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TGIF – Stop the Rally, We Want to Get Off!

Wow, so much to talk about today.

I'm going to skip quickly over poor Dominique Strauss-Kahn who is now, fairly obviously, the victim of a conspiracy to frame him.  What's the difference now?  Strauss-Kahn was "too soft on Greece" and was focused on ending the bond speculation that he felt was crippling that country (and the Socialist Kahn was also warming up to be France's next President) so he was "removed" from his position and Legarde (a better Bankster ballplayer) stepped in and teamed up with the EU to push the Greek people into debt slavery and, of course, "save" the Banksters from taking any awkward losses writing down Greece's very obviously bad debt.  

With Strauss-Kahn out of the way they stole Billions here and Billions there and shuffled some money around and now that Greece is "fixed" (on the evening of the day Greece finally gives up and votes to pass the draconian austerity measures) and evening of the same day Legarde is officially sworn in as head of the IMF to replace him – NOW they can let Domique Strauss-Kahn off the hook.  How kind of them – I guess they could have had him killed – instead of just killing his reputation.  

Of course the timing of Kahn's exoneration is no more coincidental than the timing of his arrest (he was on his way to chair the IMF's vote on Greek aid) so I guess it could all just be one of those funny coincidences - they happen all the time, right?  The media had Strauss Kahn lined up for the lynch mob on May 16th (while one article, ratcheted up the fear of a Greek default that was a "virtual certainty", allowing JPM and other Banksters to make Billions buying Greek Bonds at over 20% interest rates – BRILLIANT!).  

Speaking of JP Morgan – Now that Greece has been destroyed, where will they move the Death Star next?  Well, whichever nation will be next to fall under the Bankster death-ray, JPM along with MS and the fabulous Koch Brothers took a little detour this week and stopped to buy up the oil that is being released from the Strategic Petroleum Reserve.  That's rignt, according to Bloomberg, the 30M barrels of oil that is being released from the SPR may go right back into the hands of the same speculators we were trying to get rid of!  

Representatives of trading companies including JPMorgan Chase & Co., Morgan Stanley (MS), Hess Trading Company and Koch Supply & Trading LP joined Valero Energy Corp. (VLO) and Statoil ASA in questioning Energy Department officials June 28 about shipping options and requests for waivers of the Jones Act.  The Jones Act restricts the shipment of goods between U.S. ports to American-flagged vessels. Most oil is shipped on foreign-flagged vessels.  A lack of American-flagged vessels of adequate size means a buyer of SPR oil who wants to store the oil may require a waiver of the Jones Act.

Isn't that special?  As you can see from the Ponzi Summary (thanks Barry and CLICK CHART for much bigger, longer version) above – how many times do we have to get screwed over by THE SAME PEOPLE before we wise up as a nation?  I mean, come on people – JP Morgan has been beating poor people with sticks since the 1800s – when are we going to stop letting them?  

Meanwhile, yet another Central Banker gets a payday from Goldman Sachs as the fifth-biggest U.S. bank by assets said yesterday it hired Bank of England economist Andrew Benito after recruiting Huw Pill from the European Central Bank in May and Naohiko Baba from the Bank ofJapan in January. Moving in the other direction, Ben Broadbent, Goldman Sachs’s ex-chief U.K. economist, started at the Bank of England last month. Former vice chairman Mario Draghi will take up the presidency of the ECB in November.

Why the sudden cash and personnel flow to the BOE?  Perhaps because the Securities and Exchange Commission sued Goldman Sachs last year for misleading investors in a mortgage-linked investment that was sold in 2007. Then British Prime Minister Gordon Brown said the firm’s employees showed “moral bankruptcy” amid calls to ban the company from government work in the UK. Goldman Sachs paid $550 million in July to settle the SEC’s civil claims (because money fixes everything in the US) and is now "fixing" things with the BOE. 

Broadbent is the third Goldman Sachs alumnus to sit on the Bank of England’s Monetary Policy Committee since its creation in 1997. In his first vote on policy in June, he sided with the majority choosing to leave the U.K.’s benchmark rate unchanged. Former MPC members David Walton and Sushil Wadhwani also had Goldman Sachs on their resumes before joining the central bank.  Bank of Canada Governor Mark Carney and Fed Bank of New York President William Dudley both previously worked for Goldman Sachs as did countless others (see chart). Former U.S. Treasury secretaries Robert Rubin and Henry Paulson ran the bank before entering government, helping to earn the company the nickname “Government Sachs.” (picture by Elaine at Culture of Life News

I mentioned yesterday that Charles Hugh Smith wrote an excellent article pointing out that "The US is a Klepocracy, Too" and, of course, I was making that point in my own subtle way in Wednesday's post, so we don't need to go over ALL of the BS manipulation that's going on at the moment – suffice to say we followed through on our plan to get short yesterday afternoon and, although today is likely to hold up – it's next week that has us REALLY worried as we still can't quite figure out why we're up in the first place other than, of course – window dressing, which really isn't a good reason to go long-term bullish, is it?  

This morning in Member Chat, we already shorted the Russell futures (/TF) at 825 and oil futures (/CL) at $95.50 and both of those bets are moving along quite nicely at the moment (9 am).  We'll see how much unwinding we get today – often the first day of the money is bullish but it's hard to be MORE bullish after a week of such total BS in the markets.  

It's all about the Dollar, of course and whether we go over 74.80 (bad for stocks and commodities) or under 74.60 (good for stocks and commodities) although, this being a Friday with weekly expirations, we may just flatline into the close to burn all the suckers who bought puts and calls.  Watch the Pound during EU trading, if they blow $1.60 – it will be time to get more bearish.  

In yesterday's morning post I said: " I’m sure that’s what the Banksters WANT to see for today’s close (just over our 1.25% lines) but that would be one crazy move on the day" and, as you can see from the Big Chart – that EXACTLY what happened – isn't that special?  Remember, we don't care (from an investing point of view) IF the game is fixed, as long as we can figure out HOW the game is fixed and place our bets accordingly.   

I also mentioned in yesterday's post (you do subscribe to our daily Report Membership, don't you?) that we'd be shorting oil at $95 again and, as I'm writing this, oil just hit goal at $94, which is a $1,000 profit per contract in the Oil Futures (/CL) in 24-hours.  With 311,066 contracts still open on the NYMEX (82% of which changed hands yesterday), that was a $311M opportunity – good enough to pay for us to gas up the Range Rover for the holiday weekend!  So we take that money and run ahead of the open and we'll just see what happens with oil as the day moves on.  Gasoline (/RB) is back down to $2.92 at the NYMEX open and that now makes a fun BULLISH trade over that line (with tight stops below) as it's VERY likely they jack it back up to at least $2.95 into the weekend and a .04 move is worth $1,680 per contract.  

So let's go have some fun!  We're pretty much cashed out with speculative shorts (short-term trading, long-term we're still perversely bullish but very hedged) and our $25,000 Virtual Portfolio is now cashed out with $50,000 after 5 months and we'll be going for $100,000 starting next week so plenty of fun ahead. 

Until then, have a happy, healthy, wealthy Holiday, 

- Phil


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  1. PP for today.  Have a happy, safe 4th all!  I will be around for a while today, then off to bask in the heat and humidity of the great heartland!

  2. Phil Kahn you hit the nail right on the head what a scam

  3. Phil, those RUT Aug 710 P’s are now significantly higher (2.90) than yesterday (1.90) – why would that be if the Russell went up?  Just greater volatility? I want to sell some for the TZA offsets – do you still recommend that? 

  4. Jerconn,
    I show a low of 2.79 yesterday on TOS by TDAmeritrade for RUT Aug 710 P’s

  5. Good morning,


    IWM    79.96,  80.18,  80.48,  80.81,  81.09,  81.49,  82.28,  82.82,  83.01,  83.38 and 83.80

    I’m short !!

  6. Good morning!  

    Now it’s the first day of the month and USUALLY we get a nice inflow of fund money.  If we don’t get it – I can’t see what’s going to support the market.  Perhaps they are waiting on the June ISM numbers but we have no reason to think they’ll be good (below 50 is contraction, 52 expected) and, if we do get contraction, oil will fall off a cliff.  

    Russell Futures (/TF) opened at 825 so still time to short them again (in case you aren’t short enough) below that line and oil is a re-short (/CL) below $94, of course.  The Dollar already popped 74.80 so we’re BEARISH!!!!!  

    I’m sending this out now to make sure BEARISH is clear – let’s kill our long positions in the $25KP as well as the Income Portfolio (the short puts) and get cashy and safe(ish) over the weekend.  I still love our disaster hedges and they are about the same price as yesterday but hold off on selling offsets if you can as you’re likely to get a better price for short puts if you wait.  

    VIX Aug $15/19 bull call spread is $2, selling $17 puts for $1 is net $1 on the $4 spread.  I like that one too!  

    Watch those 1.25% lines, if they start failing, it’s a quick drop to the must holds and, if they fail – OH MY!  

  7. Giddyup to USO puts. Setting .10 TS, great start of the day.

  8. Phil
    The first 15 minutes money has been going out of market. Usually a false signal according to others.

  9. And we are sitting on the ascending support trend line for this rally, now at IWM 82.62 !!

    Out of TZA with 25 cents !!

