government stepped up one day and said "there are an acceptable number of casualties as a trade-off for Billions of people having really cool phones."  The same goes for drugs – we stop so many good things from being developed because a small number of people have adverse reactions.  A lot of our system needs to be rethought as they are grinding progress to a halt with this endless legal BS.  However – I do feel regulation is necessary, just that the risks should be known, discussed openly and accepted rather than hidden, minimized and wrangled over in courts.  

    NFLX/Step – September is a long way away and the $250 calls can be rolled to 2x the $290 calls at $18 for near even or 2x the Jan $325 calls for $18.  If you are worried about $325 – best to get out now while you can otherwise, I’d do the Sept roll and or nothing and see where you are when you get back.

    Oil/Lol – $90-$105 is about right until the Dollar is over 76, then back to $80-95. 

    Handsets/Amatta – Well since then I looked over RIMM, thought about the potential impact of the lawsuit, looked at the price of the options and the potential rolls and decided it was a fun play to take a poke at.  In that trade, if you stop out of the spread at .80, like you are supposed to then you have RIMM short at net $37.50 and if RIMM drops another 10% to $36, your risk is $1.50 for a trade that hopes to make $1.68 so it’s a reasonable risk/reward especially considering those $37.50 puts can be rolled to the Sept $32.50 puts for bettrer than even and those to the Jan $27.50 puts and those to the March $25 puts (now .92) and they don’t even make 2013 puts lower than $27.50 because no one believes RIMM can go that low and the fact that you can’t understand the difference between your trade and this one is exactly your problem.  

    USO/Exec – A little late as they are right at our target of .65 to take 1/2 off the table but I do still think they are heading lower or I would have wanted to take them all off.  

    Good call Matt!

    Thanks Shadow – Good travel info.  All should check in if they know anything about local vacation traffic.  

  110. OPK/alik – u betcha!  He sold his last company to TEVA!  Why do you think we are playing them….??? ;)

  111. Matt,
    What are you seeing for the remainder of the afternoon???

  112. next resistance 82.78 then 82.00 and 81,65 is R4.

  113. Ok, we’ve fallen so far so fast I’m not looking for further selling into the close anymore.  We could bounce soon-

  114. msb should bottom us within next 45 minutes…unless msb wants a crash today to make it look like debt vote was responsible instead of the horrid economic data.

  115. To clarify, I’m looking for a bounce into the close aka stick.  I’m I’m right, we have further to fall now-

  116. Hey, don’t look now, but TLT is still UP!  FXE is starting to fall…go /DX.  Oh, and TBT is the 20 yr Phil, not the 10 – and to answer your question:

    Will people buy 10-years at 2.5%? Yes.

  117. exec, something like March 1st or 7th-

  118. matt
    That bounce may be very soon, an unconfermed buy signal!

  119. @ matt, will you play any long position in anticipation of mr stick and sell on the close?

  120. EDZ/Tusca – It’s a bit of a laggard as the BRICs are mainly closed by the time we sell off.  Asia was flat today, Europe down 1% and we’re looking to make 2% now that 1.25% failed so lots of catching up to do by the Emerging Markets.  If anything, I’d take some off the table on local markets and let EDZ ride.

    You are very welcome Peedle!

    SDS/Kevin – Yes, that’s a good roll but you are locking in for the longer term and S&P needs to stay below 1,333 for 16 days. 

    Longs/Asaenz – Not really.  The RIMM trade is fun but I want to see how the levels are handled before getting all bullish.  

    11:00 AM On the hour: Dow -1.19%. 10-yr +0.55%. Euro +0.22% vs. dollar. Crude -0.76% to $101.92. Gold +0.48% to $1544.10.

    11:10 AM It would be hard to put an extra dent in already-sinking Treasury yields, mostly unaffected as the Fed buys $7.37B in bonds maturing 2016-2018, of just $15.993B offered by dealers; the 30-year yield -0.07 to 4.15%; 10-year -0.095 to 2.97%; five-year -0.09 to 1.61%.

    12:00 PM On the hour: Dow -1.19%. 10-yr +0.56%. Euro +0.24% vs. dollar. Crude -1.03% to $101.64. Gold +0.87% to $1550.20.

    May ISM Manufacturing Index: 53.5 vs. 57.6 consensus and 60.4 prior. Prices index 76.5 vs. 85.5 prior. Employment 58.2 vs. 62.7. Inventories 48.7 vs. 53.6. New orders 51 vs. 61.7.

    April Construction Spending: +0.4% to $765B/year vs. consensus +0.1%, +1.4% in March.

    A round-up of today’s PMI-palooza shows manufacturing slowing across the planet. Japan moved into expansion following April’s plunge, but perhaps the knock-on effect from its earthquake affected the rest of the globe this month. 

    On top of the sharp drop in its PMI (56 to 51.8), Ireland’s unemployment rate edges up to 14.8% in May. Combined with rising inflation, this brings the country’s misery index to its highest level since 1992

    The 1-2 punch of the weak ADP and PMI reports pushes the 10 year Treasury yield below 3%. At 2.97%, it’s the lowest yield since December. The 2 year dips to 0.44%, also its lowest level since late last year. 

    Goldman Sachs reads the tea leaves in ADP and ISM data and cuts its forecast for Friday’s labor report to 100,000 nonfarm jobs added in May, from a previous 150,000; in particular, the ADP report’s weakness "follows a streak of weaker-than-expected news on both the labor market and activity as a whole."

    Whatever one’s views on the debt ceiling debate or hyperinflation or deflation, if you want to know where Treasurys are going, they tend to move with changes in the state of the economy. The correlation of yields with Citigroup’s Economic Surprise Index (off a cliff recently) is a close one.

    Banking stress-test results from 21 EU countries that were to come out later this month will be pushed into July, amid backroom chat about whether the banks were too optimistic with their data. Under way since March, the tests have gained in importance as the debt crisis has simmered in the intervening months.

    2008 flashback!!!  "There is no capital raise needed here," Bank of America (BAC -2.5%) CEO Brian Moynihan responds to the touchy subject of exposure to demands from investors in mortgage-backed securities that it buy back the debt. The bank could face up to $10B in losses from repurchase claims from private investors, plus an extra $4B if certain court rulings go against it.

    Possibly to keep yields in check, Portugal opts to sell just €850M in short term paper vs. expectations of trying to move as much as €1B. "Not a great Portuguese auction," says a fixed income pro, who believes the decent demand was the result of the low amount offered.

    The recent suicide of billionaire Jin Libin shines a light on the staggering Chinese debt bubble that has grown outside control of the banks or the state. With households pouring money into direct lending or underground banks, the scale of credit sloshing around could dwarf official figures. 

    A statistic worth pondering as a new month begins: The Dow has gained more points on the first trading day of each month than all other days of the month combined since Sept. 1997. Most recently, since the bear market bottom in March 2009, the Dow has been up 20 of the 26 first trading days of the month. With the Dow now -110, today’s outcome could be different.

    Cisco Systems (CSCO) expects global internet traffic to quadruple by 2015, and the increase in traffic from 2014 to 2015 alone will exceed total IP traffic generated in 2010. It sees four drivers behind the huge growth: more devices, more users (nearly 3B by 2015), faster broadband speeds, and more video (1M video minutes crossing the internet every second by 2015).

    Ford (F) May U.S. sales: -0.1% to 192,102, in line with Edmunds expectations. Cars +8.8%, utilities +2.8%, trucks -11.1% – and F-Series pickup, the company’s top seller, down 15% to 42,399. (PR)

    GM (GM) May U.S. sales: -1.2% to 221,192 vehicles, vs. Edmunds expectations of +2%. Chevrolet down 3.5%; GMC up 8.1%; Cadillac down 5.7%; Buick up 23.8%. (PR)

  121. asaenz, maybe… but only if I feel confident I bought at the low.  Buying now most likely is NOT the LOD.

