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Wednesday: Wiping Out All of 2011′s Gains!

S&P 1,260.  That's the line we need to hold.

That's where we started the Year on January 3rd and we finished that day at 1,271, beginning a fine tradition of making almost all of our gains on the first day of the month, continuing a very disturbing (and very fake) year-long trend that I am calling "sell the next day (of the month) and go away." (chart by Bespoke).

Notice that this trend became very disturbing at the same time Uncle Ben announced his fabulous QE2 plan that showered money on his fellow Banksters according to a nice, predictable schedule that allowed them to lever up their investments to inflate stocks and commodities, trapping index fund investors (especially the working poor who make monthly contributions to IRA and 401K accounts in a nice, predictable and controllable fashion).  It's a simple plan, index fund managers get your pension money at the end of the month, they are required to buy baskets of stocks to balance their funds and that action can be manipulated by clever bankers who jack up the prices and then sell into the fake demand they created – effectively stealing tens of Billions each month out of the paychecks of working Americans.  Just another one of those great crimes they commit where they steal a little bit of money from everyone, every day.  

Speaking of robbing from the rich to give to the poor (see "The Dooh Nibor Economy"), it's time we said happy 10th anniversary to the Bush/Obama tax cuts that have, as Barry Ritholtz put it: "driven the balanced budget he inherited from President Clinton deep into the red."  So deep in the red, in fact, that even now Congress is still debating about extending the $14.5Tn deficit that the Congressional Budget Office says will double over the next 10 years if these cuts remain in place.  

That's right, those same tax cuts that are "off the table" in negotiations in Congress are, other than war spending, the sole cause of our nation's deficit.  This country does not have a spending problem, it has a collecting problem!  As Mike Konczal, a research fellow at the Roosevelt Institute, noted: "It's not like this has unleashed a wave of productivity, or better incentives, or increased work output. It's mostly just rich people got a lot more money."

According to Citizens for Tax Justice, in 2013 the tax cuts would give the richest 1 percent of West Virginians $30,000 a family (see chart above for all states). The bottom three-fifths would get less than $400. With high unemployment and a budget fight in Congress, Republicans want to extend the tax cuts again, arguing they would trickle down to working people.  Republicans say Medicare and Medicaid should be cut to pay for the deficits and extending the tax cuts. Konczal says that, in spite of the rhetoric, that won't put people to work:

It's textbook economics. That was a lot of the logic in 1937, when we caused a second wave of the Great Depression.

There is no lack of effort here on behalf of the working class.  Since 1973, productivity is up 100% but the MEDIAN (not average) income for American Workers has fallen by 5% over that same period.  Workers are, in fact, working twice as hard for less wages.  CEO pay during that same time-frame, has gone up 1,000%, with the average CEO earning 250 times as much money as the average production worker in his own company.  Out of 310 Million people in this country just 135M of us have jobs yet we only consider 13.9M (of the people "in the labor force") to be unemployed and we are only paying benefits to 4M of those people.  The rest are "discouraged workers," who don't count as they took to long to find jobs so we have written them off according to schedule.  

Why does this matter today?  Because yesterday, the head of the Federal Reserve reiterated his stance yesterday that he feels that falling wages and falling housing prices offset "transitory" inflation (what those unemployed people need to pay for food and energy) and allow him to proceed as if inflation is somebody else's problem as it's certainly not his and not a problem for anyone he hangs out with in his top 1% bubble life.  

What does Bernanke care about?  Well, like any good Bankster, he only cares about whether or not the bottom 99% have more blood to give to the top: "Developments in the labor market will be of particular importance in setting the course for household spending…  As is often the case, the ability and willingness of households to spend will be an important determinant of the pace at which the economy expands in coming quarters…  Increases in household wealth--largely reflecting gains in equity values--and lower debt burdens have also increased consumers’ willingness to spend."

A full one half of Bernanke's speech was spent deflecting the blame for higher commodity prices away from Fed action.  Not the "I'm sorry, we made a mistake" of Fisher's CNBC appearance in the morning - quite the opposite!  Ben was like a 5-year old standing in front of a TV with a cracked screen holding a baseball bat saying "the dog did it" or his sister, or ghosts or those evil emerging markets (blaming brown and yellow people for our problems is always popular in America).  Even worse than the denial is the Fed's criteria for measuring future inflation – it will only be inflation if prices go UP MORE from here.  If prices simply STAY this high, Ben is already telling us he will consider that a victory.  Listen to the master:

Besides the prospect of more-stable commodity prices, two other factors suggest that inflation is likely to return to more subdued levels in the medium term. First, the still-substantial slack in U.S. labor and product markets should continue to have a moderating effect on inflationary pressures. Notably, because of the weak demand for labor, wage increases have not kept pace with productivity gains. Thus the level of unit labor costs in the business sector is lower than it was before the recession. Given the large share of labor costs in the production costs of most firms (typically, a share far larger than that of raw materials costs), subdued unit labor costs should remain a restraining influence on inflation.

Another argument that has been made is that low interest rates have pushed up commodity prices by reducing the cost of holding inventories, thus boosting commodity demand, or by encouraging speculators to push commodity futures prices above their fundamental levels. In either case, if such forces were driving commodity prices materially and persistently higher, we should see corresponding increases in commodity inventories, as higher prices curtailed consumption and boosted production relative to their fundamental levels. In fact, inventories of most commodities have not shown sizable increases over the past year as prices rose; indeed, increases in prices have often been associated with lower rather than higher levels of inventories, likely reflecting strong demand or weak supply that tends to put pressure on available stocks.

That second paragraph is DEEPLY disturbing as it indicates the Chairman of the US Federal Reserve either doesn't understand the mechanism of commodity speculation (in which churning speculative contracts drive prices higher EVEN as actual demand DECREASES) OR he is just a lying son of a bitch who is willing to f*ck the bottom 99% of the World over to advance the agenda of his masters.  We report, you decide…  

 Speaking of our Corporate Masters and our Government's unwillingness to tax the top 1%, thereby impoverishing the bottom 90%, destroying the American way of life and plunging our nation on an unsustainable path to fiscal ruin that will make Greece look responsible…  Have you seen the Citizens for Tax Justice Report?  

They analyzed the taxes of a dozen corporations:  GE, AEP, DD, VZ, BA, WFC, FDX, HON, IBM, YHOO, UTX and XOM and it turns out that, over the past 3 tax years, those 12 companies earned $171Bn of pre-tax profits and, in total, paid NEGATIVE $2.5Bn in taxes.  That's right, WE GAVE THEM $2.5Bn!  In fact, if it wasn't for XOM and HON actually paying $3.7Bn over 3 years (on $25Bn in profits), then the other 10 would have been paid $6.2Bn by those of us who do pay taxes to thank them for making an additional 146Bn tax-free Dollars while using our roads, our water, our sewers and our power grid and our transportation network – benefiting from our military protection and the hiring of workers who were educated in our school systems at the taxpayer's expense.  

At the 35% rate us mortals pay, that's $60Bn that was not paid in taxes on the Federal level (we need another study to figure out how much they are screwing the states over for) by just 12 of the Fortune 500 who, in total, earned over $2Tn in 2010 and paid less than $200Bn in taxes (10%) with that missing $500Bn accounting for 1/3 of our total deficit.  

This is not even getting into the depreciation scam, which is another MASSIVE tax break taken by Big Business that is even larger than the tax avoidance scam we are discussing in this study.  XOM alone booked $39Bn of "losses" from depreciation in those same 3 years, allowing them to avoid another $16.7Bn in taxes, which is more money than 1M American workers collect in ANNUAL unemployment – if the workers can even afford the gas to go pick up their checks, that is…

OK, I got that out of my system – now back to work!  

We have the Fed's Beige Book today (2pm) and that's probably not going to look pretty but that doesn't stop them from running yesterday's playbook again and driving the futures back up (off a terrible drop last night – still down from yesterday's close) even as they let the Dollar drift higher (74.25) so they have room to pound it back down and goose the markets to make things look pretty for the retail schmucks while the Big Boys run for the exits.  Also moving the markets this morning will be an OPEC output decision (any moment) where an increase in supply is expected and an oil inventory report at 10:30 that should show a draw-down as imports were curtailed by a pipeline outage in Canada – but that won't stop them from spinning it as "proof" of demand in the face of high prices on CNBC.  

We had another fabulous day shorting oil from $99 to $98 twice yesterday AFTER my call to short at $99.60 in the morning which hit our $98.50 target for a $1.10 gain.  So that's a total of $3.10 in speculator punishment we doled out yesterday for another $1.038Bn for anyone who was able to short all 335,000 contracts (I'm still waiting for the $3Bn I need to cover the margin!).  We had a little fun last night and this morning scalping quarters in Member Chat and our last bet was UP from the $98.25 mark as we felt an increase in OPEC supply was already baked in and up was more likely than down.  Oil should head higher into inventories and then we will be very happy to short it again at around $100 or whatever they manage to take it to on the expected draw in crude stockpiles.  

We can thank B-B-B-Bennie and the Fed for setting up a boost in oil (and it costs Americans alone $1.5Bn per penny increase in the price of gas) – as I mentioned above, he spent half his speech discussing energy prices, declaring them transitory and "not his fault" anyway and laying out the case for demand driving prices and not the Trillions of Dollars of speculative contracts that are being bought by the same IBanks he is funneling Trillions of Dollars of loans to.  Gasoline was $2.92 (wholesale) before Ben's speech and it shot up to $2.98 after so that's $10Bn out of our collective pockets already.  Now OPEC gets to disappoint us this morning by not increasing supplies adequately to squash speculation and we should be back over $3 and the bottom 99% are right back on the road to bankruptcy, where they will lose their homes to the Banksters – MISSION ACCOMPLISHED!  

According to Corelogic, 38% of the people who took second mortgages in America are underwater on their homes with an average debt of $83,000.  $2.69 TRILLION in second mortgages are out there so we're talking about over $1Tn worth of loans that SHOULD be written down by US banks if they were marking to market so thank goodness we completely ignore basic accounting rules in this country or things would look bad, right?  

Overall, the CoreLogic report found that the percentage of underwater homeowners declined slightly in the first quarter. About 10.9 million Americans who borrowed to buy their homes, or 22.7% of all homeowners with a mortgage nationwide, were underwater in the first quarter, down from 11.1 million, or 23.1%, in the fourth quarter of 2010.  The modest decline wasn't a sign of an improving market. Rather, the change reflected completed foreclosures, which reduced the total number of homeowners in the market, CoreLogic said.

Needless to say, we'll be looking for opportunities to short into this morning's rally, hopefully we can sell oil at $100.60 again – that's our magic number and we'll see if we can stick the speculators for another Billion.  

After all, it's only US Dollars!


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  1. Phil,
      I’m short the NFLX June 250 call for $11.50 (now $16.40) and I’m torn between waiting a couple of more days or rolling. How do you decide these things? What do you think "they" will pin NFLX at by June expirations?

  2. japarikh
    NFLX I am not trading this MOMO but for my 2cents you still have over 3$ of premium in the call so wait and roll after and if the premium has reduced much more.

  3. Phil- great call in oil this morning! Now that Im no longer studying and am back in the real world I can only check this in the morning, at lunch, and after work. Anyways, you’ve been killing it on oil ( even more than you usually do) so I made a point to wake up extra early and made .25 off your ‘buy oil if you’re brave’recommendation. It’s nice to wake up and scalp 100+ bucks before I even start my real job. You lay those golden eggs everyday Phil! I thank you for that!

  4. should see weakness into 10 oclock..then rally into the close..10 other instances sonce 2010 where the market sells off more than .50bps after 330..up 73% of th etime by the close of the following session..fwiw

  5. Phil,
    Been killing the early oil trade scalping .10 to .20 while getting ready for work then playing at night between 9pm and midnight not as exciting though. Going to make sure I’m available for inventory’s at 10

  6.  Phil,
    I LOVE the first few paragraphs of your post this morning… But on tax cuts, it’s silly to assume that higher taxes aren’t deflationary.  Rich or poor, income tax or payroll tax, taxes take money out of the economy.  Taxes function to regulate aggregate demand, not to raise revenue per se (at least on the federal level).
    Have you read Warren Mosler?

  7. Phil,
      I wasn’t able to sell the weekly FAS $24 calls for $.75 yesterday and it’s looking like they’re down to $.45 today. I find it is often the case that I don’t see the recommended price available by the time I’m trying to trade. Any guidelines as to how far from the recommended price to act? 10%? Be patient and pass if it doesn’t fall within tolerance?
      When you get time, I’d be interested in your Classical faves. Outside of a short list, mostly Organ works, I’ve been pretty exclusively a rock/pop fan, but I’m always up for expanding musical horizons.

  8. PP for today.

  9. president pledging support to greece…isnt that idiotic given our woeful financial state….i love my people but ‘helping the greeks’ please..they will take it all and then want the elgins back and throw in a naked nubile and a bottle of ouzo please!….he is such a neophyte..

  10. Phil, you have me refreshing the page every other second hoping you finish the post before the open, especially when you go off on the tax cuts and Bernanke.  I LOVE these posts the most and make sure I have some friends that read them.

  11.   oil surging…BUY STOCKS!!!! hahahaha….$100+ oil is big reason for recent horrid data and investors kneejerk reaction is to cheer it.

  12. Fundamentals/Phil & Scott – Phi, you said, "I don’t really have a "process" as I’ve been following a lot of these stocks for 40 years so it’s like asking "how do you know when your kid is sick?" ", but I’ve seen you say ‘this is a good/bad time to get into XYZ, and here’s why.’ any number of times. I suspect the second part of that sentence is a lot of what Scott’s looking for, although it may differ from time to time and stock to stock. But pull that stuff together, and I’ll bet a pattern emerges. So, that’s what the books will be about, and the wiki’s a place where some of that is already.
    Speaking of the wiki, I think it needs a minor tweak. I was looking at S yesterday, and it looks to me as though it’s grabbing not only information about Sprint, but anyone else whose symbol ends in S.

