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Thursday Thump – The Bernanke Bottom

dead_bullWell 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!  


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  1.  Oil Lines:
    R3 – 97.93
    R2 – 96.81
    R1 – 95.47
    PP – 94.35
    S1 – 93
    S2 – 91.89 (we are here now)
    S3 – 90.55 
    S2 is holding now and there is a resistance line for the dollar around 76 so that might help with support. 

  2. Phil,
    Very good instincts on watching the levels yesterday and not getting tricked into Tuesday’s impressive rise……and it paid off well for all of us.

  3. Wheeeeeeee!  Thank you Phil! 

  4. That cartoon is very funny.  

  5. It is now panic at the Nymex… S2 held just about 15 minutes!  

  6. I think today is the day JRW was referring to when he suggested if we gap down at open it won’t be filled.  He was only off by a day.  It’s very easy to underestimate the tactics they’ll employ to rope in more bagholders.  The Greek vote and Bernanke’s press conference were just the tickets to do that.

  7. iea press conference at 9

  8. And for those keeping track of gold, we just bounced off S3 at 1522. Apparently it’s panic at the COMEX as well! They probably use the same bots for both!
    Silver is off S2 which is at 35.41, copper at S1 which is 4.02. 

  9. a little bloodbath in commods, let’s see if the selling intensifies in equities.

  10. This is already a  day when all pessimists can rejoice.
    Everything I am short is finally coming into bloom and break even.
    Thank you Felipe for the short oil trades, though I did, in violation of your and JRW’s caveat, keep them overnight. It will make this and next week in San Diego that much more fruitful.
    If anyone out there wants to see the Flipster and give him a good haranguing for arguing with The Felipe, and otherwise being recalcitant and well, flippant, I’d be happy to oblige.  On me.
    Cash is good.

  11. These guys are just unreal:
    Soybeans as loan collaterals, really! I was joking a couple of weeks ago about Bazooka bubblegum, but we are not far now! 

  12. Hi Matt,
    Where have you been hiding?  I was worried that you capitulated.
    So you think we may see a panic sell off to mark a temporary bottom or buy into this mornings frenzy?

  13. LOL!  The DOE says it will release 30M barrels of oil as part of IEA’s plan to oil stocks!  This is our government in full manipulation mode.  It’s an absolutely ridiculous gesture.  To think oil’s price is ANYWAY related to supply issues is imbecile.  They are just scaring off the retail speculators who have, through no fault of their own, tried to save some of the value from their once powerful dollars.  First the Fed makes savings accounts worthless, now they are shooing people out of oil.  Perhaps they should just come out and tell us what they want us to buy-  bet it’s not gold!

  14. Chaps, are you around today?  I have a question for from our dialogue a few days ago on SPX hedges.

  15. this little ploy to release 60 million barrels over thirty days is nothing but a pump job i think at 107 it might have had more impact..i am still on an intermediate sell in th emarket but i am tempted to play for a bounce i do beleive we are going to sell down 10% from these levels before we are finished..thats my take

  16. nicha / IV — I was looking at it to get a historical perspective on how expensive options on particular issues are. Just antoher datapoint to help choose between issues.
    Vegas — I’ll probably be there.

  17. hi exec, it’s very dangerous to me and others when I surmise the market’s direction.  Haven’t you learned yet?!  But it’s very safe to say that it would be crazy to buy this am.  As to your former suggestion.. I’ll leave that up to you.  Personally, I think we could see a huge down day and an eventual true test of SPX 1250… not the bs 200 dma.

  18. Any idea why XRT is up?

  19. Rainman, how are you looking at IV?  Through TOS?  i haven’t been able to find how to chart IV in TOS…

  20. matt, if 1250 is after lunch, that would put dow down 300+.  After that it’s a stone throw away to down 500, once there who is to say no flash crash.  Once that is happening, why not the bigger one then last time.  So basically down 1500 is the target.  We cover shorts there.  Once covered and full of cash might nibble a bit on the long side at say -1800, and what the heck, we will go half long at 2100 or so.  at dow 9000 might go full long…..  as long as friday we don’t wake up to dow 6000 and bankrupt sounds like a fine dream :)

  21. FAS Income / Phil – I told you it was a little bit too bullish….  :-) 

  22. stjean, sweating one side, 24hrs later sweating the other lol

  23. Phil--do you think it is time to short CMG yet?

  24. jabobeast/CMG, yesterday, 3:45PM by Phil as following..
    "CMG July $300/280 bear put spread at $11, selling Aug $300s for $10 is net $1 on the $15 spread.  Risky of course but good if you have the margin for it. "

  25. thanks bob—i forgot!

  26. Lapper – Indeed. I was wondering if it would make sense to play only one direction, for example, buy the long dated put as Phil suggested (Jan 18.33 or other) and just sell puts against that position. It less neutral, but looks to me like a more manageable trade. For example, we could have collected $500 from the short put yesterday sold another one this week. But this is a good exercise!

  27. will be testing the 11895 line in a sec

  28. xrt might be up due to great results from bbby and upped forecast from up 10-15% to 15-20% for the year

  29. RIMM is actually UP today.  I feel pretty good about a bottom there at least for a rebound to $34.

  30. lapper… lapper…. wake up lapper.
    This is one of those days where it’s probably best to just sell and walk away.  So forgive me while I talk out loud:  if I get itchy fingers I might try and cover occasionally with the hope of maximizing gains but I most certainly WILL NOT take a net long position today!

  31. Phil / Oil     Govts seem determined to help the economy with $70/80 oil.  Still time to short more oil today?

  32. bounced right up on first try

  33. Good golly what a mess!  

    We’ll see if those -5% lines hold up – I think they should and keep in mind this is a commodity sell-off and we LOVE those.  It’s too early to go bottom fishing but the volume on the Dow is very unimpressive in the opening minutes, just like it was unimpressive all day yesterday.   We still need a blow-off volume bottom and, until we get that, we can’t get REALLY comfortable getting back in and buying.  

    If you have hedges that are well in the money – the trick is to take another hedge that is just out of the money and put a tight stop on the one you have so you can take money off the table on the turn without missing possible additional downside from a false bounce.  This is, however, a very scary drop as the Dollar is only at 76.07 and LOOK AT THE CARNAGE!  

    When in doubt, get back to cash!  Cash is nice!!!  

    The low volume says to me that this could still reverse very easily so please take those lines very seriously and if the Dow can hold onto 11,900 and the S&P can hold 1,270 – we need to look UP, not down for our next set of trades.  

    QLD is an ultra-long on the Nasdaq and I like the July $77/81 bull call spread for $2.40 on the $4 spread, you can stop out at $2 so risking .40 to make $2.60 is a nice way to go.  Let’s do 10 of those in the $25KP but if the Nas fails to hold 2,625, keep your finger on that sell trigger!

    Gasoline futures (/RB) are $2.815 and they are VERY expensive but we can play them OVER the 2.825 line with very tight stops on the assumption that there will be some sort of pump into the weekend – this has been a huge drop in gasoline from $2.98 yesterday.  

    TNA July $65/72 bull call spread is $3.80 and you can offset those with a TZA Next week $41/43 bull call spread at .71, which can stop out at .50 or less to make $4 on the $7 spread that’s $5 in the money.  

    Keep in mind these are upside COVERS against the bearish positions we already have so we don’t get burned on a turn.  Obviously set 20% of the profit trailing stops on our bearish bets – just getting to cash ahead of the weekend probably wouldn’t be a bad thing.   OVER 76 ON THE DOLLAR IS NO REASON TO MAKE ANY BULLISH BETS!  

    Keep in mind our levels are trampolines, not walls – they don’t count as broken just because they bend a bit!  

    Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    8:30 Chicago Fed National Activity Index
    10:00 New Home Sales
    10:30 EIA Natural Gas Inventory
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet
    7:00 PM Conference: State Budgets Under Stress

    At the open: Dow -0.85% to 12007. S&P -0.71% to 1278. Nasdaq -1.18% to 2638.
    Treasurys: 30-year +0.67%. 10-yr +0.45%. 5-yr +0.27%.
    Commodities: Crude -4.46% to $91.15. Gold -1.8% to $1525.40.
    Currencies: Euro -1.24% vs. dollar. Yen -0.45%. Pound -0.55%.

    Market Preview: Stocks futures tumble on depressing weekly jobless claims amid already gloomy sentiment from the Fed’s worseningeconomic expectations. S&P benchmark -1.2%Crude slumps 4% on word the IEA will release supply to push down prices. More happily, Bristol Myers +6.3% and Pfizer +2.6 after a successful Phase III trial of their blood thinner. Later: new home sales.

    Notable earnings after Thursday’s close: ACNHRBMUORCL,TIBX 

    May Chicago Fed National Activity Index: -0.37 vs. -0.56 prior. Three-month moving avg. -0.19 vs. -0.15 prior. The index suggests economic growth is below its historical trend, and points to subdued inflationary pressure from economic activity over the coming year.

    Initial Jobless Claims: +9K to 429K vs. 413K consensus. Continuing claims -1K to 3,697,000

    Classic buy the rumor, sell the news action in the euro over the past week: the currency peaking right at the moment the Greek PM survived his confidence vote (and apparently assuring the status quo), only to move in a straight line down ever since. 