  122. Hello as always Phil, et al
    Scott Brown from Sabrient popping in.  I will be in and out through the day but will read thread later.  Just wanted to share that we are building MyETFfinder and MyShortFinder to go with MyStockFinder.  If anyone has particular data elements that you find particularly helpful in picking ETF’s or Short’s would be happy if you sent me a note or posted in thread.  Thanks in advance and as always, feel free to ask anything.

  123.  Hi Phil,
    Just for clarification:
    the Nas still has a long way to fall if they break below their 50 dma at 2,795 and the QQQ July $27 puts at $1 are a nice way to play. 
    I’m assuming you mean the QQQ July $57 puts — now  $1.09?

  124. Matt/LOD,
    I was waiting to jump into TNA when the DOW goes down 220ish. 
    It seems like that’s the magic number where the BOTs really kick in.  I suppose that’s the last line of defense for fear that any lower could trigger panic selling amongst the complacent bulls.

  125. Tx on NFLX--also Tx for keeping me from getting a complex

  126. Phil, any opinions on the stocks in this article as possible candidates for the Income Portfolio?

  127. Phil, have to thank you for saving me today.  I think the discipline I have learned from this site has helped me as much if not more than the actual picks.  Example – last week I went into the DIA puts a little early and didn’t get out, market went up and averaged down my position on Friday (only buy 1/3 at a time on puts because of your advice), yesterday I got killed and didn’t buy any and then went heavy this morning to average down again, with buying about 120% more of the position when market was down 40pts first thing this morning.  Sold out all but my original third of the position which was over 400 puts at 1.25-1.30 which was about .10 more than my average which I also did because I have you echoing in my head to sell the avg down position at cost basis.  I can say that I am resting much easier now having very little exposure and being up then potentially losing about 50k for the week.

  128. FAS/Phil:  Would it have made sense to sell 1/2 the longs yesterday?  My reasoning being that going with a full cover is too dangerous but selling 1/2 and having a full cover of the other 1/2 leaves us with cash to deal with any problems.  Then, if like today, FAS drops we can buy back in lower.  Just a thought.

  129. Phil/FAS – I have some core holdings of FAS, do you think now is a good time to add to them at these levels of FAS?  XLF failed 15.50, but it has done so before and recovered, plus QE3 talk may start up soon giving boost to FAS.  Looking at about 12% loss on FAS now, in an account where only ETFs are allowed (no options).

  130. 20/Pharm – I know that but they do move in synch generally and the 10-year is what most people buy.  

    ETFs/Scott – How about outsized moves by one of the top 5 holdings.  IE – if The Nas is up 5% but AAPL is up 10% and is 10% of the Nas, then the rest of the index may be weaker than it looks…

    QQQ/Jbak – Yes, the QQQ July $57 puts for $1 is the correct one!  Thanks. 

    Watch the Dollar and the 75.70 line but if they don’t make that, volume is still low enough (74M at 1pm) to give us a stick into the close.  Nas is holding up well considering MSFT down 1.6% 

    $39.50 line is a big deal for USO to hold.  2,800 in danger on the Nas as well with 2,795 being the key technical support. 

  131. Good morning,

    Thanks, matt, your squeeze call yesterday caused me to sell some more of my IWM’s, and get up to see what was going on at the open today; I sold the rest. Also, the bond market is signaling correction, (see below) :

    And , from cobra, is today’s target:

    Support at IWM 82.96 and 82.70; good hunting !!  And thanks again matt  8-)

  132. Pharm - MITI getting taken to the woodshed for a whoopin’.  I bought the AUG 5 calls, roll down and out or get out now and try again later?

  133. GMCR/$25KP – these guys are annoying. Phil, i am pretty sure you do NOT wish to own GMCR at $80, but we do have some $80 short puts that are currenly against us more than 20% (actually a little over 40%). How to roll/cover/recover here?

  134. JRW, you’re welcome.  Glad I could help!
    BTW, I’m closing my short and going long here-  mental stop as usual but I’m fairly certain we’ve seen the LOD.

  135.  Uhoh (Chinese spokesperson maybe?)China will investigate local-government debt in the June-to-September quarter, and isn’t yet ready to start restructuring action, citing Wu Xiaoling, vice director of the National People’s Congress finance and economy committee. The government can’t complete the program in three months time Wu said. She was responding to a Reuters report yesterday that China will shift as much as $463 billion of debt off local governments by September.

  136.  Bailing on 2/3 of my USO puts, thnx Phil, keep the faith and ye shall be rewarded.

  137. Ok, maybe I jumped the gun!  If they are really going for it today.. it’s not out of the realm of possibilities that we see TNA=81.68 but we’d prolly have a good stick into the close if we did see it.

  138. PHIL
    did you mean 74.70 on the $?

  139. jnpr making disappointing comments at bofa conf…tanking tech now…euro trashed off highs not looking good for oil or metals

  140. Sugar / Phil – So last year’s commodities! They even lowered the margins! Someone must need to cover some long exposure – like say 250,000 tons for deliveries! 

  141. Matt,
    Time for the BOTs to shine

  142. we must do our burning pipe dance and from the ethers call upon the : MAGICAL SLOPPY BUYER! ..i think MSB is in Asia/Europe this week!

  143. Good ideas in that list Leon – remind me to take a look on the weekend.  I’m still waiting for a good sell-off before committing cash there for now but it’s good to have a watch list.  

    If you aren’t 1/2 out on the USO June $39 puts at .85 you certainly should be.  $100 oil is a good place to stop!  

    That’s great Rustle except the size of those bets makes me nervous.  When you place big orders, you notify the bots that there’s a sucker out there who can be pushed around.  Try to break it up into smaller batches.   If you have TOS (and get the Paper money version if not) and you go to Active trader – you will see what the average lot sizes are trading at.  On the DIA $123 calls, for example, blocks of 20-50 are the norm so when you put an order in for 400 – they know you will have trouble and they will drop a few pennies on you when you sell and raise them when you are buying.  

    FAS/Dave – We didn’t want to be full covered.  Don’t forget, the longs are really placeholders that allow us to short weekly calls – we don’t expect to "win" on them at any given time.  Once you go full cover or no cover, you are gambling on direction.  When we are at a position disadvantage to the caller, that’s very dangerous.  

    FAS/Jordan – Same as above, very dangerous at the moment but I’d play for $15.50 to hold (even though it isn’t at the moment).  Just doesn’t seem that likely they’ll let us fail without a fight. 

    Dollar testing 70.75 now.  Coming up to 1 hour to NYMEX close with oil at $100 – very interesting!  RUT failed 830 – that’s a bad sign and Nas failed 2,705 – another bad sign, back below our 1.25% lines basically and very nasty if they finish below those as we’re back to consolidating for a breakdown most likely BUT I think they pumped the Dollar up to take it down and stick us into the close so watch your shorts!  


  144. Dollar looking toppy here

  145. FAS/$25KP – Phil, great call on the FAS $27 short calls.  should we set a stop for these?

  146. IWM weekly $81 calls at $2.05 have .15 premium and a stop at $1.95 makes for a nice way to play for a stick. 

  147. Could be someone in your own family…


  148. R1 for /DX is at 74.70. Since we are there now, this would be the opportunity for a stick. 

  149. ….kinda shows why some cuts are not the answer.  Rescue the poor soul and give him the bill…..

  150. Miramax movies are now on Hulu+ and Netflix streaming. Pulp Fiction and Reservoir Dogs anyone? We need some cheering up today. Nothing like Quentin Tarantino to kick it up a notch… 

  151. Phil / Stick   Sold my TZA (will reload at your call, maybe right at end of day?), but I understand you favour my holding my big position in EDZ into the close today?

  152. DIA Puts/Phil
    I never sell lots of 400, been in the game awhile.  I do break them up usually from 30-50 lots, though I did do a 90 today.

  153. @ rustle wow! on your day trades what percent gain do you try to get? 15-20% ??

  154. MITI/mrm – whadda doin’ with those?  I bought the stock and cover.  Sold the Aug $5 Ps for an entry.  Lots of support in here and if not, then it is move is to $5.