  13. Phil / Direction    Been holding on to my large EDZ and TZA positions, haven’t held a single US stock for 6 weeks.  Should I continue to hold my bearish plays?

  14. Phil, rolling the RIMM & BA puts for the Income Portfolio today?

  15.  Phil, 
    CHK about the only play I have that is profitable from the last 2 months! Its the June 30 Puts (sold 1.30) would you leave premium on the table?

  16. eurozone cds +3-4% today?

  17. Snow/wiki – I have a fix for that coming up (unfortunately semantic parsing is a completely different ball game). Thanks for the feedback!

  18.  angelcur,
    Do you have a link to that data?

  19. i meant eurozone cds +3-4% today!

  20. I thought OPEC was going to raise production, I read that early this morning and now I see that they decided not to increase production.
    Anyone know what is going on?

  21. vrus!

  22. Anyone
    Do we have a USO trade on?

  23.  101 oil?!
    waiting for your instructions!

  24. Good morning!  

    Nice pop to $101 on oil already, that is, of course, a short with tight stops on the line.  Going to be a wild ride into inventories so best to stay away if you are not a super-nimble day trader.  Those USO July $38 puts are down to .85 and now you know why I favored them yesterday as this pop only cost them a dime.  NOW I like them for 10 in the $25KP too!  

    Nothing the market does means anything if we can’t take back the Must Hold lines so it’s still 12,200 or bust for the Dow.  As I predicted (so you can say there’s no conspiracy and I’m just a psychic) – the Dollar has been shot down to 74.10 at the open to help goose the market but we’re NOT EVEN FLAT so still sucking overall.  

    If nothing else, I expect the Beige Book to freak people out later.  Inventories at 10:30 will be a big deal and there is no official word from OPEC but apparently Iran, who is in charge of OPEC, refused to allow a vote to raise prices.  Iran appointed a gym teacher to head OPEC so you can pretty much imagine he’s a guy who was sent there with very specific instructions and is not likely to do anything that may cause him to lose his head.  

    Saudi Arabia can (and will) increase supply without OPEC’s approval so our longer-term oil premise remains bearish and if you feel like you missed your chance to short – here it is again!  

    Mostly a watch and wait day, we have to see if we cross those 2.5% levels to the downside but, if we do, then we get more aggressively bearish.  On the upside, anything less than 1.25% up is meaningless.  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    10:00 Quarterly Services Report
    10:30 EIA Petroleum Inventories
    12:20 PM Fed’s Hoenig: Economic Outlook
    1:00 PM Results of $21B, 10-Year Note Auction
    2:00 PM Fed’s Beige Book

    At the open: Dow -0.11% to 12057. S&P -0.02% to 1285. Nasdaq -0.26% to 2694.
    Treasurys: 30-year +0.43%. 10-yr +0.25%. 5-yr +0.19%.
    Commodities: Crude +0.86% to $99.94. Gold -0.19% to $1541.10.
    Currencies: Euro -0.41% vs. dollar. Yen +0.3%. Pound -0.45%.

    MBA Mortgage Applications: -0.4% vs. -4% last week.

    German industrial production fell 0.6% in April vs. expectations of a 0.2% gain. Economists are unfazed, saying scorching growth may have peaked, but still continues to cruise along.

    Moody’s warns mildly on the U.K., saying it could revisit the country’s Aaa rating should growth continue to slow and fiscal reform fail to bring down the deficit as much as hoped.

    Ireland’s NAMA, sitting on a pile of depreciating real estate, is grasping at ways to unload it in a "dead" property market. One suggestion: offer it for sale at what it’s actually worth. 

    Greek unemployment continues to surge, rising to 16.1% in March, with those under 24 facing a staggering 42% rate. It is against this backdrop upon which Brussels is forcing more cutbacks and higher taxes. One suggested fiscal reform: the labor ministry, which takes until June to put out numbers for March.

    (Citizens) ultimately have the best sense of whether this level of austerity … is sustainable," says economist Graham Turner, as deposits continue to flee Greek banks. Politicians can kick the can, but if folks continue spiriting money out of the country, the inevitable default will be hastened.

    My new hero:  "The euro is not worth killing yourself for," says Lithuania’s central bank chief, announcing his country will likely miss its plan for adopting the currency in 2014.

    Another great man:  Martin Wheatley, outgoing head of Hong Kong’s Securities Commission, belittles as "nonsense," Tim Geithner’s insistence that other markets follow the U.S. lead on financial regulation. "People in glass houses should not throw stones … the U.S. has lots and lots of gaps in its regulatory structure."

    More from Mr. Wheatley: "China is the new dot-com," he says, warning of a "rush to Chinese companies" without the proper due diligence. He says Chinese regulators are doing a decent job, but the investment banks doing the underwriting that need to step up.

    Proving no idea is so bad, some government won’t try it again, China unveils a "cash for clunkers" program to juice slowing auto sales. The most recent figures show vehicle sales declining about 14% Y/Y.

    The idea of a brief technical U.S. default - gaining ground recently among Republican lawmakers – is "playing with fire," says Li Daokui, a PBOC adviser. Tiring of threats of catastrophe from the usual suspects, Republicans feel bondholders would put up with a minor delay if the result was a more sustainable budget.  OMFG!!!

    Pressed on her earlier prediction for hundreds of billions of dollars in muni bond defaults, Meredith Whitney stands by it: "It’s going to be big… What was troublesome is people took [the call] that it would have to be this year. I never said that. But that’s the size we’re looking at." And she tosses in a new warning: more double-digit declines in housing prices. 

    BP‘s annual energy review shows China to have overtaken the U.S. as the planet’s largest energy consumer in 2010, its consumption having risen 11% from 2009. The company also says the world found only 1/5th of the oil it used last year.

    07:33 AM  Crude oil futures fall below $99 as OPEC meets in Vienna, where the group is expected to raise production quotas. As recently as last week, analysts were predicting no change in production levels. Oil’s decline could have as much to do with the "risk off" vibe so far this morning as with OPEC. Premarket: USO -0.8%.

    9:44 AM Oil skies as OPEC talks break down with no agreement to increase production. Saudi Oil Minister Naimi says it’s the worst OPEC meeting he’s ever attended. Crude is up more than $2/barrel in the past few minutes to $100.75. USO +1.8%.

  25. Phil / SQQQ    In this atmoshpere I expect the momo’s to tumble even more than other stocks.  Does SQQQ best capture them and their negative impact as a group?  Also, are you most bearish on US or European stocks (especially banks)?  If Europe, what’s the best ETF to use.

  26.  Oil Lines
    R3 – 101.73
    R2 – 100.76 (we just bounced from there)
    R1 – 99.68
    PP – 98.71
    S1 – 97.63
    S2 – 96.66
    S3 – 95.58

  27. IRAN/Phil
    If you watched "Annie Hall" we know, those that can’t do teach, and those that can’t teach, teach gym and those who can’t teach gym in Iran, head OPEC.

  28. data link/yes….i get the cds data on bloomy…not sure you can get real-time free online….here is cnbc page, but it isn’t updated…

  29. They’ll be looking to rally today

  30. Phil / Dollar,Oil Contracts
    Phil, or anyone else, I’d like to clarify what everyone is using to look at the price of Oil and the price of the Dollar.  
    I am currently using the following at Interactive Brokers:
        Oil – CL JAN 12 Contract on the NYMEX
        Dollar – DXY (although I’m having trouble pulling up DXY on Interactive Brokers)
    Just want to make sure these are correct.

  31. Phil,
    if we do cross the 2.5% level below (1268, 1250 Fib level), do you still favor the TZA 34/42 Jan bcs as a disaster hedge? Neg Beige bk sure could put us there. Any new cover options? Trying to get an advance sense of how to hedge before a breakdown. Disregard if you rec’d my earlier post – not sure it went thru)

  32. Hi Phil — I still have June USO 40 put should I roll to July 38 put as comment above or wait

  33.  people cant stand for the market to be down for more than a few minutes…yet we are down -6% in less than 6 weeks…same mindset we have had whole pullback…no fear at tall!

  34. Phil & all,
    I have updated my chart SPY in "world currency".  Doesn’t look too good for stocks, if you valuate them this way.

  35. Phil,
    any lines for downside plays on the futures. Maybe TF @ 790?

  36.  I use WTI for oil futures.

  37. Phil, I’ve been holding a large position in a SDS spread 19/24 June. With a basis around $1.00. I’m starting to think I should pull some of the gain off the table. I expect further downside, but I’m vulnerable to a short term bounce into expiration. What should I do? Roll up to pull some off, roll to July?

    Thanks a lot, your insight gas been invaluable this year.

  38. Too busy this morning shorting oil and getting out of DIA puts to notice Soda popped (no pun intended).  Hoping it gets back up to 63 today so I could write some calls against it.  2nd day of a squeeze usually is the end.

  39. Phil – i have had the SDS june 20/21 bcs (1.84/.65) for a long while, bought & sold some calls but now it’s at the end. Is there anything i should do to try & capture more of the long side? or is it too late for that?

  40. HL – nice for buy write this morning.. bot HL at $7.50, Jan 12  write of $7.50 P and $10 C executed at $1.86 gives entry $5.64 entry. If called in January at $10 gives 77% gain. if put to you at 7.50 then doubled down for avg cost of $6.57.

  41.  Phil / TBT
    I have lots of Jan12 27/34 call spreads and they loosing value every day
    what do you recommend to do with them? I afraid that TBT will go down to 30 and it will be huge loss

  42. should we have taken the money on the FAS 24 calls?

  43.  Phil,
    Thanks for the quick $2500 on that oil trade!  That’s a few years in membership dues…

  44. Could anybody please tell me what the last TZA hedge is? Thanks

  45. Phil, 
    CCJ getting hammered again today. What is the roll for the short puts in the Income portfolio?

  46. amatta – i will tell you if you can tell me how to paste from word.
    also, can one paste from word into the wiki?
    and if i have saved something related to a process but not a particular stock, where does that go in the wiki? in the book thingy?

  47.  morx – u can paste from word. Also, there are different headings for the book project. Pick the one that best suits your topic.

  48. Oh dear, they already can’t keep the dollar down at 74, not a good sign for the market.  

    The Nas is already below it’s futures lows at 2,685 and the RUT is it’s lows at 790 with 785 being a breakdown at the 2.5% line so let’s watch them.  

    NFLX/Japar – I think there is little harm in waiting and maybe they will be wiped out by next Friday.  Unless we retake at least ONE of our must hold levels, we’re in a serious downtrend and I can’t see any reason at all why NFLX should outperform the market if it’s heading lower other than the usual daily manipulative pumps that we like to short into anyway.  

    And what Yodi said.  

    Thanks Jrom!  Scalping those quarters is a great skill to master when you have to work an odd schedule.  I keep my eye on the indexes, oil, gold and the Dollar when I’m messing around with them and, as long as you stick to those major crosses – you can usually stay out of trouble while catching some nice runs.  My attitude is, if I can spend 15 minutes here or there and pay for a nice dinner or a bag of groceries or some show tickets – that’s all I need and I’m happy.  

    10 instances/Angel – I love those stats!

    Congrats Bert!  See above to Jrom – $100 here, $200 there, before you know it you paid the mortgage by NOT being greedy.  

    Tax cuts/Peedle – Let’s save that for a nice weekend discussion.  

    FAS/Kevin – Well the main idea is you follow the portfolio and LEARN when we should be selling covers.  The idea is to get the experience to trade crazy stocks.  One of the things you need to learn is whether or not you have the time or the aptitude for this kind of trading.  If you can’t day trade FAS – don’t trade it at all.  Just look at its chart – it moved $4 last week alone (14%)!  There is no way to employ a "cover and walk away" strategy on a stock that moves 10% a month, let alone in a week…  I would stay away from FAS if you are not able to take advantage of moves up to "sell into the initial excitement" (and we are almost always in doubt, so we sell half) as it’s just too crazy.  You can play XLF in a similar but less insane fashion.  As to classics, I can’t imagine that’s an exciting list.  I like the normal Bach, Beethoven, Mozart, Tchaikovsky, Dvorak, Stravinsky, Wagner, Orff (probably my favorite, unloved composer), Berloiz, Vivladi, Mussorgsky, Mahler, Puccini, Chopin, Strauss, Bizet, Haydn, Bartok…  It’s really more about the performances, especially with opera so you can have 10 versions of the same piece and like something different about each one…  Here’s a fun Bach album I recommend.  

    Greece/Angel – I’m sure our Banksters are all entwined as well and Merkel probably just told Obama that she can’t hold her Government together if he doesn’t step up and you know we don’t want Germany swinging socialist so not much choice there.  

    Thanks Rustle!  

    Fundamentals/Snow – Well that’s just another way of saying "how do you know when your kid is sick?"  There’s a baseline valuation I have for most stocks I follow and what I react to are changes that I think will affect them down the road.  Don’t forget I spent many years consulting and I’ve run a mid-sized company that I built from scratch so I have a very inside-out perspective on corporations.  If I had to say what makes a particular move for me, it’s almost always news as I spend very little time studying earnings reports or balance sheets.  In fact, I rarely do more than glance over what’s in Yahoo Finance unless something looks odd and bears investigating.  For instance, big news today is:

    When Target (TGT) holds its annual meeting today, executives likely will blame lackluster results on the fragile economy, but some analysts think recent moves have trimmed profit margins by attracting lower-income shoppers at the expense of higher-end customers. Sales growth has lagged behind discount rivals and department stores; shares have lost 22% Y/Y.