    The Flash Eurozone PMI for June falls to a near two year low of 53.6 from May’s 55.8. "The euro area’s economic growth has lost momentum at a worrying rate … even German manufacturing," says Markit’s Chris Williamson. The euro continues to move lower, -0.8% at $1.4221. 

    Bank lending to businesses in the U.K. speeds its fall in May, confounding Project Merlin – an agreement lenders have made to boost credit. The banks contend their doors are open, but demand from borrowers just isn’t there.

    The CBI U.K. retail sales index for June falls to its lowest level in a year, the gauge at -2 vs. +18 in May. "Consumers are really feeling the pinch," from stagflationary conditions says CBI. Sterling falls below $1.60 for the 1st time since March and thoughts of a rate hike in 2011 are just a faint memory.

    Ireland’s economy grows at the fastest rate in 3 years in Q1, expanding 1.3%. Taking out a surge in exports, GNP continues to sink, down 4.3%. An economist cautions against reading too much into the volatile, oft-revised numbers. The Irish bond yield premium to Germany continues to march higher.

    Trying to knock down the Dollar: PBOC adviser Xia Bin adds his name to the list urging China to diversify its fx holdings. After putting aside a sufficient amount to stabilize the exchange rate, China should invest in areas of strategic importance – high tech, green technologies, gold – and higher yield.

    Deficit reduction talks led by Biden appear to grow more contentious as Democrats and Republicans become increasingly entrenched on key issues. Aside from expected ideological disputes – no new taxes vs. no changes to entitlements – negotiators argue over how quickly to implement whatever spending cuts or tax increases that might be part of a plan.

    ConAgra Foods (CAG): FQ4 EPS of $0.62 beats by $0.14. Revenue of $3.21B (+5.3% Y/Y) beats by $0.02B. (PR)

    Discover Financial Services (DFS): FQ2 EPS of $1.09 beats by $0.34. Revenue of $1.74B (+4.6% Y/Y) beats by $0.04B. Shares+1.9% premarket. (PR

    Lennar (LEN): FQ2 EPS of $0.07 beats by $0.02. Revenue of $764.5M (-6.1% Y/Y) beats by $96.9M. (PR)

    Rite Aid (RAD): Q1 EPS of -$0.07 misses by $0.05. Revenue of $6.39B (-0.1% Y/Y) beats by $0.03B. Shares +3.6% premarket. (PR)

    Wow, things are getting ugly while I write this – hopefully we bounce back to a realistic 1.5% loss.  Asia likely to be ugly tomorrow, and Europe down 2% to match us.  Still no volume so I can’t take this very seriously (26M on Dow at 10).  

  34. Matt, I was not being all that sarcastic.  A little early for this kind of moves, thought July is the month, but, hey, I am short and loving it.

  35. Dollar – There is a line at 76.22 or so that has held since April… We’ll see but it’s fast and furious this morning!
    FYI, on RBOB, S3 is at 2.79 which we bounced from earlier and S2 is at 2.83 and is now resistance. 

  36.  Phil
    Hang with the FAS trades until this PM?

  37. Thanks Ocelli, Chaser, Bruce…  I HOPE everyone is enjoying this sell-off.  

    We HAVE to take advantage of this to buy back FAS weekly calls.  In the FAS Money trade, we sold the $23 calls, now .35, in the $25KP, we sold the $23 and $24 calls but we can leave the $24 calls (now .09) and just take out the 20 $23 calls.  Also in the $25KP – I know you guys hate this but now is the time to spend $1.25 and roll to the Aug $23s.  

    Here’s a trick on that, you can buy the Aug $23s (if you have the cash) for $2.15 and set a stop on the July $24s (now .92) if XLF fails to hold $14.75 (probably .89) – hopefully we can sell them for more than $1, remind me to watch it later.   

  38.  O saw those bloomy poll numbers yesterday and said screw al gore…dump that oil!  euro cds up big again….2-yr swap spread 28 bps, 3m t-bill .00..3m shibor 6.38%…aapl trading well..india and shanghia finally

  39. russia, france, spain, italy getting crushed today…down about -2.75%

  40. Deano – I think it would be like trying to catch falling knives right now. There is no volume on the new weeklies and the bid/ask spread are huge! But I’ll defer to Phil on that! 

  41. russia, france, spain, italy getting crushed today…down about -2.75%… aaii bulls 37.46, bears 35.74…huge jump in bullishness..

  42.   technical breakout in italy sov cds +8% to 197 bps

  43.   oil was right at 200-day with a huge decline in net longs over last few weeks…i suspect last few days a bunch of hedgies got long.

  44. Woo hoo….vacation is a good thing on a down day.  Out of all my shorts for a nice gain…..have a good one all!

  45. The CMG play can get $0.40 credit now. I only got $.15… :-(
    "CMG July $300/280 bear put spread at $11, selling Aug $300s for $10 is net $1 on the $15 spread.  Risky of course but good if you have the margin for it. "

  46. Phil
    As in Sqqq (@28.92 now) 29/32 bcs? -  per your guidance below.
    "the trick is to take another hedge that is just out of the money and put a tight stop on the one you have so you can take money off the table on the turn without missing possible additional downside from a false bounce."

  47. Transports cheering up (good sign). 

    AAPL positive! 

    Beans/StJ – Don’t those spoil?  

    Oil/Matt – Releasing the SPR sends a message to speculators – there will be huge builds in oil stockpiles next week, 30M is way too many barrels for them to hide.  We’re down 15% on oil since June 1st – don’t you think that’s going to make speculators think twice.  Now that more outside people are shorting futures contracts, the NYMEX traders are actually getting stuck with the things as oil drops and that’s a nightmare for them.  

    XLF pushing down already but that’s to be expected as they try to shake out new buyers – usually I want to see 2 consecutive 10-minute candles form below a stop ($14.75 in this case) to see if it’s real but we’ll keep an eye on the $14.70 line.  Keep in mind that we’re talking about adding .15 more to the cost of the roll if we stop out but we bought a month of sales AND $1 in position for $1.25 so a good trade-off.  

  48. Oil – That $25 move from $115 to $90 saves us $225 million a day in import! Or $6.75 billion a month! That’s got to help! 

  49. Bob--I can’t understand how CMG could be at an almost all-time high. That Phil play looks great but it is kind of reminds me of GMCR. sickening to be short and getting hit on a day like today ;-(

  50. Phil, I don’t have the FAS Money trade (not to be confused with FAST Money) …. if you were starting a new FAS money trade today which strikes would you sell?

  51. Good morning,

    IWM 77.90, 78.26, 78.84, 79.19, 79.60, and 80.36

    Also the support trend line of the lows on 6/13 and today !!

    Thanks Kustomz for prompting me to buy some puts in AH !!


    Don’t know why this didn’t post the first time, sorry  8-)

  52. LOL – Listen to the emergency oil pumpers rushing in on CNBC.  This Jerrry Castellini guy is stuttering he’s in so much trouble!  

    $25KP – holding the July calls, buying 100 FAZ tomorrow $50/51 bull call spreads at .55, stop at .40 (risk $1,500) that are in the money with FAZ at $51 now

  53. WTF—how are the MoMOs basically all green with the freakin market down 200!!!?????

  54. let’s see if they are all green in 9 weeks

  55. FAS new weeklies suck!  especially 23 calls

  56. JR,
    How are you positioned?

  57. roberth/vol charts  If you call the TOS help desk they will help you set it up on your platform in about 2 minutes. You can set it up with just IV, just HV or you can superimpose them. They are usually in a lower chart pane.

  58. roberthjrfl / IV — Kustomz posted a link to CBOE yesterday that has nice historic charts.

  59. Phil / Perspective    Most smart people have figured that we risk a Ddip with no meaningful construction for years ahead and a consumer wacked by declining housing prices, high gas prices and no jobs.  The GOP have no interest in helping the economy with fiscal initiatives as they are obsessed with making sure Obama doesn’t get re-elected – and to hell with American workers.  Although it’s pathetic that Obama doesn’t announce the programs and let the GOP take the rap for being ‘anti-job creation’.
    So, yesterday we heard that ZIRP is likely infinate – which I guess is a positive.  QE 3 likely waiting in the wings for a Ddip – although questionable value.
    Great that Obama is attacking the oil speculators and probably amounts to an effective $200B US stimulus to the consumer before this decline is over ($70).  Also very positive for Europe,China and India, as this commodity attack will also crush ag commods.  I’m playing the China auto stocks on this news.  I like SORL and CAAS.
    But, the US and Europe need much more than a $200B stimulus to avoid a Ddip and create meaningful new employment.  Hard to see how we avoid entering a sustained bear market as consumers stutter while the GOP is led by idealogues who actually think austerity and tax cuts will create jobs!

  60.  Prediction – we make a small candle that closes green, and another big red one tomorrow. Looking at the 3 min candles on IWM, I’m thinking this will be a mostly non-trending day that will annoy traders. JR, thoughts? 

  61.  I’m short, btw, hoping we see 78.52 again. 

  62. cnbc saying northern europe fed up with greece…..if that is true buckle u

  63. northern europe yavol!

  64.  I do not own FAS as yet, would today be a good point to buy the Aug $23 call at $2.00?

  65. angelcur, my dog is fed up with Greece, never mind northern Europe.

  66. FAS Money/StJ – It isn’t Friday yet!  

    CMG/Jabob – Oh man, I did that one yesterday for you!  I hate to chase it now.   

