Well that didn't take long, did it?
On Tuesday I suggested selling into the day's rally, saying: "so it’s back to cash as we wait for the crash" and it wasn't a very long wait as the Greek euphoria wore off quickly and there was nothing from yesterday's FOMC statement (see Member Chat for details) or Bernanke's press conference that was supportive for the bulls. In fact, I sent out a Member Alert on the Fed statement right at 12:38 warning: "Dollar poking back over 75 but little reaction overall but this is bearish with the Fed recognizing inflation in their changed language (no QE3)." That led us to grab the QQQ weekly $55 puts at 12:39 for just .30 and they finished the day up 55%.
Of course we had to shake off the fake rally first as the markets topped out around 2:20 but, fortunately, we called that right too as I said to Members: "Fake rally – Sure, what do the minutes say that is bullish? The Fed recognized that inflation is taking hold, they do not intend to extend QE2 and they are downgrading their view on the economy. WHERE’S THE BEEF?" In that comment we also hit the SCO July $46/50 bull call spread at $2, selling USO Aug $35 puts for .96 for a net $1.04 entry on the $4 spread. With USO taking a dive today (but just down to $36.50), SCO should be flying well over $50 – see how that works?
Of course our real play of the day was my morning call to short oil again as they tested the $95 line. At 2pm in Member Chat, ahead of The Bernank (and again at 2:31, while he was speaking), I reiterated the Futures Short to Members at the $95.50 line and we got a drop all the way to $94 last night but it didn't stop there and this morning we're down to $92.50.
I don't advocate holding oil Futures overnight so we'll just call that a $1.50 win on 345,000 contracts for $517.5M of potential gains so congrats to those who got their share (at a rate of $1,500 per contract!) as we continue to stick it to the bastards at the NYMEX by calling their bluff when they pretend to want to buy barrels for inflated prices.
We added the SQQQ July $26/29 bull call spread for $1.25 at 3:32 and a bearish spread on CMG but that was all as we were already pretty bearish with the DXD July $17/18 bull call spread at .60 from Tuesday Morning's Alert to Members along with an IWM weekly $80/78 bear call spread at .48, SQQQ July $27 puts sold for .75 to pay for the $29/32 bull call spread at .70, UUP July $21 calls at .43 (a bearish bet on the market). The only long play we took on Tuesday was the RIMM weekly $25 calls at $1.90 which, of course, we took off the table – getting back to cash on the bull side by the day's end, as planned.
On Monday, we had gone with the TZA Jan $40/50 bull call spread at $2.25, offset with the BA Jan $60 puts at $2.15 as well as DIA June 30th $119.75 puts at $1.18 but we did take long plays on ADBE and VZ as well as our "FAS Money" trade, which should be pretty much on target. So you can see how we "roll with the changes" – on Monday we were willing to play both sides of the aisle but Tuesday morning we saw weakness so we killed the short-term long bets (we're still long-term bullish) and began layering in more and more bearish plays – leaving ourselves (as I said we would be in yesterday's post) THRILLED with this sell-off.
Today we'll see if we can hold 3 of 5 of our -2.5% lines, which, as I said in this morning's Member Alert, would give us a signal to take a few more bullish plays. Almost certainly the Nasdaq, NYSE and Russell will fail at the open but if the Dow and the S&P can hold it together, we may get another little bounce but we're going to be VERY cautious until we see a clearly bullish breakout now but some quick bullish plays if the Dollar is rejected at 76 could be fun this morning. Meanwhile, we're once again in what I call a "Bugs Bunny Market", where the retail investor is Elmer Fudd and Bugs Bunny is Lloyd Blankfein and his Bankster Gang of 12.
Speaking of Banksters, the Conservatives were loving it when Nick Sarkozy won the election in France because he was a "business guy" but he's still a French business guy, which means, unlike most American Capitalists, he might actually care about people. Sarkozy is a smart enough businessman to know where to point the finger and he told the G20 Ministers yesterday that the food price surge is a plague that needs their IMMEDIATE action to reign in speculators.