    McDonald’s (MCD) shares -1.8% premarket after announcing global comparable sales rose 3.1% in May, less than expected. Sales gained 2.4% in the U.S., 2.3% in Europe, 4.3% in Asia, Middle East and Africa. Systemwide sales for the month increased 12%, or 4.7% excluding the currency impact. (PR

    I’m not going to short MCD, because I like them but now I’ll look at YUM, who are up 15% this year with a p/e of 22 vs. MCD, who are up 10% with a p/e of 17, as a possible short opportunity.  So, not too complicated.  The YUM July $60/55 bear put spread is $3.85 and the $55 calls can be sold for $1.30 for net $1.55 on the $5 spread that’s 100% in the money.  Break-even is $56.85 and YUM peaked out at $56.98 so it’s a good combo to bet into earnings on expectation they disappoint as well.  In TGT’s case, they made the same mistake WMT made, both going after each other’s market share and pissing off their normal clients.  They will both fix it and TGT is a good buy on the dip (we already did WMT) but hopefully they test $45 but, if not, then over $47.50 is a signal to go long so we wait for them to test that.  I look at things like this about 100 times a day but only mention the ones I’m pretty sure about otherwise this site would be nothing but me rambling on about my observation like this all day!  8-)

    EDZ/Tusca – No reason to turn bullish until we bounce but taking the money and running as we test 7.5% is a fine idea too as we’re almost certain to get a bounce and you can re-buy on a rejection at the must hold lines.  Nothing has really changed in our premise, we’ve been down for 5 days and we’re down on day 6 – you need to look at hourly and, dare I say, DAILY charts to make your decisions.  Of course TZA is going to pause at $40, it hasn’t been over $40 since the Earthquake.  At $45, I’d really lean much more towards taking the money and running.  EDZ is similar with $19 being a tough nut to crack and then $20 will be tough too and then the declining 50 dma at $22 (by then) so don’t expect mad gains from them unless there is a very nasty event.

    Rolling puts/Rpme – Why, because it’s Wednesday before expiration week?  I think we should see how the levels play out and also what the reaction to the BBook is today.  This has been a pretty big sell-off and they are oversold and, don’t forget, we do REALLY want to own them so we don’t really care if we own them.  

    CHK/Amatta – Same as I just said to Rpme, if you really want to own them, then why worry.  If you were just trading, you should have stopped out ages ago.  Those puts were .35 last week and that’s why the rule of thumb is to take off a naked short position that is up 50% with more than 1/2 the time left and to take off a 70% gain with more than 2 weeks left and to take off an 85% gain within 2 weeks of expiration unless you are 1,000% positive you will collect the full 100% and, even then, you set tight stops so you don’t end up giving it all back like a fool. 

    CDS/Angel – Sure, why not, everything is fine…

  49. On a y/y basis, outstanding consumer credit has risen for the first time since February 2009, as nonrevolving has advanced at the fastest pace since July 2008, while revolving has declined at a slower rate ..banks willingness to lend menas ramping consumer credit gorowth ahead
    oil/ meanwhile buffonery reigns at opec meeting..saudi arabia will be leaving that flaccid group soon..maybe china will take their place
    "The Stone Age Didn’t End Because We Ran Out of Stones" — Sheikh Yamani, former OPEC oil minister

  50. re the TZA hedge, he rec BA Jan $62.50 puts at $2.55 as a sale to offset. now it is available.

  51. Phil, 
    As you requested I am reminding you of the questions I posted on the Income Portfolio chat. If you have some time after the close I appreciate your input. 

  52. stats!! phil you were mocking me!!..wah!!!!

  53.  Phil / SKX
    I have long jan12  15/20 call spread and short Jan12 17.5s puts
    any advice? may be time to adjust?

  54. Phil / 7.5%     Did you mean taking the money at 795 line on the RUT?

  55. nicha – when ever i copy from chat to word then back to chat all that font garbage is displayed. I haven’t tried it for a while. You dare me to try?

  56. morx – put it in notepad and then copy from there.

  57. OPEC/Rpme – Hard to tell but seems like no consensus was reached.  

    USO/Willie – Yes, we have the July $38 puts at .85 in the $25KP.  

    Waiting/Peedle – That makes me sad.   It’s the same as always, we short the futures on the .50 lines and especially on the $1 lines with no more than .05 stops.  I really am not going to be calling them every single time, it’s something you have to LEARN how to manage.  If someone put up how to trade futures in the Wiki, it would be a good idea to remind me and I can edit it on the weekend but it’s not rocket science – nor is picking a USO put with a .50 delta like the weekly $40 puts at .63 with a .58 delta as a substitute to play oil below the $101 line.  

    SQQQ/Tusca – It’s going to capture the Nasdaq overall and the MoMos are a lot less important than AMZN, AAPL, QCOM, INTC and CSCO, who make up about 1/3 of the index.  I don’t play Europe.  That goes back to the fact that I’m a fundamentalist.  I read everything that goes on in the US and I skim over what goes on in Europe, Asia and Emerging markets but to play European stocks, I would have to start reading all the European papers and reading the European data and watching the European charts and paying much closer attention to European politics and getting myself a Europen news feed and, since I don’t have another 100 hours a week to do that – I stick to trading the 9,000 US equities.  I can’t imagine why anyone would even consider making bets in foreign markets without doing the same.  It’s like asking me (or any US baseball fan) if the Chunichi Dragons will beat the Osaka Tigers tomorrow and insisting we bet on it.   On a macro level, I think EU banks are screwed and that the US will be somewhat buffered by money printing and distance but I don’t know a way to bet that spread so I just like being long on XLF as our IBanks will prosper once the competition is wiped out and also the insurance component, that has been such a drag, will report better than expected numbers (or less worse than expected) and we may finally get out of the doldrums.  

    LOL Rustle!  

    Back to oil – CNBC says Saudis say screw OPEC, they will pump more anyway.  Also, notice drop in oil that was expected but BUILD in gasoline AFTER the holiday weekend.  This is a demand catastrophe!  That’s why gasoline is back down to $2.98 even though oil is back at $100.88 (and YES, I still like it short here!).  

    EIA Petroleum Inventories: Crude -4.8M vs. -0.4M expected, +2.9M prior. Gasoline +2.2M vs. +0.6M expected, +2.6M prior. Distillates+0.8M vs. -0.2M expected, -1M prior. Futures +1.5% to $100.60.

    In the company’s first post-moratorium deepwater well, Exxon Mobil (XOM +1.8%) announces two major oil finds and a natural gas discovery in the Gulf of Mexico. The company expects more than 700M barrels of oil equivalent combined in the discoveries, more than 85% oil.

  58. angelcur
    I think the non revolving is comprised mostly of auto loans which are once again being given to bad credit risks with commensurate high interest rates.

  59. @ Pharm, i have read several articles that june and july are usually the worst months for bio-tech stocks (not to mention that we might be at the beginning of a big correction for the market as a whole)… do you like playing ETFs (maybe BIS and/or IBB) in anticipation of a correction on bio-tech?

  60. phil, is it a good time to long more CSCO? thanks,

  61. Contracts/Burben – I use /CL and /DX on ThinkorSwim.  You can get a screen of those for free with a PaperTrading account from them.  

    TZA/8800 – Yes, but keep in mind that a Jan disaster hedge is just that – a hedge to protect Jan and longer positions.  It’s not going to do very much short-term.  If you want a short-term cover, I like the DXD July $18/19 bull call spread at .35 (DXD at $18.27) as that has a net delta of .30 and 100 Dow points will move DXD about .20, which would put the spread .08 in the money and you collect .20 per 100 drop from there on up, which is a 57% gain for each 100 points to a max of 180%.  You can offset 50 of those ($1,750) by selling 10 TBT June $33 puts for .49 ($490) and/or 10 TGT July $45 puts for .72 ($720).  

    USO/Gucci – Shame on you for not taking $1.70 and running yesterday!  I do like the July’s better now as we need to give oil time to fail.  

    Thanks Pentax:

    Futures/Pentax – I’d go with Dow 12,050 to short off (/YM), they could give you 100 points at $5 per contract very easily.  Watch the Dollar to hold 74.25 and anything over 74.35 is golden.  

  62. The McClellan Oscillator and RSI are getting very low on the Dow.  Looks like we’re do for a bounce in the short term.  Hoping that’s the case so we can take the next leg much lower.

  63. When you get a crazy spike like that in the oil futures that stops you out, it’s OK to take another poke at the .25 line ($100.25 in this case) but always assume they have more firepower to take it higher but these are the opportunities we like to take advantage of.  $40 on USO should be a tough nut to crack but, if not, shorting oil will be a bad idea until it calms back down.   This will not affect our July USO puts, those we intend to roll and/or DD if they go below .65.  

  64.  wiki/Phil – here’s a start on trading futures:

  65. cat not rebounding much on div increase and outlook affirmation.

  66.  p.s. I expect a free membership extension for finally putting a page up on futures trading :)

  67. On oil I had R2 at 100.76 and that held well until noon. The next line (R3) is at 100.73. My guess is that you could poke at a short around 100.75. But I would be careful as they seem to be intent on pushing it up no matter what! 

  68. WFR back at 52wk low.

  69.  Phil: weeklies
    As a more subdued way to generate small but steady weekly income I’m considering something like buying T Jan 13 27.5 C @ 3.60, sell 1X the Jan 13 P @ .80 to knock off premium, (quite happy to take T at that price).   Then the plan would be  to sell ATM weeklies.   If T goes below $27.50 I would "flip bearish" as you say and sell bear call spreads keeping my long calls.  More effort than a typical artificial but it seems to me worth it every Thurs or Friday. Would also offer some balance to my short calling the MOMO’s, which have been profitable but are a different kind of work.  Does this make sense?  Better ideas?
    I’m not yet ready to go long on anything other than my already established INTC, CSCO, MSFT, TBT et. al positions that I started too early.  Those are some of the "trees" I planted this year that my gardener pruned/hacked back very severely but am confident they will survive :)

  70. Just sold Jan 2010  ACI $200 puts for $1 — Arch Coal could be mine for $19 — such a deal!!

  71.  That was ACI $20

  72. Phil, GMCR
    Reminding you about GMCR from yesterday: 
    GMCR/Amatta – OK, so it’s a net .10 spread and 10 June $80 puts can roll to 20 July $70 puts for just under even so not much there as the escape would be spending .75 to roll up to the $72.50 puts and then rolling the short puts although it may pay for us to roll the $80 puts to 2x the $75 puts now – remind me tomorrow as I should look at that one for the $25KP anyway.  
    These are again the positions I have:
    10 Short JUNE 80 PUTS (sold for $2.10).  20 Long JULY 70 PUTS (net $1.15) and 7 short June 72.50 CALLS (Sold for $6.00)  

  73.  Morx, 
    Sorry just saw your reply… I just hit Command + V on my Mac, so CTRL + V on a PC should do it… 
    don’t know about the Wiki…

  74. Just FYI, someone is putting up big money trying to keep the RUT from falling.  Repeatedly flashing bids on 400+ contracts of /TF.

  75. zero – u mean the Jan 12 ACI $20 puts as opposed to Jan 10?

  76.  Yes, sorry Nicha, I got my first comment doubly wrong.  ACI Jan 2012 $20, now .$.99

  77.  SDS/Palotay – Of course you should take gains off the table!  You risked $1 to make $5 and that was a good risk/reward, now you are risking $2.85 to make $2.15 – not quite as good is it?  There are two steps to our profit recovery program for greedy investors:  Step 1) Take the Money – Step 2) Run.  If you find this too complicated and insist on arguing, it will be then time for getting hit on the head lessons.  

    SODA/Rustle – What a silly stock…

    SDS/Morx – Are you saying you spend $1.20 for a $1 spread?  The spread is .90 and you may as well just take it and run if the S&P crosses back over 1,285 or you might be eating it on a gap up.  You are risking .90 to make .10 at this point.  If you want to get fancy, you could cash your $1.92 and hold the short puts naked ($1.02) or roll them up to the $23s, which are .40 and all premium but you’d have to re-cover if the S&P failed to hold 1,285.  On the whole, it’s a lot of work compared to taking the money and running.  

    Wow, oil hit $101.60 again, that was our very nice shorting spot last week.  I did not think they could do it, especially with that weak inventory report but, apparently, they are spinning this OPEC meeting as some massive supply disappointment and "proving" demand with our inventory drawdown in Crude, which reflects nothing but lower import numbers against holiday weekend demand (lame though that was).  This is quite a joke – maybe  they will push it to $102.50?  

    HL/Scott – Not sure it’s a great time to buy a mine but they are a good one and it’s a nice entry.  

    TBT/Tcha – I recommend getting out of them now if you think that TBT at $33 means you are "losing value every day" on a Jan $27/34 spread.  Don’t trade things you don’t understand because you will do nothing but make poor decisions along the way.  I don’t know what you paid for them and I certainly don’t understand how $30 is a "huge loss" on a $27/34 bull call spread but, as I said, get out BEFORE you take huge losses by taking small losses and finding a better position.  

    As a new spread, I like the TBT Jan $31/36 bull call spread at $2.25, selling the $28 puts for $1.15 for net $1.10 on the $5 spread that’s $3 in the money to start.  

    FAS/Morx – Not really.  XLF can’t even get over $14.95, let alone $15 and FAS hasn’t hit $24 all day.  ALL OF YOU PEOPLE NEED TO STOP LOOKING AT THE DAMNED 1-MINUTE CHARTS!  

    You are very welcome Peedle but this might be the big one as we just crossed back under $101.60 off of that ridiculous pump job.

    TZA/$25KP, Amatta – We have July $25s, 1/2 covered with this week $24s that were sold for .75, now .34.  

    CCJ/Amatta – I don’t know, I haven’t had any reason to panic yet.  As to the posted questions, perhaps if you remind me AFTER hours, when I might have time instead of the middle of a trading day (just a thought).  

    That’s a good stone age quote Angel.  

    Mocking/Angel – Yes, but with the deepest respect…

    SKX/Tcha – Not with 6 months to go.  You can roll the $15s down to the $12.50s for $1.25 but, other than that, you’re probably going to roll the puts out to 2013 whatevers but those aren’t even printed yet.

