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Thrilling Thursday – Can We Make Another Billion Today?


$1,129,860,000!  That’s how much money was made shorting 376,620 NYMEX contracts at $103 yesterday, as we planned!  Congratulations to those of you who got your share playing along with us and, to the manipulators who got stuck with the bill – screw you bastards, we have your number and we’re going to ring it now!  I called a cash-out at the $100 line in Member Chat as 2.9% was more of a drop than we expected in one day and we will re-load on the bounce as we cross back below the $100.50 line – as discussed in this morning’s Member Chat - assuming the Dollar has bottomed out at 74.35.

This isn’t complicated people – what’s the 2.5% line off of $103?  $100.425.  That’s where we’ll look for oil to consolidate but below that line we’ll be comfortable with our shorts again, looking for those next legs down to $98.88 (down 4%) and then $97.85, where we will once again look for a 20% retrace to $98.88 and then a nice short there when it fails.  So come on – you can play along at home – don’t miss out on making the next $1.129Bn!  

Meanwhile, what’s a 20% bounce off a $3 drop? 60 cents, right?  Where did oil bounce to in the futures?  $100.60?  This is not rocket science folks…  We teach these little tips to our Members every day at Philstockworld.  Sure you may find it disturbing that the chart we drew up (above) in early April is hit almost to the penny on the NYSE yesterday (2 months later) as it halted right on our red line – but that just shows us that Bots are running this market (as we keep telling you) and it also means that we can rely on our ranges and that makes it EASY to make good trading decisions.  

Also in Member Chat last night, I reviewed 8 short put ideas (bullish) that can net us over $3,000 in 15 days if we get a bounce and hold our "Must Hold" levels.  This is the nice thing about hedging – we make money on the way up OR on the way down and, when we are trading in a range – like we hopefully will this summer – then we make money both ways on a regular basis!  Let the market manipulators play their little games – we can see them coming a mile away

Also in Member Chat this morning, we caught the downturn on the Dollar as Angela Merkel made comments just ahead of the EU open to support the unified currency.  While noting that the root of the current problem is not "with the euro as such", Merkel said in a speech in Singapore that the Euro is a "stable currency, compared with the Dollar."  

So Merkel put the strong Euro ball in play and Trichet went for the Dollar kill shot into the EU lunch break by calling for much tougher fiscal intervention within the euro zone and suggesting the creation of a euro-zone finance ministry.   At a ceremony to receive the Charlemagne prize for European unity, Mr. Trichet proposed a raft of possible radical changes to improve the euro zone as a currency bloc as a number of its member states struggle with debt crises.

He said that if a bailed-out country isn’t delivering on its fiscal-adjustment program, then a "second stage" could be required, which could possibly involve "giving euro-area authorities a much deeper and authoritative say in the formation of the county’s economic policies if these go harmfully astray."  He also suggested that euro-zone authorities could have "the right to veto some national economic-policy decisions" under such a regime. In particular, a veto could apply for "major fiscal spending items and elements essential for the country’s competitiveness."

The idea of turning the EU into a Bankster’s Paradise (where you lose sovereignty to your creditors) slapped the Dollar down to it’s lows of the day and boosted the EU markets and US futures and gave us our re-shorting opportunity on oil, which just hit $1000 again (thank you very much!) and we stop out there and wait for the bounce and the next cross.  See – not complicated and that’s another $188,301,000 – not bad for 8:10 in the morning!  

As I mentioned last week, we can use our levels for evil as well and play the bull side but it’s so much more fun to take money from the speculators, isn’t it?  We do, of course, have upside plays on energy to hedge against inflation, like the XLE spread we went over on the 19th.  

You can’t be all bull or all bear in this market or you will just get crushed but, the way we bounce around, there is lots of money to be made playing both sides!  We’re quick to take bearish profits on oil this morning as we usually get a run-up into inventories (11:00) and we’d love to see a nice pump back to $101 or higher as that will set us up for another nice short if there is little or no draw in gasoline, which would back up our theory that demand was destroyed into the holiday by $4 gas at the pumps.  This inventory runs through 5/27 (Friday) so it should catch anyone who filled up for a big trip and is likely to be the "best" demand number the bulls can hope for.  

8:30 Update:  Another 422,000 of our fellow citizens lost their jobs last week but let’s accentuate the positive and that’s Productivity rising 1.8% as the remaining workers are SCARED and, as we all know, an intimidated worker is a productive worker.  Unit Labor costs fell 30% from Q4 to just 0.7% so we are not even paying 50% of the increased productivity and that is GREAT for us Capitalists.  Ah, it’s good to be the king!

Unfortunately, our Retailers seem unable to convert these slave wages into sales – economorons are baffled as to what can be going wrong (have you heard ANYONE in the MSM suggest that paying workers more money might be good for the economy?) and we have disappointing Same-Store Sales numbers from BONT, DEST, DDS, FRED, GPS, HOTT, JCP, LTD, SSI, SMRT, TGT, TJX with beats (so far) coming from BJ, BKE, COST, JWN, M, RAD, ROST and SKS – this continues our general theme of high-end retail and discounters doing well as our nation divides further into the haves and the have-nots (see charts on yesterday’s post).  

Woops, it’s 8:45 and Bernanke was too slow on the draw and has been outgunned by the BOE’s Paul Fisher, who says he could see increasing the bank’s money printing operation should the U.K. economy experience a "sudden downturn." Following the comments, a BoE spokeswoman was trotted out to say the views expressed were Fisher’s own, not the bank’s but the sounbyte is out there and the mission is accomplished.  

Bernanke signaled in April that the hurdle to more "quantitative easing" is very high and Fed officials have done nothing to indicate that Dr. Bernanke’s guidance has changed as economic data has worsened in recent weeks.  In an April news conference, Bernanke said the tradeoffs that would come with additional purchases were becoming unappealing. "It’s not clear we can get substantial improvements in [employment] without some additional inflation risk," he said.  

Fed officials have largely held to that line. In comments last week, St. Louis Fed president James Bullard said the Fed was entering a period in which Fed policy will be on pause—meaning it won’t be trying to push interest rates either higher or lower. Charles Evans, president of the Chicago Fed and a strong advocate of past programs, said earlier last month that what the Fed had done already was "sufficient."  In comments Wednesday, Cleveland Fed president Sandra Pianalto said the Fed’s current stance was appropriate and added the recovery was likely to continue, even though growth "may be frustratingly slow at times."

A boost from Congress, through additional deficit spending, looks equally unlikely. Republicans have crafted an agenda based on spending cuts and would likely be reluctant to embrace new efforts to stimulate growth through fiscal policy. New tax cuts would also face a tough reception, given Washington’s currentfocus on reducing the long-run deficit.  The Obama administration wants more infrastructure spending in the near term. In addition to education and research and development programs already proposed by Mr. Obama, there are "policies that have the potential to impact job creation now but also have the ability to increase our competitiveness," said Brian Deese, deputy director of the National Economic Council.  Unfortunately, Congress has consistently blocked all efforts by the Administration to accomplish these goals – so we drift aimlessly until the next crisis forces action.  

Meanwhile, none of this leads us to think the Dollar has much further to fall and, that being the case, it’s not likely the markets have much further to rise until we either hire more workers or increase wages (good luck with those!).  The danger is still to the downside as the Dollar could spike on the end of QE2 (winding down this month) or a worsening of the crisis in Europe.  

Evolution Securities notes that it typically takes nearly 5 years for a country’s credit rating to fall from A2 to Caa1.  Greece has managed to do it in 526 days. "Statistically, the faster the rating goes down, the more likely the issuer is to default," says an analyst with the firm.  That did not stop an auction for $5.7Bn worth of Spanish bonds from being 3 times oversubscribed this morning – with confidence boosted by Trichet and Merkel’s earlier (and very timely) comments.  

Talks between Greece and the Troika on a new fiscal reform agreement are set to wrap tomorrow. The plan will include tax hikes and privatizations of a number of state-owned assets. Most interesting to see will be the allowance for unprecedented (short of defeat in a war) external supervision of Greek government actions.

The most dangerous bit of data we have left today will be Factory Orders at 10:00.  We know Durable Goods fell off considerably and, if Factory Orders turned down to match (-1% already expected after being up 3.4% in March), it’s going to be a confidence killer. 

So let’s remain careful out there – a 0.5% bounce is weak at best…. 

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  1. EU/Trichet – "He (Trichet) also suggested that euro-zone authorities could have "the right to veto some national economic-policy decisions" under such a regime. In particular, a veto could apply for "major fiscal spending items and elements essential for the country’s competitiveness." – sounds to me like a recipe for EU disintigration. The populations of member states will revolt if Brussels actually tries to hit them with a stick like this. Countries are already on the edge of getting out of this bad deal Gordon Long described so well (on PSW).

  2.  Morning Phil,
    Is there a level on the US $ that, if pushed down to, would signal to you more weakness to come?  For example, if yesterdays low is taken out, would you expect to see a more sizable slide in the dollar?

  3. trichet is always in a haze of abisinthe fumes..can you imagine the europeans basically saying the germans are our kings?….before this is over trichet will be reviled…whats that monty python skit about pigs flying?

  4. Oil Lines
    R3 – 105.86
    R2 – 104.58
    R1 – 102.17
    PP – 100.90
    S1 – 98.48
    S2 – 97.20
    S3 – 94.80 

  5.  but tricchet is right. you cant have monetary integratsion without political ingegration..i am just saying th eonly way he accomplishes that is thru small steps and think of the implications there europe one big ol family..whats that tolstoy quote..all happy families are alike all unhappy families are alike in their own way?

  6. Interesting, they pushed the dollar down 40 basis points this morning, but yet oil is up only about $0.50. New algos? 

  7.  gold/stock spread is at some kind of record, at least for the last couple years. over 200

  8. Pharm, any thoughts on TNGN.

  9. PP for today:

    As mentioned in today’s Trading Signals, statistically, the best cases there’re 76% chances a green day tomorrow. Find time to read it if you haven’t done so. I won’t bother to repeat the statistics here again. The chart below also argues at least a rebound tomorrow morning, but as per law of inertia, more likely the selling is not over yet, so trading wise, to sell bounce might not be a bad idea. – Cobra

  10. Hello Phil, Do you have any opinion on how to trade COCO, BPI, DV etc. in light of new student loan regulations that were announced yesterday?

  11.  Pharma,
    Is there a link to the above mentioned Trading Signal?

  12. TNGN – unfortunately, tissue regeneration is not one of my specialties.  Let me look into them and do some reading.  Very interesting company, and for 1.41, could be worth a small buy in and stow it away.

  13. Phil:
    Sell the next weeks FAS $26 while we have a chance? (.77)

  14. peedle – link

  15. GS shares down by 1%

  16. GS subpoenaed

  17. I know you should only sell puts in something you want to own, but UTHR June 50-55 puts looks good to sell for income.  Any thoughts?

  18.  alik, I have a crapton of student loans, is there a link to the new student loan regulations?

  19. Good morning!  

    Everything looks right on script so far.  The Dollar is being smacked down to 70.43 at the open (TBT flying!) and oil is jamming back to $101 but keep in mind inventory is not until 11 so maybe $101.50 before they are done.  Silver not responding and laying around at $37 so I doubt the Dollar stays down, copper is also weak at $4.10 with gold at $1,542 but that is driven purely by speculators and frightened European top 1%’ers trying to protect their wealth as well as Middle Eastern despots trying to hide theirs.  

    Nat gas flew up to $4.70 but stopped there and gasoline is weak at $2.984 with oil testing $100.60 again (which is our expected bounce and can be used as a short line rather than $100.50 – with tight stops).  

    It looks like USO June $40 puts are the way to go now.  They are currently $1.19 and a move to $101 should drop them to $1.10 or less so I think the plan should be to buy 10 at $1.19 and another 10 at $1 in the $25KP if we are lucky enough to get a pop to short into.  Otherwise, it’s too dangerous a play ahead of inventories.  

    Our levels are behaving VERY well so let’s take advantage of them:  

    As long as the NYSE holds 8,280, it’s not likely anyone is in danger and the RUT should be our second warning if they fail 815 but most likely we consolidate between the Must Hold and 1.25% lines, which is a bearish indication that we are likely to trend lower on whatever happens to pop the Dollar back over 75.

    While we wait, I still like these short put plays:

    • Selling 10 INTC June $22 puts at .47 ($470) – Buying 1,000 INTC for net $21.53 is downside (but all rollable)
    • Selling 5 GS June $130 puts at $2.40 ($1,200) – Buying 500 GS at net $127.60 is downside
    • Selling 5 RIMM June $40 puts for $1.65 ($825) – Buying 500 RIMM at net $38.35 is downside
    • Selling 5 HD June $35 puts for .75 ($375) – Buying 500 HD at net $34.25 is downside
    • Selling 5 BA June $75 puts for $1.10 ($550) – Buying 500 BA at net $73.90 is downside. 

    Let’s call those official plays for the Income Portfolio now that they’ve come down to better prices but we stop out with 30% losses so risking about $1,000 on a failure!!!

    Also in the Income Portfolio, let’s re-sell 25 DIA June $121 puts for $1.15 as we already have a .50 profit in our pockets from the previous sale.  

    XLF is taking a major dive (Moody’s review!), we’ll see if they can get back to $15.50 – that would be bullish for an overall rebound.  

    Thursday’s economic calendar:
    Chain Store Sales
    8:30 Initial Jobless Claims
    8:30 Productivity and Costs
    10:00 Factory Orders
    10:30 EIA Natural Gas Inventory
    11:00 EIA Petroleum Inventories
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

    At the open: Dow -0.02% to 12288. S&P +0.06% to 1315. Nasdaq +0.16% to 2774.
    Treasurys: 30-year -0.4%. 10-yr -0.13%. 5-yr -0.08%.
    Commodities: Crude +0.2% to $100.49. Gold -0.12% to $1541.30.
    Currencies: Euro +0.86% vs. dollar. Yen +0.06%. Pound +0.11%.

