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F’ing Thursday – Give Us a Break!

Holy cow – when will it end?  

As I mentioned yesterday, we were expecting a whipsaw after the morning sell-off and we played that perfectly with bullish trades on the DIA and OIH and, as we move up, we took bearish plays on GLL, TZA and QQQ.  All good so far but then we did a little bottom fishing before wising up and shorting USO into the close – just in case.  The futures were up 2% this morning at 5am and I had to warn our Members:  

Overall, this is too weak to get us over the hump and we are going to have to lean a little more bearish unless we can follow Europe up 2.5% or more.  Our charts will turn from "spiking low on volume" to "consolidating for a move below 20%" very quickly if we don’t gets something bullish going by tomorrow.  

The Dollar was at 74.64 at the time and it’s only 75.04 now (7:50) but the futures have gone from up 2% to down 1% in less than 3 hours – that is insane!  How are retail investors supposed to play this market?  The average person does not have the stomach for watching their virtual portfolio’s value go up and down 5% a day – at some point they are all going to pull the plug and walk away.  Of course, as I was saying yesterday – that’s just what the Banksters want you to do, assuming they know QE3 is right around the corner, accompanied by a 20%+ market rally into the year’s end.  

Anyway, hope is NOT a strategy for the prudent investor so I published another set of Disaster Hedges this morning as it’s time to add a layer to our longer hedges (which are now deeply in the money).  I hate to chase these plays but one thing we learned in 2008 is that there may never be a bottom (not in the short run) no matter how oversold you think things may be.  Was the market wrong in 2008 to go below S&P 1,000?  Well 3 years of subsequent trading seem to indicate that it was – but that did not stop us from dropping 33% lower, to 666 (the mark of the Blankfein!).   

Our entire goal in a sell-off like this is to simply preserve our cash.  The lower we go the better the opportunities will be in the future but for now, it’s going to be a wild ride down to the bottom if we’re breaking below our 20% lines (-10%) along with investors’ spirits.  

Once we have our additional highly leveraged, downside hedges in place, THEN we are able to do a little bottom fishing.  Even yesterday, when we opened with a bullish trade idea on the Dow in my Morning Alert to Members (made 20% or more 4 times yesterday!) by 10:20 I put up the following hedge idea for TZA:

Disaster hedges – I would wait and see if my premise is right at 11:30 but the TZA Sept $61/73 bull call spread is $2 for the $12 spread and that’s 500% upside right there so you can risk stopping out at $1 to make $10 and you can offset with anything you REALLY want to own like VLO Sept $18 puts at $1.03 or DIS Sept $29 puts at $1.15, or T Sept $28 puts at $1.  

These are the kind of hedges I favor at the moment, ones that set us up for a new entry on one of our favorite stocks at a better price.  This is still an optimistic strategy as our goal is to offset a potential 50% loss on the spread (where we would stop out or roll) with a short $1 put that is unlikely to expire in the money if the Russell is on the rebound.  

With luck, these insurance trades will work out very cheap if it turns out we don’t need them.  I still think this is all a flush ahead of QE3, with the IBanks and their Media Lackeys doing everything they can to panic competing investors out of equities so they can buy in at another Bernanke bottom.  

I know investors have short memories but wasn’t it last August, after the Fed minutes on August 10th and before QE2 was officially announced on Sept 1st that the market dropped 7.5% in less than 3 weeks.  It was August 25th that I put up a Hedging for Disaster post, JUST LIKE THIS MORNING’s – that turned out to be completely unnecessary just 5 days later.  Fortunately, on August 29th, we also picked up a half dozen bullish Dow plays that did very, very well in "Defending Your Virtual Portfolio With Dividends."

What were the stocks we liked then?:

  • MSFT at $24.23, ran up to $29.29, now $24.20
  • T at $26.94, ran up to $31.51, now $27.88
  • VZ at $29.84, ran up to $37.96, now $33.66
  • HD at $28.74, ran up to $38.82, now $28.51
  • KFT at $30, ran up to $36.30, now $32.80
  • PFE at $16.09, ran up to $21.21, now $17.05
  • MRK at $35, ran up to $37.25, now $29.81 (we don’t like MRK anymore!)
  • INTC at $18.37, ran up to $23.73, now $19.93

So, thanks to additional action from the Fed just days later, 7 of 8 were big winners and, of course, using our options for leverage, even bigger and now a couple have made the full round trip and are attractive again.  As I said, we’ve been doing some bottom fishing in Member chat but it’s on companies like these and with 20% downside hedges from here as we don’t know when this madness will end but I HOPE (not a valid strategy) it ends soon.  

Let’s keep in mind that those were our "safety" picks as we were hoping we had bottomed at Dow 10,000.  AFTER QE3 was announced, on Sept 3rd, with the Dow already up 350 points (which seemed like a lot at the time – it’s amazing what you get used to), felling more confident I put up our much more aggressive "September’s Dozen" list and those 12 plays averaged over 160% returns vs. less than 50% on our dividend plays – EVEN THOUGH THE DIVIDEND PLAYS HAD BETTER TIMING!  

PLEASE keep that in mind this week.  We are simply following a prudent strategy as we test the waters bringing our cash off the sidelines and that’s hedge first, then take CONSERVATIVE long positions and then AFTER we have DEFINITIVE bullish news (like QE3) THEN we layer in some aggressive long positions.  

Even as I write this, the futures markets are in another wild swing, this time back up and are now about flat to yesterday’s close.  Why?  Who cares?  This is a very silly, irrational market and we should just be glad that we’ll get a good price on our disaster hedges and THEN we can look for some more upside plays – maybe we can go for yesterday’s DIA calls again, those were fun…  

 


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  1. Good Morning Phil and Everyone Else,
    Do any of you know much about France Telecom (ADR) (NYSE:FTE) and if they are a safe company to buy a few shares in to collect dividends?  With the yield as high as it is and for it to be making 52 week lows, it is setting off my spidey senses. 
    I apologize for posting this on your other posting.
    Best of luck to everyone today!
     
    DJ


  2. Oil Lines
    R3 – 87.62
    R2 – 85.38
    R1 – 84.01
    PP – 81.77
    S1 – 80.40
    S2 – 78.16
    S3 – 76.79
    Yesterday’s High and Low – 83.14 / 79.53
    Breakout Lines – 88.98 / 70.07 


  3. FAS Money Position Recap

     
    Long Strangle – Jan 12 12 Puts (3.25 now 3.77) and 2x 18.33 Calls (2.11 average cost now 2.04) 
     
    Weekly – Short August 22 Puts (2.87 now 9.52)
    Monthly – Short August 23 Puts (3.65 now 10.57)  


  4. PP For today.


  5. Phil,
     
    I did an SDS sept 27/32 bcs, net $0.95  — I take it from this mornings hedge post I should  offset if with the lowest SPY put strike that gives me around a $0.95 price /


  6. Big trouble in Europe


  7. kustomz--what is the trouble?


  8. i owuld much rather see a "slow" start to the day than up 20 spu points…(fwiw) that at some point i believe the markets force germany and france to abandone the eruo bailing exeercise which will of course exacerbate the disintegration of europe..but i can’t see a choice…just be lucky this corpses arent running our world=moribund 


  9. "The Government wants to give land confiscated from poor people’s to the investing class – isn’t that special? Plans to sell state-owned foreclosed properties to investors in bulk and at discounts, and for conversion to rentals, gets mixed reviews. Some approved, as demand for rentals is rising even as prices decline, while others pointed out that buyers pay close to list prices for repossesed homes."
     
    It’s amazing how well oiled the machine is, isn’t it?


  10. Good morning!  

    Very sad to see the futures so weak.  This is all about panic and uncertainty but there’s no limit to how low that can take us (as we know from 2008).  I am still thinking this is a bottom but that’s because I just can’t believe the leaders of the US and EU can be so stupid as to back us into another crisis that can only be fixed with Trillions in bailouts.  Unfortunately, what they’ve already let happen is simply shocking as they could have "fixed" this a dozen times over the past three weeks yet here we are again – staring into the abyss.  

    The Dollar is just below the 75 line at the moment with the Euro rejected at $1.42, the Pound struggling to get back to $1.62 and 76.75 Yen to the Dollar.  Japan has to let that Yen go down (stronger) for us to make progress.  

    Gold flew up to $1,813 and now back to $1,771, copper and Natual gas are at $4, silver at $38.35 and dropping hard while oil is going up at $82.87.

    • I still like those DIA $112 calls, now $1.05 as a bullish play but a stop if we can’t get over 10,850 quickly and out at .90 for sure.  
    • On the Downside, aside from our disaster hedges, our QQQ puts did well yesterday and we have a nice 2,400 line to give us a short indicator and we can play the Aug $50 puts, now .92 for under $1 but as a momentum play BELOW nas 2,400 only (kind of like a futurres play).  
    • I still like our FAS bull call spread from yesterday as well.  

    Am I still too optimistic?  Maybe but I am telling you that a breakdown here would be catastrophic for not just America, but the entire World so please forgive me for not wanting to play for it! 


  11. i am with you P obviously th ebig 4 know what they need to do now do it!


  12. Phil -

    Got any ideas for an earnings trade on MCP?


  13. Banks jabo..France Italy


  14. Phil / Catasrophic    Your last comment is probably clear to Ben and Timmy (and Ben meets Obama today).  He knows there is no fiscal help coming from the the economically illiterate GOP so QE3 is the only (blunt) tool left.  FOMC told us we’re slipping into Ddip, so if it’s a choice between QE3 (inflation and more criticism) and authoring the 2nd Great Depression – which choice do you think the poor guy will make?  Invest accordingly.  But I agree with your constant view that QE3 is inevitable, and hopefully very soon as some of the global pillars are wobbling.


  15. Good morning,

     

    IWM  63.38,  63.98,  64.39,  64.96,  65.60,  66.03,  66.65,  67.40,  68.10,  68.69,  68.98,  69.80  and  70.11

    I’m 1/3 TZA, but I think we close today green !!


  16. IMAX jumping up.   


  17. Phil / post — Nice post this morning. Refreshing lack of politics.


  18. bernanke is not going to do qe3 at this time..it would show panic not savy..i suppose the entire carnivale of these players is such an odd group..agreement is oging to be tough..the ..i should say THIS president won’t be TELLING the whhilrly bird what to do…


  19. I could see some big moves in the market for each tick I see. whats happening?


  20. Much thanks to Matt (the programmer) for swiftly fixing the Globe!  Please note it’s still on the main page so don’t leave that page open if it gives your computer issues but it’s out of chat pages already.  

    FTE/Manitow – See post where you asked earlier.  I do like them as a concept but France very crazy and dangerous.  

    74.80 – that’s good if we break under, bad if we bounce.    

    SODA had some earnings reality yesterday, down about 20%.  

    CSCO back over $15 – Congrats to all who kept the faith!  

    SDS/Canuck – Yes but you don’t HAVE to cover 100% either.  You can set a reasonable cost of insurance and work off that number.  Also, don’t forget, if the S&P firms up over, say 1,150 – perhaps you stop out the spread (you can always buy another) with a small loss and leave the hedge.  

    For those of you with tons of cash and margin, I will point out that the SPX TOMORROW $1035 puts can be sold for $1.  It would take a 100-point drop in the S&P to put those in the money.  However, a 50-point drop would give you big margin issues and the margin is a horrendous $125,000 in non PM accounts to make $1,000 but, for 2 days – that’s actually not a bad rate of return!  

    Europe more or less flat now.  

    Well oiled machine/Rain – Remember that Jefferson quote, whether he said it or not, it’s been around for 200 years:  

    I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.- Thomas Jefferson(Attributed)

    MCP/David – I would not touch that one with a 10-foot pole.  It’s a crazy, manipulated Momo stock that hasn’t actually made ANY money yet.  They are supposed to make money this Q but maybe .40, which would indicate a p/e of about 30, which isn’t bad if they can prove growth so the stock could move much higher but then you have to take the environment into account as SODA is fizzing this morning so maybe they all get thrown out in a bunch.  Nope, wouldn’t touch it.  

    Nas right on our line and looking like they’ll break lower.  Aug $50 puts still under $1.  DIA $112s still $1.02 so a cheap flip flop here.  


  21. Phil / Globe — Another issue I had with that globe was it caused my browser to stay at the top on a refresh rather than return to my scroll position. PITA. Thanks for taking care of it!


  22. phil just cant bear getting rid of that globe…too funny


  23. ( i know what i am getting phhile for the holidays)


  24. @Rain
    Likewise. Required so many more mouse clips per day that my finger was was getting sore! Thanks for fixing, Phil


  25. Dollar lines are:
    R3 – 76.31
    R2 – 75.67
    R1 – 75.17 (this is where we stalled this morning) 
    PP – 74.54 (74.50 has also held this morning)
    S1 – 74.04
    S2 – 73.40
    S3 – 72.90


  26. "The issuing power should be taken from the banks and restored to the people, to whom it properly belongs"
     
    The exact opposite of TBTF/TARP — We are asleep as a population. It would be interesting to see a street poll of how many people even know what TARP stands for.  The Troubled Asset Relief Program should have been applied to the people and not the banks.  I know, preaching to chior and all… Patiently waiting for the next edition of "The Creature From Jekyll Island".


  27. Phil – those TLT puts looking good so far.  great call yesterday. 


  28. I dont believe it but, it looks like the $ is about to rage.


  29. Kustomz/$- I’m not a chartist but it looks to me like a H&S on the daily is forming. If so, the $ will soon be dropping.


  30. Phil,
    Any thoughts on HOLI? Has it found a bottom?


  31. Pharm      Time to buy PLX today   now 4.30


  32. Aside from the vix stat in my morning post, we have a diamond formation which tends to resolve to the up side:

    Longer term, the Death Cross is coming !!    Smiley

    But until then………………..I’m now all in TNA off the IWM 66.03 line !!