    7.5%/Tusca – I meant we’re down 7.5% from the top of our short-term range and that’s a lot but, the way we are resting down near that line means we’re more likely consolidating for a break down, not a move up.  We still have not had any kind of volume capitulation move and the VIX is still asleep so, as I said this morning – it’s a watch and wait kind of day.  

    CNBC spending the whole lunch hour pumping oil.  

    Copies/Morx – Try pasting to an Email using the past without formatting option and then past to chat.  Also, there is a little icon at the top of the chat window with a clipboard with a W on it, that’s for pasting from Word.  

    And what Nicha said. 

    CSCO/Ethan – See yesterday’s long comment on it.  If you are scaling in then starting here and adding at $12.50 should make you happy, not sad so sure, this is a good spot.  

    79.75 Yen to the Dollar – that is scary.  Nikkei might melt down at this rate.  $1.458 to the Euro and $1.638 to the Pound with the Dollar at 74.25 (the place I expect it to hold to stay bearish).  

    Keep in mind that the Dollar is only down today because our credit rating was threatened by Fitch (who I will remind you are always the ones who make comments that are timed to aid the Banksters) at 10:30 (right on the oil report), which knocked us down from 74.35 to 74.20 while oil skyrocketed

    Fitch says it will downgrade $30B of Treasury bills due August 4 to B+ from AAA if they are not repaid in full by then – 2 days after Treasury believes its options will run out if the debt ceiling isn’t raised. Should coupon payments due August 15 not be made, U.S. debt could be placed in "restricted default."  This is total manipulative BS – but it works every time, doesn’t it?  


  78.  Phil, 
    FTR from the Income Portfolio is below your entry point. Would you go in now? or perhaps sell the calls and if they cross back 8 buy the stock and sell the puts?  As I have said I am trying to work into the positions there…

  79. Hi Phil:
    Last Dec,I bought JCI at $39.72 and sold Jan. $40 C at $4.93 for net $34.79. hoping to get 18.7% roi plus 1.7 % diviidend.Stock now at $36.12 and C at $$.80 .Stock’s 200DMA is $36.40 I’m more a fundamental investor than technical ,but breaking 200MDA concerns me.Thinking of rolling down to $37 C for more protection.Any ideas?

  80. Evil Empire /  I just shorted Goldman Sachs.  Imagine. sold CALL (GS) GOLDMAN SACHS GROUP JUN 10 11 $135

  81. Phil:
    I have a NFLX spread you had recommended about 10 days back. 4*Sep 285 call (basis 18.28), -7*Jun 265 call (basis 9.96). I am up $2250 on the spread right now. However, I have trouble getting around the nature of this spread, so I can’t quite judge when to exit the position. What would your recommendation be.

  82. Hey Phil,
    Thanks for the note last night.  I totally agree with the premise and strategy which has worked well with the valuation stocks I like to focus on.  To clarify though, on LCC and LDK is it best to accept the new shares that we were able to enter at 20% discount and not roll to anything for now.  JBL is like GCI has been where we can just roll and roll and roll but if I am understanding the LDK strategy would be to remain long with no options at this point.  LCC is probably the same case as both have forward p/e’s of 4 or less.
    Thanks again……several exciting announcements coming out of Sabrient in the next 30-60 days.

  83. Just to clarify: I understand that the position would benefit the most if we close just below 265 on expiry day in June.  I also understand that you are bearish on NFLX. If NFLX drops like a rock, we will loose on the long side as well. Which is why I am asking for your recommendation.

  84. zero – shorting GS, why?

  85. Phil / DTO   Do you ever use this double short index to short oil?

  86. When Donald Trump hates someone and goes off on them, it’s hilarious.  Here’s a clip of his thoughts on Anthony Weiner:

  87. pasting – my window doesn’t have a "w". :(

  88. Wiggly lines/Rustle – Let us know how those go.  

    China/Angel – That is BS!  Right when they make an attractive short you are suddenly not allowed to short them?  Boooo!  

    Thanks JVest!  Hopefully I’ll get to that on the weekend.  

    RIMM making new lows! 

    T/Lincoln – As long as your commissions are low I like the idea.  Make sure you consider improving your other positions if appropriate.  All good for the long-haul.  

    ACI/ZZ – I hope those were $20 puts but nice idea if so.  Ah, it was…

    GMCR/$25KP – We have the following:  

    • 20 GMCR July $70 puts at net $3.50 ($7,000), now $2.05 – down $2,900
    • 10 GMCR June $80 puts sold for $2 (-$2,000), now $4.50 – down $2,500
    • 7 GMCR June $70 calls sold for net $3.85 (-2,695), now $6.90 – down $2,135

    The 10 June $80 puts can be rolled to 20 $75 puts (now $1.65) for net $1,100 and that puts them into 100% premium.  The 7 short June $70 calls can be rolled up to 14 short $75 calls at $3.10 for $490 and those would be about 50% premium and they CAN’T both finish in the money so it has a great chance of success in cutting down what we owe considerably.  

    Thanks Wass, that’s good info.  They are trying really hard to take back 795 but the Dollar isn’t going down easy (74.20 now).  

    FTR/Amatta – Yes, but they just went ex-dividend so longer to wait to get paid.  We talked about them in yesterday’s chat.  

    JCI/Dflam – You bought the stock at net $34.79 and it’s now $36.12 – does that about sum it up?  I guess I’m not clear on what exactly "fundamental investor" means.  Apparently it has something to do with watching the short-term price movements of a stock to determine it’s long-term value?  I’ll have to look into that…    If it were me, I’d buy back the $40 caller for .80 and sell the 2013 $30 puts for $3.50 to drop the basis to $32.09/31.05 and I’d keep an eye on the 2013 $30 calls, now $9 and put a sell-stop on them at $7.50 (so you sell them only if they fall to $7.50) assuming JCI is under $35 and not just because their premium is wearing out over time.  If you sell those, it drops your basis to net $24.59/27.30 with a 26% profit if called away at $30 (20% below the current price) and, if you are worried about them holding $30, why would you even consider staying in the stock at $36?

    GS/ZZ – My only fear there is: MORE FREE MONEY.  

    74.16 on the Dollar and it’s not helping…

    NFLX/Etrad – Well up $2,250 in a few days means if you are, for one second, worried about NFLX coming back over $265 into next Friday’s close – take the money and run.  You can also close 3 of the short calls at $1.90 and lock in $2,418 of profit on those and then you’ll actually be happy if NFLX gets back to the $265-$270 range.  I’d take the money on the 3 and set a stop on 2 others at $3 as your long calls have a .40 delta and are protected by earnings so they don’t lose $2 until NFLX drops $5 more and you still have $2 of front-month protection so you can just let that premium burn as long as NFLX holds $260.

    Bending over and accepting/Scott – In a flat or up market, yes but, in a down market, I wouldn’t be in such a hurry to commit cash to the stocks.  Those forward p/es will go out the window if we have another collapse.  Just go look at how well each one held up in 2008.  If you are satisfied with that kind of performance, they you can commit here but, otherwise, I’d wait for the market to stabilize.  

    NFLX/Etrad – Very good analysis.  See, you understand it just fine, you just have to think like a chess game about how all those things would affect the contracts.

    DTO/Tusco – No, I haven’t played with it yet.  No options = no interest for me.  

    Trump/Rustle – I would have loved for that guy to President just for the comedy aspect of it.  The guy would be on TV every single day spouting off – it would be fun!  Trump has zero respect for a guy who can’t close the deal with women… 

  89. Good morning,

    If IWM 79.10 fails:

    Then Gatorbay’s targets are likely !!

    Good hunting !!

  90.  Nicha:  Intangible zeitgeist.  As long as the market goes up, no one whines about GS, but with a protracted slide, the press and public cast around for "villains" and GS has had enough bad press just from Rolling Stone over the last year to frame them in some congressman’s gunsights for a few sound bites.  A small position, I might add.

  91. Phil / Oil  After listening to the Saudi oil minister saying they’ll make sure there’s plenty of oil supply (objective probably the Prince’s $70), why is oil up today?  Traders should be panicking?  Time to go heavily short oil?

  92. Did anyone post this yet about Obama wanting to bail out Greece?  I really hope this isn’t true.

  93. @Felipe
    Please, stop slamming SODA, please.  It just paid for my condo in Mexico for Christmas week. 
    Forsake the ridicule; embrace the profits.

  94. JRW /  RUT   Why do you see so much more downside in IWN than in Dow and S&P?

  95. Isnt Gatorbay the same guy that said sell all your shorts the other day.

  96. Phil / Dimon tirade   Puzzles me.  I thought Ben works for the banksters and Jamie must have an open line into Ben.  Just venting for the media?  Or, has Ben p-d him off?  If so, Jamie and friends could make this mkt tank just to get Ben back in line (fear)?

  97. Phil,
    I entered the FAS trades later than most on the board.  I bought July 26 C for $1.02.  They are down about 25% what adjustment would you suggest.

  98. i love SODA..its the dumbest idea ever..but so is dairy queen (frozen air)..and dunkin donuts (crapcrapcrap)…but its selling like…beanie babies

  99. @ Phil… those USO puts are recovering now, i know its still i long way to go, but should we start selling them when oil hits $100 (maybe half) ? Thanks

  100. PHIL/BATHOSthe fact those TEN other set ups and my other work that is 76.55% acurate in the three samples i ve taken isnt resulting in a bounce is a piss poor sign for this market..intermediate sell indicating 1270 support..i THINK we go lower…

  101. Nice charts JRW but anyone telling you the indexes aren’t going to move in lock-step percentages is pretty out of date in their thinking.  When’s the last time they’ve de-coupled?  

    Oil/Tusca – It’s up because they can push it up and that suckers people who don’t know better to stop out (rather than scale into shorts) and it gives them a ton of room to sell into the rush.  I don’t know how many times I can say it’s fixed before people stop looking for some sort of logic to the movement.  When you see stuff go on, that’s fine for the long-term trend to take into account but, short-term, they will do whatever makes the most money every time.  

    And wheeeee on oil by the way.  These are the best moves, when they blow through .50 without a stop-out and now we can used $101 as a trailing stop with .25 adds on the way down and it certainly makes losing a few nickels earlier totally worth it.  

    Greece/Rustle – What should we do, let Europe fall apart?  

    SODA/Flips – Oh no, you are in that?

    Dimon/Tusca – It’s just theater to make America think that Ben is being tough on Banks.  The Fed is kind of an outside board of directors for the banks so think of it in that context.  The Federal Reserve Act prohibits Fed Governors from being officers or directors of any bank.  

    FAS/Button – Nothing at the moment – we have to see how the BBook is interpreted.  

    Speaking of which, it’s Beige Book time!

    Here’s the link, it looks like things sucked but they are blaming it all on Japan (so temporary) which is kind of like in the Winter when they blamed the cold or the spring, when they blamed the floods so I’m not too impressed…

  102. I guess if you shorted oil off that 101.75 R3 line from my 12:09 post, now would be a good time to cash that $1.00.

  103. Greece/Phil 
    Just seems like we’d be throwing good money after bad.  Even you said Greece should just default.  I’d hate for them to default and we’re the ones left holding the bag.

  104. Oil – Now at R2 (100.75), we bounce up from here or down to 100!

  105. rustle123 / Greece


    JRW III (premium)

    BTW, it appears that QE 3 will take the form of "The Marshall Plan" 2 !!  We get to save Europe AGAIN, AND further devalue the dollar at the same time, BRILLIANT !!

    tusca / IWM

    I think the downside target would be the March lows (IWM 77.50-78), interesting stats here, And today looks like this:

    Phil / decoupling

    Not decoupling, just more volatility in the Russell !!


  106. ma and v getting gaffed

  107. Phil--Tx on the DIA puts--good not get out at eod yesterday but out now for up 30%

  108.  USO/Asaenz – If you doubled down or rolled, then you want to get 1/2 back out even and that leaves you in a better position at a lower price otherwise, if we wanted to day trade, we would have gone with June.  When in doubt, sell half, of course, is Rule #2 for a reason.  

    Set-ups/Angel – I just don’t see how the Dollar can go lower and I don’t see anything coming along between now and earnings that can pump VALUE into equities so it’s all about the Dollar and, without a firm commitment to QE3 – then we’re back to my overall view that the Dollar is better than the Euro or Yen and, eventually, that will be realized, especially if investors begin panicking out of stocks and commodities in a flight to Dollar safety.  

    Nice pump job into NYMEX close, maybe we get $101 again but poor failure if we don’t.  

    Oil/StJ – If you have one contract, yes.  If you have 5 or more, you can just scale 20% in and out as it heads lower recognizing that each time you cash out, you raise your net short basis (TOS tracks this for you) and that then gives you a little more room to breathe on a bounce.  Of course we’re going to bounce at $100.50 and $100.60 was a solid support so we can cash out at $100.50, buy a few back at $100.60 and a few more at $100.80 and then we’re in at $100.80 for $100.70 and, if we keep a tight stop there (.05) we can only drop .15 of the $1 gain on a re-entry attempt.  So the moral of that story is there’s really no harm in cashing out at supports because you only miss a little if you re-enter below the support and you can get right back in if you get a weak bounce – but here you can see how useful it is to have that 5% rule tight in your head when day trading..

    Greece/Rustle – Yes but you have to consider what you are trying to accomplish.  If it costs $100Bn to bailout Greece  or $2.6Tn for QE3 if we fail to bail out Greece and the Global Banking System begins to collapse, then giving Greece $100Bn is a no brainer, even if it only buys us 6 months (as that’s $1.2Bn we won’t have to spend for the next 6 months).  Extend AND pretend is the G8′s entire economic program…

    You’re welcome Savi!  

  109.  since I mentioned bitcoins on this site a week ago the investment is up 343%

  110. @biodieselchris
    Wish you yelled it instead of mentioning it.  Nice.