    Initial Jobless Claims: -6K to 422K vs. 413K consensus. Continuing claims -1K to 3.7M.

    Q1 Productivity and Costs: +1.8% vs. +1.7% expected and +1.6% prior. Unit labor costs +0.7% vs. +0.8% expected and +1% prior.

    We’re on the verge of a great, great depression. The [Federal Reserve] knows it,” Peter Yastrow tells CNBC. But this isn’t really news, Barry Ritholtz writes: "The government never fixed the underlying economic problems, so we’ll have another crash."

    On the other hand:  Rising international air traffic in April indicates a growing global economy, says the IATA, with passenger traffic +11.9% year-on-year and freight +3.3%. The industry will remain profitable, although the IATA will probably lower its forecast from a latest estimate of $8.6B. (PR)

    Citigroup’s William Buiter laments the institutionalization of financial interests holding sway at central banks, nowhere more so than at the Fed. FRBNY board members representing business are giants of finance and industry, while board members representing the public are swell chaps, but not serious players.

    May same-store sales (actual vs. Thomson Reuters estimate), update #1:
    BJ +7.4% vs. +7.1%. 
    BONT -2.3% vs. +0.3%. 
    BKE +8.8% vs. +6.3%. 
    CATO -3% vs. +2%. 
    COST +13% vs. +11.2%. 
    DEST -6.9% vs. -1%. 
    DDS +2% vs. +3%. 

    May same-store sales (actual vs. Thomson Reuters estimate), update #2:
    FRED +0.2% vs. +1.6%. 
    GPS -4% vs. -1%. 
    HOTT +0.4% vs. +1.4%. 
    LTD +6% vs. +7%. 
    M +7.4% vs. +5.2%. 
    SSI 0% vs. +2.1%. 
    SMRT +0.7% vs. +1.6%. 
    TGT +2.8% vs. +3.5%. 

    May same-store sales (actual vs. Thomson Reuters estimate), update #3:
    JCP -1% vs. +3.4%. 
    JWN +7.4% vs. +5.9%. 
    RAD +1.3% vs. +0.5%. 
    ROST +4% vs. +3.7%. 
    SKS +20.2% vs. +6.5%. 
    TJX +2% vs. +3.1%. 

    May same-store sales (actual vs. Thomson Reuters estimate), update #4:
    KSS +0.8% vs. +2.9%. 
    WTSLA +2.9% vs. +4%. 
    ZUMZ +7.8% vs. +7.8%. 
    2 misses, 1 in-line for a total of 15 misses, 8 beats and 1 in-line.

  20.  By the way guys, there may some very large lifechanging events going on in Craigzooka land.  So I have to apologize for the delay in the next robotic forex trading post.  My girlfriend (soon to be wife) is interviewing for a position at Catholic University.  If she gets it, then i will be transferring from the Mathematics Phd program at Kent State in Ohio, to the Computer Science Phd program at Catholic university in Washington DC.  I just arrived in DC last night (man am I getting tired of that drive).

  21. Doubled down my TBT June 32 weekly position at the close yesterday and unloaded all of it this morning for a 40% profit.  Tough to hold overnight but the past charts of /ZB 30 year treasury futures have been showing a consistent sell off the next day or two after any sharp rise. It looks like a repeat this morning and in fact there may be some additional increas in TBT throughout the day.  Still holding some June 32 calls expiring in 15 days.

  22. Trichet/Scott – Totally right, what he is suggesting is essentially having the Banksters hold nations as collateral.  How are the people not screaming about this?  Note that our own wonderful MSM is spinning this as an excellent suggestion that will calm the markets (because that’s all that matters) and let’s never forget that Thomas Jefferson (more or less) warned us of this scam over 200 years ago, saying:  

    If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

    Ouch!  Factory orders down 1.2% – even worse than expected.  Is this news so bad it’s good?  

    10:00 AM On the hour: Dow -0.11%. 10-yr -0.04%. Euro +0.81% vs. dollar. Crude +0.19% to $100.48. Gold -0.14% to $1541.00.

    As Greece gets squeezed, Daniel Hannan compares EU commissioners to the pigs from ‘Animal Farm.’ Hannan decries them for spending millions on private jets, gifts and luxury hotels, etc. “You do not imagine," quotes Hannan, "that we pigs are doing this in a spirit of selfishness and privilege?"

    Moody’s puts the debt of Bank of America (BAC), Citibank (C), and Wells Fargo (WFC) under review for possible downgrade. The agency says the Dodd-Frank bill makes major government support less likely even as the lenders’ mortgage exposure remains high. All three banks are down more than 1%.

    Goldman Sachs (GS -1.8%) has received a subpoena from the Manhattan District Attorney’s office seeking information on the firm’s activities leading into the credit crisis, Bloomberg reports. The request relates to the Levin Subcommittee on Investigations report whichaccused Goldman of misleading buyers of mortgage-linked investments.

    James Altucher says the Dow is going to 20,000 over the next 12-18 months, but don’t bother buying stocks. "The game’s rigged," he says, "you can’t win … it’s all a scam." If you must, buy an index fund rather than individual shares. Don’t trust anyone over 30 either.

  23. Doubling down – Greek taxes edition
    This is just not going to work! It’s great for Merkel to day that the euro is more stable than the dollar. I guess you are entitled to your own opinion, but not your own facts! 

  24. /hg (copper) is down .7% but cu is up!?!? Not getting the disconnect….

  25. stj – good article.  We thought the US was in a world of hurt….I think the EU is already in a world of fantasy after it has been beaten in the wood shed.  I still believe we are ‘better’ off than they are.  Maybe I am wrong, but I don’t think so.

  26. Phil/News
    Remember…….Bad News = Good for Market……….Worst than Expected News = Fantastic for Market……Better than Expected News = Full Blown Rally in Market.

  27. EUR/USD in a box.  Needs to move one way or another now. 

  28. Phil pricing on the short put list looks way out of line they very much less than you quoted even GS 2.40 0n thye 130 p is only 1.88 after they dropped 1% this morning ???

  29. Phil/TBT,
    I’m confused about TBT. 
    I’ve been watching the TBT JAN 2012 32 puts that you recommended last week and it’s not making sense to me. 
    Wasn’t the premise of the trade that the dollar is near a bottom, and if it reverses, TBT will go up.  If TBT goes up, the value of the put will go down and thus expire worthless?
    Yesterday, the dollar was up and the puts were up big time…..what am I missing here?

  30. Phil CF is climbing day after day would it not be te\tter to sell some put on this one ?

  31. Dollar/Peedle – i don’t think you can think of the Dollar that way.  If anything is going to stick to moving on Fundaments, it should be the World’s largest currency, don’t you think.  It’s not like it has some arbitrary value – the value is set every day with $100Bn worth of transactions that set how many Dollars things are worth and, therefore, also set how many things a Dollar is worth – to say that it will break some technical spot on a chart and suddenly the price of a Pepsi will skyrocket pretty much ignores all the fundamental principles of economics.  What affects the Dollar is very simply the supply of Dollars relative to the demand for Dollars so we watch those factors and, of course, there has been no demand (slow economy) while the Fed and Treasury have been ratcheting up the supply.  That’s the major driving force and then there is speculation relative to the value of other currencies but, with the Dollar at 62% of the Global money supply and the Euro at 1/3 of that and the rest virtually meaningless, it really is all about US policy driving the Dollar so, without a drastic change – you just are not likely to get any drastic moves.  

    XLF June $15 puts hit only .21 on that dip – we are still looking to sell 10 for .50 in the $25KP and 20 for .50 in the Income Portfolio but that’s not going to happen so let’s see if we can get that for the July $15 puts, now .36.  

    Oil topped out at $100.92 at the open but is back to $100.45 now (low of $100.05 since the open), quite a wild ride but I’m still liking the short play below the $100.60 line with trailing stops (as usual). 

    Trichet/Angel – Yes, the EU needs a Central Government to work but even a Central Government wouldn’t agree to what he’s proposing.  This is a power grab by the Banks, not a benevolent Government action.  Banks always want risk-free lending – it’s up to the borrower to draw a line and for the two of them to agree on an appropriate level of risk and an appropriate level of interest paid against that risk.  When the hell did society devolve into a system where banks could heedlessly lend money and then demand full payment no matter what the situation.  If that’s the case, and if inflation is 2%, then why should anyone pay a banker more than 3% for money?  

    Oil/StJ – It’s simply too high.  You can push the Dollar down to 70 but oil won’t go up 10% because people just can’t afford it.  Oil is a demand commodity.  90M barrels of it will come out of the ground tomorrow and the next day and the next and if people don’t buy it – it quickly becomes the producers’ problem because another 90M barrels will come out of the ground the next day too.  OPEC has a meeting next week and if they don’t agree to cut production, we could have a serious glut on our hands.  

    Gold/Angel – Well what do you think, is gold overpriced or are stocks undervalued?  

    School stocks/Alik – I like DV best but I have not looked over what actually passed.  I picked DV a while ago when they went weak on panic over this nonsense and I’d say the move today shows that it was a good call.  I’d wait for them to calm down and maybe make a long-term play on them, they are the best of the bunch.    

    NFLX back to $270 – all must be well…

    FAS/$25KP, DC – Nope, we rolled back to July $27s so, if anything, I would take advantage of a sell-off to roll down the the July $26s first and THEN I would consider a sale but the roll is still over .35 so no point and we’re better of waiting until we are SURE things are breaking down.  Why is XLF down today?  Because Moody’s but BAC, C and WFC under review.  That doesn’t mean they will be downgraded, just that they need to be reviewed in light of new regs.  So, are they likely to go down 1% again tomorrow or likely to bounce back once this panic washes over the investors (traders, really) who act before they think based on squiggly lines on a chart because they haven’t done enough due diligence on their positions to have faith in the VALUE of the stocks they invest in?  

  32. Phil / EDZ    Still holding a large EDZ position.  Since you are now playing for a bounce should I take the loss at 2% this morning?

  33. Phil, do you have a USO play that you like.  The 39′s or 38′s?

  34. FU MoMos

  35. Pharm,
    6% POP on PLX.  Nice Call!

  36. EU / Pharm – I always like to point out that Europe as close to zero fiscal flexibility as a country like Germany already collects around 50% of GDP in taxes when we collect only 31%! That’s a lot of margin given political willpower (non-existent) or market forces (more likely).  

  37. This is like riding a bronco this morning!  

  38.  Jr_mints, we are trying to pick up the June 40′s for $1.19 or better.

  39. Phil / Oil
    I was wondering if you or Ilene could put together a short summary on the mechanics of the oil trading that seemed to be working out so well recently.  Maybe in the Stock World Weekly?  I have been going through old posts and trying to gleam all the information I could, but I want to make sure I’m not missing a pertinent "rule". 
    For example, a summary of the futures(CL) vs options(USO) routes to trade oil; What the Stop parameters generally are; Where to find the lines for the oil levels, etc.
    Thank you in advance if it’s not too much trouble.  

  40. Phil,
    When did we roll FAS in 25KP to July?

  41. No POMO firepower today. 
    Should be interesting to see if they play the dollar card before lunch given the lack of Bot power to push us out of this range.

  42.  UTHR/Stock – I don’t consider them a value play, they are priced for huge growth and, if they misstep, then you will indeed be stuck with the stock.  I’d at least give them a chance to test the 200 dma at 62.50 before putting money into them but I’d rather buy them AFTER they screw up in the $50s.  You can sell the puts now if you REALLY want them down there but I’d rather just keep a watch on them and sell puts when they are in more of a fall.  

    Thanks Vic, vital news! 

    Cool Craig – I hope she gets the job.  Very nice you can transfer like that.  Too bad DC has few housing bargains left…  That’s the best thing about teaching at Columbia.  My cousin was a visiting professor there and they gave her this spectacular 2Br apartment with views of the Hudson River for $1,500 a month!  NYU apparently has a lot of real estate too but I doubt you’ll get that deal in DC.  

    TBT/Button – That’s the way to play it!  That’s why I like to get long when they get near the bottom of the range – even when they break lower you can still have a very reasonable expectation of a nice bounce. 

    Greek tax increases/StJ – Can you imagine the rioting in this country if they did this?

    There are reports at pixel time that Greece has agreed to around €6.4bn in fresh austerity measures in 2011, notably including tax hikes.

    Here’s a chart of what Greece was originally supposed to raise via tax hikes in 2011, under the old programme. As you can see, 2011 was already the crunch year for tax revenue (click to enlarge):

    That’s America’s future because, one day, these bills will have to be paid…

    CU/Jrom – That is strange.  

    News/Exec – I’ll keep that in mind.  I think that was the logic that powered Greece for the last few years until the bill came due.  

    Quotes/Yodi – That’s what I saw as I was writing them.  I would say if you can’t get the price, don’t sell the puts.  The GS June $130 puts were $2.94 this morning and still $2.25 at 10 so clearly you were miles late if you saw $1.88 or maybe you are looking at the weeklies???  This was the 3rd time I printed that list and I said last night I liked them for new plays and you could have done MUCH better than any of those prices if you followed Rule #1 and: ALWAYS sold into the initial excitement.  It always amazes me that we have just 2 rules but almost nobody follows Rule #1….  

    YES!!!  VERY BEARISH OIL REPORT – BACK BELOW $100 ALREADY (so that’s the stop now – .25 trailing):  EIA Petroleum Inventories: Crude +2.9M vs. consensus of -1.2M. Gasoline +2.6M vs. consensus of +0.3M. Distillates -1M vs. consensus of -0.2M. Futures -0.25% to $100.05.  Congrats to all who are playing the Futures and USO!  