    RIMM/Button – There was a guy on Bloomberg very late last night who made a great case for RIMM based on International sales – he said his firm discounted US revenues to zero and still found them to be a buy at this price based on Global growth.  

    Oil/Tusca – Too close to the weekend and too early in the monthly cycle to chase oil down at $90 – tempting though it may be.  Keep in mind this IS oil’s reaction to the news of the SPR release I’ve been calling for for over a month.  We need more fundamental damage (or a stronger Dollar) to take it down to $85.  

    Dow volume 45M at 10:30 – still not a panic.  

    New weeklies/StJ, Deano – Yes, strangely no volume so can’t really play them with crazy spreads anyway.  Just have to wait until tomorrow but I do think we have an overreaction to the downside at the moment.  

    Well played Pharm – Have a good one!  

    CMG/Bob – Wow, you got that for a credit?  Very nice.  I guess the VIX is a big help.  

    SQQQ/8800 – Yes, July $29/32 bull call spread is .75 so you can take those with a stop at .50 and put a trailing stop on the original spread to lock in profits.  

    CNBC saying Greece is "off" again.  Consensus failing and they won’t release more money unless Greece totally capitulates on austerity. 

    XLF $14.69 – Isn’t it nice to have $4,500 coming to you as a consolation if it stays down?  We can use that money to roll if we don’t get a bounce back.  3 weeks is forever in FAS…

    FAS Money/Jvest – Starting from scratch I’d wait until tomorrow – looking grim at the moment. 

    MoMo’s/Jabob – Because they  have nothing to do with reality.  Why can’t you accept that?  They are the tools that are used to manipulate the markets and, right now, they are being used to support the Nas as best they can (and it’s not so good!). 

    BXP finally getting weak, July $100 puts just $1.45 are a nice bearish play with a stop at $1.20 – 10 in the $25KP.

  67.  And out on IWM puts from 79.15 to 78.60. May reload on a bounce. Shadow, you around?

  68. exec, drcraig / Positions

    I sold 100 puts I bought yesterday in the first half hour; when the support line I mentioned held, I bought TNA at 10:00 and sold at 10:15 as the rebound was not strong !!  I am currently in cash looking to go long off the retest of the support line (now at IWM 78.38)!!

  69. phil,
    When you have a moment….  Your feelings on Gartman’s  long gold/sht cpr spread  in terms of both fundies (decr demand for cpr) and psychology/emotions  (gold as a store of value in uncertain times).

  70. Condor / Tcha – Were you able to get the book? I know you play with oil and others, but based on the book recommendations, I would guess you could get some ideas for condors on these commodities. Risky, but possibly profitable. For example, on oil, using the 10 delta and at least 49 days as a guidelines, it is possible to sell a 74.5/75 P and 107.5/108 C August condor. 55 days to expiration, a credit of $1400 on 10 of them against a margin of about $4200. You bet that oil stay between 75 and 107.5 for at least another 4 weeks as I would not hold to expiration. By July 21, half that premium should have been eaten away! Just a thought….

  71. BTW, I don’t expect SPX to go much below 1258 on this leg down, fwiw !!

  72. Phil, nice play on DIA puts yesterday.  Is it time to buy DIA calls?

  73. Obama/Tusca – Actually he’s waiting.  Unfortunately, American voters have very tiny attention spans so there’s no point in pulling out the big guns until we get closer to the election.  Timing is something the Dems have been working hard on for the last two cycles as they realize that’s how they blew it in 2004, when Bush pulled it out with his "October Surprise" – which is a trick the Dems finally got burned with enough times to wise up and start programming against.  It’s disgustingly cynical but that’s politics in America these days…   Oil stimulus is huge and immediate actually.  We were at $4 a gallon, $3 per gallon saves 200M drivers $50 a month ($10Bn) – that’s not chicken feed and, of course, the price of chicken feed drops too so that’s about $20Bn a month saved and that’s monthly disposable income for the average person – not some uneven stimulus that disproportionately goes to the wealthy.  

    FAS/CJi – Now would be a good time if you want to do that trade (straight buy of Aug $23s at $2).  

    Gold/Copper/8800 – I am not a big binary trader.  I may take a short position on gold and a long on copper for different reasons but I think they will generally move in tandem with gold falling to $1,250-1,100 range and copper also dropping 20% to about $3.50.  There’s no good reason for them to decouple.  

    Speaking of commodities – Gasoline testing $2.85 so good place to get 1/2 out and set a stop at $2.835 on the rest of that trade!  

  74. Here’s a good chart from uempel:


  75. If you want to have a nice, bullish play on oil, XOM Aug $75 puts can be sold for $2!  

    DIA calls/Lolo – We may be just resting for the next leg down.  I’d go for the 3 plays from the Morning Alert above (better prices now) as speculative longs over the DIA calls.  

  76. And here is what that Butterfly Pharm and I were talking about the other day looks like now (text book) !!

  77.  anyone – what’s the etf on european banks?

  78. Which way at 78.83 should show a short term direction.

  79. Like JRW cash looking at long.

  80. QLD July $77/81 bull call spread is still $2.50 (up .10) so still good. 

    TNA July $65/72 bull call spread is $4.10 (up .30) and the TZA next week $41/43 bull call is still .58 so not too bad as a new entry (net $4.68 vs $4.51 this morning).  

    The Dow was our outperformer in yesterday’s multi-chart so they probably have the most to fall so let’s say if the Dow fails 11,850, we want to slap on DIA July $116 puts, now $1.21 and, of course, keep tight stops on the DIA June 30th $119.75 puts, now $1.76, which is down from $1.88 which was up .70 so .14 (20% of profit) trailing stop = $1.70! 

    Dollar 76.20 is still not good for bullish bets but Europe is closing (still down 2%), so hopefully it’s those guys who are panicking (rather than supporting the markets).

    Fiinancial holding the line is encouraging but that may be caused by our bet on FAZ because certainly someone doesn’t want to pay us almost 100% for a one-day hold.  I love finding trades like that!  

  81.  stjeanluc
    I didn’t get a book yet, try to pay with 2 dif. credit cards but it didn’t get through, send them e-mail and waiting for reply
    your idea with oil is fine, I just prefer to play them with ratio back spreads, I think it is better risk/reward

  82. John Boehner jumping in with an emergency attempt to knock the Dollar down for his masters.  

  83. Phil
    Was wondering why the DOW was down more,seemed more than oil. Thanks!

  84. Over night dollar strength usually leads to midday weakness. Usually starts at 11:30.

  85. tchayipov
    I sent you a message the other day re your put play on /CL The puts you propose are not going that low with TOS please confirm your position thanks

  86. Let’s kill the FAZ cover in $25KP – I don’t feel good about it.  Hopefully can get .50 back.  

  87. John Boehner, wonder how many times he’s had to say today …I TOLD YOU.. NEVER TO CALL ME ON THIS LINE!!

  88. Phil: I have the IWM 78/80 weekly put spread that you had recommended 2 days back (the day of greece vote) at 0.36. The spread currently is about 0.95.  Would u recommend getting out or wait for more with only 2 days remaining?

  89. UPDATE 2-Aflac offloads more European debt, books losses

  90. Pharm glad the kahoonas got rewarded before your vacay.  Enjoy!
    Phil / Oil Speculators:  I think you might have missed my point.  I do think releasing the reserves will have an impact on making the retail oil speculators get out and because of their losses stay out of the oil spec biz.  The hedgies will be back.  As will the IBs.  Retail always gets shafted.  My point was the Fed and this administration have increasingly run roughshod over retail investors.  Until speculating in oil is NOT allowed, I don’t fault people for speculating in it.  After all, you do it yourself.  You aren’t always short.  The Fed forces us to protect our money any way we can and oil is a great way to do it up until a point.  That being said, I have long been on record here saying I DO think oil speculation by anyone other then USERS should NOT be allowed.  I feel It is a matter of national security.  But until that time, I don’t blame people for trying to protect their money from our govt and the Fed. 

  91.  yodi
    I replied after your message, it was 86/81 (my mistake)
    buy 6 aug 86s puts and sell 12 aug 81s puts
    it is down today (who expected  so huge drop?) but still OK
    if / when it drop to 82-84 aria will adjust

  92. Oil / Tcha – Thanks for the input! 

  93. Phil -

    What do you think of selling the $48 puts on UNH? Get a pretty solid premium today.

  94. 10:00 AM On the hour: Dow -1.51%. 10-yr +0.52%. Euro -1.42% vs. dollar. Crude -5.28% to $90.37. Gold -1.81% to $1525.30. 

    11:00 AM On the hour: Dow -1.72%. 10-yr +0.53%. Euro -1.41% vs. dollar. Crude -4.21% to $91.39. Gold -2.19% to $1519.40.

    EIA Natural Gas Inventory: +98 bcf vs. consensus of +88 bcf. Futures sink, -3.3% to $4.175.

    May New Home Sales: -2.1% to 319K vs. 310K expected, 326K (revised from 323K) in April. Months’ supply 6.2. Median price $222,600. – WOW that SUCKS!  

    Also sucking:  Commercial real estate prices dropped 3.7% M/M and 13% Y/Y in April, according to a Moody’s index that is now 49% below its Oct. 2007 peak. The strong get stronger and the weak get weaker, as major markets such as NYC and DC have recovered more than half of post-peak losses, while distressed transactions bounce along the bottom.