  111. I can’t believe they are willing to buy oil at $101 again.  This is the most amazing thing – it costs them Billions to keep this thing going!  

  112. VIX/Phil – i am long a few June 22.5 calls, at net .83 per, now .30 (VIX just hasn’t run yet). Your thoughts on what to do with these? Roll out (how far?) and even?

  113. unlikely o will move ahead with a plan t bail greece..imo..nice to see angela feeling teutonic and all but it’s not going to fly..the president has enough issues..he has given th eappreance of being empathetic…that’s enough for the hun..if he has any hope of winning this upcomng election he’s got to understand that many many think we are in a depression..helping profilgates like my cousins in greece is a BAD idea..let’s house some homeless here or feed a few while we are at cannot be as it was..short zenophobia/ long neighborhoods

  114.   whoosh lower then v-bottom…msb…msb..msb…same pattern whole way down ode to msb:.oh great magical sloppy buyer bring to us the blinding lustre of your deception to insure our mindless complicity…buy em up buy em up buuurp

  115. Phil / al-Naimi   I understand your explanation of the manipulation of oil.  But if the Saudi’s are going to now pump another 2mm barrels to P-off the Iranians, this is going to tank global oil prices.  The i-banks and speculators have to be looking for a way out of already huge inventories.  They must be terrified right now?  I don’t see how the stop a slide to $80?

  116.  JRW – Interesting stats.- I’m curious, assuming you bought ATM puts, what would you use for your stop, given the 1,2 or 3 week hold?  As I’ve learned the hard way, entries are easy, it’s the exits that’ll kill you.

  117. oil this from a friend:  I just heard a report that Obama would consider tapping the strategic reserve because supplies arent meeting demand. These guys dont see whats going on

  118. ratards

  119. I’d shoot my grandmother for oil to slide to 80 in the next week.  It’s really not that bad of a deed since she died years ago.

  120. yah but is scary you ve still got that target hangin out!

  121. JRW / site — what site do you get the tech charts from?

  122. Just went for RIMM 3x position, and rolled a little down and out! Can go one more time to 4x….but will leave that for $33-35 area.

    Also picked up some CSCO, NVDA, MGM, RIMM stock today….

  123. 11:23 AM Treasurys are holding gains after the Fed buys $6.41B in bondsmaturing 2015-2016, of $23.448B offered by dealers. The 30-year yield -0.045 to 4.21%; 10-year -0.04 to 2.955%; five-year -0.03 to 1.53%; two-year -0.01 to 0.39%.

    01:00 PM On the hour: Dow +0.15%. 10-yr +0.38%. Euro -0.61% vs. dollar. Crude +2.56% to $101.63. Gold -0.27% to $1539.80.

    01:05 PM The Treasury sells $21B in reopened 10-year notes at 2.967%(.pdf). Bid-to-cover ratio of 3.23, vs. a recent 3.17; indirect bidders take 50.6%, vs. a recent 48.4%. Direct bidders take 8.3%, vs. a recent 8%.

    01:13 PM Treasurys trim gains after the 10-year note reopening comes in at a higher-than-expected yield of 2.967%. The 30-year yield now -0.03 to 4.23%; 10-year -0.03 to 2.968%; five-year -0.03 to 1.53%.

    02:00 PM On the hour: Dow -0.11%. 10-yr +0.51%. Euro -0.67% vs. dollar. Crude +1.79% to $100.86. Gold -0.47% to $1536.80. 

    The Fed Beige Book indicates that "economic activity generally continued to expand since the last report." Slower growth was noted in the New York, Philadelphia, Atlanta and Chicago districts; the Dallas region showed "accelerating" growth. Credit standards were reported mixed but "a bit easier" in recent weeks. Most districts noted only a "limited ability" to pass through input cost increases to customers.  So the oil district is doing well – woo-hoo!

    The Beige Book is more cautious than the past few reports, MarketWatch’s Greg Robb writes, reflecting the weak pace of recent growth. Not much that wasn’t known already: The weather, Japanese supply-chain disruptions, higher food and energy prices all weighed on growth. Stocks pare losses a bit; Treasurys and the dollar hold gains.

    Oil skies as OPEC talks break down with no agreement to increase production. Saudi Oil Minister Naimi says it’s the worst OPEC meeting he’s ever attended. Crude is up more than $2/barrel in the past few minutes to $100.75. USO +1.8%.

    The IEA notes its disappointment with OPEC for not bumpingproduction quotas today, and urges the cartel to "respond accordingly" to increases in demand. USO +1.8%

    Where’s Beaks with that crop report?  The grain complex is sharply higher ahead of tomorrow’s USDA report, expected to confirm a steep decline in reserves. Needing a perfect growing season to rebuild inventories, wet weather in some regions is preventing farmers from getting the crop planted and dry weather elsewhere will pinch yields. JJG +2.8%

    With consumers tightening their grip on wallets, Gartner cuts its 2011 forecast for PC shipment growth to 9.3%, from 10.5%. The researcher expects businesses to lead the way to 385M shipments this year; the lowered view reflects some delayed purchases due to tablets like the iPad (AAPL), and echoes IDC’s lowered expectations, to 4.2% growth from 7.1%. 

    It’s not the European debt crisis, the Japan quake or high oil prices; the biggest risk to the world economy today is the U.S. government defaulting on its debt, St. Louis Fed’s James Bullard says. "The U.S. fiscal situation, if not handled correctly, could turn into a global macro shock. The idea that the U.S. could threaten to default is a dangerous one." 

    Up 32% over the last year and, along with high rates, beginning to squeeze the economy, chatter grows that the aussie is headed lower. With compliments to the country and its vigilant central bank, the Australian dollar is just another risk asset – where the S&P 500 goes, theaussie will follow.

    Brazil’s central bank looks set to hike its benchmark rate 25 basis points to 12.25% this evening. This comes in the wake of the resignation of Brazilian president Rousseff’s Chief of Staff, thought of as the most fiscally prudent member of the new government.EWZ -5.1% YTD. 

    Low inflation and waning demand for credit mean Peru’s central bank can pause from rate hikes when it meets tomorrow … this is the opinion of the Finance Minister, who quickly adds, "it’s the central bank’s decision" – so much for independence. Shares continue to bounce from the post-election crashEPU +3.1%

    The soon-to-be-released report of the EU/IMF/ECB - the troika – mission to Greece will find to no one’s surprise that the first bailout isn’t working, the recession is deeper than expected, and additional reform measures will be necessary before further funds can be released.

    A bill that would have delayed the Fed’s debit-card interchange fee reduction rule is rejected by the U.S. Senate after failing to obtain the 60 votes needed to withstand a filibuster; the final vote was 54-45. Shares of Visa (V -3.8%) and MasterCard (MA -3.2%) slide.

    Bank of China gets a license to print money as Beijing grants it approval to bring yuan raised in Hong Kong back home. With the cost of issuing debt in Hong Kong less than what the cash can earn on the Mainland, it’s a sweet deal for the bank.

    With a mini-boom on, big office-building owners are hustling to get them on the market - because with shaky economic numbers, "who knows what the market will be like in a year or so?" Chicago’s Willis (formerly Sears) Tower, Washington’s Constitution Center, New York’s Seagram’s Building: All are on the block, and preliminary May numbers show $10B in new listings, highest since late 2007. 

    It’s over for battling mutual funds and ETFs, Chuck Jaffe writes:The ETFs won. They’re the ones taking over the wallets of investors, so now it’s just about the terms of surrender. Despite criticisms that ETFs are more a trading vehicle than a buy-and-hold, "simply put, ETFs are the advancement in technology."

    Ford Motor (F -0.7%will triple production (to 350K vehicles/year) in Russia, a market it expects to double by 2015. With Vladimir Putin in attendance, the company signed on a 50/50 JV with Sollers today, taking advantage of government incentives waiving import tariffs. (Ford’s Asia focus)

    Believing that conditions are ripe for a wave of leveraged buyouts, Deutsche Bank compiles a basket of 50 stocks it believes arepotential candidates for takeouts. Among the noteworthy names: APOL,AEPGCIKSSSYMCGPSCIFRXRTNNOCLXKBKIETR.

    Three lunchtime reads:
    1) It’s bubble time as Asia braces for QE3
    2) Fed’s clear message: We’re out of bullets
    3) Lunchtime interactive: Charting a decade of global food prices

  124. Meanwhile, i find it very encouraging that in the midst of this market drop, GOOG is still holding on to near $520, which is near its post earnings low….so it seems to be building a base here, and when the market finally moves higher, think it will join in. So, i continue to accumulate here, stock and LEAPs. great value

  125. On our way to another lost decade?
    It seems that in real terms (income!) we had been in a recession since 2006! Who knew… 

  126. @Felipe
    re:  SODA
    No, WAS in it.   The June 55 calls.  From 55 to 61 and change.  Sold yesterday. 

  127. @ Phil, do you think that the 200 moving averages of the indexes be a strong support? or do you think that they could be easily broken? the markets are falling fast, i think that since 2009 that we havent had so many down days in a row, but still with the end of qe2 and a stronger dollar the markets could fall a lot more. (and then maybe will we get a qe3) at what levels would you be willing to start bottom fishing?

  128. scottmi / VIX

    Looks like the Sellers are getting tired:


    rdn4evr / stops

    I use my levels, in this case IWM 80.00, 79.10, 78.00, 77.50, and 77.00 and watch for a trend change. I sold 40% of my short positions yesterday (too soon, but profitable); after two years of this, I’m cautious with my shorts (specially on vacation)  8-)

  129. Hey Lloyd, why don’t we whack ‘em with a stick?!

  130. sina-later!!

  131. JR,
    When are you coming home?

  132. exec/ Coming home

    Actually, I like it here !!  8-)

    Leaving for Europe Friday to check on the "addition" to the "villa", then back to the US on the 18th.

  133. i wouldnt touch this with a barge pole..

  134. I took a nibble at CZI last week….the options suck, but maybe if the China bears are correct, it could turn into something.

  135. it seems the powers that be or whatever are happy to see this decline msb stepped in several times today and got repbuffed he seems bored… what are we down 7% from recent highs..don hays screaming no way we get a spring  2010 like decline..lots of pumpahs..txn should guide down

  136. Nice call BDC!  Now, what are they exactly?  

    VIX/Scott – If they don’t pop in July, they are just not going to but naked VIX calls are tremendously speculative.  You want to make .53 back so I’d just go for the July $16/17 bull call spread at .60 and sell the $16 puts for .40 for net .20 on the $1 spread so you make your .53 back and a 50% bonus if they just hold 17.  Obviously, if you are worried that the VIX won’t hold 17, then what the Hell are you thinking with those $22.50 calls?  

    $80 oil/Tusca – If Gaddafi steps down we could drop $10 really fast.  Still, you have to be patient, in between, they can jack oil up $2.50 – $5 almost any time they want – which is actually great if you have the conviction to short it and the patience to wait for the opportunities (like before at $100.60). 

    SPR/Angel – Bernanke says it and everyone takes his word for it – idiocy!  

    GOOG/Hanna – Good catch, that does build on their valuation case.  

    Lost decade/StJ – According to real median wages, the bottom 90% have been lost since 1973.  

    200 dmas/Asaenz – The 200 and the 50 are the only ones I care about.  That’s why I like stockcharts, it’s their default view.  The end of QE2 (assuming it is) means the IBanks are now counting the days left to roll over their bets and, with just 20 days to go, they need to be unwinding their positions.  I think the low volume to the sell-off simply represents the total lack of sellers.  It’s my Roach Motel – they got in but they can’t get out.  The IBanks are disciplined enough to run long, protracted sell-offs but that’s the kind that can give you down days every single day until they weasel out of all these positions they never wanted anyway.  I’m willing to bottom fish here (down 7.5%) because I think 1,000 will hold on the S&P so only a 20% drop at most and, if we’re scaling in, we’re good to 35% and that’s 850ish.  That’s a long-term investing premise of course and I wouldn’t run out and deploy cash but selling a few puts as an initial entry, just in case we head up, is no big deal.  

    Sounds like fun JRW.  I have to figure out where I will go this summer…  

    CNBC about to dis the dollar with Jim Rogers into the close (he must have lost $1Bn as commodities pulled back).  

  137. ARIA - amazing bounce, glad I decided not to cover that last dip…

  138. Looks like we might get a little sticks.  CNBC  did the set up by announcing Jim Rogers and the fact that the Dollar may collapse, the Dollar immediately turned down and oil shot up (over $101 again for another shorting opportunity!) and the indexes jiggled higher but it’s all BS.  If they get a really good run we can short that but I’ll be surprised if the Dow can hold 12,050 at this point.  

    Still Rogers is good and this is pretty well-timed so let’s be careful (if you are short).  

  139. if jimmy rogers has 10 million i could find someone to fellate him at high noon under a cloudless sky on main street..he”s long kentucky windage..’i am long peppercorns and cornichons..and i wouldnt be suprised if i werent short ats disguised as white rice by noon tomorrow!"

  140. Bearish forcast from SHJ:

    On TF the next obvious target is slightly above 780 where there’s decent trendline support. Below that there is very strong support and another potential H&S neckline at 770:

    Click to enlarge

  141. angelcur
    Many days of down, get ready for the dead cat bounce!

  142. Bought Arch Coal $26.23 as cover for my short USO position, it gained .20+ towards the close, USO didn’t move.  Hope spring eternal.

  143. Hanna, what LEAPS are you accumulating for GOOG?  Are you doing ITMs or taking a flier?  I’m thinking the 2013 590/640 spread or similar makes a nice fuggedaboutit play…

  144.  Phil, 
    Like Morx, never got the fill on the FAS 24′s (I am traveling again and with limited access, did put the trade in for .70 and the roll but never filled) and the roll so still holding the 26′s. With this moves on the market do you expect for them to pull back to the -2.5% and bounce hard there and so should I just give them a chance and roll to 25′s tomorrow? 