  43. Pharm,  Why is the volatility so high on UTHR?

  44.  Burrben, the rule for futures is we try to short at key numbers that have worked as resistance in the past, such as $100, $103, … with very tight stops, usually just $0.05.
    For USO we almost exclusively play short, since there is about $1 of decay built in per month.  Those are just Phil’s call when oil gets out of hand.  Before you start playing USO you should go back for the last month and read all the panicking that happened in regards to the USO play in the 25k portfolio.  It eventually turned into a winner but it was quite a ride so be prepared.

  45.  Phil, if we can get USO down to the $35 range and EUR/USD back down to 1.38 then I wont need to worry about rent, at least for this year :)

  46.  Phil – I have a general question, I have some sold puts that I sold against hedges a while back, and I’m a little confused by your mention of sold puts earlier today. On the one hand I know we sell puts on stocks we would like to own, but then you also mention that we should stop out with 30% losses. How do you decide which way to go? For example, my TBT puts yesterday were down way over 30% yesterday, and I ended up rolling them to September 32s, and they are up today. I asked about rolling them/selling them a little while ago, and you suggested keeping them because they had a fair amount of premium left. I’m not too worried about the position, but on the other hand my loss on that is pretty substantial in comparison to the money received (now at $-1500 vs the ~$500 received). Today I have 15 SVU Jan ’12 puts sold for $1.50 each now $1.95/ea, pretty much at 30% loss. Being my goal is to have a portfolio like the income portfolio eventually, rather than active day-trading, what do you suggest here? Or, maybe a better way of asking, how do you suggest I make the decision whether to let it go and plan to have the stock put to me vs. taking the 30% stop loss? My feeling is that there’s still a very good chance of a big leg down, so I don’t really want to get stuck with these at a big loss, but on the other hand I think by Jan 2012 things will have calmed down again. Thanks. 

  47. craigzooka, thanks I guess I missed the call. 

  48.  The other nice thing about staying a student is that they wil loan me about 40k a year at 0% interest untill after I finish.  In addition, having an assistantship actually pays me about 25k a year and gets me free tuition.  So, assuming past performance is any indication, I have been making around 20% a year on really boring buy/writes on INTC, PFE, and AFL since 2008 when I became a member here.  After this year I should own enough shares so that the dividend covers my loan repayment.  Any more shares I can pick up after that is just extra income.

  49.  Wow, silver and gold doing some cliff-diving. Glad I’m not playing that game right now. 

  50.  Phil    Thanks for the USO 39 put trade.  We did not get out yesterday.  Out now.  Gotta get lucky once in a while:)

  51. @Pharm, whats up with ARRY? At what levels do you think would be good to add a little more to the position? Any catalyst that you know on the short-medium term? Thanks!

  52. TBT/Exec – I can’t believe I picked a buy on 2012 puts.  I would think that was a trade idea to SELL them.  There is no way I think TBT will be lower than $32 in Jan but the good news is you can get out with a profit now!  It’s not about the Dollar, it’s about interest and unless we have a MASSIVE QE3, rates will begin to creep up and only a strong Dollar can mitigate the rise but even that won’t stop it.  

    CF/Yodi – I don’t know, why CF?  Are they cheap?  Is there news?  Do you have inside information?   Is there a compelling reason that we don’t mind being assigned $150 shares and would want to make them a major part of our portfolios if assigned to us?  What makes it "better" to sell puts on them?  

    EDZ/Tusca – Depends where we end up.  Declining oil hurts the exporters so I’d be inclined to see if you can’t get that 2% back at least.  

    USO/Jr – Not now – I had one in the Morning Alert (9:56 comment) and yesterday but now it’s kind of chasing.  

    MoMos/Jabob – You have to be willing to put  up with a lot of nonsense to play them.  Meanwhile, what you said reminded me of this..

    PLX/Pharm – NICE!  Congrats Button, you are hitting them today!  

    $99.20 on oil!  Dollar 74.65.  

    Oil trading/Burr – Lots of moving parts.  There are no "rules" other than paying attention and trying to cut through the mountains of BS that move the energy markets every day.  On the lines, I’ve said that often enough but if no one has a quick reference handy (and that’s the kind of stuff that needs to go in the Wiki) then remind me on the weekend and I’ll write it up again.  

    FAS/$25KP, Vic – Yesterday but roll is cheaper now (took out callers and rolled to naked July $27s).  

    $99.12 – This is the best, not even a retrace!  

    $98.96!!!  I feel another Billion coming on….

  53. Greece.  Austerity, tax hikes….  nice dreams….  how about a molotov cocktail for reality?  These people are not Slavs, banksters would not get away with raping them up the ass.  Light it up boys!

  54. I love the sound of screaming at the NYMEX – it’s our Trading Places moment!  

  55. Phil/TBT,
    The idea was to sell the puts.

  56. UTHR – as Phil notes, the company is not a value play, but a growth story.  The company has a fantastic pipeline, and if they can get a few things going, I see them being taken out by a mid-tier pharma (GILD, etc).  With a market cap of $3.5B or so, that is chump change, and PAH is in a growing market with the aging baby boomers.  Yes, there could be missteps, so I ALWAYS do 1/4 entries into my plays…ALWAYS.  If I am right, I make a little.  If I am wrong, I can evaluate my missteps. 

    PLX is a great example.  I believe in the technology, and it is undervalued.  DCTH is the same, although they have a ways to go for some of us who bought in last year.  Phil also notes not to jump at the first print, esp if things begin to move against us.  It is always good to start a position at a DD point.  I like UTHR, and think their prospects are bright.  Time will tell.

  57. PLX/Phil – I think I said last week that I would put my entire portfolio in them if they go below $5!  When the FDA gives compassionate use for an enzyme when Genzyme messes up, and everything being equal, PLX’s enzyme is way cheaper to manufacture than SNY/Genz, & Shire for that matter.  That is worth putting money into in this day and age.


    SPX P spread from the other day….OOOhhhh sooo nice.

  58. Is there a downside target on USO, please? 

  59. Same as yesterday except we started at $101.50 so $98.50 is good for an exit on oil and that’s $1.70 on the USO June $40 puts and that’s a nice gain too so all done in the $25KP and the futures for now!  

  60. Pharmboy, quite some time ago you had a recommendation on ARRY, since that time it has gone down some and really not done much.  Do you still recommend holding, adding more at these prices or selling?  Thanks.

  61. ARRY/aes – not sure what your entry is, but mine is about $3 after my first DD.  In here is fine as they are around support.

  62. Phil,
    Any trades on IWM/TNA once we hit the must hold levels today.
    Got in at the open and before your trade, on GS 130 Puts for $1.05. Ok , I left money on the table.

  63. @Pharm i bought for the first and only time at $2.77, might add a little bit more here, thanks!
    @Phil getting closer to our must hold levels…too dangerous to play for a bounce here? wait longer? what do you expect for tomorrow? dont you think the market is already priced in for a bad report, that we might actually bounce up? thanks

  64.  Thanks, Phil, USO cashed in very nicely.  Wash on, wash off, master!

  65.  Thats Wax on Wax off!!

  66.  SPWRA July 19 puts can be sold for $2.05 – nice entry or return

  67. Phil You right I was sleeping on the puts Let me see if I did this right Sold USO 39p for 1.03 inclined buying the 39 Jun caller as well but hate to pay for options Your thoughts ? Oil and USO going up again

  68.  Sorry, Craig, I must’ve been thinking of the wash sales rule.

  69. @Felipe
    I might have missed it but have you done anything about the SQQQ calls and put trade you recommended yesterday or are we just riding it?

  70. Good morning, (4:00 in the morning, I must be nuts !!)

    Here’s my reasoning on a bounce (before the drop of next week):

    We  now sit at the convergence of the uptrend line, the 100-day moving average, the lower Bollinger Band and R/S at IWM 81.67 and 80.95; so if not now…………………………..

    AND, we are oversold !!

    we’ll see; good hunting !!

  71. Go OPEN….holy shmoly.

  72. Puts/Kurt – Well the Income Portfolio is meant to be conservative so we can’t risk losses and it’s not our intention to play with the trades too often so we "go for it" at what we hope is a bottom and we win or lose.  When you are day trading, it’s a totally different mentality, especially if you are scaling into a trade.  Also, when TBT flies down from $33 to $32 for no good reason, then you feel differently about it than if RIMM fails to hold $40.  I think that looking for "rules" is one of the big problems people have trading.  Everyone wants a system but when I tell them hard work, tons of reading, studying the positions, analyzing possibilities and watching the markets from 4am until 4pm every day is my "system", they say "yeah but what’s the rule for…"  I WISH there were silly rules for every situation – I’d be hiking around Asia right now if there were and checking in once a month to see how much money my bots made for me…  

    So, I don’t know what your TBT position is but SVU is at $9.10 and I guess you are talking about the Jan $10 puts that are now $2 and you say you are down 30%.  You are only down 30% if you buy them back.  SVU is $9.10 and you sold $10 puts for $1.50 so you agreed to buy SVU for net $8.50.  SVU pays a lovely .35 dividend, which is 4.1% of $8.50 so if you get assigned 1,500 shares at $8.50 ($12,750), you can look forward to collecting $525 in annual dividends and perhaps selling something like the 2013 $10 calls for $1.70, which would put another $2,550 in your pocket (20%) and lower your basis to $6.80, which bumps dividends down the road up to 5.1% so what exactly is the criss you are seeking to avert by turning this great trade into a 30% loss where you don’t own the stock you wanted at the price you wanted to buy it for?  

    You need to learn the concept of REALLY wanting to own a stock because you are thinking like a speculator, not an investor and this market will chew speculators up and spit them out every time.  

    Nice strategy Craig!  Way to plant trees…

    USO/Willsons – Better to be lucky than right someone once said. 

    TBT/Exec – Yes, well I still favor selling puts so what’s the question?  

    UTHR/Pharm – Thanks but now I’m more interested in PLX.  It would be nice if they either went lower or had longer options but you can certainly go artificial with the Nov $2.50/5 bull call spread at $1.95 and sell the $5 puts for .50, which is net $1.45 on the $2.50 spread with 72% upside at $5 and a break-even at $4.48.  

    USO/ZZ – Good timing but once you get past 2.5% in a day on an underlying, it’s always good to have an itchy trigger finger. 

    IWM/Jasu – I don’t like TNA.  I find IWM to be more liquid (on the options side) and gives you about the same movement so why mess around with the ultra, which tends to have wider bid/ask spreads?   As I said earlier, RUT 815 should hold up and it has so far but it won’t be clear until oil holds $98.50 into the NYMEX close at 2:35.  If you want to take a poke, the IWM $81 weekly calls are $1.05 and should be good movers but they expire tomorrow so it’s a .10 stop with no tolerance for it going the wrong way.  If they fail, then you can look at the next week $82 calls (now $1.07) for $1 or less and plan to scale into those but a break below 815 means don’t play the RUT or anything else as we could be in BIG TROUBLE.  

    Playing the bounce/Asaenz – You have to think of it like a trampoline – it may bend a bit lower but not that likely to break.  As I just said above, if oil doesn’t fail then XLE and OIH and XLF (who have way too much invested in commodities) may be able to recover but, if oil breaks lower – those levels may be toast.  As the great and powerful WOPR once said: "Sometimes, the only winning move is not to play" – at least until we have more information.   

    SPWRA/Deano – I like that idea a lot!

    USO/Yodi – I would not sell USO puts, oil could drop to $85 in a panic (10%) and USO would be $35 – not worth the risk because, would you be long-term bullish stuck with USO after oil falls to $85 when Prince Whatshisname just said they want oil at $70 and Tillerson said $70 was the right price?  

    SQQQ/Flips – That was more of a target play.  I still think we are likely going to consolidate along the must hold lines and eventually break lower.  

    4am/JRW – That’s my normal time!  Nice chart, thanks.

  73. Phil/Puts,
    You already answered it.  TBT is influence primarily by interest rates not the dollar.

  74. Too funny JRW.  I was just looking at those! 

  75. Dollar back down to 74.57 since topping out at 11:30 and it’s masking weakness at the moment so be careful.  

  76. Good Morning JR
    When you have a minute can you address my question from yesterdays 6:42 post?
    Where are you vacationing?

  77. Phil,
    Interestingly…..they are an hour late with the dollar games.  Don’t they usually pull the plug before Europe closes?

  78.  Phil – the only reason I ask is because of your 30% stoploss mention this morning, since I’m trying to emulate more of the income portfolio rather than be a short-term speculator. But I understand there are no hard and fast rules, so I was just looking for some guidance. I guess the point of the trade originally was to sell the puts to finance a hedge, but the hedge has a lot shorter life than the puts… so if the puts are still out there and the market drops more after I sold the hedge, I guess I need a new hedge? Obviously I can’t keep selling more and more puts against short-term hedges, so at some point I guess I just need hedges period, and pay for them. At this point we’re sitting tight until we break the must-hold levels on some indices, and then we buy some puts or put spreads, right? Thanks. 

  79. Phil / $ correlation     Does dollar strength boosts EDZ more than TZA?

  80. Phil, quick question – why is CCJ up – Germany and Japan big negs. Was it China reaffirming their commitment to nuclear energy? Thanks

  81. Longer-term on oil, look at what a bottle-neck they are going to run into in December at the NYMEX, which is already clogged up with 188Mb of fake orders.  If they try to roll the usual 350M barrels into Dec, they’ll end up with over 500Mb in a single month – that would be nuts!  

    Click for chart
    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jul 11 99.79 100.90 98.55 98.70 Jun 02, 12:10
    -1.59 181909   100.29 355555   Call Put 
    Aug 11 100.35 101.45 99.13 99.28 Jun 02, 12:10
    -1.58 44538   100.86 104752   Call Put 
    Sep 11 100.76 101.92 99.67 99.79 Jun 02, 12:10
    -1.54 27158   101.33 105949   Call Put 
    Oct 11 101.30 102.33 100.09 100.15 Jun 02, 12:10
    -1.57 15008   101.72 51209   Call Put 
    Nov 11 101.26 102.62 100.44 100.56 Jun 02, 12:10
    -1.47 5223   102.03 36145   Call Put 
    Dec 11 101.66 102.95 100.77 100.87 Jun 02, 12:10
    -1.41 25840   102.28 188652   Call Put 

    11:00 AM On the hour: Dow -0.14%. 10-yr -0.03%. Euro +0.79% vs. dollar. Crude +0.12% to $100.41. Gold -0.41% to $1536.90.