“Volatility is a plague on farmers and consumers,” Sarkozy said in a speech to the ministers yesterday. “It can plunge entire populations into famine and poverty.” A lack of transparency in agricultural markets is exacerbating price swings, threatening economic recovery and food production, Sarkozy said. “We have to act, and act together,” the president said. “The world is watching you. “A market that is not regulated is not a market, it’s a lottery in which fortune smiles on the most cynical, instead of rewarding hard work, investment and the creation of value,” Sarkozy said.
Wow, can we elect him President over here? Why doesn't our President have the balls to stand up to the Financial monsters that have hijacked our economy? Why do none of our elected officials have spines? Do you know who has balls of steel? JP Morgan – who used Sarkozy's speech as an excuse to team up with the World Bank(sters) to "offer" emerging markets $4Bn worth of hedges on agricultural supplies. While this sounds "nice", what they are really doing is trying to trick 3rd World countries into locking in record HIGH prices for food at the top of a rally, just when Sarkozy is rallying Global leaders to take a stand against exactly the kind of speculation JPM and the World Banksters are encouraging! Isn't that amazing?
If you want to make food cheap you can A) Stop paying US farmers not to grow it. B) Stop turning 3 acres of corn into one tank of gasoline C) Shut down commodity hedging by non-consumers (speculators). The argument that speculation provides liquidity is total nonsense – they trade 6 BILLION barrels of oil per month at the NYMEX and end up delivering 30M barrels to Cushing, OK – that's a 200 to 1 speculator to consumer ratio! If each churn of a $95 barrel of oil ONLY cost 10 cents – that would still ad $20 PER BARREL to the final price of oil – SPECULATORS MUST BE STOPPED – THEY ARE DESTROYING THE GLOBAL ECONOMY!
Sure we make plenty of money speculating ourselves but, as I outlined at the beginning of the month when I said "Let's Break the $peculator$" and made a public call for calling their bluff by offering to sell them oil at $103 per barrel – I prefer to play Robin Hood whenever possible and put the screws to the market manipulators by forcing them to put up or shut up when they run oil over our sell lines. I am extremely proud of whatever small role we may have played in contributing to the 10% decline in oil this month and I congratulate all our Members and other readers who took action by playing along.
Jean-Claude Trichet says: "Risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks. “On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks.
Meanwhile, Germany's Weder di Mauro, a member of the German government’s council of economic advisers, called a “tough” cut of Greek debt unavoidable in the long run, Reuters reported, citing a speech by the economics professor in Brussels. Because European banks couldn’t bear it, such a step isn’t feasible for now, and the current debt restructuring plans will help only to win time, the newswire cited her as saying. Di Mauro also criticized the fact that European banking regulators don’t include a Greek default scenario in their bank stress tests, Reuters said.
Update: Finally Obama shows some backbone and pulls the trigger – releasing oil from the Strategic Petroleum Reserve. In conjunction with the International Energy Agency in Paris, we will EACH be releasing 30Mb of crude – slamming the speculators dreams of a July 4th pump job as that should boost crude inventories, which are already kissing record highs! That sent oil down to the morning low of $90.32 so THANK YOU MISTER PRESIDENT! I think we're done here until oil fails to hold the $90 line – as I said, you can play oil up but we prefer to wait and see if we can get another opportunity to go short.
And did I mention – Wheeeeeeeeeeeeeeeee!
Lincoln, it’s the chicken, the egg, the salad bar, and the kitchen sink. It’s not like these douche bags just buy one instrument so the market can move the other one. they do it all in tandem, what you saw was a small lag. They are desperately trying to get the last bagholders in before it all comes down in July. So sad circus continues until these pricks decide it’s time to move. totally agree with Phil, money aside, it’s sickening to be a part of this sham. I am like a smart drug dealer now. A few $$$$ more and I am out routine. After that it’s income trader’s method on 1/4 and 3/4 in physical PM’s. But that is still far away.
I have this weird feeling I’ll be shorting oil at 92.5 again.
worst part is not that the shorts that should have paid more did not realize their potential. After a sell off like that usually there is an unbelievably profitable night in fx, upwards to 300 pips of great technically driven volatility. Now it’s just jammed and I suspect I will do no trades as it would be just a dumb chop possibly upwards as the jam continues. Maybe I should just drink a bottle of wine or two and go to sleep…
I am peace loving compassionate person, but I will celebrate when somebody somewhere put an axe in the back of one these motherless CUN…….