  155. Good morning JRW.  You missed a little action today. 

    GMCR/Scott – We’ll just roll them up and out if we have to (and there are no $80 short puts in the $25KP but there are $70 short calls).  One day rationality will return to the market.  I was just at a meeting with 100 people and 2 K-cup machines with a full variety of coffee and perhaps 8 of them got used the whole night (most people wanted vitamin water and regular water).  It’s a fad, like a fondue pot….

    China/Angel – Funny how the number $463Bn isn’t the main point of the story (and not a word about it on CNBC). 

    Good going ZZ. 

    Dollar/Z4 – Thanks, yes it’s 74.75.  If 70.75 is tested, things would get pretty wild!  

    Sugar/StJ – I imagine a lot of demand commodities are having trouble getting delivered in Egypt, Tunisia, Greece, etc…  When I get a phone call – it’s a big problem!  Normally it would be confidential but he said I could ask readers so it’s a pressing need.  

    MSB/Angel – Good dancing.  

    FAS/$25KP, Scott – Damn, I was confused, forgot we were full covered!  Yes, let’s take the money and run on the weekly $26 calls, buying them back for .65 (up .10) and also buy back the weekly $27 calls for .20 (up .40) as that’s up .25 per long, which is enough mooney to roll them to the July $27 calls so let’s do that as well.  

    Final position will be 80 July $27 calls, now $1.43, uncovered.  

  156. still within midday low range though if last push was bottom for day…remember we aren’t allowed to finish at lows for day.

  157. GMCR/$25KP  - June $80 Puts….well i got some!  up and out it may be…

    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 puts for $2 to pay for it.

  158. FAS: Now I’m confused.  I was 1/2 covered with the weekly $27 calls which were sold around 0.70.  That gives us 0.25 per long.  The roll from June $27s to July $27s is about 0.70.  Seems to me we are 0.50 short of the roll.  Am I missing something?

  159. @asaenz
    I sometimes hold for the day or the next day.  Try never to hold more than two days.  This was alot of puts because I averaged down twice, normally about 150 puts.  And before last week, I had 6 trades in 3 weeks with an average return of 35% and not one loss on the DIA puts.  That was pretty much all Phil calls.  Made more on oil though, and also get in and out of TZA, EDZ and QID for quick profits but on those I either write puts out of the money or buy the stock for a quick trade for either a day trade or hold on to it for a couple days.  I don’t trade multiple times with the same stock each day like some can on here.  I look for a buck or more on the ETF’s.  And I also write open calls (risky I know) on the MoMo stocks but am very patient on those and knock on wood, haven’t taken a loss yet.  Phil has helped me on those also,

  160. From Tim Knight:

    That tiny blip of new jobs (red square) was what America got in exchange for putting itself $2 trillion deeper in debt. Only God knows what that works out to per job created.


    So we are living in three parallel universes:

    Reality is that the job market stinks, it’s going to get much worse, and the housing market (which is already pushing to new lows) is going to start falling much faster as props give way;

    Fantasy is that the economy is on the mend, since 99% of America is too blinkered to comprehend that the country is basically on a course for failure, which was the price paid in exchange for a year or two of illusory stability;

    Wild-Eyed, Mastubatory Insanity is that startups, whose actual value in a rational marketplace would be, at best, a couple of million bucks, are being given billion-dollar valuations. But it’s different this time, right?

    I’m glad to be on vacation, even if it is raining today !!    8-)

  161. @JRW
    That is a great chart, should be posted  next to Bernanke’s head next time he speaks about how good QE2 is.

  162. Phil,
     FAS/$25KP, Scott – Damn, I was confused, forgot we were full covered!  Yes, let’s take the money and run on the weekly $26 calls, buying them back for .65 (up .10) and also buy back the weekly $27 calls for .20 (up .40) as that’s up .25 per long, which is enough mooney to roll them to the July $27 calls so let’s do that as well.’
    Really??? What happened with "Also, just because FAS would have worked out based on our premise that the rally was false – the level by which you would have been screwed had we been wrong would have been insurmountable – you just don’t take risks like that – ever!  
    So that is what I get as a response when I bring it up (that I am an idiot for even suggesting something like that)  but it is actually what you did!! Dumbfounding…Dont you think you you are being highly unfair??? 

  163. EDZ/Tusca – As long as we stay below the 2.5% lines (very likely) then emerging markets are likely to pull back a bit more.  

    2pm on the dot and the NYMEX idiocy begins…  We’ll see if they can put $101 back on the boards.  

    DIA/Rustle – Good man! 

    IWM – By the way, just because you take a call for $2 does NOT mean you should expect .40.  We take a $2 call BECAUSE it has little premium and should move well but we should be thrilled to make the same .10 to .15 we would be happy to make if took the $83s for .70 and, with a delta of .50, they would have needed a .30 move in IWM to make .15 while .20 should do it on our $81s (now $2.25) so PROTECT YOUR GAINS!  

    GMCR/Scott – Oh, sorry, forgot about that last adjustment. Haven’t updated my list yet.  So I’m not clear then, now you are worried that GMCR will not hold $80?  It’s a 1/2 cover that can (now $2.60) be rolled to 2x the July $70 puts as we roll our own puts back (using the $2 we already collected).  Bottom line is we are up 2x .35 and they are up 1x .60 so working fine so far as it’s ALL premium.  

    FAS/$25KP, Daveo – Yes, we are putting in .45 ($3,600) but buying a month of additional sales – well worth it. 

    Oil did a nice flush job just before poking higher so they probably mean it on this move up.  

  164. Thanks Phil, I like the idea of filtering for ETF’s that are deriving performance from the overperformance of top 5 holdings.  I will assign a quant to backtesting that as a filter.

  165.  Amatta:  If I didn’t know better, I’d believe that you and Phil were an old married couple!! :)

  166. @zero
    That had me LOL.

  167. Amatta: If I didn’t know better, I’d believe you are asking for it!

  168. Does anyone read Hook Analytics?  I have a copy of the latest one from yesterday, but it’s in Adobe Format and don’t know how to post it.  Can send it to anyone.

  169. Phil:
    I have the June 53 XRT puts. Does it make sense to roll to July 52′s for .20 or should I stay with the 53′s in July? Buying time. Thank you.

  170. i don’t understand – i opened my $16/17 bull call spread position on VIX when it was 16.3 last Friday afternoon, and i’m still losing money when it is 17.7! Why is that?

  171. phil--does that mean you think oil moves higher or lower? a little confused

  172. "We are paying more for content every time we renew," Hastings said about striking new content agreements. "We view that as a positive."
    I guess it is good to have higher costs if you are a MoMo???

  173. @zero

  174. is this the stick?

  175. GMCR/$25KP – just checking in on it as it had a big move.. still doing plenty of learning with this..  

  176. Good but sad point JRW.  

    Actually Amatta, that was from Friday and we did stop out of the lower calls at $1.10 as clearly specified when we took the trade so we were 1/2 covered with just the $27s, not full covered.  It’s no wonder I get confused with you slinging all this BS at me all day!  In fact, now that I’ve had to waste even more time looking it up, I see that I told you on Friday at 12:45:

    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.  

    I also told Daveo in the same comment:

    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. 

    Before that, at 10:40, my comment on FAS was: 

    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.

    There, I won that one, now I will ignore you for a day a my reward as it is clearly a waste of time telling you anything because you either ignore it or seek to use it against me to "prove" how right you are the next day.  

    Cool Scott – I will like that one!

    Married/ZZ – Time for divorce court, I think!  

    Very sad finish at the NYMEX at $100.30. 

    XRT/DC – If we don’t get any downside follow-through, then I’d say a sale and a roll back is appropriate.  

    VIX/Step – You won’t get paid unless/until it makes your target at expiration.  The contracts are not connected, they are each just reflections of pari-mutuel betting on the strike.  

    Oil/Jabob – I think it moves higher into the close (not much it turns out) and higher overnight and maybe higher into inventories (the usual trick) but, by next week or maybe after inventories – lower.  