    12:00 PM On the hour: Dow -0.66%. 10-yr flat. Euro +0.66% vs. dollar. Crude -1.59% to $98.70. Gold -1.04% to $1527.20.

    April Factory Orders: -1.2% ($440.4B) vs. -0.9% consensus, +3.8% (revised from +3%) in March. Ex-transport -0.2% vs. +2.6% prior. Shipments -0.2% vs. +3.1% (revised from +2.7%) prior. Inventories +1.3% vs. +1.4% (revised from +1.1%) prior. 

    EIA Natural Gas Inventory: +83 bcf vs. consensus of +93 bcf. Futures take a giant leap, +4.2% to $4.828. 

    Weak May sales are dragging retail stocks lower as gas prices eat into shoppers’ wallets. Specialty stores and products are taking the biggest hits: Vera Bradley (VRA -13%), Zumiez (ZUMZ -12%), Limited (LTD -6%

    In line with expectations, the Treasury sets $66B in bond sales next week: $32B in three-year notes for Tuesday, $21B in 10-year notes for Wednesday, and $13B in 30-year bonds for Thursday.

    Hand in hand with a bond rally, mortgage rates fall for a seventh straight week, Freddie Mac reports. The average 30-year fixed-rate loan slips to 4.55% from 4.6% – a six-month low, but still a bit over November’s record 4.17%. The 15-year rate fell to 3.74%. 

    Dick Bove predicts epic housing-related losses of $32B at Bank of America (BAC -0.5%) over the next 3 years. He expects a $9B hit to reserves, $23B to be charged off earnings, and asset sales to soften the blow on capital. Off 30% Y/Y, shares have priced this in, says Bove, who remains a buyer.

    "We’re going to see a major recapitalization (of the banking system) coming at some point," says Fraser Howe, who predicts more financial shenanigans as China seeks to overlay a new wave of real estate-related credit on top of the existing one. Authorities hope to build 36M low-cost homes by 2015.

    The eurozone debt crisis is reverberating in Eastern Europe where the CEE states are putting on hold plans to join the common currency. Czech president Vaclav Klaus questions whether his government’s legal obligation to join is even valid given the current issues

    Pump it up!  "Investors should be looking for buying opportunities" after yesterday’s plunge, Blackstone’s Byron Wien believes, still expecting S&P 1500 by year’s end. "The economy is not as bad as it looks." Wien favors companies most tied to economic growth, including energy, industrial and tech stocks: "That’s where the opportunities are going to be."

    Uh-Oh:  Cuadrilla Resources suspends its fracking operations in the U.K. after a 2nd earthquake hits an area near a drilling site. The British Geological Survey says evidence suggests high pressure fracking may have caused the quakes.

    Three lunchtime reads:
    1) Debating dividends: What would you want your company to do with excess cash?
    2) On a dark day, glimmers of hope for stocks
    3) Instability in the euro

  82. PLX/Phil – yeah, they do not go out far enough on the options, and my only problem with that is they should get something going around then or December.  EU is also open, although I cannot find any EU filing data on them.  That is why I am in the stock for now, but the spread is a very nice one for an initial entry for all to consider!

  83. That SP chart is nuts and a screaming sell

  84. If one really wants to be agressive with PLX, sell the Nov 7.5 Ps with the BCS Phil notes.  I am in those right now for even (1.80).

  85. Oh My!!!!……………Suddenly the dollar has become less  valuable.

  86. Phil you freightened me with the USO sold for 1.05  and now bought back for .97 thanks for the taco lunch money

  87. CMG- $1000 target!!!!
    For all the Burrito lovers out there- chew on this- from Opt’s site- English
    I am still short.

  88.   Lots of volume selling Brazil [EWZ]

  89.  I bought DIA Jun $120 put for $0.66, missed selling it for $1.09 today and it is now $0.89.  I had expected the Dow to head further down.  Should I sell at $0.89 or wait another few days?

  90. Hey all,

    I just put my clients into KERX. I know everyone here likes pharma plays.

    Stock popping off MA after dropping 8% yesterday on no news at all and light volume.

    Should really take off here.

  91. pstas
    CMG that makes two of us I am rolling until I get dissy. But selling puts along the way aswell.

  92. Dollar/Exec – Usually maybe but they made the Dollar stupid cheap this morning so likely EU people took the opportunity to trade Euros for Dollars into the close over there and, when they stopped, that dipped us again.  

    Stops/Kurt – In a low-risk portfolio, I’m trying to take advantage of an opportunity but we can’t REALLY afford to have all those assigned but we are ahead of goal enough to risk $1,000 to make $3,000 so we sell $3,000 worth of puts with a 30% stop and hope they don’t all end up triggering for a $1,000 loss.  Again, you can’t have a rule because this decision was based on where the market is at this exact moment, how many days to expiration, where we are in the portfolio in relation to goals, what other opportunities are out there as alternative strategies, out general feelings about each individual stock, the VIX at the moment and which direction we think it is going, the rollability of the puts and how rolling them will fit into our long-term plans, where we fall between the earnings periods, etc….    Sorry but there is not going to be a short answer to that.   If the market drops and you are losing money on the puts AND the hedges, then you do have problems.  If you sold a hedge to finance a short play and the short play pays off and you are "stuck" with the short put – it’s not a problem if you REALLY wanted the underlying stock but yes, you can’t do that trick again until you resolve the stock (unless you still have empty allocation slots for more short put plays).  In our Income Portfolio, we have 75% cash (same as our general allocations) so we have tons of room to be assigned.  If we were 25% cash, there is no way we would risk those short puts.   If we break a significant level then yes, we add more hedges and we also stop them out if we get back over our levels (3 of 5 rule).  

    Correlation/Tusca – I think the Dollar will give you more correlation on TZA than EDZ because the RUT is pretty much lock-step with the Dollar (or against it).  This is, by the way, stupid because the RUT companies (small caps) suffer from a weak dollar but no one seems to have programmed that concept into the Bots and all of our indices move in unison.  

    CCJ/Jo – Saudi Arabia announced 5 new plants and people realized Germany won’t be the end of the World for atomic energy.  That’s why we jumped on that dip, classic overreaction gave us a nice opportunity to get back into one of our favorite commodity plays back at the price we like them for a long-term hold.  

    USO/Yodi – Good, better safe than sorry.

    CMG/Pstas – Same premise as many have, the automatic assumption that their Asian spin-off will automatically be as big a hit as CMG and will magically have 1,000 stores in 3 years even though it took CMG 18 years to get to 1,000 and their parent was MCD’s – who, I hear, are pretty good at their jobs. 

    DIA/CJJ – So the question is you were up 68% and now you are up 34% and you want to know whether you should risk 134% of your original bet rather than take a quick 34% profit off the table and being happy because you are too greedy to take a profit now that a fish was dangled in front of you?  Am I missing something?  

  93. I expected a little more buzz around EXPE and Groupon announcement. It’s almost a back-door way for the average Joe to get  apiece of Groupon.
    I signed up for their service but haven’t received a Groupon-Expedia ‘Deal’ yet. Note to management: once you offer the sign-up, be prepared to send out deals immediately! Another EXPE failed-to-execute…

  94. Phil USO again are you keeping an eye the this as oil is going for 100 again pls advice when to sell the USO caller you seem to have a feeling for this thks

  95. JWR – do you expect this bounce to keep momentum into tomorrow?

  96. CMG – maybe this is a paid pumper trying to justify why a $9B market cap restaurant doesn’t pay dividends.

  97. Thanks phil, I have a bunch of CCJ leaps – I am not gonna touch them for a while.  I think that nuclear is a vital part of a multiprong energy strategy.  Sooner or later the noise will fade…..e.g.  oil spill x2, toyota prius brakes, massey coal mines, etc.

  98. Wow, check out those IWMs!  $81s up to $1.35 already – see, no need for TNA when you get that kind of pop off the base options.  

    Oil back to $99.89 so we’ll see if they can get back over $100.  This is a good note, the weak bounce off yesterday’s $3 drop was 20% or .60 back to $100.60 but then we got back to $101 and down 2.5% was $98.475 but now we’re not looking for a .60 bounce but a bounce of the WHOLE drop from $103 to $98.48 ($4.52) which is .90 so figure $99.40 is our weak bounce off the 2-day move and they popped that so we expect a fibonacci move back to 40% (38% actually) and we call that $100.30 so the key lines to watch now are the range between $99.40 and $100.30.  The weak Dollar (back to $74.35) means I very much doubt we get to $100.30 and that means we want another tight short at $100.25 but NOT at $100 because we have 90 mins to the NYMEX close and 9 times out of 10, that’s an up move although today may be that one time out of 10 if the Dollar pops.  

    In short – too annoying to call but I would LOVE to get another whack at shorting oil at 2:30 if they do a BS run-up.  

    EXPE/BDC – That’s a good idea to benefit of Groupon-mania but I don’t have that particular disease.  

    USO/Yodi – After two big wins in a row, my main objective is not to be an idiot and blow it.  As you know, I like to play when things are too high or too low in a range AND there are factors that give me confidence.  At the moment, the $100 line does not qualify (see above comment).  

    1:00 PM On the hour: Dow -0.26%. 10-yr -0.18%. Euro +1.01% vs. dollar. Crude -0.63% to $99.66. Gold -0.89% to $1529.40.

    GREECE IS FIXED!!!! Officials reach agreement on a program to increase and extend Greece’s bailout until 2014. The euro skies higher to $1.4478, and stocks are in the process of reversing losses. 

    And now, more bad GSE news, as the CBO says Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) will cost the government another $42B in the coming decade with their mortgage guarantees. The net cost of capital so far: about $130B, after $154B in capital less $24B in dividend payments. Frannie financed 63% of mortgages originated last year.

    Continuing a trend in which private energy firms looking for exploration dollars team up with state-owned entities looking to secure vital resources, Progress Energy (PGN) joins forces with Malaysia’s Petronas, selling half its interest in 3 shale gas properties for $1.1B.

    UBS sees limited upside ahead for General Mills (GIS -2.3% to $38.32), downgrading it to neutral from Buy – but keeping a $41 target – based on possible U.S. retail sales weakness. Other staples aren’t having a great day, down 0.9% as a sector. 

  99. Good morning everyone :)

  100. tchayipov
    Are you watching this JUL 12/6/12/6 oil play doing very well no change up to now and up over 3k!!!!

  101.  phil, would you play MU at this price, and if so, how? ($9.40)

  102. GOOG - check it out.  When ‘They’ decide to head to the next strike, they really go for it!

  103. why are the MoMos flying today? Love your Monty Python video ;-) But still hate these f n MoMos

  104. Phil/Greece got bailed out, is it time to bail on the Euro, catalyst to ramp higher is gone..

  105. GREECE IS FIXED!!!! -  in real world, when I had my microwave fixed!!!! and next week Fixed!!!! and a week later fixed again – I put that microwave into garbage, buy new one from another company and make mental note "Never buy anything from the first company again, EVER!!!"

  106.  Pharm/FXE – have you adjusted your FXE Jul 140 Ps?  What’s your plan for those now?

  107. Got to love the coordination today
    Moody’s Says It Expects To Place US Rating For Downgrade Review If No Progress On Increasing Statutory Debt Limit

  108. CCJ/Jo – Well you might want to take the opportunity to improve them.  

    MU/Jvest – I’d wait until they either test the 200 dma at $9 or get back over $10.  They are not particularly cheap and we have no idea which chippies took a hit on supply disruptions and how much of a hit so, until earnings, it’s a total crap shoot in this sector.  

    Dollar punched down to 74.26 on noise about our Aaa rating being imperiled if we don’t raise the debt limit (thanks Kustomz).  This is NOT news, just a statement of fact with convenient timing (into the NYMEX close).  

    John Taylor says slashing the deficit as QE is ending will be an "unmitigated disaster" for the economy because of the combined hit to final demand. Once the pain is great enough, QE3 will become an inevitability, but getting there will be "pretty miserable."

    Pick your inflation poison, but MIT’s Billion Prices Project (looking at more products, but no services) and the official CPI are moving pretty much in lockstep, Paul Krugman notes. (And don’t shoot the messenger.)

    And speaking of consumer prices, food markets and retailers are (begrudgingly) going along with passed-through costs, Kellogg (K) CEO John Bryant says: "They’ll always push back but they’re accepting pricing." That’s the first sign in making them stick, so investors are keeping a close eye on consumer reaction, with grain spurring broad increases.  Why does that statement make me think that John Bryant is a rapist?  

    MoMos/Jabob – Because they can run 10 MoMos up while they sell the other 90 Nas stocks (or other indexes) and keep it from looking like a down day and that means the retail suckers will continue to hold their bags while they run the pre-market up tomorrow to bring in a fresh round of dip buyers who think it’s a technical victory because the index held up so well.  

    Greece/Kustomz – Assuming it is "fixed", now we move back to Portugal and Italy.  

    More well-timed sunshine and lollipops:  Paul Louie of Nomura has a contrary view of Hong Kong property, saying there is no bubble, just a world class city with not nearly enough supply to meet demand. Unless China goes away or Hong Kong turns its back on progress, expect real estate prices to keep rising.