    My only worry is the 40 and 200 sma’s and the Pivot at 67.17 ……………..Oh, never mind !!


  33. Phil – hold on to the aug USO 32 puts from yesterday?


  34. Long article but good insight into Germany as they face the European crisis. It would be interesting to get some feedback from any German member!
    http://www.vanityfair.com/business/features/2011/09/europe-201109#gotopage1 


  35. IWM 68.10 may be a good exit for a pull-back reload, or not, but be alert there !!


  36. The Costanza Report:
    Shorting at DJIA 10950 in case you wish to do the opposite.


  37. JRW / Death Cross – Nothing more than a coin toss 6 months out though…
    http://www.thecrosshairstrader.com/wp-content/uploads/2010/06/dark_cross_table_12.png
    http://www.thecrosshairstrader.com/wp-content/uploads/2010/06/Dark_Cross_Table_21.png
    Another way to scare investors out of the market! Like they need help right now…. 


  38. italy, france, russia all down -1.0%  cds up again today…emg markets huge china cds +13bps… multi-year high of 109 bps/italy short selling ba euro financial sector cds +10%..new all-time high. this is very tricky situation because we are so massively oversold we could be up huge just because…but nothing has changed that i can tell.

     FRANCE AND ITALY SHORT SELLING BAN!!

     


  39. JRW / Death Cross — Already happened.  As well as NYA, COMPQ (today), SPX, WLSH. I’ve been surprised we didn’t get more of a shock event off these although the last few days weren’t exactly calm waters.


  40. XOM halted


  41. halted due to non-nyse bad print


  42. sorry i just repost the news folks


  43. PLX – looks like they want to take it back to support at the 3.71 area, hence I am still waiting for conviction to get in.  I will DD in that area, as they were moved throgh LT support of $6.


  44. BA down 1.00 any idea ????


  45. IMAX up on Singapore deal.  "Asia, when all my dime dancin’ is through, I’ll run to you…."  

    Holy cow, whipped again.  Not cool losing nickels on the lines without any proper pops.  Hopefully we get a real break one way or the the other.  

    Dollar 74.95 not helping but not hurting too much so fuel for a later rally being stored up (hopefully).  

    Thanks Rain, don’t get used to it!  8)

    No QE3/Angel – That’s why I can’t believe they didn’t put it in the minutes – now they are backed into a corner. 

    What’s happening/Pat – You know, same old, same old.  I am still convinced that this is a massive flush ahead of QE3 but Angel seems to disagree.  At least TBT is on the move higher as is my beloved FAS.  

    SODA – I love it when a Momo finally breaks (funny how it’s often on earnings)!  

    Globe/Angel – That thing is totally cool.  It shows all the cities that have logged in in the past few hours and the white dots are people as they log in live and, if you click on it, it actually lists each city as it comes in.  I also happen to find it useful as it gives me a quick indicator that something is going on in the World because you see a lot of people suddenly log in from a certain country or continent so you know something’s up.  Unfortunately, it seems to be a recourse hog…

    TLT/Terra – Thanks but, like many great calls, it had nothing to do with yesterday.  We were shorting $105 back last summer and I was mad that we missed the spike last week.  One of the reasons I first started keeping a blog was so I could reference back to similar market situations and look back over what worked well and what didn’t – trying to do a little better this time than last.   Just like the longs on MSFT, HD, T and PFE here we are back at last year’s very successful low – so what should we do?  That’s the deal with fundamentals – there is a price at which our dividend payers become irresistible – just like there is a price at which TLT becomes silly.  Unlike a Momo stock – there are certain laws of finance that come into play (eventually) with TLT.  

    HOLI/Enni – Poor HOLI –  BP got better treatment!  I love them at $6 but I liked them at $10 too so take it with a grain of salt.  Still, buying the stock for $6 and selling the Jan $7.50 calls for $1.40 and the $5 puts for $1.70 is net $2.90/3.95 so another 33% off before you get a 2x assignment.   I like 30 of these in the Income Portfolio.  

    Death cross/JRW – It won’t be a death cross if we plow back over the 200 dma by next week!  

    USO/Nicha – No, those should have stopped out early.  Remember they were $1.34 and I said we SHOULD take them off but we needed something in case we had a terrible open.  We didn’t and that was that but the .29 we made was supposed to be our buffer.  They opened at $1.10 and sank since then.  If you are still in them at .80, I’d sell the Tomorrow $32 puts for .33 and roll those out to the Sept $30 puts (now $1.10) AFTER the tomorrows get worthless (otherwise you can get hurt on the deltas).  Keep in mind if a trade is not in the $25KP or Income Portfolio I am NOT tracking it (and even those I get distracted) so PLEASE follow normal rules. 

    Good article StJ. 

    Good anti-call Dsheara. 

    Gold $1,759 – ROFL!  

    XOM/Angel – Technical glitch I think.  Back up now.  


  46. Phil/ Many Many Thanks!!!
    Love everything about the site and your insights and opinions are exceptional and always interesting. A trader could almost play your titles alone they seem so prescient. Thanks for all your work and bringing all this together!
    Stjeanluc / JRW / Pharmboy and all regular contributors/comment makers
    This is my first post on a board here but I’ve been a member for a few months and  all of your comments and articles and links are very appreciated, This is a great site and community and everyone involved I wanted to thank you, as well as posters on this board for all your insight and opinions, even those I don’t agree with almost always add something to a discussion and that is refreshing to see!
    JRW III / I have to say I love your chart work and these past few days with trades and winning percentages are really great. Thanks for sharing your work!


  47. lmeiner,

    You are most welcome !!


  48. IT’S ALIVE!!!!


  49. Out of TNA at IWM 68.10 for $3.20 or 8.2 %  !!  (I will reload down around IWM 67.68ish)


  50. Doubling my short at 11029.  If you have been following (and doing the opposite) you should have NOT lost the $.42/share on DXD.


  51. see the action in chf..they are actually thinkng of pegging to the euro..talk about idiocy…they are lashing themselves to the mast of sinking ship


  52. Phil – PSW server went down?


  53. phil, your server went down for a few minutes.  here in CA.


  54.  yes for sure i ve had no access til now..get those gnomes working


  55. And we’re back..I think Phil is still on SA


  56. Server went down in NYC too, for a few


  57.  whats SA


  58. Server went down here also. In St Louis, back up now


  59. sinkin like a hog in a bog


  60. Seeking Alpha


  61. I’m back; server went down !!    I’m still in cash, but waiting for the turn, now likely at IWM 67.40ish or 67.17 !!


  62. Seeking Alpha, its the back up if this site goes down. Search Phil Davis and find todays article you’ll see posts near the bottom of the page.


  63. European shares roaring now, at their highs of the day as a short-selling ban seems imminent. Stoxx (FEZ) 50 +3%. The biggest winner is Switzerland (EWL), +5% as the franc (FXF -4.7%) craters against the euro and the dollar.

  64. Any thoughts on selling puts for RIG?  Still hesitant to pull the trigger as I am a bit worried about oil prices and some fleet issues and the other overhang, but some nice premium to be had (for the risk of course) . . .


  65. Looks like they are listening to Phil’s ideas about solar panel installation:
    http://idealab.talkingpointsmemo.com/2011/08/clean-energy-is-booming-and-creating-jobs.php


  66. Rejected: A Europe-Wide Short Selling Ban "Does Not Look Likely"
    http://www.zerohedge.com/news/rejected-europe-wide-short-selling-ban-does-not-look-likely


  67. OK, we’re back!

    Please don’t forget to FOLLOW me on Seeking Alpha and then it will only take you 2 seconds to find my comments if this site goes down.  Here’s the link and keep in mind that, if you don’t do it now, when the site is down you won’t have access to this link!  

    What I said at 11:16 was that the QQQ Aug $51 puts at .90 were now a good play for Nas under the 2,450 line (tight stops) and then, at 11:21 I said:

    I am not expecting too much of a pullback as Europe is having a strong finish (so far) so let’s watch the Dow for a long entry again over the 10,850 line and it’s the DIA Aug $114 calls at .78 that should give us the best bang for the buck. 

    I’m looking for over 10,850 ONLY, so stop would be very, very tight but they are nice, liquid contracts and, if the Dow is going to pop, it should test 11,000 and that’s going to add about .30 to the calls so call that a goal.

    EU markets are closing up about 3% now and the Dollar is currently at 74.72 and over 74.80 is bad and under 74.60 is good so let’s watch that closely.  They are still trying to get the Yen back to 77 (now 76.83) which is bad as it boosts the Dollar and holds back the markets.  Euro is $1.425 on the line and Pound right at $1.62 so you know someone wanted to paint that at the close.  

    Gold $1,755 with a very long way to fall.  

    TBT made $26 – maybe there is hope…


  68. 2/3 TNA off IWM 67.40; 1/3 off 67.65 !!


  69. Phil, 
    TZA hedge Sept 53/60 now can be had for under $2 (well a few mins ago when market was up close to 290)… is that one you still like compared with the ones posted today? I feel TZA has more bang for buck…


  70. That 115 line on SPY has really been a turning point the last couple of days… Hopefully, it will be support now! It failed yesterday afternoon though (with everything else!). 


  71. Now ZH says Reuter reporting no decision on short selling ban in Europe.
    http://www.zerohedge.com/news/rejected-europe-wide-short-selling-ban-does-not-look-likely


  72. Pharm:
    What is wrong with PLX? Will they get back to 6? You won’t get in until 3.7? Thanks!


  73. kustomz / News

    First a major bank failure, then that was a misprint; now short ban, then NOT !!

    Has Lloyd taken a second job as the editor over there ??


  74.  Phil:  Held long DIA/QQQ overnight, great gain.  I’m now short gold [despite my $1800 gold prediction having been met] and long coal.  Don’t have the stones to trade the indices, I’ll sit on my profits and cool out.


  75. CNBC slams papers for "spreading rumors"…BAHAHAHA…


  76. Thank you lmeiner and welcome!  

    LOL Dsheara.  I’m telling you, you are nailing the inflections and that’s great.  Now you have to retrain you brain to know what those inflections mean.  

    On Seeking Alpha – I don’t post there every day but, if you follow me, you’ll be able to find me and my latest comments very fast.  

    If we do not break trends and head to day’s highs by noon, I doubt we’ll be getting there until and unless we get a stick at the end of the day.  Still too much selling pressure and we’re running out of week.  

    RIG/Kramer – I decided to spread the risk yesterday with the OIH short puts.

    Solar/StJ – I wish!  

    Daily Mail apologizes to SocGen for starting completely false rumors as to their solvency!  


  77. Before the new news about the good news,  I was thinking this attempt at breaking through IWM 68.10 would be the one; now we’ll have to see, so again be alert !! 


  78. TZA/Amatta – It’s good bang for the buck but also I think the RUT is way oversold now (as is everything).  If you NEED a hedge, then you NEED a hedge but I’d rather bet against emerging markets than our own small caps at the moment.  

    Nice job ZZ and totally on target with gold too!  

    CNBC/Troy – Yes, that was kind of funny.  

    The one/JRW – I think we have big and possibly insurmountable intra-day technical issues if we don’t pop it on this run.  


  79. Holy cow, it’s 11:48 and the Dow volume is just 20M???  If that isn’t a misprint then it means we can ignore EVERYTHING that is happening this morning as it can all be wiped out in 5 minutes of real trading.  


  80. Phil……..For after hours if you have not seen the Darcus Howard interview on BBC Manchester/rioting.
    No surprises…but .sadly/disturbingly poignant confirmation of PSW commentary.
    http://news.yahoo.com/blogs/upshot/viral-videos-swirl-london-200858799.html


  81. JRW the rumors are usually true and don’t forget we still have BAC fuse burning. I highly doubt "they" let this get out of control but. if the banks are withholding information then it may be too late.


  82. CSCO/Phil – "Congrats to all who kept the faith!"  Sadly, yes, CSCO has become a ‘faith-based" investment. Might as well blow on the dice…


  83. Phil / Volume — 141M @ 11:52


  84. Phil / Volume — That’s lower than the last few days but certainly not holiday like! I think the shorts are out.


  85. Phil
    I got 141 million!


  86. Costanza Theory – we will retrace half the previous day’s down candle before breaking to new lows.  My stop out will be 11250 – the previous high.  I will get bullish over 11500.  Market going to do one more flush just down to or past 10k.  Then some kind of announcement will rally the markets (probably before everyone contributes to their 401ks on 9/1).


  87. If we get through, IWM 68.53 and 68.69 are resistance !!


  88. One more thing if we ARE slowing down then Europe should have a slowdown..where do rates go in Europe? Euro trading on bullish speculation Europe will be saved and not on economic fundamentals.


  89. As I said, no guarantee of upside now from Europe so not enough firepower !!  I’m out !!


  90. Point of info, industrials and utilities appear to be outpacing the rest this week. With retail and XLF flat.


  91. Phil…If the DOW volume is correct then I guess we should be taking the winner off the table and load some hedges.


  92. My gain on that TNA was 75 cents or 1.8% !! ( a little over 10% on the day so far  8-)


  93. Very cool Living! 

    BAC/Kustomz – Speaking of which, here’s a must read from my buddy Karl (from Email):

    We blew it.

    We, the people, and governments, blew it.

    In 2007 I began writing about the banks and the fraudulent accounting that they were employing world-wide, and had been for decades.  The premise of holding things on their balance sheet at "unobservable" prices, yet counting them as assets and claiming that they were "money good" is in fact a scam as that "value" is predicated on one and only one thing – trust in the person making the claim.  There is no externally-observable and verifiable confirmation on these valuation claims – it is a parlor trick in that the alleged "chocolates" have proved time and time again to be used dog food.

    Bear Stearns and then Lehman blew up when the charade of their claimed valuations became subject to reasonable doubt, the market refused to accept their collateral and claims of "value" and ultimately those "values" were exposed as falsehoods, resulting in the destruction of the company and loss of all shareholder value.