    Hastings/Jabob – Yeah, that’s why the cable companies just throw cash at sports teams – so good for the bottom line…

  177. @ rustle, thanks! really appreciate your explanation, hopefully with more experience under my belt i can become a more active day trader such as yourself !

  178. nope.   not the stick.

  179. zero – rofl.
    rustle – hook analytics? what is that?

  180. Just got a text from Hank Paulson..the chic chick chick chickens are coming ho ho home to ra ra ra roost.

    Fugly data and all we get is a measly 1.8%, when will the markets stop kidding themselves

  181. If that was the stick, willie….it slipped and needs a PDE5 inhibitor! (Sorry, could not help myself). 

  182.  Finally NFLX coming down… good call whoever predicted the momos would start to come down later. By now I’d actually be up if it wasn’t for those f’ing TBT puts. 

  183. FXE – anyone not in it, this is a good time to get in.  Jul $140s are a good buy here.  I am in at 1.75 after a DD.  I will buy some more in here.

  184.  GMCR/Scott – See above.  

    ZIP having a bad day.  There’s a MoMo stock that never gained any momentum.  

    Yah, nice dive by NFLX!  That reality really hurts….

  185. Pharm    
    I guess I am seeing things.  I think I need a new drug.  Any recommendations?

  186. USD getting jacked up to 74.75

  187. Oh, I show my age…..A New Drug, Williex

  188. I still expect the stick since many traders will want to close their plays today and reload for tomorrow and whatever europhrenia that day brings!

  189.  Phil,
    It must be vexing for you to provide an "ignore" button to the rest of us and not able to use it yourself.
    I feel for you man!!!!!

  190. Dollar testing 74.75 again – rejection here opens the door for Mr. Stick.  

    2:00 PM On the hour: Dow -1.61%. 10-yr +0.55%. Euro +0.03% vs. dollar. Crude -2.41% to $100.22. Gold +0.53% to $1544.90.

    Warnings from bellwether techs and retailers may show economic reality biting into overly optimistic earnings forecasts. Lofty fundamentals are driving this market, so when the economic underpinnings start to weaken, look out below.

    The weak ADP jobs report has stung financial shares (KBE -3.3%) all session long, as it becomes tough to imagine how banks will get rid of all those foreclosed homes without more robust job growth. The heavyweights: WFC -4.2%BAC -3.6%USB -3.1%JPM -3%PNC -2.6%. Among regional banks: RF -6.5%STI -5.3%BBT -5.2%FITB -4.5%HBAN -3.3%.

    PMIs throughout Eastern Europe also took a hit in May, with several at or near their lowest level in a year. These countries are dependent on a vibrant EU as destination for their exports and the sharp slowdown there doesn’t bode well. Y/Y: GUR +33%, ESR +42%.

    News that was expected.  No 74.75 on Dollar after this means probably a stick is coming:  Moody’s downgrades Greece to Caa1 from B1 with outlook negative, saying there are increasing risks it will stabilize its debt situation without restructuring. The euro slides a few pips to $1.437.  This is total Junk rating – pre bankruptcy if they were a company

    Canadian small business confidence in May sinks to its lowest in 6 months, but still remains at a high level, the CFIB reading dropping to 66.9 from 70.7. The numbers are best in the oil-rich parts of the country, but below average elsewhere

    Perhaps softening its stance against any sort of restructuring, the ECB is considering getting behind a plan to roll over Greek debt. The bank believes this will not technically constitute a default. The ratings agencies are sure to have their say soon. 

    Despite slowing economies worldwide, don’t count on a QE3 program, says Pimco CEO Mohamed El-Erian. The balance has shifted, and collateral damage from such a program is more likely than potential gains – particularly considering the global economy, which becomes "like a car that is being driven with one foot on the accelerator and the other on the brake!" (Earlier: Oppenheimer

    "I can’t imagine the Fed would do $2T of QE … and say, ‘look guys, we tried, you’re on your own,’" says Jim Bianco reflecting on the weakening economy. "There will be QE3 and 4 and 5 … QE is all about trying to prevent pain in the marketplace."

    After a brief jolt, stocks would ultimately suffer from a QE3 program and Oppenheimer would become "excessively bearish," says Brian Belski, who was already souring on equities at the beginning of the year. If a new bond buying program happens, sell into the rally, he says – and he sees the S&P 500 ending the year at 1,325. 

    Summer’s here (at least by Wall Street’s post-Memorial Day calendar), but don’t buy into the "summer rally" that hasn’t existed for 40-plus years, Allan Sloan argues. Historical numbers show summer as third-best of the four seasons, and retail brokers are just trying to round up business.

    Chrysler (FIATY.PK) May U.S. sales: +10% to 115,363 vehicles, vs. Edmunds expectations of +10.6% – a 14th straight month of Y/Y gains. Total cars -4%; trucks +17%. Ram pickup +16% to 20,117. Jeep Wrangler +4% to 10,008. (PR

    Honda (HMC) May U.S. sales: -16.1% to  90,773 vehicles. Honda division -16% to 81,773; Acura division -17.1% to 9,000. Total car sales -23.6% to 48,278; trucks -5.5% to 42,495. (PR

    Hyundai (HYMLF.PK) May U.S. sales: +20.7% to 59,214 vehicles. Sonata +7.2% to 22,754; Elantra +104.5% to 20,006  (PR)

    Kia (KIMTF.PK) May U.S. sales: +53.4% to 48,212 vehicles. U.S.-made Sorento up 46% to 11,936; Soul up 82% to 11,157. (MW)

    Nissan (NSANY.PK) May U.S. sales: -9.1% to 76,148 vehicles, vs. Edmunds expectations of -1.1%. Best-selling Altima +16.3%; trucks -13.1%. (MW)

    Toyota (TM) May U.S. sales: -33.4% to 108,387 vehicles, vs. Edmunds expectations of -22.9%. Toyota division -32.2%; Lexus division -46.3%. "Beginning this month, Japan production will be at 90% of normal levels, and eight of 12 North American-built vehicles will be at 100%." 

    Three lunchtime reads:
    1) The sound of something bad not happening… yet
    2) Is bond trading dying?
    3) Will China’s bad debt problem affect employment?

  191. Employment growth teeters.
    ISM hits wall, as order growth nearly comes to a halt.
    Construction spending remains weak.
    CRE inches up towards improvement.
    Mortgage applications slip.
    Weekly chain-store sales improve.

  192. come on mr stick! i think that since march that we havent got such a downside day like today

  193. @Phil, if we dont get a stick, would you keep any long positions over night? i`m down about 5%…..

  194. i think he’s taking a powder the more we clamor the more smug he gets…that magical sloppy buyer!!

  195. @asaenz
    Forget me, JRW and Phil are Kings and there are many above me in the royal court here.
    Hook analytics is a service and a very pricey one that gives a very comprehensive look at ever factor of the market.  It is 464 pages long but he highlights neg and pos data so you can skim over a bunch of stuff.  If you’d like it, tell me.  The guy’s been pretty good.  I use it as additional reading to Phil’s site which I am obviously on religiously.

  196. just in from stavros rothstein..magical sloppy buyer is in greece buying islands!!

  197. LOL, thanks CSL!  

    Overnight/Asaenz – Are you saying you were so bullish that you lost 5% on a down 2% day and you want to risk going down another 5% in the hopes we get a 1% bounce and then you’ll "only" be down 2.5%?  So you want to risk another 5% in hopes of gaining 2.5%, right?  What happens if you are down 10%?  As long as you have a good plan for that, I guess it’s fine to go for double or almost nothing…  

    Meanwhile, bulls can be encouraged by the Dollar not popping 74.75 but if your entire market premise is based on the Dollar staying weak – you have a VERY dangerous position!

    3:00 PM On the hour: Dow -1.78%. 10-yr +0.57%. Euro -0.16% vs. dollar. Crude -2.39% to $100.25. Gold +0.67% to $1547.10.