    2011 is 2008, only with names harder to pronounce, writes Peter Atwater. It’s again becoming evident the issue is solvency, not liquidity, and in the "interplex," everything is tied together. "Lenders want time; bankers want capital; the agencies want calm; and investors just want out."

    The Congressional Budget Office issues a sobering long-term budget outlook: "As the economy continues to recover… budget deficits will probably decline markedly in the next few years. But with the aging of the population and growing health care costs, the budget outlook, for both the coming decade and beyond, is daunting.”

    A "lost decade?" The U.S. has already had that and more, argues Stephen Gordon, who shows real per capita net worth is back to 1999 levels. Housing is even uglier, with per capita equity retreating to 1978′s figure. A Canadian, Gordon compares the data to his country, and happily declares, "Canada is not the U.S."

    The pendulum has swung too far, and there’s now too much pessimism about the economy, according to Société Générale’s economic surprise indicator which indicates that a lot of negative surprises are now discounted. SocGen’s interpretation: Pay no heed to double-dip warnings.

    Bullish because it’s bad for the Dollar:  Deficit reduction talks led by Biden appear to grow more contentious as Democrats and Republicans become increasingly entrenched on key issues. Aside from expected ideological disputes – no new taxes vs. no changes to entitlements – negotiators argue over how quickly to implement whatever spending cuts or tax increases that might be part of a plan.

    House Majority leader Eric Cantor pulls out of budget talks led by VP Biden over a disagreement on taxes that will require the input of President Obama and Speaker Boehner to resolve. "We’ve reached the point where the dynamic needs to change," says Cantor. - Why do Conservatives always pull out early?  Is it something to do with the Rhythm Method?  

    Moody’s warns a temporary fix to the U.S. debt ceiling issue could be a negative in that it means no serious effort will be made to slice into the deficit. Buying time isn’t a solution, says Steven Hess, Moody’s top analyst for the U.S.

    And now they flip to talk the Euro back up – what a SCAM!  Greece’s representative to the IMF expects a deal on an austerity plan to be reached between the Greek government and the EU/IMF today. Wasn’t a deal already reached that is now being debatedin Greek parliament? Meanwhile, CNBC reports Northern EU leaders refusing any more concessions to Greece.

    The spillover from Greece into the other PIGS is getting more concerning, with Irish (2 yrs +46 bps) and Portuguese (+64 bps) yields rising sharply, deep into record territory. Spanish yields are moving up, but unlike GIP, the yield curve retains a sharply positive slope, 2 years yielding 200 basis points less than the 10s. 

    American money market funds are busy cutting exposure to eurozone banks over worries about the debt crisis. JPMorgan estimates the amount on loan dropping to $360B from $490B a year ago. Additionally, the loans are more likely to be overnight or 30 days vs. 90 days. 

    "Bernanke is either not very bright or not very honest. He admits he doesn’t know why we have a weak economy, but he’s the one who weakened it," Washington’s Blog writes. The Fed has treated the crisis as a liquidity problem, when it is really an insolvency problem; "If Bernanke can’t see it – or won’t admit it – he should be fired."

    The U.S. is "still years away" from what is considered full employment, Bernanke says – two years after the purported end of the downturn. Imagine hearing such a comment from someone of such high stature if you are among the long-term unemployedCan the Fed do anything now but watch the economy tack to its anemic course? Should it? 

    The Treasury will sell $99B in securities next week ($35B in two-year notes, $35B in five-years, $29B in seven-years). Meanwhile, on the buy side, the Fed buys $1.21B in Treasurys as planned QE2 purchases drop to a handful; the bonds are still trading higher (the 10-year yield: -0.06 to 2.91%).

    Cash on the balance sheets of S&P 500 firms (ex-financials) is at an all-time high, but Birinyi Associates believes a better way to look at it is as a percentage of market cap. By this measure, cash has been falling and now stands at 7.4% vs. 9.2% in March 2009. So it’s likely that all that sideline cash will stay on the sideline

    Zen tips on oil from the White House: Oil prices "will be what they are," but the move by the U.S. to release 30M barrels from the Strategic Petroleum Reserve not only complements the actions by Saudi Arabia and the rest of the IEA, but addresses seasonal demand. America’s been talking the moves with partner countries for "months" and says it’s ready to do more

    Sources say the FTC is fixing to serve Google (GOOG -1.9%) with subpoenas as it begins a formal antitrust probe into the firm’s dominance over the search business on the Web. 

    The HSBC June Flash China PMI declines to 50.1 from 51.6 in May. It’s the lowest reading in 11 months, "but hard-landing worries are unwarranted," says an HSBC economist. The number is a "flash" estimate, meaning it incorporates most, but not all of the survey responses. Down earlier, Chinese shares rebound to near flat.

    Recent heavy rains will help, but China still faces severe energy shortages this summer. Many reasons will be given, but the key issue is price controls on energy against a rising world cost of coal, meaning Chinese plants lose money for every kwh of juice they produce.

    This is why insurance companies are always tricky investments, you don’t know where they are keeping their money:  Aflac ([[AFL] -1.2%) says it will incur a $610M loss in Q2 from the sale of investments tied to investment in troubled European banks, part of its ongoing effort to unload some of its government and bank debt from financially stressed regions. The insurer also may issue as much as $1.24B in debt. 

    Oracle’s (ORCL -1.6%) FQ4 earnings, due out later, areexpected to grow to $0.71 from $0.60, with sales topping $10B for the first time. A key metric is revenue from new software licenses, but growth may not be as good as it looks: When acquisitions and currency movements are excluded from revenue, new license sales have risen just 2% annually in three years.

    Office furniture makers Steelcase (SCS) and Herman Miller (MLHR) both announced better-than-expected earnings (III) after yesterday’s close, with orders for each firm rising 20%-plus despite high unemployment. "Apparently, employers are increasing their spending more on the furniture than on the people who sit on the furniture." SCS+5.6%, MLHR +7% premarket.

    Phillips-Van Heusen (PVHboosts its Q2 earnings view on strong May sales in its Calvin Klein and Tommy Hilfiger unitsBoth Q2 and FY11 earnings are expected to be at the high end of their already upbeat range. Shares +0.5% premarket.

  95. Lets not forget
    China’s Wen heads to Europe, worried by debt crisis, trade
    im sure they are going to milk this

  96. Dow/Shadow – I put up a chart of that yesterday, it’s why we went with DXD.  What goes up must come down eventually (yesterday’s chart):  

    Well, we finally got rid of those depressing Europeans.  Euro ($1.412) and Pound ($1.593) finished at day’s lows as did the EU indexes with FTSE down 1.7%, DAX down 1.84% and CAC down 2.2%.

    I have to think the EU will try to say something market supportive into the weekend because Monday it may be way too late.  They really have to hit Asia’s open or the momentum could get nasty to the Global downside.  I know someone here likes to play the Nikkei futures – they are interesting at the 9,500 line for a bullish bet (/NKD).  

    IWM/Etrad – Are you kidding me?  Take the money you greedy bastard!  You can only make a nickel and you’re risking a 100% gain plus the original trade – even if it’s a 1/20 chance you get burned – is that worth taking?  It would be one thing if IWM was at $75 but it’s 78.92!  

    Oil/Matt – I have no pity for "retail" investors who speculate in commodities.  It’s a total casino and it doesn’t matter if it’s the SPR or Rent-A-Rebel – SOMEONE is manipulating that market every day.  We’ve had several 5% one-day moves this month – that’s completely ridiculous.   Anyone trading those and claiming to be an "investor" is deluding themselves – it’s gambling.  We do it too but we know it’s gambling – you don’t see me putting up long-term "holdings" on oil, do you?  You can be mad at the Fed for "forcing" you to buy commodities but it’s a timing issue, isn’t it?  Bernanke announced QE2 in Sept of 2010 and oil was $72.   That was the Fed TELLING you to buy commodities.  Bernanke announced the end of QE2 in April of 2011 and that was the Fed TELLING you to sell commodities.  The only problem retail investors have is NOT listening to the Fed.  Pros know that you can’t fight the Fed – I"m sure you’ve heard that one.  

    UNH/David – I like them long-term but they are not cheap now.  They are the kind of stock I would wait for some bad news on or an earnings miss and then jump in.  If you want to establish a long, I’d sell the 2013 $45 puts for $5.60 because net $39.40 is a great entry and, if you want to be more bullish, you can add the 2013 $55/65 bull call spread for $3.20 for a net $2.40 credit on the $10 spread and your worst case is you own UNH for net $42.60.  

    Dollar testing 76 to the downside – time to get a little more bullish if they fail it.  

    Gasoline (/RB) back to 2.820 for a reload on this morning’s trade.  

  97. Another nice day, Phil, thank.  Woke up late, since I was up late and knew my short oil/short Euro trades would do well, cashed in 2.42% gain on the whole portfolio, and again found myself flagged by the Ref for a "phantom margin call." I’ll have to learn how to hang onto to the punchbowl, but it’s better not to trade when flushed with victory anyway, as you’ve pointed out a number of times, until the fearlessness wears off.  Have fun, guys!

  98. Next week weeklies on FAS are finally making sense now. Spreads are manageable. Should we play for a stick this afternoon and hold off on making moves for now?