    Now it’s happening again.  Bank of America is trading at half of their claimed book value.  There are only two possibilities: The book value is a lie or the market is radically wrong about valuation.

    The "black box" at the time was counterparty derivative exposure – and still is.

    We refused, after the 2007/08/09 crash, to force full and complete transparency on these books of risk by forcing them all onto an exchange with nightly mark-to-market and the posting of cash margin against any underwater positions.

    Clearinghouses do not solve this problem

    This morning we have Grasso on CNBS once again trying to defend the practice of these "customized OTC derivatives." 

    Abject nonsense.

    These so-called "customized" derivatives are nothing more than an ability to rob customers by denying them the ability to see, in real time, bid, offer, open interest and size across the entire market.  This in turn means that the bank on the other side can take advantage of its customer because the customer is severely disadvantaged. 

    This is one of the banks’ big money-makers – and why not?  When the customer can’t see it’s easy to rob him blind!

    But it is this very structure, along with allowing banks to mark their assets wherever they wish along with understating provisions and releasing loss reserves far in excess of reason that allows playing with earnings numbers but results in gross overstatements of value – and capitalization.

    Ultimately, as the market calls "BS!" on the claimed values, rumor becomes reality as nobody will accept your claim of solvency if you potentially are on the hook to pay them but the market says your book value is half of what you claimed it to be!

    The solution to this is to prevent banks from playing this game.  One Dollar of Capital ends all of this cock-and-bull nonsense instantaneously by requiring that for each dollar of unsecured lending – that is, a loan that is not backed by a market-priced asset – the bank must have one dollar of actual capital – free-and-clear cash or a cash-equivalent (which is NOT pledged in a repo or other transaction.)

    It also ends the ability to crank leveraged returns by banks, of course. 

    But is this bad?  No, it’s good – because all of the panics in recent memory have had to do with banks that have lost confidence.  1987.  The Asian and Latin American implosions.  2007/08. 

    And now.

    This morning the source of the dive is a rumor from un-named sources that Asian banks are "reducing counterparty exposure" to French banks.  The effect was instantaneous – it detonated our futures, sending them down more than 30 handles, or about 3%, in minutes.

    We cannot stop these rumors and the periodic panics that are easily-ignited and destroy value until we get rid of the ability of banks to lie and obscure asset valuations.  Only when we demand that these institutions place an actual dollar of capital behind every unsecured act of lending, no matter how it’s conducted (e.g. in derivatives), and that every asset be marked to the market on a daily basis and treated as unsecured if the claim is made that no market price is available will this crap end.

    This is NOT about fiat .vs. hard-backed currencies.  It has nothing to do with the form of money and everything to do with the issuance of credit against hot air – that is, nothing – where the liability created is real but the asset’s value is a myth.

    Our CONgress and Executive, along with Ben Bernanke, must be held personally accountable for their utter refusal to stop the balance sheet games and false claims of value.  This is nothing more than state-sanctioned fraud and our refusal to put a stop to it is now threatening to once again blow our markets and economy straight to Hell.

    http://market-ticker.org/akcs-www?post=192007


  94. JRW, Just wanted to say that it really helps when you post your entry & exit points.  Helps me to learn, trade better.  You are awesome


  95. I will not buy TNA again unless we DECISIVELY break through IWM 68.10 !!

    I will buy TZA below IWM 67.40 !!

    We still have a Bull Flag though so watch the 3 minute 8 period EMA for a signal !!


  96. Sorry, that was $SOX not industrials.


  97. Speaking of banks, here is Jim Grant on CNBC this morning mentioning that banks in Europe are over leveraged like Deutsche Bank leveraged at 40 or 50 to 1:
    http://video.cnbc.com/gallery/?video=3000038647
    But he also has this long discussion about gold and currencies!
    But if European banks are truly leveraged 40 or 50 to 1, then this is truly a very large timebomb as there is not enough money in Europe to cover the potential losses in many countries.


  98. loopster,

    Smiley


  99.  XOM crashed this morning for a millisecond (it’s on all the charts at about 10:33 ET). Bloomberg said it was a SINGLE order for 100 shares XOM "at the market". It triggered the circuit breaker on XOM and caused a momentary fury. Recovered immediately.

    Yeah, who would ever have expected someone to put in a market order for an order as big as 100 shares?  LOL!!  Another scapegoat listed.

    Accept the market is rigged and discount any official explanations.


  100.  Ok, I violated a tenant of the PSW system yesterday, but it worked out.  I’m a big believer in CSCO and Chambers, so when I saw the Aug 14 call trading for $0.70 near the close, I bought 10.  Then on the pop this morning, I sold 8 of them for $1.50 and will take delivery on the other two with a nice entry down around $10.00.  I made this play only because I felt Chambers would make substantial cuts quickly, JNPR’s sales numbers were weak which tells me there was someone was taking share, and it gave me something to sell if there was a pop.  
     
    This was craps roll money, and not a normal play for me or Phil’s system, but it worked out.  Plus, the $14.00 puts I sold last week are now looking solid so my net will be substantially lower and this will have to move over the hold for long time category.
     
    I have slowed down on my laddering puts lately as I think we may have found a temporary bottom.  We certainly seem to be consolidating around 10,500/11,000, so I’m putting on intermediate hedges on big up days, trimming positions and raising cash for the next move.  I won’t start laddering DIA shorts again until we break down through the new lines.  
     
    Personally, I think we are in the early stages of setting up a new trading range about 10-15% below the last trading range as the market sizes up a recession.  I don’t think we break substantially lower without a major outside factor(ie Europe) unless the recession suddenly seems much worse than the numbers we’re getting now.  
     
    And, a mild recession may NOT precipitate QE3, Obama only wants to be re-elected so the pressure is on to hold QE3 until the last possible moment, maybe like announced in Dec launched in March.  If you look at QE2, announced in Aug, launched in Dec and markets roll it back in August.  That would be TERRIBLE timing for an incumbent hellbent on re-election.  However, if they could shift the timing so the roll back doesn’t happen until after the election, it all but assures Obama wins given the lack of substantive opponent from the other side.


  101. CSCO/Scott – Well you know I don’t feel that way.  When a stock goes below it’s value (not a bank, as Karl notes above), then I’m willing to go to bat for it.  

    Volume/Rain – Thanks, I guess ETrade got stuck somehow, I’m rebooting it.  Didn’t seem realistic.

    Meanwhile, not good that we didn’t pop on that run – be VERY careful and the Nas is still the best short with the QQQ Aug $51 puts now .93 as we cross back below 2,447 with the Dollar at 74.82.

    Other than an unnatural stick move (always possible) the trend is heading back down so a good time to add a Disaster Hedge, just in case Mr. Stick is still on vacation. 


  102.  this should hold, but gauges of credit angst aren’t confirming a solid bottom….but we could easily rally for days or even weeks due to technical state.


  103.  pelosi names clyburn, becerra, van hollen to deficit committee


  104. Hi Phil, I had the DIA 115.75/113.75 Sept bear put spread while i was out of touch this week. This morning i sold the 115.75 and am thinking i should not leave the shorts uncovered. Should i cover with something more delta neutral in case we continue to climb?


  105. Everything says we should bounce, but because we expect it………………………………

    This allows Jamie and da boyz to take us further down to get retail shares even cheaper, just in time for Ben’s big announcement !!  Hell, we even have SPX outside of it’s Bollinger Band for the first time since March of ’09 !!

    I’m 1/3 TNA off IWM 67.40 !!


  106. PLX – well, risk is off, and biotechs are a big risk.  Selling is across the board, and if you compare where they were and now, one can see they are pricing in failure.  I am going to be devoting and article to PLX and the money they could make if they undercut Shire and SNY (GENZ).  Again, this is for their treatment of Gauchers disease, a 200K/yr treatment for life.


  107. Phil, I have DIA Sep $119 calls at $1.72 now $0.61 and $123 calls at $3.30 now only $0.15. Can you suggest how I should roll them?


  108. 1/3 more TNA on surge !!  Last 1/3 over IWM 68.10 !!


  109. Great timing JRW! 

    Wow, SODA STILL going down – testing $40.  Maybe they should hold another tasting challenge on CNBC and tell you how great it is…

    Time Bomb/StJ – There’s not enough money in the World if that’s the case, so why worry about it?  I love all these guys who make these predictions but aren’t living in a fallout shelter.  They’re talking about a situation that would literally leave everyone on this planet trapped wherever they are with no credit cards to buy gas or pane or train tickets and no ATMs and then, unless they quickly figure out a barter system, food deliveries would halt and then workers wouldn’t come to work and the power would go out and sewers would back up and nuclear plants would melt down…  So what’s going to help?  Having some gold ETFs?  As I keep saying, gold won’t do you any good unless you have lead bullets to protect it and I guarantee you’ll be able to trade a $25 water filter for an ounce of gold. 

    Damn, I’m sick of those QQQ puts – don’t listen to me next time we cross below 2,450 – it’s just not working (or maybe we are buying so many we force the change).  

    This is the counter-trend move they need to break us higher but we MUST get over the Day highs, probably the Dow first (11,040), then the NYSE (7,150), S&P 1,158, Nas 2,465 and RUT 680. 

    $25KP – 20 DIA Aug $114 calls at .92, stop at .85


  110. All in !!


  111. SODA/Phil
     
    After Mark Haynes died a day after he did the Soda test, I’d be a little nervous doing their next one.


  112. "Chocolates…are used dog food….."
    For some reason that cracked me up….
    BoughtTFD.


  113. Again, watch IWM 68.43, 68.69, 68.98, and 69.50ish !!

    And of course bail if 68.10 fails !!


  114. Taking my 2.2% on CLX..

    Your buddy Phil ;-)
    We know the banks are sitting on lots of crappy assets that have gotten crappy er.


  115. CSCO/Phil – i know. i’m just a bitter long holder of CSCO because i’m a sucker, er, um, faithful…  (and it costs me on paper!)


  116. Very good CSCO call Hoss.  You are right, not my cup of tea (paying big premium pre-earnings) but your logic was great and they were ridiculously oversold.  I don’t see the Fed working that closely with Obama and, also, Obama wouldn’t want to risk the economy entering another recession, even if he does think Ben can wave his magic wand and save it.  

    DIA/Morx – So you had the $115.75 puts, took the money and ran after a big sell-off and left the naked short puts to play for the bounce – BRILLIANT!  That’s exactly how you play it.  What I don’t get is you say in case we continue to climb – don’t you have left a naked short $113.75 put?  That means you are bullish and, after this move up, just need to set stops.  

    DIA/Cjji – Well, not much left to roll now.  You are down about $4.25 so why not just try to set up a trade that makes $2.50 to get 1/2 back like (and this is a nice upside play for anyone) the DIA Sept $108.75/112 bull call spread at $1.95, selling the $94.75 puts for $1.05 for net .90 on the $3.25 spread.  You can also sell my beloved VLO (up 7% today) Sept $19 puts for .$1.06 or the FAS Aug $13 puts for $1.15.  

    ROFL Rustle!  

    CSCO/Scott – Gotta buy more when they are low on the Blue Chips (and lighten up when they are high). 


  117. TBT move predicted auction results 2 minutes before CNBC announced…


  118. TLT – big spike down.  loving it!


  119. Rustle Kass did call the bottom yesterday. 


  120. JRW- What constitutes a "fail" at 68.10? How long does it have to stay below that level or how decisvily does it have to pierce it? txs


  121. FU TLT!


  122. here comes the dollar…


  123. Takin money from the man today! 



  124. SODA way overdone… they BEAT…and gave very conservative guidance…who wouldn’t give conservative guidance if they have large exposure to europe


  125. sns1 / "fail"

    If you look at the chart now you can see that it pierced, but bounced; no bounce or descending bounces is a failure !!


  126. why euro banks!!


  127. Phil / TLT – what’s your target on this one for Sept?  98ish?


  128. Now we need to hold those levels on the next test back down.  Good rally as Dollar is at 74.83 so tons of room to take it down later and give us a super-boost.   Yen still trying for 77 and Euro $1.42 on the line and Pound $1.62 on the line – not too natural.  

    EU naked short ban seems to be a go.  That’s going to let them rally like maniacs tomorrow.  

    FAS $14!  

    TBT $27.64!

    This is shaping up to be a free money day (any idiot can buy a long and hold and do well).  That’s good if they want to get the retailers back in the game.  

    Oh, and on cue money is pouring out of bonds – staging for a buy in! 

    Bond auction was NOT GOOD.  

    he Treasury sells $16B in 30-year bonds at 3.75% (.pdf). Bid-to-cover ratio of 2.08, vs. a recent average of 2.51; indirect bidders take 12.2%, vs. a recent 40.1%. Like yesterday, direct bidders surge, taking 19.5%, vs. a recent 11.5%.

    While direct bidders keep adding debt, indirect bidders (notably including foreign central banks) bailed out on the long bond auction, and longer-dated Treasurys sink: the 30-year yield +0.22 to 3.74%; 10-year +0.20 to 2.30%. 

    Treasury prices plummet after the 30 year auction moves paper at 3.75% vs. the 3.64% it had been trading at before the sale.TLT -5.2%.

    Emini/Rain – Sad. 


  129. SODA…of course the stock will keep dropping if this is initial stage of market collapse…but there aren’t many consumer cyclicals out there with that type of growth in new market and reasonable valuation….i dont think it is the next gmcr…but if economy stabilizes it can go up alot more.


  130. Dollar won’t die!


  131. dollar getting jiggy


  132. Phil, might be a good day to pick up a few hedges for cheap. Any suggestions?


  133. I will be scaling out if we can’t break North here !! (too much resistance)


  134. TLT/Terra – I don’t really do targets.  $105 was too high and the 50 dma is $97 so it would be nice to get there and a good place to take the money and run but Sept $104 puts just doubled in the $25KP but we missed the sale so now I have to see what the action looks like (now $3.40, up from $2.15).  This "rally" isn’t very impressive and it may even be wrong-headed as that auction sucked but, on the other hand, if the auction sucked then bonds are dangerous and we chase people back to stocks, which are a good value.  