    Good advice Lol but, unfortunately, all this does is encourage more people to lend into 20% interest rates in anticipation of a fix so, when the fix doesn’t come – it will be a Global catastrophe… again…  

  109. FIXED????   Do you mean as in "My dog has been Neutered" or "That’s my horse, the gelding over there"

  110. once again 180 pip jam in eur/us did not produce the usual results.  best show is nasdaq for 1.5 points.  Laughable.  what happens when eur reverses?

  111.  lapper:  Yes, amazing, dollar crash and equities freeze up.  Not encouraging for bulls.

  112. I think Phil is right.  Masked selling.  Anything to create bids, then YOURS….  Smells like a mother of a sell-off is just around the corner

  113. Great from Barry:  I’ve been meaning to discuss this Joe Nocera piece, The Good Banker, which is my favorite thing he’s done since moving to the OpEd pages.

    “In the run-up to the financial crisis, the giant national banks — which he viewed as a distinct species from the typical American bank — had done things that deserved condemnation. And, he added, “They are still doing things that I don’t think are very good.”Such as? “It has become a virtual casino,” he replied. “To me, banks exist for people to keep their liquid income, and also to finance trade and commerce.” Yet the six largest holding companies, which made a combined $75 billion last year, had $56 billion in trading revenues. “If you assume, as I do, that trading revenues go straight to the bottom line, that means that trading, not lending, is how they make most of their money,” he said.

    This was a problem for several reasons. First, it meant that banks were taking excessive risks that were never really envisioned when the government began insuring deposits — and became, in effect, the backstop for the banking industry. Second, bank C.E.O.’s were being compensated in no small part on their trading profits — which gave them every incentive to keep taking those excessive risks. Indeed, in 2007, the chief executives of the Too Big to Fail Banks made, on average, $26 million, according to Wilmers — more than double the compensation of the top nonbank Fortune 500 executives. (Wilmers made around $2 million last year.)

    Finally — and this is what particularly galled him — trading derivatives and other securities really had nothing to do with the underlying purpose of banking. He told me that he thought the Glass-Steagall Act — the Depression-era law that separated commercial and investment banks — should never have been abolished and that derivatives need to be brought under government control. “It doesn’t need to be studied for two years,” he said. “I would put derivative trading in a subsidiary and tax it at a higher rate. If they fail, they fail.”

  114. SPWRA – Don’t forget there is a tender offer at $23.25 that expires on June 14th.  How will that effect the short puts??
    SunPower (Nasdaq: SPWRA, SPWRB) and Total (CAC: TOTF.PA) today announced that the two companies have entered into a broad strategic relationship to shape the future of the solar industry. Total Group will launch a friendly tender offer through a wholly owned subsidiary for up to 60 percent of SunPower’s outstanding Class A Common shares and 60 percent of SunPower’s outstanding Class B Common shares at a price of $23.25/share for each class.

  115.  oil approaching $100.60 …. can the NYMEX work their closing magic again or will everyone sell oil in the last 30 minutes?  :)

  116. Do we leave FAS naked overnight?

  117. Good  morning, again,

    Well, I see we’ve based and now we can move up through resistance at IWM 82.30 !!


    I expected today to be up, and tomorrow to be flat to up. Tuesday the wheels should start to come off; if they don’t by Friday, we will be making new highs !!


    Sorry, I didn’t see your post yesterday; We’re in Fiji.

    The 3 minute confirmation occurs when the 8 (or 9) EMA is pierced by an engulfing bar FOLLOWED by an engulfing bar on the the new side of the EMA (the 13:42-45 bar) !!  If I had been playing yesterday I would have likely been short the entire day, maybe in and out of 1/3 on that 13:42 move, but other than that, short and NEVER long (against the daily trend) !!

  118. Phil banks/insurers and derivatives, its too late they are now part of the Borg and committed no matter the outcome.

  119. STICK?
    If we rebound 20% of yesterday’s loss it also hits at resistance 82.78, we got to 82.65 this morning. The dollar is lower now than then and IWM lock steps. The DOW is green or trying and this looks like a flush. Any comments?

  120. Fixed/Willie – As in, until 2014 when we’re back where we started except with double the debt.

    What happens/Lapper – Yes, very poor showing all around with the Dollar smacked down to 74.26.  Last time the dollar was this low was May 6th (on the way up) and April 20th (on the way down) and the Dow was about 200 points higher and oil was about $105 so what’s it going to take now – 73 on the Dollar?  72?  How much of our buying power has to be destroyed to make the market look pretty in June?

    Nice shot at shorting $100.50 on oil a little ahead of schedule.

    SPWRA/Edro – It’s not a full buy so I think it just establishes a good floor.  

    FAS/$25KP, Lol – May as well sell 40 (1/2 cover) TOMORROW $26 calls for .32 ($1,280).  

  121. Greece isnt fixed after all

  122. Shadowfax Hi DOW what trading platform do you have I show dow red 31 down !!!

  123. yodi
    Was green for a few seconds or so.

  124. On agnosticism:

    It’s important for readers to note that I am not a permabear. In fact, just a month ago I was 100% long and firmly bullish in my outlook. But I think it’s crucial for traders to practice non-attachment to views. Rigid self identification as "bullish" or "bearish" is a major hindrance for any market participant. It’s important to be able to let go of an established view when the market reality changes. Zen master Thich Nhat Hanh says:


    We must not be attached to a view or a doctrine, even a Buddhist one … The Buddha said that if in a certain moment or place you adopt something as the absolute truth and you attach to that … then you will no longer have any chance to reach the truth. Even when the truth comes and knocks on your door, and asks you to open the door, you won’t recognize it. So you must not be too attached to dogma — to what you believe, and to what you perceive.


  125. Pharmboy,
    Heard that ABC news was having a story on stem cells and spinal cord injury tonight. Also heard they were going to discuss GERN during this. Don’t know how true this is. Worth a gamble for a short pop in price?

  126. I like the FAS Next week $27 calls at .30, selling the Tomorrow $26s for .32 as a Theta spread with a .02 credit.  The Deltas are just .05 off so you should be able to stay out of trouble on a move up and a move down can’t possibly hurt you so an interesting way to play flat or down into tomorrow.  

    That’s a very ambitious target JRW.  You were right last time we bottomed but I still can’t buy into it.  

    Borg/Kustomz – Yes, they have already assimilated the major Governments and now they are attempting to overcome the second-tier nations.  

    Stick/Shadow – I think the weak dollar is masking a weaker market but they should be able to hold us up tomorrow and then spin their asses off over the weekend to try to bring in some buyers.  We might get back to those 2.5% lines but probably not as easily as we did last time and, if we fail those, then I’d be looking for a break-down.  

    2:00 PM On the hour: Dow -0.08%. 10-yr -0.24%. Euro +1.16% vs. dollar. Crude +0.19% to $100.48. Gold -0.44% to $1536.40. 

    ROFL!  The euro gives up a few pips of its rally on a Troika/Greece agreement as the European Commission hits the wires denying such a deal. Euro buying $1.4467. Stay tuned for the denial of the denial.

    Ugly chart of the day: Junk bonds have broken through support levels at the same time that 30-year Treasurys have cracked through resistance levels, Josh Brown finds, a dubious distinction not fulfilled since late 2007. "Consider this a warning sign from the very depths of the hell that was the onset of the credit crisis."  How do I make that last part blink on and off and flash at you???

    Moody’s warns that it would expect to place the U.S. sovereign credit rating on review for a possible downgrade if the government fails to increase its debt limit: "If the debt limit is raised and default avoided, the Aaa rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction."  That’s "POSSIBLE" and "IF"!  

    The top six defensive stocks for investors right now, according to 24/7′s Jon Ogg: Pepsico (PEP), ConAgra (CAG), Altria (MO), Colgate-Palmolive (CL), Johnson & Johnson (JNJ), American Water Works (AWK).

  127. I’ll have to track this against TNA !!

    Russell 2000 High Volatility ETF (SHVY) – The underlying Russell-Axioma U.S. Small Cap High Volatility Index attempts to track stocks from the Russell 2000 with high volatility based on their variability in total returns over the last 60 days. The fund currently holds 370 stocks with the largest allocation to CARBO Ceramics (CRR) at 1.9% (SHVY overview and top holdings).

  128. Thanks for the explanation JR.

  129. painman
    Anything on spinal cord injury is good news, was told 10 years ago I was a prime beta specimen for stem cell.

  130. BIDU up 3.5% today because, of course, it was such a perfect day to buy BIDU….  

    Good point on agnosticism JRW.

    Oil $100.60 – that’s the spot!  

  131.  so phil, you called a $100.50 oil short a few minutes before nymex close. Now what? Does oil ever see big drops after nymex close, or does it just float slowly upward in a bot-powered sunshine fantasy?

  132. So someone asked about entering futures puts earlier.  On oil at the moment, you can short 1 contract at $100.50 and plan to DD at $100.60 for a $100.55 avg.  ANY time you DD, you should be looking to get 1/2 back out even.  If oil goes up from $100.60 then you should probably take a .05 stop and wait for the next cross to try again.  If you have 2 shorts and that’s not much money to you, you can plan on doing a DD at $100.85 (4 at $100.70) and again at $101 (8 at $101.85) but then you are facing a big loss if they head over $101.05 and that’s a place you REALLY should stop out as you will have been wrong for .55, which is a lot!  

    Of course you don’t DD like an idiot at whatever strike, you PLAN to DD and wait for oil to stop going up as it’s to your advantage to make your second sale at the higher strike.  The key is to recognize how much you will lose (8 x .20 in this case) and you MUST be very comfortable with that or DON’T EVEN START!  /CL contracts are $10 per penny per contract so you are risking $1,600 the minute you decide you are not going to stop out with a $50 loss on the first nickel move against you.  $50 is VERY EASY to win back, $1,600 is VERY HARD to win back.   

    Also, the margin on 8 contracts is about $80,000 – another thing you need to be aware of is your buying power. 

    So what is the net effect of scaling in to 8 positions on that ladder?

    • You are short 1 at $100.50, making $10 per penny on the way down.  A stop at $100.55 means you take a $50 loss and wait for another opportunity.
    • You are short 2 at $100.55 avg with oil at $105.60 (down $100).  A stop at $100.65 means you take a $200 loss and wait for another opportunity.  If Oil pulls back to $100.55, you can stop out half and be back to 1x at a higher strike than you started with and you can wash, rinse and repeat.  
    • You are short 4 at $100.70 avg. with oil at $100.85 (down $600 – notice how the game gets serious very quickly!).  A stop at $101.05 means you take a $1,400 loss so you can see how going down this path is no longer a fun and friendly bet!  
    • You are short 8 at $100.85 avg with oil at $101 (down $900) and every penny oil moves up costs you another $80 but this is how you can take an entry and have a buffer of a .50 range.  Don’t forget, if you are at 8 contracts and get your .15 pullback to even at $100.85, you can sell 6 or 7 – not just 4 and, since you were way wrong before, you should just be thrilled to get away with having one or two short contracts at a MUCH higher strike than you originally intended.  

    So that’s the basic premise for scaling in and out of futures contracts.  I cannot possibly emphasize enough how critical it is that you practice, Practice and PRACTICE paper trading over and Over and OVER again before you even consider risking a penny on this because even professional hedge fund managers get wiped out trading futures!  

  133. JRW / Fiji — Much easier to be agnostic (or zen like) sitting in a grass hut over a beautiful bay! :)   What do you trade on when out of the country, a laptop? Must be tough not having the screen realestate. Have you ever had to deal with export restrictions on encryption software relating to trading out of the country?

  134.  Phil, thanks for the explanation on your put thoughts. That makes a lot of sense, and I’m still green at this, so it’s helpful to hear. 

  135. Oil/Jvest – Now you have to watch the dollar to hold 74.35 as that’s our premise to stay short on oil and you have to know that oil stops trading in the overnights at about 5:15 and starts again at 6pm so you are subject to a gap there and it very much depends on your risk tolerance if you want to keep open through that.  Once 6pm starts up, you are subject to very thin overnight trading that goes on ALL NIGHT LONG so you can literally fall asleep and wake up down thousands of dollars.  Futures are EXTREMELY high-stakes gambling and, even with a single contract, it’s about the same as playing the $100 slot machines in Vegas except you do, in theory, have the edge if you understand the market but you still have to pick your spots and have a very strict stop AND profit-taking discipline. 

    For instance, the entry at $100.50 in this particular case was low because we already decided $100.60 is our real resistance so $100.65 is where we’d want to DD and there’s no point in playing 1 at $100.50 if you are going to stop out at $100.55 because we already don’t see resistance until $100.60.  The only reason to enter short at $100.50 is JUST IN CASE the psychological level at $100.50 held (it didn’t) and we never got a crack at $100.60. 

    Now the problem is you are immediately risking $150 just to take a poke at $100.50, right?  Again, that’s fine if $150 is a craps roll to you but insane if it is enough money to make you mad at yourself.  In this particular case, I’d be pissed if oil dropped below $100.50 without going up because I’d just be short 1 but that’s life (and you can scale in on a positive move too but that’s a whole other lecture).  

    So, with an entry at $100.50, we just sit tight below $100.65 and only if we hit $100.65 (ish) and it looks like resistance AND the Dollar looks like it’s not going to fail $74.35 – THEN we add another and average into 2 at $100.575.  We’re still down $150 and now we know that at $100.70 we’re just wrong and we’ll get out there with a $250 loss but then we can reload if we cross back below $100.60, which is a higher strike than we abandoned with another .05 stop and, if we are lucky – next time we catch a .25 move, which evens us up from our loss.  

    That’s another point on Futures trading – your primary goal always is to get back to even.  If you were wrong and then you luck out and things go right (and it is luck – never fool yourself) then be happy to get even.  Even is good.  Even means you get to wait for a good set-up and try again and maybe you get lucky and have an instant winner.  If you play even 7 times out of 10 and have 2 wins and 1 loss the other way, maybe you make an extra $250-500 a week and sometimes you get lucky – like we did with oil the last couple of days, and catch a big run ($3,000 and $2,500) – but you never catch those if you aren’t around to play and playing an even game keeps you around for the big ones. 