  145. My cats shadowfax and luke skywalker are getting attitude and they demand a change!

  146.  Hannamocha – Why Google?

  147. i am staying short this has the feel of the southern  end of a north bound mule

  148. JR,
    Have a safe and fun trip…..this market is crazy…..we need you around for guidance.

  149. aussie just dreadful today there is an eye into chinese prospects…french bordeux prices falling..chinese buyer finding they can put coca cola into non grand cru wines

  150. AAPL: Holding the 332 line like a champ-feels like a positive. Amazing to see it drop this week with all of the news. (Short weekly 330 puts @ 1.50).
    Wondering if the ICloud will actually make the larger IPad configs (like my 64 gig) obsolete? Should have saved the $200 I guess.

  151. rus futres 50 centavos off low

  152. there was some real carnage beneath surface today….lots of small/mid-caps down 3-4%

  153. That was strange, when is Jim Rogers on. 

    Also interesting, I was looking for info on that and it turns out CNBC Europe actually publishes a daily guest list.  THAT IS USEFUL!  Someone should give that a lookover in the mornings and their lunch and closing guests could move our markets!  If anyone sees a schedule for the US like that, please let me know. 

    Ugly chart JRW.

    FAS/Amatta – If we don’t bounce off these 7.5% lines we’ll have to get aggressive and sell more FAS puts anyway.  This time, you’d want to sell the June $23 puts (now .95) to fund a roll from the July $26s to the July $24s, which is .68 so about .40 out of pocket ($3,200).  You could risk it and just roll to the $25s but you will likely be screwed if FAS pops back up.  That would be the roll IF XLF can’t hold $14.75.  If they hold it, then just a roll down to the $25s (now .29) and see if any buyers show up by Friday. 

    Coke/Angel – Hmm, I never tried that one!  

    ICloud/Okno – Maybe when we get WiMax or whatever but with current reception on the road, I’m happier to have local storage.  Good point though, not so good for Dram long term.    I wonder if that was a plan by AAPL, those Ram chips delay their production and suck up power and are a big expense.  If ICloud makes you not need them as much – they have improved their margins and are able to move a lot more product – probably with better margins.  Smart…

    At the close: Dow -0.18% to 12049. S&P -0.42% to 1280. Nasdaq -0.97% to 2675.
    Treasurys: 30-year +0.78%. 10-yr +0.44%. 5-yr +0.35%.
    Commodities: Crude +1.87% to $100.94. Gold -0.01% to $1538.50.
    Currencies: Euro -0.83% vs. dollar. Yen +0.27%. Pound -0.33%.

    Market recap: Stocks extended their losing streak to six following yesterday’s cautious tone from Bernanke and today’s Beige Book. Financials, already lagging, fell further after a vote to delay debit card swipe fees failed in the Senate. Chip stocks took another whack, helping send the Nasdaq lower. Oil rallied after OPEC kept production unchanged. NYSE decliners led advancers three to one.

    EU commissioner Olli Rehn, more or less the overseer of Europe’s bailed out countries, turns his gaze across the Atlantic? "The situation concerning the U.S. fiscal deficit and debt is a very serious one," he says. If Tim Geithner hits the wires saying "America is not Greece," we know we’re in trouble

    Meanwhile, glass houses and all:  Two months after elections, Finland has been unable to form a government, meaning the anti-bailout True Finns may have to be offered a seat at the ruling table. "Europe will have to hold its breath for awhile longer," says a political observer.

    Duh!   A new paper from Oxford economists suggests that Wall Street firms have colluded to keep the fees for IPOs artificially high. The “7% solution” has become dominant in the U.S., the report says, and is now the norm for IPOs raising up to $250M. The same banks are prevalent in the U.S. and Europe, but European IPO fees are roughly three percentage points lower.

    Oppenheimer’s upgrade of Verizon (VZ +1.5%) propels shares to the top of Dow gainers. “VZ has premiere wireline and wireless networks and has spent almost a decade spending substantially higher capex and is set to see very strong [free cash flow] growth going forward,” a research note says. 

    Investors have already priced in the worst-case scenarios for Bank of America (BAC -1.4%) and Citigroup (C -1.8%) concerning their capital buffer, Morgan Stanley says. The market estimates Citi will need a 14% ratio and BofA will need 15.3%, or possibly 14% plus a $24B capital raise. BofA’s Brian Moynihan declared last week that his bank doesn’t need to raise capital.

  154. Phil, 
    I rally can’t take these losses anymore. Its damned if I do damned if I don’t situation. By making the decision to not day trade anymore I have missed all the short plays you have entered to and failed to protect what I had left in the portfolio, (aside from continuing the losses in the god damned FAS) and I have taken massive losses these weeks while I wait to transition into the low-touch Income Portfolio … Watching losses accumulate at the rate of $5-6K a DAY is ruining my family’s finances my health and emotional wellbeing. 
    Could you please take a look at the questions I have posted in the Income Portfolio. 

  155.  i have a feeling when oil and copper break hard…that may signal beginning of end of correction…meaning it could get really ugly for few days… but that would be low for year….just have to see how it plays out though…and we probably bounce again before then…

  156. Phil,
    "This time, you’d want to sell the June $23 puts (now .95) to fund a roll from the July $26s to the July $24s, which is .68 so about .40 out of pocket ($3,200).You could risk it and just roll to the $25s but you will likely be screwed if FAS pops back up.  That would be the roll IF XLF can’t hold $14.75.  If they hold it, then just a roll down to the $25s (now .29) and see if any buyers show up by Friday. 
    A little confusing but I think you mean that if XLF fails 14.75 THEN I do the roll for something better than .40 net? And if they do hold it just roll down to the $25′s naked, right? 

  157. amatta i have no where near phil’s expertise in options i can tell you futures MIGHT be a better vehicle for you..i know i broke even trading them in the latish eighties (options) and that was only on the back of owning 40  puts on an index on thursday oct 8 1987..i paid 24 for them sold half friday for 40 and the balance on money for i wasnt very good..futures were a better fit for me and i had immediate success….just saying you should discuss this with phil perhaps in a private convo..none of my business at all but i feel your pain and have been there..sometimes to try is to die

  158. Sounds to me like Jim is short JPM. Maria doing a great impersonation of Jim Carey  (Vera De Milo)


  159. amatta, I feel for you, and I was also in that position where I was trying my best to follow Phil and Opt and do their trades before I had my own understanding of the markets and options and futures – and I lost a ton of money….
    You cannot – I repeat cannot trade options if you need Phil or Opt to make every decision for you… It is too dynamic — I suggest that you look to get out of your positions slowly and take Phil’s advice on that, but DO NOT – I repeat DON’T get into any other trades till you are in cash and then review your trades one by one and learn –  Understand your emotional state when you got into losing trades and when you capitulated etc.. 
    This is a hard process but it can be very rewarding. I did the wrong thing by jumping into options – I learned my lesson – lost a ton of money and now I know what I trade and why I trade. I don’t trade everything Phil and Opt suggest, but I learn from their trades and try and build my own also.. Then when I am struggling I do ask Phil or Opt for their advice on a trade strategy or market direction.. But I have to be responsible for my own losses and profit… 
    I hope you understand that this is friendly advice from my battle scars.. In a Nutshell – Go to 100% cash – analyze your trading strategies and emotions and you will understand how and when you made and lost money and then scale in..

  160. Losses/Amatta – I will look later but it’s the same thing I tell you again and again and again – you are not cut out for trading.  You need to find a professional fund manager to handle your money and you need to do something else with your life.  If you are losing $5-6K per day and your portfolio is not over $1M then you are not balanced and not hedged and again, I can’t  help you.  You say you are following the Income Portfolio but the Income Portfolio has 50 Naked DIA March $110 puts that have doubled to over $40,000 and IYR Jan $50 puts as additional protection which are just now back on the money.  Not only that, but the Income Portfolio is just 20% invested as we expected the market to go down and made very light entries.  

    Looking over at your position, you have a mish-mash of a dozen different positions and NO DOWNSIDE HEDGE.  That’s about 1,000% the opposite of what we’ve been doing here.   You act like I am to blame because you "missed all the short plays" so you obviously knew we have been shorting the Hell out of the market yet you maintained a freakishly bullish portfolio and expected what to happen exactly?  

    You need to STOP TRADING.  It is not for you.  I have told you this many, many times because many, many times you show me positions like this that clearly indicate you selectively pick things with no balance whatsoever and generally tend to freak out (like you are doing now) and flip flop every time we get to the top or bottom of a range so you are perpetually buying high and selling low.  When you say things like "ruining my family’s finances, my health and emotional wellbeing" I have to now seriously tell you to stop.  I am not your financial adviser – you need professional help.  

    I will look over what you have on the comment on the income portfolio and make some comments but I will not enable your very serious gambling problem anymore – have someone else manage your portfolio – PLEASE.  I set up sample portfolios to that you can track but I am not equipped to look over your customized lists like this.  You want someone to fix something that was very poorly constructed in the fist place – that’s not possible.  You need to unwind properly, hand the cash to an investing pro and you can look over their shoulder or feed them ideas that you get from sites like mine but just the fact that you are juggling a dozen positions at your skill level is frightening.  

  161. NYS gov, Cuomo is on his way to pension reform.

  162. thats great advice rehat..

  163. angel, thanks for your post. Phil stresses Futures are a extremely dangerous… so I am sure he’d steer me away. What has been my undoing is that I can’t get a handle of the balance you should maintain and take profits on the short side when at worst fear as well as tops in the longs. 
    So doing it on a more straightforward manner with 1 position either short or long would probably work a lot better for me, instead of trying to balance all out. Out of curiousity what do you trade in the futures? so you do it a’la JRW just coming in and out?
    I just wish there would have been an Income Portfolio a year ago when I joined because that is precisely what I was looking for. And I am hoping I can make back the now $55K losses on the year…

  164. And what Rehat said!  

    Amatta, your problem is you never took the time to LEARN how to trade.  At this stage, I’m pretty sure it’s not your thing anyway but there’s a reason we have virtual portfolios and paper-trade accounts – you need to practice until you KNOW how to manage your positions otherwise you are simply tossing money on a roulette wheel and it will be an unlikely surprise when you do happen to win but, over time, the house will grind down all of your cash.  There’s a reason I tell this to people all the time – it’s true!  

    Correction/Angel – We still need a volume capitulation.  TXN just warned so we’ll see what tomorrow brings (more pain for the bulls – that’s for sure!).  

    Texas Instruments (TXN) sees Q2 EPS of $0.51-0.55 vs. $0.58 consensus. Sees revenue of $3.36-3.5B vs. $3.55B consensus. Shares -4.5% AH. (PR

    FAS/Amatta – I am sorry I said that.  You need to get out of that position.  Its the exact opposite of what you should be doing and will likely only lead to continued aggravation and disaster.  Is that clear enough?  

    Pension/Nica – Thanks, this may be the model the whole country will have to adopt:  

    A higher retirement age, an end to early retirement, higher pension contributions from workers and the end of overtime as a pension multiplier are among the elements of Gov. Andrew Cuomo’s pension reform plan, just zapped out from his press office.

    The highlights:

    • Raising the retirement age from 62 to 65
    • Ending early retirement
    • Requiring employees to contribute six percent of their salary for the duration of their career
    • Providing a 1.67 percent annual pension multiplier
    • Vesting after 12 years instead of 10 years
    • Excluding overtime from final average salary
    • Using a five year final average salary calculation with an 8 percent anti-spiking cap
    • Excluding wages above the Governor’s salary of $179,000 from the final average salary calculation
    • Eliminating lump sum payouts for unused vacation leave from the final average salary calculation
    • Prohibiting the use of unused sick leave for additional service credit at retirement

    The reform of the state pension system would impact new hires by the state and local governments, including school districts. The NYC pension reform plan would cover new employees of New York City, including the uniformed services.

    It takes a Democrat to really do something about entitlements – they are the only ones with the balls to sit down and make tough choices in a fair way.  

    Also worth noting:  

    Hanging on to modest losses for most of the day in the wake of weak earnings, Hovnanian (HOV -11.5%) capitulates late to back near summer 2009 levels. CDS pricing on the company’s debt is on the move higher as the firm sacrifices its liquidity to try and pick up land on the cheap.   I trust them to do this – obviously the market does not.  

    The Dow Transports dip into negative territory for the year, which Dow Theory believers see as a harbinger of pain ahead for the broad market. AMR (AMR -1.9%) and Delta (DAL -1.3%) are each down nearly 10% in the last six trading days. The Nasdaq and Russell 2000 indexes are now only fractionally above water on the year; the Dow and S&P are doing a bit better.

    John Burbank is making downstream bets on oil by snapping up infrastructure plays in Saudi Arabia. As of May, Saudi investments make up nearly 11% of his flagship Global Strategy fund. Despite turmoil in the region, he says “The crisis isn’t affecting the long-term reality that this is where the oil is.”

    Typically able to put political rivalry aside to focus on money, OPEC’s failure to agree to a production increase suggests that is no longer the case. Always adversarial, Saudi Arabia and Iran’s differences have intensified because of Bahrain. Toss in the fact that no one really knows who’s running the oil show in Iran, and you have the ingredients for today’s surprise.

    Steve Jobs’ latest project: the iSpaceship. Apple (AAPL) wants to build a new corporate headquarters for 12,000 employees that, in Steve Jobs’ own words, looks “a little like a spaceship.”

    Dow at 12,000 in futures!  

  165.  Amatta
    let me share my expirience with Phil (I’m member for almost 2 years)
    last year I was down around 20% up till August and when market start rally at the end of year I got back all my losses and finish year plus 45%
    How I did that? just don’t panic, when market going down adjust your positions and DD (those f****ing HOV, HSBC, RIMM and other losers can not go to zero (at least I hope so:)) for this you need enough cash
    this year just 2 month ago I was plus 20% now I’m even, I hope it will turn around soon
    good luck

  166. Phil, 
    This has been precisely the problem, TRANSITIONING to the Income Porfolio. I have been adding positions but didn’t add the short positions as i would have been out of balance right? That is why I had those questions, trying to figure out how to handle the mish mash of positions and entering the new plays. 