    In $25KP, let’s move stops on DIA $114 calls up to .95.  No reason to hold these if we lose our momentum.  

    74.88 – it’s very good that the market is rising despite the Dollar.  

    Hedges/Mampcs – Are you kidding – see previous post!  


  135. By the looks of the 30 yr auction, they might have started the stock market crash a little early.  It gained too much steam when retail piled in and they had to rescue it before they got their 30yrs sold as cheaply as they otherwise could.  Oh well, they didn’t want it to go too well anyway.  How would they have gotten people to reinflate the stock market if it had?  All in all they play the bond/stock markets like a well tuned fiddle by rushing the $s in and out.  Part on! 


  136. Scaling out for $1.30 or 3.1%  !!


  137. 01:00 PM On the hour: Dow +3.59%. 10-yr -0.68%. Euro +0.28%vs. dollar. Crude +1.32% to $83.98. Gold -1.15% to $1763.70. 

    Among financial names showing strength are three Goldman Sachs added to its Conviction Buy list this morning: Knight Capital (KCG +7.2%), Nasdaq (NDAQ +4.9%), BlackRock (BLK+3.5%). Goldman upgraded these financials to Buy from Neutral: ICE+5.1%OZM +5.4%BEN +2.6%GFIG +10.7%AIZ +3.6%.

    Agricultural stocks are outperforming the market today, as prices for corn, soybean, wheat, and other commodities shoot higher.MOS +8.1%POT +5.4%AGU +3.3%MON +4.8%DE +6%CF+8.5%

    Natural gas futures gain 3.5% after an energy report shows inventories rose much less than expected last week, coming in at 25 bcf vs. 34-38 bcf consensus. Inventories now sit close to 3% lower than the 5-year average. Natural gas fund movers: UNL +1%GAZ+3%UNG +2.6%DCNG +2.8%.

    Mortgages rate fall again, Freddie Mac reports, with a 15-year fixed now standing at 3.50% and the 30-year variety dropping 7 bps to 4.32%. Home buyers could see even better rates next week as the effect of lower Treasury yields filters through the market. 

    The best rate in town? The 4.60% paid out on Series I Savings Bonds blows away other Treasury rates, and offers investors some income with teeth. The catch is the rate is reset semi-annually based on a backward-view of CPI, so investors are likely to see a drop after November.

    The day’s chart of Societe Generale (SCGLY.PK) illustrates today’s activity in Europe. Shares stared into the abyss, before turning around to close +3.5%. Other French banks: Credit Agricole (CRARY.PK+5.4%, BNP Paribas (BNPQY.PK+0.2%. Euro financial ETF: EUFN +3.8%.

    A meeting set for Tuesday between Nicolas Sarkozy and Angela Merkel is not a crisis conference, as announced by the French President. German sources say the meeting was scheduled weeks ago, and are annoyed by Sarkozy’s panicky response to recent market action, as opposed to Merkel’s calm (she remains on holiday). -  Of course she’s calm – she’s the one with the money!  

    America’s debt is not its biggest problem (WaPo

    Turkey joins Greece and South Korea (and maybe Europe) in putting restrictions on short-selling, though not going as far as banning the practice. The move sent Turkish shares sharply higher for the day. TUR +4.2% today, is off 33% YTD.

    Central Bankers Race to Protect Growth in 72 Hours of Crisis (Bloomberg)

    Bank of America’s back-door TARP (CNN Money)

    Timing the Market Works for Some Pros but Is Risky for Average Joe (WSJ)

    The average value of a newer used car has increased to ~$23,000 from $15,000 in 2008, an annual average increase of nearly 16%, Kelley Blue Book analysts say. Used-car pricing is expected to stay strong because several years of strong new-car sales will be needed to replenish the shortage of used vehicles now pushing up prices.

    Three lunchtime reads:
    1) Why are Treasury prices rising after the S&P downgrade?
    2) This time it is different: Why August 2011 is not September 2008
    3) The coming world of smaller banks

    Time’s contrary cover signal:


  138. Hi I see Income Trader is alive again initiating the RUT sept spread we still paying for the Aug problem????


  139. TLT rising, /ES hitting resistance from 8/8, $ rising..my brains screaming to go short..


  140. TOS – switching accounts over this wkend.  hope it goes smoothly.


  141. I think that was the HOD !!  Here it is on SPX though I thought we could get to 1169……Oh well !!


  142. so you are bullish europe phil?…in as much as you see no withdrawal of key memeber from th eunion?


  143. Gold $1,750!  

    Dollar 74.94 not causing much damage yet but I doubt we can hold those DIA call stops as we’re getting weaker. 

    Nice timing again by JRW.  I was one top too early before.  

    Income Trader/Yodi – You’ll have to take it up with him, my job was to make sure he came back to talk to you. 

    TLT/Kustomz – Drop from $109 to $104 is $5, 20% bounce (weak) takes them back to $105 still bearish until they retake $106 (40% and past the main Fib level). 

    Switching/Terra – Good luck with that.  It’s such an annoying process. 

    Boring now – we have to hold those breakout lines:  Dow first (11,040), then the NYSE (7,150), S&P 1,158, Nas 2,465 and RUT 680. 


  144. TOS – everyone has to switch to tdameritrade. 
    Friday, August 12: We start the process of transitioning your account to TD Ameritrade. This means that starting Friday after market close, you won’t have access to your account online, through either thinkorswim.com or tdameritrade.com, until Sunday afternoon, August 14. Your downloadable thinkorswim trading platform will also be unavailable. Extended-hours trading will not be available Friday evening, but any open orders you have at the end of the regular session will remain open.


  145. Phil look at the shorter maturities, still above tue insane spike. So people think more short term troubles with a possible save coming from Europe.


  146. Hi Phi/DXD: Thanks for your recent help.Now I know what you mean when you say the position is ‘still on track".
    Do you still like the DXD Oct $23/ $27 bcs with short )ct$19 P hedge you recently mentioned. It’s now net credt of $.25


  147. JRW I am interested to know why you did not dump TNA at 12.36 or even at 12.42 thanks


  148. Phil / Time — Ah, the contrarian magazine cover indicator. I’ll have to pass by a news stands and have a look. Reminds me of "hot sheets" (tabloid) scene of Men In Black (can’t find a clip).


  149.  TOS – I don’t like the sound of this….How do we know things will be working by Monday?


  150. As far as Income Trader, I just made a comment on his forum.  I hope that it’s a fair comment.


  151. that 68.10 line (IWM) is holding up very nicely! (i have bought TNA at 42.10 and sold at 42.75… 4 times already in the last 45 minutes)


  152. cwan120
    Comment IT what time ?


  153. FTR and CTL:
    I found this piece on their dividends an interesting read. I currently have several FTR positions, but nothing in CTL
     
    seekingalpha.com/article/286235-dividends-in-danger-frontier-centurylink-conoco-phillips-4-others-in-the-crosshairs.


  154. PhiL/TZA: hedge still attractive to you?


  155. Phil / VLO puts – nice call on those this morning.  i did them without the hedge. 


  156. Yodi / 12:36 ?

    That’s about when I got in; I bailed at 13:35-7 !!


  157. cwan120,
    Very fair. Hope he follows your advice.


  158. You guys didn’t tell me the market is a yo-yo in reality!
    Like I said yesterday, the day to day action is too squirrely for me. (At least now that I have a job which actually requires some attention.)


  159.  Phil – NFLX – I’m short the 2013 $250 Calls, and long the 2013 $250 Puts (still very underwater, but this is a very long term trade for me).  I believe that NFLX will eventually be sub $100 as it becomes painfully clear clear that subscriber growth has slowed to a crawl (if not negative), content costs are eating up profit, and that their balance/income sheet tricks have all been a ruse.  With that being said, NFLX has come down a lot, in the last couple weeks, and seems to be resuming its march higher, hopefully temporarily.  To reduce the pain as it moved up, I half covered, by selling the August $240 Puts for about $15 a couple days ago.  That trade is looking like it was good, and I wanted to get your thoughts on how I should continue minimizing my losses on the way up, but stay somewhat positioned for the eventual collapse.  Right now my plan is to wait for these to expire worthless, and then sell another round of puts at a higher strike (again a half cover).  
    Your help is always appreciated.


  160. Out too soon; well, it’s not like I haven’t been wrong before  !!  embarrassed.gif image by prestonjjrtr

     


  161.  For a little interim laugh in the midst of all this craziness…
    http://www.youtube.com/watch?v=mhCRfdQHsZk&feature=player_embedded


  162. JRW
    What’s up or down? Seems we both missed this last move. I also am up about 11%, doesn’t make up for 2 weeks of trying options but gives hope. I will continue to stick to the one trade. Thanks for all the help!


  163. Phil,
    any suggestion on the weekly 25 TBT Calls that I still hold? I took 5 off for a gain and still have 5 remaining. My cost is 0.71. Will it be dangerous to hold it till tomorrow? I have put a 0.25 trailing stop on it. Thanks.


  164. cwan120 --
    Your comments were more than fair.  That guy just disappeared on 8/4. And it’s not like some surprise that people would want advice during that kind of free-fall.  And now he comes back with a one-sided trade…and Phil just wrote, a few days ago, that whether or not you’re in favor of the condor idea, you should NEVER do a one-sided trade.


  165. JRW / soon — Traders miss moves. Non-traders chase them.


  166. SPX 1169 after all !!


  167. 11%/Shadow—you go dude! We’re all behind you.


  168. FWIW – Apple vs Samsung (tablet) case should have a ruling by 9/15.


  169. What a crazy market!  

    At least we never got stopped out on DIA but still can’t get that good upside move to let us raise the stop.  

    Gold $1,741!

    Europe/Angel – No, I’m not bullish on Europe but I don’t think they are collapsing either.  It’s going to be driven by rumors and crises for ages but, eventually, they’ll work it all out and force us to do the same.  I do not understand the way people think Germany will bail on the EU.  If it wasn’t for the unified currency free-trade EU, German factories would look like US factories – CLOSED!  What’s that worth to them?  About 20% of their $4Tn GDP or $800Bn a year so figure $4Tn is COMPLETELY WORTH IT to them to keep things going.   What do you think China spends every year bailing out our crap debt?  

    TOS/Terra – Whuck?  That’s going to be a disaster!  What if something goes wrong on Monday?  

    And what RDN said! 

    Shorter/Kustomz – Short-term we are massively uncertain – could go either way.  

    DXD/Dflam – Only if you NEED protection.  I think we put in a nice bottom there.  

    Men in Black/Rain – That indicator is surprisingly accurate!  

    Woo-hoo – Here we go!  

    TZA/Dflam – Same as DXD, not looking necessary at the moment.  I like the hedges that are free if offset by the bull play as we LOVE those bull plays so – free insurance.  Just be aware you tie up margin for the time period to get to free.  

    Wow, go Nas go!  

    VLO/Terra – Excellllent.

    NFLX/Palotay – That’s an aggressively short play but it’s on track so why worry?  You are seeing a high VIX affect your positions but the VIX can be at 100 on expiration day and all the premium will still be gone.  It’s either on or off target that matters.   The put selling is smart as you have a lot of upside exposure but I would NOT hold the short put through earnings, that’s your most likely chance to have your fundies vindicated.  

    Too soon/JRW – Thank goodness I finally figures out that trying to catch those QQQ puts was a bad idea!  

    Very funny Amatta!  

    Accelerating to the upside!  


  170. cwan – you were more than fair to IT. Can’t trust the guy now.


  171. Shadow / options — what options are you trading? Not TZA/TNA I hope… Too wide of spreads


  172. Those shadow bars AH are getting very telling where the market is going.  Lot’s for Bear flags out there though on the charts, so beware.


  173. /CL vertical as well.  


  174. Oil – wow! big run up.


  175. TBT/Pat – You can’t hold weekly calls overnight unless you are CERTAIN they can’t pull back on you.  No second chances after tomorrow.  I mean, geez, really?  Are you asking me if you should leave a $2.25 call on the table that you paid .71 for that is only not wiping you out because it went up $2 today instead of down.  Really is that the question???  If up 200% isn’t enough for you, there’s not going to be anything I can do to help…

    11%/Shadow – Excellent.  Isn’t it great what you can do when you still have your money?  

    Oil $86 – that didn’t take long to get back in a groove. 

    Gold $1,738!  


  176. If "they" break over IWM 68.98 I will have to go at least 1/3 TNA as that is a trigger, with a target of at least 69.50, even 71.38 !!    "They" do play us technicians well  !!


  177. @ Phil, looks like today might be the beginning of at least a short term rally….should we be a little more agressive on the long side if tomorrow we hold or pull back a little? or should we stay cautiuos (maybe until Jackson Hole)? Thanks!


  178. PCLN pausing, only up 1%. 


  179. I have read the exchange under income trade and, although risky, it wasn’t a terrible idea to pick up some more cash but there should be stops (to avoid more pain) and there does need to be a workout plan on the bad leg of the last trade.  I asked yesterday but nobody told me what their actual position is.  Maybe we can discuss some fixes…

    71.38/JRW – That would be epic!  

    Now we’re getting somewhere with those DIA calls!  Let’s kill 10 (of 20) at $1.15 in $25KP and keep the stop at $1.05 on the rest.  Since they are Aug, I’m HOPING to hang on overnight.  


  180. rainman
    I gave up TNA/TZA options last year. I am stopping IWM options also, I may only do small lots but it is TNA/TZA stock, about 10 in and outs, all cash now so I don’t blow a good day.


  181. i understand why china buys out debt..its akin to doubling down on a loser..however i don’t see germany blowing itself up for the sake of the euro..at this point they are the wolrd’s fourth largest economy and actually have a crack at being number three..i don’t agree with you..but i will give you some fodder
     
    http://www.businessinsider.com/germany-benefits-from-the-eurozone-2011-4


  182. Income Trade / Phil – The previous "bad" leg was August RUT 735/745 Put vertical. Some people did roll out of that, but I am guessing most are still there.