  99. Although right now there is about $1.50 of premium in the FAS 23 weeklies straddle! 

  100. Will the 200DMA hold?

  101. Phil—wow--forgot about my IWM trade--tnx for reminding--took the money and ran

  102. How many different ways can CNBC tell you oil is going higher despite everything?

    Appearing on CNBC, veteran oil trader Mark Fisher brushes off efforts to hold down prices from the release of crude from government stocks as "bringing a knife to a gunfight." Oil remains about 4.5% lower at $91.05/barrel.

    Goldman drops Brent forecast – what a friggin’ joke against humanity that company is!  

    Crude Oil Supply & Demand (Ed Yardeni Blog)

    Nice job ZZ – congrats!  Don’t forget to use your penalty box time to take a break and buy yourself something nice so you can remember what money is for.  The most dangerous thing about getting on a roll is you tend to forget that it’s money you’re dealing with and you end up playing it like play money – very dangerous (and what casinos count on to make sure they get it back).  

    FAS/StJ – Way too early to sell them.  We get a huge bonus off the short put if FAS heads up tomorrow so we should just be happy with that.  If I were gambling, I’d sell the next weekly $23 puts for $1 now and put a stop on the current $24 puts at $1.50 (now $1.30) but I don’t want to turn the FAS Money trade into a confusing day trade so we’ll stick to the discipline and see where we end up tomorrow.  

    12:00 PM On the hour: Dow -1.4%. 10-yr +0.56%. Euro -1.24% vs. dollar. Crude -4.64% to $90.98. Gold -2% to $1522.30.

    Moody’s warns it may cut the ratings of 16 Italian banks and 2 government-related financial institutions in the wake of last week’s warning on Italy’s sovereign debt. The agency also revises its outlook on 13 other Italian banks to negative from stable.

    There’s a Report of a Brand New Hole in the Greek Austerity Plan.

    Some Greeks Fear Government is Selling NationThey are the crown jewels of Greece’s socialist state, and they are now likely to go to the highest bidder: the ports of Piraeus and Thessaloniki; prime Mediterranean real estate; the national lottery; Greek Telecom; the postal bank and the national railway system.

    Athens Accused of Big to Amend Austerity DealGreece’s new finance minister has attempted to renegotiate parts of the austerity deal struck with international lenders last month, drawing anger from his European counterparts as they battle to find a solution to Athens’ debt crisis. According to officials briefed on the gambit, Evangelos Venizelos proposed changing the €50bn privatisation programme agreed to by Greek authorities and tried to delay next week’s vote in parliament, insisting it could not be done quickly on procedural grounds.

    ‘Inevitable’ Greek Default Contagious, Feldstein Writes in FT. A Greek default is “inevitable,” and “the only question is when it will occur,” given the country’s debt-to-gross-domestic-product ratio of more than 150 percent, Harvard University Professor Martin Feldstein writes in the Financial Times. “The current negotiations are really about postponing the inevitable default,” Feldstein writes, adding that a default now could trigger defaults by Portugal, Ireland and Spain. The European Central Bank is “determined to avoid a default at this time” in order to give negotiators time to find a way to delay the contagion defaults “long enough for creditors to withstand the writedowns of bond values if Greece, Portugal and Ireland default simultaneously,” Feldstein writes.

    Big bills racked up to buttress economic recovery are coming due (LA Times)

    Outlook Grows Bleak on Main Street. In the eyes of the average small business, the U.S. economy is still in a recession and likely to stay that way through 2012. While revenues are in line with or higher than they were last year for many on Main Street, the outlook for hiring and business in general is bleak, according to a broad-reaching survey to be released Thursday. Small-business owners say a continued lack of financing, coupled with rising commodity prices and weak overall sales, is to blame. The new survey, commissioned by U.S. Bancorp, is one of several reports to come out in recent weeks painting a more dismal picture for American small businesses than previously perceived.

    Bill Gross to Deficit-Obsessed Congress: Get Real (TPM)

    The Fed’s Dual Mandate: Lessons of the 1970s (St. Louis Fed)

    What Stock-Market History Is Telling Us (Market Watch)

    Does an expanded Government role impact investment returns? (Stewart Partners)

    Pocket-Change SEC Fines: Barely a Bark and No Bite. There’s a reason yesterday’s announcement that JPM Chase(JPM) would ‘settle’ for a fine of $156.3 million, while neither admitting nor denying any wrong-doing, thereby forking over the whopping equivalent of a normal person’s weekly grocery budget, pisses people off. Because it’s a marginal fleabite on the teflon hand of the nation’s second largest bank in terms of punitive pain, and absolutely meaningless in altering the grand scheme of toxic securities creation or complex financial institution business as usual.

    I like these guys:  Medtronic (MDT -2.4%raises its annual dividend 8% and adds another 75M shares in buyback authorization (about 7% of outstanding shares). In five years, the company’s dividend has doubled, and it’s completed $9B in share repurchases over six years. 

    With frustrated investors coming together for Yahoo’s (YHOO -2.3%) annual meeting, Chairman Roy Bostock gives a vote of confidence to CEO Carol Bartz, praising "hard won progress" that still is a "work in progress." After two years at Yahoo, Bartz has cut costs and raised margins, but revenue growth has been lackluster. (TechCrunch replacement rumors)

    Ha Ha!  Prada – which went to Hong Kong for its IPO because that’s where it thinks the money is – struggles, as its shares fall below the offering price in grey market trading. Official trading in the stock begins tomorrow. 

    Lofty Valuations at Risk as Asia IPO Withdrawals Hit RecordA record $58 billion in withdrawn IPOs in Asia and muted market debuts are expected to force listing hopefuls to cut valuations to win over investors in the world’s top region for offerings.

    Living In Anxious Times as Fears of China Crash GrowPaulson’s misstep over Sino-Forest reflects unease about how the second-biggest economy does businessSuddenly finance god John Paulson isn’t looking so omniscient.

    Michele Bachmann‘s Holy War (Rolling Stone)

    Three lunchtime reads:
    1) Retirement math: Compound growing dividends or compound retained earnings?
    2) "Growing your way out of debt" is a fantasy
    3) Have the U.S. and EU ever been in such terrible shape? 

  103. 76.01 on the Dollar.  91.27 oil,  2.85 gasoline – if we pop that it’s going to be a massive winner!  

    Done being short of course, if we go down now, better to just be in cash anyway.  

  104. It is so ridiculous that it boosts shares by 4%.  I wish I wasn’t so heavy in NFLX already, because I would be shorting more here.

  105.  Look at that – NFLX right back up to where it was the last time they trotted out the NFLX-Facebook rumor.  Time to have some more fun (in a couple of days)

  106. Bill Gross / Phil – You just wonder what game this guy is playing! Now he is telling Congress to forget about deficit for now and worry about stimulus and creating jobs while at the same time divesting himself of US Treasuries! The fact of the matter is that if the US Government can borrow for 10 years at 3% and for 30 years at 5%, why not do it. In that sense, he is right! 

  107. Phil,
    The Bots just eat this low volume up.
    Where do you see us going this afternoon?

  108. Oh nice spike to $2.866 – Gasoline trading is FUN!  Penny trailine stop now if you want to go for it as oil will have a tough time at $92 but, over that and this is a grand slam.  

  109. LOL!  Do the RUT and COMP know something the other indices don’t know? 

  110. Matt,
    How are you positioned?

  111. Anybody: FAS weeklies expire today at close?

  112. Isn’t there a bit more POMO?

  113. NFLX: Announces CEO Reed Hastings joining Facebook board-stock off like a rocket-ouch. Selling weekly $260′s for $1.70. Still short $250′s.

  114. Hastings/Jabob – That’s interesting.  I guess they are pushing that NFLX partnership – NFLX up 4% on that news I guess.  

    Dollar refusing to lose 76 at the moment – can’t keep a rally going if it won’t go down. 

    Gross/StJ – He’s loaded up on high-rate EU bonds.  Now that Greece is "fixed", he has to cash his EU bonds for Euros before he moves back to the US TBills or Corp Debt so he’s talking down the Dollar to get a better exchange.  This guy is an amoral cretin and you should never believe a word that comes out of his mouth.  The only time he will ever tell you about a trade is AFTER he’s done with it and the only "advice" he ever gives enriches himself.  Yes, the same can be said for a lot of guys you see on TV all the time but not many of them control Trillion Dollar funds and use their leverage to make and break nations.  It’s not just amoral, it’s psychotic because a person who wields that kind of power and uses it the way he does couldn’t care less about how many lives he ruins to make a buck.  Short story – I don’t like him…

    Afternoon/Exec – Same as I said this morning, we should recover to down 1.5% (mission accomplished) or less and down 1% would be a victory of sorts if we can hold that on the Dow and the S&P, who were our leaders.  

    Let’s sell those UUP July $21 calls in the $25KP at .63 before we blow a nice gain.  

  115. JR,
    Are you seeing any buy programs? 
    What’s with the rally in IWM?

  116. Phil,
    INTC gaped down at the open and was making its way up since. It is now in positive territory. Looks interesting for a trade, what do you think?
    On the other topic – ZeroHedge, i always wander why his msg boards are as bad, as msg board can be. Its like reading msgs from al qaeda, storm front and communist party of north korea all in one place. 
    ZH is grotesque and contraversial at a time, but always tons of great info.