  167. Amatta, my belief is you should stay away from buying any options right now as you cannot go away for that long when trading them because they move so quickly.  Also it sounds like you don’t have stop limits in many of your positions which is one of the most important things to have.  You’d be out of most of these losses at not much of a loss at all and be sitting in cash waiting for a good opportunity.

  168. Phil I beg you to please help me get out of this situation in the best way possible and be on a solid INVESTING position to make back all these losses-- by that I mean, guiding me exactly what to do with each of the positions I posted on the questions AND which ones on the Income Portfolio I need to enter in a balanced manner. For example I mean I couldn’t nilly willy buy the 100 puts on the DIA you mention as you properly calculated the hedge for the positions you had and had actually paid for it with the short sale…
    Phil understand I get no thrill from any of this, I am not a gambler I just can’t possibly take the massive losses on the capital I need to depend on to sustain my family. And thus I have said to myself keep yourself together and things will get better…
    I need your help, I think it will take you probably 10-15 minutes to tell me what to do with all these old and new positions to enter and then manage them on a low-touch basis while I dedicate myself to something else. That is all I ask.

  169. amatta / rehat — You should read and re-read rehats post. You need to be able to make your own decisions and not rely on Phil to fix your trades if you want to become a successful trader. You need to know what you are going to do every step of the way and take action when action is needed, not freakout and get sick over it. I’ve suggested that you need to quit relying on Phil several times in the past but have quit suggesting because you never change. Now you are changing from short term to the income strategy thinking that is going to help and what is happening? You are panicing without a plan. Why don’t you paper trade until you get the hang of it?

  170. Phil / — Darn candle glance view uses the 20dma and 50dma. I had thought they also used the 200?

  171. Today’s Levels

  172. Amatta:  I think everyone here has sympathy for you because everyone on this site has taken hard losses at some point.  I can’t judge whether you are "cut out" for trading.  I can say that if you need the money you are trading with to live, it will be impossible for you, both financially and psychologically, to ride out losing positions you believe in, so any twitch in the wrong direction will turn into a loss for you.  And on the other side, you may ride gains to "get back even" or put some needed cash in the plus column.
    I have shot many thousands of rounds as a target /action shooter, and I’m cool hand luke with a .45.  All that shooting gave me confidence that, if I were ever so unfortunate to have a confrontation, I could acquit myself well. 
    Then I was taken to play Laser Tag.  Where they shoot at you!  Turns out, winning a gunfight is all about cover. Everybody, it turns out, knows how to shoot you from 7 yards away — the average real gunfight distance.  Stand out there like the Cisco Kid and you’re going down.  That means you mostly have to hide, and only pop out when there’s a really good shot — like someone with their back to you.  That takes patience — easy to say, hard to do.  The fact that you need the money is making you impatient. It’s fatal; those other market guys know how to shoot, too!!   Risking money you can’t afford to lose is throwing you off, and the more you lose, the less risk adverse you will become.  I’ve been down that road more than once, and it always ends the same way.  Save yourself the trip.

  173. amatta – I don’t have a big account but I have made similar mistakes. Like rehat, I had way too many positions before I understood options (I am still learning). I used to have 30 positions in 3 different accounts which caused a lot of aggravation. I am still at around 20 and that is a lot of stress too. The problem is because there are so many trade ideas throughout the day, it gets harder not to pick something. And that’s when I get in trouble. Like Phil says, pick something you want. Trying to drum that into my brain.
    I agree with tchay, what you are seeing are losses on paper, they have not been realized yet. If you believe in your positions, double down at the appropriate time. I am down about 20% in my IRA because of some stupid/amateur mistakes. I am pissed but can’t give up. What choices do I have. Put it in a mutual fund? …lol
    If you are losing so much money in a day and it is causing you such a huge stress, then its not worth it. I have many times stressed over positions where the losses were big for my account. In that case I ask Phil if they can be salvaged. If he gives a suggestion, I think about it and roll or I just don’t want to wait that long and I sell them at a loss and move on. I may be upset with the loss but once it is gone from the portfolio and I am not looking at it constantly, I feel much better.  Then I go back and analyze what the hell went wrong.
    Good luck.

  174. Phil,
    Long time no see, maybe 5 years?  Thought I’d stop in and say hi and maybe hang around awhile.  I barely recognize any names anymore but that’s ok.  Since last we talked I’ve made a killing, got slaughtered and climbed back.  Mostly that was all in natural gas field speculation in Montana & N.Dakota.  
    I’ve been reading through your posts and see you’ve started futures recommendations…love it.  It’s also nice to see you haven’t lost your zest for big oil.  I think I’ll relax for awhile and trade with you guys again.  Trying to screw the nat. gas companies is tiring.  Anyway, nice to see you’re still at it.

  175. rehat, rainman, 
    Thanks. Yes I understand, I do feel I have a level of understanding of the trades, and what I am trying to accomplish but then get lost in the thick of it. It is like the pilot who has his 100 hours of flight and his license and starts feeling confident, but when he gets stuck in a storm things start unraveling and he commits mistakes that get compounded until he loses control of the aircraft.  
    Another thing I see it is necessary is to have a lot of instinct and make decisions very quickly, which is something I struggle with a lot. Mainly I think it comes mostly down to keeping emotions out of it, and unfortunately I am extremely emotional. I did obvserve for a couple months and did paper trading and since but since you are risking real money emotions did not play a role and thus you make different decisions. (a pilot in a simulator I am sure has very different reactions to when a plane is stalling and he knows if he doesn’t get it under control he’ll lose his life and those of many others in his hands). 

  176.  Zero
    Yes that is right very illustrative of the problem… as with the example with the pilot. Its keeping the emotions in check but that is hard when you have such pressure to make it work. 
    But getting out at the lowest point seems to be precisely giving in to emotions at the worst possible moment? 
    I am not cut out to be a trader (at least not at the moment with such pressure) but so it is ridiculous it seems to me to then throw up my arms in defeat and do what as nicha says? give the money to a mutual fund or investment advisor--with whom I have spoken many times and all have said it is impossible to make more than 5-6% in the markets consistently (obviously covering their backs and expecting you to hand them the money to do nothing but put it on some ETF basket at best). 
    This is why I see the Income Portfolio is a perfect solution-- it is a much, much slower paced where I can keep learning AND a conservative portfolio not looking to make 4x your money as the 25K but keep it and create some income. 
    Thanks again guys for all your input!

  177.  Phil and others
    would like your opinion about selling index calls against your long portfolio:
    I do it very successful and it is free money (from margin point of view) if you have Portfolio Margin (but it doesn’t replace suggested hedge positions)
    why it is free money?
    you know, with PM you pay only about 20% of your long positions, off course it is stupid to use all money, so you should have a lot of reserve
    so I use part of it to sell index calls (1 month with price around $5)
    it is free because margin requirement for your short calls move opposite direction of margin requirements for your long positions (if market up – margin for calls increase but margin for long position decrease and vice versa)
    if market up you get profit from your longs and roll (may be DD) to next month and sooner or later you will cash them when market stop going up or corrects
    this strategy give me additional 10% per year 

  178. Phil, I know Amatta is struggling and trying your patience but I would like to say that having someone going through that turmoil and challenging you constantly has probably been as helpful to me as anything else I have experience in my short tenure here.
    I hope Amatta gets headed in the right direction and we can find someone else to take her place.

  179. Hi Pharmboy,
    Do you know anything about ANX in terms of the approval on Sept. 1?

  180.  Amatta
    I think because you try quickly get your 50k back you risking even more, may be better just forget about it and become much more conservative?
    I found that Phil’s idea to sell monthly puts of very good conservative stocks (KO, T, BA and others) much less stress
    if they continue to go up you just cash monthly premium, if they start go down – first you roll them to level where is very good entry spot to buy them, and if they go there you set up B/W position at good price and enjoy dividends and premium of your short calls and puts (but it should be good conservative stocks and sell only amount of puts that it will be only 3-5% of your portfolio when they will be assigned)
    I think it will be much less stress

  181. Thanks nicha. Yes I completely what option do we have? Having come all this way to give up and lose all that money seems to me the worst possible decision. An emotional one…  And what is the alternative like you say. 
    Like I asked Phil above, if he can help me getting out of the mess in an orderly way and into a new slower paced environment  in the Income Portfolio,  where I can keep a cool headI am sure I’ll benefit greatly… both learning wise and by not throwing away all the hard earned money my family trusted me with. 

  182. amatta – you say this:  "Like I asked Phil above, if he can help me getting out of the mess in an orderly way and into a new slower paced environment  in the Income Portfolio,  where I can keep a cool headI am sure I’ll benefit greatly…" and Phil is going to say, "you haven’t followed what I told you to do before!". I think everyone here wants you to understand that from past experiences you are NOT following Phil. You ask for his advice but only follow a part of it. You can’t do that. Either follow it to the T or don’t ask for it. So, is this time going to be different? I am not lecturing you but just pointing to you what has been happening so far.

    Like tchay says, if you are expecting to be made whole in a short amount of time, then I bet you will be taking unnecessary risks and we will be back to square one. 

    Like rpme, your questions have helped me to pay close attention to Phil’s answers. (but I still don’t learn. made a few mistakes recently). I guess some of us learn the really hard way; making same mistakes over and over again and losing a ton.

    I hope you are reading some of the books mentioned here. Opt talks about Van Tharp’s book especially the position sizing chapter. Someone here said Trading in the Zone was a good one. Rainman has recommended Options as a Strategic Investment. I read Van Tharp’s book before I understood options so it was a bit dry but I am sure if I re-read it now I would like it better. The latter two, I have just received today.

  183.  Best Metaphor Award
    Interesting reading this evening, helpful to hear so many similar learning experiences along the way.  But best metaphor goes to Zero the gunslinger, i loved that.
    My lessons have me scaling into much less adventurous trades with a much clearer view of where I am going if things move against me.  Much more about controlling what I can control than thinking I know what the market is going to do.

  184. nicha, well it has been the impression that I did not do what Phil told me, but that is not the case. It was because of mistakes in execution (not getting filled or missing posts from Phil) that I was in a disadvantageous position looking for help from Phil often. And this is precisely because trading in the 25K or 1050 or day trades things are way too fast and you lose track a lot of times and end up compounding errors by trying to fix them. 
    I don’t see this ever happening on the Income Portfolio as it is done in a time frame that allows for following properly. This is why I insist that that is the solution. THAT will allow me as I said above, to be calm and be able to absorb a lot more than merely reacting impulsively (or not reacting and panicking al the time) will have time to read all the good information you that you kindly share and others as well.

  185.  Thanks, Lincoln.  I’ve spent a lifetime trying to communicate with people with whom I don’t share a language.  I guess using metaphor to get points across is second nature.

  186. Phil,
    Assuming AH is  appropriate timing for a question regarding the change in your target for the S&P from 1268, dn 2.5% level ( and fib 38.2% =1250 ) to 1238 (dn 5%)  and today to 1000 (at worst, 30% correction). Trying to get a sense of your reasons for these progressively lowered targets since (1) no QE3 was not no surprise and (2) negative Beige Bk was expected. Was it mkt action or something(s) else ? Seeking insight into your rationale/analysis.
    Thanks again.

  187. Many people giving very good advice – my thanks to all.  

    Stockcharts/Rain – Use the gallery view, that’s my favorite.  Don’t ask me what the bottom chart is, I haven’t got a clue how those work but the first two I love to use.  

    Levels/Ilene, Elliot – Now THOSE are charts, thanks!   Notice the downtrending channels – the top of that falling channel has to break now, which is still the Must Hold line for now, before it’s any kind of recovery.  

    Very good observation on trading psychology ZZ.  Like Hank Paulson, I have discovered that the best way to win at Paint Ball is to get a bazooka – I’m not sure if they have the equivalent in Laser Tag but I will tell you that Tina had a jersey made for me once and on the pocket she had embroidered "If I can’t win, I don’t play" – that pretty much sums it up for me.  I don’t mind losing but I don’t play games I can’t win.  

    Welcome back Dday!  That Nat gas ship finally came in after all this time, now all they need is a good hurricane and we might see $6 again.  I started doing futures because the market is so freakin’ wild that you can make a fortune intra-day just following the manipulation and also because it’s fun to make oil speculators actually give you $101 for a barrel of oil!  

    Index calls/Tcha – Well if you do it with PM and can afford to roll etc, it’s fine.  Even in the psycho rally off the crash, it took 2 years to gain 100% so 5% a month in rolling is probably the "worst case".  Obviously, I like to use index puts to hedge, I never really think about selling index calls to pay for them but it’s not a bad idea but I’ll have to experiment for about a year before I get comfortable with it.  What have you been selling?  

    S&P/8800 – I didn’t change my target!  That’s just the worst case and I’m saying since I think the worst case is 1,000 and that’s down about 20%, then I don’t have qualms about taking positions, like short puts, that will force an assignment with a 20% discount EVEN THOUGH I still feel we could drop to 1,200 very easily and that the initial positions (like some we have taken recently) would turn negative.  I certainly do NOT change my targets that drastically over that short a period of time.

    Last June 9th, when the market was crashing and everyone was predicting the end of the World, etc. (like they will be if we drop another 2.5% into the weekend), I wrote "The Worst-Case Scenario:  Getting Real With Global GDP!" where I laid out my case at the time for bottom fishing and went over my logic for the overall valuation of the global markets.  I would suggest reading that.  In that post I say "I gave a similar speech to this one in February of 2009" and I guess it does bear repeating when I see people begin to freak out over, what I pointed out in yesterday’s  SPY chart, is nothing more than a normal long-term correction at the top of a 100% rally.  