  183. the move they swiss are RUMORED to be considering is more of a puzzle to me..that is pegging to the euro..thats like roping your ferrari to a plowhorse


  184. Interesting that the VIX is only down 9%.


  185. Phil — Income Trader — I stopped out of that trade long before it got really ugly.  While I’m puzzled as to why that guy just disappeared, there’s no way I’m going to ride out a debacle of that magnitude…advice or no advice.


  186.  Phil , –FAS MONEY.   Hi guys it’s me, still trying to join you guys at the pin after playing the next fairway over due to a wicked slice from having my puts exercised.  Anyway, I’m out of the long FAS shares now after much ducking and covering, and only have 2 of the short Aug $22s.  I don’t think we should hold these after Friday as there’s very little premium left and I’d hate to have them exercised after hours with that whole TOS thing going on.
    What about us rolling down to the $16 Aug puts with the money we cashed out of the long puts and selling something like the Sep $15 calls you mentioned yesterday?


  187. FAS Money / Phil – Speaking of income, what’s your thinking on the FAS Money trade now? We have repositioned the long strangle to adapt, but we are still short the August Puts (unless people stopped them out) in the weekly and monthly trade.
    Long Strangle – Jan 12 12 Puts (3.25 now 3.77) and 2x 18.33 Calls (2.11 average cost now 2.04) 
     
    Weekly – Short August 22 Puts (2.87 now 9.52)

    Monthly – Short August 23 Puts (3.65 now 10.57)  
    We are uncovered on the call side for both trades. 


  188. I think JRW’s 68.98 is the top today, which leaves tomorrow up or down, maybe 400 DOW points again.


  189. If nothing comes from this speech than fluff…watch out!


  190. Phil / Income Trade / stjeanluc
    I am still in the Income Trader’s  Aug RUT +735/-745. Planning to roll to Sept next Wednesday.

     


  191. if th epres isnt his normal self we could tack another hundo on into the close


  192. I am sure that someone will see the irony in this story:

    Tea Party aligned Georgia Rep. Tom Graves (R), who castigates Washington for fiscal irresponsibility, reached an out of court settlement Wednesday after he was sued for defaulting on a $2.2 million loan — which his attorney argued is the bank’s fault for lending him the money in the first place.

    And we trust these guys with a $14 trillion economy! These guys could not manage their way out of a wet paper bag. That’s truly scary…. 


  193. so far he is more optimisitc…nooooice


  194. "They" are pushing for The SQUEEZE !!


  195. meanwhile iwm hoding beautifully what do you think jrw?…this thing gonna get lit up into the close and get over 70?


  196. stjeanluc, TOS is showing the Short August 22 puts @7.82


  197. Sorry about that $7.52


  198. Troy / speech — You’re really not expecting something are you? He didn’t even have anything to say on the downgrade!


  199. FAS / jr_mints – Sorry, I was reposting the positions from this morning and didn’t update the prices:

    Long Strangle – Jan 12 12 Puts (3.25 now 3.01) and 2x 18.33 Calls (2.11 average cost now 2.67) 
     
    Weekly – Short August 22 Puts (2.87 now 7.50)
    Monthly – Short August 23 Puts (3.65 now 8.52)
    Thanks for the catch…


  200.  TOS on the west coast is atrociously laggy.  Very frustrating.


  201. Trade what you see, NOT what you believe, and pass the Kool-Aid please !!   In 2/3 now !!


  202. stjeanluc, no problem…..thanks for keeping up with the trade for all of us!!


  203. Another earthquake at Fukushima but "just" a 6.

    OMG – Steve Leesman just said Obama scheduled to speak in a few minutes but he doesn’t know if "that’s regular people time or Obama time."  That is both funny and true (as he’s often late) but broadcasters have lost their jobs for much less (remember poor Howard Cosell’s last broadcast)..  

    Rally/Asaenz – What are our lines to go bullish?  3 of 5 of our -5% lines.  Otherwise it’s just a 20% bounce (4%) off a 20% drop!  DO NOT GET SUCKED IN!!!   

     Germany/Angel – I think they realize how much they benefit from the Eurozone.  They would not be the World’s 3rd largest or 4th largest without it.  What they want to do is establish their Hegemony in the EU and this crisis can buy them a much bigger chair.  

    Income Trader/STJ – OK, so for one thing, it is possible that that leg will expire worthless next week.  Only 50 points away now!  I would look at possibly rolling the long putter down to the Sept $730 puts even and then, if you get that roll, you want to fill the roll from the Aug $735s (now $49.50) you own to the Sept $720 puts (now $52) for $2 and then what have you done – you’ve dropped bull put spread $15 for $2 – a $2 loss one month is nothing in the big picture.  I don’t know what everyone is freaking out about.  If the RUT doesn’t come back, your other leg will expire worthless and then you spend that $2 to roll down $15 the next month – one day you’ll get them (hopefully) and then you are back in business.  

    Wow, the Obama rally and once again CNBC cuts away from the President to criticize the 3 minutes they bothered to broadcast (and don’t forget, they get a copy beforehand and choose what part they will cut to).  They are truly sickening!  

    Income Trader/Esco – Well I don’t understand the whole thing about not setting stops anyway.  

    FAS/RDN – I’m thinking we go much higher.  QE3 baby – keep the faith!  8)  

    FAS Money/StJ – As above to RDN, this is going perfectly so far (the adjustment, not the trade) and we have to give it to tomorrow in case we gain another $2 or $3.  THEN we will certainly cover into the weekend, probably with 1/2 calls and rolling the puts to the lowest strike we can afford.  

    Graves/StJ – Sadly, not in the least surprising.  

    How about if we tack on Tuesday’s close to where we are now?  An up 10% day?  


  204.  LOL – I just realized that when I began writing that post I was warning that it’s not a real rally until we pop 3 of 5 of our -5% lines – well we did so we are now officially bullish until/unless we break 3 of 5 now.  


  205. Phil you need some stronger explainations at opening possible we get heard

     

    F’ing Thursday – Give Us a Break!


  206. And Costanza busts with a net loss of $1.43 per share for the day on DXD.  Congratulations to all those doing the opposite.


  207. they HAVE the chair already phil now they want the couch the ottoman etcetc…ok bet you a dinner


  208. hegemony youre too much…sounds like a new games show…Hege ur Money w Phil Sparkle!


  209. @ captain JR, whats the target? 69.50?


  210. JRW, looks like that 77% probability can go to 77.05% after today!
     
    I’m holding long over night.  Playing for the gap up.. but I doubt we close HOD.


  211. did anyone notice we jumped ot teh highs when cnbc quit covering..they are so even handed ey?


  212. This market reminds me of a dog shaking a toy.


  213. Income Trade / Phil – Thanks for the explanation. Thankfully, I pass on that one myself as things looked shaky then! And OK the FAS Money trade… 


  214. Not a whole lot of volume to this move.  Maybe no sellers and that can lead to a violent move up if funds begin to think they are stuck in cash.  Now would be a fantastic time to drop a stimulus bomb! 

    Stonger/Yodi – SA already changed the title to "Holy Cow Thursday" – you gotta love the mass market sensibilities….

    Ouch Dsheara.  Maybe try paper trading the opposite of what you feel for a while to see how it goes rather than tossing cash around?  

    Ottoman/Angel – That’s Turkish!  


  215. Careful.. being sold into.  I"m out.  Will reload later-


  216. It looks like they are going for the headline grabber close today.  Something to counteract all the negative headlines lately.  The stock market has become page 1 material.  Wow!  They just took out Tuesday!


  217. While I am enjoying the ride, I will be very happy to be in cash by 3:58 !!

    No real resistance until SPX 1194ish !!  And we have time to do it !!


  218. ***************************WOW******************************

    There goes 2,500 on the Nas, 11,200 on the Dow and now we’re zoning in on 1,180 on the S&P, 7,300 on the NYSE and 700 on the RUT – this is friggin AWESOME!!  

    Again I am ashamed to participate in such a sham of a market but, then again, there is nothing else I could imagine wanting to do every day!  


  219. Phil
    I listented to the rest of the speech, he finally has a backbone, that is why they cut him. The truth will set us free? Maybe!!


  220. Obama CNBC/Phil
     
    Steve Liesman also said at other times, that Obama bred with a big woman to have big kids and he wasn’t a good swimmer because he didn’t have buoyancy, and he’s a bad tipper.
     
    Soon CNBC will be showing the debt clock near his head along with how many days till his term expires then cut him off in mid speech.


  221. @Felipe
    What do you use for your stream of data on the exchanges?
    My TOS and Yahoo has a, "warning stock price data is unstable" in red when I open it to see how the market is doing.


  222. Everybody happy we’re up http://www.collegehumor.com/video/6477219/remix-e-trade-baby-loses-everything   This was yesterday


  223. phil oyu dont miss ANYTHING ..so this makes you the SHAM(E)AN of the market!


  224. The last 6 tradings days on the Russell have been about average:
    -6%
    -1.7% (will really destroy the average) 
    -10%
    +8.9%
    -5.2%
    +5.5% (so far)
    Truly remarkable! A trader’s market. Not so much for the average investor who is getting sea sick!


  225. @angelcur
    Think Amatta posted that before.


  226. asaenz / Target

    As I said, we could see 71.38 !!  Just ride it out and sell on the 8EMA turn !!  (69.88 and 70.15 are resistance)


  227. would you advise adding some bullish trades here or wait til the morning?


  228. Dollar still at 74.71 – if they can drop it back below 74.50, things could get interesting…

    Liesman/Rustle – Really, he’s a closet racist?  That’s very uncool.  

    Data/Flips – I use PowerEtrade Pro, Esignal and TOS.  

    Bullish/Morx – I am pretty content with the ones we have at the moment and I wouldn’t chase this – even though we could still get another 2.5% on a stick.  OK, actually here’s a couple if you think you are missing out:

    YRCW at .78, nice straight buy or you can sell the 2013 $1 puts at .88 for a net .12 entry.  

    HOV 2013 $2 calls at .35

    WFR 2013 $5/7.50 bull call spread at $1, selling $5 puts for .90 is net .10 on $2.50 spread.  

    FAS Sept $14/17 bull call spread at $1.50, selling $10 puts for $1 is net .50 on $3 spread and a good add on from our prior spread. 


  229. Phil – I am in the TZA Sept 60 – 70 BCS @ $2.  Perhaps i should have taken this off the table this morning, but it’s protecting what little bit of longs I have.  This is my disaster hedge.  What advice to you have.  I also have $90 (3x$30) of QQQ 52/51 put spread.
     
    Should i do anything with these now, or wait to see where things are tomorrow/earlier next week.  I learned a lot this last 2 weeks, and ended up paying more for my protection than i would have had i been prepared.  I am still not sure when to take those off the table.  They were never up much, at most 10% of goal. Anyway, any advice would be most appreciated.


  230. JRW
    You the mam with the brass ones!


  231. I am curious, what are your expectations for tomorrow ?
    Also I bought calls on the skf before the crash at 1.32 last week. I am wondering if i should hold on or sell them.
    Thanks !


  232. Liesman/Phil
     
    I don’t think he’s that much in the closet.


  233. "They" could let us fail here, be alert !!  Out at $1.75 off IWM 70.15 (good enough) another 4%  (16% on the day) !!


  234. HOV – just completed a buy write.. bot stock at $1.27, sold 2013 $2 straddle at $1.40.


  235. shadow,

    I’m out too soon again, I’m sure !!  8-)


  236. Phil – I don’t have the stomach for this. I wanna quit!!!!


  237. JRW
    I see the bots selling again, great move on the top, maybe!


  238. rainman – can I email you. I have ur email.


  239. Don’t know about the dollar effect today – at 09:30, it was at 74.80 and IWM was at 67.21. The dollar is now at 74.71 and IWM is at 70.18… Has to be other factors in play, maybe …. bots and algos! But certainly not manipulation. 


  240. This is unreal. CSCO +18%, Party like it’s 1999!


  241. I think open down.


  242. And closing in on the highs of Monday! Insane…. 


  243. Reloaded and lovin.  C’mon on folks, they need to sell some newspapers in the morning.  This is how they do it-  it’s all about selling newspapers!  Don’t you get that by now?
     
    Will be dreaming of a big gapper tonight.    8-)


  244. nicha / email — rainman.investing @ gmail.com


  245. and VIX goes down very slowly (slower then it was going up)


  246. I think TNA will close below Tuesday’s close.  Let’s not make this look too obvious…


  247. matt
    Newspappers are not selling! Careful, glad your winning!


  248. JRW, would appreciate some statistics on tomorrow’s scenario whenever you have the time!


  249. TZA/Scott – No offset?  I don’t like those hedges without a bullish offset.  I’d roll the $60 calls you own out to the Oct $73s for $1.20 and you can run down some of the premium on the short puts until you roll to a vertical and pick up at least $2 more (the Oct $75 calls are currently $5.45).  If you find a $1 offset, then it’s a free trade if TZA keeps going down.  On the Q’s, I’d just kill them and worry about the TZA. I HOPE you have bullish plays that are doing much better than what you are losing on the hedges – otherwise you are way overhedged.  

    Still not enough volume to get excited about.  Day’s total is good but very little since morning (274M on Dow with 10 mins to go).  Could be huge imbalances to fill at the close though.

    Done with DIA $114 calls at $1.40 in $25KP.


  250. Phil
    Imbalance seems to be true, excellent!


  251. Phil, for those of us that are new and working towards our 10,000 hours of mastery, do you get to collect double hours for months like the last couple?


  252. The next big line on SPY is around 119 and change. Looks like that 115 line did act as support (in this case springboard!) 