    Your primary advantage in the futures is that you will take a loss of the table but you can let a winner run (with trailing stops, of course).  Since the house has no choice – that’s your advantage but developing a discipline and managing your positions is something that only comes with LOTS of practice.  PAPER TRADE until you are sick of it.  Paper trade 10,000 times – until you are scaling in and out in your sleep!  

    The same skills will also make you a much better day trader but only if you practice. 

  136. rain,

    Not trading, (on vacation) !!  Traded some options by phone as I can’t use my system here !!

  137. Hey all,

    I have just published an article about 4 stocks I would be buying tomorrow for a pop if we get an up day tomorrow. The technicals are setting up in that way, and this position looks pretty solid.

    The four are CNI, HNZ, MMR, and NWSA

    Check it out:

  138. You’re welcome Kurt. Nice boring end of day to pontificate on….

    Sprint (S +1.9%) reportedly is near a network sharing agreement with wireless broadband network LightSquared, backed by Philip Falcone, in a deal worth as much as $20B. Sprint would receive up to $2B annually from LightSquared in the early years to help cover network upgrade costs; payments thereafter would vary based on LightSquared usage.

    I like S at $5.93.  You can buy the stock and sell the Jan $6 puts and calls for $1.60 for net $4.33/4.67 or you can go for the 2013 $5/7.50 bull call spread at $1.10 and sell the $5 puts for .76 for net .34 on the $2.50 spread with a 635% upside at $7.50 and a worst case of owning S for net $5.34 (10% off).  

    03:00 PM On the hour: Dow -0.02%. 10-yr -0.28%. Euro +1.07% vs. dollar. Crude +0.31% to $100.60. Gold -0.59% to $1534.10.

    Financials (KBE +0.4%) are among the day’s top performers despite negative headlines. Goldman Sachs (GS -0.9%) remains in the red but is well off earlier lows after subpoena reports. Despite a Moody’s note saying BofA (BAC +1%), Wells Fargo (WFC +1.1%) and Citigroup (C+1.4%) are on review for possible downgrade, all three stocks turn positive after an initial hit on the news. 

    "The real manufacturing recession began in 1999 and simply never stopped,” Karl Smith writes. It’s "unlikely" that steep job losses were caused solely by the financial crisis or housing collapse; "the story of this recession is a part of the larger story of globalization and its effects on the U.S. labor market."

     The flood of personal bankruptcies in 2010 shows signs of ebbing as May filings drop 14.8% from April, and 15.7% Y/Y. Through the first five months of 2011, total filings are now down 8.4% compared with last year. 

    Game on!  Groupon files for a $750M IPO to be led by Morgan Stanley, Goldman Sachs and Credit Suisse. The company posted revenue of $644M in 2011 Q1, up from $44M the previous year. The Q1 loss was $147M. Ticker symbol to be GRPN.

    Acknowledging a housing bubble in China, the head of China Construction Bank (CICHF.PK), the country’s largest mortgage lender, says the lack of leverage in the property sector should limit any downturn. On the yuan, he sees the currency becoming fully convertible within 5 years.

  139. Buying/David – I would not be so gung ho to buy things tomorrow.  Best to stay cashy into the weekend!  

  140. Phil, got out of all my DIA puts when we tested 12200 earlier.  Was planning to buy them back if we flipped positive and went towards the 12353 line.  For now I’m not rebuying the puts unless you think there’s a good chance that we can be down heavy tomorrow. Did we break any support lines that I missed?  Seems 12200 is going to be a tough one.

  141. Well…you know me…they’d all be daytrades.

  142. Phil / EDZ    Should I hold into the close, it’s down 2.5% today

  143. Phil, any plays on ABX?  it seems to have come down in price despite gold holding steady.

  144. Pharmboy: what do you think of ABT with seliing Jan . $55 Call? thanks

  145. Support/Rustle – 8,280 on the NYSE was our key watch confirmed by RUT 815.  The only problem is we are only holding those levels off the weak dollar and Greece is NOT fixed so, over the weekend, we’ll need to have some hedges unless we pop over the 1.25% lines tomorrow, which I doubt because the Dollar is too low to knock down another 0.75% and I think they would need at least that (74) to pick the markets up 1.25%.  They may push us down there overnight but I’d short that rally. 

    Day trades/David – Well that might work then!  

    EDZ/Tusca – Well, since you were unwilling or unable to scale in off the morning drop (which would have had you even on the 11:30 spike up) I think you should give up because you are in a short-term premium play that you aren’t going to adjust so you have time working relentlessly against you with a 50/50 chance that it gets better or worse tomorrow and oil came back and that was your best chance for an Emerging Market pullback.  I however, would hold on and roll and DD for the weekend if the trade went against me tomorrow because the only reason we’re not red today is that the Dollar got squashed again and Greece was "fixed".  If those don’t hold up – BIG TROUBLE! 

    ABX/Leon – I’m waiting for gold to get back to $1,250.  I forget the last ABX trade but check the Wiki and paste it and I’ll let you know if it’s still good.  Generally I think the miners are smarter than the metals and that means ABX is pointing to gold’s future….

  146. Phil/ABX:
    Bought ABX at $46 and sold Jan $48 Call for $3.90  in IRA looking to get 14 % return,20 % annualized . Now slightly ahead,but concerned about big copper deal ABX is closing will no longer consider them a pure gold play. Do you have any opinion as tot he copper deal being good or bad for ABX? Thanks

  147. FXE – no change for now.  Plenty of time and I want to see how the charts finish the week.


    GERN – sure, but there are a ton of companies, but if they are specifically mentioned, could be worth a small round. I  don’t play those guys, as it is very early on.

  148. Will wait tomorrow then and buy puts in any strength and still holding bearish ETF’s anyway now.

  149. Here comes Groupon – $750M initial public offering.  Sorry if it was posted above, have not caught up on chat.

  150.  ":……The real manufacturing recession began in 1999 and simply never stopped,” Karl Smith writes.."
    He’s off by about two decades, 20  years.  The jobs losses in MFG began in earnest in 1980, coincidentally with the steepest interest rates ever.  City by city, around the country—particklelerly  in the rust  belt—- imploded and have never recovered.  And never will. At least not until people are willing to work for, compete for jobs at the lowest possible wage rate.
    Prognosis for jobs, not just in MFG but services as well is dismal moving to abysmal, and then on to cataclysmic.  This and last three years College grads, though admittedly among the least educated in history, are having an impossible time of it.

  151. The AH volume just exceeded the last hour. Unreal how they can prop this puppy up.

  152. Phil/S – Bought S at 4.18 and sold Jan13 4.5Call and 4.0Put for $1.82 (now $2.50). Now that you like S at $5.93 I like it even more. Would you recommend rolling up to the 6 Puts and Calls (above) or just leave well enough alone? This is a long-term IRA portfolio.

  153. ABX/Dflam – I trust the management there enough to believe they are making a good deal but the margins will no longer be what ABX shareholders are used to – even if the acquisition is wildly successful so, on the whole, you’ll have to wait for them to find a proper level once the consolidated books are in.  At the moment, it’s an arb game but they are very attractive at $40 so if they do take a dive, I’d just go with the flow and sell some puts for a planned DD at $34 to average you in for $40 and maybe you can sell the 2013 $40s to give yourself another 10%+ of downside protection.  If you aren’t comfortable with that DD and roll to average you down to 2x at about $35, then that let’s you know right there whether you should keep it or not at $46.20, right?  

    TBT $33.44!  

    Oil $100.69 with Dollar down at 74.34 to give us the best possible close but it still sucks.  

    Volume/Pharm – Was a super low-volume day.  Even now the Dow total is 156M.  

    Well, another day, another Billion on oil.  Someone really needs to give me $3Bn to play with so I can corner the market! 8-)

    At the close: Dow -0.34% to 12248. S&P -0.12% to 1313. Nasdaq +0.15% to 2773.
    Treasurys: 30-year -0.89%. 10-yr -0.32%. 5-yr -0.18%.
    Commodities: Crude +0.37% to $100.66. Gold +0.15% to $1535.00.
    Currencies: Euro +1.13% vs. dollar. Yen -0.03%. Pound +0.2%.

    Timely statement Transports:  A breath of economic exuberance: Union Pacific (UNP +1.4%) CEO James Young says his company has seen no evidence of a slowdown, and believes second-half freight shipments will exceed first-half results. UNP and other railroads lifting transports (IYT +0.4%): KSU+2.8%CSX +1.2%NSC +1.2%.

    Timely statement Nasdaq:  Apple (AAPL +0.2%) shares are at "historic lows" after having merely performed in line with the market for seven months, so UBS adds the stock as a “key call.” Apple continues to enjoy "robust" demand for its products, but the stock trades at 12.2x forward earnings, a 10-year low, despite 64% projected EPS growth this year and a potential $85/share in cash.

    Timely statement Financials:  JPMorgan Chase (JPM) emerges as one of the biggest beneficiaries of the commodities boom sweeping Wall Street, earning more for the bank during Q1 than through all of last year. Increased volatility and higher prices of oil and other raw materials are boosting profits, as 10 large banks enjoyed a reported 55% increase in their commodities revenues.

    China’s bailout of its local government financing vehicles (LGFVs) "is the tip of the iceberg," writes Patrick Chovanec. The banking system’s exposure to other risky debt is far more extensive, and contrary to popular belief, China’s does not have its FX reserves available to use for such operations.

    Those statements came out 3:11, 3:39 and 3:51 – all aimed at boosting key sectors into the close.  So many fun ways to fix the markets…..

  154. Pharmboy:  Do you have any insight/opinions regarding Palatin Technologies (PTN) based in NJ.  They are developing obesity, asthma and female sexual dysfunction drugs.  They generated a lot of hype a few years ago with PT-141, a libido enhancing drug that was supposed to be delivered via a nasal inhaler, but as far as I understand, there were concerns about blood pressure increases and they never got FDA approval.  There was no mention of PT-141 in their last earnings conference call so I assume that it has been shelved.  Here is the link to their earnings call:
    I’d appreciate any thoughts you have.

  155. phil /gold  i guess really just a technical argument.. which i normally dont have much time for.. but I find myself captured a bit by this one..i  see stocks being literally undervalued in absolute terms.. that is..versus cash it’s just an out-of-whackness argument i guess..

  156. Interesting analysis of Groupon on Bloomberg radio now. Loosing money hand over fist…

  157. Pharm – I have a personal question to ask. Is there an email address I can mail at? Thank you.

  158. China / Phil – The more I read about them, the smarter Jim Chanos looks! I have the feeling that in a couple of years, Greece will look like a small bump on the road to financial destruction! 

  159. Phil / Confused     The GNP data points have been awful. Deduct the printed trillions in QE and unsustainable deficit spending and we would have a negative GNP print.
    That the Greeks have been cheating on their taxes and fooling the EEC is well documented by people like Martin Wolf and everyone knows (with such a large socialist leaning) the Greeks won’t go for the EEC austerity plan, so the timing of restructuring (default) is the only issue.
    The big institutional investors and hedge funds know all this, so why is the market holding at these lofty levels when the US consumer is facing dire prospects, ie a housing ddip, no jobs, inflation, reduced gov’t subsidies, elimination of free rents as foreclosures accelerate, etc – all of which lead to reduced demand and squeezed margins and another banking crisis.
    Unless…‘they’ already have inside info from Ben that QE3 is guaranteed since he can’t allow a mkt collapse which will trigger the 2nd Gt Depression??? Maybe this is how it really works in our totally rigged mkt?  Seems dangerous to short based on logic alone.

  160. Today’s levels

  161. @JRW III
    "….So you must not be too attached …………….— to what you believe, and to what you perceive."
    Makes perfect sense since—-if one has it—- there is a  ’belief’ in something or someone, e.g.  god, Buddha, Kali, money, member of the opposite sex, beauty, art, science, a tree, etc.
    That someone or something exists independent of our belief in it— with proof positive (money, tree) or it does not— no proof at all (god, Kali, Buddha) .
    I believe I’ll have a cookie.

  162. John – yeah, I played them years ago for that exact drug for ED.  The lead cadidate is an ANP receptor agonist which causes vasodilation.  The ‘natural product’ is synthesized by the atria of the heart that helps with coronary blood flow when the heart is working hard as well it is a diuretic.  The company is after CHF and asthma.  The target is a hard one, as it has been around for a while (MRK, BI, and others have been there).  I would stay away from them for now.  They are looking for a partner, and may very well get one, but too early for me with the past failures in big pharma.  One company has something on the market for it (Diiachi called carperitide – but it is more of a diuretic).  The only real penny stock I currently own is NWBO (unless of course anything under $5 is a penny stock then I am lying!).  (Oh VIAP why has though forsaken me!) 

  163. nicha – pharmboy123 at gmail

  164. S/Gbase – The thing I hate more than anything is taking a perfectly good winner and turning it into a loser out of greed.   The deal may fall through or get tangled up in regulations.  S pays no dividend so, if you want to be more bullish, I would cash the stock for a $1.75 gain and buy 2x the 2013 $3 calls for $3.25 (.32 premium) and roll the callers ($2.10) to 2x the Jan $6 calls at .80, which is $5.93 – $6.50 (the 2 long calls) – .50 (the net cost of the roll) so then you are in the new spread for + $1..07 plus the net $2.36 you put in so $3.43 net on 2 $3 spreads with a one-year time advantage means you clear at least $6 back (up $2.57) over $6 but maybe much more with a roll and that’s .43 (10%) better than if you leave it alone making a margin .43 on the $1.07 you kick in (40%) but you make ALL the money on the trade a whole year sooner if S holds up and you have the very strong possibility of rolling to calls next year that pay you another 2x time $1 or $2, which then becomes a huge ROI.  While you are at it, you can also roll the 2013 $4 put to the Jan $5 put for about a dime but keep in mind you are adding risk so you have to REALLY want to be in S long-term, in case something does go wrong.  