    After providing big returns coming out of the financial crisis, the smart money at hedge funds is now moving out of "hated" bank stocks, with particularly heavy selling in Citigroup (C), BofA (BAC) and Huntington (HBAN). "Banks are macro plays on the economy," one analyst says. "As the economy starts to hit a softer patch, those types of investments become less attractive."

  198.  this action proves we were right about recent rally…completely manufacted in my opinion…i dont believe for a second that so many are caught off guard by today’s bad data….its because msb isn’t showing up..

  199. if he doesnt appear into close this thing is oging to get trashed- 300 plus

  200. TNA………that’s a big ugly red daily candlestick.
    We might finally see that close on LOD.

  201. Since 2005, the U.S. has spent $1.1 trillion in Chinese products and services, but China has only spent $272 billion on American goods and services..we need more thomas the trains and weird wireless porn devices

  202. : problem is econmy has slowed a ton…and earnings esimates keep going up…so this next reporting season will likely see many misses and forecast copper and oil it won’t be pretty

  203. Phil / Strategy beyond today    I can’t think of any positive economic news likely to arrive for quite a while. Likely no fiscal help from GOP so Ddip distinctly possible, especially with housing collapsing, no jobs and the banks insolvency about to become headline again.
    EPS fcts are too optimistic, commodities have to tank to reflect declining real demand.
    So, only pomo is stopping a mkt collapse, and likely suspended for a while in July. Followed by mkt correction then emergency QE3 and maybe Obama fiscal initiative forced on an embarrassed Boehner.
    Shouldn’t we be positioning now for a 20% correction?

  204. Matt/Bounce
    BTW……great call on your 11:53 post.  I lucked out on the couple of dead cat bounces……but hindsight……should have went short at the open and shut the computer off.

  205. I’m really starting to have doubts about a stick today.  With all the headlines being so negative though.. seems like they are trying to force capitulation before a stick.  What an incredible free money day to the downside so far.  It’s been eons since we’ve had one.

  206. rustle – I’d love to see that Hook doc if you want to email it to me… my username at Thanks! 

  207. Total buyers strike, no bids anywhere.

  208.  British Pound [GBP] getting toasted.

  209. 81.68 (81.64)

  210. intermediate sell in effect belieev it or not we could get a short term buy into (not before) the close it depends on a few things..vix % move is one

  211. If the Bernak announces QE3 – I vote that we do a Tahrir square/ Libya/ Yemen on him and the Banksters. Go to DC and stone them…. 

  212. Zero – The dollar recovery since 11:00 AM is taking down the pound, the euro and aussie (which are both down 100 pips now). These moves are a little unsettling. Great for trading though… The yen seems fine though as this makes sense since the Japanese economy is so strong! 

  213. Hey Pharm, have you thought about PLX lately?  Sorry if I missed any recent posts.  Thanks in advance 

  214. Phil
    I was just about to ask it——--Tuscadog’s question is a good one

  215. exec, lol!  I was only off by $2.40!  Looking.. and praying.. for a TNA close at 82.69

  216. Stj:  I was scratching my head about the Yen for the last 1/2 hour.  It’s inscrutable, that’s what it is!

  217. Tuscadog:
    What did you mean by this:
    "Obama fiscal initiative forced on an embarrassed Boehner."

  218. @Kurtww
    Sent it, let me know if it came through ok.

  219. What a rout-

  220. huge attack on silver underway

  221. dclark / Boehner    Talk of austerity, spending cuts and forced gov’t layoffs will look a little silly as we start to slide into a Depression.  He’s from Ohio and, when home, is surrounded by unemployed blue collar folks – it’s an issue of personal safety.

  222.  XLF 15.39   
    We’re well under the 50 SMA.  Might pay to keep this short on.

  223. If we get another huge down day tomorrow, might be a good time to write puts on FAS.  Their one nice down day from being oversold again.

  224. zero/Yen – yen is a funding currency for carry trade, so whenever there is panic in the market, carry unwind and yen goes up, which has nothing to do with Japan’s fundamentals

  225. We just lost 5 0f 5 on the 1.25% line from this mornings post.

  226. Pardon,  that’s the 200 sma of XLF .  currently 15.58.  So not much support below here.

  227.  Thanks, step, very helpful.

  228. PO$ market.  I’m done.  I lose money in an up market and I lose money in a down market.  They are a bunch of lie-ing stealing thieves.  Plain and simple.

  229.  so much for a strong stick close

  230. 74.80 on the Dollar!  Danger!

    20% correction/Tusca, Streth – what do you think we’ve been doing?  I’ve been going on about that all last week.  Yesterday morning, I was worried I was too bearish as we weren’t prepared for a big bounce.  We still have to be agnostic until our bottoms break because it’s still a range until we break it.  

    74.86 is breaking it!  

    Gold and silver dropping like less-shiny rocks…  

    XLF/Peedle – This is the problem – everybody bails when they should be buying and everybody buys when they should be bailing.  Why do we have thick red lines at 12,200, 1,300, 2,740, 8,280 and 815?  You guys just sat here and watched a one-month sell-off stop dead at those levels and then we bounce to almost exactly the 2.5% and 4% lines AS EXPECTED and now we have been rejected back to THE SAME levels we predicted we would double test for the SAME REASONS we expected to test them (commodity breakdowns, Dollar strength) but everyone still wants to start speculating lower.  At least give the RUT a chance to fail 815 (the NYSE already failed 8,280 but just barely) – they were the only two that actually failed to hold the line last week.  If they don’t break under – why would the rest?  


  231. That dollar move really tanked the market – never had a chance! Of course, as planned, they’ll kill it around 8:00 PM tonight to round up the next group of suckers tomorrow. It’s becoming a little predictable! 

  232. Great day!  Left alot on the table selling 2/3 of my options when we were down 180 but wouldn’t have been able to think or trade logically for the rest of the day if I didn’t.

  233. PLX/sand – thought about them, I bought more yesterday b’f the close, and look at them today….not one penny down.  Oh, yes, now 1c down.  Oh, no even…..but my SPY and SPX puts…..OH MY!

  234. $25KP Adjustments:

    • All done with USO June $39 puts at .85.  
    • Done with XRT June $55 puts at $2.65. 
    • Selling 16 DIA $123 puts for $1.77

  235. trin is 3.47 that is short term quite bullish the next trading day is up 2/3rds of the time..fwiw.also check out euo…

  236. Damn, that was later than I intended.  Contracts do trade for 15 mins after the close but, if not, we’ll deal with tomorrow.  

  237. I have R2 at 74.87 for \DX and there we are… As JRW likes to say, we go up or down from here! 

  238. Trin/Angel – Yeah, the sell-off seemed a little overdone, which is why I wanted to roll the $25KP a bit more bullish. 

  239.  And R3 at 75… We shall see!

  240. well today was a whole lot more exciting than yesterday!

  241.  Matt – Right there with you. I think I’m too bearish because I’m down on up days, but when things really go down like I expect my account drops too. I know I’m still learning, but ugh. 

  242.  Well, that was pretty wild: "The meek shall inherit the earth….but by the time the strong get done with it, it won’t be worth much."

  243. stjeanluc

    We are sitting on my major support, so you are correct; we either go UP or DOWN from here !!


    How did you lose money, you called it yesterday ??  And thanks again; you paid for our vacation !!

    Looking forward to getting back to reliable internet; phone orders suck !!

  244.  when is last time market finished down this bad at lows…long time before the earth was cool…

  245. Wow, that was a stick in the AH on SPY.  I am still flabbergasted as to how they do that ‘stuff’.  Look at those bars, that is $1.50 – $2 moves.

  246. Pharm, yeah look at the green bars right at the close on GOOG and MSFT, somebody thinks ‘up’ is coming.

  247.  Hi,
    Is there a trade on VOD?  with today’s price, it shows a yield of 7% and below 200SMA.  Weak(er) euro could keep the stock low but it’s international presence should provide good long term performance.  What would be a good buy/write trade?