  253. Shouldn’t we expect more volatility tomorrow (perhaps the other way)? No volume, and no reasons for pop other than a so-so (and always suspect) employment report. Perhaps we go hard the other way tomorrow? Staying in cash.
    see:
    http://www.zerohedge.com/news.


  254. Quite the clubbing of that energizer bunny!


  255. When you’re up 400 for the day, can you really say crappy close?


  256. All bot…


  257. Reality
    Glad to see an Obama bounce but reality is nothing has happened!


  258. My TD streamer is off by 7 minutes!! I had to log on and off 3x today!


  259. well that was a very subdued ending


  260. And closing down just below some technical bull signals. Starting to not be fun.


  261. Has anyone noticed that the SET number for this morning on the SPX was 1311.11? Had this been the expiration number, I would be a huge loser on a whole bunch of pretty-safe OTM short calls. So, the SET is nearly TWO HUNDRED POINTS higher than the previous close? So much for my short 1200 and 1225 and 1240 and 1250 and 1285 and 1300 calls….. All of them would have been substantial to huge losers.
     
    I am going to see what I can find out… David? are you there?


  262. Expectations/Kowalsky – Well either we follow through up 2.5% tomorrow or we are still in danger.  On SKF, you chased them into a high VIX, very lucky if you get half off.  

    Net -.13/Scott – Very nice!  

    Quitting/Nicha – There is nothing wrong with staying in cash until things calm down.  

    Selling/Shadow – There are bound to be some funds taking profits on a 5% up move but finishing on this line is VERY BULLISH and argues for a 2.5% up move tomorrow but it’s possible that we gap that and move even higher.  Also possible we get bad news and it reverses so I cashed the DIA’s with a 50% gain.  

    Actually, it doesn’t matter where we close tomorrow as long as we hit expiration day next week about where we were last expiration day, right?  

    Mastery/Rpme – Yes, really!  This is one of those one in a lifetime events that’s happened 3 times in the last 3 years.  What was I doing this morning? Reflecting back on what worked last time this happened to us.  That’s what having experience is all about…  

    A little damage done at the close but we held 4% (20% pullback of 5% move) so still bullish.  

    More volatility/DC – The VIX still expects it (39.23).  We still need to tack on another impressive move to 11,500 to keep people motivated.  

    Dow volume finishing at 392M, nice 118M in last 10 Mins. 


  263. the worst thing today was the large rises in brazil/china sov cds and euro/N.america inv grade cds indices…indicates rising global recession worries i think we can rally more near-term, but be careful


  264. Hedges – i added. previous hedges were almost all used up (paid off, cashed out). SPOOKY is my feeling with the market right now and i don’t trust it. Happy for the insurnace and net am still plenty long..account UP for the day and almost back to start of the week. Used up some cash on it all though so need to work that up again.


  265. Wow, wish I had my TZA in AHs now…sold with 24 seconds before close on that final bot dump


  266. Prepare for a gap up tomorrow as there is a full-on Costanza short placed 5 minutes into the close…


  267. CNBC has a couple guys on thinking we go lower and not much upside to the market at all.  CNBC is now at sell, sell, sell mode.


  268. well phil, while you were all making mugo bucks, i did what you suggested yesterday…take advantage of a move up to build some hedges to protect the longs.  i had sold some sept 65 tza puts yesterday for 7.50, today i bought some 55 tza puts for net of < 7.50.  i now have 55/65 sept spread for free!
    that’s good, right?  or you don’t think they are needed any more?


  269. JRW - great calls the last two days, I’d definately voucher for you to anyone that you are legit…I"m pretty blown away to be honest.  THat said, think I’m done with the TNA/TZA trade, as for some reason I don’t have the confidence to scale in with the amount of shares that it really takes to make it worth while.  I’m not sure if you simply have better indicators, or just way more experience…or have the perfect emotional status for trading, but I do know that I"m never going to be able to scale it so best for me to move on to something else.  For anyone out there who is trying to mimic JRW and can’t pull it off, don’t feel bad…I’ve tried for a long time!  I don’t think it is necessarily IQ as I had a perfect GPA in college and I learn very quick, it is something deeper I can’t put my finger on, something probably that one can’t learn…else there would not be a 93% failure rate for day traders.   


  270. very impressive day all around today the close left somehting to be desired…but isn’t that the way to juke us out?…JRW bravo a great really super day for all as you walked point!!


  271. Phil, 
    Added the TZA disaster hedge (50 Sept 55/62 for net 1.65). I am very bullish with a lot short puts that are in the money and have a bunch of positions, so I am just a little concerned about adding yet another play to pay for the spread. But I agree on what you say to Scott as then its just throwing $7650 out if we don’t fall back (although I know its insurance but still if there is a way to get it free or at a discount much better). 
    As mentioned the porfolio goes up and down $8K with every 100 points. so This seemed like a good size hedge (a 4% move in Rut would put the hedge fully in the money) and that would pay me $26,750 in profits against a $32,000 loss on portfolio (so about 80% covered). 
    What if any after the above would you sell against the hedge? (was looking perhaps at 5 AAPL Jan 300 Puts). 
    Thanks


  272. Troy, that’s what computers are for… I call it ALGORASM~~~~  and it’s beginning to breathe!


  273. Now I’m thinking we aren’t going to get a gap tomorrow.  I think we could retrace half of today before going back up.  Too hard to call.  Where are my statistics????  8-)


  274. I am starting to believe that these S&P guys are not that credible:
    http://www.nakedcapitalism.com/2011/08/are-rating-agencies-now-trying-to-mug-rich-municipalities.html
    That, or they have some sort of hidden agenda! 


  275. Well Pharm, there is your phantom bar on SPY, gonna be interesting where we open tomorrow.


  276. Some thoughts on the global markets:
    http://blogs.reuters.com/felix-salmon/2011/08/11/chart-of-the-day-global-equity-market-edition/
    Now, Felix Salmon is a bright guy, but in this analysis, he fails to take into account that the US Equity markets are price in dollars and if priced in euros, loonie, aussie or francs, the situation would not look as bright. It’s one thing to say that the markets in the US have gone up 100% since the lows, but our currency has also lost a great deal since then! On the other hand, it’s clear that we are not out the way just yet.


  277. And this should add fuel to the market:
    http://www.bloomberg.com/news/2011-08-11/recession-threatening-u-s-after-household-spending-s-consecutive-declines.html
    Because after all, bad news is good news…. Free money forevah…. 


  278. now they have someone on CNBC saying the S&P is going to 570.  They want everyone to sell tomorrow.


  279. At the close: Dow +3.9% to 11139. S&P +4.59% to 1172. Nasdaq +4.69% to 2493.
    Treasurys: 30-year -2.08%. 10-yr -0.67%. 5-yr -0.24%.
    Commodities: Crude +3.18% to $85.53. Gold +0.27% to $1756.20.

    Currencies: Euro +0.36% vs. dollar. Yen -0.08%. Pound +0.54%. 

    Market recap: Wall Street’s wildest week continued with the Dow’s fourth consecutive 400-point move, sparked by small signs that the economy might not be headed back into recession – slightly fewer-than-expected jobless claims, and earnings from Cisco that weren’t a disaster for a change. Crude oil rallied, gold sank, and Treasurys plunged. NYSE gainers led losers five to one.

    Today, only two stocks in the S&P 500 are lower: Sprint (S-0.9%) and Sara Lee (SLE -0.7%). Yesterday, only seven S&P stocks finished higher; on Monday, all 500 stocks were losers.

    Company cash has surged 59% since 2008 to $1.12T, providing a cushion of comfort amid the upheaval in the economy and markets. Yet the validation of that conservatism may ultimately bebad news for the economy. The recent turmoil affirms executives’ caution, and may prompt some to further curb spending and bolster already bulging cash piles. 

    Gold’s post-S&P surge has come to an end today, as the metal’s price declines 1.9% to $1749/oz. Taken with today’s Treasury selloff and massive rebound in equities (with many volatile financial and tech names among the biggest winners), it’s safe to say that for one day at least, investors are once more comfortable with risk.

    Solar stocks (TAN +7.2%) outperform the broad market, and extend yesterday’s gains that were helped by Jefferies’ upgradeof First Solar (FSLR +2.2%). The sector shows signs of being oversold on supply and demand concerns after falling 40% in six months. Big movers: TSL +9.8%LDK +13.4%JASO +14.5%.

    The news the SNB is considering linking the franc to the euro, worked for a day, but implementing such a move would require leaping numerous legal and political hurdles. One beneficiary might be Europe’s emerging markets, whose citizens are "suffering sticker shock" from loans taken out in francs. 

    Goldman lowers its price targets on 21 banks, citing "renewed concerns surrounding the global economic outlook," and the toll low rates will take on lenders. Among those cut is Bank of America (BAC), Goldman attributing much of the recent decline to concerns about the bank being able to reach its Basel III capital position.

    Though ending his bearish stance on Goldman Sachs (GS+7%) yesterday, Rochdale’s Dick Bove thinks investors should stay on the sidelines for now, as irrational fiscal and monetary policies lead to irrational market activity. Bove also thinks U.S. debt obligations and trade deficits mean the dollar’s days as the reserve currency are numbered. 

    File under the worst deal in history: Executives at BofA (BAC) finally admit they regret the $4B acquisition of Countrywide Financial in 2008 that led to over $20B in mortgage security writeoffs, regulatory settlements and loan modification losses. Shares of the blue-chipper are off 80% since the mega-deal was announced.

    With bank CDs and government bonds paying a pittance, the value of large-cap stock dividends becomes even more compelling, Hale Stewart writes. Check out the latest dividend yields of these Dow stocks: T 6.28%, VZ 5.94%, MRK 5.1%, PFE 5.04%,INTC 4.37%, GE 4.24%, JNJ 3.87%, PG 3.74%, DD 3.66%, HD3.65%.

    Barclays’ C.J. Muse is raising his rating on chip stocks to Positive from Neutral, arguing the industry’s current woes represent a "mid-cycle correction" rather than the beginning of a down cycle. Intel (INTC) is one of 3 names Muse upgrades to Overweight, touting its low valuation, high dividend yield, and aggressive manufacturing technology investments.

    Though European and American coal consumption is expected to be roughly flat over the long-term, Asian consumption is expected to keep soaring due to the energy needs of China, India, and others. As a result, David White thinks recent declines in the shares of coal exporters BHPRIOBTU, and VALE present a buying opportunity.

    The latest rumor about a cheaper iPhone: Apple (AAPL) will be releasing a device featuring less storage and cheaper materials than the iPhone 5, but containing many of the same components. The less costly iPhone will sell for $400 unsubsidized (free when subsidized), compared with the iPhone’s typical $600 price. (previously

    Quick take on $400 iPhone: A $400 price point should boost the iPhone’s market share a little, but won’t greatly slow down Android’s emerging markets growth, given lower disposable incomes and the presence of Android phones with far lower price tags. A $300-$350 price point (perhaps accompanied by an inferior CPU and display) is what’s arguably needed.


  280. Today’s levels.




  281. Some thoughts on the status of world economies:
    http://drezner.foreignpolicy.com/posts/2011/08/09/is_it_1931_yet
    And a brownie point for the line of the day:

    The Chinese are pissed that they appear to be underwriting downgraded, debt-ridden train-wrecks… and this is on top of being pissed about their own train wrecks


  282. perfect headline from CNN – "The schizophrenic week on Wall Street continued on Thursday "


  283. Income trader – these guys used to put on insurance in the form of 1 put purchased one strike closer than the puts sold (1 to 10). I went back and modeled it in ToS and this would have saved you a bunch of headache this month had you done it. The same can be done on the call side. Of course this cuts into your potential profits, but given the alternative… I guess when they modeled this month’s trades they didn’t think debt downgrades were in the cards.

    I adhered to one of Phil’s mantras for the month and since I was in doubt I only sold HALF of the original Aug position. This let me roll to 2x after the first drop, and roll out two months earlier in the week when we started bouncing up and down all over the place. The strikes may not have been optimal, but it bought me time, put me 25 points from the short put sold, and I can effing sleep at night because I had a plan. So thanks Phil for drilling this into my head over the past five+ years.


  284. dick bovay (sic) reassured us all on th ebanks late in the game …including bear and lehman..he looks good with his beard and all…but temper his insights with his record


  285.  Khan is back!
    Hi everyone. I was pretty active on this site a few years ago, but left the market turmoil to pursue other ventures, specifically app development. My company, Candywriter (www.candywriter.com),  has been responsible for a number of top paid and free apps on the App Store. Hopefully, some of you are fans of our flagship, the Word Solitaire franchise.
    Anyway, I was waiting for the right opportunity to jump back in the market, and this week was a perfect one. I look forward to enjoying the ride with all my old friends and some new ones!


  286. KHAAAAAAAAN!!! Welcome back, sounds like you’ve been very productive with your time..congratulations and lots of luck!

    Europe
    The ban is back on. No shorties allowed.


  287. Welcome back khan! I’ve missed the shout-outs like kustomz posted above. I’ll check out your word solitaire app.


  288. Apple pissed off amazon so much with its new licensing terms that they went and developed an HTML5 version of their kindle reader. Optimized for the iPad, the thing even works offline but more importantly lets AMZN circumvent Apple’s requirement that you don’t link to your own sellable content unless it goes through Apple’s store (so they can take their 30%).
    Oops. I wonder how many others will follow?


  289. Phantom Bars retrace to 112.37 on SPY…..buying P at the open tomorrow to see how things move.


  290. Taking advantage/Lunar – Nicely done but just be aware that you have to switch to bullish mode and look for upside plays now that you have your covers in place.  Over the weekend, absolutely needed – all depends on next week.  Market up on QE3 rumors and multi-Trillion EU bailout rumors – sounds good but we should be very cautious about anticipation rallies.  