Did StJean earn a colored box!
robert/3:01 post,
Phil answered this already. I just want to add that when to make adjustment does matter a lot if you want to flip from short puts to short calls (or vice versa). Note that the call value decreases faster (steeper curve) than the put value when it’s OTM. So waiting until the putters gets into the money is too late to flip to a short call, especially when we want to flip to OTM callers to avoid being whipsawed, i.e. 1 putters may need to go to 3-5 callers, increasing the margin.
Rolling putters down 2X tactic has more tolerance. The shorter to expiration the less you can move the strikes. The more volatility the more you can move the strikes. For instance, we can roll SPX Aug 1280 putters to 2X Aug 1220 for even (60 points with VIX at 19), whereas the July 2X roll would only get us 40 points (from Jul 1280 to 1240 putters). For the 2X roll, it doesn’t matter much whether it’s ATM or OTM, unless it’s close to expiration. Another example: We can roll SPX Aug 1200 putters to 2X 1140 putters for even, also gaining 60 points cushion. Having margin to roll 2X and another 2-4X (totaling 4X to 8X) is the key, allowing you to roll 2X-8X without the need for good market timing. Flipping from putters to callers does require good market timing skills.
Lastly, after a bunch of rolling and flipping, we may run out of margin on both sides of the fence. In that case, we either a) pray that the market would stand still (and pledge that we will be less greedy and won’t be over-committing the shorts again, and/or will have hedging in place next time), or b) look to close out a portion of the shorts as soon as feasible, or c) looking to roll further away from the money to the longer dated options. Fun stuff!
doro i didnt realize that there was a hierarchy here designated by color coding…now i gotta break the color barrier!
Oh no, say it ain’t so.
Heresy.
http://www.bloomberg.com/news/2011-06-23/former-union-leader-says-obama-ultimately-may-ease-tax-rule.html
As a labor leader, Stern, 60, kept his union’s profile high with attacks on big business, including banks and Wall Street. That’s a technique he now says he could have done differently.
“I was awfully tough on the private equity and the banks,” he said. “Some of it was totally appropriate; others of it was probably a little bit out of hand.”
Unions must become stronger advocates for efficiency in government and public pension plans, Stern said. Also, the must find better ways to “align ourselves with businesses,” he said.
Peter D
Too bad you don’t have time for your own tab. Perhaps Peter’s Strangle World could be a future project?
Vegas
lvmoda–do you think you can look into renting the A/V equipment—minimum 3 computers and something to project on–can we use laptops and project onto a big screen tv ?
everyone coming to Vegas please send me deposit of $500–$1000 per person for food and equipment 🙂 seriously how do I go about getting the deposits and how much—ideas?
Phil–we do not want to take you away from your family for 3 poor souls , hopefully we will have more than 10
Comes down to–I need help to fine tune everything–we seem to be at a impasse
Thanks
The reasoning behind Goldman’s Brent prices revision:
http://ftalphaville.ft.com/blog/2011/06/23/604501/goldmans-history-lesson-on-oil-releases/
That strategic reserve release is really having an effect on Brent prices!
On Vegas, what I have at Cafe Moda is a very casual restaurant/bar where we can set the tables up conference style. I have broadband (cable) internet and wireless router (with options for hardwired computers). Don’t know what the response time will be to have ten or more computers on that network. I have a big-screen tv in the center where a computer can display. A projector and screen might be better since it would scale larger. I can do food and drink for the meeting, a basic buffet style with something like chicken teriyaki, mongolian beef, spring rolls, noodles and rice, etc. We’ve done conferences and presentations many times before so I don’t think there will be any problem. Probably around $30 will cover food, soft drinks and gratuities…alcohol extra.
So deciding on the big screen tv vs the projector and screen, and making sure the bandwidth is sufficient are the two things that need to be confirmed. I’m going to look into increasing my bandwidth from Cox and what limitations my router may have. If people want to make donations toward a portable projector, I may get one just to have for future events…another $20, maybe…just a thought…only four hands at the blackjack table..lol!
Finally, Savi, can we have two lists: one for definite confirmed, and a second for maybe and probable attendees? Just to keep track if we’re heading to 25 or to 3 when the time comes. Last time for some reason the number of attendees melted away at the last minute. This time, probably having deposits is a good idea to make confirmations stick. Probably using Paypal for the food/bev deposits would make sense.
Funny, Savi, I didn’t see your post – we’re working on the same wavelength! Let me know if you have other questions…
lvmoda–that is funny we were both writing at the same time—thanks for your help—yes, I will go thru and list the definites and probables
also how do you work the deposit thing—could you set it up–I am sure we will all chip in for the equipment needed and of course the food
Phil–would lvmoda’s set up work for you
Good morning!
Speaking of futures: We have the Dollar back at 75.93 and that’s hitting our futures at the moment. We were up about half a point but the EU opened at 3 and the Dollar has been shooting up ever since with the Euro ($1.4202) and the Pound ($1.5961) both selling off sharply – a continuation of yesterday’s action that took them down to $1.4124 and $1.5937.
Oil is off it’s not very impressive highs of $92.40, back to $91.19 already so we can conclude oil is extremely weak. Gasoline fell from $2.880 to $2.8375 and nat gas is $4.19, down from $4.24. Gold is back to $1,517 from $1,527 so also weak and getting weaker, silver sad at $34.79 and copper hit $4.109 but now back to $4.078.
Our futures are still up about a quarter point. Our late rally yesterday seems to have done it’s job as both Chinese markets were up about 2% and the Nikkei, as I mentioned, was up 0.85% and India was up 1.74% – finishing back above their key 18,000 line. Why is everyone so happy? Because the WSJ and many other Murdoch rags ran headlines like this one:
Now, there’s nothing WRONG with the headlines except it’s not really news is it? It gives the impression something new is going on, but it’s not. They still have to vote in Greece, they haven’t agreed on terms and the EU needs to ratify whatever they all come up with so THREE (3) major hurdles to get over and, so far, everything they have tried has completely and utterly failed.
What we do have, is an agreement with the Greek PM that still has to get through their Parliament – this is like Obama saying – "We’ve agreed to raise taxes as soon as Congress approves it!"
Oh yeah, the whole thing is also contingent upon the private creditors all agreeing to VOLUNTARILY not getting paid while pretending it’s not a default.
So you can see why Asia may have gotten all excited but the Europeans were a bit more skeptical at the open. Still, the EU markets gapped open up over 1% and are selling off at the moment but still over 1%. If the 3am trade is on the money, the Dollar should be at the morning high (76) and will come down from here which makes the Dow futures (/YM) a good trade off the 12,000 line (right now) and the RUT (/TF) a good play above it and an easy sign to get out if the Dollar goes over or either of the other two fail their levels.
See – it’s not hard to play the futures – these support level moments happen all the time.
More later, of course!
and 4 am on the dot dollar gets jammed. 03:36 touch of 4197 support level, 24 minutes to get the positions, then push the go. I guess 4300 by the opening? But looking kind of weakish now, another 40pip candle should be imminent.
Oil going down ($90.83) while the markets are going up – that’s a GOOD thing!
Still, oil is a good long over the $91 line.
what’s interesting is that commods are not participating much in this jam. ES spread to risk basket must be close to 20 points by now. I am sure Mr.Durden will comment on that in the am.
What’s 4197?
Commodities are under attack by pretty much all the Central Banks now – not a smart trade to be on the other side of except for briefly like this quickie trade on oil.
$91.48 now for a nice, non-greedy exit and then back in over $91.50 if they make it.
.764 fib on eur/usd. by some reason they LOVE .236 extension in that pair.
think they can have weak$, strong ES and cheap commods? well maybe for a day or two. then it will snap back.
well 5 more days of pomo + Q end. then what? we shall see…. can’t stay away from bearish bets at that point
looks like 75.5 on /dx and then 75.4-6 chop for the rest of the day. sheep buying – ‘them’ distributing. can almost put the offers and go to bed. Nah… One time many moons ago I went to the bathroom for number 2, cost me 12k, sleep later.