  248. mrm – for MITI, I assume you saw my answer.  Sorry, was not trying to be a smart arse.  I think more long term for them. August is a bit soon, and ASCO is this week(end), so they may drop down a bit.  I hate chasing these b’f this conference, but @ $6 when we got in for the sale of the C/Ps, they should be fine.  I like the technology, and they are the most advanced.  So, if you can, hold those and start accumulating Ps on them (sold).  Hopefully you can make up some of the loss.

  249. Matt – You may want to consider a small investment…..

    A GREAT READ!  :)

  250. AAPL/Weeklies: What a day in AAPL. In the short 345 weeklies (basis $1.71)  which were getting ugly to say the least (days range $2.35-$7.69), took the roll to the 355′s, sold @ $1.23. Held the $345′s looking for a better exit and AAPL finally came back to the tape-what a day.
    Thanks to Phil (again) for the lessons on the art of the roll, selling premium and hanging tight under fire (particularly in the first hour of trading-MADNESS). Watching you manage the $25KP has really helped my trading in a big way.

  251. Bought some calls for tomorrow; we’ll see !!

  252. Pharm, thanks. I do most of your trades in my IRA where I can’t sell naked puts and doing buy/writes uses up capital so I generally convert your ideas into calls or call spreads.  I do love your advice, I just sometimes have to ‘sand’ it a bit…

  253. JRW, not all cash tonight! That’s some conviction on your part!
    And I just checked my IWM chart and it does seem that 82 is a strong line! But we have been through briefly last month. We shall see.

  254. Here is support on IWM and SPX !!

  255. Talk about a parabolic curve. Cisco predicting that Internet traffic will quadruple by 2015:;title
    If only their stock could follow! 

  256. JRW – Them are pretty busy charts! I use Amibroker which has multiple sheets (like Excel) to separate all my indicators as I would go crazy looking at these charts. Maybe it’s the ADD in me.
    Have you ever tried Fib lines using OHLC? I am now drawing them and I have to say that it looks pretty good. 

  257. Moody’s downgrade Greece again:
    And to think that only 2000 years or so ago, Greece was a the top of the world! I have the feeling that it won’t take 2000 years for the next empire…

  258. Matt/loss

    HTF did you lose today???? U held short overnight and totally called it early this morning.

    You aren’t one of those guys that don’t listen to themselves are you?

  259. JRW, I tried playing for the stick.  I got over confident in my premise.. and got crushed tripling down.  I went with the odds that after such a huge move we wouldn’t close LOD.  When was the last time TNA lost over 9%?

  260.  Stj:  You were referring to France, right?

  261. matt,

    Try my 3 minute chart setup; it only gave one buy signal all day, at 13:42 and reversed at 14:06. You would NEVER have lost money !! (My way of trying to pay you back for yesterday’s squeeze insight) !!

  262. At the close: Dow -2.22% to 12290. S&P -2.28% to 1315. Nasdaq -2.33% to 2769.
    Treasurys: 30-year +1.13%. 10-yr +0.69%. 5-yr +0.37%.
    Commodities: Crude -2.61% to $100.02. Gold -0.27% to $1539.10.

    Currencies: Euro -0.49% vs. dollar. Yen +0.66%. Pound -0.68%. 

    Market recap: Investors just couldn’t take any more bad news. After days of data pointing to a weakening economy, stocks finally sold off from the open on worse-than-expected growth in jobs andmanufacturing, accelerating after Moody’s again downgraded Greek debt. Treasury yields hit their lows for the year, the dollar rose vs. the euro, and gold gained. NYSE decliners crushed advancers five to one.

    Treasury yields, plunging below 3% on the 10-year note for the first time since December, will keep falling amid slowing growth and fading stimulus measures until a "dramatic and sustainable" improvement in the economy stops them, David Rosenberg says. "When you look at fiscal or monetary policy, it’s going to be slowing down, [so] it’s a no-brainer why yields are trending lower." 

    JPMorgan cuts its Q2 economic forecast for the 2nd time in a week, this time lowering it to 2% from 2.5%. At this point, there’s just one month left in the quarter – it’s more descriptive than predictive. For a true estimate, the bank believes Q3 GDP will bounce to 3%.

    The tech sector has become the most popular among the nearly 200 investment advisers tracked by Mark Hulbert – but not among those whose advice should be heeded. "Those betting on these tech stocks are more in agreement with those whose past advice has been the worst, than it is with those whose advice has been most on target," Hulbert writes. 

     The good news is we only lose $14B. The White House releases a report saying of the $80B in bailout money spent for the auto industry, less than 20%, rather than the 60% projected two years ago, may be lost. Is it election season already? Full report here (pdf) 

    Flailing about to find a way to get more people able to go into debt to buy a home, the U.K. might do well to remember this model hasn’t done Spain any favors, while Germany, with the highest percentage of renters in Europe, motors along.

    Cisco’s Visual Networking Index sees internet traffic quadruplingby 2015 to 80.5 exabytes, with Asia overtaking North America in usage. On a per capita basis, South Korea will remain the leader, with the U.S. falling a spot to 5th.

    Overreaction of the day:  Orbitz (OWW) shares +53.8% in after-hours trading on reports a U.S. court rules that American Airlines (AMRmust return its schedule and airfares to the Orbitz website.

    Cautious words are not easily forgiven on a day when investors are jittery, so Juniper (JNPR -8.2%shares plunge after CEO Kevin Johnson says the firm may see a negative impact from the Japanese earthquake and is "not immune" to reduced federal spending. Yesterday, an analyst warned that the company was off to a "slow start" in the current quarter.

    Another casualty of the weak ADP jobs report is Monster Worldwide (MWW -6.9%). Stubbornly high unemployment is taking its toll on the stock, down 45% from its 52-week high of $25.90 reached in January, making it the second-worst performing stock in the S&P 500 this year, right behind AIG (AIG -1.6%). 

     Google (GOOG) says that unknown hijackers likely based in China have attempted to hack into the Gmail accounts of hundreds of users, including senior U.S. government officials, who were tricked into sharing their passwords. The disclosure likely will further complicate relations between the company and China. GOOG -0.3% AH.

  263. Matt

    Sorry about your loss.

    You are correct. TNA hasn’t closed on the LOD forever. I probably would have joined you I it wasn’t for a golf engagement.

    JR…. I’m going to have to look at that chart again tomorrow. I use the 3 min almost exclusively but didn’t notice only one confirmation.

  264. Matt – you should have gone with the oil short idea.  367,000 contracts shorted at $103 made over $1.2Bn today!  8)

  265. By the way, I’m getting $8,437 per /CL contract as margin on TOS, not $13,000.  So 367,000 contracts would have cost $3.1Bn in margin to make $1.2Bn on the day – not bad…  Tomorrow’s inventory day and I think they only measure through Saturday so they may get a nice draw-down on the holiday driving with the disappointment put off until next week’s report and then we get a nice pop (as long as they also find something to kill the Dollar). 

  266. @Phil, do you think this might be the start of the "big correction"? (i know you have been bearish since last week or more) or do you think we will stay inside our ranges until the end of QE2? yesterday i sold more than half of my long postions, not sure if i should sell the rest on a quick bounce or wait a little longer and see what june has to offer us. i am up on those, so not panicking here yet, just planning my next move….

  267. Pharm thanks on aezs.  Made 37% in 2 months.

  268. Today’s levels

  269. Phil,
    I’ve been out of town for a few days, what happens if I accedentaly hit ignore?  Does it reset every day or once a week?
    Also great day!  Made some money on my shorts.  Would be almost even if I hadn’t messed up on the USO’s my first week of trading.  Thanks for the advise as always..

  270. Phil/oil,
    I’m pissed…..I only bought 200,000 of those short contracts.
    I need to learn to grow some ba$$s.

  271. Ilene’s levels
    What an pretty pattern all those red squares make.
    So do we test the must hold tomorrow? 
    The Bots are likely to have their war faces on to protect that sacred ground tomorrow.
    BTW……have you noticed how (right on cue) all the talking heads are indicating that QE3 is now justified.  These guys are so predictable.