  117. Glad I held those USO weekly puts. Why make 20% when you can make 320%. Sold & Done for the day, time to enjoy a cigar. See you tomorrow for the next installment of the oil tug ‘o war.

  118. Phil/Gross  If you keep holding all those feeling inside, it’s going to eat you up. Let us know how you really feel.  ;)

  119. Financials still very weak, this little tech rally and $ weakness wont get us out the down trend..looking for more weakness this afternoon after the oil pump

  120. FAS Weeklies / Phil – I don’t want to turn that into another day trade vehicle. That being said, the lesson for me would be to use spikes to get out if we can. This week was the perfect storm – we could have unloaded the 24 put yesterday when they were down to 0.35. And then, we got 0.40 out of the calls today on that crazy spike down. For me, that would make the week when you can whittle about $1 of premium and place new bets on Friday or Monday depending on sentiment and VIX! And some weeks, you just hold to Friday because nothing is going on! Like you said, we have about 30 weeks to work $5 of premium anyway. $0.35 of premium every week would give us a double on the $5 we invested. That ain’t bad!

  121. Phil/ MDT
    Do you have a good MDT play for the LT. I have liked them for a while and they seem to be getting interesting again.

  122. Phil, amazing how the Nasdaq has recovered (AAPL?) today, but those QLD July 77′s don’t budge – what gives?  They’ve barely moved…

  123. John Stewart/Greece- You would never see this clip from Phil (given that he believes the Greeks are getting screwed out of their hard earned pay) but a very funny clip!

  124. Momo charts are mind-bending today – CMG, LULU, and NFLX all show bullish engulfing.  I think I’ll buy some calls on them and put an immediate end to this nonsense!

  125. 75.93!  

    Rut and Nas/Matt – They’ve been pretty reliable indicators for rallies lately.

    Weeklies/Lapper – Tomorrow.  

    POMO/Streth – They will still be doing about $60M a month in rollovers but it’s winding down and people are pulling back (wisely).  Good time to go for TBT, selling Aug $32 puts for $1.32 and buying the Sept $30/34 bull call spread for 2.10 for net .78 on the $4 spread.  

    Buy prog/Exec – It’s just the Dollar falling from 76.25 back to 75.95 – pretty much what we expected once the EU closed but now people have to position themselves into the close and if we can’t get the NYSE and the Dow back over the -1% line, then Asia will be very unhappy and I’d bank on a poor finish but we’re so close, I can’t see them not pushing it into the close unless something catastrophic happens.  

    Volume on Dow, by the way, just 93M at 1:44 – no capitulation at all – just another trading day.  

    INTC/Vic – That’s one of the short puts I liked.  As a long-term trade, I like selling the 2013 $22.50 puts for $4.10 (yes, very bullish) and buying 2x the $20/25 bull call spread for $1.90 for a net .30 credit on a spread that pays $10 if INTC hits the $25 target.  Worst case is you own them at net $22.20 but you still have 2x the $20 calls so your break-even is $20.73.

    75.99 – we need a rejection here to stay bullish!

    USO/Dday – Congrats!  Those do work once in a while.  

    Feelings/Jbur – Yeah, I do need to learn to let go…  8-)

    Spikes/StJ – Yes, that’s the way to do it if you are day-trading them but my impression is people want a steady income producer – not another nutty FAS trade like the $25KP has.  From a day-trading perspective, you have your backstops in case it goes against you so you take a quarter whenever you can on either side (like the Mattress play, which always seems to work out over time).  

    MDT/Rehat – I like shorting the 2013 $35 puts for $4.20 and buying the 2013 $40 calls for $3.30 for net $34.10 if assigned to you and no limit on the upside over $40.  The plan would be to sell some calls if we get a good run up but I think they are good for $45+ over time.  

    Nas/Jerconn – AAPL was a big help with a 1.3% gain so .15% of the Nas added.  NFLX with a big move too and DECK and PCLN and LULU…  QLD doesn’t really adjust dynamically but as long as we’re on target, we’re happy.  

    Greece/Jake – Where’s that clip from?  I’d rather see the real clip from the Daily show – shouldn’t be hard to find.  Anyway, you miss the whole point (not surprising because it’s not a Conservative one so your brain automatically edits it out), we have a BIGGER per person debt than Greece but we didn’t have any fun.  

    Yes, Mr. M – Get these markets in line!  

  126. Here you go Jake:  

  127. exec
    Right now sell program.

  128. Phil
    Thanks re POMO and TBT.

  129. Phil/Greece- Agreed the clip sucks. The original was better and no I didn’t miss the point. We’re all in deep sh!t (at least we can agree on that part). I also believe there aren’t too many better than you in reading the markets recently so thanks! BTW,  held TZA calls and USO puts overnight (against my policy) but it seemed to work. Now CMG beginning to tank. Nice!

  130. Dollar – 76.05 is R2 and we have been hugging that line for 2 hours now! 

  131. 01:00 PM On the hour: Dow -1.3%. 10-yr +0.63%. Euro -1.17% vs. dollar. Crude -4.52% to $91.10. Gold -2.09% to $1521.00. 

    01:20 PM The Treasury sells $7B in reopened 30-year TIPS at 1.744%(.pdf), the lowest yield since early last year. Bid-to-cover ratio of 3.02 vs. the previous 2.78; indirect bidders take 23.4%, vs. the previous 38.9%. Direct bidders take 26.1%.

    02:00 PM On the hour: Dow -1.4%. 10-yr +0.59%. Euro -1.22% vs. dollar. Crude -4.21% to $91.39. Gold -2.33% to $1517.20.

    With European bourses safely closed for the day – Stoxx 50 -2.3% - U.S. equities turn tail and move sharply off their lows, with the NASDAQ threatening to go green. DJIA -1.2% after being down more than 2% earlier.

    Airline stocks (FAA +1.6%lead today’s market gainers by far, as lower oil prices reduce airlines’ cost of doing business. On the flip side, energy shares (XLE -2.2%) are still down precipitously. Airlines: LUV+2.4%DAL +3.1%UAL +4.3%ALK +2%AMR +4.3%LCC +4.7%.

    Yet another way to try to turn the oil market:  The dark side of the oil inventory release, according to Gregor McDonald: It’s counterintuitively bullish, not bearish, for prices. Yes, oil prices will be rocked for months, but an inventory release highlights the fundamental problem of structurally restrained supply. The OECD could have turned to non-OPEC producers and asked them to produce more, but they have no spare capacity.

    Troubles grow at Saab, where the company has run out of money to pay staff, despite a recent cash infusion from a Chinese car dealer that was supposed to allow production to get moving again. Saab’s parent, Swedish Automobile (formerly Spyker) falls 62% in European trading.

  132. WTF Pharm, I know you are on vacation but you could have published the lines this morning mate!
    R3 – 1307.08 (right!)
    R2 – 1300.42
    R1 – 1287.83
    PP – 1281.17
    S1 – 1268.58
    S2 – 1261.92
    S3 – 1249.33
    Boucing between S1 and S2 now!
    On SPY, the lines are:
    PP – 128.60
    S1 – 127.38
    S2 – 126.71
    S3 – 125.50
    No sense worrying about resistance for now! 

  133. Well I’m glad we can agree on the markets at least Jake!  Of course you don’t want to consider that my market calls are based on my overall understanding of the Global sociopolitical situation which means it would be very strange that I can make correct market calls but be completely wrong about who the real crooks are and which economic policies make sense and which don’t.

    Dollar not being helpful at all at 76.07 and it’s killing oil into the NYMEX close but maybe someone wants a bad print at 2:35.  If the Dollar backs off after the NYMEX close, then we should probably get bullish on oil as this would start to look like a forced bottom.  Or, even better, maybe gasoline sells off again (now $2.834).  

  134. stj/pharm, lol you dont know what you got till its gone

  135. Phil:  I’ve still got a small account with 1 bullet in the chamber. Is there a USO long recommendation forthcoming, or would that be too cute on the day?

  136.  Sociopolitics / Phil – Is that Flips cue now?

  137. I think Bernanke is losing control and gets replaced by the end of the year..

    What hap to pol being off limits?

  138. I think somehow "they" would like higher prices today, but I think it will be very difficult to find buyers during the last hour. Talking about "plot". I have updated my VIX/SPY volume evaluation just now. It’s strange how the "firm only" trades differs from the "all trades" indicator. My interpretation of the put/call volume indicator is that we certainly can’t expect higher prices in a month from now, but maybe we get a little "recovery" for one or two weeks. But of course this depends more on "external events".
    Here’s the link for anyone interested:

  139. JR, curious as to what your doing im in TZA and short the QQQ

  140. USO/ZZ – I think there is a very good chance we head up into July 4th weekend.  The USO July $36/37 bull call spread is .42 and you can offset that with the short June 30th $35 puts at .45 for a .03 credit on the $1 spread.  Basically betting we hold $90 through next Friday and then you have a free bullish spread on the holiday.  

    Cue/StJ – Let’s hope not!  

    Zero Hedge says Aflac’s (AFL -1.8%$610M hit from European debt raises doubts about Bernanke’s assertion that U.S. firms’ exposure to a European sovereign default is small. Aflac has been buying Japanese government debt to help shift risk away from Europe, but Japan likely has been buying the new EFSF European bailout bonds, ZH suggests, sucking it back into the exposure.