  10. Have a nice vaca Pharm!

    WFR/Lol – This is Suntech breeching a contract, not a particular issue with WFR, who will book a very nice gain on the buy-out this year.  Talk about a wrong-way reaction!  If the market wasn’t so crap I’d be loving WFR on this dip.  Actually, I love them anyway…

    Kahn/Yodi – That poor bastard.  It’s like being trapped in a Kafka novel…

    RUT/Jercon – That’s just a supply and demand fluctuation.  It’s not the VIX because the VIX is down to 16.23 of all things!  I still like it but that’s on the absolute line of 710, not the fact that they won’t go to $12 on a move down before expiring worthless (or being rolled to longer $600 puts).  It’s not a good short to take if a big move up is going to force you out.  

    Don’t forget /RB is a nice upside play, now $2.9135.  Looking for Dollar to pull back from 74.95, of course.  

  11. Boy what a fraud on Kahn

  12. Bought TNA on the David Fry Rule !!  Looking for 83.01 or better !!

  13. Phil still holding the USO weeklies 36p short shall I roll now or wait till the afternoon?? thks

  14. Good stop DDday, very wise. 

    False, Shadow. Maybe it is but I’m willing to skip this rally in exchange for cashing out our short-term, unhedged long positions into this huge week.  If you don’t cash out when people are buying – you’re not going to get a good price!  

    XLF on the move at $15.40, that’s a bullish sign.  FAS testing $26.  Volume on Dow is just 14M, very dead so plenty of room for pre-holiday shenanigans.  

    USO/Yodi – They’re just .03, not really anything to roll is there?  It depends on ISM at 10 but I doubt oil goes much lower ($93.50 now, see above long on gasoline) and I wouldn’t chase an Aug put here.   Hopefully oil runs back up by 2:30 and gives us a better shorting entry.  

  15. Wow, what was that on SPX, /QM, and /DX

  16.  And IWM and /cl, whuck? 

  17. what a week for the bulls
    FU ISM

  18. So the rally continues! Short today, eh Phil? I think the banksters have your number.

  19. Odds favor a green day !!

  20. Phil
    I didn’t buy like JRW, my QQQ puts lost a bunch. What were the ISM numbers?

  21.  construction spending bad revision down…from +.4 to -.6% for april…came in at -.6 for May vs. estimate of +.1%

  22. dollar goes up market goes up?

  23.  Income Portfolio –  I started closing the July short puts yesterday as some hit under .10.  Do you suggest closing the longer term Jan 2012 short puts too?  Thanks, I really like this portfolio.  

  24. What a difference a week makes…    up 2.5 % lines, here we come…  

  25. phil—still bearish?

  26. We are now at the ascending resistance trend line of this rally, now at IWM 83.58; so be careful !!

  27. silver trading like death

  28. looks like a cheap point to be bearish to me.

  29. What the heck happened.. ISM??

  30. Friday, July 1, 10:03 AM June ISM Manufacturing Index: 55.3 vs. 51.8 consensus and 53.5 prior. Prices index 68 vs. 76.5 prior. Employment 59.9 vs. 58.2. New orders 51.6 vs. 51.


  31. CNBC is spinning!
    Can’t understand what was so good, smal limprovements but under last year.

  32. ISM 52.3, DOWN from 53.5 in May but better than expected and indexes are FLYING higher.  Obviously, this BS doesn’t change outlook for next week too much but that’s why we scaled in to shorts yesterday, we’ll have to wait for things to calm down now before adding shorts.  Notice oil not all that thrilled and gold not moving at all  - that’s not very rallyish…  

    Again I am totally ashamed to be participating in this sham of a market.  Look how staged that reaction was to a 0.4 "beat" in ISM.  Gold is now going the other way and the Dollar is moving back over 75 under cover of this rally but that then gives them bullish firepower again as they can now use the Dollar to give us another push later, when they need it.  

    XLF hit $15.50 and that should be it for them.  If they break over, then maybe we rally the indexes higher but, otherwise, this should be the top at Dow 12,500, S&P 1,330, Nas 2,800, NYSE 8,350 and RUT 835 – essentially our 2.5% lines.  Friggin’ FANTASTIC job by the manipulators getting us back here though – never underestimate those guys…  

    Friday’s economic calendar:
    Auto sales
    9:55 Reuters/UofM Consumer Sentiment
    10:00 ISM Manufacturing Index
    10:00 Construction Spending
    10:30 ECRI Leading Index 

    At the open: Dow +0.02% to 12417. S&P flat to 1321. Nasdaq+0.06% to 2775.
    Treasurys: 30-year +0.18%. 10-yr +0.05%. 5-yr +0.04%.
    Commodities: Crude -1.21% to $94.27. Gold -1.09% to $1486.40.
    Currencies: Euro -0.18% vs. dollar. Yen -0.41%. Pound -0.23%.

    Market preview: Stock futures are flat on Day 1 of the post-QE2 world, as most action could revolve around economic data dumped ~10 a.m. But there’s no major earnings today, and trading likely will dwindle ahead of the three-day weekend. Crude oil futures slip below $95 as eurozone PMI stumblesLater: ISM manufacturing, consumer sentiment, construction spending, U.S. auto sales.

    June ISM Manufacturing Index: 52.3 vs. 51.8 consensus and 53.5 prior.

    June Reuters/UofM Consumer Sentiment: 71.5 vs. 71.3 expected, 71.8 preliminary and 74.3 in May. Expectations 66.8 vs. 69.5 in May. Current conditions 79.6 vs. 81.9 in May.

    May Construction Spending: -0.6% to $753.5B/year vs. consensus 0%, -0.6% (revised) in April.

    Coincidentally, this statement came out at 9:55:  Three reasons Goldman Sachs’ Jan Hatzius expects a consumer comeback is in the cards for the second half of the year: gasoline prices have fallen sharply, house prices are stabilizing, household balance sheets are "healing." 

    And earlier (9:13): With investors on edge due to troubling manufacturing andinflation data, Goldman Sachs sees Chinese stocks staging a short-term rebound before falling back into a trading range. Goldman is also reducing its target for China’s CSI 3000 Index, which currently trades at 3050, to 3400 from 4000. 

    Anthony Sanders differs with James Bullard’s view that QE2 was a success, but he figures QE3 is coming just the same: "There would be no QE3 in normal times. But these are not normal times – there is a big election approaching. So if lower oil prices [don't] kick-start the economy… look for QE3." Nymex crude settled today at $95.42, right where it closed the day before the IEA’s release of oil stockpiles.

     In Alan Greenspan’s view, the Fed’s QE programs – not just QE2, but also QE1 – had little impact on the U.S. economy "besides weakening the dollar and helping US exports." Greenspan also continues to believe a Greek default is likely, and is skeptical about the introduction of QE3, given the effect it would have on the dollar.

    If a CEO was running the show in the U.S., the option on the table would be to raise taxes and cut spending at the same time, Buttonwood writes. It’s not only the rapid pace of government spending that has led to ballooning deficits, but tax receipts have fallen off since 2000. Will anyone in Congress dare suggest the idea?

    The eurozone PMI for June falls to 52 vs. 54.6 in May, the slowest pace in 18 months. The core countries remain in positive territory while the periphery contracts. Of note are Italy and Ireland – both falling below 50 after managing to hold above for the past few months. The euro gives up early gains, now flat at $1.4486. Full report (pdf). 

    The U.K. June PMI falls to a near 2 year low of 51.3 from 52 in May, and below expectations for 52.5. Markit economist Rob Dobson says the spread of the slowdown from domestic demand to now include export growth is especially worrisome. Sterling gives up early gains, now flat at $1.6031. Full report (pdf).

    India’s PMI falls to 55.3 in June from May’s 57.5. It’s the lowest reading in 9 months, but shouldn’t be enough to deter the central bank from continuing with a series of rate hikes. 

    The HSBC June PMI for China falls to 50.1 from 51.6 in May. The result is in line with HSBC’s flash estimate of 10 days ago as well as China’s official PMI - all showing China’s manufacturing sector continuing to slow.

    China’s official PMI falls to 50.9 in June, down from 52 the previous month, and lower than an anticipated 51.5. The reading is consistent with the flash number released by HSBC a few days back. The aussie slips about 40 pips to $1.0680 on the news, but is just giving back a bit of its major gains this week.

    ‘Risk-on’ investors have been moving out of the safehaven Swiss franc (FXF) in favor of the Swedish krona (FXS) on the heels of Greece’s austerity plan. But weak Swedish PMI data, and the transience of the recovery in global risk sentiment, could easily cap the potential of this pair trade.

    S&P comments on austerity measures planned by Italy, saying it is pleased at the action, but "we believe substantial downside risks to the … plan remain, primarily due to Italy’s weak growth prospects." The agency retains a negative outlook, saying there is a 1 in 3 chance, the country’s rating will be lowered in the next 2 years

    International banks, who collectively own a large chunk of Greece’s debt, are throwing their weight behind options that would provide "significant cash-flow support to Greece." These include rolling over or extending maturity dates, and reducing the stock of debt via buybacks.

    Crisis averted for the moment, eurozone finance ministers will get to spend the weekend at home, as a scheduled Sunday meeting in Brussels has been replaced with a conference call on Saturday. Ministers are expected to give a formal thumbs up to the next release of aid for Greece. 

    Sign of the times: the first gold ATM makes its debut in the U.K. "Gold to Go provides private investors with easy, convenient access to physical gold at fair, real-time prices." U.K. CPI is pushing 5% Y/Y.

    Core CPI in Japan came in above expectations at 0.6% in May, which is encouraging for a country that has suffered years of deflation and suggests domestic demand may be rebounding. Japan’s jobless figure was also better than expected, falling to 4.5% from 4.7% in April.

    Japan’s quarterly tankan business confidence index falls to a worse-than-expected -9, its lowest level in over a year, but the future outlook improves as parts shortages ease and factories steadily restore capacity following the devastating earthquake. (ETF: EWJ)

    Minnesota’s state government shuts down after the Governor and legislature fail to agree on a budget deal to resolve a $5B deficit. Two-thirds of state employees will be furloughed and state parks and campgrounds shut ahead of their busiest stretch of the year.

    The deadline for reaching a deal to raise the government’s debt limit and prevent a default is arriving sooner than many think. Though the official deadline for raising the limit is Aug. 2, an agreement needs to be reached sometime between July 15-22 in order for a bill to be passed on time.

    In a trifecta of distressing news, AutoChina (AUTC) announces that it’s under investigation by the SEC, expects to restate its FY2009 results, and won’t be filing its FY2010 annual report (form 20-F) on time.

    UPS freight will bump its rates in the U.S., Canada, and Mexico by 6.9% as of August 1.

    TIVO may be a prime candidate for a takeover once it settles a 7-year patent dispute with DISH. Possible suitors could be Google, Microsoft, or ROVI. According to Maxim, the company could be worth $20/share, almost double its current price. Shares +3.9% premarket.

    Chrome (GOOG) use 

  33.  Best Title o’day: from Bob Lang at Real Money: 

    I Love the Smell of Burning Premium in the Morning

  34. Argh!  That was another $1 on those FAS Aug $23 calls!  Oh well, we have 6 more months to make $50,000 but that was $8,000 right there….

    Oh wait, now they’ve corrected the ISM to 55.3, not 52.3 – that’s a MUCH better number.  Damn, now they might be able to go higher – lest see if those 2.5% lines hold or not

    Now oil, gas on gold catching bids too but I’m still watching for a good spot to go short.  Fantastic call by JRW at 9:51! 

    LOL Jabob! 

  35. Testing the old resistance trend line (now at IWM 83.65) as a floor !!

  36. What correction? I dont see no correction… What I want to do to these bankers (or wish happens to them) directly contradicts the buddhist teachings I try to live by…..

  37. I read somewhere that Reuters subscribers get the consumer index number at 9:55, everyone else – 10:00.

  38. If we break 83.80, i don’t see anything until 84.37 !!

  39. Dollar/DC – Sure, if they have a powerful move up, they can drive the dollar higher while no one is looking and that then gives them a loaded weapon they can use later, dropping it back down when the markets need a lift on no news.  It’s like a little dance…  

    Jan puts/Income Portfolio, Rev – Not necessary if they are on target.  I don’t have them in front of me but I was thinking more of the July and Aug short puts – why risk it over the weekend, especially with the VIX so low again (15.38 now)?  We can always sell more… 

    Bearish/Jabob – Yes, even our great ISM doesn’t make up for the rest of the World’s crappy numbers.  Now we’re up 600 points on the Dow (5%) since Monday morning.  Did $1Tn flow into the markets this week?  Not on this volume!  It’s all air underneath these levels but you can’t make the balloon pop – we’ll just have to sit back and see how far they can stretch it before it breaks. 

    Oil stopped just under $95 again but a bit scary to go short at the moment.  Gasoline up to $2.938 though.  If they break $2.94 then a good shot at $2.95+

    FAS TODAY $27 puts at .60 have just .05 premium, stop at .50 – 20 in $25KP.

  40.  For those of you following – Income Trader just alerted an insurance buy

  41. Wow, all the 401K purchasers will be paying top dollar at EOD today!

  42.  JRW, please keep us informed of your opinions! Anybody else in the income trade check Kojo’s tab for an alert. Hopefully this is the top…

  43. SQQQ Aug $23 calls at $2 are a good deal.  No cover for now.  

    DIA Aug $124 puts at $2 also nice. 

  44. Hi Phil,

    I’m a new subscriber here and would like to understand hpw you manage your intraday recommendations, such as TF and CL. Once recommended do you use and stops if so at what level? You analyze intraday or end of day price for stops? Or may be you make always discretionary decision and let us know when to close the position?

  45. Bespoke: The S&P 500 has only had 5 straight days of 0.75%+ daily gains 7 times since 1928. Will we make it 8 after today?

  46.  I found this article from Gold Scents about the dangers of technical trading right now.  Like JRW’s chart, this author is also cautious about the market hitting resistance, but he thinks it is a little early to short.  I’m locking in gains on some things and getting more towards cash today.

  47. Took a profit of $3.08 on TNA (one of my favoite calibers) !! 

    Bought 1/3 TZA !! (and will buy another 1/3 on a break down of the 83.68 trend line)

  48. Rut $1+ down from high and falling – better for income trade

  49. Phil / Anyone – I know this may be an elementary question, but why do some trades execute at or very close to the mark, but others just hang on out there even when you’re offering BETTER than the mark?  For example, I had a rolling trade that was a debit – the mark was .19, and I offered .10.  The mark went down to .6 and still didn’t execute.  Finally it did at .10 (don’t know where the mark was at that moment).  I’ve noticed this especially with more complex trades (like rolling orders).
    My assumption has always been that the mark is based on the last execution of the individual legs, and probably with varying numbers of contracts.  So the issue is matching my specific order requirements.
    Sorry if this is the umpteenth time the question has been asked/answered.

  50. From Fidelity: Econ update: Softer data, rising risks
    We believe the past month’s economic data have generally confirmed a deceleration in U.S. growth. But the overall trend is still consistent with the mid-cycle phase of expansion, characterized overall by a steadier but more modest pace of growth and a low risk of recession.

  51. Phil / ISM   I mentioned yesterday I read that there was usually a close correlation between Chicago PMI and ISM, so we need to keep this in mind, which is why I sold my double oil short before 10am.  Overlay JRW’s point, which he’s emphasized before, that day 1 is usually positive and it’s hard to go short.  Oil at $94 is going to kill the consumer and municipal and state layoffs are about to accelerate (new fiscal yr), so this week’s action is setting up some fab shorting op/s, which I’m sure you’ll time for us.
    The problem is that the looming unemployment Ddip will trigger QE3 and the banksters will be tipped off first and they’ll then crush our short positions.  How will be avoid being scre’d again?

  52.  Jceasar – I’ve had that problem when I trading something that is lower volume or wide ranging bid/ask spreads.  Sometimes ETFs like RUT, TZA and many of the ultra ETFs seem to trade this way.

  53. JRW
    3.08 is excellent as long as it includes .06 or 300mag. otherwise no legs!

  54. how long until cmg is at 400 and pcln 600 and nflx hits 300?
    fu momos!

  55. revtodd64 – Your explanation seems reasonable enough, and…you’re a WINNER!
    The trade was indeed on TZA.  ;-)

  56. shadow / 308

    Point taken, FMJ Boat Tail !!

  57.  Jceaser — on TOS, the mark is simply the mathematical midpoint between the current bid and asked.  The thinner the volume, the less it means. Some orders just aren’t going to execute at the mark, especially multi-leg orders and rolls.

  58. Go HOV, go!

  59. Hi Phill — I have 10 SQQQ naked  August 22 call bot for 3.45 yesterday-- would you rec. sell SQQQ August 23  or 24 short put today to finance the call or wait till next week and sell other stock put that you posted yesterday. thx

  60. Jceaser
    Check always what the open interest is if it is very low the spread can be very wide. and what escohen5 says

  61. revtodd64 / escohen5 / yodi – Thanks!

  62. Phil,

    I know you’re not a TA guy, but I think this chart may be helpful in understanding the forces at work here !!

    Taking 9 cents on my TZA and waiting !!

  63. Here’s another chart, that explains very well why stocks go up.
    (I admit not a good explanation for todays movement, but for the next months and years movements)
    Maybe we should all by solid stocks and take vacation for a few years.

  64. I don’t know Phil. Looks like they don’t want this to go down yet. Maybe next week. Dollar at $74.65. It’s simply amazing what short term memories we have. What’s the MSM saying? That all is well again? But this is not about us is it? It’s about what they want regardless of the world.

  65. Welcome Petrinick!  Long story but our strategy for the futures is to have VERY tight stops on the wrong side of our entry lines and we look for entry lines where we have very strong support so we should, in theory, be able to easily get out with nickel losses (or .005 losses in gasoline) and we just look to make money until the momentum stops, with very tight stops.  Many people scale in and out – which is the best practice if you are going to hold a decent-sized positions so I do call major lines to get out but I don’t call every wriggle – you shouldn’t even be touching Futures trades if you are not already a well-seasoned, hot-shot momentum trader.  

    8 days a week/Rain – First they have to hold it today – not in the bag yet, especially on this pathetic up volume.  

    Cash/Revtodd – When in doubt, cash is king.  In two weeks we’ll have a far better idea of what’s real and what’s not but this is clearly surreal already. 

    Why/JC – Depends on the liquidity of the contracts you’re trading.  If you have a multi-legged trade, then you’ll be hampered by the least active contract.  Also the brokers are all over the place with their estimates, I generally try to just bid one spread at a time to get them filled and then, depending on which leg fills first, THEN I’ll set a tolerance level for the other side.  If you are patient that way in a generally flat market, the wriggles can often get you two nice fills.  Keep in mind if you get a .05 better fill on each side of a spread just 5 times, that’s .50 you can blow on the one spread that gets away so, logically, going for the nickels and setting .25 stops on the unfilled legs is a high-probability strategy.  

    Sounds good Rain!

    Avoiding QE3/Tusca – Well my plan is to take the money and run on the short side (assuming it pays off) and scale into long positions on the way down.  As long as we’re not greedy, we’ll be thrilled when/if they announce QE3.  Stay out of trades you can’t get out of, keep a lot of cash on the side, do a lot of hit and run trading – that’s the plan for the next few weeks as we see how earnings work out. 

    Dollar 74.65, oil $94.33.  

    SQQQ/Gucci – Well the bid/ask is all over the place on those but I’d offer $1 to roll down to the Sept $20s – just in case you can get it.  Other than that, I’d just hold and see what happens over the weekend but, of course, it’s a gamble.  On the premise you might fill that roll, you can sell the July $24 calls for .75 as you’d have a +$4 spread with 2 months to go but it will give you less potential upside, of course.  

    LOL JRW – that is a great image!  

    Stocks/Pentax – Oh I’m definitely long-term bullish for that exact reason.  Money has to go somewhere and nowhere can suck up as much money as stocks except for homes, of course, and I don’t see that happening for a while. 

    MSM/DC – All is FANTASTIC.  FREE DSK, FREE DSK!!!  That’s the only news now… 8-)

  66. Phil, I have EDZ 19/22 August BCS from a week or so ago. It was pretty agressive but how or would roll down and out or just out? Limited the damage some by selling July 19 short calls. Thanks

  67. For those still holding the FAS Money $24 calls – What are you planning on doing today?  I think I’m going to wait until later today to roll,  but to which strike?  The $26 calls have about 0.40 of premium, but shouldn’t we be rolling to something lower (either the $25′s or $26′s)to better capitalize on a move down?  

  68. Phil,
    funny you mentioned homes. I’ve just been adding the Case-Shiller home prices index to that chart:
    Trend is clear, but there seems to be an offset. Do you have a clue why? Maybe homes aren’t as solid as they have been 30 years ago?

  69. Phil,
    Do you recommend to still hold the short TF position from this morning recommendation or get out. It is still overbaught in my opinion, but may continue going up.

  70. AAPL making a move now.  

    Europe closing up about half a point.  Highs of the day but not as excited as our indexes.

    Gasoline topped out just over $2.94 and gave a re-load at $2.92 again, now $2.9247.  

    11:00 AM On the hour: Dow +0.87%. 10-yr -0.37%. Euro -0.13% vs. dollar. Crude -1.19% to $94.28. Gold -1.21% to $1484.60. 

    How great has this week’s equity rally been? Up 5% already this week, should the S&P close up more than 0.75% today (as it’s on track to do), it will be just the 8th time in its history, the index has jumped more than that amount for 5 consecutive days.

    Zero exposure to stocks is the best way to position a portfolio over the next few months due to lingering uncertainty on Greece, Nautilus Invest CEO Bruno Verstraete tells CNBC. The impact of whether Greek measures amount to a credit event would be significant, he says, because of the "huge impact" on the financial industry.

    According to J.P. Morgan’s "Five Stages of Greece" report, the recent bailout has merely moved attitudes towards the Greek crisis from the "acceptance" stage of coping with disaster back to the "bargaining" stage. JPM also sees clear parallels between the Greek crisis and the Mexican debt crisis of the ’80s. 

    There’s no "collapse" in Treasury bond prices, Cullen Roche writes; it was simply investors "overreacting to all the bad news and becoming excessively negative," and now bond traders are "caught flat-footed… This is as much a non-event as the end of QE2."

    June auto sales, to be released today, likely will be level with or slightly better than May, but Ford’s (F) top sales analyst predicts sales rates will rise after June through year-end. "There are some indications that May and June could be the slowest sales rates of the year, [but] at some point in the second half, we’ll return to a sales rate of the first half or better."

    GM (GM) June U.S. sales: +10% to 215,358 vehicles. Chevrolet up 10.9%; GMC up 14.9%; Buick up 13.2%; Cadillac down 7.9%. Top-selling Silverado pickup up 5.1% to 32,579. (PR)

    UBS’ Stephen Chin raises his PT on First Solar (FSLR) to $170 from $165, claiming the company’s loan guarantees from the DOE will act as a "bridge to grid-parity," at which point solar vendors won’t be asdependent on subsidies for their survival. Chin is also raising his FY2012 and FY2013 EPS estimates by $1 on account of the DOE deal.

    IDC expects revenues for servers used to handle cloud applications to reach $9.4B by 2015, with unit shipments growing more than 21% annually. Companies likely to benefit include Fusion-io (FIO), whose memory modules are increasingly used in cloud servers, and F5 Networks (FFIV), whose application switches often interface with cloud servers.

    Wind turbine and smart grid component maker American Superconductor (AMSC -0.8%), clobbered earlier this year after seeing orders collapse from its largest customer, has been given an extension to obtain financing for its planned acquisition of Finnish power component supplier The Switch Engineering.

    Cree (CREE +2%) adds to yesterday’s gains following news of an LED bulb collaboration with GE. But with LED prices under pressure, many analysts remain negative. Morgan Stanley reiterated an Underweight rating on Wednesday, and today, Canaccord and Gabelli arereiterating Hold and Sell ratings, respectively.

  71. Phil – Regarding your response to Tusca (i.e., " lots of cash & hit and run").  That’s the strategy for the $25k/$50k portfolio, or just generally over the next few weeks?  

  72. Now some guy on CNBC is very graphically trying to re-establish the case – interesting.   This is the victim’s attorney.  Of course, she has an attorney not to prosecute DSK – that’s the prosecutor’s job.  This is the guy who handles her book deal and private lawsuit against him so it’s still going to be a horse race.  He’s working really hard to poison the jury pool, very unusual…  

    EDZ/Jomp – If we have a strong finish then it’s dangerous to roll down but, if you intend to stick with it, you do it while it’s cheap.  $1 more will get you to a $16/22 spread but you can buy out the caller for .35  and sell the July $17 calls instead for .60 and put a stop on those at .90 which accomplishes the same thing.  

    FAS Money/Palotay – The this week $24 calls are $2.66 and they can be rolled to the next week $25s at $1.85 for .81 out of pocket and that’s the roll of the moment with no offsetting put sale (hoping for a pullback).  

  73. Phil- i bought yesterday the weekly iwm 83 put @1.21  now .59  With 7days left and this loss what would you do?thanks

  74. Phil, TM is back in production, I’m thinking about TM Aug $80/85 BCS and sell 2X Aug $77.50 Put for $1.23 net for $5.00 spread that $3.00 ITM?   Thanks.

  75. The ECRI Weekly Leading Index: Ten Consecutive Weeks of Slowing Growth
    by Chart School – July 1st, 2011 11:35 am
    Courtesy of Doug Short
    The Weekly Leading Index (WLI) Growth indicator of the Economic Cycle Research Institute (ECRI) declined to 2.0 from last week’s 2.9. This is the tenth consecutive week of decline from the 11-month interim high of 7.8 for the week ending on April 15.

  76. This should be the push, as the trend line crosses 83.80 !!

    Actioni contrariam semper et æqualem esse reactionem: sive corporum duorum actiones in se mutuo semper esse æquales et in partes contrarias dirigi

  77.  Homes/Pentax – Just out of fashion, that’s all.  It doesn’t take much money to jack up gold and oil but jacking up home prices take not only a real commitment but wide-spread cooperation on the part of retail consumers – you’re not going to get that until you have a real recover, not this inflated BS kind of recovery.  

    /TF/Petronick – NO!  I recommended a short UNDER the 825 line, we went over it quite a while ago.  I still like them short again at the 835 line but AS ALWAYS with futures, with very tight stops at the line because it’s VERY EXPENSIVE to be wrong in the futures!  

    Strategy/JC – Yes, once we have cash again, I hate to commit it.  We only ended up using a lot of cash because we got sucked into that FAS position as it kept moving against us and I refused to let it go because I expected pretty much what happened today to eventually happen.  It was just bad luck that we hit $50K this week and I decided to get back to cash rather than continue to risk FAS or we would have had another $8K today as those Aug $23s are now $4.30 but I’m pretty happy where we are and confident we can get to goal ($100K) by the year’s end. 

    IWM/TraderM – They opened at $1.13, fell to $1.06 at 9:40, .95 until $9:55, .70 until 10:10 and now .55 so I assume you were very early in your scale and did not intend to stop out.  That being the case, I would roll back to the July $83 puts at .90 (+.35), which puts you in at net $1.56 and then DD at .90 for 2x at avg. $1.23 and hope we drop over the weekend.  Of course, if you luck out and get to exit 1/2 at $1.23 later today, you grab that and then you are back in 1x at $1.23 in a much better position than you started with.  

    TM/Bob – I think that’s a bit aggressive considering we’re still thinking we get a pullback and they just popped up $3 (4%) this week so a little chasey with such a short time-frame.  Had you asked me at $80, I would have been much more enthusiastic.  

    ECRI/Jabob – Good catch, that is a major indicator and still sucking! 

    Dollar 74.70 – oil $94.30, gasoline $2.9309.  Pound $1.60566, Euro $1.45023 and 80.846 Yen to the Dollar.  Gold $1,486, silver $33.88, copper $4.29 – just rejected at $4.30.  Nat  gas, as it often does, paces copper at $4.32 (I have no idea why, must be stuck in the same bot by accident).  

    12:00 PM On the hour: Dow +0.94%. 10-yr -0.38%. Euro +0.04% vs. dollar. Crude -1.3% to $94.18. Gold -1.04% to $1487.10.

    European shares close at the highs for the week as nearly 8 straight weeks of declines left a lot of folks needing to buy once the Greek crisis got pushed aside. Stoxx 50 (FEZ+5.6%. Spain (EWP) and Italy (EWI+7%, Germany (EWG) and U.K. (EWU+5%.

    Online games maker Zynga files its S-1 to go public with a $1B common share sale. (previously)

  78. Thank you, thank you very much !!

  79. Phil
    Do any August Spy puts look good?

  80. JRW- you were buying Aug IWM puts yesterday if I recall- still in them or will you add?

  81. Phil—I have the TZA 10 July 38/42 bcs @ 2.00 (now  .16)  and sold the 10 DIA aug 113 @ 1.65 (now .37)--so down net .54—thinking of holding thru weekend and then deciding—good or bad idea?

  82. Hi Phil; I have several Buy/writes wit Dc puts that have dropped 50 %. Should I close out puts with intent to buy back next week since you advocate bearish? Thnaks

  83. Phil : DEC puts,not Dc

  84. So how do I go to cash in a 401k? There is just an endless list of fund options. Is a treasury fund equivalent to cash? Is it possible for treasury investments to tank while the dollar gets stronger or would they always move in lockstep?
    (Shouldn’t be so hard to hold cash in a 401k but they really are determined to keep a chokehold on the money I guess.)

  85. Buying more puts here for next week, even as I am 100% in TNA !!

    Here’s my plan:

    And here is my rationale:

  86.  Google is in talks to buy Hulu.
    NFLX is spiking down.

  87. JRW, are you going for July puts?

  88. JRW- thanks
    By the way- my high school Latin is more than a bit rusty- care to translate? Perhaps something like equal and opposite reaction?

  89. JRW – do you still keep those IWM puts you’ve bought yesterday? 
    What’s your cost basis if that’s not a secret?

  90. palatoy--that spike down on nflx lasted about 1 minute ;-(

  91.  Phil, can you comment on the rationale for rolling to the $25 FAS calls next week, instead of the $24′s?  The $24′s will do much better if we get a complete retrace of this bs rally.

  92. Also, the last time we had an entire daily candlestick outside of the default Bollinger Band was Nov 5, 2010 and we dropped 50 S&P points the next week; one would think there will be some form of reversion to the mean.

  93. Phil,
    Homes: you might be right and probably I should also put the median (not average) wages into that chart they are probably lagging even more than the home prices and dragging these down.

  94. Jamie Dimon for Treasury, Lloyd Blankfein for President, and Satan can continue as Fed.  What could possibly go wrong?!?!? 

    if(window.yzq_d==null)window.yzq_d=new Object();

    Mark Zandi: Jamie Dimon Would Be “Fabulous” Replacement for Tim Geithner

  95. Guys,

    My puts are all August, IWM and SPY various strikes, but mostly 81′s and 82′s

    Remember, I’m NOT the options guy !!  8-)

  96.  Jabob – No kidding…  :(

  97. Troy / Satan — That’s exacty the kind of thing that could go wrong:
    if(window.yzq_d==null)window.yzq_d=new Object();

  98. JRW,
     I was typing my question before saw your post about puts.

  99. Jamie Dimon is the most arrogant pr!ck of all the bankers! At least Blankfein usually quietly goes about his satanic business….Dimon’s a loudmouth….

  100. jvest:
    There is usually a moneymarket option in 401ks. Of course your employer picks, but I always had one in the places I worked.

  101.  Seems like every time we go up dramatically, over several days, the stocks I would consider crap lead the way (NFLX, CMG, LULU etc) and then later in the rally, the stocks I would consider better, finally finish off the rally (AAPL, INTC, CSCO, ADP, ABT). If that’s the case, we should be nearing the end. I realize this is not a very specific, quantitative post – so forgive for that. Anyone else seeing the same thing?

  102.  I feel sorry for anyone playing CMG down (I’ve long since run out of dry powder). This is POS burrito play is unstoppable.
    I almost bought calls, and also on PCLN Jul-480′s back when they were 0.65 last week (now 42). 
    Almost ….  Oh well. There is sooooooo much money out there right now. How come I want none of it.

  103. moneymarket/Judy – I’m as surprised as you but I don’t see one. Fidelity handles the 401k accounts for my employer (IBM). I guess Fidelity doesn’t think they get enough fees by offering money market accounts.

  104. JRW,
    BTW – VIX indicator failed at the end of April – (a week before your first red arrow)

  105. jvest / MM — check what the default to when in cash. Some sweep into a MM.

  106. deano—phil made the perfect call on the momos around 2 weeks ago. he never said to buy them but he did say they could run. And they have all gone through the roof for the last two weeks.
    FU MOMOS!!!!!

  107. Starting to get vertigo here.

  108. Phil, 
    What kind of disaster hedges are you looking at over the weekend?

  109. JRW III: Last chart was very informative. thanks

  110. Are they really gonna pin FAS at 27 today?  It’s simply amazing.

  111. WTF-- we are 235 points away from the May 2 close?

  112. lol730

    Yes, but that was on a gap up, so not a legitimate indicator !!

  113. "Jamie Dimon for Treasury, Lloyd Blankfein for President, and Satan can continue as Fed.  What could possibly go wrong?!?!?"
    Yeah, I think with that team in charge we’d descend into some kind of Mad Max world within a couple of years.  Maybe less than two years (call me an optimist).

  114. Phil--on CMG
    have the July 300/280 bps @ net 10.50 and sold the Aug 300 calls @ 11.50 (now 23.50)—not looking good--was hoping for a sell off--any help to salvage this position?

  115. What caused oil to spike up

  116. Troy,
    That’s funny! I read that article earlier and thought the same thing.

  117. Dow volume 66M at 1:30 – still lame.  Oil $94.63, gold dead as a door-nail at $1,484.  

    SPY/Streth – I like the Aug $132 puts at $2.11 because, if you get in trouble, it’s easy to sell July somethings for $1 and roll back to Sept.  

    TZA/Savi – Well THAT is waiting too long to roll!  I’d leave it as the DIAs are obviously on track to burn through but I would take the July $38 calls, now .30 and roll them to the next week $35s at .30 because those have a much better chance of paying you and you are screwed either way if they don’t (and then you can buy some AUG calls and try again).  

    Good note on trading Rain.  

    Puts/Dflam – That’s our rule of thumb.  If you are up 50% with more than 2 weeks (or two months in long-term trades) to go and you think you’re at support, may as well take a chance as it’s time to sell something with more premium anyway if it keeps going your way.  

    Cash/Jvest – Aren’t you allowed to have actual cash?  The problem with Treasuries is if you buy low-yield notes and rates kick up, then your notes are worth much less.  I don’t know enough about the rules and options in a 401K but shouldn’t there be some guy who you can talk to on that specific account.  Surely they have some options?  

    That’s a big reverse you have planned JRW! 

    NFLX/Palotay – Quick recovery. 

    FAS/Palotay – That’s true IF it does go back down but, if it doesn’t, the better practice is to keep rolling for position.  Even when you are just buying $1 for .80, those 20% decisions add up over 50 weeks.  

    Homes/Pentax – That’s the problem with the wealth gap, the averages are a joke when 1% of the people make 40% of the money…  Unfortunately, even super-rich people only tend to buy 3 or 4 homes at most.  Doesn’t make up for the 150M people who can’t afford one at all.  

    ROFL Troy – That is the scariest thing I’ve read in ages!  

    Wheee, look at gasoline go – $2.955 on a super-spike!  

    Crap/Deano – That’s just a function of the easy to push around stocks being used to pump up the indexes and then, when real money gets drawn in, it finally begins to move the real companies.  Now you may say NFLX, CMG and LULU are real and they are but they are easier to manipulate by a mile and I say that in the context of my 1999 mind-set where many "real" companies would leave the big-caps in the dust yet most of those fast movers don’t exist at all a decade later.  Reality is fleeting in the markets…

    CMG/BDC – If you sold short calls, it just gets to the point where you have to roll them along and be patient, unfortunately.  As I said on these guys – you have to wait for earnings to get a real read on them.  

    Speaking of big caps – IBM making new highs, that’s doing wonders for the Dow.  XOM, on the other hand, not buying into the big move in oil and gasoline so a stop at $2.95 in gas is a good idea and  a short on oil below the $95 line is also good but maybe we go higher first into the NYMEX close at 2:35 so don’t try to force a trade!

    USO July $36 puts at .33 were $1.30 on Monday so a fun way to play for a disappointing demand weekend.  

  118. phil--any way this market actually goes lower today?

  119.  JRW
    why aren’t you selling calls that you could roll on the "outside" chance this thing keeps moving for a day or two.
    What about a follow thru on a big move either way before a 3 day week end?
    thanks for your insights – your moves help with other stock positioning

  120. Getting out of TNA here for another 75 cents.

  121. Phil, FAS/25k, Thanks for the FAS play and walking us through the countelss adjustments.  Due to early margin requirement contraints in my portfolio, I was not always to sell the weekly calls.  I was fortunate and kept following through when it made sense.  When we bought the July 23C I decided to add 50% more.  I decided to only sell half when you recommended selling all in the $25k. Needless to say the last couple of days have been wonderful.  Sold another 1/2 this morning, and keep rolling the stop along.  Without your insight and guidance, I would have abandoned the positions long ago. Thanks again.

  122. ISRG making new highs!

    Momos/Jbob – I’m starting to agree, this is getting silly. 

    Good picture for it, Rain.

    Hedges/JMM – Just the stuff we’ve been taking on TZA, SDS, EDZ (doubtful they sell off on Monday with us this high), SQQQ, SCO, the straight puts on DIA, SPY, USO and SQQQ….  Other than that, not much.

    May 2/Jabob – You’re right, it’s like they’re not even trying!  8)

    CMG/Savi – Yes, that is sucking.  I don’t think it’s worth moving now as the Aug calls have $10 in premium, which is a lot and the spread is now $1.40 with 14 days left so not dead yet.  You could roll the $300 puts ($1.75) to the Aug $280 puts ($4.60) and take out the short $280 puts for .40 to buy some time, hopefully after earnings and, of course, the plan would be to sell some Aug puts if you get a dip for more than the net $3.30 you’re spending on the roll.  Since the whole trade was a credit, the goal is not to add money out of pocket on the vertical (except temporary) and to work the short calls to expire worthless.  

    Oil/Bert – ROFL?  What caused it?  GREED!  

    Lower/Jabob – I would be amazed if people don’t take the money and run into the close.  Nothing is really fixed in the World except the US’s ISM number (everyone else’s sucked) and if you leave longs on the table, you are going 3 days where disaster can strike and all you can do is wake up on Tuesday and see how much you lose.  If you are a fund and you were down 5% on Monday and now you are even for the Q and can get back to cash and brag about how flexible you are – that’s the smart move.  

    Excellent Ross – that’s great to hear, congrats!  

  123. ban2

    They are Aug puts, so I have time; and with the VIX here they are cheap !!

    As to the Long Weekend Rule, it’s a situation where the market is flatish with a big move on Friday or Thursday and Friday, giving future direction. We’ve had a 7 day melt up; I think we correct !!

    Of course, I sometimes get in trouble when I think too much !! 8-)

  124.  Jvest – I had the same problem with my 401k.  There is no way to just hold cash like in a brokerage account.  I called our CFO and specifically asked for a change and they did add some investment options due to my complaints, but the best they could do was to have a fixed asset account that loses about .08% per year.  I would love to dump my 401K into my IRA when I change jobs.  It is one big scam.  My wife worked for Merrill Lynch as a CFP and felt like a fraud, so she quit and went private.  Sorry, end of rant!

  125. Now this is a move for the ages…..


    For the SWW, CRIS stock with the Dec $5/2.5 C/P for 85c……

  126.  JRW
    thanks – brain already shut down for the w/e

    2119K   View   Download  


  127. Phil / Big reverse

    I think we pull back to IWM 82ish, then down to 77.60………or up ………….to a galaxy far far away !!

    Either way, my puts win  8-)

  128. Phil / Layoffs impact    We’ve read about the start of municipal / state layoffs due to new fiscal year budget squeeze and less Fed aid.  Maybe 2 mm jobs at risk?  Now, if the GOP is going to ram austerity down Obama’s throat as part of the debt ceiling debate we will have a job crisis quite soon – but will Congress have the blls to actually cut big now while constituents are hurting.  Views on these two issues and how soon do the accelerating unemployment #’s show up?  Key to timing short positioning I think?

  129.  Wow. Dont check the markets for a couple weeks, and looky, back to right about where i left. CMG 315? AMZN 210? GMCR 90? At least SODA is doing ok (on a follow cramer thesis pre-sheeple, i’m up a good 20%). Poor RIMM thought. Yuck. Oh well other longs are doing ok. 

    Hope everyone got some good trading in the volatility of the last couple weeks. Phils calls seemed great, and FAS worked out nicely….

  130. We don’t need no stinkin’ POMO, do we?

    The flip side of the risk rally this week is the pounding of the Treasury market. At 1.82%, the 5 year Treasury is more than 40 basis points higher in 5 days. Percentage-wise it’s the biggest weekly move ever

    Even with constant worrying over deficits and a debt ceiling standoff, there’s apparently no safe haven for global investors quite like Treasuries. On key reason is the Treasury market’s size, which provides unmatched liquidity: there’s more than $9T in outstanding Treasury volume, and an average of $500B in bonds change hands each day.

    02:00 PM On the hour: Dow +1.21%. 10-yr -0.36%. Euro +0.05% vs. dollar. Crude -0.17% to $95.26. Gold -1.26% to $1483.90. 

    It seems simple enough: release oil from the SPR, watch the price drop, and everybody goes home happy. However, the mechanics ofactually purchasing the oil and getting it to where it needs to go makes one wonder why anybody bothers, unless they’re gaming the process for an arbitrage profit. 

    Dr. Copper +4% today, adding more fuel to the positive economic spin emanating after today’s stronger-than-expected ISM report. Word that China may be holding interest rates steady is helping support prices. Copper futures for September delivery stand at $4.30/pound, up from $4.09 earlier this week.

    Greece ups its already bleak forecast for economic contraction in 2011 to 3.9% from 3.5%, but finmin Venizelos sees growth returning in 2012 (how could it not). He anticipates unemployment, currently at 14.1%, topping out at 16-17% this year.

    Sure, the salary sucks – but it’s a nice bonus plan:  Citigroup’s (C) Vikram Pandit, who took a $1 salary after his bank received the most taxpayer assistance of any U.S. lender, is poised to collect $80M from other payments and awards that may eventually total more than $200M. "Taxpayers saved this bank, and he’s getting a bundle while shareholders are getting shortchanged on the stock price," Graef Crystal remarks. 

    Gambling revenue in Macau rose 52% in June Y/Y, as visitors from mainland China continued to fuel strong growth in the only place in China where casino gambling is legal. Shares of casino operators with exposure to the Macau market trade higher: LVS +4%MGM +4.5%,WYNN +4.3%MPEL +6.3%.

     Darden (DRI+5.1%) pops after issuing strong guidanceyesterday, expecting to open 80-90 new restaurants in 2012. The firm reported strong 4Q sales (+6.8% Y/Y), saying higher prices were offset by lower expenses. Darden’s rosy outlook also pushes up competitors:EAT +6.2%RT +3.6%PFCB +3.4%.

    Google (GOOG) is in early talks to buy video site Hulu, the L.A. Times reports – a move that would go a long way toward solving Google’s internal dilemma about how to add more professional content to its user-submitted empire on YouTube. Hulu advisers Morgan Stanley and Guggenheim set up meetings with Microsoft (MSFT) and Yahoo (YHOO) to gauge interest.

    Tech IPO buzz hits fever pitch as LivingSocial’s $1B IPO leaks, and Zynga files. Shares of already-public Pandora (P +8.5%) and LinkedIn (LNKD +3.3%) continue to gain, but the bubble tag has beenbandied about due to sky-high valuations. Tech IPOs hit $5.9B in 2Q, but still trail the frenzied levels of 1998-2000. 

    Chrysler (FIATY.PK) June U.S. sales: +30% to 120,394 vehicles, best June sales in four years and a 15th straight month of Y/Y gains. Total cars +5%; trucks +42% to 88,735. Ram pickup +35% to 21,362; Jeep Wrangler +27% to 11,290. (PR

    Ford (F) June U.S. sales: +14% to 194,114 vehicles. Cars up 17%, utilities up 15.3%; trucks up 9.1%. The company’s top-selling F-Series pickup reverses last month’s drop to gain 6.7% to 49,618. (PR)

    Honda (HMC) June U.S. sales: -24.3% to 83,892 vehicles. Honda division -39.4% to 32,000; Acura division -18.3% to 2,296. Total car sales -31.6% to 44,261; trucks -14.2% to 39,631. (PR)

    Kia (KIMTF.PK) June U.S. sales: +41.2% to 45,044 vehicles. Sorento up 16.3% Y/Y to 10,013; Soul up 76% to 11,314. (PR)

    Nissan (NSANY.PK) June U.S. sales: +11.4% to 71,941 vehicles. Nissan division up 16.7%; Infiniti down 24.4%. Overall, cars up 9.5%; trucks up 15.2%. (PR

    Toyota (TM) June U.S. sales: -24.1% to 110,937 vehicles, vs. Edmunds expectations of -22.9%. Toyota division -21.9% to 100,164 – Camry -24.8% to 21,375, Corolla -13.7% to 18,872. Lexus division -40.2% to 10,773. Total light trucks -12.5% to 54,379. (PR

    Three lunchtime reads:
    1) Shopping for stocks? Five measures to ignore
    2) Government: the dominant player in U.S. credit markets?
    3) A guide to selecting commodities futures-based ETFs 

  131. Pharm / ARRY – basing now for a move upwards back to $3?

  132.  GOOG is on fire the last week. 

  133. Interesting note on Health Care from Seeking Alpha:  

    "Once insurance companies intervened in collusion with anti-competitive measures instituted by Congress, the providers were all now non-compete by law across states, which built up these unnatural moats, cobbling up unnecessary administrative bureaucracies which grew heavier and heavier over time. Those bureaucracies are expensive. And that doesn’t even count what malpractice insurance has done. The insurance industry lobbyists have inflated prices along with the BAR forcing mandates on states to keep the competition a non-issue, IOW fiefdom monopolies."

    Don’t be daft! Congress only enacts laws at the behest of the highest bidder and American politicians are like children fascinated with shiny objects. There is no way that consumers can raise enough money to outbid insurance companies for favorable legislation.

    The reasons commercial health care do not work are

    1. Most diseases are chronic conditions like diabetes that cost a lot to treat over a lifetime, especially in the last few years before death when many complications set in.

    2. Carrying the additional cost of beancounters to adjudicate claims makes the whole process non cost effective.

    3. Health care in the US is vastly complicated because of the need for Workers Comp for on the job injuries. In countries where everyone has health care from birth to grave it is not an issue. If you want a new roof on your house in the US, Workers Comp may add 25% to the price, unless you use Mexicans.

    4. Lack of universal health care in the US has the effect of grossly increasing the cost of motor insurance compared to other countries.

    5. Drugs are much, much more expensive in the US that other countries for quite spurious reasons such as the cost of development of new drugs. The real reason for the higher cost is that manufacturers have bribed Congress to fix the market and allow Medicare, Medicaid, the VA, the military, and so on to pay the rigged prices.

    6. We have a totally corrupt Supreme Court that allows large corporations to bribe government ad lib. After the next American Revolution this will be seen as equivalent to the Dred Scott ruling that persons of African descent were not human and could never be US citizens. The Supreme Court is a case of the foxes guarding the chickens.

  134. hanna5, where were you?  We missed you and you missed the big run-up.

  135. Phil is not around? 

  136. This is getting painful…

  137. JRW
    I am with you on the retrace, my puts are loosers now but talk about BS, then there was today!

  138.  Pharmboy
    My son is the  domestic Mkt Mgr for a UK company called Abcam
    I asked him about CRIS since it’s in the Boston area where we live
    his input follows — btw  Abcam listed on the London exchange and a has been on a tear in the US — also mentioned is possible IPO of a new firm he deals with
    Hi Dad,
    Yes, I know them.  They buy a  good amount of antibodies from us.  The pathway that they focus on (‘hedgehog’) is a very popular one in cancer research; there are whole labs who do little else than study it.  They’re trying to develop small molecule targeted cancer therapies, which have become the big in cancer treatment.  They basically work by targeting just the cancer cells, whereas therapies like chemo attack all cells.  They can target certain parts of a biochemical pathway to inhibit (or cause) something to happen (like keeping the tumor cell from dividing, causing it to kill itself, cutting off its blood supply, etc.).  Other companies are using antibodies for similar therapies by designing antibodies to attach themselves to tumor cells and deliver a drug to just those cells.  If there is a ‘next big thing’ in cancer treatment, it will undoubtedly come from somewhere around here.
    Another big cancer research area now is “epigenetics”, which is basically studying ways to manipulate DNA to turn genes on or off.   I know the guys who started this company -they are all the pioneers in the field of epigenetics and their company will definitely be worth a ton of money if they decide to go public.

  139. Should have stuck with my system, left 30 cents on the table !! GERRRRRRRRRR !!

  140. ARRY – let’s hope so!  and that little picture thingy that JRW put up with the moon…..

  141. JRW
    S3 is holding I may buy a few more puts, looking for 5 cents lower. Bad days lead to good days or so I hope.

  142. Thats R3!!!!!

  143. CRIS/ban – I have been pushing them for over 2 years here, and we have rode them up and down (mainly up).  I first heard of them through one of the most influential cancer docs in the US (Dr. Dan Von Hoff at TGen).  Here is my write up on them from October of last year.

  144. No sign of profit takers. Are they just gonna roll this thing up all the way into the close?
    Is this about tape painting?

  145. QE2
    Remember it ends!

  146. Good rant Rev – those things are licenses to steal money.  When I set one up for my employees, we had several guys try to talk us into what is essentially a scam where the workers are forced to buy stock in the company (not even public) so we’d have a constant flow of cash back from their contributions.  We were told that "everyone is doing it" – sick!  

    CRIS/Pharm – I always thing that’s the steak restaurant!  That’s a very nice trade… 

    82/JRW – I’d like to see us close there today.  At least then I’d feel SOMEONE rational was playing.  

    PNRA now making new highs. SODA hasn’t stopped all day.  IBM still rolling.  DRI new highs – these are consumer stocks, as if the consumers just have money to burn all of a sudden!  Seems like someone is trading on the rumor of a stimulus – that’s the only sense that can be made of this…

    Man, gasoline finished at $2.97!  

    Layoffs/Tusca – I think if the states are cutting, it’s a done deal in July or maybe already gone.  Federal hasn’t made cuts yet so delayed effect there and it will take 2 months to see the numbers, maybe 3 so it’s really not useful for short-term betting.  Also, Corporations love it when everyone is unemployed – it means you can pay the ones with jobs much less and squeeze more free overtime or "productivity" out of them.  Will Congress cut jobs – The Reps want to cut every government job – that’s about 22M of them – how many of those Goverment Jobs do the reps want to save?  Cutting 4M government workers at $50,000 each only saves $200Bn and they are trying to save $400Bn a year.  One way or another, that’s going to cost 8M more jobs, public and private, which, of course, will be blamed on Obama – see how that plan works out?  

    Welcome back Hanna – I told you we’d keep things level for you!  8-)  I’d be careful trusting those Momos past the close.  

    Nasdaq’s entire gain for the year came this week! 

    Cool Ban – thanks for sharing!

    Dollar dropped 0.5% since 10, markets up 0.7% since 10 – not a complicated formula today.  Dollar still at 74.67 but maybe they can make a late stick based on funds buying in (they must be so out of balance after this move) but this is insane.  Still, nobody seems to be selling yet and now EAT is making 52-week highs, so SOMEONE is making a tremendous bet on consumers having more money next Q and it isn’t oil or gas savings at the moment.  Of course, with the VIX back down to 15.43, they could just be loading up on puts and then they let Asia and Europe do their buying on Monday and then they ram the selling down their throats next week – we’ll see.   Or, we may drift along into expirations but that would mean the EU would have to stay calm.  

    Tape/Gmarts – This is about fund flows coming in on the first of the month.  The index funds (suckers with 401Ks) are forced to buy for whatever price today so the guys who ran us up on low volume can dump into their volume buying at the close without tipping the markets too much.  That’s why I think they do that, load up on puts and then do a major dump next week and stick the put sellers with the rest of the stock.  

  147. shadow,

    Don’t forget QE 2.5 !!

  148. Since I’m still mostly offline, I dropped in -- NASDAQ’s entire gain for the year today?  Geez, thatsa one spicy meatball of a market!   ….Is it real?  I hope not because I just loaded up on TZA.  Good luck, y’all, the madness of crowds appears to be in play.

  149. Phil / Weekend hedging   This momentum is likely to pull in retail crowd next week and force some funds to reduce cash?  Also, Asia and Europe likely to follow through creating more momentum for next week.  Don’t you think setting up shorts today might look expensive on Monday?  Mish’s and Goldman’s dissing of the ‘good’ ISM as mainly inventory build effect might get more attention over the weekend if rational thought resumes?  But, more probably it’s going to be more momentum bs on Monday?

  150. GOOG 520… sheesh, should’ve bought calls when it was 470 last week!
    Phil/health care – Multifactoral problem, obviously. My take with it is that our entire culture is oriented toward producing unhealthy people with end stage diseases. You really can’t blame the health care "system" for this. We promote a crappy HFCS based diet because it’s profitable to sell. Few employers give people time during the day to exercise, and expect them to stay healthy on their own time when there are clearly other needs that compete. God-knows-what is being pumped into our environment, but I’m sure it causes cancer. The patients that cost the most money to treat seem to care the least about their health and don’t participate in their own care, rendering worthless the $$ spent. Finally, when grandma’s circling the drain in the ICU with sepsis and machines running her heart, lungs, and kidneys, the guilt-ridden family refuses to let go and demands that "everything be done" when it’s clearly a futile effort to all involved in delivering the care. In other words, health care is just like all of our other problems-- utterly unsolvable without a well meaning dictatorship! 

  151. Phil,
    I’m holding 20 FAS July 27 calls @ 1.42. What do you recommend I do with this trade? Thanks.

  152. Made out well today so I’m out early. Have a great 4th weekend all. Stay safe and enjoy your burger.

  153. 401k scam / rev, phil, can i get your opinion on this: 
    I contacted Fidelity and they confirmed there is no cash or money market option in IBM’s 401k plan. Being a proper salesman, he informed me that their most conservative option is "even better than cash" — the Stable Value Fund. I asked him specifically how it would react to a treasury shock and he said it would act more like cash than treasuries. Here’s the description:
    "The fund invests in fixed-income securities and book value wrap contracts issued by banks or insurance companies, which provide for the payment of a specified rate of interest and for participant withdrawals of their account value. The wrap contracts provide a rate of interest that will generally reflect movements in market rates of interest, but which may at any time be more or less than the actual income earned by the fixed income securities. Unit price, yield and return will vary."

  154. CBOE’s put/call ratios (open interest as of yesterday):
    IWM - 2.5 puts : 1 call
    SPY – 2.5 puts : 1 call
    DIA – 1.1 puts : 1 call

  155. JRW
    Is that the SPR release? How about a 3:30 sell program? Or max pain!!!!!!

  156. Back in the chanel after riding the upper line since 10:00 !!

  157. Holding those PUTS!!!!!

  158. shadow,

    I think "they’re" plan is close at HOD to draw bagholders on Tuesday; can’t you just smell the distribution ?!!

  159.  Any opinion on a long dollar play?  U.S. equities moving up should suck in bargain hunters.

  160. TZA/ZZ – The nice thing about TZA, much like FAS, is that, if you have the conviction to stick with it – it tends to snap back rather nicely.  

    Weekend/Tusca – You can go long if you wish – we need the counterparties!  I can only go with my gut based on what I see.  As I just said above to Gmarts, we had a low volume rally into fund buying and window dressing EXACTLY like I said we would have to EXACTLY the place I said we’d get to (2.5% lines) back when the market was 5% lower than this and you (or someone else) was asking me if I wasn’t being too bullish because of Asia this and Europe that and all the smart analysts who said it was time to buy oil and commodities and sell the dollar at 72 and run for our shelters.  If you don’t learn to play your trend lines with conviction, then you will doom yourself to buying high and selling low.   Most media types either have a fixed premise that never changes (perma bears and perma bulls) or they have no premise at all and shift with the wind (most of the rest).  

    My style of investing is very difficult by comparison because it requires huge amounts of research in the form of just reading and understanding global macros, formulating long and short-term investing targets based on expectations of the outcomes of events – AND THEN STICKING TO IT (unless the underlying premise changes with new facts).  That means that I can be very, very wrong sometimes but that’s OK if you combine it with good portfolio management because, when I’m right, I’m very, very right as well.  So forgive me if I stick to my premise, as the one I’ve been following since the end of April hasn’t failed us yet.  

    Health Care/Dr C – I agree.  My Dad was kept barely alive for 7 months for about $500,000 – perhaps he had 4 good days.  We spend about 1/3 of our total health care keeping people alive in the last year of their lives.  How do you make that call ("Death Panels" maybe?) – that I don’t know.  What we really need to do is begin re-educating (yes, brainwashing) people about sickness and death so that Americans can be more accepting of it and NOT seek to go to extreme measures at the end of someone’s life.  You can’t force it on our generation but I always tell my kids, quite matter of factly, that one day I will die and it will be sad but I’ve lived a great life and I only want them to live theirs and be happy.  I teach them to honor the dead by telling their stories, which is a tradition in my family and they dealt with my Dad’s passing very well as well as my stepmother a few years ago.  Death is a part of life – people need to learn to accept that, but if we don’t start changing attitudes in the new generation, we can’t expect to shove it down people’s throats in the name of austerity at some random point in time.  

    FAS/Hextra – I don’t understand how you managed to pay $1.42 for those?  Are they super old?  You should be thrilled they are .95, not upset they are not $1.42 again.   If you want to be greedy after gaining .80 on the week, how about moving to the XLF Aug $15/16 bull call spread at .60, which pays the 66% more you need to get even if XLF can just get to $16 by then.  With the FAS calls, all .95 could be gone on Tuesday if we have a bad open.  

    Good man DDay – have a good weekend!  

    Stable/Jvest – I have no idea what that gibberish means.  It sounds nice but what are they putting it in.  Don’t forget how "great" sub-prime investments sounded too – "They slice them and dice them so you get all the interest and none of the risk thanks to these brilliant credit default swaps from Lehman and AIG that guarantee you get paid back in full even if (and this would NEVER happen) some of the loans failed to perform."

    Put/Call/Jvest – Then how the hell does the VIX go down 5% in a day?  

    74.58 keeping us up into the close – it’s AMAZING! 

    Dollar/ZZ – I like UUP long-term but tough to pick a spot, maybe the Sept $21 calls for .53, offset with TBT Aug $33 puts at .65.  

  161.  Ahh, once again we get to marvel at the astounding coincidence of IWM at 84, FAS at 27, GOOG at 520, and all the other stocks that somehow end expiration days precisely at round numbers.  What’s that I hear, a ‘PIN’ dropping?

  162. JRW smell? YES!!

  163. R3 still holding!

  164. Phil sticking with short on Gold???

  165. What a freakin’ week!  Have a great weekend everyone – more madness to follow, I’m sure!  

  166. " Put/Call/Jvest – Then how the hell does the VIX go down 5% in a day?  "
    Phil, for that I give you (drum roll) the VIX put-call ratio: 0.43 (that’s 2.3 calls to 1 put). So clearly someone expects the VIX to rise. Also, the total put-call ratio is 0.92 which means someone must be doing something to skew the overall ratio that everyone follows, to mask the fact that they’re loading up on puts.

  167. Hi every body all out there have a nice 4th of July

  168. have a great 4th of July everyone

  169. Gold/Kustomz – We’ve been poking momentum longs over $1,500 but, mid-term (3 months), I"m still on the $1,250-1,100 bandwagon.  

    Dollar finished right down at 74.60.  

    Yes, this kind of thing happens ALL the time….

  170. Phil,
    I know you said last Friday that they would "somehow" run it up this week (by the chat on the board at the time, most of us were not really buying what you were selling), but I do believe this qualifies. Look at the 5 day chart on almost anything. Unbelievable!! Thankfully Greece is fixed and there are no other problems in the world, everything is alright.

  171. Well, almost 6% on the day, better than 20% for the portfolio for the week !!

    Even if we go strait to the moon and all my @400 puts expire worthless, it only cost today’s profit, so no harm done (but fun to play) !!  8-)

    Have a great 4th all !!

  172. Thank you so much for another amazing week Phil.  If you are right about next week, I will be a rich man but don’t worry, it’s just the profits I’m playing with.  Have a happy – Chase.  

  173. I think some here may UNDER appreciate the effort and hours you put into your research! I think this fact deserves repeating:
    "My style of investing is very difficult by comparison because it requires huge amounts of research in the form of just reading and understanding global macros, …"
    I for one feel the price of membership a great bargin (basic @ 299 in my case) considering the hours YOU invest attempting to educate the membership. If say you research 6 hours a day, M-F (US markets closed) and it’s probably more, you will spend 156 hours on my behalf in July or about a buck 90 an hour :) upps, hmmm, I just shot my foot here as you might consider raising your rates LOL.
    I think the vix, with that run up from 2 into the close, makes sense with your comment:
    "Tape/Gmarts – This is about fund flows coming in on the first of the month.  The index funds (suckers with 401Ks) are forced to buy for whatever price today so the guys who ran us up on low volume can dump into their volume buying at the close without tipping the markets too much.  That’s why I think they do that, load up on puts and then do a major dump next week and stick the put sellers with the rest of the stock. "
    Thanks Phil for your very well studied observations!

  174. Have a great holiday all! Thank you Phil.

  175. BTW: last month 1st was very down day

  176. Today’s levels.

  177. I go to Japan for 3 weeks, get back and markets are basically unchanged since I left.  So how were things.  Exciting? :D

  178.  Phil/Death Panels – I was very excited to hear this was going to be incorporated into the new health care legislation. I knew of the idea for years, but never thought we’d have the balls to do it. I’m referring to the part of the bill that pays doctors to discuss end of life care with patients. This is a brilliant strategy and should save A LOT of money over time.
    I was trained to do this during my internship, so each and every patient I admitted to the medicine service at LIJ Hospital (if it seemed reasonable) got an end of life discussion. Most had no problem signing a DNR order. Some of these patients died on my service- but they died a good clean death due to the natural progression of their disease. They didn’t die days-weeks-months after coding and having survived the trauma of an aggressive resuscitation only to live out their days half brain-dead with tubes in every orifice and hooked up to machines. 

  179.  JR- You bought 75K worth of PUTS??? WOW… I bought TEN into the close with a plan for maybe twenty more next week. Maybe one day I can mack at your level of the game!! Just out of curiosity, why August? Won’t you end up burning a lot of premium if the move down really takes that long to unfold? August would make more sense to me if you created a spread so your premium loss would be minimized. 

  180. Drcraig- I will let JR speak for himself but I also bought a pile of Aug puts this afternoon betting on a pullback early next week. I chose August for more time/flexibility. The July puts would deteriorate rather quickly next week if all does not go according to plan. The Aug puts will also burn premium but not as quickly. I will also have the opportunity to sell some July puts as covers if the madness continues upward on Tuesday to mitigate the losses a bit waiting for reality to set back in.

  181. I bought Aug spreads last week after I sold my USO, SPY and SPX puts.  I am currently scaling into the 1280/1260 BPS….those should pay off well if we move down. Out at 2.20, buying for 4 or less.

  182. August puts seems plausible as the Bernank needs the markets to crash in early August in order to move a monumental $467 Billion  of new and maturing August 2011 debt.  The banking cartel approves, as their low volume market massage requires a few more weeks of bagholder roundups.  Who says central planning can’t work in our Great Motherland of Greedmerica…long live the Bernank! 

  183. GOOG getting cocky or bored? Reuters reports the interesting numbers for bids placed during the recent auction for Nokia’s patent portfolio.