    Something/Troy – It’s like being a race-car driver.  We can all drive – just not at 200mph around a track with other cars just inches away.  With practice, you can do it but it takes years to build up the confidence and get comfortable playing with huge amounts.  That’s the kind of training you get at GS etc. – they give you a huge, real, account and have you trade it aggressively and 9 out of 10 people (who are already top traders) wash out but they don’t care if they lose $9M to find one guy they can give $100M+ to.

    Juke/Angel – Sure, if they closed without the pullback a lot of people would have held on an benefited from a gap up tomorrow.  That is certainly not the game plan!  

    Paying for it/Amatta – No need to add more if you are too bullish.  The depletion of your existing losses "pays" for the spread.  Just make sure the anticipated loss is in proportion (small proportion!) to what you expect to get back.  So, if you are down $30,000 and you will lose a $7,650 hedge that you put on to stop the bleeding – that’s fine because you’ll "only" be down $7,650 when you get your $30K back and maybe the $30K goes up 20% more and then you have the hedge money (not hegemony, Angel!) back.  Unless there is something you REALLY want to own and you can sell puts that give you a 20% buffer, don’t bother.  Maybe, though, you have one of your losing longs that you would DD on if they went lower and you can sell maybe $3,500 of those puts.  

    Take BA, for example, if you were in 500 at $70 with the 2013 $70 puts and calls sold for $15, that would be net $55/62.50 and now BA is $58.85 and you might be assigned 1,000 at net $62.50.  The question then is, would you buy more BA if it were $40?  If so, then you can just sell 7 2013 $45 puts for $5 and raise $3,500 towards your hedge and the net effect is if BA does drop below $40 (and assuming you don’t change or roll, instead of owning 1,000 shares at an average of $62.50, you end up with 1,700 at an average of $53.24 for $90,508, just $28,008 more than you would have been stuck with 1,000 at.  So you get $3,500 towards your hedge and you are committed to own 70% more BA for less than 45% of what you spent on the first 1,000 shares.  

    Ratings agencies/StJ – Oh sure, look how much work they created for themselves by downgrading the USO.  Now thousands of municipalities and businesses have to be re-rated (all for a nice fee, of course).  I’m surprised they never thought of this before!  

    Big Chart – Is that not amazing on the S&P?  I love that these are 2-year old levels!  I would have felt better if the RUT made their 5% line – they need another day like today to get there.  A very bullish pattern here would be a very scary pattern where we bounce off the must hold lines, go back to the -20% lines and form the bottom of a "W" with that last leg a huge up move all the way back to +10%.  That pattern would take about a bit over a month to run through with 5 days up, 5 back down and then 10+ on a huge rally but that times out perfectly to a Sept rally just like last year…  

    Today is the 10th, the first day on this chart is the 16th so about 5 sessions up to there, 5 back down to test the floor and then a move up and over the line (and we kept going in Sept to 10,900, then 11,500 in early Nov.  So, at the moment, we’re just sort of doing the same thing but more exaggerated.  

    Good cartoon StJ. 

    Income Trader/Kwan – Good adjustments.  Keep in mind what I don’t like about that strategy in the first place is you are making a series of two 1:20 bets (and I don’t even like 1:2 bets!) EVERY MONTH.  If, on any given month, you have a failure of EITHER of your 1:20 bets (24 chances a year), you essentially wipe out an entire year’s worth of gains.  Aside from the obvious math that betting a 1:20 bet 24 times virtually guarantees one failure per year – if you look back over the past 3 years, you’ll see about 8 different instances where you would have failed so you are not, in fact, getting fair odds (8:72 or 1:9) against the possibility of failure.  

    Even if we were to assume that the odds of failure were only 1:20, any statistical distribution that has you losing 2 times in a row, however unlikely (think consecutive numbers on a roulette wheel) will set you back 2 years of profits or, if they come early in the cycle, put you two years in the hole.  Since we have 1,000 ways to make 10% a month on money that doesn’t involve a never-ending series of 1:20 bets, I have never been interested in those kinds of spreads, no matter how "well-managed" they are.  

    Welcome back Nkhan (and perfect timing too)!  

    Puts/Pharm – But now the EU ban on shorts is a new fact.   We’ll have to see.  


  291. Hi, barfinger,
    Just saw your comment about SET.  But is today an expiration day for any SPX option?  I thought they publish SET only on an expiration day?  Can you provide the link?
    Thanks.


  292. Amazing!  Republican Representative in Colorado tells constituent whose job is being outsourced to find a new employer!
     
    http://www.huffingtonpost.com/2011/08/11/colorado-cory-gardner-jobs-outsourcing_n_924627.html
     
    Compare this with FDR’s message of empathy in 1936 in a speech right before that year’s election (this is just one that comes to mind – there are many other like this):
     
    Here and now I want to make myself clear about those who disparage their fellow citizens on the relief rolls. They say that those on relief are not merely jobless--that they are worthless. Their solution for the relief problem is to end relief--to purge the rolls by starvation. To use the language of the stock broker, our needy unemployed would be cared for when, as, and if some fairy godmother should happen on the scene.
     
    You and I will continue to refuse to accept that estimate of our unemployed fellow Americans. Your Government is still on the same side of the street with the Good Samaritan and not with those who pass by on the other side.


  293. Phil
    Given your view on iron condors (can’t say I disagree), does the startegy deserve a tab on your site?


  294. Here’s a link to the FDR speech from October 31, 1936.  It’s been called the Second New Deal speech and is probably my favorite of all his speeches.  It’s remarkable on a variety of levels.
     
    http://docs.fdrlibrary.marist.edu/od2ndst.html


  295. jcaesar,
     
    Thanks for posting, great speech, you could be a new candidate today using that and it would be just as timely.  Makes me sad when I read a great speech from a President in the past that Presidents of that caliber don’t exist at all anymore.  Now they all sound like snake oil salesman and nothing is from the heart.


  296. rustle – You’re right, you could make the same speech today and for the most part it would be very timely.  It seems like we’ve come full circle, back to a bad place.  I guess we just have to start all over again. 


  297. this is not good news for the  euro..but it should suprise no one …:Christian Lindner, general secretary of Germany’s Free Democratic Party, said the discussion about euro bonds has to end, citing an interview."Markets are speculating about it futilely," Lindner, whose party is in coalition with Chancellor Angela Merkel’s Christian Democrats, was quoted as saying. "Germany can’t assume responsibility for the debt of crisis countries," he said. That would make Germany’s financing more expensive and take away incentives for reform in countries such as Greece, he said.


  298. Hoss made a very interesting comment today about QE3 being timed for December to preserve Obama’s presidency for another term. I think thats probably true, and the facts bear it out. We are just to premature late summer/fall for QE3. Too much recent talk of inflation and QE3 has gotten a bad rap. I think we will need to have additional some real pain before they are able to justify it again. I seperately had heard rumors Obama is a sure win next election due to some powers that be  – maybe there is a plan afoot?


  299. the symbol SET should give you the daily quote on any system, otherwise, go to the CBOE site, where they will show you the expiration figures for all the indexes (but not the interim numbers). I emailed them, and they admitted it was a transposition: 1311.11 should have been 1131.11, and it showed up on my quote screen minutes later.
     
    What this demonstrates is that even though the settlement number is calculated on the computer, some DUDE has to TYPE it in for distribution to all trading houses, and therefore, it can be bungled (like it was today). My confidence in all of this was shaken, to say the least.
     
    I will question any expiration settlement number that doesnt make sense, from now on.


  300. The Fed though is supposed to act independently of the President and Congress and Bernanke was appointed by Bush.  I don’t know if they would save QE3 for that.  Right now, the anger at Republicans from the debt deal and unwillingness to budge on increasing tax revenue, Obama has a pretty good shot even now of keeping office.  Wish there was a 3rd party candidate or someone else would step up in the Democratic party to run against Obama.


  301. May sound crazy, but is there any chances that they are looking for a crash ? Everybody seems to be expecting QE3 in one form or another.
    Sorry if I sound paranoid but like Kissinger once said : Even a paranoid can have enemies. ;-)
    Maybe someone is interested in getting rid of Bank of America "à la" Bear Stearn/Lehman brothers…
    Hearing Goldman Sach saying QE3 is their base case makes me nervous.
    http://www.businessinsider.com/goldman-sachs-qe3-is-now-our-base-case-2011-8


  302. Phil,

    thanks for the advice today.  I was unable to get my order in before the close, but I think that may be a good thing.  If you don’t mind, I would like your help with a post-mortem on things so far.  My starting cash is $3000.

    What was done:
    —————-

    * Sold 2 x WFR 2013 7.5 P @ 1.75
    * Sold 1 x NLY 2013 17.5 P @ 3.30
    * Sold 2 x WFR 2013 7.5 P @ 2.40

    So, going into the crazyness, I had

    1 x NLY 2013 17.5 P * 3.30 = $330 credit
    4 x WFR 2013 7.5 P * 2.075 = $830 credit  (looking to get out of 2x at break even 2.075)

    total collected: $1160 collected.

    I didn’t have anything to the down side, so, as things got more crazy, I first added:

    3 x QQQ SEP 52/51 Put Spread @ .30 = $90 debit

    and then when that didn’t feel like enough, I added:

    1 x TZA 60/70 BCS @ $2 = $200 debit

    At this point, I was thinking I had $290 protecting the $1160 I collected and essentially 10% of my overall account protecting to the downside.

    Limitations:
    —————-

    * With the size of my account, I am not allowed to day trade, so, I am limited in doing any type of very short term trading.
    * I don’t have the margin to do many of your offsets.  I tried to find trades that were small enough for me to do without tying up all of my remaining margin.

    What I learned:
    —————-
    When you had been calling for getting to cash I wasn’t exactly sure what that meant.  I get it now, it means get to cash :D .  More specifically, I watched some puts I sold go from being a little bit up to A LOT down.  I watched spreads that I had sold go from green to red.  I watched as a fair amount more of my margin melted away.  Fortunately, much of this was in a paper account.  The WFR and NLY puts were up a little and I watched them go way down.  Next time, if it’s not nailed down, it’s getting sold :)
     
    I am grateful I listened to your advice and didn’t sell puts on a company or price I was uncomfortable with.

    Hedges are a lot cheaper when everyone’s not panicking and trying to buy hedges.

    Don’t panic.

    What to do:
    —————-
    I am not sure what to do.  I am not sure if I should invest another $120 to try to salvage the TZA or just try to get out with half and make sure next time I have downside protection before I need it.  I think I can get out of the QQQ’s close to even.  Any advice you or the group have for me is most appreciated.

    thanks in advance :)

    scot.


  303. Hi, barfinger, regarding SET:
    Wow, that’s amazing!  Thanks for your effort.  I’ll keep an eye on that as well.  I do trade SPX strangles.


  304. Kustomz/ Kwan/ Phil
    Thanks! I’m Glad to be back and anxious to make some money!


  305. seer – I’m inclined to agree with you too, actually, but I know Phil does likes to include a variety of strategies because they work differently for different people. I like it because its hands off and works with my day job well, but I’m not so keen on the statistics. I’m always looking for something better, just need to the take time to paper trade it for a bit before I change strategies.


  306. Pharm / SPY Phantom lines:  Pharm, you are right, it is incredible. On Monday, the SPY after-hours phantom quote was 117.45 and foreshadowed Tuesday’s big gain. On Tuesday, the AH phantom quote was 112.14 and foreshadowed the sharp Wednesday drop.  Wednesday AH quote was 117.49 and of course we had the massive rally today. So the AH quote tonight of 112.34 seems ominous. It is like being given tomorrow’s newspaper today. I guess it will work… until it doesn’t.  Let’s see how it goes tomorrow!


  307. It looks like the Yuan is being allowed to appreciate in a serious way. Phil, if you have In mind any U.S. corporate candidates that will likely benefit most from a weakening dollar through stepped up exports to China, I could use a few candidates. Thanks.


  308. Yuan P.S. – Since the Euro seems to be tanking vs. USD, loosening the Yuan peg will also benefit European exporters (e.g., BMW?) so Euro companies would be equally interesting.


  309. Good morning! 

    Damn, perfect 3am trade today – Dollar was punched up to just over 75, futures were at a low for the morning and, since then, the Dollar has fallen back to 74.70 and the Dow popped 200 points off the low.  That trade is fantastic when it works, which is very often as the BOJ does their best to keep the Yen down (more Yen per Dollar) into the Nikkei close to make the exporters happy.  They got all the way to 76.99 at the Nikkei open but couldn’t hold it together as both France and Greece had awful GDP numbers (not good for Japanese exports anyway). 

    The Nikkei ended up closing flat at 8,963 but down from the open, the Hang Seng was also flat but down 300 points from the open is a nasty way to get flat – HOWEVER – Keep in mind the Dow was falling 200 points in the futures (now flat) as GS et al didn’t want Asian investors to think it was a good time to buy US Equities on the cheap (because they’re not done buying them yet!).  

    The Shanghai managed to hold on for a half-point gain but the BSE fell 1.12%.  Europe, on the other hand, is in a pretty good mood,  They didn’t expect Greece to put up good numbers and France’s GDP was flat vs. up 0.3% expected and the Government is sticking to their annual targets so the CAC is still up 1.5%, the FTSE is up 1.7% and the DAX is up 1.8% (5:30) so DAMN – I wish I didn’t miss the 3am trade this morning!  

    Hopefully we get a big finish to the week.  They did ban short selling on the Financials in the EU and that did work last time they did it – for about a week – but that’s no reason not to enjoy that week, right?  

    Dollar currently on the 74.60 line – below that is going to be bullish and I’m looking for a big finish to the week where we go back down to 74.20 and pop the markets at least 2.5% today.  The Euro is at $1.425 and getting stronger, the Pound is rocketing to the $1.63 line and the Yen is currently 76.67 and we’ll need them to get back below 76.50 (stronger Yen) so the Dollar can head lower.