    With Microsoft’s (MSFT -1.5%) earlier antitrust ordeal in mind, Erick Schonfeld thinks a full-blown antitrust investigation would be a signal that Google’s (GOOG -2.5%) market power has already peaked. And "just as social (and Facebook) is starting to take over from search as the fundamental way information is shared… the government is focusing on the last decade’s war." 

    Entertainment stocks trade lower following a UBS downgrade of the sector, citing the combination of a slowing ad market, tough comps, and elevated programming costs needed to maintain audiences. (DISCA -3.2%), (TWX -1.66%)

  141. kustomz
    The Bernank is in control but sure would be nice to see him go. What worries me is Obama reappointed him, who next!

  142. StJean/Sociopolitics
    There goes Phil Again….. nudging "our collegues" with that long stick…… LOL…… Phil does make a point…. Maybe, Phil could tell us, if he knows….. the great trading guru (Phil’s Countrpat) ….. with a Republican Sociopolitical bent…….???

  143. Pentax:  I put in a very small bid one penny higher for USO July 16 $36s, it was hit, and 600 contracts were immediately asked one penny above my purchase.  Lotta desperate characters out there, I feel for ‘em.  Up to a point, that is. 

  144. Thanks, Phil, I’ll put it on tomorrow, if still available at reasonable prices, when I get my punch bowl back.

  145. WTF just happened, covered WTF!!

  146. Can I get a /DX wheeee!!

  147. Bernanke/Kustomz – I don’t see that.  Sends a terrible signal to the markets.  Maybe he can retire for "personal reasons."  Politics are off limits but mainly because people don’t know where to draw the line.  Everything is immediately personal, unfortunately, which is sad because I would hope we could rise above that as a group…

    Scary how much of a sell-off is still possible on your chart Pentax!  

    Smart Republican/Acobra – Hmm… can I have a few days to think about it?  8-)

    Woops – Dollar just smacked down to 75.92  in one very fast move – Like opening the gates for the running of the bulls!  Run Bears!!!!  


  148. PeterD or Phil or the Group.  I have a questions concerning a short put.  Let’s say you initiate the position short July 1250 put and SPX is 1300.  Further, the market has moved against you to SPX 1250 so the out of the money short put you sold is now at the money.  If you are going to roll 2x puts (more marging required) or to "split" the put into a short call / short put (no extra marging required), does it matter when you make the adjustment?  I would guess you want to do the adjustment before the delta of the short put takes off after it hits at the money.  Is your biggest bang for the buck when it is at the money, right before at the money or in the money a bit?  Any guidance on this issue would be great.  TIA.

  149. seriously WTF?

  150. Dollar – what the heck was that? Next time tell me in advance!!!

  151. That was fast!

  152. come to think of it, though, is someone testing another "fat finger" tool?

  153. Greece supposedly fixed again.  

  154. Is Boehner on the TV? 

  155. Unfnreal, everytime its ready to break…they wont let this market go to where it really wants to go and here comes the short squeeze

  156. I’m calling B.S.!

  157. Phil—I had sold the 100 faz 50 calls when you sent the alert but like an idiot held onto the 100 short faz 51s and just got out with a nice profit— word of the day WOW—sometimes a little luck helps--Thanks

  158. zz: now the "desperate characters" trade more obvious than on your last post, don’t they?

  159. Seems this was the brute force method to trigger a run up, since nothing else worked.

  160.  Mysterious forces playing above the rim, taking my ball and going for a swim.

  161. just rebought dia puts into this bs.  More than doubled my money on the first go round, would be happy for 20% on this one.

  162. Watch out net selling, wholesale selling to retail again!

  163. 75.77 is R2 for the dollar and there we are… Let’s not be greedy! 

  164. Phil, what to do with the QLD call spread – take profits or cause it barely moved hold on to it to tomorrow?

  165. I meant R1 for the dollar. And 91.89 is S2 for oil and it’s now resistance (for now!) 

  166. When/Robert – Not really as it’s cash settled but once your short putter has less than 25% premium, then what happens is the puts you want to roll to will have a much lower delta than your puts and you will begin to lose ground more quickly so you really need to be very careful once you have a putter or caller go that far in the money on you.  As soon as you are down 50%, you need to look for your rolls and then you keep track of them and you’ll know when it’s optimal to roll.  Everything is a little different – the key is to plan your moves ahead and don’t let them get away from you.  

    $92 oil!!!   This market is such a friggin’ joke!  I’d flip short off the line but I’M SCARED OF "THEM"!   

    75.69 and heading lower….

    Shenanigans/Gmarts – You are correct!  

    Bove/StJ – One would hope. 

    FAZ/Savi – Yeah, you have to be careful when you buy a spread to sell the spread!  Nice break though…

    DIA/Rustle – I think it may be over for the bears now.  They just bitch-slapped those who dare bet against Mr. Stck, who was merely on vacation and not dead at all….

    132M on the Dow at 3:25 so still not much volume.  

    LULU making new highs because nothing fights recession better than fuzzy tights.  

    QLD/Jerconn – It’s a $77/81 spread and QLD is at $82.60 – that’s "on target".  You don’t make money on those kind of spreads until they get close to expiration – you are either on target or off but that’s why they are good plays to take a poke at – because they are also forgiving when the trade moves against you.  

    Days like this I am ashamed to participate in this con game of a market…  8-)

  167. Might be early, but I used that little spike to unload the FAS 24 puts at a profit! I’ll take my $0.50 for the week! Tomorrow is another day. 

  168.  Hi Phil
    What’s your feeling on AGQ   Jan12 90 P  sold for almost $7 for an entry of $83 which, I think is about $22/oz . 
    Silver now $34.44 after being hammered today
    BTW  the very early morning posts and review of the levels each day gives a nice head start to interpreting what’s in store for the opening.

  169. 03:00 PM On the hour: Dow -1.19%. 10-yr +0.62%. Euro -0.98% vs. dollar. Crude -4.19% to $91.41. Gold -2.25% to $1518.50.

    Nice head fake ahead of the real news:  02:58 PM: The EU/IMF discovers a €5.5B "black hole" in Greece’s €28B austerity package, sending Greek politicians back to the drawing board as they face a deadline of the end of next week to pass acceptable reforms through the legislature. The euro is making a spirited afternoon rally, back over $1.42

    03:02 PM: Reuters reports Greece has reached agreement with the EU/IMF on a 5 year austerity plan. The euro spikes higher to $1.4217.

    Businesses are sitting on a record $800B in cash as CEOs opt for negative real returns over hiring workers or expanding business. Stifel Nicolaus blames it on fears of another credit crisis, a weak economy, and a lack of incentives from Washington. 

    ST Ericsson warns it will take longer than expected to turn a profit due to falling demand for its legacy products. In an attept to turn things around, it plans to carry out a review of it’s global workforce, aiming to save around $120M by 2012. ERIC -2.5%STM -3.9%.

    Ford (F +0.2%quality tumbles in the latest J.D. Power survey, whose initial ranking places Ford 23rd among 32 auto brands ranked by consumers after ranking fifth last year. But shares hold up well on hopes that the inventory release of crude into the market might help push more sales of high-margin SUVs as gas prices fall. Also: GM +0.5%. - Wow, are we still this stupid as a country – running out and buying SUVs as soon as gas goes to $3.75?  

  170.  sorry that was 34.63 on the low for silver when I looked

  171.  stj (and Phil of course) – Are you opening a new FAS spread today or waiting? Same strikes? I’m also out, down $.06 on the put and up $.55 on the calls. Pretty good considering I opened it a bit late.

  172. I get the dunce cap for the day bought 3 oil contracts instead of selling went and got some coffee came back an i was down 10,000 before i realized it , Managed the fight back to a 1700 loss, not a victory but pretty close, Think I’ll consolidate all my accounts into 1 brokerage  and make sure I have my cup full before I trade futures from now on

  173.  Phil,
      Are you expecting the FAS Weekly $24 and $25 calls to expire worthless?

  174.  Phil,
    On the subject of SUVs:
    Cultural Dictionary
    No one ever went broke underestimating the intelligence of the American people
    People can easily be persuaded to accept the most inferior ideas or useless products; attributed to H. L. Mencken

  175. DIA/Phil
    got in puts when market was only down 77, would you take the profit now, seeing the market getting weaker again or would you play into tomorrow thinking that this was a few buy programs in overdrive and Friday is typically not a good day.

  176. Phil — Many moons ago, on occassion, you posted a link to a website that was a series of articles about the psychology of trading, I believe written by a single writer.  Do you remember who that was or still have a link?

  177. Fas / Kurt – I would think it makes sense to wait until tomorrow at least considering the market manipulation in action as we speak! Remember, we opened that spread on Monday and we were able to squeeze $0.50 out of that sucker! Weekends are now danger zones! 

  178. Stockman / Scottmi – Good stuff, although you don’t know how self-serving that is considering his open trades! 

  179.  stj – Good point about the weekend. I haven’t looked at the prices on the August options, but I wonder if one strategy would be to roll the farther OTM puts or calls to something closer on days like yesterday and today to reduce the risk of the trade. 
    I’m enjoying this trade so far but I think I’ll wait until I’m no longer on semi-vacation to really up the stakes. Just playing it small for now, no stress.