Bearish still seems to be the path of least resistance but hopefully we get a pop into EOQ to short into.
75.69 – Looking good on the bull bets. Oil popped $91.50 so game on again.
Geithner: Taxes on ‘Small Business’ Must Rise So Government Doesn’t ‘Shrink’
http://www.cnsnews.com/news/article/geithner-taxes-small-business-must-rise
75.50 is another sign to take the oil off the table at $91.85 and now wait for a $92 cross (or 75 failure) to get back in.
Phil, since you are up, here is a tail from the past. In the beginning of the century I was working for a small prop trading firm in Toronto. We started dealing with Knight securities that was aggressively growing and wanted huge volume. I traded CSCO, if that could be called trading. Back then it was the glorious time of trading in teenies. so I would go on bid/ask for 5000 shares. As their specialist had to fill customers before himself, I would just eat his lunch all day long. Best part was the commission schedule. After 30mm shares per month we were commission free. I would offset 5-10% of flow through ARCA, just so I did not buy 265,000 shares and sell 265,000 shares through him. I averaged 1.5% of all CSCO shares traded. My brother traded MSFT. There were others too. Knight specialists complained, regional rep in charge of volume flew in. Asked us who is doing all the trading. We told him we have institutional flow, retail flow, and a little prop trading. Since we were shooting close to 50 mln shares per month, Knight management told specialists not to revolt. Lasted 1.5 years until they went to pennies. It was like a death in the family…. Worst part is 40% pay minus 1/2 in tax. Having that in offshore fund would not have had to work ever again.
oops 75.5 almost. thanks for 90 pips you manipulating k-suckers.
well i am 75.25-75, might nibble 35-65, but I think we just flatline here
LOL Lapper – good story! Most people just have no idea what kind of games go on in these markets. It’s all about just finding and exploiting a hole for the big boys while for us, it’s all about finding a big boy to play with.
12,050 on the Dow is good enough I think for the moment. 805 on the RUT – that’s a good morning.
Done with long oil as 75 should hold on the Dollar but it’s too scary to short so good time for me to get to work and do some reading instead of staring at these silly charts….
Still can’t believe the flagrant manipulation of our markets by the Feds. I don’t know why it bothers me so much to be lied to- Need to get over it. I know. But it is really symptomatic of our country’s predicament. It’s ok for Congress to inside trade. With the SEC coming right out and saying it, how much money do you think was made by folks in our government doing the right thing by shorting oil before the announcement? They probably told themselves it’s ok because it’s for the good of the country. F-ing self righteous elitists.
I don’t trade oil and didn’t lose any money on the announcement. My problem is the manipulation. If they want to keep prices down ban trading it by speculators. But no- That would cut off a great way to make money for those on the inside of the trade. The hypocracy sickens me to the core.
It’s not just the manipulation Matt, it’s manipulation done in a way to make sure that other market participants lose in the process. It almost takes sixth sense to predict it. But it certainly leaves a technical trail when it happens, so either recognize it and trade it or piss against it and get in line in soup kitchen. I still have the moral problems with it too, but wtf, have family to feed.
lol, now it’s Italy? That didnt take long…. At this rate our time will come in a week or two! .
HOV shows only $0.68 in TOS
is it real?????????
jr / time — yup, espeically if we keep playing chicken with the debt ceiling.
matt / flagrant — the idea is to hurt the guys that don’t have the money to lose or the money to contribute to the campaign thereby knocking them out of the game. Easiest way to reign in speculation with the least amount of pushback.
China to bail out the Euro? Interesting – the interests align:
http://humblestudentofthemarkets.blogspot.com/
Sorry, the link on china should have been this:
http://humblestudentofthemarkets.blogspot.com/2011/06/china-to-rescue.html
Greece has just announced (via Bloomberg) the official schedule of the austerity debate.
It will start on June 27 at 6:00 PM (11:00 AM ET). The final debate will start at 10:00 AM (3:00 AM ET) on the 29th).
Read more: http://www.businessinsider.com/greek-austerity-schedule-2011-6#ixzz1QBwhUBcl