  272. lori – ur welcome.

  273. Margin / Phil – I wonder is there is disconnect between initial margin and maintenance margin because their Order Type page ( clearly says $13,000 per contract! 

  274. JR/13:42 Buy Signal,
    Regarding your 5:15 post. 
    I was studying the chart looking for the buy confirmation that you pointed out.  I must have misunderstood how you read the 3 minute chart.  I was under the understanding that whenever a candle engulfs and passed above the 8 DMA that it was a buy signal.  (12:36 for example) 
    Based on your comments, does a confirmation only occur when the candle opens above the 8 DMA and closed above it?  Even if it happens to move below the 8DMA at some time during that 3 minute period… as it did at 13:42?

  275. Phil:
    So would now start being the time to look to sell puts in companies we would like to own since we’re closer to support and the VIX is higher?
    Are we supposed to be positioned for a move up tomorrow because today was overdone and they have room to push down the dollar, or are you expecting follow through tomorrow on today’s move down?

  276. SEC, Swindlers Encouragement Commission, catchy dont you think!

  277.  OREX / Pharm – Pharm I see that OREX is having a conf call this Friday.   This source suggests that they think that Contrave may not succeed if OREX proceeds with a 2 year study, and in fact recognizing the risk, that they may not go forward with the study.  I’m thinking about taking a flyer on $3.00 or $3.50 June puts.  Also thinking about playing ARENA on the long side in case it gets a pop.  Thoughts?

  278.  exec?, Oh, I get it, eXecutive!! You’re a sly dog, Mr. Blankfein!.

  279.  "If that was the stick, willie….it slipped and needs a PDE5 inhibitor! (Sorry, could not help myself)." 
    LOL, I wouldn’t have got this till yesterday:

  280.  Phil – just saying hi, haven’t been around as much lately as we’re in the middle of moving.  However, I read the posts everyday to keep up to speed.  Went to a longer term portfolio with some intermediate hedges as I knew I would be unable to trade regularly during our transition to the new home.  
    I had an observation for you…yesterday’s pump at the close was quite obviously front-running the first of the month Big Money trade that has been touted so much in the press the last couple of months.  In fact, having played the trade in Dec, Jan, and Feb, I noticed less and less bang for the buck and more ramping on the day before as people became more aware of it, so I quit doing it(I simply don’t have the cojones to short it, but this would have been the month to do it).  I think the ramp gave the sellers a TON of cover to dump like crazy today…..and voila.  Sorry I’m a day late and dollar short, but I did buy back my short TZA calls yesterday afternoon, so I’m alright.
    Anyway, don’t see how they elevate the market from here, seems to me like they kinda want things to pull back, maybe even a little aggressively, so that two positive things happen for the Fed.  First, commodity bubbles pop(or at least shrink) and ease the internal pressure on MENA and China.  Second, a quick drop would give political cover for the "see we need QE3 or else we’re all gonna DIE!!!"  a la Hank Paulson and TARP in 2008.  So a nice sharp pullback, say 5% in a few days, 10% in a week or so, and people would be spinning……and here comes the White Knight Bernanke to save the day………
    Meanwhile, back at the ranch, things continue to worsen, and 99.9% of America becomes worse off…..but hey, that’s the way the cookie crumbles.  Anyway, just saying hi.

  281. stu – I saw that and went huh?  Short, sure…I think they are going to say, "not gonna go any further b’c doing a CV study is going to cost a small fortune."  The CSO is looking from the rumours around San Diego.  I think the $3 Ps are worth a flier.  There is NOTHING in their pipeline… they will be a penny stock.  Be careful.  They have about 90M in cash, so $2/share…..Oh my…..

  282. We also bought a little bit of ARNA last week on the pop up.  IF any company has a chance, it is my belief that they do.  The cancer issues should clear up in the coming months.

  283. Kinda changed hours to currencies in last 2 days  (got fed up with some of the dishonesty but was planning on this anyway, comments like Muzzling people and nationalizing oil cos are past reasonable for me, but this site seems OK with it  to some degree ? but not all). Shorted ES/TF/Oil today did extremely well. Catching some big currency swings also but just getting started actually. Euro/AUD /GBP. Hard to play theYen as it is so incredibly plastic. Not even fiddlin with USD just watching it but playing pairs and skimming. Went to bed about 9:30 AM and got up to a sweet surprise on all index shorts. What an incredible day. Sleeping and making money , on the other hand it is all coming unglued ? Just woke up for second time today and getting ready for nites events and early AM to see what s up.
    My only questions going forward are when will they kick in the next stimuli  program and what will it be called. How long will they let people freak and demand stimuli before they come to the rescue? Has to be closer to elections IMO, but ?

  284.  Wow, just watched oil drop like a rock. Loving it.

  285.  Oil now 99.48 but the crooks have all night to "fix" it.

  286. Good morning!  

    Dollar topped out at 74.95 and oil bottomed out at $99.25 but back to $99.75 now with the Dollar at 74.78 again.  Merkel just said some stuff that was supportive of the Euro right before the EU markets opened and that lifted the Euro (but not the Pound) and pushed the Dollar down but it’s just words so we’ll see what sticks.  Yellen had this to say at 11pm, which gave us the Dollar highs at the time: 

    It’s not quite "irrational exuberance," but Fed Vice Chair Yellen,speaking in Tokyo, says PE ratios "for small-cap equities appear somewhat elevated." Earlier this year, Ben Bernanke took credit for the rally in small caps, noting the more economically sensitive Russell 2000 was outperforming other indexes. Yellen also flags the increase in leverage "by "traditionally unlevered investors," unable to get acceptable returns elsewhere. No hint of QE3 here. 

    So interesting cross-currents as everyone is posturing.  Khan just survived a "no-confidence" vote but agreed to step down "after the crisis" – whenever that will be.  Of course, this doesn’t stop the Yen from being ridiculously strong at 80.96 although we need a strong Yen today to keep the Dollar down if we want to avoid breaking our "Must Hold" levels. 

    Europe is down 1% at the open but that’s just catching up to us.  Asia was down 1.5% so that may be it for the sell-off.  

    Big correction/Asaenz – If we don’t hold our levels, then maybe.  Otherwise I am doing my best to be agnostic.  On the one hand, the economy is really weak but, on the other hand, that’s the economy of the bottom 90% and, objectively, we should care about as much about them as we do about how things are going in Turkey, because the disposable income of the bottom 90% in America is comparable to people in a 2nd-tier nation at best.  So they will spend their entire incomes every month regardless and the only variable there is whether or not they have jobs and money to borrow but, other than that – there is nothing the proletariat are likely to do to move our economy. 

    So it’s all up to us rich folks and Corporations to spend our 72% of the wealth (top 5% have that much, next 15% have 15% leaving 11% for the bottom 80% to play with) so the "big correction" comes when our attitude changes and we’re not panicking yet, are we?  We (top 10%)  are still in buy the dip mode as the bottom 90% continue to flail about and transfer the last of their remaining liquid assets up to us as they are stampeded in and out of investments by Cramer and the Banksters.  

    Don’t forget, aside from OUR attitude (the other 270M people in this nation do not count), we have to factor in all that lovely money that is sloshing around in the Trillions.  That genie is not going back in the bottle so, long-term, no matter what happens now – we have to make the inflation play – where all assets go up.  But that game won’t start in earnest until we finally strip all the assets from the bottom 90% – we wouldn’t want to accidentally make some of them rich, would we?  Once the banks have repossessed enough homes but BEFORE they have to mark them down – THEN we will suddenly have a housing boom again and all those bank-owned homes will become valuable assets.