    Value/Angel – I think that there is COMPLETELY inadequate risk factored into stocks.  They are priced on pure earnings and potential earnings going forward in an extrapolated recovery.  ANY downward revisions to global growth, like the kind we "suddenly" had in Q3 of 2008, will snap investors out of their stupor and send prices plunging back 20% – IF they are lucky enough to hold that!  There is a great International growth story but to assume it rolls out over 5 years without a hiccup is stretching value quite a bit in my opinion.  

    China/StJ – I agree.  Look at this muni bailout.  There goes 1/3 of their remaining reserves (they just spent $500Bn on the last stimulus).  Now they aren’t making money as fast and they are subsidizing fuel and who knows what else to keep their people from freaking out – it won’t be long before they decide to print money and then they are on the path to DOOM!  

    Confusion/Tusca – You are right.  Everybody, including me, believes there will be some form of QE3.  It’s the only reason I’m not 100% bearish and at the firing range, practicing to defend my home from invaders.  It’s pretty impossible to imagine any scenario in which our Government will allow the market to float freely when, as you say, freely is probably a very sharp drop.  They have already spent 2.5 years demonstrating that they will do ANYTHING to prop up the markets.   All we can do is play along and stay on our toes with a good exit strategy for when Reality shows up.  Even the 2008 collapse didn’t happen over-night – the skeptics were already out, just like we were in 2000 – maybe a little early but boy is it nice to be sitting in cash while everyone else is freaking out – just ask Warren Buffett….

     Damn!  Look at the candles on the NYSE and the Nas – RIGHT on the lines!  These are levels we have tracked all year – how’s that for a working system?  Dow popped right off the floor at our spot, RUT about the same, only the S&P accomplished an air turn and we’ll see how they handle 1,317 tomorrow but doesn’t just saying 1,317 out loud make you realize how shakey things are?  

    Market recap: Stocks ended mixed on light volume amid further signs of economic weakness (III) ahead of tomorrow’s jobs report.Treasurys fell after Moody’s warned the U.S. credit rating could be cut if no progress is made on debt ceiling talks; 10-year yields moved back over 3%. The dollar fell vs. the euro after reports of aid to Greece. NYSE advancers and decliners finished nearly even.  Wow, two of the 3 market movers were lies/exaggeration.

    Squeezed by stagnant wages and rising prices, U.S. consumers believe the chances of bringing home more money a year from now are at their lowest in 25 years, Goldman’s Jan Hatzius finds. It raises doubts over his forecast 2.5-3% rise in real consumer spending over the next year and might prompt another downward revision to forecast GDP growth in 2011 and 2012.

    Trouble with the slaves?  Shares of plantation owner Sino-Forest (SNOFF.PK -60%) plungeafter a report from Muddy Waters questions the company’s accounting and land holdings. Sino-Forest’s largest shareholder is Paulson & Company, which owned 34.7M shares as of April 29.

  165. Heard on NPR last night that OPEN has a bit of competition…..oh, and english hear it as well on Opts board.

  166.  Hi Phil,

    DBA – Jan 22/28 call debit spread, net is $4.72.  With DBA currently at $32.77, the position should work over time, but I am wondering if there is a way to take some cash off the table.
    DBC – Jan 22/27 Call debit spread, net $3.15.  Same question as above, with DBA at $30.13.  Do not have a good hedge, except that both spreads are relatively deep ITM.

  167. flips / beliefs

    Talking trading here, as I have many times expected one outcome, only to profit from riding the wave in the opposite direction when the opportunity presented itself !!

    Good hunting, grasshopper !!  8-)

  168. China / Phil – And to add to these thoughts, there was an interview on Le Monde (sorry, in French) this morning about these droughts that they are creating everywhere as they build dams to produce more electricity. The scientist was mentioning the fact that if you get too close to one of the new projects, they start creating problems or even arrest you. China is a demographics time bomb! Not only are they aging fast (labor shortage are not that far), but they will soon need to import so much food and water… Not going to end well for anyone! 

  169. And oil is up close to $0.50 since the close of Nymex. The fun never ends… 

  170.  Flip / manufacturing:  Have to agree.  U.S. manufacturers had problems in the 1980s, with the rise of Japan [we were importing cheap Japanese stuff by the mid-1960s, and their quality improved quickly], were faced with serious foreign competition across the board entering the 1990s, and, depending on industry, were almost wiped out by 1999.
    And further agree that, given U.S. academic ratings compared to most other developed nations, it’s tempting to say we have become a nation wherein the majority of workers will only qualify for McJobs.  Unfortunately, McDonalds is replacing humans with computer terminals as well, so picking fruit in the San Joaquin valley is looking like the hot job prospect lately.  Although, in response to complaints that immigrant workers were stealing American jobs in California a few years ago, the Mexicans offered any American who showed up a job, at the expense of a Mexican.  Three showed up, didn’t last the week.
    The bottom line is that if a machine can do the job, there is no job. That means the vast majority of clerical, paper-moving, stuff-counting, file logging jobs are gone — which means most white-collar jobs.  If you can’t outthink your average cyborg in a useful way — and Flip rightly points out that playing video games and displaying your underwear in pubic do not constitute job skills — then we have reached "Phil’s Conundrum", in which machines can do and make virtually everything but no humans have enough income to pay for what machines can do or make. 
    I have never had much doubt about where this was headed, and still don’t.  The selling of America.  It’s big, it’s lightly populated in terms of politically developed democracies, it’s relatively safe, peaceful and free of social upheaval [for the moment] and is still a coveted destination for a large number of EM citizens.  If the U.S. — which presently offers a $500,000 family Green Card program — would lower the price to $50,000 per head for the first 5 Million applicants – hey, presto, $250 Billion in the bank and only  3/4 of a Trillion to go if we cut Social Security. Of course, there are also asset sales — every underwater house in America, farmland, Alaskan drilling rights, Pebble Beach [again].  We can definitely get there, in the spirit in which we got here in the first place — let someone else do the work. America was built on immigrants  - ask the Indians. 

  171. Phil/Growth  this is one of those questions that is like a vaudeville skit…if you buy the premise…you buy the bit…if premise is what if there is a shock like Q32008… then by the nature of the premise itself.. there would be a similar reaction. ..your memory of a 20% gaffing is actually generous…. It was far worse than that…in one single week when there was a 25% event…so maybe the real question is: is there that kind of black swan out there?… it has to be big… it has to be unexpected. It has to be systemic…what would qualify?… i don’t see a EA implosion fully qualifying.. although it would be a knee in th enuts…the theory that china is a house of cards waiting for its own 2008 would be very bad for china.. and rough for the world.. but  not the same order of magnitude as having the banking system shut down worldwide… of  course nuclear terror a giant earthquake..a geopolitical event that takes oil to 300 bucks..the rapture?..bring it on..but they could happen sayng they ar epossible just isn’t interesting..what i like about what you do phil is you say’its probable’ and you have to be able to bet on your postulations without incurring disproportionate opportunity costs..which you do..




  172. stjeanluc - Here is a similar story

  173. Dam / Diamond – This seems to be the problem everywhere. The ecological changes are not always known…

  174. Due diligence anyone?
    These guys are just unbelievable…. All these Chinese IPO will likely end up where all the Internet bubble ended up!

  175. Profits, we don’t need no stinking profits…
    They are for suckers… Let me see, LinkedIn trades at 1000 times profits, Groupon will be over infinity – that will raise the market average a bit! 

  176. From Bespoke

    The monthly release of the ADP Payrolls report only began in late 2006, but it definitely gets its fair share of attention given that it always comes out two days prior to the even more closely-watched nonfarm payrolls report. Economists were looking for today’s ADP Payroll report to show job growth of 176,000, but the actual number came in much lower at just 38,000, making this the third biggest miss for the report in its short history.

    In the table below we highlight how the nonfarm payrolls report did versus expectations following the weakest ADP reports on record. As shown, the two ADP misses that were bigger than today’s miss were actually followed up with two better than expected payrolls reports. Back in January 2007 (the December report), the ADP estimate was for +116,000 jobs, and it actually came in at -40,000. The nonfarm payrolls number that came out two days later was then estimated to come in at +96,000, and the actual number came in at +167,000.

    At the moment, the consensus estimate for this Friday’s nonfarm payrolls number is at 170,000, but following today’s ADP report we are already beginning to see that number fall quite a bit.

  177. Warning to merchants: Keep your inventory well stocked (or else)!
    ‘Sovereign Citizen’ Opens Fire On Store Because It Ran Out Of Crawfish

  178. From PragCap – We’re now nearing the end of QE2 and some concrete conclusions can be made.   I’ll save my overall analysis of the program until after its conclusion, but I think the impact of QE2 can be pretty much summed up with the following chart:

    Economic growth peaked with QE2′s inception

    Real GDP peaked as soon as QE2 began.  Now, this shouldn’t be shocking to anyone who has been reading pragcap over the duration of this program.  From its onset I said QE2 would do nothing for the real economy.  In fact, operationally, it could do nothing.  But its impacts actually appear to have been damaging to bottom line growth.  How so?  QE2 helped contribute to a massive surge in speculation in commodity prices.

    You see, QE2 didn’t monetize anything.  It didn’t cause the money supply to explode.  It didn’t really do anything except cause a great deal of confusion and generate an enormous amount of speculation in financial markets that now appears to be contributing to turmoil and strife around the globe.  Operationally, it is no different than what the Fed does at the short end when they implement monetary policy.  The important distinction, however, is that this policy was implemented incorrectly.  Instead of targeting price they targeted size.  And the results in the bond market speak for themselves.  Rates have meandered up and down and up and down without a care in the world for the Fed’s $600B purchase program.  In other words, the program had no impact on rates.

    Aside from targeting rates, the program was intended to generate a portfolio rebalancing effect.  I won’t repeat the comments I’ve made in the past or those of Richard Koo, but the portfolio rebalancing effect is essentially a form of putting the cart before the horse.  Creating nominal wealth without an accompanying real effect that results in real economic growth is very misguided and the worst form of ponzi finance.

    Where we saw a real impact was in commodity prices, general price speculation and the financing pyramidI believe the BOJ has written the finest piece of research detailing this speculative effect.  The pass through effect from commodity prices is a contributing factor in the declining real GDP.  Inflation has risen marginally due to commodity price increases and the underlying real economy has remained stagnant.  In other words, QE2 caused margin compression without helping spur growth.  This helped create the disequilibrium I have often discussed. The result is the current air pocket in the economy.

    Critics of this analysis are likely to claim that we don’t know what would have happened to the economy without QE2.  This is true of course.  What we do know is that the economy was growing at 3.3% at the time QE2 was initiated, ISM surged to 57 just days after the announcement and climbed to 58 as the program was beginning.  In other words, we can confirm, definitively that the economy wasn’t collapsing as QE2 was beginning, but weakened as the program progressed.

    So, the only question left is – if the evidence appears to point to the fact that QE2 didn’t help the economic recovery then why in the world would anyone even consider QE3?

  179. Pharmboy, the answer to the question why would anybody consider QE3 is simple:  that is the perfect instrument to make rich richer and everybody else poorer.  The exact goal of the exercise.

  180. Looks like apple nabbed the last of the major record labels for their music service (announcing on the 6th?) –
    Just left Vegas earlier today and I’m not sure what’s normal but it didn’t look like many people were hitting the casinos in general.

  181. Sony pictures hacked. Hackers claimed to have accessed over 1 million accounts this time around (and with a simple SQL injection). Those guys can’t catch a break this year.

  182. Pharm / Lapper – Here is what I don’t get about this site :
    Pharms synopsis is spot on correct but he fails to define that this is all under the current admins auspices ? He simply says why would anybody ? The straight and simple truth is this is a dem controlled congress with a dem president and all the data/points Pharm shows is under this admin. So why not simply say this admin has made a huge mistake and is ready to do it again instead of you guys always mincing your words. Lappers response sounds as though you guys are talking about 2 seperate issues , but in fact you seem to be simply parsing words so as to not offend anybody…WTF I see Phil do this all the time and as I have said we actually agree on many,. probably most points/issues but he fails to lay responsibility of many of the mistakes where it actually lies . I always feel like the people here are living in a partial reality because they are afraid to speak the simple truth for fear of ??? Lappers response totally dismisses Obama admins complicity in the wasteful programs that accomplished nothing except feed massive amounts to banks and political cronies as though it is someone else doings other than this admin…WTF ? This is why I keep saying I see a lot of intellectual dishonesty here, because it is simply true. You aren’t really having a discussion you are mind effing each other althogh I completely agree with pharms POV/synopisis. Something is out of whack here whether you all want to admit/acknpowledge it or not .Something to ponder. And if you say anyhting or honestly try to get some dialogue going , the suggestion of Muzzling comes out ….WTF is going on here ? Something is whacked and it is obvious not right.

  183. For any sensitive souls out there, I do not mean any disrespect to anybody , I am simply stating what I see as it actually is. I am not afraid to do that. No response is even necessary but some honest thought would be a good thing ?

  184. Tell me how you would fix it Goob….and maybe I will get behind you.  I don’t blame the dems for any of ‘this’.  I don’t blame the repub’s either, well, I do to some extent.  When we are in a war, if that’s what ones calls it…raising taxes and conserving seem to be in order or at least it used to be.  When oil is at an all time high (under Bush), why did we buy more oil than the previous years at the HIGHS?  Why was Haliburtin chosen as the contractor of choice?  Where did we lose 12B in cold hard cash on a runway in Bagdad? 


    I do see the Dems as the lesser of two evils as don’t ask don’t tell is repealed, yaddah yaddah etc etc, but in the financial world, they are all in the same boat, rowing the same direction, but the destination, I hope, is different.  Again, I hope the GenYers/Xers can make a difference in the years ahead, but as long as the Baby boomers are in charge, good luck. 