  180. Phil: at least the indicator is not on "flash crash" levels (yet?).

  181. Very impressive recovery.

  182. FAS/StJ – Not a bad idea, locked in a profit for the week, which is all we ever want to do.  

    Dollar stopped falling and immediately killed the rally – this is going to make a fantastic short on June 30th!  

    AGQ/Ban – Don’t forget it will decay over time.  It’s an interesting trade but I’d want to track it for a year before trying it.  Glad you find the morning stuff helpful – I try to get things out early when the markets are looking crazy. 

    FAS Money/Kurt – Waiting to see what tomorrow looks like.  $24 puts are .97 with .09 premium and next week combos are $1.70 so not much to worry about (hopefully) as we are very likely to pick up another .50+ in premium, which is all we have to do to stay on track.  

    Futures/Bert – Nice cautionary tale.  It’s amazing how much those damned things can slam you when they go wrong.  Nice job coming back but I bet it was a miserable time doing it.  Lesson learned makes it worth the tuition though because it’s all about discipline with the futures.  

    FAS/Kevin – I don’t know anything about $25 calls but we sold the $24 calls and left those open.  Did we sell $25s?  If so, yes, I expect those to expire worthless – I’ll clean up those trades tonight.  

    True CSL.  

    Puts/Rustle – I would have gotten out when we flipped bullish ages ago.  Stops – stops are good!  I would not bet against the market tomorrow.  They want to paint something nice into the weekend.  

    The Psychology of Trading: Tools and Techniques for Minding the MarketsTrading Psychology/Rain – Sure, that’s our pal, Dr. Brett, he’s great!   If we have a book link in the Wiki – he should be in it.  

    Dollar at 75.75

    Oil 91.78.

    Nas UP 0.6%

    Rut UP 0.34%

    Still have 5 mins to get green on the others.

    Go sticky, go!!!  

  183. Puts/Phil
    Did get out, then went back in, down a few pennies a contract right here.  Hoping for a weak open.

  184. WOW, that is an impressive stick on the Q’s

  185. Well timed press release. 

  186. Yet/Pentax – Don’t even say that, what a hassle that would be.  

    Finally the bell rings and they stop the madness!

    Well that was a totally fun day, let’s NOT do that again for a while because I’m exhausted….  

  187. Phil
    Maybe this weekend, if you have time, could you think about whether a SPY or QQQ or DIA put buy is a way to get significantly short going into July 4?

  188. FAS / Kevin – The original "Income" play was:
    Buy Jan 2012 28 Calls
    Buy Jan 2012 18.33 Puts
    Sell Weekly 23 Calls (bought back this morning for about $0.43 profit)
    Sell Weekly 24 Put (bought back this afternoon for about $0.37 profit)
    The short strangle brought in $0.80 in my book. The long strangle looks to be down about $0.30 but it’s a hedge!

  189. Phil / Psycho — Added book and link to website under book project’s recommended reading. Thanks!

  190.  stjeanluc & other FAS weekly players - 
    23 calls – .74 profit
    24 puts – .06 profit
    very different sales but the same net – interesting!

  191.  Nice move by AAPL today. Very bullish on day when the DJI was over 200 down, .AAPL just kept climbing. Made 43% profit on my Aug $135 Calls and an astounding 118% on my more speculative left over long leg Jul $150 calls which I made on the Goldman Sacs recommendation spread.

  192.  Phil: Chicken or Egg?
    I thought /dx moves drove indexes but this afternoon the indexes started to move just before /dx so clearly I don’t get the relationship.  what am I missing?, or does a 1 minute chart not accurately reflect what happened at 2:56 pm?  TIA

  193. Today’s Levels.

  194. Pledge,” tying any vote to raise the debt limit to a three-tiered legislative package that cuts and caps spending, and makes it a legal requirement to balance the budget.

    Read more:

  195. breadth continues strong and made a higher high today..i am still on an intermediate term sell but as i mentioned this am i was thinking of playing a bounce which i did NOT do…i was heavily short aud euro jpy..and long chf..was long bonds flat now..short oil flat now..(tip of the derrick to phil)..short copper..(ouch)….covered most my nk futres last night…we should get a few days out of this low..the 200 day held at exactly th esame time th e’greece is fixed’ hit the wire…fixed like your male dog maybe..i am looking for lower lows but too tired to be doctrinaire

  196. 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.

  197. I have this weird feeling I’ll be shorting oil at 92.5 again.

  198. 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…….

  199. Did StJean earn a colored box!

  200. 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!

  201. doro i didnt realize that there was a hierarchy here designated by color coding…now i gotta break the color barrier!

  202. Oh no, say it ain’t so.
    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.

  203. Peter D
    Too bad you don’t have time for your own tab.  Perhaps Peter’s Strangle World could be a future project?

  204. 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

  205. The reasoning behind Goldman’s Brent prices revision:
    That strategic reserve release is really having an effect on Brent prices!

  206. 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!
    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.

  207. Funny, Savi, I didn’t see your post – we’re working on the same wavelength!  Let me know if you have other questions…

  208. 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

  209. Good morning!

    Wow those NKD’s are flying!  Hit 9,700 before pulling back, now 9,680 and that’s it for the week I guess.   Not bad at $5 per point (same as Dow) – maybe they are worth playing or, then again, maybe anything is worth playing when a trade is that obvious.  

    The key to any futures trade is just getting yourself familiar with the movement of a dozen or so items and how they react to certain kinds of news (strong/weak dollar/euro/yen, high/low oil/gold, unemployment, industrial production, housing data…) and look for the coincidences when you catch one at a major support or resistance line AND there is news that you feel strongly will take it one way or another.  

    The Nikkei is a good example, I usually hate it because it’s so crazy and I don’t think I’ve ever made a call on it before but, at 12:13 yesterday, our markets were looking stronger AND the NKD happened to be testing the 9,500 line which (one would think) should offer very strong support.  That’s the most important thing when you are going to be the futures – is there a support behind your trade that should keep you from losing too much if you are wrong.  There’s no guarantee, of course, but it just seemed unlikely that NKD would fly below the 9,500 line so we could play it bullish and set a stop below the line and go to sleep.  

    Patience, as always is key.  I think the key to picking the futures is NOT picking the futures.  I look at trades all the time and say nothing.  Only when I think we have that combination of good data plus strong support do I want to enter a position and, even then, tight stops and we just walk away if it doesn’t work.  We often lose a nickel but we sometimes make $1 (or 100 on the Dow) and we often make .25 – it’s not much different than the same portfolio management techniques we use every day, along with scaling into positions and setting stops – just running at hyperspeed!  

    Practice, practice, practice but I do encourage people to paper-trade the futures as it does give you a chance to adjust to news that otherwise catches you off guard after market and pre-market.  

    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:

    Greek Vote Sets Stage for More Cuts

    Prime Minister George Papandreou won a confidence vote in Parliament, paving the way for approval of a package of austerity measures and a second aid package for the beleaguered euro-zone nation

    EU Halts New Greek Backtrack

    European Union leaders fended off an effort by Greece to water down an austerity and privatization package that is the price for new aid, and said they were nearing approval on a new rescue program to take Athens until the end of 2014.


    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!"

    The official said the deal was reached after Greece agreed to lower the minimum taxable income for Greek taxpayers to €8,000 ($11,500) from €12,000, and agreed to a special crisis levy on all taxpayers, ranging between 1% and 5%, depending on income. The government had previously expected to cap that levy at 3% or 4%.

    There was no sign that Greece’s main opposition party would back the measures. In remarks Thursday afternoon following a gathering of center-right European parties, Greek opposition leader Antonis Samaras reiterated his opposition to higher taxes that are built into the budget measures.

    "The current policy mix implemented by the Socialist government calls for more taxes to an economy under unprecedented pressure," Mr. Samaras said. "We need corrective measures so as to ensure that the Greek economy recovers and pays back its debt."

    Euro-zone finance ministers will meet again July 3 to agree further details on a second bailout package which is planned to include the participation of Greece’ private creditors. They have pledged to complete a deal, which a senior official has said could tide Greece over for three years, on July 11.

    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!  

  210. 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.

  211. 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.  

  212. 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.

  213. What’s 4197?  

  214. 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.  

  215. .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

  216. 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.

  217. 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.

  218. Geithner: Taxes on ‘Small Business’ Must Rise So Government Doesn’t ‘Shrink’

  219. 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.  

  220. 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.

  221. well i am 75.25-75, might nibble 35-65, but I think we just flatline here

  222. 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….  

    Great NYTimes article written by illegal immigrant about his time in the US.  

    Federal Reserve Frets Over Fiscal Recklessness Behind Calm of 0.09% Yield (Bloombergsee also QE3? Bond market does the Fed’s job (CNNMoney)

    The Verizon iPhone Halted Android’s Surge. The iPhone 5 Could Reverse It. (Washington Post)

    Ethanol: Distillation Margins Uneconomic, Costlier Than Gas (Minyanville

    Both Parties Get It Wrong on Big Oil Tax Breaks (Bloomberg)

  223. 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.

  224. 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.

  225. lol, now it’s Italy? That didnt take long…. At this rate our time will come in a week or two! .

  226.  HOV shows only $0.68 in TOS
    is it real?????????

  227. jr / time — yup, espeically if we keep playing chicken with the debt ceiling.

  228. 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.

  229.  China to bail out the Euro? Interesting – the interests align:

  230.  Sorry, the link on china should have been this:

  231. 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: