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Flip Flop Friday – 2% Up or Bust!


As the great John "Hannibal" Smith used to say: "I love it when a plan comes together."  

Of course Smith’s plans usually involved a great deal of mayhem culminating in things blowing up – very apropos considering the massive market blow up this week.  The plan in Monday Morning’s Alert to Members, which was titled "Cashing in Longs and Back to Cashy and Shortish" was pretty straight-forward:  

If you want to play this rally for more upside, you can still short the VIX (we did the Aug $19 puts on Friday for $1, now 1.20) or play gold down with the GLL Aug $22s, that are still .35 or the GLD Aug $155 puts at .72 BUT I’m not really believing things are fixed so these are SPECULATIVE plays to follow the rally – WHICH I DON’T BELIEVE IN.  Clear? 

What I do believe in is shorting the Dow with DIA Aug $119 puts at $1.20 or the SQQQ Aug $21/23 bull call spread at .85, selling the Sept $19 puts for .55 for net .30 on the $2 spread.  

USO Weekly $38 puts are .44, 20 of those in the $25KP for $880!  (longs are, of course off).

Let’s be straight about that, all the short-term long, including the ones in the Income Virtual Portfolio – are DONE.  This was the pop we hoped for and now it’s done and back to cash!  

The VIX puts are, of course dead with the VIX now at 31.66 but the Aug $22 GLL calls are still .15 (down 57%) and the GLD Aug $155 puts are now .95 (up 32%) thanks to that same rise in the VIX.  Not bad for trades I did not believe in.  As to the trade ideas I did believe in:  The DIA Aug $119 puts are $6 (up 400%) and the SQQQ Aug $21/23 spread is now $1.60 while the Sept $19 puts have dropped to .15 for net $1.45, which is up 483% for the week and the USO weekly $38 puts are now $2.64 (up 500%) with 20 of those netting $5,280 off an $880 investment.   THAT’s what I mean when I say "I LOVE it when a plan comes together"!  

On Tuesday afternoon I happened to be live on the Business News Network at 3:20 and I laid out the macro plan for the viewers.  It’s just the condensed version of what the Members and I had been discussing for weeks and it all came to a head yesterday morning when the BOJ disastrously picked that morning to manipulate the Dollar higher, which sent the PRICE (but not the value) of US equities falling off a cliff.  

Note that this is the kind of advice Phil Pearlman has banned from Stock Twits (he not only turned off the account we were freely giving away but he ERASED ALL RECORDS OF OUR TWEETS) which I think were much better than the advice they sell you, a lot of which was pro oil while I was anti oil so how many Billions of Dollars did Phil Pearlman cost StockTwit readers by banning the free, alternate viewpoint with oil over $100 (now $86)?  Can a company be sued for censoring information by their readers?  Good luck with that IPO Mr. Twit!  Anyone interested in setting up a competing service – please contact me! 

Anyway, back to the markets!  So our followers on Facebook and LinkedIn and Seeking Alpha were all aware of the trade ideas that were banned from Twitter and we took many bearish positions during the week, up to and including yesterday.  Our logic is that, even if the jobs numbers are good (8:30 update – up 117,000), they won’t be enough compared to last month’s 18,000 and "good" jobs numbers push QE3 back off the table and the economy is STILL a disaster so this does not "fix" our overall problems.  

Nonetheless, we did play the futures up this morning as my 3:30 am Alert to Members suggested oil futures could be played over the $84 line (now $86.80, up $2,800 per contract) and gasoline could be played over $2.70 (now $2.78, up $3,360 per contract).  As chat moved on we went long on the S&P over the 1,200 line (now 1,207, up $700 per contract) and the Russell at 720 (now 730, up $1,000 per contract) and finally, we picked the Nikkei long off the 9,300 line and they spiked up past 9,400 on the jobs report before stopping out (up $500 per contract).  So, as usual, you get, BY FAR, the most bang for your Futures buck from oil and gasoline but they are very, very dangerous contracts to trade!

We are in take the bullish money and run mode in the futures, of course and will be at the open if we get a good relief rally.  As I said at the top of this post, it’s 2% or bust today as that’s the WEAK bounce we expect off the 10% drop in our indexes.  Europe turned around a 3% gap down at the open and, at 9am, we have the FTSE and DAX down less than 1% and the CAC up 1% – we’ll see if that lasts into their close at 11:30.  The Dollar fell from a high of 75.65 yesterday (Yentervention) to 75.20 today so that’s half a point that our markets SHOULD be up based on price alone.  That makes the little 0.7% pop we got off the jobs numbers less than impressive so far.  

We are also taking the bearish money and running as our goal is to get cahsy and neutral this weekend because CASH IS FLEXIBLE and we will have a lot more information next week to place our bets on.  I will be updating our very popular Income Virtual Portfolio as well as our $25,000 Virtual Portfolio (around $60,000 virtual dollar now!) over the weekend and we will discuss our strategy going forward but, for today, let’s be happy to get back to cash and not try to force things.  That was our plan when we topped out at the end of June and now we are – HOPEFULLY – at the bottom of our range – but we won’t know that until these levels hold up through Tuesday’s Fed announcement.  

Until then, a wise prognosticator knows when NOT to prognosticate!  

Have a great weekend, 

- Phil


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  1. What’s the rule for turning bullish again from here? 3 above 5% lines? Or 2.5% lines?
    Separate question, on a pop this am, if I needed a reload on some hedges, any of the ones from yesterday still good?

    Am out of town, so don’t see things aw well, but can position myself a little if needed. Thank Phil.


  2.  Phil, I have a friend who’s a member of this board but hasn’t asked about his TBT situation. I don’t recall the full details, but he’s short a number of TBT 32 puts, accumulated from prior rolls, that are up in August. He has several more with later expirations. His total is 40. He’s freaking out about what to do- roll, take assignment, or accept a loss. I believe he has enough margin for another roll, but understandably he’s not happy to accept more risk on TBT. What do you suggest he do with respect to the August puts?

  3.  drcraig: friends
    If your friend is coming to Vegas ask if he would like to split the cost of my room at the Motel 6.  He would probably find it educational ;)

  4. Phil (Response to your followup ?’s from this morning’s post):
    Thanks so much for your input.  The QQQ position is the result of a number of bad rolls that have gotten away from me.  It increased recently when I bought back a 52P (to offset) as a way to hedge more against further drops in the market.
    The VIX is a bull call spread (20/24).  I see how the VIX does not correspond with the market and, if I sell, I am trying to find a way to maximize what I get out of the trade (rather than selling a $4 spread completely in the money for 1.80).
    Thanks again for all of your help.

  5. Phil / Carnac – So the NFP numbers are better than expected – it appears we will have an up day.  That said, given the mess the world economy is in, do you expect us to have an up day followed by volatility and perhaps more down days? 

  6. FU PCLN!!!

  7. Phil
    You referenced the above play: shorting the Dow with DIA Aug 119P at 1.20. TOS has these at 5.85 right now. Are we talking about the same put? Thanks for clarifying.

  8. Oil Line
    R3 – 97.19
    R2 – 94.73
    R1 – 90.15
    PP – 87.69
    S1 – 83.11
    S2 – 80.65
    S3 – 76.07
    First time in a long time for PP under 90 and a S line under 80!
    Yesterday’s high and low – 92.27 / 85.23 (wheeeeeee)
    Breakout lines – 103.661 / 66.79 (yeah right! – volatility is creating monster lines) 

  9. Please make Cramer go away….

  10. Phil

    Friday, August 5, 8:32 AM July Nonfarm Payrolls: +117K vs. consensus of +75K, +18K prior. Unemployment 9.1% vs 9.2% expected.

    We are definitely getting a pop at the open, but this doesn’t change your "we need 2% or bust", right?
    Need to shift more bullish a little, how about IWM calls?

  11.  UBS raises Inc price target to $575 from $550;
    Benchmark raises Inc price target to $690 from $676
     Bofa merrill raises price target to $660 from $650
    JP Morgan raises price target to $682 from $610.00

  12. Jabo… I was short both PCLN and CMG at the 160-175 level… Both kicked my ass and caused me to give up on shorting momo’s. I’m with you on the FU’s though.

  13. FAS Money Recap – and it’s not pretty!

    Long strangle – Jan 12 18.33 Puts (2.40 now 4.02) and 28 Calls (2.40 now 1.17). 
    Short Weekly – August 22 Puts (2.87 now 4.10) and August 21 Calls (0.82 now 0.58)

    Short Monthly – August 23 Puts (3.65 now 4.97). We stopped out of the 26 Puts at 6.70 (sold at 1.75 so that hurts!) 

  14. Phil
    My bad. The DIA 119P at 1.20 mentioned above was your call on MONDAY. Wish I had held on to them! 

  15. drcraig – might want to give the Aug strikes on TBT.  Kind of hard to advise without knowing the strikes.


    PP for today.  Sell into the rally.

  16. PCLN … 540 PT yesterday…

  17.  Explosion at VLO refinery!  

  18.  Speaking of Vegas, is there anyone who wants to split a room?  I would like to stay at Ceasars but the cheapest room I can find is $550 a night, which seems ridiculous compared to the other hotels.  Did they reserve the whole Hotel for you Phil?

  19. TBT / Phil..   how about selling some next fri 28 puts for 1.60 ish ????

  20. Please make Cantor go away…. 

  21. I echo Hoss, if we have closed our shorts, and need to recover, is the DIA put trade still your fave? I am possibly going to be in the woods Mon & Tues and would like to be covered. Some of the recent recommendations expire today. Thank you for getting us through this. I didn’t play it very well but better than if i had not been reading your posts. (unless of course i had just buried my $ in the back yard) :) (today’s my 39th anniv and my dear wife is not too happy that i am glued to the computer)

  22.  Stay bullish – they are ditching the Dollar down to 75 – if we get below that we may keep going up (fake though it may be).  

  23. stj—if you can do that I would be so deeply grateful--he is one of the  most irritating  #*&%

  24. how about USO calls expiring today or next week? speculative trade..i guess.

  25. Phil / EDZ SQQQ   So you are saying I should take the loss at the open on these two shorts you suggested at the end of the day yesterday?

  26. i signed up for the TWits thingy and now there are people following me! That’s really ridiculous.

  27. Nice sector chart showing 6 of 10 sectors have ZERO stocks above their 50 DMA:  Breadth is Now Nonexistent

  28. Craig – I may go to Vegas. Will know by the weekend. Ready to share a room but I am looking to spend no mre than a $100.

  29.  Pharm- Aug 32 TBT puts. 

  30.  @nicha, do you mean a $100 a night?  

  31. @ Iflantheman
    Nice call on going long AAPL calls at 3:25 yesterday. Didn’t go for your Oct 380 calls, but I’m out of the ones I did buy at +17%. Thanks!

  32. Good morning!

    We are expecting a 2% bounce this morning and it looks like those SONS OF BITCHES are not going to give retail investor a chance to play as we’re heading for a 1.5% gap open.  TBT got so low that Eric Cantor (who owns a lot of TBT) is the "special guest" on CNBC ahead of the bell and the more he spouts his BS, the more the Dollar goes down, which makes TBT go up, of course.  TBT is now up 5% pre-market – mission accomplished.

    I very much hope we do better than 2% this morning because I hate having to redraw the lines on the Big Chart as it’s actually a lot of work as I have to re-base all my assumptions (hasn’t been changed since last November) but, obviously, we are well below what we thought would be a bottom that held.  

    Of course this happened last summer as well and it turned out that it was just Cramer and his Bankster buddies chasing all the retailers out of equities ahead of QE2 (like they didn’t know it was coming!) so that they could buy all the stocks at bargain-basement prices.  So far, this is just a repeat of the same action but it’s too uncertain into Tuesday’s Fed meeting so CASHY and NEUTRAL is the way to go until then.  

    Obviously, there’s nothing at all to be bullish about until and unless we retake 3 of our 5 5% lines.  The Dow (90 points below at 11,500 at the open) and the Nasdaq (20 points below at 2,583 at the open) have the best chance of making it over and ANYTHING red today is TERRIBLE.  

    As I noted (subtly) above, we are gapping up at the open but the volume is not that strong so you are certainly not missing a rally until some significant portion of the 2Bn Dow shares that were traded down in the past two weeks are traded up.  So you will NOT BE MISSING ANYTING by waiting to see if we can do more than the EXPECTED 2% WEAK BOUNCE off the 10% drop (per the 5% rule).  If we don’t bounce 2% – then today is much more likely just a pause on the way to the 20% drop that I said should be (hopefully) the worst case.  

    If you are in cash, then a 20% drop is the "best case".  And cash doesn’t mean dump all longs (or shorts), cash means getting your portfolio to neutral so a 500-pint move in the Dow up or down will not affect you on Monday or Tuesday.  After Tuesday, we should have a better idea of which way the markets are heading for August.  

    Remember the advice of the great and powerful WOPR: "Sometimes, the only winning move is not to play."

  33.  Wow, that was a quick, headiing back already.  This is fantastic, get to cash all at good prices…

  34. Even VLO is up despite the explosion.  I guess a reduction in capacity is good.

  35.  Phil – Fun with FAS – Have my finger on the sell button for the today calls you mentioned.  Leaning toward the 17 calls at $1.65.  What do you think?

  36. RUT turns red…  

  37. FAS Money MOTHLY – Selling Aug 19 calls for $1.25. 

  38. Phil / $    Why isn’t the $ much stronger given the huge PIIGS risk unfolding in Europe, with little evidence of ECB intervention.  I have not read of anything which makes their situation any better than yesterday?

  39. lflantheman is selling AAPL calls !!!    How’s that for confidence we are going down?

  40. Just checked..yep face is still there.

  41.  I know this is a tough question to answer, but I have some IMW weekly 72 puts. Question is when to cash them in. We’re in a GD free fall here. JR, you up yet??

  42. Dollar holding that 75 line is a killer.  

    Bullish/Hoss – Has to be retaking those 5% lines, which is less than a 2% bounce for the Dow and the Nas (not everyone hit 10%).  I will draw a wider chart over the weekend but the Big Chart shows a 10% range and if we’re now 5% below that due to a change in fundamentals then the Must Hold level needs to be moved to reflect the new expected range but that new range will still be at least 10% so the top of the new range would be the -5% of the old range and that means the bottom of the new range would be AT LEAST a 20% drop from the top.  I may decide though, as I said Tuesday afternoon, that without QE3, then we have to move our must hold line all the way back to where we were pre-QE2 with maybe a small allowance for better earnings and a Dollar adjustment.  See how hard that question is to answer but the simple answer is – VERY BEARISH now that we went red!  

  43. FAS Money / Phil – Never saw the 19 Calls at 1.25! The 18 calls are 1.38 now and the 19 calls are 0.97. Checked the chart and could not find a 1.25 print on the 19… Did you mean the 18 Calls?

  44. Sold AAPL Aug 5 375s for 5.15 and bought them back 5 min later for 2.50.   Isn’t there a law against this  ?    :)   

  45. VIX @ 32.5 over yesterdays highs

  46. Income Trader very sad.  :-(

  47. rumor is S&P is going to downgrade US today

  48. Craig – yes. $100 a night.

  49. AAPL / Iflan..   what about the puts you sold..   still holding??

  50. topher7    All cash in the AAPL acct.   Trades moving so rapidly I can’t easily post them.   Think market going down so would look to sell weekly calls on an AAPL bounce upward.  

  51. Fidelity is a mess.  Servers totally dysfunctional.  Must have unbelievable volume.  Abandoned to the fates.

  52. Son of B#*&(#  some big player out there is laughing at me….scared me out of some of bearish put positions and bought some IWM call to make overall position more balanced….and then the bottom falls out of the market…..On the plus side I wasn’t that bad out of balance so I am ok.

  53. topher7…For instance, if I see AAPL above 375 again I’ll probably sell today’s 375 calls, believing 375 won’t hold for the day.   But if they are quickly profitable I won’t let them be, but will buy them back quickly. 

  54. jmm12 – Is that a friend you heard that from, or is it a more "public" rumor?  Just curious.

  55. They are jerking this market around like a yo yo.

  56. ifaln..AAPL..  ok change of strategy , at least for today..   I’ll cover my puts on the next move..

  57. rustle123 – Could be all those regular people who only read/saw the news last night, who are now having their own turn to panic?

  58. Phil, 
    Would this still be a time to roll AUGUST Puts (now deep in the money of course) or better wait to hopefully have a better chance next week?
    Hold the following all AUGUST:
    -20 113 DIA (Net 1.52) (Part of a hedge back in June that expired worthless so cutting both ways now…)
    -10 HPQ 36 Puts (net 1.10) part of another hedge in June
    -10 TBT net 1.04
    -15 FAS 19 net .70 
    -5 GLW 17 0.90
    -10 RIMM 26 net 1.35 

  59. I’m really hoping for a mid day "rally" to short,  because I don’t think this holds.  Market bottoms don’t really look like yesterdays downward zoom, so I don’t think we’ve seen the valley yet. 

  60. Phil / Who?   Anyway of knowing who is the main seller this am following the bounce.  Margin calls from yesterday’s decline? Retail investors reducing their portfolios after yesterday’s scare?  I guess the most important thing to understand is what are the big boys doing as they will set the trend for the next few days.  Boy, Biggs sounded pretty forlorn!

  61. I’m in Aug DIA puts 113 @1.82.  Can’t believe I bough them today instead of two days ago.  What a difference.

  62. TBT/Dr C – The $32 puts are $5 now and they can be rolled to the Jan $30 puts are $4.50 so it’s not like either cash or margin should be spent on a roll, you only sacrifice time to improve your position.  When you have longer short puts like that, it’s always good to use your cash to BUY shorter-term pushes as momentum plays when the stock crosses below a line that causes you fear.  So if you do that roll, you can buy the next week $27 puts to cover (.70) if they cross below $27 as TBT goes higher, you just raise the spot where you want to jump in to protect it but, generally, you just want to leave it alone and let time eat away at the long putter’s premium.  I think TBT is way too low at $27 and should be back at $29-30 when things calm down but that won’t stop them from spiking down to $25. Look at March (low of $29.77, back to $41) or November ’08 (low of $35, back to $59) – these are 30% bounces off the lows so the real time to panic is when you are forced into a position where a 30% gain in TBT ($35) over time can’t help you.  

    The key to rolling is to find a position in which you REASONABLY expect a bounce will help you get out even – that’s all we ever want to do is erase the loss (see first half $25KP) and  the winners will take care of themselves.  

    Sorry LDM but I lost track.  What are the positions and the cost basis? 

    Dollar back below 75 and up we go again – total joke of a day but thank you Mr. Blankfien for letting us get the hell out!  

  63.  Phil doesn’t have any doubt that the markets are manipulated.  Let’s hope so.  If they let this turkey fall all out bed, they can kiss their "stock market wealth effect" goodbye.  Yesterday I was told that 38% of the population of Alabama is on food stamps. Rick Perry, on present form, seems to be on the way to the presidency.
     Moving to Sri Lanka is starting to look like a wise career move – American politics are going to make the storming of the Winter Palace look like a snowball fight..

  64. @Zero
    Is our currency worth anything in Sri Lanka?  How’s real estate prices there?

  65. Good call JC – Volatility it is.  Today is too crazy to play, just a good time to cash out the winners and figure out what to do with the losers.  

    PCLN saying FU Jabob now.  On the other hand, this is dead center for our $25KP play!  

    DIA/Champ – That was from MONDAYS Alert.  A bit late to chase up 400% and all…

    Bad news bulls – that’s a lower high on the same dollar drop and we’re heading into last hour on the EU so WATCH OUT FOR A DOLLAR BOUNCE OFF 74.90.  Europe down 2% FTSE and DAX, down 1% CAC so they’ve all dropped 2% from their highs on our Jobs report.  

  66. Well this isn’t an optionable stock but one good thing all the yo-yo movement did was allow me to buy TNH at $141….HUGE divdend, MLP, agriculture play

  67. USO TODAY $34 puts at .45, 10 in the $25KP, stop if they cross back over $86.50, looking for .60+

  68.  Phil – I have a disaster hedge with January FAZ 47/52 bull call spread with 30 put. It is completely in the money but only up a couple hundred at this point. Should I take the money or wait it out? Thanks

  69. The Bernank-sters might use the jobs numbers as part of an excuse NOT to announce a QE3 next week. Then drop it on the market next month after we have +20% market decline. Well hoping for a small move up after Europe close to catch a day trade like yesterday QQQ off the low around 11:30 – noon, somehow seems less likely tho.

  70.  jceasar- Friend at a major bank

  71. I still don’t think there will be a QE3 under any circumstance.  They’re goal was to keep rates low, raise asset prices and the stock market thinking people would spend more because they are making money in the market and companies might start hiring again cutting into unemployment.  Instead they caused rampant inflation, most people are not in the market so it didn’t matter if it went up, companies didn’t hire and households had less money to spend on other goods because of inflation so consumer spending shrank.  What the hell would QE3 accomplish?  Full out depression probably.

  72. Phil
    What is causing all the gyrations today?

  73. The simplest solution was instead of QE3, take Phil’s idea of spending 300 billion on infrastructure every year for the next 10 years, instantly put 6 million people to work at $50,000 each in tasks they are skilled for and collect taxes off that income and save the unemployment they are getting paid.  Problem solved.  Market goes up, economy gets better, confidence gets better, spending increases and the cycle starts to reverse.  It really is a simple solution, but you have jackass slaves serving in Congress who must obey their corporate masters instead of the district they are supposed to represent.

  74. Phil
    A couple of more hedges just in case Jmm12′s friend at the bank is correct about S&P downgrade. That would be devastating IMO!

  75.  Phil -FAS ; (I think your LDM q was for me) I was assigned 1800 shares of FAS at 23.  I am long 20 of the Jan $20 puts. was waiting for the 7:00 bounce which is failing now.

  76. QQQ Aug puts…..

  77. REDRUM, REDRUM!  Referring to the color and state of the markets, to be clear.

  78. Phil, 
    Sorry missed two others:
    -8 PLCM 30 (net 1.10) 
    -3 WYNN Sept 150 Puts (Net 5.60)  

  79. " -5% of the old range and that means the bottom of the new range would be AT LEAST a 20% drop from the top."
    How might these new lines impact the Dollar?  and oil?  77-78?  Higher?  $20 lower on oil?
    Could gold hold up if this happens?

  80. Hello Phil, is it a good idea to buy PCLN puts now? If yes, then what strike do you recommend?

  81. Yeah rustle, I agree completly! I have no illusions concerning QE3 as an economy saver. Any attempt thereof would send us into probable depression and it seems they don’t even really care. Clearly $$ needs to get into the hands of those that will spend it into the economy and since the US concumer is around 70% of the economy, a no brainer.

  82. Jcaesar – Looking at condors now and a .10 delta on the RUT in October gets you a 550/560/835/845 condor. 20% protection on the downside and 17% on the upside. Credit around 20% of margin!

  83.   This great week shows what we have been saying here for a long time. Catching a trend, and staying in the trend, makes up many many times for the periods of being whipsawed by the market. 

    Just keep your losses small, even if you have many in a row. One or two winners will more than make up for it. We have shown it in our results time and time again.

    This is why you need to always stay disciplined and always let your winners run. Always believe in your strategy, and stay in  the trend until the trend reverses. No matter what.

    Too many traders get frustrated, and then when they see a profit they just take it quickly. Because it feels good, and because they are afraid of losing it. But this is the worst thing you can do, and what separates profitable traders from the rest.

    You should never exit a position because it is showing a nice profit. You should only exit because your signal is telling you that the trend is over.

  84. Most get bearish when stocks are lower, its going to take a group of very brave and bullish traders/saviors like the PPT to get a rally going.

    Yep. Europe again. Following comments from Generali’s CEO Giovanni Perissinotto based on a transcript from a conference call earlier that the Eurozone is at risk of breakup (something which everyone knows, but nobody dares to say, especially not anyone whose CDS is trading in lockstep with those of Italy), the USDCHF just plunged to fresh all time lows. And so all the goodwill created by the robotic buying on the NFP headlines is gone. 

  86. eyezz – the quote from last night abt the 7k coats on back order indicated that a small percent of the population does 60% of the spending. We just need to get the rich to shop at walmart. (then they could put their coats on lay-a-way)

  87. stjean – Yeah, not bad at all.  I obviously went in too soon.  I rolled down my call side already to create credit.  My put wing is at 640.  Too close to make me feel comfortable right now.   I’m certainly not as bad off as anyone who stuck in there with the Income Trader, but I could be happier!

  88. Anyone thinking rally off the European close???

  89. Please keep Art Cashin on…. 

  90.  Rustle:  I was with some very Republican people in Washington yesterday, and they echoed Phil’s "put ‘em to work" stimulus idea over QE-anything in the same language:  crumbling U.S. infrastructure, work instead of endless handouts, the whole Roosevelt-ian WPA thing.  No idea if it will gain traction, but nobody seems to think that giving banks money solves anything, and rightly so.

  91. Phil (repost from 8:57 am):
    Thanks so much for your input. 
    1) QQQ 57P (in @ 4.5) -The result of a number of bad rolls that have gotten away from me.  The cost increased recently when I bought back a 52P (to offset) as a way to hedge more against further drops in the market.
    2) VIX 20/24 bull call spread (in @ 3.17).  I see how the VIX does not correspond with the market and, if I sell, I am trying to find a way to maximize what I get out of the trade (rather than selling a $4 spread completely in the money for 1.80).  How should I handle this?
    Thanks again for all of your help.

  92. what did Art say?

  93. GMCR finally down over 10% in a couple days, dang wish I had been more greedy, lol instead choose to be disiplined and cashed in my puts yesterday …

  94. Cashin is my favorite of the CNBC regulars.

  95. After you Kustomz. :) All kidding aside it would be great if we could get the the threat of a downgrade completely off the table. And then there still is the mess in Europe and Yentervention pressuring the dollar higher.

  96. IWM/Russell – See how dangerous it is to chase a pre-market pop?  That’s why we’ve been so interested in the futures lately – the best (and most obvious) moves of the day come when the markets are closed.  

    Caesars/Craig – I haven’t even called them yet but that is NUTS!  Maybe it’s always been that high, I don’t pay for my room so I have no clue but Atlantic City is $200.  

    TBT/Toph – If we have a nasty crash they could go even lower so I don’t like making short-term bets at the moment – tempting though they may be.  The Sept $26 puts topped out at $115 when TBT was $1 lower (and the VIX was higher) and are now $1 so I like those for a sale to raise cash.  

    Happy anniversary Morx!  To guard against the Fed disappointing everyone next week I would go with the DIA Sept $115.75/113.75 bear put spread at $1.  You can offset that with something you REALLY want to buy on a sell-off like XLF Sept $13 puts at .45 or AXP Sept $43 puts at .95 but the bottom line is that, with DIA at $113.35 now, you make 100% UNLESS the Dow ends up higher and you don’t lose all your money UNLESS the Dow is up 200 points and, if it happens next week, you will still be able to take a good portion off the table once you decide you don’t need the protection.

    USO/Pat – Notice how I PATIENTLY waited until the situation lined up and became a much higher probability.  I cannot emphasize enough the value of NOT trading when a market is choppy – especially on a crazy open.  

    EDZ/Tusca – I hope you didn’t do that!  Our plan was to see if they made 2% or we would bust.  Which ones did I pick yesterday?  

    Breadth/Rain – WOW!  (From Bespoke


    VLO/Seer – It’s like when there’s a miner strike and the miner goes up.  VLO back down now but gasoline still 2.76

    Speaking of oil – after 11:30 our premise for shorting USO (EU selling pressure) is shot if it’s not working so best to get out by then on $25KP as premium decay is a bitch on expiration day!  

    FAS/RDN – Absolutely correct on your instincts at 9:45 (those 10,000 hours kicking in!).

    Dollar/Tusca – It’s not just Japan (who are standing aside today) but the Swiss and the Chinese and the Aussies and Canada all want the Dollar to be stronger.  Don’t forget that EU is "only" about 25% of global currency.  That’s the problem – if not the Dollar and not the EU – A LOT of money pushes into the "safe" countries and jams their currency to record highs.  China gets inflows and, because they peg to the Dollar – MUST buy a Dollar for every Dollar’s worth of Yuan that flow in – hence their constant participation in auctions.  If China de-pegged, that would totally crash the Dollar (and probably our whole economy) but China has $2Tn of our Dollars with a much smaller economy than ours so they’d be looking at a $400Bn hit if the Dollar falls 20% PLUS it would make our goods 20% cheaper and their goods 20% more expensive – they certainly don’t want that so we do our little currency dance around and around and around….  

    Rent-A-Rebel very busy today – pipeline explosion in Iran now.  Sounds like people are getting desperate in the oil pits!  

  97. Iflan- AAPL- so, you are out of the Oct calls also?

  98. Phil—I have short rimm aug 26 puts @ 1.31—would one roll to sept 25 puts for a small credit now?

  99. What good is this report unless you really know how to read it. Most of us just see or hear what is on the surface.
    9:45 AM Goldman Sachs’ Jan Hatzius weighs in on the NFP report, calling it "good but not great," benefiting mostly from "subdued expectations." The decline in the unemployment rate was driven by a drop in labor force participation, not by employment gains.

  100. Mabey Obama will announce a massive jobs $$ program "Roosevelt style"!   lol not holding my breath here

  101. Fannie Mae needs more money. What a surprise. That’s the kind of news we need today:

  102. FAS Money/StJ – The MONTHLY Aug $19 calls?  They opened at $1.50 and were still $1.18 at 9:50.  Dropped like a rock after that though and yes, if you miss one then just buy the next strike with tight stops as a momentum play.  NOW, however, I would not chase.  

    Law/Iflan – I think that one is gravity.   :)   

    VIX 32.75 – bad sign!!  Dow below 11,220 will be VERY BAD SIGN!  

    Those USO puts may get interesting….

  103.  Phil what do you think of wfr?

  104.  Phil – FAS instincts – Yeah, too bad I didn’t do it!  Thing is I’m all cash except for the FAS Money and a CMG and a LULU ratio backspread, so I seem to be so delta neutral that while everyone else is either making or losing loads of money, I’m basically where I was on Monday.  I suppose thats a good thing, but lots of angst for nothing

  105. 75.13 – any twich up in the Dollar is devastating for the market!  

    USO Today $34 puts done at .75. in $25KP 

  106. Pharm who makes the strongest antidepressant? I think it would be prudent to go long happy pill manufacturers.

  107. @zero
    Funny thing is history does repeat itself and that was a clear way out of the depression then and cutting spending was Hoover’s way that put us in a depression.  We have the answer key and no one wants to use it and no Republican would vote for spending money for anything right now.  I don’t think many Democrats would either.

  108. Remember the days before the telepromter…when the pres didn’t look like an idiot when it didn’t work?

  109. FAS Money / Phil – Sorry, very slow chart in TOS… They did drop 0.40 in about 5 minutes after you posted so there was little chance of catching that one! Too late to enter now!

  110.  Sold out my today IWM 72 puts for a double. Not bad, and this at least pays me back a chunk of what I lost on my Google 605/610 bcd from Monday. Holding IWM 72 Aug puts for a continued slide next week. Birinyi’s predicting another 3% down based on "waterfall events" like yesterday. Sounds optimistic to me.

  111. Why are random people calling me uncle?

  112.  Oh the President has been speaking – how nice of CNBC to join him…

  113. Pres is going to take out 1180 if he continues this hopeee thingy, without substance…

  114. 75.21 is PP for the dollar today. It has been resistance so far since the open… We are closing in on that right now! 

  115. When congress gets back in sep. I want to move quickly…someone get Obama a napkin please!

  116. Looks like nobody wants a sell-off an nobody wants to buy either.

  117. JRW Flying my lines are 70.64 70.92 71.26 71.75 72.47 73.80

  118. Good morning,


    drcraig / Puts

    I think we fail here (IWM 70.72), if so, I would sell on any turn near the EOD !! If we bounce, however, we will probably see 71.80 so sell on any turn (watch the 8EMA on the 3 minute) !!

  119. That 119 line on SPY is a 50% retracement from the lows of last July to the highs of April. The next line is a 61.8% retracement (usually the stronger line) at around 115! 

  120. kustomz / happy pill — The Fed in the form of QE3!

  121. Phil -
    I still have the IWM weekly Aug 11 $76 puts @.45 from a $25K play. What can I do to better this position? Thanks.

  122. For DIA, these retracement lines are at 113 and around 108.50. 

  123. JRW, what are your lines for today.

  124. Sorry meant 112.50 for the DIA 50% line! 

  125. Rolls/Amatta – Yes the spike up would have been a good time as the long puts still had premium while the Augs had little left.  I wouldn’t roll DIA as they are all premium.  HPQ I’d go to Jan $32 puts at $3 and that would be your net entry as you burn the $1.  TBT strike would be nice but see above for TBT rolls.  FAS I’d wait on the Fed on Tuesday, GLW I’d go Jan $15 puts ($2) and that becomes your net entry and RIMM I’d just go Sept $25 puts as an even roll as this price is stupid.

    Nice job by whoever caught .85 on USO!  

    USO NEXT WEEKLY $32 puts at .35 – 10 in the $25KP (pressing our profits).  

  126.  A lot of the option flows are suggesting negative yields for short term rates.

  127.  JRW= At 71.12, so above your EOD 70.72…so are you saying sell even if before EOD?

  128. Higher volume than yesterday: 11:30 130M vs 80M yesterday.

  129. SO no NEW jobs…just shuffle the non-existing ones?  Eeeek!

  130. Unless the bots work off PResidential speech word clouds, not sure how "that" is going to help save the markets today…

  131. They tried to use AAPL to get the buy bots to bite and it worked for a few minutes but they sold heavy into the move.

  132.  Here we go again :-)

  133. Yep, what I suspected…the bots just grew legs, and jumped out the 32st floor Goldman Suks window.

  134. pstas…yes, I’m out of the AAPL Oct calls.   They were kicked out this am on a stop-loss.   I have NO aapl holdings right now, except the QQQputs, which are of course a way of shorting aapl and a lot of other stuff.   The puts I bought this am are already up 20%.   My mouth watereth.   :)

  135. BAC scaring the crap out of the markets.

  136. Phil--are we doing anything with the IYR covers in the income portfolio?

  137. Phil / Fiscal void    Boy this Pres has dumb advisors.  Can’t these morons write him some ‘structural stimulus’ speeches which you’ve often detailed?  Where the hell do they think the jobs will come from, housing? pubic sector? tax reductions?  This country is full of idiots.  If he doesn’t challenge this clown Cantor by screaming for a major structural stimulus plan in every speech, he won’t get re-elected.

  138. The QQQ Aug 54 puts are now 1.90 or so, up 25%.  I’ve put a .10 trailing stop on these.  These will be converted to cash before the day is done.  

  139. Sell in May and go away.

  140. LINES

    Other than yesterdays, 73.74,  72.75,  71.80,  70.72 and the lines on the chart above !!

    I’m in TZA as I think we are going lower !!

  141. tusca / Fiscal void – Would he make the speeches just to demonstrate what he would do if the Tea Baggers weren’t in control?  Otherwise he’s just whistling in the wind.

  142. Now over 2.00, up 37%.  Is this legal?

  143. You are right JRW.  We ARE going lower.

  144. All about the dollar.

  145.  Phil if I’m underhedged, what do you recommend as a hedge?

  146. Well so much for 1180….thank you inept President and federal govt…

  147. The way the market is swinging, we can be down 50 in five minutes or less or down 300 in 2 minutes.

  148. To reiterate to all you AAPL followers.  I am SHORT AAPL and the market. 

  149. JRW - at least we should stop at 1143…someday…or is this more than a H/S reversal?!?!?

  150. Good 10:18 call Iflan! 

    Who/Tusca – I just prefer to think of "THEY" – whatever market forces, government intervention and Bankster manipulation may go on in the morning is just one big, delicious soup of data that we play off.  If you start thinking about one specific factor at a time, it can drive you nuts (and also lead you to put too much weight on a single thing).  

    Gotta love these ultras!  TZA up as much today as they were yesterday. Exponential growth once you get going and string together consecutive days in their favor (take note StJ!).  This is why those far out of the money hedges on Ultras are smart long-term protection – they are very cheap (as a bull call spread) and can surprisingly go in the money on a real Disaster (like this).  

    DIA/Rustle – Brilliant call at 10:19!  

    Manipulated/ZZ – Yes, but, as I just noted above, it’s only one of the factors.  Kind of like one guy in a bobsled – they can’t make the whole thing move when the team is going the other way, just nudge to try to set directions.   Let me know how Sti Lanka is – I haven’t totally given up on the UK yet.  

    TNH/Russell – Nice job sticking to your guns on a buy target.  

    FAZ/Willsons – Ah, that is the fatal flaw of long-term disaster hedges – they only protect you against a LASTING disaster.  Short-term, they are pretty useless, that’s why I said yesterday it’s good to have one long-term, one short-term and one Mattress hedge.  The same way you are not making any money, you also are not going to lose much on the way back down so I’d wait on the Fed because it’s too dangerous to go naked.  You COULD flip your long calls to the 2013 $65 calls ($23, +$2) to lower your Theta burn and that’s just $10 above your $20 caller.  It’s risky but the assumption is you hold value better than he does and will benefit from a turn.  If we don’t turn, then you roll him to something above you in 2013.  

    Now everyone on CNBC is telling people not to sell!  What a racket… Same scam they ran in 2008 – create a panic, THEN tell retailers not to sell into the panic, then cause more panic (next week’s plan), tell all retailers to go to cash, ignore the bottom and AFTER we’re up 10%, THEN tell retailers it’s time to buy.  

    I think take the dime and run on the Next week USO calls in the $25KP – that was a nice bonus – why risk it?

  151. Oh, that was a stop on the $25KP, not an exit!!!  

     RUT 700 is, needless to say, a must hold but Dollar at 75.17 says it won’t.   

  152. This looks NASTY to me.!!  Follow Phils advice.  Don’t be caught here without some hedges.

  153. Hat Trick: Dow violates 11,200, IWM violates 70 and SPX 1175, all on the same candle!

  154. Troy we can certainly blame the Gov for the bad econoomy but, Bernanke has been the master at helping misprice every asset under the sun. The blame should lay on his shoulders and his alone for whats taken place in the equity markets for creating a false sense of security.

  155. Got out of puts at a double and that was still too early. 

  156. JRW. Any more lines  below where we are now?  Have S 1 at 70.17

  157. Kustomz - if the pres announced a $400B jobs program, to hire 10M at $40k/year….what would that have done?

  158. rustle…use trailing stops to maximize your gains when the market is moving like this.

  159. 1700 pts down with barely a pause, amazing.

  160. Ultras / Phil – Taking notes…. 

  161. Troy every union worker in the country would have gone out and bought a GM SUV 8-)

  162. I’m getting out as I now think we bounce and I have a meeting !!

  163. Italy canceled Aug 10th auction

  164. All of these gyrations just give more faith in efficient markets!  Makes total sense.

  165.  Okay, time to buy.  Now, uh, what?

  166. Looks like a stick move, /DX just spiked down 0.30.

  167. I still wouldn’t be surprised if we are up today a little before the next leg down.  Very hard to go down 20% in a straight line.  Usually a couple pauses along the way.

  168. ECB buying out Italy.

  169. Stick – odd time of day for a dramatic dollar move, wonder what that’s about….

  170. Aaaaand, they can’t keep a good buck down.

  171. To clarify, ECB will buy Italian bonds conditionally, which usually means the conditions are to privatize assets. Let the raping and pillaging continue!

  172. I’m out of the QQQ puts with a 55% gain  about 25k for the day, so I’m outa here for the weekend, in  CASH!   No positions, no worries.  Hope you guys make some serious $ on this market the rest of the day.  I’ll see you all on Monday.  Be careful out there!   

  173. now my put sale looks great.

  174. rainman – Is that from an inside source, or are you just joking/pontificating?

  175. Die GMCR!!!  

    Gyrations/DC – 100% the Dollar.  And that’s moving around based on whatever pretty much anyone with a microphone happens to say.  

    Thanks Rustle – I have pushed this with DC people and they can’t get it to fly.  Reps consider it a form of Satanism.  They filibustered the last infrastucture bill that was brought up in the Senate and now no one wants to touch it.

    FAS/RDN – I answered that one in the previous post this morning.  I wouldn’t change the longs unless you are looking to DD or roll but I hope you took advantage of the morning spike to get out of the 1,800 shares.  Once you cash out – it’s just a matter of selling the next puts and you are back on track.  

    "Good" news from the EU as they are backing Italy and Spain debt (details to follow) – should give us a lift as the Dollar heads lower.  But bad if $75 holds after that news.  

    QQQ TODAY $51 calls are $1.35 with no premium, can be used as momentum plays with stop at $1.25

    AAPL TODAY $380 calls are .60 – fun craps roll into the close. 

    Out of USO Next week puts of course in $25KP. 

  176. Wundaber Iflan..enjoy your weekend!

  177. Trend line resistance (descending) here (IWM 71.40) then 72.75 and 73.74 !!

  178.  Sorry that was the QQQ $52 calls (today) not the $51s.  Now they have premium so no fun.  

  179. Phil / Italy   Why did this news of ECB backing not get more traction?

  180.  Taken out of half my SQQQ 23s at 7.70 – Thxs Phil.

  181. VIX coming down which also means option premiums starting to come down too.  Hoping to buy back puts as a hedge if we go positive and make a little run.

  182. And in the time it took to post that link, +4 more for 938!

  183. ECB just told you they are fooked. Italy is going to be tough to sort out.

  184. @ Phil, if we do turn positive today, how can we make an educated guess if its all fake BS, and we continue going lower next week or maybe bottoming out and begin to turn up next week? Thanks…

  185. 12:30 — DJI volume 194  — yeseterday at this time 113M.  Was that our bottom?

  186. I’ve updated my charts:
    a) it’s ridiculous how low we are and how fast we came here:
    b) it’s ridiculous how precisely we are following the indicator:
    a+b = the conspiracy theory: maybe this was an orchestrated action to finally get the last good entry prices before inflation will take stock prices to the moon…  sound’s crazy, but how knows… too many strange things going on in these markets.

  187. should have been "who knows"

  188. For all income trader players, I did roll Aug. $735/745 to 1.5X Aug. $720/730 yesterday for $0.70 credit. I am tring to roll to Aug. 2X $710/700. for little credit($0.45). Hope it will get filled.

    Hope this helps.

    BTW, I checked the Sep. rolls, they are not good at all. GOOD LUCK ALL….. We all need it.

  189. Phil / QE3 now for Europe     Why isn’t the $ soaring now?  Bearish for stocks here?

  190. Volume 200M at 12:30, not too shabby.  Remember – we WANTED a 2.5% sharp sell-off to reverse on.  Now the trick is for them to reverse!  

    Belisconi speaking at 1pm and likely to accept ECB offer which may suddenly take Italy fear off the table.  

    Reuters reports sources saying the ECB will buy Italian and Spanish sovereign paper if Italian PM Berlusconi will commit to specific reforms. The euro is all over the place – first printing all the way down to $1.4056 and now back to $1.4224. U.S. shares are rallying.

    More on the story about ECB purchases of Italian and Spanish paper: Reuters reports the ECB expects Italy to fast-track welfare reform, and the EU is applying pressure on Berlusconi to make an announcement, of which, one is expected soon. 

    After falling hard yesterday, Telecom Italia (TI +7.9%) is bouncing back thanks to its 1H results. Revenue of €14.54B (+10% Y/Y) slightly beat consensus, as did earnings of €1.17B (excluding a €3.18B goodwill charge). The company’s reiterating of full-year guidance is sitting well with investors worried about macro troubles

    Hopefully good for gold shorts. 

  191. bobhu
    Rolled RUT Aug IC yesterday to 710/700

  192. SO if the ECB prints a trillion…then all is solved?  Someone hit the "That was easy" button!

  193. c’mon early stick, let’s go up 100 now.

  194.  On FAS Money – Lets buy back those call covers (all).

  195. Tusca / QEuro — Maybe Uncle Ben is going to print the money and lend it to the ECB? You know how how they like to help the foreign banks with our money!

  196. stjean – Did you pull the trigger on your iron condor trades earlier?  I wouldn’t blame you if you didn’t.

  197. I thought Phil mentioned a few days ago that ECB has $1 trillion. If they don’t and they end up printing, wouldn’t the dollar go up and equities go down here.

  198. Corporate bond funds are selling off hard.  CYE as an example. 

  199. /Phil/CNBC – "QE Infinity"…would be a nice title for an article this weekend! :D

  200. Watch our bond market, all the other stuff is just noise.

  201.  Hey Phil,
    you’re looking for longs here?  Help me out cuz I thought anything but the 2% bounce was disappointing.  Are you looking for this to hold, or just a bounce up?

  202.  Posted at 11:52 on our board:

     ”We still have some way to go. But if we touch 1170 or so, and the market starts bouncing, do not hesitate to go long for a trade.”

  203.  2 more/Amatta – PLCM, I’d go 2x Oct $25 puts at $2.80 but be very concerned if they fail to hold $24 (maybe stop out 1/2).   WYNN should bounce back (at $500 a night!), I’d wait. 

    New lines/Peedle – The bearish assumption would be the dollar goes up (when you sell stocks and commodities you create a demand for Dollars).  Gold and oil would sell off as well (see 2008).

    PCLN/Alik – No I only thought earnings wouldn’t take them higher, the earnings were great and they are a terrible stock to short.  

    Why is everyone so surprised?  I have been saying for 3 years now that the solution to the global debt crisis is hyperinflation – you can’t have hyperinflation unless the US (and China), the EU and the BOJ are all printing money.  So what happened this week – they flush retailers out of the market BECAUSE the BOJ prints money and now the EU says they will print $1Tn for Greece and Spain (next stop, France!) and guess what will happen next week???  MORE FREE MONEY!!!

  204. Phil / Italy    So we rally on a promise of fiscal austerity from Berlusconi which he can’t enforce politically?

  205. 1.4265 euro resistance

  206. Phil- why does out bailouts and QE hurt our dollar but somehow the eu bailouts help theirs?!? F u euro!

  207. More austerity..just what the world needs

  208. How perfect is the title to today’s post?  Psychic Phil.

  209.  When the EU prints, doesn’t that support the US $$?

  210. Hey, Optrader – I take profits quickly!  I agree with what you say but I don’t like to be greedy, I’m all about trailing stops but I guess that is what you mean by the trend being over…  

    74.70 already on the Dollar.  ROFL – what a scam.  I am so embarrassed to be associated with this con game of a market…

    Italy already agreed!  Didn’t even wait 10 minutes for his scheduled speech to say "Si!" Wow, this is like some broadly staged comedy.  Talk about getting screwed on a gap up, the poor EU traders were down 2.5% at the close and they are going to possibly walk into a 5% gap up on Monday morning so – if we do manage to close up 2.5% – that trend should continue on Monday.  If we close flat – neutral is safer even though it’s still a bullish indicator (the turn we originally expected). 

  211. Very strong downward trend resistance at day’s highs – breaking over them (3/5) would be VERY BULLISH.  

    Dollar needs to stay under 74.80.  Yesterday’s low was 74.50 so that may put a top on the day regardless.  

  212. CCJ 2013 $25 puts can be sold for $6, nice stock to own long-term. 

  213.  Someone explain why what some useless horndog says in Rome can turn around the global markets!?!?
    Don’t get it!

  214. Phil – I like your analysis on most things (political and economic) but I don’t understand your excessive focus on inflation. I’m trying to better understand this, because it’s something you feel REALLY strongly about.  I understand how free money telegraphs itself into inflated asset prices.  I’m with you there.  But I don’t see how you can blame QE for inflated commodities.  We just have A LOT more people of means in this world every year (developing world, not US, for sure) who put inflationary pressures on commodities.  So I just don’t buy the QE / commodities inflation connection.  And I think my view is supported by most saltwater economic heavyweights (Krugman and Shiller to name a couple).  They tend to think we need more inflation (a moderate amount, to be sure), not less.   Maybe this is a topic for a weekend and maybe you can just point me to some outside sources who support your thesis.  I know you’re a busy guy, and don’t want to burden you with this academic question.
    Also, please don’t throw me off the board for challenging the inflation orthodoxy!  ;-)

  215. There are so many ups and downs today ANYONE what is the official stand on FAS thanks

  216. New IMF chief is under investigation already….

    Kust – do you have the 5, 7, 10 (TNX is this one) and 30 yr tickers for TOS on the treasuries?

  217. Italy will introduce a balanced budget rule in the constitution. Reformss include labor, welfare, and infrastructure.

  218. While we are watching this rally, something to think about in the coming months…..layoffs that have not been factored in!  There are lots of them if you look at the cost saving measures the banks, tech, and others are going through.

  219. Arggh, cashed out some longs at the bottom!

  220.  Yes, that is what I mean by the trend being over: trailing stops. Well, there are many ways to skin a cat. But I do like being greedy ;-) And staying in the trend as long as possible.

  221.  out of shorts, mostly, VIX too high to hold any front month positions, as the getting is just too good.
    Went, long a few things, including AAPL stock and TBT calls for a rebound there.

  222. Testing trend line support (was resistance now at IWM 71.63) as a floor; if it fails we retest the lows, if "they" can break over 72.75 we run !!

  223.  peedle:  That horndog’s country was meant to be part of the PIIGS solution — if it became part of the problem [excuse me, it is part of the problem] the Euro is toast.

  224. Im watching them Pharm.

  225.  Phil or Anyone,
    ECB is buying bonds.  Ok.  Seems like QE.  So why does the euro rally here?  When the Swiss announced easier money supply the franc traded down. 

  226. Phil / volatility   The i-banks must be making a fortune on this volatility?  Buy Goldman and MS?

  227. Optader / board – you mention "our board". Where is your board?

  228.  zero,
    seems like a matter of time til euro is toast.  But I never underestimate what "they" can manipulate along the way.

  229. Condors / Jcaesar – I did pull the trigger, but I am starting small to give me some room to roll if needed. We’ll see! 

  230.  Rainman, just click on the "Optrader" tab just above. Then click on "view the most recent post, discussion and trades".

    Then click on “comments” for the comments of the week, with the live virtual swing trading portfolio.

  231. Generali/Troy – That’s the rumor mill in action.  Gotta be careful with those.  

    Infrastructure/ZZ – Please tell them to write to Congress!  

    LDM – I made a comment at 10:20 to you.  I need to know what the actual position is (Month, strike basis) and whether you are long or short.  

    Holy cow, Berlisconi said something but people didn’t care for it.  I guess too much austerity is spooking people but it’s still a net positive.  Bound to be people here (even on indexes) looking to take profits and, of course – "they" want a strong close – not a strong 1pm.  

    UYG Aug $49/50 bull call spread at .55, 20 in $25KP. 

  232. TNX wont get excited unless 25.48 gets taken out.

  233.  peedle: I agree, but dare to short it and you are up against all the forces of darkness.  I have the scars to prove it.

  234. 72.27 is 61.8% fib line

  235. Phil / austerity    So now Italy joins the UK, Spain and the US in austerity.  How can increased unemployment be bullish for stocks?

  236.  I’m short euro with swiss franc.  so far so good. Our dollar crashing is the only strategy our ‘leaders’ have… who am I to stand in their way.

  237. FAS Money – All Calls have been cashed now! On the weekly trade we made about $0.40 on the 21 Calls. If you were able to sell the monthly calls at 1.25 earlier today, you could have made 0.25 or so!
    Position Update:
    Long strangle – Jan 12 18.33 Puts (2.40 now 4.70) and 28 Calls (2.40 now 1.47). 
    Short Weekly – August 22 Puts (2.87 now 4.45)

  238. anyone know how to refresh the etrade pro screen? mine keeps freezin up today.

  239.  SHY – the Barclay’s short term [1-3 year] bond fund, down .07 today, attracting lots of buyers.

  240. Morx/etrade – Already called them, their servers are down on pro.  Refreshing is a waste of time!

  241. Hope this extra informaiton helps – thanks again!
    1) Long QQQ Aug 57P (in @ 4.5) -The result of a number of bad rolls that have gotten away from me.  My basis increased recently when I bought back a 52P (to offset) as a way to hedge more against further drops in the market.
    2) Long VIX Aug 20/24 bull call spread (in @ 3.17).  I see how the VIX does not correspond with the market and, if I sell, I am trying to find a way to maximize what I get out of the trade (rather than selling a $4 spread completely in the money for 1.80 or less).  How should I handle this?

  242. OK, to summarize the ECB situation – yesterday Trichet says that everything is OK in Europe and actually, the US and Japan are the problems. But rules out QE. While he speaks, they are quietly buying Irish and Portuguese bonds because these markets are small enough to be impacted! And now, they are talking about buying Italian and Spanish bonds because these guys can’t sell them without paying rates that would shame a payday lender! And that’s supposed to be supportive of the euro! It’s getting hard to know which is the worst central banker in the world, but we are getting to know which one is the best liar! 

  243. thanks tradinv1

  244.  One more question Phil,
    For near term direction, are you still thinking up 2% or bust?

  245. ET Pro is working fine for me…could be your computer and/or Internet.  It uses a lot of bandwidth.  Perhaps they are keeping mine going with all the brokerage fees I’ve given them today!  I don’t know if Platinum runs on different servers?

  246. Good recap StJean

  247.  stjeanluc,
    but what are markets seeing there that rallies the euro?  

  248. Phil – How did you get .55 on UYG spread? Spread has been between .70-.80 for past half hour..

  249.  U.S Steel [X] down 17% in a week; buying some.

  250. sns1 – I see it at .58 on TOS. 

  251. Rally / Peedle – I was saying earlier this week that I thought the market were looking for an excuse to go down this week to flush the longs and they did starting Monday and would be looking for an excuse to go up on Friday to flush the shorts. Nothing more rational than that I guess… Fundamentals don’t enter in the equation anymore, we are ruled by bots and algos! 

  252. 240M at 1:30,  130M yesterday. Short squeeze yet to come?

  253. ET PRO
    Not keeping up on option prices.

  254. Crazy fun fact..   2 weeks ago today (7/22) TNA was $86 , and 54 dollars higher than TZA @ 32….
    At noon today TZA was 54 and 7 points HIGHER than TNA @ 47..    2 WEEKS!!!

  255. Phil -  bought both TNA and TZA on equal amounts when we stalled at 72.75…first time I"ve done that, but it worked great on the huge spike downat 1:03 as I quickly got out of TNA and made great profit on TZA.  What do you think, crazy tactic for a crazy day?  

  256. shadow – i noticed that when i was entering a bid way higher than their ask and it wouldn’t fill. Could be my stuff too. Also some heavy thunder storms coming through.

  257. Txs Terra- was looking through etrade.

  258. @ Phil should we sell the rally? i dont know if they cant take us 2.5% up which was what you were looking for… thanks!

  259. @ JR seems like 72.75 is very hard to break, what do you see for the remaining of the day? thanks!

  260. JRW – got the day off. Was curious what your position is now? Still waiting for 72.75/ 727.5 (TF)?

  261. morxlntway
    All but one was fairly good but I do market orders about 20 or so today. I also feel we have failed the 72.75 line. Cash now.

  262. bought TNA, sold half with a nice gain, not sure if i will sell the other half here because iwm cant break 72.75 which was what JRW was looking at as a resitance…

  263. CNBC - rumor that SP ratings comment out Sunday night. Hmmm…

  264. Asaenz – nice! Great minds think alike….Not really the best statement though. For me it’s more like a clueless mind wants to know what a great mind (Phil/JRW/Pharm) think…

  265. PFE buy write Jan 2013 for income portfolio perhaps? PFE yield is now 4.6%

  266.  interesting TF futures remain in the red

  267. I am moving out of any longs that one does NOT want to hold for a while.  If you are even our UP on some of the biotech plays, I would lighten up.  Talked with a bond trader and they are looking for another big move down in the market.  3 mo bills are trading at Par, 6 mo are at 0.04 and 1 yr are at 0.11.  That tells you sumpin’ is up.

  268. Lines:

    IWM   70.11,  70.66,  71.38,  72.75,  73.74,  75.33,  75.91,  76.32,  76.69,  77.34,  77.84,  78.13,  78.64,  and  78.98

    I’m in cash waiting for direction !!

  269. RIMM/Savi – They are at $24 and the puts are $2.50 so .50 premium to work off is not chicken feed.  I’d keep my eye on the roll to the $24 puts (now $2.30) as they should go even at some point or, if we have a nice pop, you may not need to roll at all.  

    WFR/Bgb – Crazy at $5.70, down about 20% in the last few months with SOX down about the same so nothing particularly bad about them.  Businesses have cycles and the SOX are in a down one in general (unless you make IPhone parts) but that doesn’t make WFR (or CSCO) a bad company.  It all depends on what kind of investor you are.  

    Dow volume 245M at 1:30 and it’s not down volume for a change.  

    Monday/RDn – You are neutral when the market dropped 10%?  What’s wrong with that?  That means you can buy things that are 10% cheaper than they were on Monday – the trick is to figure out where that bottom is.

    IWM/Hextra – I don’t remember those but were they naked shorts or calls you bought?  If you bought them, take the money and run of course!  

    IYR/Income Portfolio, Savi – No change as we have 2 weeks and reason to believe we may bounce back.  As it’s a 1/2 cover, I’m not too worried.  

    Obama/Tusca – I think the Dems are "saving" the good stuff for the election cycle.  I hate this strategy but its their new favorite.  You can’t expect the Administration to "save" the markets because this one is around Cantor’s neck at the moment.  Nobody thinks that the Debt deal had anything to do with the Dems and anyway, Congress has an 82% disapproval rating and the other 18% can’t be smart enough to pull the lever so  what does that mean for the election?  Change of Congress!  

    QQQ/Iflan – That’s the way to do it! 

    Underhedged/Bgb – I guess you weren’t!  Now’s the time to take on if you felt like you were missing like that DIA put spread above.  

    Damn JRW – On the friggin’ button at 12:03!  

    AAPL 2 hour $380s are a double – don’t blame me if you are a greedy bastard and blow this one!  

    Those QQQs only made $1 so AAPL wins!  

    S&P rumors now being used on CNBC to knock us down.  What they did do today is 

    According to Gang of 12 Member Barclays, one reason for U.S. shares giving up their early gains is a rumor S&P will downgrade the U.S. after the close tonight. It wouldn’t be too much of a surprise given the agency’s earlier statements, and – beyond a knee-jerk reaction – it’s hard to imagine the move having an effect on shares or bond rates.

    What I did here today is that Gang of 12 Member CS CUT their year end target on the S&P by 7% – TO 1,350.  Where are we now?  1,208.  So 1,350 is 12.5% UP from here in 5 months.  That’s how silly things are.  

    "None of the normal preconditions of a U.S. recession are in place," Garthwaite wrote in his global equity strategy note.

    He saw a 50 percent chance of more quantitative easing (QE) in the U.S., and said QE in the U.K. and Japan appear likely.

    Garthwaite, who maintained his overweight stance on equities, lowered his forecast for earnings growth in the United States to 12 percent from 14 percent in 2011, and in the euro-area to 7 percent from 12 percent.

  270. Im seeing a fail, markets rocket higher they sell putting money right back into bonds..not something you want to see in hopes of a market recovery. Its give and take and I’m seeing more take. We rallied 400 points off the lows in the Dow. Thats a big move.

    We need some QE3 talk

  271. Bond junkies are also expecting gold to move down, as the IMF and countries are going to have to raise reserves for the banks.  China will also be raising rates, so, in part they expect a move in gold to be down.  Not positive, but they are not expecting a big move up based upon the miners performance/movement thus far.

  272. Gingrich on Bloomberg saying financial regulations are holding the country back – then the next crash he will probably say: "where is the govt?" Just like the oil spill in the gulf. Talk about flip floppers. What a tool.

  273. Sorry guys, I’m trying to do this with only a laptop and a phone, so I’m watching, Jake’s on the phone for orders, and I post when I can  !!

  274. Earth to  Pharm:  why does ARIA have 15x it’s average call volume today?  They made a cheerful announcement on their progress Aug. 2, but something must have popped today.

  275. Phil—the DIA 101.75 sept puts and QQQ 52/51 sept bps from yesterday hold as cover over weekend right?

  276. Shouldnt we be shorting the sh!t out of this POS market right now!? I mean if the dollar down almost 1% is all this can get us and the weekend coming up….

  277.  Hey Phil,
    Would you sell into the close if we can’t retake your levels? 

  278. Looks like a bunch of squeezy triangle thingys forming.

  279. Hi Phil — into the weekend — should I add more Sept Dia 101.75 long put for protection — or what other hedge do you recomend thx

  280. 11,470 and 11,535 range on the Dow… the fear is losing the latter and they may have the will to take us over 11,535

  281.  You are very welcome ZZ! 

    Wow, CNBC pulling Carter tapes to scare viewers now: "We have a crisis of confidence"  

    ECB/Kustomz – Nobody with $1,000,000,000,000 to throw around is "fooked".  

    Thanks Pentax!

    Italian Parliament will work in August!!!  Now I know the World is ending….

  282. 74.68!

  283. Space to zero (on earth) – ARIA is not alone in its decent into biotech hell.  Speculation is off the table and retail is left holding the bag….nothing new there.  I am an investor in biotechs, but their drug WORKs.  Technically, they could retrace to $5, but they are holding support here.  Either someone is covering their longs or buying back their covers from a while ago, or they are going to drive this baby back up.  That, I do not know!  23K Sept 12 Calls have moved through, so someone thinks it is safe to sell those, or they are betting big?  Time will tell.

  284. Thanks Phil on the AAPL play!
    Those AAPL 380 calls are a great example of disciplined trading! I tried to get in @ .32 a couple hours ago (but missed) and would have been very happy to catch a couple dimes. Sure AAPL could pop over $380.32 by the close but why take that gamble now this close to EOD? more like $$ suicide now. btw, it seems many stocks like to close on options day close to round numbers so puts and calls there expire @ 0 but i have no real historical data on hand, just seems like that happens, so AAPL closes right about $375  (jmho)

  285. ECB/Kustomz – Nobody with $1,000,000,000,000 to throw around is "fooked". 

    Bernanke give Phil back his computer stop fooking around :-)

  286. EU QE3/Tusca – It’s pushing the Dollar down because the EU has money but has not been willing to spend it.  That’s been causing the solvency of the EU to be in doubt and pushed the Euro to the 200 DMA DESPITE the fact that the Dollar is a total joke.  By taking action on the last two (perceived) weak members, the Euro has confidence restored and now begins to look safer than the Dollar again.  

    That being said, this is crap movement so far with the dollar down 1% since the open.  Either they are saving it for an EOD spike or it’s masking a lot of selling.  

    2%/Peedle – That’s right and we still need to get to 2% but I got a little more confident with the Italy news.  Now I’m getting a little worried that not much is happening as we hit what should not be major resistance (unless our range has already dropped). 

  287. I’m also buying more calls based on another Hammer finish as Wednesday !!  Meanwhile, we should know soon:

  288.  Thanks, Pharm, I picked some up today, DX [dedos cruzados]

  289. phil--any hope for the stick??
    figures the one time in my life i wanted a stick…

  290.  thx phil

  291. Phil I know its easy to fall in love with Europe since they have all those wonderful socialist programs but, you cant have parasites go unchecked for too long otherwise eventually they will kill the host.

  292. damn VIX won’t go down.  Hesitant to buy puts again knowing if we go up on Monday and the VIX drops, the options will get killed from loss of premium as much as market movement which hurts a hedge play.  Bought the 113′s this morning at 1.82 when Dow was up 125, they were 1.93 when dow was up 145 before.

  293.  Compare what CONGRESS has just proposed (in their DEBT CEILING DEAL) with a comparable families finances.

    IRS RECEIPTS (INCOME):                $  2,170,000,000,000
    Federal SPENDING:                                       $  3,820,000,000,000
    New DEBT BECAUSE OF SPENDING :      $ 1,650,000,000,000
    TOTAL National DEBT:                               $14,271,000,000,000
    BUDGET CUT:                                                $       38,500,000,000 (about 1 percent of the spending)


    FAMILY INCOME:                                $  21,700
    SPENDING:                                                        $  38,200
    CURRENT DEBT:                                            $142,710
    AMOUNT PROPOSED TO BE CUT FROM FAMILY BUDGET: only $385 (about 1% of Spending)

  294. JRW – U gonna stay long if that hammer is red yet above yesterday’s low?

  295. Impressive volume @ 285M with an hour to go.

  296. Will 50% Fib hold here?  Place your bets…Vegas Baby!

  297. JRW – were did you fly too?  Do you have a pilots license?

  298. JRW handycap
    Order flow is green 3 buys but money flow is out. Did get a ZIG.

  299. Were going down….

  300. @Itrade
    Awesome comparable

  301.  Dollar down over 1%… Dow only .6% and NDX DOWN -.75%
    I’ve been on this board long enough to know that ain’t good!

  302. Now it’s red!

  303. Since the volume is so high not sure if we witness an epic battle or just a sell off.

  304.   huge increase in consumer credit…market ignoring

  305. At this rate we will be down 20% by Wednesday!

  306. Phil, not saying the people of Europe are parasites (have relatives there)…PIIGS taking down Germany is what I was referencing.

  307. Wow, 4:00 PM can’t come soon enough! 

  308. maybe a BS stick and we are positive again jajaja this market is a joke

  309. nothing like a bs fake at the end of a quiet calm week in the markets.

  310. RUT goes up .6% in 2 minutes, nice…THat’s normal….

  311. Dow strength=toe dipping since most pay a nice div. not a bad way to test the waters on a market bounce.

  312. Phil /anyone: I need HELP:
    Phil suggested a hedge thiaAM which was a  Spy 2013 $125/$115 Bear Put , I bought $125 Puts and sold $115 a hedge for a market decline,but I’m losing money as the market goes down. Did I do it correctl?

  313. At least TBT is up almost 5% on the day.

  314.  EUR.USD is coming up to the top of a falling channel.  Should it stall here the markets won’t like it.

  315. VIX is rising…..


    dflam, if you bought this am, when VIX was at 39, your paying for the volatility.  I have sold short puts that are hitting my long puts (and calls) for the same reason.  ITM will be bigger than OTM. 

  316. pHIL /spy HEDGE: I BOUGHT spy 2013 $125 p AT $17.40 ,NOW $17.48 AND SOLD $115 p AT $12.91 .NOW $14.96.

  317. Phil/SP  500 EOD - 1204… 3 months free PSW? :D

  318. Pharm: SPY is at $119.85 so my ITM long put at $125. increase $.33 but my short OTM $115 P which I sold increased by $1.93. My hedge is working against me. What gives?

  319. Phil—could you think of a trade for Vegas so that I can make some money to be able to afford the trip  :-)

  320. Phil / EDZ   Liquidated on Italy news.  Do you think I should buy back for the weekend or do you think the Europe is fixed story will develop over the weekend?

  321. Phil – Not that you dont usually, but you have DEFINITELY earned your money this week. THe recommendations have been PERFECT. Selling into the initial excitement (MULTIPLE TIMES), hedges, everything. Im reading this when I get home from work and want to cry b/c I cant trade at work! I might have to start getting up at 3 AM though to catch those trades bc youre killing it then too! May you and yours have a blessed weekend!

  322. Inflation/JC – Different kinds of inflation.  The kind of inflation QE drives is top-down inflation – rich people get more money, they speculate and buy expensive crap and no real demand is created.   The GOOD kind of inflation is demand inflation led by labor inflation where the workers can count on having a 3% bigger paycheck every year.  That makes them happy to buy homes and cars and whatever on layaway and a tight job market gives them confidence to spend and, of course, home prices tend to go up and stocks go up too as they sell more stuff to more people.  We can talk more about that over the weekend.  And by the way, we PRODUCE more commodities than ever and, in fact, supply has almost never fallen behind demand other than minor disruptions but SPECULATION distorts the price.  Rex Tillerson of XOM said if he sold oil directly it would be at $65-75 per barrel (when oil was over $100) – the rest is speculation mark-up.  How’s that for a source?

    JRW’s 72.75 target on the RUT seems to have been the dead top for the day.  VERY disappointing. 

    IBanks/Tusca – I’ve been picking them for a while. Still like them but not too crazy as they may have "black swanned" on this one.  

    Austerity/Tusca – Better than BK is the current mood.  And, how can you ask how increased unemployment can be bullish for stocks – look how happy  our fine companies are…

    QQQ/LDM – Well clearly you should be taking the money and running on the Aug $57 puts.  You were very lucky to get a sell off that got you near even.  If we rally now you are screwed.  Let cash be your hedge for now and look at the DIA bear put spread from earlier for weekend coverage.  On the VIX, it’s frustrating that you don’t get the $4 isn’t it?  DO NOT play the VIX unless you really know what you are doing and, even then, it’s stupid.  You can take the Aug $20s off the table at $10 and buy the Sept $22.50s for $6.30 which does not REALLY cover the Augs but it will make you feel better until they expire.  

    Bust/Peedle – I think that has been averted and now we either are up 2% at the close or drift into the Fed. 

    UYG/SNS – The last sale on the $49s was $2.76 and the last sale on the $50s was $2.60.  The spreads are now $2.94/3.10 and $2.44/2.58 so for you to be seeing .80 would have to be your broker taking the WORST POSSIBLE combination if the two and it’s seriously time to change brokers.  You don’t just pay whatever they say, you make an offer for .55 or enter one leg or the other first on momentum to fill it.

    X/ZZ – Very tempting. 

    TNA/Topher – Cool!  

    TZA/Troy – That’s an excellent tactic actually.  We used to do it whenver FAS and FAZ crossed.  

    Boy if they have any firepower, they are sure saving it…   Have to take a bullish flyer into the weekend now because it’s the Europeans that were panicking and this announcement is AFTER they are in bed so they should be pushing the Euro higher on Monday and the Dollar dips and (hopefully) we go up – at least  a little bit.  

    TNA Aug $55/60 bull call spread at $1.60, selling TBT Aug $28 puts for .80 for .80 on the $5 spread.  

    DIA Aug $113/116 bull call spread at $1.60, selling $107 calls for $1.15 is .45 on the $3 spread.


  323. dflam,
    You got the SPY correct – buy the higher, sell the lower.

  324. Wasn’t Barton Biggs a Coen Brothers Movie?  He thinks yesterday was a flash crash from HFT programs, you think?

  325. Pharm / Weekend

    I will be 100% cash, but I do have some calls and sold puts !! (September)

  326. Man, you can drive a truck through those Jan13 spreads….I wouldn’t worry about it for now b/c of the prints on the Bid/Ask.  I don’t see Phil’s recommendation though…..

  327. This should go to IWM 72.30 at least !!

  328.  PFE/Otto – I like them.  You can buy them for $17.45 and sell the 2013 $15 puts and calls for $5.25 and that drops the net to $12.20/13.60 and boosts that .80 dividend to 6.5%. 

    RUT crazy low compared to other indexes.  

    Cash/JRW – SMART!  

    Covers/Savi – If you need them.  I’m now dropping my expectations of a sell-off ahead of the fed to about 33% with the S&P downgrading us the catalyst but I don’t think they will — just a warning at most.  

  329. JRW AND Phil -  What does a flat-ish close tell you about next week? Seems to me that if after a decent NFP and a massive change in European debt policy that the best we can do is stay flat, doesnt send a very confident message of follow through…

  330. Phil – Do you recommend cashing out of the Sep. 43/47 calls on SCO?  With SCO at 57.24 the trade is deep in the money, however the bid/ask spread is absolutely terrible to get out…….I can’t even get out for 3.25 on it.

  331. I hope your right Phil about the weekend… but yikes
    Nasdaq down more than 1%… Dollar down more than 1%
    Seems like with only 30 stocks they can use the DOW to hide weakness.  When all the proles are watching the news tonight they’ll think the market held up.

  332.  there it goes

  333.  Phil, I would like to buy Citigroup and hold it for the long term. Could you suggest some good option plays that could lower my entry cost of getting into C. Thanks.

  334. What a crock. IWM up 1% in last 15 minutes…Guess the headlines will be something orignal like "dow finds late day buyers"….

  335. Phil,
    To answer your question on the IWM weekly Aug 11 $76 put @ .45 they were naked shorts. What should I do now I’m getting killed on them. Thanks.

  336. peedle, Dow is the safest bet in equities..think a risky market its a smart move.

  337. All of those that floated stock offerings b’f this sell off are under water by 20% or so.  IMGN $12, BPAX $3, DCTH $5 etc. etc. I am sorry, but this is a very unhealthy situation.

  338. TNA  / Phil.. sell some aug 45 put for 2.25?

  339. topher7 / TNA

    If you like black hammers !!  (I do)  8-)

  340. Pharm – AMAG holding up, sort of.

  341. Phil- Any pre-close hedge suggestions on SPY?

  342. Natives are too focused on Europe, BAC smells fishy and the financial are extremely weak.

  343. that did not sound right JRW :)

  344. morx, there is an offer on the table for them to go private IF they nix the Allos deal.  The option spread on them right now will be OK, but I am looking to get out even if we can get the volatility to move our way.  The deal is at $18, which does not help our BCS at all.

  345. LOL/lapper

  346. phil your  dia 113/116 b/c $1.60  selling 107.00 call  $1.15. that must mean puts right!!

  347. Troy / Pilot

    A wise man once told me not to share too much personal information over the Internet !!  8-)

  348. AAPL call looking good for $375 Eyezz. 

    Parasites/Kustomz – So the PEOPLE are the parasites and the Corporations are the host?  Good topic for the weekend…  

    LOL ITrade – That’s a great comparison!  

    Bear put/Dflam – You are losing money as the VIX goes up and your putters have more premium than you do so they benefit more.  Just worry about being on or off target on that one, not the PRICE that fluctuates constantly.  Also, if a daily fluctuation is enough to worry you – then you are overhedging!  Any vertical spread does not really make money until the last 2 weeks.  Before that the premiums usually wash each other out.  That’s great on a hedge though because if the S&P pops next week, you should be able to get out with a reasonable loss and, if it doesn’t, then you remain ON TARGET.  

    SPY/Dflam – See last comment.  The length of that means it’s simply a bet on where SPY will finish in 2013 (you are betting lower than $115 and, if that’s right, then we are Fooked!  

    1,204/Troy – That’s going to be tough but a reasonable guess. 

    Vegas/Savi – LVS Sept $41/44 bull call spread at $1.50, selling Aug $39 puts for $1.10 is net 5 of those for $200 will pay $1,500 if it works.  Should cover the trip.  About $3K in margin to run it.  

    EDZ/Tusca – No one in the US cares about Italy but EVERYONE in Europe and Asia will care a lot.   My gut says guess bullish into weekend but CASH is my main play!  

  349. Speaking of BAC:
    And back in July I posted a link to the same blog:
    We can’t say the the handwriting was not on the wall…. 

  350. LOL Phil—-I will give it a try

  351. Outta here for now. Have a good weekend everybody! Updated charts on the blog if time allows and a recap of FAS Money! 

  352. Thanks Jrom – you too!  

    And have a great weekend everybody.  

    Dow up 60 points matters more to international traders than the rest (which is why they painted it) but the rest of the indexes SUCKED.  NAS and RUT down big again but at least volume was huge (404M) 2 days in a row and we’re off the lows.  

    I’ll be catching up on chat and in and out this weekend.  

    - Phil

  353. JRW – Wish I could be so wise…but unfortunately, I’m my worst enemy.  Have a good weekend friend…

  354. Pharm – so how does a Jan option react to an earlier than Jan sale of the company? does it just get closed at 18? Maybe if we sell another put, Jan 15s are 1.50.
    or buy a call if we are pretty sure it will close at 18?
    I have never been in this situation before.

  355. where is Stjean’s blog, anyone?

  356. Looks like i picked the wrong week to uncover the higher strike price on bull call spreads. It is now beer o’clock.
    Stop by if anyone is in town.

  357. Longs – ugh what an ugly week. short puts are killing me as their margin maintenance has been jumping up. WM, PCAR, FIEC and GLW sure looking tempting at these levels. in fact, had to nibble at some GLW stock.

  358.  Phil  - after getting caught in the middle of selling out of a spread I ended up with: +20 IWM Aug 79p at $1.76 now $7.66 and -20 Aug 78p at $.76 now $6.73.  What do I do with this? Thanks.

  359.   2yr euro swap spread up huge today …hungary cds up 16%….emg markets cds up huge accross the board

  360. JRW, we can make a fortune in TNA if the world doesnt come to an end 8-)

    Great weekend folks…

  361.  Good week. Love TBT’s rebound. 
    It’s like Staples: "That was Easy!"

  362. XLF Jan13-18 calls are a sweet deal at 0.58 if you can get in at that price Monday.

  363.  Amidst the clamor of positions collapsing, Phil’s mini-lecture on maintaining disaster hedges as a kind of of continuous tax on your profits really stood out.  I was pretty sure I could just buy insurance when I felt my house was at risk of catching on fire.  Even sadder, I actually had "disaster insurance" this week — a cleverly designed offset between Euros, oil and gold, dollar-matched, and bound to produce at least modest profits no matter what happened.
    The result was my largest weekly loss of the year.  Not crippling, because I’ve done well this year, but it took a large chunk of hard-earned winnngs off the table.
    An old Tehachapi cowboy / ex-prison guard once told me:  "It ain’t what ya don’t know that hurts ya.  It’s what ya know that ain’t so."  

  364. SCO/JJ – Yes, I said that yesterday. That spread should be $3.50 out of $4 so not worth risking through Sept, even though it’s not likely to fail at this point – you never know…  You just need to ask for your price or, ask for $15.50 on the $43s and see if you get it, if you do, then you just need to buy the $47s for $12 or less and a nice move up in oil should do that for you.  

    Dow/Peedle – It’s possible and, if I felt that the macros had gotten more negative, that’s what I would suspect but it just seemed to me like people were going cashy and cautious, which is the proper 

    C/Turning – VERY important to scale in so if, for example, you want to buy $10,000 worth of C (300 shares) you can start by buying 200 shares for $33.44 ($6,688) and you can sell the 2013 $30 puts and calls for $14.20 ($2,840) for net $19.24/24.62 ($3,848).  The /24.62 is the net cost of 400 shares of C if your $30 puts are assigned to you.  Notice though, that that would put you in at 400 shares for $9,848, which is 33% more shares than you could have bought now for $10K.  Meanwhile you are only tying up $3,848 in cash plus about $1,300 in margin on the put side (varies by broker/account).  

    If C goes over $30 at 2013 expirations and you don’t roll the caller, you are called away at $30 for $6,000 cash (up $2,152, 55%).  If C is under $30, even if it’s at $20, you don’t have to take the assignment.  Let’s say this was January and we sold the Aug $40 puts and calls for $14.20 18 months ago and we bought C for $43.33 – Our net would have been $29.13/34.56 and the Aug $40 puts are $6.60.  Rather than end up with 400 at net $34.56, we could now decide to roll the Aug $6.60 putter to the same 2013 $30 puts and calls for $14.20 and we collect net $7.60, which drops the net on your 200 shares to $21.53/25.77 so not much worse than a new entry at this price AFTER C fell 23% over the past 18 months. 

    I’m going into detail here because it comes up a lot and because I do try and try and try to get people to understand how powerful scaling in with buy/writes can be.  If you scale in in quarters, you can ride out a 40% drop in the price of your shares without breaking a sweat.  The problem is most people are impatient and aren’t willing to wait 3-4 years to build up a full position.  This is why all Members are required to watch "The Man Who Planted Trees".

    Late day buyers/Jrom – That’s the way they play it.  

    CNBC is running this rumor of the S&P downgrading the US over and over again.  

    IWM/Hextra – They have a lot of premium at $5 so I would not be too quick to do anything with them.  Just keep your eye on a roll, like the Sept $68 puts at $2.20.  Yes, you eat $2.80 (less the .45) but don’t try to win it all back at once.  If those expire worthless, then you can find something else to sell for $2.20 and, before you know it, you’re even.  I understand letting 20% go and I even understand letting 50% go (although that’s the point at which you need to roll), as it is a small short, but I don’t understand letting 100%, 200%, 300%, 400%, 500%, 600%, 700%, 800%, 900%, 1,000% and 1,100% go before taking action.  

    TNA/Topher – Very tempting but very risky!  

    SPY/Sns – Nope, just the ones at 3:30.  

    DIA/Jash – Yes, sorry, that’s selling the PUTS for $1.15 (calls are a bit higher). 

    IWM/Brook – So you are in for a buck and can get a buck at most and they are low enough that you are likely to get it.  I’d cascade stop your $79 puts with something like 4 at $7.50, 2 at $7.25, 2 at $7 and 2 at $6.50 and each time you stop out 2 of yours, you set a trailing stop in 2 of theirs of about a dime so you are making a series of momentum plays on bullish moves up and, if you are lucky, you’ll catch a few good ones where you get out at your stop but the short puts stay in for another $1 or so.  

    Hedges/ZZ – Thanks for sharing.  You don’t want to be clever with hedges.  If you are tech heavy, hedge the Nas and if you are industrial, well Duh….  Also, what people often don’t realize is that you can’t hedge stocks that don’t correlate to the index (like Momos, individual financials, biotechs, individual miners).  That’s why I favor blue chips – if they go down, everyone goes down.  Strategically, this Q we shorted the RUT as our favorite hedge because the weak dollar, massive unemployment and skyrocketing commodity prices don’t really help the small caps.  That’s about as much thinking as we want to do when hedging.  Yesterday I picked some Momos to hedge simply because they were not going down while the market was so EVENTUALLY they would probably catch up but that’s a great example of what poor correlation they have to the index.  

  365. Today’s levels.

  366. Phil,
    Crazy week at work so I haven’t made a single trade.  WTF is going on with this market.  Is there a legitimate reason for this sell off or just more games?
    Maybe a quick pull back to justify QE3

  367. Here we go!  This is the headwinds the biotech/pharma companies are facing in the coming years in the US.  One needs a good comparator trial to show that a new drug is SUPERIOR to alternative, less expensive treatments….now this was in the UK, but it will start moving quickly when the fire is lit in the Medicare Reimbursement rates……

    The U.K.’s cost-effectiveness watchdog has crashed Gilenya’s party. The Novartis ($NVS) multiple sclerosis drug got a thumbs down from the National Institute for Health and Clinical Excellence, which is something of a standard-bearer for drug reimbursements. Novartis was disgusted by the decision, and patient groups immediately began planning their protests.

    The explanation leaned heavily on efficacy data. "Unfortunately our independent committee wasn’t given sufficient evidence to show that Gilenya could reduce relapses considerably better than the other treatments currently being used," NICE’s Carole Longson said in a statement. "Based on the available clinical evidence and economic analysis, our independent committee concluded that Gilenya would not be a good use of resources."

    NICE logged several criticisms of the Gilenya data, including a complaint that the Swiss drugmaker didn’t compare the new pill with beta interferons besides Avonex, not to mention Biogen Idec’s Tysabri. But no doubt the bar wouldn’t have been set so high if Gilenya had a less-hefty price tag; at 19,000 pounds ($30,000) in the U.K., it’s cheaper than in U.S., but still not cheap. In the cost-effectiveness balance, a big weight on the cost side has to be offset by more impressive data on the efficacy side.

    That’s why Novartis balked at NICE’s suggestion to compare Gilenya with "best supportive care," i.e., no active treatment; at costs that low, treatment doesn’t have to be super-effective to be worth the price. "It will be very difficult for any new therapy to demonstrate cost-effectiveness against best supportive care," the drugmaker said in a statement. The only drugs likely to win that match-up would be symptom-management treatments, rather than meds aimed at stalling progress of the disease, Novartis said.

    Novartis plans to fight NICE’s decision, and it will have help from the MS Society in the U.K., which pronounced itself disappointed with the recommendation (or lack thereof). If public outcry isn’t enough to sway NICE--and it often isn’t--the drugmaker could offer a patient-access scheme, a.k.a. discount program, to lighten up the cost side of the equation. Or maybe Novartis has some other data in its files to put forward. Whatever the appeal strategy, NICE will be playing its familiar bad-guy role in U.K. media.

  368. 30 Years Ago Today: The Day the Middle Class Died …a letter from Michael Moore
    Friday, August 5th, 2011
    From time to time, someone under 30 will ask me, "When did this all begin, America’s downward slide?" They say they’ve heard of a time when working people could raise a family and send the kids to college on just one parent’s income (and that college in states like California and New York was almost free). That anyone who wanted a decent paying job could get one. That people only worked five days a week, eight hours a day, got the whole weekend off and had a paid vacation every summer. That many jobs were union jobs, from baggers at the grocery store to the guy painting your house, and this meant that no matter how "lowly" your job was you had guarantees of a pension, occasional raises, health insurance and someone to stick up for you if you were unfairly treated.
    Young people have heard of this mythical time — but it was no myth, it was real. And when they ask, "When did this all end?", I say, "It ended on this day: August 5th, 1981."
    Beginning on this date, 30 years ago, Big Business and the Right Wing decided to "go for it" — to see if they could actually destroy the middle class so that they could become richer themselves.
    And they’ve succeeded.
    On August 5, 1981, President Ronald Reagan fired every member of the air traffic controllers union (PATCO) who’d defied his order to return to work and declared their union illegal. They had been on strike for just two days.
    It was a bold and brash move. No one had ever tried it. What made it even bolder was that PATCO was one of only three unions that had endorsed Reagan for president! It sent a shock wave through workers across the country. If he would do this to the people who were with him, what would he do to us?
    Reagan had been backed by Wall Street in his run for the White House and they, along with right-wing Christians, wanted to restructure America and turn back the tide that President Franklin D. Roosevelt started — a tide that was intended to make life better for the average working person. The rich hated paying better wages and providing benefits. They hated paying taxes even more. And they despised unions. The right-wing Christians hated anything that sounded like socialism or holding out a helping hand to minorities or women.
    Reagan promised to end all that. So when the air traffic controllers went on strike, he seized the moment. In getting rid of every single last one of them and outlawing their union, he sent a clear and strong message: The days of everyone having a comfortable middle class life were over. America, from now on, would be run this way:
    * The super-rich will make more, much much more, and the rest of you will scramble for the crumbs that are left.
    * Everyone must work! Mom, Dad, the teenagers in the house! Dad, you work a second job! Kids, here’s your latch-key! Your parents might be home in time to put you to bed.
    * 50 million of you must go without health insurance! And health insurance companies: you go ahead and decide who you want to help — or not.
    * Unions are evil! You will not belong to a union! You do not need an advocate! Shut up and get back to work! No, you can’t leave now, we’re not done. Your kids can make their own dinner.
    * You want to go to college? No problem — just sign here and be in hock to a bank for the next 20 years!
    * What’s "a raise"? Get back to work and shut up!
    And so it went. But Reagan could not have pulled this off by himself in 1981. He had some big help:
    The AFL-CIO.
    The biggest organization of unions in America told its members to cross the picket lines of the air traffic controllers and go to work. And that’s just what these union members did. Union pilots, flight attendants, delivery truck drivers, baggage handlers — they all crossed the line and helped to break the strike. And union members of all stripes crossed the picket lines and continued to fly.
    Reagan and Wall Street could not believe their eyes! Hundreds of thousands of working people and union members endorsing the firing of fellow union members. It was Christmas in August for Corporate America.
    And that was the beginning of the end. Reagan and the Republicans knew they could get away with anything — and they did. They slashed taxes on the rich. They made it harder for you to start a union at your workplace. They eliminated safety regulations on the job. They ignored the monopoly laws and allowed thousands of companies to merge or be bought out and closed down. Corporations froze wages and threatened to move overseas if the workers didn’t accept lower pay and less benefits. And when the workers agreed to work for less, they moved the jobs overseas anyway.
    And at every step along the way, the majority of Americans went along with this. There was little opposition or fight-back. The "masses" did not rise up and protect their jobs, their homes, their schools (which used to be the best in the world). They just accepted their fate and took the beating.
    I have often wondered what would have happened had we all just stopped flying, period, back in 1981. What if all the unions had said to Reagan, "Give those controllers their jobs back or we’re shutting the country down!"? You know what would have happened. The corporate elite and their boy Reagan would have buckled.
    But we didn’t do it. And so, bit by bit, piece by piece, in the ensuing 30 years, those in power have destroyed the middle class of our country and, in turn, have wrecked the future for our young people. Wages have remained stagnant for 30 years. Take a look at the statistics and you can see that every decline we’re now suffering with had its beginning in 1981 (here’s a little scene to illustrate that from my last movie).
    It all began on this day, 30 years ago. One of the darkest days in American history. And we let it happen to us. Yes, they had the money, and the media and the cops. But we had 200 million of us. Ever wonder what it would look like if 200 million got truly upset and wanted their country, their life, their job, their weekend, their time with their kids back?
    Have we all just given up? What are we waiting for? Forget about the 20% who support the Tea Party — we are the other 80%! This decline will only end when we demand it. And not through an online petition or a tweet. We are going to have to turn the TV and the computer and the video games off and get out in the streets (like they’ve done in Wisconsin). Some of you need to run for local office next year. We need to demand that the Democrats either get a spine and stop taking corporate money — or step aside.
    When is enough, enough? The middle class dream will not just magically reappear. Wall Street’s plan is clear: America is to be a nation of Haves and Have Nothings. Is that OK for you?
    Why not use today to pause and think about the little steps you can take to turn this around in your neighborhood, at your workplace, in your school? Is there any better day to start than today?
    Michael Moore
    P.S. Here are a few places you can connect with to get the ball rolling:
    Showdown in America
    Democracy Convention
    Occupy Wall Street
    October 2011
    How to Join a Union, from the AFL-CIO
    (They’ve learned their lesson and have a good president now) or
    Change to Win
    High School Newspaper
    (Just because you’re under 18 doesn’t mean you can’t do anything!)

  369. So now we are officially downgraded.
    So down another 1000 points on Monday?

  370. Oh I see its the ratings downgrade, thats the reason. Glad they dont leak stuff to each other on Wall Street (oh wait I heard it hear). I think there is plenty of bad news to spook people, the dreaded Ddip recission (though we had been skimming along the bottom channel anyway) and now ratings. Anectotally, for whatever its worth, I have seen more people coming out to commit to business ventures of late here in Miami (mucho plata se ha hecho en Latino America), which to me is a little more fundamentally bullish. As far as reason to panic, to me this is not 2008: no subprime mis-ratings fisco (how ironic that they are on the otherside now) or the house of credit event dominos that were cds and repos. Of course a major soverign default might do it. Could it be the tea party is sabotaging things?

  371. Rustle- Congratulations. Your credibility just went from zero to negative. Extremist wacko spamming us with Michael Moore material on a trading site??? This guy makes his living reeling in suckers like you. I guess they pay you min wage to spew this crap? Get a life.  Appreciate the weekend humor. Laughing my ass off!

  372. From what I’m reading, market could actually go up since our dollar might get weaker.  Also the two alternatives to the US Treasury in order are 2 Japan and 3 Italy, don’t think people will be bailing out of treasuries to go to either of those two countries.
    And Jakester, might not agree with some of Michael Moore’s views, but do on this.  He backs up his claims with facts, you back up yours with nothing but hot air which is like alot of other Republicans.  Bring facts to the table and have some sort of debate if you can find them.  And I listed this after hours not during trading day.  If you actually followed what I did today, you would’ve made a couple bucks.

  373. rustle123 – What are you reading regarding the effect on the market, or are you just surmising this?  Regarding Jakester, I’ve noticed he loves to spread his joy and wisdom on this site as much as he can – a real treasure he is.  LOL!

  374. No been reading what I could on various sites on the internet and on CNN and MSNBC over last few days.  Waiting for Phil’s comments.  I’m just guessing, that this might not be such a bad thing.  And my brother read that Obama and Geithner kind of wanted this to happen because it will now be harder for China to manipulate the yuan against us giving us a better advantage for competition.

  375. "A US downgrade might cause Treasuries to rally as riskier assets were dropped. A bet against the richest and most powerful country on the planet is never a safe one."

    Mark Gongloff in the Wall Street Journal’s Market Beat blog had similar thoughts:

    "The reality is that US Treasuries, federally guaranteed mortgage-backed securities and agency debt account for 53 percent of all triple-A assets in the global bond universe, according to Nomura. There are few other places to go."

    Gongloff cites a BMO Capital Markets analysis stating that:

    "Ten years have passed since Japan lost its AAA rating and while its 10-year yield still remains close to 1% its currency has not been negatively impacted, but rather it is near the strongest levels of the decade.
    Therefore while a credit downgrade would create a long period of uncertainty before all the implications became clear, there is precedent to suggest that rates may not spike higher as some market participants are expecting and the world’s reserve currency may remain unaffected."

  376. Also recently credit default swaps have factored a downgrade in already in the last few weeks.  This should have little or no impact.

  377. Who knows on Monday my TBT gains may make up for my FAS losses? What a mess, everyone check your covenants, particularlay the Permitted Investments defintion. Yikes. I will keep beating my drum the concept of "nationally recoginized statistical ratings organization" needs to be writeen OUT of law. No private company should be written into law as required to get a rating from. The rating agencies need to survive out of there own merit not a privilaged place under law. The have done a terrible job since they have been slowly written into more and more legal requirements affecting companies and financial institutions. They completely screwed the country with their rating of MBS, CDO, CMBS etc. And now they pull this SH*T. Come on.

  378. Interesting – thanks Rustle.

  379. From Barry Ritholtz:
    S&P Downgrades US to AA+

    By Barry Ritholtz – August 5th, 2011, 8:39PM

    Here is the great irony: S&P (and the rest of the ratings agencies)  helped contribute in no small way to the overall economic crisis. The toadies rated junk securitized mortgage backed paper AAA because they were paid to do so by banks.
    They are utterly corrupt, and should have received the corporate death penalty (ala Arthur Anderson).
    The good news is we have removed the requirements from SEC and other regulations that their input is ever needed; The bad news is they still have some sway.
    It just goes to show you that the old cliche is true: You don’t need analysts in a bull market, and you don’t want them in a bear market.

  380.  I would guess it’s a non-event.  What would be the event? The Chinese realizing that the U.S. isn’t creditworthy and buying Euro-denominated paper?  The rating agencies doing the math and announcing that Euro paper is a better credit bet?  Gigantic outflows of bond proceeds into Swiss paper with a zero yield [and Switzerland would immediately impose capital controls]?  
    U.S. [over]consumption based entirely on government [over]borrowing has driven the world economy for at least a decade and quite arguably longer  Nothing new has happened.  If rating agencies were capable of uncovering credit unworthiness on a massive scale that had escaped the attention of bond buyers, investors would be hanging on their every word.  This purely public relations-based "announcement" will be greeted by the sniggering and yawning it deserves.

  381.  Not to get get too political… but Republicans, Democrats, Unions, big business… they’ve all colluded for decades to grab what they can.  At least at the leadership levels.
    This I know for sure: There will be NO solutions coming from these clowns.  Michael Moore included.  Even though he is half right by default (no pun intended).

  382. P.S. — By "overconsumption" I include the spending of the U.S. government itself, perhaps principally, which is done in the name of its citizens — including every war from Vietnam to Iraq II, not one of which ever added a nickle to U.S. GDP or fput a single gallon of cheaper gasoline on the table to feed America’s overmotored SUV habit.

  383.  Aren’t some market participants requires to only hold AAA?  And aren’t there different levels of collateral based on a bonds rating?  So possible some people may at least need to raise cash.
    Anyone know more about these things?  I’d love to know for sure.

  384. well if sp proved itself to be marginalized in the last 10 years..not counting how they got shapiroed last week..they are now completely irrelevent..if there has ever been a time for liberals and conservatives to get their flamthrowers out this is it…a chance for conspiracists to come together left and right to destroy these dirty panderinas once and for all..i just don’t see the lefties or the righties in extremis as being bright enough to conceive of a plan much less a means to exploit it to bring david beers and his clowns down…i wonder if soros paid for this…maybe..the koch bros…now FINALLY  the chinese can demonstrate the general state of their worldwide cred by dumping those bonds as a natural recoiling outcome of all their lecturing and proslytizing on how to cook our books because aside form general tso’s chicken thats what they cook best. FU DEBTHOLDERS! 

  385. Hi there!

    I made a new post on the Downgrade but too tired to chat now – let’s move comments over there as this is bound to be the topic for the weekend.  

    Going to have to do a lot more reading than I planned this weekend, that’s for sure!  

  386. Rustle- There is no need to debate about Michael Moore. His cheap, tabloid newspaper sensationalism (or "documentaries" as you may refer to them) in which he stages fake scenes to insite outrage  have been widely discredited by many. He knows exactly the level of intellectual sophistication of his viewers and the fiction that stimulates them.  In the mean time, he get’s rich off of people like you while living in a very nice home in Manhattan and sends his kids to the very best American private schools. Sorry, but this exchange isn’t even worth the time it took to write the response. BTW, I did very well in the markets today, thanks for your concern.

  387. Good for you jake, glad to hear you did well in the markets, too bad you are amoung those that so easily dismiss the misery of the many, of course not your problem, I imagine you have not missed many meals in your life but hey good for you!