    Even though I expect a 2.5% move up and we may even go higher, I’m very skeptical about whether it will hold up so still cashy and cautious.  That doesn’t mean we miss stuff though – yesterday, for example, we picked up 20 DIA Aug $114 calls in the $25KP for .92 and sold 10 at $1.15 and 10 at $1.40 for a total gain of $710.  That may not sound very exciting but the market was up 5% for the day and that trade made 38%.  We allocated $1,840 out of a $60,000 portfolio (3%) to the trade and $710 is a 1.2% gain for the day on the ENTIRE portfolio.   

    So let’s say we sat out 20 crazy days in the market and managed to net just a 10% gain while we waited for a proper place to re-commit to longer trades – is that a bad thing?  We did the same thing the day before too – we didn’t make a trade until the end of the day but the trade we made returned better than 50% – AND THAT WAS IN THE OPPOSITE DIRECTION!  That’s why, when we have a choppy market I say CASHY and CAUTIOUS but that doesn’t mean we give up, it just means we are staying mainly in CASH and being CAUTIOUS – I do not understand why people find this so terrible that they’d rather juggle 20 positions and hedges in a market that swings back and forth 5% a day.

    Keep in mind that it is VERY POSSIBLE that we are barreling headlong into a MAJOR CRASH.  Historically, wild market swings do not end well.  We also may be barreling headlong into QE3 but, if we are – YOU ARE NOT GOING TO MISS MUCH.  Unless you routinely make over 100% a year in a full portfolio – going to cash and making CONSERVATIVE directional bets is not going to place you at a disadvantage.  

    One reason is because we don’t have to bet both ways – we only jump in when we think we see a nice move coming and we get out quickly when we’re wrong and that’s easy to do because we have no skin in the game.  If you have a long-term portfolio that is locked down in neutral (a wise thing) to wait out the crisis – then Cashy and Cautious is a very good strategy for your short-term allocation while we ride out the market storm.  

    That being said – no matter how high we climb, I’m going to be liking a disaster hedge into the weekend as well as an oil short.  In fact, I like shorting oil (/CL) below the $85 line today (now $85.11) with tight stops.  Gasoline (/RB) is $2.833 and I’d be very surprised if they don’t go UP to $2.85 at least.  Natural gas pulled away from copper ($4.01) and is now $4.12 – as we expected, reviews on fracking are showing it’s much more damaging to the environment than has been claimed – regulations will be coming, as they often do when companies make children’s hair fall out and stuff (hard to ignore on TV).  

    Gold is $1,750 and silver is $38.50 and they will go down if the Dollar rises so GLD is going to be an interesting short if the Dollar goes over 74.80 but, then again, so will our indexes!  

    Friday’s economic calendar:
    8:30 Retail Sales
    9:55 Reuters/UofM Consumer Sentiment
    10:00 Business Inventories 

    11 out of 30 economists polled by the WSJ don’t think the Fed will stick to its pledge not to hike rates before mid-2013, believing Ben Bernanke & Co. will be "forced by market conditions" to tighten monetary policy beforehand. The Chinese yuan is the favorite currency of the polled economists to buy, and the euro their favorite currency to short.

    Regardless of where things go from here, there’s no denying this week’s price movements have been historic. This is the first time the Dow has seen four straight days of either 400-point or 3.5%+ movements, not to mention the first time the Dow has seen 6 days of 400-point swings between the daily high and low.

    Is case anyone has lost track with all of the big numbers flying around: For the week, DJIA -2.6%, S&P 500 -2.3%, Nasdaq -1.2%. Given the volatility lately, these losses could be erased (or doubled) in the space of 15 minutes tomorrow. - Can we make it a bullish week?  

    Rep. Dave Camp, House Ways and Means Committee chairman and member of the new "super committee" charged with forging a deal to cut the deficit, says he won’t rule out tax increases if they could boost economic growth – "everything is on the table."

    French Q2 GDP comes in at zero vs. +0.3% forecast and +0.9% in Q1. Households’ consumption expenditure -0.7% vs. +0.4% in Q1. "Overall, total domestic demand (excluding inventory changes) drove GDP down," the INSEE stats agency says. Euro -0.5% vs. the dollar. 

    Quick take on French GDP: The zero growth won’t do anything to calm fears about the government’s ability to cut the deficit and the country’s AAA rating. With shares gyrating wildly this week, partly because of France, today could be another day of turmoil. Euro-0.5% vs. dollar and -1% vs. the Swissie.

    The French short-selling ban applies to 11 of its banks and insurance companies and lasts for 15 days. Included: Axa (AXAHY.PK), BNP Paribas (BNPQF.PK), Credit Agricole (CRARY.PK), Scor (SCRYY.PK), and Societe Generale (SCGLY.PK). (PR) (earlier)

    Italy’s cabinet may reportedly meet this evening to OK measures to balance the budget by 2013 as the government attempts to convince investors that debt is under control. The proposals include easing labor-market laws, selling local services, and possibly hiking capital-gains tax to 20% from 12.5%.

    Good for future earnings:  2011 is shaping up to be the third biggest year for corporate buybacks since 1985, according to Birinyi Associates. With $324B in stock repurchases already through July, we’re on track to rack up over $550B by the end of the year. Corporations remain flush with cash, and with the S&P 500 trading at just 12.8 times earnings, the pipeline appears likely to remain full for some time to come. 

    Bad for humans:  August volume run-rates on Nasdaq-listed shares are tracking 56% higher than YTD averages, rocketing over the past six trading days to a record 21.3B shares traded. The surge isn’t too surprising when you take into account high frequency trading – which accounts for nearly 70% of total volume – and thrives on the volatility we’ve seen over recent sessions (III).

    2008 redux? Global markets are behaving irrationally; they’re not headed for a second meltdown, Peter Morici writes. But what if recent events are a continuation, not a second coming, of 2008? Losses have merely been shifted from private to public, and covering deficits with borrowed funds, some of it newly printed, "does not constitute meeting debt service requirements."

    What recession?  More on Nordstrom (JWN): Q2 earnings jumped 20% as the upscale retailer continued to report designer merchandise was among its top sellers. The company notes that consumers are purchasing full price merchandise at levels not seen since 2007. Shares +3.5% AH. 

    The U.S. Postal Service fires a shot across Washington’s bow by proposing to cut 120K jobs through union-prohibited layoffs, and to withdraw its employees from federal health and retirement plans. The proposal requires the approval of Congress, but, if passed, could have serious ramifications for government workers, as well as the national labor movement.


  310. Speaking of Nordstom’s – I realized something this weekend shopping with my Mom and he friend, who is well off.  There is this thing now where they DON’T want to buy things on sale – as if it’s a sign that they are struggling that other people will see.  This seems silly until you realize that rich women shop A LOT and, unlike people who are happy to check out Sears, they have a fairly limited amount of stores that cater to them.   So they all KNOW what’s on sale where and, when one of their pack buys a sale item – their friends KNOW they went for the discount.  It’s an interesting dynamic, I’d be curious to know what others have observed.  

    Dow (/YM) Futures are a short under 11,100.  RUT (/TF) under 690 – just crossing now!  


  311. Jobs/JC – I love the way the guy keeps saying less taxes like a mantra that solves everything.  Sadly though, a bunch of people clap and cheer when he says it.  It’s a con, pure and simple but I guess people lined up for medicine shows for 100 years even though any intelligent person knew it was a fraud….

    Here’s a pretty balanced video on WMT, pro and con:


  312. Don’t be too greedy on the futures, they often take us down ahead of the open so they can get some upside momentum going into the bell.  If we break below 11,000 on the Dow or 1,160 on S&P or 680 on the RUT – THAT’s a problem.  Nas holding 2,150 (now 2,151.5) would be a bullish sign to be cautious on the short plays.  


  313. See, we don’t NEED to get up at 3am to have fun with the futures – they just keep throwing opportunities at us!  

    Condors/Seer – People kept asking for something to feature them so we put up Income Trader, who was very easy to follow.  There are many, many strategies I don’t agree with – I can’t ban them all, can I?  Also, as I keep trying to tell people, there are times when a certain strategy works and times when it doesn’t – it might be a good idea NOT to play the condors in times of uncertainty or maybe even just not during earnings months.  Frankly, I don’t know because I change my tactics based on market conditions so there’s no one strategy I would ever stick with no matter what.   I don’t use Optrader’s strategy either but it’s a fantastic one, as is JRW’s – people have to find the style of trading that is comfortable for them and, of course, I favor a mix of strategies.  If you played 10 contracts on the Condor and took a $10,000 hit, that would be FULLY OFFSET by putting $2,000 in to a disaster hedge that paid 500% and if you aren’t putting AT LEAST 1 month’s profits into protecting your positions, then you are not paying attention to the main pages of this site, let alone the tabs!  

    FDR/JC – Thanks, makes you think there must be a good leader out there… somewhere….

    Lindner/Angel – I always wonder if some of that stuff is taken out of context to scare people.  They are, of course the junior partner in the coalition with just 93 seats (out of 622), but we’ve seen how much damage the Tea Party can cause in this country so we do have to take those guys seriously. 

    Crash/Kowalsky – Good quote!  That’s my worry, people expect something out of Europe and/or QE3 to save us and the real danger is that those things don’t happen next week and we go off a cliff.   Possibly US trades (and even global traders) will keep the faith through Jackson Hole but it does worry me when GS says it’s a done deal – maybe they just have a few Billion more shares to dump on suckers before letting the markets die?  

    Hedges/Scott – The problem is you are not paying $290 to protect $1,160, you are paying $290 PER MONTH to protect $1,160 – see the difference.  You have 18 months until you collect your premiums on those puts and you SPENT PREMIUM (like a sucker at a casino) that will ABSOLUTELY expire next Friday, no matter which way the market goes.  Even worse, you did it AFTER you made the bets, not when you made the bet.  This is like buying a house on the beach and not buying flood insurance when there hasn’t been one for 10 years and it would have been $10,000 a year but then, AFTER you get hit for $150,000 in damage, you call the insurance company and they tell you it’s $25,000 a year for insurance and  you buy it because you are scared of getting another $150,000 hit but, 10 years later, you spent $250,000 on insurance and there wasn’t another flood.  

    To a VERY SMALL extent, you scaled into WFR but that was too early as it was down just .65 and all you did was run the average to $2.08 from $1.75 (18%).  The situation was far from hopeless at $2.40 and the problem is you went from 2 short puts that you had no need to protect to 4 short puts you are worried about and need to protect so the REAL COST of adding the 2 additional short puts has to include the fact that you now have to buy insurance.  

    Anyway, I have to go to work now and will be happy to discuss more on weekend but – IF you are going to hedge a 2013 position – take a 2013 hedge!  TZA is at $50 and the 2013 $30/35 bull call spread is $2.50 so $250 returns $500 UNLESS THE RUT GOES UP.  See how nice that hedge is – it’s in the money NOW.  You don’t lose $250 unless the RUT is higher and, if the RUT is higher then you probably will be doing well on your short puts.  THAT’S A HEDGE – short-term hedges are GAMBLING!  They are fine for additional insurance but they are directional bets with short time-frames and need to be treated as such (with tight stops).  

    Candidates/ZZ – Sure, the Dow – I listed some in the post above and check that Dividend Portfolio as well as 13 Dow Plays and a Chip shot – which I am very likely to update this weekend as our first Watch List for next week (still not ready to call it a Buy List).  

    Euro/ZZ – Not tanking today.

    Dollar back down to 74.60 – could be a nice pop shaping up!  Yen right on 76.50 line, would be very nice if it went lower (stronger).  

    Seems like QE3 rumors are going around somewhere!  


  314. "….11 out of 30 economists polled by the WSJ don’t think the Fed will stick to its pledge not to hike rates before mid-2013, believing Ben Bernanke & Co. will be "forced by market conditions" to tighten monetary policy beforehand. The Chinese yuan is the favorite currency of the polled economists to buy, and the euro their favorite currency to short."
    So 19 believe it will stick, and the Yuan is not the fave currency?
    Taken all together that economists are:  little more than brainiac charlatans, gorgon creatures with bad breath (Greeenspan was notorious for his) or on some tenure track at some prestigious university, and have never had a real job in the real world, are generally wrong just about all the time just about everything including the last 3 years’ debacle in the RE markets, recessions, and historic unemployment, i can safely disregard any of their prognostications, take out my Ouija board, and find more accurate answers to those questions than any "economist" can provide. I findit remarkable that many economists are ironcally,  multimillionaires.  One wonders if they are just wrong but lucky sometimes to DO the opposite of what they say will happen or if there is an intention to mislead.
    True Story:  a good friend in grade school, and high school was the smartest boy in the room. Valedictorian and top of his MBA and PHD  class. Went on to become an Economist at a major mutual fund and eventually became VEEP and with his stock holdings—in the corporation which he amassed over 15 years and a subsequent buyout by a major insurance company—- became a multimillionaire before age 50.
    During a market low which had recently been on a tear, rising 15% in several weeks, he was interviewed by the WSJ. He was asked if he thought the market turn was for real and replied that it was a fake, to stay with bonds.
    I called him up out of the blue, reminded him of our earlier association— due to the fact that I set him up, at his request, with a date with the head majorette at a local high schoo,who he was too shy and nerdy to ask out-- remembered me fairly well. I asked him if he was completely confident about his market prediction that it would turn south and go even lower than before the runup. He assured me he was and that if I really wanted to do well, to stick with the bond market.  I heeded his advice to my eternal regret. As the stock market took off like a rocket for the succeeding several years, never did return to its low. 
    I ran into an associate of his many years later who shared a VEEP spot at his former company, who also became a multimillionaire, but had not stuck with bonds.  When I mentioned to him the epsisode described above, he said, "If it wasn’t for me pressing him to buy our shares in the early years for single digits when we were just getting some traction, today he would be teaching at some obscure university in Wyoming instead of attending wine tastings all over the world. He owes his fortune to me."


  315. Phil
    Thanks for your view on the condors.  I didn’t play the put side last month which made it a directional bet, but it was a good hedge.