    If it is so difficult to get your point across, why do you continually bring it up.  I get your points.  We all do.  So, again, I ask, what would you propose we do?  Cap has stated to throw them all out.  So has Phil.  So have I.  So has???  Give me a break.  Vote out who you don’t like in your district, I will do it in mine, but until then….quit harping, pointing fingers and do something about it.  Maybe you are?  Run for office, stand on a corner and say something!  Phil has advocated to write your Congress person.  Tell them your issues.  Point the fingers at them.  Have you done that?  I hope so.  If not, then why waste the words on here attacking and filling in jibberish that we already know. 


    Last time I checked, this is not a political blog but and investing one, and we need to take into account the political actions that affect or investing premise, but not run around crying wolf every time one runs by the door.  Ok, good night.


    Oh, Obama did not ask for QE2, goob…..remember that!

  185. Goob – Nobody is fearful of making comments to Phil. Your constant rants are ridiculous and what I dont get is WHY YOU KEEP MAKING THEM!? So…. Many of the members on this site are intellectually dishonest? What else? Oh yeah, we also don’t have the intestinal fortitude you have… After all, you’re the only one on here with "the balls to kill Osama Bin Laden" lol. How about doing those of us who haven’t chosen to ignore you yet a favor and try to make at LEAST one completely trade related comment for every "blah blah blah democrats are to blame", or blah blah blah PRAVDA comment……

  186. Lol, Pharm hadn’t refreshed and didnt see your post! You stole my thunder! hahaha

  187. Goob:  I’m not partisan in U.S. politics; I just try to vote for good government, which is something of fool’s errand.
    But I don’t get your ragging on the "Dems" for the fiscal situation in the U.S.   Alan Greenspan, father of both internet and real estate bubbles, was appointed by Ronald Reagan.  Ben Bernanke was appointed by George Bush II.  The only big mistake Obama made was being elected President while the disastrous, debt-splurging, financially unregulated economic history of the U.S. was unraveling.  Face it, the last fiscally prudent President we had was Clinton — the economy boomed under his leadership while the government showed the first, and last, U.S. budget surplus since 1969.
    And military adventures — you know about that stuff.   Bush invaded Iraq.  Bush II invaded Iraq and Afghanistan.  Full U.S. involvement in the Vietnam war came with Eisenhower.  Clinton involved the U.S. in Kosovo to stop a full-blown genocide, arguably the only sensible U.S. war effort since WW II.  All administrations have war casualties.
    Lastly, " Obama admins complicity in the wasteful programs that accomplished nothing except feed massive amounts to banks and political cronies…"  You’re joking, right?  Wall Street lawyers used to run circles around the SEC beginning in the 1980s, when investment banks started going public — leveraged leasing, what the Japanese called "trick leases", tax shelters, tax-exempt financing for racket ball franchises, junk bonds,with Milken, Lauder, Perella and the whole leveraged buyout wrecking crew…the lion’s share of it all done under Republican auspices.  You think that Obama invented bank bailouts?.
    Unsurprisingly, since I was working for Nixon’s law firm, then an investment bank, I voted for all those Republicans, and there’s two sides to every story — and the story was that the Republicans did exactly what the American people wanted them to do, which was to extend their false prosperity as long as possible.  But to somehow believe that the NASDAQ bubble, real estate bubble and leveraging of America that led to the present mess was somehow, retroactively, Obama’s fault is to be uninformed. 

  188. @0×0
    I don’t want to start anything, but exonerating Clinton is highly partisan. Or you aren’t familiar with his role in creating or sustaining or exacerbating the R.E. bubble and he could have at any time replaced the errant, and grossly incompetent Greenspan.
    In either case, Clinton bears as much or more responsibility for the R.E. bubble, unemployment in Manufacturing, along with being one of the sleaziest characters to ever occupy the oral office.
    If you like I can post why Clinton bears his share of the burden for the R.E. debacle or you could google it and find out.

  189. Good morning!  

    Pretty dull overnight other than oil falling from $101 back to $99.50 yet again.  Was a texbook case for the futures scaling strategy discussed above with a nice drop to $100.25 by 11pm, then a run-up back to $100.50 and then, right on cue, the 3am trade kicked in and they dropped $1 like a rock.  Now back to $99.82 with the Dollar smacked down to 74.335 at the moment but it’s WAY too low and there will be hell to pay if it bounces back.  

    Our futures off about 0.25%, strange dealings in Asia with the Hang Seng down 1.31% but the Shanghai was up .084%.  The Nikkei was down 0.666% so Lloyd is communicating to his buddies and the BSE was down 0.53%.  FTSE and CAC are flat but Germany seems happy, up 0.5%.  Everyone is waiting on jobs data really (and expecting a big miss due to ADP’s report):

    Released on 6/3/2011 8:30:00 AM For May, 2011

      Prior Consensus Consensus Range
    Nonfarm Payrolls – M/M change 244,00  170,000  90,000  to 200,000 
    Unemployment Rate – Level 9.0 % 8.9 % 8.7 % to 9.0 %
    Average Hourly Earnings – M/M change 0.1 % 0.2 % 0.1 % to 0.2 %
    Av Workweek – All Employees 34.3 hrs 34.3 hrs 34.2 hrs to 34.3 hrs
    Private Payrolls – M/M change 268,000  180,000  115,000  to 225,000 

    I think it’s a lose-lose because, if jobs suck, commodities keep falling and that drags the market down but, if jobs are good, then the Dollar goes up and that drags the market down.  We need a wishy=washy 100-150K I think in order to flatline between the must hold levels and the 1.25% lines.  

    Meanwhile, Greece is not even close to fixed and anyone who says it is is lying.  Even if they come to an agreement, it then would have to be ratified by many countries over the next few weeks.  And then there is whether or not the Greek people will put up with what is essentially selling the nation into slavery in order to pay off the bondholders:  

    Protesters took over the Finance Ministry building in Athens Friday morning, hanging a giant banner from the roof calling for a general strike, just as Greece wraps up tough negotiations with international officials on new 

    Euro-Zone Private Sector Growth SlowsGrowth in the euro zone’s private sector slowed to its weakest rate for five months in May and inflation eased, taking some pressure off the European Central Bank to tighten monetary policy, a survey by financial-information firm Markit showed.

    But the WSJ, in it’s battle to bash the Dollar, is leading with this today:

    Moody’s Threatens U.S. Debt Rating Cut

    Moody’s warned it might review the government’s Aaa debt rating for a possible downgrade as early as next month if there is no progress toward a deal on the federal borrowing limit

    So the battle lines are drawn and we’ll see how things play out at 8:30, hopefully we hold our must hold lines – won’t be pretty if we don’t!  

  190. Phil
    Good morning. I will not be available in the afternoon. I am holding FAS June (this week) $26 caller. If we are down this morning or flat, I am looking to roll down the long July $27 call to $26 for between (.35-.40) and roll the caller to next weeks – (here’s where it gets tricky) either the $26 (.90) or $27 (.55). Which do you think would be the better play for the caller? I am leaning towards the $27′s as a lock to expire worthless next week. Thank you.

  191. Phil
    …of course if the jobs numbers are absolutely horrible I may be able to just buy back this weeks caller for (.10-.15) and just wait until next weeks bounce (they will find some reason!) to to sell the $26or $27 caller. Do you think its a good idea to go naked over the weekend in lieu of a bigger than expected sell-off today? Thanks.

  192. DBA/DrMtv – When you do a vertical, they are very targeted trades.  Because the deltas are similar, you make very little, even when you are well in the money – until you get very close to expiration and the premium wears off.  In fact, your in the money calls will lose their premium much faster than the calls you sold, giving you a much worse-looking performance, right up until the end.  On DBA, since I think commodities are topped out, I would either cash out ($5.40 out of $6) or take the $10.80 for the Jan $22s off the table and cover the short Jan $28 calls ($5.40) with 2013 $30s at $5.30.  That’s taking $5.50 off the table and leaving a bearish spread that pays a nice bonus if DBA heads lower and you can always add longs and do a 1.5x roll if DBA does head higher as you have $5.50 cash on the side.  DBC is similar but they don’t have a 2013 so not much to be done with them other than cash out for $4.50 (if possible) or wait.  As you are forced to wait for them to make $1 – all the more reason to flip bearish on DBA as you have another $1 coming to you on DBC if we head up anyway.

    China droughts/StJ – Yeah, that seems to be getting very serious.  Scary thing is this is exactly what was predicted would happen when they built 3 Gorges but they ignored it and built it anyway.  I was at a conference in 1999 doing a presentation I wish I still had pointing out that it was not possible for everyone in China and India to have our lifestyle, or even the lifestyle of an Eastern European.  Forget trying to give 2.5Bn people 1.5Bn cars (not enough metal and rubber in the World, even if there was fuel) – we don’t even have the steel for refrigerators or washers and dryers nor is there any realistic way we can bring their electrical consumption up to Eastern European levels and, even if we accomplished all that – where would they put the trash?  Currently, 2Bn of those 2.5Bn people consume food that is not packaged – do you realize what an environmental catastrophe it would be if we begin plastic-wrapping all their meals?  This is the problem with the US exporting their culture through film and television around the World – we have created desires that can’t realistically be fulfilled – a very stupid move from a country with 5% of the Global population that consumes 25% of the planet’s resources.  

    Green cards/ZZ – Yeah that’s nice for year one but we need over $1Tn EVERY YEAR – are you going to bring in 5M per year?  I think clamping down on immigration was a huge mistake because, as you say, immigrants built this country and keep it fresh – the melting pot of America has always been our greatest advantage and what SHOULD be happening now is that wealthy Asians and Arabs should be coming here in droves and buying our real estate and building new businesses but we’ve created a hostile, xenophobic environment that has forced a decade’s worth of the World’s best and brightest to stay home and build their own countries up, making the competition all the tougher for us.  The Dubai port deal was a defining moment in our shift of attitude.  

    25%/Angel – Yes but that’s not a day.  When we break our levels we hedge and then we stack the hedges as we begin to give up on our long positions and get back to cash – we don’t stand like deer in headlights while the market drops 25%, let alone 60%!  There’s a reason we regularly have Disaster Hedges in our portfolio but the valuations of stocks don’t reflect that possibility at all.  Let’s say that various things you mention may spark a 20% market correction (and note the root word "correct" in there!) and let’s say EU has just a 5% chance of happening.  That’s still 1% that should be discounted (a 5% chance of a 20% correction), then you go through the rest and assign a likelihood of something happening during your investing horizon so let’s say it’s just a year and we say China 10% (+2), Nuke 1% (+.2), Earthquake 2.5% (+.5), oil shock 10% (+2) and now we’re up to 5.7% that should be discounted to growth to account for risk – even that very conservative calculation is not in there.  It’s not about "probable" – it’s about possible.  What’s improbable is that NOTHING bad will happen but it’s a reflection of the infantile attitude of modern investors that they are willing to put out money under the premise that nothing will go wrong and, even if it does, someone will bail them out.  

    China/StJ – Maybe we should call that one 20% likely to implode! 

    Good note from PragCap, Pharm.  

    FAS/DC – I would take out the caller and go naked over the weekend.  The $27s are not a very attractive sell right now.  The roll down should also wait because it will either be cheaper on Monday or you won’t need it if we head up.   You can’t be at $25.70 on FAS thinking $27 looks "safe".  We were at $26.90 last Wednesday and $28.40 on Monday.  In fact, $1.50 is about the AVERAGE weekly move for FAS.  Unfortunately for us, it’s been generally a down average but just moving to July gives us 8 weeks left to sell so we can afford to burn one (though we haven’t yet) waiting to see if we catch a break.   The only real variable is, if we have a big drop, then we may want to do that roll to the July $26 calls for .35 but we still wouldn’t want to cover.  

    Oh no – They have unleashed the Greenspan on CNBC – now we know we’re screwed!  

  193. Phil
    Ok, makes sense. Thank you.

  194. I have said numerous times that the republicans started the mess of bailouts when H Paulson made his infamous we have to statements and of course the repubs did not read many of the legislative issues that have caused much of the mess along with the dems.  No matter how you slice it much gets glossed over here for whatever reason and sort of talked around as if it does not exist ? That is what I am speaking to. So without any real dialogue how will any of it ever get resolved, and I have done all of the above mentioned to contact and vote, of course. I have equal disdain for both partiers, but the dems are in fact and were in control other than Boehner now, who is basicly ineffective at best. I still see the same dishonest stuff coming out ? Obviously some neeed a lightning rod to focus their angst on.
    Zero and others , I am fully aware this all goes back decades and all are responsible. I have stated this many times. That is in fact a differernt point than QE2 being basicly fully a function of this admin which is what Pharm was saying but did not specify to this admin and all I said was pointing that out and people basicly come unglued ? Still none of my questions /reasonongs are answered ? And J Rom gets to distort what I have said previously which I won’t even go down that road . I still see the same thing happening , Oh well ? And not one person gets it about muzzling or speaks up ? Pretty weird ? If it all was not so important it would be laughable. The ability to vattempt to villify, belittle or otherwise muzzle psychogically is also a point of contention and quite weird ? Some of it is like 6th grade, teacher teacher he said something I don’t want to hear so make him not say that ! Amazing  

  195. wow …worst number since sept 2010

  196. By the way, the solution is basicly what Zero explained the other day better than I have said on numerous occassions. That is to somehow change the lobbying/money interest that is able to corrupt from the top down , mostly congress. Clearly both sides have taken part in the corruption, but again that really is a different issue as compared to this admin being responsible for QE2 . It is on their watch and GWB has been gone for a long time. So ?
    My point this AM about this sites Psyche is also a different issue and I still think a completely valid one . Just saying, I still don’t get why grown men can’t say what seems quite obvious and needs to be discussed ? again something to ponder ?