    For now, we are following Bernanke’s explicit instructions NOT to hire any US Workers (see Feb 4th post).  Clearly our Corporate Masters have kept their end of the bargain and now it’s up to Uncle Ben to show us more money and we can forget this little sell-off and get back to ignoring and soaring.   In short – it’s all about the rhetoric for the next week or so…

    Here’s my video from early Feb:

  287. No pomo today.
    current schedule will run out on the 9th.  on the 10th they will release a new one that will end on the 30th instead of the usual 9-11 of the following month.  Could be the last reminder that free money days are over, at least for now.  Kind of hard to be bullish here, Phil.  Catch 22 for fed.  Can’t QE until market pukes.  No QE – who is the buyer?  Plus it would be wildly profitable or ‘them’ to go down hard before QE3, and then another 100% move higher like the last time.

  288. dollar is not getting any strength.  Yet it did nothing when market did 3 black crows on May 2-4, then it played catch up a little (600 pips in 2 days).  We shall see what it does now. 

  289. Ignor/Lori – Welcome back!  Just try ignoring someone.  A list will pop up under your comment box with who you are ignoring and you can uncheck them at any time to put their comments back.  Don’t worry about USO, that messes all of us up once in a while…

    200K/Exec – That’s OK, you should be able to fill out the rest around $101 if they get a good pump going today.   As to testing the must holds – I doubt they have the balls to let it happen because they don’t trust what will happen if we fail them.  I think Merkel speaking ahead of the EU open was round one of Central Banker speak this morning that will have the general aim of keeping a lid on the Dollar until they can get some positive news going to support equities.  Don’t forget, a bounce back to that 1.25% line is easy, it’s when that line begins to act like overhead resistance that we’ll need to start drawing lower levels on our charts.  You are right about QE3 talk: 

    QE3? Better hope so, says the new consensus among market pros. "There is one bet right now: Bernanke will bail out the world," one says. “If that does not happen, then no investment will be safe."

    Everyone knew this week’s data dump would be a downer, so today’s stock slide isn’t about the data, Jeff Macke writes. It’s about two things: (1) This is a short week during the summer, and it doesn’t take much to move markets without it "meaning" anything; and (2) The market is in a negatively biased trading range. Nothing more, nothing less. 

    Tim Geithner defends the administration’s auto bailout as "A Rescue Worth Fueling:" U.S. automakers "are getting stronger [and] are leading a comeback in American manufacturing. And while we will not get back all of our investment in the industry, we will recover much more than most predicted." If the shortfall is "only" $4B, that’s $80K per job saved

    After being hit hard in 2008 and now faced with new regulations that require them to address their under-funding issues, corporate pension plans are rolling the dice with hedge funds in what may turn out to be a risky bet to find a quick fix to their problems.

    Margin/StJ – I’m not sure what they are doing but I can clearly see the net effect, which is what I care about when trading.  Maybe there are concessions due to account sizes?  

    Selling puts/Dsheara – Now is a good time to take a poke as we have a clear signal to bail out if we drop 2 of 3 of our must hold lines.  Last week, when we were this low, I gave Kurt a list of suggestions to make a quick $3K by June selling puts:

    • Selling 20 INTC June $22 puts at .29 ($580) – Buying 2,000 INTC for net $21.71 is downside (but all rollable)
    • Selling 5 GS June $130 puts at $1.30 ($650) – Buying 500 GS at net $128.70 is downside
    • The above NFLX backspread.  
    • Selling 10 RIMM June $40 puts for .90 ($900) – Buying 1,000 RIMM at net $39.10 is downside
    • Selling 5 HD June $36 puts for .55 ($275) – Buying 500 HD at net $35.45 is downside
    • Selling 5 BA June $75 puts for $1.08 ($540) – Buying 500 BA at net $73.92 is downside. 

    Most of those puts are more now (because of the VIX and the drop) than they were then and I still like the list to play for a bounce.  The NFLX spreads can be found at the end of this week’s Stock World Weekly and that last one is still playable too as we’re back to $267.

    Also, in the Income Portfolio, we added 5 short DE $80 puts, still .95 and 10 short CCJ July $28 puts, now $1.35 and we were looking to sell XLF June $15 puts for .50 but no bites yet.  

    As to the move, we have to play for the bounce until the floor breaks – just like we play for a rejection off the tops until those break.  In between the major technicals – the fundamentals rule but when you hit those Fat lines, you need a MAJOR reason to get above or below.  Greece has been about to default for over a year – we need something stronger than that to dump the Euro and get the Dollar moving well enough to blow our support lines.  US data has also sucked, we need a better reason to stop ignoring it and it would have to be a reason that doesn’t lead to Dollar weakness (bad news is good news thing).  So, I expect a bounce back to the 1.25% lines and only when we see rejections there do we really begin to look for the floor to fail.  

    SEC/Rpme – Don’t piss off a regulator! 

    Hey Hoss!  They may want to tank the markets to bring on QE3 and I’m sure they are legitimately worried about what will happen when it ends but that worry is not reflected in TLT yet, so it’s hard to see it at real at the moment.  We still have a month of POMO left so it’s a bit early to panic the markets.  Also, they are not likely to waste the opportunity to ditch the Dollar one more time as we hit our debt ceiling limit – They tried to hurt the Dollar into the weekend with that idiotic vote in the House but that didn’t work so now I’m sure the speech writers are cranking out the soundbytes so they can get one last Dollar dump in before they rip the markets the other way.  

    Even at this moment, the Dollar is back to 74.74 – keeping our futures a little green despite Europe’s 1.25% drop.  The Euro is back to $1.439 and the Pound seems to have found a floor at $1.63 and is back at 1.6316 at the moment.  They Yen made a run to 81 but failed that so stronger now at 80.92 and that can really trash the Dollar if they let it head lower.  

    Oil is $99.60 at the moment and has been rejected at $100 this morning, gasoline dropped to $2.975, Nat gas is doing relatively well at $4.65, gold $1,544, silver $37.26 and copper $4.096.  We’ll see how low the Dollar can go and, more importantly, if the commodities recover relative to the Dollar or if the weak Dollar is being used to mask selling – as it was yesterday morning.

    Elections/Goober – I think the question is, who has control and what do they want and what market effect will bring that about.  That then depends on the rhetoric.  If the Republicans hold up the debt vote, then the Dems would be happy to crash the market and blame it on them.  If the debt vote goes through, then the Republicans will be happy to crash the market and say the Dems forced them onto this path of destruction.   The key is – who is really able to make the market crash?  That would, of course, be the IBanks and clearly they have no interest in being regulated so the timing will be very interesting.  Last year, we had a huge rally into the election on QE2, which Ben announced in Sept.  That went well for the Reps so I figure they will look to repeat that performance and I have every intention of being long in the fall.  

    Fixing oil/Greno – You are totally right but that’s fine when you get used to the patterns. 

    Wow Lapper, that’s just what I was saying above.  I figure one more pop up while they have a good line to sink the Dollar, then they pull the rug out – dump all the weak hands out of stocks and THEN Bernanke rides to the rescue and everything is beautiful again.   Last year they let us chop all summer – very possibly the same again this year, which is fine as we love playing a range! 

  290. 70.37!  Nice takedown on the Dollar, popping oil back to $100.50 – a thing of beauty in the World of market manipulation.  

    I was waiting for $101 oil to short again but, since we got out at $100, anything over that is a bonus if we catch the next wave down.  I’m worried they run out of gas here as the Dollar should have trouble going lower than $70.35 so that’s the line to watch but, otherwise, I think it’s good to short below the $100.50 line and risk a nickel and then again under $101 if we do get back there. 

  291. Phil
    Is there a USO play on this? Thanks.

  292. USO/DC – You have to wait for the open, unfortunately.  That’s why the futures are so much fun ($100.30 already!).  

  293. Phil:
    Did you really mean $70.37 or $74.37 on the dollar? $70.37 will panic anyone with shorts on the table!

  294. Notice that monster juicing on dollar produced ZERO results.  everything is flat, and considering a huge sell off yesterday, it is a bit worrisome for bag holders, I mean longs.

  295. 74.37!  Thanks DC – I’m spastic with those numbers this week!