    The market moves in cycles.  If you spend your days focusing on 1-minute moves then everything looks like a catastrophe.  That’s another reason I don’t usually like trading futures – it makes it very hard to shift gears back and take a rational look at the longer-term trends, even for me – and I have a pretty good sense of perspective….  

    March 2009 was a time to buy.  Everyone was panicking and I made 16 bullish picks in 3 hours on TV that made over 400% in 6 months.  In June 2010 I was excited to buy again and in Sept 2010 I decided QE2 would be a game changer and we went from cautious buy/writes to aggressive plays on the 3rd.  Since then, I haven’t been motivated to make and aggressive portfolio other than our Breakout Defense plays and the Secret Santa Hedges (plus the quickly aborted May Flower Inflation Hedges).  

    NOW I am finally getting excited for some entries again but I’m also PATIENTLY waiting for EVIDENCE that we have hit a bottom and are consolidating for a turn.  I know it must suck for all you hyper-types to have to wait a year between these major portfolios but it’s kind of stupid of me and a disservice to you if I put up portfolios just because people are impatient, right?  

    So I wait patiently and you guys wait impatiently and we have hundreds of small trades to make while we wait but, so far, nothing that has motivated me to commit more sideline cash than the 35% we’re currently playing with since our slightly too-early cash out in April.  

    So THAT is where I stand at the moment.  

  188.  Phil / shorting index calls
    for 200k account I sell 2x SPX and 2x RUT calls 1-1.5 month to exp. at price around $5 (it should be around 6-8% above market) total margin 15-20k but I have margin reserve at least 100k
    and again, I don’t care about this 20k margin because it moves opposite direction with margin of long portfolio (and make it free from margin point of view)
    when market go up I enjoy my paper profit of longs and roll short index calls higher to next month, when market stops I cash these 2k of profit and start over again

  189.  and thanks for good advice, I can use that cash to buy index puts for hedge :)

  190. Phil
    I have HOV 2012 sold puts (in at $1.70 now at $2.50) and CSCO 2013 $17.50 sold puts (in at $2.10 now at $3.28). Thinking about rolling HOV’s to (1.5x) $4 2012 at $1.87 and rolling CSCO to (2x) $15 2013 at $2.22. Sensible moves or something better? I want to own them, but think I can get a better entry. Thank you.

  191. tchayipov, amatta
    Hi I see you on the board but you never respond to me writings. I as well play the futures in /cl corn and weat doing well with them so far. I set up papertrade on you 12/6 two month out positions on corn doing excellent so far. As well I see all your comments on amatta where I see and understand the same problem options can be a bitch just amatta do not feel to bad I am at present on vacation and follow the market as I can and I am down to day 43,000.00 The same thing turns around and I am up 36 or 45k Phil knows very well my HOV and C and BAC trades they stink but one has to hold on to them and hope they come out of the woods. Besides futures where I up to now never landed up with a hundred barrlles of oil in front of my door one has to grind through. Yes we are in a down market and many sellers are running to the exit. But with 50k you really need to sit back and do not play 10 and 20 options at the time. Many guys here gave some good advice. Follow it.

  192. Amatta

    Phil is right, if you must trade, take a small percentage to of your funds to play/gamble with and let a professional manage the rest.

    It’s not worth messing up your health and family over.

    Good luck

  193. exec/regarding your answer to amatta – there is no professional out there who does what Phil teaches us. So, in this regard I would suggest to amatta to pay attention to what Phil is teaching.

  194. amatta/not getting filled at Phil’s prices – some of the time when Phil recommends selling a put or call for a certain amount, it is not possible to do so because either people have piled on to the trade and it has gotten away or when I see the post it might be too late. If I still want to follow it, I usually lower my price by a few cents. I feel it is better to be in the trade than not especially when you are quite sure the put may expire worthless.

  195. Nicha,
    I agree however, trading is not an exact science and from what I have read, Amatta is playing with leveraged ETF’s which are highly volatile and can inflict a lot of pain in a very short time.  It sounds like he wants to transition into an income portfolio but like many is drawn in by the intoxicating lure of the triples.
    If he can’t break that habit then he would be better off having a professional manage the portion of his portfolio that he can’t afford to lose and play with the remaining money.

  196. Phil/Evidence
    Being the cynical type, I can’t help but think that part of this pullback is orchestrated by "them" so that they can set the stage for another round of QE or whatever they decide to call it this time around.
    On the other hand…..the overwhelming flow of negative news is daunting and there’s a side of me that believes the dooms day advocates who predict the S&P will find 400.  In fact, someone was lecturing me today about how during the great depression, it was the second round of the crash that really wiped out a lot of people.
    What is your primary gauge for determining that we are nearing a bottom?  

  197.  Phil: true value
    FWIW for me I get more out of the more leisurely comments AH and weekends from you and others sharing experiences and ideas that are more general than the frenetic back and forth that takes place during trading hours.  I know it all has it’s benefits, just an observation that I have learned something about myself and I think it is cool how you work with all types.  
    My sense is you get as much a psychic benefit from teaching as you do from the more obvious financial aspect of what you do.  Even though I grew up in NJ, living in NC for half my life now the expression here is "somebody done raised you right".

  198.  Amatta:  I understand that most investment professionals, unless you’re in a high-zoot fund, can’t assure you more than 6% and most can’t produce even that sum consistently, taking into account down markets which one clearly must.  The big banks are completely useless, for example.
    But if you work at it, you might find a manager that does consistently better -- Ttere are undoubtedly quite a few that can do 12% per annum, I should think. I use one that does; he has, unfortunately, quite a high minimum investment.  He has averaged over 22% per annum since 1993, calculated right up to the present date -  And it is not a 2%/20% hedge fund with a long lockup, just a very talented investment manager.   Shop around, don’t despair.
    And let’s face it — you wouldn’t try resetting your broken leg, why would you experiment with your net worth playing Joe Trader if you haven’t spent a few thousand hours practicing?  And as for Phil’s counsel that you shouldn’t be doing this at all, he has been doing this long enough to probably have that right.

  199.  This is the link to an interview with the head of Bestinver, it gives a clear idea of what a long-term approach really means to a good investment manager — it’s not just "buy and hold forever", which Buffett seems to preach.

  200. Phil,
    Thanks for the excellent explication and for placing your comments regarding possible lower  levels in context.   Yup, we are an impatient lot – especially for insight and hopefully a measure of investing acumen.

  201. Phil--just read your "where I stand at the moment"—tx so much, really put things in perspective—

  202. Phil/GMCR, Unfortunately I have 8 June $60 calls sold for $5.23, now $16. Would you roll 16 Sept $75 calls for $8?

  203. Savi
    "Where I stand at the moment"—Where might I find this? Thanks.

  204. Phil
    Just read this provided by jakester from above (thank you jakester). Is it possible for the Fed to be wiped out as suggested in this article? Can’t they just print their way out of debt?
    “Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”

  205. Thank you scottmi.

  206. Debt and more debt……
    Interesting and scary charts. Visually we are f’ked!
    So Phil, how long can we extend and pretend before it all collapses and or something else occurs? These stories get repeated over and over, yet, when you listen to our glorious politicians we only hear half the story (either too much spending or not enough taxes). This problem is going to take a concerted effort by all to:  1. Curb spending 2. PAY FOR WHAT WE DID 3. Be responsible citizens.  If not we are doomed.
    Not trying to get you on your soapbox, but I am really concerned about where we are heading.

  207. Amatta – I dont get any pleasure from your failure, I wish you the best and truly hope your portfolio recovers. THat being said, all the members here are being WAY too nice! Picture me as your friend who doesnt sugar coat things who will tell you when you f#ck up…. THIS IS YOUR DAMN FAULT!!!! YOU DONT LISTEN!!!  Much like we could count on goober making obnoxious comments DAILY, we can count on you having a borderline breakdown almost DAILY with some position "Phil recommended". Phil inevitably looks back at his comments and finds that you only did half of his play or waited until your position was down 80% when he had stops set at losing 10-20%. A fool and his money are easily parted (or something like that) and if you continue down this path you will have NO retirement nest egg.
    I dont understand why are you on this site… You pay Phil good $$$ to give you great advice which you never follow and then complain about your monetary losses from not following Phil’s advice….Think about it. We like you (unlike goober lol) and want you to stay… However,  if youre not following the advice, or dont understand the advice given well enough to follow it in its entirety then what’s the friggin point!? Do yourself a favor and stop doing BOTH DAY AND SWING TRADES. Maybe put 50% of your $ into WMT, KO, AGNC, GLW, CSCO, XOM, etc and write covered calls against your shares. Collect the dividedends as well as making money off the calls. About 1-2x a year Phil puts out a buy list. Usually solid companies at cheaper prices which also pay good dividends. My advice would be to close out all your trades and wait for that buylist.   Good companies which pay decent dividends &  will still be around if we have another massive crash…. Almost everytime he does these lists 95% of the positions seem to be up 10%+ 1-4months after he posts them.. This letter is probably a waste of time though. If youre paying Phil a decent chunk of change to advise you and not following his advice then what makes me think you’d listen to me!  I must be crazy !!!

  208.  yodi
    sorry, sometimes I’m very busy during trading hrs I don’t have time to read all posts,
    if you have corn position it is time to adjust it from Put side:
    because puts for corn futures have low vol. , distance between shorts and longs is not big, so what should you do:
    move your long puts up with ration 6 / 4 with zero debit (I mean price of 4 higher strike puts should be the same as a price of original 6)
    now you have to move some of your shorts higher (one or two strikes away from your longs) but not 4 shorts yet, try to have total put position zero debit or with some small credit 
    if every thing fine your shorts should loose value faster than longs (making money for you) you will continue roll your shorts higher one by one
    the same you should do with your calls (except moving longs, because vol. for calls originally higher than puts, distance between longs and shorts is much better than for puts)
    so for calls, as soon as you see that value for shorts much less than value of longs you start moving one by one your short calls closer to your longs
    only advice: dont do it very often, market going up and down pretty fast and we still have lots of time till exp. try avaluate your position ones per week or two

  209.  Yodi
    I was down big time with this strategy on oil position after they moved from 114 to 95, but after lots of adjustments and rolls I got almost everything back (lots of stress), at least I lost less than I made for that period from my corn and wheat positions

  210.  Ammata
    send me all your positions (including how much you pay for them and your buying power) and we think together how to get out from this sh*t

  211. Good morning!

    Same routine as the rest of the week.  Dollar knocked down to 74.05 to goose the futures so we’ll see if it finally sticks but I doubt it.  

    Euro $1.462, Pound $1.644 and 80.02 Yen to the Dollar, down from 80.20 at 3am.

    Oil once again coming down from $101.60, now $101.27.  Nat gas still strong at $4.83 but had a wild spike down to $4.50 yesterday so we’ll watch them.  Gasoline at $2.98 again, gold $1,537, silver $36.98 and copper $4.07.

    Hang Seng was down 0.23% but that was due to a 250-point stick into the close.  The Nikkei was flat along with the BSE but the Shanghai fell 1.7% and ended at the low of the day.  

    Europe gapped up at the open but is now down 0.25% and at the lows so far.  I don’t see a particular reason yet although Japan’s GDP sucked.  

     Japan’s latest GDP figures show the economy shrank an annualized real 3.5% in Q1, a smidge better than preliminary estimates of -3.7%. On a quarterly basis, GDP was unrevised at -0.9% as household and business spending remained weak. 

    Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    8:30 Trade Balance
    10:00 Wholesale Trade
    10:30 EIA Natural Gas Inventory
    1:00 PM Results of $13B, 30-Year Note Auction
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

    Something like this may be coming soon to a state near you (or perhaps your own): Gov. Chris Christie strikes a deal with New Jersey’s senate cutting pensions and benefits for state employees. New Jersey’s pension system was $53.9B underfunded as of the latest fiscal year.

    Andrew Ross Sorkin’s defense of Goldman Sachs (GS) and Lloyd Blankfein doesn’t sit too well with Matt Taibbi. "The Sorkin piece reads like it was written by the bank’s marketing department, which may not be an accident," Taibbi writes, mindful that New York Times’ (NYT) Dealbook has sponsorship agreements with several companies, including Goldman.

    Jamie Dimon (JPM) is a hero – "our Pericles" – on Wall Street afterdirectly challenging Bernanke on whether too much bank regulation might be hurting the economy. But Robert Reich reminds Dimon that "a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy."

    From Zach Goldfarb’s profile of Geithner’s sway in the WH: "Stimulus, he told [Christina] Romer, was ‘sugar,’ and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt. Wrong, Romer snapped back. Stimulus is an ‘antibiotic’ for a sick economy… ‘It’s not giving a child a lollipop.’"

    White House advisers are reportedly considering a temporary cutin employer contribution to payroll taxes in order to stimulate hiring. It’s unclear how advanced discussions are, but if the deal goes through, staffing firms like MWWDHXJOBS and others could see a bounce.

    Texas Instruments (TXNblames its weak outlook on one customer – Nokia (NOK). TXN now +0.2% after dropping more than 4%.

    Look for a cabinet reshuffle as Greek PM Papandreou tries to gain momentum for passage of the troika-imposed austerity plan. Among the jobs in jeopardy is that of Finance Minister Papaconstantinou, under increasing attack from all sides, and recently referred to by an MP as "a college boy … who lacks any experience in the market."

    Typically able to put political rivalry aside to focus on money, OPEC’s failure to agree to a production increase suggests that is no longer the case. Always adversarial, Saudi Arabia and Iran’s differences have intensified because of Bahrain. Toss in the fact that no one really knows who’s running the oil show in Iran, and you have the ingredients for today’s surprise

  212. tchayipov
    It is great to see that you are willing to help Ammata. It is a tribute to Phil that so many here are willing to help fellow members regardless of their level of expertise.